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HomeMy WebLinkAboutProperty - Deeds/Titles - Land Aquisition Certificates of Participation Series 1996/Cert. Purchase Agreement- McGarry, Sears_C RELEASE For valuable consideration received, MARTIN M. MCGARRY, as successor trustee of the Mary Jacqueline Eidel. Revocable Trust dated April 10, 1989; and MARTIN M, MCGARRY and JOAN MCGARRY, husband and wife; and DIANE ANDERSON, a single woman ( (hereinafter referred to as Seller) hereby release the TOWN OF ORO VALLEY, and its agents, and employees from any and all claims or causes of action of any nature, known or unknown, foreseen or unforseen, contingent or certain, in connection with the real property more particularly described on Exhibit A, including but not limited to the claims or causes of action listed in a Statutory Notice of Claim made by Seller to the Town of Oro Valley dated May 1, 1996, a copy of which is attached hereto as Exhibit B. Dated: September 17 . 1996 SELLER: MARTIN M. MCGARRY, et7 successor trustee of the Mary Jacqueline Eidel Revocable Trust dated April 10, 1989 Dated: - MARTIN M. MCGARRY I OAN MCGARRY Dated: 9- DIANE ANDERSON ,, Dated: /-7 / By: • /6 Martin M. McGarry, her attorney in fact martoro.rd/Scptember 16, 1996 EXHIBIT "A" No. 158895 That portion of Block 2 of VISTA DEL ORO I I , according to the plat of record in the office of the County Recorder of Pima County, Arizona, recorded in Book 35, of Maps, Page 94 , described as follows : BEGINNING at a point on the West line of Section 12 , Township 12 South, Range 13 East, Gila and Salt River Base and Meridian, Pima County, Arizona, at a point which is North 00 degrees 02 minutes 25 seconds West, a distance of 844 . 28 feet from the Southwest corner of Section 12 , on a curve of the South right-of-way line of Lambert Lane, as shown on Map recorded in Book 8 of Road Maps, Page 57; Thence Northeasterly along the arc of said curve, having a radius of 1834 . 86 feet through a central angle of 24 degrees 51 minutes 47 seconds, arc distance of 796 . 23 feet to a point of tangency; Thence continuing North 85 degrees 39 minutes 25 seconds East along said right-of-way line, a distance of 200 . 00 feet to the Northeast corner of said Block 2 ; Thence departing said right-of-way line, South 31 degrees 12 minutes 36 seconds Eat, along the Easterly boundary of Block 2 , a distance of 512 . 37 feet; Thence South 58 degrees 47 minutes 24 seconds West, along the boundary line of Block 2 , a distance of 197 . 37 feet to a point on the North line of an erosion buffer dedicated to Pima County, as shown in instrument recorded in Docket 9920, Page 323 ; Thence continue South 58 degrees 47 minutes 24 seconds West, along said buffer line, a distance of 28 . 67 feet ; Thence North 80 degrees 08 minutes 54 seconds West, along said buffer line, a distance of 68 . 65 feet; Thence South 58 degrees 44 minutes 00 seconds West, along said buffer line, a distance of 279 . 44 feet; Thence South 36 degrees 46 minutes 59 seconds West, along said buffer line, a distance of 42 . 10 feet; Thence South 52 degrees 34 minutes 06 seconds West, along said buffer line, a distance of 441 . 13 feet; Thence South 43 degrees 48 minutes 41 seconds West, along said buffer line, a distance of 318 . 01 feet; Thence departing said buffer line, North 41 degrees 14 minutes 35 seconds West, a distance of 857 . 78 feet to a point on the South right-of-way line of Lambert Lane; -2- No. 158895 Thence North 48 degrees 45 minutes 25 seconds East, along said right-of-way line, a distance of 166 . 72 feet to a point of curve to the right having a radius of 1834 . 86 feet; Thence Northeasterly along the arc of said curved right-of-way, a distance of 385 . 47 feet through a central angle of 12 degrees 02 minutes 13 seconds, to the POINT OF BEGINNING. TOGETHER WITH all Grantor' s right, title and interest in and to the Easement rights contained in instrument recorded in Docket 9920 , Page 323 . -3- SEP-17-96 TUE 03:07 PM it FAX NO. 5205770717 P, 04 awls . Rama Oaks Scum OW= 102DCA, 41timeliCamiAmmum mSarni CI•it NO Paladx.Adana i5o+, gThem.MOM.Baa LI.P .teizqua,s747 ra.d.42o ®.30141 "KZ ca; MiimihmodWMOU LAWiCaS &at S 8akci jr. Qice HIE Iffmict 31422,00003 M r 1, 1596 Mayor and Town Couticil do Ms..Kathryn Cavelier Town Clerk Town of Oro Vey 1100 North La Canada Drive Oro Valley, Ari is 85737-7016 Re: tstartiu. McGarry',Larobert Lane Property; Statutory Notice of Claim Honorable Mayor and Council of the Town of Oro Valley Our firin represents isartinMMcGarxy,the owe of a 23_8-acre parcel located south of Lambert Lane appraxizaately one mile west of north First Avenge (the"Property"). McGarry atibretits the following dam for damages totalling 31,800,00040 nt the Town of Oro Valley(the"moo.'), puzsuant to Alt$. § 12.,21.01_ The Town has breached the Annexation and Development nt (the'A raft) catered into with McGarry and for ty adopted an October 5, - 1994. Additionally,the Towne conduct with regard f ,the nt constitutes misrepresentation,and an unconstitutional taking of property without payment of just compensation. Factual Background. The Town adapted Rolutou No.CR)94-45 on October 6, 1994. This resolution approved the Agreamatit between MeGaiv and the Town. The Town proffered tbis Agreetaent to McGarry pip to induce MeGirry to execute e=tici deliver a penton fur annezation of the Property to the Town si=ultaneausly with the execution of the.Agrsement. The anoexatoa became f3737,1 on Decker 10, 1994. Partly in reliance on the Agreement,McGarry entered into a contract with SNK Itemity.Group (SNX) for the sale and development of the Proper. Paragraph.7 of the Agreement permitted McGarry to file a developtment plan far the Property either with Lima County or the Tom Mc G4 zy choose to file f development plan with Pima County on Dec tuber 9, 1994 Pima County accepted that plan for review. In his letter of December 20, 1994 to Pima County,Mr.Don Chatfield: the Town's Planning and Zoning Director, acicowledd M s 1119324231, EXHIBIT B 09/17/96 TUE 14:57 [TX/RX NO 6121] [ 004 SEP-17-96 TUE 03:07 PM it FAX No, 520577071•7 P, 05 JUN 27 '`fib 09:29 FR TO 957?0?17 P P.O3'eS LEWIS Mayor and Town Council May1, 1996 Page 2 RomacA LAW? as rig t Isnder tbe Agrwriaent to pursue review of its development plan in Pima County. By late January, 1905,Pima Cauuty'e review arata plan was most = .p and SNI's consulting engineer had received comments on the Initial submittal from Pima CoMity and were preparing a revised pian far reaubsctittai. On February 8,1996 Pima Gotmiy stopped review of die development plan and asked the Town to provide n ' a that the County should continue tia review. Notwithstanding the that it do eco,the Tom d to provide such confirmation and Pima Ccreuniy refused to continue reviewing the develop/no=plan., d the Town not cleAitied to provide theJ as retested by McGarry,the develapm2nt plan would have been approved by Pima County ire mid- February 1995,and SNK would have immediately submitted its building plans to Town for review. That review could have then been completed, and buldh ng p rmite issued'before the Town's original zoning for the Property was adopted on May 17, 1996. These permits would hove wed under the interim zoning,and would not have been subject to the renrendum.described below. Althouch the Town clearly breached Paragraph 7 of the AgropmEnt, McGtarif and aNIK wed their development plan with the Tqwn in,order to mitigate their dampagw. They requested that the Town plane ilami the SEME position ae they bad reached in Pima County so ss to minixrdze delay,and further noted that the Town was requited to rem the plans based an Ptma County development standards. 113 Town wed thiE request,effectively forcing McGarry and SISTK to t "gtart aver again,"with resulting widition l cost and.delay. + 7 At the time, the Town actively created additionalobstacles,such as lengthy public Wings on sQ. allod"health anti safety*if39LUN, irrelevant to tlak§ - Tom's formai development plan review process. Moreover,insfividual members of the Town Council from time to time in 1995 made skat.ements or took actions with reser to M and SNS$development o the Property which tortiously interfered with McGarry's contractual relationships with the Town and SN& Those obstacles sppered designed soleky to baras McGarTY n-nd courage the development of the Property. McGarry and SNK wed a nc:dice of potential claim purse sit to § 12-821.01 on April 4, 1995 in order to clocuament the Town's breath of the Agreement. After Development Review Board approval of the clavglownent plan had finally been obtained in mid-April i995 (although.with recommended changes inconsistent with the Agreement and unacceptable to Merry and SNK), the asE731Z5D 09/17/96 TUE 14: 57 [TX/RX NO 6121] Z005 SEP-17-96 TUE 03:08 PM it FAX NO 5205770717 P. 06 2UN 2? '96 05;30 FF TO 95770717 P.04405 • LEWIS - Mayor and Town Council ROANDCA May 1., 153S6 Page 3 Iowa's governing body deed won on the development plan from May 3, 1995 to May 17, 1995. On May 11 the Mayor and Town Council analty approved the develOriment plan,but with chi wbicb required farther mons and resubm.UL In addition, on May 1'x,1995,tbe governing body kustructed Town stair to investigate acquisition of the Property for a park This threat of possible condemnation deterred SNK from immediately ciaramencing work on construction drawings. The Tom did.na5nally reject acquisition of the Property unti almost two months later ort July 12, 1996_ In the meantime,the original Town zoning for the Property,also approved on May 17,bye the subject of a referendum petition soaking to overt=the wiling, pion, and subsequent litigation brought try proponents when it was rejected by the Town,also cast a cloud on the future of the development- eignsequently,SNK did not begin work on cozC3t ructioi drawings until August, 1998,which ware finally approved by the Town for the issuanee of building pormiti i Tanu.r, 1996- On April 12, 1996,€3NIE terminated its agreement to purchase the Property f��McGarry. The delay caused by the Town's actions in violation of the agreement vow a material end groxitnate cause of S s decision not to purobase tite Property and the resulting image McGarry has suffered.. Claims and.Damages_ The Ta .'s story, =cooperative conduct with marl to the implementation of the Agreement with McGarry h resulted in aignifmant chi=ns and ca ges. First,the Town has breached Ilpecitc prc v dans of the# reemea, including but not limited to: • Paragraph 3 in Bch the Town authorize3 the continued enforcement of Pima County zoning and develop until the Town adopts orienalzoning for the Property. • Pax ph 7 in which the Town agrees to allow itilcGarry to Qbtain review of his development plan from Pirna County. • Paragraph 10 in which the Town agreed not to place any restriction on the availability of building permits for ten years after the annexation of the Property, QEa?3o 09/17/96 TUE 14:57 [TX/RX NO 6121] Z006 SEP-17-96 TUE 03:08 PM 0 FAX NO. 5205770717 P. 07 .TUI 27 6 09=31 FR TO 9577071? P.05/05 LEWIS r • Mayor and Tari Couil May x.,1996 Page 4 ROCA LAWYERS 1 Second,the Towa deli ly rni d its intention to agreeto the development cthe Property in order to twee McGanis agreement to the annemativn. d, the Town's conduct in delaying the d vel c:lent of t 130 Property constitutes a taking of Property withoutof i� compensation- Damages am eusatioaD incus by Merjany due to the Towns conduct include=sta related to the development of the Prop,it luding the loss and�cgeaae �for the derma incurred_by of Its contract with SNL Re ogle eomp�e Mr,McGlarry under this claim tom at lease$ ,800,400,00. Demand_ If the Town does not resolve this claim within GO days pursuant to �1,010E) Mc tTy�file suit the'down in Pima Cour�ty AILS. § 3,�8 � outlined above,punitive d�.ag�� Soerior Court seeking damagiw for the claims _ aid ramb servient of alf co -a Ana attorntu ' fees required to puzgan this Cly and any siiingequent litigation. Please(=tact me if'you.woe any questions- I anticipate your prompt response to this claim -4arsak q rte► i Si/ i Mr.Martin McGarry *k TOTAL PAGE.05 09/17/96 TUE 14:57 [TX/RX NO 6121] [ 007 EXHIBIT "A" No. 158895 ThatP ortion of Block 2 of VISTA DEL ORO I I, according to the plat of record in the office of the County Recorder of Pima County, Arizona, recorded in Book 35 , of Maps, Page 94 , described as follows : BEGINNING at a point on the West line of Section 12 , Township 12 South, Range 13 East, Gila and Salt River Base and Meridian, Pima County, Arizona, at a point which is North 00 degrees 02 minutes 25 seconds West, a distance of 844 . 28 feet from the Southwest corner of Section 12 , on a curve of the South right-of-way line of Lambert Lane, as shown on Map recorded in Book 8 of Road Maps, Page 57; Thence Northeasterly along the arc of said curve, having a radius of 1834 . 86 feet through a central angle of 24 degrees 51 minutes 47 seconds, arc distance of 796 . 23 feet to a point of tangency; Thence continuing North 85 degrees 39 minutes 25 seconds East along said right-of-way line, a distance of 200 . 00 feet to the Northeast corner of said Block 2 ; Thence departing said right-of-way line, South 31 degrees 12 minutes 36 seconds Eat, along the Easterly boundary of Block 2 , a distance of 512 . 37 feet; Thence South 58 degrees 47 minutes 24 seconds West, along the boundary line of Block 2 , a distance of 197 . 37 feet to a point on the North line of an erosion buffer dedicated to Pima County, as shown in instrument recorded in Docket 9920, Page 323 ; Thence continue South 58 degrees 47 minutes 24 seconds West, along said buffer line, a distance of 28 . 67 feet; Thence North 80 degrees 08 minutes 54 seconds West, along said buffer line, a distance of 68 . 65 feet; Thence South 58 degrees 44 minutes 00 seconds West, along said buffer line, a distance of 279 . 44 feet; Thence South 36 degrees 46 minutes 59 seconds West, along said buffer line, a distance of 42 . 10 feet ; Thence South 52 degrees 34 minutes 06 seconds West, along said buffer line, a distance of 441 . 13 feet; Thence South 43 degrees 48 minutes 41 seconds West, along said buffer line, a distance of 318 . 01 feet; Thence departing said buffer line, North 41 degrees 14 minutes 35 seconds West, a distance of 857 . 78 feet to a point on the South right-of-way line of Lambert Lane; -2- No. 158895 Thence North 48 degrees 45 minutes 25 seconds East, along said right-of-way line, a distance of 166 . 72 feet to a point of curve to the right having a radius of 1834 . 86 feet ; Thence Northeasterly along the arc of said curved right-of-way, a distance of 385 .47 feet through a central angle of 12 degrees 02 minutes 13 seconds, to the POINT OF BEGINNING. TOGETHER WITH all Grantor' s right, title and interest in and to the Easement rights contained in instrument recorded in Docket 9920 , Page 323 . -3- EXHIBIT "A" No. 158895 ThatP ortion of Block 2 of VISTA DEL ORO II , according to the plat of record in the office of the County Recorder of Pima County, Arizona, recorded in Book 35, of Maps, Page 94 , described as follows : BEGINNING at a point on the West line of Section 12 , Township 12 South, Range 13 East, Gila and Salt River Base and Meridian, Pima County, Arizona, at a point which is North 00 degrees 02 minutes 25 seconds West, a distance of 844 . 28 feet from the Southwest corner of Section 12 , on a curve of the South right-of-way line of Lambert Lane, as shown on Map recorded in Book 8 of Road Maps, Page 57; Thence Northeasterly along the arc of said curve, having a radius of 1834 . 86 feet through a central angle of 24 degrees 51 minutes 47 seconds, arc distance of 796 . 23 feet to a point of tangency; Thence continuing North 85 degrees 39 minutes 25 seconds East along said right-of-way line, a distance of 200 . 00 feet to the Northeast corner of said Block 2 ; Thence departing said right-of-way line, South 31 degrees 12 minutes 36 seconds Eat, along the Easterly boundary of Block 2 , a distance of 512 . 37 feet; Thence South 58 degrees 47 minutes 24 seconds West, along the boundary line of Block 2 , a distance of 197 . 37 feet to a point on the North line of an erosion buffer dedicated to Pima County, as shown in instrument recorded in Docket 9920 , Page 323 ; Thence continue South 58 degrees 47 minutes 24 seconds West, along said buffer line, a distance of 28 . 67 feet; Thence North 80 degrees 08 minutes 54 seconds West, along said buffer line, a distance of 68 . 65 feet ; Thence South 58 degrees 44 minutes 00 seconds West, along said buffer line, a distance of 279 . 44 feet; Thence South 36 degrees 46 minutes 59 seconds West, along said buffer line, a distance of 42 . 10 feet; Thence South 52 degrees 34 minutes 06 seconds West, along said buffer line, a distance of 441 . 13 feet; Thence South 43 degrees 48 minutes 41 seconds West, along said buffer line, a distance of 318 . 01 feet; Thence departing said buffer line, North 41 degrees 14 minutes 35 seconds West, a distance of 857 . 78 feet to a point on the South right-of-way line of Lambert Lane; -2- No. 158895 Thence North 48 degrees 45 minutes 25 seconds East, along said right-of-way line, a distance of 166 . 72 feet to a point of curve to the right having a radius of 1834 . 86 feet; Thence Northeasterly along the arc of said curved right-of-way, a distance of 385 . 47 feet through a central angle of 12 degrees 02 minutes 13 seconds, to the POINT OF BEGINNING. TOGETHER WITH all Grantor' s right, title and interest in and to the Easement rights contained in instrument recorded in Docket 9920 , Page 323 . -3- Recording Requested by: FIRST AMERICAN TITLE When recorded mail to: TOWN OF ORO VALLEY ATTN: TOBIN SIDLES ' 11000 N. LA CANADA ORO VALLEY, AZ 85737 WARRANTY DEED Escrow No.'231-190-158895 For the consideration of TEN AND NO/100 DOLLARS, and other valuable considerations, I or we, " MARTIN McGARRY, Successor Trusteeof THE MARY JACQUELINE EIDAL REVOCABLE TRUST, dated April 10, 1989, as to an undivided 31/32 of an undivided 18/23 interest, and MARTIN McGARRY &JOAN M. McGARRY, husband and wife, as to an undivided 5/23 interest, and MARY DIANA ANDERSON, a widow, as to an undivided 1/32 of an undivided 18/23 interest; ' the GRANTOR do hereby convey to NORWEST BANK ARIZONA, N.A., a national banking association , as Trustee under Trust Agreement by and between NORWEST BANK ARIZONA, N.A., a national the GRANTEE banking association, and the Town of Oro Valley, as Buyer, dated 9/1/96, the following described real property situate in Pima County, Arizona: `J2 SEE EXHIBIT A ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF. SUBJECT TO: Existing taxes,assessments,liens,encumbrances,covenants,conditions,restrictions,rights of way and easements of record. And the GRANTOR does warrant the title against all persons whomsoever, subject to the matters above set forth. DATED: September 16, 1996 Norwest Trust Beneficiaries: ,;2*-< - 71L All Owner's of the Town of Oro MARTIN McGARRY, Trustee Q- 1-7 Valley, Arizona, Certificates Series 199 6 `� 2r/1/- / of Participation, •-RTIN M.McGARRY Eidal Trust Beneficiaries: Mi22,111) Li Martin M & Joan M. McGarry /OII N. McGARRY , 2230 Camino El Granado Tucson, Az. 85718 7A e,;) ./__. ----,fr----i-,-. e- --MARY ;MANE 4�c P€.,--r--__)-4-•-/ & AANE ANDERSON Mary Diane Anderson 650 S. Monarch e-, 6"' Jibe'9,��,Y) BY. Aspin, Co. 81612 MARTIN M. McGARRY, her attorney ' fact STATE OF ARIZONA ) ) ss. County of Pima ) CC� !�o byMARTIN This instrument was acknowledged and executed before me this l day ofS , 19 Th s g McGARRY,Successor Trustee of THE MARY JACQUELINE EIDAL REVOCABLE UST,dated April 10, 1989, and MARTIN M. McGARRY&JOAN N. McGARRY,husband and wife,and MARTIN M. McGARRY,attorney in fact for MARY DIANE ANDERSON . I / My Comm +lkires:%spF '` TER my% P MAA) ''''''Y PlibliC couNT,Atzara Notary Public FAT-AZ 6051(Re-1/91 JC--A ts,X97 EXHIBIT "A11 No. 158895 Block 2 of VISTA DE ' That portion of L ORO II, according to the plat of record in the office of the County Recorder of Pima County, Arizona, recorded in Book 35, of Maps, Page 94, described as follows : BEGINNING at aP oint on the West line of Section 12 , Township 12 South, Range 13 East, Gila and Salt River Base and Meridian, Pima County, Arizona, at a point which is North 00 degrees 02 minutes 25 seconds West, a distance of 844 . 28 feet from the Southwest corner of Section 12 , on a curve of the South right-of-way line of Lambert Lane, as shown on Map recorded in Book 8 of Road Maps, Page 57 ; Thence Northeasterly along the arc of said curve, having a radius of 1834 . 86 feet through a central angle of 24 degrees 51 minutes 47 seconds, arc distance of 796 . 23 feet to a point of tangency; Thence continuing North 85 degrees 39 minutes 25 seconds East along said right-of-way-wa line, a distance of 200 . 00 feet to the Northeast g Y corner of said Block 2 ; Thence departing said right-of-way line, South 31 degrees 12 minutes 36 seconds Eat, along the Easterly boundary of Block 2 , a distance of 512 . 37 feet; Thence South 58 degrees 47 minutes 24 seconds West, along the boundary line of Block 2, a distance of 197 . 37 feet to a point on the North line of an erosion buffer dedicated to Pima County, as shown in instrument recorded in Docket 9920, Page 323 ; Thence continue South 58 degrees 47 minutes 24 seconds West, along said buffer line, a distance of 28 . 67 feet; Thence North 80 degrees 08 minutes 54 seconds West, along said buffer line, a distance of 68 . 65 feet; Thence South 58 degrees 44 minutes 00 seconds West, along said buffer line, a distance of 279 .44 feet; Thence South 36 degrees 46 minutes 59 seconds West, along said buffer line, a distance of 42 . 10 feet ; Thence South 52 degrees 34 minutes 06 seconds West, along said buffer line, a distance of 441 . 13 feet ; Thence South 43 degrees 48 minutes 41 seconds West, along said buffer line, a distance of 318 . 01 feet; Thence departing de art in said buffer line, North 41 degrees 14 minutes 35 seconds West, a distance of 857 . 78 feet to a point on the South right-of-way line of Lambert Lane; -2- No. 158895 Thence North 48 degrees 45 minutes 25 seconds East, along said right-of-way line, a distance of 166 . 72 feet to a point of curve to the right having a radius of 1834 . 86 feet; Thence Northeasterly along the arc of said curved right-of-way, a distance of 385 . 47 feet through *a central angle of 12 degrees 02 minutes 13 seconds, to the POINT OF BEGINNING.. TOGETHER WITH all Grantor' s right, title and interest in and to the Easement rights contained in instrument recorded in Docket 9920, Page 323 . -3- September 16, 1996 First American Title Insurance Company 1880 East River Road, Tucson, Arizona 85718 RE: Escrow No. 231-190-158895 The undersigned, being the Trustee(s) of the MARY JACQUELINE EIDAL REVOCABLE TRUST , dated 10, 1989 does herebycertifythat as of this date said Trust Agreement is in full force and effect APRILdo(es) and has not been amended, modified or revoked. The names and addresses of the beneficiaries of the trust, which must be disclosed on the deed, are as follows: NAME: MARTIN M. & JOAN M. McGARRY ADDRESS: 2230 Camino El Granada, Tucson, Az . 85718 NAMES: MARY DIANE ANDERSON ADDRESS: 650 S . Monarch, Aspin, Colorado 81612 NAME: ADDRESS: NAME: ADDRESS: MARTIN McGARRY, Successor Tru tee , Trustee FAT-AZ 6098 (Rev. 7/94)JCA • J�.'..._i:. ... ._ ...1:..K iiL.sii�i34t.--ar._�.a..ai...w.a.raar...w................._......� l,�'iat, Arizona Department of Revenue AFFIDAVIT OF PROPERTY VALUE ,T' ""'� Division of Property Valuation&Equalization SEE INSTRUCTIONS ON REVERSE - '`' r PROPERTY VALUE — ..�� ►; AFFIDAVIT OF • .n DPVE Form 82162(Rev.4/89) 1. ASSESSOR'S PARCEL NUMBER(S)(Primary Parcel Number) 9. FOR OFFICIAL USE ONLY(buyer and seller leave blank) (a) 224 2 7 301B (a) County of Recordation: BOOK MAP PARCEL SPLIT (b) Docket&Page Number. NOTE:If the sale involves multiple parcels,how many are included? parcels other than (c) Fee/Recording Number. (b) List the number of additional the primary parcel that are included in sale. . (d) Date of Recording: List the additional parcel numbers(up to 4)below: Assessor/DOR Validation Codes: I(c) (d) DOR (e) Assessor I (f) (e) (f) 2. SELLER'S NAME&ADDRESS: 10. TYPE OF DEED OR INSTRUMENT(Check One): McGarryand Anderson a. . WarrantyDeed d. I I Contract or Agreement Erdal Trust, 2230 Camino El Grando i I I b. IX f Special Warranty Deed e. l •Quit •Claim Deed P Tucson, Arizona 85718 c. I I Joint Tenancy Deed f. i I Other ' 3. BUYER'S NAME&ADDRESS: 11. TOTAL SALE PRICE: $ 2, 5 O O 0 (� (�(� Norwest Sank Arizona, N.A.{ a National Banking ��jwVV ssoc ation, as Trustee unete-r Trust A reemen- 12. PERSONAL PROPERTY: Areceivepersonal property(see reverse for definition)that has a v a.ot bet,e n •r st B nk Ari z n Did the buyer any p op y d- •.ill • • • v aiie ,► izo _ - b o rice: 3 y value greater than 5/o of the sale p� �� Afi,,,* Z ,(r,5"0i2_____ (a) Yes No X .If yes,briefly describe: Buyer and Seller related? Yes No—X If yes,state relationship: Approximate Value:(b) $ 4. ADDRESS OF PROPERTY: 13. DATE OF SALE: 9 / 9 6 Month Year Vacant Land - NOTE:This is the date of the contract of sale.If you are recording title in fulfillment of a previously recorded contract,you need not complete this affidavit(see A.1 on reverse). 5. MAIL TAX BILL TO. 14. CASH DOWN PAYMENT: Norwest Bank Arizona, N. . $ 2,500,000.00 —17 ea---,(/ -4,( 15. METHOD OF FINANCING(check all that apply): 6. TYPE OF PROPERTY(Check One): a. X 1 All Cash b. Exchange or trade c. I I Assumption of existing loan(s) d. New loan from seller a. X Vacant Land f. Commercial/Industrial (seller Carryback) Agriculture e. New loan(s)from financial institution: c. b. I I Single Fam.Residence 9� g I �1 Conventional (2) VA (3) 1 1 FHA 1 1 Condo/Townhouse h. ri Mobile Home (1) j 2-4 Plex Affixed 1 d. 1f. I I Other,Explain Specify:i. I I Other, P f :Y e. I I Apartment Bldg. 16. PARTIAL INTERESTS: Is only a partial interest(e.g.,1/3 or 1/2)being transferred? 7. RESIDENTIAL BUYER'S INTENDED USE (Answer if you checked, b, c, d, Yes No___X__ If yes,explain or h above)(Check One): To be occupied by owner or To be rented to someone 17. SOLAR ENERGY(check all that apply): II "family member." I I other than"family member.' X— b. I I Hot Water a y a. . None NOTE:See reverse for definition of"family member." c. Heating-Passive d. Heating-Active 8. PARTY COMPLETING AFFIDAVIT(Name,Address,&Phone) 18. LEGAL DESCRIPTION(attach copy if necessary) First American Title Insurance Company Vacant Land 1880 E. River Road, Tucson, AZ 85718 Pima County, AZ 231-190-0158895 (Phone) (520 577=2707 Legal Attached THE UNDERSIG 1 :EING DULY SWORN • •aTH SAYS THAT THE FORE 11.4m; •511,4 s IQN A RI. • D CORRECT STAT•M NIT OF THE FACTS PERTAIN.. •�T.E .�� ,SF./ OF HE :O 'P SCRIB B-PROPERTY. 'r '" •1A I , , a • .1 • ,.;_..►a sc r / ,� ,4 Signature of Se - /Ages 1 40 A Signature of Buyer/AgentR.A. • 1 ) Ler110, Assistant Vice Presidint �- State of Arizona,County of N�rl State of Ariz�b a,04u�y�of .�.- �. �--- r `= �� r:+L Subsc ibed and sworn to bef. - • • .is Subs ibed d;swo �.,• .. •rem- I0. rr i$:;•6� W • mak t OFFICIAL SEAL ��.:.. � � � fv JACQUES 6 / `` ';'-'1, .- � P - r,, / `_,v .,,� 19 ��day of .: .., Ot�ARLE _/ da of :' .moi= IC- a e o or�� ��` 110, g� `� A COUNTY �. . ,:'�. NotaryPublic �..,. ;�►�;► �„.• .�- Notary Pubic -� _ ' .!Sr/ My,,'omm.Expires Dec.13,1999 Notary Expiration Date Notary Expiration Date -. .. , i Y • EXHIBIT "A" ,•, --- :. :` No. 158895 !• r• : D L ORO I I ♦` That portion of Block 2 of VISTA , according to the plat of record in the office of the ,County Recorder of Pima County, t. Arizona, recorded in Book 35, of Maps, Page 94, described as follows : BEGINNING at a point on the West line of Section 12 , Township 12 i South, Range 13 East, Gila and Salt River Base and Meridian, Pima s atpoint which isNorth 00 degrees 02 minutes 25 ° County, Arizona, a x: seconds West, a distance of 844 . 28 feet from the Southwest corner ofSection 12 , on a curve of the South right-of-way of-way line of Lambert of ; Lane, as shown on Map recorded in Book 8 of Road Maps, Page 57 ; i. the axc of said curve, having a radius Thence Northeasterly along of 183 4 . 86 feet through a central angle of 24 degrees 51 minutes 47 seconds, arc distance of 796 . 23 feet to a point of tangency; g Thence continuing North 85 degrees 39 minutes 25 seconds East along sai g Y d ri ht-of-wa line, a distance of 200 . 00 feet to the Nor heast corner of said Block 2 ; • Thence departing said right-of-way line, South 31 degrees 12 p g minutes 36 seconds Eat, along the Easterly boundary of Block 2, a distance of 512 . 37 feet; Thence South 58 degrees 47 minutes 24 seconds West, along the boundary line of Block 2 , a distance of 197 . 37 feet to a point on North line of an erosion buffer dedicated to Pima County, as the shown in instrument recorded in Docket 9920, Page 323 ; Thence continue South 58 degrees 47 minutes 24 seconds West, along said buffer line, a distance of 28 . 67 feet; Thence North 80 degrees 08 minutes 54 seconds West, along said buffer line, a distance of 68 . 65 feet; rees 44 minutes 00 seconds West, along said Thence South 58 deg buffer line, a distance of 279 . 44 feet; Thence South 36 degrees 46 minutes 59 seconds West, along said buffer line, a distance of 42 . 10 feet ; Thence South 52 degrees 34 minutes 06 seconds West, along said buffer line, a distance of 441 . 13 feet; West, along said 43 degrees 48 minutes • 41 seconds Thence South g buffer line, a distance of 318 . 01 feet; Thence departing said buffer line, North 41 degrees 14 minutes 35 seconds West, a distance of 857 . 78 feet to a point on the outh rig h -of-way line of Lambert Lane; -2- i • • -II•A-A•SIMA7M&A.M-........•• • • • • • No. 158895 Thence North 48 degrees 45 minutes 25 seconds East, along,, 6aid right-of-way line, a distance of 166 . 72 feet to a point of curve to the right having a radius of 1834 . 86 feet; Thence Northeasterly along the arc_of said curved right-of-way, a ' distance of 385 .47 feet through *a central angle of 12 degrees 02 minutes 13 seconds, to the POINT OF BEGINNING'.. TOGETHER WITH all Grantor' s right, title and interest in and to the Easement rights contained in instrument recorded in Docket 9920, Page 323 . • • .• • • • • • -3- • • • • • When recorded return to: Town of Oro Valley Attn: Tobin Sidles 11000 North La Canada Oro Valley, Arizona 85737 CORPORATION SPECIAL WARRANTY DEED Escrow No. 231-190-158895 KNOW ALL MEN BY THESE PRESENTS; THAT NORWEST BANK ARIZONA, N.A., A NATIONAL BANKING ASSOCIATION, AS TRUSTEE UNDER TRUST AGREEMENT BY AND BETWEEN NORWEST BANK ARIZONA, N.A. AND THE TOWN OF ORO VALLEY, ARIZONA, DATED AS OF SEPTEMBER 1, 1996 For the consideration of TEN AND NO/100 DOLLARS, and other valuable consideration, the GRANTOR herein does hereby convey to TOWN OF ORO VALLEY, ARIZONA, A POLITICAL SUBDIVISION OF THE STATE OF ARIZONA the GRANTEE, the following described real property situate in Pima County, Arizona: SEE EXHIBIT A ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF SUBJECT TO: Existing taxes, assessments, liens, encumbrances, covenants, conditions, restrictions, rights of way and easements of record. And the GRANTOR binds itself and its successors to warrant the title against its acts and none other, subject to the matters above set forth. SKR:mep 154950.1 9/17/96 AFFIDAVIT EXEMPT PER ARS 42-1614 A-3. Pursuant to A.R.S § 33-401, the name and address of the beneficiaries of The Trust Agreement by and between Norwest Bank Arizona, N.A. and The Town of Oro Valley, Arizona, dated as of September 1, 1996 are all owners of the Town of Oro Valley Certificates of Participation Series 1996, c/o Norwest Bank Arizona, N.A., Attn: Corporate Trust Services, 3300 North Central Avenue, Phoenix, Arizona 85012. IN WITNESS WHEREOF, the GRANTOR has caused its corporate name to be signed by the undersigned officer. DATED: September 18, 1996. NORWEST BANK ARIZONA, N.A., a national banking association, Trustee R.A. (Ginny) LENIO, Assistant Vice President State of Arizona County of Maricopa The foregoing instrument was acknowledged before me this /g61-day of September, 1996, by R.A. (Ginny) LENIO, who acknowledged to be the Assistant Vice President of Norwest Bank Arizona, N.A., a national banking association, and that as such officer, being authorized so to do, executed the foregoing instrument for the purposes therein contained by signing the name of the association as Trustee. (Seal and Expiration Date) OFFICIAL SELL CHARLENE JACQUES i . .. Notary Pitbhcip. ARIGUPA-St itoe ofItNTY N •tirizona y Pub c My Comm t:xa;Irc:s Dec. 13, 1999 SKR:mep 154950.1 9/17/96 —2 • i • • !, r • EXHIBIT "A" 158895 That portion of Block 2 of VISTA DSL ORO I I , according to the plat of record in the office of the .County Recorder of Pima County, ' in Book 35, of Maps, Page 94, described as Arizona, recorded • follows : BEGINNING at a point on the West line of Section 12, Township 12 South, Range 13 East, Gila and Salt River Base and Meridian, Pima County, a point at which is North 00 degrees 02 minutes 25 seconds West, a distance of 844 . 28 feet from the Southwest corner of Section 12 , on a curve of the South right-of-way line of Lambert Lane, as shown on Map recorded in Book 8 of Road Maps, Page 57; Thence Northeasterlyalong the arc of said curve, having a radius of 1834 . 86 6 feet through a central angle of 24 degrees 51 minutes .47 seconds, arc distance of 796 . 23 feet to a point of tangency; 3 9 minutes 25 seconds East along Thence continuing North 85 degrees said right-of-way-way line a distance of 200 . 00 feet to the Northeast corner of said Block 2 ; Thence departing said right-of-way line, South 31 degrees 12 minutes 36 seconds Eat, along the Easterly boundary of Block 2 , a distance of 512 . 37 feet; Thence South 5 8 degrees 47 minutes 24 seconds West, along the . boundary line of Block 2, a distance of 197 . 37 feet to a port on bou y to Pima County, as • the North line of an erosion buffer dedicated shown in instrument recorded in Docket 9920, Page 323 ; g Thence continue South 58 degrees 47 minutes 24 seconds West, along said buffer line, a distance of 28 . 67 feet; Thence North 80 degrees 08 minutes 54 seconds West, along said buffer line, a distance of 68 . 65 feet; g Thence South 58 degrees 44 minutes 00 seconds West , along said buffer line, a distance of 279 . 44 feet; Thence South 36 degrees 46 minutes 59 seconds West, along said buffer line, a distance of 42 . 10 feet ; Thence South 52 degrees 34 minutes 06 seconds West, along said buffer line, a distance of 441 . 13 feet; Thence South 43 degrees 48 minutes 41 seconds West, along said buffer line, a distance of 318 . 01 feet; Thence departing said buffer line, North 41 degrees 14 minutes 35 West, a distance of 857 . 78 feet to a point on thesouth seconds . righh-of-way line of Lambert Lane; -2- • L. No. 158895 *: * Thence North 48 degrees 45 minutes 25 seconds East, along., g-aid right-of-way line, a distance of 166 . 72 feet to a point of curve to the right having a radius of 1834 . 86 feet ; Thence Northeasterly along the arc .of said curved right-of-way, a distance of 385 . 47 feet through 'a central angle of 12 degrees 02 minutes 13 seconds, to the POINT OF BEGINNING..' TOGETHER WITH all Grantor' s right, title and interest in and to the Easement rights contained in instrument recorded in Docket 9920, Page 323 . •• • • • j •- • ft \. -3- • • • • Src AMER/ First American Title Insurance Company 1880 East River Road, Suite 120 • Tucson, Arizona 85718 P. 0. Box 65448 • Tucson, Arizona 85728 „ fi (520) 577-8707 • Fax: (520) 577-0236 September 19, 1996 VIA COURIER ESCROW NO. 231-190-158895 TOWN OF ORO VALLEY ATTN: TOBIN SIDLES 11000 N. LA CANADA ORO VALLEY, AZ 85737 RE: MM MCGARRY / TOWN OF ORO VALLEY VACANT LAND In connection with the above numbered escrow, we are enclosing the documents listed below. Please keep these documents in a safe place since some cannot be replaced. Please negotiate any checks enclosed immediately. ORIGINAL EXECUTED RELEASE COPIES OF ALL EXECUTED DOCUMENTS We would like to thank you for the opportunity to serve you and hope that you will contact us again for your escrow and title insurance needs. et/44.P diVia' Carol Archer, Esc /ow gyficer • 4)#1\ FAT-AZ 6252 (Rev. 7/94)CYE a e-C7.”- � rctir L • • . . . .. . , , . . , i - . :. , , .- I. . . ,.,, ,:. , : ,. , , , ,, ,...• .. . ,...:. .. . ., . : . ,.. , GURT ', •Ro 201 N.CENTRAL"AVE.,'SUITE 3300 ONE S.CHURCH AVE.,SUITE 800 ENFELD . P.L.C. PHOENIX,ARIZONA 85073-330,0 ' -• ,TUCSON,ARIZONA 85701-1620 • ,. ' FACSIMILE(602)254-4878 FACSIMILE(520)624-3849 . ATTORNEYS SINCE 1921TELEPHONE(602)257-7422 - : ., ,'TELEPHONE(520)628-7070"' ' - . 11 REPLY TO THE PHOENIX OFFICE , '.. ' • , SCOTT W.RUBY(602)257-7432 . ' . ' ','...% September 18, 1996 • First American Title • •• • : - • •. Insurance Company ' _ . , . _ • . 1880 East River Road, Suite 120 ,.=, ..:.;',f,:.-s ; },. . .„,"....,_./... . • •' Tucson� (Arizona .8572$ , : ., .: . ', • ' Attention: Carol Archer .- ; - _. •, ,• ': . • • Re . Town of Oro Valley, Certificates of'.';'.: -i ',•, ''..•l ' / ';' , . • i •• . '\ - Participation, Series,1996 ` , ' , . -. • .r , ,. , Your.Escrow No. 231-190-158895 A, , ; _• .t ': Our File No 006766-20019'',''• , '' ..-‘.:. :',.:-...•,:::.,;,--7...::,....-,-,-.. .:...,,...1-:‘,-s.f......-,...!.-2.:,.'.:.._.`-',-.. Dear Ms. Archer . • • • ':..c • • ' ,' r ' , s This letter is being written to you on behalf of the Town of Oro Valley,'Arizona ("Town") in connection,with those certain escrow. instructions dated as of:September :17:1996,,, . . •by and between Martin'McGarry, Successor Trustee of the Mary..Jacqueline Eidal Revocable . ,• •. •. . +, • Trust, 'under Trust.Agreement•dated' April -10.,'.4989; Martin,,McGarry• and.•-Joan• McGarry,.•, ; husband and.'wife and-, Mary Diane ,Anderson',. a .married'woman 'as her 'sole and separate .. • '_.- property'. "Sellers" and •Norwest Bank .Arizona N.A. 'a national banking • • 'perty ) associationas trustee under Trust'Agreement b ,and between Norwest Bank Arizona, N.A.'and' . , g Y the Town of Oro'Valle , Arizona dated September-1,'1996 ("Norwest"). •First American Title y Insurance Company (the,"Title.Company") has agreed,to handle.the escrow'established;by the A reement. ..-,-,4,,..„...,:..:-..::,,,:,...:::::...„,....:,:,....,.. :. . . above-described Seller has a reed to sell and NorwestPursuant tthe g topurchase that certain'real property'described in Schedule A (the . Property") of - has agreed p p y . ' the commitment'for title,insurance number 158.895 as amended, dated September 10, .1996 (the ..Title Commitment"). , - . . • ' . . .,:. ..:.,: . .or, .,. , . ' ... - . - ' . In'accordance,with terms of that certain Purchase Agreement executed by;Norwest • Norwest• has agreed to the Pro ,ert :to Town. Yoil..will‘receive,.by wire.the;, and Town,, g convey y p Y '. ' . ' fu refunds'required from Norwest to close this transaction in accordance•with your;final loan.closing. L, - - .- . .' statement reviousl ,,,,-delivered, to :Norwest, and -Town (the 'Closing :Funds"). -.:You are to - , -. • . • .'.. .,. . , • • ? lip NI 6••, . J i r a • y, -, lam / - , . '; , `• . t., �y`r First American Title Company' --2_ September 1$, ,1996 disburse the Closing Funds to the pafties, identified in'your final loan closing. statement 'only 'upon'your full compliance with the termof-this ` � • The following documents irefeTred,to herein, collectively•,'as', the'.."Closing. Documents". •., •�1 Deed from Sellers to Norwest previously delivered to you by.Sellers:and and • in the form previously.forwarded byyto Norwest and,.Town, treview-(the "First peed"), p Y. you 2. • Affidavit of Value enclosed herewith in connection with the First Deed(the >., "Affidavit"). • , ; 3. Deed from Norwest to Town enclosed herewith (the !'Second Deed",). S • . You are'to record the First Deed'and then the Second Deed in'the official records • r of the Pima County Recorder's'office... You are 'also directed to file the Affidavit.as required • bylaw. � .•; • r - , - ,• , � ,.,�' � . ` . The'Closing Funds'are to be distributed.only.when Title Company is irrevocably and unconditionally committed to issue, without ' payment of further fee or premium an ALTA standard coverage owner'.s.policy'of title insurance• issued by Titley,company.in.the,amount of $2,500,000.00, dated the date and time'the'Second - •• Deed is recorded,'insuring Towri•that fee'simple title to the Property is,,vested,in.Town, subject onlyto exception numbers 1 through 6, inclusive, of the Title Commitment (the "'Title Policy"): • When the'foregoing has been•accomplished, you are•instructed to: ' 1. immediately contact,the Town(Tobin Sidles, Town Attorney) and confirm recordation; 2.. disburse the Closing Funds in accordance with your :.final':settlement statement dated September 17 1996;•' ' • , 3.• issue to Town the requested'.Title Policy, and deliver within ten'working , days of recording the original .and one copy of the •Title to,:,Town care of the, • undersigned at the above address and. 1 '' •. • g a • • •r • • 4. • • 'return to the undersigned,the enclosed copy of.,this•letter indicating your • • - :agreement,to the foregoingby signing'the enclosed copy of this•letter:below'and,returning:the , • • same to my attention �. • .• • ,-, .- \ _ • First American TitleCompany, � `=3=; ' . \ ,-i s ' ,ti September 181996 � � Upon the ^close of escrow. you are to file any necessary forms 1099 with the ' Y = ,, • r:Internal Revenue Service. , i 1. , , Changes in these instructions may be authorized_only by Tobin Sidles. If any -, further action is required by Town to close this transaction, please,notify us immediately. *• : Very truly yours • . . Ii ♦ ' Rub Scott W. y , _ , ; • - , CO 1 . .% • -: , For the Fine -` . .. .' SWRmaw 154979 • , , . , - Enclosures .+ • , a, ! r ,,' r r '' f..• { 'l l' ' ,,•-1 , : \ 1' f s r r-' .r _ .. ., _, ?.Tom,,• , cc• Tobin Sidles ' „ ♦ .,, -,, • The foregoing instructions are accepted and receipt of the Warrant and documents as described g g 2 therein is hereby acknowledged. : _ FIRST AMERICAN TITLE •INSURANCE,. . COMPANY . • .�, J ,,t ti • Y f By, ti , t ' Its . , 7 — C' ' , il I ' , ) ' i r l. l 4` ' , `. i 7 \ ' ' i. .1 ,' •, , t 1f -., , r 1. ` .' • , -` ; l •,"A' r- `+ ` '1r• , r •? , i r r.. .. -•` y •,•.. .• /r t`` a \,-t. • i ; 1 ., .'',y 1 ie': , . '1 ,..,i - \ . *>•\'/'' t,,, rr ,.111 t ,r 1.. ) .1, IL ` `\ •,,.1 1. , - I .,.^ r '/Y 1 '1 ,tom c. •' _ - ''' +t .T.\, r - ' ' 'F.' -• >.` , i', ,., r, .- ,a;, '.., :\' tis .. f,, \ ., ,. •' , r ,r:!'-. _. • /,• 1. - .. • '.`1•ti, h , U 1. / ,. S' i •-/t ,' '( • 1 ESCROW INSTRUCTIONS This Agreement is made byand between MARTIN McGARRY, et al, "Owner", and NORWEST BANK ARIZONA N.A., a national banking association, as Trustee under Trust Agreement byand between NORWEST BANK ARIZONA, N.A., a national banking- association, and the Town of Oro Valley, a political subdivision, as Buyer, dated 9/1/96, hereinafter called "Town". 1. Property and nd Purchase Price. The Owner is the owner of the property, described on Exhibit "A", improvements all located thereon (the " lieu of eminent domain proceedings, the Owner agrees to sell to "Property"). In Norwest bank and the Town agrees to purchase the property from NorYvest which includes an easement over approximately seven acres of real property for $2.5 pp Y million (the "PurchasePrice"),"), J subject to the terms and conditions set forth below. ert The parties acknowledge that no personal property is 2. No Personal Property.y and that nopersonal property is located on the Property being being purchased sold. Risk of Loss forDamage to Improvements. Owner shall be responsible for the 3_ risk of loss for damage to improvements prior to close of escrow. 4. Warranty Deed. The Owner shall deposit into escrow a warranty deed conveying to the Property, free and clear of all liens and encumbrances and to Norwest titleP Y,� . . ,� subject only to those matters identified on Exhibit "B". NorVVest agrees to then assign the property to the Town of Oro Valley. 5. No Salvage. The Owner shall not salvage or remove any portion of the Property. 6. Escrow and Prorations. The Purchase Price shall be deposited in escrow in full w er shall occur at closing. Payout to the O upon closing. For fee purchases (a)n used for proration of rents, property taxes and other the date of closing shall be e is due for improvement districts shall be paid similar costs, and (b} assessments in n p ' Property rt taxes shall be prorated based upon full by the Owner prior to closing. P Y , ' ofthe Property. The proration of taxes shall both the date of closing and the size � . assessed against Owner's entire parcel which are be for the proportion of taxes g attributable to the Property. payableunderthis Agreement maybe due holders (the 7. Security Interest. Monies g ai notes secured by mortgages or deeds of trusts, up to and "Lienholders") of certain penalty on the notes, including the total amount of unpaid principal, interest and p y bythe Lienholders, be paid to the Lienholders. if any, and shall, upon demand Owner shall obtain from the Lienholders releases for any fee transfer. 8. Possession and Closing. Possession shall be given to the Town by assignment shall be on or before the later of (a) September 18, on the date of closing. Closing h 1 X96 or (b} 3 0 da s after receipt of all necessary releases or consents from ► y L1enholders or (c) anY other date agreed to by the parties. ��5 AMEBIC/ �.� - . �J:,. . 1„,,, First American Title Insurance Company � -- 4i= '� 1880 East River Road, Suite 120 • Tucson, Arizona 85718 r"2t,- ---'' P. O. Box 65448 • Tucson, Arizona 85728 (520) 577-8707 • Fax: (520) 577-0236 SETTLEMENT STATEMENT DATE: September 17, 1996 SETTLEMENT DATE: i ESCROW OFFICER: CAROL ARCHER ESCROW NUMBER: 231-190-158895 SELLER: MARTIN MCGARRY, SUCCESSOR TRUSTEE OF THE MARY JACQUELINE EIDAL REVOCABLE TRUST, DATED APRIL 10, 1989,AS TO AN UNDIVIDED 31/32 BUYER: NORWEST BANK ARIZONA, N.A., A NATIONAL BANKING ASSOCIATION, AS TRUSTEE UNDER TRUST AGREEMENT WITH TOWN OF ORO VALLEY ARIZONA PROPERTY: VACANT LAND, PIMA COUNTY, AZ. VACANT LAND - SELLER BUYER CHARGES CREDITS CHARGES CREDITS SALES PRICE 2,500,000.00 2,500,000.00 ADJUSTMENTS COUNTY TAXES FROM 09/18/96 TO 01/01/97 2,463.30 2,463.30 DISBURSEMENTS/CHARGES FIRST AMERICAN TITLE ESCROW FEE 885.15 1,264.50 TITLE INSURANCE 3,314.50 DOCUMENT DELIVERY FE 10.00 RECORDING FEES 12.00 25.00 PIMA COUNTY TREASURER/PARCEL #224-27-3018 1996 TAXES 8,561.46 SUB TOTALS: 12,783.11 2,502,463.30 2,503,752,.80 NET PROCEEDS DUE SELLER 2,489,680.19 FUNDS DUE FROM BUYER 2,503,752.80 TOTALS: 2,502,463.30 2,502,463.30 2,503,752.80 2,503,752.80 MISCELLANEOUS NOTES: TAXES PAID IN FULL FOR 1996 THRU ESCROW /724,- ( -2iC-: ° de MARTIN MCGARRY, TRUSTEE OF EID: T' T Ad....... )* . ' NORWEST BANK ARIZONA, N.A. MARTIN M. MCGARRY AS TRUSTEE '7UY\I/W (( (JJOAN M. MCGARRY / BY: ` --e----.1`.--1-4-—< '.,..-Ac”71€-------(V-P-- MARY DIANE ANDERSON, BY MARTIN M. MCGARRY, POC 1 FAT-AZ 6319/JCA SETTLEMENT STATEMENT PAGE 1 THIS STATEMENT COVERS MONEY SETTLEMENT THROUGH—ESCROW ONLY-KEEP IT AS A REFERENCE FOR TAX PURPOSES 09/17/96 TUE 15:04 FAX 520 577 0236 FATCO MAIN OFFICE II002 5.� AMERt e . . � Amecan Thie la�a�a� ce Conpaa 1880 East River Road, Suite 120 • Tucson, Arizona 85718 ke .: P. 0. Box 65448 • Tucson, Arizona 85728 (520) 577-8707 • Fax: (520) 577-0236 SETTLEMENT STATEMENT DATE: September 17, 1996 SETTLEMENT DATE: ESCROW OFFICER: CAROL ARCHER ESCROW NUMBER: 231- 190.15E$95 SELLER: MARTIN MCGARRY, SUCCESSOR TRUSTEE OF THE MARY JACQUELINE EIDAL REVOCABLE TRUST, DATED APRIL 10, 1989,AS TO AN UNDIVIDED 31/32 BUYER: TOWN OF ORO VALLEY, A POLITICAL SUBDIVISION PROPERTY: VACANT LAND, PIMA COUNTY, AZ. VACANT LAND SELLER BUYER CHARGES CREDITS CHARGES CREDITS SALES PRICE 2,500,000.00 2,500,000.00 ADJUSTMENTS COUNTY TAXES FROM 09/18/96 TO 01/01/97 2,463.30 2,463.30 DISBURSEMENTS/CHARGES FIRST AMERICAN TITLE ESCROW FEE 885.15 1,264.50 TITLE INSURANCE 3,314.50 DOCUMENT DELIVERY FE 10.00 RECORDING FEES 12.00 25.00 PIMA COUNTY TREASURER/PARCEL #224-27-3015 1996 TAXES 8,561.46 SUB TOTALS; 12,783.11 2,502,463.30 2,503,752.80 NET PROCEEDS DUE SELLER 2,489,680.19 FUNDS DUE FRGII BUYER 2,503,752.80 TOTALS: 2,502,463.30 2,502,463.30 2,503,752.80 2,503,752_80 MISCELLANEOUS TAXES PAID IN FULL FOR 1996 THRU ESCROW MARTIN MCGARRY, TRUSTEE OF EIDAL TRUST TSI OF ORO V! ~—"" MARTIN N. MCGARRY JOAN No MCGARRY MARY DIANE ANDERSON, BY MARTIN M. MCGARRY, POC BY: % AN M. MCGARRY . MARY D I ANE ANDERSON, BY MARTIN N. MCGARRY, POC PAT-AZ 6319/JCA SETTLEMENT STATEMENT PAGE 1 THIS STATEMENT COVERS MONEY SETTLEMENT THROUGH ESCROW ONLY-KEEP IT AS A REFERENCE FOR TAX PURPOSES 09/17/96 TUE 15:04 FAX 520 577 0236 FATCO MAIN OFFICE El 003 Recording Requested by: FIRST AMERICAN TITLE When recorded mail to: TOWN OF ORO VALLEY ATTN: TOBIN SIDLES 11000 N. LA CANADA ORO VALLEY, AZ 85737 CORPORATION SPECIAL WARRANTY DEED Escrow No. 231-190-158895 KNOW ALL MEN BY THESE PRESENTS: THAT NORWEST BANK ARIZONA, N.A., a national banking association, For the consideration of TEN AND NO/100 DOLLARS, and other valuable considerations, the GRANTOR herein does hereby convey to TOWN OF ORO VALLEY, a political subdivision the GRANTEE, the following described real property situate in Pima County, Arizona: SEE EXHIBIT A ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF_ SUBJECT TO: Existing taxes, assessments, liens, encumbrances, covenants, conditions, restrictions, rights of way Y and easements of record. And the GRANTOR binds itself and its successors to warrant the title against its acts and none other, subject to the matters above set forth. IN WITNESS WHEREOF, the GRANTOR has caused its corporate name to be signed by the undersigned officer. DATED: September 17,, 1996 NORWEST BANK ARIZONA, N.A., a national bankingassociation BY: R. A. (tinny) LENTO, Assistant Vice President STATE OF ARIZONA ) ) ss. County of MARICOPA ) This instrument was acknowledged and executed before me this day of 19 by LENIO who acknowledged to be the Assistant Vice President of _NORWEST BANK • - _.� ARIZONA, l�.A_a national banking association , and that as such officer, being authorized so to do, signed the name g of the corporation as such officer_ , 4,,,_ County ,,,- County of MARICOPA ) This instrument was acknowledged and executed before me this day of , 19by_R„ A. (tinny) LENIO who acknowledged to be the Assistant Vice Presic1ent of _NORWEST BANK ARIZONA, N.A.a national banking association , and that as such officer, beingauthorized so to do, signed the name of the corporation g rp as such officer. My Commission Expires: Notary Public PAT-AZ 6056A(Rev. 1/91)JCA 09/17/96 TUE 15:05 FAX 520 577 0236 FATCO MAIN OFFICE L1004 EXHIBIT "A"t No. 158895 That portion of Block 2 of VISTA DEL ORO I I, according to the plat of record in the office of the County Recorder of Pima County, Arizona, recorded in Book 35, of Maps, Page 94, described as follows : BEGINNING at a point on the West line of Section 12, Township 12 South, Range 13 East, Gila and Salt River Base and Meridian, Pima County, Arizona, at a point which is North 00 degrees 02 minutes 25 seconds west, a distance of 844 .28 feet from the Southwest corner of Section 12, on a curve of the South right-of-way line of Lambert Lane, as shown on Map recorded in Book 8 of Road Maps, Page 57; Thence Northeasterly along the arc of said curve, having a radius of 1834 . 86 feet through a central angle of 24 degrees 51 minutes 47 seconds, arc distance of 796 .23 feet to a point of tangency; Thence continuing North 85 degrees 39 minutes 25 seconds East along said right-of-way line, a distance of 200 . 00 feet to the Northeast corner of said Block 2; Thence departing said right-of-way line, South 31 degrees 12 minutes 36 seconds Eat, along the Easterly boundary of Block 2, a distance of 512 .37 feet; Thence South 58 degrees 47 minutes 24 seconds West, along the boundary line of Block 2, a distance of 197.37 feet to a point on the North line of an erosion buffer dedicated to Pima County, as shown in instrument recorded in Docket 9920, Page 323 ; Thence continue South 58 degrees 47 minutes 24 seconds West, along said buffer line, a distance of 28 . 67 feet; Thence North 80 degrees 08 minutes 54 seconds West, along said buffer line, a distance of 68 . 65 feet; Thence South 58 degrees 44 minutes 00 seconds West, alongsaid buffer line, 279 .44 feet; a distance of Thence South 36 degrees 46 minutes 59 seconds West, alongsaid feet; buffer line, a distance of 42 .10 Thence South 52 degrees 34 minutes 06 seconds West, alongsaid buffer line, a distance of 441. 13 feet; Thence South 43 degrees 48 minutes 41 seconds West, along buffer line, a distance of 318 . 01 feet; said Thence departing said buffer line, North 41 degrees 14 minutes seconds West, a distance of g 35 right-of-way , - 857. 78 feet to a point on the South fight of-way line of Lambert Lane; -2- 09/17/96 TUE 15:05 FAX 520 577 0236 FATCO MAIN OFFICE Ij005 No. 158895 - - Thence North 48 degrees 45 minutes 25 seconds East, along said right-of-way line, a distance of 166 .72 feet to a point of curve to the right having a radius of 1834 . 86 feet; Thence Northeasterly along the arc of said curved right-of-way, a distance of 385 .47 feet through a central angle of 12 degrees 02 minutes 13 seconds, to the POINT OF BEGINNING. TOGETHER WITH all Grantor' s right, title and interest in and to the Easement rights contained in instrument recorded in Docket 9920, Page 323 . _3- NUDE = IHRNSMibblUN END=bEt'-lY 1:7_,:i-1:--2 NO. LUM HiiiiK/NTWK biHiiuN NHPlaS r-,,,7,77:-, TELEPHONE NO. uul OK a 5770231c. 007 —OROVHLLEYLUuRT — ..,... — ESCROW INSTRUCTIONS This Agreement is made byand between Citadel Two, L.L.C., a limited liability corporation, the "Owner", and the Town of Oro Valley, a political subdivision of the State of Arizona, the "Town". 1. Property Pro ert and Purchase Price. The Owner is the owner of the Certificate of Purchase of thero ert described on Exhibit "A", (the "Property"). The Owner agrees to sell and p p Y the Town agrees to purchase the property pursuant to the terms and conditions set forth g in the Memorandum of Understanding (MOU). 2. Property.No Personal Pro ert . The parties acknowledge that no personal property and no improvements are beingpurchased and that no personal property is located on the p Property being sold. 3. Assignment of Certificate of Purchase. The Owner shall deposit into escrow an assignment nment of the Certificate of Purchase conveying to Town title to the Property, free and clear of all liens and encumbrances and subject only to those matters identified on Exhibit "B". 4. No Salvage. The Owner shall not salvage or remove any portion of the Property. 5. Escrow and Prorations. Shall be according to the agreements expressed in the attached Memorandum of Understanding (MOU). 6. Possession and Closing. Possession shall be given to the Town on the date of closing. Closing shall be on or before September 30, 1996. and warrants that, to the Environmental Representations. Owner hereby represents 7. p best of Owner's knowledge, no pollutants, contaminants, toxic or hazardous substances, wastes or materials have been stored, used or are located on the Property or within any surface or subsurface waters thereof; and that no environmental legal action of any kind has been commenced or threatened with respect to the Property. However, the Town is accepting the property in an "as-is" condition. 8. Environmental Indemnification. Shall be as expressed in the attached Memorandum of Understanding (MOU). 9. Environmental Inspection Rights. Owner shall permit Buyer to conduct such Property of the inspections as the Buyer deems necessary to determine the environmental p p tY codProperty.n ition of the If the investigations reveal the presence of contamination or the need to conduct environmental clean up, Buyer, prior to close of escrow, may terminate thisg Agreement. The Town has not discovered any environmental problems after inspection. 10. No Leases. To the best of Owner's knowledge, Owner warrants that there are no oral or written leases on all or any portion of the Property,except for the State Land. 11. Broker's Commission. No broker or finder has been used for this transaction. Each party agrees a rees to indemnify and hold harmless the other against fees, costs, and expenses of against defendinga ainst such claims made by anyone claiming to have been employed by the Owner or Town, respectively. 12. Closing Costs. Expenses incidental to transfer of title, including title reports, recording fees, escrow fees, releases and Owners Title Insurance Policy, shall be paid according to the attached MOU document. 13. Right of Entry. The Owner hereby grants right of entry to the Town, its agents and contractors. If the Agreement is not acted upon by the Town Council within fourteen (14) days of the Owner's execution of this Agreement, the right of entry shall terminate. 14. Conflict of Interest. This Agreement is subject to all state laws regarding conflicts of interest. 15. Survival of Representation and Warranties. All representations and warranties contained herein shall survive the closing. 16. Escrow Instructions. The Escrow Company shall be Fidelity National Title Agency, Inc. c/o Lenora Shealy: X This Contract will be used as escrow instructions. (a) If Seller and Buyer elect to execute additional escrow instructions to fulfill the terms hereof, they shall deliver the same to Escrow Company. Title may not be transferred until approved by the State Land Department. Monies are to be held in escrow by the Title company until this permission is received. (b) All documents necessary to close this transaction shall be executed promptly by Seller and Buyer in the standard form used by Escrow Company. Escrow Company is hereby instructed to modify such documents to the extent necessary to be consistent with this Contract. (c) If any conflict exists between this Contract and any escrow instructions executed pursuant hereto, the provisions of this Contract shall be controlling. (d) All closing and escrow costs, unless otherwise stated herein, shall be allocated according to the attached MOU. (e) Any documents necessary to close the escrow may be signed in counterparts, each of which shall be effective as an original upon execution, and all of which together shall constitute one and the same instrument. 17. FIRPTA. If applicable, Seller agrees to complete, sign and deliver to Escrow Company a certificate indicating whether Seller is a foreign person or a non-resident alien pursuant to the Foreign Investment in Real Property Tax Act (FIRPTA). Seller agrees to comply with IRS reporting requirements. 18. Title and Vesting. Escrow Company has provided to Buyer a Commitment for Title Insurance, and Buyer approves same. 19. Prorations. Taxes, homeowner association fees, rents, irrigation fees, and, if assumed, insurance premiums, interest on assessments, and interest on encumbrances shall be prorated as of X Close of Escrow and per the attached MOU. 20. Assessments. The amount of any assessment which is a lien as of the Close of Escrow shall be Paid in Full by Seller X Assumed by Buyer. Any assessment that becomes a lien after Close of Escrow is the Buyer's responsibility. 21. Entire Agreement. This Agreement shall constitute the entire contract between the Owner and Town and no modification hereof shall be binding unless in writing and signed by both parties. The performance of this Agreement constitutes the entire consideration by Town, includes all just compensation due Owner, and shall relieve the Town of all further obligation or claims relating to the take of the Property or to the remaining portion of Owner's property, or on account of the location, grade or construction of the proposed public improvement. 22. MOU: Conflict& Incorporation. In case there is any conflict between the terms of these Escrow Instructions and the MOU, the terms and conditions of the MOU shall govern. The parties hereby incorporate by reference all terms of the MOU. By Owner Date Tax ID # or SS# Approved as to Form: Approved and accepted this day of , 19 96 . • Mayor, Town i Oro Valley Cheryl Skalsky r:\wp51\tobin\citadel2.esc FidelityNational Title Agency, Inc. One South Church Avenue,Suite 110 1717 Tucson,AZ 85701-1636 (602)629-9933 * FAX(602) 629-0233 July 29, 1996 TOBIN SIDLES TOWN OF ORO VALLEY 11000 N. LA CANADA DRIVE ORO VALLEY, AZ 85737 ESCROW NO. : 16032717-LS SELLER/LENDER: CITADEL TWO, L.L.C. , AN ARIZONA LIMITED LIABILITY COMPANY BUYER/BORROWER: THE TOWN OF ORO VALLEY, A POLITICAL SUBDIVISION OF THE STATE OF ARIZONA PROPERTY: YOUR NO. : The items checked below are being sent to you in regard to the above captioned transaction. Receipt No. for payment of $ Check No. in the amount of $ Check No. in the amount of $ X Commitment for Title Insurance Amended X Plat Map Copies of Items shown under Schedule B, Section II (Exceptions) Copies of Items shown under Schedule B, Section III (Requirements) Buyer's Closing Statement Amended Seller's Closing Statement Amended HUD Statement Amended Please call the undersigned if you have any questions or if we may be of further service. Respectfully, 7T)I '/?i&6/lr-- Lenora Shealy Escrow Officer k) "Preliminary Report Top Sheet" We're on top of your transaction! WILL ANY OF THESE SITUATIONS AFFECT YOUR TRANSACTION? * Are your principals exchanging this property? * Will your principals be using a power of attorney? * Are any of the parties on title deceased? * Has there been a change in marital status? * Do any of the parties signing not have a photo I.D. or drivers license? * Will there be a new entity formed? ie., partnership or corporation? * Have any of the principals recently filed bankruptcy? If you answered yes to any of these questions, please contact your escrow or title officer. Thank you for choosing Fidelity National Title Insurance Company iii( E.It Commitment for Title Insurance Fidelity National Title Insurance Company A Stock Company COMMITMENT FOR TITLE INSURANCE FIDELITY NATIONAL TITLE INSURANCE COMPANY,a Corporation,herein called the Company,for valuable consideration,hereby commits to issue its policy or policies of title insurance,as identified in Schedule A,in favor of the proposed insured named in Schedule A,as owner or mortgagee of the estate or interest covered hereby in the land described or referred to in Schedule A,upon payment of the premiums and charges therefore;all subject to the provisions of Schedules A and B and to the Conditions and Stipulations hereof. This Commitment shall be effective only when the identity of the proposed Insured and the amount of the policy or policies committed for have been inserted in Schedule A hereof by the Company, either at the time of the issuance of this Commitment or by subsequent endorsement. This Commitment is preliminary to the issuance of such policy or policies of title insurance and all liability and obligations hereunder shall cease and terminate six(6)months after the effective date hereof or when the policy or policies committed for shall issue, whichever first occurs, provided that the failure to issue such policy or policies is not the fault of the Company. This Commitment shall not be valid or binding until countersigned by an authorized officer or agent. IN WITNESS WHEREOF,the Company has caused this Commitment to be signed and sealed,to become valid when countersigned by an authorized officer or agent of the Company, all in accordance with its By-Laws. This Commitment is effective as of the date shown in Schedule A as "Effective Date." FidelityNational Title Insurance company .01LE ,.,s BY 7.7_,_.,,,,7 :11 , () t'' O. d'/'7 ( SEAL President 1)% ��,D ATTEST ,_ C)se(\'-e(ut-i- t5U.s (1.J1 --) Countersigned .4 -' ' 0 01 'Jib . AliSecretary Authorized Signature FORM 27-83-66(9/94) ALTA COMMITMENT-1966 Valid Only if Schedule A and B are Attached The conditions of this commitment require that the premium and charges be paid prior to the issuance of the title policy(s).Therefore,no policy(s)will be issued until the charges have been remitted to the issuing agent. CONDITIONS AND STIPULATIONS 1. The term"mortgage",when used herein,shall include deed of trust,trust deed,or other security instrument. 2. If the proposed Insured has or acquires actual knowledge of any defect,lien,encumbrance,adverse claim or other matter affecting the estate or interest or mortgage thereon covered by this Commitment other than those shown in Schedule B hereof,and shall fail to disclose such knowledge to the Company in writing,the Company shall be relieved from liability for any loss or damage resulting from any act of reliance hereon to the extent the Company is prejudiced by failure to so disclose such knowledge. If the proposed Insured shall disclose such knowledge to the Company,or if the Company otherwise acquires actual knowledge of any such defect,lien,encumbrance,adverse claim or other matter,the Company at its option may amend Schedule B of this Commitment accordingly, but such amendment shall not relieve the Company from liability previously incurred pursuant to paragraph 3 of these Conditions and Stipulations. 3. Liability of the Company under this Commitment shall be only to the named proposed Insured and such parties included under the definition of Insured in the form of policy or policies committed for and only for actual loss incurred in reliance hereon in undertaking in good faith (a) to comply with the requirements hereof,or(b) to eliminate exceptions shown in Schedule B,or (c)to acquire or create the estate of interest or mortgage thereon covered by this Commitment. In no event shall such liability exceed the amount stated in Schedule A for the policy or policies committed for and such liability is subject to the insuring provisions, exclusion from coverage,and the Conditions and Stipulations of the form of policy or policies committed for in favor of the proposed Insured which are hereby incorporated by reference and are made a part of this Commitment except as expressly modified herein. 4. Any claim of loss or damage,whether or not based on negligence,and which arises out of the status of the title to the estate or interest or the lien of the insured mortgage covered hereby or any action asserting such claim, shall be restricted to the provisions and Conditions and Stipulations of the Commitment. FIDELITY NATIONAL TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE SCHEDULE A Order Number : 160327-17 1 . Effective date : July 18 , 1996 at 7 : 59 A.M. 2 . Policy or Policies to be issued: Amount of Insurance STANDARD Owners Policy Proposed Insured: 1 THE TOWN OF ORO VALLEY, a political subdivision of the State of Arizona ALTA Loan Policy $ Proposed Insured: STANDARD Loan Policy $ Proposed Insured: 3 . The estate or interest in the land described or referred to in this Commitment and covered herein is : A FEE 4 . Title to the estate or interest in said land is at the effective date hereof vested in : THE STATE OF ARIZONA, as to the Legal Title; and CITADEL TWO, L.L. C. , an Arizona limited liability company, as to Equitable Title, as created by the Certificate of Purchase shown as Item No . 5 of Schedule B 5 . The land referred to in this commitment is in the State of Arizona County of Pima and is described as follows : The West half of the West half of the Southeast quarter (w2w2SE4) and the West half of the Southeast quarter of the Southwest quarter of the Southeast quarter (W2Se4SW4SE4) of Section 2 , Township 12 South, Range 13 East, Gila and Salt River Meridian, Pima COunty, Arizona EXCEPT 2 . 48 acres in State of Arizona Patent No . 53 -52608 r r �, B y ' { . '' r'' 1 ' : _ 4 . LYNN A. GROSSE-56/bb Escrow Officer: Lenora Shealy - 629-9933 SCHEDULE B This policy does not insure against loss or damage. nor against costs. attorneys' fees or expenses. any or all of which arise by reason of the following: PART I 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real prope.rty or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of :Duch proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests or claims which are not shown by the public records but which could be ascertained by an inspection of the land or by making inquiry of persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records. 4. Discrepancies, conflicts in boundarry lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5. (a)Unpatented mining claims;(b)reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c)water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records. 6. Any right, title, interest, estate or easement in land beyond the lines of the area specifically described or referred to in Schedule A, or in abutting streets, roads, avenues, alleys, lanes, ways or waterways, but nothing in this paragraph shall modify or limit the extent to which the ordinary right of an abutting owner for access to a physically open street or highway is insured by this policy. ". Any law, ordinance or governmental regulation(including but not limited to building and zoning ordinances)restricting or regulating or prohibiting the occupancy, use or enjoyment of the land. or regulating the character, dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership or a chance in the dimensions or area of the land or any parcel of which the land is or was a part, whether or not shown by the public records at Date of Policy, or the effect of any violation of any such law, ordinance or governmental regulation, whether or not shown by the public records at Date of Policy. 8. Rights of eminent domain or governmental rights of police power unless notice of the exercise of such rights appears in the public records. 9. Defects, liens, encumbrances, adverse claims, or other matters (a) whether or not shown by the public records at date of policy, but created, caused, suffered, assumed or agreed to by the insured claimant; (b) not shown by the public records and not otherwise excluded from coverage but known to the insured claimant either at Date of Policy or at the date such claimant acquired an estate or interest insured by this policy or acquired the insured mortgage and not disclosed in writing by the insured claimant to the Com- pany prior to the date such insured claimant became an insured hereunder; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had been a purchaser or encumbrancer for value without knowledge. 10. Any facts. rights, interests or claims which are not shown by the public records but which could be ascertained by making inquiry of the lessors in any lease or leases described or referred to in Schedule A. 11. The effect of any failure to comply with the terms. covenants and conditions of any lease or leases described or referred to in Schedule A. (Schedule B continued on next page of this Policy) SCHEDULE B - PART I Land Title Association of Arizona Standard Coverage Policy Form - 1974 (REV. 8-86) Form T-36I Order No. 160327-17 COMMITMENT FOR TITLE INSURANCE SCHEDULE B - Section II Schedule B of the policy or policies to be issued will contain exceptions to the following matters unless the same are disposed of to the satisfaction of the Company. Rights are reserved to include additional exceptions and/or requirements with respect to any matters arising subsequent to the effective date hereof and prior to the recordation date of the transaction to be insured herein, but any such matters shall be dealt with prior to recordation hereunder. A. Regulations, conditions and restrictions governing use of ground water pursuant to Arizona Revised Statutes 45-101 et. Seq. B. Exception to coverage which will appear in the policy or policies to be issued which are shown under Schedule B - Section I herein. 1. Any action, by the Pima County Assessor and/or Treasurer, altering the current or prior tax assessment, subsequent to the date of the Policy of Title Insurance. 2 . The right of entry upon said land for the purpose of exploration, development and removal of the substances reserved by the State of Arizona from said land, pursuant to A.R. S. 37-231 . 3 . Right of Way No. 09-001993 for Naranja Drive granted by the State of Arizona to Pima County, as disclosed by the records of the Arizona State Land Department, and as shown on the map recorded in Book 8 of Road Maps, Page 89 . (affects the South 75 feet) 4 . The following matters shown on the map of a survey by James L. Dean, R.L. S. , of The WLB Group, Inc. , dated October 28 , 1994 , last revised November 17, 1994 , Job No. 192039-C-001-1000 : a. Existing fence across the Southeast corner of the W2 SE4 SW4 SE4 of said Section 2 . b. Existing dirt pit road across the Northeast corner of said W4 S E 4 SW4 S E 4. c. Top of construction slope of property to the West encroaches over West line in two places. d. Existing fence from property to the East encroaches over the North part of the East line. e. There are multiple dirt roads in and around the property. 5 . Certificate of Purchase No. 53-53167 from the State of Arizona, Seller, to CITADEL TWO, L.L. C. , an Arizona Limited Liability Company, Buyer, dated September 22 , 1994 , recorded February 9 , 1995, in Docket 9977 , Page 1339 . Order No. 160327-17 Schedule B - Section III REQUIREMENTS COMMITMENT FOR TITLE INSURANCE The following are the requirements to be complied with: NOTE: All Instruments need to conform with the Pima County Recorder' s Instrument Conformance Template ARS § 11-480 requires that the: Maximum document width is 82" Maximum document length is 14" Minimum print size is 10 point Minimum top margin is 2" Minimum left, right and bottom margins be ;AI 1. 1995 taxes are fully exempt. 2 . File an assignment of the Purchaser ' s interest in the Certificate of Purchase shown as Item No. 5 of Schedule B with the Arizona State Land Department. NOTE: Said assignment must be on the approved form and must be signed by the appropriate official accepting said assignment. 3 . Record the Assignment called for above. PIMA COUNTY, ARIZONA ORDER 160327 Fidelity National Area Code 1011 Tax Rate 15 . 68260 Printed 07/24/1996 10 : 11 Parcel Number 224-03 -169D7 Docket Book 0 Page 0 Date 01/01/1901 Situs Addr Owners Name STATE OF ARIZONA Mailing Addr Section 2 Township 12S Range 13E Legal SE4 EXC PTN N1450 ' S1525 ' W70 ' & EXC S75 ' & PTN NE4 LYG S & AD J TO 42/30 213 . 14 AC SEC 2-12-13 (FORMERLY 203 -83-169A) *** 1995 TAXES UPDATED TRU 07/19/96 Value Ratio Land 1, 385 , 410 . 00 16 . 0% Improvement 0 . 00 0 . 0% Full Cash Value Exemption Net Assessed Land and Impr 1, 385 , 410 . 00 Total 0 . 00 Personal prop 0 . 00 Total 0 . 00 Limited 1, 234 , 400 . 00 Total 0 . 00 1995 TOTAL TAX 0 . 00 FIRST HALF INTEREST SECOND HALF INTEREST TOTAL DUE 0 . 00 0 . 00 0 . 00 0 . 00 0 . 00 No Liability BACK TAX INFORMATION UPDATED THRU 07/19/96 CP NO. /TYPE SALE DATE YEAR TAXES DUE INT. DUE AMOUNT DUE OLD PCL ** NO DELQ TAXES DUE FOR THIS PARCEL ** UPDATED THRU DATES : ASSESSMENTS RESOLUTIONS CITY OF TUCSON 07/18/1996 07/15/1996 ORO VALLEY 07/05/1996 07/05/1996 PIMA COUNTY 07/05/1996 07/05/1996 *** NO ASSESSMENTS *** *** NO RESOLUTIONS *** *** NO SOLD ASSESSMENTS *** Search Completed 3N U (A).4 1 1 aliiiNS HIP 1 0 U rliff Ei AIN GE 1 0 1 i p, ... _, _ 1 2 I ' 42 Sk✓ CO,c,,, SEC. 35--7f1,;WE- WEST 5278.68' (GLO) 1 ' 17-TANGERINE ROAD � 4O/t O . . Rx ��� • ‘.. �.�3 p' - y .. LOT 1 `k) Fr 4 COPPER LOT 3 ANTELOPE CREEK WAY ..ONTE NOW_ 34.23 AC 34.25 .C HfILLS. 34.29 AC (iai �: c r ' d LOTS 1-187 MONTERRA c�Ys; ANTELOPE CREEK LOT 2 A-C KNOLLS , ,� PiLAC3 PL. CREEK II �RAYrHo• PLACE 34.27 AC 2 1 cd Milli 'E R ! C.A. A-D' _ LOTS 4 ,-169N -- r GRAYTHORN •L. .S`i I :42.7 wt . , L,..,,,- _, ,� :_ .��4 b o ''o C .o ho ( 44 , suit/ ` « 4t, 33 M&P 40/5 a ,, d 3 40/50 M&P • , ,rCiR � I _\ . 'sa •-F+ D••• II T • P VALLEY . wase • j*'" - • CS .,.. .gRIT;GB PL. D 'I • CROSS- C (� PLACE .. 7 e 0.r- PL. '..' 9 zo� tiG PL. t''! �' 4 ES ' U . P�I 4 p� L. 4 �C LD .� P - LO 1-184' ce LOTS 1-235 A. • BLKS A-F a CRYSTALLINE WAY . • F. ill _. ....t... ____ .f.:i a Ni4r..s:1111- . 414 cp in 1 Aix' a� .., ;,.,. Ailloilv COPPER CREEK I .tiiii GOLD:4 EY DR. A a a • PHASE I o "PO - n .2 , _ LO'T'S 1 69 • _ 9 a a 4 38/94 M&PcpCD .:,,r $ STONE W ,� • _ P � .. LODE - LAND z � W S QUICKSIL X. PL. I o = s Z b a JV a N0� .....)1 • 03 § oCOPPER CREEK I I C p57 PL. . - cn pox- "• BLOCK L I LOTS 1-46 169D t. 0 z �°� }, 40 78 M&P . . . 69D ‘,4.1.. ./,12- . .:. . . . . N., . . % . cf V J A O� 4,- es.J , vt,. .1Y S 1� ♦�' NOP as o�vi , 4 .'=. ,� COPPER CREEK �(..,' BLOCKS A&B • '� :, LOTS 1-62, CA "A"&"B" ._ . _ „ ■ 46/07 M&P L a. (g, rx • o-T q�' BREEZY P g`' 0224-O6) M5 1 . - • .••. COURT m . Pi. �, •'• `50' WEEP•'G WASH WAY °" ? a -.. • g A °'., .WHusH COU f 1 RX 08/089 NARANJA 6RIVE T 169E S 89d 54' W 5277.36' (GLO) NOW f COPPER SPRINGS ESTATES LOTS 1-9 C.A. "A" 44/15 M&P JUL-26-96 FRI 13:02 FIDELITY NTL TITLE DWNTN FAX NO. 6290233 P. 02/05 P. 01/04 JUL-26-96 FRI 11:22 FIDELITY NATIONAL TITLE INSURANCE COMPANY COMMITMENT FOR TITLE INSURANCE SCHEDULE A Order Number: 160327-17 1 . Effective date: July 18, 1996 at 7:59 A.M. 2 . Policy or Polici1e to be isoued: Amount of Insurance STANDARD Owners Policy $ Proposed Insured; THE TOWN OF' ORO VALLEY, a political subdivision of the State of Arizona ALTA Loan Policy Proposed Insured; STANDARD Loan Policy Proposed Insured; 3 . The estate or interest in the land described or referred to in this Commitment and covered herein A FEE 4 , Title to the estate or interest in said land is at the effective date hereof ve,ted in: THE STATE OF ARIZONA, as to the Legal Title; and Ci'T'N1JEL TWO, L.L.C. , an Arizona limited liability company, as to Equitable Title, as created by tha Certificate of Purchase shown as Item No. 5 of Schedule B 5 - The land referred to in this commitment ifE; in the State of Arizona County of Pima and is described as follows : The West half of the West half of the Southeast quarter (w2w2 SE4) and the West half of the Southeast quarter of the Southwest quarter of the Southeast quarter (W2Se4SW4SE4) of Section 2, Township 12 South, Range 13 East, Gila and Salt River Meridian, Pima County, Arizona EXCEPT 2 .48 acres in State of Arizona Patent No. 53-52605 6;44:i By• ,& 1 Escrow Officer: Lenora Shealy -- 629-9933 JUL-26-96 FRI 13:02 FIDELITY NTL TITLE DWNTN FAX NO. 6290233 P, 03/05 P. 02/09 JUL-26-96 FRI 11;22 SCHEDULE B This policy does not Insure against loss or damage,nor against costs,attorneys'fees or expenses. any or all of which arise by reason of the following_ PART I 1-Ta c5 or assessments which are¶101 shown as existing liens by the records of any taxing authority chat levies Lakes or assessments on real property or by the public records, Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings. whether or not shown by the records of such agency or by the public records. 2. Any facts,rights,lntercais or claims which arc riot shown by the public records but which could be ascertained by att Inspection of the land or by making inquiry of persons In possession thereof. 3. )asetnents, liens or encumbrances, or claims thereof, which aro not shown by the public records. 4,Discrepancies,conflicts in boundary lutes,shortage in arca,encroachmerltS,or any other facts which a Correct survey would disclose, and which are riot shown by the pubiit records. 5.(a)Unpatented mining claims;(b)reservations or exceptions in patenus or in Acts authorizing the Issuance thereof;(c)water tights, claims or title to water, whether or not the matters excepted under(a), (b), or (c) arc shown by the public records. b. Any right, title,interest. estate or easemettc in land beyond the lines of the arca specifically described or referred to in Schedule A, or in abutting strew, roads, avenues, alleys, lanes, ways or waterways, but nothing in this paragraph shall modify or limit the extent to which the ordinary right of an abutting owner for access to a physitaily open street or highway is insured by this policy. 7.Any law,orditiancc or governmental regulation(including but not limited to building and zoning ordinances)restricting or regulating or prohibiting the occupancy,use or enjoyment of the land,or regulating the character,dimensions or location of any improvement now or hereafter erected on the land, or prohibiting a separation in ownership Or a change in the dimensions or area of the land or any parcel of which the land is Os-was a part, whether or trot Shown by the public records at Date of Policy, or the effect of any violation of any such law,ordinance or governmental regulation,whether or not shown by the public records at Date of Policy. 8.Raghta of eminent domain or governmental righr3 of police power unless notice of the exercise of such rights appears LA the public records. 9. Defects,liens, encumbrances,adverse claims,or other matters (a)whether or not shown by-,hc public records at da�e of poises, but created, caused,suffered,assumed or agreed to by the insured claimant;(b)not shown by the public records and not otherwise excluded from coverage but known to the insured claimant either at bate of Policy or at the date such claimant acquired an estate or interest insured by this policy or acquired the insured mortgage and not disclosed In writing by the insured claimant to she Com- pany prior to the date such insured claimant became an insured hereunder:(c)resulting in no loss or damage to the insured claimant; (d) attaching or treated subsequent to Date of Policy: or (e) resulting In loss or damage which would not have bren sustained if the hi cured claimant had been a purchaser or encumbrancer for value without knowledge. 10. Any facts,rights.lnierests or claims which art not shown by the public records but which could be ascertained by creaking inquiry of the lessors in any lease or leases described or referred to in 5c11edule A. I i. The erect of any failure so comply with the terms. corcnant5 and conditions Of any lease or teases described or referred to in Schedule A. (Schedule $ cohtlnucd on next page of this Policy) SCHEDULE 8 - PART I Land Title Association of Arizona Standard Coverage Policy Form - 1974 (REV. 6-86) Form T-361 JUL-26-96 FRI 13:03 FIDELITY NTL TITLE DWNTN FAX Na 6290233 P. 04/05 JUL-26-96 FRI 11:23 P. D04 Order No. 160327--17 COMMITMENT FOR TITLE INSURANCE SCIIEtIULE $ - section II Schedule B or the policyor policies to be issued will contain exceptions to the following matters unless the same are disposed of to the satisfaction of the Company. Rights are reserved to include additional exceptions and/or requirements with respect to any matters arising subsequent to the effective date hereof and prior to the recordation date or the transaction to be insured herein, but any such matters 5ha11 be dealt with prior to recordation hereunder, A. Regulations, conditions and restrictions governing use of ground water pursuant to Arizona Revised Statutes 45-101 et. Seq. I L Exception to coverage which will appear in the policyor policies to be issued which are shown under Schedule B -- Section T herein. 1. Any action, by the Pima County Assessor and/or Treasurer, altering the current or prior tax assessment, subsequent to the date of the policy of Title Insurance, 2. The right of entry upon said land for the purpose of exploration, development and removal of the substances reserved by the State of Arizona from said land, pursuant to A.R.S. 37- 231.. 3. Right of Wax No. 09-001993 for Naranja Drive granted by the State of Arizona to Pima County, as disclosed by the records of the Arizona State Land Department, and as shown on the map recorded in Book 8 of Road Maps, Page 09. (affects the South 75 feet) 4. The following matters shown on the map of a survey by James L. Dean, R.L.S. , o f The WL! Group, Inc. , dated October 28, 1994, last reid,sed November 17, 1994, Job No. 192039-C-001-1000! a. Existing fence across the Southeast corner of the Wh SES SWC SE: of said Section 2. b. xisting dirt pit road across the Northeast corner of said Wk SE; SA SAA. c. Top of construction slope of property to the West encroaches over West line in two places. d. Existing fence from property to the East encroaches over the North part of the East line. e, There are multiple dirt roads in and around the property. 5. Certificate of Purchase No. 53-53167 from the State of Arizona, Seller, to CITADEL TWO, L.L.C. , an Arizona Limited Liability Company, to er dated se teniber 22, 1994, recorded February 9, 1995, in Doc et � 9977, �a � C,1 1339. JUL-26-96 FRI 13:04 FIDELITY NTL TITLE DWNTN FAX N0, 6290233 P. 05/05 JUL-26-96 FRI 11:24 P. 04/04 order No. 160327-17 schet4ulo B -- Section III REQUIREMENTS COMMITMENT FOR TITLE INSURANCE The following are the requirements to be complied with: NOTE: All Instruments need to conform with the Pima County Recorder's Zr1►$t1'"UlntglXt contorinarice Template ARB § 11-48G requires that that Maximum QaatuQent width is s�,• Me►xiarum doczuuasati length is 14" Minimum print gigs is to point Minimum topmaryin is 2" left, rvOit and bottom margins be 1/211 1. 1995 taxes are fully exempt. Z. File an assignment of tha Purchasexig interest in the Certificate of Purchase shown as Item No. 5 of schedules B with the Arizona State Land Department. NOTE; Said assignment must be on the approvQd dorm and muat be signed by the appropriate affioia], accepting said assignment. 3 . ReCbfC4 the Assignment called for above. WINTON $5,125,000 CERTIFICATES OF PARTICIPATION, SERIES 1996, EVIDENCING PROPORTIONATE INTERESTS IN A PURCHASE AGREEMENT BETWEEN NORWEST BANK ARIZONA, N.A., AS TRUSTEE, AS SELLER, AND THE TOWN OF ORO VALLEY, ARIZONA, AS BUYER. CERTIFICATE PURCHASE AGREEMENT September 6, 1996 Mayor and Council The Town of Oro Valley, Arizona Ladies and Gentlemen: The undersigned, Peacock, Hislop, Staley & Given, Inc. (the "Underwriter"), acting on its own behalf and not as fiduciary or agent for you, but for our own benefit, hereby offers to enter into this Certificate Purchase Agreement for the purchase of $5,100,000 $5,125,000 in aggregate original principal amount of Certificates of Participation, Series 1996 (the "Certificates"), evidencing undivided proportionate interests in a Purchase Agreement, dated as of September 1, 1996 (the "Purchase Agreement"), between the Town of Oro Valley, Arizona, an Arizona municipality (the "Town"), as buyer, and Norwest Bank Arizona, N.A., as trustee (the "Trustee"), under a Trust Agreement, dated as of September 1, 1996 (the "Trust Agreement"), between the Trustee and the Town, as seller. The Certificates are special, limited obligations, as described in, and executed and delivered pursuant to, the Trust Agreement. The proceeds of the sale of the Certificates will be used by the Trustee to acquire three parcels of real property and to improve one parcel or more parcels for use as a municipal park (the "Project") for sale to the Town pursuant to a the Purchase Agreement; amounts. Amounts payable by the Town pursuant to the Purchase Agreement will be secured by a pledge of the Town's receipts of fines and forfeitures, license and permit fees, transaction privilege (sales) taxes, other transaction privilege, excise and business taxes, franchise fees and taxes bed and rental taxes and income taxes now or hereafter imposed and/or collected by the Town, including state-shared sales and income taxes and state revenue sharing (collectively, the "Excise Taxes"), to the extent necessary to pay amounts due under the Purchase Agreement on a parity with amounts due under the Lease- Purchase Agreement, dated as of April 1, 1996, between the Town and the Town of Oro Valley Municipal Property Corporation. The Certificates will be insured by a policy of bond insurance (the "Policy") issued by MBIA Corporation (the "Insurer") and the reserve fund will initially be funded to the Reserve Requirements (as required by the Trust Agreement) with a debt service reserve fund surety bond (the "Surety Bond")"Qualified Surety Obligation") issued by the Insurer. The Certificates will be purchased at an aggregate purchase price of $ $5,011,245.20 (which represents a the principal amount of$ less Underwriter's Discount of$ )$5,125,000 less original issue discount of $38,754.80 and less underwriter's discount of $/5,000) plus accrued interest to the date of delivery. The Certificates will be payable, as to interest, on January 1, 1997 and on each January July 1 and July January 1 thereafter until the Certificates are paid or prepaid in full and, as to principal, on July 1, 1997 and on each July 1st thereafter through 2007, and on July 1, 2012 2011 and July 1, 2017, subject to optional and mandatory prepayments, as set forth on Exhibit A attached hereto. This offer is made subject to acceptance by the Town and acknowledgment by the Trustee prior to 11:59 p.m. (Mountain Standard Time) on the date hereof or such other time as is mutually agreed upon. Upon such acceptance and acknowledgment, as evidenced by duly authorized signatures in the spaces therefor below, this Certificate Purchase Agreement shall be in full force and effect in accordance with these terms and will be binding upon the Towne Trustee and the Underwriter, and, upon execution and delivery of the Trust Agreement, the Trustee. If this offer is not so accepted and acknowledged, it is subject to withdrawal by the Underwriter upon written notice delivered to the Town at any time prior to such acceptance and acknowledgment. The Underwriter has offered to enter into this Certificate Purchase Agreement in reliance upon the representations, warranties and agreements of the Town herein, the acknowledgment and acceptable by the Trustee and the performance by the Town and the Trustee of their respective agreements and obligations hereunder, both as of the date hereof and as of the date of Closing. All capitalized terms used in this Certificate Purchase Agreement and not otherwise defined herein have the same meaning as in the Offering Statement described herein and the Trust Agreement. SECTION 1. PURCHASE, SALE AND OFFERING OF THE CERTIFICATES. (a) Based upon the terms and conditions and upon the representations herein set forth, the Underwriter hereby agrees to purchase, and the Town hereby agrees to cause the Trustee to execute, sell and deliver to the Underwriter, and the Trustee agrees to, concurrently with the execution and delivery of the Trust Agreement, the Trustee will execute, sell and deliver to the Underwriter, all (but not less than all) of the $5,100,000 $5,125,000 aggregate original principal amount of the Certificates. (b) The Underwriter agrees to make a bona fide public offering of the Certificates at the offering prices or yields set forth in the Offering Statement (defined below). The Underwriter may offer a portion of the Certificates for sale to selected dealers who are members of the National Association of Securities Dealers, Inc. and who agree to resell the Certificates to the public on terms consistent with this Certificate Purchase Agreement. The Underwriter reserves, however, the right to change such offering prices or yields as the Underwriter shall -2- deem necessary in connection with the marketing of the Certificates and to offer and sell the Certificates to certain dealers (including dealers depositing the Certificates into investment trusts) and others at prices lower than the initial offering prices or at yields higher than the initial yields set forth in the Offering Statement. The Underwriter also reserves the right (a) to overallot or effect transactions that stabilize or maintain the market price of the Certificates at a level above that which might otherwise prevail in the open market and (b) to discontinue such stabilizing, if commenced, at any time. A "bona fide public offering" shall may include an offering to a representative number of institutional investors or registered investment companies, regardless of the number of such investors to which the Certificates are sold. SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS In order to induce the Town to enter into the Certificate Purchase Agreement and to induce the Underwriter to purchase the Certificates and to make the offering and sale of the Certificates contemplated by this Certificate Purchase Agreement, the Town hereby makes the following representations, warranties and agreements: (a) Offering Statement. (i) Preliminary Offering Statement Deemed Final. The Town hereby represents and warrants that, as of its date, the Preliminary Offering Statement, dated August 29, 1996 (the "Preliminary Offering Statement"), prepared by the Town for use in connection with the public offering, sale and distribution of the Certificates, was "deemed final" by the Town for the purposes of the require- ments of Rule 15c2-12(b)(1) (the "Rule") promulgated pursuant to the Securities Exchange Act of 1934, as amended. (ii) Delivery and Use. The Town will deliver to the Underwriter, without charge, within seven business days after the execution and delivery hereof and, in the event the Closing Date is less than seven (7) business days from the date hereof, upon request of the Underwriter, in sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, a reasonable number of copies of a final Offering Statement relating to the Certificates which has been determined by a duly authorized official of the Town to be a final Offering Statement for the purposes of SEC Rule 15c2-12(b)(3) and (4). The final Offering Statement, which shall be in substantially the form of the Preliminary Offering Statement, including the cover page and the appendices thereto, with only such additions, omissions and modifications as may be necessary to set forth the information relating to the Certificates contained herein, is hereinafter referred to as the "Offering Statement", except that if the Offering Statement has been amended between the date thereof and the end of the Warranty Period, the term "Offering Statement" shall refer to the Offering Statement as so amended. -3- (iii) Representation. As of the date of acceptance hereof by the Town and until 25 days following the Closing (as hereinafter defined) (the "Warranty Period"), the Town represents and agrees that the statements and information in the Offering Statement (excluding the information under the headings "MUNICIPAL BOND INSURANCE," "TAX EXEMPTION", "ORIGINAL ISSUE DISCOUNT", "MARKET DISCOUNT PROVISIONS", "UNDERWRITING", "POLITICAL DONATIONS", "RELATION- SHIPS AMONG PARTIES", and in Appendices D and E) (the "Warranted Information") are and will be at the Closing Date, as defined in Section 3 hereof, (if necessary from time to time by amendment), true, correct and complete in all material respects; and such Warranted Information in the Offering Statement does not and will not include any untrue statement of a mattrial fact or omit to state any material fact necessary in order to make such statements and information, in light of the circumstances under which they are or were made, not misleading. (iv) Amendments or Supplements. Between the date hereof and the end of the Warranty Period, (a) the Town will not adopt or participate in the issuance of any amendment of or supplement to the Offering Statement to which, after having been furnished with a copy, the Underwriter shall object in writing or which shall be disapproved by counsel for the Underwriter and (h), if any material adverse event relating to or affecting the Town or its properties or operations or any transaction contemplated hereby, by the Trust Agreement or by the Purchase Agreement, shall occur, or if any event relating to or affecting the correctness of any statement contained in the Offering Statement shall occur, or if the Town is notified that such an event has occurred, then in any such event the Town shall promptly notify the Underwriter of the circumstances and details of such event. If, in the opinion of counsel for the Underwrit- er, it is necessary to amend or supplement the Offering Statement to make the Offering Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser or a potential customer (as defined for purposes of SEC Rule 15c2-12(b)(4)), the Town will forthwith prepare and furnish to the Underwriter (at the expense of the Town) a reasonable number of copies of an amendment of or supplement to the Offering Statement (in form and substance satisfactory to counsel for the Underwriter) that will amend or supplement the Offering Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances existing at the time the Offering Statement is delivered to a purchaser, not misleading; provided, however, that if such an event shall occur on or prior to the date of Closing, the Underwriter in its sole discretion shall have the right to terminate its obligations hereunder by written notice to the Town and the Trustee, and thereafter the Underwriter will be under no obligation to purchase or pay for the Certificates. (b) Use of Documents. The Town hereby authorizes the use of the Offering Statement, including all amendments and supplements thereto, by the Underwriter in connection with the public offering and sale of the Certificates. -4- (c) Litigation. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, pending, or, to the best knowledge of the Town, after due investigation, threatened, before or by any court, governmental agency, public board or body, against or affecting the Town nor is there any basis for any such action, (i) which in any way questions or would question the validity of the proceedings taken by the Town in connection with the authorization, execution, sale and delivery of the Certificates or the authorization, execution and delivery of the Town Documents (as defined in (d) below), (ii) involving any of the assets, properties or operations of the Town wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated by the Certificate Purchase Agreement or the Offering Statement, or would in any way adversely affect the validity or enforceability of the Certificates, the Undertaking, the Purchase Agreement, the Trust Agreement or the Certificate Purchase Agreement (or of any other instrument required or contemplated for use in consummating the transactions contemplated thereby or hereby or by the Offering Statement) or (iii) contesting in any way the completeness or accuracy of the Offering Statement. (d) Corporate Existence and Authority. The Town is a municipal corporation with - --.. . - ': - duly created and validly existing under the laws of the State of Arizona and has, and at the Closing will have, full legal right, power and authority (i) to enter into and deliver this Certificate Purchase Agreement, the Purchase Agreement, the Trust Agreement, and the Undertaking, and all documents included as exhibits thereto and required thereunder to be executed and delivered by the Town (collectively referred to as the "Town Documents"), (ii) to authorize and direct the execution, sale, and delivery of the Certificates to the Underwriter as provided in the this Certificate Purchase Agreement, and (iii) to carry out and to consummate the transactions contemplated by the Town Documents and the Offering Statement. (e) Financial Statements. The audited financial statements of the Town set forth in Appendix C to the Offering Statement, (i) fairly present the financial position and results of operations of the Town at the respective dates and for the respective periods indicated therein in accordance with the generally accepted accounting principles ("GAAP"), and (ii), to the best of the Town's knowledge, have been prepared in accordance with GAAP consistently applied throughout the periods concerned (except as otherwise disclosed in the notes to such financial statements). Since June 30, 1995, the Town has not incurred any material liabilities, direct or contingent, nor has there been any material adverse change in the financial position, results of operations or condition, financial or otherwise, of the Town that is not completely and accurately described in the Offering Statement, whether or not arising from transactions in the ordinary course of business. (f) Approvals. The Town has received and there remain currently in full force and effect (or the Town will receive prior to the execution and delivery of the Certificates), all authorizations, licenses, permits, franchises, privileges, consents, approvals, reviews and legal clearances of any governmental body or regulatory authority, public agency, court or person (i) that would constitute a condition precedent to, or the absence of which would adversely affect, -5- the execution or delivery of, or the performance by the Town under, the Town Documents, or of the transactions contemplated herein or in such documents or in the Offering Statement, except for the consent of the Insurer to the pledge of the Excise Taxes, the consent of the State of Arizona to the transfer of rights with respect to a portion of the real property included in the Project, and such consents and approvals as may be required under state securities or Blue Sky laws and (ii) to acquire, construct and operate own the Project and carry on its business as described in the Offering Statement. The Town -. -: -. : - : :- '- - reasonably believes that any remaining approvals, licenses or permits required for the Project or for the transactions contemplated by the Town Documents will net be issued or received in due course. (g) Due Authorization and Approval. The Town (i) has duly authorized (A) the execution and delivery of, and the due performance of its obligations with respect to, the Town Documents and (B) the taking of any and all actions as may be required on the part of the Town to carry out, give effect to and consummate the transactions contemplated by those documents and the Offering Statement and (ii) has approved the terms and use of the Offering Statement through its duly authorized officers. The Town will take any and all actions necessary or appropriate to consummate the transactions described in such documents and the Offering Statement. (h) Resolutions. The resolutions of the Town relating to the Certificates adopted on August 28, 1996 ((collectively, the "Town Resolution"), acknowledging and approving the execution and delivery of the Certificates and authorizing the execution and delivery of the Town Documents and the sale of the Certificates to the Underwriter have been duly and validly adopted by the Town Council and are, on the date hereof, and will be at the Closing, in full force and effect, without modification. (i) Due Execution and Delivery. This Certificate Purchase Agreement has been duly executed and delivered by the Town and is, and when executed and delivered by the other parties thereto, the Town Documents will be, legal, valid and binding obligations of the Town, all of such documents being enforceable in accordance with their respective 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. At or prior to the date of Closing, the Town Documents shall have been duly authorized, executed and delivered by the Town. (j) Certificates Legal, Valid and Binding Obligations. The form, terms, execution and delivery of the Certificates have been duly and validly authorized and approved by the Town (in the case of the form and terms thereof, through its duly authorized officers) and, when executed and delivered to and paid for by the Underwriter on the Closing Date in accordance with the terms of -the this Certificate Purchase Agreement, the Certificates will (i) have been duly executed and delivered by and represent legal, valid, and binding limited obligations enforceable in accordance with their terms and entitled to the benefits and security of the Trust Agreement (and the Purchase Agreement) subject as to enforcement of remedies only to -6- 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. The principal of and interest and any premium with respect to such Certificates is payable by the Trustee from moneys held from time to time pursuant to the Trust Agreement, from payments, if any, received from the Town pursuant to the Purchase Agreement, which payments are secured by a pledge of the Excise Taxes to the extent set forth therein, and from the Policy and the Qualified Surety Bei Obligation. Neither the faith and credit nor the taxing power of the State of Arizona or of the Town is pledged as security for such payment. (k) No Conflicts or Restrictions. The adoption of the Town Resolution, the execution and delivery by the Town of the Town Documents and compliance by the Town with the respective provisions thereof, do not and will not violate or conflict with or result in or constitute a breach of, or default under, any indenture, deed of trust, mortgage, commitment, agreement, or other instrument to which the Town is a party or by which it or its property is bound, or conflict with or violate any constitutional provision, existing law, rule or regulation, or any judgment, order, or decree to which the Town or any of its property is subject, except for such minor breaches, defaults, potential defaults or events of default, if any, which individually or in the aggregate would have no material adverse effect on the enforceability against or the performance by the Town of the Town Documents or on the Town's financial condition, operations or properties. The Town is not a party to any contract or agreement or subject to any restriction, the performance of or compliance with which may have a material adverse effect on the financial condition, operations or property of the Town. (1) Representations True and Correct. The representations of the Town set forth in the Town Documents are, and as of the Closing Date will be, true, correct and complete in all material respects. (m) No Defaults. The Town is not now and has never been , nor has it during the preceding five (5) years been, in default in the payment of principal of, or premium or interest on, or otherwise in any material respect in default with respect to, any bonds, notes or other material obligations which it has issued, assumed or guaranteed as to payment of principal, premium or interest or as to which it is or was obligated. The Town has no knowledge of any event which has occurred or is continuing that, with the lapse of time or the giving of notice or both, would constitute an event of default under any such bonds, notes or other material obligations. No event has occurred and is continuing that, upon the execution and delivery of the Certificates, constitutes an Event of Default, as defined in the Town Documents, or that, with the lapse of time or the giving of notice or both, would constitute such an Event of Default. (n) Qualification of Certificates Under Blue Sky Laws. The Town will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as may be reasonably requested by the Underwriter to qualify the Certificates for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and to determine the eligibility of the Certificates for investment under the laws of such states and other jurisdictions, -7- and will use its best efforts at the reasonable request of the Underwriter to continue such qualifications in effect so long as required for the distribution of the Certificates; provided, however, that in no event will the Town be required to take any action to qualify to do business in any jurisdiction in which it is not now so qualified. (o) Certificates and Representations. Any certificate signed by a duly authorized official of the Town and delivered to the Underwriter at the Closing shall be deemed a representation and warranty by the Town as to the truth, correctness and completeness of the statements made therein. The Town covenants that between the date hereof and the Closing it will not take any action that will cause the representations and warranties made herein to be untrue as of the Closing. (p) Reports to the Secretary of the Treasury. The Town will cause to be prepared and submitted the information report concerning the Certificates required by Section 149(e) of the Internal Revenue Code of 1986, as amended (the "Code"), and any then existing or proposed regulations thereunder, by registered mail, return receipt requested, to the Secretary of the Treasury, at or prior to the Closing. Thereafter, at any time, the Town will prepare and submit or cause to be submitted any supplement to the information report which is deemed by the Underwriter or Special Counsel (identified herein) to be necessary or advisable. The information included in the information report and any supplement thereto will be true and complete for the purposes for which intended. (q) Additional Certificates Excise-Tax-Secured Obligations. The Town agrees that during the period from the date hereof to and including the date on which the Certificates are executed and delivered to the Underwriter, it will not ffi offer or issue any bonds, notes or other obligations for borrowed money or (ii) incur any material liabilities, direct or contingent, payable from or secured by a pledge of the Excise Taxes or other revenues or assets securing the Certificates. (r) Continuing Disclosure. The Town hereby covenants and agrees, for the benefit of the beneficial owners from time to time of the Certificates, to deliver to the Underwriter a written undertaking (the "Undertaking") on or before the date of delivery of the Certificates to provide certain on-going disclosures relating to the Town sufficient to enable the Underwriter to comply with the requirements of subsection (b)(5) of the Rule. The Undertaking shall be as described in the Offering Statement, with only such changes as may be agreed to in writing by the Underwriter. (s) Application of Proceeds and Arbitrage. The proceeds from the sale of the Certificates will be applied for the purposes specified, and in the manner provided, in the Trust Agreement and the Purchase Agreement. The Town hereby covenants that it will take no action which will cause the Certificates to be "arbitrage bonds" within the meaning of Section 148(a) of the Code. SECTION 3. CLOSING. -8- The "Closing Date" shall be September 2-6 18, 1996 or such earlier or later date as we mutually agree upon. The "Closing Time" shall be 8:00 a.m. (Mountain Standard Time) or such other time of day as we mutually agree upon on the Closing Date. On the Closing Date and at the Closing Time, the Issuer will deliver or cause to be delivered, to The Depository Trust Company in New York, New York, the Certificates in definitive form (all the Certificates to be typewritten in authorized denominations as described in the Offering Statement and registered in the name of Cede & Co.), duly executed and authenticated, together with the items identified in Section 4 below. It is anticipated that CUSIP identification numbers will be obtained for the Certificates, but neither the failure to obtain such numbers for any Certificate nor any error with respect thereto shall constitute cause for a failure or refusal by the Underwriter to accept delivery of the Certificates in accordance with the terms of this Certificate Purchase Agreement. On the Closing Date and at the Closing Time, the Underwriter will accept delivery of the Certificates and pay the purchase price of the Certificates in federal funds to the order of the Trustee (the "Closing"). SECTION 4. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The Underwriter's obligations under this Certificate Purchase Agreement are and shall be subject to the following further conditions: (a) Conditions of Closing. At the time of Closing, (i) this Certificate Purchase Agreement, the Offering Statement, the Purchase Agreement, the Trust Agreement, the Undertaking and all necessary authorizing resolutions of the Town shall be in full force and effect and shall not have been amended, modified or supplemented from the respective forms provided to the Underwriter prior to the date hereof except as may have been agreed to in writing by the Underwriter, (ii) the proceeds of the sale of the Certificates shall be paid to the Trustee • ' - '• •: - -. -- . •-- to be deposited for use and used as provided in the Trust Agreement, (iii) the Issuer shall have duly adopted and there shall be in full force and effect such resolutions as, in the opinion of Gust Rosenfeld, P.L.C. ("Special Counsel"), shall be necessary in connection with the transactions contemplated hereby, and (iv) the Certificates shall have been delivered in accordance with the terms of this Certificate Purchase Agreement. (b) Conditions With Respect to the Offering Statement. Subsequent to the respective dates as of which information is given in the Offering Statement as of its initial date, there shall not have been any material adverse change, or any development involving a prospective material adverse change, in or affecting the operations, financial condition or properties of the Town which change or development makes it impractical or inadvisable in the judgment of the Underwriter to proceed with the offering or the delivery of the Certificates as contemplated by the Offering Statement. (c) Conditions At or Prior to Closing. Receipt by the Underwriter of the following at or prior to the Closing: -9- (1) the approving opinion of Special Counsel, substantially in the form of Appendix E to the Offering Statement and a supplemental opinion of Special Counsel, substantially in the form attached hereto as Exhibit B, in each case dated the Closing Date and either addressed to the Underwriter or with a statement or separate letter authorizing reliance thereon by the Underwriter; (2) the opinion of Tobin C. Sidles, Esq., Town Attorney, addressed to the Underwriter and dated the Closing Date, substantially to the effects that (i) the Town Documents have been duly authorized, executed and delivered by the Town and are valid and binding obligations of the Town enforceable in accordance with their respective terms, subject as to enforcement of remedies only to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally and to the availability of equitable relief, (ii) the Town has authorized and approved the execution, sale and delivery of the Certificates pursuant to and in accordance with the necessary authorizing resolutions, the Purchase Agreement, the Trust Agreement and this Certificate Purchase Agreement, all of which have been duly adopted by the Town and are in full force and effect as of the date hereof; (iii) the Town has duly authorized the use by the Underwriter of the information relating to the Town in the Offering Statement and its distribution and use by the Underwriter in connection with the offering and sales of the Certificates; (iv) the adoption of the resolution(s), the authorization, execution and delivery of the Town Documents and the approval of the execution and delivery of the Certificates, and compliance with the respective provisions thereof under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the Town a breach of or default under any agreement or other instrument to which the Town is a party or to which it or its property is subject or of any existing law, ordinance, administrative regulation, court order or consent decree to which the Town or any of its property is subject; (v) •• :- -' .•: -: •- : - : .- •- - ':. •: -, there are no actions, suits, proceedings or investigations at law or in equity by or before any court, public board or body, pending or, to the best of his knowledge after due investigation, threatened against or affecting the Town which question or seek to restrain or enjoin its right to levy and collect excise taxes, fees, rentals and charges or to authorize, execute, deliver and perform its obligations pursuant to the Town Documents, or the execution or delivery of the Certificates or the Town Documents or the validity or enforceability in accordance with their respective terms of the Certificates or the Town Documents or wherein an unfavorable decision, ruling or finding would materially and adversely affect the transactions contemplated by the Offering Statement (except to the extent disclosed therein) or the Town Documents; (vi) except for the consents and approvals required on the parts of the Insurer with respect to the pledge of Excise Taxes and of the State with respect to the acquisition of one parcel of real property included in the Project, no consent of any other party and no -10- consent, license, approval or authorization of, exemption by, or registration with any governmental body, authority, bureau, agency, or person (other than those that have been obtained or will be obtained prior to the delivery of the Certifi- cates) is required in connection with the execution and delivery of the Certificates or the execution, delivery and performance by the Town of the Town Documents, except that no opinion is expressed as to compliance with applicable state or federal securities laws; and (vii) the Town is a duly existing body corporate under the laws of the State of Arizona and its power to enter into and perform its obligations with respect to the Town Documents is not being nor has it been challenged, contested or revoked nor, to the knowledge of such counsel, is there any basis therefor; (3) the opinion of counsel to the Insurer substantially to the effects that the Policy and the Qualified Surety Bond Obligation have been duly authorized, issued and delivered on behalf of the Insurer and are the valid and binding obligations of the Insurer enforceable in accordance with their respective terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally and to the availability of equitable relief; (4) the opinion of Snell & Wilmer L.L.P., counsel for the Underwrit- er, substantially to the effects that based on its participation in the preparation of Offering Statement, and without having undertaken independently to determine the accuracy, completeness or fairness of the statements contained therein, nothing has come to the attention of such counsel that would lead such counsel to believe that the information contained in the Offering Statement (except as to information under the headings "MUNICIPAL BOND INSURANCE" and "POLITICAL DONATIONS" and as to financial and demographic information and statistical data included therein, including in the appendices thereto, as to which no opinion need be expressed) contains any untrue statement of material fact or omits 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, and that the Undertaking provides a reasonable basis upon which the Underwriter may conclude that the requirements of the Rule have been satisfied; (5) a certificate or certificates, dated the Closing Date, signed by an authorized officer of the Town, in form and substance satisfactory to Special Counsel and to the Underwriter, agreements of the Town in the Town Documents are tie and correct in all material respects as on its part to be performed Of satisfied in the Town Documents at or prior to the Closing; (ii) . . . . . . . . . . . . . e . -11- • • •• • 1. ••- • • • - ••• •• • •• • • • •• . . •• . - D: •.• . •• - r. - • •• • • • • •: - • • . •• • . ... • • - : •- e - •- . - - • •• • - : - :• : '- •- e - •- . - -- - the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements true, correct and complete in all material respects; (6)(5) a certificate or certificates, dated the date of Closing, signed on Underwriter and Closing Date, signed by an authorized officer or officers of the Town, in form and substance satisfactory to Special Counsel and to the Underwriter, substantially to the effects that_ (i) the representations and agreements of the Town in the Town Documents are true, correct and complete in all material respects as of and as if made on the Closing Date; (ii) the Town has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder in the Town Documents at or prior to the Closing; (iii) the final Offering Statement insofar as it relates to the Town, the Project and the Town Documents is true, correct and complete in all material respects as of and as if made on the Closing Date and does not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (iv) no litigation is pending or, to the best of his, her or their knowledge, threatened in any court or before any governmental board, agency or body (a) in any way contesting er affecting the completeness or • •• ' - ••• - ••- • - •- • - - -- ••• against the Town before any judicial, quasi-judicial or administrative board, body or agency (A) to restrain or enjoin the execution, sale or delivery of the Certificates or contesting the validity or enforceability in accordance with their respective terms any of the Certificates, the application of the proceeds thereof, or the performance by the Town of the provisions of the Town Documents, or--{ }(B) in any way contesting or affecting any authority for, or the validity or enforceability of,the Town Documents, the Certificates or the application of the proceeds of the Certificates, or (C) in any way contesting the existence or powers of the Town or its authority or ability to enter into or perform afly duty in connection with the transactions contemplated hereby, by the Certificates; or the Town Documents; and (v)1 to the best of his, her or their knowledge, no event affecting the Town or the financial condition of the Town has occurred since the date of the Offering Statement which it is necessary to disclose should be disclosed in the Offering Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements : •: •- : r••. •: • •- -•• relating to the Town and its financial condition true, correct and complete in all material respects and not -12- misleading in any material respect; (iv)(vi) the Offering Statement (as modified, as permitted herein) as of the Closing Date is in all other respects true, correct and complete in all material respects and does not omit any statement of a material fact necessary to make the statements therein with respect to the Town and the Town Documents and under the headings "THE PROJECT", and in Appendices A, B or C thereto, in light of the circumstances under which they were made, not misleading; (v)(vii) to the best of his, her or their knowledge, the Town has not previously failed to provide any required financial information on or before the date specified in any undertaking entered into pursuant to the Rule; and (-4) (viii) the Town has complied with all the terms and conditions in the this Certificate Purchase Agreement and the Town Documents to be complied with by it prior to or concurrently with the Closing; (7)(6) a certificate or certificates, dated the date of Closing, signed by an authorized representative or representatives of the Trustee and in form and substance satisfactory to Special Counsel and to the Underwriter, substantially to the effects that, to the best of his or her knowledge: (i) the Trustee is duly organized, validly existing and in good standing as a national banking association having the powers of a trust company, with full corporate and other power and authority to conduct its business and affairs as a trustee; (ii) the Trustee has full right, power and authority to (A) exercise corporate trust powers in the State of Arizona, and (B) execute and deliver, perform its obligations under and consummate the transactions contemplated by the Trust Agreement and all documents included as exhibits thereto and required thereunder to be executed and delivered by the Trustee (collectively, the "Trustee Documents"); (iii) the Trustee has by proper corporate action duly authorized (A) the execution and delivery of, • and the due performance of its obligations under the Trustee Documents, and (B) 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 transactions contemplated by such documents; (iv) the Trustee's execution and delivery of the Trustee Documents and its compliance with the terms thereof do not and will not in any material respect conflict with or constitute on the part of the Trustee a breach of or default under any agreement or instrument to which the Trustee is a party or by which the Trustee is bound or of any existing law, regulation, order, decree, writ or injunction known to the Trustee, or Trustee's charter or Bylaws; (v) the Trustee will comply with the requirements of the Trustee Documents and in accordance therewith will not take or omit to take any action which will in any way result in the proceeds from the sale of the Certificates being applied in a manner inconsistent with the Trustee Documents; (vi) the representations and agreements of the Trustee contained in the Trustee Documents are true and correct in all material respects as of the Closing and that the Trustee has complied with all agreements and satisfied all conditions on its part to be performed or satisfied under the Trustee Documents at or prior to the Closing; and (vii) no litigation is pending or threatened against the Trustee before any judicial, quasi- -13- judicial or administrative forum (A) to restrain or enjoin the execution or delivery of any of the Certificates, the application of the proceeds thereof, or the performance by the Trustee of the provisions of the Trustee Documents, (B) in any way contesting or affecting any authority for, or the validity of the Certificates, the Trustee Documents, or the applications of the proceeds of the Certificates, or (C) in any way contesting the existence or corporate trust powers of the Trustee; (83(7) one copy of the transcript of all proceedings of the Town relating to the authorization, execution, sale and delivery of the Certificates and authorizing execution and delivery of the Town Documents, including copies of Town Resolution approving and authorizing the distribution of the Offering Statement and authorizing the execution and delivery of the Town Documents and the execution and delivery of the Certificates, certified by appropriate officials of the Town, respectively; (9)(8) one executed copy of each of the Trust Agreement, the Purchase Agreement and the Undertaking, any related UCC Financing Statements and any certificate or certificates concerning tax matters relating to the Certificates; f-1-49)01 a specimen of the typewritten Certificates; (11)(10) evidence that Moody's Investors Service and Standard & Poor's Corporation have assigned ratings of not less than "Aaa" and "AAA", respectively, to the Certificates based on the Insurer's delivery of its Policy, as described in subparagraph (14) below; (12)(11) a certificate of the Town, in form and substance satisfactory to Special Counsel and counsel to the Underwriter setting forth the facts, estimates and circumstances in existence on the date of the Closing which establish that interest payable with respect to the Certificates will not be included in the gross income of the holders thereof for federal income tax purposes and that it is not expected reasonably expects that the proceeds of the Certificates will not be used in a manner that would cause the Certificates to be "arbitrage bonds" within the meaning of Section 148 of the Code; (13)(12) a copy of the Information Return on Form 8038-G required to be filed with the United States Treasury by Section 149(e) of the Code; (14)(13) the Policy and the Qualified Surety Bend Obligation issued by the Insurer and delivered to the Trustee; and (15)(14) such additional legal opinions, certificates, proceedings, instruments and other documents, including necessary consents and approvals -14- of the Insurer and the State of Arizona with respect to acquisition of a portion of the Project, as the Underwriter or Special Counsel may reasonably request. (d) Approval by Underwriter. All of the opinions, letters, certificates, instruments and other documents mentioned in this Certificate Purchase Agreement shall be deemed to be in compliance with the provisions of this Certificate Purchase Agreement if, but only if, in the reasonable judgment of the Underwriter, they are satisfactory in form and substance, as evidenced by the Underwriter's payment of the purchase price and acceptance of the Certificates. (e) Failure to Satisfy Conditions. If there shall be a failure to satisfy the conditions to the Underwriter's obligations contained in this Certificate Purchase Agreement, or if the Underwriter's obligations shall be terminated for any reason permitted by this Certificate Purchase Agreement, this Certificate Purchase Agreement shall be terminated and the Underwriter, the Town and the Trustee shall have no further obligation hereunder, except as provided in Sections 6 and 7 hereof. SECTION 5. TERMINATION. The Underwriter shall have the right to terminate this Certificate Purchase Agreement by notifying the Town and the Trustee of its election to do so, if at the time of such notification, between the date hereof and the Closing: (a) (i) legislation shall have been passed 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 United States Department of the Treasury or the Internal Revenue Service or any member of the United States Congress or presented as an option for consideration to either the Senate Finance Committee or the House Ways and Means Committee by the staff of either such committee or by the staff of the Joint Committee on Taxation, or (ii) a decision shall have been rendered by a court of the United States or of the State of Arizona or by the Tax Court of the United States, or (iii) a ruling or an official statement (including a press release) or proposal shall have been made or a regulation shall have been proposed or made by or on behalf of the Treasury Department of the United States or the Internal Revenue Service or other federal or Arizona authority, or (iv) legislation shall have been introduced or passed in the Arizona Legislature with respect to Federal or Arizona taxation upon revenues or other income of the general character to be derived by the Town pursuant to the Town Documents, by any similar body, or upon interest on obligations of the general character of the Certificates, or, with respect to Arizona taxation of the interest payable with respect to the Certificates as described in the Offering Statement, or other actions or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the Federal income tax consequences or Arizona tax consequences of any of the transactions contemplated in connection herewith from those in effect on the date hereof, and any other action or event shall have occurred which, in the reasonable judgment of the Underwriter, materially and adversely affects the market for the Certificates or the market price generally of obligations of the general character of the Certificates; or -15- (b) any event shall have occurred, or any condition shall exist, which, in the reasonable judgment of the Underwriter, either (i) makes untrue or incorrect in any material respect as of such time any statement or information contained in the Offering Statement or (ii) is not reflected in the Offering Statement but should be reflected therein in order to make the statements and information contained therein not misleading in any material respect; or (c) the Town shall have sustained with respect to its properties a substantial loss by fire, flood, accident or other calamity that, in the sole reasonable judgment of the Underwriter, could have a material adverse impact on the marketability of or security for the Certificates, whether or not such loss shall have been insured; or (d) there shall have occurred any outbreak or escalation of hostilities (whether or not foreseeable at the time of execution hereof) or other local, national or international calamity or crisis, or default with respect to the debt obligations of, or the institution of proceedings under the federal bankruptcy laws by or against, any state of the United States or any agency of the United States., the effect of which on the financial markets of the United States being such as, in the judgment of the Underwriter, would materially and adversely affect the ability of the Underwriter to market the Certificates on the terms as contemplated in the Offering Statement or to enforce contracts for the sale of the Certificates; or (e) there shall be in force a general suspension of trading on the New York Stock Exchange or other national securities exchange, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of a determination by any such exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction or the State of Arizona shall have taken any action, whether administrative, legislative, judicial or otherwise, which would have a material adverse affect on the marketing or sale of the Certificates; or (f) there shall have been established any new restrictions on transactions in securities materially affecting the free market for securities or the extension of credit by, or the charge to the net capital requirements of, underwriters by any such exchange, the Securities and Exchange Commission, any other federal or state agency or the Congress of the United States, or by Executive Order; or (g) a general moratorium on commercial banking activities shall have been declared by Federal, Arizona or New York authorities having jurisdiction and shall be in force; or (h) legislation shall be enacted or any action shall be taken by the Securities and Exchange Commission or other governmental or regulatory authority which, in the opinion of counsel for the Underwriter, has the effect of requiring the contemplated distribution of the Certificates, or any action or instrument pertaining thereto, to be registered under the Securities Act of 1933 or under Arizona law or requiring the Trust Agreement or any instrument pertaining thereto to be qualified pursuant to the Trust Agreement Act of 1939 or any action shall have -16- been taken by any court or by any governmental authority suspending the use of the Offering Statement or any amendment or supplement thereto or any proceeding for that purpose shall have been initiated or threatened in any such court or by any such authority; or (i) an order, decree or injunction of any court of competent jurisdiction, or order, ruling, regulation or official statement by the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, is issued or made to the effect that the execution and delivery of the Certificates or issuance, offering or sale of obligations of the general character of the Certificates including any or all underlying obligations, as contemplated hereby or by the Offering Statement, is or would be in violation of the federal securities laws as amended and then in effect; or (j) the withdrawal or downgrading of any rating of the Certificates by a national rating agency; or (k) any state "blue sky" or securities commission shall have withheld registration, exemption or clearance of the offering of the Certificates and, in the judgment of the Underwriter, the market for the Certificates is materially affected thereby. SECTION 6. INDEMNIFICATION BY-THE--TOWN. (a) The Town agrees, but only to the extent permitted by law, to indemnify and hold the Trustee and the Underwriter and each person, if any, who controls (as such term is defined in Section 13 of the Securities Act of 1933, as amended) the Underwriter, from and against any and all losses, claims, damages, liabilities, actions,judgments, costs and expenses (a) arising out of any statement or information in the Offering Statement relating to the Town (or any amendments thereto consented to in writing by the Town) that is or is alleged to be untrue or incorrect in any material respect or the omission or alleged omission therefrom of any statement or information that should be stated therein or that is necessary to make the statements therein relating to the Town not misleading in any material respect, and (b) to the extent of the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission or alleged untrue statement or omission if such settlement is effected with the written consent of the Town; and the Town, to the extent permitted by law, will reimburse any legal or other expenses reasonably incurred by the Underwriter (or any person controlling the Underwriter) in connection with investigating or defending any such loss, claim, damage, liability or action. In case any claim shall be made or action brought against the Underwriter or any controlling person based upon the Offering Statement for which indemnity may be sought against the Town, as provided above, the Underwriter shall promptly notify the Town in writing setting forth the particulars of such claim or action and the Town shall, but only to the extent permitted by law, assume the defense thereof, including the retention of counsel acceptable to the Underwriter and the payment of all expenses thereof. The Underwriter shall have the right to retain separate counsel in any such action but shall bear the fees and expenses of such counsel -17- unless (1) the Town shall have specifically authorized the retaining of such counsel or (2) the parties to such suit include the _ -:- • ' - . - : - '-_ :- : - : :- : - Town, and the Underwriter or controlling person or persons have been advised by such counsel that one or more legal defenses may be available to them which may not be available to the Town, in which case the Town shall not be entitled to assume the defense of such suit notwithstanding its obligation, but only, to the extent permitted by law, to bear the fees and expenses of such counsel. (b) The Underwriter agrees to indemnify and hold the Town harmless from and against any and all losses, claims, damages, liabilities, actions, judgments, costs and expenses arising out of (i) any statement made by or on behalf of the Underwriter in connection with the offering or sale of the Certificates (other than statements contained in the Offering Statement) which is or is alleged to be untrue or incorrect in any material respect or omits or is alleged to omit any information necessary to make the statements made, in light of the circumstances under which made, not misleading in any material respect or (ii) any violation of law or conduct constituting gross negligence or wilful misconduct by or on behalf of the Underwriter in connection with the offering or sale of the Certificates inlcudin. in an such case an amount s aid in settlement of an liti•ation commenced or threatened against the Town from any such claim if such settlement is effect with the prior written consent of the Underwriter; and the Underwriter will reimburse any legal or other expenses reasonable incurred by the Town in connection with investigating or defending any such loss, claim, danage, liability, action, judgment, cost or expense. In case any claim shall be made or action brought against the Town for which indemnity may be sought against the Underwriter on the basis of the foregoing provision, the Town shall promptly notify the Underwriter in writing setting forth the particulars of such claim or action and the Underwriter shall assume the defense thereof, including the retention of counsel acceptable to the Town and the payment of all expenses thereof. The Town shall have the right to retain separate counsel in any such action but shall bear the fees and expenses of such counsel unless (1) the Underwriter shall have specifically authorized the retention of such counsel or (2) the parties to such suit include the Underwriter or any controlling person or persons, and the Town has been advised by such counsel that one or more legal defenses may be available to them which may not be available to the Underwriter, in which case the Underwriter shall not be entitled to assume the defense of such suit notwithstanding its obligation, but only to bear the fees and expenses of such counsel. (c) Notwithstanding anything in this Letter or the Certificate Purchase Agreement to the contrary, the provisions of this Section 6 shall survive termination of this Certificate Purchase Agreement and payment in full of the Certificates, : -: - -: ': - - :' : • • the Certificate Purchase Agreement. -18- SECTION 7. PAYMENT OF EXPENSES. The Trustee shall pay, but only from the proceeds of the Certificates or other available funds, expenses incident to the performance of its obligations under the Trust Agreement, including but not limited to: (a) the fees, charges and expenses of the Town, the Insurer, and the Trustee . -: -- -'-. - '. • = , including the premiums for the Policy and the Qualified Surety Bend Obligation; (b) the cost of the preparation (including printing, duplicating and distribution) of the Trust Agreement, the Purchase Agreement, the Offering Statement, and any amendment thereto or supplement thereof(in such reasonable quantities as may be requested by the Underwriter); (c) the cost of the preparation, printing, execution and delivery of the Certificates, including any CUSIP Service Bureau charges; (d) the cost of qualifying Certificates for sale under Blue Sky laws; (e) all expenses incurred in connection with obtaining ratings, if deemed necessary or desirable, for the Certificates; and (f) the fees and disbursements of Special Counsel and Counsel to the Town. The Underwriter shall pay (a) the cost of preparation of any Blue Sky Survey and Legal Investment memorandum, (b) the fees and disbursements of Underwriter's Counsel and (c) advertising expenses in connection with the public offering of the Certificates and all other expenses incurred by them in connection with their public offering and distribution of the Certificates. In the event that the Certificates are not sold by the Trustee to the Underwriter for any reason other than a default by the Underwriter, the Town will pay upon demand all expenses which would otherwise be paid by the Town from the proceeds of the Certificates pursuant to this Section. If the Underwriter defaults in its obligations hereunder, then the Underwriter will pay upon demand all such expenses which would otherwise be paid by the Town pursuant to this Section. SECTION 8. NOTICES. Any notice or other communication to be given under this Certificate Purchase Agreement may be given by delivering the same in writing as follows: If to the Town: Town of Oro Valley, Arizona 11000 N. LaCanada Drive Oro Valley, AZ 85737 Attention: Town Manager -19- If to the Trustee: Norwest Bank Arizona, N.A. Corporate Trust Department 3300 North Central Avenue Phoenix, AZ 85012 Attention: R.A. (Ginny) Lenio If to the Underwriter: Peacock, Hislop, Staley & Given, Inc. 2999 North 44th Street, Suite 100 Phoenix, AZ 85018 Attention: Larry S. Given, President SECTION 9. PARTIES IN INTEREST AND SURVIVAL OF REPRESENTATIONS. This Certificate Purchase Agreement is made solely for the benefit of the Town and the Underwriter (including the successors or assigns of the Underwriter) and the other indemnified parties mentioned in Section 6 hereof, and no other person, partnership, association or corporation shall acquire or have any right hereunder or by virtue hereof. All of the representations, warranties, agreements and indemnities made by the Town herein shall survive the Closing, remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriter or any indemnified party of any matters described in or related to the transactions contemplated hereby or any termination of the Certificate Purchase Agreement. SECTION 10. MISCELLANEOUS. (a) Headings. The headings of the Sections of this Certificate Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof. (b) Governing Law. This Certificate Purchase Agreement shall be governed by and construed in accordance with the laws of the State of Arizona. (c) Counterparts. This Certificate Purchase Agreement may be executed, accepted and approved in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute and accept or approve this Certificate Purchase Agreement by signing any such counterpart. (d) Modification; Assignment. This Certificate Purchase Agreement may not be changed orally, but only by an agreement in writing and signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. The Trustee may not assign any of its rights or obligations under this Certificate Purchase Agreement without the written consent of the Underwriter, and the Underwriter shall not be required to purchase the Certificates under this Certificate Purchase Agreement except from the Trustee. -20- (e) Conflicts of Interest. Notice is hereby given of the provisions of Section 38-511, Arizona Revised Statutes, to the extent applicable. (f) Provision of Information. The Underwriter agrees to provide, from time to time, upon request, such information as may be necessary for the Town to file reports required pursuant to Section 149(e) of the Code, Section 35-501 of the Arizona Revised Statutes, or otherwise. fThis space left blank intentionally] -21- If you agree with the foregoing, please sign the enclosed counterpart of this Certificate Purchase Agreement and return it to the Underwriter. This Certificate Purchase Agreement shall become a binding agreement between you and the Underwriter when at least one counterpart of this Certificate Purchase Agreement shall have been signed by or on behalf of each of the parties hereto and acknowledged and accepted by the Trustee specified in the Trust Agreement. PEACOCK, HISLOP, STALEY & GIVEN, INC. By: Title: Accepted and Agreed to as of September 6, 1996 THE TOWN OF ORO VALLEY, ARIZONA By: Mayor Title: Attest: Town Clerk Acknowledged and Accepted as of September 6, 1996 NORWEST BANK ARIZONA, N.A. By: Title: _22_ EXHIBIT A TO CERTIFICATE PURCHASE AGREEMENT MATURITY SCHEDULES TOWN OF ORO VALLEY, ARIZONA, CERTIFICATES OF PARTICIPATION, SERIES 1996 PRINCIPAL PAYMENT DATE PRINCIPAL AMOUNT INTEREST RATE July 1, 1997 $ gy 170,000 3.90% July 1, 1998 150,000 4.25 July 1, 1999 150,000 4.50 July 1, 2000 155,000 4.625 July 1, 2001 160,000 4.75 July 1, 2002 170,000 4.875 July 1, 2003 180,000 5.00 July 1, 2004 190,000 5.10 July 1, 2005 205,000 5.15 July 1, 2006 215,000 5.25 July 1, 2007 230,000 5.30 July 1, 20 2011 1,050,000 5.75 July 1, 2017 2,100,000 5.75 PREPAYMENT PROVISIONS Mandatory Prepayments: (1) Certificates payable as to principal on July 1, 2012 2011 are subject to mandatory prepayment on the following dates in the following amounts: Prepayment Date Prepayment Amount July 1, 2008 $ 240,000 July 1, 2009 255,000 July 1, 2010 270,000 July 1, 2011 July 1, 2012* 285,000 *Stated payment date A-1 (2) Certificates payable as to principal on July 1, 2017 are subject to mandatory prepayment on the following dates in the following amounts: Prepayment Date Prepayment Amount July 1, 20 2012 $ 300,000 July 1, 20 .4 2013 320,000 July 1, 20-142014 340,000 July 1, 2015 360,000 July 1, 2016 380,000 July 1, 2017* 400,000 *Stated payment date Optional Prepayments: Certificates payment payable as to principal on or before July 1, 200 2006 are not subject to prepayment. Certificates payable as to principal on and after July 1, 200 2007 are subject to optional prepayment prior to their respective stated payment dates on July 1, 200 2006 and on any January 1 or July 1 thereafter, in whole or in part, from such Certificates payment dates as may be designated by the Town, and by lot within any Certificates of the same stated payment date as may be selected by the Trustee, at a prepayment price equal to the principal amount thereof plus accrued interest with respect thereto to the date of prepayment plus a premium expressed as a percentage of the principal amount of the Certificates so called for prepayment as follows: Prepayment Dates Prepayment Premium July 1, 200 2006 and January 1, 2007 1.0% 200 July 1, 200 and January 1, 200 Thereafter -0-No premium A-2 EXHIBIT B TO CERTIFICATE PURCHASE AGREEMENT [FORM OF SUPPLEMENTAL SPECIAL COUNSEL OPINION] [Date of Closing] Town of Oro Valley, Arizona Norwest Bank Arizona, N.A., as trustee Peacock, Hislop, Staley & Given, Inc. Re: $5,125,000 Town of Oro Valley, Arizona Certificates of Participation, Series 1996 Ladies and Gentlemen: Pursuant to a Certificate Purchase Agreement, dated September 6, 1996 (the "Certificate Purchase Agreement") between the Town or Oro Valley, Arizona (the "Town"), and Peacock, Hislop, Staley & Given, Inc. (the "Underwriter"), we have delivered to you our approving opinion of even date herewith relating to $5,125,000 aggregate original principal amount of Certificates of Participation, Series 1996 (the "Certificates"), evidencing proportionate interests in a Purchase Agreement, dated as of September 1, 1996 (the "Purchase Agreement"), by and between Norwest Bank Arizona, N.A., as trustee (the "Trustee") under a Trust Agreement, dated as of September 1, 1996 (the "Trust Agreement"), between the Trustee, as seller under the Purchase Agreement, and the Town, as purchaser under the Purchase Agreement. All terms used herein shall have the respective meanings assigned in the Certificate Purchase Agreement. We hereby supplement the aforesaid approving opinion and further advise you as follows: 1. The Town has full power and authority (a) to adopt resolutions (the "Town Resolutions") authorizing the transactions contemplated by the Town Documents and by the Offering Statement, dated September 6, 1996 and to execute, deliver and comply with the Town Documents; and (b) to approve and authorize the distribution and use of the Offering Statement. •- - -• - -- - '-- ' - • - - ' - - - - • ' '- - - • • -- . . . . . . . .. . . . . . . . . . - - •. . . .. ._ . -. - • - .- . . - . . . . -.- - and the Town Resolutions do not conflict with or violate any Federal or Arizona constitutional or statutory provision. B-1 2. The Town has duly authorized the execution and delivery of the Town Documents, each of which has been executed and delivered by duly authorized officials or representatives of the Town and, assuming the due authorization, execution and delivery thereof by the other parties thereto, each constitutes the legal, valid and binding obligation of the Town enforceable in accordance with its respective terms, subject only to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws, and equitable principles, affecting the enforceability of creditors' rights generally, and does not and will not conflict with or violate any Federal or Arizona constitutional or statutory provision. •. . . - . - I I . • . .- - ' . • .• •. - J . .- 4 3. 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 Town in connection with the Trustee's execution, sale and delivery of the Certificates or the execution and delivery by the Town, or the performance by the Town, of its obligations under, the Town Documents. 5 4. The Certificates are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification as an indenture pursuant to the Trust Agreement Act of 1939, as amended. The Certificates are not subject to the registration requirements of Title 44, Chapter 12, Article 4, Arizona Revised Statutes, as amended. 6 5. The Town has duly authorized the distribution and use of the Offering Statement by the Underwriter in connection with the public offering and sale of the Certificates. 7 6. The statements contained in the Offering Statement on the cover thereof and under the headings entitled "THE CERTIFICATES OF PARTICIPATION", "SECURITY FOR AND SOURCES OF PAYMENT OF THE CERTIFICATES", "LEGAL MATTERS", "TAX EXEMPTION", "ORIGINAL ISSUE DISCOUNT", "MARKET DISCOUNT PROVISIONS"; and "CONTINUING SECONDARY MARKET DISCLOSURE", "POLITICAL DONATIONS" and "RELATIONSHIPS AMONG PARTIES" (to the extent such . - --- • - . - . - :. • - section describes the Town's obligations under the Undertaking), and in Appendices D and E, insofar as such statements purport to summarize certain provisions of the laws of Arizona and the United States of America (insofar as they relate to the Certificates), the Certificates, the Trust Agreement, the Purchase Agreement, the Continuing Disclosure Undertaking, and the Federal and Arizona income tax status of the interest en payable with respect to the Certificates, are true, correct and complete in all material respects and such sections of PHX3:HICKSB/3172692.4 B-2 the Offering Statement, when taken as a whole, do not contain an untrue statement of a material fact or omit to state a material fact required to be stated or set forth therein or necessary in order to make the statements and information therein, in light of the circumstances under which they were made or set forth, not misleading. The foregoing opinion is intended solely for the benefit of the addressees and no other person may rely on this opinion without our express written consent. Respectfully submitted, GUST ROSENFELD P.L.C. PHX3:HICKSB/3172692.4 B-3 This redlined draft, generated by CompareRite - The Instant Redliner, shows the differences between - original document : F:\DMS\DOCS\HICKSB\3172692.03 and revised document: F:\DMS\DOCS\HICKSB\3172692.04 Deletions appear as struck-through text Additions appear as bold+dbl underlined text Snell L.L.P. PHOENIX,ARIZONA LAW OFFICES TUCSON,ARIZONA One Arizona Center Phoenix,Arizona 85004-0001 (602)382-6000 IRVINE,CALIFORNIA Fax:(602)382-6070 SALT LAKE CITY,UTAH William A.Hicks III(602)382-6303 September 6, 1996 To the parties named on the enclosed Distribution List Re: Town of Oro Valley, Arizona, Certificates of Participation, Series 1996 Ms. Lenio and Gentlemen: Enclosed for each of you is a revised copy of the Certificate Purchase Agreement to be executed in connection with the sale and delivery of the referenced certificates of participation. Changes from the August 30, 1996 draft have been marked for your convenience. Please call me if you have any questions. Note the change in the closing date (to September 18, 1996). Very truly yours, SNELL & WILMER L.L.P. dAtir,L) William A. Hicks, III WAH/db Enclosure Member: LEX MUND!,a global association of independent law firms with members in :kj\(\(\k* the united states and 60 countries throughout the world. $5,100,000 CERTIFICATES OF PARTICIPATION, SERIES 1996 EVIDENCING PROPORTIONATE INTERESTS IN A PURCHASE AGREEMENT BETWEEN NORWEST BANK ARIZONA, N.A., AS TRUSTEE, AS SELLER, AND THE TOWN OF ORO VALLEY, ARIZONA, AS BUYER DISTRIBUTION LIST (as of August 30, 1996) TOWN OF ORO VALLEY, ARIZONA SNELL & WILMER L.L.P. 11000 North La Canada Drive One Arizona Center Oro Valley, AZ 85737-7015 Phoenix, AZ 85004-0001 FAX: (520) 297-0428 FAX: (602) 382-6070 David Andrews, (520)297-2591 William A. Hicks, III (602)382-6303 Finance Director Tobin C. Sidles, Esq. (520)297-5222 NORWEST BANK ARIZONA, N.A. Town Attorney 3300 North Central Avenue Phoenix, AZ 85012 FAX: (602) 248-1200 GUST ROSENFELD P.L.C. 201 North Central Avenue R.A. (Ginny) Lenio (602)248-2346 Suite 3300 Phoenix, AZ 85073-3300 LEWIS AND ROCA, LLP FAX: (602) 340-1538 40 North Central Avenue Phoenix, AZ 85004-4429 Fred H. Rosenfeld (602)257-7422 FAX: (602) 262-5747 Scott W. Ruby (602)257-7422 Bryant D. Barber (602)262-5311 PEACOCK, HISLOP, STACEY & GIVEN, INC. MBIA CORPORATION 2999 North 44th Street, Suite 100 113 King Street Phoenix, AZ 85018 Armonk, NY 10504 FAX: (602) 952-0220 FAX: (914) - Larry Given (602)952-6851 Adam Bergonzi (914)765-3533 B. Mark Reader (602)952-6842 PHX3:HICKSB/3174714. 4 TOWN OF ORO VALLEY COUNCIL COMMiT11TICATION MEETING DATE: 8\28\96 TO: HONORABLE MAYOR AND COUNCIL FROM: Tobin Sidles, Town Attorney SUBJECT: Possible adoption of Resolution Number(R)96- 71 ,relating to the acquisition and financing of three parcels of land and the construction of public park improvements on one parcel; authorizing the execution and delivery of a purchase agreement or lease purchase agreement, a trust agreement and a certificate purchase agreement ; approving an official statement; approving the issuance and sale of not to exceed $5,600,000 certificates of participation, series 1996, evidencing a proportionate interest of the ownership thereof in the purchase agreement and the sale of such certificates to the purchaser thereof; approving the form and authorizing the execution of a continuing disclosure certificate and a letter of representation pertaining to a book entry system for the certificates; authorizing the taking of all other actions necessary to the consummation of the transactions contemplated by the resolution. SUMMARY: Adoption of this Resolution authorizes and approves the Town through staff to consummate the financing and other transactions necessary for acquisition or lease of three parcels of land, the McGarry property, the Sears-Citadel property, and Parcel M. FISCAL IMPACT: Approximately $5.6 million RECOMMENDATIONS: Approval is recommended SUGGESTED MOTION: I move that we adopt Resolution number (R) 96- 71 or I move that we do not adopt Resolution number (R) 96- 71 •'•n.tore of D artment Head 44 d, e Town Manger's Review TRUST AGREEMENT by and between NORWEST BANK ARIZONA, N.A. as Trustee and THE TOWN OF ORO VALLEY, ARIZONA as Buyer Dated as of September 1, 1996 TRUST AGREEMENT THIS TRUST AGREEMENT, made and entered into as of September 1, 1996 (the "Trust Agreement" or "Certificate Trust Agreement"), by and between NORWEST BANK ARIZONA, N.A., an 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 "Buyer"); WITNESSETH: WHEREAS, the Buyer desires to acquire three parcels of land and to construct public park improvements on one or more of the parcels to be acquired (the "Project") under a Purchase to be acquired (the "Project") pursuant to a Purchase Agreement, dated as of September 1, 1996 (the "Purchase Agreement") wherein the Trustee is the Seller and the Buyer is the buyer; and WHEREAS, the Buyer has pledged certain revenues (the "Excise Taxes") to the payment of amounts due under the Purchase Agreement; and WHEREAS, the Buyer and the Trustee will enter into this Trust Agreement to, among other things, facilitate the financing of the acquisition of the three parcels of land and construction of the public park improvements constituting the Project; and WHEREAS, for the purpose of obtaining money to be deposited with the Trustee to finance the acquisition and construction of the Project, the Trustee has agreed to execute and deliver Town of Oro Valley, Arizona Certificates of Participation, Series 1996 (the "Certificates" or the "1996 Certificates"), each evidencing a proportionate interest in the Purchase Agreement and the Payments (as defined herein) made by the Buyer under the Purchase Agreement, in exchange for the moneys required herein to be deposited to finance such acquisition and construction; and WHEREAS, the Buyer has previously pledged its Excise Taxes to the payment of the Buyer's Obligations, including lease payments, pursuant to the 1996 Lease which lease payments secure the debt service on Town of Oro Valley Municipal Property Corporation, Municipal Water System Acquisition Bonds, Series 1996 (the "Series 1996 Bonds"); and WHEREAS, while the obligations pursuant to the 1996 Lease enjoy a first lien on the Excise Taxes, the Buyer, upon satisfaction of certain conditions, may make additional pledges on a parity with the obligations of the 1996 Lease, and, pursuant to the Purchase Agreement, the pledge of the Excise Taxes for the payment of the Certificates will be on a parity with the pledge obligations of the 1996 Lease. NOW, THEREFORE, in consideration for the Certificates issued and Outstanding under this Trust Agreement, the acceptance by the Trustee of the trusts created herein and of the purchase and acceptance of the Certificates by the Owners, and to secure the payment of principal thereof and interest thereon, the rights of the Owners of the Certificates and the performance and the observance of the covenants and conditions contained in the Certificates, the Purchase FHR:pbd 149922.3 8/20/96 authorizing the issuance of the Certificates, and shall also include any later resolution authorizing the issuance of Additional Certificates. "Certificate of Completion" means the notice of completion, filed with the Trustee by the Buyer Representative, stating that the Project, or any phase thereof, has been substantially completed. "Certificate," "Certificates" or "1996 Certificates" means the $5,400,000 aggregate principal amount of Town of Oro Valley, Arizona Certificates of Participation, Series 1996. "Closing Date" means with respect to any series of Certificates the day when such Certificates, duly executed by the Trustee, are delivered to the original purchaser thereof. "Completion Date" means the date on which the final Certificate of Completion is filed with the Trustee by the Buyer Representative. "Contractor" means any contractor under a Construction Contract and any successor or assigns permitted. "Construction Contract" means, collectively, any contracts between Buyer, as agent of the Trustee, and a Contractor, for the acquisition, construction or installation of any construction phase of the Project. "Costs of Issuance Fund" means the fund of that name created pursuant to Article III hereof. "Debt Service" means, with respect to the Certificates and obligations payable from Excise Taxes on parity with the Certificates, as of any date of calculation and with respect to any period, the sum of (1) the interest due during such period (except to the extent that such interest is payable from proceeds of the Certificates or other amounts set aside for such purpose at the time such obligations are issued), and (2) the principal (or mandatory sinking fund or installment purchase price or lease rental or similar) payments or deposits required with respect to such Certificates during such period; such sum to be computed on the assumption that no portion of such Certificates shall cease to be Outstanding during such period except by reason of the application of such scheduled payments. "Defeasance Obligations" mean and are limited to: 1. Cash; 2. Non-callable Federal Securities; 3. CATS, TIGRS or STRPS; 4. Refcorp interest strips; 4 5. Municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: (a) the municipal obligations are not subject to redemption prior to maturity or (ii) the Trustee has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions; (b) the municipal obligations are secured by cash or Non-callable Federal Securities which may be applied only to payment of the principal of, interest and premium on such municipal obligations; (c) the principal of and interest on the Non-callable Federal Securities(plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations ("Verification"); (d) the cash or Non-callable Federal Securities serving as security for the municipal obligations are held by an escrow agent or trustee in trust for the owners of the municipal obligations; (e) no substitution of the Non-callable Federal Obligations shall be permitted except with another Government Obligation and upon delivery of a new verification and if a forward supply contract exists with respect to such municipal obligations, the Verification sets forth the matters required for forward supply contracts as required in Section 10.02 of this Trust Agreement; and (f) the cash or Government Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent. "Delivery Costs" means all items of expense directly or indirectly payable by or reimbursable to the Buyer or the Trustee relating to the execution, sale and delivery of the Purchase Agreement, this Trust Agreement, and the Certificates, including but not limited to filing and recording costs, settlement costs, printing costs, reproduction and binding costs, initial fees and charges of the Trustee, financing discounts, legal fees and charges, insurance fees and charges, financial and other professional consultant fees, costs of rating agencies for credit ratings, fees for execution, transportation and safekeeping of the Certificates and charges and fees in connection with the foregoing. "Depository Trustee" means any bank or trust company, including the Trustee, meeting the requirements of, and designated to act as, a Depository Trustee pursuant to Section 13.1 of this Agreement. "Event of Default" means any event of default under the Purchase Agreement, as defined in Section 12 thereof. 5 "Federal Securities" means direct obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury and CATS, TIGRS and STRPS) or obligations of which are unconditionally guaranteed by, the United States of America, or obligations that are backed by the full faith and credit of the United States of America. "Excise Taxes" means all fines and forfeitures, license and permit fees, transaction privilege (sales) taxes, other transaction privilege, excise and business taxes, franchise fees and taxes, bed and rental taxes and income taxes which the Town now collects or may collect in the future or which are allocated or apportioned to the Town by the State or governmental unit, except those taxes which by law must be expended for other purposes "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 Buyer, and the Excise Taxes shall be accounted for on that basis. "FNMA" means the Federal National Mortgage Association, a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act, or any successor thereto. "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 Buyer or the Trustee. "Insurance Policy" means any municipal bond insurance policy issued by an insurer guaranteeing payment of any Certificate. "Insurer" means for the 1996 Certificates - "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 Certificates. "19.96 Bonds" or "Series 1996 Bonds" means Town of Oro Valley Municipal Property Corporation Municipal Water System bonds, Series 1996 (Canada Hills and Rancho Vistoso Water Utilities Acquisition Project) dated April 1, 1996. "1996 Lease" means that certain Lease-Purchase Agreement entered into by and between the Town of Oro Valley and the Town of Oro Valley Municipal Property Corporation dated as of April 1, 1996, pertaining to the lease-purchase by Town of Oro Valley of the Canada Hills and Rancho Vistoso Water Utilities; the 1996 Lease enjoys a parity position with the 1996 Certificates with respect to the Buyer's pledge of Excise Taxes.. "Maximum Annual Debt Service Requirement" means at any computation date, the greatest Annual Debt Service Requirement for the then current or any succeeding Fiscal Year (whether by maturity, mandatory redemption or otherwise). With respect to any one or more 6 Certificates, Maximum Annual Debt Service means, at the time of computation, the greatest Annual Debt Service Requirement with respect to the applicable Certificate. "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 Buyer by notice to the Trustee. "Original Purchaser" means Peacock, Hislop, Staley & Given, Inc., as original purchaser of the Certificates and, as to Additional Certificates, the Person or Persons identified as the purchaser or purchasers in the applicable purchase agreement or purchase proposal. "Outstanding," when used as of any particular time with respect to Certificates, means (subject to the provisions of Section 9.3 hereof) all Certificates theretofore executed and delivered by the Trustee under this Trust Agreement except Certificates theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation. "Owner" or any similar term, when used with respect to a Certificate means the person in whose name such Certificate shall be registered. "Paying Agent" means, as to the 1996 Certificates, the Trustee, until a successor Paying Agent shall have become such pursuant to applicable provisions of this Trust Agreement and, as to any series of Additional Certificates, the bank, trust company or other person designated as a Paying Agent in accordance herewith. "Payments" mean all payments required to be paid by Buyer on any Payment Date pursuant to Section 2 of the Purchase Agreement and as set forth in Exhibit B to the Purchase Agreement. "Payment Date" means any date on which a Payment is due from Buyer as designated on Exhibit C to the Purchase Agreement. "Payment Fund" means the fund by that name established and held by Trustee pursuant to Article V hereof. "Payment Request Form" means the form set forth in Exhibit C which is attached hereto and made a part hereof. "Permitted Investments" means: 1. Federal Securities. 7 2. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (a) U.S. Export-Import Bank, Direct obligations or fully guaranteed certificates of beneficial ownership (b) Rural Development(formerly known as Farmers Home Administration), Certificates of beneficial ownership (c) Federal Financing Bank (d) Federal Housing Administration Debentures (e) General Services Administration, Participation certificates (f) Government National Mortgage Association ("GNMA") GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations (g) U.S. Maritime Administration, Guaranteed Title XI financing (h) U.S. Department of Housing and Urban Development, Project Notes, Local Authority Bonds, New Communities Debentures-U.S. Government guaranteed debentures and U.S. Public Housing Notes and Bonds U.S. government guaranteed public housing notes and bonds 3. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following United States government agencies (non-full faith and credit agencies): (a) Federal Home Loan Bank System, Senior debt obligations (b) Federal Home Loan Mortgage Corporation ( 'FHLMC") Participation Certificates and Senior debt obligations (c) Federal National Mortgage Association ("FNMA"), Mortgage-backed securities and senior debt obligations (excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal) (d) Student Loan Marketing Association, Senior debt obligations (e) Resolution Funding Corporation, obligations (f) Farm Credit System, Consolidated statewide bonds and notes 8 4. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of -G; AAAm; or AAm and if rated by Moody's of AAA, Aal or Aa2. 5. Certificates of deposit secured at all times by collateral described in 1 and/or 2 above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks whose short term obligations are rated A-1 or better by S&P and P-i by Moody's. The collateral must be held by a third party and the Certificate Owners must have a perfected first security interest in the collateral. 6. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF. 7. Commercial paper rated, at the time of purchase, "Prime-i" by Moody's and "A-1" or better by S&P. 8. Bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies. 9. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime-1" or "A3" or better by Moody's and "A-1" or "A" or better by S&P. 10. Repurchase agreements that provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee a (buyer/lender), and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus interest at a yield to the Trustee in exchange for the securities at a specified date. Repurchase Agreements must satisfy the following criteria: 1. Repurchase Agreements must be between the Trustee and a dealer bank or securities firm. (a) Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by S&P and Moody's, or (b) Banks rated "A" or above by S&P and Moody's. 2. The written Repurchase Agreement must include the following: (a) Securities which are acceptable for transfer are: (1) Direct United States Obligations, or 9 (2) Federal agencies backed by the full faith and credit of the U.S. Government (and FNMA and FHLMC) (b) The term of the Repurchase Agreement may be up to 30 days. (c) The collateral must be delivered to the Trustee (if trustee is not supplying the collateral) or third party acting as agent for the Trustee (if the Trustee is supplying the collateral) before/simultaneously with payment (perfection must be achieved by possession of certificated securities). (d) The Trustee has a perfected first priority security interest in the collateral. (e) Collateral is free and clear of third-party liens and in the case of a SIPC broker was not acquired pursuant to a Repurchase Agreement or reverse Repurchase Agreement. (f) Failure to maintain the requisite collateral percentage will require the Trustee to liquidate collateral. (g) Valuation of Collateral: (1) The securities must be valued weekly, marked-to-market at current market price plus accrued interest (2) The value of collateral must be equal to 104% of the amount of cash transferred by the Trustee to the dealer bank or security firm under the Repurchase Agreement plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by the Trustee, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of the collateral must equal 105% (h) The Trustee receives a legal opinion from an Independent Counsel that the Repurchase Agreement is a legal investment of public monies under the laws of the State. 3. Investments with the State Treasurer in the pooled investment fund (LPIG=GOV only) for the collective investment of public funds in the State authorized to be created by Title 35, Chapter 2, Article 2, Section 35-326, Arizona Revised Statutes, as amended; provided, however, that the same shall only be made after the Trustee has received all proceedings and proofs necessary in the opinion of the Trustee to make such investment in conformance with the other requirements of this Indenture. 4. Investment Agreements, including GIC's, issued by entities rated A or better by S&P and Moody's and otherwise acceptable to the Insurer and Moody's. "Personal Property" means the personal property described in Exhibit A attached to the Purchase Agreement, together with any amendment thereto executed by the Buyer 10 Representative. "Project" means the three parcels of land to be acquired and the public park improvements to be constructed pursuant to the Purchase Agreement. "Project Costs" mean, with respect to the Project, all cost of acquiring the three parcels of land and all architectural, environmental, engineering, soils, survey, archaeology, demolition, construction management fees, development fees, contingencies and other related costs of acquiring and constructing the Project and all costs payable to a Contractor under a Construction Contract, or incurred by Trustee or Buyer with respect to the transaction to which this Trust Agreement pertains. "Purchase Agreement" means the Purchase Agreement, dated as of September 1, 1996, by and between the Buyer and the Trustee as Seller, together with any duly authorized and executed amendment thereto. "Qualified Surety Insurer" means the issuer of a Qualified Surety Obligation which, if a letter of credit or line of credit, must be issued by a bank rated at least "AA" by S&P or "Aa" by Moody's and, if an insurance policy or surety bond, such policy or bond must be issued by an insurance company rated in the highest rating category by S&P and Moody's and by A.M. Best & Co. (if so rated). "Qualified Surety Obligation" means a letter of credit or line of credit, insurance policy or surety bond issued by a Qualified Surety Insurer; if such Qualified Surety Obligation will not adversely affect the then-current rating on the Certificates if the Certificates are then rated by Moody's or S&P. "Reserve Fund" means the Reserve Fund established pursuant to Section 3.6 hereof. "Reserve Requirement" means as to the Series 1996 Certificates, $ and as to any Additional Certificates, it means the lesser of the Maximum Annual Debt Service Requirement, (i) 125% of the average Annual Debt Service Requirement pertaining only to such additional obligations or (ii) 10% of the stated principle amount of such Additional Obligations. The Reserve Requirement may be satisfied by cash, a Qualified Surety Obligation, or combination thereof. "Record Date" means the close of business of the Trustee on the fifteenth day of the month preceding an Interest Payment Date. "Reimbursement Request Form" means the form set forth in Exhibit D hereof. "S&P" means Standard & Poor's Corporation, a corporation organized and existing under the laws of the State of New York, 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, "S&P" shall be deemed to refer to any other nationally recognized 11 securities rating agency designated by the Buyer by notice to the Trustee. "Seller" means the Trustee in its trust capacity as Seller under the Purchase Agreement. "State" means the State of Arizona. "Supplemental Trust Agreement" means any trust agreement supplemental to this Trust Agreement entered into between the Buyer and the Trustee in accordance with Article IX hereof. "Term of the Purchase Agreement" means the time during which the Purchase Agreement is in effect, as provided in Section 1 of the Purchase Agreement. "Town" shall have the same meaning as Buyer. "Trust Agreement" or "Agreement" means this Trust Agreement, together with any amendments or supplements hereto permitted to be made hereunder. "Trustee" means , or any successor thereto acting as Trustee pursuant to this Trust Agreement and in its capacity as Seller under the Purchase Agree- ment. "United States Obligations" means any bonds or other obligations which 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). "Value at Market" or "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. "Vendor" means any supplier of items for inclusion in the Project who is to be paid from amounts held in the Acquisition Fund. 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. 12 ARTICLE II CERTIFICATES Section 2.1. Authorization of the 1996 Certificates. The Trustee is hereby authorized and directed to execute and deliver to the Original Purchaser the Certificates in an aggregate principal amount of not to exceed $5,600,000 evidencing proportionate ownership interests in the Purchase Agreement and all Payments to be made thereunder. The Buyer may issue, sell and deliver one or more series of Additional Certificates for the purposes, upon satisfaction of the conditions, and in the manner provided in the Purchase Agreement and herein. Section 2.2. Date. Each Certificate shall be dated September 1, 1996, 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 Certificates. Section 2.3. Maturities and Interest Rates. The Certificates shall be in the denomination of $5,000 of principal amount or any integral multiple thereof, except that no Certificate may have principal maturing in more than one year. The Certificates shall mature on the dates and in the principal amounts, and interest with respect thereto shall be computed at the rates, as shown below: Principal Interest Maturity Dates Amounts Rates Section 2.4. Interest on Certificates. The Certificates shall be in fully registered certificated form. Interest on the Certificates shall be payable semiannually on July 1 and January 1 of each year commencing January 1, 1997, to and including the date of maturity. Said interest shall represent the portion of Payments designated as interest and coming due during the six- month period preceding each Interest Payment Date with respect to the Certificates. The proportionate share of the portion of Payments designated as interest with respect to any Certificate shall be computed by multiplying the portion of Payments designated as principal with respect to such Certificate by the rate of interest applicable to such Certificate (on the basis of a 360-day year of twelve 30-day months). Section 2.5. Form of Certificates. The fully registered form of the Certificates and the assignment to appear thereon shall be substantially in the form set forth in Exhibit A, attached hereto and incorporated herein. 13 Section 2.6. Execution. The Certificates shall be executed by and in the name of the Trustee by the manual signature of an authorized representative of the Trustee. If any officer whose signature appears on any Certificate ceases to be such officer before the Closing Date, such signature shall nevertheless be as effective as if the officer had remained in office until the Closing Date. Any Certificate may be executed on behalf of the Trustee by such person as at the actual date of the execution of such Certificate shall be the proper officer of the Trustee although at the nominal date of such Certificate such person shall not have been such officer of the Trustee. Section 2.7. Application of Proceeds. The proceeds received by the Trustee from the sale of the 1996 Certificates shall forthwith be set aside by the Trustee in the following respective funds and accounts and in the following order of priority: (a) All accrued interest received from the Original Purchaser in the amount of $ shall be deposited to the Payment Fund; (b) $ shall be deposited to the Costs of Issuance Fund; and (c) Not to exceed $560,000 shall be deposited to the Reserve Fund. (d) The remainder of the proceeds in the amount of $ shall be deposited to the Acquisition Fund. To the sum of to purchase parcel No. 1 as shown on Exhibit "E" attached hereto. To the sum of to purchase parcel No. 2 as shown on Exhibit "E" attached hereto. To the sum of to purchase parcel No. 3 as shown on Exhibit "E" attached hereto. Section 2.8. Book Entry System; Termination. The Certificates and the assignment to appear thereon shall be substantially in the form set forth in Exhibit A, attached hereto and incorporated herein. The Certificates shall be initially issued as Book-Entry Certificates. The terms appearing in Exhibit _ may be varied as necessary to cause any Certificate to conform to this Trust Agreement. The Book-Entry Certificates shall be registered so as to participate in a global book-entry system with the Depository Trust Company (the "Depository"). The Book-Entry Certificates shall be initially issued in the form of a single fully registered Bond for each maturity. Upon initial issuance, the ownership of each such Book-Entry Certificate shall be registered in the Certificate register in the name of Cede & Co., or any successor thereto, as nominee of the Depository. The Trustee is authorized to execute and deliver the Representation Letter in substantially the form attached hereto as Exhibit D. With respect to Book-Entry Certificates registered in the Certificate register in the name of Cede & Co., the Trustee shall 14 have no responsibility or obligation to Direct or Indirect Participants of the Depository or beneficial owners for which the Depository holds Book-Entry Certificates from time to time. Without limiting the immediately preceding sentence, the Seller, the Buyer and the Trustee shall have no responsibility or obligation with respect to (a) the accuracy of the records of the Depository, Cede & Co., or any Direct or Indirect Participant thereof or any beneficial owner of a Certificate with respect to the ownership interest in the Book-Entry Certificates, (b) the delivery to any direct or indirect participant or any other person, other than a registered Owner of a Book-Entry Certificate as shown in the Certificate register, of any notice with respect to the Book-Entry Certificate, including any notice of redemption or (c) the payment to any Direct or Indirect Participant or any other person, other than a registered Owner of a Book-Entry Certificate as shown in the Certificate register, of any amount with respect to principal of, premium, if any, or interest on, the Book-Entry Certificates. No person other than a registered Owner of a Book-Entry Certificate as shown in the Certificate register shall receive a certificate evidencing such Book-Entry Certificates. Upon delivery by the Depository to the Trustee of written notice to the effect that the Depository has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions hereof with respect to the payment of interest by the mailing of checks or drafts to the registered Owners of Book-Entry Certificates appearing as registered Owners in the registration books maintained by the Trustee at the close of business on a Record Date, the name "Cede & Co." in this Indenture shall refer to such new nominee of the Depository. In the event that (a) the Buyer determines that the Depository is incapable of discharging its responsibilities described herein and in the Representation Letter or (b) the agreement among the Lessee, the Trustee and the Depository evidenced by the Representation Letter shall be terminated for any reason, the Buyer shall notify the Depository of the unavailability through the Depository of Book-Entry Certificates and the Book-Entry Certificates shall no longer be restricted to being registered in the Certificate register in the name of Cede & Co. (or a successor nominee), as nominee of the Depository Trust Company. At that time, the Issuer may determine that the Book-Entry Certificates shall be registered in the name of and deposited with a successor depository operating a global book-entry system, as may be acceptable to the Lessee, or such depository's agent or designee but, if the Lessee does not select such alternate global book-entry system, then the Book-Entry Certificates may be registered in whatever name or names the registered Owners of Book-Entry Certificates transferring Book-Entry Certificates shall designate, in accordance with the provisions hereof. Notwithstanding any other provision of this Indenture to the contrary, so long as any Book-Entry Certificate is registered in the name of Cede & Co., as nominee of the Depository, all payments with respect to principal of, premium, if any, and interest on any Book-Entry Certificate and all notices with respect to such Book-Entry Certificate shall be made and given, respectively, in the manner provided in the Representation Letter. (a) Transfer of Certificates. If a Book-Entry only system is not in effect for the 1996 Certificates, any Certificate may, in accordance with its terms, be transferred upon the books required to be kept pursuant to the provisions of Section 2.12 hereof by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Certificate for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Certificate or Certificates shall 15 be surrendered for transfer, the Trustee shall execute and deliver a new Certificate or Certificates in fully registered form of the same series, maturity and interest rate and for a like aggregate principal amount. (b) Exchange of Certificates. If a Book-Entry only system is not in effect for the 1996 Certificates, Certificates may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Certificates of authorized denominations of the same series, maturity and interest rate. (c) Transfer Costs. In connection with any such exchange or transfer of Cert- ificates, the Owner requesting such exchange or transfer 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 Buyer, or any fee or expense of the Trustee or the Buyer with respect to such exchange or transfer. Section 2.9. Certificates Mutilated, Lost, Destroyed or Stolen. If any Certificate shall become mutilated, the Trustee, at the expense of the Owner of said Certificate, shall execute and deliver a new Certificate of like tenor, series, maturity and amount in exchange and substitution for the Certificate so mutilated, but only upon surrender to the Trustee of the Certificate so mutilated. Any mutilated Certificate so surrendered to the Trustee shall be cancelled by it and redelivered to, or upon the order of, the Certificate Owner. If any Certificate 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 Certificate Owner, shall execute and deliver a new Certificate of like tenor, series, maturity and amount and numbered as the Trustee shall determine in lieu of and in substitution for the Certificate so lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each new Certificate delivered under this Section 2.9 and of the expenses which may be incurred by the Trustee in carrying out the duties under this Section 2.9. Any Certificate issued under the provisions of this Section 2.9 in lieu of any Certificate alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Agreement with all other Certificates secured by this Agreement. The Trustee shall not be required to treat both the original Certificate and any replacement Certificate as being Outstanding for the purpose of determining the principal amount of Certificates which may be executed and delivered hereunder or for the purpose of determining any percentage of Certificates Outstanding hereunder, but both the original and replacement Certificate shall be treated as one and the same. Notwithstanding any other provision of this Section 2.9, in lieu of delivering a new Certificate for a Certificate which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Certificate upon receipt of the aforementioned indemnity. Section 2.10. Payment. Payment of interest due with respect to any Certificate 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 by first class mail to such Owner at his address as it appears on such registration books; provided, however, that interest payable to the 16 Depository or to any Owner of$1,000,000 or more in principal amount of Certificates shall be paid by wire transfer in immediately available funds to an account in the continental United States if the Owner makes a written request of the Trustee at least two (2) days before the Interest Payment Date specifying the account address. The notice may provide that it shall remain in effect for subsequent interest payments until otherwise requested in a subsequent written notice. The principal with respect to the Certificates shall be payable in lawful money of the United States of America upon surrender when due at the principal corporate trust office of the Trustee. So long as the book entry system is in effect all Payments on the Certificates will be made directly to the Depository in "same day" funds. Section 2.11. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Agreement to be signed or executed by Certificate 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 Certificates. Proof of the execution of any such instrument, or of any instrument appointing any such attorney or agent, and of the ownership of Certificates shall be sufficient for any purpose of this 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 Certificates by any person and the amount, the maturity and the numbers of such Certificates and the date of his or her holding the same may be proved on the registration books maintained pursuant to Section 2.12 hereof. Nothing contained in this Article II shall 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 certificate shall bind every future Owner of the same Certificate in respect of anything done or suffered to be done by the Trustee in pursuance of such request or consent. Section 2.12. Certificate Register. The Trustee will keep or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Certificates which shall at all times during regular business hours be open to inspection by the Buyer and, upon presentation for such purpose, the Trustee shall, under such reasonable regula- tions as it may prescribe, register or transfer or cause to be registered or transferred, on said books, Certificates as hereinbefore provided. 17 Section 2.13. Payment of Unclaimed Amounts. In the event any check for payment of interest on a Certificate is returned to the Trustee unendorsed or is not presented for payment within two (2) years from its payment date or any certificate is not presented for payment of principal at the maturity date, if funds sufficient to pay such interest or principal due upon such Certificate 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 Certificate who shall thereafter be restricted exclusively to such funds for any claim of whatever nature relating to such Certificate or amounts due thereunder. The Trustee's obligation to hold such funds shall continue for two years and six months following the date on which such interest or principal payment became due, whether at maturity, or otherwise, at which time the Trustee shall surrender such unclaimed funds so held to the Buyer, whereupon any claim of whatever nature by the Owner of such Certificate arising under such Certificate shall be made upon the Buyer. 18 ARTICLE III APPLICATION OF PROCEEDS RECEIVED BY TRUSTEE; ACQUISITION FUND; RESERVE FUND Section 3.1. Acquisition Fund. The Trustee shall establish a special trust fund designated as the "Town of Oro Valley 1996 Certificate Acquisition Fund" (hereinafter referred to as the "Acquisition Fund"); shall keep such Fund separate and apart from all other funds and moneys held by it; and shall administer such Fund as provided in this Agreement. Section 3.2. Purpose. Except as provided in Section 3.4, moneys in the Acquisition Fund shall be expended only for Project Costs. Section 3.3. Payment of Project Costs. (a) Specific instructions as to payment for the three parcels of land will be inserted as subparagraph a. (b) The remaining amount in the Acquisition Fund will be applied to the payment of the Project Costs with respect to construction of public park improvements , as hereinafter provided, upon receipt of a duly executed Payment Request Form in substantially the form attached hereto as Exhibit C, certified to by the Buyer 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 (3) Business Days following submission of such Payment Request Form. Notwithstanding the foregoing, the Trustee shall apply moneys on deposit in the Acquisition Fund to reimburse the Buyer for any Project Costs incurred or advanced by the Buyer within three (3) Business Days of receipt of a duly executed Reimburse- ment Request Form in substantially the form attached hereto as Exhibit D duly certified by the Buyer Representative. (c) Project Costs with respect to construction of public parks improvements will be paid directly to the Contractor, the Vendor or the payee named in the Payment Request Form unless the Contractor, the Vendor or the Buyer Representative request payment to be made to the Contractor, the Vendor or payee and another party jointly, in which case such cost shall be paid jointly. (d) Should any shortfall or deficiency occur in either the Costs of Issuance Fund or the Acquisition Fund, the Buyer shall pay such amounts to the Trustee. (e) Pursuant to the Purchase Agreement and subject to the terms and conditions thereof, the Buyer has irrevocably been appointed by the Trustee as its sole and exclusive agent to act for and on behalf of the Trustee in the construction of the Project. (f) Amounts in the Acquisition Fund shall be used to pay principal and interest on the Certificates if insufficient funds are otherwise available to make such payments when due. 19 Section 3.4. Transfers Upon Completion. On the final acquisition of parcels 2 and 3 as shown on Exhibit A to the Purchase Agreement and upon full payment for parcel 1 and after the Completion Date for construction of the public park improvements, all remaining moneys (hereinafter referred to as "Excess Proceeds") in the Acquisition Fund shall be transferred to the Payment Fund and applied by the Trustee to the Payments due from the Buyer on the next succeeding Payment Date. Section 3.5. Establishment and Application of Costs of Issuance Fund. (a) The Trustee shall establish a special trust fund designated as the "Town of Oro Valley Costs of Issuance Fund" (hereinafter referred to as the "Costs of Issuance Fund"), shall keep such Fund separate and apart from all other funds and moneys held by it, and shall administer such Fund as provided in this Article III. (b) Amounts in the Costs of Issuance Fund shall be disbursed for Delivery Costs. Disbursements from the Costs of Issuance Fund shall be made by the Trustee upon receipt of a certificate requesting disbursement executed or approved by the Buyer Representa- tive. Each such certificate shall set forth the amounts to be disbursed for payment, or reimbursement of previous payments, of Delivery Costs and the person or persons to whom said amounts are to be disbursed. (c) Should amounts in the Costs of Issuance Fund be insufficient to pay all Delivery Costs the Buyer shall assume and pay all Delivery Costs which cannot be paid from the Costs of Issuance Fund, the Trustee shall make demand upon the Buyer in the event of such deficiency and the Buyer shall pay to Trustee the amounts necessary to permit the Trustee to pay all Delivery Costs. (d) On the earlier of 1, 1997, or when all Delivery Costs associated with the Certificates have been paid (as shown by a certificate of a Buyer Representative, if requested by the Trustee), the Trustee shall transfer any amounts remaining in the Costs of Issuance Fund to the Payment Fund or the Acquisition Fund as directed by the Buyer, and the Costs of Issuance Fund shall be closed. Section 3.6. Application of Acquisition Fund Investment Earnings. Subject to Section 7.7 pertaining to arbitrage rebate, the Trustee shall transfer, on or before each Payment Date, any investment earnings on the moneys on hand in the Acquisition Fund to the Payment Fund to be applied and credited to pay Payments due pursuant to the Purchase Agree- ment. Section 3.7. Payments by the Buyer. Subject to the limitation to Excise Taxes, the Buyer shall be required to make Payments as shown on Exhibit B to the Purchase 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 ten (10) Business Days prior to each Payment Date, shall notify the Buyer 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. 20 Section 3.8. Investment of Funds. At the Buyer's direction, all of the money and any funds shall be invested and reinvested in Permitted Investments. Permitted Investments attributable to monies in the reserve fund shall not have maturities extending beyond five (5) years. Section 3.9. Obligation With Respect to Rebate. The Buyer has agreed pursuant to the Certificate Purchase Agreement to provide for annual amounts due pursuant to Section 148 of the Internal Revenue Service Code as required rebates. 21 ARTICLE IV REDEMPTION OF CERTIFICATES Section 4.1. Optional Prepayment. (a) Certificates maturing on or before July 1, are not subject to optional prepayment prior to their respective specified maturity dates. Certificates maturing on and after January 1, are subject to optional prepayment prior to their respective specified maturity dates on July 1, , and on any January 1 or July 1 thereafter, in whole or in part, from such maturities as may be designated by the Buyer, and by lot within any maturity as may be selected by the Trustee, at a prepayment price equal to the principal amount thereof plus interest accrued to the date of prepayment plus a premium expressed as a percentage of the principal amount of the Certificates so called for prepayment prior to maturity as follows: Prepayment Prepayment Dates Premium July 1, and January 1, July 1, and January 1, Thereafter Section 4.2. Mandatory Prepa The Certificates maturing on July 1, 2012, are subject to mandatory prepayment prior to maturity at a prepayment price equal to the principal amount thereof plus accrued interest to the date of prepayment but without premium on the following dates and in the following principal amounts: Prepayment Principal Amount Dates to be Prepaid July 1, July 1, July 1, July 1, July 1, (final maturity) Certificate to be prepaid will be selected by lot by the Trustee from among the Certificates maturing on July 1, 2012. The Certificates maturing on July 1, 2017, are subject to mandatory prepayment prior to maturity at a prepayment price equal to the principal amount thereof plus accrued interest to the date of prepayment but without premium on the following dates and in the following principal amounts: 22 Prepayment Principal Amount Dates to be Prepaid July 1, July 1, July 1, July 1, July 1, (final maturity) Certificate to be prepaid will be selected by lot by the Trustee from among the Certificates maturing on July 1, 2017. Section 4.3. Notice of Redemption. (a) The notice of redemption of Certificates, shall identify (i) by designation, letters, numbers or other distinguishing marks, the Certificates or portions thereof to be redeemed, (ii) the redemption price to be paid, (iii) the date fixed for redemption, and (iv) the place or places where the amounts due upon redemption are payable. The notice shall be given by the Trustee on behalf of the Buyer by mailing a copy of the redemption notice by first class mail, postage prepaid, not more than sixty (60) nor less than thirty (30) days prior to the date fixed for redemption, to the Owner of each Certificate subject to redemption in whole or in part at the address of the Owner shown on the Books maintained by the Registrar on the fifteenth (15th) day preceding that mailing; provided, that failure to receive notice by mailing, or any defect in that notice, as to any Certificate shall not affect the validity of the proceedings for the redemption of any Certificate; and fuarther provided, however, that so long as the Certificates are held in book entry form, such notices will be sent solely to the Depository. (b) Notices of redemption shall also be sent pursuant to this Section for receipt no later than the close of business on the second Business Day prior to the mailing of such notice by (1) registered or certified mail, (2) overnight delivery service or (3) facsimile transmission, to the following registered securities depositories registered with the Securities and Exchange Commission known to the Trustee to be then in the business of holding substantial amounts of obligations of types such as the Bonds, including: Midwest Securities Trust Company Capital Structured-Call Notification 440 South LaSalle Street Chicago, Illinois 60605 Facsimile: (312) 663-2343 The Depository Trust Company 711 Stewart Avenue Garden City, New York 11530 Facsimile: (516) 227-4039 (516) 227-4190 23 Philadelphia Depository Trust Company Reorganization Division 1900 Market Street Philadelphia, Pennsylvania 19103 Facsimile: (215) 496-5058 Arizona Department of Revenue 1600 W. Monroe Street Phoenix, Arizona 85007 Attn: Econometrics Section (c) Notices of redemption shall further also be sent on the date of the mailing of the notice pursuant to this Section by (1) registered or certified mail, (2) overnight delivery service, or (3) facsimile transmission to two of the following services: Moody's Municipal and Government 99 Church Street, 8th Floor New York, New York 10007 Attention: Municipal News Reports Standard & Poor's Called Bond Record 25 Broadway, 3rd Floor New York, New York 10004 Financial Information, Inc.'s Financial Daily Called Bond Service 30 Montgomery Street, 10th Floor Jersey City, New Jersey 07302 Attention: Editor Kenney Information Service's Called Bond Service 55 Bond Street, 28th Floor New York, New York 10004 (d) Neither the failure to mail any notice required by Subsection (b) or (c) hereof, nor any defect in any notice so mailed, shall affect the sufficiency of such notice or the redemption otherwise effected by such notice. Section 4.4. Payment of Redeemed Certificates. (a) If notice is mailed as provided in Section 4.05 hereof, the Certificates and portions thereof to be redeemed shall become due and 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. 24 (b) If moneys for the redemption of all of the Certificates and portions thereof to be redeemed, together with interest accrued thereon to the redemption date, are held by the 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 Certificates 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, those Certificates 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 or a Paying Agent for the redemption of particular Certificates 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 Certificates. Section 4.5. Variation of Redemption Provisions. The provisions of this Article IV, insofar as they apply to issuance of any series of Additional Certificates, may be varied by the Supplemental Trust Agreement providing for that series. Section 4.6. Purchase of Certificates. Notwithstanding the foregoing, if at any time there is money in the Payment Fund and any of the outstanding Certificates payable from such Payment Fund may be purchased in the open market at a net cost to the Buyer which would be less than the cost of redeeming such Certificates under the provisions of this Article (or, prior to the time such Certificates may be redeemed, at a price equal to or below par), the Buyer, from time to time, at the request of the Buyer, may cause the Trustee to purchase so many of such Certificates as the Buyer shall designate and to pay therefor from the Payment Fund, to the extent of the funds in such Fund. The Certificates so purchased shall be cancelled by the Trustee. 25 ARTICLE V PAYMENTS; PAYMENT FUND Section 5.1. Trustee's Rights in Purchase Agreement. The Trustee, as Seller under the Purchase Agreement, holds in trust hereunder all of its rights and duties in the Purchase Agreement, including but not limited to all of the Seller's rights to receive and collect all of the Payments and all other amounts required to be deposited in the Payment Fund pursuant to the Purchase Agreement or pursuant hereto. All Payments and such other amounts to which the Seller 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 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 Certificates. So long as any Certificates are Outstanding, the Buyer shall have no beneficial right or interest in the Payment Fund or the moneys deposited therein, except only as provided in this Agreement, and such moneys shall be used and applied by the Trustee as hereinafter set forth. Section 5.3. Deposits. There shall be deposited in the Payment Fund all 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 with respect to the Certificates 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, on or before each Interest Payment Date, transfer any 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 and Accounts created hereunder, after payment of all Certificates, including accrued interest, and payment of any applicable fees, expenses or indemnities to the Trustee, or provision for such payment having been made to the satisfaction of the Trustee, shall be withdrawn by the Trustee and remitted to the Buyer. Section 5.7. Reserve Fund. (a) The Trustee shall create a separate and special fund to be known as the Town of Oro Valley Certificates of Participation, Series 1996, Reserve Fund ("the Reserve Fund"). (b) All moneys at any time on deposit in the Reserve Fund shall be held by 26 the Trustee in trust for the benefit of the Owners, and applied solely as provided herein. Initially, there shall be deposited in the Reserve Fund at the time and in the amounts set forth in Section 2.7 hereof; provided, however, the Reserve Requirement for the 1996 Certificates shall not exceed $560,000 and, thereafter, any moneys received by the Trustee for deposit therein pursuant to the Purchase Agreement shall also be deposited to the Reserve Fund. Moneys in the Reserve Fund shall be held in trust as a reserve for the payment when due of all the Payments to be paid pursuant to the Purchase Agreement. If on any December 31 or June 30 the moneys available in the Payment Fund are less than the amount of the Debt Service then due and payable with respect to the Outstanding Certificates, the Trustee shall apply the moneys available in the Reserve Fund in an amount needed to make up the deficiency by transferring from the Reserve Fund to the Payment Fund the amount necessary for this purpose. In the case of a Qualified Surety Obligation, the Trustee shall calculate the amount of moneys available in the Payment Fund at such time as to allow the Trustee to deliver a demand for payment to the issuer of the Qualified Surety Obligation not less than three (3) business days prior to the date on which the funds are required. Upon receipt of any delinquent Payment with respect to which moneys have been advanced from the Reserve Fund, such Payment shall be deposited in the Reserve Fund to the extent necessary to equal the Reserve Requirement. Transfers from the Reserve Fund to the Payment Fund shall not result in a credit or reduction of Buyer's obligation to pay Payments. (c) If the Reserve Fund and the Payment Fund (excluding amounts required to pay the Certificates not then presented) are sufficient to pay all Outstanding Certificates, the Trustee shall, upon the written direction of the Buyer Representative, transfer all amounts then on deposit in the Reserve Fund to the Payment Fund and shall thereafter pay the Certificates. Any amounts remaining in the Reserve Fund upon payment in full of all Outstanding Certificates, or upon provision for such payment as provided in Section 13.1 hereof, shall be withdrawn by the Trustee and returned to the Buyer. (d) The Reserve Fund shall be valued at the following times ("Reserve Fund Valuation Dates"): (i) as of the initial issuance of Certificates; (ii) each December 1 and June 1; and (iii) immediately after a Reserve Fund draw down occurs which transfers moneys or investments to the Payment Fund to cover an insufficiency therein. If the Reserve Fund Value is less than the Reserve Requirement after any valuation, the Trustee shall promptly notify the Buyer of the amount of any deficiency from the Reserve Requirement and request that Buyer pay such deficiency on the next payment date. (e) The Buyer may present a Qualified Surety Obligation in exchange for the moneys and investments then on deposit in the Reserve Fund. The Qualified Surety Obligation shall be issued by an issuer meeting the requirements of the Insurer. The Buyer agrees to comply with the terms and provisions of the agreement pertaining to the issuance and reimbursement of the Qualified Surety Obligation. (0 If on any Reserve Fund Valuation Date the Reserve Fund exceeds the Reserve Requirement and if the Buyer is not then in default under the Purchase Agreement, the Trustee shall withdraw the amount of any such excess from such fund and shall deposit such 27 amount in the Reserve Fund. Except for such withdrawals, all money in the Reserve Fund shall be used and withdrawn solely for the purpose of paying the interest on or principal of the 1996 Certificates in the event that no other money of the Buyer is available therefor, or for the retirement of all the 1996 Certificates. Section 5.8. Payment Pursuant to Insurance Policy. As long as an Insurance Policy shall be in full force and effect with respect to a Certificate, the Buyer and the Trustee agree to comply with the following provisions: (a) If, on the third day preceding any Interest Payment Date there is not on deposit with the Trustee sufficient moneys available to pay all principal of and interest on the Certificates due on such Interest Payment Date, the Trustee shall immediately notify the Insurer and State Street Bank and Trust Company or its successor as its Fiscal Agent (the "Fiscal Agent") of the amount of such deficiency. If, by said Interest Payment Date, the Buyer has not provided the amount of such deficiency, the Trustee shall simultaneously make available to the Insurer and to the Fiscal Agent the registration books for the Certificate maintained by the Trustee. In addition: (1) The Trustee shall provide the Insurer with a list of the Owners entitled to receive principal or interest payments from the Insurer under the terms of the Insurance Policy and shall make arrangements for the Insurer and its Fiscal Agent (A) to mail checks or drafts to Owners entitled to receive full or partial interest payments from the Insurer and (B) to pay principal of the Certificate surrendered to the Fiscal Agent by the Owners entitled to receive full or partial principal payments from the Insurer; and (2) The Trustee shall, at the time it makes the registration books available to the Insurer pursuant to (i) above, notify Owners entitled to receive the payment of principal of or interest on the Certificate from the Insurer (A) as to the fact of such entitlement, (B) that the Insurer will remit to them all or part of the interest payments coming due subject to the terms of the Insurance Policy, (C) that, except as provided in paragraph (b) below, in the event that any Owner is entitled to receive full payment of principal from the Insurer, such Owner must tender his Certificate with the instrument of transfer in the form provided on the Certificate executed in the name of the Insurer, and (D) that, except as provided in paragraph (b) below, in the event that such Owner is entitled to receive partial payment of principal from the Insurer, such Owner must tender his Certificate for payment first to the Trustee, which shall note on such Certificate the portion of principal paid by the Trustee, and then, with an acceptable form of assignment executed in the name of the Insurer, to the Fiscal Agent, which will then pay the unpaid portion of principal to the Owner subject to the terms of the Insurance Policy. (b) In the event that the Trustee has notice that any payment of principal of or interest on a Certificate has been recovered from an Owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee shall, at the time it provides notice to the Insurer, notify all Owners that in the event that any Owners' payment is so recovered, such Owner will be entitled to payment from the Insurer to the extent of such recovery, and the 28 Trustee shall furnish to the Insurer its records evidencing the payments of principal of such interest on the Certificate which have been made by the Trustee and subsequently recovered from Owners, and the dates on which such payments were made. (c) The Insurer shall, to the extent it makes payment of principal of or interest on the Certificates, become subrogated to the rights of the recipients of such payments in accordance with terms of the Insurance Policy and, to evidence such subrogation, (1) in the case of subrogation as to claims for past due interest, the Trustee shall note the Insurer's rights as subrogee on the registration books maintained by the Trustee upon receipt from the insurer of proof of the payment of interest thereon to the Owners of such Certificates and (2) in the case of subrogation as to claims for past due principal, the Trustee shall note the Insurer's rights as subrogee on the registration books for the Certificates maintained by the Trustee upon receipt of proof of the payment of principal thereof to the Owners of such Certificate. Notwithstanding anything in this Trust Agreement or the Certificates to the contrary, the Trustee shall make payment of such past due interest and past due principal directly the Insurer to the extent the Insurer is a subrogee with respect thereto. 29 ARTICLE VI PLEDGE AND LIEN Section 6.1. Pledge,. Payments and all other amounts due under the Purchase 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 Buyer pursuant to the Purchase Agreement for the prompt and punctual payment of amounts due under the Purchase Agreement according to its terms, and to create and maintain the funds as hereinafter specified therein and herein. None of the Certificates 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 Certif- icates in series, or the delivery of any of the Certificates prior to the delivery of any other of the Certificates of said series, or regardless of the time or times the Certificates mature. All of the Certificates 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. Section 6.2. Protection of Lien. The Trustee and the Buyer 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 Buyer agree that no obligations the payment of which is secured by a superior or equal claim on or interest in property or Excise Taxes or other moneys pledged hereunder will be incurred, issued or delivered except obligations issued on a parity herewith pursuant to Section 6.4 hereof. Section 6.3. Existing Parity Pledge. The pledge hereunder is on a parity with the pledge of the Excise Taxes to payments due with respect to the 1996 Lease. Section 6.4. Issuance and Delivery of Additional Obligations. (a) The Buyer may cause Additional Obligations to be issued from time to time for any purpose permitted in Section 8 of the Purchase Agreement. The Series 1996 Bonds are not considered Additional Obligations for any purpose of this Trust Agreement. (b) All Additional Obligations shall be on a parity with the Series 1996 Certificates as to the assignment to the Trustee of the right, title and interest of the Buyer in the Purchase Agreement and moneys in the funds created hereby; provided, that nothing herein shall prevent payment of any series of Additional Obligations from (i) from sources not applicable to the Series 1996 Certificates and any one or more series of Additional Obligations or (ii) not being paid from sources applicable to the Series 1996 Certificates or sources which are applicable to one or more series of Additional Obligations. (c) The issuance of such Additional Obligations is subject to specific conditions. 30 ARTICLE VII MONEYS IN FUNDS; INVESTMENT Section 7.1. Held in Trust. The moneys and investments held by the Trustee under this Trust Agreement are irrevocably held in trust for the benefit of the Owners of the Certificates, and for the purposes herein specified, and such moneys, and any income or interest earned thereon, shall be expended only as provided in this Agreement, and shall not be subject to levy or attachment or lien by or for the benefit of any creditor of the Buyer, the Trustee or any Owner of Certificates. Section 7.2. Investments Authorized. Upon written order of the Buyer Representative, moneys held by the Trustee hereunder shall be invested and reinvested by the Trustee, to the maximum extent practicable in Permitted Investments having the highest yield reasonably obtainable. In the absence of such direction, the Trustee may invest or reinvest only in Permitted Investments. The Buyer Representative may direct such investment in specific 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. 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. Section 7.3. Accounting. The Trustee shall furnish to the Buyer, 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 7.7 pertaining to arbitrage rebate, 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 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 Buyer hereby covenants with the Owners of the Certificates that it will make no use of the proceeds of the Certificates or other moneys which would cause the obligations of the Buyer under the Purchase Agreement to be 31 "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Internal Revenue Code of 1986, as amended. Section 7.7. Tax Covenants. In consideration of the acceptance and execution of the Agreement by the Trustee and the purchase by the Certificate Owners, from time to time, and in consideration of retaining the exclusion of interest income from gross income on the Agreement and the Certificates for federal income tax purposes, the Buyer covenants with the Trustee and the Certificate 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 the Agreement or the Certificates to become subject to inclusion in gross income for federal income tax purposes under either laws existing on the date of execution of the Purchase Agreement or such laws as they may be modified or amended or tax laws later adopted. The Buyer 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 Certificates 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 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 Purchase Agreement and property financed thereby. 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 Certificate proceeds on an annual basis. The Buyer 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 thirty (30) days after each anniversary of the Certificate issuance. No later than sixty (60) days after each fifth anniversary of the Certificate issuance, upon receipt from the Buyer, the Trustee shall file a completed Form 8038-T, and remit the payment required by Code Section 148(0(3), as directed by the Buyer with the Internal Revenue Service Center, Philadelphia, Pennsylvania 19255. Such payment shall be from moneys contained in the Arbitrage Rebate Fund. In addition, upon the payment of the last certificate of the issue, upon receipt from the Buyer, the Trustee shall file, within sixty (60) days after the last payment, a completed Form 8038-T and remit, as directed by the Buyer, the final payment as required by Code Section 148(0(3). In the event there is insufficient moneys in the Arbitrage Rebate Fund to make a payment when due, the Buyer shall pay to the Trustee from Excise Taxes or other money lawfully available therefor the amount necessary to provide the Trustee with an amount sufficient to make such payment when due. 32 ARTICLE VIII THE TRUSTEE Section 8.1. Appointment of Trustee. , a banking association, is hereby appointed Trustee by the Buyer for the purpose of executing and delivering the Purchase Agreement, as Seller, and receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Agreement. The Buyer covenants that it will maintain as Trustee a bank or trust company with a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or State authority, so long as any Certificates 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. The Trustee is hereby authorized to redeem the Certificates when duly presented for payment at maturity and to cancel all Certificates upon payment thereof. The Trustee shall keep accurate records of all funds administered by it and of all Certificates paid and discharged. Section 8.2. Liability of Trustee. The recitals of facts, covenants and agreements herein and in the Certificates contained shall be taken as statements, covenants and agreements of the Buyer, and the Trustee assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Certificates or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Certificates assigned to or imposed upon them, respectively, including but not limited to the Trustee's obligations under Section 7.7 hereof. Section 8.3. Merger or Consolidation. Any 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 such company shall be eligible under Section 8.1 hereof, shall be the successor to the Trustee without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding. Section 8.4. Protection and Rights of the Trustee. 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 which it shall in good faith believe to be genuine and to have been passed or signed by the proper board or person or to have been prepared and furnished pursuant to any of the provisions of this Agreement or the Purchase 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 33 bound to recognize any person as an Owner of any Certificate or to take any action at his request unless such Certificate shall be deposited with the Trustee and satisfactory evidence of the ownership of such Certificate shall be furnished to the Trustee. The Trustee may consult with counsel, who may be counsel to the Buyer 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. 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 proved and established by the certifi- cate of the Buyer Representative and such certificate shall be full warranty to the Trustee for any action taken or suffered under the provisions of this 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. The Trustee may become the Owner of the Certificates 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 Buyer 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 Certificates, whether or not such committee shall represent the Owners of the majority in principal amount of the Certificates then Outstanding. The recitals, statements and representations by the Buyer contained in this Trust Agreement or in the Certificates shall be taken and construed as made by and on the part of the Buyer 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. 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 under this Trust Agreement or for anything whatever in connection with the funds and accounts established hereunder, except only for its own willful misconduct or negligence. 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 Buyer or any other party of any funds which the Trustee has released in accordance with the terms of this Trust Agreement. 34 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 Buyer of the Project. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from the Purchase Agreement or this Trust Agreement for the existence, furnishing or use of the Project. Notwithstanding any provision in this Trust Agreement or the Purchase 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 13(a)(1) of the Purchase Agreement, unless the Trustee has actual notice thereof or is specifically notified in writing of such default by the Buyer or the Owners of at least twenty-five percent (25%) in aggregate principal amount of the Certificates then Outstanding. Section 8.5. Compensation of Trustee. The Buyer shall from time to time, as agreed upon between the Buyer 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 of Trustee. The Buyer (but only if no Event of Default has occurred and is continuing), or the Owners of a majority in aggregate principal amount of all Certificates 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 of Arizona, having a combined capital (exclusive of borrowed capital) and surplus of at least Fifty Million Dollars ($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 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. The Trustee may at any time resign by giving written notice to the Buyer. Upon receiving such notice of resignation, the Buyer shall promptly appoint a successor trustee by an instrument in writing; provided, however, that in the event that the Buyer does not appoint a successor trustee within thirty (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 Buyer 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 Certificate Owners at their respective addresses set forth on the Certificate registration books maintained pursuant to Section 2.12 hereof. 35 Notwithstanding the foregoing, in the event the Trustee merges or becomes consolidated with any other entity which resulting entity is otherwise qualified to be a successor trustee hereunder, such resulting entity shall assume all rights, obligations and duties of the Trustee hereunder and under the Purchase Agreement without the execution or filing of any papers or any further act on the part of either party hereto. 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 under this Trust Agreement, and to hold title to property or to take any other action which may be desirable or necessary. Section 8.8. Commingling. The Trustee may commingle any of the funds held by it pursuant to this Trust Agreement 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 under this Trust Agreement, which shall be available for inspection by the Buyer, or any of their agents, at any time during regular business hours. The Trustee shall provide the Buyer Representative with semiannual reports of funds transactions and balances. 36 ARTICLE IX MODIFICATION OR AMENDMENT OF AGREEMENTS Section 9.1. Amendments Permitted. This Trust Agreement and the rights and obligations of the Owners of the Certificates and the Purchase 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 Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 9.3 hereof, shall have been filed with the Trustee. No such modification or amendment shall (1) extend or have the effect of extending the fixed maturity of any Certificate 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 consent of the Owner of such Certificate, or (2) reduce or have the effect of reducing the percentage of Certificates required for the affirmative vote or written consent to an amendment or modification of the Purchase Agreement, or (3) 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. This Agreement and the rights and obligations of the Owners of the Certificates and the Purchase 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 (1) to provide for additions to the Project, (2) 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 Buyer, (3) to cure, correct or supplement any ambiguous or defective provision contained herein or therein, (4) to provide for Additional Certificates, (5) with respect to rating matters, or (6) 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 Certificates. Any such supplemental agreement shall become effective upon execution and delivery by the parties hereto or thereto as the case may be. The Trustee may rely upon an opinion of counsel as conclusive evidence that any such supplemental agreement complies with this Section 9.1. Section 9.2. Procedure for Amendment With Written Consent of Certificate Owners. This Agreement and the Purchase Agreement may be amended by supplemental agreement as provided in this Section 9.2 in the event the consent of the Owners of the Certificates are required pursuant to Section 9.1 hereof. A copy of such supplemental agreement, together with a request to the Certificate Owners for their consent thereto, shall be mailed by the Trustee to each Owner of a Certificate at his address as set forth on the Certificate registration books maintained pursuant to Section 2.12 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 provided. 37 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 Certificates then Outstanding (exclusive of Certificates disqualified as provided in Section 9.3 hereof) and a notice shall have been mailed as hereinafter in this Section 9.2 provided. The consent of an Owner of a Certificate shall be effective only if accompanied by proof of ownership of the Certificates for which such consent is given, which proof shall be such as is permitted by Section 2.11 hereof. Any such consent shall be binding upon the Owner of the Certificate 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 in this Section 9.2 provided for has been mailed. After the Owners of the required percentage of Certificates shall have filed their consents to such supplemental agreement, the Trustee shall mail a notice to the Owners of the Certificates in the manner hereinbefore provided in this Section for the mailing of such supple- mental 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 Certificates 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 Certificates at the expiration of sixty (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 sixty (60) day period. Section 9.3. Disqualified Certificates. Certificates owned or held by or for the account of the Buyer or by any person directly or indirectly controlled by, or under direct or indirect common control with the Buyer (except any Certificates held in any pension or retirement fund) shall not be deemed Outstanding for the purpose of any vote, consent, waiver or other action or any calculation of Outstanding Certificates provided for in this Agreement, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Agreement. Section 9.4. Effect of Supplemental Agreement. From and after the time any supplemental agreement becomes effective pursuant to this Article IX, this Agreement or the Purchase 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 Certificates 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 Agreement or the Purchase Agreement, as the case may be, for any and all purposes. 38 The Trustee may require each Certificate Owner, before his consent provided for in this Article IX shall be deemed effective, to reveal whether the Certificates as to which such consent is given are disqualified as provided in Section 9.3 hereof. Section 9.5. Endorsement or Replacement of Certificates Delivered After Amendments. The Trustee may determine that Certificates 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 Certificate Outstanding at such effective date and presentation of his Certificate for the purpose at the office of the Trustee, a suitable notation shall be made on such Certificate. The Trustee may determine that the delivery of substitute Certificates, so modified as in the opinion of the Trustee is necessary to conform to such Certificate Owners' action, which substitute Certificates shall thereupon be prepared, executed and delivered. In that case, upon demand of the Owner of any Certificate then Outstanding, such substitute Certificate shall be exchanged at the principal office of the Trustee, without cost to such Owner, for an Certificate of the same character then Outstanding, upon surrender of such Outstanding Certificate. Section 9.6. Amendatory Endorsement of Certificates. The provisions of this Article IX shall not prevent any Certificate Owner from accepting any amendment as to the particular Certificates held by him, provided that proper notation thereof is made on such Certificates. 39 ARTICLE X COVENANTS, NOTICES Section 10.1. Compliance With and Enforcement of Purchase Agreement. The Buyer covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Purchase Agreement. The Buyer 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 Purchase Agreement. The Buyer, 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 Buyer, will deliver the same, or a copy thereof, to the Trustee. Section 10.2. Observance of Laws and Regulations. The Buyer 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 Buyer, 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. Section 10.3. Prosecution and Defense of Suits. The Buyer shall promptly, upon request of the Trustee or any Certificate Owner, from time to time take such action as may be necessary or proper to remedy or cure any defect in or cloud upon the title to the Project, whether now existing or hereafter developing and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee and every Certificate Owner harmless for, from and against all loss, cost, damage and expense, including attorneys' fees, which they or any of them may incur by reason of any such defect, cloud, suit, action or proceeding. Section 10.4. Recordation and Filing. The Buyer shall file the Purchase Agreement (or a memorandum thereof or a financing statement with respect thereto), and all such documents as may be required by law (and shall take all further actions which may be necessary or be reasonably required by the Trustee), all in such manner, at such times and in such places as may be required by law in order fully to preserve, protect and perfect the security of the Trustee and the Certificate Owners. Section 10.5. Further Assurances. The Trustee and the Buyer 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 Agreement and the Purchase Agreement, and for the better assuring and confirming unto the Owners of the Certificates the rights and benefits provided herein. 40 Section 10.6. Notification to the Buyer of Failure to Make Payments. The Trustee shall notify the Buyer of any failure by the Buyer to make any Payment or other payment required under the Purchase Agreement to be made to the Trustee, in writing and within one (1) Business Day of any such failure. Such notice shall not be a prerequisite for the occurrence of an Event of Default hereunder or under the Purchase Agreement. 41 ARTICLE XI LIMITATION OF LIABILITY Section 11.1. Limited Liability of the Buyer. Except for the payment of Payments from Excise Taxes when due in accordance with the Purchase Agreement and the performance of the other covenants and agreements of the Buyer contained in the Purchase Agreement and as otherwise provided herein, the Buyer shall have no pecuniary obligation or liability to any of the other parties or to the Owners of the Certificates with respect to this Agreement, or the terms, execution, delivery or transfer of the Certificates, or the distribution of Payments to the Owners by the Trustee. Section 11.2. No Liability of the Buyer for Trustee Performance. Except as otherwise provided herein, the Buyer shall have no obligation or liability to any of the other parties or to the Owners of the Certificates with respect to the performance by the Trustee of any duty imposed upon it under this Agreement. Section 11.3. Indemnification of the Trustee. To the extent permitted by law, the Buyer 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: (a) the use, maintenance, condition or management of, or from any work or thing done on, the Project, or the site of the Project, or any portion thereof, by the Buyer; (b) any breach or default on the part of the Buyer in the performance of any of its obligations under this Agreement and any other agreement made and entered into for purposes of the Project; (c) any act of negligence of the Buyer or of any of its agents, contractors, servants, employees or licensees with respect to the Project; (d) any act of negligence of any assignee of, or purchaser from, the Buyer or of any of its or their agents, contractors, servants, employees or licensees with respect to the Project; (e) the construction or acquisition of the Project or Project Costs; (0 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 any portion thereof, by the Buyer; (g) the ownership of the Project, or the site of the Project, or any portion thereof, (h) the Trustee's exercise and performance of its powers and duties hereunder, or (i) 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 Certificates, including the costs and expenses of defending itself against any claim of liability arising under this Trust Agreement. No indemnification will be made under this Section or elsewhere in this Agreement for willful misconduct, negligence or breach of duty under this Agreement by the Trustee, or by its officers, agents, employees, successors or assigns. The Buyer's obligations hereunder for indemnification under this Section: (i) shall remain valid and binding notwithstanding, and shall survive, the maturity and payment of the Certificates or resignation or removal of the Trustee or the termination of this Agreement, and (ii) shall not be limited by any nonrecourse or other limitations of liability provided for in the Purchase Agreement or any other document or instrument relating to the Certificates. 42 The Trustee, promptly after determining that any event or condition which requires or may require indemnification by the Buyer 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 Buyer in writing of such circumstances or action (the "Notification"). Upon giving of the Notification, the Trustee shall cooperate fully with the Buyer in order that the Buyer may defend, compromise or settle any such matters or actions which may result in payment by Buyer hereunder. The Buyer shall give the Trustee notice of its election within fifteen (15) days after receiving the Notification whether the Buyer, 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 Buyer 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 Buyer hereunder. The Buyer 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 Buyer shall pay all losses and the Trustee shall be fully released from such claim or action. If the Buyer either fails to timely give its notice or notifies the Trustee that the Buyer 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 Buyer is required to and does indemnify the Trustee as herein provided, the rights of the Buyer 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 an 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. 43 ARTICLE XII EVENTS OF DEFAULT AND REMEDIES OF CERTIFICATE OWNERS Section 12.1. Seller's Rights held in Trust. As provided herein, the Trustee holds in trust hereunder all of the Seller's rights in and to the Purchase Agreement, including without limitation all of the Seller's rights to exercise such rights and remedies conferred on the Seller pursuant to the Purchase 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. Section 12.2. Remedies Upon Default;Acceleration. Upon(1)the nonpayment of the whole or any part of any Payment at the time when the same is to be paid as provided herein or in the Purchase Agreement, (2) the violation by the Buyer of any other covenant or provision of the Purchase Agreement or this Trust Agreement, (3) the occurrence of an event of default with respect to any outstanding bonds which have a parity position to the Certificates as to the Buyer's pledge of, and the lien upon, the Excise Taxes, or (4) the insolvency or bankruptcy of the Buyer as the same may be defined under any law of the United States of America or the State of Arizona, or any voluntary or involuntary action of the Buyer or others to take advantage of, or to impose, as the case may be, any law for the relief of debtors or creditors, including a petition for reorganization, and if such default has not been cured (i) in the case of nonpayment of any Payment hereunder or under the Purchase Agreement on the due date, or the nonpayment of installment payments on their due dates with respect to any other obligations from time to time outstanding which are secured by a parity pledge of the Excise Taxes; and (ii) in the case of the breach of any other covenant or provision of this Trust Agreement or the Purchase Agreement or of any other agreement pertaining to bonds referred to in (3), within sixty (60) days after notice in writing from the Trustee specifying such default, then the Trustee (a) may take whatever action at law or in equity may appear necessary or desirable to collect the Payments and any other amounts payable by the Buyer hereunder or under the Purchase Agreement, then due and thereafter to become due, or to enforce performance and observance of any pledge, obligation, agreement, or covenant of the Buyer under this Trust Agreement or the Purchase Agreement, (b) terminate construction and acquisition of the Project and transfer to the Buyer any remaining portions of the Project still held by the Trustee, whether or not completed, and (c) pursue any other remedy at law or in equity, including the remedy of specific performance. Section 12.3. Application of Funds. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of this Article XII or Section 10 of the Purchase Agreement shall be applied by the Trustee in the order following upon presentation of the several Certificates, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid: 44 First, to the payment of the fees, costs and expenses of the Trustee and of the Certificate Owners in declaring such Event of Default and in the exercise of remedies hereunder or under the Purchase 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 Certificates for principal and interest, and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid with respect to the Certificates, then to the payment first of the interest component accrued but unpaid (ratably to the aggregate of such interest) and then principal component (ratably to the aggregate of such principal) without preference or priority of any installment of interest over any other installment of interest, or any principal over any other principal. 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 Certificates 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 Certificates by a suit in equity or action at law for the specific performance of any covenant or agreement contained herein. Section 12.5. Non-waiver. Nothing in this Article XII or in any other provision of this Agreement or in the Certificates, shall affect or impair the obligation of the Buyer to pay or prepay the Payments as provided in the Purchase Agreement, or affect or impair the right of action, which is absolute and unconditional, of the Certificate 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 Certificates 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 Certificates may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Certificate 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 Certificates then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Certificates, 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 Certificates Outstanding. Section 12.7. Limitation on Certificate Owners' Right to Sue. No Owner of any Certificate issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Agreement, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default FHR:pbd 149922.3 8/20/96 -45- hereunder; (b) the Owners of at least a majority in aggregate principal amount of all the Certifi- cates 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; (c) said Owners shall have tendered to the Trustee reasonable indemnity against the costs, expenses, and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee. 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 Certificates of any remedy hereunder; it being understood and intended that no one or more Owners of Certificates shall have any right in any manner whatever by his or their action to enforce any right under this 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 Certificates. The right of any Owner of any Certificate 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 this Agreement. 46 ARTICLE XIII MISCELLANEOUS Section 13.1. Defeasance. If and when all Outstanding Certificates shall be paid and discharged in any one or more of the following ways: (a) by paying or causing to be paid the principal of and interest with respect to all Certificates Outstanding, as and when the same become due and payable; (b) 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 Certificates Outstanding, including all principal and interest; or (c) by depositing with a Depository Trustee, in trust for such purpose, any noncallable Defeasance Obligations in such amount as shall be certified to the Trustee and the Buyer by a national firm of certified public accountants acceptable to both the Trustee and the Buyer, 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 Certificates (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 Purchase Agreement. If a forward supply contract is employed in connection with a defeasance described in paragraph (c) of this Section, (i) such accountant's verification shall expressly state that the adequacy of the trust to accomplish the defeasance relies solely on the cash and the initial Defeasance Obligations and the maturing principal thereof and interest income thereon and does not assume performance under or compliance with the forward supply contract, and (ii) the applicable deposit or trust agreement shall provide that in the event of any discrepancy or difference between the terms of the forward supply contract and the depository trust agreement and this Trust Agreement the terms of the depository trust agreement and this Trust Agreement shall be controlling. If the Certificates to be defeased are insured the Insurer will receive a draft of any forward supply contract at least ten (10) days prior to its execution and will be able to make comments thereon to the Buyer or the Depository Trustee. Notwithstanding that any Certificates shall not have been surrendered for payment, all obligations of the Trustee and the Buyer with respect to all Outstanding Certificates shall cease and terminate, except only the obligation of the Trustee to pay or cause to be paid, from funds deposited pursuant to paragraphs (b) or (c) of this Section and paid to the Trustee by the Depository Trustee, to the Owners of the Certificates not so surrendered and paid all sums due with respect thereto, and in the event of deposits pursuant to paragraphs (b) or (c), the Certificates shall continue to represent direct and proportionate interests of the Owners thereof in such funds. FHR:pbd 149922.3 8/20/96 -47- Any funds held by the Trustee, at the time of one of the events described in paragraphs (a) through (c) of this Section, which are not required for the payment to be made to Owners or for the payment of any other amounts due and payable by Buyer hereunder or under the Purchase Agreement, shall be paid over to the Buyer. Any Certificate or portion thereof in authorized denominations may be paid and discharged as provided in this Section 13.1; provided that if any such Obligation or portion thereof will not mature within sixty (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. After provision for the Certificates has been made under (c) above, at the direction of the Buyer, all or any part of the Defeasance 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 Defeasance Obligations which the Depository Trustee shall hold provided that thereafter the moneys and Defeasance 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 Certificates (including all principal and interest) at their respective maturity dates. No Payment or Certificate 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 Certificate is thereby made includable in gross income for federal income tax purposes. The Trustee, the Depository Trustee, and the Buyer may rely upon an opinion of nationally recognized bond counsel (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 Certificates. The Depository Trustee shall be any bank or trust company, which may be the Trustee, designated by the Buyer, with a combined capital and surplus of at least Fifty Million Dollars ($50,000,000) and subject to supervision or examination by federal or State of Arizona authority. Section 13.2. Records. The Trustee shall keep complete and accurate records of all moneys received and disbursed under this Agreement, which shall be available for inspection by the Buyer, the Contractor 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 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: 48 If to the Buyer: Oro Valley Attention: Finance Director If to the Trustee: Section 13.4. Notices to the Insurer. (a) While the Insurance Policy is in effect with respect to the 1996 Certificates, the Buyer with respect to items (i) through (v), inclusive, and (vii) and the Trustee with respect to items (vi) and (viii), shall furnish to the Insurer: (1) within 180 days after the end of each of the Buyer's Fiscal Years, a copy of Buyer's budget, any quarterly or annual financial statements of the Buyer and a copy of any audit and annual report of the Buyer; (2) a copy of any notice to be given to the registered Owners of the Certificates and any certificate rendered pursuant to this Trust Agreement relating to the security for the Certificates; (3) prior written notice of resignation or the removal of the Trustee and the appointment of any successor thereto; (4) official statement or other disclosure, if any, prepared in connection with the issuance of additional debt whether or not it is on a parity with the Certificates within 30 days after the sale thereof; (5) notice of the redemption, other than mandatory sinking fund redemption, of any of the Certificate or of any advance refunding of the Certificates, including the principal amount, maturities and CUSIP numbers thereof; (6) a full transcript of all proceedings relating to the execution and delivery of any supplemented agreement amending, modifying or supplementing this Trust Agreement or the Purchase Agreement; (7) notice of any draw upon the Reserve Fund or any deficiency, of the Reserve Requirement due to market fluctuation; and (8) such additional information as the Insurer may reasonably request from time to time. 49 (b) The Trustee shall notify the Insurer of any failure of the Buyer to provide relevant notices or certificates required hereunder. Section 13.5. The Insurer's Control of Proceedings. Anything in this Trust Agreement to the contrary notwithstanding, unless the Insurer is in bankruptcy, receivership, insolvency or similar proceedings or is in default or is contesting its obligations under the Insurance Policy, (i) the Insurer shall be entitled to control and direct enforcement of all rights and remedies granted to the Owners or the Trustee for the benefit of the Owners under the Trust Agreement, (ii) the Insurer shall also be entitled to approve all waivers of events of default, and (iii) for all purposes of Article VIII of this Trust Agreement and Article V of the Purchase Agreement, except for the giving of notice to Owners, the Insurer shall be deemed to be the sole Owner of the Certificates. Section 13.6. Default by the Insurer. Any provision of this Trust Agreement to the contrary notwithstanding, if under any provision hereof or of this Trust Agreement any action is to be taken only with the consent or approval of the Insurer, if at the time such consent or approval would otherwise be called for, the Insurer is in bankruptcy, receivership, insolvency or similar proceedings or is in default of or is contesting its obligations under the Insurance Policy then the consent or approval of such Insurer shall not be required. Section 13.7. Covenant as to Conflict of Interest. A.R.S. Section 38-511 provides that the Buyer 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 Buyer 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 Buyer 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 Buyer from any other party to the contract arising as a result of the contract. Section 13.8. Payments Due on Non-Business Day. Any payments due on a day which is not a Business Day may be made on the next Business Day and, if so made, will be deemed to have been made on the date due. Section 13.9. Governing Law. This Agreement shall be construed and governed in accordance with the laws of the State of Arizona. Section 13.10. Binding Effect and Successors. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Whenever in this Agreement either the Buyer 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 in this Agreement contained by or on behalf of the Buyer or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. 50 Section 13.11. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same Agreement. Section 13.12. Destruction of Cancelled Certificates. Whenever in this Agreement provision is made for the surrender to or cancellation by the Trustee and the delivery to the Buyer of any Certificates, the Trustee may, upon the request of the Buyer Representative, in lieu of such cancellation and delivery, destroy such Certificates and deliver a certificate of such destruction to the Buyer. Section 13.13. 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 of this Agreement. All references herein to "Articles", "Sections", and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement; and the words "herein", "hereof", "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. Section 13.14. Parties Interested Herein. Nothing in this Trust Agreement or the Certificates, expressed or implied, is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the Buyer, the Trustee, and the Owners of the Certificates, 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 covenants, stipulations, provisions and agreements in this Trust Agreement contained by and on behalf of the Buyer shall be for the sole and exclusive benefit of the Buyer, the Trustee, and the Owners of the Certificates. Section 13.12. Waiver of Notice. Whenever in this 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 13.13. Severability of Invalid Provisions. In case any one or more of the provisions contained in this Agreement or in the Certificates 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 of this Agreement, and this 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 Agreement and each and every other section, paragraph, sentence, clause or phrase hereof and authorized the delivery of the Certificates pursuant thereto irrespective of the fact that any one or more sections, paragraphs, sentences, clauses or phrases of this Agreement may be held illegal, invalid or unenforceable. 51 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. NORWEST BANK OF ARIZONA, N.A., as Trustee By Its THE TOWN OF ORO VALLEY, ARIZONA, as Buyer By Mayor ATTEST: Town Clerk FHR:pbd 149922.3 8/20/96 -52- EXHIBIT A (FORM OF FACE OF EXCISE TAX REVENUE OBLIGATION) CERTIFICATE OF PARTICIPATION, SERIES 1995 Evidencing a Proportionate Interest of the Owner Hereof in Purchase Price Payments to be Made by the THE TOWN OF ORO VALLEY, ARIZONA to as Trustee No: Denomination: $ Interest Maturity Dated Rate Date Date CUSIP September 1, 1996 Registered Owner Principal Amount: THIS IS TO CERTIFY THAT the registered owner identified above, or registered assigns, as the registered owner of this Certificate of Participation, Series 1996 (the "Certificate") is the owner of an undivided proportionate interest in the right to receive certain Payments thereof under and defined in that certain Purchase Agreement (the "Purchase Agree- ment"), dated as of September 1, 1996, by and between (the "Trustee"), and the Town of Oro Valley, Arizona, a municipal corporation and a political subdivision existing under the laws of the State of Arizona (the "Buyer"), which Payments and other rights and interests under the Purchase Agreement are held by the Trustee in trust under a Trust Agreement dated as of September 1, 1996 (the "Trust Agreement") by and between the Buyer and the Trustee. The Trustee maintains its principal corporate trust office in Phoenix, Arizona (the "Principal Office"). The registered owner of this Certificate is entitled to receive, subject to the terms of the Purchase Agreement, on the maturity date set forth above, the principal amount set forth above, representing a portion of the Payments designated as principal coming due during the preceding six months, and to receive semiannually on January 1 and July 1 of each year commencing January 1, 1997 (the "Payment Dates") until payment in full of said portion of FHR:pbd 149922.3 8/20/96 A-1 principal, the registered owner's proportionate share of the Payments designated as interest coming due during the six (6) months immediately preceding each of the Payment Dates. Said proportionate share of the portion of the Payments designated as interest is the result of the multiplication of the aforesaid portion of the Payments designated as principal by the interest rate per annum set forth above. Interest shall be calculated on the basis of a 360-day year composed of twelve (12) months of thirty (30) days each. Said amounts representing the registered owner's share of the Payments designated as interest are payable in lawful money of the United States of America by check mailed when due by first class mail by the Trustee to the registered owner in whose name this Certificate is registered at the close of business on the fifteenth (15th) day of the calendar month next preceding the Payment Date at his address as it appears on the registration books of the Trustee; provided, however, that interest payable to any owner of $1,000,000 or more in principal amount of Certificates may 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 two (2) days before the Payment Date specifying the account address. The notice may provide that it shall remain in effect for subsequent interest payments until otherwise requested in a subsequent written notice. Said amounts representing the registered owner's share of the Payments designated as principal are payable when due upon surrender of this Certificate at the Principal Office of the Trustee. The Trustee has no obligation or liability to the registered owners of the Certificates for the payment of interest or principal pertaining to the Certificates. The Trustee's sole obligations are to administer, for the benefit of the registered owners of the Certificates, the various funds and accounts established pursuant to the Trust Agreement. The recitals, statements and representations made in this Certificate shall be taken and construed as made by and on the part of the Buyer, 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. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS CERTIFICATE SET FORTH ON THE REVERSE SIDE HEREOF AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH ON THE FRONT SIDE HEREOF. FHR:pbd 149922.3 8/20/96 A-2 IN WITNESS WHEREOF, this Certificate has been executed and delivered by the Trustee, acting pursuant to the Trust Agreement. Date of Execution: , as Trustee By Authorized Representative (FORM OF REVERSE OF CERTIFICATE) This Certificate has been executed and delivered by the Trustee pursuant to the terms of the Trust Agreement. The Buyer is authorized to enter into the Purchase Agreement and the Trust Agreement under the laws of the State of Arizona and by resolution of the Mayor and Council of the Buyer adopted August 28, 1996 (the "Resolution"). Reference is hereby made to the Purchase Agreement and the Trust Agreement (copies of which are on file at the Principal Office of the Trustee) for a description of the terms on which the Certificates are delivered, the rights thereunder of the registered owners of the Certificates, the rights, duties and immunities of the Trustee and the rights and obligations of the Buyer under the Purchase Agreement, to all of the provisions of which Purchase Agreement and Trust Agreement the registered owner of this Certificate, by acceptance hereof, assents and agrees. The Certificates are payable from Payments to be made by the Buyer pursuant to the Purchase Agreement. The Buyer is required under the Purchase Agreement to make Payments from all unrestricted excise, transaction, franchise, privilege and business taxes, state- shared sales and income taxes, fees for licenses and permits and state revenue-sharing, now or hereafter validly imposed by the Buyer or contributed, allocated and paid over to the Buyer and not earmarked by the contributor for a contrary or inconsistent purpose (the "Excise Taxes"), which Payments are sufficient to pay, when due, the annual principal and interest due with respect to the Certificates. The Certificates are payable from a pledge of, and secured by a lien on, the Excise Taxes as are necessary for the prompt and punctual payment of the Certificates, all as more fully described in, and provided by, the Purchase Agreement with respect to the pledge of Excise Taxes. The holder hereof shall never have the right to demand payment of this Certificate or any Payments under the Purchase Agreement out of any funds other than said described income and revenues pledged for payment thereof and such other funds as may be provided for under the Trust Agreement. The rights of the holder hereof to payment from Excise Taxes are subject to the prior right to payment from such Excise Taxes of the obligations due pursuant to a Lease Purchase Agreement which obligations secure the Town of Oro Valley Municipal Property Corporation Municipal Water System Acquisition Bonds, Series of 1996, and on any other obligations hereafter issued on a parity therewith pursuant to the Trust Agreement and the Purchase Agreement. FHR:pbd 149922.3 8/20/96 A-3 THE OBLIGATION OF THE BUYER TO MAKE PAYMENTS DOES NOT REPRESENT OR CONSTITUTE A GENERAL OBLIGATION OF THE BUYER, THE STATE OF ARIZONA OR ANY POLITICAL SUBDIVISION THEREOF FOR WHICH THE BUYER 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 PAYMENTS UNDER THE PURCHASE AGREEMENT CONSTITUTE AN INDEBTEDNESS OF THE BUYER, THE STATE OF ARIZONA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION OR OTHERWISE. For further definitions, a description of the terms on which the Certificates are executed and delivered, a more complete statement of the income and revenues from which, and conditions under which, this Certificate is payable, the conditions under which additional Certificates may be authorized, a statement of the terms under which the Trust Agreement or the Purchase Agreement may be modified, a statement of the general covenants and provisions pursuant to which this Certificate is issued, and of the rights of the holders of the Obligation, reference is made to the Trust Agreement and the Purchase Agreement, and to all the provisions thereof the owner hereof, by acceptance of this Certificate, consents and agrees. All Certificates of the total authorized amount 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. The registered owner of this Certificate shall have no right to enforce the provisions of the Trust Agreement or the Purchase Agreement or to institute any action to enforce the covenants thereof, or to take any action with respect to a default thereunder or hereunder, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as provided in the Trust Agreement. Upon certain conditions, this Certificate may be subject to acceleration in the event of a default by the Buyer under the Trust Agreement or the Purchase Agreement. To the extent and in the manner permitted by the terms of the Trust Agreement, the provisions of the Trust Agreement may be amended by the parties thereto with the written consent of the owners of a majority in aggregate value of the Certificates then outstanding, and may be amended without such consent under certain circumstances but in no event such that the interests of the owners of the Certificates are adversely affected, provided that no such amendment shall impair the right of any owner to receive in any case such owner's proportionate share of any Payment thereof in accordance with such owner's Certificate. The Certificates are executed and delivered only in fully registered form in principal denominations of $5,000 or integral multiples thereof. FHR:pbd 149922.3 8/20/96 A-4 This Certificate may be exchanged for an Certificate or Certificates of like aggregate principal amount in authorized denominations having the same maturity date and interest rate. This Certificate is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at said Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement and upon surrender and cancellation of this Certificate. Upon such transfer a new Certificate or Certificates, of authorized denomination or denominations, for the same aggregate principal amount will be delivered to the transferee in exchange therefor. The Buyer and the Trustee may treat the registered owner hereof as the absolute owner hereof for all purposes, whether or not this Certificate shall be overdue, and the Buyer and the Trustee shall not be affected by any notice to the contrary. The Trustee may require a registered owner, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or governmental charges required by law in connection with the exchange or transfer. The Certificates are not subject to optional redemption prior to maturity. (Form of Assignment) The following abbreviations, when used in the inscription on the face of this Certificate, shall be construed as though they were written out in full according to applicable laws or regulations: A-5 TEN COM - as tenants in common UNIF GIFT/TRANS MIN ACT TEN ENT - as tenants by the Custodian entireties (Gust) (Minor) JT TEN - as joint tenants under Uniform Gifts/Transfers with right of to Minors Act survivorship and not as tenants in common 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 thereunder, 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 enlarge- ment 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 A-6 EXHIBIT B Purchase Agreement B-1 EXHIBIT C Payment Request Form Application No. The Trustee is hereby requested to pay from the Acquisition Fund, as defined in the Trust Agreement, dated as of September 1, 1996 (the "Trust Agreement"), among the Town of Oro Valley, Arizona (the "Buyer") and , as trustee (the "Trustee") to the person or corporation designated below as Payee, the sum set forth below such designation, in payment of the Acquisition 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 Acquisition Costs described below and has not formed the basis of any prior request for payment. Payee: Address: Amount: Description of Acquisition Costs or portion thereof authorized to be paid to the Payee: The Buyer acknowledges that it has received and inspected each item of the Project described above and has found each item of the Project so described to be in good condition, in conformity with the Buyer's specifications and satisfactory for the Buyer's purposes and in accordance with the applicable Construction Contract and the plans for the Project. Accordingly, the Buyer hereby accepts each item of the Project so described. Notwithstanding anything herein to the contrary, the Buyer shall not be deemed to have waived or released the Seller or Vendor named herein from any liability or obligation to the Buyer in the event the Buyer's acknowledgment herein is discovered to be inaccurate in any respect as to any item of the Project described above. C-1 By execution of this Payment Request Form, the Buyer requests and approves the payment of the amount stated above to the Payee set forth above. DATED: . THE TOWN OF ORO VALLEY, ARIZONA By Buyer Representative Please forward payment to Payee at the following address: C-2 EXHIBIT D Reimbursement Request Form Application # The Trustee is hereby requested to pay from the Acquisition Fund established by the Trust Agreement, dated as of September 1, 1996 (the "Trust Agreement"), between the Town of Oro Valley, Arizona (the "Buyer"), and , as trustee (the "Buyer"), to the Buyer, the sum set forth below as reimbursement of (all/a portion) of the Project Costs (as defined in the Trust Agreement) described below. Payment of the amount, shown below was made by the Buyer on , 19 , as evidenced by , attached hereto, as full/partial payment of invoice No. of , also attached hereto. The amount shown below was paid by the Buyer as a Project Cost and has not formed the basis of any prior request for payment. The Buyer acknowledges that it has received and has inspected each item of the Project described below and has found each item of the Project so described to be in good condition, in conformity with the Buyer's specifications and satisfactory for the Buyer's purposes. Accordingly, the Buyer hereby accepts each item of the Project so described. Notwithstanding anything herein to the contrary, the Buyer shall not be deemed to have waived or released the Seller or Vendor named on the attached documentation, from any liability or obligation to the Buyer in the event the Buyer's acknowledgment herein is discovered to be inaccurate in any respect as to any item of the Project described below. Amount: D-1 Description of Project Cost or portion thereof for which reimbursement is hereby requested: Dated: , 19_. By Buyer Representative Date received: , 19_. By Buyer Representative D-2 PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (hereinafter referred to as "Agreement") by and between the Town of Oro Valley, Arizona, a municipal corporation and a political subdivision under the laws of the State of Arizona (hereinafter referred to as "Buyer") and , a national banking association(hereinafter referred to as "Seller"), in its capacity as trustee under the Trust Agreement dated as of September 1, 1996, by and between the Seller and the Buyer (the "Trust Agreement") WITNESSETH: Section 1. Definitions. All terms not otherwise defined herein are as defined in the Trust Agreement. Section 2. Term and Payments. (a) For the purpose of causing the acquisition of three parcels of land for future Town use and the construction of certain public park improvements on one parcel to be acquired (the "Project ") under the terms and conditions hereinafter set forth, Seller sells to Buyer and Buyer buys from Seller, the Project. The Project is more particularly described in Exhibit A attached hereto and incorporated by reference herein. (b) Seller agrees to acquire the land and to construct and install the Public Park Improvement portion of the Project or cause the same to be constructed and installed; all construction to be in accordance with the plans and specifications prepared for Buyer; and to pay all costs and expenses attendant thereto, including architectural and engineering costs and construction management fees, if any. To provide the funds necessary therefor, the Seller, as Trustee under the Trust Agreement, will execute and deliver the Certificates of Participation, Series 1996 (the "Certificates") and Seller shall have no further obligation to provide funds to pay such costs and expenses. (c) Buyer agrees to make purchase payments hereunder to Seller at the address specified pursuant to Section 18 hereof(or such other address as Seller may designate in writing) on or before the tenth (10th) day of each month commencing and in the amounts set forth in the payment schedule attached hereto as Exhibit B and incorporated herein. Buyer's obligation to make such payments shall be limited to payment from the Buyer Excise Taxes pledged to the payment thereof by the Buyer and Buyer shall have no obligation to or be compelled to make purchase payments from any other source of funds. (d) The obligations of Buyer 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 by Seller of any obligation to Buyer or otherwise, or out of indebtedness or liability at any time owing to Buyer by Seller. Until such time as all of the payments shall have been fully paid or provided for, Buyer (i) will not suspend FHR:lec 8/21/96 149923.02A or discontinue any payments provided for in this Section 2, (ii) will perform and observe all other agreements contained in this Agreement, and (iii) will not terminate the term of this Agreement for any cause, including, without limiting the generality of the foregoing, failure of Seller 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 Buyer, 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 Seller 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 Seller from the performance of any of the agreements on its part herein or in the Trust Agreement contained and in the event Seller shall fail to perform any such agreements on its part, Buyer may institute such action against Seller as Buyer may deem necessary to compel performance so long as such action does not abrogate the obligations of Buyer contained in the first sentence of this paragraph (d). Section 3. Pledge of Excise Taxes, Limited Certificates. Buyer pledges for the payment of the Payments hereunder and all other amounts payable pursuant hereto its Excise Taxes. Buyer intends that this pledge shall be a first lien pledge upon such amounts of said Excise Taxes as will be sufficient to make the payments pursuant hereto when due; provided, however, that such first lien pledge shall rank on the same parity as to the Excise Taxes pledge as the 1996 Lease. Buyer agrees and covenants to make said payments from such Excise Taxes, except to the extent it chooses to make the payments from other funds pursuant to Section 5. Said pledge of, and said lien on, the Excise 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 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 Buyer shall remit to the Trustee from Excise Taxes all amounts due under this Agreement in the amounts and at the times and for the purposes as required herein. Buyer'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 its Excise Taxes and shall in no circumstances constitute a general obligation of, or a pledge of the full faith and credit of, Buyer, 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. Section 4. Excise Taxes. Subject to the 1996 Lease and any other obligations on a parity herewith, all Excise Taxes in excess of amounts, if any, required to be deposited with or held by the Trustee for payments due under this Agreement or the Trust Agreement shall constitute surplus revenues and may be used by the Buyer for any lawful purpose, including the payment of junior lien obligations to which such Excise Tax proceeds may from time to time be pledged. In order to secure payment of the 1996 Lease and this Agreement and any Additional Obligations, the Buyer has created a separate and special fund which shall contain only Excise Taxes and shall not contain any other moneys of the Buyer, this fund shall be known FHR:lec 8/21/96 149923.02A 2 as the "Oro Valley Excise Tax Fund" (the "Excise Tax Fund"). The Excise Tax Fund shall be funded solely and only from the Excise Taxes received by the Buyer and from no other source. Under no circumstances shall moneys be deposited from the Buyer's general fund to the Excise Tax Fund. The Excise Tax Fund may be reduced to zero in each month after the amount required to be transferred to the Payment fund to be held by the trustee under the Indenture has been transferred. All payments to be made pursuant to this Agreement shall be made from the Excise Tax Fund. If at any time the moneys in the Excise Tax Fund are not sufficient to make the deposits and transfers herein required, any such deficiency 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 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. The Buyer shall continue to impose all necessary Excise Taxes and shall collect and receive the proceeds of sufficient Excise Taxes, and pay such proceeds to the Trustee in such amounts and at such times as will be fully sufficient, in conjunction with any other legally available moneys (but not proceeds of ad valorem taxes, except in compliance with Section 5) which the Buyer may from time to time lawfully choose to pay to the Trustee, to assure the punctual performance of all duties requiring the payment or expenditure of money by the Buyer under the terms of this Agreement. Such payments shall be made on the dates specified herein during the term of this Agreement and shall be sufficient to meet all requirements for payment of the Certificates. Section 5. Other Funds. The Town may, at its sole option, make rental and make payments under this Purchase Contract from its other funds as permitted by law and as the Town shall determine from time to time, but the Seller acknowledges that it has no claim hereunder to such other funds. No part of the purchase payments payable pursuant to this Purchase Agreement shall be payable out of any ad valorem taxes imposed by the Town, from bonds or other obligations, the payment of which the general taxing authority of the Town is pledged, or from its general funds, unless: 1. the same shall have been duly budgeted by the Town according to law; 2. such payment or payments shall be within the budget or expenditure limits of the Constitution and laws of the State; and 3. such payment is not in conflict with the Constitution and laws of the State. Section 6. Coverage Test. So long as this Agreement remains unpaid or unprovided for, the Town shall not further incumber the Excise Taxes on a basis equal to this first lien pledge unless the Excise Taxes collected in the next preceding Fiscal Year shall have amounted to at least two (2) times the highest combined Payments to be made under this Agreement for any succeeding twelve (12) months' period and any payments to be made on any Additional Obligations then outstanding and any Additional Obligations then proposed to be secured by a pari passu pledge of the Excise Taxes. FHR:Iec 8/21/96 149923.02A 3 Section 7. Rate Covenant. To the extent permitted by law, the Excise Taxes shall be retained and maintained in full force and effect so that the combined amount of all such Excise Taxes shall be equal to at least two (2) times the total of all Payments payable hereunder and on the 1996 Lease and all Additional Obligations in any current Fiscal Year. If such receipts for the preceding Fiscal Year shall not have equalled two (2) times payment requirements hereunder for the then current Fiscal Year, the Buyer shall promptly impose new Excise Taxes or increase the rates for the Excise Taxes then currently imposed by the Buyer in order that (i) the current receipts will be sufficient to meet all current Payment requirements and (ii) the current Fiscal Year's receipts will be reasonably calculated to obtain the level required above for the succeeding fiscal years' payment requirements. Section 8. Issuance or Incurrence of Additional Obligations Generally. (a) The Buyer covenants not to incur or cause to be issued any Additional Obligations unless the provisions of this Section 8 have been complied with. Buyer may incur or cause to be issued Additional Obligations which may be in the form of Additional Certificates or other obligations enjoying a claim and lien on the Excise Taxes on a parity with the 1996 Lease and this Agreement (and, thus, on a parity with the 1996 Bonds and 1996 Certificates). Such Additional Obligations shall be issued solely and only to finance or refinance the cost of acquiring, constructing, reconstructing or improving buildings, equipment and other real and personal properties suitable for any use by and for leasing to Buyer or its agencies or instrumentalities, including but not limited to domestic water systems, or for refinancing or pre- paying of the 1996 Lease, the this Agreement or any Additional Obligations hereafter issued or incurred. (b) Additional Obligations shall be on a parity with the 1996 Lease and this Agreement as to Buyer's pledge of, and the Additional Obligation Owners' lien on, Buyer's Excise Taxes; provided, that nothing herein shall prevent any series of Additional Obligations (i) from being paid from sources which are not applicable to the 1996 Lease, this Agreement or to any one or more series of Additional Obligations or, (ii) from not being paid from sources other than Excise Taxes although such sources may be applicable to the 1996 Lease, this Agreement or one or more series of Additional Obligations. (c) The issuance or incurrence of Additional Obligations is subject to the following specific conditions which are hereby made conditions precedent to incurrence or issuance. (1) The Buyer shall be in compliance with all covenants and undertakings set forth in the 1996 Lease and this Agreement and shall also be in compliance with all material covenants and conditions pertaining to the then outstanding Additional Obligations as such documents have then been amended or supplemented; (2) A Buyer's resolution authorizing issuance or incurrence of such Additional Obligations shall require that the proceeds thereof be applied solely for one or more of the purposes set forth in subsection (a) of this Section 8 and expenses and costs incidental thereto, including costs and expenses incident to the sale of such Additional Obligations, the FHR:lec 8/21/96 149923.02A 4 costs of any premium relating to insurance on the Additional Obligations, the cost of any Qualified Surety Obligation, or for any other Reserve Fund Guaranty, and, if desired by Buyer a reasonable Reserve Fund may be created at the Buyer's option for the protection of the Owners of the specific series of Additional Obligations and to pay interest on said Additional Obligations during the actual period of acquisition, construction or improvement of the real and personal property sold to Buyer and a reasonable period of time thereafter; (3) The conditions set forth in Sections 6 and 7 of this Agreement shall then be satisfied; and (4) Before Buyer shall incur or cause to be issued any Additional Obligations the following shall have occurred: (a) Any amendments or supplements to the 1996 Lease, this Agreement or to any document relating to the then outstanding Additional Obligations, which are necessary or advisable, in the opinion of nationally recognized bond counsel, to provide that the Additional Obligations will be issued or incurred on a parity as to the pledge of and lien on the Excise Taxes with the 1996 Lease and this Agreement and the Trust Agreement shall have been consummated; (b) A copy of the Buyer's resolution pertaining to such Additional Obligations, certified by Buyer's clerk, shall have been filed with the Trustee; (c) The written opinion of an Independent Counsel, who may be Buyer's counsel, shall be rendered to Buyer to the effect that: (1) the documents pertaining to such Additional Obligations comply with the requirements hereof and the Trust Agreement; (2) the Additional Obligations have been duly authorized; and (3) all conditions precedent to the delivery of such Additional Obligations have been fulfilled; (d) Buyer receives a written opinion of nationally recognized bond counsel who may also be counsel to which reference is made in subparagraph (c) above, to the effect that: (1) the Additional Obligations will be valid and legal special obligations of Buyer in accordance with their terms and will be secured thereunder equally and, except as otherwise provided in this Section, on a parity as to the pledge of and lien on the Excise Taxes with the 1996 Lease, this Agreement all other Additional Obligations then outstanding; and (2) the issuance of the Additional Obligations will not result in the interest on the 1996 Bonds and the 1996 Certificates becoming subject to federal income taxation. Section 9. Incurrence of Additional Obligations Under This Purchase Agreement. To simplify the incurrence of Additional Obligations, Buyer and Seller may cause Additional Obligations to be incurred as Additional Certificates through amendment to this Purchase Agreement and execution of a Supplemental Trust Agreement. To incur such Additional Certificates all conditions of Section 8 hereof must have been met and an amendment to this Purchase Agreement must be executed by the parties hereto which amends the definition of the "Project", and also amends Exhibit A, which describes the Project, to include one or more additional parcels of land or construction projects permitted by subsection (a) of Section 8. FHR:lec 8/21/96 149923.02A 5 In addition, Exhibit B hereto must have also be amended to restate the Payment schedule and manner which provides for payment of the Additional Certificates and all Certificates and Additional Certificates then Outstanding. When the documents required by Section 8 and the foregoing paragraph have been received, the Trustee may authenticate and deliver the Additional Certificates. Section 10. Enforcement of Pledge; Conditions. In the event of any default by the Buyer under the 1996 lease or this Agreement or any document committing the town to pay its Excise Taxes on obligations which are on a parity with the 1996 Lease and this Agreement, the remedies of the Seller with respect to the enforcement of the liens, pledges, covenants and agreements contained in this Agreement shall be as provided herein. The Trustee, on behalf of the Owners of the 1996 Certificates, or, where so provided in this Trust Agreement, such Owners may enforce the liens, pledges, covenants and agreements contained herein in accordance with the terms and conditions of the Trust Agreement. The conditions set forth in Section 6 hereof is, at the time of execution and shall be at the time of issuance of the 1996 Certificates, satisfied. Section 11. Representations, Warranties and Covenants. (a) EXCEPT WITH RESPECT TO ITS POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO PERFORM ITS COVENANTS HEREUNDER, SELLER HAS MADE AND MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND ASSUMES NO OBLIGATION WITH RESPECT TO THE TITLE, MERCHANTABILITY, CONDITION, QUALITY OR FITNESS OF THE PROJECT FOR ANY PARTICULAR PURPOSE OR THE CONFORMITY OF THE PROJECT TO ANY PLANS, SPECIFICATIONS, CONSTRUCTION CONTRACT,PURCHASE ORDER,MODEL OR SAMPLE, OR AS TO ITS DESIGN, CONSTRUCTION, DELIVERY, INSTALLATION AND OPERATION OR ITS SUITABILITY FOR USE BY BUYER AFTER COMPLETION OF CONSTRUCTION. ALL SUCH RISKS SHALL BE BORNE BY BUYER WITHOUT IN ANY WAY EXCUSING BUYER FROM ITS CERTIFICATES OBLIGATIONS UNDER THIS AGREEMENT AND SELLER SHALL NOT BE LIABLE TO BUYER FOR ANY DAMAGES ON ACCOUNT OF SUCH RISKS. Except with respect to any acts by Seller which are not undertaken at Buyer's request or with Buyer's prior approval, Buyer agrees to waive all claims against Seller growing out of the construction portion of the Project. Seller shall have no liability to Buyer for any failure of any construction contractor to perform any construction contract in any respect. Seller shall have no obligation to obtain or insure compliance with any required Arizona Department of Environmental Quality permits or approval procedures for the Project. In the event of any defect in any item of the construction phase of the Project, Buyer understands and agrees that Buyer's recourse will be against the contractors, manufacturers or suppliers and, where applicable, the person selling the property to Seller, and not against Seller. For such purpose, Seller hereby assigns and transfers to Buyer the right, title and interest of Seller in and to all representations, warranties and service agreements relating to the Project made or entered into by the Seller and by any contractor, manufacturers or suppliers. Seller further designates Buyer as its attorney-in-fact granting to Buyer the right to initiate and take all FHR:Iec 8/21/96 149923.02A 6 actions necessary to enforce any and all construction contracts and all such warranties and service agreements. (b) Buyer 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 Buyer, enforceable against Buyer in accordance with its terms, and has been duly authorized, executed and delivered by Buyer; that all required procedures for execution and performance of this Agreement, 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 which are legally available for such purposes. Section 12. Providing for Payment. Buyer may provide for the payment of any Payment required to be made under this Agreement in any one or more of the following ways: (a) by paying such Payment as provided herein as and when the same becomes due and payable at its scheduled due date pursuant to Exhibit A hereof; (b) 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 Seller and available for such Payment is fully sufficient to make, or cause to be made, such Payment; or (c) by depositing with a Depository Trustee, in trust for such purpose, any Defeasance Obligations which are noncallable, in such amount as shall be certified to the Seller and Buyer, by a national firm of certified public accountants acceptable to both the Seller and Buyer, as being fully sufficient, together with the interest to accrue thereon and moneys then on deposit with the Seller 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 Seller, with a combined capital and surplus of at least Fifty Million Dollars ($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 (b) or (c) of this Section 12 (a "Depository Trustee"). If the Buyer shall provide for the full Payment of this Purchase Agreement in the manner set forth above, Buyer shall be relieved of all further responsibilities to make payments hereunder and Seller shall look only to the money or the United States obligations held by the Depository Trustee for the payment of the then remaining balance hereof. Section 13. Transfer of Project, Personal Property. (a) Except as otherwise provided in this Section 13 or Section 14 hereof, upon the earlier of Payment, or the provision of Payment, of the this Agreement in full or completion of all of the Project as evidenced by a Certificate of Completion, the Seller shall execute FHR:lec 8/21/96 149923.02A 7 appropriate transfer documents in the form attached hereto as Exhibit C, which shall transfer the Seller's right, title and interest in and to the Project or that portion of the Project completed to the Buyer, including without limitation, all of Seller's right, title and interest in the Personal Property or portion thereof included within the completed portion of the Project. The Seller shall convey title free from any liens, encumbrances or security interests, created, or permitted and not discharged, by Seller without Buyer's written consent. (b) All right, title and interest in any underground storage tanks shall be transferred to the Buyer upon delivery of such tanks to the site of installation and before any such tanks are placed underground. No storage tanks will be installed underground or used to hold any fuel or other petroleum products until transferred to Buyer. (c) All right, title and interest in any sewage or sludge treatment or disposal facility shall be transferred to the Buyer prior to any sewage, effluent or waste being processed, held or disposed of therein. Section 14. Remedies Upon Default. (a) Upon(1) the nonpayment of the whole or any part of any Payment at the time when the same is to be paid as provided herein or in the Trust Agreement, (2) the violation by the Buyer of any other covenant or provision of this Agreement or the Trust Agreement, (3) the occurrence of an event of default with respect to the 1996 Lease or any Additional Obligations which have a parity position to this Agreement as to the Buyer's pledge of, and the lien upon, the Excise Taxes, or (4) the insolvency or bankruptcy of the Buyer as the same may be defined under any law of the United States of America or the State of Arizona, or any voluntary or involuntary action of the Buyer or others to take advantage of, or to impose, as the case may be, any law for the relief of debtors or creditors, including a petition for reorganization, and if such default has not been cured (i) in the case of nonpayment of any Payment hereunder or under the Trust Agreement on such Payment's due date, or the nonpayment of installment payments on their due dates with respect to any Additional Obligations from time to time outstanding which are secured by a parity pledge of the Excise Taxes; and (ii) in the case of the breach of any other covenant or provision of the Trust Agreement or this Agreement or of any other agreement pertaining to the 1996 Lease or any Additional Obligations within sixty (60) days after notice in writing from the Seller specifying such default, then the Seller may (A) take whatever action at law or in equity may appear necessary or desirable to collect the Payments and any other amounts payable by the Buyer hereunder or under this Agreement, then due and thereafter to become due, or to enforce performance and observance of any pledge, obligation, agreement, or covenant of the Buyer under the Trust Agreement or this Agreement, (B) terminate construction and acquisition of the Project and transfer to the Buyer any remaining portions of the Project still held by the Trustee, whether or not completed, and (C) pursue any other remedy at law or in equity, including the remedy of specific performance. NOTE; ACCELERATION REMOVED ON THE ASSUMPTION THE CERTIFICATES WILL BE INSURED. FHR:lec 8;'21/96 149923.02A 8 (b) Seller, 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 Buyer or anyone claiming under Buyer, (i) have a receiver appointed of all the Excise Taxes which are so pledged for the payment of amounts due hereunder, with such powers as the court making such appointment shall confer; to which appointment Buyer irrevocably consents and(ii) seek and obtain injunctive relief. (c) The Buyer's obligations under this Agreement, including, without limitation, its obligation to pay the Payments, shall survive any action brought as provided in this Section 14, and the Buyer shall continue to pay the Payments and perform all other obligations provided in this Agreement; provided, however, that the Buyer shall be credited with any amount received by the Trustee pursuant to actions brought under this Section 14. Section 15. Assignment and Sublease. (a) Except as otherwise provided herein, without the prior written consent of Seller, Buyer 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, Seller shall be entitled, with or without notice to, or the consent of, Buyer to sell, pledge, assign, transfer and encumber all or any part of its right, title and interest in and to the Project, this Agreement and all payments of any kind due or which become due to Seller hereunder, provided that such transfer or assignment shall not impair the Certificates, that the transferee or assignee shall be bound by the terms hereof and all related agreements executed by Seller 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 Buyer's receipt of notice of any such assignment or transfer of Seller's interest, any such assignee(s) or transferee(s) shall thereafter (collectively, if more than one) become and be deemed to be Seller hereunder, and have all of the rights, powers, privileges and remedies, and be subject to all of the covenants and agree- ments, of Seller hereunder for all purposes of this Agreement except that Seller and Buyer agree and acknowledge that any such assignee(s) or transferee(s) will have made no representation or warranty, and therefore will assume no obligation, with respect to the title, merchantability, condition, quality or fitness of the Project for any particular purpose, or for the enforcement of any warranties or service agreement made or assigned by the initial Seller named herein, and that following any Seller's assignment or transfer of its interest hereunder as herein provided, Buyer shall have no right to abate, reduce, withhold or offset against any payments due any successor to Seller, or otherwise hereunder, on account of any claims for misrepresentations or breach of warranty or service agreements or any claims for sums due Buyer from any prede- cessor(s) in interest of such Seller. No sale, assignment or transfer of all or any part of Seller's right, title and interest in, to and under this Agreement and all payments of any kind due or to become due to Seller hereunder shall be effective unless and until Buyer shall have received a duplicate original counterpart of the document by which the sale, assignment or transfer is made, disclosing the name, mailing address and tax identification or social security number of each such purchaser, assignee or transferee (including where applicable, the settlor and beneficiaries of any trust and the principal and nominee of any interest to be held in nominee name); FHR:lec 8/21/96 149923.02A 9 provided, however, that if such assignment or transfer is made to a bank or trust company as Trustee, Paying or escrow agent for the Owners of the Certificates, it shall thereafter be sufficient that a copy of the agency or trust agreement shall have been filed with Buyer until Buyer shall have been advised that such agency or trust agreement is no longer in effect. During the term of this Agreement, Buyer 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 Buyer's receipt of written notice as above- described, of Seller's sale, assignment or transfer of all or any part of its interest in this Agreement or the payments hereunder, Buyer agrees to attorn to and recognize any such pur- chaser(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 payable pursuant to this Agreement, and as Seller(s) under this Agreement. Upon the written request of any purchaser, assignee or transferee of Seller's interest, Buyer 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 Buyer 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 to this Agreement. Any such purchaser, assignee or transferee shall agree in writing to assume and perform all of the duties and responsibilities of Seller and shall acknowledge Buyer's rights under this Agreement. Provided, however, that in the event the Seller 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 Seller hereunder without the execution or filing of any papers or any further act on the part of either party and "Seller" hereunder shall refer to such resulting party. Section 16. Buyer Appointed Agent for Seller. Seller does hereby irrevocably appoint Buyer as its sole and exclusive agent to act for and on behalf of Seller in acquiring, constructing and installing the Project. As such agent, Buyer shall have full authority to approve plans and specifications and modifications thereof, to enter into construction contracts, to supervise all phases of acquisition, construction and installation and to do all things necessary to bring about the completion of the Improvements. Seller shall not be accountable for the acts of Buyer as its agent hereunder and Buyer assumes all responsibility for the performance of such duties. Section 17. Miscellaneous. (a) No covenant or obligations herein to be performed by Buyer may be waived except by the written consent of Seller 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 Seller from invoking such remedy at any later time prior to Buyer's cure of the condition giving rise to such remedy. FHR:lec 8/21/96 149923.02A 10 (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 and the Trust Agreement constitute 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 Seller and Buyer. (d) Any term or provision of this Agreement found to be prohibited by law or unenforceable 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. (e) Seller hereunder shall have the right at any time or times, by notice to Buyer, to designate or appoint any person or entity to act as agent or trustee for Seller 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 and their respective heirs, successors, assigns and personal representatives, as the case may be. Any person or entity acquiring any beneficial interest in or to Seller's right, title or interest herein shall be and have the rights of a third party beneficiary hereunder. (i) Any payments due on a day which is not a Business Day may be made on the next Business Day and will be deemed to have been made on the date due. Section 18. 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 Seller: TO COME FHR:lec 8/21/96 149923.02A 11 If to Buyer: Town of Oro Valley, Arizona 11000 N. LaCanada Drive Oro Valley, Arizona 85737-7015 Attn: Finance Director with a copy to: Gust Rosenfeld P.L.C. 201 N. Central Avenue, Suite 3300 Phoenix, Arizona 85073 Telecopy No. (602) 340-1538 Attn: Mr. Scott W. Ruby (602) 257-7422 Section 19. Tax Covenants. In consideration of the acceptance and execution of this Agreement by the Seller and the purchase of the Certificates 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 Certificates for federal income tax purposes, Buyer covenants with Seller and the 1996 Certificate Owners and with the Owners of any Additional Certificates hereinafter incurred 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, the 1996 Certificates or any Additional Certificates to become subject to inclusion in gross income for federal income tax purposes under either laws existing on the date of execution of this Agreement or such laws as they may be modified or amended or tax laws later adopted. Buyer 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 Certificates 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 to this 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 this Agreement; and limiting the use of the proceeds of this Agreement and Project financed thereby. In consideration for the issuance of tax-exempt Certificates, Buyer agrees to be the ultimate obligor for the payment of arbitrage rebate should the amounts held in the Arbitrage Rebate Fund under the Trust Agreement be insufficient to make all payments required by Section 148 (0(3) of the Internal Revenue Code of 1986, as amended, or any succeeding sections. The Buyer shall cause to be prepared each completed Form 8038-T as may be required pursuant to the Trust Agreement and direct the Trustee to file it and remit such payment all as may be necessary to comply with Section 148(0(3), as amended, or any succeeding sections as may be applicable. FHR:lec 8/21/96 149923.02A 12 Section 20. Buyer's Easement to Seller. Buyer gives express permission to Seller to cause the Project to be constructed, installed and maintained and hereby grants and conveys to Seller, and all persons claiming by, through or under Seller, including its successors and assigns under the Trust Agreement and the Owners of the Certificates for whom it acts, an exclusive easement upon, in and to the Project for the purpose of permitting the Project to be constructed and installed. Section 21. Covenant as to Conflict of Interest. A.R.S. Section 38-511 provides that Buyer 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 Buyer 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, Buyer 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 Buyer from any other party to the contract arising as a result of the contract. Section 22. Seller's Limited Authority. Notwithstanding any other terms or provisions of this Agreement, Seller's interest in the Project and responsibility for causing the acquisition, construction and installation of the construction phase of the Project is solely for the purpose of facilitating the financing of the Project's acquisition by the Buyer and Seller shall not have the power, authority or obligation to assume any responsibility for the overall management of the Project, including, without limitation, any day-to-day decision-making or operational aspects of the Project. The elements of the Project and the sites therefor were selected by the Buyer and all design and engineering criteria and specifications for the Project to be constructed or acquired were or will be determined by the Buyer. Section 23. Seller as Trustee. The Seller is acting hereunder in its capacity as Trustee under the Trust Agreement and the term "Seller", when used herein, shall also mean the Trustee as defined in the Trust Agreement. Section 24. Amendment. This Agreement may only be amended or modified in the manner set forth in the Trust Agreement. FHR:lec 8/21/96 149923.02A 13 IN WITNESS WHEREOF, the parties have executed this Agreement as of the September 1, 1996. Seller: , a banking association, as Trustee By Its Buyer: THE TOWN OF ORO VALLEY, ARIZONA, a munici- pal corporation and political subdivision under the laws of the State of Arizona By ATTEST: Mayor By Town Clerk FHR:lec 8/21/96 149923.02A 14 State of Arizona County of Pima The foregoing instrument was acknowledged before me this day of September, 1996, by the Mayor of the Town of Oro Valley, Arizona, a municipal corporation and political subdivision under the laws of the State of Arizona, on behalf of the Town. My commission expires: Notary Public State of Arizona County of The foregoing instrument was acknowledged before me this day of September, 1996, by , the of , a banking association, on behalf of Seller. My commission expires: Notary Public FHR:lec 8/21/96 149923.02A 15 PURCHASE AGREEMENT Between as Trustee and TOWN OF ORO VALLEY, ARIZONA Dated as of September 1, 1996 FHR:lec 8/21/96 149923.02A EXHIBIT A DESCRIPTION OF PROJECT TO COME FHR:Iec 8/21/96 149923.02A A-1 EXHIBIT B PAYMENT SCHEDULE (monthly payments) Payment Total Date Principal Interest Payment FHR:lec 8/21/96 149423.02A B-1 EXHIBIT C BILL OF SALE TRANSFER OF PORTION OF PROJECT , a banking association, as Trustee under that Trust Agreement dated as of September 1, 1996 (the "Trust Agreement"), by and between the Trustee and the Town of Oro Valley, Arizona (the "Buyer"), and as Seller under that Purchase Agreement dated as of September 1, 1996 (the "Purchase Agreement"), between Seller and the Buyer, hereby transfers all of Seller's right, title and interest in and to the following portion of the Project (as defined in the Trust Agreement): including without limitation all of Seller's right, title and interest in any Personal Property (as described in the Trust Agreement) or portion thereof included within the above portion of the Project. The Seller hereby conveys title free from any liens, encumbrances or security interests created, or permitted and not discharged, by Seller without Buyer's written consent. , a banking association, as Trustee By Its State of Arizona County of Maricopa The foregoing instrument was acknowledged before me this day of September, 1996, by , the of , a banking association, on behalf of the association. (Seal and Expiration Date) Notary Public FHR:lec 8/21/96 149923.02A C-1 NOTE: ALSO NEED A DEED FHR:lec 8/21/96 149923.02A C-2 TOWN OF ORO VALLEY SUMMARY OF SELECT PROVISIONS OF PRINCIPAL DOCUMENTS The following is a summary of certain provisions of the Agreement and the Declaration of Trust Agreement which are not described elsewhere in this Official Statement. These summaries do not purport to be comprehensive and reference should be made to the Purchase Agreement and the Declaration of Trust 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 Declaration of Trust. SUMMARY OF DEFINITIONS Section 1.1. Definitions. Unless the context otherwise requires, the following terms have the following meanings: "Additional Bonds"--any Bonds issued by the Town of Oro Valley Municipal Property Corporation,which are supported by a pledge of Excise Taxes expressed to be on a parity orap j passu basis with the Agreement and the 1996 Lease. "Additional Certificates" --any Certificates enjoying a parity claim upon the Excise Taxes with the 1996 Certificates. "Acquisition Costs" --the price to acquire and construct the Project. "Additional Obligations"--any obligation which grants to the Owners of such Additional Obligations a lien and claim which is on a parity as to the Excise Taxes with the 1996 Lease and the Agreement. Additional Obligations may be in the form of Additional Bonds, Additional Certificates or any other form of obligation wherein the Buyer pledges,and the owner of the Additional Obligation enjoys,a parity lien and claim on the Buyer's Excise Taxes. "Annual Debt Service Requirement"--for any fiscal year the amount to be paid on the 1996 Lease,the Agreement and any Additional Obligations. "Bond Year" --the Buyer's Fiscal Year. "Business Day" --a day other than Saturday, Sunday or an Arizona bank holiday or a day when the New York Stock Exchange is closed. "Buyer" --the Town of Oro Valley, Arizona. "Certificate Resolution" --the resolution authorizing the Certificates and any later resolution authorizing Additional Certificates. "Certificate," "Certificates" or"1996 Certificates" --the Town of Oro Valley, Arizona Certificates of Participation, Series 1996. "Completion Date" --the date the final Certificate of Completion is filed. "Contractor" -- any contractor under a Construction Contract. "Construction Contract" --any contract for the construction or installation of the construction phase of the Project. "Debt Service" --as to the Certificates and all other obligations payable from Excise Taxes on parity with the Certificates, on any calculation date(1) interest due during such period unless payable from Certificate proceeds,and(2)the principal(or mandatory sinking fund or installment purchase price or lease rental or similar payments or deposits)during such period coming due based on the assumption that only scheduled payments will be made. "Defeasance Obligations": 1. Cash; Non-callable Federal Securities; 3. CATS, TIGRS or STRPS; 4. Refcorp interest strips; 5. Municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: (a) the municipal obligations are non-callable or Trustee has been given irrevocable instructions concerning their call and redemption and the municipal obligations issuer has covenanted against their redemption contrary to such instructions; FHR:lec 151416.03 8/21/96 (b) the municipal obligation applicable is secured by cash or non-callable federal securities applicable only to such municipal obligations; (c) the non-callable federal securities is principal of any interest and escrow cash has been verified by independent certified public accountants as sufficient to fully pay all of the municipal obligations("Verification"); (d) the cash or non-callable federal securities are held by an escrow agent or Trustee in trust for the owners of the municipal obligations; (e) No substitution shall be permitted except with another non-callable federal security and upon delivery of a new verification; and (f) the cash or non-callable federal securities are not available to satisfy any other claims, including those by or against the Trustee or escrow agent. 6. Any combination of the items listed in subparagraphs(a)through(f)above. "Delivery Costs" -- all expenses directly or indirectly relating to the Purchase Agreement, the Declaration of Trust, and the Certificates. "Depository Trustee" -- any bank or trust company (including Trustee) meeting the requirements of and designated to act as a Depository Trustee. "Event of Default" --any event of default under the Purchase Agreement. "Federal Securities"--direct obligations of the United States of America(CATS,TIGRS and STRPS)or obligations backed by the full faith and credit of the United States of America. "Excise Taxes" -- all fines and forfeitures, license and permit fees, transaction privilege (sales) taxes, other transaction privilege, excise and business taxes, franchise fees and taxes, bed and rental taxes and income taxes which the town now collects or may collect in the future or which are allocated or apportioned to the town by the State or governmental unit,except those taxes which by law must be expended for other purposes. "Fiscal Year" --the period commencing each July 1 and ending June 30 of the succeeding calendar year,unless changed by Buyer; the Excise Taxes shall be accounted for on that basis. "FNMA" --the Federal National Mortgage Association. "Independent Counsel" -- an attorney duly admitted to practice law before the highest court of the state in which such attorney maintains an office and who is not an employee of the Buyer or the Trustee. "Insurance Policy" --any municipal bond insurance policy guaranteeing any 1996 Certificate. "Insurer" --the entity insuring the 1996 Certificates. "Interest Payment Date" --each date on which Certificate interest is due and payable. "1996 Bonds"or"Series 1996 Bonds"--Town of Oro Valley Municipal Property Corporation Municipal Water System bonds,Series 1996(Canada Hills and Rancho Vistoso Water Utilities Acquisition Project)dated April 1, 1996. "1996 Certificates" or "Certificates" --Town of Oro Valley, Arizona, Certificates of Participation, Series 1996. "1996 Lease"--the Lease-Purchase Agreement between the Town of Oro Valley Municpial Property Corporation and Norwest Bank Arizona, N.A., pertaining to the Lease-Purchase by Buyer of two water utility systems. The 1996 Lease enjoys a panty position with the Agreement with respect to the Buyer's pledge of Excise Taxes. "Maximum Annual Debt Service Requirement"--at any computation date,the greatest Annual Debt Service Requirement for the then current or any succeeding Fiscal Year(whether by maturity, mandatory redemption or otherwise). "Outstanding" --when used as of any particular time with respect to Certificates: all Certificates theretofore executed and delivered by the Trustee except cancelled or disqualified Certificates. "Paving Agent" -- the Trustee. "Payments" -- ail payments required to be paid pursuant to the Purchase Agreement. FHR:lec 151416.03 8/21/96 -2- "Payment Date" --any date on which a Payment is due. "Permitted Investments": 1. Federal Securities. 2. Bonds,debentures,notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies only if backed by the full faith and credit of the United States of America(stripped securities are only permitted if stripped by the agency itself). (a) U.S. Export-Import Bank,Direct obligations or fully guaranteed certificates of beneficial ownership; (b) Rural Development(formerly known as Farmers Home Administration),Certificates of beneficial ownership; (c) Federal Financing Bank; (d) Federal Housing Administration Debentures; (e) General Services Administration, participation certificates; (f) GNMN guaranteed mortgage-backed bonds and GNMA guaranteed pass-through obligations; (g) U.S. Maritime Administration, guaranteed Title XI financing. (h) U.S.Department of Housing and Urban Development,Project Notes,Local Authority Bonds,New Communities Debentures,U.S. Government guaranteed debentures and U.S.Public Housing Notes and Bonds U.S. Government guaranteed public housing notes and bonds. 3. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following United States government agencies(non-full faith and credit agencies): (a) Federal Home Loan Bank System, Senior debt obligations; (b) Federal Home Loan Mortgage Corporation("FHLMC")Participation Certificates and Senior debt obligations; (c) Federal National Mortgage Association("FNMA"), Mortgage-backed securities and senior debt obligations (excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal); (d) Student Loan Marketing Association, Senior debt obligations; (e) Resolution Funding Corporation, obligations; (f) Farm Credit System, Consolidated statewide bonds and notes. 4. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, having an S&P rating of AAm-G, AAAm, or AAm, and a Moody's rating of AAA, Aal or Aa2. 5. Certificates of deposit secured at all times by collateral described in 1 and/or 2 above and issued by commercial banks, savings and loan associations,or mutual savings banks whose short-term obligations are rated A-1 or better by S&P and P-1 by Moody's. The collateral must be held by a third party and the Certificate Owners must have a perfected first security interest in the collateral. 6. Certificates of deposit,savings accounts,deposit accounts or money market deposits fully insured by FDIC,including BIF and SAIF. 7. Commercial paper rated when purchased, "Prime-1" by Moody's and "A-1" or better by S&P. 8. Bonds or notes issued by any state or municipality rated by Moody's and S&P in one of the two highest rating categories. 9. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured,uninsured and unguaranteed obligation rating of"Prime-1" or "A3" or better by Moody's and "A-1" or "A" or better by S&P. 10. Repurchase agreements that provide for the transfer of securities from a dealer bank or securities firm(seller/borrower) to the Trustee a(buyer/lender), and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus interest at a yield to the Trustee in exchange for the securities at a specified date. Repurchase agreements must: FHR:lec 151416.03 8/21/96 -3- (a) be between the Trustee and a dealer bank or securities firm. (b) be sold by primary dealers on the Federal Reserve reporting dealer list rated A or better by S&P and Moody's, or (c) banks rated "A" or above by C&P and Moody's. Written Repurchase Agreements must include: (a) Securities which are acceptable for transfer are(1)United States obligations or(2)Federal agencies backed by the full faith and credit or the U.S. Government(and FNMA and FHLMC). (b) Have a term of not to exceed 30 days. (c) The collateral must be delivered to Trustee(if Trustee is not supplying the collateral)or third-party acting as Trustee is agent(if Trustee is supplying the collateral) before/simultaneously with payment (perfection must be achieved by possession of certificated securities). (d) Trustee has a perfected first priority security interest in the collateral. (e) Collateral is free and clear of third-party liens and in the case of a SIPC broker not acquired pursuant to a Repurchase Agreement or reverse Repurchase Agreement. (f) Failure to maintain the requisite collateral percentage will require the Trustee to liquidate collateral. (g) Valuation of collateral: (1) The securities must be valued weekly,market-to-market at current market price plus accrued interest. (2) The value of collateral must be equal to 104%of the amount of cash transferred Trustee to the dealer bank or security firm under the Repurchase Agreement plus accrued interest. If the value of securities held as collateral slips below 104%of the value of the cash transferred by Trustee,then additional cash and/or acceptable securities must be transferred to Trustee. If,however,the securities used as collateral are FNMA or FHLMC, then the collateral value must equal 105%. (h) The Trustee receives a legal opinion from an Independent Counsel that the Repurchase Agreement is a legal investment of public monies under the laws of the State. Investments with the State Treasurer in the pooled Investment Fund(LGIP-GOV only) created by Title 35, Chapter 2, Article 2,Section 35-326,Arizona Revised Statues,as amended;provided,however,that the same shall only be made after Trustee has received all proceedings and proofs necessary in Trustee's opinion to make such investment in conformance with the other requirements hereof. Investment Agreements, including GICs(Guaranteed Investment Contracts)issued by entities rated A or better by S&P and Moody's and that otherwise are acceptable to Insurer and Moody's. "Project" --the three parcels of land and the public park improvements to be constructed on one parcel. "Project Costs" --costs of acquiring the three parcels and all cost of acquiring and constructing the public park improvements. "Purchase Agreement" --the Purchase Agreement and any Amendment. "Qualified Surety Insurer" --the issuer of a Qualified Surety Obligation which, if a letter or line of credit, issued by a bank rated at least"AA" by S&P or"Aa"by Moody's and, if an insurance policy or surety bond issued by an insurance company rated in the highest rating category by S&P and Moody's and by A.M. Best&Co. (if so rated). "Qualified Surety Obligation" -- a letter of credit or line of credit, insurance policy or surety bond issued by a Qualified Surety Insurer. "Reserve Requirement" -- as to the Series 1996 Certificates, $ and as to any Additional Certificates, the lesser of the (i) Maximum Annual Debt Service Requirement, (ii) 125% of the average pertaining to such Additional Obligations or(iii) 10% of the stated principal amount of such Additional Obligations. The Reserve Requirement may be satisfied by cash,a Qualified Surety Obligation,or Trustee's combination thereof. "Record Date" --the close of Trustee's business on the 15th day of the month preceding an Interest Payment Date. "S&P" --Standard&Poor's Corporation. F HR:lec 151416.03 8/21/96 -4- "Seller" --Trustee,as Seller under the Purchase Agreement. "Series 1996 Bonds"--Town of Oro Valley Municipal Property Corporation,Municipal Water Sewer Acquisition Bonds,Series 1996 (the "Series 1996 Bonds") "State" --the State of Arizona. "Supplemental Declaration of Trust" --any trust agreement supplemental to the Declaration of Trust. "Term of the Purchase Agreement" --the time during which the Purchase Agreement is in effect. "Town" --the Buyer. "Declaration of Trust" --the Declaration of Trust and any permitted amendments or supplements. "United States Obligations"--any bonds or other obligations which 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).. "Value at Market"or"Market Value" --the indicated bid value of the investments to be valued as shown in the Wall Street Journal or any publication having general acceptance as a valuation source for similar securities or any securities pricing service used by Trustee and generally accepted as a source of valuation. SUMMARY OF THE AGREEMENT Section 2. Term and Payments. (a) For the purpose of acquiring the Project, Seller sells to Buyer and Buyer hereby buys from Seller, the Project. (b) Seller will acquire the land and construct the park improvements in accordance with the plans and specifications prepared for Buyer.To provide the funds necessary therefor,the Seller,as Trustee under the Declaration of Trust will execute and deliver the Certificates. (c) Buyer agrees to make Payments hereunder to Seller on or before the tenth (10th) day of each month commencing . Buyer's obligation to make such payments shall be limited to payment from Buyer's Excise Taxes and Buyer has no obligation to make Payments from any other source of funds. (d) Buyer's obligation to make Payments shall be absolute and unconditional and not subject to any defense or any right of set-off, abatement, counterclaim, or recoupment arising out of any breach by Seller of any obligation to Buyer or otherwise, or out of indebtedness or liability at any time owing to Buyer by Seller. Section 3. Pledge of Excise Taxes, Limited Certificates. Buyer hereby pledges to the Payments hereunder its Excise Taxes. Buyer intends that this pledge shall be a first lien pledge upon such amounts of Excise Taxes will be sufficient to make the payments pursuant hereto when due;provided,however,that such first lien pledge shall rank on a parity as to the Excise Taxes pledge as the Agreement, the 1996 Lease and any Additional Obligations. Said pledge is irrevocably made for the Payments due hereunder. All of the Payments are coequal as to the pledge of and lien on the Excise Taxes and share ratably,without preference,priority or distinction,as to the source or method of payment from Buyer's Excise Taxes or security therefor. Buyer shall remit to the Trustee solely from its Excise Taxes all amounts due hereunder as required herein. Buyer's obligation is limited to payment from Excise Taxes and shall in no circumstances constitute a general obligation of, or a pledge of the full faith and credit of,Buyer,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. Section 4. Excise Taxes. Subject to the 1996 Lease and any Additional Obligations,all Excise Taxes in excess of amounts, if any, required to be deposited with Trustee for Payments shall constitute surplus revenues and may be used by the Buyer for any lawful purpose. In order to secure payment of the 1996 Lease and this Purchase Agreement,Buyer has created a separate and special fund(the"Excise Tax Fund")and is funded solely and only from the Excise Taxes received by the Buyer and from no other source. All Payments to be made pursuant to this Purchase Agreement shall be made from the Excise Tax Fund. If at any time the moneys in the Excise Tax Fund are not sufficient to make the Payments,any such deficiency shall be made up from the first moneys thereafter received and available in addition to the then-current required transfers. The Buyer shall impose all necessary Excise Taxes and shall collect the Excise Tax proceeds and pay such proceeds to the Trustee to assure the punctual performance of all Payments. Section 6. Coverage Test. While this Agreement remains unpaid or unprovided for, Buyer shall not further incumber the Excise Taxes on a basis equal to this first lien pledge unless the Excise Taxes collected in the next preceding Fiscal Year shall have amounted to at least two times the highest combined Payments for any succeeding twelve(12)months'period and any payments to be made on the 1996 Lease, the Agreement and any Additional Obligations then outstanding and any Additional Obligations then proposed. FHR:l.ec 151416.03 8/21/96 -5- Section 7. Rate Covenant. To the extent permitted by law,the Excise Taxes shall be retained and maintained in full force and effect so that the combined amount of all such Excise Taxes shall be equal to at least two times the total of all Payments on the Agreement, 1996 Lease and all Additional Obligations in any current Fiscal Year. If such receipts for the preceding Fiscal Year shall not have equalled two times the required Payments for the then current Fiscal Year,the Town shall promptly impose new excise and franchise taxes or increase the rates for the Excise Taxes it then imposes so that(i)the current receipts will be sufficient to meet all current requirements and(ii)the current Fiscal Year's receipts will be reasonably calculated to obtain the level required above for the succeeding Fiscal Years' Payments. Section 8. Issuance or Incurrence of Additional Obligations Generally. (a) Buyer will not incur any Additional Obligations unless the provisions of this Section 8 are met.Buyer may incur Additional Obligations in the form of Additional Bonds,Additional Certificates or other obligations on a parity with respect to the Buyer's pledge of excise taxes with the 1996 Lease and the 1996 Certificates. Such Additional Obligations shall be issued solely and only to finance or refinance the cost of acquiring,constructing,reconstructing or improving buildings,equipment and other real and personal properties suitable for any use by and for leasing to Buyer or its agencies or instrumentalities,including but not limited to domestic water systems,or for refinancing or prepayment of the 1996 Lease, the 1996 Certificates or any Additional Obligations. (b) Additional Obligations shall be on a parity with the 1996 Lease and the 1996 Certificates with respect to Buyer's pledge of Excise Taxes; but nothing shall prevent any series of Additional Obligations(i)from being paid from sources not applicable to the 1996 Lease,or to any series of Additional Obligations or(ii)not being paid from sources other than Excise Taxes although other sources may be used to pay the 1996 Lease, or any other Additional Obligations. (c) The incurrence of Additional Obligations is subject to the following conditions precedent: (1) The Buyer shall be in compliance with all covenants and undertakings in the 1996 Lease and this Agreement and also with all material covenants and conditions pertaining to the then outstanding Additional Obligations; (2) A Buyer's resolution authorizing issuance or incurrence of such Additional Obligations shall require that the proceeds thereof shall be applied solely for one or more of the purposes set forth in subsection(a)of this Section 8; (3) The conditions set forth in Sections 6 and 7 of this Purchase Agreement shall then be satisfied; and (4) Additionally, the following shall also have occurred: (a) Any amendments or supplements to the 1996 Lease,this Agreement or to any document relating to outstanding Additional Obligations,which are necessary or advisable,in the opinion of nationally recognized bond counsel,to provide that the Additional Obligations will be issued on a parity as to the pledge of and lien on the Excise Taxes with the 1996 Lease and the Agreement shall have been consummated; (b) A copy of the Buyer's resolution pertaining to such Additional Obligations,certified by the clerk, shall have been filed with the Trustee; (c) The written opinion of an Independent Counsel,who may be Buyer's counsel,shall be rendered to Buyer to the effect that: (1) the documents pertaining to such Additional Obligations comply with the requirements of this Agreement; (2)the Additional Obligations have been duly authorized; and(3)all conditions precedent to the delivery of such Additional Obligations have been fulfilled; (d) Buyer receives a written opinion of nationally recognized bond counsel, to the effect that: (1)the Additional Obligations will be valid and legal special obligations of Buyer in accordance with their terms and will be secured equally and,except as otherwise provided, on a parity as to the pledge of and lien on the Excise Taxes with the 1996 Lease, the Agreement (and the 1996 Certificates)and all other Additional Obligations then outstanding;and(2)the issuance of the Additional Obligations will not result in the interest on the 1996 Lease (and the 1996 Bonds)and the Agreement(and the 1996 Certificates)becoming subject to federal income taxation. Section 9. Incurrence of Additional Obligations Under This Purchase Agreement. Buyer and Seller may cause Additional Obligations to be incurred as Additional Certificates through amendment to this Purchase Agreement and execution of a Supplemental Declaration of Trust.To incur such Additional Certificates all conditions of Section 8 hereof must have been met,an amendment to this Purchase Agreement must be executed which amends the definition of the "Project," to include one or more additional parcels of land or construction projects permitted by subsection(a)of Section 8. In addition, the payment schedule must have also be amended to restate the Payments to provide for payment of the proposed Additional Certificates and all 1996 Certificates and Additional Certificates then Outstanding. Section 10. Enforcement of Pledge;Conditions. If Buyer defaults under the 1996 lease,this Purchase Agreement or any document committing the town to pay obligations from Excise Taxes on a parity with the 1996 Lease and the Agreement,Seller's remedies shall be as provided herein. The Trustee may enforce these liens and pledges and the aforesaid covenants and agreements in accordance with the Declaration of Trust. FHR:lec 151416.03 8/21/96 -6- Section 12. Providing for Payment. Buyer may provide for the payment of any Payment in the following ways: (a) by paying such Payment as provided herein as and when the same becomes due and payable; (b) by depositing with a Depository Trustee,in trust,money which,together with the amounts then on deposit with the Seller and available for such Payment is fully sufficient to make, or cause to be made, such Payment;or (c) by depositing with a Depository Trustee, in trust for such purpose,any Non-callable United States Certificates certified by a national firm of certified public accountants,as being fully sufficient,together with the interest to accrue thereon and moneys then on deposit with Seller and available for such payment, to make such Payment when due and payable. A Depository Trustee shall be a bank or trust company,including Seller,with a combined capital and surplus of at least Fifty Million Dollars($50,000,000)who is subject to supervision or examination by federal or Arizona authority. If the Buyer shall so provide for the full payment here of Purchase Agreement Seller shall thereafter look only to the money or the United States obligations so held for payment of the remaining balance. Section 14. Remedies Upon Default. (a) Upon(1) nonpayment of any Payment when due, (2)Buyer's violation of any other covenant or provision hereof or of the Declaration of Trust, (3)the occurrence of an event of default with respect to the 1996 Lease or Additional Obligations,or(4)the insolvency or bankruptcy of the Buyer or any voluntary or involuntary action of the Buyer or others to take advantage of,or to impose any law for the relief of debtors(i)in the case of nonpayment of any payment hereunder or under the Declaration of Trust on the due date, or the nonpayment of payments due on the 1996 Lease or Additional other Obligations and (ii)in the case of breach of any other covenant or provision of the Declaration of Trust or this Agreement or of any other agreement pertaining to the 1996 Lease or Additional Obligations referred to in(3),within sixty(60)days after notice in writing from the Seller specifying such default, then the Seller may(A)take whatever action at law or in equity may appear necessary or desirable to collect the Payments and any other amounts payable or to enforce Buyer's performance under the Declaration of Trust or this Agreement,(B)terminate construction and acquisition of the Project and transfer to the Buyer any remaining portions of the Project still held by the Trustee,whether or not completed, and(C)pursue any other remedy at law or in equity, including the remedy of specific performance. (b) Seller may without giving bond(i)have a receiver appointed to collect all the Pledged Excise Taxes with powers the court confers, and Buyer irrevocably consents to such appointment and(ii)seek and obtain injunctive relief. (c) The Buyer's obligations shall survive any action so brought and the Buyer shall continue to pay the Payments and perform all other obligations provided herein. Section 16. Buyer Appointed Seller's Agent. Seller irrevocably appoints Buyer as its sole and exclusive agent to act for and on Seller's behalf in acquiring, constructing and installing the Project. Section 19. Tax Covenants. Buyer covenants to neither take nor fail to take any action within its power which would result in interest income on this Agreement or the Series 1996 Certificates becoming subject to inclusion in gross income for federal income tax purposes under either laws existing on the date of execution of this Agreement or such laws as they may be modified or amended or tax laws later adopted. Section 21. Covenant as to Conflict of Interest. A.R.S.Section 38-511 provides that Buyer 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 Buyer 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. SUMMARY OF THE DECLARATION OF TRUST Section 2.1. Authorization of the 1996 Certificates. The Trustee is authorized to deliver the 1996 Certificates in an aggregate principal amount of not to exceed$5,600,000 evidencing proportionate ownership interests in all Payments to be made under the Purchase Agreement. Section 5.1. Trustee's Rights in Purchase Agreement. The Trustee,as Seller under the Purchase Agreement,holds in trust all of its rights in the Purchase Agreement,including the right to receive all Payments. All Payments shall be paid directly to Trustee and held by the Trustee in trust hereunder. Section 5.2. Establishment of Payment Fund. The Trustee shall establish a special fund,the Payment Fund. All moneys at any time deposited in the Payment Fund shall be held in trust for the benefit of the Owners. While any Certificates are Outstanding, Buyer shall have no interest in the Payment Fund and such moneys shall be applied as hereinafter set forth. FHR:lec 151416.03 8/21/96 -7- Section 5.3. Deposits. All Payments shall be deposited in the Payment Fund. 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, interest on, and premium,if any, on the Certificates when due. Section 5.5. Transfers of Investment Earnings to Payment Fund. Subject to any required arbitrage rebate,Trustee shall, on or before each Interest Payment Date,transfer any 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 and Accounts created hereunder, after payment of all Certificates remitted to Buyer. Section 5.7. Reserve Fund. (a) The Trustee shall create the Reserve Fund. (b) All moneys in the Reserve Fund shall be held in trust for the Owners'benefit and applied solely as provided herein. The Reserve Fund shall be a reserve for payment, when due, of all Payments. If on any December 31 or June 30 the Payment Fund balance is less than the Debt Service then due,the Trustee shall apply moneys in the Reserve Fund to make the deficiency by transferring the amount necessary for this purpose. Upon receipt of any delinquent Payment with respect to which moneys have been advanced from the Reserve Fund, such Payment shall be deposited in the Reserve Fund. Transfers from the Reserve Fund to the Payment Fund shall not result in a credit or reduction of Buyer's obligations to pay Payments. (c) If the Reserve Fund and the Payment Fund(excluding amounts required to pay Certificates not yet then presented)are sufficient to pay all Outstanding Certificates, the Trustee shall, upon the Buyer's direction, transfer all amounts in the Reserve Fund to the Payment Fund to pay the Certificates. (d) The Reserve Fund shall be valued at the following times:(i)as of the initial issuance of Certificates;(ii)each December 1 and June 1;and(iii)immediately after a Reserve Fund drawdown occurs. If the Reserve Fund value is less than the Reserve Requirement after any valuation, the Trustee shall promptly request the Buyer to pay such deficiency on the next Payment Date. (e) The Buyer may present a Qualified Surety Obligation in exchange for the moneys and investments then on deposit in the Reserve Fund. (f) If on any Reserve Fund Valuation Date the Reserve Fund exceeds the Reserve Requirement and Buyer is not then in default under the Purchase Agreement,the Trustee shall withdraw any such excess from such fund and shall deposit such amount in the Payment Fund. Section 5.7. Payment Pursuant to Insurance Policy. As long as an Insurance Policy shall be in full force and effect with respect to a Certificate, Trustee will comply with the following provisions: (a) If, on the third day preceding any Interest Payment Date Trustee has insufficient moneys to pay all Certificate principal and interest on such Interest Payment Date, the Trustee shall immediately notify the Insurer and State Street Bank and Trust Company (the "Fiscal Agent")of the deficiency amount. If,by said Interest Payment Date,Buyer has paid such deficiency, the Trustee shall simultaneously make available to the Insurer and to the Fiscal Agent the registration books for the Certificates. (b) If Trustee has notice that any Certificate payment has been recovered from an Owner pursuant to the United States Bankruptcy Code through a final, nonappealable order,the Trustee shall notify all Owners that if any Owners'payment is so recovered, such Owner will be entitled to payment from the Insurer to the extent of such recovery. (c) The Insurer shall, to the extent it makes Certificate payments subrogated to the recipient's rights to such payments. ARTICLE VI PLEDGE AND LIEN Section 6.1. Pledge. Payments are payable from a pledge of, and secured by a lien on, the Excise Taxes as necessary for prompt payment. No Certificate shall be entitle to priority or distinction,one over the other, in the application of the Excise Taxes regardless of the delivery of any Certificates prior to the delivery of any other Certificates or regardless of the Certificates' maturity dates. All of a the Certificates are coequal as to the pledge of and lien on the Excuse Taxes and share ratably,without preference,priority or distinction,as to the source or method of payment from Excise Taxes or security therefor. Section 6.2. Protection of Lien. The Trustee and the Buyer hereby agree not to create any lien having priority or preference over the lien hereof Trustee and Buyer agree that no obligations secured by a superior claim will be incurred. FHR:lec 151416.03 8/21/96 -8- Section 6.3. Existing Parity Pledge. The pledge hereunder is on a parity with the pledge of the Excise Taxes to payment due on or with respect to the Series 1996 Bonds. Section 6.4. Issuance and Delivery of Additional Certificates. (a) The Buyer may issue Additional Certificates from time to time for any purpose permitted herein. (b) Additional Certificates shall be on a parity with the Series 1996 Certificates as to Payments made under the Purchase Agreement and moneys in the funds created hereby. Nothing herein shall prevent any series of Additional Certificates(i)from being paid with sources not applicable to the Series 1996 Certificates and any one or more series of Additional Certificates or(ii)not being paid from sources applicable to the Series 1996 Certificates or sources which are applicable to one or more series of Additional Certificates. (c) No Additional Certificates shall be issued or authenticated by Trustee unless all requirements of Sections 8 and 9 of the Agreement have been complied with. ARTICLE VII MONEYS IN FUNDS; INVESTMENT Section 7.1. Held in Trust. The moneys and investments held by the Trustee under this Declaration of Trust are irrevocably held in trust for the benefit of the Certificate Owners expended only as provided herein. Section 7.2. Investments Authorized. Moneys held hereunder shall be invested and reinvested by Trustee,to the maximum extent practicable in Permitted Investments having the highest yield reasonably obtainable. Section 7.3. Accounting. The Trustee shall furnish to the Buyer, 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. Any arbitrage rebate,any investment income,or loss shall be deposited in or charged to the respective funds from which such investments were made except as otherwise provided herein. Section 7.5. Valuation and Disposition of Investments. All investments shall be valued at Market Value. Section 7.6. Arbitrage Covenant. The Buyer hereby covenants with the Owners of the Certificates that it will make no use of the proceeds of the Certificates or other moneys which would cause the Certificates to be"arbitrage bonds"and subject to federal income taxation by reason of Section 148 of the Internal Revenue Code of 1986, as amended. Section 8.2. Liability of Trustee. The recitals of facts,covenants and agreements herein and in the Certificates contained shall be taken as statements, covenants and agreements only of Buyer. Section 8.6. Removal of Trustee. The Buyer(if no Event of Default is continuing),or the Owners of a majority in aggregate principal amount of all Certificates Outstanding, by written directive,at any time and for any reason,may remove the Trustee. Any successor Trustee shall be a bank or trust company doing business in the State,having a combined capital(exclusive of borrowed capital)and surplus of at least Fifty Million Dollars($50,000,000)and subject to supervision or examination by Federal or State authority. If Trustee merges or becomes consolidated with any other entity qualified to be a successor trustee hereunder, such resulting entity shall become of the Trustee. Section 8.7. Commingling. Trustee may commingle any of the funds held by it but all funds held hereunder shall be accounted for separately notwithstanding any commingling. Section 9.1. Amendments Permitted. This Declaration of Trust may be amended by a Supplemental Declaration of Trust upon the written consent of the Owners of a majority in aggregate principal amount of Certificates then Outstanding,exclusive of Certificates disqualified. No such amendment shall(1)extend or have the effect of extending the fixed maturity of any Certificate 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 consent of the Owner of such Certificate or(2) reduce the percentage of Certificates required for written consent to an amendment of the Purchase Agreement, or(3) modify the Trustee's rights or obligations without its written assent. This Agreement and the rights and obligations of the Owners of the Certificates and the Purchase Agreement and the rights and obligations of the parties thereto,may be modified or amended at any time by a supplemental agreement,without the Owners'consent but only (1)to provide for additions to the Project, (2) 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 Buyer,(3)to cure,correct or supplement any ambiguous or defective provision FHR:lec 151416.03 8/21/96 -9- contained herein or therein, (4)to facilitate Additional Certificates, (5)with respect to rating matters, or(6) in regard to questions arising hereunder which shall not adversely affect the interests of the Certificate Owners. Section 9.3. Disqualified Certificates. Certificates owned by or for Buyer(except any Certificates held in any pension or retirement fund)shall not be deemed Outstanding for the purpose of any consent. Section 10.1. Compliance With and Enforcement of Purchase Agreement. The Buyer covenants and agrees with the Owners of the Certificates to perform all obligations and duties imposed on it under the Purchase Agreement. Section 11.1. Limited Liability of the Buyer. Except for the payment of Payments from Excise Taxes when due and the performance of Buyer's other covenants and agreements in the Purchase Agreement,Buyer shall have no pecuniary obligation or other liability to Seller or the Certificate Owners. Section 11.2. No Liability of the Buyer for Trustee Performance. Buyer shall have no obligation with respect to the Trustee's performance of any duty imposed upon it hereunder. Section 11.4. Opinion of Counsel. Before being required to take any action, Trustee may require an opinion of an Independent Counsel acceptable to the Trustee who may be counsel to any party 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. Section 12.2. Remedies Upon Default;Acceleration. Upon(1)the nonpayment of any Payment when due,(2)Buyer is in violation of any other provision of the Agreement or this Declaration of Trust,(3)the occurrence of an event of default with respect to the 1996 Lease or any Additional Obligations or(4)the insolvency or bankruptcy of the Buyer and if such default has not been cured(i) in the case of nonpayment of any Payment or a Non-payment of the 1996 Lease or of any Additional Obligations,and(ii)in the case of the breach of any other covenant or provision of this Declaration of Trust or the Agreement within sixty (60)days after notice in writing from the Trustee specifying such default, then the Trustee may take whatever action at law or in equity may appear necessary or desirable to collect the Payments and any other amounts payable by the Buyer hereunder or under the Purchase Agreement, then due and thereafter to become due, or to enforce performance and observance of any pledge, obligation, agreement, or covenant of the Buyer under this Declaration of Trust or the Purchase Agreement, (b)terminate construction and acquisition of the Project and transfer to the Buyer any remaining portions of the Project still held by the Trustee, whether or not completed,and(c)pursue any other remedy at law or in equity,including the remedy of specific performance. Section 12.3. Application of Funds. All post default moneys received by the Trustee shall be applied in the following order: First,to the payment of Trustee's Obligation owners'fees,costs and expenses in declaring such Event of Default and in the exercise of remedies, including reasonable compensation to its or their agents, attorneys and counsel; and Second,to the payment of the whole amount of Certificates then unpaid and if moneys shall be insufficient to pay the whole amount then to pay first the interest component then unpaid(ratably to the aggregate of such interest)and then the principal component(ratably to the aggregate of such principal)without preference or priority of any installment of unpaid interest over any other installment of unpaid interest, or any principal over any other principal. Section 12.4. Institution of Legal Proceedings. If one or more Events of Default shall be continuing,Trustee may,and upon the written request of the Owners of a majority in aggregate principal amount of the Certificates then Outstanding,and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of the Owners by suit. Section 12.6. Power of Trustee to Control Proceedings. If upon an Event of Default Trustee shall have taken any action, by judicial proceedings or otherwise, it shall have full power,in the exercise of its discretion,with respect to the continuance,discontinuance, withdrawal, compromise, settlement or other disposal of such action, but Trustee shall not discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation, without the consent of a majority in aggregate principal amount of the Certificates Outstanding. Section 12.7. Limitation on Obligation Owners' Right to Sue. No Owner shall have the right to institute any suit unless (a) such Owner shall have previously given to Trustee written notice of the Event of Default; (b)the Owners of at least a majority in aggregate principal amount of all the Certificates then Outstanding shall have made written request upon Trustee to exercise the powers hereinbefore granted or to institute such a action; (c) said Owners shall have tendered to Trustee reasonable indemnity; and (d)the Trustee shall have omitted to comply for a period of sixty days thereafter. Section 13.1. Defeasance. If and when all Outstanding Certificates shall be paid and discharged in any one or more of the following ways: (a) by causing to be paid the principal of and interest on all Certificates Outstanding, when due and payable; (b) by depositing with a Depository Trustee,in trust for such purpose,money which,together with the amounts then on deposit in the Payment Fund is fully sufficient to cause to be paid all Certificates Outstanding; or FHR:lec 151416.03 8/21/96 -i0- (c) by depositing with a Depository Trustee,in trust for such purpose,any noncallable Defeasance Obligations in such amount as certified by a national firm of certified public accountants as being fully sufficient,together with the interest to accrue thereon,to cause to be paid and discharged all Certificates(including all principal and interest)at their respective maturity dates. All of Trustee's and Buyer's obligations as to Outstanding Certificates shall cease and terminate, except Trustee's Obligation to pay the Certificates from funds deposited. FHR:lec 151416.03 8/21/96 -11- $ THE TOWN OF ORO VALLEY CERTIFICATES OF PARTICIPATION SERIES 1996 CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is undertaken by The Town of Oro Valley, Arizona (the "Town") as the obligated person, in connection with the issuance of The Town of Oro Valley Certificates of Parcipation (the "Certificates"). In consideration of the initial sale and delivery of the Certificates, the Town covenants as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is for the benefit of the Owners of the Certificates and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). 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. "Bond Counsel" shall mean Gust Rosenfeld or such other nationally recognized bond counsel as may be selected by the Town. "Dissemination Agent" shall mean the Town, or any person designated in writing by the Town as the Dissemination Agent. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. Currently, the following are National Repositories: Bloomberg Municipal Repositories P.O. Box 840 Princeton, New Jersey 08542-0840 Telephone: (609)279-3200 Fax: (609) 279-5962 Thomson Municipal Services Group c/o the Bond Buyer Attn: Municipal Disclosure 395 Hudson Street New York, New York 10014 Telephone: (212) 807-3814 Fax: (212) 989-9282 Internet: Disclosure @ Muller.com Kenny Information Systems, Inc. 65 Broadway - 16th Floor New York, New York 10006 Telephone: (212) 770-4595 Fax: (212) 797-7994 FHR:gmh 151676.1 8/21/96 Moody's NRMSIR Public Finance Information Center 99 Church Street New York, New York 10007 Telephone: (800) 339-6306 Fax: (212) 553-1460 Disclosure, Inc. 5161 River Road Bethesda, Maryland 20816 Attn: Document Acquisitions/Municipal Securities Telephone: (301) 951-1300 Fax: (301) 657-1962 "Offering Statement" shall mean the offering statement dated September_, 1996, relating to the Certificates. "Owner of a Certificate" shall mean any beneficial owner of the Certificates. "Participating Underwriter" shall mean any of the original underwriters of the Certificates required to comply with the Rule in connection with offering of the Certificates. "Repository" shall mean each National Repository and each State Repository. "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. "State Repository" shall mean any public or private repository or entity designated by the State of Arizona as a state repository for the purpose of the Rule. As of the date of this Disclosure Certificate, there is no State Repository. Section 3. Provision of Annual Reports. (a) The Town shall, or shall cause the Dissemination Agent to, not later than February 1 of each year (the "Filing Date"), commencing March 1, 1997, provide to each Repository an Annual Report for the fiscal year ending on the preceding June 30 which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than fifteen (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 to the Repositories an Annual Report or any part thereof by the Filing Date required in subsection (a) above, the Town shall promptly send a notice to each Repository in substantially the form attached as Exhibit "A" not later than such Filing Date. (c) If the Town's audited financial statements are not submitted with the Annual Report and the Town fails to provide to the Repositories a copy of its audited financial statements within 30 days of receipt thereof by the Town, then the Town shall promptly send a notice to each Repository in substantially the form attached as Exhibit "B". (d) The Dissemination Agent shall: (i) determine each year prior to the date(s) for providing the Annual Report and audited financial statements the name and address of each National Repository and each State Repository, if any; and (if the Dissemination Agent is other than the Town) (ii) 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 all the Repositories to which it was provided. FHR:gmh 151676.1 8/21/96 -2- Section 4. Content of Annual Reports. (a) The Annual Report may be submitted as a single document or as separate documents comprising a 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 fmancial 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 fmancial statements of the Town are available, the same shall be submitted to each Repository within 30 days of receipt 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 Section 4(a) hereof, annual audited financial statements for the Town. (B) Annually updated financial information and operating data of the type contained in the following subsections of the Official Statement: (I) Schedule of Pledged Excise Tax Receipts (II) Appendix B OTHER? (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 annual 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 annual financial statements is contained in Note 1 of the audited financial statement included within the Official Statement. (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 each of the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Town shall clearly identify each such other document so incorporated by reference. Section 5. Reporting of Significant Events. (a) This Section 5 shall govern the giving of notices by the Town of the occurrence of any of the following events with respect to the Certificates, if material: (1) Principal and interest payment delinquencies; (2) Non-payment related defaults; (3) Unscheduled draws on debt service reserves reflecting fmancial difficulties; (4) Unscheduled draws on credit enhancements reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions or events affecting the tax-exempt status of the Certificates; FHR:gmh 151676.1 8/21/96 -3- (7) Modifications to rights of the Owners of the Certificates; (8) Certificate calls; (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the Certificates; and (11) Rating changes. (b) Whenever a Listed Event occurs, then the Town, if such Listed Event is material, shall promptly file a notice of such occurrence with each Repository; provided, that any event under subsection (a)(1), (6), (8), (9) or (11) will always be deemed to be material. 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 Certificates. 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 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 Bond Counsel, have complied with the requirements of the Rule at the time of the primary offering of the Certificates, 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 the Owners of the Certificates, as determined by Bond Counsel. Notice of any amendment to the accounting principles shall be sent within 30 days to the Repositories. Section 9. Additional Information. If the Town chooses to 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, 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 10. Default. In the event of a failure of the Town to comply with any provision of this Disclosure Certificate any Owner of a Certificate 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 Purchase Agreement which supports the Certificates or the Town's resolution authorizing the Purchase Agreement and the Certificates. Section 11. 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, Bond Counsel or the Town's financial advisor. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Town, the Dissemination Agent, the Participating Underwriter and the Owners of the Certificates, and shall create no rights in any other person or entity. FHR:gmh 151676.1 8/21/96 -4- Section 13. Governing Law. This Disclosure Certificate shall be governed by the law of the State of Arizona and any action to enforce this 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 Rule 15c2-12 and the federal securities law. Date: TOWN OF ORO VALLEY, ARIZONA By Its FHR:gmh 151676.1 8/21/96 -5- EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Obligated Person: Town of Oro Valley, Arizona Name of Issuer: Norwest Bank Arizona, N.A. Name of Bond Issue: Town of Oro Valley, Arizona, Certificates of Participation, Series 1996 Dated date of Certificates: September 1, 1996 CUSIP: NOTICE IS HEREBY GIVEN that the Town has not provided an Annual Report with respect to the above-named Certificates as required by Section 3(a) of the Disclosure Certificate dated September , 1996. The Issuer anticipates that the Annual Report will be filed by Dated: Town of Oro Valley, Arizona By Its EXHIBIT B NOTICE TO REPOSITORIES OF FAILURE TO FILE AUDITED FINANCIAL STATEMENTS Name of Obligated Person: Town of Oro Valley, Arizona Name of Issuer: Norwest Bank Arizona, N.A., Issuer Name of Bond Issue: Town of Oro Valley, Arizona, Certificates of Participation, Series 1996 Dated Date of Certificates: September 1, 1996 CUSIP: NOTICE IS HEREBY GIVEN that the Town failed to provide its audited financial statements with its Annual Report or, if not then available, within 30 days of receipt as required by Section 4(a) of the Disclosure Certificate dated with respect to the above-named Certificates. The Issuer 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 FHR:gmh 151676.1 8/21/96 -6- •- ' I1)yers'1itleJnsurance @rporation NATIONAL HEADQUARTERS Richmond, Virginia • • COMMITMENT FOR TITLE INSURANCE • •r LAWYERS TITLE INSURANCE CORPORATION, A Virginia corporation, herein called the Company, for valuable consideration, hereby commits to issue its policy or policies of title insurance, as identified in Schedule A, in favor of the proposed Insured named in Schedule 1 , A, as owner or mortgagee of the estate or interest covered hereby in the land described or referred to in Schedule A, upon payment of the premiums and charges therefor; all subject to the provisions of Schedule A and B and to the Conditions and Stipulations hereof. This Commitment shall be effective only when the identity of the proposed Insured and the amount of the policy or policies committed for have been inserted in Schedule A hereof by the Company, either at the time of the issuance of this Commitment or by subsequent endorsement. • ••-* This Commitment is preliminary to the issuance of such policy or policies of title insurance and all liability and obligations hereunder shall cease and terminate six (6) months after the effective date hereof or when the policy or policies committed for shall issue, whichever �.► first occurs, provided that the failure to issue such policy or policies is not the fault of the Company. This Commitment shall not be valid or binding until countersigned by an authorized officer or agent. IN WITNESS WHEREOF, the Company has caused the Commitment to be signed and sealed, to become valid when countersigned by an 4 authorized officer or agent of the Company, all in accordance with its By-Laws. This Commitment is effective as of the date shown in Schedule A as "Effective Date." .3, .• CONDITIONS AND STIPULATIONS '" 1. The term "mortgage," when used herein, shall include deed of trust, trust deed, or other security instrument. 1`.:. 2. If the proposed Insured has or acquires actual knowledge of any defect, lien, encumbrance, adverse claim or other matter affecting the • .,.: estate or interest or mortgage thereon covered by this Commitment other than those shown in Schedule B hereof, and shall fail to disclose •• W- such knowledge to the Company in writing, the Company shall be relieved from liability for any loss or damage resulting from any act of e,4 reliance hereon to the extent the Company is prejudiced by failure to so disclose such knowledge. If the proposed Insured shall disclose . such knowledge to the Company, or if the Company otherwise acquires actual knowledge of any such defect, lien, encumbrance, adverse •• claim or other matter, the Company at its option may amend Schedule B of this Commitment accordingly, but such amendment shall not ' relieve the Company from liability previously incurred pursuant to paragraph 3 of these Conditions and Stipulations. • 3. Liability of the Company under this Commitment shall be only to the named proposed Insured and such parties included under the )‘-. definition of Insured in the form of policy or policies committed for and only for actual loss incurred in reliance hereon in under taking in •4".. good faith (a) to comply with the requirements hereof, or (b) to eliminate exceptions shown in Schedule B, or (c) to acquire or create the estate or interest or mortgage thereon covered by this Commitment. In no event shall such liability exceed the amount stated in Schedule ‘.44 ` A for the policy or policies committed for and such liability is subject to the insuring provisions and Conditions and Stipulations and the tocsr Exclusions from Coverage of the form of policy or policies committed for in favor of the proposed Insured which are hereby incorporated by reference and are made a part of this Commitment except as expressly modified herein. 4. Any action or actions or rights of action that the proposed Insured may have or may bring against the Company arising out of the status of the title to the estate or interest or the status of the mortgage thereon covered by this Commitment must be based on and are subject to the provisions of this Commitment. I, `* 1 ,u)yers' tIe Insurance rporation / 6. • V President s Attest: 1Z%?4;z(......, • Countersigned by Secretary v401",.." Agent or Aut Officer • Ikr. This document is printed on white paper with green graduated shading and logo. This document is not valid unless shading is present. COPYRIGHT 1966-AMERICAN LAND TITLE ASSN. 91-88 COVER LITHO IN U.S.A. 1-088-00962 downtown One South Church, Suite 2130 . Tucson, AZ 85701- COMMITMENT FOR TITLE INSURANCE 09/16/96 SCHEDULE BW/sm 1. EFFECTIVE DATE: September 11, 1996 at 7:00 a.m CASE NO. 501,044 DI' 2. POLICY OR POLICIES TO BE ISSUED: (a) Standard Coverage Policy-Form 89 AMOUNT: $ 700,000.00 PROPOSED INSURED: Town of Oro Valley, a municipal corporation (b) AMOUNT: PROPOSED INSURED: NONE (c) AMOUNT: PROPOSED INSURED: NONE 3. TITLE TO THE fee simple ESTATE OR INTEREST IN THE LAND DESCRIBED OR REFERRED TO IN THIS COMMITMENT IS AT THE EFFECTIVE DATE VESTED IN: Canna Financial Corporation, a Nevada corporation 4. THE LAND REFERRED TO IN THIS COMMITMENT IS DESCRIBED AS FOLLOWS: See Exhibit "A" attached hereto and made a part hereof COUNTERSIGNED AT: TUCSON, ARIZONA THIS COMMITMENT IS INVALID UNLESS Lawyers Title of Arizona, Inc. THE INSURING PROVISIONS AND BY: 2 SCHEDULES A AND B ARE ATTACHED. &te -� Authorized Officer ent SCHEDULE A • EXHIBIT "A" Apart of the Northwest Quarter of Section 11, Tbwnship 12 South, Range 13 East, Gila and Salt River Base and Meridian, Pima County, Arizona, described as follows: COMMENCING at the Northwest corner of the said Northwest Quarter; THENCE South 00 degrees 01 minutes 41 seconds East along the West line of the said Northwest Quarter a distance of 631.99 feet; THENCE South 89 degrees 56 minutes 10 seconds East 75.00 feet to the POINT OF BEGINNING on a line 75.00 feet East of and parallel with the said West line; THENCE North 00 degrees 01 minutes 41 seconds West along the said parallel line a distance of 557.11 feet to a line 75.00 feet South of and parallel with the North line of the said Nort~hrwest Q • THENCE North 89 degrees 52 minutes 57 seconds East along the said parallel line a distance of 560.00 feet; THENCE South 00 degrees 01 minutes 41 seconds East 558.88 feet; THENCE North 89 degrees 56 minutes 10 seconds West 560.00 feet to the POINT OF BEGINNING. CASE NO. 501,044 DT SCHEDULE B--SECTION 1 REQUIREMENTS NOTICE OF POSSIBLE ENTITLEMENT TO BENEFITS UNDER SETTLEMENT OF TITLE SEARCH AND EXAMINATION SERVICES ANTITRUST LITIGATION Persons who purchased title insurance,including title search and examination services or other title services, or who became insured under policies of title insurance covering real estate issued in Arizona or Wisconsin issued between January 1, 1981 and June 10, 1986,covering real estate in those states,may be entitled to certain benefits under a final Order and Judgment entered in the Title Search and Examination Services Antitrust Litigation in the United-. States District Court for the District of Arizona. These benefits may include the right to receive the last$5,000 of title insurance at no charge or an increase in the face amount of a title insurance policy purchased during this period of time. Persons who purchased title search and examination services in Wisconsin during the period January 1, 1981 through December 31, 1984,or Arizona during the period January 1, 1981,through December 31, 1982,may be entitled to a cash benefit. For further information,please contact Martha Brissette in the National Headquarters Regulatory Department at 1-800-446-7086. THE FOLLOWING ARE THE REQUIREMENTS TO BE COMPLIED WITH: ITEM (A) PAYMENT TO OR FOR THE ACCOUNT OF THE GRANTORS OR MORTGAGORS OF THE FULL CONSIDERATION FOR THE ESTATE OR INTEREST TO BE INSURED. ITEM (B) PROPER INSTRUMENT(S) CREATING THE ESTATE OR INTEREST TO BE INSURED MUST BE EXECUTED AND DULY FILED FOR RECORD,TO WIT: 1. TAXES for the year 1995 are shown paid in the amount of $8,413.98. (State Tax Parcel No. 224-26-56803) 2. Furnish currently certified copy of a Resolution of The Board of Directors of the Corporation named below, authorizing the execution and delivery by the proper officers of all instruments required to consuxrrnate this transaction. Said certification must be by an officer other than the officer(s) authorized to sign and must state that the resolution has not been revoked: Corporation: Canna Financial Corporation, a Nevada corporation 3. Record Deed from Carma Financial Corporation, a Nevada corporation to Town of Oro Valley, a municipal corporation. CASE NO. 501,044 DT SCHEDULE B--SECTION 2 EXCEPTIONS THE POLICY OR POLICIES TO BE ISSUED WILL CONTAIN EXCEPTIONS TO THE FOLLOWING UNLESS SAME ARE DISPOSED OF TO THE SATISFACTION OF THE COMPANY 1. Defects,liens, encumbrances,adverse claims or other matters,if any,created, first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date the proposed insured acquires for value of record the estate or interest or mortgage thereon covered by the Commitment. 2. TAXES for the year 1996, a lien not yet due and payable. 3. ANY action, subsequent to the date hereof, by the Pima County Assessor and Treasurer reassessing, altering and/or increasing the current or any prior years taxes or assessments. 4. All matters as set forth in the Covenants, Conditions and Restrictions in instrument: Recorded in Docket 8092 Page 888 and anended in Docket 8245 at page 50 and amended in Docket 8259 at page 1632 and amended in Docket 8273 at page 2076 and amended in Docket 8356 at page 869 and wended in Docket 8594 at page 749 and amended in Docket 9687 at page 2201 N YI'E: This exception omits any covenant, condition or restriction based on race, color, religion, sex, handicap, familial status or national origin, unless and only to the extent that the restriction is not in violation of state or federal law, or relates to a handicap, but does not discriminate against handicapped people. Continued. . . NOTE:IF POLICY IS TO BE ISSUED IN SUPPORT OF A MORTGAGE LOAN,ATTENTION IS DIRECTED TO THE FACT THAT THE COMPANY CAN ASSUME NO LIABILITY UNDER ITS POLICY, THE CLOSING INSTRUCTIONS, OR INSURED CLOSING SERVICE FOR COMPLIANCE WITH THE REQUIREMENTS OF ANY CONSUMER CREDIT PROTECTION OR TRUTH IN LENDING LAW IN CONNECTION WITH SAID MORTGAGE LOAN. CASE NO. 501,044 DT SCHEDULE B--SECTION 2 EXCEPTIONS 5. All matters as set forth in the Covenants, Conditions and Restrictions in instrument: Recorded in Docket 8092 Page 1002 NOTE: This exception units any covenant, condition or restriction based on race, color, religion, sex, handicap, familial status or national origin, unless and only to the extent that the restriction is not in violation of state or federal law, or relates to a handicap, but does not discriminate against handicapped people. 6. All matters as set forth in the Covenants, Conditions and Restrictions in instrument: Recorded in Docket 8092 Page 1017 and amended in Docket 8259 at page 1692 and amended in Docket 8273 at page 2069 and amended in Docket 8356 at page 879 NOTE: This exception omits any covenant, condition or restriction based on race, color, religion, sex, handicap, familial status or national origin, unless and only to the extent that the restriction is not in violation of state or federal law, or relates to a handicap, but does not discriminate against handicapped people. 7. All matters as set forth in the Covenants, Conditions and Restrictions in instrument: Recorded in Docket 8622 Page 1529 NOTE: This exception omits any covenant, condition or restriction based on race, color, religion, sex, handicap, familial status or national origin, unless and only to the extent that the restriction is not in violation of state or federal law, or relates to a handicap, but does not discriminate against handicapped people. Continued. . . CASE NO. 501,044 DT SCHEDULE B--SECTION 2 EXCEPTIONS 8. EASEMENT and rights incident thereto, as set forth in instrument: Recorded in Docket: 8622 Page: 1830 Purpose: errant golf balls ,=- If CASE NO. 501,044 DT Area Code 1011 Tax Rate 15.68260 Printed 09/16/1996 14:35 Parcel Number 224-26-56803 Docket Book 10038 Page 871 Date 05/08/1995 Situs Addr Owners Name CARMA FINANCIAL CORPORATION Mailing .Addr % COSCAN ARIZONA INC • ' 7400 N ORACLE RD SUITE 343 . • TUCSON, AZ • Section 11 Township 12S Range 13E Legal S558.88' OFA' N633.88' OF E560' OF W635' OF NW4 7.17 AC SEC 11-12-13 AP93 (FORMERLY 224-26-002S) *** 195 TAXES UPDATED THRU 07/26/96 Value Ratio Land 4§8,488.00 16.0% Improvement 0.00 0.0% Full Cash Value Exemption Net Assessed Land and Impr 468,488.00 0.00 74,958.00 Personal prop 0.00 0.00 0.00 Limited 281,093.00 0.00 44,975.00 1995 TOTAL TAX 8,413.98 FIRST HALF INTEREST SECOND HALF INTEREST TOTAL DUE 0.00 0.00 0.00 0.00 0.00 No Liability BACK TAX INFORMATION UPDATED THRU 07/26/96 CP NO./TYPE SALE DATE YEAR TAXES DUE INT. DUE AMOUNT DUE OLD PCL 0 121594 ' F 94 0.00 0.00 0.00 0 112895 OW 94 0.00 0.00 0.00 1 SUB TOTAL: 0.00 5% ASSIGNEE PD: 0.00 FEES AND 5%: 0.00 INTEREST DUE FROM ASSIGNMENT: 0.00 REDEMPTION FEE: 0.00 DELINQUENT TAXES, INTEREST AND FEES DUE IF PAID DURING SEP 96 0.00 r UPDATED THRU DATES: ASSESSMENTS RESOLUTIONS CITY OF TUCSON 08/20/1996 08/19/1996 ORO VALLEY 08/01/1996 08/01/1996 PIMA COUNTY 08/01/1996 08/01/1996 *** NO ASSESSMENTS *** *** NO RESOLUTIONS *** *** NO SOLD ASSESSMENTS. *** Search Completed 1 i . • . . . . . . . . . . . .. . . . . ., ', . • ' ' • • •• . .. .. , . . .. . . . , . . . • • . .,•' 4 i - '.?' '• .0•.0-;•:°!•-:''.:7'4 "".. '•:''''.. -4P• '.i.....,,..'....... '.: .:'....:,......!..'.'•••• „••••• ''.•....'....- ..;•.•.....,..,.. ••. ........ • ' •‘. . . ..:•':•'. '.:':•. • , . .• •• ,. ,. .• • . .. .". .....•,....i3.....-,r,i,e,ettr.,—,X,X.,...e.P W:2,1,4taist.AX.,.....14 11 i LCORD . ., i AP THIS MAP iS FdEINI.:1-7,!-;EC.) FOR FiEFEFIENC.',E ONLY AND DOES NOT CONSMUTE A SURVEY • ......---............,---- SECTION 11 , TOWNSHIP .12 SOUTH , RANGE 13 EAS S 89d 54' W 5277.36' (GLO) Za -- IQ : • •WV . / ' rrr-i rrr err i 1 i •' 24 MASTERS IiILL LOTS 1-50 p .13 ' , 1 LA _ 6. • g - • co v . 57 .. 41/57M&P ...'$' MONTE pcTh. 1. •.•, . .. 137.76 4,, ci 01:31 DEL ORO 798.66 ' 50,57 10443 0Z1 23.3 91.21 .. . 121,44. . . . . ' • • ° • ,..,, • . . . . . . . . . . . . . . . ..e ir • • ED • ..) . ' ' c1944;. I " : 1 6 CP '11 fr) #' CANADA HILL: 1 •• LOTS 1-187 A 80.02 d If' '' e ESTATES 1 (- • • 81.20 A i', ;I A t > ' 80.39 • , . • -••• -.-- -- --** C-5 11 1 ‘1)),''''' 4e: ' & . PHASE II , I 1 • 27/99 MSc) 1 E2J n-A 0 . ,•'..., 161.62 M 117.41, .T •LOTS —130, 4 Ci° 3 > . 42.67 A z pi 70.89 5 -• ., 2 ,c, 1.82.94 .4.; I.),..• I _ _A.......d....A ;....1_ .......... ....._ ....._ ...._.._. ........ xit.4...._ _ .4(.7. ......... .......... • G' ''t • #.1, ..4 PE Z • '• /., . • . ,,,,, • . z axputomp• WAY 1 .79.00-^ ...• co kr ,• 45/057 •,,,,., T. .r 0: .• %95,5 . Cts . • • lailarmiftr: . PTN. OF . THE HIGHLANDS %c1/4 . ,.., ,. Alid 16/21 M&P •• PUCE •Tr,: g ...,..\.:2, . 4, I / X C'----- i-117411,4.7"7P442231 op, VISTA DEL VISTA ` co"SO /900 -,- •?4, . eo ki .....• o e., .. •,. ' ORO —62 . ,s, ,T I G' ' ESTATES iii___A_LAi _lip...•PIACI• 0 r?.., A,B&C" 232 ' . CANADA HILLS k . • M&P 0, ,5- . . . . ,r4,1, '/ . LOTS 1-137 4.,. o .0'' ligritak (4 ESTATES41/43 M&P 0 (1>. ... , 0 LOTS 1-41 . Q 0 •,,, . . . .. 14. ' i . . z C.A. A&B . 1 , .6vz• ...- AUTUM. -?V.I) P 44\40 •,, :, • • N fa.it>. 4, 9-•#•\9cf)' M&P HILL .. . . ... •., e.g. VISTA 0 Z ,... ... 414. .1 ao, .EL 0110 II Ck1 ,,, LOTS , 1-54 ' : BLOCK 1 U c)co - ,,, -", sat 36/04 .P 41/58 M&Pvik • LAMBERT IMP r4 o pc)co • 45 ' . :6-- LANE • 43.69 ' ' l"490$36... LOTS 1-120 189.',...6 1.41113ERT LANE (0/17 RA.) •. . 4__V137 M&P ---1 1)Q 4 I- 770,6A BLOCK 3S 89c1 52' W 5280' (GLO) 33/62 M&P ASSESSED V/224-25-024F 567' THE VILLAGES OF LA CANADA LOTS 1-500,BLOCK A E 40/59 M&P !i ._ ..... .. ..................__...........••....••••••........ ..••••••.........• •.•••••••••••••••••••••••••••••..... .....................•...... ... ................ ......... ....... ...•...•••••••••...”......-....•.....• • !