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HomeMy WebLinkAboutPackets - Council Packets (1642)         AGENDA ORO VALLEY TOWN COUNCIL REGULAR SESSION SEPTEMBER 22, 2021 ORO VALLEY COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE   The Town has modified its public comment procedures in the newly renovated town council chambers. For more details, please see the instructions for in person and/or virtual speakers at the end of the agenda. To watch and/or listen to the public meeting online, please visit https://www.orovalleyaz.gov/town/departments/town-clerk/meetings-and-agendas   Executive Sessions – Upon a vote of the majority of the Town Council, the Council may enter into Executive Sessions pursuant to Arizona Revised Statutes §38-431.03 (A)(3) to obtain legal advice on matters listed on the Agenda.        REGULAR SESSION AT OR AFTER 5:00 PM   CALL TO ORDER   ROLL CALL   EXECUTIVE SESSION - Pursuant to A.R.S. §38-431.03(A)(1) and (A)(3) Personnel matter - Town Manager's annual performance review   RECONVENE REGULAR SESSION AT OR AFTER 6:00 PM   CALL TO ORDER   ROLL CALL   PLEDGE OF ALLEGIANCE   UPCOMING MEETING ANNOUNCEMENTS   COUNCIL REPORTS  Spotlight on Youth   TOWN MANAGER'S REPORT   The Mayor and Council may consider and/or take action on the items listed below: ORDER OF BUSINESS: MAYOR WILL REVIEW THE ORDER OF THE MEETING   INFORMATIONAL ITEMS   CALL TO AUDIENCE – At this time, any member of the public is allowed to address the Mayor and Town Council on any issue not listed on today’s agenda. Pursuant to the Arizona Open Meeting Law, individual Council Members may ask Town Staff to review the matter, ask that the matter be placed on a future agenda, or respond to criticism made by speakers. However, the Mayor and Council may not discuss or take legal action on matters raised during “Call to Audience.” In order to speak during “Call to Audience” please specify what you wish to discuss when completing the blue speaker card.   PRESENTATIONS   1.Proclamation - Diaper Need Awareness Week   2.Town of Oro Valley FY 20/21 financial update through June 2021 (Please reference the attachments for the Town's monthly financial update)   CONSENT AGENDA  (Consideration and/or possible action)   A.Minutes - September 8, 2021   B.Approval of any direction to the Town Attorney and necessary staff as discussed in executive session   REGULAR AGENDA   1.PUBLIC HEARING:  DISCUSSION AND POSSIBLE ACTION REGARDING AN APPLICATION FOR A SERIES 14 (PRIVATE CLUB) LIQUOR LICENSE FOR STONE CANYON CLUB LOCATED AT 14200 N. HOHOKAM VILLAGE PLACE (To speak virtually on this item, register at https://forms.orovalleyaz.gov/forms/bluecard at least 24 hours prior to the start of the meeting.  See below for complete instructions)   2.PRESENTATION, DISCUSSION AND POSSIBLE ACTION REGARDING RESOLUTION NO. (R)21-47, AUTHORIZING THE EXECUTION AND DELIVERY OF AN AGREEMENT, A TRUST AGREEMENT, A CONTINUING DISCLOSURE CERTIFICATE, AN OBLIGATION TO PURCHASE AGREEMENT AND FORMS OF RELATED OBLIGATION DOCUMENTS; APPROVING A PRELIMINARY OFFICIAL STATEMENT; APPROVING THE SALE, EXECUTION, AND DELIVERY OF EXCISE TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021, EVIDENCING A PROPORTIONATE INTEREST OF THE OWNERS THEREOF IN AN AGREEMENT BETWEEN THE TOWN OF ORO VALLEY, ARIZONA AND A TRUSTEE; AND AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION, AND DECLARING AN EMERGENCY   FUTURE AGENDA ITEMS (The Council may bring forth general topics for future meeting agendas. Council may not discuss, deliberate or take any action on the topics presented pursuant to ARS 38-431.02H)   ADJOURNMENT The Mayor and Council may, at the discretion of the meeting chairperson, discuss any Agenda item.   POSTED:  9/15/21 at 5:00 p.m. by pp When possible, a packet of agenda materials as listed above is available for public inspection at least 24 hours prior to the Council meeting in the office of the Town Clerk between the hours of 8:00 a.m. – 5:00 p.m. The Town of Oro Valley complies with the Americans with Disabilities Act (ADA). If any person with a disability needs any type of accommodation, please notify the Town Clerk’s Office at least five days prior to the Council meeting at 229-4700.   PUBLIC COMMENT ON AGENDA ITEMS   The Town has modified its public comment procedures for its public bodies to allow for limited remote/virtual comment via Zoom. The public may provide comments remotely only on items posted as required Public Hearings, provided the speaker registers 24 hours prior to the meeting. For all other items, the public may complete a blue speaker card to be recognized in person by the Mayor, according to all other rules and procedures. Written comments can also be emailed to Town Clerk Michael Standish at mstandish@orovalleyaz.gov for distribution to the Town Council prior to the meeting. Further instructions to speakers are noted below.   INSTRUCTIONS TO IN-PERSON SPEAKERS   Members of the public shall be allowed to speak on posted public hearings and during Call to Audience when attending the meeting in person.  The public may be allowed to speak on other posted items on the agenda at the discretion of the Mayor. If you wish to address the Town Council on any item(s) on this agenda, please complete a blue speaker card located on the Agenda table at the back of the room and give it to the Town Clerk. Please indicate on the blue speaker card which item number and topic you wish to speak on, or, if you wish to speak during Call to Audience, please specify what you wish to discuss. Please step forward to the podium when the Mayor calls on you to address the Council.       1. For the record, please state your name and whether or not you are a Town resident.       2. Speak only on the issue currently being discussed by Council. You will only be allowed to            address the Council one time regarding the topic being discussed.       3. Please limit your comments to 3 minutes.       4. During Call to Audience, you may address the Council on any matter that is not on the agenda.       5. Any member of the public speaking must speak in a courteous and respectful manner to those            present.   INSTRUCTIONS TO VIRTUAL SPEAKERS FOR PUBLIC HEARINGS Members of the public may attend the meeting virtually and request to speak virtually on any agenda item that is listed as a Public Hearing.  If you wish to address the Town Council virtually during any listed Public Hearing, please complete the online speaker form by clicking here https://forms.orovalleyaz.gov/forms/bluecard at least 24 hours prior to the start of the meeting.  You must provide a valid email address in order to register. Town Staff will email you a link to the Zoom meeting the day of the meeting. After being recognized by the Mayor, staff will unmute your microphone access and you will have 3 minutes to address the Council.  Further instructions regarding remote participation will be included in the email. In accordance with the Pima County Health Department’s most recent health advisory, the Town respectfully asks all in-person meeting attendees, regardless of vaccination status, to please wear a mask while indoors. COVID-19 remains a fluid situation, and the Town will adjust its safety guidelines in accordance with any future health advisories from the Health Department.   Thank you for your cooperation.    Town Council Regular Session 1. Meeting Date:09/22/2021   Proclamation - Diaper Need Awareness Week Subject Proclamation - Diaper Need Awareness Week Summary Attachments Proclamation     Town Council Regular Session 2. Meeting Date:09/22/2021   Presentation and possible discussion of the Town's Fiscal Year 2020/21 Financial Update through June 2021 (year-end, unaudited) Subject Town of Oro Valley FY 20/21 financial update through June 2021 (Please reference the attachments for the Town's monthly financial update) Summary Attachments Memo  Attachment A - General Fund  Attachment B - Highway Fund  Attachment C1 - Community Center Fund  Attachment C2 - Cash Flow Statement  Attachment D - Summary All Funds  Attachment E - General Fund Sales Tax  Attachment F - General Fund State Shared Revenues  Staff Presentation  Oro Valley, it ’s in our nature. www.orovalleyaz.gov 11000 N. La Cañada Drive • Oro Valley, Arizona 85737 phone: (520) 229-4700 • fax: (520) 229-0428 Town Manager’s Office M E M O R A N D U M TO: Mayor and Councilmembers FROM: Mary Jacobs, Town Manager David Gephart, Chief Financial Officer DATE: September 22, 2021 SUBJECT: June 2021 Financial Update This financial report is intended to provide an overview and status of revenues and expenditures for the Town’s selected funds through FY 20/21 (July 2020 – June 2021). Funds included in this financial update are the General Fund, Highway Fund and Community Center Fund. All amounts are preliminary, un-audited and subject to change based upon adjusting entries, as necessary. EXECUTIVE SUMMARY: The Town has thus far successfully navigated the challenges posed by the COVID -19 pandemic. Staff is pleased to report that financial performance across all funds has exceeded expectations. Revenues are strong, especially for single-family residential permits and construction sales taxes due to a strong housing market, as well as retail and online sales tax collections. There are also indications of improvement in restaurant/bar and bed tax collections . General Fund Overall, General Fund revenues and expenditures ended the fis cal year better than originally forecasted (See Attachment A). Due to strong local sales taxes, permit fee revenues , as well as federal aid from the CARES Act and American Rescue Plan Act, revenues total $56.9 million or 131.2% of budget. Combined with expenditures ending the fiscal year 5.7% below budget at $42.0 million, the General Fund preliminarily ended the fiscal year with a surplus of approximately $14.9 million. Highway Fund Revenues and expenditures for the Highway Fund ended the fiscal year better than originally budgeted (See Attachment B). Revenues totaled approximately $3.8 million or 102.1% of budget, while expenditures only totaled $3.4 million or 86.8% of budget. The Highway Fund preliminarily ended the fiscal year with a surplus of $424,000. Community Center Fund Overall, year-end revenues and expenditures for the Community Center Fund performed better than budgeted figures (See Attachment C-1 & C-2). Revenues totaled $7.6 million or 106.8% of budget, while expenditures totaled $5.8 million or 83.9% of budget. Due to increased half-cent sales tax collections and CIP project roll-over, the Community Center Fund preliminarily ended the fiscal year with a surplus of $1.8 million. BACKGROUND AND DETAILED INFORMATION: GENERAL FUND Attachment A shows General Fund revenues and expenditures through June 30, 2021, The preliminary year-end amounts for the General Fund are as follows: Revenues: $56,888,739 Less: Expenditures: ($42,037,914) Preliminary Estimated Change in Fund Balance: $14,850,825 * *The adopted fiscal year 2020/21 budgeted change in fund balance is $(1,225,025) General Fund Revenues • Local sales tax collections in the General Fund totaled $21.8 million or 120.4% of the budget amount of $18.1 million for the fiscal year. Construction sales tax collections totaled $4.9 million through June 30th, which exceeded the budgeted amount by $1.5 million. Despite COVID -19, retail collections in the General Fund totaled $8.0 million for FY 20/21 and are 9.9% or $300,000 higher than the prior fiscal year . Restaurant/bar c ollections and bed tax collections remained relativity flat year-over-year and ended near budgeted levels. Due to strong collections in construction, retail and remote collections, General Fund sales taxes preliminarily ended the fiscal year $3.7 million, or 20.4% over budget. Please see Attachment E for detailed information on General Fund local sales tax collections. • License and permit revenues totaled $3.3 million or 208.8% of the budget amount of $1.6 million for the fiscal year. Total Single Family Residential (SFR) permits issued for the fiscal year were 498 and represent a large portion of this revenue. For reference, last fiscal year, the Town had issued 275 SFR permits . Commercial permit revenue is another large portion of this category and includes large one-time permit revenues . • State shared revenues , which include shared sales tax, income tax and auto-lieu fees, total $14.4 million or 109.4% of the budget amount of $13.2 million for the fiscal year. Both state shared sales taxes and auto-lieu fees saw higher than expected collections throughout the fiscal year. Please see Attachment F for detailed information on General Fund state shared revenue collections. • Other intergovernmental revenues include RTA reimbursements for transit services, school resource officers, and animal control revenues. Preliminary year-end totals are $1.2 million or 71.3% of budget. This is mainly due to reduced ridership demand as a result of COVID-19, which caus ed reductions in RTA transit reimbursements. • Charges for services revenues totaled $2.0 million or 88.9% of the budget amount of $2.2 million for the fiscal year. A large portion of these revenues are associated with Parks & Recreation programming and farebox revenues. As anticipated, these revenues were impact by COVID-19, but were starting to see recovery towards the end of the fiscal year . • Federal grant revenues totaled $13.4 million for the fiscal year. This figure includes the Town’s allotted $5.3 million of AZ Cares funding as well as the first of two receipts of the American Rescue Plan Act which is approximately $7.7 million. The remaining amounts are smaller grants related to public safety. General Fund Expenditures • General Fund expenditures ended the fiscal year below budget by about $2.5 million, or 5.7%. This is due to personnel savings from position vacancies, O&M savings fr om departments and one-time projects, as well as project carry-over into next fiscal year. Preliminarily, the General Fund ended the fiscal year with a total fund balance of $35.8 million, or 80.2% of budgeted expenditures. HIGHWAY FUND Highway Fund Re venues • State shared highway user funds totaled $3.7 million or 107.4% of the budget amount of $3.5 million for the fiscal year. This was anticipated as monthly distributions from the state remained stronger than original projections. • Budgeted s tate grant revenues were reimbursable costs by the RTA related to the La Cholla Road widening project. As this project was substantially completed in the prior fiscal year, there were no additional reimbursements expected. Actual amounts received are from an RTA street light program. Highway Fund Expenditures • Highway Fund expenditures ended the fiscal year at $3.4 million or 86.8% of the adopted budget of $3.9 million. The primary reasons expenditures were below budget in the Highway Fund are due to reimbursable costs associated with the La Cholla Road widening project, as well as project carry-over for the Lambert Lane overlay project into the new fiscal year. The Highway Fund preliminarily ended the fiscal year with a surplus of $424,016 and an ending fund balance of $1.2 million. COMMUNITY CENTER FUND Attachment C-1 shows the consolidated financial status of the Community Center Fund with all revenues and expenditures from the golf operator and Town-managed operations. Attachment C-2 shows the monthly line-item detail for the contract-managed operations , specifically revenues and expenditures associated with the golf, food and beverage operations. Totals in the revenue and expenditure categories in Attachment C -2 tie to the c ontracted operating revenues and expenditures in Attachment C -1. Community Cente r Fund Revenues • Revenues in the Community Center Fund through June totaled $7.6 million or 106.8% of the budget amount of $7.1 million. • Contracted operating revenues from the golf operator totaled $4.0 million for the fiscal year. This is approximately $725,000 or 22.3% higher than revenues from last fiscal year. This is mainly the result of increased golf and member related revenues. • Due to facility closures and reduced patronage from COVID-19, Town operating revenues for the fiscal year totaled $513,000 or 53.7% of budget. Savings in Town operating costs partially helped offset this shortfall. • Due to strong retail and remote collections, local sales tax revenues for the fiscal year totaled $2.9 million or 118.2% of the budget amount of $2.5 million. Community Center Fund Expenditures • Expenditures in the Community Center Fund totaled $5.8 million or 83.9% of the budget amount of $6.9 million for the fiscal year. • Contracted operating expenditures from the golf operator totaled $4.6 million, or 103.1% of budget to end the fiscal year. The primary driver for this overage is costs related to the Pusch Ridge course which were unbudgeted. Overall year-end contracted operating expenditures are approximately $232,000 or 4.8% lower than cos ts from the prior fiscal year, even when including unbudgeted Pusch costs . • Budgeted c apital outlay is comprised of several minor capital items , in addition to $1.1 million for the golf course irrigation project. As construction for the irrigation project is on hold, the bulk of this year’s budgeted project was not spent. Actual expenditures of $140,000 account for smaller items at the community center as well as design work for the irrigation project. • Overall, preliminary year-end expenditures for the Community Center Fund are under budget by $1.1 million or 16.1%. This is due to a combination of personnel, O&M, and capital outlay savings . • Preliminarily, the Community Center Fund ended the fiscal year with a s urplus of $1.8 million and a total fund balance of $2.7 million. The year-end sales tax support for golf operations is estimated to be $456,612. This figure assumes ($664,688) for contracted golf operations, $125,000 in outside HOA contributions, and $83,076 in local sales taxes generated from golf related operations. Please see Attachments A and B for additional details on the General Fund and Hi ghway Fund. See Attachments C-1 and C-2 for additional details on the Community Center Fund. See Attachment D for a fiscal year-to-date consolidated summary of all Town Funds. See attachments E and F for a breakdown of monthly local sales tax collections and state shared revenue collections for the General Fund. ATTACHMENT A June YTD Financial Status General Fund % Budget Completion through June --- 100.0% % Actuals YE % Variance to Budget to Budget REVENUES:` LOCAL SALES TAX 21,832,073 18,128,304 120.4%21,832,073 20.4% LICENSES & PERMITS 3,325,826 1,592,500 208.8%3,325,826 108.8% FEDERAL GRANTS 13,356,262 5,790,969 230.6%13,356,262 130.6% STATE GRANTS 214,154 75,000 285.5%214,154 185.5% STATE/COUNTY SHARED 14,435,338 13,194,438 109.4%14,435,338 9.4% OTHER INTERGOVERNMENTAL 1,192,419 1,672,000 71.3%1,192,419 -28.7% CHARGES FOR SERVICES 1,991,889 2,239,675 88.9%1,991,889 -11.1% FINES 135,547 125,000 108.4%135,547 8.4% INTEREST INCOME 123,041 150,000 82.0%123,041 -18.0% MISCELLANEOUS 282,190 262,500 107.5%282,190 7.5% TRANSFERS IN - 120,000 0.0%- -100.0% TOTAL REVENUES 56,888,739 43,350,386 131.2%56,888,739 31.2% % Actuals YE % Variance to Budget to Budget EXPENDITURES: CLERK 400,345 428,524 93.4%400,345 -6.6% COMMUNITY & ECON. DEV.2,696,250 2,779,661 97.0%2,696,250 -3.0% COUNCIL 161,901 197,019 82.2%161,901 -17.8% FINANCE 836,613 832,888 100.4%836,613 0.4% GENERAL ADMINISTRATION 4,928,422 5,251,466 93.8%4,928,422 -6.2% HUMAN RESOURCES 437,350 457,347 95.6%437,350 -4.4% INNOVATION & TECHNOLOGY 3,577,773 3,944,198 90.7%3,577,773 -9.3% LEGAL 863,668 870,592 99.2%863,668 -0.8% MAGISTRATE COURT 802,123 864,826 92.7%802,123 -7.3% MANAGER 946,617 1,028,734 92.0%946,617 -8.0% PARKS & RECREATION 3,130,364 3,478,517 90.0%3,130,364 -10.0% POLICE 16,602,121 16,953,228 97.9%16,602,121 -2.1% PUBLIC WORKS 4,067,847 4,898,891 83.0%4,067,847 -17.0% TRANSFERS OUT 2,586,520 2,589,520 99.9%2,586,520 -0.1% TOTAL EXPENDITURES 42,037,914 44,575,411 94.3%42,037,914 -5.7% SURPLUS / (DEFICIT)14,850,825 (1,225,025) 14,850,825 BEGINNING FUND BALANCE 20,899,548 Plus: Surplus / (Deficit)14,850,825 ENDING FUND BALANCE **35,750,373 * Year-end estimates are subject to further revision ** Ending fund balance amounts are estimates and are subject to further revision FY 2020/2021 Year End Estimate * Budget Year End Estimate * Actuals thru 06/2021 Actuals thru 06/2021 Budget ATTACHMENT B June YTD Financial Status FY 2020/2021 % Budget Completion through June --- 100.0% Actuals thru 06/2021 Budget % Actuals to Budget Year End Estimate * YE % Variance to Budget REVENUES: LICENSES & PERMITS 37,108 25,000 148.4%37,108 48.4% STATE GRANTS 16,588 210,000 7.9%16,588 -92.1% STATE/COUNTY SHARED 3,714,572 3,458,929 107.4%3,714,572 7.4% INTEREST INCOME 1,022 5,000 20.4%1,022 -79.6% MISCELLANEOUS 7,542 2,000 377.1%7,542 277.1% TOTAL REVENUES 3,776,832 3,700,929 102.1%3,776,832 2.1% Actuals thru 06/2021 Budget % Actuals to Budget Year End Estimate * YE % Variance to Budget EXPENDITURES: TRANSPORTATION ENGINEERING 3,046,525 3,512,881 86.7%3,046,525 -13.3% STREET MAINTENANCE 306,291 348,220 88.0%306,291 -12.0% TOTAL EXPENDITURES 3,352,816 3,861,101 86.8%3,352,816 -13.2% SURPLUS / (DEFICIT)424,016 (160,172) 424,016 BEGINNING FUND BALANCE 818,962 Plus: Surplus / (Deficit)424,016 ENDING FUND BALANCE **1,242,978 * Year-end estimates are subject to further revision ** Ending fund balance amounts are estimates and are subject to further revision - Highway Fund ATTACHMENT C-1 June YTD Financial Status % Budget Completion through June --- 100.0% % Actuals YE % Variance to Budget to Budget REVENUES: CONTRACTED OPERATING REVENUES Golf Revenues, Trail and Cart Fees 2,298,066 1,567,840 146.6%2,298,066 46.6% Member Dues 1,021,503 850,000 120.2%1,021,503 20.2% Food & Beverage 448,780 760,776 59.0%448,780 -41.0% Merchandise & Other 202,516 325,933 62.1%202,516 -37.9% 3,970,865 3,504,548 113.3%3,970,865 13.3% TOWN OPERATING REVENUES Daily Drop-Ins 31,289 30,000 104.3%31,289 4.3% Member Dues 343,628 707,000 48.6%343,628 -51.4% Recreation Programs 86,696 160,000 54.2%86,696 -45.8% Swim Team/Swim Lessons - 8,000 0.0%- -100.0% Facility Rental Income 51,215 50,500 101.4%51,215 1.4% Concession Sales 129 100 129.0%129 29.0% 512,957 955,600 53.7%512,957 -46.3% OTHER REVENUES Local Sales Tax 2,947,420 2,492,960 118.2%2,947,420 18.2% Real Property Rental Income 19,502 19,502 100.0%19,502 0.0% Interest Income 4,454 1,000 445.4%4,454 345.4% Miscellaneous 127,060 125,000 0.0%127,060 1.6% 3,098,436 2,638,462 117.4%3,098,436 17.4% TOTAL REVENUES 7,582,258 7,098,610 106.8%7,582,258 6.8% % Actuals YE % Variance to Budget to Budget EXPENDITURES: CONTRACTED OPERATING EXPENDITURES Personnel 1,425,099 1,687,606 84.4%1,425,099 -15.6% Operations & Maintenance 2,956,482 2,513,430 117.6%2,956,482 17.6% Capital Equipment Purchases 53,873 - 0.0%53,873 0.0% Equipment Leases 200,099 294,792 67.9%200,099 -32.1% 4,635,553 4,495,828 103.1%4,635,553 3.1% TOWN OPERATING EXPENDITURES Personnel 711,610 762,713 93.3%711,610 -6.7% Operations & Maintenance 128,367 216,037 59.4%128,367 -40.6% 839,977 978,750 85.8%839,977 -14.2% CAPITAL OUTLAY 139,657 1,124,500 12.4%139,657 -87.6% TRANSFERS OUT 158,302 278,302 56.9%158,302 -43.1% TOTAL EXPENDITURES 5,773,489 6,877,380 83.9%5,773,489 -16.1% SURPLUS / (DEFICIT)1,808,769 221,230 1,808,769 BEGINNING FUND BALANCE 862,818 Plus: Surplus / (Deficit)1,808,769 ENDING FUND BALANCE **2,671,587 * Year-end estimates are subject to further revision ** Ending fund balance amounts are estimates and are subject to further revision FY 2020/2021 Actuals thru 06/2021 Budget Year End Estimate * Community Center Fund Actuals thru 06/2021 Budget Year End Estimate * ATTACHMENT C-2 July 2020 Aug. 2020 Sept. 2020 Oct. 2020 Nov. 2020 Dec. 2020 Jan.2021 Feb. 2021 Mar. 2021 April 2021 May 2021 June 2021 YTD FY 2021 FY 2021 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Budget Forecast REVENUES: Green Fees 104,791 105,899 122,143 93,295 171,862 161,787 162,631 229,807 269,410 241,815 163,971 88,767 1,916,178 1,333,602 1,916,178 Cart Fees 18,898 19,444 19,752 20,236 19,956 20,761 21,970 24,066 23,626 23,767 22,925 22,626 258,027 234,237 258,027 Driving Range 1,644 2,670 4,685 5,054 4,366 3,876 3,846 6,781 4,907 5,323 3,600 3,680 50,432 65,695 50,432 Golf Cards/Passes (709) - 709 - - - - - - - - - - - - Pro Shop Sales 11,834 10,009 10,825 8,276 14,099 21,293 16,957 17,213 35,312 27,457 15,166 8,797 197,238 222,238 197,238 Other Golf Rev.4,015 3,186 4,282 2,300 9,313 6,704 4,985 2,124 3,582 3,325 1,635 1,136 46,587 3,000 46,587 Clinic/School Rev.360 1,243 1,184 864 1,927 2,089 4,302 3,634 2,878 2,146 1,838 4,377 26,842 15,000 26,842 Monthly Dues 74,950 82,272 75,649 77,485 79,933 87,318 84,558 91,219 93,616 94,466 90,061 89,976 1,021,503 850,000 1,021,503 Misc. & Discounts (642) 323 133 951 (448) 1,375 1,140 1,289 1,193 (712) 8,070 (7,394) 5,278 20,000 5,278 Food & Beverage 24,734 22,371 23,461 22,740 36,582 34,969 33,510 43,846 52,541 60,691 55,860 37,475 448,780 760,776 448,780 TOTAL REVENUES:239,875 247,417 262,823 231,201 337,590 340,172 333,899 419,979 487,065 458,278 363,126 249,440 3,970,865 3,504,548 3,970,865 COST OF SALES: Pro Shop 9,815 8,835 10,735 5,880 11,797 21,621 10,803 11,629 23,458 19,847 11,628 6,229 152,277 144,454 152,277 Lessons & Group Services - - - - - - - - - - - - 13,350 - Food & Beverage 8,569 7,784 8,471 9,529 12,831 12,235 9,909 13,001 15,485 18,454 16,288 15,029 147,585 256,095 147,585 TOTAL COST OF SALES:18,384 16,619 19,206 15,409 24,628 33,856 20,712 24,630 38,943 38,301 27,916 21,258 299,862 413,899 299,862 GROSS INCOME:221,491 230,798 243,617 215,792 312,962 306,316 313,187 395,349 448,122 419,977 335,210 228,182 3,671,003 3,090,649 3,671,003 EXPENDITURES: Personnel 93,134 127,987 105,158 119,665 114,075 136,159 128,485 115,287 122,195 114,720 118,153 130,081 1,425,099 1,687,606 1,425,099 Golf Operations 5,503 1,778 2,224 6,329 17,209 8,906 3,681 12,133 7,201 4,414 7,036 7,332 83,746 30,900 83,746 G&A 20,792 52,369 24,364 12,231 22,577 30,873 72,503 28,926 35,216 33,613 40,392 (7,975) 365,881 135,509 365,881 Maintenance 148,148 151,140 221,930 219,568 118,088 67,554 12,972 68,592 86,897 101,845 139,825 158,460 1,495,019 1,524,660 1,495,019 Sales & Marketing 1,284 2,415 2,083 3,515 1,691 910 6,580 1,172 1,105 3,993 1,514 640 26,902 42,100 26,902 Food & Beverage 18,238 17,444 16,756 17,386 24,209 23,907 23,370 20,536 23,339 24,758 25,641 57,213 292,797 241,362 292,797 Management Fees 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 120,000 120,000 Golf Cart Leases 13,041 13,041 13,041 13,041 18,092 13,041 13,041 13,041 13,041 13,041 13,041 13,041 161,542 156,488 161,542 Equipment Leases 19,277 19,280 - - - - - - - - - - 38,557 138,304 38,557 Capital Equipment Purchases - - - - - - - - 53,873 - - 53,873 - 53,873 Other Expenses 12,590 17,043 - - - 450 6,248 - 20,930 8,728 7,668 147,200 220,857 3,000 220,857 Insurance - P&C 3,300 3,300 3,300 3,300 9,115 4,463 4,600 4,600 3,812 3,380 4,868 3,380 51,418 2,000 51,418 TOTAL EXPENDITURES:345,306 415,797 398,856 405,035 335,056 296,263 281,480 274,287 323,736 372,365 368,138 519,372 4,335,691 4,081,929 4,335,691 NET INCOME:(123,815) (184,999) (155,239) (189,243) (22,094) 10,053 31,707 121,062 124,386 47,612 (32,928) (291,190) (664,688) (991,280) (664,688) El Conquistador Cash Flow Statement ATTACHMENT D Consolidated Year-to-Date Financial Report through June 2021 FY 2020/2021 FY 20/21 Capital Leases/Left in Accounts Begin Bal.Transfer Out Thru June 2021 General Fund 20,899,548 56,888,739 56,888,739 2,586,520 27,834,992 9,995,731 1,620,671 42,037,914 35,750,373 Highway Fund 818,962 3,776,832 3,776,832 1,203,687 599,777 1,549,352 3,352,816 1,242,978 Seizure & Forfeiture - Justice/State 244,194 100,394 100,394 - 55,063 22,715 77,778 266,810 Community Center Fund 862,818 7,582,258 7,582,258 358,401 2,136,709 3,138,722 139,657 5,773,489 2,671,587 Municipal Debt Service Fund 169,721 141,398 1,076,200 1,217,598 6,438 1,215,445 1,221,883 165,436 Oracle Road Debt Service Fund 6,841 173,191 173,191 1,800 174,038 175,838 4,194 Water Resource System & Dev. Impact Fee Fund 16,545,872 4,114,256 1,130,495 5,244,751 120,000 2,839,028 321,661 3,280,689 18,509,934 Townwide Roadway Dev Impact Fee Fund 2,966,188 514,773 514,773 1,647,354 1,647,354 1,833,607 Parks & Recreation Impact Fee Fund 779,573 370,700 370,700 880,708 880,708 269,565 Police Impact Fee Fund 103,398 165,367 165,367 100,000 100,000 168,765 Capital Fund 2,410,736 1,047,831 1,771,143 2,818,974 2,791,438 2,791,438 2,438,272 PAG/RTA Fund 382,519 2,204,727 2,204,727 1,338,628 1,338,628 1,248,618 Water Utility 13,830,116 18,198,408 1,131,611 19,330,019 1,130,495 3,400,842 7,680,813 2,903,046 4,711,254 19,826,450 13,333,685 Stormwater Utility 628,026 1,635,969 1,635,969 808,588 368,321 215,775 1,392,684 871,311 Benefit Self Insurance Fund 2,088,823 3,851,207 3,851,207 3,812,717 3,812,717 2,127,313 Recreation In-Lieu Fee Fund 16,100 945 945 - 17,045 Total 62,753,435 100,766,995 5,109,449 105,876,444 4,175,416 35,384,818 25,779,382 15,948,372 - 6,422,398 87,710,386 80,919,493 Total OutPersonnelO&M Capital ContingencyFundRevenueOther Fin Sources/ Tfrs Total In Debt Service ATTACHMENT E General Fund Local Sales Tax Collections FY 2020/21 CATEGORY JULY AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUNE TOTAL Construction Sales Tax 643,435 471,705 517,101 483,032 384,176 321,621 305,338 241,562 254,568 450,343 409,924 442,859 4,925,664 Utility Sales Tax 267,771 337,260 350,040 360,019 286,715 249,286 245,891 271,681 241,698 227,632 221,458 205,402 3,264,853 Retail Sales Tax 647,068 579,089 560,008 613,570 607,315 709,153 889,306 606,222 620,243 748,368 700,138 692,038 7,972,518 Bed Tax 42,564 33,546 32,879 38,003 170,718 105,673 36,242 40,721 99,686 148,989 144,442 130,433 1,023,896 Restaurant & Bar Sales Tax 127,814 114,578 118,223 130,147 158,913 137,151 142,356 130,977 154,257 183,628 167,142 191,389 1,756,575 All Other Local Sales Tax *117,419 174,520 141,653 120,588 200,416 200,756 183,337 164,894 171,734 218,085 193,522 201,188 2,088,112 TOTAL 1,846,071$ 1,710,698$ 1,719,904$ 1,745,360$ 1,808,253$ 1,723,640$ 1,802,470$ 1,456,056$ 1,542,186$ 1,977,045$ 1,836,626$ 1,863,309$ 21,031,618$ FY 2019/20 CATEGORY JULY AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUNE TOTAL Construction Sales Tax 517,637 462,244 615,858 617,534 412,787 459,531 281,257 380,036 315,236 504,767 492,156 511,642 5,570,685 Utility Sales Tax 234,537 311,362 320,239 325,272 244,544 210,285 218,262 264,950 224,019 198,472 192,478 226,165 2,970,585 Retail Sales Tax 555,057 542,964 524,735 491,087 630,262 661,184 892,958 582,264 553,726 630,299 560,570 634,962 7,260,068 Bed Tax 54,830 91,322 99,278 104,342 120,624 123,846 109,383 142,745 100,338 51,680 14,780 21,154 1,034,323 Restaurant & Bar Sales Tax 142,433 139,049 154,388 151,118 150,996 176,520 173,479 175,764 138,125 129,206 93,589 119,171 1,743,839 All Other Local Sales Tax *46,762 59,797 66,191 63,774 119,804 155,857 181,405 158,895 123,624 111,669 101,265 108,652 1,297,696 TOTAL 1,551,256$ 1,606,738$ 1,780,689$ 1,753,127$ 1,679,017$ 1,787,223$ 1,856,744$ 1,704,654$ 1,455,069$ 1,626,093$ 1,454,838$ 1,621,747$ 19,877,196$ * Note: Does not include cable franchise fees or sales tax audit revenues ATTACHMENT F General Fund State Shared Revenues FY 2020/21 CATEGORY JULY AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUNE TOTAL State Shared Income Tax 548,361 548,361 548,361 548,361 548,361 548,360 548,361 548,361 548,361 548,361 548,361 548,361 6,580,331 State Shared Sales Tax 243,577 413,638 354,744 490,371 357,106 523,608 454,947 376,182 433,435 572,504 533,021 709,210 5,462,343 County Auto Lieu 98,728 256,745 217,528 201,958 162,796 190,665 190,824 175,212 182,116 216,303 197,466 302,323 2,392,664 TOTAL 890,666$ 1,218,744$ 1,120,633$ 1,240,690$ 1,068,263$ 1,262,633$ 1,194,132$ 1,099,755$ 1,163,912$ 1,337,168$ 1,278,848$ 1,559,894$ 14,435,338$ FY 2019/20 CATEGORY JULY AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUNE TOTAL State Shared Income Tax 489,186 489,186 489,186 489,186 489,186 489,186 489,186 489,186 489,186 489,186 489,186 489,186 5,870,232 State Shared Sales Tax 367,929 418,577 314,216 381,361 447,490 322,597 408,444 563,756 324,864 540,907 349,280 255,070 4,694,491 County Auto Lieu 89,556 184,257 174,793 173,529 183,209 157,268 177,671 183,502 159,026 80,587 138,405 371,622 2,073,425 TOTAL 946,671$ 1,092,020$ 978,195$ 1,044,076$ 1,119,885$ 969,051$ 1,075,301$ 1,236,444$ 973,076$ 1,110,680$ 976,871$ 1,115,878$ 12,638,148$ Fiscal Year 2020/21 Financial Update Through June 2021 September 22, 2021 Note: Revenues and expenditures listed in this report are preliminary, unaudited and subject to change based upon adjusting entries, as necessary. GENERAL FUND REVENUES REVENUE SOURCE Budget Actuals Thru 06/2021 % of Budget $ Actuals to Budget Notes Local Sales Taxes $ 18,128,304 $ 21,832,073 120.4%$ 3,703,769 Over budget due to strong collections in most areas including retail and online State Shared Revenues 13,194,438 14,435,338 109.4%1,240,900 Over budget due to strong state shared sales tax collections and VLT revenues Charges for Services 2,239,675 1,991,889 88.9%(247,786)Under budget due to COVID-19 disruptions to parks & recreation and transit revenues Licenses & Permits 1,592,500 3,325,826 208.8%1,733,326 Over budget due to strong residential and commercial permitting activity Grant Revenue 5,865,969 13,570,416 231.3%7,565,293 Figure includes CARES and ARPA funding along with various other grant revenues All Other 2,329,500 1,733,197 74.4%(596,303) Includes other intergovernmental revenue, transfers, interest income, misc. revenue TOTAL GENERAL FUND REVENUES $ 43,350,386 $ 56,888,739 131.2%$ 13,538,353 Over budget by $13.5 million or 31.2% due to strong local sales tax revenue and federal aid revenues GENERAL FUND SALES TAXES - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Construction Utility Retail Hotel/Bed Restaurant & Bar All Other “Wayfair” ruling 3-month rolling average GENERAL FUND EXPENDITURES EXPENDITURE CATEGORY Budget Actuals Thru 06/2021 % of Budget $ Actuals to Budget Notes Personnel $ 28,976,810 $ 27,834,992 96.1%$ (1,141,818) Slightly under budget due to personnel vacancy savings Operations & Maintenance 11,451,081 9,995,731 87.3%(1,455,350) Below budget due to intentional savings in first half of fiscal year, in addition to some project carry-over into the next fiscal year Capital 1,558,000 1,620,671 104.0%62,671 Slightly over budget due to re-labeling several O&M projects and Capital as part of best practices Transfers Out 2,589,520 2,586,520 99.9%(3,000)On budget. Transfers are related to debt service payments and CIP Transfers. TOTAL GENERAL FUND EXPENDITURES $ 44,575,411 $ 42,037,914 94.3%$ (2,537,497) Under budget by $2.5 million or 5.7% due to O&M and personnel savings Year -End Surplus: $14.9M Budgeted Deficit/Use of Fund Balance = $(1.2M) Estimated Ending Fund Balance: $35.8M 85.1% of budgeted expenditures Exceeds Council 25% Policy by $25.3M GENERAL FUND $41.7M $39.9M $56.9M $42.0M$43.4M $44.6M $.0M $10.0M $20.0M $30.0M $40.0M $50.0M $60.0M Revenues Expenditures General Fund FY 20/21 Through June PY Actual CY Actual CY Budget HIGHWAY FUND REVENUES REVENUE SOURCE Budget Actuals Thru 06/2021 % of Budget $ Actuals to Budget Notes Licenses & Permits $ 25,000 $ 37,108 148.4%$ 12,108 Over budget due to increased permitting activity State Grants 210,000 16,588 7.9%(193,412) Budgeted reimbursements associated with La Cholla widening. No reimbursements received, as costs were incurred in prior FY State Shared Revenues 3,458,929 3,714,572 107.4%255,643 Over budget due to strong HURF revenues All Other 7,000 8,564 122.3%1,564 Includes interest income and other miscellaneous revenue TOTAL HIGHWAY FUND REVENUES $ 3,700,929 $ 3,776,832 102.1%$ 75,903 Over budget by $76,000 or 2.1% due to strong HURF revenue collections HIGHWAY FUND EXPENDITURES EXPENDITURE CATEGORY Budget Actuals Thru 06/2021 % of Budget $ Actuals to Budget Notes Personnel $ 1,387,651 $ 1,203,687 86.7%$ (183,964)Under budget due to personnel vacancy savings from La Cholla widening project Operations & Maintenance 642,950 599,777 93.3%(43,173) Slightly under budget due to savings in various line- items Capital 1,830,500 1,549,352 84.6%(281,148) Under budget due to CIP project timing and carry- over TOTAL HIGHWAY FUND EXPENDITURES $ 3,861,101 $ 3,352,816 86.8%$ (508,285) Under budget by $508,000 or 13.2% due to personnel and O&M savings and CIP project carry- over Year -End Surplus: $424,000 Budgeted Deficit/Use of Fund Balance: $(160,172) Estimated Ending Fund Balance: $1,242,978 HIGHWAY FUND $4.1M $4.1M $3.8M $3.4M $3.7M $3.9M $.0M $.5M $1.0M $1.5M $2.0M $2.5M $3.0M $3.5M $4.0M $4.5M $5.0M Revenues Expenditures Highway Fund FY 20/21 Through June PY Actual CY Actual CY Budget COMMUNITY CENTER FUND REVENUES REVENUE SOURCE Budget Actuals Thru 06/2021 % of Budget $ Actuals to Budget Notes Contracted Operating Revenues $ 3,504,548 $ 3,970,865 113.3%$ 466,317 Over budget due to golf and member related revenues Town Operating Revenues 955,600 512,957 53.7%(442,643) Below budget due to disruptions and prior closures caused by COVID-19 Other Revenues 2,638,462 3,098,436 117.4%459,974 Includes 1/2 cent sales tax revenues, HOA contributions, interest income and other misc. revenues TOTAL COMM. CENTER FUND REVENUES $ 7,098,610 $ 7,582,258 106.8%$ 483,648 Over budget by $484,000 or 6.8% due to strong golf related revenues and half-cent sales tax collections COMMUNITY CENTER FUND EXPENDITURES EXPENDITURE CATEGORY Budget Actuals Thru 06/2021 % of Budget $ Actuals to Budget Notes Contracted Operating Expenditures $ 4,495,828 $ 4,635,553 103.1%$ 139,725 Over budget due to costs associated with Pusch course Town Operating Expenditures 978,750 839,977 85.8%(138,773) Under budget due to personnel and O&M savings from closures caused by COVID-19 Capital Outlay 1,124,500 139,657 12.4%(984,843) Under budget due to roll-over of golf course irrigation project Transfers Out 278,302 158,302 56.9%(120,000) Under budget due to not completing previously scheduled transfer to General Fund TOTAL COMM. CENTER FUND EXPENDITURES $ 6,877,380 $ 5,773,489 83.9%$ (1,103,891) Under budget by $1.1 million or 16.1% due to CIP carry-over, transfers, and operating savings Year -End Surplus: $1.8M Budgeted Surplus/Addition to Fund Balance: $221,230 Estimated Ending Fund Balance: $2,671,587 COMMUNITY CENTER FUND $6.6M $6.2M $7.6M $5.8M $7.1M $6.9M $.0M $1.0M $2.0M $3.0M $4.0M $5.0M $6.0M $7.0M $8.0M Revenues Expenditures Community Center Fund FY 20/21 Through June PY Actual CY Actual CY Budget MONTHLY FINANCIAL UPDATE QUESTIONS?    Town Council Regular Session A. Meeting Date:09/22/2021   Requested by: Mike Standish Submitted By:Michelle Stine, Town Clerk's Office Department:Town Clerk's Office SUBJECT: Minutes - September 8, 2021 RECOMMENDATION: Staff recommends approval. EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to approve (approve with the following changes) the September 8, 2021 minutes.  Attachments 9-8-21 Draft Minutes  D R A F T   MINUTES ORO VALLEY TOWN COUNCIL REGULAR SESSION SEPTEMBER 8, 2021 ORO VALLEY COUNCIL CHAMBERS 11000 N. LA CAÑADA DRIVE            REGULAR SESSION AT OR AFTER 5:00 PM   CALL TO ORDER    Mayor Winfield called the meeting to order at 5:00 p.m.   ROLL CALL Present: Joseph C. Winfield, Mayor Melanie Barrett, Vice-Mayor Tim Bohen, Councilmember Harry Greene, Councilmember Joyce Jones-Ivey, Councilmember Josh Nicolson, Councilmember Steve Solomon, Councilmember EXECUTIVE SESSION - Regarding the property commonly known as the former Vistoso Golf Course, pursuant to A.R.S. §38-431.03(A)(3), (4) and/or (7): 1) Discussion or consultation for legal advice with the Town attorney or attorneys, and/or; 2) Discussion or consultation with the Town attorney or attorneys in order to consider its position and instruct its attorneys regarding the public body's position regarding contracts that are the subject of negotiations, in contemplated litigation or in settlement discussions conducted in order to avoid or resolve litigation, and/or; 3) Discussions or consultations with designated representatives of the Town in order to consider its position and instruct its representatives regarding negotiations for the purchase, sale or lease of real property    Motion by Mayor Joseph C. Winfield, seconded by Councilmember Joyce Jones-Ivey to go into Executive Session at 5:01 p.m. regarding the property commonly known as the former Vistoso Golf Course, pursuant to A.R.S. §38-431.03(A)(3), (4) and/or (7): 1) Discussion or consultation for legal advice with the Town attorney or attorneys, and/or; 2) Discussion or consultation with the Town attorney or attorneys in order to consider its position and instruct its attorneys regarding the public body's position regarding contracts that are the subject of negotiations, in contemplated litigation or in settlement discussions conducted in order to avoid or resolve litigation, and/or; 3) Discussions or consultations with designated representatives of the Town in order to consider its position and instruct its representatives regarding negotiations for the purchase, sale or lease of real property Mayor Winfield announced the following staff members would be joining Council in the Executive Session: Town Manager Mary Jacobs, Assistant Town Manager Chris Cornelison, Town Attorney Jonathan Rothschild and Town Clerk Mike Standish. 9-8-21 Minutes, Oro Valley Town Council Regular Session  1   Vote: 7 - 0 Carried   RECONVENE REGULAR SESSION AT OR AFTER 6:00 PM   CALL TO ORDER    Mayor Winfield reconvened the Regular Session at 6:07 p.m.   ROLL CALL    Present: Joseph C. Winfield, Mayor Melanie Barrett, Vice-Mayor Tim Bohen, Councilmember Harry Greene, Councilmember Joyce Jones-Ivey, Councilmember Josh Nicolson, Councilmember Steve Solomon, Councilmember   PLEDGE OF ALLEGIANCE    Mayor Winfield led the audience in the Pledge of Alligience.   UPCOMING MEETING ANNOUNCEMENTS    Town Clerk Mike Standish announced the upcoming Town meetings.   COUNCIL REPORTS    Councilmember Jones-Ivey reported that she attended the League of Arizona Cities and Towns Annual Conference. Ms. Jones-Ivey also reported that the Canyon Del Oro High School Project Graduation event was in need of volunteers. She requested that interested individuals contact cdoprojectgrad.com for more information. Councilmember Solomon encouraged citizens to volunteer for Amphi's Project Graduation events. Mayor Winfield recognized and thanked the staff members that managed the Oro Valley booth at the League of Arizona Cities and Towns Annual Conference. Councilmember Bohen reported that he had attended several Oro Valley business openings and expressed his excitement for Oro Valley's future.   TOWN MANAGER'S REPORT     Town Manager Mary Jacobs reported the following information: Overview of Council Chambers remodel Recognized staff members involved with the Council Chambers remodel Status update regarding a new mural at James D. Kreigh park 9-8-21 Minutes, Oro Valley Town Council Regular Session  2    ORDER OF BUSINESS    Mayor Winfield re-organized the agenda as follows: Consent Item (J) would go before the Call to Audience. All other agenda items would remain as posted. Mayor Winfield provided the guidelines for participation in the Town Council's Regular Session meeting.   J.Approval of any direction to the Town Attorneys, Town Manager, and/or designated representatives as discussed in Executive Session regarding the property commonly known as the former Vistoso Golf Course       Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene that the Town Council direct staff in accordance with their discussion in Executive Session to proceed with a settlement agreement of all disputes with Romspen that will facilitate the Conservation Fund's purchase of the 202 acres of the former Vistoso golf course; that the Town Council will allow the Town to be a party to the resolution of all claims with Romspen and be party to the negotiations of a conservation easement between the Conservation Fund and Romspen; including any consideration required by the Town; and that staff is directed in furtherance of a settlement agreement to involve a third party regarding the purchase of the 6 acres of the property owned by Romspen, currently zoned multi-family residential.    The following individuals spoke in support of item (J). Oro Valley resident Teresa Marrow Oro Valley resident Rosa Daily Oro Valley resident Tom Stegman    Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene that the Town Council direct staff in accordance with their discussion in Executive Session to proceed with a settlement agreement of all disputes with Romspen that will facilitate the Conservation Fund's purchase of the 202 acres of the former Vistoso golf course; that the Town Council will allow the Town to be a party to the resolution of all claims with Romspen and be party to the negotiations of a conservation easement between the Conservation Fund and Romspen; including any consideration required by the Town; and that staff is directed in furtherance of a settlement agreement to involve a third party regarding the purchase of the 6 acres of the property owned by Romspen, currently zoned multi-family residential.  Vote: 7 - 0 Carried   INFORMATIONAL ITEMS    There were no informational items.   CALL TO AUDIENCE    No comments were received.   PRESENTATIONS   9-8-21 Minutes, Oro Valley Town Council Regular Session  3  1.Proclamation - National Preparedness Month       Mayor Winfield proclaimed the month of September 2021 as Preparedness Month in Oro Valley. Innovation and Technology Director Chuck Boyer accepted the proclamation.   CONSENT AGENDA    Councilmember Bohen requested item (H) be removed from the Consent Agenda for discussion   A.Minutes - July 7 and August 18, 2021      B.Resolution No. (R)21-38, authorizing the Town Manager to sign, on behalf of the Town, the general consultant contract for Town Attorney services with the law firm of Mesch Clark Rothschild      C.Resolution No. (R)21-39, authorizing and approving the Town of Oro Valley to enter into the Intergovernmental Agreement (IGA) for participation in the Arizona Child Abduction Response Team (CART)      D.Resolution No. (R)21-40, authorizing and approving an Intergovernmental Agreement (IGA) between the Town of Oro Valley Police Department and the Arizona Department of Public Safety for participation in the Gang Immigration and Intelligence Team Enforcement Mission (GIITEM)      E.Resolution No. (R)21-41, authorizing and approving a task force agreement between the Drug Enforcement Administration and the Town of Oro Valley for the participation of one (1) Oro Valley Police Officer in the Tucson High Intensity Drug Traficking Areas (HIDTA) Task Force      F.Resolution No. (R)21-42, authorizing and approving a task force agreement between the Drug Enforcement Administration (DEA) and the Town of Oro Valley for the participation of two (2) Oro Valley police officers in the DEA Tucson Task Force      G.Resolution No. (R)21-43, authorizing and designating the Town Manager to execute an agreement for financial contributions towards Pusch Ridge 9-Hole Golf Course operations with 1) El Conquistador Resort Patio Homes Association; 2) Shadows of the Ridge HOA #1; and 3) Shadows of the Ridge      I.Resolution No.(R)21-45, designating David Gephart as Chief Fiscal Officer, authorized to submit the Town's Annual Expenditure Limitation Report (AELR) to the State Auditor General for FY21-22       Motion by Mayor Joseph C. Winfield, seconded by Councilmember Josh Nicolson to approve Consent items (A) through (G) and (I).  Vote: 7 - 0 Carried   H. Resolution No. (R)21-44, authorizing and approving renewal of a communications equipment site lease between T-Mobile and the Town of Oro Valley at 10555 N. La Canada Drive       Councilmember Bohen requested clarification regarding item (H). Town Manager Mary Jacobs clarified item (H).   9-8-21 Minutes, Oro Valley Town Council Regular Session  4     Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to approve Consent item (H).  Vote: 7 - 0 Carried   REGULAR AGENDA   1.DISCUSSION AND POSSIBLE ACTION REGARDING PROPOSED AMENDMENTS TO ORO VALLEY TOWN CODE CHAPTER 15, WATER CODE, TO INCORPORATE A POLICY PROHIBITING WATER WASTING, IMPOSE RESTRICTIONS DURING TOWN DECLARED POTABLE WATER SHORTAGES AND IMPOSE PENALTIES FOR FAILURE TO COMPLY WITH WATER CONSERVATION REQUIREMENTS A. RESOLUTION NO. (R)21-46, DECLARING THE AMENDED ORO VALLEY TOWN CODE CHAPTER 15 WATER CODE, ATTACHED HERETO AS EXHIBIT "A" AND FILED WITH THE TOWN CLERK, A PUBLIC RECORD B. PUBLIC HEARING: ORDINANCE NO. (O)21-09, APPROVING THE PROPOSED AMENDMENTS TO ORO VALLEY TOWN CODE CHAPTER 15, WATER CODE TO INCORPORATE A POLICY PROHIBITING WATER WASTING, IMPOSE RESTRICTIONS DURING TOWN DECLARED POTABLE WATER SHORTAGES AND IMPOSE PENALTIES FOR FAILURE TO COMPLY WITH WATER CONSERVATION REQUIREMENTS       Motion by Mayor Joseph C. Winfield, seconded by Vice-Mayor Melanie Barrett to approve Resolution No. (R)21-46, declaring the proposed code amendment to Oro Valley Town Code Chapter 15, Water Code, attached hereto as exhibit "A" and filed with the Town Clerk, a public record  Vote: 7 - 0 Carried    Water Utility Director Peter Abraham presented item 1B and included the following. Genesis of the Water Code amendment Proposed changes to the following sections of Chapter 15 Examples of water wasting Discussion ensued amongst Council and staff regarding item 1B. Mayor Winfield opened the public hearing. No comments were received. Mayor Winfield closed the public hearing. Discussion continued amongst Council and staff regarding item 1B.    Motion by Mayor Joseph C. Winfield, seconded by Vice-Mayor Melanie Barrett to approve Ordinance No. (O)21-09, amending the Oro Valley Town Code Chapter 15, Water Code.  Vote: 7 - 0 Carried   9-8-21 Minutes, Oro Valley Town Council Regular Session  5         FUTURE AGENDA ITEMS    Vice-Mayor Barrett requested a future Study Session with representatives from the Central Arizona Project, seconded by Councilmember Jones-Ivey.   ADJOURNMENT    Motion by Mayor Joseph C. Winfield, seconded by Councilmember Harry Greene to adjourn the meeting at 7:14 p.m.  Vote: 7 - 0 Carried     ________________________________ Michelle Stine, MMC Deputy Town Clerk I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the regular session of the Town of Oro Valley Council of Oro Valley, Arizona held on the 8th day of September 2021. I further certify that the meeting was duly called and held and that a quorum was present. ________________________________________ Michael Standish, CMC Town Clerk 9-8-21 Minutes, Oro Valley Town Council Regular Session  6     Town Council Regular Session B. Meeting Date:09/22/2021   Submitted By:Mike Standish, Town Clerk's Office Department:Town Clerk's Office SUBJECT: Approval of any direction to the Town Attorney and necessary staff as discussed in executive session RECOMMENDATION: N/A EXECUTIVE SUMMARY: N/A BACKGROUND OR DETAILED INFORMATION: N/A FISCAL IMPACT: N/A SUGGESTED MOTION: I MOVE to approve any direction to the Town Attorney and necessary staff as discussed in executive session. Attachments No file(s) attached.    Town Council Regular Session 1. Meeting Date:09/22/2021   Requested by: Mike Standish Submitted By:Michelle Stine, Town Clerk's Office Department:Town Clerk's Office SUBJECT: PUBLIC HEARING:  DISCUSSION AND POSSIBLE ACTION REGARDING AN APPLICATION FOR A SERIES 14 (PRIVATE CLUB) LIQUOR LICENSE FOR STONE CANYON CLUB LOCATED AT 14200 N. HOHOKAM VILLAGE PLACE (To speak virtually on this item, register at https://forms.orovalleyaz.gov/forms/bluecard at least 24 hours prior to the start of the meeting.  See below for complete instructions) RECOMMENDATION: Staff recommends approval of this liquor license to the Arizona Department of Liquor Licenses and Control for the following reasons: 1.  No protests to this license have been received. 2.  The necessary background investigation was conducted by the Police Department. 3.  The Police Department has no objections to the approval of the Series 14 Liquor License. EXECUTIVE SUMMARY: An application for a new Series 14 (Private Club) Liquor License has been submitted by Agent Andrea Dahlman Lewkowitz for Stone Canyon Club located at 14200 N. Hohokam Village Place. Ms. Lewkowitz has submitted all necessary paperwork to the Town of Oro Valley and the Arizona Department of Liquor Licenses and Control, and has paid all related fees associated with applying for the liquor license ($500 Application Processing Fee). BACKGROUND OR DETAILED INFORMATION: This non-transferable, on-sale retail privileges liquor license allows the holder of a club license to sell and serve all types of spirituous liquor for consumption only on the premises owned, leased or occupied by the club, and only to bona fide members of the club and their bona fide guests. A "club" is defined in the statutes as including veterans and fraternal organizations and their building associations, golf, social and airline clubs. In accordance with Section 4-201 of the Arizona Revised Statutes, the application was posted for 20 days on the premises of the applicant's property, ending August 27, 2021.  No protests were received during this time period. Police Chief Kara Riley completed a standard background check on Stone Canyon Club and Agent Andrea Dahlman Lewkowitz. Chief Riley has no objection to the approval of the Series 14 (Private Club) License. FISCAL IMPACT: Per Ordinance No. (O)11-16, the Town of Oro Valley charges a $500 liquor license application processing fee to Per Ordinance No. (O)11-16, the Town of Oro Valley charges a $500 liquor license application processing fee to cover the costs incurred by the Town to process the application. Per Section 8-2-6 Schedule of the Oro Valley Town Code, persons licensed by the State of Arizona to deal in spirituous liquor within the Town shall pay an annual license fee of $80.00 to the Town. SUGGESTED MOTION: I MOVE to RECOMMEND APPROVAL of the issuance of a Series 14 Liquor License to the Arizona Department of Liquor Licenses and Control for Andrea Dahlman Lewkowitz and principals for Stone Canyon Club located at 14200 N. Hohokam Village Place. or I MOVE to RECOMMEND DENIAL of the issuance of a Series 14 Liquor License to the Arizona Department of Liquor Licenses and Control for Andrea Dahlman Lewkowitz and principals for Stone Canyon Club located at 14200 N. Hohokam Village Place.  or  I MOVE that NO RECOMMENDATION be made regarding the issuance of a Series 14 Liquor License to the Arizona Department of Liquor Licensees and Control for Andrea Dahlman Lewkowitz and principals for Stone Canyon Club located at 14200 N. Hohokam Village Place.  Attachments Series 14 Description  PD Approval  Application  License Type: Series 14 Private Club This non-transferable, on-sale retail privileges liquor license allows the holder of a club license to sell and serve all types of spirituous liquor for consumption only on the premises owned, leased or occupied by the club, and only to bona fide members of the club and their bona fide guests. A "club" is defined in the statutes as including veterans and fraternal organizations and their building associations, golf, social and airline clubs. •• State of Arizona Department of Liquor Licenses and Control Created 08/03/2021 @08:44:18 AM Local Governing Body Report LICENSE Number: Name: State: Issue Date: Original Issue Date: Location: Mailing Address: Phone: Alt. Phone: Email: STONE CANYON CLUB Pending Type: Expiration Date: 14200 N HOHOKAM VILLAGE PLACE ORO VALLEY, AZ 85737 USA 2600 N CENTRAL AVENUE #1775 PHOENIX, AZ 85004 USA (520)219-1500 (480)776-8101 ANDREA@LEWKLAW.COM 014 CLUB AGENT Name:ANDREA DAHLMAN LEWKOWITZ Gender:Female Correspondence Address:2600 N CENTRAL AVENUE #1775 Phone: Alt. Phone: Email: PHOENIX, AZ 85004 USA (602)200-7222 ANDREA@LEWKLAW.COM OWNER Page 1 of 1 0    Town Council Regular Session 2. Meeting Date:09/22/2021   Submitted By:David Gephart, Finance Department:Finance SUBJECT: PRESENTATION, DISCUSSION AND POSSIBLE ACTION REGARDING RESOLUTION NO. (R)21-47, AUTHORIZING THE EXECUTION AND DELIVERY OF AN AGREEMENT, A TRUST AGREEMENT, A CONTINUING DISCLOSURE CERTIFICATE, AN OBLIGATION TO PURCHASE AGREEMENT AND FORMS OF RELATED OBLIGATION DOCUMENTS; APPROVING A PRELIMINARY OFFICIAL STATEMENT; APPROVING THE SALE, EXECUTION, AND DELIVERY OF EXCISE TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021, EVIDENCING A PROPORTIONATE INTEREST OF THE OWNERS THEREOF IN AN AGREEMENT BETWEEN THE TOWN OF ORO VALLEY, ARIZONA AND A TRUSTEE; AND AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION, AND DECLARING AN EMERGENCY RECOMMENDATION: Staff recommends approval. EXECUTIVE SUMMARY: On June 16, 2021, Town Council adopted the FY 2021/2022 budget, inclusive of a $25 million bond issuance for various parks and recreation improvements. On July 7, 2021, Town Council identified specific priority projects with associated amenities to be included in the bond issuance, including improvements to the Community Center, Naranja Park, and Multi-use Paths. This item requests final Town Council authorization to move forward with issuance of the bonds. BACKGROUND OR DETAILED INFORMATION: On May 5, 2021, Town Council passed Ordinance No.(O) 21-05, broadening the use of revenue resulting from the 0.5% increase to the transaction privilege tax enacted by Ordinance No. (O)14-17 on December 17, 2014.  On June 16, 2021, Town Council adopted the fiscal year 2021/2022 budget, inclusive of a $25 million bond issuance for various parks and recreation improvements which utilizes the 0.5% increase to the transaction privilege tax as the primary source of repayment. On July 7, 2021, Town Council identified specific priority projects with associated amenities to be included in the $25 million parks bond issuance, including improvements to the Community Center, Naranja Park, and Multi-use Paths.  Those projects include the following: Community Center  Conquistador and Canada courses golf irrigation replacement Tennis court replacement Resurfaced/reconfigured parking Naranja Park  Two (2) multi-use fields Splash pad Pickleball courts Basketball courts Pump track Skate park New paved paths Ramadas Restrooms Associated infrastructure Multi-use Paths  La Canada Drive between Lambert and Naranja Naranja Drive between La Canada and park entrance CDO wash to James D. Kriegh park This item requests final Town Council authorization to move forward with issuance of the bonds. FISCAL IMPACT: The Town anticipates a $1.7 million debt repayment per annum, including principal and interest, repaid over 20 years.  The Town forecasts that the 0.5% sales tax the Town Council identified as the fund source for this bond repayment will be sufficient for both the continuing operations of the Town's golf courses and community center as well as the repayment. SUGGESTED MOTION: I MOVE to (Approve or Deny) Resolution No. (R)21-47, authorizing the execution and delivery of an Agreement, a Trust Agreement, A Continuing Disclosure Certificate, an Obligation to Purchase Agreement and Forms of Related Obligation documents; Approving a Preliminary Official Statement; Approving the Sale, Execution, and Delivery of Excise Tax Revenue Obligations, Tax-Exempt Series 2021, Evidencing a proportionate interest of the owners thereof in an Agreement between the Town of Oro Valley, Arizona and a Trustee; and Authorizing the Taking of all other actions necessary to the consummation of the transactions contemplated by this Resolution, and declaring an emergency. Attachments (R)21-47 Authorizing Resolution  Preliminary Official Statement  Obligation Purchase Agreement  Agreement  Trust Agreement  Continuing Disclosure Certificate  staff presentation  4213356.5 1 RESOLUTION No. (R)21-47 A RESOLUTION OF THE MAYOR AND TOWN COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA, AUTHORIZING THE EXECUTION AND DELIVERY OF AN AGREEMENT, A TRUST AGREEMENT, A CONTINUING DISCLOSURE CERTIFICATE, AN OBLIGATION PURCHASE AGREEMENT AND FORMS OF RELATED OBLIGATION DOCUMENTS; APPROVING A PRELIMINARY OFFICIAL STATEMENT; APPROVING THE SALE, EXECUTION AND DELIVERY OF NOT TO EXCEED $25,000,000 OF TOWN’S EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021, EVIDENCING A PROPORTIONATE INTEREST OF THE OWNERS THEREOF IN AN AGREEMENT BETWEEN THE TOWN OF ORO VALLEY, ARIZONA, AND A TRUSTEE; AUTHORIZING AND RATIFYING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION ; AND DECLARING AN EMERGENCY. WHEREAS, the Town of Oro Valley, Arizona (the “Town”), desires to finance (i) various improvements to its parks and recreation facilities, and (ii) the payment of the delivery costs of the 2021 Obligations defined herein (the “Project ”), through the execution and delivery, in one or more series as tax-exempt and/or taxable obligations, of not to exceed $25,000,000 of Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021, to be dated no earlier than October 1, 2021 (the “2021 Obligations”); and WHEREAS, the 2021 Obligations will be executed and delivered pursuant to a Trust Agreement, to be dated no earlier than October 1, 2021 (the “Trust Agreement ”), by and between the Town and a trustee who is a bank or trust company authorized to do trust business in the State of Arizona to be selected by the Town pursuant to Section 5 herein (the “Trustee”); and WHEREAS, each 2021 Obligation shall evidence a proportionate interest of the owner thereof in an Agreement, to be dated no earlier than October 1, 2021 (the “Agreement ”), by and between the Town and the Trustee, as payee, and committing the Town to make certain payments (the “Payments”) to the Trustee in such amounts and payable at such times so as to be sufficient to pay the principal of, premium, if any, and interest on the 2021 Obligations; and WHEREAS, the Trust Agreement will authorize the Trustee to apply the proceeds of the 2021 Obligations to (i) finance costs related to the Project, (ii) fund, as applicable, the Payment Fund, as created pursuant to the Trust Agreement, and (iii) pay all or a portion of the costs of delivery of the 2021 Obligations ; and WHEREAS, Stifel, Nicolaus & Company, Incorporated (the “Financial Advisor”), acting in accordance with the Strategic Alliance of Volume Expenditures (SAVE) Cooperative Response Proposal #C-007-1213, will serve as financial advisor with respect to the 2021 Obligations ; and 4213356.5 2 WHEREAS, the Town will receive a proposal for purchase of the 2021 Obligations from Piper Sandler & Co., an underwriter (the “Underwriter”), as selected by the Town, with the assistance of the Financial Advisor, in the form of an Obligation Purchase Agreement (the “Obligation Purchase Agreement ”); and WHEREAS, the Town will pay the payments and other amounts due under the Agreement from the Town’s previously established Excise Tax Fund; and WHEREAS, the Town Clerk has presented to the Mayor and Town Council of the Town (the “Council”) at this meeting the proposed forms of: (i) the Agreement; (ii) the Trust Agreement; (iii) the Obligation Purchase Agreement; (iv) the Continuing Disclosure Certificate relating to the 2021 Obligations (the “Continuing Disclosure Certificate”); and (v) a preliminary form of the Official Statement relating to the 2021 Obligations (the “Preliminary Official Statement ”). Collectively, the foregoing documents are referred to herein as the “Obligation Documents.” NOW, THEREFORE, BE IT RESOLVED by the Mayor and Council of the Town of Oro Valley, Arizona, that: Section 1. Determination of Need. It is hereby found and determined that the financing of the costs of the Project pursuant to the terms of the Obligation Documents is in the best interest of and in furtherance of the purposes of the Town and in the public interest. Section 2. Terms of 2021 Obligations . The Town hereby approves the execution and delivery of the 2021 Obligations, as hereinafter described, by the Trustee. The 2021 Obligations shall be executed in the aggregate principal amount of not to exceed $25,000,000. The 2021 Obligations shall be in the denomination of $5,000 or any integral multiples thereof, shall be dated as set forth in the Trust Agreement, shall bear interest from such date payable on the dates provided in the Trust Agreement, and shall be fully registered without co upons as provided in the Trust Agreement. The 2021 Obligations shall bear interest from their dated date at the rates per annum set forth in the Trust Agreement and the Obligation Purchase Agreement and shall mature on July 1 (or such later date as agreed upon in the executed Obligation Purchase Agreement) in some or all of the years 2022 through and including 2041, and in no event shall any of the 2021 Obligations mature later than July 1, 2041, inclusive, and shall bear interest from their dated date to maturity or earlier redemption of each of the 2021 Obligations, provided that the yield (as determined pursuant to the regulations of the Internal Revenue Code of 1986, as amended (the “Code”)) on all of the tax-exempt 2021 Obligations shall not exceed 3.50%. The forms, terms, interest rates, dated 4213356.5 3 date, interest payment dates, maturity dates, maturity amounts, provisions for redemption and other provisions of the 2021 Obligations and the provisions for the signatures, authentication, payment, registration, transfer, exchange, redemption and number shall be as set forth in the Trust Agreement and the Obligation Purchase Agreement. Section 3. Award to Underwriter. The Chief Financial Officer of the Town (the “Chief Financial Officer”) is hereby authorized and directed to accept, upon consultation with the Financial Advisor, a proposal from the Underwriter to purchase the 2021 Obligations pursuant to the Obligation Purchase Agreement. Section 4. Approval of the 2021 Obligation Documents and Related Closing Documents . The Mayor of the Town (the “Mayor”), the Town Manager of the Town (the “Town Manager”) and the Chief Financial Officer are each hereby authorized and directed to determine and approve, for each series of 2021 Obligations, the final interest rates, dated dates, interest payment dates, maturity dates, maturity amounts, purchase price, redemption provisions, and cause the same to be set forth in the Obligation Documents and such other documents related to the issuance and sale of the 2021 Obligations. The forms, terms and provisions of the Obligation Documents, in substantially the form of such documents (including the exhibits thereto) presented at this meeting are hereby approved, with such final provisions, insertions, deletions, changes necessary to accurately reflect the tax-exempt and/or taxable status of the 2021 Obligations, and such other changes as shall be approved by the Mayor, the Town Manager or the Chief Financial Officer, the execution of each such document being conclusive evidence of such approval, and the Mayor, the Town Manager, the Chief Financial Officer and the Town Clerk of the Town (the “Town Clerk ”) are each hereby authorized and directed to execute and deliver, where applicable, or to approve the Obligation Documents and to take all actions necessary to carry out and comply with the terms of such documents. Section 5. Selection of Trustee; Trustee Action. The Town Manager and the Chief Financial Officer are authorized to receive proposals to act as Trustee from banks authorized to engage in trust business in the State of Arizona. Based on the proposals received, the Town Manager and the Chief Financial Officer shall select the Trustee. The Town hereby requests the Trustee so selected to take any and all actions necessary in connection with the execution and delivery of the applicable Obligation Documents and financing the costs of the Project, and, as applicable to the Trustee, the execution and delivery of the 2021 Obligations. The Town further authorizes and directs the Trustee and any trustees for any obligations on a parity with the 2021 Obligations to enter into such agreements as may be reasonable for the administration of the trusts so held. Section 6. Preliminary Official Statement; Official Statement. The Town hereby approves, ratifies and authorizes the use by the Underwriter of copies of the Preliminary Official Statement and the final Official Statement, which shall be in substantially t he form of the Preliminary Official Statement with such changes as are necessary as a result of the sale of the 2021 Obligations (the “Official Statement ”) in connection with the offering and sale of the 2021 Obligations. The Town hereby authorizes the Mayor, the Town Manager and the Chief Financial Officer to execute the instruments deeming the Preliminary Official Statement as “final ” as of its date for purposes of Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”). The 4213356.5 4 Mayor, the Town Manager and the Chief Financial Officer are each hereby authorized and directed to execute, when completed, the Official Statement. Section 7. Pledge of Excise Taxes and Parks and Recreation Taxes . Pursuant to the Agreement and the Trust Agreement, the Town shall pledge all its unrestricted excise, transaction, franchise, privilege and business taxes, state -shared sales and income taxes, fees for licenses and permits, fines, bed and rental taxes and state revenue -sharing, now or hereafter validly imposed by the Town or contributed, allocated and paid over to the Town and not earmarked by the contributor for a contrary or inconsistent purpose (“Excise Taxes”), and, to the extent Excise Taxes are insufficient, its additional 0.5% transaction privilege tax imposed by the Town pursuant to Ordinance No. (O)14-17, as amended by Ordinance No. (O)21 -05 (effective May 21, 2021), to fund the needs of the Town’s Community Center, golf and tennis facilities or for parks and recreation purposes (the “Parks and Recreation Taxes”), to the payments and other amounts to come due under the Agreement and the Trust Agreement. Revenues generated by the Town from development impact fees will not be deemed Excise Taxes or Parks and Recreation Taxes for purposes of the Agreement and Trust Agreement. Revenues received by the Town from vehicle license taxes charged by the State of Arizona will not be deemed Excise Taxes or Parks and Recreation Taxes for purposes of the Agreement and the Trust Agreement. The Town also levies an additional 6.0% transient lodging tax on any hotel, motel or apartment let for less than 30 consecutive days, the revenues from which are restricted by State law to use for visitor and hospitality services and will not be deemed Excise Taxes or Parks and Recreation Taxes for purposes of the Agreement and the Trust Agreement. The Town’s obligation to make any payments under the Agreement or the Trust Agreement does not constitute an obligation of the Town or the State of Arizona, or any of its political subdivisions, for which the Town or the State of Arizona, or any of its political subdivisions, is obligated to levy or pledge any form of ad valorem property taxation nor does the obligation to make any payments under the Agreement or the Trust Agreement constitute an indebtedness of the Town or of the State of Arizona or any of its political subdivisions within the meaning of the Constitution of the State of Arizona or otherwise. The pledge will be on a parity with certain outstanding pledges of such Excise Taxes as described in the Trust Agreement. Section 8. Town to Maintain Coverage of Two Times Debt Service . Pursuant to the Agreement, the Town will covenant and agree that the Excise Taxes that it presently imposes will continue to be imposed in each F iscal Year (as defined in the Trust Agreement) so that the amount of Excise Taxes, all within and for the next preceding Fiscal Year of Town, shall be equal to at least two times the Annual Debt Service Requirement (as defined in the Trust Agreement) payable under the Agreement, and under any Outstanding (as defined in the Trust Agreement) Parity Obligations (as defined in the Trust Agreement), for the current Fiscal Year. The Town will further covenant and agree that if such receipts for any such Fiscal Year shall not equal at least two times such Annual Debt Service Requirement for such Fiscal Year, or if at any time it appears that the current Fiscal Year’s receipts will not be sufficient to meet the current Fiscal Year’s actual Annual Debt Service Requirement, the Town will either impose new Excise Taxes or will, to the extent permitted by applicable law, increase the rates of such taxes currently imposed in order that (i) the current Fiscal Year’s receipts will be sufficient to meet the current Fiscal Year’s Annual Debt Service Requirement and (ii) the then-current Fiscal Year’s receipts will be equal to at least two times the next succeeding Fiscal Year’s Annual Debt Service Requirement. 4213356.5 5 Section 9. Continuing Disclosure . The Mayor, the Town Clerk and the Chief Financial Officer and the officers of the City, on behalf of the City, are each hereby authorized and directed, without further order of the Council, to execute and deliver a written undertaking or agreement containing such terms and provisions as are necessary to comply with the continuing disclosure provisions of Section 240.15c2 -12, General Rules and Regulations, Securities Exchange Act of 1934. Section 10. Resolution Irrepealable . After any of the 2021 Obligations are delivered by the Trustee to the Underwriter thereof upon receipt of payment therefor, this resolution shall be and remain irrepealable until the 2021 Obligations and the interest and premium, if any, thereon shall have been fully paid, cancelled and d ischarged. Section 11. Further Action. The Mayor, the Town Clerk, the Town Manager, the Chief Financial Officer and the other officers of the Town, on behalf of the Town, are each hereby authorized and directed, without further order of the Council, to (i) execute and deliver such certificates, proceedings and agreements as may be necessary or convenient to be executed and delivered on behalf of the Town, to evidence compliance with, or further the purposes of, all the terms and conditions of this resolution and the consummation of the transactions contemplated herein, and (ii) represent and act for the Town in all matters pertaining to the Town’s obligations as may be necessary to comply, on a continuing basis, with the Internal Revenue Service, Securities and Exchange Commission and other governmental entities ’ requests, reporting requirements and other matters. Section 12. Execution of the 2021 Obligation Documents and Other Proceedings . All actions of the officers and agents of the Town that conform to the purposes and intent of this resolution and that further the issuance and sale of the 2021 Obligations as contemplated by this resolution and the Obligation Documents, whether heretofore or hereafter taken, are hereby ratified, confirmed and approved. Section 13. Severability. If any section, paragraph, clause or phrase of this Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or phrase shall not affect any of the remaining provis ions of this Resolution. Section 14. Waiver of Inconsistency. All orders, resolutions and ordinances or parts thereof inconsistent herewith are hereby waived to the extent only of such inconsistency. This waiver shall not be construed as reviving any order, resolution or ordinance or any part thereof. Section 15. Emergency. The immediate operation of this resolution is necessary because the exigencies of the municipal bond market, and the need for an immediate sale and early closing to secure the most favorable interest rates on the 2021 Obligations require that the 2021 Obligations be issued and delivered as soon as possible; therefore, an emergency is hereby declared to exist. [Signature Page to Follow] 4 213356 PASSED AND ADOPTED by the Mayor and Town Council of the Town of Oro Valley, Arizona, this 22nd day of September 2021. Joseph C. Winfield, Mayor ATTEST: __________________________________ Michael Standish, Town Clerk APPROVED AS TO FORM: _________________________________ Tobin Sidles, Legal Services Director CERTIFICATION I, Michael Standish, the duly appointed and acting Town Clerk of the Town of Oro Valley, Arizona, do hereby certify that the above and foregoing Resolution No. (R)21-47 was duly passed by the Mayor and Town Council of the Town of Oro Valley, Arizona, at a regular meeting held on September 22, 2021, and that a quorum was present thereat. Michael Standish, Town Clerk * Subject to change. DRAFT II 9-10-21 PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER __, 2021 NEW ISSUE – BOOK-ENTRY-ONLY RATING: See “RATING” herein. In the opinion of Gust Rosenfeld P.L.C., Phoenix, Arizona, Special Counsel, under existing laws, regulations, rulings and judicial decisions, and assuming continuing compliance with certain restrictions, conditions and requirements by the Town as mentioned under “TAX EXEMPTION” herein, interest income on the Obligations is excluded from gross income for federal income tax purposes. In the opinion of Special Counsel, interest income on the Obligations is exempt from Arizona income taxes. Such interest income is not an item of preference to be included in computing the alternative minimum tax of individuals. See “TAX EXEMPTION,” “AMORTIZABLE PREMIUM” and “ORIGINAL ISSUE DISCOUNT” herein. $25,000,000* TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 Dated: Date of Initial Delivery Due: July 1, as shown on the inside front cover page The Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “Obligations”) will be executed and delivered in the principal amount of $25,000,000* for the purpose of (i) financing __________ and (ii) paying costs incurred in connection with the execution and delivery of the Obligations. See “PLAN OF FINANCE” herein. The Obligations will be dated their date of initial execution and delivery and will be executed and delivered as fully registered securities without coupons and will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository for the Obligations. Beneficial interests in the Obligations will be available to purchasers in amounts of $5,000 of principal, or any integral multiple thereof, due on a specific maturity date only under the book-entry-only system maintained by DTC through brokers and dealers who are, or act through, DTC Participants. So long as any purchaser is the beneficial owner of an Obligation, such purchaser must maintain an account with a broker or a dealer who is, or acts through, a DTC Participant to receive payment of principal and interest with respect to such Obligations. See APPENDIX G – “BOOK-ENTRY-ONLY SYSTEM.” Interest on the Obligations will accrue from their dated date and be payable semiannually on July 1 and January 1 of each year, commencing on January 1, 2022*, until maturity or prepayment and principal of the Obligations will be payable in accordance with the maturity schedule shown on the inside front cover page. SEE MATURITY SCHEDULE ON INSIDE FRONT COVER PAGE Use of the book-entry-only system may be discontinued at any time. Utilization of the book-entry-only system will affect the method and timing of payment of the Obligations and the method of transfer of the Obligations. So long as the book-entry-only system is in effect, a single fully registered obligation for each maturity of the Obligations will be registered in the name of Cede & Co., as nominee of DTC, through U.S. Bank National Association, as trustee (the “Trustee”). So long as the book-entry-only system is in effect and Cede & Co. is the registered owner of the Obligations, all references herein (except under the heading “TAX EXEMPT”), to owners of the Obligations will refer to Cede & Co. and not the Beneficial Owners (as defined herein). See APPENDIX G – “BOOK-ENTRY-ONLY SYSTEM.” The Obligations will be subject to optional prepayment prior to maturity as described herein under “THE OBLIGATIONS – Prepayment Provisions.”* The Obligations will be payable from installment payments (“Payments”) to be made by the Town pursuant to an Agreement, to be dated as of October 1, 2021*, between the Town of Oro Valley, Arizona (the “Town”) and the Trustee. The Payments will be secured by a first lien pledge of the Excise Taxes (as defined herein) and, to the extent Excise Taxes are insufficient, by a first lien pledge of the Parks and Recreation Taxes (as defined herein). Such pledge on Excise Taxes will be on parity with the Town’s pledge of such amounts to the payment of the Existing Parity Obligations (as defined herein) and any Additional Parity Obligations (as defined herein). Such pledge on the Parks and Recreation Taxes will be on parity with the Town’s pledge of such amounts to the payment of any Additional Parks and Recreation Tax Parity Obligations (as defined herein). See “SECURITY AND SOURCES OF PAYMENT” herein. THE OBLIGATIONS WILL BE SPECIAL, LIMITED, REVENUE OBLIGATIONS OF THE TOWN AND WILL BE PAYABLE SOLELY FROM THE SOURCES DESCRIBED HEREIN. THE OBLIGATIONS DO NOT CONSTITUTE A GENERAL OBLIGATION OR AN INDEBTEDNESS OF THE TOWN, THE STATE OF ARIZONA OR ANY POLITICAL SUBDIVISION THEREOF (WITHIN THE MEANING OF CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION) AND THE FULL FAITH AND CREDIT OF THE TOWN, THE STATE OF ARIZONA OR ANY POLITICAL SUBDIVISION THEREOF IS NOT PLEDGED TO PAY THE PRINCIPAL OF OR INTEREST ON THE OBLIGATIONS. The Obligations will be offered when, as and if executed and delivered and accepted by the Underwriter identified below (the “Underwriter”), subject to the receipt of approving the legal opinion of Gust Rosenfeld P.L.C., Phoenix, Arizona, Special Counsel, as to validity and tax exemption. Certain legal matters will be passed upon for the Underwriter by Squire Patton Boggs (US) LLP, Phoenix, Arizona, Counsel to the Underwriter. It is expected that the Obligations will be delivered to DTC on or about October __, 2021*. This cover page contains certain information with respect to the Obligations for convenience of reference only. It is not a summary of material information with respect to the Obligations. Investors must read this entire Official Statement and all appendices to obtain information essential to the making of an informed investment decision with respect to the Obligations. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. MATURITY SCHEDULE* $25,000,000* TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 * Subject to change. (1) CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (“CGS”) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright© 2021 CGS. All rights reserved. CUSIP® data herein is provided by CGS. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Town, Special Counsel, the Financial Advisor, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. Maturity Date Principal Interest Price or (July 1) Amount Rate Yield No. 2022 600,000$ 2023 865,000 2024 895,000 2025 925,000 2026 955,000 2027 990,000 2028 1,025,000 2029 1,060,000 2030 1,100,000 2031 1,135,000 2032 1,175,000 2033 1,215,000 2034 1,260,000 2035 1,305,000 2036 1,350,000 2037 1,395,000 2038 1,445,000 2039 1,495,000 2040 1,550,000 2041 1,600,000 2042 1,660,000 CUSIP®(1) %% (i) TOWN OF ORO VALLEY, ARIZONA MAYOR AND COUNCIL Joe Winfield, Mayor Melanie Barrett, Vice Mayor Timothy Bohen, Councilmember Harry L. “Mo” Greene, II, MD, Councilmember Joyce Jones-Ivey, Councilmember Josh Nicolson, Councilmember Steve Solomon, Councilmember TOWN ADMINISTRATIVE OFFICERS Mary Jacobs, Town Manager David Gephart, Chief Financial Officer Wendy Gomez, Finance and Budget Administrator FINANCIAL ADVISOR Stifel, Nicolaus & Company, Incorporated Phoenix, Arizona SPECIAL COUNSEL Gust Rosenfeld P.L.C. Phoenix, Arizona TRUSTEE, REGISTRAR AND PAYING AGENT U.S. Bank National Association Phoenix, Arizona (ii) REGARDING THIS OFFICIAL STATEMENT No dealer, broker, salesperson or other person has been authorized by the Town, Stifel Nicolaus & Company, Incorporated (the “Financial Advisor”) or Piper Sandler & Co. (the “Underwriter”) to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of the Town’s Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “Obligations”) by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth in this Official Statement, which includes the cover page, inside front cover page and appendices hereto, has been obtained from the Town, the Arizona Department of Revenue and other sources that are considered to be accurate and reliable and customarily relied upon in the preparation of similar official statements, but such information has not been independently confirmed or verified by the Town, the Financial Advisor or the Underwriter, is not guaranteed as to accuracy or completeness, and is not to be construed as the promise or guarantee of the Town, the Financial Advisor or the Underwriter. The Underwriter have provided the following sentence for inclusion in this Official Statement: “The Underwriter has reviewed the information in this Official Statement pursuant to their responsibilities to investors under the federal securities laws, but the Underwriter does not guarantee the accuracy or completeness of such information.” None of the Town, the Financial Advisor, the Underwriter, counsel to the Underwriter or Special Counsel (as defined herein) are actuaries. None of them have performed any actuarial or other analysis of the Town’s share of the unfunded liabilities of the Arizona State Retirement System or the Public Safety Personnel Retirement System. The presentation of information, including tables of receipts from taxes and other sources, shows recent historical information and is not intended to indicate future or continuing trends in the financial position or other affairs of the Town. All information, estimates and assumptions contained herein are based on past experience and on the latest information available and are believed to be reliable, but no representations are made that such information, estimates and assumptions are correct, will continue, will be realized or will be repeated in the future. To the extent that any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty, and no representation is made that any of these statements have been or will be realized. All forecasts, projections, opinions, assumptions or estimates are “forward looking statements” that must be read with an abundance of caution and that may not be realized or may not occur in the future. Information other than that obtained from official records of the Town has been identified by source and has not been independently confirmed or verified by the Town, the Financial Advisor or the Underwriter and its accuracy cannot be guaranteed. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made pursuant hereto will, under any circumstances, create any implication that there has been no change in the affairs of the Town or any of the other parties or matters described herein since the date hereof. The Obligations will not be registered under the Securities Act of 1933, as amended, or any state securities law, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency will have passed upon the accuracy or adequacy of this Official Statement or approved the Obligations for sale. References to website addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such publications and websites and the information and links contained therein are not incorporated into, and are not part of, this Official Statement for purposes of Rule 15c2-12 of the Securities and Exchange Commission. The Town will covenant to provide continuing disclosure as described in this Official Statement under the heading “CONTINUING DISCLOSURE” and in APPENDIX F – “FORM OF CONTINUING DISCLOSURE CERTIFICATE” all pursuant to Rule 15c2-12 of the Securities and Exchange Commission. (iii) IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY ALLOW CONCESSIONS OR DISCOUNTS FROM THE INITIAL PUBLIC OFFERING PRICES TO DEALERS AND OTHERS, AND THE UNDERWRITER MAY OVERALLOT OR ENGAGE IN TRANSACTIONS INTENDED TO STABILIZE THE PRICES OF THE OBLIGATIONS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET IN ORDER TO FACILITATE THEIR DISTRIBUTION. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. A wide variety of information, including financial information, concerning the Town is available from publications and websites of the Town and others. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded. No such information is a part of, or incorporated into, this Official Statement, except as expressly noted herein. (iv) TABLE OF CONTENTS Page INTRODUCTORY STATEMENT ............................................................................................................................... 1  THE OBLIGATIONS .................................................................................................................................................... 2  General Provisions .................................................................................................................................................... 2  Prepayment Provisions ............................................................................................................................................. 2  Purchase of Obligations in Lieu of Prepayment ....................................................................................................... 3  SECURITY AND SOURCES OF PAYMENT ............................................................................................................. 3  General ..................................................................................................................................................................... 3  Covenant to Maintain Debt Service Coverage .......................................................................................................... 4  Additional Parity Obligations ................................................................................................................................... 5  Events of Default; No Acceleration .......................................................................................................................... 5  Coronavirus Disease 2019 (“COVID-19”) ............................................................................................................... 5  PLAN OF FINANCE .................................................................................................................................................... 5  EXCISE TAXES AND PARKS AND RECREATION TAXES .................................................................................. 6  Excise Taxes ............................................................................................................................................................. 6  State Shared Revenues .............................................................................................................................................. 8  Excise Tax and Parks and Recreation Tax Collections ........................................................................................... 10  SOURCES AND USES OF FUNDS ........................................................................................................................... 11  ESTIMATED DEBT SERVICE REQUIREMENTS AND COVERAGE .................................................................. 12  LITIGATION .............................................................................................................................................................. 13  UNDERWRITING ...................................................................................................................................................... 13  RATING ...................................................................................................................................................................... 13  LEGAL MATTERS .................................................................................................................................................... 14  TAX EXEMPTION ..................................................................................................................................................... 14  AMORTIZABLE PREMIUM ..................................................................................................................................... 15  Original Issue Discount ............................................................................................................................................... 16  RELATIONSHIP AMONG PARTIES ....................................................................................................................... 16  CONTINUING DISCLOSURE ................................................................................................................................... 17  FINANCIAL ADVISOR ............................................................................................................................................. 17  FINANCIAL STATEMENTS ..................................................................................................................................... 17  CONCLUDING STATEMENT .................................................................................................................................. 18  APPENDIX A: TOWN OF ORO VALLEY, ARIZONA – GENERAL ECONOMIC AND DEMOGRAPHIC INFORMATION APPENDIX B: TOWN OF ORO VALLEY, ARIZONA – FINANCIAL DATA APPENDIX C: TOWN OF ORO VALLEY, ARIZONA – AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 APPENDIX D: SUMMARIES OF SELECT PROVISIONS OF PRINCIPAL DOCUMENTS APPENDIX E: FORM OF APPROVING LEGAL OPINION APPENDIX F: FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX G: BOOK-ENTRY-ONLY SYSTEM 1 OFFICIAL STATEMENT $25,000,000* TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 INTRODUCTORY STATEMENT This Official Statement, which includes the cover page, the inside front cover page and appendices hereto, has been prepared to provide information in connection with the execution and delivery by U.S. Bank National Association (the “Trustee”) on behalf of the Town of Oro Valley, Arizona (the “Town”), in connection with the original issuance of $25,000,000* principal amount of its Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “Obligations”). Certain information concerning the authorization, purpose, terms, security for sources of payment of the Obligations is contained in this Official Statement. Information about the Town is included in APPENDIX A – “TOWN OF ORO VALLEY, ARIZONA – GENERAL ECONOMIC AND DEMOGRAPHIC INFORMATION” and APPENDIX B – “TOWN OF ORO VALLEY, ARIZONA – FINANCIAL DATA”, and the most recent audited financial statements for the Town are included in APPENDIX C – “TOWN OF ORO VALLEY, ARIZONA – AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020.” In general, the Town is required under the Agreement (as defined herein) to pay the Payments (as defined herein) for the Project (as defined herein) which are equal to the principal and interest payable with respect to the Obligations. The Payments will be payable from, and secured solely by a first pledge of, and a first lien on, Excise Taxes (as defined herein) on a parity with the $940,000 principal amount outstanding of Town of Oro Valley Excise Tax Revenue Obligations, Series 2010 (Federally Taxable – New Clean Renewable Energy Bonds – Direct Payment) (the “2010 Obligations”), $1,215,000 principal amount outstanding of Town of Oro Valley Excise Tax Revenue Obligations, Series 2012 (the “2012 Obligations”), $1,756,000 principal amount outstanding of Town of Oro Valley Excise Tax Revenue Refunding Obligations, Series 2015 (the “2015 Obligations”), $1,548,000 principal amount outstanding of Town of Oro Valley Excise Tax Revenue Obligations, Series 2016 (the “2016 Obligations”), $8,372,000 principal amount outstanding of Town of Oro Valley Excise Tax Revenue Refunding Obligations, Series 2017 (the “ 2017 Obligations”), $6,902,000 principal amount outstanding of Town of Oro Valley Excise Tax Revenue Obligations, Series 2018 (the “2018 Obligations”) and $17,975,000 principal amount outstanding of Town of Oro Valley Excise Tax Revenue Obligations, Taxable Series 2021 (the “2021 Obligations,” and collectively with the 2010 Obligations, the 2012 Obligations, the 2015 Obligations, the 2016 Obligations, the 2017 Obligations and the 2018 Obligations, the “Existing Parity Obligations”) and any additional parity obligations that may be issued in the future as provided in the Agreement (“Additional Excise Tax Parity Obligations” and, together with the Existing Parity Obligations, the “Excise Tax Parity Obligations”). In addition, to the extent Excise Taxes are insufficient to make the Payments, the Payments will be payable from, and secured solely by a first pledge of, and a first lien on, the Parks and Recreation Taxes (as defined herein) on a parity with certain additional parity obligations that may be issued in the future as provided in the Agreement (“Additional Parks and Recreation Tax Parity Obligations” and, together with the Additional Excise Tax Parity Obligations, the “Additional Parity Obligations” and, collectively with the Obligations and the Existing Parity Obligations, the “Parity Obligations”). See “EXCISE TAXES AND PARKS AND RECREATION TAXES” and “SECURITY AND SOURCES OF PAYMENT” herein. The offering of the Obligations is made only by this Official Statement, which supersedes any other information or materials used in connection with the offering or sale of the Obligations. Accordingly, prospective purchasers of the Obligations should read this entire Official Statement and all appendices before making an investment decision. This Official Statement contains financial and other information derived from the Town’s records, except for information expressly attributed to other sources. The presentation of historical information, including tables of receipts from taxes and other revenues, is intended to show recent historical information and is not to be construed as * Subject to change. 2 a projection or indication of future or continuing trends in the financial position or other affairs of the Town. No representation is made that past experience, as shown by such financial or other information, will necessarily continue or be repeated in the future. The achievement of certain results or other expectations contained in “forward-looking” statements in this Official Statement involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Town does not plan to issue any updates or revisions to those “forward-looking” statements if or when its expectations or events, conditions or circumstances on which such statements are based occur. For definitions of certain words used in this Official Statement, and denoted by initial capital letters, see APPENDIX D – “SUMMARIES OF SELECT PROVISIONS OF PRINCIPAL DOCUMENTS.” Descriptions of the authorization, purpose and terms of the Obligations and summaries of certain provisions of the Agreement and the Trust Agreement (as defined herein) are included in this Official Statement. Such descriptions and summaries are not comprehensive or definitive, and all summaries of and references to the Agreement and the Trust Agreement appearing herein are qualified by reference to the full text of such documents. References herein to the Obligations are qualified by reference to the form thereof as set forth in the Trust Agreement. Copies of the full texts of the Agreement and the Trust Agreement are available for inspection at the designated corporate office of Trustee. THE OBLIGATIONS General Provisions The Obligations will be dated the date of their initial execution and delivery, and the principal represented thereby will bear interest from such date, at the rates, and will be payable on the dates and in the amounts, all as set forth on the inside front cover page hereof. Interest represented by the Obligations will be payable semiannually on each January 1 and July 1 (each an “Interest Payment Date”), commencing January 1, 2022*. The Obligations will be registered only in the name of Cede & Co., the nominee of The Depository Trust Company, New York, New York (“DTC”), under the book-entry-only system described in APPENDIX G – “BOOK-ENTRY- ONLY SYSTEM.” Beneficial ownership interests in the Obligations may be purchased through direct and indirect participants of DTC in amounts of $5,000 payable on specific payment date or integral multiples thereof. See APPENDIX G – “BOOK-ENTRY-ONLY SYSTEM.” Prepayment Provisions* Optional Prepayment. The Obligations maturing before or on July 1, 20__, will not be subject to prepayment prior to their stated payment date. The Obligations matures on or after July 1, 20__, may be prepaid prior to maturity, in whole or in part on any date, in any order of maturity and by lot within any maturity, by the Town, on or after July 1, 20__, at a prepayment price equal to the principal amount thereof plus accrued interest on such Obligation to the date fixed for prepayment, but without premium. Town’s Election to Redeem. The Trustee, at the direction of the Town, will redeem any Obligations subject to prepayment. The Mayor and Council of the Town shall adopt a resolution to redeem such Obligations and shall thereupon give written notice to the Trustee at least 45 days prior to the prepayment date. In the event that notice of prepayment shall have been given by the Trustee to the Owners as provided in the Trust Agreement, if there has not been deposited with the Trustee prior to the prepayment date, funds which, in addition to any other moneys available therefor and held by the Trustee, will be sufficient to redeem at the prepayment price thereof, plus interest accrued to * Subject to change. 3 the prepayment date, all of the redeemable Obligations for which notice of prepayment has been given, then such prepayment shall be cancelled and of no effect and notice of cancellation shall be sent in the manner and to the persons that notice of prepayment had been sent. Notice of Prepayment. The notice of prepayment of Obligations shall identify (i) by designation, letters, numbers or other distinguishing marks, the Obligations or portions thereof to be redeemed, (ii) the prepayment price to be paid, (iii) the date fixed for prepayment, and (iv) the place or places where the amounts due upon prepayment are payable. The notice shall be given by the Trustee on behalf of the Town by mailing a copy of the prepayment notice by first class mail, postage prepaid, not less than 30 days prior to the date fixed for prepayment, to the Owner of each Obligation subject to prepayment in whole or in part at the address of the Owner shown on the Obligation register maintained by the Trustee on the 15th day preceding that mailing; provided, that failure to receive notice by mailing, or any defect in that notice, as to any Obligation shall not affect the validity of the proceedings for the prepayment of any Obligation for which notice was properly given. The notice will also state whether the funds necessary for the prepayment are on deposit with the Trustee or whether the prepayment is conditional on such funds being deposited, on or prior to, the date set for prepayment. The Trustee is not required to provide a notice of prepayment of Obligations pursuant to mandatory prepayment. Notwithstanding the foregoing, notice of prepayment may be given to DTC or any securities depository by electronic means, or in any other manner permitted by the depository. Purchase of Obligations in Lieu of Prepayment If at any time there is money in the Payment Fund available for such purpose, any of the Outstanding Obligations may be purchased in the open market at a net cost to the Town that would be less than the cost of prepaying such Obligations under the provisions of the Trust Agreement (or, prior to the time such Obligations may be prepaid, at a price equal to or below the principal amount thereof), the Town, from time to time, may cause the Trustee to purchase so many of such Obligations as the Town shall designate and to pay therefor from the Payment Fund, to the extent of the funds in the Payment Fund. The Obligations so purchased shall be cancelled by the Trustee in accordance with the provisions of the Trust Agreement. SECURITY AND SOURCES OF PAYMENT General The Obligations will be special revenue obligations, payable solely from payments (the “Payments”) to be made by the Town pursuant to an Agreement, dated as of October 1, 2021* (the “Agreement”), between the Town and the Trustee, and amounts from time to time deposited in the funds created under the hereinafter defined Trust Agreement. The Obligations are being executed and delivered for the purpose of (i) financing __________ (the “Project”) and (ii) paying costs incurred in connection with the execution and delivery of the Obligations. See “PLAN OF FINANCE” and APPENDIX D – “SUMMARIES OF SELECT PROVISIONS OF PRINCIPAL DOCUMENTS” herein. The Payments to be made by the Town to the Trustee under the Agreement will be due semiannually payable from and secured by a first lien pledge of the Excise Taxes and, to the extent such Excise Taxes are insufficient, the Payments will be secured by a first lien pledge of the Parks and Recreation Taxes. This pledge of such Excise Taxes will be on a parity basis with the Existing Parity Obligations and any Additional Parity Obligations. This pledge of such Parks and Recreation Taxes will be on a parity basis with the Additional Parks and Recreation Tax Parity Obligations. See “EXCISE TAXES AND PARKS AND RECREATION TAXES” herein. “Excise Taxes” means all unrestricted excise, transaction, franchise, privilege and business taxes, State Shared Revenues (defined below), fees for licenses and permits, fines, bed and rental taxes, and State revenue-sharing now or hereafter validly imposed by the Town or contributed, allocated and paid over to the Town and not earmarked by the contributor for a contrary or inconsistent purpose. Revenues generated by the Town from development impact fees will not be deemed Excise Taxes for purposes of the Trust Agreement and the Agreement. Revenues received by the Town from vehicle license taxes charged by the State will not be deemed Excise Taxes for purposes of the Trust Agreement and the Agreement. 4 “Parks and Recreation Taxes” means revenue generated pursuant to Ordinance No. (O)14-17, as amended by Ordinance No. (O)21-05, which imposed an additional 0.5% transaction privilege tax to fund the needs of the Town’s Community Center, golf and tennis facilities or for parks and recreation purposes (effective May 21, 2021). Excise Taxes will not include excise taxes levied by the Town which are restricted as to use by the Town Council or by State of Arizona (the “State”) law. For example, the Town also levies an additional 6.0% transient lodging tax on any hotel, motel or apartment let for less than 30 consecutive days, the revenues from which are restricted by State law to use for visitor and hospitality services. Amounts collected from these sources will not be part of the Excise Taxes pledged to amounts due pursuant to the Agreement. The Town may also in the future levy excise taxes for restricted purposes, the revenues from which will not be part of the Excise Taxes pledged to the payment of amounts due pursuant to the Agreement. “State Shared Revenues” means all received amounts of excise taxes, transaction privilege (sales) taxes and income taxes imposed by the State or any agency thereof and returned, allocated or apportioned to the Town, except the Town’s share of any such taxes which by State law, rule or regulation must be expended for other purposes, such as motor vehicle fuel taxes. Revenues received by the Town from vehicle license taxes charged by the State will not be part of State Shared Revenues pledged to the payment of amounts due pursuant to the Agreement. The Payments to be paid by the Town to the Trustee pursuant to the Agreement may be paid, at the option of the Town, from any other lawful revenue or source of the Town. Such revenues are not pledged to the Payments, and, if commenced, such use of such revenues may be discontinued at any time by the Town. THE OBLIGATIONS WILL BE SPECIAL, LIMITED, REVENUE OBLIGATIONS OF THE TOWN AND WILL BE PAYABLE SOLELY FROM THE SOURCES DESCRIBED HEREIN. THE OBLIGATIONS DO NOT CONSTITUTE A GENERAL OBLIGATION OR AN INDEBTEDNESS OF THE TOWN, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (WITHIN THE MEANING OF CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION) AND THE FULL FAITH AND CREDIT OF THE TOWN, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS NOT PLEDGED TO PAY THE PRINCIPAL OF OR INTEREST ON THE OBLIGATIONS. Covenant to Maintain Debt Service Coverage Pursuant to the Agreement, the revenues from the Excise Taxes will, to the extent permitted by applicable law, be retained and maintained so that the amounts received from the revenues from the Excise Taxes, when combined mathematically for such purpose only, all within and for the most recently completed fiscal year, shall have been equal to at least two (2) times the total of interest and principal requirements for the current fiscal year for the Obligations, the Existing Parity Obligations and any Additional Parity Obligations issued or incurred by the Town after the execution and delivery of the Obligations. (The amount of the State Shared Revenues is determined by statutory formula and the Town has not covenanted to, and has no power to, set or maintain rates or otherwise impose taxes to increase, replace or supplement the State Shared Revenues to provide for the payment of the amounts due on the Obligations.) If the revenues from the Excise Taxes for any such fiscal year shall not have been equal to at least two (2) times the total of the interest and principal requirements for the current fiscal year for the Obligations, the Existing Parity Obligations and any Additional Parity Obligations issued or incurred by the Town after the execution and delivery of the Obligations or if at any time it appears that the revenues from the Excise Taxes will not be sufficient to meet such requirements, the Town will, to the extent permitted by applicable law, impose new exactions of the type of the Excise Taxes which will be part of the Excise Taxes or increase the rates for the Excise Taxes currently imposed in order that (a) the revenues from the Excise Taxes will be sufficient to meet all current requirements on the Obligations, the Existing Parity Obligations and any Additional Parity Obligations and (b) the revenues from the Excise Taxes will be reasonably calculated to attain the level as required above. See “EXCISE TAXES AND PARKS AND RECREATION TAXES” herein. 5 Additional Parity Obligations The revenues from the Excise Taxes will not be encumbered on a basis senior or prior to the lien made pursuant to the Agreement. The revenues from the Excise Taxes will not be encumbered on a basis equal to the lien made pursuant the Agreement, whether under the Trust Agreement or otherwise, unless the revenues from the Excise Taxes in the most recently completed fiscal year of the Town shall have amounted to at least two (2) times the highest combined interest and principal payments to be made for any succeeding fiscal year for the Obligations, the Existing Parity Obligations and any Additional Parity Obligations then outstanding and any Additional Parity Obligations then proposed to be issued. Events of Default; No Acceleration Upon a failure by the Town to make Payments pursuant to the Agreement or the occurrence of another Event of Default under the Agreement of the Trust Agreement, the Trustee may, and upon request of the Owners of 25% in aggregate principal amount of the Obligations and upon being indemnified to its satisfaction from any liability or expense, shall exercise the remedies described in Appendix D – “SUMMARIES OF SELECT PROVISIONS OF PRINCIPAL DOCUMENTS – TRUST AGREEMENT – Events of Default and Remedies Upon Events of Default,” including, without limitation, seek the appointment of a receiver for the collection and proper disbursement of the Excise Taxes and Parks and Recreation Taxes pledged pursuant to the Agreement. Notwithstanding anything in the Agreement or the Trust Agreement, there will be no right to accelerate the maturities of the Obligations or Payments not then past due. Coronavirus Disease 2019 (“COVID-19”) The COVID-19 global pandemic continues to affect the nation and the State with ongoing concerns related to health and safety, appropriate preventative protocols, fiscal and economic issues, and student learning loss. At present, government and business operations in the State, following the rescindment of numerous COVID-19-related Executive Orders by Arizona Governor Doug Ducey, essentially function without government-imposed restrictions relating to the pandemic. Excise Tax and Parks and Recreation Tax collections and other collections dependent on tourism or local business activity may be materially adversely affected by the continued spread of COVID-19 due to slower business activity. The Town, however, cannot predict the extent of the impact COVID-19 will have on collections of Excise Taxes and Parks and Recreation Taxes, which could have a negative impact on Town revenues and ability to pay operating expenses and debt service on the Obligations. The State’s finances are likely to be adversely affected by the continued spread of COVID-19, the various governmental actions taken in response thereto and changes in the behavior of businesses and people, which all could affect the amount of State Shared Revenues distributed to counties and municipalities, including the Town. Excise Taxes are a major source of revenue of the Town’s General Fund and the security and source of payment of the Obligations. The Town, however, cannot predict how the spread of COVID-19, or the various governmental or private actions taken in response thereto will affect its finances or operations, including the receipt of these funds. PLAN OF FINANCE The proceeds of the Obligations, net of amounts used to pay costs related to the execution and delivery of the Obligations, will be used finance ___________. [To be updated with project information] 6 EXCISE TAXES AND PARKS AND RECREATION TAXES Excise Taxes will be pledged as security for the Payments due pursuant to the Agreement, which will be used to pay debt service on the Obligations and, to the extent Excise Taxes are insufficient, Parks and Recreation Taxes will be pledged as security for the Payments pursuant to the Agreement. The revenues from the Excise Taxes include the State Shared Revenues, as described herein. The major categories of such revenues are discussed more fully under this heading. NO ASSURANCES CAN BE GIVEN THAT THE AMOUNT OF STATE SHARED SALES TAXES OR STATE SHARED INCOME TAXES DESCRIBED BELOW WILL NOT BE REDUCED OR ELIMINATED BY THE STATE LEGISLATURE IN THE FUTURE. Excise Taxes Town Transaction Privilege (Sales) Taxes. The Town’s unrestricted transaction privilege (sales) tax is levied by the Town upon persons and entities on account of their business activities within the Town. The amount of tax due is calculated by applying the tax rate against the gross proceeds of sales or gross income derived from the business activities shown in the table below. Town Parks and Recreation Taxes. Since March 1, 2015, the revenue received from 0.5% of the Town’s transaction privilege (sales) tax is restricted in use by the Mayor and Council to funding operations at the Town’s Community Center or for parks and recreation purposes and constitutes the Parks and Recreation Taxes pledged to amounts due pursuant to the Agreement. TABLE 2 TRANSACTION PRIVILEGE (SALES), LICENSE AND USE TAX RATES BY CATEGORY Category Town Privilege Tax Rate (a) Advertising 2.50% Amusements 2.50 Contracting – Prime 4.00 Contracting – Speculative Builders 4.00 Contracting – Owner Builder 4.00 Job Printing 2.50 Manufactured Buildings 2.50 Timbering and Other Extraction 2.50 Severance – Metal Mining 0.10 Publication 2.50 Hotels 2.50 Hotel/Motel (Additional Tax) (b) 6.00 Rental Occupancy 2.00 Rental, Leasing & Licensing for Use of TPP 2.50 Restaurant and Bars 2.50 Retail Sales 2.50 MRRA Amount (c) 2.50 Transporting 2.50 Utilities 4.00 (a) Currently, the Town levies a 2.50% transaction privilege (sales) tax (except for mining, contracting, utilities and certain hotel, restaurant and bar activities). The Town may also in the future levy excise taxes for 7 restricted purposes, the revenues from which will not be part of the Excise Taxes pledged to the payment of amounts due pursuant to the Agreement. (b) The Town levies an additional 6.0% transient lodging tax on any hotel, motel or apartment let for less than 30 consecutive days, the revenues from which are restricted by State law to use for visitor and hospitality services. Amounts collected from these sources will not be part of the Excise Taxes pledged to amounts due pursuant to the Agreement. (c) Report amount due on construction-related materials purchased exempt from tax and incorporated into a Maintenance, Repair, Replacement or Alteration (MRRA) project. Source: Arizona Department of Revenue. The following table shows audited collections of the Town’s unrestricted transaction privilege (sales) tax by industry classification for fiscal years 2015/16 through and including 2019/20, projected collections for fiscal year 2020/21 and budgeted collections for fiscal year 2021/22. TABLE 3 TRANSACTION PRIVILEGE (SALES) TAX COLLECTIONS BY INDUSTRY CLASSIFICATION (a)(b) ($000’s) (a) Due to the Town’s participation in the Arizona Department of Revenue (“ADOR”) sales tax collection program and ADOR’s reporting of collections on a cash basis, the totals represented here may differ from the amounts shown for Town-wide Sales and Use Tax collections. (b) Figures include the Parks and Recreation Taxes and the additional 6.0% transient lodging tax on any hotel, motel or apartment let for less than 30 consecutive days, the revenues from which are restricted by State law to use for visitor and hospitality services. No amounts collected from the 6.0% transient lodging tax will be part of the funds pledged to amounts due pursuant to the Agreement and such amounts have been excluded from the line item for “Town Sales & Franchise Fees” in TABLE 5. (c) Projected and budgeted figures are “forward-looking” statements, subject to change upon audit and should be considered with an abundance of caution. Source: Finance Department of the Town. Franchise Fees. The Town imposes and collects franchise fees to engage in certain activities within the Town and the right to utilize certain Town property. Business Licenses. The Town imposes and collects fees for licenses to engage in certain activities within the Town and the right to utilize certain Town property. Those entities transacting more than one type of business are required Audited Projected Budgeted Industry Classification 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 (c)2021/22 (c) Construction 2,131$ 4,295$ 4,653$ 4,191$ 4,363$ 4,032$ 3,311$ Manufacturing 156 137 140 173 198 213 217 Transportation, warehousing, communications & utilities 3,133 3,171 3,384 3,335 3,288 3,452 3,446 Wholesale trade 131 136 154 183 211 221 225 Retail trade 6,844 7,086 7,733 8,430 9,830 10,362 10,716 Restaurants, bars & lodging 3,295 3,473 3,907 4,299 3,011 2,671 3,975 Finance, insurance & real estate 443 562 646 1,114 442 407 415 Services 672 702 840 963 1,004 719 733 All other 190 202 206 237 409 441 438 Cable franchise 622 648 657 635 662 615 615 Total (c)17,617$ 20,412$ 22,320$ 23,560$ 23,418$ 23,133$ 24,091$ 8 to have a separate business license for each activity. The Town has the authority and ability to set the charge for the business license at whatever rate it determines. Permits. The Town imposes and collects fees for permits to engage in certain activities within the Town and the right to utilize certain Town property. Parks and Recreation Fees. The Town imposes and collects fees for certain parks and recreation activities. Fines and Forfeitures. The Town imposes and collects fines and forfeitures for violations of State laws or Town ordinances relating to traffic, parking, animal control and other offenses. State Shared Revenues State Shared Sales Taxes. Pursuant to statutory formula, cities and towns in Arizona receive a portion of revenues from the State-levied transaction privilege (sales) tax. As TABLE 4 indicates, the rate of taxation on such tax varies among the different types of business activities taxed, with the most common rate being 5.0% of the amount or volume of business transacted. Currently, the aggregate amount distributed to all Arizona cities and towns is equal to 25% of the “distribution share” of revenues attributable to each category of taxable activity. Each city’s or town’s allocation of the revenues available to all cities and towns is based on its population relative to the aggregate population of all cities and towns as shown by the latest census. State-levied transaction privilege (sales) taxes are collected by the State and are distributed monthly to cities and towns. TABLE 4 STATE TRANSACTION PRIVILEGE (SALES), TAXABLE ACTIVITIES, AND DISTRIBUTION SHARE TAX RATES Taxable Activities State Tax Rate Distribution Base Education Tax Rate (a) Combined Tax Rate Transporting 5.000% 20.00% 0.60% 5.600% Utilities 5.000 20.00 0.60 5.600 Telecommunications 5.000 20.00 0.60 5.600 Pipeline 5.000 20.00 0.60 5.600 Private car line 5.000 20.00 0.60 5.600 Publication 5.000 20.00 0.60 5.600 Job printing 5.000 20.00 0.60 5.600 Prime contracting 5.000 20.00 0.60 5.600 Owner builder sales 5.000 20.00 0.60 5.600 Amusement 5.000 40.00 0.60 5.600 Restaurant 5.000 40.00 0.60 5.600 Personal property rental 5.000 40.00 0.60 5.600 Retail (excluding food sales) 5.000 40.00 0.60 5.600 Transient lodging 5.500 50.00 N/A 5.500 Mining – non-metal, oil/gas 3.125 32.00 N/A 3.125 Commercial lease 0.000 N/A N/A 0.000 Severance – metalliferous mining 2.500 80.00 N/A 2.500 Use tax utilities 5.000 20.00 0.60 5.600 Jet fuel use tax (b) N/A N/A (b) N/A = Not applicable. 9 (a) Represents the State transaction privilege (sales) tax rate approved by voters of the State in November 2000 (the “Education Tax”) on certain of the categories of business activity at six-tenths of one percent (0.6%). The Education Tax collections are dedicated exclusively to education and are not distributed to the Town or pledged to amounts due under the Agreement. (b) Does not include $0.0305 per gallon State tax on the retail sale of jet fuel, which tax is only levied on the first ten million gallons sold to each purchaser in each calendar year. Source: Arizona Revised Statutes, Arizona Department of Revenue and the Arizona Secretary of State. State Shared Income Taxes. Under current State law, Arizona cities and towns are preempted from imposing a local income tax. Cities and towns are, however, entitled by statutory formula to receive typically 15.00% of the net proceeds of the State’s personal and corporate income tax collections for the fiscal year which is two fiscal years prior to the current fiscal year. Distribution of such funds is made monthly based on the proportion of each city’s or town’s population to the total population of all incorporated cities and towns in the State as determined by the latest census. Reduced economic activity or reductions in the statutory formula share could adversely affect the Town’s revenues. Legislation Regarding Withholding of State Shared Revenues. Section 41-194.01, Arizona Revised Statutes, permits the State to withhold from a county, city or town (“Local Jurisdiction”) State revenues that would otherwise be shared with Local Jurisdictions. Under such statute, at the request of one or more members of the State Legislature, the State Attorney General must investigate any ordinance, regulation, order or other official action (“Local Action”) adopted or taken by the governing body of a Local Jurisdiction that the legislator alleges violates State law or the State Constitution. The Attorney General must make a written report within 30 days after receipt of the request. The Local Jurisdiction then has 30 days to resolve the violation. If the Attorney General determines that the violation has not been resolved within 30 days, the Attorney General must notify the State Treasurer and the State Treasurer must withhold payment to the Local Jurisdiction of State Shared excise taxes otherwise due to the Local Jurisdiction pursuant to Section 42-5029(L), Arizona Revised Statutes and all State Shared income taxes otherwise due to the Local Jurisdiction pursuant to Section 43-206(F), Arizona Revised Statutes, until such time as the Attorney General determines that the violation has been resolved. However, the State Treasurer may not withhold any amount that the Local Jurisdiction certifies to the Attorney General and the State Treasurer as being necessary to make deposits or payments for debt service on bonds or other long-term obligations that were issued or incurred before the Local Action occurred. The Town is not aware of any Local Action by the Town taken or currently under consideration that does or if taken would violate State law or the State Constitution. State Shared Revenues are a component of the Excise Taxes pledged to payments due with respect to the Agreement. The withholding of State Shared Revenues could have a material adverse effect on the payment of principal of and interest on the Obligations during any period of withholding. Lack of Town’s Control Over State Shared Sales Tax or State Shared Income Tax Levels; Pending State Budget Proposal. From time to time, bills are introduced in, and legislation enacted by, the Arizona Legislature to change the formulas used to allocate State Shared Sales Taxes and State Shared Income Taxes, including proposed adjustments that would reduce the distribution to cities and towns. The possibility of changes in this respect are more likely to be adverse to the Town when the State is experiencing financial difficulties. The Town cannot determine whether any such measures will become law or how they might affect State Shared Sales Taxes and State Shared Income Taxes, which comprise State Shared Revenues. In addition, initiative measures are circulated from time to time seeking to place on the ballot changes in Arizona law, which would repeal or modify State Shared Sales Taxes and State Shared Income Taxes (a major source of funds for state revenue sharing). The Town cannot predict if any such initiative measures will ever actually be submitted to the electors, what form the measures might take or the outcome of any such election. It should be noted that no assurances can be given that the amount of State Shared Sales Taxes and State Shared Income Taxes will not be reduced or eliminated by the State Legislature in the future. The State Legislature may from time to time eliminate State Shared Sales Taxes and State Shared Income Taxes or may change the amount and timing 10 of payment of State Shared Sales Taxes and State Shared Income Taxes and is under no legal obligation to maintain the amount of State Shared Sales Taxes and State Shared Income Taxes payable to the Town at any amount or level. For example, addressing State budgetary deficiencies, adjustments that reduce the distribution of State Shared Sales Taxes could be enacted. Likewise, legislative reductions in State sales or income taxes generally could result in reductions in the amounts distributed to local governments, including the Town. Accordingly, the Town is unable to covenant to maintain State Shared Sales Taxes or State Shared Income Taxes at any certain level. Included among State budget proposals for fiscal year 2021-22, which are currently being considered by the State Legislature, is a proposal contained in House Bill 2900 to consolidate the State’s current four personal income tax rate categories into a single flat rate of 2.5% over a two-year period. A study commissioned by the League of Arizona Cities and Towns indicates that, if enacted in its current form, the proposal would result in a $1.9 billion annual income tax reduction by the State, reducing State Shared Income Taxes by up to 31% which, for the Town, would be a reduction of approximately $2.27 million annually, based upon the Town’s Fiscal Year 2020-21 share of State Shared Income Taxes. Neither the State budget nor the proposal contained in House Bill 2900 has been approved by the State Legislature or enacted into law. The Town cannot predict whether such budget proposal will be approved by the State Legislature, what form it might take and the outcome of any such budget proposal. Excise Tax and Parks and Recreation Tax Collections Set forth below are audited collections of revenues from the Excise Taxes and Parks and Recreation Taxes for fiscal years 2015/16 through and including 2019/20, projected collections for fiscal year 2020/21 and budgeted collections for fiscal year 2021/22. TABLE 5 HISTORICAL AND PROJECTED COLLECTIONS OF EXCISE TAXES AND PARKS AND RECREATION TAXES (a) (a) Due to the Town’s participation in the ADOR sales tax collection program and ADOR’s reporting of collections on a cash basis, the totals represented here may differ from the amounts shown for Transaction Privilege (Sales) Tax Collections in TABLE 3. (b) Projected and budgeted figures are “forward-looking” statements, subject to change upon audit and should be considered with an abundance of caution. (c) Does not include excise taxes levied by the Town which are restricted as to use by the Town Council or by State law. See footnote (b) for TABLE 2 for more information. Audited (a)Projected (b)Budgeted (b) Source 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Town Sales & Franchise Fees (c)14,534,671$ 17,073,435$ 18,617,863$ 19,545,263$ 19,800,213$ 19,689,394$ 19,487,749$ Licenses & Permits 1,915,992 2,388,950 2,679,690 2,387,832 2,400,899 2,795,663 1,874,000 Fines 159,154 131,637 131,393 135,771 111,611 125,000 125,000 State-Shared Sales Tax 3,886,852 3,989,179 4,210,168 4,469,774 4,694,491 4,946,000 5,406,272 State-Shared Income Tax 4,937,719 5,329,864 5,422,693 5,370,779 5,870,231 6,580,332 6,007,636 Subtotal 25,434,388$ 28,913,065$ 31,061,807$ 31,909,419$ 32,877,445$ 34,136,389$ 32,900,657$ Parks and Recreation Taxes 2,030,750$ 2,199,466$ 2,330,941$ 2,469,464$ 2,584,916$ 2,767,485$ 2,932,798$ Total 27,465,138$ 31,112,531$ 33,392,748$ 34,378,883$ 35,462,361$ 36,903,874$ 35,833,455$ 11 SOURCES AND USES OF FUNDS Sources of Funds Principal Amount $25,000,000.00* [Net] Original Issue Premium (a) Total Sources of Funds Uses of Funds Deposit to the Project Fund Payment of Costs of Issuance (b) Total Uses of Funds * Subject to change. (a) Net original issue premium consists of original issue premium on the Obligations, less original issue discount on the Obligations. (b) Will include compensation and costs of the Underwriter (as defined herein) with respect to the Obligations. 12 ESTIMATED DEBT SERVICE REQUIREMENTS AND COVERAGE The following table illustrates the (i) annual debt service on the Outstanding Existing Parity Obligations, (ii) estimated annual debt service on the Obligations and (ii) projected maximum annual debt service coverage. TABLE 6 ESTIMATED DEBT SERVICE REQUIREMENTS AND COVERAGE (a) * Subject to change. ProjectedMaximumProjected Excise TaxesTotal Maximum and Parks andExisting Estimated Excise Taxes Total Recreation Taxes Obligations The Obligations Annual Annual Debt Plus: Excise Taxes and Annual Debt Fiscal Excise Total Estimated Total Estimated Debt Service Service Parks and Parks and ServiceYear Taxes (b)Debt Service Principal* Interest (c)Debt Service Requirements* Coverage (e)Recreation Taxes (f)Recreation Taxes Coverage (g)2019/20 32,877,445$ 2,584,916$ 35,462,361$ 2020/21 34,136,389 3,560,018$ 3,560,018$ 2,767,485 36,903,8742021/22 4,818,371 600,000$ 622,222$ 1,222,222$ 6,040,593 2022/23 4,832,428 865,000 854,000 1,719,000 6,551,428 5.21x 5.63x2023/24 4,825,602 895,000 823,725 1,718,725 6,544,327 2024/25 4,821,058 925,000 792,400 1,717,400 6,538,458 2025/26 4,351,115 955,000 760,025 1,715,025 6,066,140 2026/27 2,543,519 990,000 726,600 1,716,600 4,260,119 2027/28 2,141,328 1,025,000 691,950 1,716,950 3,858,278 2028/29 2,139,551 1,060,000 656,075 1,716,075 3,855,626 2029/30 2,141,870 1,100,000 618,975 1,718,975 3,860,845 2030/31 2,141,959 1,135,000 580,475 1,715,475 3,857,434 2031/32 1,966,974 1,175,000 540,750 1,715,750 3,682,724 2032/33 1,969,142 1,215,000 499,625 1,714,625 3,683,767 2033/34 1,275,070 1,260,000 457,100 1,717,100 2,992,170 2034/35 1,273,667 1,305,000 413,000 1,718,000 2,991,667 2035/36 1,275,526 1,350,000 367,325 1,717,325 2,992,851 2036/37 1,275,472 1,395,000 320,075 1,715,075 2,990,547 2037/38 1,273,443 1,445,000 271,250 1,716,250 2,989,693 2038/39 1,495,000 220,675 1,715,675 1,715,675 2039/40 1,550,000 168,350 1,718,350 1,718,350 2040/41 1,600,000 114,100 1,714,100 1,714,100 2041/42 1,660,000 58,100 1,718,100 1,718,100 48,626,113$ 25,000,000$ 10,556,797$ 35,556,797$ 84,182,910$ (d) 13 (a) Prepared by the Financial Advisor (as defined herein). (b) The amount of Excise Taxes used to calculate the coverage requirements for existing and projected debt service is the estimated, actual amount for fiscal year 2020/21 and are subject to change upon audit and should be considered with an abundance of caution.. See TABLE 5 – “Historical and Projected Collections of Excise Taxes and Parks and Recreation Taxes.” (c) Interest on the Obligations is estimated. (d) The first interest payment on the Obligations is due on January 1, 2022*. Thereafter, interest payments will be made semiannually on July 1 and January 1, until maturity or prior prepayment.* (e) Debt service coverage is based on revenues available for debt service (see footnote (b)) compared to the highest combined total of the debt service requirements in any succeeding fiscal year for the Obligations and Outstanding Existing Parity Obligations. (f) The Parks and Recreation Taxes are not pledged or available to make debt service payments on the Outstanding Existing Parity Obligations. (g) Coverage for the Obligations is 5.63x based on Excise Taxes available for debt service, including the Parks and Recreation Taxes, compared to the highest combined total of the debt service requirements in any succeeding fiscal year for the Obligations. LITIGATION Representatives of the Town will certify that no litigation or administrative action or proceeding is pending or, to the best of their knowledge, threatened, restraining or enjoining, or seeking to restrain or enjoin, the authorization, sale or execution and delivery of the Obligations or contesting or questioning the proceedings and authority under which the Obligations have been authorized and are to be secured, sold, executed or delivered, or the validity of the Obligations. UNDERWRITING The Obligations will be purchased by Piper Sandler & Co. (the “Underwriter”) at an aggregate purchase price of $_____________ pursuant to a purchase contract between the Town and the Underwriter. The aggregate purchase price reflects compensation to the Underwriter of $____________. The Obligations may be offered and sold to certain dealers (including the Underwriter and other dealers depositing Obligations into investment trusts) at prices lower than the public offering prices stated on the inside front cover page hereof, and such public offering prices may be changed, from time to time, by the Underwriter. The Underwriter’s obligations are subject to certain conditions precedent, and the Underwriter will be obligated to purchase all of the Obligations if any Obligations are purchased. The Underwriter has entered into a distribution agreement (“Distribution Agreement”) with Charles Schwab & Co., Inc. (“CS&Co”) for the retail distribution of certain securities offerings at the original issue prices, including the Obligations. Pursuant to the Distribution Agreement, CS&Co will purchase Obligations from the Underwriter at the original issue price less a negotiated portion of the selling concession applicable to any Obligations that CS&Co sells. RATING S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC (“S&P”) has assigned a rating of “___” to the Obligations. Such rating reflects only the views of S&P. An explanation of the significance of a rating assigned by S&P may be obtained at One California Street, 31st Floor, San Francisco, CA 94111. Such rating may be revised or withdrawn entirely at any time by S&P if, in its judgment, circumstances so warrant. Any downward revision or withdrawal of such rating may have an adverse effect on the market price or marketability of the Obligations. The Town will covenant in its continuing disclosure undertaking with respect to the Obligations that it will file notice of any formal change in any rating relating to the Obligations. See “CONTINUING DISCLOSURE” and APPENDIX F – “FORM OF CONTINUING DISCLOSURE CERTIFICATE” herein. 14 LEGAL MATTERS Legal matters incident to the authorization, sale and execution and delivery by the Town of the Obligations and with regard to the tax exemption of the interest thereon will be passed upon by Special Counsel (as defined herein). A signed copy of that opinion, dated and speaking only as of the date of delivery of the Obligations, will be delivered to the Town. The form of that opinion is included as APPENDIX E – “FORM OF APPROVING LEGAL OPINION” hereto. Gust Rosenfeld P.L.C. (“Special Counsel”) has provided portions of the information in the tax caption paragraph on the cover page, under the headings “THE OBLIGATIONS,” “SECURITY AND SOURCES OF PAYMENT” (except with respect to the subheading entitled “Coronavirus Disease 2019”), “LEGAL MATTERS,” “TAX EXEMPTION,” “ORIGINAL ISSUE DISCOUNT,” “ORIGINAL ISSUE PREMIUM,” “RELATIONSHIP AMONG PARTIES” (only as it relates to Special Counsel), “CONTINUING DISCLOSURE” (excluding any information pertaining to compliance with prior undertakings) and in APPENDIX D – “SUMMARIES OF SELECT PROVISIONS OF PRINCIPAL DOCUMENTS,” APPENDIX E – “FORM OF APPROVING LEGAL OPINION” and APPENDIX F – “FORM OF CONTINUING DISCLOSURE CERTIFICATE”, in each case, as it fairly and accurately summarized the matters purported to be summarized therein, but otherwise has not participated in the preparation of this Official Statement and will not opine upon its accuracy, completeness or sufficiency. Special Counsel has not, and will not, examine or attempt to examine or verify any of the financial or statistical statements or data contained in this Official Statement and will also express no opinion with respect thereto. Certain legal matters will be passed upon for the Underwriter by Squire Patton Boggs (US) LLP, Phoenix, Arizona, counsel to the Underwriter (“Counsel to the Underwriter”), excluding any financial or statistical statements. The various legal opinions to be delivered concurrently with the delivery of the Obligations express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. TAX EXEMPTION In the opinion of Special Counsel, under existing laws, regulations, rulings and judicial decisions, and assuming continuing compliance with certain restrictions, conditions and requirements by the Town as described below, the portion of each Payment and prepayment, if any, made by the Town under the Agreement and denominated and comprising interest income pursuant to the Agreement and received by the Owners of the Obligations is excluded from gross income for federal income tax purposes and is exempt from State income taxes. The opinion of Special Counsel will be dated as of the date of initial delivery of the Obligations. The form of such opinion is included as APPENDIX E – “FORM OF APPROVING LEGAL OPINION” attached hereto. The Internal Revenue Code of 1986, as amended (the “Code”), imposes various restrictions, conditions and requirements relating to the continued exclusion of interest income on the Agreement from gross income for federal income tax purposes, including a requirement that the Town rebate to the federal government certain of its investment earnings with respect to the Obligations. The Town has covenanted to comply with the provisions of the Code relating to such matters. Failure to comply with such restrictions, conditions and requirements could result in the interest income on the Agreement being included as gross income for federal income tax purposes, under certain circumstances, from the date of delivery. The opinion of Special Counsel assumes continuing compliance with such covenants. The Code also imposes an “alternative minimum tax” upon certain individuals. A taxpayer’s “alternative minimum taxable income” (“AMTI”) is its taxable income with certain adjustments. Such interest income on the Agreement is not an item of tax preference to be included in the AMTI of individuals. 15 Although Special Counsel will render an opinion that, as of the delivery of the Obligations, interest income on the Agreement will be excluded from gross income for federal income tax purposes, the accrual or receipt of interest on the Obligations may otherwise affect a Beneficial Owner’s (as defined herein) federal tax liability. Certain taxpayers may experience other tax consequences. Taxpayers who become Beneficial Owners of the Obligations, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain subchapter S corporations, individuals who receive Social Security or Railroad Retirement benefits and taxpayers who have or are deemed to have incurred indebtedness to purchase or carry tax-exempt obligations, should consult their tax consultants as to the applicability of such tax consequences to the respective Beneficial Owner. The nature and extent of these other tax consequences will depend upon the respective Beneficial Owner’s particular tax status and the Beneficial Owner’s other items of income or deduction. Special Counsel expresses no opinion regarding any such other tax consequences. The Agreement and the Obligations will not be “private activity bonds” within the meaning of Section 141 of the Code. Under existing federal tax law, if Obligations are determined to be invalid for failure to comply with a substantive or procedural requirement of local law, the Obligations will be deemed not to be an obligation of the Town and interest on the Obligations will not be excludable from gross income for federal income tax purposes. The Obligations do not provide for an adjustment in interest rate or yield in the event of taxability, and an event of taxability does not cause an acceleration of the principal of the Obligations. From time to time, there are legislative proposals in Congress, which, if enacted, or made effective, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Obligations. Any such change that occurs before initial delivery of the Obligations could cause Special Counsel to deliver an opinion substantially different from the form of opinion shown in APPENDIX E – “FORM OF APPROVING LEGAL OPINION.” The extent of change in Special Counsel’s opinion cannot be determined at this time. It cannot be predicted whether, when or in what form any such proposals would apply to obligations (such as the Obligations) issued prior to enactment or effective date. Prospective purchasers should consult with their own tax advisor regarding any other pending or proposed federal income tax legislation. AMORTIZABLE PREMIUM The initial public offering price of the Obligations maturing on July 1, ____ through and including July 1, ____ (collectively, the “Premium Obligations”) is greater than the amount payable on such Premium Obligations at maturity. An amount equal to the difference between the initial public offering price of a Premium Obligation (assuming that a substantial amount of the Premium Obligations of that maturity are sold to the public at such price) and the amount payable at maturity, constitutes premium to the initial Beneficial Owner of such Premium Obligations. The basis for federal income tax purposes of a Premium Obligation in the hands of such initial Beneficial Owner must be reduced each year by the amortizable obligation premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable obligation premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Obligation. The amount of premium which is amortizable each year by an initial Beneficial Owner is determined by using such Beneficial Owner’s yield to maturity. Beneficial Owners of the Premium Obligations should consult with their own tax advisors with respect to the determination of amortizable obligation premium with respect to the Premium Obligations for federal income tax purposes and with respect to the state and local tax consequences of owning Premium Obligations. 16 ORIGINAL ISSUE DISCOUNT The initial public offering prices of the Obligations maturing on July 1, ____ through and including July 1, ____ (collectively, the “Discount Obligations”), are less than the respective amounts payable at maturity. As a result, the Discount Obligations will be considered to be issued with original issue discount. The difference between the initial public offering price (assuming it is the first price at which a substantial amount of that maturity of Discount Obligations was sold (the “OID Issue Price”)) of the Discount Obligations and the amount payable at maturity of the Discount Obligations will be treated as “original issue discount.” With respect to a Beneficial Owner who purchases a Discount Obligation in the initial public offering at the OID Issue Price and who holds the Discount Obligation to maturity, the full amount of original issue discount will constitute interest income which is not includible in the gross income of the Beneficial Owner of the Discount Obligation for federal income tax purposes and Arizona income tax purposes and that Beneficial Owner will not, under present federal income tax law and present Arizona income tax law, realize a taxable capital gain upon payment of the Discount Obligation at maturity. The original issue discount on each of the Discount Obligations is treated for federal income tax purposes and Arizona income tax purposes as accreting daily over the term of such Discount Obligation on the basis of a constant interest rate compounded at the end of each six-month period (or shorter period from the date of original issue) ending on January 1 and July 1 (with straight-line interpolation between compounding dates). The amount of original issue discount accreting each period will be added to the Beneficial Owner’s tax basis for the Discount Obligation. The adjusted tax basis will be used to determine taxable gain or loss upon disposition of the Discount Obligation. An initial Beneficial Owner of a Discount Obligation who disposes of the Discount Obligation prior to maturity should consult his or her tax advisor as to the amount of the original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or disposition of the Discount Obligation prior to maturity. The Code contains certain provisions relating to the accretion of original issue discount in the case of subsequent Beneficial Owners of the Discount Obligations. Beneficial Owners who do not purchase the Discount Obligations in the initial offering at the OID Issue Price should consult their own tax advisors with respect to the tax consequences of the ownership of Discount Obligations. A portion of the original issue discount that accretes in each year to a Beneficial Owner of a Discount Obligation may result in certain collateral federal income tax consequences. Beneficial Owners of Discount Obligations in states other than Arizona should consult their own tax advisors with respect to the state and local tax consequences of owning Discount Obligations. RELATIONSHIP AMONG PARTIES Special Counsel has previously represented, and is currently representing, the Underwriter with respect to other financings and has acted or is acting as bond counsel with respect to other obligations underwritten by the Underwriter and may do so in the future. Special Counsel also serves and has served as bond counsel for one or more of the political subdivisions that the Town territorially overlaps. Counsel to the Underwriter has previously acted as special counsel with respect to other obligations underwritten by the Underwriter and may continue to do so in the future if requested. 17 CONTINUING DISCLOSURE The Town, as the “obligated person” with respect to the Obligations, will covenant for the benefit of the owners of the Obligations to provide certain financial information and operating data relating to the Town by not later than February 1 in each year commencing February 1, 2022 (the “Annual Reports”), and to provide notices of the occurrence of certain enumerated events (the “Notices”). Such covenants will be made in order to assist the Underwriter in complying with the S.E.C. Rule 15c2-12 (the “Rule”). The form of the undertaking which describes the content of the Annual Reports and the Notices and method of their dissemination is included as APPENDIX F – “FORM OF CONTINUING DISCLOSURE CERTIFICATE” hereto. A failure by the Town to comply with these covenants must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Obligations in the secondary market. Absence of continuing disclosure could adversely affect the Obligations and specifically their market price and transferability. The Town was five days late filing its audited financial statements for the fiscal year ended June 30, 2018, which included the required operating data as well. The Town has reviewed its filing requirements and has implemented written procedures to facilitate compliance with its continuing disclosure undertakings in all material respects. FINANCIAL ADVISOR Stifel, Nicolaus & Company, Incorporated (the “Financial Advisor”) is serving as financial advisor to the Town. The Financial Advisor’s fee for services rendered with respect to the sale of the Obligations is contingent upon the execution and delivery of the Obligations. The Financial Advisor participated in the preparation of this Official Statement but has not verified, and does not assume any responsibility for, the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Obligations, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor has provided the following sentence for inclusion in this Official Statement: “The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the Town, but the Financial Advisor does not guarantee the accuracy or completeness of such information.” FINANCIAL STATEMENTS The comprehensive annual financial report of the Town for the fiscal year ended June 30, 2020, a copy of which is included in APPENDIX C – “TOWN OF ORO VALLEY, ARIZONA – AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020” of this Official Statement, have been audited by Heinfeld, Meech & Co., P.C., certified public accountants, to the extent and for the period indicated in their report thereon. The Town is not aware of any facts that would make such comprehensive annual financial report misleading. The comprehensive annual financial report is for the fiscal year ending June 30, 2020, and is not current and may not represent the current financial condition of the Town. The Town neither requested nor obtained the consent of Heinfeld, Meech & Co., P.C., to include the report, and Heinfeld, Meech & Co., P.C., has performed no procedures subsequent to rendering its opinion on the financial statements. 18 CONCLUDING STATEMENT To the extent that any statements made in this Official Statement involve matters of opinion or estimates, whether or not expressly stated to be such, they are made as such and not as representations or fact of certainty and no representation is made that any of these statements have been or will be realized. Information set forth in this Official Statement has been derived from the records of the Town and from certain other sources, as referenced, and is believed by the Town to be accurate and reliable. Information other than that obtained from official records of the Town has not been independently confirmed or verified by the Town and its accuracy is not guaranteed. Neither this Official Statement nor any statements that may have been or that may be made orally or in writing are to be construed as a part of a contract with the original purchasers or subsequent owners of the Obligations. This Official Statement has been prepared on behalf of the Town and executed for and on behalf of the Town by its Chief Financial Officer. TOWN OF ORO VALLEY, ARIZONA By: Chief Financial Officer A-1 APPENDIX A TOWN OF ORO VALLEY, ARIZONA – GENERAL ECONOMIC AND DEMOGRAPHIC INFORMATION The following information regarding the Town is provided for background information only. No representation is made as to the relevance of the data to the repayment of the Obligations. The Obligations are payable solely from Payments to be paid by the Town under the Agreement which are secured by a first lien pledge of the Excise Taxes and Parks and Recreation Taxes as described under the heading “SECURITY AND SOURCES OF PAYMENT.” General The Town, incorporated in 1974, is located in the northeastern part of Pima County, Arizona. The Town is approximately six miles north of the city limits of Tucson, Arizona (“Tucson”). A farming area 30 years ago, the Town is now a part of the Tucson metropolitan area. The Town covers an area of approximately 30 square miles and is located at an elevation of 2,600 feet at the base of the Santa Catalina Mountains. The following table illustrates respective population statistics for the Town, the County and the State. POPULATION STATISTICS Town of Pima State of Years Oro Valley County Arizona 2020 Census 47,070 1,043,433 7,151,502 2010 Census 41,011 980,263 6,392,017 2000 Census 29,700 843,746 5,130,632 1990 Census 6,670 666,957 3,665,305 1980 Census 1,489 531,443 2,718,425 Source: Arizona Office of Economic Opportunity and the U.S. Census Bureau. Municipal Government and Organization The Town’s government operates under the Council-Manager form of government. Policymaking and legislative authority are vested in the Town Council, which consists of a Mayor and six Councilmembers. Councilmembers are elected to four-year staggered terms. The Mayor is directly elected by the qualified voters of the Town and the Vice- Mayor is selected by the Town Council from among its members. The Town Council is responsible for, among other things, the adoption of local ordinances, budget adoption, the development of citizen advisory committees and the hiring of the Town Manager. The Town Manager is responsible for implementation of the policies of the Town Council. The Town Manager appoints all department heads except the Chief of Police, Town Attorney and Magistrate. A-2 Employment and Employers The Town’s economy is linked closely with that of Tucson. Due to the Town’s proximity to Tucson, the majority of the residents of The Town commute to areas within the Tucson metropolitan area for employment. The following table illustrates several of the major employers within the Town. TABLE A-3 MAJOR EMPLOYERS Town of Oro Valley, Arizona Approximate Number of Employer Description Employees Ventana Medical Systems Inc High Tech Manufacturing & Development 1,700 Oro Valley Hospital LLC Health Care 700 Amphitheater Unified School District Education 600 Town of Oro Valley Government, Social, & Advocacy Services 590 Walmart Retail 390 Hilton Tucson El Conquistador Resort Hospitality, Tourism, & Recreation 340 Casa De La Luz Foundation Health Care 260 Fry’s Food Stores Retail 240 Target Retail 180 Securaplane Technologies Inc Business Services 180 Source: Maricopa Association of Governments, Employer Database. The following table illustrates annual unemployment rate averages for the Town. TABLE A-4 UNEMPLOYMENT RATE AVERAGES Calendar Town of Year Oro Valley (a) 2021 (b) 5.5% 2020 6.5 2019 4.3 2018 4.2 2017 4.3 2016 4.6 (a) Each year, historical estimates from the Local Area Unemployment Statistics (LAUS) program are revised to reflect new population controls from the Census Bureau, updated input data, and reestimation. The data for model-based areas also incorporate new seasonal adjustment, and the unadjusted estimates are controlled to new census division and U.S. totals. Sub-state area data subsequently are revised to incorporate updated inputs, reestimation, and controlling to new statewide totals. (b) Data as of July 2021. Source: Arizona Office of Economic Opportunity, in cooperation with the U.S. Department of Labor, Bureau of Labor Statistics. A-3 Commerce The following table shows the municipal privilege sales tax collections for the Town. TABLE A-5 TRANSACTION PRIVILEGE (SALES) TAX COLLECTIONS Town of Oro Valley, Arizona ($000s omitted) Municipal Fiscal Privilege Tax Year Collections 2019/20 $22,655 2018/19 23,183 2017/18 22,128 2016/17 19,615 2015/16 16,995 Source: The Comprehensive Annual Financial Reports for the Town. B-1 APPENDIX B TOWN OF ORO VALLEY, ARIZONA – FINANCIAL DATA The following information regarding the Town is provided for background information only. No representation is made as to the relevance of the data to the repayment of the Obligations. The Obligations are payable solely from Payments to be paid by the Town under the Agreement which are secured by a first lien pledge of the Excise Taxes as described under the heading “SECURITY AND SOURCES OF PAYMENT.” Current Year Statistics (Fiscal Year 2021/22) Town of Oro Valley, Arizona General Obligation Bonded Debt Outstanding None Excise Tax Parity Obligations Outstanding and to be Outstanding $63,708,000 * (a) Wastewater Revenue Obligations Outstanding 9,406,214 * Subject to change. (a) Includes the Obligations. STATEMENTS OF BONDED INDEBTEDNESS Excise Tax Parity Obligations Outstanding and to be Outstanding Town of Oro Valley, Arizona (a) These 2010 Obligations were issued as “Clean Renewable Energy Bonds” with a federal interest subsidy payments at 3.752% each year. However, due to mandatory federal budget reductions caused by federal sequestration, the Town’s federal interest subsidy payment was reduced by 8.7% in federal fiscal year 2012/13, 7.2% in federal fiscal year 2013/14, 7.3% in federal fiscal year 2014/15, 6.8% in federal fiscal year 2015/16, 6.9% in federal fiscal year 2016/17, 6.6% in federal fiscal year 2017/18, 6.2% in federal fiscal year 2018/19, 5.9% in federal fiscal year 2019/20 and 5.7% in federal fiscal year 2020/21. The Town anticipates continued similar reductions in federal interest subsidy payments so long as federal sequestration remains in effect. The Town is required to pay the full interest payments on the “Clean Renewable Energy Bonds” each year despite such reductions in federal interest subsidy payments. (b) Total Excise Tax Parity Obligations includes the Obligations. The Parks and Recreation Taxes are not pledged or available to make debt service payments on the Outstanding Existing Parity Obligations. Final Maturity Issue Original Date Series Amount Purpose (July 1) 2010 2,445,000$ Solar panels 2027 940,000$ (a) 2012 2,580,000 Aquatic facility 2027 1,215,000 2015 3,775,000 Refunding 2025 1,756,000 2016 2,000,000 Energy Savings 2031 1,548,000 2017 14,302,000 Refunding 2026 8,372,000 2018 8,140,000 Water infrastructure improvements 2033 6,902,000 2021 17,975,000 Pension liability management 2038 17,975,000 Total Excise Tax Revenue and State Shared Revenue Obligations Outstanding 38,708,000$ Plus: The Obligations 25,000,000 Total Excise Tax Revenue and State Shared Revenue Obligations Outstanding and to be Outstanding 63,708,000$ (b) Balance Outstanding and to be Outstanding * * B-2 Wastewater Revenue Obligations Outstanding Town of Oro Valley, Arizona (a) Represents loan agreements with the Water Infrastructure Finance Authority of Arizona. These loans are secured by and payable from sewer system revenues. Other Obligations Outstanding Town of Oro Valley, Arizona Item Annual Payment Amount Periods Due Golf cart operating lease $156,487.92 Annually through July, 2022 Final Maturity Issue Original Date Balance Series Amount Purpose (July 1) Outstanding 2012 16,595,000$ Refunding 2022 1,815,000$ 2014 5,000,000 Water improvements 2038 2,404,214 (a) 2021A 1,951,000 Refunding 2039 1,951,000 2021B 3,631,000 Refunding 2026 3,236,000 Total Water Revenue Obligations Outstanding 9,406,214$ B-3 GENERAL FUND Below are the Town general fund revenues, expenditures and changes in fund balance for audited fiscal years 2015/16 through and including 2019/20, projected fiscal year 2020/21 and budgeted fiscal year 2020/21. THIS INFORMATION IS NOT INTENDED TO INDICATE FUTURE OR CONTINUING TRENDS OF THE FINANCIAL AFFAIRS OF THE TOWN. The Obligations will be payable solely from the sources described under the heading “SECURITY AND SOURCES OF PAYMENT OF THE OBLIGATIONS.” The information provided in the following table is for reference only. General Fund Town of Oro Valley, Arizona (a) Projected and budgeted figures are “forward-looking” statements, subject to change upon audit and should be considered with an abundance of caution. Audited Projected Budgeted 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 (a)2021/22 (a) REVENUES Sales taxes 13,913,125$ 16,425,605$ 17,961,199$ 20,454,936$ 20,172,487$ 19,750,240$ 20,542,707$ Franchise taxes 621,546 647,830 656,664 635,494 662,048 615,000 615,000 Intergovernmental 12,732,130 13,458,181 13,740,676 13,773,704 14,527,210 25,887,530 21,139,713 Licenses, fees and permits 1,872,858 2,313,504 2,634,574 2,356,619 2,400,849 2,767,613 1,849,000 Fines, forfeitures and penalties 159,154 132,148 131,831 165,669 111,611 125,000 125,000 Charges for services 2,100,215 2,278,332 2,217,259 2,519,565 2,072,288 1,964,885 2,387,776 Investment income: 162,310 39,343 - 648,246 807,580 295,445 150,000 Other 322,640 431,094 390,030 370,120 311,906 224,700 264,000 TOTAL REVENUES 31,883,978$ 35,726,037$ 37,732,233$ 40,924,353$ 41,065,979$ 51,630,413$ 47,073,196$ EXPENDITURES Current: General government 10,775,836$ 10,375,226$ 11,070,844$ 14,424,463$ 16,531,008$ 18,702,300$ 30,060,589$ Public safety 15,182,914 15,543,292 16,551,778 16,050,890 16,721,674 16,631,469 18,131,000 Transit 1,432,910 1,528,654 1,536,294 1,150,322 1,110,444 863,243 1,259,955 Culture and recreation 3,033,101 3,190,447 3,174,753 3,251,463 3,189,550 3,136,584 3,305,861 Capital outlay - - 569,014 570,914 409,984 1,460,202 1,095,175 Debt service Principal retirement 41,608 42,852 44,134 - - - - Interest and fiscal charges 3,845 2,601 1,320 - - - - TOTAL EXPENDITURES 30,470,214$ 30,683,072$ 32,948,137$ 35,448,052$ 37,962,660$ 40,793,798$ 53,852,580$ Excess of revenues over (under) expenditures 1,413,764$ 5,042,965$ 4,784,096$ 5,476,301$ 3,103,319$ 10,836,615$ (6,779,384)$ Other financing sources (uses): Transfers in 185,000$ 305,000$ 305,000$ 120,000$ -$ 120,000$ -$ Transfers out (1,226,086) (2,469,304) (2,524,668) (4,150,514) (1,775,436) (2,589,520) (7,408,264) Prior period adjustments - - 2,158,236 - - - - Total Other financing sources (uses) (1,041,086)$ (2,164,304)$ (61,432)$ (4,030,514)$ (1,775,436)$ (2,469,520)$ (7,408,264)$ Fund balance at beginning of year 10,151,875$ 10,524,553$ 13,403,214$ 18,125,878$ 19,571,665$ 20,899,548$ 29,266,643$ Fund balance at end of year 10,524,553$ 13,403,214$ 18,125,878$ 19,571,665$ 20,899,548$ 29,266,643$ 15,078,995$ B-4 RETIREMENT SYSTEM Pension and Retirement Plans The Town contributes to the retirement plans described below: the cost-sharing Arizona State Retirement System (“ASRS”) and the multiple-employer PSPRS and the Corrections Officers Retirement Plan (“CORP”). Benefits are established by State statute and, depending on the plan, provide retirement, death, long-term disability, survivor and health insurance premium benefits. Both the Town and each covered employee contribute in the case of each. Each of the plans has reported increases in its unfunded liabilities The increases in unfunded liabilities is expected to result in increased future annual contributions by the Town and its employees; however the specific impact on the Town’s and its employees’ future contributions cannot be determined at this time. The Governmental Accounting Standards Board (“GASB”) adopted Statement Number 68, Accounting and Financial Reporting for Pensions, which requires that cost-sharing employers report their “proportionate share” of a plan’s net pension liability in their government-wide financial statements and that the cost-sharing employer’s pension expense component include its proportionate share of the system’s pension expense, the net effect of annual changes in the employer’s proportionate share and the annual differences between the employer’s actual contributions and its proportionate share. GASB’s Statement No. 67, Financial Reporting for Pensions, is designed to improve financial reporting by state and local governmental pension plans. Starting on page 47 in APPENDIX C – “TOWN OF ORO VALLEY, ARIZONA – AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020” is information about the plans based on GASB’s Statements Nos. 67 and 68. Please refer to APPENDIX C for more specific information about the plans. In the case of any difference between what is here versus what is in APPENDIX C, the latter supersedes the former. The Arizona State Retirement System ASRS is a multiple-employer defined benefit pension plan, a multiple-employer defined benefit health insurance premium benefit plan, and a multiple-employer defined benefit long-term disability plan for approximately 600,000 Arizona public employees including qualified employees of the State, municipal governments, counties and K-12 education agencies. As of June 30, 2020, the unfunded liability for ASRS was $15.9 billion with a funding ratio of 72.8% and an assumed earning rate of 7.5%. As of June 30, 2020, the Town reported a liability of $18,808,834 for its proportionate share of the net pension liability under ASRS. Pursuant to State statute, the contribution rate for the employer (the Town) and active members of ASRS are equal. For fiscal year 2021/22, the actuarially determined contribution rate for the Town and active members of ASRS is 12.41% (12.22% for retirement and health insurance and 0.19% for long-term disability). The table below shows recent actuarially determined contribution rates that the active ASRS members and the Town are/were required to contribute, the plan’s funded status and the pension contributions under ASRS for the current and past four fiscal years. Fiscal Year Ended Retirement and Health Insurance Premiums Long-term Disability Total Contribution Rate Funded Status Pension Contributions June 30, 2022 12.22% 0.19% 12.41% unavailable unavailable June 30, 2021 12.04 0.18 12.22 unavailable unavailable June 30, 2020 11.94 0.17 12.11 72.8% $1,579,300 June 30, 2019 11.64 0.16 11.80 72.3 1,523,859 June 30, 2018 11.34 0.16 11.50 71.2 1,418,992 B-5 The Public Safety Personnel Retirement System PSPRS is an agent multiple-employer defined benefit pension plan and an agent multiple employer defined benefit health insurance premium benefit plan that covers public safety personnel who are regularly assigned to hazardous duties for which the Arizona State Legislature establishes active plan members’ contribution rates and member benefits. This is not a “pooled” system – a separate account exists for the police employees of each participating political subdivision. In total, there are 258 individual plans in PSPRS. Each plan has its own financial condition, funding status, etc. which varies greatly across the system. A 2016 amendment to the State constitution (“Prop 124”) created an exception to the prohibition in the Constitution against diminishing or impairing public retirement system benefits by allowing for certain adjustments to PSPRS and preserved the State’s legislature ability to modify public retirement benefits. Prop 124 allowed for, among other things, the replacement of permanent benefit increases then required by law with COLA (defined below) provisions tied to the regional consumer price indexes. PSPRS active membership is comprised of three separate “tiers” based on date of hire which are shown in the following table. “Tier 1” Members “Tier 2” Members “Tier 3” Members Hired into PSPRS position before January 1, 2012 Hired into PSPRS position on or after January 1, 2012 and before July 1, 2017 Hired into PSPRS position on or after July 1, 2017 The different tiers have different types of plans. Tier 1 members have a defined benefit plan, Tier 2 members have a defined benefit or defined benefit hybrid plan and Tier 3 members have a defined contribution, defined benefit or defined benefit hybrid plan. (The hybrid plan is a pension with an additional defined contribution tax-deferred retirement savings account for Tier 2 and Tier 3 members who do not contribute to Social Security). For Tier 1 and Tier 2 members, the type of plan is determined automatically. For Tier 3 members the type of plan is an irrevocable career choice with a default to a defined benefit plan after 90 days. The actuarially determined employer contribution rate varies among the different tiers and the different types of plans as shown in the tables below. As of June 30, 2019, the unfunded liability for Tiers 1 and 2 of PSPRS was $9.3 billion with a funding ratio of 47.7%. When calculating, an assumed earning rate of 7.3% was used and an assumed rate of 1.75% was used for increases in the cost of living allowance (“COLA”). The following tables show the actuarially determined annual contribution rates, funded status and total audited contribution amounts for PSPRS. In July 2021, the Town issued its 2021 Obligations, the proceeds of which were used to finance a payment to PSPRS to fund all or a portion of the Town’s unfunded accrued Police (pension) liabilities with respect to PSPRS. As such, it is expected the figures for future years will present lower employer contribution rates and funded ratios at or near 100%. B-6 Police Fiscal Year Ended 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Actuarially Determined Contribution Rates Tier 1/2 Defined Benefit Employer (a) 43.57% 41.65% 38.59% 37.04% 34.85% Tier 1 Defined Benefit Employee 7.65% 7.65% 7.65% 7.65% 7.65% Tier 2 Defined Benefit Employee (a)(b) 11.65% 11.65% 11.65% 11.65% 11.65% Tier 3 Defined Benefit Employer (a)(c) 40.32% 37.61% 34.05% 32.36% 28.80% Tier 3 Defined Benefit Employee (a) 9.94% 9.94% 9.94% 9.94% 9.94% Tier 3 Defined Contribution Employer (a) 40.26% 38.08% 34.62% 32.93% 29.41% Tier 3 Defined Contribution Employee 9.88% 10.41% 10.51% 10.51% 10.55% Pension Funded Status N/A N/A 61.7% 60.8% 59.90% Health Funded Status N/A N/A 132.7% 146.2% 115.90% Total Town (Employer) Pension and Contribution N/A N/A $2,552,903 $2,548,626 $2,485,191 __________________ (a) Not applicable for Tier 2 for fiscal years prior to fiscal year 2017/18. Does not include additional contribution percentage of 3% associated with Tier 2 & 3 defined benefit members additionally participating in the defined contribution plan. Employer rate is 4% for Tier 2 members for a period of time depending on the individual’s membership date and 3% for Tier 3 members. (b) Tier 2 employees contribute a maximum of 11.65%, but statutory requirements dictate only 7.65% is applied toward employer costs. (c) The amortization of unfunded liabilities for Tier 1 and Tier 2 is applied to the payroll for employees in all tiers, including Tier 3, on a level percent basis. The Corrections Officers Retirement Plan (“CORP”) CORP is an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit plan that covers certain State, County and municipal employees whose primary duties require direct contact with inmates, for which the State Legislature establishes active plan members’ contribution rates. The CORP also administers the Administrative Officers of the Courts (“AOC”) cost-sharing plan. The CORP plan has reported increases in its unfunded liabilities. The most recent annual reports for the CORP may be accessed at: http://www.psprs.com/investments--financials/annual-reports. The effect of the increase in the CORP’s unfunded liabilities is expected to result in increased contributions by the employers of CORP covered employees and CORP employees, however the specific impact on future annual contributions to the CORP, cannot be determined at this time. As presented below, CORP active membership is comprised of three separate “tiers” based on date of hire which are shown in the following table. Tier 1 Members Tier 2 Members Tier 3 Members Hired into CORP position before January 1, 2012 Hired into CORP position on or after January 1, 2012 and before July 1, 2018 Hired into CORP position on or after July 1, 2018 B-7 Among other differences, the tiers vary in terms of employee contribution rate, retirement eligibility, and post retirement cost of living adjustment eligibility. Additionally, in lieu of the defined benefit program, most employees in Tier 3 are members of a defined contribution program. For Tier 1 and Tier 2 members, for the fiscal year ended June 30, 2012 and each subsequent fiscal year, the employee contribution rate is set by statute and calculated at the lesser of 8.41%, or fifty percent of the sum of the member’s contribution rate from the preceding fiscal year, plus the aggregate computed employer contribution rate, subject to a minimum employee contribution rate of 7.65%. Until the funded status of the Plan reaches 100 percent, the member contribution rate for full-time dispatchers is 45 basis points less than the general member contribution rate. The employer contribution rates are based upon an actuarial valuation, and generally may not be less than 6%. All correction members hired on or after July 1, 2018 (Tier 3), are required to participate in a DC plan; however, AOC probation and surveillance officers hired on or after this date have the option to choose between a DB plan and the DC retirement account managed by PSPRS. Generally, the defined contribution plan rate is 7% for employees and 5% for employers. The DB plan contribution rate for Tier 3 is 66.7%/33.3 employee/employer for the normal cost associated with the program and 50%/50% for the unfunded liability associated with the program. Additionally, the employer contribution rate (DB and DC) includes a legacy unfunded liability component associated with Tiers 1 and 2. The tables on the following page show the actuarially determined annual employer contribution rates, funded status and total audited contribution amounts for the CORP plan. Dispatchers Fiscal Year Ended 6/30/2022 6/30/2021 6/30/2020 6/30/2019 6/30/2018 Contribution Rates* Tier 1/2 Defined Benefit Employer (a) 79.23% 75.53% 59.94% 61.36% 43.63% Tier 1/2 Defined Benefit Employee (a) 7.96% 7.96% 7.96% 7.96% 7.96% Tier 3 Defined Contribution Employer (b) 82.17% 78.15% 59.22% 60.06% N/A Tier 3 Defined Contribution Employee 7.49% 7.65% 7.70% 7.70% N/A Pension Funded Status N/A N/A 44.6% 44.0% 45.4% Health Funded Status N/A N/A 151.2% 138.5% 137.1% Total Town (Employer) Pension Contribution N/A N/A $126,199 $124,108 $87,996 __________________ (a) Not applicable for Tier 2 for fiscal years prior to fiscal year 2017/18. Does not include additional contribution percentage of 3% associated with Tier 2 & 3 defined benefit (“DB”) members additionally participating in the defined contribution (“DC”) plan. Employer rate is 4% for Tier 2 members for a period of time depending on the individual’s membership date and 3% for Tier 3 members. (b) The amortization of unfunded liabilities for Tier 1 and Tier 2 is applied to the payroll for employees in all tiers, including Tier 3, on a level percent basis. B-8 Statutory Changes and Court Decisions Regarding the PSPRS and CORP PSPRS and CORP are operated under the umbrella of the Public Safety Personnel Retirement System and the Public Safety Personnel Retirement System Board of Trustees. Since 2011 there have been various retirement program modifications designed to mitigate the increasing unfunded liabilities in the programs. Some of these modifications were enacted by the Arizona Legislature and other changes (like Prop 124) were implemented by voter approved amendments to the State Constitution. Additionally, in some instances, modifications enacted by the Arizona Legislature were reversed based on the outcome of successful court challenges. Substantively, the modifications have included changes to contribution rates, retirement criteria, funding horizons, retirement benefits and post-retirement benefit increase calculations. Potential Future State Legislation Affecting ASRS, PSPRS and CORP Bills are frequently introduced at sessions of the State Legislature that, if enacted, could impact the administration of the ASRS, PSPRS and CORP and the eligibility, timing and payment of benefits from such plans. The Town is unable to determine whether any such bills will be enacted into legislation or in what form such legislation may be enacted and what the impact of any such legislation may be. Other Post-Employment Retirement Benefits Beginning with the fiscal year that commenced on July 1, 2018, the Town was required to implement Government Accounting Standards Board Statement Number 54, Accounting by Employers for Post-Employment Benefits Other than Pensions (“GASB 54”), which requires reporting the actuarially accrued cost of post-employment benefits, other than pension benefits (“OPEB”), such as health and life insurance for current and future retirees. GASB 54 requires that such benefits be recognized as current costs over the working lifetime of employees, and to the extent such costs are not pre-funded, GASB 54 will require the reporting of such costs as a financial statement liability. The Town does not offer OPEBs. The Town employees, their spouses and survivors may, however, be eligible for certain retiree health care benefits under health care programs provided by the State. Employees on long-term disability and their spouses may also qualify for retiree health care benefits through the State. It is expected that substantially all the Town employees that reach normal or early retirement age while working for the Town will become eligible for such benefits. Currently, such retirees may obtain the health care benefits offered by the State by paying the applicable health care insurance premium; such plan is available to all participants, whether retired or not, in the State’s health care program. It is not the responsibility of the Town to fund such costs. C-1 APPENDIX C TOWN OF ORO VALLEY, ARIZONA – AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 The following audited Financial Statements are for the fiscal year ended June 30, 2020, and have been audited by Heinfeld, Meech & Co., P.C., certified public accountants, to the extent and for the period indicated thereon. The Town has neither requested nor obtained the consent of Heinfeld, Meech & Co., P.C. to include its report and Heinfeld, Meech & Co., P.C. has performed no procedures subsequent to sending its report on the financial statements. These are the most recent audited financial statements available to the Town. THESE FINANCIAL STATEMENTS ARE NOT CURRENT AND MAY NOT REPRESENT THE CURRENT FINANCIAL CONDITIONS OF THE TOWN. D-1 APPENDIX D SUMMARIES OF SELECT PROVISIONS OF PRINCIPAL DOCUMENTS The following is a summary of certain provisions of the Agreement and the Trust Agreement that are not described elsewhere in this Official Statement. These summaries do not purport to be comprehensive and reference should be made to the Agreement and the Trust Agreement for a full and complete statement of their provisions. All capitalized terms not defined in this Official Statement shall have the meaning set forth in the Trust Agreement and Agreement. DEFINITIONS For the purpose of the following summaries of the Agreement and the Trust Agreement, these words and phrases have the following meanings: “Annual Current Principal Requirement” means, for any Fiscal Year, the amount of principal coming due during such Fiscal Year on the Obligations and any Parity Obligations. “Annual Debt Service Requirement” means, for any Fiscal Year, the Annual Current Principal Requirement for that Fiscal Year and the amount required to be deposited to pay interest on any Parity Obligations and the Obligations in that Fiscal Year. For the purpose of compliance with the requirements of the Trust Agreement with respect to the proposed issuance of any Parity Obligations, such proposed Parity Obligations shall be treated as Outstanding for the determination of the Annual Debt Service Requirement. [For the computation of Annual Debt Service Requirement, (i) debt service on Credit Enhanced Indebtedness shall be deemed to include any periodic fees payable to the issuer of any liquidity or credit facility as a condition to such issuer’s commitment to purchase such obligations upon tender or to provide moneys necessary for payment of principal of and interest on such obligations when due, and (ii) debt service on Credit Enhanced Indebtedness shall not be based upon the terms of any reimbursement obligation to the issuer of any liquidity or credit facility except to the extent and for periods during which payments are required to be made pursuant to such reimbursement obligation as a result of the issuer’s unreimbursed advances of funds thereunder.] “Authorizing Resolution” means Resolution No. [____], passed, adopted and approved by Mayor and Council of the Town on September 22, 2021. “Business Day” means a day of the year other than (a) a Saturday, Sunday or legal holiday or equivalent (other than moratorium), (b) a day on which banking institutions generally are required or are authorized by law or other governmental action to be closed and (c) a day on which the New York Stock Exchange is closed. “Credit Enhanced Indebtedness” means (i) any series of Parity Obligations payment when due of the principal of and interest on which is fully secured by an irrevocable letter of credit, surety bond, insurance policy or other credit facility or arrangement pursuant to which the Town is obligated to reimburse the issuer thereof for advances made thereunder to pay such principal or interest, or (ii) any series of Parity Obligations, a feature of which is an option on the part of the owners thereof to tender, or a requirement that such owners tender, all or a portion of such Parity Obligations to the Town, or a trustee or other fiduciary for such owners, or another party, for payment of a purchase price or similar payment prior to their specified maturity or due date, if and to the extent that a party other than the Town has undertaken to provide the monies necessary for such payment, or (iii) if applicable, the Obligations. “Depository Trustee” means any bank or trust company, which may include the Trustee, meeting the requirements of, and designated to act as, Depository Trustee pursuant to the Trust Agreement. “Event of Default” means an event of default under the Agreement, or with respect to any Parity Obligations, an event of default specified thereunder. “Excise Taxes” means all unrestricted excise, transaction, franchise, privilege and business taxes, state shared sales and income taxes, fees for licenses and permits, fines, bed and rental taxes, and state revenue-sharing, now or hereafter validly imposed by the Town or contributed, allocated and paid over to the Town and not earmarked by the contributor D-2 for a contrary or inconsistent purpose. Revenues generated by the Town from development impact fees will not be deemed Excise Taxes for purposes of the Trust Agreement and the Agreement. Revenues received by the Town from vehicle license taxes charged by the State will not be deemed Excise Taxes for purposes of the Trust Agreement and the Agreement. The Town also levies an additional 6.0% transient lodging tax on any hotel, motel or apartment let for less than 30 consecutive days, the revenues from which are restricted by State law to use for visitor and hospitality services. The revenues generated by the Parks and Recreation Taxes and the 6.0% transient lodging tax will not be deemed Excise Taxes for purposes of the Trust Agreement and the Agreement. The Town may impose taxes for restricted purposes the revenues from which will not be Excise Taxes and will not be pledged to the payment of the amounts due pursuant to the Agreement. “Fiscal Year” means the period commencing each July 1 and ending June 30 of the succeeding calendar year, unless otherwise determined and designated by the Town, and the Excise Taxes and Parks and Recreation Taxes shall be accounted for on that basis. “Independent Counsel” means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Town or the Trustee. “Interest Payment Date” means each of the dates specified in the Trust Agreement on which interest is due and payable with respect to the Obligations. “Market Value” means the indicated bid value of the investment or investments to be valued as shown in the Wall Street Journal or any publication having general acceptance as a source of valuation of the same or similar types of securities or any securities pricing service available to or used by the Trustee and generally accepted as a source of valuation. “Maximum Annual Debt Service Requirement” means the greatest Annual Debt Service Requirement required to be paid in any Fiscal Year ending then or thereafter on or under the Outstanding Parity Obligations and the Obligations. “Outstanding”, when used as of any particular time with respect to Obligations, means (subject to the provisions of the Trust Agreement) all Obligations theretofore executed and delivered by the Trustee under the Trust Agreement except: (i) Obligations theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (ii) Obligations for the payment or redemption of which funds or noncallable United States Obligations in the necessary amount shall have theretofore been deposited with a Depository Trustee; and (iii) Obligations in lieu of or in exchange for which other Obligations shall have been executed and delivered by the Trustee pursuant to the provisions related to transfer and exchange of obligations in the Trust Agreement. When used as of any particular time with respect to Parity Obligations, Outstanding means all such Parity Obligations theretofore executed and delivered under the applicable authorizing documents except (x) those that have been cancelled or surrendered for cancellation; (y) those for which payment or redemption has been irrevocably provided for with funds or noncallable United States Obligations in the necessary amount and all other actions have been taken as required under the authorizing documents for the payment thereof; and (z) those in lieu of or in exchange for which other Parity Obligations shall have been executed and delivered pursuant to the authorizing documents therefor. “Owner” means any person who shall be the registered owner of any Outstanding Obligation or Parity Obligation. “Parks and Recreation Taxes” means revenue generated pursuant to Ordinance No. (O)14-17, as amended by Ordinance No. (O)21-05, which imposed an additional 0.5% transaction privilege tax to fund the needs of the Town’s Community Center, golf and tennis facilities or for parks and recreation purposes (effective May 21, 2021). “Payment Date” means any date on which a Payment is due from the Town pursuant to the Agreement. D-3 “Payment Fund” means the fund by that name established and held by the Trustee pursuant to the Trust Agreement. “Payments” means all payments required to be paid by the Town on any date pursuant to the Agreement, including but not limited to the payments set forth in Exhibit A to the Agreement. “Permitted Investments” means investments that are permitted under A.R.S. §§ 35-323 and 35-324: (i) Certificates of deposit in eligible depositories. (ii) Deposits in one or more federally insured banks or savings and loan associations placed in accordance with the procedures prescribed in Arizona Revised A.R.S. § 35-323.01. (iii) Interest bearing savings accounts in banks and savings and loan institutions doing business in this State (including the Trustee and its affiliates) whose accounts are insured by federal deposit insurance for their industry, but only if deposits of more than the insured amount are secured by the eligible Depository to the same extent and in the same manner as required under Arizona Revised Statutes Title 35, Article 2.1. (iv) Repurchase agreements with a maximum maturity of 180 days. (v) The pooled investment funds established by the State treasurer pursuant to A.R.S. § 35- 326. (vi) Obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities. (vii) Bonds, notes or other evidences of indebtedness of this State or any of its counties, incorporated cities or towns, school districts or special taxing districts, including registered warrants, substitute checks and electronic funds, transfer vouchers that bear interest pursuant to A.R.S. § 11-635. (viii) Bonds, notes or evidences of indebtedness of any county, municipal district, municipal utility or special taxing district of any state that are payable from revenues, earnings or a special tax specifically pledged for the payment of the principal of and interest on the obligations, and for the payment of which a lawful sinking fund or reserve fund has been established and is being maintained, but only if a default in payment on principal or interest on the obligations to be purchased has not occurred within five years after the date of investment, or, if such obligations were issued less than five years before the date of investment, a default in payment of principal or interest has not occurred on the obligations to be purchased nor any other obligations of the issuer within five years after the investment. (ix) Bonds, notes or evidences of indebtedness issued by any county improvement district or municipal improvement district of any state to finance local improvements authorized by law, if the principal and interest of the obligations are payable from assessments on real property within the improvement district. An investment shall not be made if: (a) The face value of all such obligations, and similar obligations outstanding, exceeds 50% of the market value of the real property, and if improvements on which the Bonds or the assessments for the payment of principal and interest on the Bonds are liens inferior only to the liens for general ad valorem taxes. (b) A default in payment of principal or interest on the obligations to be purchased has occurred within five years after the date of investment, or, if the obligations were issued less than five years before the date of investment, a default in the payment of principal or interest has occurred on the obligations to be purchased or on any other obligation of the issuer within five years after the investment. D-4 (x) Commercial paper of prime quality that is rated within the top two ratings by a nationally recognized rating agency. All commercial paper must be issued by corporations organized and doing business in the United States. (xi) Bonds, debentures, notes or other evidences of indebtedness that are denominated in United States dollars and that carry at a minimum an “A” or better rating, at the time of purchase, from at least two nationally recognized rating agencies. (xii) Negotiable or brokered certificates of deposit issued by a nationally or state-chartered bank or savings and loan association (including the Trustee and its affiliates). (xiii) Securities of or any other interests in any open-end or closed-end management type investment company or investment trust, including exchange traded funds whose underlying investments are invested in securities allowed by state law, registered under the investment company act of 1940 (54 Stat. 789; 15 United States Code sections 80a-1 through 80a-64), as amended. (xiv) Fixed income securities of corporations organized and doing business in any state of the United States or the District of Columbia which carry one of the two highest ratings of Moody’s and S&P or their successors. If only one of the above mentioned services rates the security, it must carry the highest rating of that service. If a rating change occurs after purchase, it is not mandatory to sell the security. (xv) Investments in money-market funds (including those offered by the Trustee or its affiliates) rated “AAAm” or “AAAm-G” by S&P and, if rated by Moody’s, rated “AAA”, “AA-1” or “AA-2”. “Town Representative” means the Town Manager or Chief Financial Officer or any other person authorized by the Town Manager or Mayor and Council of the Town to act on behalf of the Town with respect to the Trust Agreement. “United States Obligations” means any bonds or other obligations that are direct obligations of or fully guaranteed as to timely payment of principal, interest and any premium by the United States of America (including Refcorp Strips). “Variable Rate Indebtedness” means any series of Parity Obligations the rate of interest on which is not established at the time of issuance as one or more numerical rates applicable throughout the term thereof or for specified periods during the term thereof, such that at the time of issuance or at the time of any calculation with respect thereto the numerical rate of interest which will be in effect during all remaining portions of the term thereof cannot be determined. D-5 AGREEMENT Term and Payments. (a) To provide the funds necessary to finance the Project, the Trustee shall execute and deliver the Obligations and apply the proceeds thereof to finance the Project at the direction of the Town. The Town agrees to pay all costs and expenses attendant to the Project. To provide the funds necessary therefor, the Trustee, pursuant to the Trust Agreement, will execute and deliver the Obligations. (b) For such purpose, the Town agrees to make payments (the “Payments”) under the Agreement to the Trustee in the amounts set forth in Exhibit B attached to the Agreement and incorporated therein, and the Trustee hereby agrees to accept the Payments. The Town’s obligation to make such Payments shall be limited to payment from Excise Taxes and Parks and Recreations pledged to the payment thereof by the Town. (c) Intentionally left blank. (d) The obligations of the Town to make the Payments from the sources described herein and to perform and observe the other agreements contained herein shall be absolute and unconditional and shall not be subject to any defense or any right of set-off, abatement, counterclaim, or recoupment arising out of any breach of the Trustee of any obligation to the Town or otherwise, or out of indebtedness or liability at any time owing to the Town by the Trustee. Until such time as all of the Payments shall have been fully paid or provided for, the Town (i) will not suspend or discontinue any payments provided for in this Section 2, (ii) will perform and observe all other agreements contained herein, and (iii) will not terminate the term of the Agreement for any cause, including, without limiting the generality of the foregoing, failure of Trustee or any other person to complete the acquisition, construction and installation of the Project, the occurrence of any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Project, the taking by eminent domain of title to or temporary use of any or all of the Project, commercial frustration of purpose, abandonment of the Project by Town, any change in the tax or other laws of the United States of America or of the State of Arizona or any political subdivision of either or any failure of the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Trust Agreement or the Agreement. Nothing contained in this Section shall be construed to release the Trustee from the performance of any of the agreements on its part herein or in the Trust Agreement and in the event the Trustee shall fail to perform any such agreements on its part, the Town may institute such action against the Trustee as the Town may deem necessary to compel performance so long as such action does not abrogate the obligations of the Town contained in the first sentence of this paragraph (d). The Agreement shall not terminate so long as any payments are due and owing under the Obligations. (e) In the event that the Town expects that it will not make a Payment when due hereunder, the Town shall, at least five Business Days before the date such Payment is due, notify the Trustee in writing of such expectation. Pledge of Excise Taxes and Parks and Recreation Taxes; Limited Obligations. (a) The Town, in the Agreement, pledges for the Payments to be made under the Agreement and all other amounts payable pursuant hereto its Excise Taxes and Parks and Recreation Taxes. The Town intends that this pledge shall be a first lien pledge upon such amounts of said taxes as will be sufficient to make the Payments pursuant to the Agreement when due. The Town agrees and covenants to make said Payments from such Excise Taxes and Parks and Recreation Taxes, except to the extent it chooses to make the Payments from other funds pursuant to the Agreement. Said pledge of, and said lien on, the Excise Taxes and Parks and Recreation Taxes is irrevocably made and created for the prompt and punctual payment of the amounts due under the Agreement according to the terms of the Agreement, and to create and maintain the funds as hereinafter specified in the Agreement or as may be specified in the Trust Agreement. All of the Payments are coequal as to the pledge of and lien on the Excise Taxes and Parks and Recreation Taxes pledged for the payment thereof and share ratably, without preference, priority or distinction, as to the source or method of payment from Excise Taxes and Parks and Recreation Taxes or security therefor. The pledge and lien shall be on a parity with the pledge of and lien on such Excise Taxes for the payments due with respect to the Parity Obligations and the pledge and lien shall be on a parity with the pledge of and lien on such Parks and Recreation Taxes for the payments due with respect to the Parks and Recreation Tax Parity Obligations. D-6 The Town shall remit to the Trustee (or other appropriate trustee with respect to Parity Obligations) from Excise Taxes and Parks and Recreation Taxes all amounts due under the Agreement in the amounts and at the times and for the purposes as required herein. The Town shall remit to the Trustee (or other appropriate trustee with respect to Excise Tax Parity Obligations) from Excise Taxes all amounts due on Excise Tax Parity Obligations. The Town shall remit to the Trustee (or other appropriate trustee with respect to Parks and Recreation Tax Parity Obligations) from Excise Taxes and Parks and Recreation Taxes all amounts due under the Agreement on Parks and Recreation Tax Parity Obligations. In order to secure payment of the Obligations and Parity Obligations, the Town previously created a separate and special fund which shall contain only Excise Taxes and shall not contain any other moneys of the Town, known as the “Oro Valley Excise Tax Fund” (the “Excise Tax Fund”). The Excise Tax Fund is and shall continue to be funded solely and only from the Excise Taxes received by the Town and from no other source. The Excise Tax Fund may be reduced to zero in each month after the amounts required to be transferred to the applicable trustee for the applicable payment fund for the Existing Parity Obligations, the Obligations and any other Parity Obligations have been transferred. In addition, in order to secure payment of the Obligations and any other Parks and Recreation Tax Parity Obligations, the Town previously created a separate and special fund which shall contain only Parks and Recreation Taxes and shall not contain any other moneys of the Town, known as the “Oro Valley Parks and Recreation Tax Fund” (the “Parks and Recreation Tax Fund”). The Parks and Recreation Tax Fund is and shall continue to be funded solely and only from the Parks and Recreation Taxes received by the Town and from no other source. The Parks and Recreation Tax Fund may be reduced to zero in each month after the amounts required to be transferred to the applicable trustee for the applicable payment fund for the Obligations and any other Parks and Recreation Tax Parity Obligations have been transferred. All payments to be made pursuant to the Agreement shall be made from the Excise Tax Fund and the Parks and Recreation Tax Fund. If at any time the moneys in the Excise Tax Fund and the Parks and Recreation Tax Fund are not sufficient to make all of the deposits and transfers required by the Agreement or the Parks and Recreation Tax Parity Obligations, or, if at any time the moneys in the Excise Tax Fund are not sufficient to make all of the deposits and transfers required by the Excise Tax Parity Obligations, then, first, the moneys in the Excise Tax Fund shall be distributed between the Agreement and the Parity Obligations on a pro rata basis as determined by the debt service then due without regard to the existence of a reserve fund, a cash funded reserve fund or a reserve fund guaranty or similar surety and, second, the moneys in the Parks and Recreation Tax Fund shall be distributed between the Agreement and the Parks and Recreation Tax Parity Obligations on a pro rata basis as determined by the debt service then due without regard to the existence of a reserve fund, a cash funded reserve fund or a reserve fund guaranty or similar surety. Any deficiency in the Excise Tax Fund or the Parks and Recreation Tax Fund shall be made up from the first moneys thereafter received and available for such transfers under the terms of the Agreement, and the transfer of any such sum or sums to said fund or accounts as may be necessary to make up any such deficiency shall be in addition to the then-current transfers required to be made pursuant hereto. (b) The Town’s obligation to make payments of any amounts due under the Agreement, including amounts due after default or termination thereof, is limited to payment from Excise Taxes and Parks and Recreation Taxes and shall in no circumstances constitute a general obligation of, or a pledge of the full faith and credit of, the Town, the State of Arizona or any of its political subdivisions, or require the levy of, or be payable from the proceeds of, any ad valorem taxes. Prepayment; Providing for Payment. (a) The Town may prepay the Payments in order to cause the redemption of the Obligations as provided in the Trust Agreement. (b) The Town may provide for the payment of any Payment in any one or more of the following ways: (i) by paying such Payment as provided in the Agreement as and when the same becomes due and payable at its scheduled due date pursuant to the Agreement; (ii) by depositing with a Depository Trustee (as defined below), in trust for such purposes, at or before maturity, money which, together with the amounts then on deposit with the Trustee and available for such Payment is fully sufficient to make, or cause to be made, such Payment; or D-7 (iii) by depositing with a Depository Trustee, in trust for such purposes, any United States Obligations which are noncallable, in such amount as shall be certified to the Trustee and the Town, by a national firm of certified public accountants acceptable to both the Trustee and the Town, as being fully sufficient, together with the interest to accrue thereon and moneys then on deposit with the Trustee and available for such Payment, to make, or cause to be made, such Payment, as and when the same becomes due and payable at maturity. A Depository Trustee shall be any bank or trust company, including the Trustee, with a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or State of Arizona authority who holds money and securities in trust for the purposes set forth in subparagraphs (ii) or (iii) of this paragraph (b) (a “Depository Trustee”). Event of Default and Remedies Upon Event of Default. (a) The occurrence of one or more of the following events shall constitute an “Event of Default,” whether occurring voluntarily or involuntarily, by operation of law or pursuant to any order of any court or governmental agency: (i) The Town’s failure to make any Payment or any other amount payable under the Agreement or under the Trust Agreement when the same shall become due; (ii) The Town’s failure to perform or observe any other covenant, condition or agreement required to be performed or observed by the Town under the Agreement or under the Trust Agreement, which failure continues for a period of 20 days after written notice thereof from the Trustee to the Town; provided, however, that if the failure cannot be corrected within the applicable time period, the Trustee will not unreasonably withhold its consent to an extension of 180 days from the date of delivery of such written notice to the Town by the Trustee if corrective action is instituted by the Town within the applicable period and diligently pursued until the default is corrected; provided, however, that if the failure cannot be corrected within the initial 180 day extension, the Town may request, and the Trustee will not unreasonably withhold its consent to, successive additional 180 day extension(s) so long as the Town is diligently pursuing corrective action; provided further that should the Town require an extension of time to correct any such failure the Trustee shall be provided with a certification from the Town to the effect that the failure cannot be corrected within the required timeframe and the Town has commenced or will promptly commence such corrective action and will diligently pursue such corrective action; (iii) Any representation or warranty made by the Town under the Agreement shall be untrue in any material respect as of the date made and not made true in all material respects within 20 days after written notice thereof from the Trustee to the Town; (iv) The Town shall make, permit or suffer any unauthorized assignment or transfer hereof or any interest therein; or (v) The Town becomes insolvent or admits in writing its inability to pay its debts as they mature or applies for, consents to, or acquiesces in the appointment of a trustee or receiver for the Town or a substantial part of its property; or in the absence of such application, consent or acquiescence, a trustee or receiver is appointed for the Town or a substantial part of its property and is not discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, moratorium, or any proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is instituted by or against the Town and, if instituted against the Town, is consented to or acquiesced in by the Town or is not dismissed within 60 days. (b) Upon the occurrence of any Event of Default specified in paragraph (a) of Section 11 of the Agreement, the Trustee shall give written notice of such Event of Default to the Town and may, upon the request of the Owners of 25% in aggregate principal amount of the Obligations then outstanding and upon being indemnified pursuant to its satisfaction, pursue or exercise any of the following remedies or rights, provided that such election or commencement to exercise any such remedy or right shall not preclude the Trustee from concurrently or separately electing or exercising any other remedy not inconsistent therewith: D-8 (i) Enforce the Agreement by appropriate legal or other action to collect all amounts due or accruing under the Agreement or under the Trust Agreement and to cause the Town to pay or perform its other obligations under the Agreement or under the Trust Agreement when and as the same shall be required to be paid or performed under the Agreement or under the Trust Agreement, and for damages for the breach of the Agreement and of the Trust Agreement, which damages shall be the amounts payable under the Agreement at the times therein set forth without acceleration plus the reasonable costs of collection, including reasonable attorneys’ fees and expenses. (ii) Pursue and exercise any other remedy available at law or in equity and all other remedies permitted under the Trust Agreement. No other remedy exercised by the Trustee under Section 11 of the Agreement shall excuse any of the Town’s obligations under the Agreement. (c) The Trustee, upon the bringing of a suit to collect the Payments in default, may as a matter of right, without notice and without giving bond to the Town or anyone claiming under the Town, seek and obtain injunctive relief. (d) The obligation of the Town to make Payments is not subject to acceleration and such Payments may not be made immediately due and payable for any reason. Assignment. (a) Except as otherwise provided in the Agreement, without the prior written consent of the Trustee (which, prior to the payment of the Obligations in full, shall not be given without the Trustee’s receipt of direction from the Owners of a majority in aggregate principal amount of the Obligations then Outstanding to give such consent), the Town shall not assign, transfer, pledge or hypothecate or otherwise dispose of the Agreement, or any interest therein. (b) Subject to the terms of the Trust Agreement, the Trustee shall be entitled, with or without notice to, or the consent of, the Town, to sell, pledge, assign, transfer and encumber all or any part of its right, title and interest in and to the Agreement and all payments of any kind due or which become due to the Trustee under the Agreement, provided that such transfer or assignment shall not impair the Obligations, that the transferee or assignee shall be bound by the terms of the Agreement and all related agreements executed by the Trustee in connection herewith and shall execute such nondisturbance and acceptance instruments as shall reasonably be required to evidence the same as hereinafter provided and, upon the Town’s receipt of notice of any such assignment or transfer of the Trustee’s interest, any such assignee(s) or transferee(s) shall thereafter (collectively, if more than one) become and be deemed to be the Trustee under the Agreement, and have all of the rights, powers, privileges and remedies, and be subject to all of the covenants and agreements, of the Trustee under the Agreement for all purposes thereof. During the term of the Agreement, the Town shall maintain a complete and accurate record of all such sales, assignments and transfers in form necessary to comply with Section 149(a) of the Code, as amended, and the regulations proposed or existing, from time to time promulgated thereunder. Upon the Town’s receipt of written notice as above-described, of the Trustee’s sale, assignment or transfer of all or any part of its interest in the Agreement or the payments thereunder, the Town agrees to attorn to and recognize any such purchaser(s), assignee(s) or transferee(s) (jointly if more than one) as the owner(s) of all right, title and interest in, to and under the Agreement and the payments thereafter due and payable pursuant thereto, and as the trustee(s) under the Agreement. Upon the written request of any purchaser, assignee or transferee of the Trustee’s interest, the Town agrees to execute and deliver to such purchaser, assignee or transferee such certificates or other instruments in such forms as may reasonably be required by such purchaser, assignee or transferee, and to which the Town can truthfully attest, including but not limited to a separate acknowledgment of assignment and attornment certificate in the customary form as to such purchaser’s, assignee’s or transferee’s right, title and interest in, to and under the Agreement and the payments thereafter due and payable pursuant hereto. Any such purchaser, assignee or transferee shall agree in writing to assume and perform all of the duties and responsibilities of the Trustee and shall acknowledge the Town’s rights under the Agreement; provided, however, that in the event the Trustee becomes merged or consolidated with any other entity and the resulting entity meets the requirements for a successor trustee under the Trust Agreement, then the resulting entity shall assume all rights, responsibilities and duties of the Trustee under the Agreement without the execution or filing of any papers or any further act on the part of either party and the “Trustee” under the Agreement shall refer to such resulting party. D-9 Conflict of Interest. A.R.S. § 38-511 provides that the Town may, within three years after its execution, cancel any contract, without penalty or further obligation, if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the Town is, at any time while the contract or any extension of the contract is in effect, an employee or agent of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract. In addition, the Town may recoup any fee or commission paid or due to any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the Town from any other party to the contract arising as a result of the contract. D-10 TRUST AGREEMENT Establishment of Payment Fund. The Trustee shall establish a special fund designated as the “Town of Oro Valley 2021 Second Payment Fund” (which shall also be known as the “Payment Fund”). All moneys at any time deposited by the Trustee in the Payment Fund shall be held by the Trustee in trust for the benefit of the Owners of the Obligations. So long as any Obligations are Outstanding, the Town shall have no beneficial right or interest in the Payment Fund or the moneys deposited therein, except only as provided in the Trust Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. Pledge. (a) The Payments and all other amounts due under the Agreement are payable from a pledge of, and secured by a lien on, the Excise Taxes as may be necessary for their prompt and punctual payment. Said pledge of, and said lien on, the Excise Taxes is irrevocably made and created by the Town pursuant to the Agreement for the prompt and punctual payment of amounts due under the Agreement according to its terms, and to create and maintain the funds as hereinafter specified therein and in the Trust Agreement. None of the Obligations shall be entitled to priority or distinction one over the other in the application of the Excise Taxes hereby pledged to the payment thereof, regardless of the issue of the Obligations in series, or the delivery of any of the Obligations prior to the delivery of any other of the Obligations of said series, or regardless of the time or times the Obligations mature. All of the Obligations are coequal as to the pledge of and lien on the Excise Taxes pledged for the payment thereof and share ratably, without preference, priority or distinction, as to the source or method of payment from Excise Taxes or security therefor. The pledge of Excise Taxes shall be on parity with the pledge thereof with respect to the Parity Obligations. (b) In addition to the pledge and lien of the Excise Taxes, the Payments and all other amounts due under the Agreement are also payable from a pledge of, and secured by a lien on, the Parks and Recreation Taxes as may be necessary for their prompt and punctual payment. Said pledge of, and said lien on, the Parks and Recreation Taxes, is irrevocably made and created by the Town pursuant to the Agreement for the prompt and punctual payment of amounts due under the Agreement according to its terms, and to create and maintain the funds as hereinafter specified therein and herein. None of the Obligations shall be entitled to priority or distinction one over the other in the application of the Parks and Recreation Taxes hereby pledged to the payment thereof, regardless of the issue of the Obligations in series, or the delivery of any of the Obligations prior to the delivery of any other of the Obligations of said series, or regardless of the time or times the Obligations mature. All of the Obligations are coequal as to the pledge of and lien on the Parks and Recreation Taxes pledged for the payment thereof and share ratably, without preference, priority or distinction, as to the source or method of payment from Parks and Recreation Taxes or security therefor. The pledge of the Parks and Recreation Taxes shall be on parity with the pledge thereof with respect to the Parks and Recreation Tax Parity Obligations. (c) The Town’s obligation to make the Payments or any other payments under the Agreement or the Trust Agreement does not constitute an obligation of the Town or the State, or any of its political subdivisions, for which the Town or the State, or any of its political subdivisions, is obligated to levy or pledge any form of ad valorem property taxation nor does the obligation to make the Payments or any other payments under the Agreement or the Trust Agreement constitute an indebtedness of the Town or of the State or any of its political subdivisions within the meaning of the Constitution of the State or otherwise. Protection of Lien. The Trustee and the Town hereby agree not to make or create or suffer to be made or created any assignment or lien having priority or preference over the assignment and lien of the Trust Agreement upon the interests granted thereby or any part thereof. The Trustee and the Town agree that no obligations the payment of which is secured by a superior or equal claim on or interest in property or revenues pledged under the Trust Agreement will be delivered by either except in lieu of, or upon transfer of registration or exchange of, any Obligation as provided in the Trust Agreement and except for Parity Obligations. Parity Obligations. The Town reserves the right to issue additional Parity Obligations payable from and secured by an equal lien on the Excise Taxes and, in limited cases in compliance with the Parks and Recreation Tax Ordinance, the Parks and Recreation Taxes, with the Obligations herein authorized and for the purpose or purposes as specified by law, but no such additional Parity Obligations shall be issued unless all of the following conditions are met: D-11 (a) All deposits in the funds and accounts created under Article V of the Trust Agreement must be current. (b) A certificate of the Chief Financial Officer of the Town or other officer acting as chief fiscal officer of the Town shall have been received and placed on file with the Trustee to evidence that all conditions precedent set forth in this Section have been satisfied and the aggregate amount of Excise Taxes herein pledged and received by or on behalf of the Town during the Fiscal Year next preceding the date of issuance of any such additional Parity Obligations is at least equal to 200% of the Maximum Annual Debt Service Requirement (including such Parity Obligations) for the Obligations and any Parity Obligations for the Bond Years in which the Obligations or any Parity Obligations are Outstanding. If the Town issues Parity Obligations to refund the Obligations or one or more series of other Parity Obligations by providing for payment of the amounts due thereon in advance of their maturity then, for purposes of the Trust Agreement, such refunded Obligations or Parity Obligations to the extent they will no longer be Outstanding after the refunding, will be treated as not Outstanding for the purpose of determining the Annual Debt Service Requirement. (c) If the Parity Obligations proposed to be issued constitute Variable Rate Indebtedness, the proceedings authorizing the issuance of such Parity Obligations shall specify a maximum interest rate payable on such Parity Obligations. (d) The obligation to make payments on the Parity Obligations from Excise Taxes and/or Parks and Recreation Taxes shall not be subject to acceleration for any reason and such payments shall not be made immediately due and payable prior to their scheduled due date. Parity Obligations may include any long term obligation or deferred payment for property including, without limitation, installment purchase or lease-purchase agreements. For the purpose of Section 6.4 of the Trust Agreement, payments on installment purchase or lease-purchase agreements shall be deemed to include a principal component and an interest component and references in the Trust Agreement to the payment of principal, interest and premium shall include the payment of lease purchase or installment purchase payments. On or before the date of issuance of any Parity Obligations, the Town shall deliver to the Trustee in writing a description of the Parity Obligations, the dates and amounts due thereon and shall further provide the Trustee with a copy of the proceedings authorizing the Parity Obligations. Investments Authorized. Upon written order of the Town Representative, moneys held by the Trustee under the Trust Agreement shall be invested and reinvested by the Trustee in Permitted Investments. Such investments, if registrable, shall be registered in the name of the Trustee and shall be held by the Trustee. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this section and may invest in funds which are Permitted Investments to which the Trustee or any of its affiliates provide services as an investment advisor. Such investments and reinvestments shall be made giving full consideration to the time at which funds are required to be available. The Trustee may act as purchaser or agent in the making or disposing of any investment. Amounts in the Payment Fund may be invested only in Permitted Investments which (a) are rated no lower than the underlying rating on the Obligations or (b) secured by obligations which are so rated. Absent written direction of the Town, the Trustee shall hold such moneys uninvested in cash, with no liability for interest. The Trustee may conclusively rely upon the written investment orders of the Town Representative as to both the suitability and legality of the directed investments, and such orders shall be deemed to be a certification to the Trustee that such directed investments constitute Permitted Investments. The Trustee shall not be obligated to monitor the ratings on investments or the Obligations and shall be entitled to assume that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter (including for reinvestment purposes), absent receipt of written notice to the contrary. Although the Town recognizes that it may obtain brokerage confirmations or written statements containing comparable information at no additional cost, the Town agrees that brokerage confirmations are not required to be issued by the Trustee for each month in which a monthly statement of investments is provided by the Trustee. No statement needs to be provided, however, for any fund or account for any month in which no investment activity occurred during such month in such fund or account. The Trustee may elect to credit the funds and accounts held by it with moneys representing income or principal payments due on, or sales proceeds due in respect of, the D-12 investments in such funds and accounts, or to credit to such funds and accounts the investments intended to be purchased with such moneys, in each case before actually receiving the requisite moneys from the payment source, or to otherwise advance funds for directed investment transactions. Notwithstanding anything else in the Trust Agreement, (i) any such crediting of funds or assets shall be provisional in nature, and the Trustee shall be authorized to reverse any such transactions or advances of funds in the event that it does not receive good funds with respect thereto, and (ii) nothing in the Trust Agreement shall constitute a waiver of any of the Trustee’s rights as a securities intermediary under Uniform Commercial Code §9-206. Liability of Trustee; Standard of Care. The recitals of facts, covenants and agreements in the Trust Agreement and in the Obligations contained shall be taken as statements, covenants and agreements of the Town, and the Trustee assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of the Trust Agreement or of the Obligations or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations in the Trust Agreement or in the Obligations assigned to or imposed upon them, respectively, including but not limited to the Trustee’s obligations under the Trust Agreement. Prior to the occurrence of an Event of Default under the Trust Agreement, or after the timely cure of an Event of Default, the Trustee shall perform only such duties as are specifically set forth in the Trust Agreement and no implied covenants or obligations shall be read into the Trust Agreement against the Trustee. After the occurrence of an Event of Default, the Trustee shall exercise such of the rights and powers vested in it, and use the same degree of care and skill in such exercise, as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs. Protection and Rights of the Trustee. (a) The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram, request, consent, waiver, certificates, statements, affidavit, voucher, bond, requisition or other paper or document that it shall in good faith believe to be genuine and to have been passed or signed by the proper governing body or person or to have been prepared and furnished pursuant to any of the provisions of the Trust Agreement, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall not be bound to recognize any person as an Owner of any Obligation or to take any action at his request unless such Obligation shall be deposited with the Trustee and satisfactory evidence of the ownership of such Obligation shall be furnished to the Trustee. The Trustee may consult with counsel, who may be counsel to the Town with regard to legal questions and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it under the Trust Agreement in good faith in accordance therewith. (b) Whenever in the administration of its duties under the Trust Agreement, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Trust Agreement, such matter (unless other evidence in respect thereof be specifically prescribed in the Trust Agreement) shall be deemed to be conclusively proved and established by the certificate of the Town Representative and such certificate shall be full warranty to the Trustee for any action taken or suffered under the provisions of the Trust Agreement upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. (c) The Trustee may become the Owner of the Obligations with the same rights it would have if it were not Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the Town with the same rights it would have if it were not the Trustee; and may act as a depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Obligations, whether or not such committee shall represent the Owners of the majority in principal amount of the Obligations then Outstanding. (d) The recitals, statements and representations by the Town contained in the Trust Agreement or in the Obligations shall be taken and construed as made by and on the part of the Town and not by the Trustee, and the Trustee does not assume, and shall not have, any responsibility or obligation for the correctness of any thereof. (e) The Trustee may execute any of the trusts or powers of the Trust Agreement and perform the duties required of it thereunder by or through attorneys, agents, or receivers, and shall be entitled to advice of D-13 counsel concerning all matters of trust and its duty under the Trust Agreement, and the Trustee shall not be answerable for the default or misconduct of any such attorney, agent, or receiver selected by it with reasonable care. The Trustee shall not be answerable for the exercise of any discretion or power under the Trust Agreement or for anything whatever in connection with the funds and accounts established thereunder, except only for its own willful misconduct or negligence. (f) No provision in the Trust Agreement shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its duties thereunder. The Trustee shall not be accountable for the use or application by the Town or any other party of any funds that the Trustee has released in accordance with the terms of the Trust Agreement. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Agreement or the Trust Agreement for the acquisition, construction, installation, furnishing, equipping, existence or use of the Project. The Trustee makes no representation or warranty, express or implied, as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the Town of the Project. (g) Notwithstanding any provision in the Trust Agreement or in the Agreement to the contrary, the Trustee shall not be required to take notice or be deemed to have notice of an Event of Default, except an Event of Default under Section 11(a)(i) of the Agreement, unless the Trustee has actual notice thereof or is specifically notified in writing of such default by the Town or the Owners of at least 25% in aggregate principal amount of the Obligations then Outstanding. (h) The Trustee shall have no duty or obligation to approve or evaluate any expert or other skilled person selected by the Town for any of the purposes expressed in the Trust Agreement or the Agreement. Removal and Resignation of Trustee. (a) The Town (but only if no Event of Default has occurred and is continuing), or the Owners of a majority in aggregate principal amount of all Obligations Outstanding, by written directive, at any time and for any reason, may remove the Trustee and any successor thereto, but any such successor shall be a bank or trust company doing business and having an office in the State, having a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000 and subject to supervision or examination by Federal or State authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or the requirements of any supervising or examining authority above referred to, then, for the purposes of this section, the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) The Trustee may at any time resign by giving written notice to the Town. Upon receiving such notice of resignation, the Town shall promptly appoint a successor trustee by an instrument in writing; provided, however, that in the event that the Town does not appoint a successor trustee within 30 days following receipt of such notice of resignation, the resigning Trustee may petition the appropriate court having jurisdiction to appoint a successor trustee. Any resignation or removal of the Trustee and appointment of a successor trustee shall become effective upon acceptance of appointment by the successor trustee. Trustee and Town shall execute any documents reasonably required to affect the transfer of rights and obligations of the Trustee to the successor trustee. Upon such acceptance, the successor trustee shall mail notice thereof to the Obligation Owners at their respective addresses set forth on the Obligation registration books maintained pursuant to Section 2.13 of the Trust Agreement. Amendments Permitted. (a) The Trust Agreement and the rights and obligations of the Owners of the Obligations and the Agreement and the rights and obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement which shall become effective when the written consent of the Owners of a majority in aggregate principal amount of the Obligations then Outstanding, exclusive of Obligations disqualified as provided in Section 9.3 of the Trust Agreement, shall have been filed with the Trustee. No such modification or amendment shall (i) extend or have the effect of extending the fixed maturity of any Obligation or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof, without the express D-14 consent of the Owner of such Obligation, or (ii) reduce or have the effect of reducing the percentage of Obligations required for the affirmative vote or written consent to an amendment or modification of the Agreement without the express consent of the Owners of the Obligations, or (iii) modify any of the rights or obligations of the Trustee without its written assent thereto. Any such supplemental agreement shall become effective as provided in Section 9.2 of the Trust Agreement. (b) The Trust Agreement and the rights and obligations of the Owners of the Obligations and the Agreement and the rights and obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement, without the consent of any such Owners, but only (i) to add to the covenants and agreements of any party, other covenants to be observed, or to surrender any right or power in the Trust Agreement reserved to the Trustee or the Town, (ii) to cure, correct or supplement any ambiguous or defective provision contained in the Trust Agreement or in the Agreement, (iii) to facilitate the issuance of additional Parity Obligations, (iv) in connection with rating matters, (v) to preserve the exclusion of interest represented by the Obligations from gross income for purposes of federal or State income taxes and to preserve the power of the Town to continue to issue bonds or incur other obligations the interest on which is likewise exempt from federal and State income taxes, or (vi) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which shall not adversely affect the interests of the Owners of the Obligations. Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto or thereto as the case may be. The Trustee shall be entitled to receive and may rely upon an opinion of nationally recognized bond counsel selected by the Town as conclusive evidence that any such supplemental agreement complies with this Section. Procedure for Amendment With Written Consent of Owners. (a) The Trust Agreement and the Agreement may be amended by supplemental agreement as provided in Section 9.2 of the Trust Agreement in the event the consent of the Owners of the Obligations are required pursuant to Section 9.1 of the Trust Agreement. A copy of such supplemental agreement, together with a request to the Obligation Owners for their consent thereto, shall be mailed by the Trustee to each Owner of an Obligation at his address as set forth on the Obligation registration books maintained by the Trustee pursuant to Section 2.13 of the Trust Agreement, but failure to mail copies of such supplemental agreement and request shall not affect the validity of the supplemental agreement when assented to as in Section 9.2 of the Trust Agreement. (b) Such supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consent of the Owners of a majority in principal amount of the Obligations then Outstanding (exclusive of Obligations disqualified as provided in Section 9.3 of the Trust Agreement) and a notice shall have been mailed as hereinafter provided in Section 9.2 of the Trust Agreement. The consent of an Owner of an Obligation shall be effective only if accompanied by proof of ownership of the Obligations for which such consent is given, which proof shall be such as is permitted by Section 2.12 of the Trust Agreement. Any such consent shall be binding upon the Owner of the Obligation giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter provided for in Section 9.2 of the Trust Agreement has been mailed. (c) After the Owners of the required percentage of Obligations have filed their consents to such supplemental agreement, the Trustee shall mail a notice to the Owners of the Obligations in the manner hereinbefore provided in this section for the mailing of such supplemental agreement of the notice of adoption thereof, stating in substance that such supplemental agreement has been consented to by the Owners of the required percentage of Obligations and will be effective as provided in Section 9.2 of the Trust Agreement (but failure to mail copies of said notice shall not affect the validity of such supplemental agreement or consents thereto). A record, consisting of the papers required by this section to be filed with the Trustee, shall be conclusive proof of the matters therein stated. Such supplemental agreement shall become effective upon the mailing of such last-mentioned notice, and such supplemental agreement shall be deemed conclusively binding upon the parties hereto and the Owners of all Obligations at the expiration of 60 days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such 60 day period. Covenants. The Town covenants and agrees with the Owners of the Obligations to perform all obligations and duties D-15 imposed on it under the Agreement. The Town will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be an Event of Default under the Agreement. The Town, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting its estate in the Project, which may or can in any manner affect such estate of the Town, will deliver the same, or a copy thereof, to the Trustee. The Town will well and truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States of America, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired by the Town, including its right to exist and carry on business as a political subdivision, to the end that such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired. Limitation of Liability. Except for the payment of the Payments from Excise Taxes or Parks and Recreation Taxes when due in accordance with the Agreement and the performance of the other covenants and agreements of the Town contained in the Agreement, the Town shall have no pecuniary obligation or liability to any of the other parties or to the Owners of the Obligations with respect to the Trust Agreement, or the terms, execution, delivery or transfer of the Obligations, or the distribution of the Payments to the Owners by the Trustee. The Town shall have no obligation or liability to any of the other parties or to the Owners of the Obligations with respect to the performance by the Trustee of any duty imposed upon it under the Trust Agreement. Indemnification of the Trustee. (a) To the extent permitted by law, the Town shall indemnify and save the Trustee harmless for, from and against all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of: (i) the Obligations or the use, maintenance, condition or management of, or from any work or thing done on, the Project, or any portion thereof or interest therein, by the Town; (ii) any breach or default on the part of the Town in the performance of any of its obligations under the Trust Agreement and under any other agreement made and entered into in connection with the Obligations; (iii) any act of negligence of the Town or of any of its agents, contractors, servants, employees or licensees with respect to the Obligations or the Project; (iv) any act of negligence of any assignee of, or purchaser from, the Town or of any of its or their agents, contractors, servants, employees or licensees with respect to the Project; (v) the acquisition, construction or installation of the Project or any interest therein; (vi) the actions of any other party, including but not limited to the operation or use of the Project or the site of the Project, or interest therein, by the Town; (vii) the ownership of the Project, or the site of the Project, or interest therein; (viii) the Trust Agreement and the Agreement, including (ix) the Trustee’s exercise and performance of its powers and duties hereunder; or (x) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading in any official statement or other offering circular utilized in connection with the sale of the Obligations, including the costs and expenses of defending itself against any claim of liability arising hereunder. No indemnification will be made under this Section or elsewhere in the Trust Agreement for willful misconduct, negligence or breach of duty under the Trust Agreement by the Trustee, or by its officers, agents, employees, successors or assigns. The Town’s obligations hereunder shall remain valid and binding notwithstanding the maturity and payment of the Obligations or resignation or removal of the Trustee. (b) The Trustee, promptly after determining that any event or condition which requires or may require indemnification by the Town under the Trust Agreement exists or may exist, or after receipt of notice of the commencement of any action in respect of which indemnity may be sought under the Trust Agreement, shall notify the Town in writing of such circumstances or action (a “Notification”). Upon giving of a Notification, the Trustee shall cooperate fully with the Town in order that the Town may defend, compromise or settle any such matters or actions which may result in payment by Town under the Trust Agreement. The Town shall give the Trustee notice of its election within 15 days after receiving the Notification whether the Town, at its sole cost and expense, shall represent and defend the Trustee in any claim or action which may result in a request for indemnification under the Trust Agreement. If the Town timely gives the notice that it will represent and defend the Trustee thereafter, the Trustee shall not settle or compromise or otherwise interfere with the defense or undertakings of the Town under the Trust Agreement. The Town shall not settle or compromise any claim or action against the Trustee without the written D-16 approval of the Trustee, except to the extent that the Town shall pay all losses and the Trustee shall be fully released from such claim or action. If the Town either fails to timely give its notice or notifies the Trustee that the Town will not represent and defend the Trustee, the Trustee may defend, settle, compromise or admit liability as it shall determine in the reasonable exercise of its discretion and in an effort to minimize any claims for indemnity made under the Trust Agreement. In the event the Town is required to and does indemnify the Trustee as provided in the Trust Agreement, the rights of the Town shall be subrogated to the rights of the Trustee to recover such losses or damages from any other person or entity. Event of Default and Remedies Upon Event of Default. (a) The occurrence of one or more of the following events shall constitute an “Event of Default,” whether occurring voluntarily or involuntarily, by operation of law or pursuant to any order of any court or governmental agency: (i) The Town’s failure to make any Payment or any other amount payable under the Agreement, under the Trust Agreement or under any governing documents relating to any Parity Obligations when the same shall become due; (ii) The Town’s failure to perform or observe any other covenant, condition or agreement required to be performed or observed by the Town under the Agreement, under the Trust Agreement or under any governing documents relating to any Parity Obligations, which failure continues for a period of 20 days after written notice thereof from the Trustee to the Town; provided, however, that if the failure cannot be corrected within the applicable time period, the Trustee will not unreasonably withhold its consent to an extension of 180 days from the date of delivery of such written notice to the Town by the Trustee if corrective action is instituted by the Town within the applicable period and diligently pursued until the default is corrected; provided, however, that if the failure cannot be corrected within the initial 180 day extension, the Town may request, and the Trustee will not unreasonably withhold its consent to, successive additional 180 day extension(s) so long as the Town is diligently pursuing corrective action; provided further that should the Town require an extension of time to correct any such failure the Trustee shall be provided with a certification from the Town to the effect that the failure cannot be corrected within the required timeframe and the Town has commenced or will promptly commence such corrective action and will diligently pursue such corrective action; (iii) Any representation or warranty made by the Town under the Agreement shall be untrue in any material respect as of the date made and not made true in all material respects within 20 days after written notice thereof from the Trustee to the Town; (iv) The Town shall make, permit or suffer any unauthorized assignment or transfer hereof or any interest therein; or (v) The Town becomes insolvent or admits in writing its inability to pay its debts as they mature or applies for, consents to, or acquiesces in the appointment of a trustee or receiver for the Town or a substantial part of its property; or in the absence of such application, consent or acquiescence, a trustee or receiver is appointed for the Town or a substantial part of its property and is not discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, moratorium, or any proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding, is instituted by or against the Town and, if instituted against the Town, is consented to or acquiesced in by the Town or is not dismissed within 60 days. (b) Upon the occurrence of any Event of Default specified in paragraph (a) of Section 11 of the Agreement, the Trustee shall give written notice of such Event of Default to the Town and may, upon the request of the Owners of 25% in aggregate principal amount of the Obligations then outstanding and upon being indemnified pursuant to its satisfaction, pursue or exercise any of the following remedies or rights, provided that such election or commencement to exercise any such remedy or right shall not preclude the Trustee from concurrently or separately electing or exercising any other remedy not inconsistent therewith: (i) Enforce the Agreement by appropriate legal or other action to collect all amounts due or accruing under the Agreement or under the Trust Agreement and to cause the Town to pay or perform its other D-17 obligations under the Agreement or under the Trust Agreement when and as the same shall be required to be paid or performed under the Agreement or under the Trust Agreement, and for damages for the breach of the Agreement and of the Trust Agreement, which damages shall be the amounts payable under the Agreement at the times therein set forth without acceleration plus the reasonable costs of collection, including reasonable attorneys’ fees and expenses. (ii) Pursue and exercise any other remedy available at law or in equity and all other remedies permitted under the Trust Agreement. No other remedy exercised by the Trustee under Section 11 of the Agreement shall excuse any of the Town’s obligations thereunder. (c) The Trustee, upon the bringing of a suit to collect the Payments in default, may as a matter of right, without notice and without giving bond to the Town or anyone claiming under the Town, seek and obtain injunctive relief. (d) The obligation of the Town to make Payments is not subject to acceleration and such Payments may not be made immediately due and payable for any reason. Application of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of the Trust Agreement and subject to the Agreement shall be applied by the Trustee in the following order upon presentation of the Obligations, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid: First, to the payment of the costs and expenses of the Trustee and of the Obligation Owners in declaring such Event of Default and taking action under the provisions of the Trust Agreement, including reasonable compensation to its or their agents, attorneys and counsel; and Second, to the payment of the whole amount then owing and unpaid with respect to the Obligations for principal and interest, with interest on the overdue principal and installments of interest (but such interest on overdue installments of interest shall be paid only to the extent funds are available therefor following payment of principal and interest and interest on overdue principal, as aforesaid), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid with respect to the Obligations, then to the payment of such principal and interest without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest. Institution of Legal Proceedings. If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the Owners of a majority in aggregate principal amount of the Obligations then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners of Obligations by a suit in equity or action at law for the specific performance of any covenant or agreement contained in the Trust Agreement. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Trust Agreement, whether upon its own discretion or upon the request of the Owners of a majority in aggregate principal amount of the Obligations then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Obligations, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, without the consent of a majority in aggregate principal amount of the Obligations Outstanding. Limitation on Obligation Owners’ Right to Sue. (a) No Owner of any Obligation executed and delivered under the Trust Agreement shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Trust Agreement, unless (i) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default thereunder, (ii) the Owners of at least a majority in aggregate principal amount of all the Obligations then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, (iii) said Owners shall have tendered to the Trustee reasonable D-18 indemnity against the costs, expenses, and liabilities to be incurred in compliance with such request and (iv) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. (b) Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Obligations of any remedy under the Trust Agreement; it being understood and intended that no one or more Owners of Obligations shall have any right in any manner whatever by his or their action to enforce any right under the Trust Agreement, except in the manner therein provided, and that all proceedings at law or in equity with respect to an Event of Default shall be instituted, had and maintained in the manner provided in the Trust Agreement and for the equal benefit of all Owners of the Outstanding Obligations. (c) The right of any Owner of any Obligation to receive payment of said Owner’s proportionate interest in the Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this section or any other provision of the Trust Agreement. Defeasance. (a) If and when all Outstanding Obligations have been paid and discharged in any one or more of the following ways: (i) by paying or causing to be paid the principal of and interest with respect to all Obligations Outstanding, as and when the same become due and payable; (ii) by depositing with a Depository Trustee, in trust for such purpose, at or before maturity, money which, together with the amounts then on deposit in the Payment Fund is fully sufficient to pay or cause to be paid all Obligations Outstanding, including all principal and interest and premium, if any; or (iii) by depositing with a Depository Trustee, in trust for such purpose, any noncallable United States Obligations in such amount as shall be certified to the Trustee and the Town by a national firm of certified public accountants acceptable to both the Trustee and the Town, as being fully sufficient, together with the interest to accrue thereon and moneys then on deposit in the Payment Fund together with the interest to accrue thereon, to pay and discharge or cause to be paid and discharged all Obligations (including all principal and interest) at their respective maturity dates, which deposit may be made in accordance with the provisions of Section 10 of the Agreement. (b) Notwithstanding that any Obligations shall not have been surrendered for payment, all obligations of the Trustee and the Town with respect to all Outstanding Obligations shall cease and terminate, except only the obligation of the Trustee to pay or cause to be paid, from the Payments paid by or on behalf of the Town from funds deposited pursuant to paragraphs (a)(i) or (ii) of this section and paid to the Trustee by the Depository Trustee, to the Owners of the Obligations not so surrendered and paid all sums due with respect thereto, and in the event of deposits pursuant to paragraphs (a)(i) or (ii), the Obligations shall continue to represent direct and proportionate interests of the Owners thereof in such Payments under the Agreement. (c) Any funds held by the Trustee, at the time of one of the events described in paragraphs (a)(i) through (iii) of this section, which are not required for the payment to be made to Owners, shall be paid over to the Town. (d) Any Obligation or portion thereof in authorized denominations may be paid and discharged as provided in Section 13.1 of the Trust Agreement. (e) After provision for the Obligations has been made under (a)(iii) above, at the direction of the Town, all or any part of the United States Obligations held by the Depository Trustee may be liquidated and the proceeds therefrom together with all or any portion of the moneys held by the Depository Trustee may be used to acquire other United States Obligations which the Depository Trustee shall hold provided that thereafter the moneys D-19 and United States Obligations held by the Depository Trustee shall remain sufficient, as evidenced by a certificate of a national firm of certified public accountants to pay and discharge all Obligations (including all principal and interest) at their respective maturity dates. (f) No Payment or Obligation may be so provided for and no liquidation or acquisition may be made if, as a result thereof, or of any other action in connection with which the provisions for payment of such Payment or Obligation is made, the interest payable on any Obligation is thereby made includable in gross income for federal income tax purposes. The Trustee, the Depository Trustee, and the Town may rely upon an opinion of nationally recognized bond counsel selected by the Town (which opinion may be based upon a ruling or rulings of the Internal Revenue Service) to the effect that the provisions of this paragraph will not be breached by so providing for the payment of any Payments or Obligations. (g) The Depository Trustee shall be any bank or trust company, which may be the Trustee, designated by the Town, with a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or State authority. Conflict of Interest. A.R.S. § 38-511 provides that the Town may, within three years after its execution, cancel any contract, without penalty or further obligation, if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the Town is, at any time while the contract or any extension of the contract is in effect, an employee or agent of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract. In addition, the Town may recoup any fee or commission paid or due to any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the Town from any other party to the contract arising as a result of the contract. Governing Law. The Trust Agreement shall be construed and governed in accordance with the laws of the State of Arizona. No Boycott of Israel. To the extent A.R.S. § 35-393 through § 35-393.03 are applicable, the parties hereby certify that they are not currently engaged in, and agree for the duration of the Trust Agreement to not engage in, a “boycott” of goods or services from Israel, as that term is defined in A.R.S. § 35-393. E-1 APPENDIX E FORM OF APPROVING LEGAL OPINION TIMOTHY A. STRATTON 602-257-7465 FAX: 602-254-4878 tstratton@gustlaw.com [Closing Date] Mayor and Town Council Town of Oro Valley, Arizona U.S. Bank National Association Phoenix, Arizona Ladies and Gentlemen: We have examined the proceedings relating to the execution and delivery by U.S. Bank National Association (the “Trustee”) of $25,000,000* aggregate principal amount of Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “2021 Obligations”), dated [Closing Date] pursuant to a Trust Agreement dated as of _____ 1, 2021 (the “Trust Agreement”), between the Trustee and the Town of Oro Valley, Arizona (the “Town”). Each of the 2021 Obligations evidencing a proportionate interest of the owners thereof, in obligations of the Town under an Agreement, dated as of _____ 1, 2021 (the “Agreement”), between the Trustee, as payee, and the Town, as payor, including certain payments (the “Payments”) and all other amounts due and payable by the Town pursuant to the Agreement over the period from the date hereof to July 1, 20___. The Payments are secured by certain excise tax revenues and transaction privilege tax revenues pledged by the Town pursuant to the Agreement. All of the right, title and interest of the Trustee, as payee under the Agreement, in and to the Agreement and the Payments are pledged in trust to the Trustee to secure the payment of principal of and interest on the 2021 Obligations. We have also examined a form of the 2021 Obligations. Based upon such examination, we are of the opinion that, under the law existing on the date of this opinion: 1. The 2021 Obligations, Trust Agreement and Agreement are legal, valid, binding and enforceable in accordance with their respective terms, except that the binding effect and enforceability thereof are subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws in effect from time to time affecting the rights of creditors generally, and except to the extent that the enforceability thereof may be limited by the application of general principles of equity. 2. The obligations of the Town under the Agreement and the 2021 Obligations are payable from and are secured by a pledge of and lien on the Excise Taxes and Parks and Recreation Taxes (both as defined in the Trust Agreement), as provided in the Agreement and Trust Agreement. Pursuant to the Trust Agreement, the payment of principal of and interest on the 2021 Obligations and the payment other amounts due and payable is secured by the Trustee’s right, title and interest to the Agreement and the Payments. The Agreement and the Trust Agreement create the first lien on the Excise Taxes and Parks and Recreation Taxes they purport to create. The rights of the Owners of the 2021 Obligations to payment from Excise Taxes shall be on a parity with the rights to payment from such Excise Taxes of the holders of the Existing Parity Obligations and any additional Parity Obligations (both as defined in the Trust Agreement) and the rights of the Owners of the 2021 Obligations to payment from the Parks * Subject to change. E-2 and Recreation Taxes shall be on parity with the rights to payment from such Parks and Recreation Taxes of the holders of any Parks and Recreation Tax Parity Obligations (as defined in the Trust Agreement). Additional obligations may be issued in the future on a parity basis with the 2021 Obligations related to the Agreement with respect to payments due from and the lien on Excise Taxes and Parks and Recreation Taxes as provided in the Agreement and the Trust Agreement. 3. Under existing laws, regulations, rulings and judicial decisions, the portion of each Payment made by the Town under the Agreement and denominated as and comprising interest pursuant to the Agreement and received by the owners of the 2021 Obligations is excluded from gross income for the purpose of calculating federal income taxes and is exempt from State of Arizona income taxes. Interest income on the Agreement is not an item of tax preference to be included in computing alternative minimum tax. Neither the Agreement nor the 2021 Obligations are private activity bonds within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended (the “Code”). We express no opinion regarding other federal tax consequences arising with respect to either the Agreement or the 2021 Obligations. The Code imposes various restrictions, conditions and requirements relating to the continued exclusion of interest income on the Agreement from gross income for federal income tax purposes, including a requirement that the Town rebate to the federal government certain of the investment earnings with respect to the Agreement. Failure to comply with such restrictions, conditions and requirements could result in the interest income on the Agreement received by the owners of the 2021 Obligations being included as gross income for federal income tax purposes from the date of execution and delivery of the 2021 Obligations. The Town has covenanted to comply with the restrictions, conditions and requirements of the Code necessary to preserve the tax-exempt status of the interest income on the Agreement received by the owners of the 2021 Obligations. For purposes of this opinion, we have assumed continuing compliance by the Town with such restrictions, conditions and requirements. As to questions of fact material to our opinion, we have relied upon, and assumed due and continuing compliance with the provisions of, the proceedings and other documents, and have relied upon certificates, covenants and representations furnished to us without undertaking to verify the same by independent investigation, including, without limitation, those with respect to causing interest on the 2021 Obligations to be and remain excluded from gross income for federal income tax purposes. GUST ROSENFELD P.L.C. Timothy A. Stratton Special Counsel F-1 APPENDIX F FORM OF CONTINUING DISCLOSURE CERTIFICATE $25,000,000* TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 CONTINUING DISCLOSURE CERTIFICATE (CUSIP Base No. 68702J) This Continuing Disclosure Certificate (this “Disclosure Certificate”) is undertaken by the Town of Oro Valley, Arizona (the “Town”) in connection with the execution and delivery of $25,000,000* in aggregate principal amount of the Town’s Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “2021 Obligations”). In consideration of the initial sale, execution and delivery of the Obligations, the Town covenants as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is for the benefit of the Obligation Holder and in order to assist the Participating Underwriter in complying with the Rule (all as defined herein). Section 2. Definitions. Any capitalized term used herein shall have the following meanings, unless otherwise defined herein: “Annual Report” shall mean the annual report provided by the Town pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Audited Financial Statements” shall mean the Town’s annual financial statements, which are currently prepared in accordance with generally accepted accounting principles (GAAP) for governmental units as prescribed by the Governmental Accounting Standards Board (GASB) and which the Town intends to continue to prepare in substantially the same form. “Dissemination Agent” shall mean the Town or any person designated in writing by the Town as the Dissemination Agent. “EMMA” shall mean the Electronic Municipal Market Access system of MSRB, or any successor thereto approved by the United States Securities and Exchange Commission, as a repository for municipal continuing disclosure information pursuant to the Rule. “Financial Obligation” shall mean: (i) a debt obligation; (ii) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) a guarantee of (i) or (ii), except that “Financial Obligation” does not include municipal securities as to which a final official statement has been provided to the MSRB. “Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board, or any successor thereto. * Subject to change. F-2 “Obligation Holder” shall mean any registered owner or beneficial owner of the Obligations. “Official Statement” shall mean the final official statement dated ______, 2021 relating to the Obligations. “Participating Underwriter” shall mean any of the original underwriters of the Obligations required to comply with the Rule in connection with offering of the Obligations. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “Special Counsel” shall mean Gust Rosenfeld P.L.C. or such other nationally recognized Special Counsel as may be selected by the Town. Section 3. Provision of Annual Reports. (a) Commencing February 1, 2022, and by no later than February 1 of each year thereafter (the “Filing Date”), the Town shall, either directly or by directing the Dissemination Agent to do so, provide an Annual Report to the MSRB. The Annual Report shall be provided electronically and in a format prescribed by the MSRB. The Annual Report shall be consistent with the requirements of Section 4 of this Disclosure Certificate and shall include information from the fiscal year ending on the preceding June 30. All documents provided to the MSRB shall be accompanied by identifying information prescribed by the MSRB. Currently, filings are required to be made with EMMA. Not later than 15 business days prior to such Filing Date, the Town shall provide the Annual Report to the Dissemination Agent (if other than the Town). (b) If the Town is unable or for any reason fails to provide electronically to EMMA an Annual Report or any part thereof by the Filing Date required in subsection (a) above, the Town shall in a timely manner, send a notice to EMMA in substantially the form attached as Exhibit A not later than the Filing Date. (c) If the Town’s Audited Financial Statements are not submitted with the Annual Report and the Town fails to provide to EMMA a copy of its Audited Financial Statements within 30 days of receipt thereof by the Town, then the Town shall, in a timely manner, send a notice to EMMA in substantially the form attached as Exhibit B. (d) The Dissemination Agent shall: (i) determine the proper electronic filing address of EMMA each year prior to the date(s) for providing the Annual Report and Audited Financial Statements; and (ii) if the Dissemination Agent is other than the Town, file a report or reports with the Town certifying that the Annual Report and Audited Financial Statements, if applicable, have been provided pursuant to this Disclosure Certificate, stating the date such information was provided and listing where it was provided. Section 4. Content of Annual Reports. (a) The Annual Report may be submitted as a single document or as separate documents comprising an electronic package, and may incorporate by reference other information as provided in this Section, including the Audited Financial Statements of the Town; provided, however, that if the Audited Financial Statements of the Town are not available at the time of the filing of the Annual Report, the Town shall file unaudited financial statements of the Town with the Annual Report and, when the Audited Financial Statements of the Town are available, the same shall be submitted to EMMA within 30 days of receipt thereof by the Town. (b) The Town’s Annual Report shall contain or incorporate by reference the following: (i) Type of Financial and Operating Data to be Provided: (A) Subject to the provisions of Sections 3 and 4(a) hereof, Audited Financial Statements for the Town. F-3 (B) Annually updated financial information and operating data of the type contained in [the following tables] in the Official Statement: (I) [TABLE 5 – HISTORICAL AND PROJECTED COLLECTIONS OF EXCISE TAXES AND PARKS AND RECREATION TAXES]: and (II) [ ] (C) In the event of an amendment pursuant to Section 8 hereof not previously described in an Annual Report, an explanation, in narrative form, of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided and, if the amendment is made to the accounting principles to be followed, a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles, including a qualitative discussion of the differences, and the impact on the presentation and, to the extent feasible, a quantitative comparison. (ii) Accounting Principles Pursuant to Which Audited Financial Statements Shall Be Prepared: The Audited Financial Statements shall be prepared in accordance with generally accepted accounting principles and state law requirements as are in effect from time to time. A more complete description of the accounting principles currently followed in the preparation of the Town’s Audited Financial Statements is contained in Note 1 of the Audited Financial Statements included within the Official Statement. Notice of amendment to the accounting principles shall be sent within 30 days to EMMA. (c) Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Town or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from EMMA. The Town shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Listed Events. (a) This Section shall govern the giving of notices by the Town, either directly or by directing the Dissemination Agent to do so, of the occurrence of any of the following events with respect to the Obligations. The Town shall in a timely manner, not in excess of 10 business days after the occurrence of the event, provide notice of the following events with EMMA: (i) Principal and interest payment delinquencies; (ii) Non-payment related defaults, if material; (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service (the “IRS”) of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Obligations, or other material events affecting the tax status of the Obligations; (vii) Modifications to rights of Obligation Holders, if material; (viii) Obligation calls, if material, and tender offers; (ix) Defeasances; (x) Release, substitution, or sale of property securing repayment of the Obligations, if material; (xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the Town; (xiii) The consummation of a merger, consolidation, or acquisition involving the Town or the sale of all or substantially all of the assets of the Town, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material; F-4 (xv) The incurrence of a Financial Obligation of the Town, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Town, any of which affect Obligation Holders, if material; and (xvi) A default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Town, any of which reflect financial difficulties. (b) “Materiality” will be determined in accordance with the applicable federal securities laws. Note to Section 5(a)(xii) above: For the purposes of the event identified in subsection (a)(xii) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Town in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Town, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Town. Section 6. Termination of Reporting Obligation. The Town’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Obligations. Such termination shall not terminate the obligation of the Town to give notice of such defeasance or prior redemption. Section 7. Dissemination Agent. The Town may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. Section 8. Amendment. Notwithstanding any other provision of this Disclosure Certificate, the Town may amend this Disclosure Certificate if: (a) The amendment is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in identity, nature or status of the Town, or the type of business conducted; (b) This Disclosure Certificate, as amended, would, in the opinion of Special Counsel, have complied with the requirements of the Rule at the time of the primary offering of the Obligations, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment does not materially impair the interests of Obligation Holders, as determined by Special Counsel. Section 9. Filing with EMMA. The Town shall, or shall cause the Dissemination Agent to, electronically file all items required to be filed with EMMA. Section 10. Additional Information. The Town may, at the Town’s election, include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate. If the Town chooses to include such information, the Town shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the Town to comply with any provision of this Disclosure Certificate any Obligation Holder may seek specific performance by court order to cause the Town to comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any failure of the Town to comply with this Disclosure Certificate shall be an action to compel performance and such failure shall not constitute a default under the Obligations or the resolution authorizing the Obligations. F-5 Section 12. Compliance by the Town. The Town hereby covenants to comply with the terms of this Disclosure Certificate. The Town expressly acknowledges and agrees that compliance with the undertaking contained in this Disclosure Certificate is its sole responsibility and the responsibility of the Dissemination Agent, if any, and that such compliance, or monitoring thereof, is not the responsibility of, and no duty is present with respect thereto for, the Participating Underwriter, Special Counsel or the Town’s financial advisor. Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Town, the Dissemination Agent, the Participating Underwriter and Obligation Holders, and shall create no rights in any other person or entity. Section 14. Governing Law and Interpretation of Terms. This Disclosure Certificate shall be governed by the law of the State of Arizona and any action to enforce this Disclosure Certificate must be brought in an Arizona state court. The terms and provisions of this Disclosure Certificate shall be interpreted in a manner consistent with the interpretation of such terms and provisions under the Rule and the federal securities law. [Signature on the following page] F-6 Date: [Closing Date] TOWN OF ORO VALLEY, ARIZONA By ________________________________________ Chief Financial Officer [Signature Page to Continuing Disclosure Certificate] F-7 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Town of Oro Valley, Arizona Name of Issue: $25,000,000 Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax- Exempt Series 2021 Dated Date of Obligations: [Closing Date] Base CUSIP: 68702J NOTICE IS HEREBY GIVEN that the Town has not provided an Annual Report with respect to the above-named Obligations as required by Section 3(a) of the Continuing Disclosure Certificate dated _____, 2021. The Town anticipates that the Annual Report for fiscal year ended June 30, _____ will be filed by ______________________. Dated: ______________ TOWN OF ORO VALLEY, ARIZONA By________________________________________ Its ________________________________________ -------------------------------------------------------------------------------------------------------------------------------------------- EXHIBIT B NOTICE OF FAILURE TO FILE AUDITED FINANCIAL STATEMENTS Name of Issuer: Town of Oro Valley, Arizona Name of Issue: $25,000,000 Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax- Exempt Series 2021 Dated Date of Obligations: [Closing Date] Base CUSIP: 68702J NOTICE IS HEREBY GIVEN that the Town failed to provide its audited financial statements with its Annual Report or, if not available, within 30 days of receipt as required by Section 4(a) of the Continuing Disclosure Certificate dated July 6, 2021 with respect to the above-named Obligations. The Town anticipates that the audited financial statements for the fiscal year ended June 30, ____ will be filed by ______________________. Dated: ______________ TOWN OF ORO VALLEY, ARIZONA By________________________________________ Its ________________________________________ [Exhibits to Continuing Disclosure Certificate] * Subject to change. G-1 APPENDIX G BOOK-ENTRY-ONLY SYSTEM The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Obligations. The Obligations will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Obligation will be issued for each maturity of the Obligations, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Securities Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants” and together with the Direct Participants, the “Participants”). DTC has Standard & Poor’s rating of: “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for the Obligations on DTC’s records. The ownership interest of each actual purchaser of each Obligation (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Obligations are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Obligations, except in the event that use of the book-entry system for the Obligations is discontinued. To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Obligations with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Obligations; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Obligations may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed amendments to the Obligation documents. For example, Beneficial Owners of Obligations may wish to ascertain that the nominee G-2 holding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Obligations within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Obligations unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Town as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payment of principal of and interest on the Obligations and the redemption price of any Obligation will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Town or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee or the Town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of and interest on the Obligations and the redemption price of any Obligations will be made to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Town or Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Obligations at any time by giving reasonable notice to the Town or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, certificates are required to be printed and delivered. The Town may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Town believes to be reliable, but the Town takes no responsibility for the accuracy thereof. Squire Draft 09/08/21 010-9250-0847/3 OBLIGATION PURCHASE AGREEMENT $[PAR] TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 [Pricing Date] Mayor and Council Town of Oro Valley, Arizona 11000 North La Cañada Oro Valley, AZ 85737 The undersigned, on behalf of Piper Sandler & Co. (the “Underwriter ”), acting on its own behalf, offers to enter into this Obligation Purchase Agreement (this “Agreement ”) with the Town of Oro Valley, Arizona (the “Town”), which, upon written acceptance of this offer, will be binding upon the Town and the Underwriter. This offer is made subject to written acceptance hereof by the Town before 5:00 p.m., Arizona time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Town at any time prior to the acceptance hereof. Terms not defined in this Agreement shall have the same meanings assigned to them in the Trust Agreement and the Official Statement (both defined herein). 1. Purchase and Sale of the Obligations . (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter shall purchase all, but not less than all, and the Town shall cause U.S. Bank National Association, as trustee (the “Trustee ”), to execute, sell and deliver to the Underwriter all, of the $[PAR] principal amount of Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “Obligations ”) representing the undivided, proportionate interests in Payments (as defined herein) to be made by the Town. (b) Inasmuch as this purchase and sale represents a negotiated transaction, the Town acknowledges and agrees that: (i) the primary role of the Underwriter, as an underwriter, is to purchase securities, for resale to investors, in an arm’s-length commercial transaction between the Town and the Underwriter and that the Underwriter has financial and other interests that differ from those of the Town; (ii) the Underwriter is not acting as a municipal advisor, financial advisor, or fiduciary to the Town and has not assumed any advisory or fiduciary responsibility to the Town with respect to the transaction contemplated hereby and the discussions, undertakings and 2 010-9250-0847/3 procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Town on other matters); (iii) the only obligations the Underwriter ha s to the Town with respect to the transaction contemplated hereby expressly are set forth in this Agreement; and (iv) the Town has consulted its own legal, accounting, tax and other advisors, as applicable, to the extent it deems appropriate. (c) The principal amount of the Obligations to be executed and delivered, the dated date thereof and the maturities, redemption provisions and interest rates and yields per annum therefor are set forth in Schedule I hereto. The Obligations shall be as described in, and shall be executed, delivered and secured under and pursuant to the provisions of a Trust Agreement, dated as of [October] 1, 2021 (the “Trust Agreement ”), by and between the Town and the Trustee, and authorized by a Resolution of the Mayor and the Council of the Town (the “Mayor and Council”) adopted on [September 22], 2021 (the “Resolution”). (d) The Obligations represent undivided, proportionate interests in the right to receive payments (the “Payments ”) to be made by the Town pursuant to an Agreement, dated as of [October] 1, 2021 (the “Purchase Agreement ”), by and between the Town and the Trustee. The obligations of the Town under the Purchase Agreement will be payable exclusively from the Excise Taxes and Parks and Recreation Taxes and will not be a general obligation or indebtedness of the Town for any purpose. (e) The purchase price of the Obligations shall be $__________, which represents an aggregate principal amount of the Obligations of $_____________, plus [net] original issue premium of $________, less an underwriting discount of $__________. 2. Public Offering. The Underwriter shall make a bona fide public offering of all of the Obligations at yields not less than the public offering yields set forth on the inside front cover page of the Official Statement and may subsequently change such offering yields without any requirement of prior notice. Subject to Section 3 of this Agreement, the Underwriter may offer and sell Obligations to certain dealers (including dealers depositing Obligations into investment trusts) and others at yields higher than the public offering yields stated on the inside front cover page of the Official Statement. 3. Establishment of Issue Price . (a) The Underwriter agrees to assist the Town in establishing the issue price of the Obligations and shall execute and deliver to the Town on the Closing Date an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit A, with such modifications as ma y be appropriate or necessary, in the reasonable judgment of the Underwriter, the Town and Gust Rosenfeld P.L.C. (“Special Counsel”), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Obligations. (b) [Except as otherwise set forth in Schedule [II] attached hereto,] the Town will treat the first price at which 10% of each maturity of the Obligations (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Agreement, the Underwriter shall report to the Town the price or prices at which it has sold to the 3 010-9250-0847/3 public each maturity of Obligations. [If at that time the 10% test has not been satisfied as to any maturity of the Obligations, the Underwriter agrees to promptly report to the Town the prices at which it sells the unsold Obligations of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Obligations of that maturity or (ii) the 10% test has been s atisfied as to the Obligations of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Town or Special Counsel.] For purposes of this Section, if Obligations mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Obligations. (c) [The Underwriter confirms that it has offered the Obligations to the public on or before the date of this Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Schedule [II] attached hereto, except as otherwise set forth therein. Schedule [II] also sets fo rth, as of the date of this Agreement, the maturities, if any, of the Obligations for which the 10% test has not been satisfied and for which the Town and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Town to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold -the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Obligations, the Underwriter will neither offer nor sell unsold Obligations of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (1) The close of the fifth (5th) business day after the sale date; or (2) The date on which the Underwriter has sold at least 10% of that maturity of the Obligations to the public at a price that is no higher than the initial offering price to the public. The Underwriter will advise the Town promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Obligations to the public at a price that is no higher than the initial offering price to the public.] (d) [The Underwriter confirms that: (1) any selling group agreement and any third -party distribution agreement relating to the initial sale of the Obligations to the public, together with the related pricing wires, contains or will co ntain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third -party distribution agreement, as applicable: (i) (a) to report the prices at which it sells to the public the unsold Obligations of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Obligations of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Obligations of tha t maturity, provided that, the reporting obligation after the Closing Date may be at 4 010-9250-0847/3 reasonable periodic intervals or otherwise upon request of the Underwriter, and (b) to comply with the hold-the-offering-price rule, if applicable, if and for so long as d irected by the Underwriter, (ii) to promptly notify the Underwriter of any sales of Obligations that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Obligations to the public (each suc h term being used as defined below), and (iii) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public. (2) any selling group agreement relating to the initial sale of the Obligations to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third -party distribution agreement to be employed in connection with the initial sale of the Obligations to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Obligations of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Obligations of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Obligations of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold -the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.] (e) [The Town acknowledges that, in making the representations set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Obligations to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Obligations, including, but not limited to, its agreement to comply with the hold-the-offering- price rule, if applicable to the Obligations, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third -party distribution agreement was employed in connection with the initial sale of the Obligations to the public, the agreement of each broker- dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Obligations, including, but not limited to, its agreement to comply with the ho ld -the - offering-price rule, if applicable to the Obligations, as set forth in the third -party distribution agreement and the related pricing wires. The Town further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker- dealer that is a party to a third -party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Obligations, including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Obligations.] (f) The Underwriter acknowledges that sales of any Obligations to any person that is a related party to an underwriter participating in the initial sale of the Obligations to the 5 010-9250-0847/3 public (each such term being used as defined below) shall not constitute sales to the public for purposes of this Section. Further, for purposes of this Section: (1) “public” means any person other than an underwriter or a related party, (2) “underwriter” means (A) any person that agrees pursuant to a written contract with the Town (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Obligations to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Obligations to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Obligations to the public), (3) a purchaser of any of the Obligations is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if o ne entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), [and (4) “sale date” means the date of execution of this Agreement by all parties.] 4. The Official Statement. (a) The Preliminary Official Statement dated _______, 2021 (including the cover page, the inside front cover page and Appendices thereto, the “Preliminary Official Statement”), of the Town relating to the Obligations, to be subsequently revised to reflect the changes resulting from the sale of the Obligations and including amendments or supplements thereto, is hereinafter called the “Official Statement.” (b) The Preliminary Official Statement has been prepared for use by the Underwriter in connection with the public offering, sale and distribution of the Obligations. The Town hereby deems the Preliminary Official Statement “final” as of its date, except for the omission of such information which is dependent upon the final pricing of the Obligations for completion, all as permitted to be excluded by Section (b)(1) of Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule ”). (c) The Town represents that appropriate officials of the Town have reviewed and approved the information in the Official Statement and that the Council has authorized the Official Statement and the information therein contained to be used by the Underwriter in connection with the public offering and the sale of the Obligations. The Town shall provide, or cause to be provided, to the Underwriter as soon as practicable after the date of the acceptance by 6 010-9250-0847/3 the Town of this Agreement (but, in any event, not later than within seven (7) business days after the acceptance by the Town of this Agreement and in sufficient time to accompany any confirmation that requests payment from any customer) copies of the Official Statement which is complete as of the date of its delivery to the Underwriter in such quantity as the Underwriter shall request in order for the Underwriter to comply with Section (b)(4) of the Rule and the rules of the Municipal Securities Rulemaking Board (the “MSRB”). (d) If, after the date of this Agreement to and including the date the Underwriter is no longer required to provide the Official Statement to pote ntial customers who request the same pursuant to the Rule (the earlier of (i) 90 days from the “end of the underwriting period ” (as defined in the Rule) and (ii) the time when the Official Statement is available to any person from the MSRB, but in no case less than twenty-five (25) days after the “end of the underwriting period ” for the Obligations), the Town becomes aware of any fact or event which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or if it is necessary to amend or supplement the Official Statement to comply with law, the Town will notify the Underwriter (and for the purposes of this clause provide the Underwriter with such information as it may from time to time request) and if, in the opinion of the Underwriter, such fact or event requires preparation and publication of a supplement or amendment to the Official Statement, the Town will forthwith prepare and furnish, at the expense of the Town (in a form and manner approved by the Underwriter), a reasonable number of copies of either amendments or supplements to the Official Statement so that the statements in the Official Statement as so amended and supplemented will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or s o that the Official Statement will comply with law. If such notification shall be subsequent to the Closing, the Town shall furnish such legal opinions, certificates, instruments and other documents as the Underwriter may deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. (e) Unless otherwise notified in writing by the Underwriter, the Town can assume that the “end of the underwriting period” for purposes of the Rule is the Closing Date. 5. Representations , Warranties, and Covenants of the Town. The undersigned on behalf of the Town, but not individually, represents and warrants to and covenants with, as applicable, the Underwriter that: (a) The Town is validly existing as a municipal corporation duly created, organized and existing under the laws of the State of Arizona (the “State”) with powers specifically required for purposes of this Agreement and has now and at the Closing Date will have full legal right, power and authority to cause the Resolution to be adopted and (i) to enter into, execute and deliver the Resolution, the Trust Agreement, the Purchase Agreement, this Agreement, and an Undertaking of the Town which satisfies the requirements of Section (b)(5)(i) of the Rule (the “Undertaking” and such documents referred to in this clause (i) hereinafter collectively referred to as the “Town Documents ”), (ii) to cause the sale and execution and delivery of the Obligations as provided herein, (iii) to carry out and consummate the transactions contemplated by the Town Documents and the Official Statement, and (iv) to impose, levy, collect and pledge, as applicable, the Excise Taxes and Parks and Recreation Taxes as contemplated in the Town Documents and 7 010-9250-0847/3 the Official Statement, and the Town has complied, and will at the Closing Date be in compliance in all material respects, with the terms of the Town Documents as they pertain to such transactions; (b) By all necessary official action of the Town prior to or concurrently with the acceptance hereof, the Town has duly authorized all necessary action to be taken by it for (i) the adoption of the Resolution and the sale and execution and delivery of the Obligations, (ii) the approval, execution and delivery of, and the performance by the Town of the obligations on its part contained in, the Obligations and the Town Documents and (iii) the consummat ion by it of all other transactions contemplated by the Official Statement and the Town Documents and any and all such other agreements and documents as may be required to be executed, delivered and/or received by the Town in order to carry out, give effect to, and consummate the transactions contemplated herein and in the Official Statement; (c) The Town Documents constitute legal, valid and binding obligations of the Town, enforceable in accordance with their respective terms, subject to bankruptcy, insolvenc y, reorganization, moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors’ rights; the Obligations, when paid for and executed and delivered, in accordance with the Resolution, the Trust Agreement and this Agreement, will constitute legal, valid and binding obligations of the Town entitled to the benefits of the Trust Agreement and enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws and principles of equity relating to or affecting the enforcement of creditors’ rights; and upon the execution and delivery of the Obligations as aforesaid, the Purchase Agreement and the Trust Agreement will provide, for the benefit of the holders, from time to time, of the Obligations, the legally valid and binding pledge of and lien they purport to create as set forth in the Purchase Agreement and the Trust Agreement; (d) The Town is not in breach of or default in any material respect under any applicable constitutional provision, law or administrative regulation of the State or the United States or any applicable judgment or decree or any loan agreeme nt, trust agreement, bond, note, resolution, agreement or other instrument to which the Town is a party or to which the Town is otherwise subject, and no event has occurred and is continuing which constitutes or with the passage of time or the giving of no tice, or both, would constitute a default or event of default by the Town under any of the foregoing, and the execution and delivery of the Obligations and the Town Documents and the adoption of the Resolution and compliance with the provisions on the part of the Town contained herein and therein will not conflict with or constitute a breach of or default under any constitutional provision, administrative regulation, judgment, decree, loan agreement, trust agreement, bond, note, resolution, agreement or other instrument to which the Town is a party or to which the Town is or to which any of its property or assets are otherwise subject nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Town pledged to secure the Obligations or under the terms of any such law, regulation or instrument, except as provided by the Obligations, the Purchase Agreement and the Trust Agreement; (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a c ondition 8 010-9250-0847/3 precedent to, or the absence of which would materially adversely affect the due performance by the Town of its obligations under the Town Documents and the Obligations have been duly obtained, except such approvals, consents and orders as may be r equired under the “blue sky” or securities laws of any jurisdiction in connection with the offering and sale of the Obligations; (f) The Obligations conform to the descriptions thereof contained in the Official Statement under the caption “THE OBLIGATIONS”; the proceeds of the sale of the Obligations will be applied generally as described in the Official Statement under the caption “THE OBLIGATIONS” and the Undertaking conforms to the form thereof attached to the Official Statement as Appendix [F] – “FORM OF CONTINUING DISCLOSURE CERTIFICATE”; (g) There is no legislation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the best knowledge of the Town after due inquiry, overtly threatened against the Town, affecting the existence of the Town or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale or execution and delivery of the Obligations or the levy, collection or pledge, as applicable, of the Excise Taxes and Parks and Recreation Taxes securing the payment of the Obligations pursuant to the Trust Agreement or in any way contesting or affecting the adoption of the Resolution or the validity or enforceability of the Obligations or the Town Documents, or contesting the exclusion from gross income of interest on the Obligations for federal income tax purposes or State income tax purposes, or contesting in any way the completeness or accuracy of the Official Statement or any supplement or amendment thereto or contesting the powers of the Town or any authority for the execution and delivery of the Obligations, the adoption of the Resolution or the execution and delivery of the Town Documents, nor, to the best knowledge of the Town, is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Obligations or the Town Documents; (h) As of the date thereof and hereof, the Preliminary Official Statement (excluding information under the headings “TAX EXEMPTION ,” “ORIGINAL ISSUE DISCOUNT,” “BOND PREMIUM,” “RATINGS” and “UNDERWRITING ” and in Appendix [G]) did not and does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (i) The Town has not granted a lien on, made a pledge of or agreed to apply the Excise Taxes and Parks and Recreation Taxes, except as provided or permitted in the Purchase Agreement or as described in the Official Statement; (j) As of the date of the Town’s acceptance hereof and (unless the Official Statement is amended or supplemented pursuant to Section 4(d) of this Agreement) at all times subsequent thereto during the period up to and including the Closing Date, the Official Statement (excluding information under the headings “TAX EXEMPTION,” [“ORIGINAL ISSUE DISCOUNT,”] [“BOND PREMIUM,”] “RATINGS” and “UNDERWRITING ” and in Appendix [G]) does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; 9 010-9250-0847/3 (k) If the Official Statement is supplemented or amended pursuant to Section 4(d) of this Agreement, at the time of each supplement or amendment thereto and (unless subsequently supplement ed or amended pursuant to such paragraph) at all times subsequent thereto during the period up to and including the Closing Date, the Official Statement as so supplemented or amended (excluding information under the headings “TAX EXEMPTION,” [“ORIGINAL ISSUE DISCOUNT,”] [“BOND PREMIUM,”] “RATINGS” and “UNDERWRITING” and in Appendix [G]) will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which made, not misleading; (l) The Town will apply, or cause to be applied, the proceeds from the sale of the Obligations as provided in and subject to all of the terms and provisions of the Trust Agreement and not take or omit to take any action which action or omission will adversely affect the exclusion from gross income for federal income tax purposes or State income tax purposes of the interest on the Obligations ; (m) The Town will furnish such information and execute such instru ments and take such action in cooperation with the Underwriter as the Underwriter may reasonably request (A) to (y) qualify the Obligations for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions in the United States as the Underwriter may designate and (z) determine the eligibility of the Obligations for investment under the laws of such states and other jurisdictions and (B) to continue such qualifications in effect so long as required for the distribution of the Obligations (provided, however, that the Town will not be required to qualify as a foreign corporation or to file any general or special consents to service of process under the laws of any jurisdiction) and will advise the Underwriter immediately of receipt by the Town of any notification with respect to the suspension of the qualification of the Obligations for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose; (n) The financial statements of, and other financial information regarding, the Town in the Official Statement fairly present the financial position and results of the Town as of the dates and for the periods therein set forth in accordance with generally accepted governmental accounting principles as applicable to governmental units and have been prepared in accordance with generally accepted governmental accounting principles consistently applied throughout the periods covered (except as otherwise disclosed in the Official Statement or financial statements); (o) Except as otherwise disclosed in the Official Statement, since June 30, 2020, the Town has not incurred any material liabilities, direct or contingent, nor has the re been any material adverse change in the financial position, result s of operations or condition, financial or otherwise, of the Town that are not described in the Official Statement, whether or not arising from transactions in the ordinary course of business; (p) Prior to the Closing, there will be no adverse change of a material nature in such financial position, results of operations or condition, financial or otherwise, of the Town and the Town is not a party to any litigation or other proceeding pending o r, to its knowledge, threatened which, if decided adversely to the Town, would have a materially adverse effect on the financial condition of the Town; 10 010-9250-0847/3 (q) Prior to the Closing and to the extent it may agree to do so pursuant to applicable law, the Town will not offer or issue any bonds, notes or other obligations for borrowed money or incur any material liabilities, direct or contingent, payable from or secured by any of the revenues or assets which secure the Obligations without prior approval of the Underwriter; (r) Any certificate, signed by any official of the Town authorized to do so in connection with the transactions contemplated by this Agreement, shall be deemed a representation and warranty by the Town to the Underwriter as to the statements made therein; (s) The Town has submitted to the Arizona Department of Revenue, the Arizona State Treasurer’s Office or the Arizona Department of Administration, as applicable, the information required with respect to previous issuances of bonds, securities and lease -purcha se agreements of the Town pursuant to Section 35-501, Arizona Revised Statutes, and will file the information relating to the Obligations required to be submitted to the Arizona Department of Administration pursuant thereto within 60 days of the date of Closing; and (t) Except as otherwise indicated in the Official Statement, the Town has been and is in material compliance during the last five years with the terms of all continuing disclosure undertakings previously executed by the Town pursuant to the Rule. 6. Closing. (a) Before 10:00 a.m., Arizona time, on [Closing Date] (the “Closing Date”), or at such other time and date as shall have been mutually agreed upon by the Town and the Underwriter, the Town will, subject to the terms and conditions hereof, cause the Obligations to be delivered to the Underwriter duly executed, together with the other documents hereinafter mentioned, and the Underwriter will, subject to the terms and conditions hereof, accept such delivery and pay the purchase price of the Obligations as set forth in Section 1 of this Agreement by wire transfer payable in immediately available funds to the order of the Town (the “Closing ”). Payment for the Obligations as aforesaid shall be made at the offices of Special Counsel, or such other place as shall have been mutually agreed upon by the Town and the Underwriter. (b) Delivery of the Obligations shall be made through the facilities of The Depository Trust Company, New York, New York (“DTC ”), or, in the case of a “Fast Automated Securities Transfer” with the Trustee or by such other means as shall have been mutually agreed upon by the Town and the Underwriter. The Obligations shall be prepared in definitive fully registered form, bearing CUSIP numbers without coupons, with one Obligation for each maturity of the Obligations, registered in the name of Cede & Co., all as provided in the Trust Agreement, and shall be made available to the Underwriter at least one business day before the Closing for purposes of inspection. 7. Closing Conditions . The Underwriter has entered into this Agreement in reliance upon the representations, warranties and agreements of the Town contained herein, and in reliance upon the representations, warranties and agreements to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Town and the Trustee of their obligations hereunder and thereunder, both as of the date hereof and as of the Closing Date. Accordingly, the obligations of the Underwriter under this Agreement to purchase, to accept 11 010-9250-0847/3 delivery of and to pay for the Obligations shall be conditioned upon the performance by the Town and the Trustee of their obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions, including the delivery by the Town and the Trustee of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Underwriter : (a) The representations and warranties of the Town contained herein shall be true, complete and correct on the date hereof and on and as of the Closing Date, as if made on the Closing Date; (b) The Town and the Trustee shall have performed and co mplied with all agreements and conditions required by this Agreement to be performed or complied with by them prior to or at the Closing Date; (c) At the time of the Closing, (i) the Town Documents, the hereinafter defined Trustee Documents (as defined herein) and the Obligations shall be in full force and effect in the form heretofore approved by the Underwriter and shall not have been amended, modified or supplemented, and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriter and (ii) all actions of the Town and the Trustee required to be taken by the Town and the Trustee shall be performed and in full force and effect in order for Special Counsel and counsel to the Underwriter to deliver their respective opinions referred to hereafter; (d) At or prior to the Closing, the Resolution shall have been duly adopted and delivered by the Town and the Trustee shall have duly executed and delivered the Obligations; (e) At the time of the Closing, there shall not have occurred any change or any development involving a prospective change in the condition, financial or otherwise, or in the revenues or operations of the Town, from that set forth in the Official Statement that in the reasonable judgment of the Underwriter, is material and adverse and that makes it, in the judgment of the Underwriter, impracticable to market the Obligations on the terms and in the manner contemplated in the Official Statement; (f) At the Closing Date, no “event of default” shall have occurred or be existing under the Town Documents or the Trustee Documents nor shall any event have occurred which, with the passage of time or the giving of notice, or both, shall constitute an event of default under the Town Documents or the Trustee Documents; (g) The Town shall not have failed to pay principal or interest when due on any of its outstanding obligations for borrowed money; (h) All steps to be taken and all instruments and other documents to be executed, and all other legal matters in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in legal form and effect to the Underwriter; (i) At or prior to the Closing, the Underwriter shall have received an electronic copy of the transcript of all proceedings of the Town relating to the authorization and delivery of the Town Documents, executed and certified, as necessary, by appropriate officials of the Town, 12 010-9250-0847/3 and the Trustee relating to the authorization and delivery of the Trustee Documents, executed and certified, as necessary, by appropriate officials of the Trustee, including each of the following documents: (1) the Official Statement, and each supplement or amendment thereto, if any, executed on behalf of the Town by the Mayor, or such other official as may have been agreed to by the Underwriter, and the reports and audits referred to or appearing in the Official Statement; (2) the Town Documents and the Trustee Documents ; (3) the approving opinion of Special Counsel, dated the Closing Date, with respect to the Obligations, in substantially the form attached to the Official Statement along with a reliance letter with respect thereto, dated the Closing Date and addressed to the Underwriter ; (4) a supplemental opinion of Special Counsel dated the Closing Date, addressed to the Underwriter, substantially to the effect that: (i) the Resolution has been duly adopted and is in full force and effect; (ii) it is not necessary, in connection with the offering and sale of the Obligations, to register the Obligations under the Securities Act of 193 3, as amended (the “1933 Act”) or to qualify the Trust Agreement under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”); (iii) the information contained in the Preliminary Official Statement and the Official Statement on the cover page the reof, under the headings entitled “INTRODUCTORY STATEMENT,” “THE OBLIGATIONS,” “SECURITY AND SOURCES OF PAYMENT,” “TAX EXEMPTION,” “ORIGINAL ISSUE DISCOUNT” [(as provided in the Preliminary Official Statement only),] “BOND PREMIUM,” “RELATIONSHIP AMONG PARTIES” (insofar as it relates to Special Council) and “CONTINUING DISCLOSURE” (other than matters relating to the Town’s compliance with prior undertakings as to which no opinion shall be express ed) therein, and in Appendices D, E and F thereto, insofar as such information summarizes certain provisions of the Obligations, the Town Documents and certain provisions of State and federal law, including the federal and State income status of interest on the Obligations, fairly present the information purported to be shown; provided, however, that such information does not purport to summarize all the provisions of, and is qualified in its entirety by, the complete documents which are summarized and, based solely on such counsel’s participation in the transaction as Special Counsel, nothing has come to their attention that would lead them to believe that the information and statements in the Preliminary Official Statement, as of its date and as of the date hereof, and the Official Statement, as of the date hereof and as of the Closing Date, contained or contain any untrue statement of a material fact or omitted or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that 13 010-9250-0847/3 no view need be expressed as to the financial statements of the Town, any other financial forecast, technical or statistical data, and any information in the Preliminary Official Statement or the Official Statement regarding DTC ; (iv) this Agreement has been duly authorized, executed and delivered by the Town and (assuming due authorization and execution by the Underwriter ) is a legal, valid and binding obligation of the Town, enforceable in accordance with its terms, subject to customary exceptions for bankruptcy and judicial discretion; (v) the Undertaking has been duly authorized, executed and delivered by the Town and is a legal, valid and binding obligation of the Town, enforceable in accordance with its terms; subject to customary exceptions for bankruptcy and judicial discretion; and (vi) no consent of any other party and no consent, license, approval or authorization of, exemption by, or registration with any governmental body, authority, bureau or agency (other than those that have been obtained or will be obtained prior to the delivery of the Purchase Agreement, the Trust Agreement, the Undertaking and this Agreement) is required in connection with the execution, delivery and performance by the Town of the Purchase Agreement, the Trust Agreement, the Undertaking and this Agreement; (5) An opinion of the counsel to the Town that, based on an investigation of the records of the Superior Court of Pima County and the United States District Court, District of Arizona, there is no action, suit, proceeding, inquiry or investigation by or before any court, governmental agency, public board or body pending or, to his or her knowledge (upon due inquiry), overtly threatened (i) in any way affecting the powers of the Town, the existence of the Town or the title to office of any of the officials of the Town, (ii) seeking to restrain or enjoin the sale, execution and delivery of the Obligations, or the levy, collection or pledge, as applicable, of the Excise Taxes and Parks and Recreation Taxes to be levied to pay the Payments, (iii) in any way contesting or affecting the validity or enforceability of the Obligations, the Town Documents or any agreements entered into in connection therewith, (iv) contesting in any way the completeness or accuracy of the Official Statement, (v) which may materially adversely affect the Town or its properties or (vi) questioning the applicable tax-exempt status of the Obligations ; nor, to the best knowledge of such counsel, is there any reasonable basis therefor; (6) An opinion of counsel to the Underwriter, dated the Closing Date, addressed to the Underwriter to the effect that: (i) the Obligations are exempt securities under the 1933 Act and the Trust Indenture Act and it is not necessary, in connection with the offering and sale of the Obligations, to register the Obligations under the 1933 Act and the Trust Agreement need not be qualified under the Trust Indenture Act; (ii) the Undertaking meets the requirements of paragraph (b)(5)(i) of the Rule and 14 010-9250-0847/3 (iii) based upon their participation in the preparation of the Preliminary Official Statement and the Official Statement as counsel for the Underwriter and their participation at conferences at which the Preliminary Official Statement and the Official Statement was discussed, but without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Preliminary Official Statement and the Official Statement, such counsel has no reason to believe that the Preliminary Official Statement, as of its date and as of the date hereof, and the Official Statement, as of the date hereof and as of the date of Closing, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except for any financial, forecast, technical and statistical statements and data included in the Preliminary Official Statement and the Official Statement and the information regarding DTC and its book-entry system, in each case as to which no view need be expressed); (7) A certificate, dated the Closing Date and signed by the Mayor, the Town Clerk and the Town Manager of the Town, the effect that, to the best of their knowledge, information and belief of those executing the certificate: (i) the representations and warranties of the Town contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date; (ii) except as otherwise described in the Official Statement, no litigation or proceeding against it is pending or, to their knowledge, overtly threatened in any court or administrative body nor is there a basis for litigation which would (a) contest the right of the members or officia ls of the Town to hold and exercise their respective positions, (b) contest the due organization and valid existence of the Town, (c) contest the validity, due authorization and execution of the Obligations, the Town Documents or the Trustee Documents, or the levy, collection or pledge, as applicable, of the Excise Taxes and Parks and Recreation Taxes securing the payment of the Obligations pursuant to the Trust Agreement or (d) which if resolved adversely to the Town, would have a material adverse effect on (I) the functioning of the Town, the operations of the Town, its revenues or its properties, or payment by the Town of the amounts due under the Purchase Agreement in the manner and time required thereby or (II) the validity or enforceability of the Purchase Agreement or the financial condition of the Town or its operations; (iii) the Town has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied prior to the Closing Date; (iv) the Town has complied with all requirements and covenants under prior obligation documents, including, without limitation, the Agreement and the Trust Agreement, each dated as of July 1, 2021 between U.S. Bank National Association and the Town, for the issuance of the Obligations; (v) the Resolution has been duly adopted by the Town, is in full force and effect and has not been modified, amended or repealed; 15 010-9250-0847/3 (vi) the audited financial statements included in the Official Statement were true and correct as of June 30, 2020, and the other financial statements and other financial statistical data included in the Official Statement are true and correct as of the date of such certificate; (vii) no event affecting the Town has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein, in light of the circumstances under which made, not misleading in any respect as of the time of the Closing, and the information contained in the Official Statement (excluding the information under the headings “TAX EXEMPTION,” [“ORIGINAL ISSUE DISCOUNT,”] [“BOND PREMIUM,”] “RATINGS” and “UNDERWRITING ” and in Appendix [G]) is correct in all material respects and, as of the date of the Official Statement, did not, and, as of the Closing Date, does not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (8) A certificate, dated the Closing Date, of appropriate representatives of the Town in form and substance satisfactory to Special Counsel (a) setting forth the facts, estimates and circumstances in existence on the Closing Date, which establish that it is not expected that the proceeds of the Obligations will be used in a manner that would cause the Obligations to be “arbitrage bonds” within the meaning of section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), and any applicable regulations (whether final, temporary or proposed), issued pursuant to the Code and (b) certifying that to the best of the knowledge and belief of the Town there are no other facts, estimates or circumstances that would materially change the conclusions, representations and expectations contained in such certificate; (9) Any other certificates and opinions required by the Resolution or the Trust Agreement for the execution and delivery thereunder of the Obligations; (10) Evidence satisfactory to the Underwriter that the Obligations have been assigned a rating of “___” by S&P Global Ratings, a division of Standard & Poor’s Financial Services LLC, and that such rating is in effect as of the Closing Date; (11) A certificate or certificates, dated the Closing Date, of an authorized officer of the Trustee that: (i) The Trustee is a national banking association, duly organized and validly existing under the laws of the United States of America with the power and authority to exercise corporate trust powers in the State and has full power and authority to execute and deliver and perform its obligations under the Obligations, the Purchase Agreement and the Trust Agreement (such documents referred to in this clause hereinafter collectively referred to as the “Trustee Documents ”) and all other documents executed and delivered by the Trustee in connection with the issuance of the Obligations; 16 010-9250-0847/3 (ii) The Trustee has by proper corporate action duly authorized the execution and delivery of, and the due performance of its obligations under the Trustee Documents and the taking of any and all other actions as may be required on the part of the Trustee to carry out, give effect to and consummate the transaction contemplated by such Trustee Documents; (iii) The Trustee Documents (when executed and delivered by the other parties thereto) will be, legal, valid and binding obligations of the Trustee, enforceable in accordance with their terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws in effect from time to time affecting the rights of creditors generally and to the availability of equitable relief; (iv) The Obligations have been duly executed and delivered by an authorized officer of the Trustee; (v) The Trust Agreement has been duly executed and delivered by an authorized officer of the Trustee; (vi) The resolutions of the Trustee authorizing the execution and delivery and/or performance of the Trust Agreement by the Trustee have been duly adopted by the Trustee, are in full force and effect and have not been modified, amended or repealed; (vii) No approval, permit, consent, authorization or order of any court or any governmental or public agency, authority or person not already obtained (other than any approvals that may be required under the “blue sky” laws of any jurisdiction) is required with respect to the Trustee in connection with the issuance and sale of the O bligations or the execution and delivery by the Trustee of, or the performance by the Trustee of its obligations under, the Trustee Documents; (viii) The execution and delivery by the Trustee of the Trustee Documents and the compliance by the Trustee with the pro visions thereof do not and will not materially conflict with or result in a material breach or violation of any of the terms or provisions of, or constitute a default under any resolution, indenture, deed of trust, mortgage commitment, agreement or other instrument to which the Trustee is a party or by which the Trustee is bound, or any constitutional provision, existing law, administrative regulation, court order or consent decree to which the Trustee or its property is subject; (ix) There is no litigation, action, suit or proceeding pending or threatened by or before any court, administrative agency, arbitrator or governmental body that challenges (A) the proper authorization, execution and delivery of the Trustee Documents, (B) the assignment of its rights under the Purchase Agreement, or (C) the ability of the Trustee to otherwise perform its obligations under the Trustee Documents and to carry out the transactions contemplated thereby and 17 010-9250-0847/3 (x) The representations and warranties of the Trustee set forth in the Trustee Documents are, and as of the Closing Date will be, true, accurate and complete as if made on the Closing Date; (12) The filing copy of the Information Return Form 8038-G (IRS) for the Obligations; (13) The filing copy of the information required to be submitted pursuant to Section 35-501(B), Arizona Revised Statutes; (14) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the representations and warranties of the Town contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the Town on or prior to the Closing Date of all the respective agreements then to be performed and conditions then to be satisfied by the Town. All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Underwriter. If the Town shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Obligations contained in this Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Obligations shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and the Underwriter, the Town shall not be under any further obligation hereunder, except that the respective obligations of the Town and the Underwriter set forth in Section 9(c) hereof shall continue in full force and effect. 8. Termination. The Underwriter shall have the right to cancel its obligation to purchase the Obligations if, between the date of this Agreement and time of the Closing, the market price or marketability of the Obligations shall be materially adversely affected, in the sole judgment of the Underwriter, by the occurrence of any of the following: (a) legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or any member of the Congress or the State legislature or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for conside ration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary, or proposed), press release, statement or other form of notice by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to impose, directly or indirectly, federal income taxation or State income taxation upon interest received on obligations of the general character of the Obligations or, with respect to State taxation, of the interest on the Obligations as described in the Official Statement, 18 010-9250-0847/3 or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences or State income tax consequences of any of the transactions contemplated herein; (b) legislation introduced in or enacted (or resolution passed) by the Congress or an order, decree, or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary, or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission (the “SEC”), or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Obligations, including any or all underlying arrangements, are not exempt from registration under or other requirements of the 1933 Act, or that the Trust Agreement is not exempt from qualification under or other requirements of the Trust Indenture Act, or that the issuance, offering, or sale of obligations of the general character of the Obligations, including any or all underlying arrangements, as contemplated hereby or by the Official Statement or otherwise, is or would be in violation of the federal securities law as amended and then in effect; (c) any state “blue sky” or securities commission or other governmental agency or body shall have withheld registration, exemption or clearance of the offering of the Obligations as described herein, or issued a stop order or similar ruling relating thereto; (d) a general suspension of trading in securities on the New York Stock Exchange, the American Stock Exchange or other major exchange shall be in force, or the establishment of minimum prices on either such exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, a general banking moratorium declared by federal, State of New York, or State officials authorized to do so; (e) the New York Stock Exchange or other national securities exchange or any governmental authority, shall impose, as to the Obligations or as to obligations of the general character of the Obligations, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter ; (f) any amendment to the federal or state Constitution or action by any federal or state court, legislative body, regulatory body, or other authority materially adversely affecting the tax status of the Town, its property, income securities (or interest thereon), or the validity or enforceability of the Obligations ; (g) any event occurring, or information becoming known which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (h) there shall have occurred since the date of this Agreement any materially adverse change in the affairs or financial condition of the Town; 19 010-9250-0847/3 (i) the United States shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency or there shall have occurred any other outbreak or escalation of hostilities or a national or international calamity or crisis, financial or otherwise; (j) any fact or event shall exist or have existed that, in the judgment of the Underwriter, requires or has required an amendment of or supplement to the Preliminary Official Statement or the Official Statement; (k) there shall have occurred any withdrawal or downgradin g, or any notice shall have been given of (A) any intended or potential withdrawal or downgrading or (B) any review or possible change that does not indicate a possible upgrade, in the rating accorded any of the obligations of the Town (including the ratings to be accorded the Obligations ); (l) the purchase of and payment for the Obligations by the Underwriter, or the resale of the Obligations by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission; (m) a material disruption in securities settlement, payment or clearance services affecting the Obligations shall have occurred; (n) any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order; and (o) additional events or announcements related to the COVID-19 virus and its imp act result in cancelation of orders from investors or the inability of investors to proceed with the purchase of their Obligations in an amount that the Underwriter deems to have an adverse material impact on the sale of and market for the Obligations. 9. Ex penses . (a) The Underwriter shall be under no obligation to pay, and the Town shall pay, all expenses incident to the performance of the Town’s obligations hereunder, including, but not limited to (i) the cost of preparation and printing of the Obligations, the Preliminary Official Statement and the Official Statement and any amendment or supplement thereto, (ii) the fees and disbursements of Special Counsel, counsel to the Trustee [and counsel to the Underwriter]; (iii) the fees and disbursements of the Trustee pursuant to the Trust Agreement, and any engineers, accountants, and other experts, consultants or advisers retained by the Town, if any; and (iv) the fees for a bond rating. The Town shall also pay for any expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter which are incidental to implementing this Agreement and the execution and delivery of the Obligations, including miscellaneous closing costs. 20 010-9250-0847/3 (b) Except as provided for above, the Underwriter shall pay (i) all advertising expenses in connection with the public offering of the Obligations ; and (ii) all other expenses incurred by it in connection with its public offering and distribution of the Obligations. (c) If this Agreement shall be terminated by the Underwriter because of any failure or refusal on the part of the Town to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Town shall be unable to perform its obligations under this Agreement, the Town will reimburse the Underwriter for all “out-of-pocket expenses ” reasonably incurred by the Underwriter in connection with this Agreement or the offering contemplated hereunder. (d) The Town acknowledges that it has had an opportunity to evaluate and consider the fees and expenses being incurred as part of the execution and delivery of the Obligations. 10. Notice Concerning Cancellation. To the extent applicable by provision of law, this Agreement is subject to cancellation pursuant to Section 38 -511, Arizona Revised Statutes, the provisions of which are incorporated herein. 11. Notices . Any notice or other communication to be given under this Agreement must be given by delivering the same in writin g to: To the Town: Town of Oro Valley, Arizona 11000 North La Cañada Oro Valley, AZ 85737 Attention: David Gephart, Administrative Services Director & CFO To the Trustee: U.S. Bank National Association 101 N. First Avenue, Suite 1600 Phoenix, Arizona 85003 Attention: Global Corporate Trust To the Underwriter : Piper Sandler & Co. 2525 E. Camelback Rd., Ste. 950 Phoenix, Arizona 85016 Attention: Nicholas Dodd, Managing Director 12. Parties in Interest. This Agreement as heretofore specified shall constitute the entire agreement between us and is made solely for the benefit of the Town and the Underwriter (including successors or assigns of the Underwriter), and no other person shall acquire or have an y right hereunder or by virtue hereof, this Agreement may not be assigned by the Town. All of the representations, warranties and agreements of the Town contained in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigations made by or on behalf of the Underwriter; (ii) delivery of and payment for the Obligations pursuant to this Agreement; and (iii) any termination of this Agreement. 21 010-9250-0847/3 13. Effectiveness . This Agreement shall become effective upon the acceptance hereof by the Town and shall be valid and enforceable at the time of such acceptance. 14. Choice of Law. This Agreement shall be governed by and construed in accordance with the law of the State. 15. Se verability. If any provision of this Agreement shall be held or deemed to, or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions because it conflicts with any provisions of any Constitution, statute, rule of public policy or any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatever. 16. Business Day. For purposes of this Agreement, “business day” means any day on which the New York Stock Exchange is open for trading. 17. Se ction Headings . Section headings have been inserted in this Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Agreement and will not be used in the interpretation of any provisions o f this Agreement. 18. Counterparts; Electronic Signature . This Agreement may be executed in several counterparts each of which shall be regarded as an original (with the same effect as if the signatures thereto and hereto were upon the same document) and all of which shall constitute one and the same document. The electronic signature of a party to this Agreement shall be as valid as an original signature of such party and shall be effective to bind such party to this Agreement. For purposes hereof: (i) “electronic signature ” means a manually signed original signature that is then transmitted by electronic means; and (ii) “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a portable document format (pdf) or other replicating image attached to an email or internet message. [Signature page follows.] [Signature page to Obligation Purchase Agreement ] 010-9250-0847/3 If you agree with the foregoing, please sign the enclosed counterpart of this Agreement and return it to the Underwriter. This Agreement shall become a binding agreement between you and the Underwriter when at least the counterpart of this letter shall ha ve been signed by or on behalf of each of the parties hereto. Very truly yours, PIPER SANDLER & CO. By Name: Nicholas Dodd Title: Managing Director Accepted and agreed at ............ ...m., MST, this ......... of .................., 2021 TOWN OF ORO VALLEY, ARIZONA By: Title: ATTEST: By: Town Clerk, Town of Oro Valley, Arizona Schedule I – 1 010-9250-0847/3 SCHEDULE I $[PAR] TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATION S, TAX-EXEMPT SERIES 2021 DATED DATE: [Closing Date] Maturity Date (July 1) Principal Amount Interest Rate Yield $ % % [Optional Prepayment . The Obligations maturing before or on July 1, 20__, will not be subject to prepayment prior to maturity. The Obligations maturing on or after July 1, 20__, will be subject to prepayment in such order and from such maturities as may be selected by the Town and by lot within any maturity by such methods as may be selected by the Trustee from prepayments made at the option of the Town, in whole or in part on any date on or after July 1, 20__, at a prepayment price equal to the principal amount of Obligations or portions thereof to be prepaid , together with accrued interest to the date fixed for prepayment, but without premium.] Schedule I – 2 010-9250-0847/3 [Mandatory Prepayment . The Obligations maturing July 1, 20__ will be subject to mandatory prepayment on the following dates and in the following amounts at a price equal to the principal amount thereof plus interest accrued to the date of prepayment, but without premium: Maturing July 1, 20__ Year Principal Amount Prepaid $ ________________ *Maturity] Schedule II – 1 010-9250-0847/3 SCHEDULE II $[PAR] TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 Maturities for Which the 10% Test Has Been Met Maturity Date (July 1) Principal Amount Interest Rate Yield Price $ % % % Maturities for Which the 10% Test Has Not Been Met Maturity Date (July 1) Principal Amount Interest Rate Yield Price $ % % % A – 1 010-9250-0847/3 EXHIBIT A FORM OF ISSUE PRICE CERTIFICATE Piper Sandler & Co. (“Piper”), as Underwriter for the Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “Obligations”) executed and delivered on behalf of the Town of Oro Valley, Arizona (the “Town”), based on its knowledge regarding the sale of the Obligations, certifies as of this date as follows: [If the issue price is determined using only the general rule (ac tual sales of at least 10%) in Regulations § 1.148-1(f)(2)(i): (A) As of the date of this certificate, for each Maturity of the Obligations, the first price at which at least 10% of such Maturity of the Obligations was sold to the Public is the respective price listed on Schedule A (the “Sale Price” as applicable to respective Maturities). The aggregate of the Sale Prices of each Maturity is $[______] (the “Issue Price”).] [If the issue price is determined using a combination of actual sales (Re gulations § 1.148-1(f)(2)(i)) and hold-the -offering-price (Regulations § 1.148-1(f)(2)(ii): (A) As of the date of this certificate, for each Maturity listed on Schedule A as the “General Rule Maturities,” the first price at which at least 10% of such Matur ity was sold to the Public is the respective price listed in Schedule A (the “Sale Price” as applicable to each Maturity of the General Rule Maturities). (B) On or before the Sale Date, Piper offered the Maturities listed on Schedule A as the “Hold-the-Offering-Price Maturities” to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices” as applicable to each Maturity of the Hold-the-Offering-Price Maturities). A copy of the pricing wire or equivalent communication for the Obligations is attached to this certificate as Schedule B. (C) As set forth in the Obligation Purchase Agreement, dated [Pricing Date], between Piper and the Town, Piper has agreed in writing that, (i) for each Maturity of the Hold- the-Offering-Price Maturities, it would neither offer nor sell any portion of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any third - party distribution agreement shall contain the agreement of each broker -dealer who is a party to the third-party distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, Piper has not offered or sold any Maturity of the Hold -the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Pric e for that Maturity of the Obligations during the Holding Period. (D) The aggregate of the Sale Prices of the General Rule Maturities and the Initial Offering Prices of the Hold-the-Offering-Price Maturities is $[______] (the “Issue Price”).] A – 2 010-9250-0847/3 [If the issue price is determined using only the hold-the -offering -price rule in Regulations § 1.148-1(f)(2)(ii): (A) Piper offered, on or before the Sale Date, each Maturity of the Obligations to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”). A copy of the pricing wire or equivalent communication for the Obligations is attached to this certificate as Schedule B. The aggregate of the Initial Offering Prices of each Maturity is $[_______] (the “Issue Price”). (B) As set forth in the Obligation Purchase Agreement, dated [Pricing Date], between Piper and the Town, Piper has agreed in writing that, (i) for each Maturity of the Obligation, it would neither offer nor sell any portion of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any third -party distribution agreement shall contain the agreement of each broker-dealer who is a party to the third -party distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, Piper has not offered or sold any Maturity of the Obligation at a price that is higher than the respective Initial Offering Price for that Maturity of the Obligation during the Holding Period.] [(B),(E), or (C)] Definitions. [NOTE: If issue price is determined using only the general rule (actual sales of 10%), delete the definitions of “Holding Period” and “Sale Date.”] [“Holding Period” means, for each Hold -the-Offering-Price Maturity of the Obligations, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date ([________, 2021]), or (ii) the date on which Piper has sold at least 10% of such Maturity of the Obligations to the Public at a price that is no higher than the Initial Offering Price for such Maturity.] “Maturity” means Obligations with the same credit and payment terms. Obligations with different maturity dates, or Obligations with the same maturity date but different stated interest rates, are treated as separate Maturities. “Public” means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. [“Sale Date” means the first day on which there is a binding contract in writing for the sale of a Maturity of the Obligations. The Sale Date of the Obligations is [Pricing Date].] “Underwriter” means (i) any person that agrees pursuant to a written contract with the Town (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Obligations to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Obligations to the Public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Obligations to the Public). A – 3 010-9250-0847/3 All capitalized terms not defined in this certificate have the meaning set forth in the Federal Tax Exemption Certificate of the Town. The signer is an officer of Piper and duly authorized to execute and deliver this certificate of Piper. The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Piper’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Town with respect to certain of the representations set forth in the Tax Certificate of the Town and with respect to compliance with the federal income tax rules affecting the Obligations, and by Gust Rosenfeld P.L.C., as special counsel, in connection with rendering its opinion that the interest on the Obligations is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038 -G, and other federal income tax advice that it may give to the Town from time to time relating to the Obligations. Dated: [Closing Date] PIPER SANDLER & CO. By:_____________________________ Title:____________________________ A – 4 010-9250-0847/3 SCHEDULE A General Rule Maturities Maturity Date (July 1) Principal Amount Interest Rate Yield Price Issue Price $ % % % $ Hold-the -Offering -Price Maturities Maturity Date (July 1) Principal Amount Interest Rate Yield Price Issue Price $ % % % $ A – 5 010-9250-0847/3 SCHEDULE B [Actual Sales for Undersold Maturities as of the Closing Date Maturity/CUSIP Date Sold Time Sold Par Amount Sale Price **] [PRICING WIRE OR EQUIVALENT COMMUNICATION ] (Attached) AGREEMENT by and between U.S. BANK NATIONAL ASSOCIATION , as Trustee and TOWN OF ORO VALLEY, ARIZONA Related to TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 Dated as of _____ 1, 2021 4 213323.5 i AGREEMENT Table of Contents 1. Term and Payments............................................................................................................ 1 2. Pledge of Excise Taxes; Limited 2021 Obligations ........................................................... 4 3. Surplus and Deficiency of the Excise Taxes ..................................................................... 5 4. Use of Other Funds at the Option of Town ....................................................................... 5 5. Parity Obligations............................................................................................................... 6 6. Town to Maintain Coverage of Two Times Debt Service................................................. 6 7. Definition of Excise Taxes ................................................................................................ 6 8. Representations, Warranties and Covenants...................................................................... 6 9. Prepayment; Providing for Payment .................................................................................. 7 10. Event of Default and Remedies Upon Event of Default .................................................... 8 11. Assignment ......................................................................................................................... 9 12. Intentionally Left Blank ..................................................................................................... 10 13. Miscellaneous ..................................................................................................................... 11 14. Notices; Mailing Addresses............................................................................................... 12 15. Definitions .......................................................................................................................... 12 16. Intentionally Left Blank ..................................................................................................... 12 17. Notice as to Conflict of Interest ......................................................................................... 13 18. Trustee ............................................................................................................................... 13 19. E-Verify Requirements ...................................................................................................... 13 20. No Boycott of Israel .......................................................................................................... 14 EXHIBIT A – Description of Project EXHIBIT B – Payment Schedule EXHIBIT C – Bill of Sale 4 213323.5 1 AGREEMENT THIS AGREEMENT, dated as of _____ 1, 2021 (this “Agreement”), is made by and between the Town of Oro Valley, Arizona, a municipal corporation and a political subdivision under the laws of the State of Arizona (the “Town”) and U.S. Bank National Association a na tional banking association authorized to do trust business in the State of Arizona (the “Trustee”), in its capacity as trustee under the Trust Agreeme nt dated as of _____ 1, 2021, by and between the Trustee and the Town (the “Trust Agreement”) and in its capacity as “Payee” as described in the Trust Agreement. W I T N E S S E T H: WHEREAS, the Town desires to finance (i) various improvements to its parks and recreation facilities, and (ii) the payment of the Delivery Costs of the 2021 Obligations defined herein (the “Project”); and WHEREAS, in order to finance the Project, the Town has authorized the execution and delivery of the Town’s Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax- Exempt Series 2021 (the “2021 Obligations”) to be executed and delivered pursuant to the Trust Agreement ; and WHEREAS, the Trustee will execute and deliver the 2021 Obligations and use the proceeds of the 2021 Obligations to provide funds to the Town to finance the Project and to pay the Delivery Costs of the 2021 Obligations; and WHEREAS, the Town shall hereby agree to pay to the Trustee from time to time the Payments (as defined herein) and to pledge its Excise Taxes and, to the extent Excise Taxes are insufficient, Parks and Recreation Taxes (both as defined in the Trust Agreement) as security and the source of payment of such Payments and the Trustee shall hereby agree to accept such Payments, NOW, THEREFORE, in consideration of the foregoing introduction and recitals, which are incorporated herein by reference, and the mutual covenants, conditions and agreements hereinafter contained, it is hereby agreed as follows: 1. Definitions . All terms not otherwise defined herein are as defined in the Trust Agreement. 2. Term and Payments . (a) For the purpose of providing the funds necessary to finance the Project as described in Exhibit A which is attached hereto and made a part hereof, the Trustee shall execute and deliver the Obligations and apply the proceeds thereof to finance the Project at the direction of the Town and the Trustee hereby sells to Town and Town hereby buys from Trustee, the Project . The Town agrees to pay all costs and expenses attendant to the Project. It is understood and agreed that Trustee shall in no event be deemed an owner of the Project or appear on any records 4 213323.5 2 (including, without limitation, real property records) as an owner of the Project. To provide the funds necessary therefor, the Trustee, pursuant to the Trust Agreement, will execute and deliver the 2021 Obligations. (b) For such purpose, the Town agrees to make payments (the “Payments”) hereunder to the Trustee in the amounts set forth in Exhibit B attached hereto and incorporated herein, and the Trustee hereby agrees to accept the Payments . The Town’s obligation to make such Payments shall be limited to payment from Excise Taxes and Parks and Recreations Taxes pledged to the payment thereof by the Town. (c) Intentionally left blank. (d) The obligations of the Town to make the Payments from the sources described herein and to perform and observe the other agreements contained herein shall be absolute and unconditional and shall not be subject to any defense or any right of set-off, abatement, counterclaim, or recoupment arising out of any breach of the Trustee of any obligation to the Town or otherwise, or out of indebtedness or liability at any time owing to the Town by the Trustee. Until such time as all of the Payments shall have been fully paid or provided for, the Town (i) will not suspend or discontinue any payments provided for in this Section 2, (ii) will perform and observe all other agreements contained herein, and (iii) will not terminate the term of this Agreement for any cause, including, without limiting the generality of the foregoing, failure of Trustee or any other person to complete the acquisition, construction and installation of the Project, the occurrence of any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Pro ject, the taking by eminent domain of title to or temporary use of any or all of the Project, commercial frustration of purpose, abandonment of the Project by Town, any change in the tax or other laws of the United States of America or of the State of Arizona or any political subdivision of either or any failure of the Trustee to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Trust Agreement or this Agreement. Nothing contained in this Section shall be construed to release the Trustee from the performance of any of the agreements on its part herein or in the Trust Agreement and in the event the Trustee shall fail to perform any such agreements on its part, the Town may institute such action against the Trustee as the Town may deem necessary to compel performance so long as such action does not abrogate the obligations of the Town contained in the first sentence of this paragraph (d). This Agreement shall not terminate so long as any payments are due and owing under the 2021 Obligations. (e) In the event that the Town expects that it will not make a Payment when due hereunder, the Town shall, at least five Business Days before the date such Payment is due, notify the Trustee in writing of such expectation. 3. Pledge of Excise Taxes and Parks and Recreation Taxes ; Limited 2021 Obligations (a) The Town hereby pledges for the Payments to be made hereunder and all other amounts payable pursuant hereto its Excise Taxes and, to the extent Excise Taxes are insufficient, Parks and Recreation Taxes. The Town intends that this pledge shall be a first lien pledge upon such amounts of said taxes as will be sufficient to make the Payments pursuant hereto 4 213323.5 3 when due. The Town agrees and covenants to make said Payments from such Excise Taxes and Parks and Recreation Taxes, except to the extent it chooses to make the Payments from o ther funds pursuant to Section 5. Said pledge of, and said lien on, the Excise Taxes and Parks and Recreation Taxes is hereby irrevocably made and created for the prompt and punctual payment of the amounts due hereunder according to the terms hereof, and to create and maintain the funds as hereinafter specified in this Agreement or as may be specified in the Trust Agreement. All of the Payments are coequal as to the pledge of and lien on the Excise Taxes and Parks and Recreation Taxes pledged for the payment thereof and share ratably, without preference, priority or distinction, as to the source or method of payment from Excise Taxes and Parks and Recreation Taxes or security therefor. The pledge and lien shall be on a parity with the pledge of and lien on such Excise Taxes for the payments due with respect to the Parity Obligations and the pledge and lien shall be on a parity with the pledge of and lien on such Parks and Recreation Taxes for the payments due with respect to the Parks and Recreation Tax Parity Obligations. (b) The Town shall remit to the Trustee from Excise Taxes and Parks and Recreation Taxes all amounts due under this Agreement in the amounts and at the times and for the purposes as required herein. The Town shall remit to the Trustee (or other appropriate trustee with respect to Excise Tax Parity Obligations) from Excise Taxes all amounts due on Excise Tax Parity Obligations. The Town shall remit to the Trustee (or other appropriate trustee with respect to Parks and Recreation Tax Parity Obligations) from Excise Taxes and Parks and Recreation Taxes all amounts due on Parks and Recreation Tax Parity Obligations. In order to secure payment of the 2021 Obligations and Parity Obligations, the Town previously created a separate and special fund which shall contain only Excise Taxes and shall not contain any other moneys of the Town, known as the “Oro Valley Excise Tax Fund” (the “Excise Tax Fund”). The Excise Tax Fund is and shall continue to be funded solely and only from the Excise Taxes received by the Town and from no other source. The Excise Tax Fund may be reduced to zero in each month after the amounts required to be transferred to the applicable trustee for the applicable payment fund for the Existing Parity Obligations, the 2021 Obligations and any other Parity Obligations have been transferred. In addition, in order to secure payment of the 2021 Obligations and any other Parks and Recreation Tax Parity Obligations, the Town previously created a separate and special fund which shall contain only Parks and Recreation Taxes and shall not contain any other moneys of the Town, known as the “Oro Valley Parks and Recreation Tax Fund” (the “Parks and Recreation Tax Fund”). The Parks and Recreation Tax Fund is and shall continue to be funded solely and only from the Parks and Recreation Taxes received by the Town and from no other source. The Parks and Recreation Tax Fund may be reduced to zero in each month after the amounts required to be transferred to the applicable trustee for the applicable payment fund for the 2021 Obligations and any other Parks and Recreation Tax Parity Obligations have been transferred. All payments to be made pursuant to this Agreement shall be made from the Excise Tax Fund and the Parks and Recreation Tax Fund. (c) If at any time the moneys in the Excise Tax Fund and the Parks and Recreation Tax Fund are not sufficient to make all of the deposits and transfers required by this Agreement or the Parks and Recreation Tax Parity Obligations, or, if at any time the moneys in the Excise Tax Fund are not sufficient to make all of the deposits and transfers required by the Excise Tax Parity Obligations, then, first, the moneys in the Excise Tax Fund shall be distributed between this Agreement and the Parity Obligations on a pro rata basis as de termined by the debt service then due without regard to the existence of a reserve fund, a cash funded reserve fund or a reserve 4 213323.5 4 fund guaranty or similar surety and, second, the moneys in the Parks and Recreation Tax Fund shall be distributed between this Agreement and the Parks and Recreation Tax Parity Obligations on a pro rata basis as determined by the debt service then due without regard to the existence of a reserve fund, a cash funded reserve fund or a reserve fund guaranty or similar surety. Any deficiency in the Excise Tax Fund or the Parks and Recreation Tax Fund shall be made up from the first moneys thereafter received and available for such transfers under the terms of this Agreement, and the transfer of any such sum or sums to said fund or acc ounts as may be necessary to make up any such deficiency shall be in addition to the then-current transfers required to be made pursuant hereto. (d) The Town’s obligation to make payments of any amounts due under this Agreement, including amounts due after default or termination hereof, is limited to payment from Excise Taxes and Parks and Recreation Taxes and shall in no circumstances constitute a general obligation of, or a pledge of the full faith and credit of, the Town, the State of Arizona or any of its political subdivisions, or require the levy of, or be payable from the proceeds of, any ad valorem taxes. 4. Surplus and Deficiency of the Excise Taxes and Parks and Recreation Taxes . All Excise Taxes and Parks and Recreation Taxes in excess of amounts, if any, required to be deposited with or held by the Trustee (or other appropriate trustee with respect to Parity Obligations) for Payments due under this Agreement or the Trust Agreement or Parity Obligations shall constitute surplus revenues and may b e used by the Town for any lawful purpose for the benefit of the Town, including the payment of junior lien obligations to which such Excise Taxes and Parks and Recreation Taxes may from time to time be pledged. If at any time the moneys in the funds and accounts held for payment of amounts due under this Agreement or Parity Obligations are not sufficient to make the deposits and transfers therein required, any such deficiency shall be made up from the first moneys thereafter received and available for such transfers under the terms hereof and documents governing any Parity Obligations, and the transfer of any such sum or sums to said fund or accounts as may be necessary to make up any such deficiency shall be in addition to the then-current transfers required to be made pursuant hereto. 5. Use of Other Funds at the Option of the Town. The Town may, at the Town’s sole option, make such Payments from its other funds as permitted by law and as the Town shall determine from time to time, but the Trustee acknowledges that it has no claim hereunder to such other funds. No part of the Payments payable pursuant to this Agreement shall be payable out of any ad valorem taxes imposed by the Town or from bonds or other obligations, the payment of which the Town’s general taxing authority is pledged, unless (a) the same shall have been duly budgeted by the Town according to law, (b) such payment or payments shall be within the budget limitations of the statutes of the State of Arizona, and (c) any such bonded indebtedness or other obligation is within the debt limitations of the Constitution of the State of Arizona. 6. Parity Obligations . So long as any amounts due hereunder remain unpaid or unprovided for, the Town shall not create, suffer or permit any lien upon the Excise Taxes and Parks and Recreation Taxes senior to the lien hereof. So long as any amounts due hereunder remain unpaid or unprovided for, the Town shall not create, suffer or permit any lien upon Excise Taxes and Parks and Recreation Taxes on a parity herewith except for Parity Obligations upon compliance with the requirements therefor set out in the Trust Agreement. 4 213323.5 5 7. The Town to Maintain Coverage of Two Times Debt Service . To the extent permitted by law, the Town covenants and agrees that the Excise Taxes which it presently imposes will continue to be imposed in each Fiscal Year so that the amount of Excise Taxes, all within and for the next preceding Fiscal Year of the Town, shall be equal to at least two times the Annual Debt Service Requirement payable hereunder, and under any Outstanding Parity Obligations, for the current Fiscal Year. The Town further covenants and agrees that if such receipts for any such Fiscal Year shall not equal at least two times such Annual Debt Service Requirement for such Fiscal Year, or if at any time it appears that the current Fiscal Year’s receipts will not be sufficient to meet the current Fiscal Year’s actual Annual Debt Service Requirement, the Town will, to the extent permitted by law, either impose new Excise Taxes or will increase the rates of such taxes currently imposed in order that (a) the current Fiscal Year’s receipts will be sufficient to meet the current Fiscal Year’s Annual Debt Service Requirement and (b) the then-current Fiscal Year’s receipts will be equal to at least two times the next succeeding Fiscal Year’s Annual Debt Service Requirement. 8. Definition of Excise Taxes and Parks and Recreation Taxes . (a) “Excise Taxes” shall mean all unrestricted excise, transaction, franchise, privilege and business taxes, state-shared sales and income taxes, fees for licenses and permits, fines, bed and rental taxes, and state revenue-sharing, now or hereafter validly imposed by the Town or contributed, allocated and paid over to the Town and not earmarked by the contributor for a contrary or inconsistent purpose. (b) “Parks and Recreation Taxes” shall mean revenues generated pursuant to Ordinance No. (O)14-17, as amended by Ordinance No. (O)21-05, which impose an additional 0.5% transaction privilege tax to fund the needs of the Town’s Community Center, golf and tennis facilities or for parks and recreation purposes (effective May 21, 2021 ). (c) Revenues generated by the Town from deve lopment impact fees will not be deemed Excise Taxes or Parks and Recreation Taxes for purposes of this Agreement and the Trust Agreement. Revenues received by the Town from vehicle license taxes charged by the State will not be deemed Excise Taxes or Park s and Recreation Taxes for purposes of this Agreement and the Trust Agreement. The revenues generated by the Parks and Recreation Taxes will not be deemed Excise Taxes for purposes of this Agreement and the Trust Agreement. The Town also levies an additional 6.0% transient lodging tax on any hotel, motel or apartment let for less than 30 consecutive days, the revenues from which are restricted by State law to use for visitor and hospitality services and such revenues will not be deemed Excise Taxes or Par ks and Recreation Taxes for purposes of the Agreement and the Trust Agreement. The Town may impose taxes for restricted purposes the revenues from which will not be Excise Taxes or Parks and Recreation Taxes and will not be pledged to the payment of the a mounts due pursuant to this Agreement. 9. Representations, Warranties and Covenants . (a) The Town represents, warrants and covenants that it has the power to enter into this Agreement, that this Agreement is a lawful, valid and binding obligation of the Town, enforceable against the Town in accordance with its terms, and has been duly authorized, exec uted 4 213323.5 6 and delivered by the Town; that all required procedures for execution and performance hereof, including publication of notice, public hearing or competitive bidding, if applicable, have been or will be complied with in a timely manner; that all Payments hereunder will be paid when due out of funds that are legally available for such purposes. (b) Intentionally Left Blank . (c) Except with respect to its power and authority to enter into this Agreement and to perform its covenants hereunder, the Trustee has made and makes no representation or warranty, express or implied, and assumes no obligation with respect to the Project financed by this Agreement. All such risks shall be borne by the Town without in any way excusing the Town from its obligations under this Agreement and the Trustee shall not be liable to the Town for any damages on account of such risks. Except with respect to any acts by the Trustee which are not undertaken either (i) at the Town’s request, or (ii) with the Town’s prior approval, the Town agrees to waive all claims against the Trustee relating to the Project financed by this Agreement. 10. Prepayment; Providing for Payment. (a) The Town may prepay the Payments in order to cause the redemption of the Obligations as provided in Article IV of the Trust Agreement. (b) The Town may provide for the payment of any Payment in any one or more of the following ways: (i) by paying such Payment as provided herein as and when the same becomes due and payable at its scheduled due date pursuant to Section 2 herein ; (ii) by depositing with a Depository Trustee (as defined below), in trust for such purposes, at or before maturity, money which, together with the amounts then on deposit with the Trustee and available for such Payment is fully sufficient to make, or cause to be made, such Payment; or (iii) by depositing with a Depository Trustee, in trust for such purpose s, any United States Obligations which are noncallable, in such amount as shall be certified to the Trustee and the Town, by a national firm of certified public accountants acceptable to both the Trustee and the Town, as being fully sufficient, together with the interest to accrue thereon and moneys then on deposit with the Trustee and available for such Payment, to make, or cause to be made, such Payment, as and when the same becomes due and payable at maturity. A Depository Trustee shall be any bank or trust company, including the Trustee, with a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or State of Arizona authority who holds money and securities in trust for the purposes set forth in subparagraphs (ii) or (iii) of this paragraph (b) (a “Depository Trustee”). 4 213323.5 7 11. Event of Default and Remedies Upon Event of Default. (a) The occurrence of one or more of the following events shall constitute an “Event of Default,” whether occurring voluntarily or involuntarily, by operation of law or pursuant to any order of any court or governmental agency: (i) The Town’s failure to make any Payment or any other amount payable hereunder, under the Trust Agreement or under any governing documents relating to any Parity Obligations when the same shall become due; (ii) The Town’s failure to perform or observe any other covenant, condition or agreement required to be performed or observed by the Town hereunder, under the Trust Agreement or under any governing documents relating to any Parity Obligations, which failure continues for a period of 20 days after written notice thereof from the Trustee to the Town; provided, however, that if the failure cannot be corrected within the applicable time period, the Trustee will not unreasonably withhold its consent to an extension of 180 days from the date of delivery of such written notice to the Town by the Trustee if corrective action is instituted by the Town within the applicable period and diligently pursued until the default is corrected ; provided, however, that if the failure cannot be corrected within the initial 180 day extension, the Town may request, and the Trustee will not unreasonably withhold its consent to, successive additional 180 day extension(s) so long as the Town is diligently pursuing corrective action; provided further that should the Town require an extension of time to correct any such failure the Trustee shall be provided with a certification from the Town to the effect that the failure cannot be corrected within the required timeframe and the Town has commenced or will promptly commence such corrective action and will diligently pursue such corrective action; (iii) Any representation or warranty made by the Town hereunder shall be untrue in any material respect as of the date made and not made true in all material respects within 20 days after written notice thereof from the Trustee to the Town; (iv) The Town shall make, permit or suffer any unauthorized assignment or transfer hereof or any interest therein; or (v) The Town becomes insolvent or admits in writing its inability to pay its debts as they mature or applies for, consents to, or acquiesces in the appointment of a trustee or receiver for the Town or a substantial part of its property; or in the absence of such application, consent or acquiescence, a trustee or receiver is appointed for the Town or a substantial part of its property and is not discharged within 60 days; or any bankruptcy, reorganization, debt arrangement, moratorium, or any proceeding under any bankruptcy or insolvency law, or any dis - solution or liquidation proceeding, is instituted by or against the Town and, if instituted against the Town, is consented to or acquiesced in by the Town or is not dismissed within 60 days. (b) Upon the occurrence of any Event of Default specified in paragraph (a) of Section 11 hereof, the Trustee shall give written notice of such Event of Default to the Town and may, upon the request of the Owners of 25% in aggregate principal amount of the Obligations then outstanding and upon being indemnified pursuant to its satisfaction, pursue or exercise any of the following remedies or rights, provided that such election or commencement to exercise any such 4 213323.5 8 remedy or right shall not preclude the Trustee from concurrently or separately electing or exercising any other remedy not inconsistent therewith: (i) Enforce this Agreement by appropriate legal or other action to collect all amounts due or accruing hereunder or under the Trust Agreement and to cause the Town to pay or perform its other obligations hereunder or under the Trust Agreement when and as the same shall be required to be paid or performed hereunder or thereunder, and for damages for the breach hereof and of the Trust Agreement, which damages shall be the amounts payable here - under at the times herein set forth without acceleration plus the reasonable costs of collection, including reasonable attorneys’ fees and expenses. (ii) Pursue and exercise any other remedy available at law or in equity and all other remedies permitted under the Trust Agreement. No other remedy exercised by the Trustee under this Section 11 shall excuse any of the Town’s obligations hereunder. (c) The Trustee, upon the bringing of a suit to collect the Payments in default, may as a matter of right, without notice and without giving bond to the Town or anyone claiming under the Town, seek and obtain injunctive relief. (d) The obligation of the Town to make Payments is not subject to acceleration and such Payments may not be made immediately due and payable for any reason. 12. Assignment. (a) Except as otherwise provided herein, without the prior written consent of the Trustee (which, prior to the payment of the Obligations in full, shall not be given without the Trustee’s receipt of direction from the Owners of a majority in aggregate principa l amount of the Obligations then Outstanding to give such consent), the Town shall not assign, transfer, pledge or hypothecate or otherwise dispose of this Agreement, or any interest therein. (b) Subject to the terms of the Trust Agreement, the Trustee shall be entitled, with or without notice to, or the consent of, the Town, to sell, pledge, assign, transfer and encumber all or any part of its right, title and interest in and to this Agreement and all payments of any kind due or which become due to the Trustee hereunder, provided that such transfer or assignment shall not impair the Obligations, that the transferee or assignee shall be bound by the terms hereof and all related agreements executed by the Trustee in connection herewith and shall execute such nondisturbance and acceptance instruments as shall reasonably be required to evidence the same as hereinafter provided and, upon the Town’s receipt of notice of any such assignment or transfer of the Trustee’s interest, any such assignee(s) or transferee(s) shall thereafter (collectively, if more than one) become and be deemed to be the Trustee hereunder, and have all of the rights, powers, privileges and remedies, and be subject to all of the covenants and agreements, of the Trustee hereunder for all purposes hereof. During the term hereof, the Town shall maintain a complete and accurate record of all such sales, assignments and transfers in form necessary to comply with Section 149(a) of the United States Internal Revenue Code of 1986, as amended, and the regulations proposed or existing, from time to time promulgated thereunder. Upon the Town’s receipt of written notice as 4 213323.5 9 above-described, of the Trustee’s sale, assignment or transfer of all or any part of its interest in this Agreement or the payments hereunder, the Town agrees to attorn to and recognize any such purchaser(s), assignee(s) or transferee(s) (jointly if more than one) as the owner(s) of all right, title and interest in, to and under this Agreement and the payments thereafter due and payab le pursuant hereto, and as the trustee(s) hereunder. Upon the written request of any purchaser, assignee or transferee of the Trustee’s interest, the Town agrees to execute and deliver to such purchaser, assignee or transferee such certificates or other instruments in such forms as may reasonably be required by such purchaser, assignee or transferee, and to which the Town can truthfully attest, including but not limited to a separate acknowledgment of assignment and attornment certificate in the customary form as to such purchaser’s, assignee’s or transferee’s right, title and interest in, to and under this Agreement and the payments thereafter due and payable pursuant hereto. Any such purchaser, assignee or transferee shall agree in writing to assume and perform all of the duties and responsibilities of the Trustee and shall acknowledge the Town’s rights hereunder; provided, however, that in the event the Trustee becomes merged or consolidated with any other entity and the resulting entity meets the requirements for a successor trustee under the Trust Agreement, then the resulting entity shall assume all rights, responsibilities and duties of the Trustee hereunder without the execution or filing of any papers or any further act on the part of either party and the “Trustee” hereunder shall refer to such resulting party. 13. Transfer of Project, Personal Property . Trustee shall execute appropriate transfer documents in the forms attached hereto as Exhibit C, which shall transfer Trustee’s right, title and interest, if any, in and to the Project, respectively, including without limitation, all of Trustee’s right, title and interest in the Personal Property. Trustee shall convey title free from any liens, encumbrances or security interests created by Trustee except as may be otherwise imposed hereunder or under the Trust Agreement, or as otherwise consented to in writing by the Town. 14. Miscellaneous . (a) No covenant or obligation herein to be performed by the Town may be waived except by the written consent of the Trustee and a waiver of any such covenant or obligation or a forbearance to invoke any remedy on any occasion shall not constitute or be treated as a waiver of such covenant or obligation as to any other occasion and shall not preclude the Trustee from invoking such remedy at any later time prior to the Town’s cure of the condition giving rise to such remedy. (b) This Agreement shall be construed and governed in accordance with the laws of the State of Arizona in effect from time to time. (c) This Agreement constitutes the entire agreement between the parties and shall not be modified, waived, discharged, terminated, amended, supplemented, altered or changed in any respect except by a written document signed by both the Trustee and the Town. (d) Any term or provision hereof found to be prohibited by law or unenforce - able or which would cause this Agreement to be invalid, prohibited by law or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without, to the extent reasonably possible, causing the remainder of this Agreement to be invalid, prohibited by law or unenforceable. 4 213323.5 10 (e) Trustee hereunder shall have the right at any time or times, by notice to the Town, to designate or appoint any person or entity to act as agent or trustee for the Trustee for any purposes hereunder. (f) Use of the neuter gender herein is for purposes of convenience only and shall be deemed to mean and include the masculine or feminine gender whenever and wherever appropriate. (g) The captions set forth herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. (h) Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties a nd their respective heirs, successors, assigns and personal representatives, as the case may be. Any person or entity acquiring any interest in or to the Trustee’s right, title or interest herein shall be and have the rights of a third party beneficiary hereunder. 15. Notices; Mailing Addresses . All notices, consents or other communications required or permitted hereunder shall be deemed sufficient if given in writing addressed and mailed by registered or certified mail, or delivered to the party for which the same is intended or certified, as follows: If to the Trustee: U.S. Bank National Association 101 North First Avenue, Suite 1600 Phoenix, Arizona 85003 Attn: Global Corporate Trust If to the Town: Town of Oro Valley, Arizona 11000 N. La Cañada Drive Oro Valley, Arizona 85737-7015 Attn: Chief Financial Officer with a copy to: Gust Rosenfeld P.L.C. One East Washington Street, Suite 1600 Phoenix, Arizona 85004-2553 Attn: Timothy A. Stratton, Esq. All notices, approvals, consents, requests and any communications to the Trustee hereunder must be in writing in English and must be in the form of a document that is signed manually or by way of an electronic signature (including electronic images of hand written signatures and digital signatures provided by DocuSign, Orbit, Adobe Sign or any other electronic signature provider acceptable to the Trustee). Electronic signatures believed by the Trustee to comply with the ESIGN ACT of 2000 or other applicable law shall be deemed original signatures for all purposes. If the Town chooses to use electronic signatures to sign documents delivered to the Trustee, the Town agrees to assume all risks arising out of its use of electronic signatures, including without limitation the risk of the Trustee acting on an unauthorized document and the 4 213323.5 11 risk of interception or misuse by third parties. Notwithstanding the foregoing, the Trustee may in any instance and in its sole discretion require that an original document bearing a manual signature be delivered to the Trustee in lieu of, or in addition to, any document signed via electronic signature. 16. Tax Covenants . In consideration of the acceptance and execution of this Agreement by the Trustee and the purchase of the 2021 Obligations by the Owners thereof, from time to time, and in consideration of retaining the exclusion of interest income from gross income on this Agreement and the 2021 Obligations for federal income tax purposes, the Town covenants with the Trustee and the 2021 Obligation Owners from time to time to neither take nor fail to take any action, which action or failure to act is within its power and authority and would result in interest income on this Agreement or the 2021 Obligations to become subject to inclusion in gross income for federal income tax purposes under either laws existing on the date of execution hereof or such laws as they may be modified or amended or tax laws later adopted. The Town agrees that it will comply with such requirement(s) and will take any such action(s) as are necessary to prevent interest income on this Agreement or the 2021 Obligations from becoming subject to inclusion in gross income for federal income tax purposes. Such requirements may include but are not limited to making further specific covenants; making truthful certifications and representations and giving necessary assurances; complying with all representations, covenants and assurances contained in certificates or agreements to be prepared by special counsel; to pay to the United States of America any required amounts representing rebates of arbitrage profits relating hereto; filing forms, statements and supporting documents as may be required under the federal tax laws; limiting the term of and yield on investments made with moneys relating hereto; and limiting the use of the proceeds hereof and property financed thereby. In consideration for the issuance of the 2021 Obligations, the Town agrees to be the ultimate obligor for the payment of arbitrage rebate should the amounts held in the Arbitrage Rebate Fund be insufficient to make all payments required by Section 148(f)(3) of the Code or any succeeding sections. Town shall cause to be prepared each completed Form 8038 -T as may be required pursuant to the Trust Agreement and direct Trustee to file it and remit such payment all as may be necessary to comply with Section 148(f)(3), as amended, or any succeeding sections as may be applicable. 17. Notice as to Conflict of Interest. A.R.S. § 38-511 provides that the Town may, within three years after its execution, cancel any contract, without penalty or further obligation, if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the Town is, at any time while the contract or any extension of the contract is in effect, an employee or agent of any other party to the contract in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract . In addition, the Town may recoup any fee or commission paid or due to any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the Town from any other party to the contract arising as a result of the contract. 18. Trustee . The Trustee is acting hereunder in its capacity as the Trustee under the Trust Agreement and is entitled to all the rights, protections, immunities and indemnities 4 213323.5 12 hereunder as afforded to the Trustee under the Trust Agree ment. The Trustee has no duty or obligation to monitor the Town’s compliance with the Town’s covenants set forth in this Agreement. 19. E-Verify Requirements . To the extent applicable under A.R.S. § 41-4401, the Trustee and its subcontractors warrant compliance with all federal immigration laws and regulations that relate to their employees and their compliance with the E-verify requirements under A.R.S. § 23-214(A). The Trustee or its subcontractors’ breach of the above-mentioned warranty shall be deemed a material breach of this Agreement and may result in the termination of the Trustee’s services by the Town. The Town retains the legal right to randomly inspect the papers and records of the Trustee or its subcontractor employees who work on this Agreement to ensure that the Trustee and its subcontractors are complying with the above -mentioned warranty. The Trustee and its subcontractors warrant to keep the papers and records open for random inspection by the Town during normal business hours. The Trustee and its subcontractors shall cooperate with the Town’s random inspections including granting the Town entry rights onto its property to perform the random inspections and waiving their respective rights to keep such papers and records confidential. 20. No Boycott of Israel. To the extent A.R.S. § 35-393 through § 35-393.03 are applicable, the parties hereby certify that they are not currently engaged in, and agree for the duration of this Agreement to not engage in, a “boycott” of goods or services from Israel, as that term is defined in A.R.S. § 35 -393. [Signatures on following pages] 4213323 IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day of ______, 2021. TRUSTEE: U.S. BANK NATIONAL ASSOCIATION By_________________________________ Its_________________________________ [Signature page of the Trustee to the Agreement] 4213323 TOWN: TOWN OF ORO VALLEY, ARIZONA, a municipal corporation and political subdivision under the laws of the State of Arizona By_________________________________ Mayor ATTEST: By_________________________________ Town Clerk APPROVED AS TO FORM: By ___________________________________ Special Counsel [Signature page of the Town to the Agreement] 4 213323.5 A-1 EXHIBIT A DESCRIPTION OF PROJECT The 2021 Project consists of the financing of various improvements to its parks and recreation facilities. 4 213323.5 B-1 EXHIBIT B PAYMENT SCHEDULE Payment Date Principal Interest Total Payment 1/1/2022 7/1/2022 1/1/2023 7/1/2023 1/1/2024 7/1/2024 1/1/2025 7/1/2025 1/1/2026 7/1/2026 1/1/2027 7/1/2027 1/1/2028 7/1/2028 1/1/2029 7/1/2029 1/1/2030 7/1/2030 1/1/2031 7/1/2031 1/1/2032 7/1/2032 1/1/2033 7/1/2033 1/1/2034 7/1/2034 1/1/2035 7/1/2035 1/1/2036 7/1/2036 1/1/2037 7/1/2037 1/1/2038 7/1/2038 4 213323.5 C-1 EXHIBIT C BILL OF SALE TRANSFER OF PROJECT U.S. Bank National Association, a national banking association, as Trustee under that Trust Agreement dated as of [______] 1, 2021 (the “Trust Agreement”), by and between Trustee and the Town of Oro Valley, Arizona (“Town”), and as Trustee under that Agreement dated as of [______] 1, 2021 (the “Agreement”), between Trustee and Town, hereby transfers all of Trustee’s right, title and interest in and to the Project (as defined in the Trust Agreement) including without limitation all of Trustee’s right, title and interest in any [PERSONAL PROPERTY DESCRIPTION]. Trustee hereby conveys title without recourse, representation or warranty, except for its conveyance free from any liens, encumbrances or security interests created by Trustee (other than any liens imposed hereunder or by the Trust Agreement) without Town’s written consent. U.S. BANK NATIONAL ASSOCIATION , as Trustee By______________________________ Its_____________________________ State of Arizona County of Maricopa The foregoing instrument was acknowledged before me this ____ day of ___________, 20__, by ____________________________, the ___________________ of U.S. Bank National Association , a national banking association, on behalf of the association. (Seal and Expiration Date) ___________________________________ Notary Public ______________________________________________________________________________ TRUST AGREEMENT by and between U.S. BANK NATIONAL ASSOCIATION as Trustee and TOWN OF ORO VALLEY, ARIZONA Related to TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 Dated as of ______ 1, 2021 ______________________________________________________________________________ 4 213173.5 i TABLE OF CONTENTS ARTICLE I DEFINITIONS Section 1.1. Definitions ................................................................................................. 2 Section 1.2. Authorization .......................................................................................... 10 Section 1.3. Interpretation ........................................................................................... 10 ARTICLE II THE 2021 OBLIGATION S Section 2.1. Authorization of the 2021 Obligations ................................................... 10 Section 2.2. Date ......................................................................................................... 11 Section 2.3. Maturities and Interest Rates ................................................................... 11 Section 2.4. Interest on 2021 Obligations ................................................................... 11 Section 2.5. Form ........................................................................................................ 12 Section 2.6. Execution ................................................................................................ 12 Section 2.7. Book-Entry-Only S ystem........................................................................ 12 Section 2.8. Application of Proceeds .......................................................................... 13 Section 2.9. Transfer and Exchange ............................................................................ 13 Section 2.10. 2021 Obligations Mutilated, Lost, Destroyed or Stolen ......................... 14 Section 2.11. Payment ................................................................................................... 14 Section 2.12. Execution of Doc uments and Proof of Ownership ................................. 15 Section 2.13. 2021 Obligation Register ........................................................................ 15 Section 2.14. Payment of Unclaimed Amounts ............................................................ 15 Section 2.15. Issuance and Delivery of Parity Obligations .......................................... 16 Section 2.16. F.A.S.T. Closing ..................................................................................... 16 ARTICLE III APPLICATION OF PROCEEDS; PROJECT FUND DELIVERY COSTS FUND Section 3.1. Project Fund; Purpose ............................................................................. 16 Section 3.2. Payment of Project Costs ........................................................................ 16 Section 3.3. Excess Proceeds ...................................................................................... 17 Section 3.4. Application of Project Fund Investment Earnings .................................. 17 Section 3.5. Payments by the Town ............................................................................ 17 Section 3.6. Establishment and Applica tion o f Delivery Costs Fund ......................... 17 ARTICLE IV REDEMPTION OF 2021 OBLIGATIONS Section 4.1. Redemption or Purchase of 2021 Obligations ........................................ 19 Section 4.2. Terms of Redemption of 2021 Obligations ............................................ 19 4 213173.5 ii Section 4.3. Town’s Elec tion to Redeem .................................................................... 19 Section 4.4. Notice of Redemption ............................................................................. 20 Section 4.5. Payment of Redeemed 2021 Obligations ................................................ 20 Section 4.6. Purchase of 2021 Obligations ................................................................. 21 ARTICLE V PAYMENTS; PAYMENT FUND Section 5.1. Trustee’s Rights in the Agreement .......................................................... 21 Section 5.2. Establishme nt of Payment Fund ............................................................. 21 Section 5.3. Deposits ................................................................................................... 21 Section 5.4. Application of Moneys ............................................................................ 21 Section 5.5. Transfers of Invest ment Earnings to Payment Fund ............................... 21 Section 5.6. Surplus .................................................................................................... 21 Section 5.7. Separate Funds and Accounts ................................................................. 22 ARTICLE VI PLEDGE AND LIEN Section 6.1. Pledge ...................................................................................................... 28 Section 6.2. Protection of Lien.................................................................................... 28 Section 6.3. Reserved .................................................................................................. 28 Section 6.4. Parity Obligations ................................................................................... 28 ARTICLE VII MONEYS IN FUNDS; INVESTMENTS Section 7.1. Held in Trust ........................................................................................... 25 Section 7.2. Investments Authorized .......................................................................... 25 Section 7.3. Accounting .............................................................................................. 26 Section 7.4. Allocation of Earnings ............................................................................ 26 Section 7.5. Valuation and Disposition of Investments .............................................. 26 ARTICLE VIII THE TRUSTEE Section 8.1. Appointment of Trustee .......................................................................... 26 Section 8.2. Liability of Trustee ; Standard of Care .................................................... 27 Section 8.3. Merger or Consolidation ......................................................................... 27 Section 8.4. Protect ion and Rights of the Trustee ....................................................... 27 Section 8.5. Compensation of Trustee ........................................................................ 29 Section 8.6. Removal and Resignation of Trustee ...................................................... 29 Section 8.7. Appointment of Agent ............................................................................ 29 Section 8.8. Commingling .......................................................................................... 29 Section 8.9. Records .................................................................................................... 30 4 213173.5 iii ARTICLE IX MODIFICATION OR AMENDMENT OF AGREEMENTS Section 9.1. Amendments Permitted ........................................................................... 30 Section 9.2. Procedure for Amendment with Written Consent of Owners ................. 30 Section 9.3. Disqualified 2021 Obligations ................................................................ 31 Section 9.4. Effect of Supplemental Agreement ......................................................... 31 Section 9.5. Endorsement or Replacement of 2021 Obligations Delivered After Amendments .................................................................................. 32 Section 9.6. Amendatory Endorsement of 2021 Obligations ..................................... 32 ARTICLE X COVENANTS; NOTICES Section 10.1. Compliance With and Enforcement of Agreement ................................. 32 Section 10.2. Observance of Laws and Regulations ..................................................... 32 Section 10.3. Further Assurances .................................................................................. 33 Section 10.4. Notification to the Town of Failure to Make the Payments .................... 33 ARTICLE XI LIMITATION OF LIABILITY Section 11.1. Limited Liability of the Town................................................................. 34 Section 11.2. No Liability of the Town for Trustee Performance ................................ 34 Section 11.3. Indemnification of the Trustee ................................................................ 34 Section 11.4. Opinion of Counsel ................................................................................. 35 ARTICLE XII EVENTS OF DEFAULT AND REMEDIES OF 2021 OBLIGATION OWNERS Section 12.1. Payee ’s Rights held in Trust ................................................................... 36 Section 12.2. Remedy ................................................................................................... 36 Section 12.3. Application of Funds ............................................................................... 37 Section 12.4. Institution of Legal Proceedings ............................................................. 37 Section 12.5. Non-Waiver ............................................................................................. 37 Section 12.6. Power of Trustee to Control Procee dings ............................................... 38 Section 12.7. Limitation on 2021 Obligation Owners’ Right to Sue ............................ 38 ARTICLE XIII MISCELLANEOUS Section 13.1. Defeasance .............................................................................................. 39 Section 13.2. Records .................................................................................................... 40 Section 13.3. Notices .................................................................................................... 40 Section 13.4. Covenant as to Conflict of Interest ......................................................... 41 4 213173.5 iv Section 13.5. Governing Law ....................................................................................... 41 Section 13.6. Binding Effect and Successors ................................................................ 41 Section 13.7. Execution in Counterparts ....................................................................... 41 Section 13.8. Destruction of Cancelled 2021 Obligations ............................................ 41 Section 13.9. Headings .................................................................................................. 41 Section 13.10. Parties I nterested Herein ......................................................................... 42 Section 13.11. Waiver of Notice ..................................................................................... 42 Section 13.12. Sever ability of Inva lid Provisions ........................................................... 42 Section 13.13. E-Verify Requirements ........................................................................... 42 Section 13.14. Reserved .................................................................................................. 42 Section 13.15. No Boycott of Israel ................................................................................ 42 EXHIBIT A FORM OF 2021 OBLIGATION EXHIBIT B PAYMENT REQUEST FORM EXHIBIT C REIMBURSEMENT REQUEST FORM EXHIBIT D FORM OF DISBURSEMENT CERTIFICATE FOR DELIVERY COSTS 4213173.5 1 TRUST AGREEMENT THIS TRUST AGREEMENT, made and entered into as of _____ 1, 2021 (this “Trust Agreement ”), by and between U.S. Bank National Association, a national banking association, as trustee (the “Trustee”), and the TOWN OF ORO VALLEY, ARIZONA, a municipal corporation organized under the laws of the State of Arizona (the “Town”). W I T N E S S E T H: WHEREAS, for the purpose of financing (i) various improvements to its parks and recreation facilities (the “Project”), and (ii) the payment of all or a portion of the delivery costs of the 2021 Obligations defined herein, as further described in the Agreement, dated of even date herewith (the “Agreement ”), by and between the Trustee, as payee (“Payee”), and the Town, as payor, and wherein such Agreement the Trustee has agreed to provide the funds for the Project, and in return for the funds the Town has agreed to make the Payments (as defined in the Agreement) to the Trustee, in its role as Payee; and WHEREAS, the Town has pledged certain of its revenues (the “Excise Taxes” and “Parks and Recreation Taxes,” each as defined herein) to the Payments (as defined herein) due under the Agreement ; and WHEREAS, the Town and the Trustee will enter into this Trust Agreement to , among other things, facilitate and administer the financing of costs related to the Project; and WHEREAS, for the purpose of obtaining moneys to be deposited with the Trustee to finance the costs of the Project, the Trustee has agreed, at the Town’s direction, to execute and deliver the Town’s Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “2021 Obligations,” and individually, an “2021 Obligation”), each evidencing a proportionate interest in the Payments or Prepayments (as defined herein) made by the Town pursuant to the Agreement, in exchange for the moneys required herein to be deposited to finance the Project; and WHEREAS, the Town has further authorized the execution and delivery of the 2021 Obligations in order to provide moneys to (i) fund the Project Fund established pursuant hereto, and (ii) pay all or a portion of the delivery costs of the 2021 Obligations ; and WHEREAS, the Town has determined that all acts have been done and performed that are necessary to make this Trust Agreement a valid and binding agreement for the security for the 2021 Obligations authenticated and delivered pursuant hereto. NOW, THEREFORE, in consideration for the 2021 Obligations executed and delivered and Outstanding (as defined herein) in accordance with this Trust Agreement, the acceptance by the Trustee of the trusts created herein and of the purchase and acceptance of the 2021 Obligations by the Owners (as defined herein), and to secure the payment of principal thereof and interest thereon (to the extent provided herein), the rights of the Owners of the 2021 Obligations and the performance and the observance of the covenants and conditions contained in the 2021 4213173.5 2 Obligations, the Agreement and herein, the Trustee hereby declares an irrevocable trust and acknowledges its acceptance of all right, title and interest in and to all of the following described “Trust Estate”: A. All right, title and interest of the Trustee, in its role as Payee, in and to the Agreement, the Payments and Prepayments and any other amounts payable by the Town pursuant to the Agreement and the present and continuing right to (i) make claim for, collect or cause to be collected, receive or cause to be received all such revenues, receipts and other sums of money payable or receivable thereunder, (ii) bring actions and proceedings thereunder or for the enforcement of such rights, and (iii) do any and all other things which the Trustee, as Payee, is or may become entitled to do thereunder. B. Except as otherwise provided herein, all right, title and interest of the Trustee in and to amounts on deposit from time to time in the funds and accounts created pursuant hereto, subject to the provisions hereof permitting the application thereof for the purposes and on the terms and conditions set forth herein. C. All right, title and interest of the Trustee, in its role as Payee, to enforce the Agreement and receive payment from Excise Taxes and Parks and Recreation Taxes of amounts due under the Agreement. D. All rights declared in trust by the Trustee shall be administered by the Trustee according to the provisions hereof and for the equal and proportionate benefit of the Owners of the 2021 Obligations. TO HAVE AND TO HOLD , all and singular, the trust estate, including all additional property which by the terms hereof has or may become subject to the encumbrance hereof, unto the Trustee and its successors and assigns, forever, subject, however, to the rights of the Town, it s successors and assigns, under the Agreement. IN TRUST, however, for the equal and proportionate benefit and security of the Owners from time to time of the 2021 Obligations executed and delivered hereunder and Outstanding; and conditioned, however, that if the Town shall well and truly pay or cause to be paid fully and promptly when due all indebtedness, liabilities, obligations and sums at any time secured hereby, including interest and attorneys’ fees, and shall promptly, faithfully and strictly keep, perform and observe or cause to be kept, performed and observed all of its covenants, warranties and agreements contained herein, then and in such event, this Trust Agreement shall be and become void and of no further force and effect; otherwise, the same shall remain in full force and effect, and upon the trust and subject to the covenants and conditions hereafter set forth. 4213173.5 3 ARTICLE I DEFINITIONS Section 1.1 Definitions . Unless the context otherwise requires, the terms defined in this Section 1.1 shall, for all purposes of this Trust Agreement, have the meanings herein specified. “Agreement ” means that certain Agreement, dated as of _____ 1, 2021, by and between the Town and the Trustee, as Payee, together with any duly authorized and executed amendment thereto. “Annual Current Principal Requirement ” means, for any Fiscal Year, the amount of principal coming due during such Fiscal Year on the 2021 Obligations and any Parity Obligations. “Annual Debt Service Requirement ” means, for any Fiscal Year, the Annual Current Principal Requirement for that Fiscal Year and the amount required to be deposited to pay interest on any Parity Obligations and the 2021 Obligations in that Fiscal Year. For the purpose of compliance with the requirements of Section 6.4 of this Trust Agreement with respect to the proposed issuance of any Parity Obligations, such proposed Parity Obligations shall be treated as Outstanding for the determinat ion of the Annual Debt Service Requirement. For the computation of Annual Debt Service Requirement, (i) debt service on Credit Enhanced Indebtedness shall be deemed to include any periodic fees payable to the issuer of any liquidity or credit facility as a condition to such issuer’s commitment to purchase such obligations upon tender or to provide moneys necessary for payment of principal of and interest on such obligations when due, (ii) debt service on Credit Enhanced Indebtedness shall not b e based upon the terms of any reimbursement obligation to the issuer of any liquidity or credit facility except to the extent and for periods during which payments are required to be made pursuant to such reimbursement obligation as a result of the issuer’s unreimbursed advances of funds thereunder and (iii) debt service on Variable Rate Indebtedness shall be based upon the maximum interest rate payable on such Variable Rate Indebtedness. “A.R.S.” means Arizona Revised Statutes, as amended. “Authorizing Resolution” means Resolution No. (R)21-__ passed, adopted and approved by Mayor and Council of the Town on September 22, 2021. “Book -Entry-Only System ” means, as to the 2021 Obligations, a system under which (i) physical 2021 Obligation certificates in fully registered form are issued only to the DTC or its nominee as Owner, or any successor to DTC, and (ii) the ownership of beneficial interests in the 2021 Obligations and principal of, premium, if any, and interest thereon may be transferred only through a book entry made by others than the Town or the Trustee. The records maintained by entities other than the Town or the Trustee constitute the written record that identifies the owners, and records the transfer of beneficial interests in those 2021 Obligations for purposes of payment of principal, premium, if any, and interest thereon. 4213173.5 4 “Business Day” means a day of the year other than (a) a Saturday, Sunday or legal holiday or equivalent (other than moratorium), (b) a day on which banking institutions generally are required or are authorized by law or other governmental action to be closed and (c) a day on which the New York Stock Exchange is closed. “Closing Date” means with respect to any series of 2021 Obligations, the day such 2021 Obligations, duly executed by the Trustee, are delivered to the Underwriter through the Book-Entry-Only System. “Code” means the Internal Revenue Code of 1986, as amended. References to the Code and Sections thereof include applicable regulations and temporary regulations thereunder and any successor provisions to those Sections, regulations or temporary regulations and any applicable regulations or temporary regulations issued pursuant to the Internal Revenue Code. “Credit Enhanced Indebtedness” means (i) any series of Parity Obligations payment when due of the principal of and interest on which is fully secured by an irrevocable letter of credit, surety bond, insurance policy or other credit facility or arrangement pursuant to which the Town is obligated to reimburse the issuer thereof for advances made thereunder to pay such principal or interest, or (ii) any series of Parity Obligations, a feature of which is an option on the part of the owners thereof to tender, or a requirement that such owners tender, all or a portion of such Parity Obligations to the Town, or a trustee or other fiduciary for such owners, or anothe r party, for payment of a purchase price or similar payment prior to their specified maturity or due date, if and to the extent that a party other than the Town has undertaken to provide the monies necessary for such payment, or (iii) if applicable, the 2021 Obligations. “Delivery C osts” means the costs incurred by the Town with respect to the execution, sale and delivery of the 2021 Obligations. Such costs may include, without limitation, the fees and costs of financial advisors, special counsel, underwriter ’s counsel, disclosure counsel, financial feasibility studies, rating agencies, registrars and paying agents initial fees, and publication of preliminary official statements and official statements related to the initial sale of the 2021 Obligations. “Delivery Costs Fund” means the fund by that name established pursuant to Article III hereof and held by the Trustee. “Depository Trustee” means any bank or trust company, which may include the Trustee, meeting the requirements of, and designated to act as, Depository Trustee pursuant to Section 13.1 of this Trust Agreement. “DTC” means The Depository Trust Company (a limited purpose trust company), New York, New York, until a successor depository shall have become such pursuant to the applicable provisions of this Trust Agreement and, thereafter, DTC shall mean the successor to DTC. DTC is a securities depository that is a clearing agency under federal law operating and maintaining, with its participants or otherwise, a Book -Entry-Only System to record ownership of beneficial interests in the 2021 Obligations 4213173.5 5 “Electronically” or “Electronic” notice means notice transmitted through a time - sharing terminal, computer network or facsimile machine, if operative as between any two parties, or if not operative, by telephone (promptly confirmed in writing). “Event of Default ” means an event of default under the Agreement, or with respect to any Parity Obligations, an event of default specified thereunder. “Excise Tax Parity Obligations” means and includes the Existing Parity Obligations and any bonds, lease purchase agreements, purchase agreements or other obligations authorized on a parity basis with the 2021 Obligations as to their lien on Excise Taxes in accordance with the terms and conditions of Section 6.4 hereof. “Excise Taxes” means all unrestricted excise, transaction, franchise, privilege and business taxes, state-shared sales and income taxes, fees for licenses and permits, fines, bed and rental taxes, and state revenue-sharing, now or hereafter validly imposed by the Town or contributed, allocated and paid over to the Town and not earmarked by the contributor for a contrary or inconsistent purpose. Revenues generated by the Town from development impact fees will not be deemed Excise Taxes for purposes of this Trust Agreement and the Agreement. Revenues received by the Town from vehicle license taxes charged by the State will not be deemed Excise Taxes for purposes of this Trust Agreement and the Agreement. The Town also levies an additional 6.0% transient lodging tax on any hotel, motel or apar tment let for less than 30 consecutive days, the revenues from which are restricted by State law to use for visitor and hospitality services. The revenues generated by the Parks and Recreation Taxes (as defined herein) and the 6.0% transient lodging tax will not be deemed Excise Taxes for purposes of this Trust Agreement and the Agreement. The Town may impose taxes for restricted purposes the revenues from which will not be Excise Taxes and will not be pledged to the payment of the amount s due pursuant to the Agreement. “Existing Parity Obligations” means Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2010 (Federally Taxable – New Clean Renewable Energy Bonds – Direct Payment) ($2,445,000 principal amount issued, $1,085,000 outstanding); Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2012 ($2,580,000 principal amount issued, $1,390,000 outstanding); Town of Oro Valley, Arizona, Excise Tax Revenue Refunding Obligations, Series 2015 ($3,775,000 principal amount issued, $2,173,000 outstanding); Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2016 (Bank Qualified) ($2,000,000 principal amount issued, $1,681,000 outstanding); Town of Oro Valley, Arizona, Excise Tax Revenue Refunding Obligations, Series 2017 ($14,302,000 principal amount issued, $9,929,000 outstanding); Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2018 ($8,140,000 principal amount issued, $7,373,000 outstanding); and Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Taxable Series 2021 ($17,975,000 principal amount issued, $17,975,000 outstanding). “F.A.S.T.” shall mean DTC’s fast automated securities transfer procedures, wherein the 2021 Obligations are fully paid for by the Underwriter and are deemed delivered to DTC notwithstanding that the Trustee, as registrar, continues to hold such 2021 Obligations in custody for DTC. 4213173.5 6 “Fiscal Year” means the period commencing each July 1 and ending June 30 of the succeeding calendar year, unless otherwise determined and designated by the Town, and the Excise Taxes and Parks and Recreation Taxes shall be accounted for on that basis. “Independent Counsel” means an attorney duly admitted to the practice of law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Town or the Trustee. “Interest Payment Date” means each of the dates specified in Section 2.4 hereof on which interest is due and payable with respect to the 2021 Obligations. “Market Value” means the indicated bid value of the investment or investments to be valued as shown in the Wall Street Journal or any publication having general acceptance as a source of valuation of the same or similar types of securities or any securities pricing service available to or used by the Trustee and gene rally accepted as a source of valuation. “Maximum Annual Debt Service Requirement ” means the greatest Annual Debt Service Requirement required to be paid in any Fiscal Year ending then or thereafter on or under the Outstanding Parity Obligations and the 2021 Obligations. “Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Town by notice to the Trustee. “Notification” means the indemnification notification from the Trustee to the Town as described in Section 11.3 hereof. “2021 Obligations” means the $_____ aggregate principal amount of Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021, to be executed and delivered pursuant hereto. “Outstanding”, when used as of any particular time with respect to 2021 Obligations, means (subject to the provisions of Section 9.3 hereof) all 2021 Obligations theretofore executed and delivered by the Trustee hereunder except: (i) 2021 Obligations theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (ii) 2021 Obligations for the payment or redemption of which funds or noncallable United States Obligations in the necessary amount shall have theretofore been deposited with a Depository Trustee; and (iii) 2021 Obligations in lieu of or in exchange for which other 2021 Obligations shall have been executed and delivered by the Trustee pursuant to Section 2.9 hereof. 4213173.5 7 When used as of any particular time with respect to Parity Obligations, Outstanding means all such Parity Obligations theretofore executed and delivered under the applicable authorizing documents except (x) those that have been cancelled or surrendered for cancellation; (y) those for which payment or redemption has been irrevocably provided for with funds or noncallable United States Obligations in the necessary amount and all other actions have been taken as required under the authorizing documents for the payment thereof; and (z) those in lieu of or in exchange for which other Parity Obligations shall have been executed and delivered pursuant to the authorizing documents therefor. “Owner” means any person who shall be the registered owner of any Outstanding 2021 Obligation or Parity Obligation. “Parity Obligations” means, together, Excise Tax Parity Obligations and Parks and Recreation Tax Parity Obligations. “Parks and Recreation Tax Ordinance” means Ordinance No. (O )14-17, as amended by Ordinance No. (O)21-05, which imposed an additional 0.5% transaction privilege tax to fund the needs of the Town’s Community Center, golf and tennis facilities or for parks and recreation purposes (effective May 21, 2021). “Parks and Recreation Tax Parity Obligations” means and includes any bonds, lease purchase agreements, purchase agreements or other obligations authorized on a parity basis with the 2021 Obligations as to their lien on Excise Taxes and Parks and Recreation Taxes in accordance with the terms and conditions of Section 6.4 hereof. “Parks and Recreation Taxes” means revenue generated p ursuant to Ordinance No. (O)14-17, as amended by Ordinance No. (O)21 -05, which imposed an additional 0.5% transaction privilege tax to fund the needs of the Town’s Community Center, golf and tennis facilities or for parks and recreation purposes (effective May 21, 2021 ). “Payee” means the Trustee in its trust capacity as Payee in accordance with the Agreement. “Payment Date” means any date on which a Payment is due from the Town pursuant to the Agreement. “Payment Fund” means the fund by that name established and held by the Trustee pursuant to Article V hereof. “Payment Request Form ” means the form set forth in Exhibit B which is attached hereto and made a part hereof. “Payments” means all payments required to be paid by the Town on any date pursuant to the Agreement, including but not limited to the payments set forth in Exhibit A to the Agreement. 4213173.5 8 “Permitted Investments” means investments that are permitted under A.R.S. §§ 35- 323 and 35-324: (i) Certificates of deposit in eligible depositories. (ii) Deposits in one or more federally insured banks or savings and loan associations placed in accordance with the procedures prescribed in Arizona Revised A.R.S. § 35-323.01. (iii) Interest bearing savings accounts in banks and savings and loan institutions doing business in this State (including the Trustee and its affiliates) whose accounts are insured by federal deposit insurance for their industry, but only if deposits of more than the insured amount are secured by the eligible Depository to the same extent and in the same manner as required under Arizona Revised Statutes Title 35, Article 2.1. (iv) Repurchase agreements with a maximum maturity of 180 days. (v) The pooled invest ment funds established by the State treasurer pursuant to A.R.S. § 35-326. (vi) Obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities. (vii) Bonds, notes or other evidences of indebtedness of this State or any of its counties, incorporated cities or towns, school districts or special taxing districts, including registered warrants, substitute checks and electronic funds, transfer vouche rs that bear interest pursuant to A.R.S. § 11-635. (viii) Bonds, notes or evidences of indebtedness of any county, municipal district, municipal utility or special taxing district of any state that are payable from revenues, earnings or a special tax specifically pledged for the payment of the principal of and interest on the obligations, and for the payment of which a lawful sinking fund or reserve fund has been established and is being maintained, but only if a default in payment on principal or interest on the obligations to be purchased has not occurred within five years after the date of investment, or, if such obligations were issued less than five years before the date of investment, a default in payment of principal or interest has not occurred on t he obligations to be purchased nor any other obligations of the issuer within five years after the investment. (ix) Bonds, notes or evidences of indebtedness issued by any county improvement district or municipal improvement district of any state to finance local improvements authorized by law, if the principal and interest of the obligations are payable from assessments on real property within the improvement district. An investment shall not be made if: 4213173.5 9 (a) The face value of all such obligations, and similar obligations outstanding, exceeds 50% of the market value of the real property, and if improvements on which the Bonds or the assessments for the payment of principal and interest on the Bonds are liens inferior only to the liens for general ad valor em taxes. (b) A default in payment of principal or interest on the obligations to be purchased has occurred within five years after the date of investment, or, if the obligations were issued less than five years before the date of investment, a default in the payment of principal or interest has occurred on the obligations to be purchased or on any other obligation of the issuer within five years after the investment. (x) Commercial paper of prime quality that is rated within the top two ratings by a nationally recognized rating agency. All commercial paper must be issued by corporations organized and doing business in the United States. (xi) Bonds, debentures, notes or other evidences of indebtedness that are denominated in United States dollars and tha t carry at a minimum an “A” or better rating, at the time of purchase, from at least two nationally recognized rating agencies. (xii) Negotiable or brokered certificates of deposit issued by a nationally or state - chartered bank or savings and loan association (including the Trustee and its affiliates). (xiii) Securities of or any other interests in any open-end or closed-end management type investment company or investment trust, including exchange traded funds whose underlying investments are invested in securities allowed by state law, registered under the investment company act of 1940 (54 Stat. 789; 15 United States Code sections 80a-1 through 80a-64), as amended. (xiv) Fixed income securities of corporations organized and doing business in an y state of the United States or the District of Columbia which carry one of the two highest ratings of Moody’s and S&P or their successors. If only one of the above mentioned services rates the security, it must carry the highest rating of that service. If a rating change occurs after purchase, it is not mandatory to sell the security. (xv) Investments in money-market funds (including those offered by the Trustee or its affiliates) rated “AAAm” or “AAAm-G” by S&P and, if rated by Moody’s, rated “AAA”, “AA-1” or “AA-2”. “Personal Property” means the personal property described in Exhibit C attached to the Agreement, together with any duly authorized and executed amendment thereto. “Prepayment ” means any payment applied towards the prepayment of the Payments, in whole or in part, pursuant to Section 10 of the Agreement. “Project ” means as defined in the Recitals hereof. 4213173.5 10 “Project Costs” means all fees, expenses and costs related to financing the Project incurred by the Trustee or the Town with respect to the transaction to which this Trust Agreement pertains. “Project Fund” means the fund by that name established pursuant to Section 3.1 hereof and held by the Trustee. “Rebate Amount ” means the amount due to the United States under Section 148(f) of the Code with respect to the investment of proceeds of the 2021 Obligations. “Rebate Consultant ” means an individual or firm acceptable to, and retained by, the Town experienced in the calculation of rebate due to the United States with respect to tax- exempt municipal bonds. “Rebate Fund” means the fund by that name established and held by the Trustee pursuant to Article V hereof. “Reimbursement Request Form ” means the forms set forth in Exhibit C hereof. “Record Date” means the close of business on the last day of the calendar month (other than a Saturday, Sunday or a legal holiday or equivalent (other than a moratorium) for banking institutions generally (a “Business Day”)) immediat ely preceding the applicable Interest Payment Date, or if such date is not a Business Day, the previous Business Day. “Registrar” means the Trustee. “S&P” means S&P Global Ratings, a division of Standard & Poor’s Financial Services, LLC, and entity organized and existing under the laws of the State of New York, its successors and assigns, and, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Town by notice to the Trustee. “State” means the State of Arizona. “Town” means the Town of Oro Valley, Arizona, a municipal corporation and a political subdivision of the State. “Town Representative” means the Town Manager or Chief Financial Officer or any other person authorized by the Town Manager or Mayor and Council of the Town to act on behalf of the Town with respect to this Trust Agreement. “Trust Agreement ” means this Trust Agreement, together with any amendments or supplements hereto permitted to be made hereunder. “Trustee” means U.S. Bank National Association or any successor thereto acting as Trustee pursuant to this Trust Agreement. 4213173.5 11 “U nderwriter” means Piper Sandler & Co., as original purchaser of the 2021 Obligations. “United States Obligations” means any bonds or other obligations that are direct obligations of or fully guaranteed as to timely payment of principal, interest and any premium by the United States of America (including Refcorp Strips). “Variable Rate Indebtedness” means any series of Parity Obligations the rate of interest on which is not established at the time of issuance as one or more numerical rates applicable throughout the term thereof or for specified periods during the term thereof, such that at the time of issuance or at the time of any calculation with respect thereto the numerical rate of interest which will be in effect during all remaining portions of the term thereof cannot be determined. Section 1.2 Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into this Trust Agreement, and has taken all actions necessary to authorize the execution of this Trust Agreement by the officers and persons signing it. Section 1.3 Interpretation. (a) Unless the context otherwise indicates, defined terms shall include all variants thereof, words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine or feminine gender is for convenience only and sha ll be deemed to mean and include the neuter, masculine or feminine gender, as appropriate. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof. (c) References herein to DTC shall include both DTC and any securities depository nominee of DTC in whose name the 2021 Obligations may be registered. (d) Unless otherwise indicated, references herein to Articles and Sections shall be to the Articles and Sections, or subdivisions thereof, of this Trust Agreement. The words “herein,” “hereof,” “hereby,” “hereunder ” and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or subdivision hereof. 4213173.5 12 ARTICLE II THE 2021 OBLIGATIONS Section 2.1 Authorization of the 2021 Obligations . (a) The Trustee is hereby authorized and directed to execute and deliver to or hold in custody for DTC, the 2021 Obligations in an aggregate principal amount of $______ evidencing proportionate, undivided ownership interests in the Agreement and all Payments , Prepayments and premiums, if applicable. The Town is authorized to enter into this Trust Agreement pursuant to the Authorizing Resolution. The 2021 Obligations shall be issued as a single issue and shall be issued to finance the Project and to pay Delivery Costs. (b) The Trustee shall not, at any time while the 2021 Obligations are Outstanding, execute additional bonds or obligations payable from the Payments. The 2021 Obligations shall in no event be deemed an obligation or debt of the Trustee. Section 2.2 Date . Each 2021 Obligation shall be dated the date of its initial execution and delivery, and interest with respect thereto shall be payable from such date, or from the most recent Interest Payment Date to which interest has previously been paid or made available for payment with respect to the Outstanding 2021 Obligations. Section 2.3 Maturities and Interest Rates . The 2021 Obligations shall be in the denomination of $5,000 or any integral multiple thereof, except that no 2021 Obligation may have principal maturing in more than o ne year. The 2021 Obligations shall mature on the dates and in the principal amounts, and interest with respect thereto shall be computed at the rates, as shown below: Maturity Date (July 1) Principal Amount Interest Rates 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 4213173.5 13 Maturity Date (July 1) Principal Amount Interest Rates 2038 Section 2.4 Interest on 2021 Obligations . Interest on the 2021 Obligations shall be payable on [January 1, 2022] and semiannually on each July 1 and January 1 thereafter to and including the date of maturity or prior redemption, if applicable, whichever is earlier (each, an “Interest Payment Date”). Said interest shall represent the portion of the Payments designated as interest and coming due during the six-month period (or shorter period from the dated date of the 2021 Obligations) preceding each Interest Payment Date with respect to the 2021 Obligations. The proportionate share of the portion of the Payments designated as interest with respect to any 2021 Obligation shall be computed by multiplying the portion of the Payments designated as principal with respect to such 2021 Obligation by the rate of interest applicable to such 2021 Obligation (on the basis of a 360-day year consisting of 12 months of 30 days each). Section 2.5 Form. The fully-registered form of the 2021 Obligations and the assignment to appear thereon shall be substantially in the form s et forth in Exhibit A, attached hereto and incorporated herein. If the Book -Entry-Only System is discontinued, the 2021 Obligations shall be in substantially the same form with such changes as may be necessary to provide for the execution and delivery of the 2021 Obligations to the beneficial owners thereof. Section 2.6 Execution. The 2021 Obligations shall be executed by and in the name of the Trustee by the manual signature of an authorized representative of the Trustee. If any authorized representative whose signature appears on any 2021 Obligation ceases to be such officer before the Closing Date, such signature shall nevertheless be as effective as if the authorized representative had remained in office until the Closing Date. Any 2021 Obligation may be executed on behalf of the Trustee by such person as at the actual date of the execution of such 2021 Obligation shall be the proper authorized representative of the Trustee although at the nominal date of such 2021 Obligation such person shall not have been such authorized representative of the Trustee. No 2021 Obligation shall be valid or become obligatory for any purpose or shall be entitled to any security or benefit under this Trust Agreement unless and until executed and delivered by the Trustee. The execution by the Trustee upon any 2021 Obligation shall be conclusive evidence that the 2021 Obligation so executed has been duly authorized and delivered hereunder and is entitled to the security and benefit of this Trust Agreement. Section 2.7 Book-Entry-Only System. (a) The 2021 Obligations shall be initially issued to DTC or its nominee for holding in a Book-Entry-Only System, without further action by the Town. There shall be a single 2021 Obligation representing the entire aggregate principal amount of each maturity of the 2021 Obligatio ns and such 2021 Obligations shall be registered in the name of DTC or its nominee, as Owner, and immobilized initially in the custody of the DTC or the Trustee. The Trustee, pursuant to a request by the Town for the removal or replacement of DTC, and upo n 30 days’ notice to DTC, may remove or replace DTC. The Trustee agrees to remove or replace DTC at any time at the request of the Town. No other action by the Town shall be required to effect such a removal 4213173.5 14 or replacement. DTC may determine not to continue to act as depository for the 2021 Obligations upon 30 days written notice to the Trustee. The Owners have no right to either a Book -Entry-Only System or a depository for the 2021 Obligations. (b) Notwithstanding any other provision of this Trust Agree ment or the 2021 Obligations, so long as the 2021 Obligations are in a Book-Entry-Only System and DTC or its nominee is the Owner of the 2021 Obligations : (i) Presentation of 2021 Obligations to the Trustee at redemption or at maturity, shall be deemed made to the Trustee when the right to exercise ownership rights in the 2021 Obligations through DTC or DTC ’s participants is transferred by DTC on its books. (ii) DTC may present notices, approvals, waivers, votes or other communications required or permitted to be made by Owners under this Trust Agreement on a fractionalized basis on behalf of some or all of those persons entitled to exercise ownership rights in the 2021 Obligations through DTC or its participants. (iii) 2021 Obligations or any portion thereof shall not be transferable or exchangeable except: (A) To any successor of DTC ; (B) To any new DTC not objected to by the Trustee, upon (a) the resignation of the then current DTC or its successor from its functions as DTC or (b) termination of the use of the DTC by direction of the Town; (C ) To any Persons who are the assigns of the DTC or its nominee, upon (1) the resignation of the DTC from its functions as DTC hereunder, or (2) termination by the Town of use of the DTC . (c) If the use of the Book-Entry-Only System is discontinued, then after the Trustee has made provision for notification of the beneficial owne rs of their beneficial interests in the 2021 Obligations by appropriate notice to the then depository, the Town and the Trustee shall permit withdrawal of the 2021 Obligations from DTC, and authenticate and deliver 2021 Obligation certificates in fully registered form and in denominations authorized by this Section 2.7 to the assignees of DTC or its nominee. Such withdrawal, authentication and delivery shall be at the cost and expense (including costs of printing or otherwise preparing, and delivering, suc h replacement 2021 Obligation certificates) of the Town. (d) Subject to any arrangements made by the Trustee with a depository with respect to the 2021 Obligations held in a Book-Entry-Only System, which arrangements are hereby authorized subject to the approval of the Town, principal of, premium, if any, and interest shall be payable on any 2021 Obligation as provided in this Trust Agreement. Section 2.8 Application of Proceeds . The proceeds received by the Trustee from the sale of the 2021 Obligations shall forthwith be set aside by the Trustee in the following respective funds [and accounts] and in the following order of priority: 4213173.5 15 (a) The Trustee shall deposit the amount of $____ to the Delivery Costs Fund ; and (b) The Trustee shall deposit the amount of $_____ to the Project Fund. Section 2.9 Transfer and Exchange . So long as the Book-Entry-Only System is in effect, the 2021 Obligations will be issued as a single 2021 Obligation for each maturity date, registered in the name of DTC or its nominee. If the Book -Entry-Only System is no longer in effect, the following will apply: (a) Any 2021 Obligation may, in accordance with its terms, be transferred upon the books required to be kept pursuant to the provisions of Section 2.13 hereof by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2021 Obligation for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any 2021 Obligation or 2021 Obligations shall be surrendered for transfer, the Trustee shall execute and de liver a new 2021 Obligation or 2021 Obligations in fully registered form of the same series, maturity and interest rate and for a like aggregate principal amount. (b) The 2021 Obligations may be exchanged at the designated corporate trust office of the Trustee for a like aggregate principal amount of 2021 Obligations of authorized denominations of the same series, maturity and interest rate. In connection with any such exchange or transfer of the 2021 Obligations, the Owner requesting such exchange or tra nsfer shall, as a condition precedent to the exercise of the privilege of making such exchange or transfer, remit to the Trustee an amount sufficient to pay any tax, or other governmental charge required to be paid, other than one imposed by the Town, or any fee or expense of the Trustee or the Town with respect to such exchange or transfer. (c) The Trustee may, but shall not be obligated to, exchange or register the transfer of an 2021 Obligation (i) if the 2021 Obligation has been called, or selected for call, for redemption, in whole or in part, or (ii) during a period of 15 days preceding the giving of a notice of redemption. If an 2021 Obligation is transferred after having been called or selected for redemption, any notice of redemption that has been given to the transferor shall be binding on the transferee and a copy of the notice of redemption shall be delivered by the Trustee to the transferee along with the duly registered 2021 Obligation or 2021 Obligations. Section 2.10 2021 Obligations Mutilated, Lost, Destroyed or Stolen. If any 2021 Obligation shall become mutilated, the Trustee, at the expense of the Owner of said 2021 Obligation, shall execute and deliver a new 2021 Obligation of like tenor, series, maturity and amount in exchange and substitution for the 2021 Obligation so mutilated, but only upon surrender to the Trustee of the 2021 Obligation so mutilated. Any mutilated 2021 Obligation so surrendered to the Trustee shall be cancelled by it and redelivered to, or upon the order of, the Owner s. If any 2021 Obligation shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee, and, if such evidence is satisfactory to the Trustee and, if an indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Owner s, shall execute 4213173.5 16 and deliver a new 2021 Obligation of like tenor, series, maturity and amount and numbered as the Trustee shall determine in lieu of and in substitution for the 2021 Obligation so lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each new 2021 Obligation delivered under this Section 2.10 and of the expenses that may be incurred by the Trustee in carrying out the duties under this Section 2.10. Any 2021 Obligation issued under the provisions of this Section 2.10 in lieu of any 2021 Obligation alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Trust Agreement with all other 2021 Obligations secured by this Trust Agreement. The Trustee shall not be required to treat both the original 2021 Obligation and any replacement 2021 Obligation as being Outstanding for the purpose of determining the principal amount of 2021 Obligations that may be executed and delivered hereunder or for the purpose of determining any percentage of 2021 Obligations Outstanding hereunder, but both the original and replacement 2021 Obligation shall be treated as one and the same. Notwithstanding any other provision of this Section 2.10, in lieu of delivering a new 2021 Obligation for an 2021 Obligation that has been mutilated, lost, destroyed or stolen, and that has matured, the Trustee may make payment with respect to such 2021 Obligation upon receipt of the aforementioned indemnity. Section 2.11 Payment. (a) Book-Entry-Only System. So long as the Book -Entry-Only System is in effect, interest payments and principal payments that are part of periodic principal and interest payments shall be paid to Cede & Co. or its registered assigns, in same -day funds no later than 2:30 p.m. (Eastern Time) (or such other time required by DTC) on each interest or principal Payment Date (or in accordance with then existing arrangements between the Town and DTC). (b) Without Book-Entry-Only System. If the Book-Entry-Only System is no longer in effect, the following will apply: (i) Payment of interest due with respect to any 2021 Obligation on any Interest Payment Date shall be made to the person appearing on the registration books of the Trustee as the Owner thereof as of the Record Date immediately preceding such Interest Payment Date, such interest to be paid by check mailed on the date due by first class mail to such Owner at his address as it appears on such registration books. (ii) The principal [and redemption price, if any,] with respect to the 2021 Obligations shall be payable in lawful money of the United States of America upon surrender when due at the designated office of the Trustee. (iii) Interest and, if arrangements for surrender are made with the Trustee, principal [and redemption premium, if any,] payable to any securities depository or to any Owner of $1,000,000 or more in principal amount of 2021 Obligations shall be paid by wire transfer in immediately available funds to an account in the United States if the Owner makes a written request of the Trustee at least 20 days before the Interest Payment Date specifying the account address. The notice may provide that it shall remain in effect for subsequent payments until otherwise requested in a subsequent written notice. 4213173.5 17 Section 2.12 Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Trust Agreement to be signed or executed by the Owners may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Owners in person or by their attorneys or agents appointed by an instrument in writing for that purpose, or by any bank, trust company or other depository for such 2021 Obligations. Proof of the execution of any such instrument, or of any instrument appointing a ny such attorney or agent, and of the ownership of 2021 Obligations shall be sufficient for any purpose of this Trust Agreement (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any Owner or his attorney or agent of any such instrument and of any instrument appointing any such attorney or agent, may be proved by a certificate, which need not be acknowledged or verified, of an officer of any bank or trust company located within the United States of America, or of any notary public, or other officer authorized to take acknowledgments of deeds to be recorded in such jurisdictions, that the persons signing such instruments acknowledged before him the execution thereof. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such certificate shall also constitute sufficient proof of his authority. (b) The fact of the ownership of 2021 Obligations by any person and the amount, the maturity and the numbers of such 2021 Obligations and the date of his holding the same be proved on the registration books maintained pursuant to Section 2.13 hereof. Nothing contained in this Article II sha ll be construed as limiting the Trustee to such proof, it being intended that the Trustee may accept any other evidence of the matters herein stated which the Trustee may deem sufficient. Any request or consent of the Owner of any 2021 Obligation shall bind every future Owner of the same 2021 Obligation in respect of anything done or suffered to be done by the Trustee in pursuance of such request or consent. For so long as the 2021 Obligations are in a Book-Entry-Only System and DTC or its nominee is the Owner of the 2021 Obligations, in the event that any provision of this Trust Agreement or of the Agreement requires the procurement of the consent of all or a certain percentage of the Owners of the 2021 Obligations , the Trustee shall be entitled to rely (i) upon the written consent given by DTC as the registered Owner of such 2021 Obligations, (ii) upon the written indication given by DTC that it has obtained the consent of the beneficial owners of the requisite principal amount of such 2021 Obligations or, (iii) if proof of beneficial ownership and indemnification satisfactory to the Trustee has been provided to the Trustee, upon the written consent given by the benefic ial owners of the requisite principal amount of such 2021 Obligations. Section 2.13 2021 Obligation Register. The Trustee will keep or cause to be kept, at its designated office, sufficient books for the registration and transfer of the 2021 Obligations which shall at all times during regular business hours be open to inspection by the Town and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the 2021 Obligations as hereinbefore provided. 4213173.5 18 Section 2.14 Payment of Unclaimed Amounts . In the event any check for payment of interest on an 2021 Obligation is returned to the Trustee unendorsed or is not presented for paymen t within two years (subject to applicable escheat law) from its Interest Payment Date or any 2021 Obligation is not presented for payment of principal at the maturity date [or redemption date], if funds sufficient to pay such interest or principal due upon such 2021 Obligation shall have been made available to the Trustee for the benefit of the Owner thereof, it shall be the duty of the Trustee to hold such funds, without liability for interest thereon, for the benefit of the Owner of such 2021 Obligation who shall thereafter be restricted exclusively to such funds for any claim of whatever nature relating to such 2021 Obligation or amounts due thereunder. The Trustee’s obligation to hold such funds shall continue for two years and six months (subject to applicable escheat law) following the date on which such interest or principal payment became due, [whether] at maturity, [or at the date fixed for redemption] or otherwise, at which time the Trustee shall surrender such unclaimed funds so held to the Town, whereupon any claim of whatever nature by the Owner of such 2021 Obligation arising under such 2021 Obligation shall be made upon the Town. Section 2.15 Issuance and Delivery of Parity Obligations . Subject to compliance with the provisions of Article VI hereof, the Town may authorize the issuance, execution and delivery of Parity Obligations from time to time. Section 2.16 F.A.S.T. Closing. The Trustee may agree to hold the 2021 Obligations for DTC under F.A.S.T. If F.A.S.T. is used to close the sale o f the 2021 Obligations, the 2021 Obligations will be deemed fully issued, delivered, and enforceable according to their terms, even though the Trustee, as registrar, retains physical custody of the 2021 Obligations after receiving full payment therefore. 4213173.5 19 ARTICLE III APPLICATION OF PROCEEDS; PROJECT FUND; DELIVERY COSTS FUND Section 3.1 Project Fund; Purpose . The Trustee shall establish and maintain in trust a separate fund designated as the “Town of Oro Valley Second 2021 Project Fund” (the “Project Fund”). The Trustee shall administer the Project Fund as provided in this Trust Agreement. Except as provided in Section 3.3, monies in the Project Fund shall be expended only for Project Costs. Section 3.2 Payment of the Project Costs . (a) The amount in the Project Fund will be applied to the payment of the Project Costs, as hereinafter provided, upon receipt of a duly executed Payment Request Form in substantially the form attached hereto as Exhibit B, certified to by the Town Representative. The Trustee shall remit to the payee designated in the Payment Request Form, the amount requested to be paid in such Payment Request Form within three Business Days following submission of such Payment Request Form. Notwithstanding the foregoing, the Trustee shall apply moneys on deposit in the Project Fund to reimburse the Town for any Project Costs incurred or advanced by the Town within three Business Days of receipt of a duly executed Reimbursement Request Form in substantially the form attached hereto as Exhibit C duly certified by the Town Representative. The Trustee shall be entitled to fully rely upon the Payment Request Forms or Reimbursement Request forms submitted to it in accordance with this Section 3.2, and shall have no duty or obligation to make any investigation or inquiry in connection therewith. (b) Project Costs will be paid directly to the payee named in the Payment Request Form unless the Town Representative requests payment to be made to the payee and another party jointly, in which case such cost shall be paid jointly. (c) Should any shortfall or deficiency occur in the Delivery Costs Fund or the Project Fund, the Town shall pay such amounts to the Trustee. (d) Pursuant to the Agreement and subject to the terms and conditions thereof, the Town has irrevocably been appointed by the Trustee as its sole and exclusive agent to act for and on behalf of the Trustee in the financing of the Project. (e) Amounts in the Project Fund shall be used to pay principal and interest on the 2021 Obligations if insufficient funds are otherwise available to make such payments when due. Section 3.3 Excess Proceeds . On the acquisition, construction and installation of the 2021 Project, but in in no event later than three days after the Town notifies the Trustee that its obligation to fund its portion of the Project Costs has been satisfied, all remaining moneys not ne eded to pay Project Costs (hereinafter referred to as “Excess Proceeds”) in the Project Fund, including the investment earnings on the funds therein, shall be transferred to the Payment Fund and applied by the Trustee to the Payments due from the Town on the next succeeding Payment 4213173.5 20 Date; provided however, that any such Excess Proceeds shall only be used to pay the Payments due on the 2021 Obligations. Section 3.4 Application of Project Fund Investment Earnings . In accordance with Section 5.5, and subject to Section 7.6 pertaining to arbitrage rebate, the Trustee shall transfer, at least 15 days before each January 1 and July 1, any investment earnings on the monies on hand in the Project Fund to the Payment Fund to be applied and credited to pay Payments due on the 2021 Obligations pursuant to the Agreement. Section 3.5 Payments by the Town. The Town shall be required to make Payments as required in the Agreement as necessary to make the Payments shown on Exhibit B to the Agreement, taking into account any funds on deposit in the Payment Fund as a credit towards any Payment for the 2021 Obligations then due. The Trustee, not less than 10 Business Days prior to each Payment Date, shall notify the Town of the amount required to be paid on that Payment Date after taking into account interest earnings which will be transferred to the Payment Fund in accordance herewith. Section 3.6 Establishment and Application of Delivery Costs Fund. (a) The Trustee shall establish and maintain in trust a separate fund designated as the “Town of Oro Valley Second 2021 Delivery Costs Fund” (the “Delivery Costs Fund”). Money deposited in said fund shall be kept separate and apart from all other funds and moneys held by it, and the Trustee shall administer such fund with respect to the 2021 Obligations as provided in this Section. (b) The Trustee shall make payments from the Delivery Costs Fund, except payments and withdrawals pursuant to subsection (e) of this Section, in the amounts, at the times, in the manner and on the other terms and conditions set forth in this subsection. Before any such payment from the Delivery Costs Fund shall be made, there shall be filed with the Trustee a requisition therefore in substantially the form set forth in Exhibit D attached hereto, signed by a Town Representative. Each such requisition shall state, in respect of the payment to be made (i) the name and address of the person, firm or corporation to whom payment is due, (ii) the amount of such payment, and (iii) the particular item of the cost to be paid and that such payment in the stated amount is a proper charge against the Delivery Costs Fund and that no part of such payment shall be applied to any item which has previously been paid as a Delivery Cost of the 2021 Obligations. The Trustee shall promptly issue its check, or transmit a wire transfer to the Town or to the person identified in the requisition in the amount or amounts specified in each such requisition or, if requested pursuant to any such requisition, shall by wire transfer, interbank transfer or other method, as specified in the respective requisition, or arrange to promptly make each payment required by such requisition. The Town shall apply, or cause to be applied, all suc h moneys received from the Delivery Costs Fund to the payment of the Delivery Costs of the 2021 Obligations identified in the requisition relating to such moneys. Each such requisition shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Upon receipt of each such requisition, signed by a Town Representative, the Trustee shall pay the amount set forth therein as directed by the terms thereof. 4213173.5 21 (c) Upon the earlier of (i) [January 1, 2022] or (ii) the receipt by the Trustee of a certificate of a Town Representative requesting the Trustee to close the Delivery Costs Fund , and after payment from the Delivery Costs Fund of all amounts included in requisitions submitted by the Town pursuant to this Section 3.6, the Trustee shall transfer any moneys remaining in the Delivery Costs Fund to the Payment Fund or such other fund as directed by a Town Representative. Upon such transfer the Trustee shall close the Delivery Costs Fund. (d) Moneys held in the Delivery Costs Fund may be invested and reinvested to the fullest extent practicable in any investment directed by the Town in writing, in which the Town can legally invest its funds, which mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from the Delivery Costs Fund. Any investment earnings on moneys on deposit in the Delivery Costs Fund shall be deposited in the Delivery Costs Fund and be used in the same manner as other amounts on deposit in the Delivery Costs Fund. (e) Notwithstanding any of the other provisions of this Section, to the extent that other moneys are not available therefor, amounts in the Deliver y Costs Fund shall be applied to the payment of principal of and interest on the 2021 Obligations when due. 4213173.5 22 ARTICLE IV REDEMPTION OF THE 2021 OBLIGATION S Section 4.1 Redemption or Purchase of the 2021 Obligations . Under the terms of the Agreement, money may be paid or credited for the purpose of redeeming 2021 Obligations when redeemable or purchasing 2021 Obligations when permitted hereunder. The Town covenants that any and all money received by the Town which, pursuant to the Agreement, is to be used to redeem or purchase the 2021 Obligations or a portion thereof in advance of the stated maturity date shall be paid to the Trustee under this Trust Agreement, and in such event, the Trustee shall deposit the same in the Payment Fund and shall use any and all such money to prepay and redeem or purchase 2021 Obligations in accordance with their terms and the provisions of this Article. Section 4.2 Terms of Redemption of the 2021 Obligations . The 2021 Obligations maturing on or before July 1, 20__, will not be subject to redemption prior to their stated maturity dates. The 2021 Obligations maturing on or after July 1, 20__, will be subject to redemption prior to their stated maturity dates, at the option of the Town, in whole or in part from maturities selected by the Town on July 1, 20__, or on any date thereafter, by the payment of a redemption price equal to the principal amount of each such 2021 Obligation redeemed, plus interest accrued to the date fixed for redemption, without premium. Section 4.3 Town’s Election to Redeem. The Trustee, at the direction of the Town, will redeem any 2021 Obligations subject to redemption. The Mayor and Council of the Town shall adopt a resolution to redeem such 2021 Obligations and shall thereupon give written notice to the Trustee at least 45 days prior to the redemption date. In the event that notice of redemption shall have been given by the Trustee to the Owners as pr ovided in Section 4.4 hereof, if there has not been deposited with the Trustee prior to the redemption date, funds which, in addition to any other moneys available therefor and held by the Trustee, will be sufficient to redeem at the redemption price thereof, plus interest accrued to the redemption date, all of the redeemable 2021 Obligations for which notice of redemption has been given then such redemption shall be cancelled and of no effect and notice of cancellation shall be sent in the manner and to the persons that notice of redemption had been sent. Section 4.4 Notice of Redemption. The notice of redemption of 2021 Obligations shall identify (a) by designation, letters, numbers or other distinguishing marks, the 2021 Obligations or portions thereof to be redeemed, (b) the redemption price to be paid, (c) the date fixed for redemption, and (d) the place or places where the amounts due upon redemption are payable. The notice shall be given by the Trustee on behalf of the Town by mailing a copy of the redemption notice by first class mail, postage prepaid, not less than 30 days prior to the date fixed for redemption, to the Owner of each 2021 Obligation subject to redemption in whole or in part at the address of the Owner shown on the 2021 Obligation register maintained by the Trustee on the 15th day preceding that mailing; provided, that failure to receive notice by mailing, or any defect in that notice, as to any 2021 Obligation shall not affect the validity of the proceedings for the redemption of any 2021 Obligation for which notice was properly given. The notice will also state whether the funds necessary for the redemption are on deposit with the Trustee or whether the redemption is conditional on such funds being deposited, on or prior to , the date set for redemption. 4213173.5 23 Notwithstanding the foregoing, notice of redemption may be given to DTC or any securities depository by electronic means, or in any other manner permitted by the depository. Section 4.5 Payment of Redeemed 2021 Obligations . (a) If notice is mailed as provided in Section 4.4 hereof, the 2021 Obligations and portions thereof to be redeemed shall become due a nd payable on the redemption date, and upon presentation and surrender thereof at the place or places specified in that notice and shall be paid at the redemption price, plus interest accrued to the redemption date, without premium. (b) If moneys for the redemption of all of the 2021 Obligations and portions thereof to be redeemed, together with interest accrued thereon to the redemption date, are held by the Trustee, a Depository Trustee or any paying agent on the redemption date, so as to be available therefor on that date and, if notice of redemption shall have been deposited in the mail as aforesaid, then from and after the redemption date those 2021 Obligations and portions thereof to be redeemed shall cease to bear interest and no longer shall be considered to be Outstanding hereunder. If those moneys shall not be so available on the redemption date, or that notice shall not have been deposited in the mail as aforesaid, the redemption shall be cancelled and of no effect and those 2021 Obligations and portions thereof shall continue to bear interest until they are paid, at the same rate as they would have borne had they not been called for redemption. (c) All moneys deposited in the Payment Fund and held by the Trustee, Depository Trustee or a paying agent for the redemption of particular 2021 Obligations shall be held in trust for the account of the Owners thereof and shall be paid to them, respectively, upon presentation and surrender of those 2021 Obligations. Section 4.6 Purchase of 2021 Obligations . Notwithstanding the foregoing, if at any time there is money in the Payment Fund and any of the Outstanding Obligations payable from such Payment Fund may be purchased in the open market at a net cost to the Town that would be less than the cost of redeeming such Obligations under the provisions of this Article (or, prior to the time such Obligations may be redeemed, at a price equal to or below par), the Town, from time to time, may cause the Trustee to purchase so many of such Obligations as the Town shall designate and to pay therefor from the Payment Fund, to the extent of the funds in the Payment Fund. The Obligations so purchased shall be cancelled by the Trustee in accordance with the provisions hereof. 4213173.5 24 ARTICLE V PAYMENTS; PAYMENT FUND Section 5.1 Trustee ’s Rights in the Agreement. The Trustee, as Payee under the Agreement, holds in trust hereunder all of its rights and duties in the Agreement, including but not limited to all of the Payee’s rights to receive and collect all of the Payments, Prepayments and all other amounts required to be deposited in the Payment Fund pursuant to the Agreement or pursuant hereto. All the Payments, Prepayments and such other amounts to which the Payee may at any time be entitled shall be paid directly to the Trustee in trust, and all of the Payments collected or received by the Trustee shall be held by the Trustee in trust hereunder. Section 5.2 Establishment of Payment Fund. The Trustee shall establish a special fund designated as the “Town of Oro Valley 2021 Second Payment Fund” (which shall also be known as the “Payment Fund”). All moneys at any time deposited by the Trustee in the Payment Fund shall be held by the Trustee in trust for the benefit of the Owners of the 2021 Obligations . So long as any 2021 Obligations are Outstanding, the Town shall have no beneficial right or interest in the Payment Fund or the moneys deposited therein, except only as provided in this Tr ust Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. Section 5.3 Deposits . Subject to the provisions of Section 6.1 hereof, the Town shall be required to make Payments as shown on Exhibit A to the Agreement, taking into account any funds on deposit in the Payment Fund as a credit towards any Payment then due. The Trustee, not less than 10 Business Days prior to each Payment Date, shall notify the Town of the amount required to be paid after taking into account interest earnings which will be transferred to the Payment Fund in accordance herewith, on or before such Payment Date. There shall be deposited in the Payment Fund all of the Payments received by the Trustee. Section 5.4 Application of Moneys . All amounts in the Payment Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and interest on the 2021 Obligations as the same shall become due and payable, in accordance with the provisions of Articles II and IV hereof. Section 5.5 Transfers of Investment Earnings to Payment Fund. Subject to Section 7.7 pertaining to arbitrage rebate, the Trustee shall, at least annually, 15 days prior to each July Interest Payment Date, transfer any remaining income or profit on the investment of moneys in the funds hereunder to the Payment Fund. Section 5.6 Surplus . Any surplus remaining in any of the funds or accounts created pursuant to this Trust Agreement, after [redemption or] payment of all 2021 Obligations, including [premiums and] accrued interest, if any, and payment of any applicable fees to the Trustee, or provision for such [redemption or] payment having been made to the satisfaction of the Trustee, shall be withdrawn by the Trustee and remitted to the Town. Section 5.7 Separate Funds and Accounts . Monies and investments properly paid into and held in the funds and accounts established hereunder shall not be subject to the claims of the owners of any Parity Obligations, and the Owners of the 2021 Obligations shall have no claim 4213173.5 25 or lien upon any monies or investments properly paid into and held in the funds and accounts established under the proceedings for any Parity Obligations. ARTICLE VI PLEDGE AND LIEN Section 6.1 Pledge . (a) The Payments and all other amounts due under the Agreement are p ayable from a pledge of, and secured by a lien on, the Excise Taxes as may be necessary for their prompt and punctual payment. Said pledge of, and said lien on, the Excise Taxes, is irrevocably made and created by the Town pursuant to the Agreement for the prompt and punctual payment of amounts due under the Agreement according to its terms, and to create and maintain the funds as hereinafter specified therein and herein. None of the 2021 Obligations shall be entitled to priority or distinction one over the other in the application of the Excise Taxes hereby pledged to the payment thereof, regardless of the issue of the 2021 Obligations in series, or the delivery of any of the 2021 Obligations prior to the delivery of any other of the 2021 Obligations of said series, or regardless of the time or times the 2021 Obligations mature. All of the 2021 Obligations are coequal as to the pledge of and lien on the Excise Taxes pledged for the payment thereof and share ratably, without preference, priority or distinction, as to the source or method of payment from Excise Taxes or security therefor. The pledge of Excise Taxes shall be on parity with the pledge thereof with respect to the Parity Obligations. (b) To the extent Excise Taxes are insufficient, the Payments and all other amounts due under the Agreement are also payable from a pledge of, and secured by a lien on, the Parks and Recreation Taxes as may be necessary for their prompt and punctual payment. Said pledge of, and said lien on, the Parks and Recreation Taxes, is irrevocably made and created by the Town pursuant to the Agreement for the prompt and punctual payment of amounts due under the Agreement according to its terms, and to create and maintain the funds as hereinafter specified therein and herein. None of the 2021 Obligations shall be entitled to priority or distinction one over the other in the application of the Parks and Recreation Taxes hereby pledged to the payment thereof, regardless of the issue of the 2021 Obligations in series, or the delivery of any of the 2021 Obligations prior to the delivery of any other of the 2021 Obligations of said series, or regardless of the time or times the 2021 Obligations mature. All of the 2021 Obligations are coequal as to the pledge of and lien on the Parks and Recreation Taxes pledged for the payment thereof and share ratably, without preference, priority or distinction, as to the source or method of payment from Parks and Recreation Taxes or security therefor. The pledge of the Parks and Recreation Taxes shall be on parity with the pledge thereof with respect to the Parks and Recreation Tax Parity Obligations. (c) The Town’s obligation to make the Payments or any other payments under the Agreement or this Trust Agreement does not constitute an obligation of the Town or the State, or any of its political subdivisions, for which the Town or the State, or any of its political subdivisions, is obligated to levy or pledge any form of ad valorem property taxation, nor does the obligation to make the Payments or any other payments under the Agreement or this Trust 4213173.5 26 Agreement constitute an indebtedness of the Town or of the State or any of its political subdivisions within the meaning of the Constitution of the State or otherwise. Section 6.2 Protection of Lien. The Trustee and the Town hereby agree not to make or create or suffer to be made or created any assignment or lien having priority or preference over the assignment and lien hereof upon the interests granted hereby or any part thereof. The Trustee and the Town agree that no obligations the payment of which is secured by a superior or equal claim on or interest in property or revenues pledged hereunder will be delivered by either except in lieu of, or upon transfer of registration or exchange of, any 2021 Obligation as provided herein and except for Parity Obligations. Section 6.3 Existing Parity Pledge . The pledge of Excise Taxes under the Agreement is on a parity basis with the pledge of the Excise Taxes to payments due on or with respect to the Existing Parity Obligations. Section 6.4 Parity Obligations . The Town reserves the right to issue additional Parity Obligations payable from and secured by an equal lien on the Excise Taxes and, in limited cases in compliance with the Parks and Recreation Tax Ordinance, the Parks and Recreation Taxes, with the 2021 Obligations herein authorized and for the purpose or purposes as specified by law, but no such additional Parity Obligations shall be issued unless all of the following conditions are met: (a) All deposits in the funds and accounts created under Article V hereof must be current. (b) A certificate of the Chief Financial Officer of the Town or other officer acting as chief fiscal officer of the Town shall have been received and placed on file with the Trustee to evidence that all conditions precedent set forth in this Section 6.4 have been satisfied and the aggregate amount of Excise Taxes herein pledged and received by or on behalf of the Town during the Fiscal Year next preceding the date of issuance of any such additional Parity Obligations is at least equal to 200% of the Maximum Annual Debt Service Requirement (including such Parity Obligations) for the 2021 Obligations and any Parity Obligations for the Bond Years in which the 2021 Obligations or any Parity Obligations are Outstanding. If the Town issues Parity Obligations to refund the 2021 Obligations or one or more series of other Parity Obligations by providing for payment of the amounts due thereon in advance of their maturity then, for purposes of this Trust Agreement, such refunded 2021 Obligations or Parity Obligations to the extent they will no longer be Outstanding after the refunding, will be treated as not Outstanding for the purpose of determining the Annual Debt Service Requirement. (c) If the Parity Obligations proposed to be issued constitute Variable Rate Indebtedness, the proceedings authorizing the issuance of such Parity Obligations shall specify a maximum interest rate payable on such Parity Obligations. (d) The obligation to make payments on the Parity Obligations from Excise Taxes and/or Parks and Recreation Taxes shall not be subject to acceleration for any reason and such payments shall not be made immediately due and payable prior to their scheduled due date. 4213173.5 27 Parity Obligations may include any long term obligation or deferred payment for property including, without limitation, installmen t purchase or lease-purchase agreements. For the purpose of this Section 6.4, payments on installment purchase or lease - purchase agreements shall be deemed to include a principal component and an interest component and references in this Trust Agreement to the payment of principal, interest and premium shall include the payment of lease purchase or installment purchase payments. On or before the date of issuance of any Parity Obligations, the Town shall deliver to the Trustee in writing a description of the Parity Obligations, the dates and amounts due thereon and shall further provide the Trustee with a copy of the proceedings authorizing the Parity Obligations. ARTICLE VII MONEYS IN FUNDS; INVESTMENTS Section 7.1 Held in Trust. The moneys and investmen ts held by the Trustee under this Trust Agreement are irrevocably held in trust for the benefit of the Owners of the 2021 Obligations , and for the purposes herein specified, and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Trust Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Town, the Trustee or any Owner of 2021 Obligations. Section 7.2 Investments Authorized. Upon written order of the To wn Representative, moneys held by the Trustee hereunder shall be invested and reinvested by the Trustee in Permitted Investments. Such investments, if registrable, shall be registered in the name of the Trustee and shall be held by the Trustee. The Trustee may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Section 7.2 and may invest in funds which are Permitted Investments to which the Trustee or any of its affiliates provide services as an investment ad visor. Such investments and reinvestments shall be made giving full consideration to the time at which funds are required to be available. The Trustee may act as purchaser or agent in the making or disposing of any investment. Amounts in the Payment Fund may be invested only in Permitted Investments which (a) are rated no lower than the underlying rating on the 2021 Obligations or (b) secured by obligations which are so rated. Absent written direction of the Town, the Trustee shall hold such moneys uninvested in cash, with no liability for interest. The Trustee may conclusively rely upon the written investment orders of the Town Representative as to both the suitability and legality of the directed investments, and such orders shall be deemed to be a cer tification to the Trustee that such directed investments constitute Permitted Investments. The Trustee shall not be obligated to monitor the ratings on investments or the 2021 Obligations and shall be entitled to assume that any investment which at the time of purchase is a Permitted Investment remains a Permitted Investment thereafter (including for reinvestment purposes), absent receipt of written notice to the contrary. Although the Town recognize s that it may obtain brokerage confirmations or written statements containing comparable information at no additional cost, the Town agree s that brokerage confirmations are not required to be issued by the Trustee for each month in which a monthly statement of investments is provided by the Trustee. No statement needs to be provided, however, for any fund or account for any month in which no investment activity occurred during such month in such fund or account. The Trustee may elect to credit the funds and accounts held by it with moneys representing income or principal payments due on, or sales proceeds due in respect of, the investments in such funds and accounts, or to credit to such funds and accounts the investments intended to be purchased with such moneys, in each case before actually receiving the 4213173.5 28 requisite moneys from the payment source, or to otherwise advance funds for directed investment transactions. Notwithstanding anything else in this Trust Agreement, (i) any such crediting of funds or assets shall be provisional in nature, and the Trustee shall be authorized to reverse any such transactions or advances of funds in the event that it does not receive good funds with respect thereto, and (ii) nothing in this Trust Agreement shall constitute a waiver of any of the Trustee ’s rights as a securities intermediary under Uniform Commercial Code §9 -206. Section 7.3 Accounting. The Trustee shall furnish to the Town, not less than semiannually, an accounting (which may be in the form of its customary statement) of all investments made by the Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Section 7.2 hereof. Section 7.4 Allocation of Earnings . Subject to Section 5.5 pertaining to annual transfers to the Payment Fund, any income, profit or loss on such investments shall be deposited in or charged to the respective funds from which such investments were made, and any interest on any deposit of funds shall be deposited in the fund from which such deposit was made, except as otherwise provided herein. Section 7.5 Valuation and Disposition of Investments . For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund shall be valued at Market Value. The Town acknowledges that market values shall be determined in accordance with the price provided by pricing services and sources relied upon by the Trustee and the Trustee does not have any duty to independ ently value any asset or an obligation. The Trustee may sell at the best price obtainable, or present for redemption, any Permitted Investment so purchased by the Trustee whenever it shall be necessary in order to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from such investment. Section 7.6 Arbitrage Covenant. The Town hereby covenants with the Owners of the 2021 Obligations that it will make no use of the proceeds of the 2021 Obligations or other moneys which would cause the obligations of the Town under the Agreement to be “arbitrage bonds ” subject to federal income taxation by reason of Section 148 of the Code. Section 7.7 Tax Covenants . In consideration of the acceptance and execution of the Agreement by the Trustee and the purchase by the 2021 Obligation holders, from time to time, and in consideration of retaining the exclusion of interest income from gross income on the Agreement and the 2021 Obligations for federal income tax purposes, the Town covenants with the Trustee and the 2021 Obligation holders from time to time to neither take nor fail to take any action, which action or failure to act is within its power and authority and would result in interest income on the Agreement or the 2021 Obligations to become subject to inclusion in gross income for federal income tax purposes under either laws existing on the date o f execution of the Agreement or such laws as they may be modified or amended. 4213173.5 29 The Town agrees that it will comply with such requirement(s) and will take any such action(s) as are necessary to prevent interest income on the Agreement or the 2021 Obligations from becoming subject to inclusion in gross income for federal income tax purposes. Such requirements may include but are not limited to making further specific covenants; making truthful certifications and representations and giving necessar y assurances; complying with all representations, covenants and assurances contained in certificates or agreements to be prepared by special counsel; to pay to the United States of America any required amounts representing rebates of arbitrage profits relating to the Agreement; filing forms, statements and supporting documents as may be required under the federal tax laws; limiting the term of and yield on investments made with moneys relating to the Agreement; and limiting the use of the proceeds of the Agreement and property financed thereby. In the event the Town is required to rebate any earnings and profits from the investments of the 2021 Obligations, the Trustee shall establish a separate “Arbitrage Rebate Fund.” The Arbitrage Rebate Fund shall be held separate and apart from all other funds and accounts held by the Trustee. The Arbitrage Rebate Fund shall be funded with earnings and profits from the investment of the 2021 Obligation proceeds on an annual basis. The Town must compute, or engage professionals to compute, the exact amount of earnings which need to be deposited into the Arbitrage Rebate Fund no later than 30 days after each anniversary of the 2021 Obligation issuance unless and until advised by such professionals that further calculat ion of rebate amounts is not necessary. No later than 60 days after each fifth anniversary of the 2021 Obligation issuance, upon receipt from the Town, the Trustee shall file a Form 8038 -T completed by the Town and delivered to the Trustee, and remit the payment required by Section 148(f)(3) of the Code, as directed by the Town with the Internal Revenue Service Center, Ogden, Utah 84201. Such payment shall be from moneys contained in the Arbitrage Rebate Fund. In addition, upon the redemption of the last 2021 Obligation of the issue, upon receipt from the Town, the Trustee shall file, within 60 days after the last redemption, a Form 8038 -T completed by the Town and delivered to the Trustee and remit, as directed by the Town, the final payment as require d by Section 148(f)(3) of the Code. In the event there is insufficient moneys in the Arbitrage Rebate Fund to make a payment when due, the Town shall pay to the Trustee from Excise Taxes and Parks and Recreation Taxes or other money lawfully available the refor the amount necessary to provide the Trustee with an amount sufficient to make such payment when due. 4213173.5 30 ARTICLE VIII THE TRUSTEE Section 8.1 Appointment of Trustee . (a) U.S. Bank National Association is hereby appointed Trustee by the Town for the purpose of executing and delivering the Agreement, as Payee, and receiving all moneys required to be deposited with the Trustee pursuant hereto and to allocate, use and apply the same as provided in this Trust Agreement. The Town covenants that it will maintain as Trustee a bank or trust company with a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal or State authority, so long as any 2021 Obligations are Outstanding. If such bank or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to then for the purpose of this Section 8.1 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) The Trustee is hereby authorized to redeem the 2021 Obligations when duly presented for payment at maturity, or redemption, and to cancel all 2021 Obligations upon payment thereof. The Trustee shall keep accurate records of all funds administered by it and of all 2021 Obligations paid and discharged. Section 8.2 Liability of Trustee ; Standard of Care . The recitals of facts, covenants and agreements herein and in the 2021 Obligations contained shall be taken as statements, covenants and agreements of the Town, and the Trustee assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Trust Agreement or of the 2021 Obligations or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the 2021 Obligations assigned to or imposed upon them, respectively, including but not limited to the Trustee ’s obligations under Section 7.7 hereof. Prior to the occurrence of an Event of Default hereunder, or after the timely cure of an Event of Default, the Trustee shall perform only such duties as are specifically set forth in this Trust Agreement and no implied covenants or obligations shall be read into this Trust Agreement against the Trustee. After the occurrence of an Event of Default, the Trustee shall exercise such of the rights and powers vested in it, and use the same degree of care and skill in such exercise, as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs. Section 8.3 Merger or Consolidation. Any bank or company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business; provided that so long as such company is eligible under Section 8.1 hereof, such bank or company shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. 4213173.5 31 Section 8.4 Protection and Rights of the Trustee . (a) The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, telegram, request, consent, waiver, certificates, statements, affidavit, voucher, bond, requisition or other paper or document that it shall in good faith believe to be genuine and to have been passed or signed by the proper governing body or person or to have been prepared and furnished pursuant to any of the provisions hereof, and the Trustee shall be under no duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall not be bound to recognize any person as an Owner of any 2021 Obligation or to take any action at his request unless such 2021 Obligation shall be deposited with the Trustee and satisfactory evidence of the ownership of such 2021 Obligation shall be furnished to the Trustee. The Trustee may consult with counsel, who may be counsel to the Town with regard to legal questions and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith in accordance therewith. (b) Whenever in the administration of its duties under this Trust Agreement, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) shall be deemed to be conclusively p roved and established by the certificate of the Town Representative and such certificate shall be full warranty to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. (c) The Trustee may become the Owner of the 2021 Obligations with the same rights it would have if it were not Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the Town with the same rights it would have if it were not the Trustee; and may act as a depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of 2021 Obligations, whether or not such committee shall represent the Owners of the majority in principal amount of the 2021 Obligations then Outstanding. (d) The recitals, statements and representations by the Town contained herein or in the 2021 Obligations shall be taken and construed as made by and on the part of the Town and not by the Trustee, and the Trustee does not assume, and shall not have, any responsibility or obligation for the correctness of any thereof. (e) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, and the Trustee shall not be answerable for the default or misconduct of any such attorney, agent, or receiver selected by it with reasonable care. The Trustee shall not be answerable for the exercise of any discretion or power hereunder or for anything whatever in connection with the funds and accounts established hereunder, except only for its own willful misconduct or negligence. 4213173.5 32 (f) No provision in this Trust Agreement shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. The Trustee shall not be accountable for the use or application by the Town or any other party of any funds that the Trustee has released in accordance with the terms hereof. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Agreement or this Trust Agreement for the acquisition, construction, installation, furnishing, equipping, existence or use of the Project. The Trustee makes no representation or warranty, express or implied, as to the title, value, design, compliance with specifications or legal requirements, quality, durability, operation, condition, merchantability or fitness for any particular purpose or fitness for the use contemplated by the Town of the Project. (g) Notwithstanding any provision herein or in the Agreement to the contrary, the Trustee shall not be required to take notice or be deemed to have notic e of an Event of Default, except an Event of Default under Section 11(a)(i) of the Agreement, unless the Trustee has actual notice thereof or is specifically notified in writing of such default by the Town or the Owners of at least 25% in aggregate principal amount of the 2021 Obligations then Outstanding. (h) The Trustee shall have no duty or obligation to approve or evaluate any expert or other skilled person selected by the Town for any of the purposes expressed in this Trust Agreement or the Agreement. (i) The Trustee shall have the right to accept and act upon instructions or directions, including funds transfer instructions , sent by Electronic Means; provided, however, that the Town shall provide to the Trustee an incumbency certificate listing designated persons authorized to provide such instructions (“Authorized Officers ”), which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. As used in this paragraph, “Electronic Means” means a portable document format (“pdf”) or other replicating image attached to an unsecured email, secure electronic transmission (containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee), or another method or system specified by the Trustee as available for use in connection with its services hereunder. If the Town elects to give the Trustee instructions by Electronic Means and the Trustee in its discretion elects to act upon such instructions, the Trustee ’s understanding of such instructions shall be deemed controlling. The Town agrees that the Trustee cannot determine the identity of the actual sender of such instructions and that the Trustee shall conclusively presume that instructions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The Town shall be responsible for ensuring that only Authorized Officers transmit such instructions to the Trustee, and the Town and its Authorized Officers are responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and authentication keys provided by the Trustee, if any. The Trustee shall not be liable for any losses, costs, o r expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction delivered by other means. The Town agrees (i) to assume all risks arising out of the use of such Electronic Means to submit instructions and direction to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions and the risk of interception and misuse b y third 4213173.5 33 parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting instructions to the Trustee and that there may be more secure methods of transmitting instructions than the use of Electronic Means; (iii) that the security procedures (if any) to be followed in connection with its transmission of instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) that it will notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. Section 8.5 Compensation of Trustee . The Town shall, from time to time and as agreed upon between the Town and the Trustee, pay to the Trustee reasonable compensation for its services, and shall reimburse the Trustee for all its advances and expenditures, including but not limited to advances to, and reasonable fees and expenses of, independent appraisers, accountants, consultants, counsel, agents and attorneys-at-law or other experts employed by it in the exercise and performance of its powers and duties hereunder. Section 8.6 Removal and Resignation of Trustee . (a) The Town (but only if no Event of Default has occurred and is continuing), or the Owners of a majority in aggregate principal amount of all 2021 Obligations Outstanding, by written directive, at any time and for any reason, may remove the Trustee and any successor thereto, but any such successor shall be a bank or trust company doing business and having an office in the State, having a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000 and subject to supervision or examination by F ederal or State authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or the requirements of any supervising or examining authority above referred to, then, for the purposes of this Section 8.6, the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) The Trustee may at any time resign by giving written notice to the Town. Upon receiving such notice of resignation, the Town shall promptly appoint a successor trustee by an instrument in writing; provided, however, that in the event that the Town does not appoint a successor trustee within 30 days following receipt of such no tice of resignation, the resigning Trustee may petition the appropriate court having jurisdiction to appoint a successor trustee. Any resignation or removal of the Trustee and appointment of a successor trustee shall become effective upon acceptance of appointment by the successor trustee. Trustee and Town shall execute any documents reasonably required to affect the transfer of rights and obligations of the Trustee to the successor trustee. Upon such acceptance, the successor trustee shall mail notice t hereof to the 2021 Obligation Owners at their respective addresses set forth on the 2021 Obligation registration books maintained pursuant to Section 2.13 hereof. Section 8.7 Appointment of Agent. The Trustee may appoint an agent or agents to exercise any of the powers, rights or remedies granted to the Trustee hereunder and to hold title to property or to take any other action which may be desirable or necessary. 4213173.5 34 Section 8.8 Commingling. The Trustee may commingle any of the funds held by it pursuant hereto in a separate fund or funds for investment purposes only; provided, however, that all funds or accounts held by the Trustee hereunder shall be accounted for separately notwithstanding such commingling by the Trustee. Section 8.9 Records . The Trustee shall keep complete and accurate records of all moneys received and disbursed hereunder, which shall be available for inspection by the Town, or any of its agents, at any time during regular business hours. The Trustee shall provide the Town Representative with semiannual reports of funds transactions and balances. ARTICLE IX MODIFICATION OR AMENDMENT OF AGREEMENTS Section 9.1 Amendments Permitted. (a) This Trust Agreement and the rights and obligations of the Owners of the 2021 Obligations and the Agreement and the rights and obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement which shall become effective when the written consent of the Owners of a majority in aggregate principal amo unt of the 2021 Obligations then Outstanding, exclusive of 2021 Obligations disqualified as provided in Section 9.3 hereof, shall have been filed with the Trustee. No such modification or amendment shall (i) extend or have the effect of extending the fixe d maturity of any 2021 Obligation or reducing the interest rate with respect thereto or extending the time of payment of interest, or reducing the amount of principal thereof [or reducing any premium payable upon redemption thereof], without the express consent of the Owner of such 2021 Obligation, or (ii) reduce or have the effect of reducing the percentage of 2021 Obligations required for the affirmative vote or written consent to an amendment or modification of the Agreement without the express consent of the Owners of the 2021 Obligations, or (iii) modify any of the rights or obligations of the Trustee without its written assent thereto. Any such supplemental agreement shall become effective as provided in Section 9.2 hereof. (b) This Trust Agreement and the rights and obligations of the Owners of the 2021 Obligations and the Agreement and the rights and obligations of the parties thereto, may be modified or amended at any time by a supplemental agreement, without the consent of any such Owners, but only (i) to add to the covenants and agreements of any party, other covenants to be observed, or to surrender any right or power herein reserved to the Trustee or the Town, (ii) to cure, correct or supplement any ambiguous or defective provision co ntained herein or therein, (iii) to facilitate the issuance of additional Parity Obligations, (iv) in c onnection with rating matters, (v) to preserve the exclusion of interest represented by the 2021 Obligations from gross income for purposes of federal or State income taxes and to preserve the power of the Town to continue to issue bonds or incur other obligations the interest on which is likewise exempt from federal and State income taxes, or (vi) in regard to questions arising hereunder or thereunder, as the parties hereto or thereto may deem necessary or desirable and which shall not adversely affect the interests of the Owners of the 2021 Obligations. Any such supplemental agreement shall become effective upon execution and delivery by the parties here to or thereto as the case may be. The Trustee shall be entitled to receive and may rely upon an opinion of nationally recognized 4213173.5 35 bond counsel selected by the Town as conclusive evidence that any such supplemental agreement complies with this Section 9.1. Section 9.2 Procedure for Amendment With Written Consent of 2021 Obligations Owners . (a) This Trust Agreement and the Agreement may be amended by supplemental agreement as provided in this Section 9.2 in the event the consent of the Owners of the 2021 Obligations are required pursuant to Section 9.1 hereof. A copy of such supplemental agreement, together with a request to the 2021 Obligation Owners for their consent thereto, shall be mailed by the Trustee to each Owner of an 2021 Obligation at his address as set forth on the 2021 Obligation registration books maintained by the Trustee pursuant to Section 2.13 hereof, but failure to mail copies of such supplemental agreement and request shall not affect the validity of the supplemental agreement when assented to as in this Section 9.2 provide d. (b) Such supplemental agreement shall not become effective unless there shall be filed with the Trustee the written consent of the Owners of a majority in principal amount of the 2021 Obligations then Outstanding (exclusive of 2021 Obligations disqualified as provided in Section 9.3 hereof) and a notice shall have been mailed as hereinafter provided in this Section 9.2. The consent of an Owner of an 2021 Obligation shall be effective only if accompanied by proof of ownership of the 2021 Obligations for which such consent is given, which proof shall be such as is permitted by Section 2.12 hereof. Any such consent shall be binding upon the Owner of the 2021 Obligation giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter provided for in this Section 9.2 has been mailed. (c) After the Owners of the required percentage of 2021 Obligations have filed their consents to such supplemental agreement, the Trustee shall mail a notice to the Owners of the 2021 Obligations in the manner hereinbefore provided in this Section for the mailing of such supplemental agreement of the notice of adoption thereof, stating in substance that such supplemental agreement has been consented to by the Owners of the required percentage of 2021 Obligations and will be effective as provided in this Section 9.2 (but failure to mail copies of said notice shall not affect the validity of such supplemental agreement or consents thereto). A record, consisting of the papers required by this Section to be filed with the Trustee, shall be conclusive proof of the matters therein stated. Such supplemental agreement shall become effective upon the mailing of such last-mentioned notice, and such supplemental agreement shall be deemed conclusively binding upon the parties hereto and the Owners of all 2021 Obligatio ns at the expiration of 60 days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such 60 day period. Section 9.3 Disqualified 2021 Obligations . Any 2021 Obligations owned or held by or for the account of the Town or by any person directly or indirectly controlled by, or under direct or indirect common control with the Town (except any 2021 Obligations he ld in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent, waiver or 4213173.5 36 other action or any calculation of Outstanding 2021 Obligations provided for herein and shall not be entitled to vote upon, consent to, or take any other action provided for in this Trust Agreement. Section 9.4 Effect of Supplemental Agreement. From and after the time any supplemental agreement becomes effective pursuant to this Article IX, this Trust Agreement or the Agreement, as the case may be, shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of 2021 Obligations Outstanding, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any supplemental agreement shall be deemed to be part of the terms and conditions of this Trust Agreement or the Agreement, as the case may be, for any and all purposes. The Trustee may require each 2021 Obligation Owner, before his consent provided for in this Article IX shall be deemed effective, to reveal whether the 2021 Obligations as to which such consent is given are disqualified as provided in Section 9.3 hereof. Section 9.5 Endorsement or Replacement of 2021 Obligations Delivered After Amendments . The Trustee may determine that 2021 Obligations delivered after the effective date of any action taken as provided in this Article IX shall bear a notation, by endorsement or otherwise, in form approved by the Trustee, as to such action. In that case, upon demand of the Owner of any 2021 Obligation Outstanding at such effective date and presentation of his 2021 Obligation for the purpose at the office of the Trustee, a suitable notation shall be made on such 2021 Obligation. The Trustee may determine that the delivery of substitute 2021 Obligations, so modified as in the opinion of the Trustee is necessary to conform to such 2021 Obligation Owners ’ action, which substitute 2021 Obligations shall thereupon be prepared, executed and delivered. In that case, upon demand of the Owner of any 2021 Obligation then Outstanding, such substitute 2021 Obligation shall be exchanged at the designated office of the Trustee, without cost to such Owner, for a 2021 Obligation of the same character then Outstanding, upon surrender of such Outstanding 2021 Obligation. Section 9.6 Amendatory Endorsement of 2021 Obligations . The provisions of this Article IX shall not prevent any 2021 Obligation Owner from accepting any amendment as to the particular 2021 Obligations held by him; provided that proper notation thereof is made on such 2021 Obligations. 4213173.5 37 ARTICLE X COVENANTS, NOTICES Section 10.1 Compliance With and Enforcement of the Agreement. The Town covenants and agrees with the Owners of the 2021 Obligations to perform all obligations and duties imposed on it under the Agreement. The Town will not do or permit anything to be done, or omit or refrain from doing anything, in any case where any such act done or permitted to be done, or any such omission of or refraining from action, would or might be an Event of Default under the Agreement. The Town, immediately upon receiving or giving any notice, communication or other document in any way relating to or affecting its estate in the Project, which may or can in any manner affect such estate of the Town, will deliver the same, or a copy thereof, to the Trustee. Section 10.2 Observance of Laws and Regulations . The Town will well and truly keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States of America, or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or franchise now owned or hereafter acquired by the Town, including its right to exist and carry on business as a political subdivision, to the end tha t such rights, privileges and franchises shall be maintained and preserved, and shall not become abandoned, forfeited or in any manner impaired. Section 10.3 Further Assurances . The Trustee and the Town, at the expense, and upon the reasonable request of the Town, will make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Trust Agreement and the Agreement, and for the better assuring and confirming unto the Owners of the 2021 Obligations the rights and benefits provided herein. Section 10.4 Notification to the Town of Failure to Make the Payments . The Trustee shall notify the Town of any failure by the Town to make any Payment or other payment required under the Agreement to be made to the Trustee, in writing and within one Business Day of any such failure. Such notice shall not be a prerequisite for the occurrence of an Event of Default. 4213173.5 38 ARTICLE XI LIMITATION OF LIABILITY Section 11.1 Limited Liability of the Town. Except for the payment of the Payments from Excise Taxes or Parks and Recreation Taxes when due in accordance with the Agreement and the performance of the other covenants and agreements of the Town contained in the Agreement, the Town shall have no pecuniary obligation or liability to any of the other parties or to the Owners of the 2021 Obligations with respect to this Trust Agreement, or the terms, execution, delivery or transfer of the 2021 Obligations, or the distribution of the Payments to the Owners by the Trustee. Section 11.2 No Liability of the Town for Trustee Performance . The Town shall have no obligation or liability to any of the other parties or to the Owners of the 2021 Obligations with respect to the performance by the Trustee of any duty imposed upon it hereunder. Section 11.3 Indemnification of the Trustee . (a) To the extent permitted by law, the Town shall indemnify and save the Trustee harmless for, from and against all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of: (i) the 2021 Obligations or the use, maintenance, condition or management of, or from any work or thing done on, the Project, or any portion thereof or interest therein, by the Town; (ii) any breach or default on the part of the Town in the performance of any of its obligations hereunder and under a ny other agreement made and entered into in connection with the 2021 Obligations or the Project; (iii) any act of negligence of the Town or of any of its agents, contractors, servants, employees or licensees with respect to the 2021 Obligations or the Project; (iv) any act of negligence of any assignee of, or purchaser from, the Town or of any of its or their agents, contractors, servants, employees or licensees with respect to the Project; (v) the acquisition, construction or installation of the Pro ject or any interest therein; (vi) the actions of any other party, including but not limited to the operation or use of the Project or the site of the Project, or interest therein, by the Town; (vii) the ownership of the Project, or the site of the Project, or interest therein; (viii) this Trust Agreement and the Agreement, including (ix ) the Trustee’s exercise and performance of its powers and duties hereunder; or (x) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading in any official statement or other offering circular utilized in connection with the sale of the 2021 Obligations, including the costs and expenses of defending itself against any claim of liability arising hereunder. No indemnification will be made under this Section or elsewhere in this Trust Agreement for willful misconduct, negligence or breach of duty under this Trust Agreement by the Trustee, or by its officers, agents, employees, successors or assigns. The Town’s obligations hereunder shall remain valid and binding notwithstanding the maturity and payment of the 2021 Obligations or resignation or removal of the Trustee. (b) The Trustee, promptly after determining that any event or condition which requires or may require indemnification by the Town hereunder exists or may exist, or after receipt of notice of the commencement of any action in respect of which indemnity may be sought hereunder, shall notify the Town in writing of such circumstances or action (a “Notification ”). 4213173.5 39 Upon giving of a Notification, the Trustee shall cooperate fully with the Town in order that the Town may defend, compromise or settle any such matters or actions which may result in payment by Town hereunder. The Town shall give the Trustee notice of its election within 15 days after receiving the Notification whether the Town, at its sole cost and expense, shall represent and defend the Trustee in any claim or action which may result in a request for indemnification hereunder. If the Town timely gives the notice that it will represent and defend the Trustee thereafter, the Trustee shall not settle or compromise or otherwise interfere with the defense or undertakings of the Town hereunder. The Town shall not settle or compromise any claim or action against the Trustee without the written approval of the Trustee, except to the extent that the Town shall pay all losses and the Trustee shall be fully released from such claim or action. If the Town either fails to timely give its notice or notifies the Trustee that the Town will not represent and defend the Trustee, the Trustee may defend, settle, compromise or admit liability as it shall determine in the reasonable exercise of its discretion and in an effort to minimize any claims for indemnity made hereunder. In the event the Town is required to and does indemnify the Trustee as herein provided, the rights of the Town shall be subrogated to the rights of the Trustee to recover such losses or damages from any other person or entity. Section 11.4 Opinion of Counsel. Before being required to take any action, the Trustee may require an opinion of Independent Counsel acceptable to the Trustee, which opinion shall be made available to the other parties hereto upon request, which counsel may be counsel to any of the parties hereto, or a verified certificate of any party hereto, or both, concerning the proposed action. If it does so in good faith, the Trustee shall be absolutely protected in relying thereon. ARTICLE XII EVENTS OF DEFAULT AND REMEDIES OF 2021 OBLIGATION OWNERS Section 12.1 Payee ’s Rights Held in Trust. As provided herein, the Trustee holds in trust hereunder all of the Payee’s rights in and to the Agreement, including without limitation all of the Payee’s rights to exercise such rights and remedies conferred on the Payee pursuant to the Agreement as may be necessary or convenient to enforce payment of the Payments and any other amounts required to be deposited in the Payment Fund and enforcement of the pledge of Excise Taxes and Parks and Recreation Taxes. Section 12.2 Remedy. Subject to Section 12.7 hereof, if an Event of Default shall happen, then and in each and every such case during the continuance of such Event of Default, the Trustee may, and upon request of the Owners of 25% in aggregate principal amount of the 2021 Obligations and indemnified to its satisfaction from any liability or expense shall, exercise one or more of the following remedies: (a) The Trustee may proceed to protect and enforce its rights and the rights of the holders of the 2021 Obligations hereunder by a suit or suits in equity or at law, either for the specific performance of any covenant or agreement contained herein or in the Agreement, or in aid of the execution of any power granted herein or in the Agreement or for the enforcement of any other appropriate legal or equitable remedy, as the Trustee, being advised by counsel, may deem most effectual to protect and enforce any of the rights or interests under the 2021 Obligations , 4213173.5 40 this Trust Agreement and/or the Agreement. All rights of action hereunder or under any of the 2021 Obligations or under the Agreement may be enforced by the Trustee without the possession of any of the 2021 Obligations or the production thereof on any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee, and any recovery of judgment shall be for the ratable benefit of the Owners of the 2021 Obligations. (b) The Trustee, upon the bringing of a suit to enforce any of its rights hereunder or under the Agreement, as a matter of right without notice and without giving bond to the Town or anyone claiming under them, may (i) have a receiver appointed of all of the property encumbered hereby and of the earnings, income, rents, issues and profits thereof, and of all the Excise Taxes and Parks and Recreation Taxes that are pledged for the payment of the payments under the Agreement, pending such proceedings, with such powers as the court making such appointment shall confer, including such powers as may be necessary or usual in such cases for the collection and proper disbursement of the Excise Taxes and Parks and Recreation Taxes pledged for the payment of the Payments under the Agreement, and the Town does hereby irrevocably consent to such appointment and (ii) seek and obtain such injunctive relief as may be appropriate. (c) The Trustee is hereby appointed, and the successive respective Owners by taking and owning the 2021 Obligations, shall be conclusively deemed to have so appointed the Trustee, the true and lawful attorney-in -fact of the respective Owners, with authority to make or file, in the respective names of the Owners or in be half of all Owners as a class, any proof of debt, amendment to proof of debt, petition or other document; to receive payment of all sums becoming distributable on account thereof; to execute any and all acts and things for and in behalf of all Owners as a class, as may be necessary or advisable, in the opinion of the Trustee, in order to have the respective claims of the Owners against the Town allowed in any equity receivership, insolvency, liquidation, bankruptcy or other proceedings to which the Town shall be a party. The Trustee shall have full powers of substitution and delegation in respect of any such powers. (d) Notwithstanding anything herein or in the Agreement to the contrary, there shall be no right under any circumstances to accelerate the maturit ies of the 2021 Obligations nor to declare any Payment not then past due or in default to be immediately due and payable. Section 12.3 Application of Funds . All moneys received by the Trustee pursuant to any right given or action taken under the provisio ns of this Article XII and subject to Section 16 of the Agreement shall be applied by the Trustee in the following order upon presentation of the 2021 Obligations, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid: First, to the payment of the costs and expenses of the Trustee and of the 2021 Obligation Owners in declaring such Event of Default and taking action under the provisions of this Article XII, including reasonable compensation to its or their agents, attorneys and counsel; and Second, to the payment of the whole amount then owing and unpaid with respect to the 2021 Obligations for principal and interest, with interest on the overdue principal and installments 4213173.5 41 of interest (but such interest on overdue installments of interest shall be paid only to the extent funds are available therefor following payment of principal and interes t and interest on overdue principal, as aforesaid), and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid with respect to the 2021 Obligations, then to the payment of such principal and interest without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest. Section 12.4 Institution of Legal Proceedings . If one or more Events of Default shall happen and be continuing, the Trustee in its discretion may, and upon the written request of the Owners of a majority in aggregate principal amount of the 2021 Obligations then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners of 2021 Obligations by a suit in equity or action at law for the specific performance of any covenant or agreement contained herein. Section 12.5 Non-Wa iver. Nothing in this Article XII or in any other provision of this Trust Agreement or in the 2021 Obligations shall affect or impair the obligation of the Town to pay or prepay the Payments as provided in the Agreement, or affect or impair the right of a ction, which is absolute and unconditional, of the 2021 Obligation Owners to institute suit to enforce and collect such payment. No delay or omission of the Trustee or of any Owner of any of the 2021 Obligations to exercise any right or power arising upon the happening of any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, and every power and remedy given by this Article XII to the Trustee or the Owners of 2021 Obligations may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the 2021 Obligation Owners. Section 12.6 Power of Trustee to Control Proceedings . In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in aggregate principal amount of the 2021 Obligations then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the 2021 Obligations, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provid ed, however, that the Trustee shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, without the consent of a majority in aggregate principal amount of the 2021 Obligations Outstanding. Section 12.7 Limitation on 2021 Obligation Owners ’ Right to Sue . (a) No Owner of any 2021 Obligation executed and delivered hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Trust Agreement, unless (i) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default hereunder, (ii) the Owners of at least a majority in aggregate principal amount of all the 2021 Obligations then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, (iii) said Owners shall have tendered to the Trustee 4213173.5 42 reasonable indemnity against the costs, expenses, and liabilities to be incurred in compliance with such request and (iv) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. (b) Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of 2021 Obligations of any remedy hereunder; it being understood and intended that no one or more Owners of 2021 Obligations shall have any right in any manner whatever by his or their action to enforce any right under this Trust Agreement, except in the manner herein provided, and that all proceedings at law or in equity with respect to an Event of Default shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding 2021 Obligations. (c) The right of any Owner of any 2021 Obligation to receive payment of said Owner’s proportionate interest in the Payments as the same become due, or to institute suit for the enforcement of such payment, shall not be impaired or affected without the consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision hereof. 4213173.5 43 ARTICLE XIII MISCELLANEOUS Section 13.1 Defeasance . (a) The provisions of this Section 13.1 shall apply if and when all Outstanding 2021 Obligations have been paid and discharged in any one or more of the following ways: (i) by paying or causing to be paid the principal of and interest and redemption premiums (if any) with respect to all 2021 Obligations Outstanding, as and when the same become due and payable; (ii) by depositing with a Depository Trustee, in trust for such purpose, at or before maturity, money which, together with the amounts then on deposit in the Payment Fund is fully sufficient to pay or cause to be paid all 2021 Obligations Outstanding, including all principal and interest and [and redemption premium, if any]; or (iii) by depositing with a Depository Trustee, in trust for such purpose, any noncallable United States Obligations in such amount as shall be certified to the Trustee and the Town by a national firm of certified public accountants selected by the Town, as being fully sufficient, together with the interest to accrue thereon and moneys then on deposit in the Payment Fund together with the interest to accrue thereon, to pay and discharge or cause to be paid and discharged all 2021 Obligations (including all principal and interest[ and redemption premiums]) at their respective maturity dates[ or prior redemption dates], which deposit may be made in accordance with the provisions of Section 10 of the Agreement. (b) Notwithstanding that any 2021 Obligations shall not have been surrendered for payment, all obligations of the Trustee and the Town with respect to all Outstanding 2021 Obligations shall cease and terminate, except only the obligation of the Trustee to pay or cause to be paid, from the Payments paid by or on behalf of the Town from funds deposited pursuant to paragraphs (a)(i) or (ii) of this Section and paid to the Trustee by the Depository Trustee, to the Owners of the 2021 Obligations not so surrendered and paid all sums due with respect thereto , and in the event of deposits pursuant to paragraphs (a)(i) or (ii), the 2021 Obligations shall continue to represent direct and proportionate interests of the Owners thereof in such Payments under the Agreement. (c) Any funds held by the Trustee, at the time of one of the events described in paragraphs (a)(i) through (iii) of this Section, which are not required for the payment to be made to Owners, shall be paid over to the Town. (d) Any 2021 Obligation or portion thereof in authorized denominations ma y be paid and discharged as provided in this Section 13.1 ; provided, however, that if any such Obligation or portion thereof will not mature within 60 days of the deposit referred to in paragraphs (b) or (c) of this Section 13.1, the Trustee shall give notice of such deposit by first class mail to the Owners. 4213173.5 44 (e) After provision for the 2021 Obligations has been made under (a)(iii) above, at the direction of the Town, all or any part of the United States Obligations held by the Depository Trustee may be liquidated and the proceeds therefrom together with all or any portion of the moneys held by the Depository Trustee may be used to acquire other United States Obligations which the Depository Trustee shall hold provided that thereafter the moneys and United States Obligations held by the Depository Trustee shall remain sufficient, as evidenced by a certificate of a national firm of certified public accountants selected by the Town to pay and discharge all 2021 Obligations (including all principal, interest[ and redemption premiums]) at their respective maturity dates or prior redemption dates. (f) No Payment or 2021 Obligation may be so provided for and no liquidation or acquisition may be made if, as a result thereof, or of any other action in connection wit h which the provisions for payment of such Payment or 2021 Obligation is made, the interest payable on any 2021 Obligation is thereby made includable in gross income for federal income tax purposes. The Trustee, the Depository Trustee, and the Town may rely upon an opinion of nationally recognized bond counsel selected by the Town (which opinion may be based upon a ruling or rulings of the Internal Revenue Service) to the effect that the provisions of this paragraph will not be breached by so providing for the payment of any Payments or 2021 Obligations. (g) The Depository Trustee shall be any bank or trust company, which may be the Trustee, designated by the Town, with a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or State authority. Section 13.2 Records . The Trustee shall keep complete and accurate records of all moneys received and disbursed hereunder, which shall be available for inspection by the Town and any Owner, or the agent of any of them, at any time during regular business hours. Section 13.3 Notices . All written notices to be given under this Trust Agreement shall be given by mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective upon deposit in the United States mail, postage prepaid or, in the case of personal delivery, upon delivery to the address set forth below: If to the Town: Town of Oro Valley, Arizona 11000 N. La Cañada Drive Oro Valley, Arizona 85737-7015 Attn: Chief Financial Officer If to Special Counsel: Gust Rosenfeld P.L.C. One East Washington Street, Suite 1600 Phoenix, Arizona 85004 Attn: Timothy A. Stratton, Esq. 4213173.5 45 If to the Trustee: U.S. Bank National Association 101 North First Avenue, Suite 1600 Phoenix, Arizona 85003 Attn: Global Corporate Trust All notices, approvals, consents, requests and any communications to the Trustee hereunder must be in writing in English and must be in the form of a document that is signed manually or by way of an electronic signature (including electronic images of handwritten signatures and digital signatures provided by DocuSign, Orbit, Adobe Sign or any other electronic signature provider acceptable to the Trustee). Electronic signatures believed by the Trustee to comply with the ESIGN ACT of 2000 or other applicable law shall be deemed original signatures for all purposes. If the Town chooses to use electronic signatures to sign documents delivered to the Trustee, the Town agrees to assume all risks arising out of its use of electronic signatures, including without limitation the risk of the Trustee acting on an unauthorized document and the risk of interception or misuse by third parties. Notwithstanding the foregoing, the Trustee may in any instance and in its sole discretion require that an original document bearing a manual signature be delivered to the Trustee in lieu of, or in addition to, any document signed via electronic signature. Section 13.4 Covenant as to Conflict of Interest. A.R.S. § 38-511 provides that the Town may, within three years after its execution, cancel any contract, without penalty or further obligation, if any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the Town is, at any time while the contract or any extension of the contract is in effect, an employee or agent of any other party to the contrac t in any capacity or a consultant to any other party of the contract with respect to the subject matter of the contract. In addition, the Town may recoup any fee or commission paid or due to any person significantly involved in initiating, negotiating, securing, drafting or creating the contract on behalf of the Town from any other party to the contract arising as a result of the contract. Section 13.5 Governing Law. This Trust Agreement shall be construed and governed in accordance with the laws of the State. Section 13.6 Binding Effect and Successors . This Trust Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Whenever in this Trust Agreement either the Town or the Trustee is named or referred to, such reference shall be deemed to include successors or assigns thereof, and all the covenants and agreements herein contained by or on behalf of the Town or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 13.7 Execution in Counterparts . This Trust 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 Trust Agreement. Section 13.8 Destruction of Cancelled 2021 Obligations . Whenever in this Trust Agreement provision is made for the surrender to or cancella tion by the Trustee and the delivery to the Town of any 2021 Obligations, the Trustee may, in lieu of such cancellation and delivery, 4213173.5 46 destroy such 2021 Obligations and deliver a certificate of such destruction to the Town upon request. Section 13.9 Headings . The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references here in to “Articles,” “Sections,” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Trust Agreement; and the words “herein,” “hereof,” “hereunder ” and other words of similar import refer to this Trust Agreement as a who le and not to any particular Article, Section or subdivision hereof. Section 13.10 Parties Interested Herein. Nothing in this Trust Agreement or the 2021 Obligations, expressed or implied, is intended or shall be construed to confer upon, or go give or grant to, any person or entity, other than the Town, the Trustee, and the Owners of the 2021 Obligations, any legal or equitable right, remedy or claim under or by reason of this Trust Agreement or any covenant, condition or stipulation hereof, and all cove nants, stipulations, provisions and agreements herein contained by and on behalf of the Town shall be for the sole and exclusive benefit of the Town, the Trustee, and the Owners of the 2021 Obligations. Section 13.11 Waiver of Notice . Whenever in this Trust Agreement the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 13.12 Severability of Invalid Provisions . In case any one or more of the provisions contained in this Trust Agreement or in the 2021 Obligations shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such invalidity, illegality or unenforceability shall not affect any other provision hereof and this Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The parties hereto hereby declare that they would have entered into this Trust Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the 2021 Obligations pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases hereof may be held illegal, valid or unenforceable. Section 13.13 E-Verify Requirements . To the extent applicable under A.R.S. § 41- 4401, the Trustee and its subcontractors warrant compliance with all federal immigration laws and regulations that relate to their employees and their compliance with the E-verify requirements under A.R.S. § 23-214(A). The Trustee or its subcontractors’ breach of the above-mentioned warranty shall be deemed a material breach of this Trust Agreement and may result in the termination of the Trustee’s services by the Town. The Town retains the legal right to randomly inspect the papers and records of the Trustee or its subcontractor employee who work on this Trust Agreement to ensure that the Trustee and its subcontractors are complying with the above- mentioned warranty. The Trustee and its subcontractors warrant to keep the papers and records open for random inspection by the Town during the Trustee’s normal business hours. The Trustee and its subcontractors shall cooperate with the To wn’s random inspections including granting the 4213173.5 47 Town entry rights onto its property to perform the random inspections and waiving their respective rights to keep such papers and records confidential. Section 13.14 Reserved. Section 13.15 No Boycott of Israel. To the extent A.R.S. § 35-393 through § 35-393.03 are applicable, the parties hereby certify that they are not currently engaged in, and agree for the duration of this Trust Agreement to not engage in, a “boycott” of goods or services from Israel, as that term is defined in A.R.S. § 35-393. [Signatures on following pages] 4 213173 IN WITNESS WHEREOF, the parties have executed this Trust Agreement as of the day and year first above written. U.S. B ANK NATIONAL ASSOCIATION, as Trustee By__________________________________ Its__________________________________ [Signature page of Trustee to Trust Agreement] 4 213173 TOWN OF ORO VALLEY, ARIZONA, as Town By___________________________________ Mayor Attest: _______________________________ Town Clerk [Signature page of Town to Trust Agreement] 4213173.5 A-1 EXHIBIT A FORM OF 2021 OBLIGATION Number: R-_____ Denomination: $__________ Unless this 2021 Obligation is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Trustee, as registrar (or any successor registrar), for registration of transfer, exchange, or payment, and any 2021 Obligation issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge, or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATION , TAX-EXEMPT SERIES 2021 Evidencing a Proportionate Interest of the Owner Hereof in Payments to be Made by the TOWN OF ORO VALLEY, ARIZONA to U.S. BANK NATIONAL ASSOCIATION , as Trustee Interest Rate Maturity Date Dated Date CUSIP _____% July 1, 20__ _____, 2021 68702J___ Registered Owner: CEDE & CO. Principal Amount: THIS IS TO CERTIFY THAT the registered owner identified above, or registered assigns, as the registered owner (the “Owner”) of this Excise Tax and Parks and Recreation Tax Revenue Obligation, Tax-Exempt Series 2021 (this “2021 Obligation”) is the owner of an undivided proportionate interest in the right to receive certain Payments under and defined in that certain Agreement (the “Agreement ”), dated as of [_____] 1, 2021, by and between U.S. Bank National Association, a national banking association (the “Trustee”), as payee, and the Town of Oro Valley, Arizona (the “Town”), a municipal corporation and a political subdivision existing under the laws of the State of Arizona, as payor, which Payments [and Prepayments] and other 4213173.5 A-2 rights and interests under the Agreement are held by the Trustee in trust under a Trust Agreement dated as of [_____] 1, 2021 (the “Trust Agreement ”) by and between the Town and the Trustee. The Trustee maintains a corporate trust office for payment and transfer of the 2021 Obligations (the “Designated Office”). Payment Terms The registered owner of this 2021 Obligation is entitled to receive, subject to the terms of the Agreement, on the maturity date set forth above, the principal amount set forth abo ve (the “Principal ”), representing a portion of the Payments designated as principal coming due and to receive semiannually on January 1 and July 1 of each year commencing January 1, 2022 (the “Interest Payment Dates”), until payment in full of said portion of principal, the registered owner’s proportionate share of the Payments designated as interest coming due (the “Interest”) during the period commencing on the last date on which Interest was paid and ending on the day prior to the Interest Payment Date or, if no Interest has been paid, from the Dated Date specified above. Said Interest is the result of the multiplication of the Principal by the interest rate per annum set forth above. Interest shall be calculated on the basis of a 360 -day year composed of 12 months of 30 days each. Principal of and interest on this 2021 Obligation is payable in lawful money of the Unite d States of America to the registered owner or to any other registered owner hereof, as shown on the registration books maintained by the Trustee, at the address appearing therein at the close of business on the last day of the calendar month (other than a Saturday, Sunday or a legal holiday or equivalent (other than a moratorium) for banking institutions generally (a “Business Day”)) immediately preceding the applicable Interest Payment Date, or if such date is not a Business Day, the previous Business day (the “Record Date”). Limitation on Trustee ’s Responsibility The Trustee has no obligation or liability to the registered owners of the 2021 Obligations for the payment of Interest or Principal pertaining to the 2021 Obligations. The Trustee’s sole obligation is to administer, for the benefit of the registered owners of the 2021 Obligations, the various funds and accounts established pursuant to the Trus t Agreement. The recitals, statements and representations made in this 2021 Obligation shall be taken and construed as made by and on the part of the Town, and not by the Trustee, and the Trustee does not assume, and shall not have, any responsibility or obligation for the correctness of any thereof. Authorization This 2021 Obligation has been executed and delivered by the Trustee pursuant to the terms of the Trust Agreement. The Town is authorized to enter into the Agreement and the Trust Agreement under the laws of the State of Arizona and by resolution of the Mayor and Council of the Town adopted September 22, 2021. Reference is hereby made to the Agreement and the Trust Agreement (copies of which are on file at the Designated Office of the Trustee) for further 4213173.5 A-3 definitions, a description of the terms on which the 2021 Obligations are delivered, the rights thereunder of the registered owners of the 2021 Obligations, the rights, duties and immunities of the Trustee and the rights and obligations of the Town under the Agreement, to all of the provisions of which Agreement and Trust Agreement the registered owner of this 2021 Obligation, by acceptance hereof, assents and agrees. Payment from Excise Taxes and Parks and Recreation Taxes The 2021 Obligations are payable from the Payments to be made by the Town pursuant to the Agreement. The Town is required under the Agreement to make Payments from Excise Taxes and, to the extent Excise Taxes are insufficient, Parks and Recreation Taxes (both as defined in the Trust Agreement), which Payments are sufficient to pay, when due, the annual principal and interest due with respect to the 2021 Obligations; provided that the Mayor and Council of the Town may impose other transaction privilege taxes in the future, the uses of revenue from which will be restricted at the discretion of such Council and which, if so restricted, will not be deemed Excise Taxes. Pledge of Excise Taxes and Parks and Recreation Taxes The Payments and all other amounts due under the Agreement are payable from a pledge of, and secured by a lien on, the Excise Taxes and, to the extent Excise Taxes are insufficient, Parks and Recreation Taxes, as may be necessary for their prompt and punctual payment. Said pledge of, and said lien on, the Excise Taxes and Parks and Recreation Taxes is irrevocably made and created by the Town pursuant to the Agreement for the prompt and punctual payment of amounts due under the Agreement according to its terms, and to create and maintain the funds as hereinafter specified therein and herein. None of the Payments shall be entitled to priority or distinction one over the other in the application of the Excise Taxes and Parks and Recreation Taxes thereby pledged to the payment thereof. The Payments made by the Town in connection with the 2021 Obligations and the payments for hereafter issued Parity Obligations (as defined in the Trust Agreement) are co-equal as to the pledge of and lien on the Excise Taxes pledged for the payment thereof and share ratably, without preference, priority or distinction, as to the source or method of payment from Excise Taxes or security therefor. The pledge of Excise Taxes under the Agreement is on a parity basis with the pledge of Excise Taxes to payments due on or with respect to the Existing Parity Obligations (as defined in the Trust Agreement) and any additional Parity Obligations. The Payments made by the Town in connection with the 2021 Obligations and the payments for hereafter issued Parks and Recreation Tax Parity Obligations (as defined in the Trust Agreement) are co-equal as to the pledge of and lien on the Parks and Recreation Taxes pledged for the payment thereof and share ratably, without preference, priority or distinction, as to the source or method of payment from Parks and Recreation Taxes or security therefor . The pledge of Parks and Recreation Taxes under the Agreement is on a parity basis with the pledge of Parks and Recreation Taxes to payments due on or with respect to any additional Parks and Recreation Tax Parity Obligations. For further definitions, a description of the terms on which the 2021 Obligations are executed and delivered, a more complete statement of the income and revenues fr om which, and conditions under which, this 2021 Obligation is payable, the conditions under which additional 4213173.5 A-4 2021 Obligations or Parity Obligations may be authorized, a statement of the terms under which the Trust Agreement or the Agreement may be modified , a statement of the general covenants and provisions pursuant to which this 2021 Obligation is issued, and of the rights of the owner of the 2021 Obligation, reference is made to the Trust Agreement and the Agreement, and to all the provisions thereof the owner hereof, by acceptance of this 2021 Obligation, consents and agrees. All 2021 Obligations of the total authorized amount and all obligations which have been or may hereafter be issued as Parity Obligations, as provided in the Trust Agreement and the Agreement, and are co-equal as to the pledge of and lien on all such Excise Taxes securing the payment thereof, and share ratably without any preference, priority or distinction as to the source or method of payment from Excise Taxes and security thereof. All 2021 Obligations of the total authorized amount and all obligations which have been or may hereafter be issued as Parks and Recreation Tax Parity Obligations, as provided in the Trust Agreement and the Agreement, and are co -equal as to the pledge of and lien on all such Parks and Recreation Taxes securing the payment thereof, and share ratably without any preference, priority or distinction as to the source or method of payment from the Parks and Recreation Taxes and security thereof. Limited Pledge THE OBLIGATION OF THE TOWN TO MAKE PAYMENTS DO ES NOT REPRESENT OR CONSTITUTE A GENERAL OBLIGATION OF THE TOWN, THE STATE OF ARIZONA OR ANY PO LITICAL SUBDIVISION THEREOF FOR WHICH THE TOWN OR THE STATE OF ARIZONA OR ANY POLITICAL SUBDIVISION THEREOF IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION, NOR DOES THE OBLIGATION TO MAKE P AYMENTS UNDER THE AGREEMENT CONSTITUTE AN INDEBTEDNESS OF THE TOWN, THE STATE OF ARIZO NA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY C ONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION OR OTHERWISE. This 2021 Obligation represents an interest in a limited obligation of the Town (as described herein) and no Council member, officer or agent, as such, past, present or future, of the Town shall be personally liable for the payment hereof. Optional Redemption The 2021 Obligations maturing on or before July 1, 20__, will not be subject to prepayment prior to maturity. The 2021 Obligations maturing on or after July 1, 20__, will be subject to prepayment in such order and from such maturities as may be selected by the Town and by lot within any maturity by such methods as may be selected by the Trustee from prepayments made at the option of the Town, in whole or in part on a ny date on or after July 1, 20__, at a prepayment price equal to the principal amount of 2021 Obligations or portions thereof to be prepaid, together with accrued interest to the date fixed for redemption, but without premium. Notice of Redemption The notice of redemption of 2021 Obligations shall identify (a) by designation, letters, numbers or other distinguishing marks, the 2021 Obligations or portions thereof to be redeemed, 4213173.5 A-5 (b) the redemption price to be paid, (c) the date fixed for redemption, and (d) the place or places where the amounts due upon redemption are payable. The notice shall be given by the Trustee on behalf of the Town by mailing a copy of the redemption notice by first class mail, postage prepaid, not less than 30 days prior to the date fixed for redemption, to the Owner of each 2021 Obligation subject to redemption in whole or in part at the address of the Owner shown on t he 2021 Obligation register maintained by the Trustee on the 15th day preceding that mailing; provided, that failure to receive notice by mailing, or any defect in that notice, as to any 2021 Obligation shall not affect the validity of the proceedings for the redemption of any 2021 Obligation for which notice was properly given. The notice will also state whether the funds necessary for the redemption are on deposit with the Trustee or whether the redemption is conditional on such funds being deposited, on or prior to, the date set for redemption. Notwithstanding the foregoing, notice of redemption may be given to DTC or any securities depository by electronic means, or in any other manner permitted by the depository. Transfer This 2021 Obligation may be transferred on the registration books upon delivery hereof to the Trustee, as registrar, accompanied by a written instrument of transfer in form and with guaranty of signature satisfactory to the Trustee, as registrar, duly executed by the registered owner of this 2021 Obligation, or his or her attorney-in-fact or legal representative, containing written instructions as to the details of the transfer. No transfer of this 2021 Obligation shall be effective until entered on such registratio n books. In all cases upon the transfer of an 2021 Obligation, the Trustee shall enter the transfer of ownership in the registration books and shall authenticate and deliver, in the name of the transferee or transferees, a new fully registered 2021 Obligat ion of the denominations of $5,000 or any integral multiple thereof (except that no 2021 Obligation shall be issued which relates to more than a single principal maturity) for the aggregate principal amount which the registered owner is entitled to receive at the earliest practicable time in accordance with the provisions of the Trust Agreement. The registered owner of one or more 2021 Obligations may, upon request, and upon the surrender to the Trustee of such 2021 Obligations, exchange such 2021 Obligatio ns for 2021 Obligations of other authorized denomination of the same maturity, series, and interest rate together aggregating the same principal amount as the 2021 Obligations so surrendered. The Town or the Trustee shall charge the registered owner of suc h 2021 Obligation, for every such transfer or exchange of an 2021 Obligation, an amount sufficient reimburse it for any tax, governmental fee or other governmental charge required to be paid with respect to such transfer, and may require that such charge b e paid before any such new 2021 Obligation shall be delivered. The Town shall pay all initial registration fees on the 2021 Obligation. Subsequent owners of 2021 Obligations will pay all transfer fees including governmental fees, taxes or charges. The registered owner of any 2021 Obligation shall be required to pay any expenses incurred in connection with the replacement of a mutilated, lost, stolen or destroyed 2021 Obligation. 4213173.5 A-6 The Town and the Trustee may, but are not required to, transfer or exchange any 2021 Obligations during the period (i) from the Record Date to and including the respective interest payment date or (ii) from 15 days prior to the selection of 2021 Obligations to be redeemed and including the day on which notice of redemption is given. The Trustee may, but is not required to, transfer or exchange any 2021 Obligations within the periods referred to above, the interest payment on such 2021 Obligation will be made payable to and mailed to the registered owners shown on the bond register maintained by the Trustee as of the close of business on the respective Record Date. Enforcement Pursuant to Trust Agreement The registered owner of this 2021 Obligation shall have no right to enforce the provisions of the Trust Agreement or the Agreement or to institute any action to enforce the covenants thereof, or to take any action with respect to a default thereunder or he reunder, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Trust Agreement. No Acceleration The 2021 Obligations are not subject to acceleration for any reason. This 2021 Obligation shall not be entitled to any security or benefit under the Trust Agreement until executed by the Trustee. IN WITNESS WHEREOF, this 2021 Obligation has been executed and delivered by the Trustee, acting pursuant to the Trust Agreement. Date of Execution: _______________, 2021. U.S. BANK NATIONAL ASSOCIATION , as Trustee By___________________________________ Authorized Representative 4213173.5 A-7 The following abbreviations, when used in the inscription on the face of this 2021 Obligation , shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT/TRANS MIN ACT TEN ENT - as tenants by the entireties Custodian JT TEN - as joint tenants with right of (Cust) (Minor) survivorship and not as tenants in under Uniform Gifts/Transfers common to Minors Act ___________________________ Additional abbreviations may also be used though not in the above list. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto Insert Social Security or Other Identifying Number of Transferee ________________________________ ________________________________ _____________________________________________________________________________________ (Please Print or Typewrite Name and Address of Transferee) the within certificate and all rights ther eunder, and hereby irrevocably constitutes and appoints _____________________, attorney to transfer the within certificate on the books kept for registration thereof, with full power of substitution in the premises. Dated________________ ____________________________________ Note: The signature(s) on this assignment must correspond with the name(s) as written on the face of the within registered certificate in every particular without alteration or enlargement or any change whatsoever. Signature Guaranteed: _________________________________ The signature(s) should be guaranteed by an eligible guarantor institution pursuant to Securities and Exchange Commission Rule 17Ad-15 4213173.5 B-1 EXHIBIT B PAYMENT REQUEST FORM Application No. _______________ The Trustee is hereby requested to pay from the Project Fund, as defined in the Trust Agreement, dated as of [_____] 1, 2021 (the “Trust Agreement”), among the Town of Oro Valley, Arizona (the “Town”) and U.S. Bank National Association, as trustee (the “Trustee”) to the person or corporation designated below as Payee, the sum set forth below such designation, in payment of the Project Costs (as defined in the Trust Agreement) described below. The amount shown below is due and payable under a purchase order or contract with respect to the Project Costs described below and has not formed the basis of any prior request for payment. Payee: ____________________________________________________________________________ Address: ___________________________________________________________________________ Amount: ___________________________________________________________________________ Description of Project Costs or portion thereof authorized to be paid to the Payee: _____________________________________________________________________________________ _____________________________________________________________________________________ By execution of this Payment Request Form, the Town reques ts and approves the payment of the amount stated above to the Payee set forth above. DATED: _______________________. THE TOWN OF ORO VALLEY, ARIZONA By____________________________________ Town Representative Please forward payment to Payee at the following address: _________________________________________ _________________________________________ _________________________________________ 4213173.4 C-1 EXHIBIT C REIMBURSEMENT REQUEST FORM Application No. _______________ The Trustee is hereby requested to pay from the Project Fund established by the Trust Agreement, dated as of [____] 1, 2021 (the “Trust Agreement”), between the Town of Oro Valley, Arizona (the “Town ”), and U.S. Bank National Association, as trustee (the “Trustee”), to the Town, the sum set forth below as reimbursement of (all/a portion) of the Project Costs (as defined in the Trust Agreement) described below. The amount shown below was paid by the Town as a Project Costs and has not formed the basis of any prior request for payment. The Town hereby certifies that the statutorily prescribed period within which laborers’, materialmen’s or mechanics ’ lien may be filed has expired (or that an appropriate bond has been filed there against) with respect to the items covered by this Reimbursement Request Form and there are no such liens, other liens or security interests outstanding with respect to the Project. Amount: ___________________________________________________________________________ Description of Project Costs or portion thereof for which reimbursement is hereby requested: _____________________________________________________________________________________ _____________________________________________________________________________________ ____________________________________________________________. Dated: ___________________, 20__. By_____________________________ Town Representative Date received: ____________________, 20__. By_____________________________ Town Representative 4213173.4 D-1 EXHIBIT D FORM OF DISBURSEMENT CERTIFICATE FROM THE DELIVERY COSTS FUND RE: Town of Oro Valley, Arizona Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 The Town of Oro Valley, Arizona (the “Town”) hereby requests, U.S. Bank National Association, as trustee (the “Trustee”), under that certain Trust Agreement, dated as of [____ 1, 2021, by and between the Town and the Trustee, relating to the above -captioned Obligations to pay to the persons designated below as Payee, the sum set forth below such designation, in payment of the Delivery Costs (as defined in the Trust Agreement) described below. Name of Payee Amount Gust Rosenfeld P.L.C. Squire Patton Boggs (US) LLP Stifel, Nicolaus & Company, Incorporated S&P Global Ratings Stifel, Nicolaus & Company, Incorporated (OS Preparation) ImageMaster (POS Publication) U.S. Bank National Association Total The Town hereby certifies that each item in the amount set forth above is a proper charge against the Delivery Costs Fund and no part of such payment shall be applied to any item which has previously been paid as a Delivery Cost of the 2021 Obligations. Dated: _________, 2021. TOWN OF ORO VALLEY, ARIZONA By:_____________________________ Authorized Representative 4216385.4 1 $________ TOWN OF ORO VALLEY, ARIZONA EXCISE TAX AND PARKS AND RECREATION TAX REVENUE OBLIGATIONS, TAX-EXEMPT SERIES 2021 CONTINUING DISCLOSURE CERTIFICATE (CUSIP Base No. 68702J) This Continuing Disclosure Certificate (this “Disclosure Certificate”) is undertaken by the Town of Oro Valley, Arizona (the “Town”) in connection with the execution and delivery of $______ in aggregate principal amount of the Town’s Excise Tax and Parks and Recreation Tax Revenue Obligations, Tax-Exempt Series 2021 (the “2021 Obligations”). In consideration of the initial sale, execution and delivery of the Obligations, the Town covenants as follows: Section 1. Purpose of the Disclosure Certificate . This Disclosure Certificate is for the benefit of the Obligation Holder and in order to assist the Participating Underwriter in complying with the Rule (all as defined herein). Section 2. Definitions . Any capitalized term used herein shall have the following meanings, unless otherwise defined herein: “Annual Report ” shall mean the annual report provided by the Town pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Audited Financial Statements” shall mean the Town’s annual financial statements, which are currently prepared in accordance with generally accepted accounting principles (GAAP) for governmental units as prescribed by the Governmental Accounting Standards Board (GASB) and which the Town intends to continue to prepare in substantially the same form. “Dissemination Agent ” shall mean the Town or any person designated in writing by the Town as the Dissemination Agent. “EMMA” shall mean the Electronic Municipal Market Access system of MSRB, or any successor thereto approved by the United States Securities and Exchange Commission, as a repository for municipal continuing disclosure information pursuant to the Rule. “Financial Obligation” shall mean: (i) a debt obligation; (ii) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) a guarantee of (i) or (ii), except that “Financial Obligation” does not include municipal securities as to which a final official statement has been provided to the MSRB. “Listed Events” shall mean any of the events listed in Section 5 of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board, or any successor thereto. 4216385.4 2 “Obligation Holder” shall mean any registered owner or beneficial owner of the Obligations. “Official Statement ” shall mean the final official statement dated ______, 2021 relating to the Obligations. “Participating Underwriter” shall mean any of the original underwriters of the Obligations required to comply with the Rule in connection with offering of the Obligations. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “Special Counsel” shall mean Gust Rosenfeld P.L.C. or such other nationally recognized Special Counsel as may be selected by the Town. Section 3. Provision of Annual Reports . (a) Commencing February 1, 2022, and by no later than February 1 of each year thereafter (the “Filing Date”), the Town shall, either directly or by directing the Dissemination Agent to do so, provide an Annual Report to the MSRB. The Annual Report shall be provided electronically and in a format prescribed by the MSRB. The Annual Report shall be consistent with the requirements of Section 4 of this Disclosure Certificate and shall include information from the fiscal year ending on the preceding June 30. All documents provided to the MSRB shall be accompanied by identifying information prescribed by the MSRB. Currently, filings are required to be made with EMMA. Not later than 15 business days prior to such Filing Date, the Town shall provide the Annual Report to the Dissemination Agent (if other than the Town). (b) If the Town is unable or for any reason fails to p rovide electronically to EMMA an Annual Report or any part thereof by the Filing Date required in subsection (a) above, the Town shall in a timely manner, send a notice to EMMA in substantially the form attached as Exhibit A not later than the Filing Date. (c) If the Town’s Audited Financial Statements are not submitted with the Annual Report and the Town fails to provide to EMMA a copy of its Audited Financial Statements within 30 days of receipt thereof by the Town, then the Town shall, in a timely manner, send a notice to EMMA in substantially the form attached as Exhibit B. (d) The Dissemination Agent shall: (i) determine the proper electronic filing address of EMMA each year prior to the date(s) for providing the Annual Report and Audited Financial Statements; and (ii) if the Dissemination Agent is other than the Town, file a report or reports with the Town certifying that the Annual Report and Audited Financial Statements, if applicable, have been provided pursuant to this Disclosure Certificate, stating the date such information was provided and listing where it was provided. 4216385.4 3 Section 4. Content of Annual Reports . (a) The Annual Report may be submitted as a single document or as separate documents comprising an electronic package, and may incorporate by reference other information as provided in this Section, including the Audited Financial Statements of the Town; provided, however, that if the Audited Financial Statements of the Town are not available at the time of the filing of the Annual Report, the Town shall file unaudited financial statements of the Town with the Annual Report and, when the Audited Financial State ments of the Town are available, the same shall be submitted to EMMA within 30 days of receipt thereof by the Town. (b) The Town’s Annual Report shall contain or incorporate by reference the following: (i) Type of Financial and Operating Data to be Provided: (A) Subject to the provisions of Sections 3 and 4(a) hereof, Audited Financial Statements for the Town. (B) Annually updated financial information and operating data of the type contained in [the following tables] in the Official Statement : (I) [TABLE 5 – HISTORICAL AND PROJECTED COLLECTIONS OF EXCISE TAXES AND PARKS AND RECREATION TAXES ]: and (II) [ ] (C) In the event of an amendment pursuant to Section 8 hereof not previously described in an Annual Report, an explanation, in narrative form, of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided and, if the amendment is made to the accounting principles to be followed, a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles, including a qualitative discussion of the differences, and the impact on the presentation and, to the extent feasible, a quantitative comparison. (ii) Accounting Principles Pursuant to Which Audited Financial Statements Shall Be Prepared: The Audited Financial Statements shall be prepared in accordance with generally accepted accounting principles and state law requirements as are in effect from time to time. A more complete description of the accounting principles currently followed in the preparation of the Town’s Audited Financial Statements is contained in Note 1 of the Audited Financial Statements included within the Official Statement. Notice of amendment to the accounting principles shall be sent within 30 days to EMMA. (c) Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Town or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. I f the document incorporated by reference is a final official statement, it must be available from EMMA. The Town shall clearly identify each such other document so incorporated by reference. 4216385.4 4 Section 5. Reporting of Listed Events . (a) This Section shall govern the giving of notices by the Town, either directly or by directing the Dissemination Agent to do so, of the occurrence of any of the following events with respect to the Obligations. The Town shall in a timely manner, not in excess of 10 business da ys after the occurrence of the event, provide notice of the following events with EMMA: (i) Principal and interest payment delinquencies; (ii) Non-payment related defaults, if material; (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service (the “IRS”) of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Obligations, or other material events affecting the tax status of the Obligations; (vii) Modifications to rights of Obligation Holders, if material; (viii) Obligation calls, if material, and tender offers; (ix) Defeasances; (x) Release, substitution, or sale of property securing repayment of the Obligations, if material; (xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the Town; (xiii) The consummation of a merger, consolidation, or acquisition involving the Town or the sale of all or substantially all of the assets of the Town, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material; (xv) The incurrence of a Financial Obligation of the Town, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Town, any of which affect Obligation Holders, if material; and (xvi) A default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Town, any of which reflect financial difficulties. (b) “Materiality” will be determined in accordance with the applicable federal securities laws. Note to Section 5(a)(xii) above: For the purposes of the event identified in subsection (a)(xii) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Town in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Town, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers 4216385.4 5 in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdic tion over substantially all of the assets or business of the Town. Section 6. Termination of Reporting Obligation. The Town’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Obligations. Such termination shall not terminate the obligation of the Town to give notice of such defeasance or prior redemption. Section 7. Dissemination Agent. The Town may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. Section 8. Amendment. Notwithstanding any other provision of this Disclosure Certificate, the Town may amend this Disclosure Certificate if: (a) The amendment is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in identity, nature or status of the Town, or the type of business conducted; (b) This Disclosure Certificate, as amended, would, in the opinion of Special Counsel, have complied with the requirements of the Rule at the time of the primary offering of the Obligations, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment does not materially impa ir the interests of Obligation Holders, as determined by Special Counsel. Section 9. Filing with EMMA. The Town shall, or shall cause the Dissemination Agent to, electronically file all items required to be filed with EMMA. Section 10. Additional Information. The Town may, at the Town’s election, include any information in any Annual Report or notice of occurrenc e of a Listed Event in addition to that which is specifically required by this Disclosure Certificate. If the Town chooses to include such information, the Town shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the Town to comply with any provision of this Disclosure Certificate any Obligation Holder may seek specific performance by court order to cause the Town to comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any failure of the Town to comply with this Disclosure Certificate shall be an action to compel p erformance and such failure shall not constitute a default under the Obligations or the resolution authorizing the Obligations. Section 12. Compliance by the Town. The Town hereby covenants to comply with the terms of this Disclosure Certificate. The Town expressly acknowledges and agrees that compliance with the undertaking contained in this Disclosure Certificate is its sole responsibility and the 4216385.4 6 responsibility of the Dissemination Agent, if any, and that such compliance, or monitoring thereof, is not the responsibility of, and no duty is present with respect thereto for, the Participating Underwriter, Special Counsel or the Town’s financial advisor. Section 13. Beneficiaries . This Disclosure Certificate shall inure solely to the benefit of the Town, the Dissemination Agent, the Participating Underwriter and Obligation Holders, and shall create no rights in any other person or entity. Section 14. Governing Law and Interpretation of Terms . This Disclosure Certificate shall be governed by the law of the State of Arizona and any action to enforce this Disclosure Certificate must be brought in an Arizona state court. The terms and provisions of this Disclosure Certificate shall be interpreted in a manner consistent with the interpretation of such terms and provisions under the Rule and the federal securities law. [Signature on the following page] 4216385 Date: _______, 2021. TOWN OF ORO VALLEY, ARIZONA By ________________________________________ Chief Financial Officer [Signature Page to Continuing Disclosure Certificate] 4216385.4 EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Town of Oro Valley , Arizona Name of Issue: $______ Excise Tax and Parks and Recreation Tax Revenue Obligations , Tax-Exempt Series 2021 Dated Date of Obligations : ______, 2021 Base CUSIP: 68702J NOTICE IS HEREBY GIVEN that the Town has not provided an Annual Report with respect to the above -named Obligations as required by Section 3(a) of the Continuing Disclosure Certificate dated _____, 2021. The Town anticipates that the Annual Report for fiscal year ended June 30, _____ will be filed by ______________________. Dated: ______________ TOWN OF ORO VALLEY, ARIZONA By________________________________________ Its ________________________________________ ------------------------------------------------------------------------------------------------------------------------------------------------ EXHIBIT B NOTICE OF FAILURE TO FILE AUDITED FINANCIAL STATEMENTS Name of Issuer: Town of Oro Valley , Arizona Name of Issue: $_____ Excise Tax and Parks and Recreation Tax Revenue Obligations , Tax-Exempt Series 2021 Dated Date of Obligations : ____, 2021 Base CUSIP: 68702J NOTICE IS HEREBY GIVEN that the Town failed to provide its audited financial statements with its Annual Report or, if not available, within 30 days of receipt as required by Section 4(a) of the Continuing Disclosure Certificate dated July 6, 2021 with respect to the above -named Obligations. The Town anticipates that the audited financial statements for the fiscal year ended June 30, ____ will be filed by ______________________. Dated: ______________ TOWN OF ORO VALLEY, ARIZONA By________________________________________ Its ________________________________________ [Exhibits to Continuing Disclosure Certificate] $25M Parks & Recreation Revenue Bonds Process Followed and Timeline April 21, 2021 –Public hearing on broadening use of ½ cent transaction privilege tax beyond Community Center/Golf purposes May 5, 2021 –Town Council approves Ordinance No.(O)21-05, broadening use of revenue resulting from ½ cent transaction privilege tax June 16, 2021 –Town Council adopted FY21/22 budget, inclusive of $25 million parks & recreation bond issuance July 7, 2021 –Town Council identifies specific priority parks and recreation projects with associated amenities Town Council Approved Projects Community Center Exterior Improvements Naranja Park Amenities (at least 50% of bond proceeds) Multiuse Path Connections Community Center Exterier Improvements Community Center Exterior Improvements Conquistador golf course irrigation replacement Cañada golf course irrigation replacement Tennis Court surface replacement Resurfacing/reconfiguring parking lot 2 multi-use fields Splash pad Pickleball courts Basketball courts Pump track At least 50% of bond proceeds Naranja Park Amenities Skate park New paved paths Ramadas Restrooms Associated infrastructure Multiuse Path Connections •La Cañada Dr. between Lambert and Naranja •Naranja Dr. between La Cañada and Park entrance •CDO wash to James D. Kriegh Park Multiuse Path Connections Why a bond issuance? Intergenerational equity Quicker disposition of projects Low cost of capital relative to inflation Historical 10-year Treasury Yields US Inflation (1.0) - 1.0 2.0 3.0 4.0 5.0 6.0 Jan '14 Mar '14 May '14 Jul '14 Sep '14 Nov '14 Jan '15 Mar '15 May '15 Jul '15 Sep '15 Nov '15 Jan '16 Mar '16 May '16 Jul '16 Sep '16 Nov '16 Jan '17 Mar '17 May '17 Jul '17 Sep '17 Nov '17 Jan '18 Mar '18 May '18 Jul '18 Sep '18 Nov '18 Jan '19 Mar '19 May '19 Jul '19 Sep '19 Nov '19 Jan '20 Mar '20 May '20 Jul '20 Sep '20 Nov '20 Jan '21 Mar '21 May '21 Jul '21 US Inflation Rates by Month (2014-Current) Questions