Loading...
HomeMy WebLinkAboutMunicipal Property Corporation - Annual Reports (2) AGENDA Town of Oro Valley Municipal Property Corporation ert Cor oration Special Meeting Wednesday, March 14, 2007, 2:30 p.m. Kachina Room 11,000 N. La Canada Drive SPECIAL MEETING - AT OR AFTER 2:30 PM Call to Order Roll Call pp 1. Approval of February 28, 2007 Minutes 2. Election of Board of Directors - APPROVING THE FORM OF AND 3. RESOLUTION MPC NO. 07-01 AUTHORIZING THE EXECUTION AND DELIVERY OF THE FOURTH AMONG THIS ENT TO THE LEASE-PURCHASE PURCHASE AGREEMENT WELLS FARGO BANK, THE TOWN OF ORO CORPORATION, VALLEY ANDXECUTION OF THE THE FORM AND AUTHORIZING THE E N.A.; APPROVING BETWEEN THIS TO THE INDENTURE FOURTH SUPPLEMENT BE AUTHORIZING THE FARGO BANK, N.A.; CORPORATION AND WELLSY THE TOWN OF ORO VALLEY ISSUANCE OF NOT TO EXCEED $22,000,000EXCISE TAX REVENUE N.i AL PROPERTY CORPORATION RPORATION!, � APPROVING BONDS, SERIES REFUNDING 2007 BY THIS CORPORATION;OF A PURCHASE AUTHORIZING THE EXECUTION THE FORM AND SETTING RESPECT TO THE CONTRACT WITH SERIES 2007 BONDS; SALE; WITH RESPECT CONDITIONS AND PARAMETERS TO SUCH AUTHORIZING THE PREPARATION AND APPROVAL OF PRELIMINARY AND FINAL OFFICIAL STATEMENTS PERTAINING TO THE SERIES 2007 BONDS; THE TOWN OF ORO VALLEY TO AUTHORIZING THE TOWN MANAGER "FINAL"; OF STATEMENTS SUCH PRELIMINARY AND DEEM FINAL OFFICIALDEPOSITORY TRUSTEE; THE APPOINTMENT AUTHORIZING OF A THE EXECUTION OF A AND AUTHORIZING APPROVING THE FORMOF NT' DEPOSITORY TRUST AGREEMENT; AUTHORIZING MULTIPLE SERIES ONDS� AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY B N OF THE TRANSACTIONS CONTEMPLATED BY THE CONSUMMATION TO THIS RESOLUTION; AND DELEGATING CERTAIN DUTIES. Adjournment The Town of Oro Valley complies with the Americans with Disabilities Act(ADA). If any person with a disability needs any type of accommodation, please notify the Town Clerk's Office at least 5 days prior to the meeting at 229-4700. Posted: 03/09/07, 4:00 p.m. (cp) MINUTES OF THE ORO VALLEY MUNICIPAL PROPERTY CORPORATION SPECIAL MEETING KACHINA CONFERENCE ROOM 11,000 N. LA CANADA DRIVE FEBRUARY 28, 2007 CALL TO ORDER: 4:00 p.m. PRESENT: Tom Vetrano, Treasurer Kent Russell ALSO PRESENT: Stacey Lemos, Finance Director Scott Ruby, Bond Counsel, Gust Rosenfeld Mark Reader, Financial Advisor, Stone & Youngberg Kathryn Cuvelier, Town Clerk REVIEW AND DISCUSSION OF THE PROPOSAL TO ISSUE EXCISE TAX REVENUE REFUNDING BONDS, SERIES 2007 Finance Director Stacey Lemos explained that the purpose of this study session is to brief p issuance of Town of Oro Valley Excise Tax Refunding the MPC members of a proposed n amount not to exceed $20,000,000. She explained that staff is Bonds, Series 2007 Ina recommending the refundingbecause the market conditions of approximately 4.4% are lower than the current rates on the outstanding bonds, and the minimum 2% savings threshold requirement is currentlyexpected to be met. It is proposed that the debt service be structured to capture significant debt service savings in the Water on the new bonds p Utility Fundin years,the early so that those funds may be used to help offset some of the future costs of financingthe deliveryof CAP water to the Town of Oro Valley. tin the firm of Gust Rosenfeld explained the legal aspects of the Scott Ruby, representing , . . Also, Mark Reader, representing the underwriting firm of Stone & proposed transactionp the financial aspects of the proposed refunding and distributed a 5 Youngberg, explainedp year index showing Exempt Tax Exem t Interest Rate Trends. He also distributed a summary of Outstanding Excise Tax Revenue Debt as of January 1, 2007. The next meeting will be held on March 14, 2007 at 2:30 p.m. to review and approve the Resolution authoring the Excise Tax Revenue Refunding Bonds, Series 2007. This meeting will be held in the Kachina Conference Room. ADJOURNMENT A MOTION was made byKent Russell to adjourn the special meeting at 4:40 p.m. MOTION seconded by Tom Vetrano. MOTION carried 2—0. 02/28/07 Minutes, Oro Valley Municipal Property Corporation 2 Prepared by: Kathryn E. Cuvelier, CMC Town Clerk .......... ........ ........._...... TOWN OF ORO VALLEY MPC BOARD COMMUNICATION MEETING DATE: March 14, 2007 TO: MUNICIPAL PROPERTY CORPORATION BOARD MEMBERS FROM: — Stacey temo-s,Finance Director SUBJECT: Resolution No. MPC 07-01 Authorizing the Issuance of Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007 p Y SUMMARY: The item resented herein requests Municipal Property Corporation Board approval of a resolution p that would authorize the issuance of Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds. Approval of this resolution would also approve the execution of all related documents that are itemized in this communication. This item has been scheduled for approval bythe Town of Oro Valley Mayor and Town Council on March 21, 2007, and a resolution for pp their approval has been prepared. As a result of historical low interest rates which currently prevail, the bond issuance as proposed is an advanced refunding of some of the Town's existing outstanding bonds relating to the issuances from 1996 (Water Company Acquisitions), 2000 (Naranja Land Acquisition) and 2001 (Water Library).and ° Improvements The average interest rate of these outstanding issuances is 5.3/° compared to an estimated average rate for the new issue of 4.4% which is subject to changed based on the Municipal and U.S. Government securities markets. Based on current assumptions, the refunding would result in net cash flow savings to the Town of approximately $2.1 million which, on a netp resent value basis, would result in debt service savings of approximately $930,000 or approximately approximately 4.90% of the principal amount of bonds being refunded. Of this amount, app o pp 85% of the debt service savings would be realized by the Water Utility Fund and 15 % by the General Fund. Typically, when the present value savings as a percent of the bonds to be refunded equals two percent or more, cities and towns will effectuate a refunding transaction based on this minimum threshold/metricp arameter. As indicated above, the current analysis indicates a spread on this proposed issue of 4.90% resulting in an efficient refunding opportunity for the Town, again depending upon market conditions at the time of sale. Therefore, staff is recommending the refunding because the market conditions of approximately 4.4% are lower than the current rates on the outstanding bonds, and the minimum 2% savings threshold requirement is currently expected to be met. It isro osed that the debt service schedule on the new bonds be structured to capture significant p p debt service savings in the Water Utility Fund in the early years, so that those funds may be used to help offset some of the future costs of financing improvements to the existing water system. Bond counsel, represented by the firm of Gust Rosenfeld, will be present by telephone should there be any qregarding arding the legal aspects of the proposed transaction. Also, Mr. Mark Reader g and Mr. Josh Ormiston, representing the underwriting firm of Stone & Youngberg, will also be present by telephone hone should there be any questions regarding the financial aspects of the proposed refunding. G:ISTACEYICouncil CommunictBond Refunding 2007 MPC Approval 3-14-07 mtg.doc TOWN OF ORO VALLEY MPC BOARD COMMUNICATION Page 2 of 2 ATTACHMENTS: 1. Financial Summary of Proposed Refunding 2. Resolution No. (R)07- 01 3. Fourth Amendment to Lease-Purchase Agreement between the Town as Lessee and the Municipal Property Corporation as Lessor pp 4. Fourth Supplement to Trust Indenture between Wells Fargo Bank Arizona and the Municipal Property Corporation 5. Draft Preliminary Official Statement 6. Bond Purchase Agreement 7. Resolution No. MPC- 07-01 8. Depository Trust Agreement 9. Continuing Disclosure Certificate SUGGESTED MOTION: I move to approve Resolution No. MPC 07-01 Authorizing the Issuance of Town of Oro Valley Municipal Property Corporation al Pro ert Cor Excise Tax Revenue Refunding Bonds, Series 2007. 1i& t i Stacey Led.s Finance BItctor adV4s4---- David L. Andrews Town Manager G:ISTACEY1Council CommuniclBond Refunding 2007 MPC Approval 3-14-07 mtg.doc RESOLUTION NO. MPC 07-01 RESOLUTION APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE FOURTH AMENDMENT TO THE LEASE-PURCHASE AGREEMENT AMONG THIS CORPORATION, THE TOWN OF ORO VALLEY AND WELLS_FARGO_ BANK,_NA • _APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF THE FOURTH SUPPLEMENT TO THE INDENTURE BETWEEN THIS CORPORATION AND WELLS FARGO BANK, N.A.; AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $22,000,000 THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION EXCISE TAX REVENUE REFUNDING BONDS, SERIES 2007 BY THIS CORPORATION; APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF A PURCHASE CONTRACT WITH RESPECT TO THE SERIES 2007 BONDS; SETTING CONDITIONS AND PARAMETERS WITH UCH SALE; AUTHORIZING THE PREPARATION AND APPROVAL RESPECT TO S OF PRELIMINARY AND FINAL OFFICIAL STATEMENTS PERTAINING TO THE NDS; AUTHORIZING THE TOWN MANAGER OF THE TOWN OF SERIES 2007 BO , ORO VALLEY TO DEEM SUCH PRELIMINARY AND FINAL OFFICIAL "FINAL"; AUTHORIZING THE APPOINTMENT OF A DEPOSITORY STATEMENTS TRUSTEE; APPR OVING THE FORM AND AUTHORIZING THE EXECUTION OF A DEPOSITORY TRUST AGREEMENT; AUTHORIZING MULTIPLE SERIES OF BONDS; AUTHO RIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION; AND DELEGATING CERTAIN DUTIES. WHEREAS, as of April 1, 1996, the Town of Oro Valley (the "Town") and the Town of Oro Valley MunicipalProperty Pro ert Corporation (the "Corporation") entered into a Lease- Purchase Agreement recorded in Docket 10375 at Page 1317, Official Records of Pima County, Pima CountyRecorder's Office (the "Lease-Purchase Agreement"); and WHEREAS, as of June 1, 1999, the Town and the Corporation entered into a First Amendment to Lease-Purchase Agreement recorded in Docket 11087 at Page 866, Official Records of Pima CountyRecorder's Office (the "First Amendment"); and WHEREAS, as of November 1, 2000, the Town entered into a Purchase Agreement (the Agreement")2000 Purchase A reement") by and between the Town, as Buyer, and . Wells Fargo Bank,N.A., as Trustee (the "Series 2000 Trustee"); and WHEREAS, as of April 1, 2001, the Town and the Corporation entered into a Second Amendment to Lease-Purchase Agreement recorded in Docket 11546 at Page 2861 Official Records of Pima CountyRecorder's Office (the "Second Amendment"); and WHEREAS, as of December 1, 2003, the Town and the Corporation entered into a Third Amendment to Lease-Purchase Agreement (the "Third Amendment"); and WHEREAS, as of September 1, 2005, the Town entered into a Purchase • p �� and The Agreement (the "Series 2005 Purchase Agreement ) by and between the Town, as Buyer,Bank ofpan New York Trust Company,N.A., as Trustee (the "Series 2005 Trustee"); and y KCH:joy 713210.03 03/06/07 WHEREAS the Town, the Corporation and Norwest Bank Arizona, N.A. (now Wells Fargo Bank, N.A.), as trustee (the "Trustee"), entered into a Trust Indenture dated as of providing 1, 1996 (the "1996 Indenture");")� for the issuance of $28,400,000 Town of Oro Valley Municipal Property Corporation Water System Acquisition Bonds, Series 1996 (the "Series p y rp 1996 Bonds"); and WHEREAS, the Town, the Corporation and the Trustee. entered into a First Supplement to Indenture dated as of June 1, 1999 (the "First Supplement") providing for the issuance of$4,930,000 Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 1999 (the "Series 1999 Bonds"); and WHEREAS, the Town entered into a Trust Agreement dated as of November 1, 2000 (the "Series 2000 Trust Agreement")" by and between the Town, as Buyer, and the Series greement 2000 Trustee, providingfor the issuance of $2,580,000 Excise Tax Revenue Obligations, Series 2000 (the "Series 2000 Obligations"); and WHEREAS, the Town, the Corporation and the Trustee entered into a Second p Supplement to Indenture dated as of April 1, 2001 (the "Second Supplement") providing for the issuance of$9,010,000 T n of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 2001 (the "Series 2001 Bonds"); and WHEREAS, the Town, the Corporation and the Trustee entered into a Third Supplement to Indenture dated as of December 1, 2003 (the "Third Supplement") providing for the issuance of $15,750,000 Town of Oro Valley Municipal Property Corporation Excise Tax 750, Revenue Refunding Bonds, Series 2003 (the "Series 2003 Bonds"); and WHEREAS, the Town entered into a Trust Agreement dated as of September 1, "Series2005 Trust Agreement") byand between the Town, as Buyer, and The Bank of 2005 (the g ) New York Trust Company, N.A. as Trustee (the "Series 2005 Trustee"), providing for the issuance of $6,215,000 Excise Tax Revenue Obligations, Series 2005 (the "Series 2005 Obligations"); and WHEREAS, the Town and the Corporation now wish to issue a series of The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007 (the "Series 2007 Bonds") as "Additional Obligations" as defined in the 1996 Indenture andto use the proceeds thereof to (1) refund certain outstanding obligations of the and the Town (the "Obli ations Being Refunded") and (2) pay the costs of issuance of Corporation g the Series 2007 Bonds; and WHEREAS, the Series 2007 Bonds will be issued through a fourth supplement to the 1996 Indenture to be dated as of the dated date of the Series 2007 Bonds as provided herein (the "Fourth Supplement") 1996 Indenture, as supplemented by the First Supplement, the ppement ) pp Second Supplement, the Third Supplement and the Fourth Supplement, is referred to herein as the "Trust Indenture"); and WHEREAS, top rovide for payment of the Series 2007 Bonds, the Corporation and the Town will enter into the fourth amendment to the Lease-Purchase Agreement (the "Fourth Amendment") to be dated as of the dated date of the Series 2007 Bonds as provided herein (the KCH:joy 713210.03 03/06/07 -2- Lease-Purchase Agreement, as amended bythe First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment, is referred to herein as the "Lease"); and WHEREAS, the Corporation wishes to aid the Town by refunding the Obligations Being Refunded; and WHEREAS, this Corporation deems it necessary to refund the Obligations Being i'p Refunded through the issue Amendment and the Fourth Supplement and to and sell not to exceed $22,000,000 of the Series 2007 Bonds and to increase the Rental Payments (as defined in pursuant Trust Indenture) to be made bythe Town to the terms of the Lease to cover the increased debt service caused bythe issuance of the Series 2007 Bonds; and AS the Reserve Fund (as such term and all other initially capitalized WHERE terms used herein are hereinafter defined or defined in the Indenture) was funded with respect to the the Series 1996 Bonds bydeposit of cash in the aggregate amount of$1,970,000; and p upon defeasance of all of the Series 1996 Bonds, that portion of the WHEREAS, p Reserve Fund funded for the Series 1996 Bonds may be released and the amount therein used to refund ap ortion of the Obligations Being Refunded; and there have been placed on file with the Secretary of the Corporation WHEREAS, and presented to the meetingat which this 2007 Corporation Resolution was adopted (i)the proposed form of the Fourth Amendment; (ii) the proposed form of the Fourth Supplement; (iii) the proposed form ofAgreement the Bond Purchase A reement (the "Series 2007 Purchase Agreement"), (the "Ori inal Series 2007 Purchaser"); (iv) the proposed form of a from Stone & Youngberg LLC "Original Depository Trust Agreement to be dated the dated date of the Series 2007 Bonds (the "Series 2007 ent" byand amongWells Fargo Bank, N.A., as depository trustee (the Depository Trust Agreement")"Series 2007 Depository Trustee"), the Town and the Corporation; and (v) a draft of a preliminary official statement (the "PreliminaryOfficial Statement") relating to the Series 2007 Bonds; and WHEREAS, the Series 2007 Bonds will be sold through negotiation to the • Purchaser, pursuant to the Series 2007 Purchase Agreement and in Original Series 2007 accordance with the conditions and parameters set forth herein; and WHEREAS, if it is determined to be in the best interest of the Town and the authorized herein may the bonds be issued in more than one series, with distin • guishing series designations,nations in the aggg re ate not to exceed the maximum amount permitted hereby; and WHEREAS, to refund the Obligations Being Refunded, the Corporation hereby adopts this 2007 Corporation Resolution and approves and authorizes the execution of the Fourth Amendment, the Fourth Supplement, the Series 2007 Depository Trust Agreement and the Series 2007 Purchase Agreement and the issuance and sale of the Series 2007 Bonds; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, THAT: KCH:joy 713210.03 03/06/07 -3- Section 1. Definitions. "First Amendment" means the First Amendment to the Lease-Purchase Agreement dated as of June 1, 1999. "First Supplement" pp means the First Supplement to Trust Indenture dated as of June 1, 1999. "Fourth Amendment" means the Fourth Amendment to the Lease-Purchase Agreement, dated as of the dated date of the Series 2007 Bonds. "Fourth Supplement" means the Fourth Supplement to Trust Indenture, dated as of the dated date of the Series 2007 Bonds. "Indenture" means the Trust Indenture, as supplemented by the First Supplement, the Second Supplement, the Third Supplement and the Fourth Supplement and all later pp supplements. "Lease" means the Lease-Purchase Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment and all later amendments. "Obligations Being Refunded" means the Series 1996 Bonds Being Refunded, the � Series 1999 Bonds Being Refunded, the Series 2000 Obligations Being Refunded, the Series 2001 Bonds Being Refunded, the Series 2003 Bonds Being Refunded, and the Series 2005 Obligations Being Refunded. "Original Series 2007 Purchaser" means Stone & Youngberg LLC, the original purchaser of the Series 2007 Bonds. "Rental Payments" means the payments to be made by the Town under the Lease. "Second Amendment" means the Second Amendment to the Lease-Purchase Agreement, dated as of April 1, 2001. means the Second Supplement Supplement" to Trust Indenture, dated as of April 1, 2001. "Series 1996 Bonds" means The Town of Oro Valley Municipal Property Corporation Municipal Water System Acquisition Bonds, Series 1996. "Series 1996 Bonds Being Refunded" means that portion of the Series 1996 Bonds being refunded with the proceeds of the Series 2007 Bonds. "Series 1999 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 1999. "Series 1999 Bonds Being Refunded" means that portion of the Series 1999 Bonds being refunded with the proceeds of the Series 2007 Bonds. KCH:joy 713210.03 03/06/07 -4- "Series 2000 Obligations" means the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2000. "Series 2000 Obligations Being Refunded" means that portion of the Series 2000 Obligations beingrefunded with the proceeds of the Series 2007 Bonds. g "Series 2000 Trust Agreement" means that Trust Agreement dated as of November 1, 2000, byand between Wells Fargo Bank, N.A., as Trustee, and the Town of Oro Valley, Arizona, as Buyer. "Series 2000 Trustee" means Wells Fargo Bank, N.A., acting as Trustee under the Series 2000 Trust Agreement. "Series 2001 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 2001. "Series 2001 Bonds Being Refunded" means that portion of the Series 2001 Bonds being refunded with the proceeds of the Series 2007 Bonds. "Series 2003 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2003. "Series 2003 Bonds Being Refunded" means that portion of the Series 2003 Bonds being refunded with the proceeds of the Series 2007 Bonds. "Series 2005 Obligations" means the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2005. "Series 2005 Obligations Being Refunded" means that portion of the Series 2005 Obligations beingrefunded with the proceeds of the Series 2007 Bonds. g "Series 2005 Trust Agreement" means that Trust Agreement dated as of September r 1 2005, byand between The Bank of New York Trust Company, N.A., as Trustee, and the Town of Oro Valley, Arizona, as Buyer. "Series 2005 Trustee" means The Bank of New York Trust Company,N.A., acting as Trustee under the Series 2005 Trust Agreement. "Series 2007 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007. "Series 2007 Depository Trust Agreement" means the Depository Trust Agreement dated as of the dated date of the Series 2007 Bonds by and among the Depository Trustee, the Town and the Corporation. "Series 2007 Depository Trustee" means Wells Fargo Bank, N.A., or any successor thereto, as depository trustee under the Series 2007 Depository Trust Agreement. p y KCH:joy 713210.03 03/06/07 -5- "Series 2007 Purchase Agreement" means the Purchase Agreement pertaining to the initial purchase of the Series 2007 Bonds among the Original Series 20073 Purchaser, the Corporation and the Town. "Series 2007 Continuing Disclosure Agreement" means the Continuing Disclosure Undertaking of the Town substantially in the form attached to the Preliminary Official Statement pertaining to the Series 2007 Bonds. "Series 2007 Rental Payments" means the additional Rental Payments to be made by the Town under the Fourth Amendment which are assigned by the Corporation to the Trustee by the Fourth Supplement. "Third Amendment" means the Third Amendment to the Lease-Purchase Agreement, dated as of the dated date of the Series 2003 Bonds. "Third rd Supn lement" means the Third Supplement to Trust Indenture, dated as of the dated date of the Series 2003 Bonds. Section 2. Findings and Determinations. A. On behalf of this Corporation, this Board finds and determines as follows: 1. The Series 2007 Bonds will be issued as "Additional Obligations" for purposes of the Lease and the Indenture. Such Additional Obligations are hereby authorized to be issued to refund 2. g certain obligations orp f the Corporation and the Town which financed facilities suitable for use by the Town or its agencies or instrumentalities. 3. The issuance of such Additional Obligations is hereby determined and declared to for be necessarythe purpose of refunding the Obligations Being Refunded. p � 4. This Corporation is in compliance with all covenants and undertakings set forth in the Lease and in the Indenture. proceeds The of the sale of the Series 2007 Bonds will be applied solely to refinance or refund bonds or other obligations which had been issued to finance the cost of acquiring, constructing, reconstructing or improving domestic water systems, buildings, , and other real andpersonal properties suitable for use by and leasing to the Town or its equipment p p agencies or instrumentalities, and to pay the costs of issuance of the Series 2007 Bonds and the Issuance thereof is herebydetermined and declared by this Corporation to be necessary for that purpose. 6. The Series 2007 Bonds, as 'Additional Obligations (as defined in the equally and ratablysecured by the Lease without preference as to priority of Indenture), shall be q y any of the Series 2007 Bonds over the Series 1999 Bonds, the Series 2001 Bonds, the Series 2003 Bonds and anyother bonds or other obligations, except as expressly provided in the Indenture. KCH:joy 713210.03 03/06/07 -6- 7. The conditions of Section 3.03, 3.05 and 7.05 of the Lease are, as of the date hereof, and will be, at the date of issuance of the Series 2007 Bonds, fully satisfied. B. Further, on behalf of this Corporation, this Board finds and determines that the refundingof the Obligations Being Refunded pursuant to the terms of the Lease, the issuance g eries 2007-BBonds pursuant-to the Indenture the entry-into-the-Fourth Amendment the e - --- -ofthe p Fourth Supplement, the Series 2007 Depository Trust Agreement and the Series 2007 Purchase Agreement are all in furtherance of the Corporation and the Town's purposes, in the public interest and will enhance the standard of living within the Town. Section 3. Authorization of the Series 2007 Bonds. This Board hereby authorizes the sale issuance and delivery of the Series 2007 Bonds byte Corporation. The Series 2007 Bonds shall be designated "The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue RefundingBonds, Series 2007" and shall be issued in a principal amount of not to exceed 000,000. The Series 2007 Bonds shall be in the denomination of$5,000 or any $22 integral multiples thereof; all Series 2007 Bonds shall be dated April 1, 2007, or such later date as is set forth in the Series 2007 Purchase Agreement, and shall bear interest from such date payable on January 1 andy ofyear,Jul 1 each commencing January 1, 2008 or such later date as the President of this Corporation, with the concurrence of the Mayor of the Town, may approve. The rp yield on the Series 2007 Bonds shall not exceed 5.5% per annum, and the Series 2007 Bonds shall mature on July 1 in not to exceed thirty (30) ears from the date of the Series 2007 Bonds. This Y Board hereby requiresthe present value of the debt service savings, net of all costs associated with the Bonds shall be not less than 2.5% of the principal amount of the Obligations Being Refunded. forms, terms andprovisions of the Series 2007 Bonds and the provisions for The the signatures, authentication, payment, registration, transfer, exchange, redemption and number shall be as set forth in the Indenture and as such, are hereby approved. If the terms and conditions of the Series 2007 Purchase Agreement meet the terms and conditions for the Bonds set forth herein, then the sale of the Series 2007 Bonds to the Series 2007 Purchaser pursuant to the provisions of the Series 2007 Purchase Agreement Original is hereby authorized. The Series 2007 Bonds shall be delivered to or upon the order of the Original Series 2007upon receipt Purchaser i t of payment therefor. The officers, employees and p attorneys of the Town are herebyvested with all power and authority to issue, sell and deliver the Series 2007 Bonds in accordance herewith. Section 4. Authorization of Documents. The form, terms andp rovisions of the Fourth Amendment, the Series 2007 Purchase Agreement, the Fourth Supplement and the Series 2007 Depository Trust Agreement are substantially in the form of such documents (including the exhibits thereto) presented at the meeting of this Board at which this Resolution was adopted or on file with the Town are hereby such insertions, deletions and changes as shall be approved by the Mayor or the approved, with Finance Director of the Town, with the concurrence of the President. The President, with the concurrence oy f the Mayor of the Town, is specifically authorized to insert the final terms and conditions of the Series 2007 Bonds in any of the foregoing documents, so long as such term and conditions are withinthe parameters of this 2007 Corporation Resolution. The President, with the KCH:joy 713210.03 03/06/07 -7- concurrence of the Mayor of the Town, is hereby authorized and directed to execute and deliver those documents which are to be executed by or for this Corporation and such other documents and instruments and make such certifications and declarations as are necessary to complete the transaction and the execution of such documents shall be conclusive evidence of such approval. �e R efu n d in' of Obli.ations -Rein'--Refunded:T-ie refunding-of-the-ct�on� ns BeingRefunded is herebyauthorized. The Finance Director of the Town shall --- Obligations and identifythe principal amounts and maturity dates of the Series 1996 Bonds, the determine p p Series 1999 Bonds, the Series 2000 Obligations, the Series 2001 Bonds, the Series 2003 Bonds Series 2005 Obligations which will constitute the Obligations Being Refunded, and the and the g dates on which theyshall be redeemed in advance of maturity. Proceeds of the Series 2007 Bonds will be deposited with the Series 2007 Depository Trustee pursuaan-to the Series - 20 7-Depository Trustg Agreement and invested in U.S. Government securities, the maturing principal and interest willprovide for the payment of the debt service on the Obligations Being Refunded and of which p Y the redemption of the Obligations Being Refunded on the dates set therefor. The Series 2007 p g Depository Trustee is authorized and directed, as provided in the Series 2007 Depository Trust pp Agreement, to transfer to each applicable trustee of any series of Obligations Being Refunded such amounts at such times as necessary to make such payments. Section 6. The Official Statement. The Preliminary Official Statement on file with the Corporationhereby approved is a roved for use with respect to the sale of the Series 2007 Bonds. g The Town Manager shall oversee the final preparation of the Preliminary Official Statement. The President, with the concurrence of the Town Manager, is authorized and empowered on behalf of Corporation to deem such preliminary official statement "final" for all purposes of Section this 240.15c2-12, Regulations,Rules and Re ulations, Securities Exchange Act of 1934 (the "Rule"), and its circulation and distribution bythe Town, the Corporation and the Original Series 2007 Purchaser approved.areherebya roved. The Town and the Corporation will cause the final official statement (the "Official Statement") in substantially the form of the Preliminary Official Statement referred to aboveto prepared be and distributed with the Series 2007 Bonds. The President, with the concurrence of the Mayor of the Town, is authorized to act on behalf of this Corporation to approve, execute and deliver the Official Statement on behalf of this Corporation and such execution by the President shall be deemed conclusive evidence of approval of the Official Statement and that the Official Statement has been "deemed final" pursuant to the Rule. Section 7. Request for Trustees and Town Action. This Corporation hereby requests the Town and the Trustee to take any and all actions necessary to cause the issuance, sale and deliveryof the Series 2007 Bonds and the refunding of the Obligations Being Refunded. This Corporation herebyrequests the Town, the Trustee, the Series 2000 Trustee, the Series 2005 Trustee and the Series 2007 Depository Trustee to take any and all action necessary in connection with the execution and deliveryof the Fourth Amendment, the Fourth Supplement, the Series 2007 Purchase Agreement, the Series 2007 Depository Trust Agreement and the Continuing Disclosure Agreement. The Trustee, the Series 2000 Trustee, the Series 2005 Trustee and the Series 2007 Depository Trustee are authorized and directed to take all action necessary to refund the Obligations Being Refunded, as applicable,licable, in accordance with instructions from the Finance Director of the Town. KCH:joy 713210.03 03/06/07 -8- Section 8. The Purchase Agreement and Insurance. This Corporation hereby authorizes the execution of, and requests the Town to execute and enter into, the Series 2007 PurchaseAgreementupon approval of the final terms and conditions and to cause the Series pp 2007 Bonds to be sold to the Original Series 2007 Purchaser pursuant to the terms thereof. The Series 2007proceeds Bond shall be used only to refund the Obligations Being Refunded and pay 4 .. - . - ._-_ . - ' uanc: , sale and_insurance, if applicable, pertaining—to-the—Series a - The Corporation mayexpend the Series 2007 Bond proceeds to purchase bond 2007 Bonds. rp p insurance or other credit enhancements for all or part of the Series 2007 Bonds and to purchase reserve fund guarantees or suretybonds to fund any required reserve fund. The Corporation, the Town and the Trustee are authorized and directed to pay or cause to be paid such premiums, fees or_cQsts,together with all other fees, costs and expenses of issuance, from the Series 2007 Bond proceeds. Section 9. Pledge of Excise Taxes. To secure the payment of the increased Rental Payments provided for in the Fourth Amendment, the Corporation hereby accepts the Town's pledge of the Excise Taxes. Section 10. Resolution a Contract. After any of the Series 2007 Bonds are bythe Trustee to the Original Series 2007 Purchaser thereof upon receipt of payment delivered g therefor, this 2007 Corporation Resolution shall be and remain irrepealable until the Series 2007 Bonds and the interest thereon shall have been fully paid, cancelled and discharged. Section 11. Liquidation of Reserve Fund. If the Series 1996 Bonds Being Refunded include all the remainingSeries 1996 Bonds, the Trustee is directed to sell, as directed Director, the portion of the Reserve Fund funded with the proceeds of the Series by the Finance and transfer the proceeds from the sale to the Depository Trustee to contribute to the 1996 Bonds refunding of the Obligations Being Refunded. Section 12. Issuance in One or More Series. If it is advantageous to the and the Town, as determined by the Finance Director of the Town, the Series 2007 Corporation Bonds may be issued in more than one series from time to time, without further action of the Board or th e Council, providedaggregate that the a gregate principal amount of all such series not exceed $22,000,000. If issued in more than one series, each series shall be designated to distinguish it the others, and shall have such dated date, interest rates, maturity dates, principal amounts, from redemptionprovisions rovisions and other terms as are determined pursuant to the provisions hereof, and all references herein to the Series 2007 Bonds, the Fourth Amendment, the Fourth Supplement, the g Series 2007 Purchase Agreement, the Series 2007 Depository Trust Agreement and other documents shall also refer to the bonds and corresponding similar documents entered into from p time to time for each separate series with such titles, dated date and other designations as may be appropriate to distinguish the documents of each series. Section 13. Authorization and Ratification. All actions of the officers and rp agents of this Corporation, the Town or the Mayor and Town Council of the Town which conform to the purposes and intent of this 2007 Corporation Resolution and which further the issuance and sale of the Series 2007 Bonds and the refunding of the Obligations Being Refunded as contemplated by ntem lated this 2007 Corporation Resolution, whether heretofore or hereafter taken are ratified, confirmed and approved. The proper officers and agents of this Corporation are authorized and directed to do all such acts and things and to execute and deliver all such KCH:joy 713210.03 03/06/07 -9- documents on behalfCorporationas may of this be necessary to carry out the terms and intent of Y this 2007 Corporation Resolution. Section 14. Severability. If any section, paragraph, clause or phrase of this 2007 Corporation Resolution shall for anyreason be held to be invalid or unenforceable, the .-- -- -rceabilit of such secti�lr,- arag-raplvclause-or phrase-shall-not-affoc any of mvalii�ty or unen- ability Y .p the remaining provisions of this 2007 Corporation Resolution. Section 15. Waiver of Inconsistency. All orders and resolutions or parts thereof inconsistent herewith are herebywaived to the extent only of such inconsistency. This waiver shall not be an construed as revivingorder, resolution or ordinance or any part thereof. Y PASSED, ADOPTED AND APPROVED on March 14, 2007. President, The Town of Oro Valley Municipal Property Corporation ATTEST: Secretary, The Town of Oro Valley Municipal Property Corporation APPROVED AS TO FORM: GUST ROSENFELD P.L.C. Bond Counsel KCH:joy 713210.03 03/06/07 -1 0- CERTIFICATION pp , the dulyappointed and acting Secretary of The I, Oro ValleyMunicipal Property Corporation, do hereby certify that the above and Town of p p Y foregoing Resolution No. MPC was duly passed by the Board of Directors of The Town of 'unicipa `ro ert Co -oration at a regularlyscheduled ee-tii -on I-arch-l 4, Oro a ey p p Y �Y 2007 and the vote was aye's, nay's and absent, that the President and Secretary were present thereat. DATED: , 2007. Secretary, The Town of Oro Valley Municipal Property Corporation KCH:joy 713210.03 03/06/07 -1 1- V V v ^—x N.4 V F h r1 N N^x M rt M F V OC N N C h r1 h h r1`.00 ,•Q N M U V Z M V h M V V M N f'1 7 V C�'t � Y � V7 Gam_ � �G,�vl,7 N of ... a N 7 Y M M M M M M M M M M M N N N N N Y N V NN—Mo S00 N7C 7,v Shh V 2 Y 1.P'1 tNCXx hx�G\r0:x 0•1 VhN,V r V 0 C 1NtN ' N Vh 00 xNO U7 V Y.4 R 4 71 V V V orV V.,o 7 Q 7 2 (✓ H H O O V � Y 7 x V g u N .z x. x a h ?v'i Ni G N ry r. Q^V 00 M t2 r'1 h Y �h �00 h V r1 M N L,x�:an M rhi cti gy =N N N N NN u V x w --c9c„(cocc_c^acoccco 0 c >zi o c 8 p c c o c c e c c c c c c c c c a N W�n vi C�vi vi vi C O C O vi v',C O N M 7 r1 v1 V h^O ,N M V h•.'� N Q S. H C N N N N N N N N M M M Y 7 O u a. N _1 a� rte+ ... r o c c x x x^rri r��1 r�i o'v _ V h,,,V,,;V,et 1 M x M E r1 7 r": OC h h h ri^e 7 7 r.O 1 t\ 'C Q M C p. Gam,6, n G�.v ao.x x N an (- iii --N--... ... N e I's C C C C x x i.0o x v'1 v1 v1 C C '� N'f� h M JO M;�.v1 T M �' (( (Q r, C r x M x Z.r1 00^ral '� I:, M,.rt h r1 V1 7 M M N V. g _h _s H a- w w o N N Ls] a� �•' c ,- "'R'R" s v coc-c c -.c c o 4 O M Nc ic x C_p^C C c C_C y 'n. C E C^C hi F, x a- ov 1N ,is H V vmM- NM VVr M 1 � ri C O OC v1 V V V O O c^O O C u x h C O C O h r h to C H N h v1 O P'1 v1 C C N N N C N OC h V 1 h frl OU N n V C[�00 h C 9 v C ri V v,ri r1 h h oe h h h v, O W cz (o Nn�.��V V� V V I.o�.� x g K e o y u u N q C T u 44 V V x r,',,'Z'' V V—' V O C'.^^C Q (hit fV .4 x h O p^ C V1 Z V1 ce N r1 C f'1 rt O O h N N c N II II .O `3 x if,,^h n N v G M x C'Q �+ z �``.L� F" t) H N N N N N N `7 = a O J = 2 O W rr w � /�/ p c Q Q caB=Sec. SS- 1 N N H s o Nv V O M v x Y •• W . M M T Y Y Y 7 r r r to V V yy � w -- N 4 H H .. 0 .tt W Zv .� ,,,, 00 � �N 7C N 70'1M r1 V'f r1 C.-..^ .'7 - .-..O x C hC 2 LM,^�N Oho N C O c j C -C:O M �:. 00 h x NO ~�Q �.....�.�.. �. v M ^ x n IHU - HH H. : C/, ^ .;, GC ''+ bq lir Q .. o I- N Y 7 M M M M M M f+1 M M M M N N N N N T e; T CQ O E- H C 21 H H O rTAD aA to O c u C 7 71 V O OC V �'O r1 E, tCi rrf v-i v1 C Q O C C� N OC N 7 x �M^• vl N N G,OO O M rf M v1 O C a rM, 9C N �O_r-`�O O.XX C 7 !C fig" V x f� ^V� N l",-- h h v1 of OO V of N M O L-' O (1. .. `^ OO n .,°- V OC n M et O C OO N of N Y N C V 0 u x r�i 00 N h.- C\ to u V, JhG s v1 Q A N V 77 M s O -..-. c X �. �M N N N rcC. � 7 O O O Qt 00 V V V1 7 M N �0 H 3 4, c- H H y O H N .. .......-. -. N O 0 (U r 5 V E H 0 .›r • 0 v p E cc alY •a• C C 88 --- E-' 8888888888 § 8 § C C C C p C 0 O O O iO O C 5 c j c C O c O c O O j O c O S` O C O O O C O R O �"" _ v1 C O C v1 O vi v1 O O v'1 O� r1 v,O§ r C � a. O v'1 ^ of M^.. 00 r h V h h V V 00 ...- .,. y N CS. C C N O 7 u O N h v OO ..• N ....N N�7 r1 V h Y h Q h 00 � ... x Q H C -N N M V .'C+ = C H iA a H N N N N N N N,N N N N N U 7 � ` ac,1 cx . co. �� "'� �, s .te• �, _ -h-C "'C r1 v',v1 v'1 O r1 O U V '1G N ? 7 G,= 8 N 7 00 00 ^ 00 � N U_ P.CT C 7 N O Y h h h h C N M J h M 7 L, C C\ .C h O h .', r h v V V h r1 N 00 x 00 V v^ v 1 V h .3 O rt P?-..O,M M 00 x,M r1; ,6 �' 7 OO ..�,V1 h a M M G, ..'�V+ 00 OC N O 00 V' C v r1 M N N M �"'h M M M O V °� O C O N N N r v'1 r. to r to O N x 7t h h V V N N N N N N h O ,., g N N Q of 4 4 4.N N 'S 'tf Q v Q Q N (j] O v� N R 7 N N N N N N N N N a, F"25 H N I E.... u (•" H H d v Pt v t _ _ _ �. C I 'fl > C x h !�7 h J1 �•. h M ao 7 O t,0- a h O 7 N 7 C h h h h C N f•1 N L O h h M M O h N O O O h _00 00 r, 00 tf1 7 � of O r1('1�"C V1 M M OC 00 M V1� .... (,L„ C y � ^00 of C\ -�V C N CL, M of OC� M x N ri oo M (.,, �i�. r1 O_N h M x 7,r V h x^OC �.. c A x V of -, oC M r; V ., ^ Y V h M N c y V O OC h V`.v1'!M N h •y,, t E"' _ .� i q r1 v1 v1 r1 7 Y M N of C H-- . H H 2 V' u 3 d u x .. v c` v w a ° x_y � v, M o h ,^, M - M.: to �h - a o p 0p 0 o h :8.'-Z O C c OC C C E p C O C E C (3� V 1 h V V OG h ^ P^1 - vvli M - C p C ?v? _ q ? h h .ef C -' y ti `O C C C C C..O c 0."�. p d ee ' .O .'^ V �:. M N N h v1 x C rti O h N O. g.ri O Vt E^r1 g h 70 Ep V 1 G 3 V ^„M, . C O q •U V�C OC G1 N C h h✓\�C M C y V \: -..•. 3 p . M M O 7 7 h V •� H M M N N E, ... H ' a. "r r► I u Y, -C C ..O O-O C-C V M oo d t�j M x M N R M M V 1 V h n V M x h h ! h V1 t/',V1 rl v1 V1 h h v1 r1 v1 v'1 N'1 V M x h M Q C., � h"'� N N r1 � •>> h h V N N N N N N N N N N N rt N N x Q [ �C x N Y x O -a L O N N V n N x 7 y V N OC 00 h 0o r V N N 7 M h ^ tT c C C' O '-� V V h�^.h h h h h h h h r',rt x t;, tb 'C O N .a :h 7 r1 Y,r1 r1 h r1 N N tr1 -. . _ (p Cn p Y Y 7 V V V V V V V V V CT_ O: N C 1-- r. N N N N N N N N N N N N N-+ Q q ... of N U E .6 H K r Q' H .R 4. It O.' C � x Y1 7 O OO 7 N 00 M M r\V M 00 O ,C ,n"'C-C -C -O C -c c C r V M OO "' -" Cnom.. 3 e z x ... x h V 7 N N N V -�r1 V M ao r, 4 O N .V.. h V'1 t/'1 V'1 V1 V1 V•1 V1 v1 N'1 V1 h V1 V1 E.vl�^.M]C ai'1 M � M 00 Vl � h�••�h T N N M V ` h h V N N N•n N n n N en N rV[� -..N N OC �: ,",p Y 7 h C ti -, - � "d y ` �� � � N .Y.. V v1 00 V N r 00 `: � N T� U C n N V n h •,,,,,,,,,,h OG V v CC^^ N (2•. x .., N V r•, 8 M V 1 N V C M r,h '.�, C M C/] r 'Z V7:•+h h h h h h h h h h O M,h t•„ C A u h Y M M N N C O G, 00 x h V V h v M N N M "' CD V d h h h V V V V V V V V V V V to 7 M N N t:, y O E"' E ^ yy h O r, G .4 H 4 l� N O H `0!,' o 3 ,4 3 H . o IS 00 .% x - O - O 8 = O O 2,000000R W n c M _ h ^ h _„r', vMi o x o C —'?E E. - h N N refs F x x C 'T r1 E Y O O C O 0 ... O N y '.. to is C O O V1-^r1 C r1 rt- r. O ' V - OMC R JO '' - Q OxC rh1 - 7 h f� g N R.h h c x N N V'1 7 N M M of 7 tI1 7 7:V M ?V1 r1 V x V VIP .'--� 4. y V ^ .h- x x, C - N M7 N N N N N N:iHI N N T lz. C C - O -. C _ O _ •- N N N g g N n1 g N N g N N N N N N N N N EN N N a 0"' i�•. R a x x x X x x X x x x x x x x :< x 5 L ;-- .- r x Y.r,, r x x.—N N e•.r x N.n v1 c.:N N '�-'•�� ' •n v1 •n•n•n v1;x x oo DG 70,._, I V -,oc— — n n g '. .: �?x r�.—.n—a c��?C'_-_"-N., ? ,•7�N oo x� oo �? 00 r = x—p O o — r... .l a H N N 7,- N K JJ K Z yy•••' K O 0 � ea c u x JY! N E. .n N^f".—G.R ..",T V———Q S C _ ril U E :7, q v N r^.r:§—?,J n N;--..4 p.f^.t+•.4,0--c• (, ,,C.. �C....7 r C•--•r:—x� r rr�z.n—_7� 'n � ^U n^ U U L^x C f.'.—er:-.—'p^M:1 v!3',..L^x C rr Q .n i y LP. r :� 7 r o U ?r v x r x 7 c-:v r<. x -•—N— 1 r C 'a" J C `. !•- -r,c-:r.e-,fr.t•,t~.e-,fes.e•.f-1 ► _ __,i--__✓7.. y ------ j K K V a N 15 i o E v 7 U G G •in.•a U U C OD C r c+.r N—Q N v1(.71.N r•..--. ~.G1 x^ h .7 t c? o�a J��—r.—ao r r r.-?�•n—Q 25 'n W v li Cf s l'i -VY r S e g n n.;T1 r z c S^C j H c,z J- .,.-,r l— x r-,7 Q n N vo, > z T. 0g N OG o p r - CK W a •'...: •C F. c Z y qC.A Sx Q Sc 8§S S( S x x S -§X§§ o G Z ��zo` o 'nU N t',.. N N�.e+:•/r1.5�x•/�'1 �...—'lei x r z .,, --N N rJ N N N N N N rJ N N——N N rt— v K c SSSC S S i 6 6 Sn'n'n nyx n g a -- a , o- vr c,x c-i .? v,rrxv . -„, v1nx, N_ t L.X'4;1:22.xn'x onG cV eV.rV..`r•r.x ..^- .... v Sa Q K 4....". ` 1 .. OC Sc X Y X Q yC r8, S 8 Y Syc',-.`11 '...t; ••`rt.". -•C O op O of �rl N r\.Vi./',•n r, r .N-T\^, P N Ol .... .•J„ —x x oo r r r r r r f� V\:Q 7 e•-.N— , K r.53 = _ Q iV X §. � v p r -7-,6 a 7?; .,j 'n v C N K Q � s,11- z 7,', L- — -J N cs ~ H 1' -p J1 O r 1^N vOtx l C r Vi :J S U '4 v.A H M! `n N Q .7 Al v Ry'. O.q H w `` W $ §§§.§§-§§§§sg §§ s �"1 4.,Q.., VO1 VN1 V1.(N C'V..-,O OG.,OOiO x 4t -' Q O tO H OC g^„" A g. ao a:ale ,�;,�o S c C ;4 1 0 c • `� h .. v 4 opo'°S c n i i c .? s .-: q O � � O, C K c'`! r 3 Z �E r 5,.n 5 5 v,5.n 5 x S.in X-.moi.v3 o�c x NO E. 7 O N T �'n'n•'`1�•� 'n�r�l N x � c-1 ['� an'n Oc vi�: �C- C r n •� .-. [ ^vi vi C O O n .n .n n 0 Q 00 •-•...,.........,,,,,,,,,...,..,..,...,....,.0., x Cv ^ (� —— �. —— N — N r �' ir9 i •C v c -1.S L or vCl Oh N 15" NO N hOe' X':n.rOI,•j?.v—,Si fx.—0 2 — t: Nr- NrJNNN � N_ , � .r- i rrx,xao x`.x orz v `r E..n- .n cr N O a OO C vV •• Eo o O R g a a < a§§§ §§§§x $�§§ § . O � V0_N V1N r r = , :O V,. r C _ -- H N— — w, a -)8 V V L VU C � C� 6. C N U .V V _C c v V V r 7 v X r�� _ :•-', a o 0 ,�.„^���1x�� ^. 00 N G ea :r 1-N Y N Q :.T r 2.N rJ V x-SiE'n—en'7, ;, O t° �:x f�oo^V'• N O!`u',r�r•n �L—V••Q N f^, •- qJV N N.�:.r r+.V V r•.N e-S V' C VO r N N v N q ?'•_, —. N T �„� ac .�j F'g• x r r ao•n 7 e F. — : m 'J;/) �O l� �./ - t-..., 7•7 f-.-.!P-.-e-:r'•-e-'.f-.-r!N N N r 1 Q i, .. H isi 8 3, � C 7 C•. N O O H .� Jr ( = —r!70 N-7§J u T1.r'/f,n r f`•xn T x�—7 1 N ,s<L � 15;-' % x V' r•'-.—��0 1:..•n e7'—^_�.x N N z N Q — U U C N 4 � P. c• ^V' r x CT 0o x r V.,:,.x:a g,n 4 r,N o�D• 7 N L orf e 17 r O — K `h `'w `v o u u 3 x a a o 0 0 a , v r Y Sic X Y Sc SG Y X SC X 7c X SG^SC Y�'SC Ti• Q •Q Q' S vi^^",^O.,vi ^v'i C "vi vi E. X^ 5 • `' j- n C C c a - % M C x --N N 7.n V'•r o V,7 r x o; oo ? X:s7 .,•- r.. c.i. ...^ 1 —,-_-,-,:,-i- rl N N N rJ N N r!N N———N r!c•. .. +' . ._ .- L. t () .. K =7 t'a 3 3 3 a e •:N e...fie'....../ S ..i •Z a�- W f-11 j 1., AN U � ^ m ) r —D F 7 7 v L/1Y , y ,.- �C , K V L -y - _ 2 m 1 70 i>• `r`�J C 1^,. .,c,c—N r-•4.i-.l:r x F,N N N;!N :•d OC GL= 2 N N N N N N N N N N N N N N N N N N N N N ^;.E.-2":7:^ V a �- U U in 00 it [- N i p C., WI M M O en - C O O C C 0 " = U 00 wl' C, oo O V r 00 in ' N M 00 -* in in O O in O ,D y •- C •^ Oh r- N ChM kn Cr, O I-- 00 ,D .1- r O to N O �t as U U > " " " " " " " " ^ ^• ^ M [� O� 00 N• 00 ON 'b C - t- ,t v-) in kr, in in, N N Cr, O: CI Oh C C,., N •--- N N cV c-I cI N N• N N Ni Ni c-) cV Z 0 mi EA E1- Z � E- Ca - _--- -- U M e- wt �- �t � N ^ . O O0 O0 0 0 CC CD in O C NI cn .v M '.0 '.D 'D 00 .1 00 O --- M O .0 O �• C---.., C- O i!1 c-I O O C ^ ^ ^ ^ ^ " ^ ^ ^ ^ ^ " " " " M .D .D t� M in .D 00 O� C� O 00 C M C- C 00 N 00 01 . cd u �1 'D '.D 00 O\ O\ C C\ N N M N N N in in ,r .0 r- C\ 00 E4 • O (/) -., C re") .n t� C C " �t Q1 0, 01 01 C\ C\ 00 H a) CA c c Q C o an O N 0 0 0 NI - . N _ M d• d• �' �T �t OC 01 M 00 �t OD O0 O O OD O V 00 a) C t-- C-- O in N O 00 0 �..i " " ^ " " - 0C) .D 00 G• 1 �1 01 't7' 00 C• M .•• -4 CU ,+.. 00 �n V; " C!� a) r, � 'C '.0 O O O 0, 0, in cf --y 00 0, N .1' 'O 00 ch M (, � ' o4 .1 G) r- t- r- [� t- .D .D `D .0 `D .0 is -0' .0- M N .-. Q a 0 -0 a) oh C) Eo9 O 0 Q C EA z 0 0 0 0 0 0 N o0 .0 .D .D 0 0 0 0 0 0 00 N O C O o 0 0 00 --- N N C C C C C C x r. r- in O c� CT O O O C C O -, cc 0 0 0 0 0 0 " " ^ ^ " ^ ^ " ^ " " " " ^ " ,' M C to O w- wn C t= ~� O� LL 0 00 O, 01 O M in � 00 - M .0 M - 00 00 00 „� _ 'C 00 ,' ,r ,r 00 IfC `0 '0 C 00 0, cn ^ " " ^ .. W a EA W 04 y oo ..,-1if (r)� � C. M N M N C ,C) M o0 O -vin 110 41 'r " v in C O O O O �n ,.s [� N t-- t-- --, �n (7, N N O O cf • •-- •-• M• N .O o0 r-. M• C1 �• in -I:3ccs .-. in in in 00 00 C-0 C- O O O O O M 01 0\ 01 O\ C, O VD C 4.-. F--, ..-• ... .-. •- (�j .-� •, r• .-. r. M ••`+ U 4f3 EA U tt c24C)• Q al O C M T H 00 in in in .n in kr, in in C, O O [- M O, en 00 00 0 'Cr �1 r- in in in in in in in in N N [- M 'O 'C On 00 N O CO O O O O O N O �r • _ 0 G) �t I!1 O in in in in V1 C1 N in \O 1- 00 \D 01 00 M `, 0 �. 'C C, `D N 00 00 00 00 00 'D in M 0, O M in t- Cr, O N C00 00 00 r- r.-- r-- r-- r-- I- r- `0 .D in - M N N • tl 6.9M V `. EA 0 C ~ L' ‘trO O O O N CC1 V0 'C 'C C C 0 0 CC C El'il CI CD CD CD CD O O O O in -- CC `D ,r N C C C C C C a- C C O . N O O O iri wi O -- en vC. U .0 .O C- r- M M M M M .0 M l.1 i!1 '.0 00 WI .... i. ..4 il .-•+ r. r. M Ir.... a O 0 N --. O to 00 01 'C N CC 'O M 00 .-• O 'D N CL) U 0n 00 c-D 00 M �D in 'O M 00 v� 1--- ..... (, U. � 0 U M 00 M N � O ^' M M Vl --- ,D [� M ^„ V'1 � N N in C • 00 O 00 N `0 .D .D `D M M 00 01 r- [� .-1 3 .x a) ? 00 00 c-�i �r 00 r� 0o CC Ms o M '0 00 C� ri CC v �] a) N o0 00 00 in 'D N - N tt M t-- in 'D ifC V1 '-0 O N N O C\ 01 C .1• 1,1 kr1 in in in N N M 0C ON OC 01 O\ O O CO - 0 x .0 N N N N N N N (N• N N N N• N (Nr- ,-" --• O 0 cd a) 49 E r 'a) 0 O 'D [� 00 C\ O .-r N M cn ' r- 00 C1 O - N M d- in i.. O o 0 0 N_ N N N N N N U as � 'C C- 00 CC 0 - N M .1 'C c 0000ON 0 .-, N M C in r-,-, 4) i!1 O N N N N N N 0 cilo C o 0 0 (.�,r � O O O O O O O O O O O O O O O O O O O O O N N N N N N N N N N (N N N N N N N N N N N GO CL) 0 L Cl M. L a a) U U [— M 00 M dt N N M O ,C Co M N -•� dt O .-• 0 yam, 3 U M N M 00 Co 00 - � [-, Co O Co .-. 00 00 CO 00 110 t- U U C > '�7' 00 O ,.0 hn O t- N --. [� N 00 *-� CO C VO � .-. C::, C s., w w w n w w w w w w w w w w w w w w Q) X > U 0Ttt --. ... v1 O, C, O 00 M 00 00 N O 00 ,0 COW U cA N CO O CO 00 O O O CO 00 CO M N N (n `O ,c, ,r) I .T7 Ce_ 00 .— N .-� d• '' d- d' M M M N N CO d" d- .1- ,t' Co Z c. H Q C N 0 ,.0 V0 V0 00 00 00 d. ‘.0 V0 O O0 -- 00 00 00 00 00 00 00 O 00 M OC O U N N N N N N N Noo C ' In' Is n n n w ^ w w n w w w -al C) 0p 00 00 `p `0 `0 ,47) M M M M M -- N 00 �_� O CA EoS N N N N N .' O .M „CD r O Q Q (NO bO � C O N N 00 `0 00 `0 00 v0 `0 00 M N M in N o0 U ^ kr) 00 00 00 00 00 00 00 00 Co O 00 00 O ,•0 N . C N N N N N 00 O 00 M C)C) C N w N N w w I w n n w w w w w w w ..-^ Ni- -p CY •% E5 00 00 00 V0 ,0 V0 V0 �O (! '� M M -� Co M = -..4 6R Erg i... .,-' +� C) Q — NI 00 Co `C N M ("0 C [T. cox 00 N C.1 N O N 00 �i N .� ^ .- . Z. �O 00 Co O M M .U - 1) .4 � w � br9 V W �v — C 00 N 00 [� (f) v'1 CO0.4Co CO Co CT 01 Co Co CO [— 00 00 ,..0 'd' V:, 00 ,� U kr) V0 kr) 00 O tt N 00 04 '~ w w n n w ^ ^ ^ w w w n w : OM [� [� [� [� [� t�EA N N N N N M C WO a4 C:) 0 C CCI O N in in in in kr) ,r) v-1 --� O O M t� 00 Co CI Ce Co Co Co Co Co CO CO Co C-- 00 M •-• M 00 v> N 00 .1 v7 O N E--. V) w w n w w n w w w w n n w w v1 V 1 v7 vl U1 tt M M M N N I N N N N N '0 1 .:I- M N \:J O r O ER C C.) C cid N O M M M Co s.. crzi 2 —. cf' 00 O M V1 r- - 00 C 0. 00 N C. 00 Co O •j C) ._ N '[r 00 M C7 — NO —N N d- •i'..", a O 0 N 00 N .1 N N --- (N dr '.0 N O -� CT '- 0 N cN M Co O CT 00 �t Co VO N 00 00 CT 00 ^ NI N cd C) Q) Q) N N Co 1n 1n Co V0 V0 N � N 00 00 00 '.0 '.0 v1 � / w w w w ^ w w w w n ^ -,••� 00 00 N O 00 �/ C.J •— a •— 00 C\ N 0, M M — c 01 ,O C C) O O .-� O CT --. .-. N N N (n 1r) N kr, v1 00 '.0 .‘") Co C) X > C) Co N N N .1 .1- �' �t •f' ,' N N Co .1 .1 .1 d dr N N C., w U 69 w n w n ^ w w w w w n CV 0.0 ▪ CX C) Jo 00 N 00 Co O --. N M (r) 0.0 N 00 Co O -� (N M dr kr) ,•0 73 i. O O O ON N N N N N N � 00 N 00 Co O N M '� kkr) V N 00 Co O •-. N rre) 'r v1 O ... O O O O O N N N N N N LL., �' O O O O O O O O O O O O O O O O O O O O O C/) N (N N N N N N N N (N N N N N N N N N N N N (i) i.. CO ta.0 C) L a RESOLUTION NO. (R)07- 42 RESOLUTION APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND DELIVERY OF THE FOURTH AMENDMENT TO LEASE-PURCHASE _ AGREEMENT, A BOND __ _ __ _E AGREEMENT ALD A CONTINUING ---PURC–HAS APPROVING—THE EXECUTION OF A FOURTHDISCLOSURE AGREEMENT; APPRO AUTHORIZING THE PREPARATION AND SUPPLEMENT TO TRUST INDENTURE; APPROVAL OF A PRELIMINARY OFFICIAL STATEMENT AND A FINAL OFFICIAL STATEMENT AND THE EXECUTION OF THE LATTER; APPROVING THE TOWN OF ORO VALLEY MUNICIPAL ISSUANCE OF NOT TO EXCEED S22,000,000 PROPERTY CORPORA.TION EXCISE TAX REVENUE REFUNDING BONDS, SERIES 2007 SECURED BY RENTAL PAYMENTS MADE PURSUANT TO THE LEASE- PURCHASE AGREEMENT BETWEENTOWN' THE OF ORO VALLEY, ARIZONA AND THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, AS D AMENDED BY THE FIRST, SECOND, THIRD AND FOURTH AMENDMENTS THERETO; APPROVING THE PLEDGE OF EXCISE TAXES AS SECURITY FOR THE AUTHORIZING THE NEGOTIATION PAYMENTS; OF THE BOND PURCHASE AGREEMENT CONCERNINGTHE SALE OF THE CORPORATION'S WITH RESPECT TO SUCH PARAMETERS BONDS; SETTING CONDITIONS AND APPOINTMENT OF A DEPOSITORY TRUSTEE; SALE; AUTHORIZING THE A AUTHORIZING THE EXECUTION OF APPROVING THE FORM AND OF AUTHORIZING DEPOSITORY TRUST AGREEMENT; MULTIPLE SERIES TO OF ALL OTHER ACT BONDS; AUTHORIZING THE TAKINGIONS NECESSARY CONTEMPLATED BY THIS 10 TRANSACTIONS THE CONSUMMATION OF THEAND DECLARING AN CERTAIN DUTIES; RESOLUTION, DELEGATING EMERGENCY Oro Valley, Arizona (the "Town") believes it is in the WHEREAS, the Town of interests certain outstanding obligations (the "Obligations Being best of the Town to refund of Oro Municipal Property Corporation (the Refunded") of the Town and The Town Valley "Corporation"); and WHEREAS, the Town desires and deems it necessary to: (1) enter into a Fourth Amendment to be dated as of the dated date of the Series 2007 Bonds as provided herein (the Lease-Purchase Agreement between the Town and the Corporation "Fourth Amendment") to the g "First • the First Amendment thereto (the Amendment") dated as of April 1, 1996 and amended by "Second „ ent thereto (the Amendment ) dated as of dated asof June 1 1999, the Second Amendm April 1, 2001 and the Third Amendment thereto (the "Third Amendment") dated as of First Amendment, the Second Amendment, the Third December 1, 2003 (as amended by the . "Lease"), in order to provide for the refunding of the Amendment and the Fourth Amendment, the . sale bythe Corporation of its Excise Tax BeingRefunded; and (2) approve the �� � Obligations • (the "Series 2007 Bonds ) secured by rental payments Revenue Refunding Bonds, Series 2007 . Agreement, which Fourth Amendment will be made pursuant to the terms of the Lease-Purchaseg • • N.A., as • Bank, successor in interest to Norwest Bank Arizona, assigned to Wells Fargo N.A., pursuant to the Trust Indenture dated as of April 1, 1996 by and between trustee (the "Trustee") KCH:joy 713203.03 03/02/07 the Corporation and the Trustee as supplemented by the First Supplement thereto (the "First Supplement") dated as of June 1, 1999, the Second Supplement thereto (the "Second Supplement") pp ) dated as of April 1, 2001, the Third Supplement thereto (the "Third Supplement") dated as of December 1, 2003 and the Fourth Supplement thereto (the "Fourth Supplement") to be dated as of the dated date of the Series 2007 Bonds as provided herein (as supplemented by the First Supplement,-the__SecondSu Supplement, the Third Supplement and the Fourth Supplement, the �P � pp "Indenture"); and WHEREAS, a purchase contract (the "Series 2007 Purchase Agreement") will be negotiated byand amongthe Corporation, the Town and Stone & Youngberg LLC (the "Original g � Series 2007 Purchaser"), to contain final terms and provisions relative to the sale of the Series 2007 Bonds in accordance with the conditions and parameters set forth herein; and WHEREAS, the Reserve Fund (as such term and all other initially capitalized terms used herein are hereinafter defined or defined in the Indenture) was funded with respect to the Series 1996 Bonds by the deposit of cash in the aggregate amount of$1,970,000; and WHEREAS, upon defeasance of the Series 1996 Bonds, that portion of the Reserve Fund funded with respect to the Series 1996 Bonds may be released and the amount therein used to refund a portion of the Obligations Being Refunded; and WHEREAS, if it is determined to be in the best interest of the Town and the the Series 2007 Bonds may be issued in more than one series, with distinguishing Corporation, seriesg ons, designations, in the aggg re ate not to exceed the maximum amount permitted hereby; and WHEREAS, there have been placed on file with the Town and presented to the Town Clerk at this meetingthe forms containing substantially the final terms and provisions of the To n win documents: (i) the Fourth Amendment; (ii) the Fourth Supplement; (iii) the Series 2007 folio g Purchase Agreement; the Series 2007 Continuing Disclosure Agreement; (v) the proposed form ofDepository Agreement a De osito Trust A reement to be dated the dated date of the Series 2007 Bonds (the "Series 2007 Y De ositor Trust Agreement") by and among Wells Fargo Bank, N.A., as depository Depository trustee (the p"Series 2007 Depository Trustee"), the Town and the Corporation; and (vi) a preliminaryofficial statement (the "Preliminary Official Statement") pertaining to the Series 2007 Bonds. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COUNCIL OF THE TOWN OF ORO VALLEY, ARIZONA, THAT: Section 1. Definitions. "First Amendment" means the First Amendment to the Lease-Purchase Agreement dated as of June 1, 1999. "First Supplement" means the First Supplement to Trust Indenture dated as of June 1, 1999. "Fourth Amendment" means the Fourth Amendment to the Lease-Purchase Agreement, dated as of the dated date of the Series 2007 Bonds. • KCH:joy 713203.03 03/02/07 -2- the Fourth Fourth Supplement" Supplement to Trust Indenture, dated as means 10 of the dated date of the Series 2007 Bonds. "Indenture" means the Trust Indenture, as supplemented by the First Supplement, u lement and the Fourth Supplement and all later the Second Supplement, the Third Supplement supplements. -- ---- -- --- -Lease" means the Lease-Purchase Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment and all later amendments. " Refunded" means the Series 1996 Bonds Being Refunded, the "Obligations Being Series 1999 Bonds Being Refunded, the Series 2000 Obligations Being Refunded, the Series 2001 Bonds Being Refunded, the Series 2003 Bonds Being Refunded and the Series 2005 Obligations Being Refunded. "Original Series 2007 Purchaser" means Stone & Youngberg LLC, as underwriter of the Series 2007 Bonds. "RentalPayments" means the payments to be made by the Town under the Lease. p y "Second Amendment" means the Second Amendment to the Lease-Purchase Agreement, dated as of April 1, 2001. 10 "Second Supplement" means the Second Supplement to Trust Indenture, dated as of April 1, 2001. "Series 1996 Bonds" means The Town of Oro Valley Municipal Property CorporationMunicipalSystem Water S stem Acquisition Bonds, Series 1996. "Series 1996 Bonds BeingRefunded" means that portion of the Series 1996 Bonds beingrefunded with the proceeds of the Series 2007 Bonds. "Series1999 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 1999. "Series 1999 Bonds BeingRefunded" means that portion of the Series 1999 Bonds beingrefunded with the proceeds of the Series 2007 Bonds. "Series 200 � 0 Obligations" means the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2000. "Series 2000 Obligations ations Being Refunded" means that portion of the Series 2000 Obligations being refunded with the proceeds of the Series 2007 Bonds. "Series 2000 Trust Agreement" means that Trust Agreement dated as of � between Wells Fargo Bank, N.A., as Trustee, and The Town of Oro November 1, 2000, by and IPValley, Arizona, as Buyer. KCH:joy 713203.03 03/02/07 -3- "Series 2000 Trustee" means Wells Fargo Bank, N.A., acting as Trustee under the Series 2000 Trust Agreement. "Series 2001 Bonds" means The Town of Oro Valley Municipal Property CorparatiomExcise Tax Revenue Bonds, Series 2001. "Series 2001 Bonds Being Refunded" means that portion of the Series 2001 Bonds being refunded with the proceeds of the Series 2007 Bonds. "Series 2003 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2003. "Series 2003 Bonds Being Refunded" means that portion of the Series 2003 Bonds being refunded with the proceeds of the Series 2007 Bonds. "Series 2005 Obligations" means the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2005. "Series 2005 Obligations Being Refunded" means that portion of the Series 2005 Obligations being refunded with the proceeds of the Series 2007 Bonds. "Series 2005 Trust Agreement" means that Trust Agreement dated as of September 1, 2005, by and between The Bank of New York Trust Company, N.A., as Trustee, and the Town of Oro Valley, Arizona, as Buyer. "Series 2005 Trustee" means The Bank of New York Trust Company, N.A., acting 110 as Trustee under the Series 2005 Trust Agreement. "Series 2007 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007. "Series 2007 Depository Trust Agreement" means the Depository Trust Agreement dated as of the dated date of the Series 2003 Bonds by and among the Depository Trustee, the Town and the Corporation. "Series 2007 Depository Trustee" means Wells Fargo Bank, N.A., or any successor thereto, as depository trustee under the Series 2007 Depository Trust Agreement. "Series 2007 Purchase Agreement" means the Purchase Agreement pertaining to the initialp urchase of the Series 2007 Bonds among the Original Series 2007 Purchaser, the Corporation and the Town. "Series 2007 Continuing Disclosure Agreement" means the Continuing Disclosure Undertaking of the Town substantially in the form attached to the Preliminary Official Statement pertaining to the Series 2007 Bonds. "Series 2007 Rental Payments" means the additional Rental Payments to be made by the Town under the Fourth Amendment which are assigned by the Corporation to the Trustee by the Fourth Supplement. KCH:joy 713203.03 03/02/07 -4- Third Amendment" means the Third Amendment to the Lease-Purchase Agreement, dated as of the dated date of the Series 2003 Bonds. "Third Supplement" means the Third Supplement to Trust Indenture, dated as of the dated date of the Series 2003 Bonds. Section 2. Fin-dingeterminations. The Mayor and—Councl in and Obligations Being that the refunding theof g Refunded pursuant to the terms of the Series 2007 ContinuingDisclosure Agreement, the Fourth Supplement, Fourth Amendment, the . • Agreement and the PreliminaryOfficial Statement is in furtherance of the Series 2007 Purchase n thepublic interest and that the financing thereof through the the purposes of the Town and i issuance and the sale of the Series 2007 Bonds will enhance the standard of living within the Town. Section 3. Approval of the Series 2007 Bonds. The Mayor and Council hereby approves the sale, issuance and deliveryof the Series 2007 Bonds by the Corporation. The Series 2007 Bonds shall be issued in the aggb principal amount of not to exceed $22,000,000. regate • in the denomination of$5,000 or any integral multiples thereof, The Series 2007 Bonds shall be date as set forth in the Series 2007 Purchase Agreement and shall bear interest shall be dated such from such date payable January a able on 1 and July 1 of each year, commencing the date as set forth in Agreement and shall be fully registered Bonds without coupons initially the Series 2007 Purchase issued in book-entry formprovided as in the Trust Indenture. The Finance Director is authorized representations relatingto the Depository Trust Company's book-entry program 111 to sign a letter of p and any contract required to implement such book-entry program. The yield on the Series 2007 Bonds shall not exceed 5.5% per annum, and the Series 2007 Bonds shall mature on July 1 in not to exceed thirtyears from the date of the Series 2007 Bonds. Y provisions forms, terms and of the Series 2007 Bonds and the provisions for authentication, payment, registration, transfer, exchange, redemption and number the signatures, authe � p Y g shall be as determined by the Finance Director, consistent with this resolution and as set forth in the Third Supplement and the same are hereby approved. The Finance Director shall determine the Obligations Being Refunded as well as the exercise of redemption provisions with respect thereto based on the best interests of the Town. The Town Manager and Finance Director are hereby authorized and directed to assist the Corporation in order to cause the Series 2007 Bonds to be delivered to or upon the order of the Original inal Series 2007 Purchaser upon receipt of payment therefor. Section 4. Approval of the Series 2007 Purchase Agreement. If the terms and conditions of the Series 2007 Purchase Agreement meet the terms and conditions for the Series 2007 Bonds set forth herein, the sale of the Series 2007 Bonds to the Original Series 2007 Purchaser pursuant to the provisions of the Series 2007 Purchase Agreement is hereby authorized and the offer of the Original Series 2007 Purchaser to purchase the Series 2007 Bonds as set forth in the Series 2007 Purchase Agreementapproved is a roved and the officers, employees and attorneys of the Town are hereby vestedwithpower all and authority to issue, sell and deliver the Bonds in accordance herewith. KCH:joy 713203.03 03/02/07 -5- Section 5. Approval of Documents. The form, terms and provisions of the Fourth Amendment, the Series 2007 Continuing Disclosure Agreement, the Fourth Supplement, the Series 2007 Depository Trust Agreement and the Series 2007 Purchase Agreement (including 40 p rY the exhibits thereto) in the terms presented at the meeting at which this Resolution was adopted or on file with the Town are hereby approved, with such insertions, omissions and changes as shall be approvedby theMayor, Vice Mayor, To-wn 'bi-ager-or+i afce Di-rector, t ie-execution oLsuch y documents being conclusive evidence of such approval. The Mayor, Vice Mayor, Town Manager, Finance Director or Town Clerk are hereby authorized and directed to execute and deliver the Fourth Amendment, the Series 2007 Continuing Disclosure Agreement, the Fourth Supplement, the Series 2007 Depository Trust Agreement and the Series 2007 Purchase Agreement as well as p ry the Official Statement hereinafter described and such other documents and instruments as are necessary complete lete the transactions contemplated by the Lease, the Fourth Amendment, the p Trust Indenture, the Fourth Supplement, the Series 2007 Continuing Disclosure Agreement, the Series 2007 Depository Trust Agreement, the Official Statement and the Series 2007 Purchase p rY Agreement. Section 6. Refunding of Obligations Being Refunded. The refunding of the Obligations BeingRefunded is hereby authorized. The Finance Director of the Town shall g determine and identify the principal amounts and maturity dates of the Series 1996 Bonds, the Series 1999 Bonds, the Series 2000 Obligations, the Series 2001 Bonds, the Series 2003 Bonds and the Series 2005 Obligations which will constitute the Obligations Being Refunded, and the dates on which theyshall be redeemed in advance of maturity. Proceeds of the Series 2007 Bonds will be deposited with the Series 2007 Depository Trustee, pursuant to the Series 2007 Depository Trust Agreement, and invested in U.S. Government securities, the maturing principal and interest g � . which willprovide for the payment of the debt service on the Obligations Being Refunded and of p Y theredemptionObligations of the Obli ations Being Refunded on the dates set therefor. The Series 2007 Depository Trustee is authorized and directed, as provided in the Series 2007 Depository Trust p ry Agreement, to transfer to the applicable trustees for the Obligations Being Refunded such amounts at such times as necessary to make such payments. Section 7. Approval of Official Statement. The Preliminary Official Statement in substantially presented the form at the meeting at which this Resolution was adopted or on file with the Town is hereby approved and the preparation thereof by the Town and the Corporation is herebyratified and approved. The Finance Director is authorized to deem such pp Preliminary Official Statement "final" for all purposes of Section 240.15c2-12, General Rules and Regulations, Securities Exchange Act of 1934 (the "Rule"). The distribution thereof by the Original Series 2007 Purchaser is hereby ratified and approved. The Town and the Corporation are herebyauthorized and directed to cause a final official statement (the "Official Statement") in substantially the form of the Preliminary Official Statement referred to above to be prepared and distributed with the Bonds upon initial issuance. The Mayor, Town Manager or Finance Director are authorized to deem the Official Statement "final" for all purposes of the Rule and to approve, execute and deliver the Official Statement on behalf of the Corporation and the Town and such execution shall be deemed conclusive evidence of approval of the Official Statement. Section 8. Continuing Disclosure. The Town hereby acknowledges that it is the "obligatedperson" (as defined in the Rule) with respect to the Series 2007 Bonds and agrees to . with the requirements of the Rule as set forth in the Series 2007 Continuing Disclosure comply q110 KCH:joy 713203.03 03/02/07 -6- Agreement. The Finance Director employees,other em to ees, agents and contractors of the Town are withand provisions of the Series 2007 Continuing Disclosure authorized to comply the terms ' Disclosure Agreement shall be for the benefit of the Agreement. The Series 2007 Continuing g • g Bonds. To the extent now or hereafter permitted by law, the beneficial holders of the Series 2007 Rule and other terms and provisions of the Series 2007 Continuing cost of compliance with the , therefor'_ _ _ _ - , . -- *.-. , _ . •. • l - . "=taxes. The failure-to • • •de therefor s a11 ............... only a default under this section of this Resolution and shall not be a default for purposes of the Lease or the Indenture. Section 9. Request for Corporation and Trustee Action. The Town hereby n and all actions necessary to cause the issuance, sale and requests the Corporation to take any and the refundingof the Obligations Being Refunded. Wells delivery of the Series 2007 Bonds Fargo Bank, N.A. shall be the Trustee, paying a in agent, registrar and the Series 2007 Depository to serve in such capacities. The Town hereby requests the Trustee and is hereby approved Series 2000 Trustee, the Series 2005 Trustee and the Series 2007 Corporation, the Trustee, the • and all action necessary in connection with the execution and Depository Trustee to take any delivery of the Fourth Amendment, the Fourth Supplement, the Series 2007 Purchase Agreement, the Series 2007Depository De osito Trust Agreement and the Continuing Disclosure Agreement. The Trustee, the Series 2000 Trustee, the Series 2005 Trustee and the Series 2007 Depository Trustee are authorized and directed to take all action necessary to refund the unded applicable, in accordance with instructions from the Finance Obligations Being Ref as Director of the Town. 10 Section 10. Security for the Series 2007 Bonds. For the payment of the principal of, premium, if any, and interest on the Series 2007 Bonds and any other amounts due Indenture, the Town shall pay and transfer to the Trustee the Rental under the Lease or Trust Payments provided for in the Lease and the other amounts required to be paid by the Town pursuant to the provisions of the Lease. other securityprovided for in the Indenture, to secure the payment of In addition to he the Rental Payments provided for in the Lease and the other amounts required to be paid by t of the Lease, the Town hereby agrees to (i) establish or maintain Town pursuant to the provisions a separate and special "Oro ValleyLease-Purchase Obligation Fund" as required by the Lease; (ii) apply Net Revenues of t System S stem in the manner and priority established in the Lease; and ••• the System, subject to annual appropriation, to the payment of all (iii) pledge the net revenues of y � under the Lease except to that portion of such Rental Payments allocated to Rental Payments due p the Development ment Services Building or the Library, which shall be paid from excise taxes. The Town herebyabsolutely and unconditionally pledges, on a first lien basis, the Excise Taxes as security for the payment ment of all Rental Payments due under the Lease. Further, the Town agrees: (i) not to grant any or pledge led e of or upon excise taxes superior to the lien hereby g created to secure the rentala ments due under the Lease; (ii) to establish or maintain a separate p � Fund" shall be deposited and and special "Oro Valley Excise Tax to which all excise taxes p p thereafter such fund shall contain onlyexcise taxes; and (iii) to apply excise taxes in the manner IPand priority established in the Lease. KCH:joy 713203.03 03/02/07 -7- The obligation to make Rental Payments will not constitute an obligation of the Town for which the Town is obligated to levy or pledge any form of ad valorem taxation nor does the obligation to make rental payments under the Lease constitute an indebtedness of the Town or g of the State of Arizona or any of its political subdivisions within the meaning of the Constitution of the State of Arizona or otherwise. Section 11. Covenant to be Bound. The Town agrees to be bouncft the terms and provisions of the Lease, Sections 6.04(a) and 11.17 of the Indenture, the 2007 Continuing Disclosure Agreement and the Series 2007 Purchase Agreement. The Town further covenants that g it will do all things necessary to assist the Corporation and the Trustee in the issuance and delivery of the Series 2007 Bonds. Section 12. Resolution a Contract. The Town further covenants and agrees that after any of the Series 2007 Bonds are delivered by the Trustee to the Original Series 2007 Purchaseruponpayment receipt thereof i t of a ment therefor, this resolution shall be and remain irrepealable until the Series 2007 Bonds and the interest thereon shall have been fully paid, cancelled and discharged. Section 13. Approving Insurance. The Finance Director is authorized to aid the Corporation g q in acquiring.for the Series 2007 Bonds a financial guaranty insurance policy and to pay the Initial Insurance Premium (as defined in the Indenture). The Finance Director may expend or provide for the reimbursement from Series 2007 Bond proceeds the amount required to purchase bond insurance or other credit enhancements for all or part of the Series 2007 Bonds. The Finance Director and the Trustee are authorized and directed to pay or cause to be paid such together with all other fees, costs and expenses of issuance, from Series premiums, fees or costs 40 2007 Bond proceeds. The Finance Director is authorized to make such changes to the Fourth Amendment, FourthSupplementagreements and other a reements as may be requested by any provider of credit agencies enhancementor the ratinga encies if such changes are determined by the Finance Director to be in the best interests of the Town and the Corporation. Section 14. Liquidation of Reserve Fund. If the Series 1996 Bonds Being Refunded include all of the remainingSeries 1996 Bonds, the Trustee is directed to sell, as Finance Director, the portion of the Reserve Fund funded with the proceeds of the directed by the Bonds and transfer the proceeds from the sale to the Depository Trustee to contribute Series 1996 to the refunding of the Obligations Being Refunded. Section 15. Issuance in One or More Series. If it is advantageous to the Corporation and the Town, as determined by the Finance Director of the Town, the Series 2007 Bonds may be issued in more than one series from time to time, without further action of the Board or the Council, provided that the aggregate principal amount of all such series not exceed $22,000,000. If issued in more than one series, each series shall be designated to distinguish it from the others, and shall have such dated date, interest rates, maturity dates, principal amounts, redemption provisions and other terms as are determined pursuant to the provisions hereof, and all references herein to the Series 2007 Bonds, the Fourth Amendment, the Fourth Supplement, the Series 2007 Purchase Agreement, the Series 2007 Continuing Disclosure Agreement, the Series 2007 Depository Agreement A reement and other documents shall also refer to the bonds and corresponding similar documents entered into from time to time for each separate series with such KCH:joy 713203.03 03/02/07 -8- ' maybe appropriate to distinguish the documents of titles, dated date and other designations as each series. Section 16. Authorization and Ratification. All actions of the officers and ' the purposes and intent of this resolution and which further agents of the Town which conform to p rp the issuance an sale of—the - Series 2007—Bonds—and -the---refunding—of—the obliga ' eing_ Refunded as contemplated by this resolution whether heretofore or hereafter taken are hereby • The proper officers and agents of the Town are hereby ratified, confirmed and approved. p p such acts and things and to execute and deliver all such authorized and directed to do all necessary documents on behalf of the Town as maybeto carry out the terms and intent of this resolution. Section 17. Effect and Severability. This resolution shall be in full force and ' paragraph, clause or from and after its passage and approval by this Council. If any section, effect p g the invalidity of this resolution shall for any reason be held to be invalid or unenforceable, or unenforceability of such section, paragraph, clause or phrase shall not affect any of the remaining provisions of this resolution. 10 KCH:joy 713203.03 03/02/07 -9- Section 18. Emergency. The immediate operation of the provisions of this resolution is necessary for the preservation of the public peace, health, life and property of the Town of Oro Valley, an emergency is hereby declared to exist, and this resolution shall be in full g Y force and effect from and after itsp assage, adoption and approval by the Mayor and Council of the Town of Oro Valley, and it is hereby exempt from the referendum provisions of the Constitution . _ • Tmcw- • w: izona. PASSED ADOPTED AND APPROVED on March 21 , 2007. Mayor, Town of Oro Valley, Arizona ATTEST: Clerk, Town of Oro Valley, Arizona APPROVED AS TO FORM: GUST ROSENFELD P.L.C. Bond Counsel CERTIFICATION I Kathryn Cuvelier, the duly appointed and acting Town Clerk of the Town of Oro Arizona, do herebycertifythat the above and foregoing Resolution was duly passed by the Valley, Town Council of the Town of Oro Valley, Arizona, at a regular meeting held on March 21 2Y 007 and the vote was aye's and nay's and that the Mayor and Council Members were present thereat. DATED: , 2007. Clerk, Town of Oro Valley, Arizona KCH:joy 713203.03 03/02/07 -10- When recorded, please return to: Mr. Keith C. Hoskins Gust Rosenfeld P.L.C. 201 E. Washington Street, Suite 800 Phoenix, Arizona 85004-2327 FOURTH AMENDMENT TO LEASE-PURCHASE AGREEMENT BY AND AMONG TOWN OF ORO VALLEY, ARIZONA, as Lessee, THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, an Arizona nonprofit corporation, as Lessor AND WELLS FARGO BANK, N.A., as Trustee Dated as of , 2007 KCH:joy 713376.02 03/06/07 This FOURTH AMENDMENT TO LEASE-PURCHASE AGREEMENT, dated as of , 2007 (this "Fourth Amendment") by and among the TOWN OF ORO VALLEY, ARIZONA (the "Town"), as Lessee, THE TOWN OF ORO VALLEY 411 MUNICIPAL PROPERTY CORPORATION, an Arizona nonprofit corporation (the "Corporation"), as Lessor, and WELLS FARGO BANK, N.A. (the "Trustee"), as assignee of the Lease-Purchase Agreement (as hereinafter defined); WITNESSETH WHEREAS, the Town and the Corporation entered into the Lease-Purchase Agreement, dated as of April 1, 1996, and recorded in Docket 10375, at Page 1317 in the office of the County Recorder of Pima County, Arizona (the "1996 Lease-Purchase Agreement"); and WHEREAS, the Town and the Corporation entered into a First Amendment to Lease-Purchase Agreement (the "First Amendment") dated as of June 1, 1999, and recorded in Docket 11087, at Page 866 in the office of the County Recorder of Pima County, Arizona; and WHEREAS, the Town and the Corporation entered into a Second Amendment to Lease-Purchase Agreement (the "Second Amendment") dated as of April 1, 2001, and recorded in Docket 11546, at Page 2861 in the office of the County Recorder of Pima County, Arizona; and WHEREAS, the Town and the Corporation entered into a Third Amendment to Lease-Purchase Agreement (the "Third Amendment") dated as of December 1, 2003, and recorded in Docket , at Page in the office of the County Recorder of Pima County, Arizona; and111 WHEREAS, the 1996 Lease-Purchase Agreement, the First Amendment, the Second Amendment, the Third Amendment and all rental payments to be made thereunder (the "Rental Payments") have been assigned to the Trustee; and WHEREAS, this Fourth Amendment is the fourth amendment to the 1996 Lease- Purchase Agreement; for all purposes of this Fourth Amendment the term "Lease" shall mean the 1996 Lease-Purchase Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and this Fourth Amendment and any amendment adopted hereafter; and WHEREAS, the Corporation and the Trustee have entered into a Trust Indenture dated as of April 1, 1996 (the "1996 Trust Indenture"), pertaining to the issuance of$28,400,000 of the Town of Oro Valley Municipal Property Corporation, Municipal Water System Acquisition Bonds, Series 1996 (the "Series 1996 Bonds"); and WHEREAS, the Corporation and the Trustee have entered into a First Supplement to Trust Indenture dated as of June 1, 1999 (the "First Supplement") pertaining to the issuance of $4,930,000 of the Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 1999 (the "Series 1999 Bonds"); and WHEREAS, the Corporation and the Trustee have entered into a Second Supplement to Trust Indenture dated as of April 1, 2001 (the "Second Supplement") pertaining to KCH:joy 713376.02 03/06/07 the issuance of $9,010,000 of The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 2001 (the "Series 2001 Bonds"); and WHEREAS, the Corporation and the Trustee have entered into a Third Supplement to Trust Indenture dated as of December 1, 2003 (the "Third Supplement") pertaining to the issuance of$15—,750,000 ofThe-Town-of-Oro Valley Municipal-Prope rporatio-n-E-x-c-ise .............. Tax Revenue Refunding Bonds, Series 2003 (the "Series 2003 Bonds"); and WHEREAS, the Corporation and the Trustee have entered into a Fourth Supplement to Trust Indenture dated as of , 2007 (the "Fourth Supplement") pertaining to the issuance of $ of The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007 (the "Series 2007 Bonds"), and for allp �u oses of this Fourth Amendment, the term "Trust Indenture" shall mean the 1996 Trust Indenture as supplemented by the First Supplement, the Second Supplement, the Third Supplement, the Fourth Supplement and any additional supplements adopted hereafter; and WHEREAS, the Lease and the Rental Payments to be made thereunder constitute the Revenues to be received by the Corporation from the Town for payment of Obligation Service Charges (as defined in the Trust Indenture) on the Series 1996 Bonds, the Series 1999 Bonds, the Series 2001 Bonds, the Series 2003 Bonds and the Series 2007 Bonds; and WHEREAS, the Town caused to be issued $2,580,000 original principal amount of the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2000 (the "Series 2000 Obligations") and $6,215,000 original principal amount of the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2005 (the "Series 2005 Obligations") which have a pari passu claim upon the Excise Taxes (as hereinafter defined), securing the Lease; and WHEREAS, the parties contemplated that the Town might make later requests for the issuance of Additional Obligations (as defined in the Trust Indenture) to finance or refinance the cost of acquiring, constructing, reconstructing or improving buildings, equipment and other real and personal property suited for any use by and for leasing to the Town or its agents or instrumentalities, included, but not limited to, domestic water systems or for refinancing or advance refunding of Obligations (as defined in the Trust Indenture); and WHEREAS, the Town has requested that the Corporation cause Additional Obligations to be issued to refund [all of the outstanding Series 1996 Bonds, and certain portions of the Series 2000 Obligations and the Series 2001 Bonds] (such portions, collectively, the "Obligations Being Refunded"); and WHEREAS, by this Fourth Amendment the Town will continue to lease back from the Corporation the Project (as defined in the Lease) and the Town will agree to pay the increased Rental Payments set forth on Exhibit A, attached hereto, in order that the Revenues (as defined in the Trust Indenture) paid under the Lease shall be sufficient to pay all principal and interest on the Series 1999 Bonds, the Series 2001 Bonds, the Series 2003 Bonds and the Series 2007 Bonds; NOW THEREFORE, PURSUANT TO LAW AND FOR AND IN CONSIDERATION OF THE MUTUAL COVENANTS HEREINAFTER CONTAINED, IT IS HEREBY AGREED as follows: KCH:joy 713376.02 03/06/07 -2- Section 1. Purpose. This Fourth Amendment shall constitute the Fourth Amendment to the 1996 Lease-Purchase Agreement. The Corporation hereby agrees to continue to lease to the Town, and the Town agrees to continue to lease from the Corporation, the Project, 41) the Town agrees to pay the additional Rental Payments set forth on Exhibit A hereto and the Town agrees to amend any existing financing statement related thereto. Section 2. Definitions. (A) Unless the context otherwise requires, all terms not otherwise defined herein are as defined in the Trust Indenture or in the Lease. (B) For all purposes of this Fourth Amendment and the Lease, the following terms shall have the following definitions: "Fourth Amendment" means the Fourth Amendment to the Lease-Purchase Agreement, dated as of , 2007. "Fourth Supplement" means the Fourth Supplement to Trust Indenture, dated as of , 2007. "Indenture" means the Trust Indenture, as supplemented by the First Supplement, the Second Supplement, the Third Supplement and the Fourth Supplement and all later supplements. "Lease" means the Lease-Purchase Agreement, as amended by the First • Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment and all later amendments. "Obligations Being Refunded" means [the Series 1996 Bonds Being Refunded, the Series 2000 Obligations Being Refunded and the Series 2001 Bonds Being Refunded.] "Reserve Requirement" means as to the Series 1999 Bonds $484,540 and as to any other Additional Obligations for which the Reserve Fund is required to be funded, it means the lesser of an amount equal to the Maximum Annual Debt Service Requirement for the Obligations, 125% of the average Annual Debt Service Requirement for the Obligations or 10% of the stated principal amount of the Obligations. The Reserve Requirement may be satisfied by cash, a Qualified Surety Obligation, or a combination of the two. For the 2003 Bonds, no reserve is required to be funded unless in any year Excise Taxes pledged and received during the prior Fiscal Year was less than 250% of the highest aggregate Annual Debt Service Requirement for the current or any future year on the Obligations. If required to be funded, the Town must deposit on each Interest Payment Date one-tenth of the amount required until the Reserve Fund equals the Reserve Requirement. "Series 1996 Bonds Being Refunded" means that portion of the Series 1996 Bonds being refunded with the proceeds of the Series 2007 Bonds, which portion is all of the Series 1996 Bonds which currently are Outstanding. KCH:joy 713376.02 03/06/07 -3- "Series 2000 Obligations Being Refunded" means that portion of the Series 2000 Obligations being li ations refunded with the proceeds of the Series 2007 Bonds. "Series 2001 Bonds Being Refunded" means that portion of the Series 2001 Bonds being refunded with the proceeds of the Series 2007 Bonds. "Series 2005 Obligations" means the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2005. "Series 2005 Trust Agreement" means that Trust Agreement dated as of September 1, by 2005, and between The Bank of New York Trust Company, N.A., as Trustee, and the Town of Oro Valley, Arizona, as Buyer. "Series 2005 Trustee" means The Bank of New York Trust Company, N.A., acting as Trustee under the Series 2005 Trust Agreement. "Series 2007 Bond Insurance Policy" means the Bond Insurance Policy pertaining to the Series 2007 Bonds. "Series 2007 Bond Insurer" means the issuer of the Series 2007 Bond Insurance Policy. "Series 2007 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007. "Series 2007 Continuing Disclosure Agreement" means the Continuing Disclosure Undertakingof the Town substantially in the form attached to the Preliminary Official Statement pertaining to the Series 2007 Bonds. "Series 2007 Depository Trust Agreement" means the Depository Trust Agreement, dated as , 2007 by and among the Depository Trustee, the Corporation and the Town. "Series 2007 Depository Trustee" means Wells Fargo Bank, N.A., as Depository Trustee under the Series 2007 Depository Trust Agreement. "Series 2007 Purchase Agreement" means the Purchase Agreement pertaining to the initialp urchase of the Series 2007 Bonds among the Original Series 2007 Purchaser, the Corporation and the Town. "Series 2007 Rental Payments" means the additional Rental Payments to be made by the Town under the Fourth Amendment which are assigned by the Corporation to the Trustee by the Fourth Supplement. "2007 Closing Date" means the date on which the Series 2007 Bonds are delivered to the Original Series 2007 Purchaser. 10 KCH:joy 713376.02 03/06/07 -4- Section 3. Exhibits. The following exhibits are attached hereto and by reference made a part of this Fourth Amendment: 41111 Exhibit A: the Schedule of Rental Payments to be made by the Town hereunder showing the date and amount of each Rental Payment. It is the intention of the parties hereto supersede an othersuc Schedules; Exhibit B: the form of Amendment to Financing Statement to be delivered pursuant to the Lease-Purchase Agreement. Section 4. Article 1 of the Lease is amended by the addition of the following Paragraph to Section 1.01. The agree arties thatterms not specifically defined herein shall have the pany meanings assigned in the Indenture. The Town hereby agrees to pay the Rental Payments in accordance with Exhibit A to the Fourth Amendment, which Exhibit A shall supercede and replace Exhibit A attached to this Lease-Purchase Agreement and Exhibit B to the First Amendment, Exhibit B to the Second Amendment and Exhibit B to the Third Amendment. So long as any portion of the Series 2007 Bonds is outstanding, the fee title to and any leasehold estate in the Leased Property shall not merge, but shall always be kept separate and distinct, notwithstanding the union of such estates either in the Town or the Corporation. Section 5. Subsection 3.03(a) of the Lease is amended to read as follows: • (Strike Throughs Indicate Deletions, Bold Capitals Indicate Additional or Changed Text). Section 3.03 Source of Payment. (a) Subject to the Town's annual appropriation of sufficient Net Revenues, the Town hereby agrees to pay all rental payments from Net Revenues except that portion of the Rental Payments allocated to the Development Services Building and the Library and, to the extent such Net Revenues are not appropriated or are insufficient, then the Town agrees to make such payments from Excise Taxes. The Town hereby pledges to make all Rental Payments which are allocated to the Development Services Building and Library from Excise Taxes and not from Net Revenues. Notwithstanding any other provision of this Lease-Purchase Agreement, including any non-appropriation by the Town with respect to Net Revenues, the Town is and shall be absolutely and unconditionally obligated to pay all Rental Payments from Excise Taxes as provided in this Section 3.03, and to pay all amounts due under the Lease, including but not limited to, the Rental Payments required to bep aid pursuant to Sections 1.03 and 1.05 and Article II hereof from Excise Taxes. In addition, the Town hereby agrees not to grant any lien or pledge of or upon Excise Taxes superior to the lien created by this Lease to secure payment of all Rental Payments due under this Lease, which Rental Payments shall be used by the Corporation to pay principal and interest on the Series 1996 Bonds, the Series 1999 Bonds, the Series 2001 Bonds and, the Series 2003 Bonds AND THE SERIES 2007 BONDS and any Additional Obligations. The Town hereby agrees that, while the Series 1996 Bonds, the Series 1999 Bonds, the Series 2001 Bonds and, the Series 2003 Bonds AND THE SERIES 2007 BONDS and any • KCH:joy 713376.02 03/06/07 -5- Additional Obligations are outstanding, it will not grant any lien or pledge of or upon su erior to, on a parity with or subordinate to the lien securing the Excise Taxes (whether superior Series 1996 Bonds, Series 1999 Bonds, the Series 2001 Bonds and, the Series 2003 Bonds AND THE SERIES 2007 BONDS) without the prior consent of MBIA Insurance Corporation. The Town intends that this pledge shall be a first lien upon all Excise Taxes as will be sufficient to make the rental and other payments pursuant - eta, an• the T—oown shall make such payments from receipts from such Excise Taxes, except to the extent that ,, it makes such payments from Net Revenues or from other funds pursuant to Section 3.02 hereof. Section 6. Section 3.06 of the Lease is amended to read as follows: (Strike Throughs Indicate Deletions, Bold Capitals Indicate Additional Text). Section 3.06 Enforcement of Pledge. In the event of any default by the Town under this Lease-Purchase Agreement, the remedies of the Corporation with respect to the enforcement of the liens and pledges set forth in this Article with respect to the covenants and agreements contained in this Article shall be as provided in Article V hereof. The Trustee, on behalf of the registered owners of the Series 1996 Bonds, Series 1999 Bonds, Series 2001 Bonds, Series 2003 Bonds, SERIES 2007 BONDS and any Additional Obligations, may enforce these liens and pledges and the aforesaid covenants and in agreements place of the Corporation in accordance with the terms and conditions of g the Indenture. Section 7. Section 3.07 of the Lease is amended by adding a fourth sentence thereto to read as follows: The condition set forth in Section 3.05 hereof is, at the time of execution of the Fourth Amendment, and shall be, at the time of the issuance of the Series 2007 Bonds, satisfied. Section 8. Article III of the Lease is amended by adding Section 3.11 to read as follows: Section 3.11 Reserve Fund. If the Reserve Fund is required to be funded with respect to the Series 2007 Bonds, the Town shall make the payments necessary to fund the Reserve Fund. KCH:joy 713376.02 03/06/07 -6- Section 9. Article VI of the Lease is amended by the addition of the following Sections 6.12, 6.13 and 6.14, as follows: • Section 6.12 Town's Representations, Covenants and Warranties as to the Series 2007 Bonds. The Town represents, covenants and warrants to the Corporation and the Trustee, their successors and assignssthat-all-represe Cations, covenants-and-warranties of the Town contained in this Lease-Purchase Agreement are hereby restated, as of , 2007 and as of the date of execution of the Fourth Amendment, as if therein set forth. For all purposes of this Lease, all such representations, covenants and warranties are incorporated herein by reference thereto. Section 6.13 Corporation's Representations, Covenants and Warranties. Corporation represents, covenants and warrants to the Town and the Trustee, that all promises, agreements, and representations and warranties of the Corporation contained in this Lease-Purchase Agreement are restated as of , 2007, and as of the date of execution hereof. For all purposes of this Lease, all such representations, covenants and warranties of the Corporation are incorporated herein by reference hereto. Section 6.14 Trustee's Representations, Covenants and Warranties. The Trustee represents, covenants and warrants to the Town and the Corporation, that the Trustee or its predecessors were, as of April 1, 1996, and have throughout the period from such date to the date hereof, accepted and acted as the Trustee under the Trust Indenture and that during all such period the Trustee was, and remains, a national banking association qualified to accept and administer trusts within the State of Arizona, and the Trustee by execution of the Fourth Amendment and the Fourth Supplement acceptsthe 11) added duties and responsibilities and agrees to accept the assets and assignments contained herein and in the Fourth Supplement for the purpose of the issuance and sale of the Series 2007 Bonds as defined and described in the Fourth Supplement. Section 10. Article XI of the Lease is amended by the addition of the following Sections: 11.38, 11.39, 11.40, 11.41, 11.42, 11.43, 11.44, 11.45, 11.46 and 11.47. Section 11.38 Deposit of Moneys. On the 2007 Closing Date (as defined in the Fourth Supplement), the Trustee shall deposit the proceeds of the sale of the Series 2007 Bonds in accordance with the provisions of the Fourth Supplement and the Series 2007 Depository Trust Agreement. Section 11.39 Loan Payments. Exhibit A to this Lease-Purchase Agreement is hereby amended to conform to Exhibit A attached hereto. Such Exhibit A contains the combined Rental Payment schedule to be made under this Lease Purchase Agreement, as amended by the First Amendment, Second Amendment, Third Amendment and Fourth Amendment. The Town shall, in accordance with Exhibit A, pay interest commencing on July 1, 2007. Section 11.40 Refunding of the Obligations Being Refunded. Portions of thep roceeds of the Series 2007 Bonds shall be deposited with the Series 2007 Depository Trustee and used to pay debt service on, and redeem in advance of maturity, the KCH:joy 713376.02 03/06/07 -7- Refunded Obligations Beingpursuant to the Fourth Supplement and the Series 2007 Depository Trust Agreement. Section 11.41 Term of Lease. Notwithstanding any provision of the Fourth Sec Amendment, the term of this Lease-Purchase Agreement shall continue to be from April 1, 1996 to July 2, 2026. Section 11.42 Integration; Incorporation by Reference. All other terms, and each and everySection of this Lease-Purchase Agreement and the exhibits conditions thereto which are not modified or superseded by the Fourth Amendment and which do not conflict with the terms of the Fourth Amendment are incorporated by reference into the h Amendment, it beingdeemed the intention of the parties hereto that this Lease- PurchaseFourtThird Agreement, the First Amendment, the Second Amendment, the Th Amendment and the Fourth Amendment shall be construed to be one integrated document. Section 11.43 Governing Law. The Fourth Amendment shall be governed exclusively by the provisions of the applicable laws of the State of Arizona. Section 11.44 Severability. Should term or provision of the Fourth any Amendment or the application thereof to any person, entity or circumstance, shall to any extent be held to be invalid or unenforceable, the remainder of the Fourth Amendment and i Lease or the application of such term or provision to persons or circumstances other this than those as to which it is invalid or unenforceable shall not be affected thereby and its term andprovision rovision of the Fourth Amendment shall remain valid and enforceability to the fullest extent permitted by law. Section 11.45 Counterparts. The Fourth Amendment may be executed in several courite arts each of which shall be an original, but all of which shall constitute but one instrument. Section 11.46 Full Force and Effect. Notwithstanding the Fourth Amendment, all warranties, representations and ifindemnities originally contained in this , Lease shall stayin full force and effect as herein specifically stated. Section 11.47 Cancellation. To the extent applicable by provision of law, the parties hereto acknowledge that the Fourth Amendment is subject to cancellation pursuant g to Section 38-511, Arizona Revised Statutes, as amended, the provisions of which are hereby incorporated by reference herein. KCH:joy 713376.02 03/06/07 -8- WHEREOF, theCorporation and the Town have caused their IN WITNESS � respective names to be signedtheir hereto byrespective officers thereunto duly authorized, all as of the day and year first above written. ATTEST: THE TOWN OF ORO VALLEY MUNICIPAL P-ROP-ERTALCORPORATION, an Arizona nonprofit corporation Secretary President ATTEST: TOWN OF ORO VALLEY, a municipal corporation Town Clerk Mayor APPROVED AS TO FORM: Town Attorney WELLS FARGO BANK, N.A., Trustee • By: Its: • KCH:joy 713376.02 03/06/07 -9- STATE OF ARIZONA COUNTY OF On this the day o f 2007, before me, personally appeared and , the President and Secretary, respectively, of THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY nonprofit corporation, and that they, as such officers, being CORPORATION, an Arizona p � for executed the foregoing authorized so to do, g g Fourth Amendment to Lease-Purchase Agreement the purposes therein contained by signing i nin the name of the corporation by themselves as such officers. Notary Public My Commission Expires: STATE OF ARIZONA COUNTY OF On this the dayof , 2007, before me, personally appeared Paul Loomis • , the Mayor of the TOWN OF ORO VALLEY, ARIZONA, a municipal corporation, and that he, as such officer, beingauthorized so to do, executed the foregoing Fourth Amendment to Lease-Purchase Agreement for the purposes u oses therein contained by signing the name of the municipal corporation by himself as such officer. Notary Public My Commission Expires: STATE OF ARIZONA COUNTY OF On this the dayof , 2007, before me personally appeared the of WELLS FARGO BANK, N.A., a national banking association, and that such officer being authorized so to do, executed the foregoing Fourth chase Agreement for the purposes therein contained by executing such Amendment to Lease Pur g document in my presence. Notary Public My Commission Expires: KCH:joy 713376.02 03/06/07 EXHIBIT A RENTAL PAYMENTS • • KCH:joy 713376.02 03/06/07 A-1 EXHIBIT B AMENDMENT TO FINANCING STATEMENT 111 KCH:joy 713376.02 03/06/07 B-1 FOURTH SUPPLEMENT TO TRUST INDENTURE by and between WELLS FARGO BANK, N.A., as Trustee THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION 111/ Dated as of , 2007 KCH:joy 713032.03 03/06/07 FOURTH SUPPLEMENT TO TRUST INDENTURE 111 THIS FOURTH SUPPLEMENT TO TRUST INDENTURE, made and entered into2007 (the "Fourth Su lement") by and between WELLS FARGO as of � pp BAND, N.A., a national• l banking association, as Trustee (the "Trustee"), and THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, an Arizona nonprofit corporation (the "Corporation"); WITNESSETH WHEREAS, simultaneouslywith the execution of this Fourth Supplement, the Corporation and the Town of Oro Valley, Arizona (the "Town") have entered into a Fourth Amendment to Lease-Purchase Agreement (the "Fourth Amendment"), which is the fourth amendment to that certain Lease-Purchase Agreement dated as of April 1, 1996, and recorded in Docket 10375, at Page 1317 in the Office of the County Recorder (the "Recorder") of Pima County, Arizona (the g"Lease-Purchase Agreement") and amended by the First Amendment to Lease-Purchase Agreement dated as of June 1, 1999, and recorded in Docket 11087, at Page 866 in the office of the Recorder (the "First Amendment"); the Second Amendment to Lease-Purchase p Agreement dated as of April 1, 2001, and recorded in Docket 11546, at Page 2861 in the office of the Recorder (the "Second Amendment"); the Third Amendment to Lease-Purchase Agreement dated as of December 1, 2003, and recorded in Docket , at Page in the office of the purposes(the "Third Amendment"); for all of this Fourth Supplement the term "Lease" 11) g shall mean the Lease-Purchase Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment; and WHEREAS, the Town desires to refund the following outstanding obligations of the Town or the Corporation (collectively, the "Obligations Being Refunded"): Maturity Redemption Date Amount Date Redemption (July 1) Refunded (July 1) Price The Town of Oro Valley Municipal 2010 $ 2,775,000 2008 101% Property Corporation, Municipal 2026 12,600,000 2008 101% p � Water System Acquisition Bonds, Series 1996 (the "Series 1996 Bonds Being Refunded") Town of Oro Valley, Arizona, Excise 2020 $ 200,000 2010 101% Tax Revenue Obligations, Series 2000 (the "Series 2000 Obligations Being Refunded") The Town of Oro Valley Municipal 2020 $3,440,000 * 2011 101% Property Corporation, Excise Tax Revenue Bonds, Series 2001 (the "Series 2001 Bonds Being Refunded") * Redemption allocated to mandatory redemption requirements in the years 2015 to and including 2019. KCH:joy 713032.03 03/06/07 WHEREAS, under the Fourth Amendment the Corporation will continue to lease back to the Town certain property and improvements, and the Town will continue to lease from the Corporation certain property and improvements as described in the Lease and related • documents but will amend the Lease to allow for increased lease payments to provide for the ••- a • •-• ervice on the additional bonds issued hereunder; and WHEREAS, the Town has pledged certain revenues (the "Excise Taxes") for the payment of all amounts due under the Lease, but intends to pay all Rental Payments under the Lease except those allocated to the Development Services Building and the Library from Net Revenues of the Water System; and WHEREAS, the Corporation and the Trustee have heretofore entered into a Trust Indenture dated as of April 1, 1996 (the "Trust Indenture"), a First Supplement thereto (the "First Supplement") dated as of June 1, 1999, a Second Supplement thereto (the "Second Supplement") dated as of April 1, 2001, a Third Amendment thereto (the "Third Supplement") dated as of December 1, 2003, which are supplemented by this Fourth Supplement (the Trust Indenture, as so supplemented, is referred to herein as the "Indenture"); and WHEREAS, to finance the refunding of the Obligations Being Refunded and to pay the costs of issuance of the refunding bonds issued hereunder, the Corporation will cause the Trustee to issue The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007 (the "Series 2007 Bonds"), each secured by a proportionate interest in the Lease and the rental payments and prepayments made by the Town under the Lease (the "Rental Payments"), on a parity, however, with respect to claim upon rental payments with the unrefunded portion of the Series 1996 Bonds, the Series 1999 Bonds, the Series 2001 Bonds and the Series 2003 Bonds and any Additional Obligations hereafter issued or incurred; and WHEREAS, this Fourth Supplement will provide for the execution and delivery of the Series 2007 Bonds as Additional Obligations ranking on a parity with the remaining Series 1996 Bonds, Series 1999 Bonds, Series 2001 Bonds and Series 2003 Bonds; NOW, THEREFORE, THIS FOURTH SUPPLEMENT TO INDENTURE WITNESSETH, that to secure the payment of Obligation Service Charges (as described in the Indenture) on the Series 1999 Bonds, the Series 2001 Bonds, the Series 2003 Bonds, and the Series 2007 Bonds and Additional Obligations hereafter issued or incurred according to their true intent and meaning, to secure the performance and observance of all of the covenants, agreements, obligations and conditions contained therein and herein, and to declare the terms and conditions upon and subject to which the Obligations (including without limitation, the Series 2007 Bonds) are and are intended to be issued, held, secured and enforced, and in consideration of the premises and the acceptance by the Trustee of the trusts created herein and of the purchase and acceptance of the Series 2007 Bonds by the Owners thereof, and for other good and valuable consideration, the receipt of which is acknowledged, the Corporation has executed and delivered this Fourth Supplement to Indenture and absolutely assigns hereby to the Trustee, and to its successors in trust, and its and their assigns, all right, title and interest of the Corporation in and to (i) the Fourth Amendment, the Corporation, however, to remain liable to observe and perform all of the conditions and covenants in the Fourth Amendment provided to be observed and performed by it; (ii) all of the rents, issues and profits payable to or received by the Corporation under the Fourth Amendment described in paragraph (i) above, including without limitation, all of the Rental KCH:joy 713032.03 03/06/07 -2- 110 Payments to bepaid to the Corporation or the Trustee under the terms of the Fourth Amendment, y � payments except a ments to the Trustee and the Corporation under Sections 1.03(iii) and 1.05(ii), (iii), (v) and (vi) of the Lease and the Unassigned Corporation's Rights; and (iii) all property which is byexpress provisions hereof required to be subjected to the lien hereof and any additional property ma that , from time to time hereafter, by delivery or by writing of any kind, be subjected y to the lien hereof, by the Corporation or by anyone in its behalf, and the Trustee is hereby Y authorized to receive the same at any time as additional security hereunder, SUBJECT, HOWEVER, to the rights of access and control in the Town as reserved and granted in Section 9.02 of the Lease; TO HAVE AND TO HOLD unto the Trustee and its successors in that trust and its and their assigns forever; BUT IN TRUST, NEVERTHELESS, and subject to the provisions hereof, (a) for the equal and proportionate benefit, security and protection of all present and future Owners of the Obligations issued or to be issued under and/or secured by the Indenture, (b) for the enforcement of the payment of the principal of and interest and any premium on the Obligations, when payable, according to the true intent and meaning thereof and of the Indenture, and (c) to secure the performance and observance of and compliance with the covenants, agreements, obligations, terms and conditions of the Indenture, in each case, without p priority riority or distinction, as to lien or otherwise, of any one Obligation over any other by reason of designation, number, date of the Obligations or of authorization, issuance, sale, execution, authentication, delivery or maturity thereof, or otherwise, so that, except as otherwise provided herein, each Obligation of a series and all Obligations of a series shall have the same right, lien and privilege under the Indenture, and shall be secured equally and ratably, it being intended that the lien and security hereof shall take effect from the date hereof, without regard to the date of actual issue, sale or disposition of the Obligations, as though upon the date hereof all of the Obligations were actually issued, sold and delivered to purchasers for value; provided, however, that if(i) the principal of the Obligations and the interest due or to become due thereon together with any premium required by redemption of any of the Obligations prior to maturity, shall be well and truly paid, at all times and in the manner to which reference is made in the Obligations, according to the true intent and meaning thereof, or the outstanding Obligations shall have been paid and discharged in accordance with Article X of the Indenture, and (ii) all of the covenants, agreements, obligations, terms and conditions of the Corporation under the Indenture shall have been kept, performed and observed, and there shall have been paid to the Trustee, the Registrar and the Paying Agents all sums of money due or to become due to them in accordance with the terms and provisions hereof, then, the Indenture and the rights assigned hereby shall cease, determine and be void, except as provided in Section 10.03 of the Indenture with respect to the survival of certain provisions; otherwise, this Fourth Supplement to Indenture shall be and remain in full force and effect. It is declared that all Obligations issued hereunder and secured hereby are to be issued, authenticated and delivered, and that all Revenues assigned hereby are to be dealt with and KCH:joy 713032.03 03/06/07 -3- d subject to, the terms, conditions, stipulations, covenants, agreements, disposed of under, upon an uses and purposes provided herein. The Corporation has agreed and obligations, trusts, p rp covenanted, and agrees and covenants with the Trustee and with each and all Owners, as follows: Se ction 1. Article I of the Trust Indenture is supplemented by the addition of new Sections 1.09 and 1.1-0, to read asfollows: _------.- - Section 1.09 Additional Definitions. Unless the context otherwise requires, the terms defined in this Indenture shall, for all purposes of the Fourth Supplement and this Indenture, haveg specified the meanings therein s ecified except for the following additions and modifications: "Fourth Amendment" means the Fourth Amendment to the Lease-Purchase Agreement, dated as of , 2007. "Fourth Supplement" means the Fourth Supplement to Trust Indenture, dated as of , 2007. "Indenture" means this Trust Indenture, as supplemented by the First Supplement, the Second Supplement, the Third Supplement and the Fourth Supplement and all later supplements. "Lease" means the Lease-Purchase Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment and all later amendments. Obligations BeingRefunded" means the [Series 1996 Bonds Being Refunded, the Series 2000 Obligations Being i ations Refunded and the Series 2001 Bonds Being Refunded.] "Original Series 2007 Purchaser" means Stone & Youngberg LLC, as underwriter of the Series 2007 Bonds. Reserve Requirement" means as to the Series 1999 Bonds $484,540 and as to any AdditionalObligations Obli ations for which the Reserve Fund is required to be funded, it means q the lesser of an amount equal to the Maximum Annual Debt Service Requirement for the Obligations, 125g % of the average Annual Debt Service Requirement for the Obligations or 10% of the stated principal al amount of the Obligations. The Reserve Requirement may be satisfied by cash, a Qualified Surety Obligation,ation, or a combination of the two. For the 2007 Bonds, no reserve is required to be funded unless in any year Excise Taxes pledged and received during the prior Fiscal Year was less than 250% of the highest aggregate Annual Debt Service Requirement for the current or any future year on the Obligations. If required to be funded, the Town must deposit on each Interest Payment Date one-tenth of the amount required until the Reserve Fund equals the Reserve Requirement. "Series 1996 Bonds Being Refunded" means that portion of the Series 1996 proceeds being refunded with the of the Series 2007 Bonds, which portion is all of the Series 1996 Bonds which currently are Outstanding. • KCH:joy 713032.03 03/06/07 -4- "Series 2000 Obligations Being Refunded" means that portion of the Series 2000 Obli ations beingrefunded with the proceeds of the Series 2003 Bonds. g "Series 2001 Bonds Being Refunded" means that portion of the Series 2001 Bonds beingrefunded with the proceeds of the Series 2007 Bonds. "Series 2005 Obligations" means the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2005. "Series 2005 Trust Agreement" means that Trust Agreement dated as of September 1, 2005� by and between The Bank of New York Trust Company, N.A., as Trustee, and the Town of Oro Valley, Arizona, as Buyer. "Series 2005 Trustee" means The Bank of New York Trust Company, N.A., acting as Trustee under the Series 2005 Trust Agreement. "Series 2007 Bond Insurance Policy" means the Bond Insurance Policy pertaining to the Series 2007 Bonds. "Series 2007 Bond Insurer" means the issuer of the Series 2007 Bond Insurance Policy. "Series 2007 Bonds" means The Town of Oro Valley Municipal Property 1111 Corporation Excise Tax Revenue Refunding Bonds, Series 2007. "Series 2007 Continuing Disclosure Agreement" means the Continuing DisclosureUndertaking of the Town substantially in the form attached to the Preliminary Official Statement pertaining to the Series 2007 Bonds. "Series 2007 Depository Trust Agreement" means the Depository Trust Agreement, dated as of , 2007 by and among the Series 2007 Depository Trustee, the Corporation and the Town. "Series 2007 Depository Trustee" means Wells Fargo Bank, N.A., as Depository Trustee under the Series 2007 Depository Trust Agreement. "Series 2007 Purchase rchAgreement" means the Purchase Agreement pertaining to � the initialp urchase of the Series 2007 Bonds among the Original Series 2007 Purchaser, the Corporation and the Town. "Series 2007 Rental Payments" means the additional Rental Payments to be made by the Town under the Fourth Amendment which are assigned by the Corporation to the Trustee by the Fourth Supplement. "Third Amendment" means the Third Amendment to the Lease-Purchase Agreement, dated as of December 1, 2003. "Third Supplement" means the Third Supplement to Trust Indenture, dated as of December 1, 2003. KCH:joy 713032.03 03/06/07 -5- "2007 Closing Date" means the date on which the Series 2007 Bonds are delivered to the Original Series 2007 Purchaser. Section 1.10 Authorization. Each of the parties hereby represents and warrants that it has full legal authority and is duly empowered to enter into the Fourth Supplement, and has taken all actions necessary__to authorize the execution of the Fourth Supplement by the officers and persons signing it. In addition, each side warrants and represents that the Fourth Supplement and the Fourth Amendment comply in all respects with the requirements of the Indenture to permit the Series 2007 Bonds to be issued as Additional Obligations under the Indenture. Section 2. Article II of the Trust Indenture is supplemented by addition of new Sections 2.17, 2.18, 2.19 and 2.20 to read as follows: Section 2.17 Authorized Obligations and Amount of Series 2007 Bonds. The total authorized principal amount of Series 2007 Bonds which shall be issued under the provisions of this Indenture is $ . The Series 2007 Bonds shall be issued as Additional Obligations. Section 2.18 Issuance of Series 2007 Bonds. It is determined to be necessary to, and the Corporation shall, issue, sell and deliver $ aggregate principal amount of"The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007". The Series 2007 Bonds shall be initially issuable only in fully registered book-entry form, substantially as set forth in Exhibit A to the Fourth Supplement and the Series 2007 Bonds shall mature and bear interest as follows: • Principal Interest Principal Interest Maturity Amount Rate Maturity Amount Rate The Series 2007 Bonds shall be numbered in such manner as determined by the Trustee in order to distinguish each Series 2007 Bond from any other Obligation. Except when the Series 2007 Bonds are in book-entry-only form, the Series 2007 Bonds shall be in the denominations of $5,000 or any integral multiple thereof. The Series 2007 Bonds shall be dated the date of their initial authentication and delivery; and shall bear interest from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from their date, until paid. Interest shall be • KCH:joy 713032.03 03/06/07 -6- payable semiannually on July 1 and January 1 of each year, commencing July 1, 2007 at 11) the rates set forth above. Section 2.19 Delivery of Series 2007 Bonds. (a) Upon the execution and-delivery hcrcefT-and satisfaction of the conditions established in this Indenture for delivery of the Series 2007 Bonds, the Corporation shall execute the Series 2007 Bonds and deliver them to the Trustee. Thereupon, the Trustee shall authenticate the Series 2007 Bonds and deliver them to, or on the order of, the Series 2007 Original Purchaser in accordance with this Article and as directed by the Corporation. (b) Prior to delivery by the Trustee of any Series 2007 Bonds: (i) the Trustee shall have received a written request and authorization on behalf of the Corporation, signed by the President or the Secretary, to authenticate and deliver the Series 2007 Bonds to, or on the order of, the Series 2007 Original Purchaser upon payment to the Trustee of the amounts specified therein (including without limitation, all then accrued interest), which amounts shall be deposited as provided in Article V hereof, (ii) the Trustee is satisfied that the Corporation is in then compliance with all covenants and undertakings set forth in the Lease and in this Indenture, (iii) the Trustee shall have received the Obligation Resolution authorizing the issuance of the Series 2007 Bonds which shall have been duly adopted by the Corporation and the Trustee is satisfied that such Obligation Resolution meets all requirements of this Indenture, (iv) the Trustee shall have received a certified copy of the Resolution of the Town authorizing the execution of the Fourth Amendment and approving 1110 the issuance of the Series 2007 Bonds, (v) the Trustee is satisfied that all conditions which must be satisfied in this Indenture and Sections 3.03, 305 and 7.05 of the Lease in order for the Series 2007 Bonds to be issued as Additional Obligations have been satisfied, and (vi) the Trustee shall have received: (i) the Fourth Amendment and the Fourth Supplement, both duly executed by all parties thereto, and an opinion of Bond Counsel to the effect that the Series 2007 Bonds will be issued in compliance with the provisions hereof; (ii) the written opinion of counsel required pursuant to Section 2.04(c)(v)(D) hereof; (iii) the written opinion of nationally recognized Bond Counsel required by Section 2.04(c)(v)(E) hereof; and (iv) a certificate executed by the Town's Finance Director certifying to the Town's compliance with the rate covenant contained in Section 3.04 of the Lease and the coverage test contained in Section 3.05 of the Lease. Section 2.20 Form of Series 2007 Bonds. So long as the Series 2007 Bonds are administered as Book-Entry-Only Obligations, the fully registered form of the Series 2007 Bonds and the assignment to appear thereon shall be substantially in the form set forth in Exhibit A, attached to the Fourth Supplement and incorporated by reference 111 herein. During any period when the Series 2007 Bonds, or any part thereof, are not administered as Book-Entry Obligations, a bond form substantially like Exhibit A attached KCH:joy 713032.03 03/06/07 -7- to the Fourth Supplement will be used with such changes as are appropriate and approved by the Town Manager. Section 3. Article IV of the Indenture is supplemented by the addition of the following Section: Section 4.14 Redemption Provisions- Series rovisions Serie Optional s 2007 Bond O tionaRedemption. Series 2007 Bonds maturing on or before are not cto redemption prior to their stated maturity date. Series 2007 July 1, 20 subjectp . maturing on or after 1, 20 , may be redeemed prior to maturity, in whole or in Bonds ma g July part, on anyInterest Payment Date, in the order of maturities designated by the Town on or y after July 1, 20 redemption price a e ual to the principal amount thereof plus accrued q interest on such principal rinci al to the date fixed for redemption, but without premium. Section 4. Article V of the Indenture is supplemented by the addition of Sections 5.20 and 5.21 to read as follows: Section 5.20 Application of Proceeds of Series 2007 Bonds. The proceeds received by the Trustee from the sale of the Series 2007 Bonds shall forthwith be set aside by the Trustee in the followingrespective funds and accounts and in the following order of priority: (1) The Trustee shall deposit all accrued interest in the Interest Account of the Obligation Retirement Fund in the amount of$ (2) The Trustee shall deposit with the Series 2007 Depository Trustee for deposit under the Series 2007 Depository Trust Agreement the sum of$ to pay premiumg and on the Obligations Being Refunded and to pay Costs of principal, interest Issuance of the Bonds. (3) Any remainingbalance of the Series 2007 Bond proceeds shall be deposited to the Interest Account or Principal Account of the Obligation Retirement Fund as directed by the Town. The Original Series 2007 Purchaser did pay directly to the Series 2007 Bond amount of $ , the insurance premium for the Series 2007 Insurer the Municipal Bond Insurance Policy, and received credit therefore against the purchase price of the Series 2007 Bonds. Section 5.21 Excess Returned by Depository Trustee. Any amounts returned to the Trustee by Depository the De osito Trustee shall be deposited to the Interest Account or the Principal al Account of the Obligations Retirement Fund as directed by the Town. Section 5. Article IX of the Indenture is supplemented by the addition of new Section 9.10 to read as follows: Section 9.10 Special Provisions concerning Series 2007 Bonds. Notwith- standing any other provision of this Indenture, so long as the Series 2007 Bond Insurer is KCH:joy 713032.03 03/06/07 -8- not in default under the terms of the Series 2007 Bond Insurance Policy, the Trustee shall treat the consent of the Series 2007 Bond Insurer as the consent of the owners of all then outstanding Series 2007 Bonds then insured by such insurer, and if the Series 2007 Insurer is not in default under the terms of the Series 2007 Bond Insurance Policy, the Series 2007 Bon Insurer shall be deemed the exclusive owner of all Series 2007 Bonds to initiate any action or remedy- to be undertaken or to approve any modification of amendment to the Indenture pursuant to Article IX hereof. To the extent that the Series 2007 Bond Insurer makes payment of principal of, or interest on the Series 2007 Bonds, it shall become the owner of such Bonds and the pertaining payments interest a ments and shall be fully subrogated to all of the owner's rights thereunder, including the owner's right to payment thereof. If the Series 2007 Bonds, pp paid al or interest is by the Series 2007 Bond Insurer pursuant to the Series 2007 Bond Insurance pledge, the of the Excise Taxes and all of the Town's Obligations to the owners under the Lease shall continue to exist and the Series 2007 Bond Insurer shall be fully subrogated to all rights of such owners in accordance with the terms and conditions of the Indenture and the Series 2007 Municipal Bond Insurance Policy. Section 6. Article XII of the Indenture is supplemented by the addition of new Sections 12.21, 12.22 and 12.23 to read as follows: Section 12.21 Integration; Incorporation by Reference. All terms and conditions in each and every Section of this Indenture, the First Supplement, the Second 111 Supplement, the Third Supplement and the Exhibits thereto which are not modified or pp superceded bythe Fourth Supplement and which do not conflict with the terms of the p Fourth Supplementincorporated are iorated by reference into the Fourth Supplement, it being � deemed the intention of the parties hereto that this Indenture, the First Supplement, the Second Supplement, the Third Supplement and the Fourth Supplement shall be construed to be one integrated document. Section 12.22 Severability. Should any term or provision of the Fourth Supplement or the application thereof to any person, entity or circumstances, shall to any extent, be held to be invalid or unenforceable, the remainder of the Fourth Supplement, this Indenture' pp the First Supplement, the Second Supplement, the Third Supplement or the pp a lication of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby and all other terms and provisions of the FourthSupplement Su plement shall remain valid and enforceable to the fullest extent permitted by law. KCH:joy 713032.03 03/06/07 -9- d Effect. Notwithstanding the Fourth Supplement, Section 12.23 Full Force and all warranties, representations and indemnities and other covenants, promises and • the First Supplement, the Second Supplement, the agreements contained in this Indenture, pp g shall stay Supplement and the Fourth Supplement in full force and effect as if herein specifically stated except as otherwise modified by the Fourth Supplement. have executed this Fourth Supplement as IN WITNESS WHEREOF, the parties of the day and year first above written. WELLS FARGO BANK, N.A., as Trustee By: Its: THE TOWN OF ORO VALLEY, MUNICIPAL PROPERTY CORPORATION, as Corporation By: Its: 4111 Exhibit A Book-Entry Bond Form • KCH:joy 713032.03 03/06/07 -10- EXHIBIT A 111 REGISTERED REGISTERED NO. R- $ UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE CORPORATION OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE& CO. (OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,CEDE&CO.,HAS AN INTEREST HEREIN UNITED STATES OF AMERICA STATE OF ARIZONA THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION EXCISE TAX REVENUE REFUNDING BOND, SERIES 2007 Interest Rate: Maturity Date: Issue Date CUSIP , 2007 111 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: The Town of Oro Valley (Arizona) Municipal Property Corporation, a nonprofit corporation organized and existing under and by virtue of the laws of the State of Arizona rp g (hereinafter referred to as the "Corporation"), for value received, hereby promises to pay to the Registered Owner (named above), or registered assigns, the Principal Amount (stated above) on the aforesaid Maturity Date, unless this Series 2007 Bond is subject to prior redemption and is redeemedp rior to its maturity date and payment provided therefor, and to pay interest on the Principal Amount at the interest rate shown above. Interest isp y a able on January 1 and July 1 of each year commencing July 1, 2007 "interest a ment dates"), and will accrue from the most recent date to which interest has (the payment beenp aid or, if no interest has been paid, from the original dated date set forth above. Interest p will be computed on the basis of a year comprised of 360 days consisting of twelve (12) months of thirty (30) days each. Principal of and interest on this bond are payable in lawful money of the United . States of America. Interest payments and principal payments that are part of periodic principal pY and interest payments shall be received by Cede & Co., as nominee of DTC, or its registered 111 assigns same-day ns in funds no later than 2:30 p.m. (Eastern Time) on each interest or principal payment ment date in accordance with existing arrangements between the Corporation and DTC. KCH:joy 713032.03 03/06/07 A-1 This Series 2007 Bond is one of a duly authorized issue of bonds of the Corporation known as its Excise Tax Revenue Refunding Bonds, Series 2007 (herein called the "SeriesBonds"), in an aggregate rinci al amount of$ issued for the purpose of • 2007principal certain outstanding obligations of the Corporation and the Town and paying costs of refunding g • - •• I. .. • . .-• - I :•I•s_are special obligations of the Corporation issued under arid—equally—and ratably-secured, both as to principal a-nd-interest -y -a- Corp Trust April dated as of A ril 1, 1996, as supplemented by the First Supplement to Trust Indentureby dated as of June 1, 1999, the Second Supplement to Trust Indenture dated as of April 1, 2001, Third bythe Su lement to Trust Indenture dated as of December 1, 2003 and by Supplement pp the Fourth Supplement to Trust Indenture dated as of , 2007 (as so supplemented, hereinafter referred to as the Indenture )" , from the Corporation to the Trustee. Reference is hereby made to the Indenture for the nature and extent of the security, a statement of the terms and upon u on which the Series 2007 Bonds are issued and secured, the rights of the registered owners hereof and the terms under which obligations on a parity with the Series 2007 Bonds have been issuedObligations and Additional Obli may be issued in the future (collectively, "Additional Obligations"). Pursuant to a Lease-Purchase Agreement dated as of April 1, 1996, as amended by the First Amendment to Lease-Purchase Agreement dated as of June 1, 1999, the Second Amendment to Lease-Purchase Agreement dated as of April 1, 2001, the Third Amendment to Lease-Purchase Agreement dated as of December 1, 2003, and the Fourth Amendment to Lease- Purchase Agreement reement dated as of , 2007 (as so amended, the "Lease"), between the Corporation and the Town of Oro Valley, Arizona (the "Town"), the Corporation will continue to lease the Project (as defined in the Lease) to the Town. The Rental Payments to be paid by the � Town to t Corporationpursuant to the Lease have been assigned to the Trustee as security for • thep Y a ment of the Series 2007 Bonds and any Additional Obligations. Under the terms of the Lease, the Town has agreed to pay as Rental Payments sums to pay, amongother things, theprincipal of and interest on the Series 2007 Bonds as the sufficient samecharges due, and all char es and expenses of the Corporation and the Trustee. For the payment the rental and other payments required under the Lease except for the Rental Payments of p Y p allocated to the Development Services Building and the Library (as defined in the Indenture), the Town expects to use the net revenues of the Town's water system (the "Water System") and, to the extent such net revenues are insufficient, to use its Excise Taxes (as defined hereafter). The Town y will make all Rental Payments which are allocated to the Development Services Building and the Library from its Excise Taxes and not from Net Revenues. The Town has pledged all its Excise Taxes as security for the payment of the Rental Payments due under the Lease. The pledge of p y e shall be a first lien upon the Excise Taxes as will be sufficient to make the rental and Excise Taxes p other payments due pursuant to the Lease. The Series 2007 Bonds (including for all purposes this Bond) are payable solelyfrom amounts received by the Corporation under the Lease and all amendments thereto. The Town covenants in the Lease that, to the extent permitted by law, the Excise Taxes shall be retained and maintained so that all such Excise Taxes shall be at least equal times the total of Rental Pa ments payable under the Lease in any current fiscal to at least two (2) Y such year. If such receipts recei for any precedingfiscal year shall not equal two (2) times the rental payment requirements ofcurrent fiscal year hereunder, the Town shall impose new or increase any existing rates on Excise Taxes in order that (i) the current receipts will be sufficient to meet all requirements hereunder and (ii) the current year's receipts will be reasonably calculated to • current KCH:joy 713032.03 03/06/07 A-2 attain the level as required above for the succeeding fiscal year's rental payment requirements. right to issue other obligations secured by a pledge and first lien on the net The Town reserves the g revenues of the Water System . Under the Lease, as amended, and this Series 2007 Bond, Excise Taxes mean: all • -- 0 a ion •rive e•e sa es • - - an privilege, excise and business taxes, franchise fees and taxes, bed and rental taxes and income taxes which the Town now collects or maycollect in the future, and all state shared sales and Income taxes and state revenuesharingcollected and allocated or apportioned, now or hereafter, to the Town by the State of Arizona, political subdivision thereof, or any other governmental any of the Town of any or agency, except the share excise and franchise taxes which by State of Arizona law, rule or regulation must be expended for other purposes, such as the motor vehicle fuel tax. The Town, for itself, its successors and assigns, has covenanted and agreed in the y Lease that, so long as any Rental Payments remain unpaid or unprovided for, it shall not further on a basis equal to the first lien pledge contained in the Lease unless encumber the Excise Taxes q in the next recedin fiscal year shall have amounted to at least two (2) the Excise Taxes collectedpreceding times the highest combined Rental Payments to be made hereunder for any fiscal year (July 1 to June 30) and any payments to be made on anyAdditional Obligations then outstanding and any ' ' Obligations then proposed to be secured by a parity pledge of the Excise Taxes. AdditionalOb g p p The SeriesJY 2007 Bonds enjoy a lien and claim on the Rental Payments on a parity basis with The Town of Municipal Oro ValleyMunici al Property Corporation Excise Tax Revenue Bonds, Series 1999; The Town of Oro ValleyMunicipal Property Corporation Excise Tax Revenue Bonds, Series 2001; and The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2003. The Town's pledge led e of Excise Taxes under the Lease is on a parity with the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2000; and the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2005. THE TOWN IS NOT AND SHALL NOT BE LIABLE FOR THE PAYMENT FROM AD VALOREM TAXES OF THE RENTAL PAYMENTS DUE PURSUANT TO THE LEASE OR PRINCIPAL OF AND INTEREST ON THIS SERIES 2007 BOND. PURSUANT TO THE INDENTURE, THE SERIES 2007 BONDS ARE SPECIAL OBLIGATIONS OF THE CORPOR.ATION AND THE AMOUNTS THEREON, AND ON ANY ADDITIONAL OBLIGATIONS ON A PARITY HEREWITH, SHALL BE PAYABLE SOLELY FROM THE RENTAL PAYMENTS MADE PURSUANT TO THE LEASE. THE SERIES 2007 BONDS DO NOT AND SHALL NOT REPRESENT OR CONSTITUTE A DIRECT OR INDIRECT PLEDGE OF THE FULL FAITH AND CREDIT OF THE TOWN OR OF THE STATE OR OF ANY POLITICAL SUBDIVISION MUNICIPALITY OR OTHER AGENCY THEREOF. THE CORPORATION HAS NO TAXING POWER. provided in, and to the extent permitted by the Indenture, or any indenture As supplemental thereto, therightsobligations and obli ations of the Corporation and the registered owners of the Series 2007 Bondsbe maymodified bythe Corporation with the written consent of the registered owners of a ma� y o'majority f the principal amount of all Bonds outstanding, including all pp KCH:joy 713032.03 03/06/07 A-3 Bonds on aarity with the Series 2007 Bonds; provided, however, that no such modification shall p effect the reduction of, or the extension of the stated time of payment of the principal hereof or of 40 the interest hereon, or permit the creation of any lien on the trust estate prior to or on a parity with the lien of the Indenture (except parity obligations or other obligations under the conditions set forth in the Indenture) or deo ' - •_ =: te -. • • •- s- -• •f the lien created by the Indenture. Series 2007 Bond Optional Redemption. Series 2007 Bonds maturing on or before July 1, 20 , are not subject to redemption prior to their stated maturity date. Series 2007 Bonds maturing on or after July 1, 20 , may be redeemed prior to maturity, in whole or in part, on any Interest Payment Date, in the order of maturities designated by the Town on or after July 1, 20 , at a redemption price equal to the principal amount thereof plus accrued interest on such principal to the date fixed for redemption, but without premium. Notice of redemption of the Series 2007 Bonds shall be mailed by first class mail, pg prepaid,postage not more than 60 nor less than 30 days prior to the date fixed for redemption, to the registered owner of each Series 2007 Bond to be redeemed in whole or in part at the registered owner's address shown on the registration books for the Series 2007 Bonds on the 15th day precedingthat mailing. Failure to mail notice to any registered owner of Series 2007 Bonds shall not affect the validity of the proceeding for the redemption of Series 2007 Bonds with respect to registered owners of other Series 2007 Bonds. The Registrar, initially the Trustee, shall maintain the registration books of the Corporation for the registration of ownership of each Series 2007 Bond as provided in the Indenture. • So long as the Book-Entry-Only System is in effect, the Series 2007 Bonds may be transferred only pursuant to the rules of the Book-Entry-Only System. If the Book-Entry-Only System is discontinued, this Series 2007 Bond may be transferred on the registration books upon delivery hereof to the Registrar, accompanied by a written instrument of transfer in form and with guaranty of signature satisfactory to the Registrar, dulyby executed the registered owner of this Series 2007 Bond, or his or her attorney-in-fact or legal representative, containing written instructions as to the details of the transfer. No transfer of g this Series 2007 Bond shall be effective until entered on such registration books. In all cases upon the transfer of a Series 2007 Bond, the Registrar shall enter the transfer of ownership in the registration books and shall authenticate and deliver, in the name of the transferee or transferees, a new fully registered Series 2007 Bond or Series 2007 Bonds of the denominations of$5,000 or any whole multiple thereof(except that no Series 2007 Bond shall be issued which relates to more than a single principal maturity) for the aggregate principal amount which the registered owner is entitled to receive at the earliest practicable time in accordance with the provisions of the Indenture. If the Book-Entry-Only System is discontinued, the registered owner of one or more Series 2007 Bonds may, upon request, and upon the surrender to the Registrar of such Series 2007 Bonds, exchange such Series 2007 Bonds for Series 2007 Bonds of other authorized denomination of the same maturity, series, and interest rate together aggregating the same principal amount as the Series 2007 Bonds so surrendered. KCH:joy 713032.03 03/06/07 A-4 Th Corporatione or the Registrar shall charge the registered owner of such Series 110 2007 Bond, for everysuch transfer or exchange of a Series 2007 Bond, an amount sufficient reimburse it foray tax,ngovernmental fee or other governmental charge required to be paid with respect to suchmay transfer, and require that such charge be paid before any such new Series 2007 Bond-s e1.ivered. The Corporation shall pay all initial registration fees on the Series 2007 ha�l_be_d rp Bonds. Subsequent owners of Series 2007 Bonds will pay-all transfer fees including ng governmental fees, taxes charges. registered or The owner of any Series 2007 Bond shall be required to pay any expenses incurred in connection with the replacement of a mutilated, lost, stolen or destroyed Series 2007 Bond. The Corporation and the Registrar may, but are not required to, transfer or exchange any Series 2007 Bonds duringthe period (i) from the record date to and including the interest payment date or (ii) from fifteen days prior to the selection of Series 2007 respective p y Bonds to be redeemed and includingthe day on which notice of redemption is given. The but is not required to, transfer or exchange any Series 2007 Bonds within the Registrar may, q . to above, the interest payment on such Series 2007 Bonds will be made payable to periods referredp Y g and mailed to the registered owners shown on the bond register maintained by the Registrar as of the close of business on the respective record date. This Series 2007 Bond shall not be entitled to any security or benefit under the Indenture beor obligatory valid or become obli ator for any purpose until the certificate of authentication hereon shall have been signed by the Registrar. This Series 2007 Bond is a special obligation of the Corporation, and no incorporator, member, director, officer or agent, as such, past, present or future, of the Corporation shall be personally liable for the payment hereof. It is hereby certified and recited that all conditions, acts and things required by the Constitution and laws of the State of Arizona to exist, to occur and to be performed precedent to and in the issuance of this Series 2007 Bond do exist, have occurred and have been performed. KCH:joy 713032.03 03/06/07 A-5 IN WITNESS WHEREOF, the President and Secretary of the Corporation have caused this Series 2007 Bond to be executed in the name of the Corporation by the facsimile signature of said President and by the facsimile signature of said Secretary, all as of the date written above. THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION (Facsimile) President ATTEST: (Facsimile) Secretary CERTIFICATE OF AUTHENTICATION This Series 2007 Bond is one of The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007. Date of Authentication: WELLS FARGO BANK, N.A., as Registrar By: Authorized Representative 411) KCH:joy 713032.03 03/06/07 A-6 ASSIGNMENT For value received, the undersigned sells, assigns and transfers unto the within obligation and irrevocably constitutes and appointsattorney to transfer that obligation on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: [INSERT PROPER LEGEND] Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within obligation in every particular, without alteration or any change whatsoever. KCH:joy 713032.03 03/06/07 A-7 PRELIMINARY OFFICIAL STATEMENT DATED MARCH ,2007 J C • .2 NEW ISSUE-BOOK-ENTRY-ONLY RATINGS: See"RATINGS" herein. r �'-u In the opinion of Gust Rosenfeld P.L.C., Special Counsel, under existing laws, regulations, rulings and judicial decisions, and assuming acontinuing compliance with certain restrictions, conditions and requirements by the Town, as mentioned under "TAX EXEMPTION" • . herein, interest income on the Series 2007 Bonds is excluded from gross income for federal income tax purposes and is exempt from .11:1? Arizona income taxes. Interest income on the Series 2007 Bonds is not an item of preference to be included in the alternative minimu tax of individuals or corporations; such interest income must, however, be taken into account as an adjustment to alternative minimu v taxable income for certain corporations which income is subject to federal alternative minimum tax.See "TAX EXEMPTION," "BOND s c PREMIUM"and"ORIGINAL ISSUE DISCOUNT"herein. • , DRAFT II $17,125,000* - -__ 3/7/07 • .= TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION • .© EXCISE TAX REVENUE REFUNDING BONDS,SERIES 2007 � J J '^ 1: Due: 1,as shown on the inside front cover o Dated: Date of Delivery July • C --� c The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds,Series 2007(the"Series 2007 Bonds") = = are being issued for the purpose of providing funds to(1) refinance certain outstanding excise tax secured obligations of the Town and '~ (2)pay the costs and expenses related to the issuance of the Series 2007 Bonds. L Interest on the Series 2007 Bonds is payable semi-annually on January 1 and July 1 of each year (each an "Interest Payment Date") • ucommencing on July 1,2007*. Interest is calculated on the basis of a 360-day year of twelve 30-day months. • y AIJ • The Series 2007 Bonds will be delivered to and registered in the name of Cede & Co., as nominee of The Depository Trust Company, = New York, New York, a registered securities depository ("DTC"). The Town of Oro Valley Municipal Property Corporation (the .L "Corporation")will initially utilize the "book-entry-only system"of DTC,although the Corporation and DTC each reserve the right to .c .?, discontinue that system at any time.Utilization of the book-entry-only system will affect the methods and timing of payment of principal 4.1 -c and interest on,and the method of transfer of,the Series 2007 Bonds. So long as the book-entry-only system is in effect,all payments of principal and interest will be made when due to Cede&Co.,through ,as trustee. DTC will be responsible � C c for distributing the principal and interest payments to its direct and indirect participants for distribution to the beneficial owners of the r4 Series 2007 Bonds(the`Beneficial Owners"). So long as the book-entry-only system is in effect and Cede&Co.,as nominee of DTC, vt• •.? © is the registered owner of the Series 2007 Bonds,all references herein to owners of the Series 2007 Bonds and provisions for consents by owners of the Series 2007 Bonds will refer to and be solicited from Cede& Co.,and not the Beneficial Owners. See APPENDIX G =• = • "BOOK-ENTRY-ONLY SYSTEM." L I." Cr. See Inside Front Cover for Maturity Schedule 1110 o L C C C ✓ r. The Series 2007 Bonds are subject to optional and mandatory redemption prior to maturity as described herein*. o � J The Series 2007 Bonds are special obligations of the Corporation payable solely from the rental payments to be paid by the Town of Oro .� Valley,Arizona (the "Town") to the Corporation pursuant to a Lease-Purchase Agreement(as amended by the first, second, third and ▪ o g fourth amendments thereto), between the Town and the Corporation. The payment of the rental payments is secured, together with • C certain Existing Parity Obligations (defined herein)and Additional Parity Obligations(defined herein) by a pledge of and first lien on, • 747:: all of the Excise Taxes(defined herein)received by the Town. The Series 2007 Bonds are not secured by the property refinanced with proceeds of the Series 2007 Bonds. See "SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2007 BONDS"herein. •° = The Series 2007 Bonds are special obligations of the Corporation payable solely from the sources herein described. The Series 2007 Bonds are not general obligations of the Corporation, the Town, the State of Arizona or any political subdivision thereof and • u L. neither constitute an indebtedness of the Town when computing the limit imposed by constitutional, statutory or charter aP rovision or a charge againstthe general credit or taxing power of the Town, the State of Arizona or any political subdivision • c .o 2 thereof nor a liability of the Town,the State of Arizona or any political subdivision thereof for payment of the Series 2007 Bonds other than from the sources pledged therefor. The Corporation has no taxing power. r The scheduled payment of principal of and interest on the Series 2007 Bonds when due will be guaranteed under a • L. o insurance policy to be issued concurrently with the delivery of the Series 2007 Bonds by [Insert Insurance Logo] • The Series 2007 Bonds are offered when,as and if issued,subject to the approving opinion of Gust Rosenfeld P.LC.,Phoenix,Arizona, Bond Counsel, as to validity and tax exemption. In addition, certain legal matters will be passed upon solely for the benefit of the Underwriter by Greenberg Traurig,LLP,Phoenix,Arizona. It is expected that the Series 2007 Bonds will be available for delivery to DTC on or about April 19,2007*. This cover page contains certain information for convenience of reference only. It is not a summary of the issue of which the Series 0 2007 Bonds are a part. Investors must read this Official Statement in its entirety to obtain information essential to the making of an i1. nformed investment decision with respect to the Series 2007 Bonds. v • * Subject to change. STONE & You N G B E R G L L C IP MATURITY SCHEDULE* Maturity Date Principal Interest Price or (July 1) Amount Rate Yield 2009 $ 425,000 % % 2010 845,000 2011 85,000 2012 90,000 2013 95,000 2014 100,000 2015 605,000 2016 630,000 2017 660,000 2018 685,000 2019 720,000 2020 2,230,000 2021 1,460,000 2022 1,535,000 2023 1,610,000 0 2024 1,685,000 2025 1,785,000 2026 1,880,000 * Subject to change. REGARDING THIS OFFICIAL STATEMENT or other person has been authorized by the Corporation,Town or the Underwriter to • No dealer,broker, salesperson give any information or to make any representations resentations other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing This Official Statement does not co - ._� - ,_ -- 9 - . •e solicitation of an offer-to buy nor will there be any sale of the Series 2007 Bonds-by any person in any jurisdiction in which it is unlawful for such person to make such offer,solicitation or sale. The information set forth in this Official Statement, which includes the cover page, inside front cover page and appendices hereto, has been obtained from the Corporation, Town, the Arizona Department of Revenue, the Pima County Assessor,Finance Director and Treasurer and other sources which are considered to be accurate and reliable relied upon in the preparation of similar official statements,but such information is not guaranteed and customarily p P P the Town as to accuracyor completeness and is not to be construed as the promise or guarantee of the Corporation, or the Underwriter. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of its responsibilities to, investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The _ information, includingtables of receipts from taxes and other sources, shows recent historical presentation of not intended to indicate future or continuing trends in the financial position or other affairs of the information and is Corporation or the Town. All information,estimates and assumptions contained herein are based on past experience and on the latest information available and are believed to be reliable, but no representations are made that such information, estimates assumptions tions are correct, will continue,will be realized or will be repeated in the future. P To the extent that any statements made in this Official Statement involve matters of opinion or estimates,whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty, and no representation is made that any of these statements have been or will be realized. All forecasts, projections, opinions, assumptionslooking statements"or estimates are "forward tatements" which must be read with an abundance of caution and which maynot be realized or may not occur in the future. Information other than that obtained from official records of the Corporation or the Town has been identified by source and has not been independently confirmed or verifiedby Corporation,the Co oration,the Town or the Underwriter and its accuracy cannot be guaranteed. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this 11110 pursuant Statement nor anysale made hereto will, under any circumstances, create any implication that there has been no change in the affairs of the Corporation or Town or any of the other parties or matters described herein since the date hereof. this offering,the Underwriter may allow concessions or discounts from the initial public offering In connection with g� prices to dealers and others and the Underwriter may overallot or engage in transactions intended to stabilize the , hose which might otherwise prevail in the open market in order to prices of the Series 2007 Bonds at levels above t facilitate their distribution. Such stabilization,if commenced,may be discontinued at any time. The Series 2007 Bonds will not be registered under the Securities Act of 1933, as amended, or any state securities . law, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission nor anyother federal,state or other governmental entity or agency will have passed upon the accuracy or adequacy of this Official Statement or approved the Series 2007 Bonds for sale. q Y The Town will undertake provide to continuing disclosure as described in this Official Statement under the caption "CONTINUING DISCLOSURE" and in APPENDIX F — "FORM OF CONTINUING DISCLOSURE UNDERTAKING,"all pursuant to Rule 15c2-12 of the Securities and Exchange Commission. 10 TABLE OF CONTENTS P_ 1 INTRODUCTORY STATEMENT 2 THE MUNICIPAL PROPERTY CORPORATION 3 THE SERIES 2007 BONDS General Terms 3 Registrar and Paying Agent 3 Redemption Provisions 4 PLAN OF REFUNDING 45 Schedule of Obligations Being Refunded 5 VERIFICATION OF MATHEMATICAL COMPUTATIONS 5 SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2007 BONDS General 56 5 Rental Payments Under the Town Lease Reserve Fund 7 6 6 Additional Obligations 7 Junior Lien Obligations 7 Town's Intention to Pay Certain Rental Payments from Net Water System Revenues 8 Consequences of Insufficient Net Water System Revenues to Pay Rental Payments 8 BOND INSURANCE 8 RENTAL EXCISE TAXES 8 Town Sales and Franchise Taxes 10 State-Shared Income Taxes. 11 State-Shared Sales Taxes 12 Licenses and Permits;Fines with Respect to State-Shared Sales Taxes, State-Shared Income Taxes and Potential Adverse Circumstances12 Town Sales Tax 111 12 Factors Affecting Development 14 Actual and Projected Collections COVERAGE* 14 ESTIMATED DEBT SERVICE REQUIREMENTS AND 17 THE WATER SYSTEM 17 General Background 17 Administrative Staff 18 Billing and Accounting 18 Water Sources and Supply 28 Rate and Fee Adjustments 21 Factors Affecting Water Costs 1 Water System Fees 2 21 Water Rates 30 27 Net Water System Revenues Coverage of Water System-related Debt Service 31 THE TOWN'S GENERAL-FUND 32 LITIGATION 32 LEGAL MATTERS 3 2 TAX EXEMPTION 32 BOND PREMIUM 34 ORIGINAL ISSUE DISCOUNT RATINGS 34 3 4 UNDERWRITING 5 35 POLITICAL CONTRIBUTIONS 35 RELATIONSHIP AMONG PARTIES 35 CONTINUING DISCLOSURE TEMENT 35 CERTIFICATION CONCERNING OFFICIAL STA 36 GENERAL PURPOSE FINANCIAL STATEMENTS 36 CONCLUDING STATEMENT 36 MISCELLANEOUS TABLE OF CONTENTS (continued) • Town of Oro Valley,Arizona—General Economic and Demographic Information APPENDIX A. T _® _ _ _ a. . _ - _ . ... inancial Data APPENDIX C: Town of Oro Valley,Arizona—Audited Annual General-' _:ose mancia -�. - - .-- Year Ended June 30,2006 APPENDIX D: Summaries of the Principal Documents APPENDIX E: Form of Approving Legal Opinion APPENDIX F: Form of Continuing Disclosure Certificate APPENDIX G: Book-Entry-Only System APPENDIX H: Specimen Insurance Policy 111 OFFICIAL STATEMENT $17,125,000* Y MUNICIPAL PROPERTY OF ORO VALLE CORPORATION EXCISE TAX REVENUE REFUNDING BONDS, SERIES 2007 INTRODUCTORY STATEMENT . � cover page and appendices hereto,has been prepared in connection with This Official Statement,which includes the p g . Oro ValleyMunicipal Property Corporation(the "Corporation") of the original issuance and sale by the Town of 'ci al Property Corporation Excise Tax Revenue principal amount of the Town of Oro Valley Muhl p P �' Official Statement. $17,125,000* Refunding Bonds, Series 2007 (the "Series 2007 Bonds"), identified on the cover page of this Statement. authorization, purpose, terms, sources of payment, and security for the Sen es Certain information concerning the 'al Statement. Information about the Town of Oro Valley, Arizona (the 2007 Bonds is contained in this Office "Town"), is included in APPENDICES A and B, and the most recent audited financial statements for the Town are included in APPENDIX C. pursuant Series 2007 Bonds are being issued to a Trust Indenture, dated as of April 1, 1996 (the "Trust� Indenture"), between the Corporation and Wells Fargo Bank Arizona, N.A., as trustee (the "Trustee"), as supplemented by the First Supplement to Trust Indenture, dated as of June 1, 1999 (the "First Supplement"), the Second Supplement to Trust Indenture,dated as of April 1,2001 (the"Second Supplement"),the Third Supplement October 1 200the "Third Supplement") and the Fourth Supplement to Trust to Trust Indenture, dated as of 3"Fourth to Indenture, to be dated as of April 1, 2007* (the Fourth Supplement" and, ether with the Trust Indenture, the g and the Third Supplement, the"Indenture"). The Series 2007 Bonds are First Supplement,the Second Supplement . . funds to 1 refinance certain outstanding excise tax secured obligations of being issued for the purpose of providing ( ) the Town (the "Obligations Being Refunded") and (2) pay the costs and expenses related to the issuance of the Series 2007 Bonds. The Series 2007 Bonds are special obligations of the Corporation paid from rental payments to be paid by the Town ("Rental Payments") pursuant to a Lease-Purchase Agreement dated as of April 1, 1996 (the "Lease-Purchase Agreement"), as amended by the First Amendment to Lease-Purchase Agreement, dated as of June 1, 1999 (the "First Amendment"),the Second Amendment to Lease-Purchase Agreement,dated as of April 1,2001 (the"Second ent to the Lease-Purchase Agreement, dated as of October 1, 2003 (the "Third Amendment"), the Third Amendment " e Fourth Amendment to the Lease-Purchase Agreement, to be dated as of April 1, 2007* (the Amendment ) and the "Fourth Amendment" and, together with the Lease-Purchase Agreement, the First Amendment, the Second Amendment and the Third Amendment,the"Town Lease"). Under the terms of the Town Lease the Town is required to make semi-annual Rental Payments in amounts , . the principal and interest requirements of the Series 2007 Bonds. The Rental Payments sufficient to pay when due p p de a lien on Excise Taxes (hereinafterfined) on a parity with the $46,460,000 are payable from and secured by aggregate outstanding principal amount of Town of Oro Valley Municipal Property Corporation Municipal Water System Acquisition Bonds, Series 1996 (the "1996 Bonds"), Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 1999 (the "1999 Bonds"), Town of Oro Valley, Arizona Excise Tax Revenue " ,Town of Oro Valley Municipal Property Corporation Excise Tax Obligations, Series 2000(the"2000 Obligations ) " ,Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 2001 (the"2001 Bonds ) and Town of Oro Valley Municipal Property Revenue Refunding Bonds, Series 2003 (the "2003 Bonds") ns" and together with the 1996 g Corporation Excise Tax Revenue Obligations, Series 2005 (the "2005Obligations" Obligations, the rp . Bonds, the 1999 Bonds, the 2000 Obligations, the 2001 Bonds, the 2003 Bonds and the 2005g Obligations")and anyadditional parity obligations that may be issued in the future as provided in "Existing Parity the Town Lease and the Indenture ("Additional Parity Obligations" and, together with the Obligations and the Existing Parity Obligations,the"Parity Obligations"). See"SECURITY FOR AND SOURCES OF PAYMENT OF P ty THE SERIES 2007 BONDS"herein. * Subject to change. 1 The Lease Purchase Agreement was executed and delivered in connection with the issuance of the 1996 Bonds to finance the acquisition of two domestic water systems (the "1996 Project"). The First Amendment was executed and delivered in connection with the issuance of the 1999 Bonds to finance a Development Services Building for the 1111 Town and to finance additional Water System-related improvements(the"1999 Project"). The Second Amendment was executed and delivered in connection with the issuance of the 2001 Bonds to finance a library for the Town and fel-mance a•• • ; - ystem-related improvements(the"2001 Project"). The Town owns a leasehold interest portion the site for a of the 2001 Project,leased-by-the Town to the Corporation in.connection with the issuance of the 2001 Bonds pursuant to the Facilities Lease, dated as of April 1, 2001 (the "FacilitiesZease T-The-Tiird Amendment was executed and delivered in connection with the issuance of the 2003 Bonds to refinance portions of 1996 Certificates of Participation, the 2000 Obligations and the 2001 Bonds. The 1996 the 1996 Bonds, Series t and the 2001 Project are sometimes herein collectively referred to as the "Leased Project, the 1999 Projec J Property"). tons right, title and interest, as lessor, in the Town Lease, and the Corporation's right, title Certain of the Corporation's and interest, as lessee, in the Facilities Lease, have been assigned to the Trustee pursuant to the Indenture. The Trustee will hold the rights and interests assigned in trust for the benefit of the owners of the 1996 Bonds,the 1999 Bonds,the 2001 Bonds and the 2003 Bonds. References to provisions of federal or Arizona law, whether codified or uncodified,are references to those current provisions. Those provisions may be amended,repealed or supplemented. The offering of the Series 2007 Bonds is made only by this Official Statement, which supersedes any other information or materials used in connection with the offering or sale of the Series 2007 Bonds. Accordingly, prospective purchasers of the Series 2007 Bonds should read this entire Official Statement before making an investment decision. t contains financial and other information derived from the Town's records, except for This Official Statement attributed to other sources. The presentation of historical information, including tables of information expressly receipts from taxes and other revenues, is intended to show recent historical information and is not to be construed of future or continuing trends in the financial position or other affairs of the Town.No as a projection or indicationpastexperience,is made that as shown by such financial and other information, will necessarily • continue or be repeated in the future. For definitions of certain words used in this Official Statement, and denoted by initial capital letters, see APPENDIX D—"SUMMARIES OF THE PRINCIPAL DOCUMENTS." Descriptions of thea authorization,purpose and terms of the Series 2007 Bonds and summaries of certain provisions of the Town Lease and the Indenture are included in this Official Statement. Such descriptions and summaries are not comprehensive or definitive,and all summaries of and references to the Town Lease and the Indenture appearing herein are qualified by reference to the full text of such documents. References herein to the Series 2007 Bonds are qualified by reference to the form thereof as set forth in the Indenture. Copies of the full texts of the Town Lease and the Indenture P . are available for inspection at the office of the Underwriter, Stone& Youngberg LLC, 2555 East Camelback Road, Suite 280,Phoenix,Arizona,85016. THE MUNICIPAL PROPERTY CORPORATION payments to the extent oy f a ments received from the Town under the Town Lease, the Corporation is not financially liable for the payment of the principal of or interest on the Series 2007 Bonds and the Owners of the Series 2007 Bonds will have no right to look to the Corporation for payment of the Series 2007 Bonds. p corporation Corporation is a nonprofit co oration incorporated pursuant to the laws of the State of Arizona (sometimes referred to herein as "Arizona" or the "State") formed in 1996 for the purpose of any civic or charitable purpose such as financing the acquiring,cost of ac uirin , constructing and equipping of facilities for use by and for leasing to the Town. The Corporationis governedby a three-member Board of Directors, each of whom is appointed by the Mayor and Council of the Town to serve three-year terms.In addition to the Series 2007 Bonds,the Corporation has 2 previously issued the 1996 Bonds, the 1999 Bonds, the 2001 Bonds and the 2003 Bonds and it may in the future issue additional bonds or obligations,either pursuant to the Indenture or otherwise. THE SERIES 2007 BONDS General Terms The Series 2007 Bonds will be dated the date of initial delivery,and will be registered in the name of Cede&Co.,as nominee of The Depository Company,Trust Com any, New York, New York ("DTC") under the book-entry-only system described herein (the "Book-Entry-Only System"). See APPENDIX G — "BOOK-ENTRY-ONLY SYSTEM. Beneficial ownership interests in the Series 2007 Bonds may be purchased in amounts of$5,000 of principal due on a specific maturity date or integralmultiples multi thereof. Interest on the Series 2007 Bonds will be payable on July 1, 2007*, and on each July 1 and January 1 thereafter (each an "interest payment date") until maturity or prior redemption. The Series 2007 Bonds will mature on the dates and in the principal amounts and bear interest at the rate,in each case,as set forth on the inside front cover page of this Official Statement. See "TAX EXEMPTION,""ORIGINAL ISSUE DISCOUNT" and"BOND PREMIUM"herein for a discussion of the treatment of the interest on the Series 2007 Bonds for federal income tax purposes. Registrar and Paying Agent The Trustee will serve e as the initial bond registrar and transfer agent(the"Registrar")and paying agent(the"Paying Agent")for the e Series 2007 Bonds. The Corporation may change the Registrar and Paying Agent without notice to or consent of the registered owners of the Series 2007 Bonds. Redemption Provisions* 111 Optional Redemption. Series 2007 Bonds maturing before July 1, 20_will not be subject to redemption prior to maturity. Series 2007 Bonds maturing on and after July 1, 20 will be subject to redemption prior to maturity, at the option of the District, in whole or in part on July 1, 20or on any interest payment date thereafter, by the . of a redemptionprice equal to the principal amount of each Series 2007 Bond redeemed plus interest payment p accrued to the date fixed for redemption but without premium. Mandatory Redemption. Series 2007 Bonds maturing on July 1, 20 *, are subject to mandatory sinking fund redemption prior to their stated maturity, at random or such other manner, as selected by the Trustee, on January 1 and July 1 in the years and principal amounts as follows,at a redemption price equal to the principal amount thereof plus interest accrued to the date of redemption,but without premium: Maturity Dates* Principal Amount* (maturity) Whenever Series subject Bonds subject to mandatory sinking fund redemption are purchased,redeemed(other than by mandatory sinking fund redemption) or are delivered by the Town to the Trustee for cancellation, the principal Pon amount of the Series 2007 Bonds so retired shall satisfy and be credited against the mandatory sinking fund requirements for such maturity in any order specified by the Town. * Subject to change. 111 3 as the Book-Entry-Only System is in effect,redemption notices will be sent only to Notice of Redemption. So long trY DTC by electronic media, not more than 60 nor less than30 days prior to the date set for redemption. If the Book- Entry-Only System is discontinued, notice of redemption of any Series 2007 Bond will be mailed on the same each owner of the Series 2007 Bonds. Failure to properly give notice of redemption of any Series 2007 schedule to Bond will not affect the redemption of any other Series 2007 Bond for which notice is properly given. Effect ofRedemption. On the date designated for redempd he-acnes 2007_Bonds_or pnrtions_thereof to e Reem p . redeemed will become and be due and payable at the redemption price for such Series 2007 Bonds or portions thereof, and, if moneyspayment for a ment of the redemption price are held in a separate account by the Registrar and Paying Agent, interest on such Series 2007 Bonds or portions thereof to be redeemed will cease to accrue, such Series 2007 Bonds or portions ortions thereof will cease to be entitled to any benefit or security under the Indenture, the owners of such Series 2007 Bonds or portions thereof will have no rights in respect thereof except to receive on the redemption price thereof and such Bonds or portion thereof will be deemed paid and no longer payment of P practice s DTC' is to determine by lot the amount of the interest of each Direct Participant in the Series 2007 Bonds(as defined in APPENDIX G—"BOOK-ENTRY-ONLY SYSTEM")to be redeemed. Redemption of Less Than All ofa Series 2007 Bond. The District may redeem any amount which is included in a Series 2007 Bond in the denomination in excess of,but divisible by, $5,000. In that event,if the Book-Entry-Only System is discontinued, the registered owner will submit the Series 2007 Bond for partial redemption and the Registrar and Paying Agent ent will make such partial payment and will cause to be issued a new Series 2007 Bond in a principal amount which reflects the redemption so made, to be authenticated and delivered to the registered owner thereof. PLAN OF REFUNDING The proceeds of the Series 2007 Bonds (net of costs of issuance with respect to the Series 2007 Bonds), together with the proceeds of the liquidation of investments in the debt service reserve and held for the 1996 Bonds,will be q with ,as depository trustee(the"Depository Trustee") placed in a trust(the"Depository Trust") and used to acquireobligations certain obli of the United States (the"Government Obligations"). Remaining proceeds Obligations are calculated to be sufficient to provide for the payment of interest on the and the Governmentg . • Refunded until payment at maturity or prior redemption, and to provide for payment of principal Obligations Being and premium at the maturity or prior redemption of the Obligations Being Refunded as shown below. See "SCHEDULE OF OBLIGATIONS BEING REFUNDED"below. The proceeds of the Series 2007 Bonds and other amounts in the Depository Trust will be held irrevocably in trust Trustee for the payment of debt service and redemption of the Obligations Being Refunded by the Depository pursuant to the terms of a Depository Trust Agreement, dated as of April 1, 2007* (the "Depository Trust Agreement"),among the Town,the Corporation and the Depository Trustee. * Subject to change. 4 IP Schedule of Obligations Being Refunded* Redemption MaturityPrincipal Principal Redemption Premium(As Issue Date Amount Amount Date a Percentage •• ;- ,,-, Jul 1 of Principal) Series u y •... �• - _ — 1996 2010 5.200% $ 2,775,000 $ 2,775,000 2008 1.00%2026 5.375 12,600 12,000 ,600 000 2008 1.00 2000 2020 5.500 200,000 200,000 2010 1.00 2001 2015 5.000 505,000 505,000 2011 1.00 2016 5.000 530,000 530,000 2011 1.00 2017 5.000 560,000 560,000 2011 1.00 2018 5.000 585,000 585,000 2011 1.00 2019 5.000 615,000 615,000 2011 1.00 2020 5.000 645,000 645,000 2011 1.00 $ 19,015,000 $ 19,015,000 VERIFICATION OF MATHEMATICAL COMPUTATIONS Grant Thornton,LLP, a firm of independent public accountants,will deliver to the Corporation and the Town,on or before the settlement date of the Series 2007 Bonds, its verification report indicating that it has examined, in accordance with standards established by the American Institute of Certified Public Accountants, the information 0 and assertions provided bythe Underwriter on behalf of the Corporation and the Town relating to the Series 2007 Bonds and the Obligations BeingRefunded. Included in the scope of its examination will be a verification of the mathematical accuracy of(a)the mathematical computations of the adequacy of the cash and the maturing principal of and interest on the Government Obligations to pay, when due, or called for redemption the principal of and interest on the Obligations BeingRefunded and (b) the mathematical computations supporting the conclusion of Bond Counsel that the Series 2007 Bonds are not "arbitrage bonds" under the Internal Revenue Code of 1986 as amended and the regulations promulgated thereunder. SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2007 BONDS General The Series 2007 Bondsspecialobligations are obli ations of the Corporation payable solely from the Rental Payments paid by the Town pursuant to the Town Lease. The Town pledges for payment of such Rental Payments, all of the Town's fines and forfeitureslicense and permit fees, transaction privilege (sales) taxes, other transaction privilege taxes, , and a d business taxes,franchise fees and taxes,bed and rental taxes and income taxes which the Town now or in the future imposes and collects, and all state shared sale and income taxes and state revenue sharing collected or allocated or apportionednow or hereafter to the Town by the State of Arizona, any political subdivision thereof,or , any other governmental unit or agency,except the share of the Town of any excise or franchise taxes which by State g of Arizona law, rule or regulation must be expended for other purposes, such as motor vehicle fuel taxes (the "Excise Taxes"). pledge Such led e is on a parity with the pledge of Excise Taxes for the payment of the Existing Parity Obligations and any Additional Parity Obligations that may be issued in the future. * Subject to change. 110 5 Pursuant to the Town Lease,to the extent permitted by law,the Town agrees to retain and maintain the Excise Taxes in effect so that the combined amount of all Excise Taxes in any fiscal year(July 1 to June 30) are equal to at least two(2)times the total amount payable on the Parity Obligations during such fiscal year(July 1 to June 30). If such 1111 receipts for the preceding fiscal year shall not equal at least two (2) times such Rental Payment requirements, the Town will impose new excise and franchise taxes or increase the rates for the Excise Taxes currently imposed in or�er a i e s - - -'. -"-- -- ._• __• t-. . .•-u -. -ii-. under the Town Lease and (ii)the current year's receipts will be reasonably calculated--to attain the-level---as required-for the next succeeding fiscal year's Rental Payment requirements for such purpose. THE SERIES 2007 BONDS AND THE RENTAL PAYMENTS UNDER THE TOWN LEASE DO NOT CONSTITUTE AN INDEBTEDNESS OR GENERAL OBLIGATION OF THE TOWN NOR SHALL THE TOWN BE LIABLE FOR THE PAYMENT FROM AD VALOREM PROPERTY TAXES OF THE RENTAL PAYMENTS OR PRINCIPAL OF AND INTEREST ON THE SERIES 2007 BONDS. PURSUANT TO THE INDENTURE, THE SERIES 2007 BONDS WILL BE SPECIAL OBLIGATIONS OF THE CORPORATION PAYABLE SOLELY FROM THE RENTAL PAYMENTS MADE PURSUANT TO THE TOWN LEASE. THE SERIES 2007 BONDS DO NOT AND SHALL NOT REPRESENT OR CONSTITUTE A DEBT OR A DIRECT OR INDIRECT PLEDGE OF THE FULL FAITH AND CREDIT OF THE TOWN OR OF THE STATE OR OF ANY POLITICAL SUBDIVISION, MUNICIPALITY OR OTHER AGENCY THEREOF. THE CORPORATION HAS NO TAXING POWER. Rental Payments Under the Town Lease The Town Lease provides for the payment by the Town to the Trustee on each June 15 and December 15, commencing June 15, 2007*, an amount which when added to any amount held by the Trustee for such purpose, equals the amount of interest due on the Series 2007 Bonds on the next succeeding Interest Payment Date,together with an amount which, when added to any amount held by the Trustee for such purpose, is equal to one-half(1/2) (as of December 15)or 100% (as of June 15)of the principal payable with respect to the Series 2007 Bonds on the next succeeding July 1. To provide the funds necessary to make these payments, the Town is required pursuant to the Town Lease to segregate, apportion and deposit into a special fund maintained by the Town, on the 10th day of each month during the six-month period prior to the above-described December 15 and June 15, one-sixth(1/6)of the amount to come due. See APPENDIX D—"SUMMARIES OF THE PRINCIPAL DOCUMENTS." • Reserve Fund A Reserve Fund was established with respect to the 1996 Bonds and funded also with respect to the 1999 Bonds. The amount funded with respect to the 1996 Bonds will,concurrently with the issuance of the Series 2007 Bonds,be released and the proceeds deposited with the Depository Trustee and used to refund the 1996 Bonds. In accordance with the provisions of the Trust Agreement, no deposits needed to be made into the Reserve Fund for the 2001 Bonds,the 2003 Bonds or the Series 2007 Bonds so long as the Excise Taxes collected for the preceding fiscal year are at least two and one-half(2.5)times the debt service requirements on all Parity Obligations for the current fiscal year. In the event that the Excise Taxes collected for the preceding fiscal year are less than two and one-half(2.5) times the highest annual debt service requirements on all Parity Obligations for the then current or any future fiscal year, the Town shall deposit into the Reserve Fund,on each Interest Payment Date,one-tenth(1/10th)of Maximum Annual Debt Service on any Parity Obligations except any for which a reserve fund is already established or for which no reserve fund is required until the amount in the Reserve Fund equals the Reserve Fund Requirement. Until the Reserve Fund is funded with respect to the Series 2007 Bonds, the Owners of the Series 2007 Bonds will have no claim on amounts in the Reserve Fund. In lieu of cash deposits, in the event the Reserve Fund is required to be funded for the Series 2007 Bonds, the Corporation may elect to provide a Qualified Surety Obligation in the amount of the Additional Reserve Requirement. Moneys deposited in the Reserve Fund from time to time will be invested according to the provisions of the Indenture (the "Eligible Investments") and will be applied by the Trustee to the extent necessary to provide for the payment of principal and interest on the Series 2007, the 2001 Bonds, the 1999 Bonds and the 1996 Bonds when due if the moneys available in the Revenue Fund are insufficient for that purpose. In the event of any such application of Reserve Fund moneys,the Town Lease provides for the payment by the Town of additional rent in an amount sufficient to replenish the Reserve Fund on or before the next succeeding Interest Payment Date. Neither 6 ations have any claim upon the Reserve Fund and except upon the the 2000 Obligations nor the 2005 Obli111 g occurrence of certain conditions,no Reserve Fund is maintained for the 2000 Obligations or the 2005 Obligations. Additional Obligations Under the Indenture, the Corporation may issue one or more series of obligations on a parity with the Series 2007 Bonds to finance and refinance the co_ st_of acquiring,,constructing,I econstructing or improving buildings,equipment q____ and other real and personal propertysuitable for any use by and lease to the Town, includm n -limited - the 1999 Bonds,the 2000 Obligations,the 2001 Bonds,the 2003 Bonds, domestic water systems,or for refinancing 2007 Bonds or any Additional Parity Obligations,and including costs of issuance the 2005 Obligations or the Series and any required reserve funds. At the time of issuance,the Corporation must enter into an amendment to the Town provide rovide the additional Rental Payments necessary to pay the additional Lease or new lease with the Town which will debt service on the bonds to be issued. So long as any Parity Obligations remainunpaidor unprovided for,the Town covenants not to further encumber the Excise Taxes on a basis equal to the first lien pledge led e enjoyed by the Outstanding Parity Obligations unless the Excise Taxes collected in the next precedingfiscal year shall have amounted to at least two (2) times the highest combined Rental Payments to be made thereunder for any succeeding twelve(12)months' and any payments to be made on any obligations then outstanding and any obligations ations then proposed to be secured by a pari passu pledge of the Excise Taxes. Junior Lien Obligations Under the Indenture,the Town may make pledges of and permit liens on the Excise Taxes which are subordinate to the pledge and lien securing the Series 2007 Bonds. Town's Intention to Pay Certain Rental Payments from Net Water System Revenues 111 Subject to the pledge of revenues of the Water System for payment of the Town of Oro Valley Municipal Property Corporation Senior Lien Water Project Revenue Bonds, Series 2003 described in APPENDIX B FINANCIAL DATA — Municipal Property Corporation oration Water Project Revenue Bonds Outstanding" (the "Water Revenue portion the Town intends to pay the of the Rental Payments relating to the Water System-related improvements which were with ith P roceeds of the sale of the Obligations Being Refunded representing Obligation Service Charges relating to the Series 2007 Bonds as well as rental payments approximately 96% of the O g relating to the portion of the 2 003 Bonds, 2001 Bonds and the 1999 Bonds, for such purposes which are not being refunded (collectively, the "Water System Related Debt Service") from revenues of the Water System remaining p after the payment of operating expenses of the Water System ("Net Water System Revenues"). Should Net Water System Revenues prove insufficient to pay the Rental Payments under the Town Lease,the Town will be obligated to pay the Water System Related Debt Service from Excise Taxes. In addition,additional bonds on a parity with the pledge of revenues from the WaterSystemmay be issued if per a filed statement by an independent certified public accountant or a consultant to the effect that Net Water System Revenues for the most recently completed fiscal year for which audited financial statements for the Town are available were equal to at least 120% of"Parity Test Debt takinginto account outstandingparity lien obligations (which includes the Water Revenue Bonds), Service"for all issued. Certain to the Net Water System Revenues-in the report of the the obligations proposed to be adjustments independent certified public accountant or consultant may be permitted. Additional parity lien obligations for refunding purposes are also permitted if the foregoing financial tests and other conditions are met. Payment of the Water System Related Debt Service is secured by the Town's pledge of Excise Taxes. THE TOWN'S NET WATER SYSTEM REVENUES ARE NOT PLEDGED TO,NOR DO THEY SECURE,THE RENTAL PAYMENTS TO BE PAID UNDER THE TOWN LEASE. Y appropriated be annuals a ro riated by the Town by setting forth in its adopted budget line Net Water System Revenues must items which indicate that the Water System Related Debt Service will be made for the respective fiscal year covered in such budget from Net Water System Revenues. Inclusion of Net Water System Revenues for the rental payments in any fiscal year's budget will not obligate the Town to continue to include such payments from Net Water System d ets forsubsequent fiscal years. Inclusion or exclusion of Net Water System Revenues Revenues in subsequent bug 7 as a source ofP �ayment for rental payments in any fiscal year's budget will not lessen the Town's promise and • pledge to pay the rental payments from Excise Taxes. The Town shall be absolutely and unconditionally obligated to pay all rental payments under the Lease-Purchase Agreement from Excise Taxes including as a result of any such non-appropriation. Consequences of Insufficient Net Water System Revenues to PayRental Payments The Water System Related Debt Service represents a substantial percentage of the Town's current annual budgeted expenditures. Therefore,in order to avoid using Excise Taxes which currently pay budget expenditures the Town is g relY in on Net Water System Revenues to provide at least one times coverage for the Water System Related Debt Service even though the pledged source of the Rental Payments for such obligations, in addition to a portion of the 1999 Bonds,the 2000 Obligations, the balance of the 2001 Bonds, the 2003 Bonds, the 2005 Bonds and the Series 2007 Bonds are the pledged Excise Taxes. Although the Town expects sufficient Net Water System Revenues to pay the Water System Related Debt Service, such Rental Payments from Net Water System Revenues must be annuallybudgeted by the Town and there can be no assurance that such annual appropriation will occur. IF THE TOWN USES EXCISE TAXES FOR RENTAL PAYMENTS RELATING TO THE WATER RELATED DEBT SERVICE SOME INTERRUPTION OF NORMAL M[JNICIPAL SERVICES COULD RESULT BECAUSE THE TOWN USES THE EXCISE TAXES FOR OTHER MUNICIPAL OPERATIONS. For a description of the Water System,see"THE WATER SYSTEM"herein. BOND INSURANCE [To Comet RENTAL EXCISE TAXES The Excise Taxes pledged to payment of Rental Payments paid by the Town pursuant to the Purchase Agreement • currently include the Town's unrestricted revenues from fines(the"Fines"), license and permit fees("Licenses and Permits"), transaction privilege taxes ("Town Sales Taxes"), franchise fees and taxes ("Franchise Taxes"), other transactionP rivilege,excise and business taxes,bed and rental taxes and income taxes which the Town now collects, or may collect in the future ("Miscellaneous Taxes"), and all state-shared sales taxes ("State-Shared Sales Taxes") and state-shared income taxes("State-Shared Income Taxes")collected or allocated or apportioned now or hereafter to the Town by the State of Arizona, any political subdivision thereof, or any other governmental unit or agency, except the share of the Town of any excise or franchise taxes which by State of Arizona law,rule or regulation must be expended for other purposes, such as motor vehicle fuel taxes. NO ASSURANCES CAN BE GIVEN THAT THE AMOUNT OF STATE-SHARED SALES TAXES OR STATE-SHARED INCOME TAXES WILL NOT BE REDUCED OR ELIMINATED BY THE LEGISLATURE OF THE STATE IN THE FUTURE. The major categories of such revenues are discussed more fully as follows. 8 Town Sales and Franchise Taxes 1110 Town Sales Taxes. Town Sales Taxes are levied by the Town upon persons on account of their business activities within the Town. The amount of taxes due are calculated by applying the tax rate against the gross proceeds of sales org ross income derived from the business activities shown in the table hereafter. Town Sales Taxes are collected by the Ai izona-Departs n "f n"venue and remitted to the Town on a monthly basis_ TABLE 1 TOWN TRANSACTION PRIVILEGE (SALES)TAX RATES BY CATEGORY Category Rate Utilities 2.0% Telecommunications 2.0 Publishing 2.0 Printing 2.0 Advertising 2.0 Contracting 4.0 Retail Sales 2.0 Restaurants and Bars 2.0 Hotel/Motel 6.0 Amusements 2.0 Rentals 2.0 Mining 2.0 Transportation 2.0 Source: Arizona Department of Revenue. Franchise Taxes. Cities and towns in the State have exclusive control over public rights-of-way dedicated to the municipality and may grant franchise agreements to and impose Franchise Taxes on utilities using those rights-of- way. A franchise may be granted only with voter approval, with the exception of cable television franchises which due to federal law do not require voter approval. The term of voter approved franchises is limited to 25 years. The Town has granted franchises to,and imposed Franchise Taxes on,cable television franchises. 9 The following table shows the actual amounts for fiscal years 2001/02 through and including 2005/06 and the projected amounts for fiscal years 2005/06 and 2006/07 of Town Sales and Franchise Taxes collected by industry classification: 410 TABLE 2 _— _TOWN SALES AND FRANCHISE TAX COLLECTIONS BY INDUSTRY CLASSIFICATION (5000's omitted) Audited Projected(a) Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Industry Classification 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Construction $2,779 $1,978 $ 3,014(b) $3,594(b) $ 4,888(b) $ 6,100 $ 6,700 Manufacturing 6 4 29 137 165 143 145 Transportation,Communication&Utilities 55 101 50 116 91 269(c) 820(c) Wholesale Trade 61 31 46 54 56 66 65 Retail Trade 1,877 2,086 2,722 2,942 3,229 3,500 3,700 Restaurant,Bars&Lodging 1,250 1,354 1,556 1,888 2,392(d) 2,703(d) 2,950(0 Fire,Insurance&Real Estate 45 62 101 142 872 258 140 Sery ices 258 285 393 379 262 292 290 All Other 42 50 (13) 68 194 265 265 Cable Franchise Tax 302 342 372 402 435 420 420 TOTAL $6,675 $6,293 $ 8,270 $9,722 $12,584 $ 14,016 $ 15,495 (a) Projections provided by the Town. Such projections are forward looking statements and no assurance can As indicated be given that the projected collections will be realized at the trines or in the amounts shown. above, approximately 43.5% of the Town Sales Tax collections are projected to be construction activity in year ear 2006/07. Therefore, a decline in construction activity may cause the Town Sales Tax collections fiscalIII projectedscal year 2006/07 to differ from those displayed above. Although the rate of growth in for.T construction,P articularly in single-family residences has slowed, the Town expects activity to remain level for the next twenty years. SUCH PROJECTIONS MUST BE VIEWED WITH AN ABUNDANCE OF CAUTION. See "EXCISE TAXES—Factors Affecting Development." presented(b) are Figures on the cash basis of accounting per the Arizona Department of Revenue Standard Industry Summary Local Taxes Collection Reports for all classifications except cable franchise. Cable franchise taxes are presented on the modified accrual basis of accounting. (c) Includes 2.0%additional(4.0%total)construction contracting tax which became effective May 1, 2004. (d) Includes 2.0%utilities tax effective April 1, 2007 and ending April 1, 2009 unless extended by a majority vote of the Town Council prior to that date. (e) Includes 3.0%additional(6.0%total)bed tax effective January 1, 2006. Source: Finance Department of the Town. State-Sha red Income Taxes. Also, under current State law, Arizona cities and towns are preempted by the State from imposing a local income tax. Cities and towns are, however,entitled by statutory formula to typically receive 15.0% of the net revenues of the State'sP ersonal and corporate income tax collections for the two fiscal years prior to the current fiscal year. Distribution of such funds is made monthly based on the proportion of each city's or town's population to the total population of all incorporated cities and towns in the State as determined by the latest decennial or special census. 10 State-Shared Sales Taxes 111 Pursuant to statutory formula, cities and towns in Arizona receive a portion of the State-levied transaction privilege (sales)tax. The State transaction privilege(sales)tax is levied against the same categories of business activity as the City's transaction privilege (sales) tax with the exception of food sales, which the State exempts from tax. As the table below indicates,the rate of taxation varies among the different types of business activities taxed,with the most common rate being 51)%of the amount or volume of business transacted. TABLE 3 STATE SALES TAX TAXABLE ACTIVITIES,TAX RATES AND DISTRIBUTION SHARE Tax Distribution Taxable Activities Rate(a) Share Mining Severance 2.5000% 80.00% Timbering Severance (b) 80.00 Nonmetalliferous Mining,Oil and Gas Production 3.1250 32.00 Transportation and Towing 5.0000 20.00 Utilities 5.0000 20.00 Communications 5.0000 20.00 Railroads and Aircraft 5.0000 20.00 Publishing 5.0000 20.00 Printing 5.0000 20.00 Private Cars/Pipelines 5.0000 20.00 Contracting(c) 5.0000 20.00 Restaurants and Bars 5.0000 40.00 0 Amusements 5.0000 40.00 Rentals/Personal Property 5.0000 40.00 Retail(excluding food sales) 5.0000 40.00 HotellMotel 5.5000 50.00 Membership Camping 5.0000 40.00 Rental Occupancy 3.0000 66.67 Use and Use Inventory 5.0000 0.00 Jet Fuel/Jet Fuel Use(per gallon) (d) (a) Exclusive of 0.6000% increase effective June 1, 2001, dedicated exclusively to education. The revenues from this additional 0.6000% tax are not subject to distribution. (b) $2.1300 per thousand board feet for timber products that are derived from Ponderosa pine and$1.5100 per thousand board feet for timber products derived from all species except Ponderosa pine. [To be updated by Bond Counsel.] (c) Most contracting activity is taxed at 5.0000%;however, other classes at lower rates exist. (d) $0.0305 per gallon. Source: Arizona Department of Revenue. Under current State law, Arizona cities and towns are preempted by the State from imposing a local income tax. Cities and towns are, however, entitled by statutory formula to typically receive 15.0% of the net revenues of the State's personal and corporate income tax collections for the two fiscal years prior to the current fiscal year. 0 11 Distribution of such funds is made monthly based on the proportion of each city's or town's population to the total populationnco of all incorporated cities and towns in the State as determined by the latest decennial or special census. � Licenses and Permits; Fines. • p The Town imposes and collects fees for licenses and permits to engage in certain activities within the Town and for the rig ht to utilize certain Town property. The Town also imposes and collects fines for violations of State laws or Town ordinances relating to traffic,parking and other offenses. Beginning September 1,2003 (such year serving as baseyear for such purposes) 75% of the judicial collections of the Town's court in excess of their fiscal year the PrP q 2002/03 collections are required each fiscal year to be transferred to the State for deposit in the State's general fund. The State will collect the excess collections from all cities and towns until it receives$45 million annually. Potential Adverse Circumstances with Respect to State-Shared Sales Taxes, State-Shared Income Taxes and Town Sales Tax It should be noted that no assurances can be given that the amount of State-Shared Sales Taxes and State-Shared Income Taxes will not be reduced or eliminated by the State legislature in the future. From time to time,bills are introduced in the Arizona Legislature to make changes to the formula used to allot State- Shared ed Sales Taxes and State-Shared Income Taxes. The possibility of changes in this respect are more likely to be adverse to the Town when the State is experiencing financial difficulties. The Town cannot determine whether any such measures will become law or how much they might adversely affect the revenues which comprise the Excise Taxes. In addition, initiative measures are circulated from time to time seeking to place on the ballot changes in Arizona law which repeal or modify State-Shared Sales Taxes and State-Shared Income Taxes. Further, initiative meas ores are circulated from time to time seeking to place on the ballot changes to the Town Code which would repeal or modifythe Town's sales taxes. The Town cannot predict if any such initiative measures will ever actually be submitted to the electors,what form the measures might take or the outcome of any such election. In addition, in the event State income tax collections decrease either from an economic downturn or from further State income tax cuts,the revenues to be received by the Town from State-Shared Income Taxes could be materially adversely affected. See"State-Shared Income Taxes." • Also, initiative measures may be circulated seeking to place on the ballot changes which could repeal or modify the Town Sales Taxes. The Town cannot determine what measures might be proposed or how much such measures might adversely affect the revenues which comprise the Excise Taxes. Factors Affecting Development. Excisep Taxes and Development. A significant portion of the Excise Taxes (approximately % for budgeted fiscal_ year 2006/07 figures) comes from the State and local sales tax on construction activity. The amount of Town Sales Taxes and State-Shared Sales Taxes received by the Town will be partially dependent upon the rate of development of the realroPertY in the Town,particularly single family residential development. There is no way to predict the P rate at which such development will occur. In fact,as has been widely reported,there has been a general slow down in the single familyhousing sector in the Tucson metropolitan area including the Town and Pima County,Arizona g (the"Cour over the past 12 to 18 months. The long-term availability of and demand for finished lots suitable "County"), for the construction of homes and other structures in the Town depend on many factors. Such factors include general economic conditions,fluctuations in interest rates and land prices both locally and nationally,the availability and costs of utilities necessaryfor development, the quality of, and costs for, the other services supplied by the Town and other political subdivisions, changes in the income tax treatment of land ownership, changes in the of borrowed funds and numerous other factors. For example, sewer service for the Town is supplied by availability the CountY. While the Town currently believes that adequate sewer capacity will be available from the County to up with keep development at the fastest rates anticipated by the Town, there can be no assurance that that will P continue to be the case. The Town believes the same to be true for the providers of other utilities,both public and private,and with respect to other services such as schools and fire and police protection. 12 411 In addition,land development operations are subject to comprehensive federal, State and local regulation. Approval 110 is required from various agencies in connection with the layout and design of developments,the nature and extent of improvements,the availability of an assured water supply,construction activity,land use,zoning,school and health requirements and many other matters. The Town likewise believes that such approvals should be forthcoming as necessary to maintain development at the fastest rates anticipated by the Town. Local Political Considerations_ In areas of rapid growth,such as has occurred in the Town,public/political attitudes toward growth are subject to shifts from support for growth to opposition to growth. No assurances sari e-giverf that the Mayor and Council of the Town as now constituted or a future Mayor and Council will not delay and defer action required for continued growth. Such action by the Mayor and Council as now constituted or a future Mayor and Council could have a material adverse impact on the amount of Excise Taxes received by the Town. Growing Smarter. During 1998,the Arizona Legislature promulgated the Growing Smarter Act of 1998("Growing Smarter") which created new planning requirements throughout the State and provided stronger tools for local governments in their efforts to manage rapid development. Growing Smarter also created the "Growing Smarter Commission" which conducted hearings throughout the State on ways to enhance the law and to address certain other issues. During 2000,the Arizona Legislature adopted additional legislation known as"Growing Smarter Plus" which significantly expands Growing Smarter particularly the planning requirements passed in 1998. Fast-growing communities must now plan for growth areas and identify the means to provide necessary public services in the future. In addition to environmental and infrastructure elements,an analysis of available water is now required. To pay for growth,communities are permitted to establish service area limits, beyond which new growth pays the full cost for services. Growing Smarter allowed citizens to refer general plans passed by local government to the ballot for voter approval. Growing Smarter Plus goes a step farther by requiring fast growing and large cities and Pima and Maricopa Counties,Arizona to submit their general plans to the voters for ratification. (The Town is located in Pima County,Arizona.) Every ten years,voters will have the final say over general planning in their communities. The Town has a public participation process associated with revisions to its general plan. This process is intended to create overall community support for important items such as land use planning,community economic development 11 strategy,neighborhood specific development approaches and other critical components associated with development decision making. Notwithstanding such practices, it is unclear at this time how Growing Smarter and Growing Smarter Plus will affect development activity in the State and particularly the Town in the future. 110 13 Actual and Projected Collections The following tables set forth the Town's actual Excise Tax collections for fiscal years 2001/02 through and 41111 including 2005/06 through2001/02 and the Town's projected collections for fiscal years 2005/06 and 2006/07. TABLE 4 HISTORICAL AND PROJECTED EXCISE TAX COLLECTIONS (5000's omitted) Audited(a) Projected(b) Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Industry Classification 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Town Sales and Franchise Taxes $ 6,675 $ 6,218 $ 8,297 $ 9,939 $ 12,891 $ 14,816 $ 15,260 Licenses and Permits 1,415 1,785 2,537 2,524 2,433 1,958 2,017 Fines 203 225 218 209 214 190 200 State-Shared Sales Taxes 2,289 3,161 2,846 2,936 3,343 3,713 3,824 State-Shared Income Taxes 3,098 2,323 2,687 2,958 3,432 4,230 4,357 TOTAL $ 13,680 $ 13,711 $ 16,584 $ 18,567 $ 22,314 $ 24,907 $ 25,658 (a) Figures presented on the cash basis of accounting per the Arizona Department of Revenue Standard igu are Industry �' ndus Summa Local Taxes Collection Reports for all classifications except cable franchise. Cable franchise taxes are presented on the modified accrual basis of accounting. Projections provided by the Town. Such projections are forward looking statements and no assurance can be given that the projected(b) J oected collections will be realized at the times or in the amounts shown. SUCH • PROJECTIONS MUST BE VIEWED WITH AN ABUNDANCE OF CAUTION. Source: Finance Department of the Town. ESTIMATED DEBT SERVICE REQUIREMENTS AND COVERAGE* The followingtable illustrates the pledged Excise Taxes for fiscal year 2006/07, the combined outstanding debt service on the 1999 Bonds, the 2000 Obligations, the 2001 Bonds, the 2003 Bonds and the 2005 Obligations, the estimated debt service on the Series 2007 Bonds, the estimated Excise Tax debt service coverage of fiscal years 2 � 006/07 through and including 2010/11, the projected Net Water System Revenues for fiscal year 2006/07, the combined Water System Related Debt Service and the Net Water System Revenues debt service coverage of the fiscal years 2006/07 through and including 2010/11. Projections of Excise Taxes,Net Water System Revenues and debts service coverage are forward looking statements and must be viewed with an abundance of caution. See "SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2007 BONDS - Consequences of Insufficient System t Net Water S Revenues to Pay Rental Payments"for a statement regarding the impact of a shortfall in or a appropriate failure to a ro nate Net Water System Revenues intended to pay debt service on the Water Related Debt Service on the normal operations of the Town. * Subject to change. 14 • a> 0 „, ,.... a� ..• E a .E a4 x x x x x 3 07 0 a z a A U -, v1 d d M oo d 01 00 0 0 0 0 0 0 0 CD._..Q r. ------ -- ▪ O Z ;r `- et .r- M O M d 7D oo "n 01 N O r. O v1 vl v) O v1 O v1 vl o0 kr, N d t- O •-. 01 O 0o M N oo M 0 t- N N v1 N vl N N M ' a� r;O• t-N a:01 O N 4 N N 00 .0 CID 0 o V] O N 70 E ' v(l M vv11 07 �• N VD N t- -. O O ... d d d d d N ,.. p w oo N t- 10 •-+ N 10 V0 M t f h VO O O O O O t- N N N N M gq .1 X N M rn M M �7 et M re M M M N l+7 N N N N•-+•-i r+rr-. rn- ko A oa3cxcol .4 O a, N 00 0 -1 M M M M 'n 'n 0 0 0 CD CD CD 0 0 0 CD 00 0 0 0 C O C O a CDN N N N t- M M g ;6 > � 01 '.D d O1 01 et et - t� O vl vl N O t- N N in N in N N 01 0 oo N• et vi vi vi O�M• 10 O• N• • N• O1 O\O N N N 00 •-i • .-. d d et et d M y 0 et N h et "4 vdi 0 0 0 0 0 0 0 0 0 0 0 t� t� t� t-- N - v� 5 ' ° N N• N N N N N N N• N N• N• N• N• N N f V •--. i.-. ^' .-' ^• A03 et GA cre} v1 b 2 lei v; oo � 3 � S °' Z x 5 g .0 •v g° M N O N 01 VD oo 10 10 • 5A 7) > 10D '. v, v; vi W W U tin _ W .� .-, .... d .-- O o ' ' , 'C ami a' 00 N M N 01 •—� d N N O0C 01 M M M 01 00 O O - 04 ''' v O 01 O d t.... O .. M •-• oo O\ r+ t� M d d v, r. d O 1 ,:. E. Q� g . ami . Cl.'•.�oo,j.....i cri•-;•-+oo C M vi 0<..N 1/40-0o O en-1/40-et- .. t� O 00 t- 1.-- 00 vl M et M �+ 00 01 -. rr N ,. N t� . O A C� N M 00 01 01 01 00 01 O1 O\ O1 O d N d d d d et O1 W U M eei M M M M M M M M M• M cr'i M N N N N• N• GA u ' 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 '' 0 00 0 0 0 0 0 0 0 0 0 0 0 v1 'n v'► 'n O O v4 0 O Eel •-y 01 01 01 .. t.... - M M .44 0\ v1 N N t- t- O vl N O Z1 'O O M O 1D 14 0\vi•--v• i 0'v5 01 t.-7'00 N• M d 4. N 1:3 •}, 6. N N O N VD 10 v., 1 M l vO t.... d O 01 N d 1O 00 01 w 00 G. :: •--r o0 00 0o N N• t- t- t- E t.- VD 10 VD d d M N •--.0O W OOi te cA " o o ') N...:� N ti ,.+ ei o 0 0 0 0 0 0 0 o C O o 0 0 0 0 0 0 " O CI L. O O O O O O O O O O O O O O O O O O O • O �� 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O L*r E a G. vi v;v;C vi C v;O C• vi C C C v;C v• i vi C v; 4 '� L et oo 0o a\ 01 O O M 10 0o N en .O M ,0 00 00 04 N 4. 40 0 -E - 70 7D 70 70 N N `� V> '.0 N 00 •--� '4 �o .= V py ... 0 ., cA cA O g 40 by V ^ cu u L ••, O t� MO t� 01 •M-� d N vdl N d 00 00 00 00 0�1 O p•l G "0 �• 01 O - v1 10 M O O 00 N O 70 � O V0 V0 v1 VD •--. d • •1 .0 .5 0 U .-�N 10 10 M N N(K oo C d 00 00 00 N C o0 00 cv cs O A in VD M •--, •-. N ON 1/40 'n d d d O O in N M .� rr O O v1 "7 vl VD ,4 .s 'V U O Cn M N N N cr9 cM M M N(Ni N• •--+ (.4- 0) A g o W .2....) w N W i V tn C) Z 0) COO CO w • o = C ... N M d v1 V0 t� 00 C 00 C O •-� N M 'n oo C N N N N N N N N rr y \D t o0 01 O •-. M d 70 N rq CD CD CD 0 N N N N N Zi i N N N '0• O N N N N N N N N N N N N N N N N N N N N NN '-, ",, C4 4) ZO = o) CS ° 'Hz C .i "� Q,, 4) r..,, • Z o) Z CS `., O -ZS O CS .� O .., ZS v .., CS 4) o) O ° �' '"34) ••x ti P> O N p' CS O ,, o) j ? O Q `' o) O O CS o) 'ZS b I of " 4) c) -- O .c ° Z O L. a)s. "CS 0) Q Z o) O o) -� O o) �. O Ory , CS O O o . p obi p �� ..' .., vU a+., v b � C ' i -1Z 0 oiO • t,O O o) L. ti _ C °)io) S >, 4 *Z.'0 o, 0 . � v o, VI Cr . Cs -. . o) — •v a .2 +., W .., O 'Zs 4. CZ 2 �O Ci 'w ; � yy° � � : V) .� o) O z w o) o) z o) 4.., c 'tz •— t) �vZ 0 0 � 0E40 .� � :8Z � 0 IL E-, "' o o � °, •— ,, , o) , L. .� E - � o o ? CI en Z obi z ��, W `� Ov o "' •� 6 ,r '�; °�' ,� O obi .v CI '. '.zz, o Cs "° E� 'ts ° 0 00.' a" � ..� o W � Qq110 p .� Ci rZq ?, tO Z, o) S; o) ,, o) 4�) o) `o ,, W d O C., -o �•� 2 O '"s NO Z N 'Zs �, \o Z ,., L. o L. W ° s z W 'B = .Qo t O o) 'ts \ t.`' Z v .s O� V2 , ,, 4) °� o O o) CO ,...._. b' o •:� 'ts o, 0 0 " 0., aa Z `� o� o, o o) ,, o Q -r ° 7..., ti �� z ,vQ Z � ) 4) s\ �. 0) ^' z TsbO '1- c� t rZ5 z R ' ° c Q o =ti i , o a, , •— i �+ .� • ° 0.' N o 0 �, sem, o� o v O .., �,, w �, o °' cn 'ts 0 .z 'ts = ? o) Z o� V m 0 `'' — 4) z a) = 4) v 'tt E_, • o Cs Za oe 0 Z o Er z o z z, o) ''''': 0 � . .v • ' a bo Z 0 'ZS i-` O • � L. sE03 '� '., ., o) C3 W v �' 'ZS Z `'� C t � o) L. CS o) L. 44)) "-CS Sy CS � Q,, •� v z 'Z5 CL, 'ZS •o) W 'Zs °' ° E'" °) O p •— *" cli O Z do o) bo o) CS O z ��, �, 0 ..a d of a 'ts O .r w ZalS; tio ° .� y O L. p o) = 4, 4) c ,� LT, E a of ° cn it s Z .°z z o oa vim, V a, 'is = 0.' .., •� v o) oz) " at .� E o C - w ori L. E 04 w z V .1 � cs cs `� O L. ..... '�'tis ., 'ZSR L. E O �+ CS `�'� 0 4 i obi - o v a c TABLE 6 110 SOURCES AND USES OF FUNDS Sources of Funds Principal Amount-of the-Series 2007-Bonds $17,125,000_00* Net Original Issue Premium(a) Total Sources of Funds $ Uses of Funds Deposit to the Depository Trust Fund $ Deposit to the Interest Account Costs of Issuance(b) Total Uses of Funds $ (a) Net of Underwriter's compensation. (b) Includes bond insurance premium, if any. THE WATER SYSTEM (Inclusion of Water System information to be discussed.] General Background The water system serving the Town(the"Water System")is comprised of two separate public water systems located within and without the town limits of the Town. The larger water system serves customers located in the Town and has approximately 15,500 connections. The second water system (sometimes referred to as the "Countryside System")serves customers located near the Town in unincorporated Pima County, Arizona and has approximately 2,200 connections. The Water System is owned by the Corporation and,pursuant to a lease purchase agreement with the Corporation,is operated and maintained as a self-supporting municipally-operated utility of the Town. It is operated in a manner where the costs of providing water to the general public on a continuing basis will be financed by user charges. The Water System is operated, and accounted for, under a separate enterprise fund by the Town. Although a separate audit of the Water System's records will not be conducted, it is subject to audit procedures in conjunction with the annual audit of the Town's combined financial statements. The Water System's authority and responsibility is derived from the Arizona Revised Statutes and ordinances and resolutions of the Town Mayor and Council. The Mayor and Council adopt the Water System's annual budget(the"Water System Budget"),establish water rates and fee structures and provide overall policy direction. State law establishes the requirements for presentation and adoption of the Town's budget,which includes the Water System Budget and requires the submission of a proposed Water System Budget to the Mayor and Council each year. The Mayor and Council are required to hold a public hearing on the proposed budget and to adopt the Town Budget. 111 17 "Commission") was established by Ordinance to act as an official Oro ValleyWater Utility Commission (the Comm ) The consists of seven The to the Town Council on water system matters and policies. Commission at least one member advisory board . members appointed by the Town Council. The constituency of the Commission shall include rima 4110 - limits. Pursuant to the Ordinance establishing the Commission,the primary from the service area outside the Town limit responsibility of the Commission to conduct an is annual water review process involving an evaluation of the Water ent program and water rate adjustments to meet those needs. System's-revenue requirements and capital unprovem p_g evaluation and analysis ol�-reclaimed water-unpravGments including The Commission was actively involved in the improvements.the recommendation to the Town Council to suchfund Following the Commission's review of the y water rate adjustments to the Mayor and Council. After systemit recommends a capital program and schedule of tes and charges. the Mayor and Council have the final authority to establish water ra public hearings, Y Administrative Staff the day-to-day management of the Water System shall be the In accordance with the utility code of the Town, Y presently who is appointed by the Town Manager. Philip C. Saletta,P.E.p Y responsibility of the Water Utility Director PP is the Water Utility Director. eerie from the Colorado School of Mines and an M.B.A. in Mr. Saletta has a B.S. degree in Geological Engin g Professional Civil Engineer in the State of Arizona Finance from the University of Colorado. He is a Registered over 24 years experience working for water 2005 and the State of Colorado since 1984. Mr. Saletta has various positions including: General since resources and utilities. Prior to coming to Oro Valley in June 2005, he heldvan including: g: He is a Water Conservancy District and Managing Engineer at Colorado Springsand the Manager of the Dolores - member of the Arizona Water Pollution Control Association, the American Water Works Association Colorado Water Users Association. Shirley Seng has 10 years experience working with the water utility as its Utility Administrator. Prior to the Town acquiring it in 1996,the utility was ovateprivate water company. Ms. Seng was employed by the wned and opera as a P includin Controller and General Manager. private water company for 13 years and held various positions g Billing and Accounting • Accounting for the Water System is performed by the Finance Department of the Town while computer operations are performed by the Water System itself. Meters are read and bills issued monthly. Delinquent accounts receive a "late notice" 30 days after the initial billing and one "delinquent notice" 10 days after the "late notice. Water is in full and a service charge is assessed. Less than 1%of the Water service discontinued until the account is paid ation is still accurate) System's total accounts reach the point turn-off. (this inform Water Sources and Supply water supply from groundwater sources pumped from Well Supply. The Water System obtains all of its municipal the Canada Del Oro Wash watershed of the Tucson, twenty-one (21) wells. The well fields are all located iri Arizona basin portion of the Upper Santa Cruz River Valley. In June 2003,the Arizona Department of Water Resources ("ADWR")renewed the Designation of Assured Water Supply for the Town of Oro Valley. According to letters from the ADWR,recoverable groundwater in the aquifers (between ground level and 1,000 feet below the surface) will be from which the Water System pumps its water (b of the Water System's service areas through and sufficient and of adequate quality to meet the projected demand beyond the final maturity of the Series 2007 Bonds. AP" is a water delivery system run by the Central Arizona Water Surface Water. The Central Arizona Project("CAP") 1.5 million acre feet per year of Arizona's 2.8 .r Conservation District ("CAWCD") which conveys approximately and Pima, Arizona counties in Pinal acre feet annual entitlement of Colorado River water to Maricopa, issupplemental to the existing millionpp central Arizona. CAWCD's boundaries include all three such counties. This water communitiesxstin surface water and groundwater now being used by municipalities, industry, agriculture andIndian these counties. 18 CAWCD is vested with the powers of a municipal corporation. CAWCD's responsibilities include contracting with the Secretary of the Interior of the United States of America for water to be provided by the CAP, subcontracting with local water users for delivery of CAP water, repaying construction, operation, maintenance and replacement costs connected with the CAP, and operating and maintaining the CAP facilities. In addition, it has express authority to levy an ad valorem tax against all real property within the three counties. This tax,in an amount not to exceed $0.14 per $100 of assessed valuation, may be used to repay construction and operation costs of the CAP. CAWCD also has bonding au onty. • •• • is goy- .• •• . - - -;- :8. : -- ' - a a • voters of each of the three counties. In April of 2003, the United States of America and CAWCD agreed to settle litigation over the amount of the construction cost repayment obligation,the amount of the respective obligations for payment of the operation, maintenance and replacement costs and the application of certain revenues and credits against such obligations and costs. Under the agreement, CAWCD's obligation for substantially all of the CAP features that have been constructed so far will be set at $1.646 billion, which amount assumes (but does not mandate) that the United States of America will acquire a total of 667,724 acre feet of CAP water for federal purposes. The United States of America will complete unfinished CAP construction work related to the water supply system and regulatory storage stages of CAP at no additional cost to CAWCD. Of the $1.646 billion repayment obligation, 73% will be interest bearing and the remaining 27% will be non-interest bearing. These percentages will be fixed for the entire 50-year repayment period,which commenced October 1, 1993. Effectiveness of the agreement is subject to a number of conditions including settlement of certain Indian community water claims and other water claims and will require certain Arizona legislation. Federal enabling legislation was passed in 2004. If the conditions are not met by May 9, 2012, and the parties do not amend the agreement, the agreement will terminate and litigation will resume. If it appears prior to May 9, 2012, that the conditions will not be met by the deadline, the parties can amend the agreement or either party may petition the United States District Court to terminate the agreement and resume litigation. While this litigation may, if, CAWCD is unsuccessful, have some adverse impact on the cost of CAP water to the Town, it is not expected that the litigation will have a material adverse effect on the Town or the Water System. On August 25, 2006, the Secretary of the Interior published his final reallocation decision for CAP water. That decision reallocated previously uncontracted CAP municipal and industrial("M&I")priority water to various M&I water providers in accordance with section 104(b)of the Arizona Water Settlements Act(Act),Pub.L.108-451,and recommendations of the Arizona Department of Water Resources. Additionally, Section 104(d)of the Act directed the Secretary of the Interior to offer amended subcontracts for CAP M&I priority water. The amended subcontracts provide for permanent service of Colorado River water with an initial delivery term of 100 years. The amended subcontracts 100-year delivery term begins on January 1 of the year following that in which the subcontract becomes effective. It is anticipated that all conditions will be satisfied in 2007 and that delivery of CAP water under the amended subcontracts could begin on January 1,2008. With the acquisition of the Canada Hills Water Company in 1996, the Town acquired an allocation of 1,652 acre feet of CAP water. With the Town's management of Oro Valley Water Improvement District ("OVWID"), the Town received control of an additional allotment of 642 acre feet of CAP water. Additionally, the Town acquired an allotment of 4,454 acre feet of CAP water in 2002 as a result of Intergovernmental Agreements with the City of Tucson related to the settlement of the Northwest Agreements, effluent rights and reclaimed water. The combination of these acquisitions has resulted in the Town's existing allocation of 6,748 acre feet of CAP water. The reallocation of uncontacted CAP M&I priority water referenced above includes a reallocation of 3,557 acre feet of CAP water for the Town of Oro Valley. The subcontract, when fully executed,will result in a total CAP water allocation of 10,305 acre feet per year for the Town. CAP Water is a valuable source of water supply for the future Oro Valley. Currently the Town uses approximately 8,500 acre-feet per year of ground water for drinking water and 1,500 acre-feet of reclaimed water for irrigation. CAP water is not currently used directly but it is used to balance ground water depletions that Oro Valley currently has obligations to repay. This is done through what is known as a Ground Water Savings Facility (GWSF). Currently we use about 2,500 to 4,000 acre-feet per year through the Kai Farms GWSF. This has allowed the Town to accumulate long-term storage credits for future water resource management. For the future,The Town is planning to directly treat and deliver our CAP Water. The Town has a Memorandum of Understanding with Flowing Wells Irrigation District, Town of Marana and Metropolitan Domestic Water 19 Improvement District to work together and study the possible delivery and treatment systems and prepare cost infrastructure needed for CAP Water. These studies are in the preliminary stages. Currently there estimates for the - one is a water quality and treatment pilot study and the other is a cost estimate study. are two studies underway, This and other information will be used to prepare a more detailed plan to develop our CAP Water. It is anticipated that in 2012, we could have treated CAP Water delivered to Oro Valley. This will increase our • water to our community,citizens water supply,reduce our groundwater use,and provide safe and reliable dr_kmg - and customers. During the early yearsof CAP availability, supply will exceed demand. It is anticipated that the CAWCD through Y excess CAP water for groundwater recharge until 2017 and in non-shortage years after 2017. the CAGRD will use Various long-term factors could impact the reliability of the CAP supply including precipitation in the upper Colorado River basin; operation of the Colorado River system by the United States Bureau of Reclamation ("USBR"); bli ations to fulfill Colorado River appropriations to other users which have priority over the Town; o g operation of the CAP bythe USBR and CAWCD;and operation and maintenance and failures of the CAP facilities. The USBR has predicted that project shortages may occur one year in five by the year 2050. Water Rate Structure. After reviewingrecommendations from the Commission,water rate schedules are adopted by Council. The Town'sprincipal consideration in designing rate schedules is to assure that allocated the Mayor and . costs of service are recovered in an equitable manner from the various customer classes. The first element of the water rate is the base rate or service fee. The base rate is designed to recover customer costs associated with billing,collection expenses and meter reading. The second element of the monthlywater use rate is the commodity charge. This charge is dependent upon the amount of water used per month. residential customer in the Water System's service area has historically used an average of A typical single-family 10,000gallons per month throughout the calendar year. On the basis of this level of use, typical customer would g pay$34.05 per month during the calendar year under current rates. Rate and Fee Adjustments 41111 The Town has adjusted dusted the water rates ten times since acquiring the Water System.The first adjustment was in fiscal year 1996/97. Uponacquisition,uisition, the Town reduced the monthly base rate and increased the commodity rate. The was in fiscal year 1997/98 to equalize the rates between the two private utilities acquired. The second adjustment third adjustment dustment was in fiscal year 1998/99 which resulted in a 5.5% increase in revenues to meet the revenue requirements. The fourth rate increase was in fiscal year 1999/00 which created a three-tier conservation rate structure. The fifth adjustment was in fiscal year 2000/01 which resulted in a 6.74% increase in revenues to meet the revenue requirements and equalize the rates of the newly acquired service area formerly known as the Oro Valley Water Improvement District. The sixth adjustment was in 2001/02 which resulted in a 6.7%increase in base and commodity rates. The seventh adjustment removed the 1,000 gallons of water previously included in the base made in fiscal year 2002/03 resulted in a $1.90 cost per customer per month. The eighth rate. This change made in fiscalyear 2003/04 was a 1.6%increase to meet revenue requirements. Additionally,the Town adjustment implemented the Groundwater Preservation Fee ("Groundwater Preservation Fee") to finance delivery systems for renewable water supplies such as reclaimed water and/or CAP water. The ninth adjustment made in fiscal year 2005/06 was a 3.0% increase to both base rates and commodity rates. The tenth adjustment made in fiscal year 2006/07 was a 5.8% increase in base rates and commodity rates. In addition, a new construction water rate was implemented and the Groundwater Preservation Fee was increased by$0.04 per 1,000 gallons. The Town has two separate development impact fees one is the Potable Water System Development Impact Fee and p P the other is the Alternative Water Development Impact fee. These fees are collected at the time water meters are purchased. Revenue from these impact fees are used to pay for growth-related potable and alternative water infrastructure for CAP Water and Reclaimed Water and related debt service. The Town is currently in the process of increasing both impact fees. 20 411 110 Factors Affecting Water Costs Over theP ast several years,energy costs have had a significant impact on the operating expenses of municipal water systems. The energy costs of operating the existing well systems vary from well to well and from one well system to another. Operating expenses, including power, are affected by topographic pumping lifts needed to serve the higher elevations of the water system's service area as well as depth of wells from which groundwater is extracted. Use of CAP water, if only for groundwater recharge,will also increase operating expenses because costs associated with CAP water purchase and recharge is currently more expensive than pumping groundwater from system wells. In an effort to decrease pumping costs, the Water System is in the process of replacing over-sized and under-sized pumps as well as constructing large size reservoirs to provide gravity feeds to as many customers as possible thereby reducing the need for pumps that currently pressurize the water system. During last 3 years, OVWU has constructed 2.1 MG of reservoir capacity and installed"premium efficient"motors in all wells and booster pump facilities. This has helped to decrease power costs. Since 2003,the Water System has reduced its power costs by 2%even though demand has increased by 4%over the same time period. Water System Fees Customers connecting to the Water System are required to place a deposit as security against future service charges. In addition, customers must pay meter installation fees, potable water system development impact fees and alternative water resource development impact fees("AWRD")prior to installation of any meter. The following are schedules of fees and charges: TABLE 1 TOWN OF ORO VALLEY WATER UTILITY SCHEDULE OF FEES AND CHARGES(a) Service Charge Amount New Service Establishment Fee $ 20.00 Service Reconnection Fee 40.00 Service Reconnection Fee(after 5:00 p.m.) 70.00 Meter Re-read Fee 20.00 Insufficient Funds/Returned Check Fee 25.00 Document Reproduction Fee 1.50/Sheet Document Reproduction Fee Cost Backflow Prevention Installation Permit 50.00 Customer Requested Meter Test Cost Customer Security Deposit(Basic) 40.00 Destruction of Property Cost Hydrant Meter Deposit 1,200.00 Hydrant Meter Relocation Fee T&M Delinquent Payment Fee 5.00 Service Area Inclusion Fee: per acre 5.00 per lot 2.00 (a) Service charges became effective June 17, 2006. Source: The Town. 111 21 TABLE 2 METER INSTALLATION FEES&IMPACT FEES • The following rates were effective July 1,2006: Total Meter Meter Installation Sales Tax Installation Meter Size 6.10% Fees (in inches) Charges 5/8 x 3/4 $150.00 $9.15 $159.15 10.68 185.68 3I4 x 3/4 175.00 1 standard212.20 200.00 12.20 1.5 standard 390.00 23.79 413.790 34.16 5 94.16 560.0 1.5 turbine 34.16 5 94.16 2 standard 560.00 5 83.55 550.00 33.55 2 turbine 83.27 1,448.27 2 compound 1,365.00 875.00 53.38 928.38 3 turbine1 Q3.70 l,803.70 3 compound 1,700.00 4 turbine 1,600.00 97.60 1,697.60 167.75 2,917.75 4 compound 2,750.00 6 turbine 3 240.00 197.64 3,437.64 300.43 5,225.43 6 compound 4,925.00 8 turbine Time&Materials Time&Materials Time&Materials Multifamily 144.00 144.00 (per unit) N/A Turf Uses(per acre) 3,680.00 Golf Course Turf Areas 4,640.00 Lakes&Open Water 2,880.00 Turf for Cemeteries,Parks&Schools 2 880.00 ill Turf Areas with 10 Acres or More Turf 22 • STABLE 3 ORO VALLEY WATER UTILITY RATE SCHEDULE ALTERNATIVE WATER RESOURCE DEVELOPMENT IMPACT FEE The following rates were effective August 13, 1996: Fees apply to SF&MF Residential,Commercial Meter Size Irrigation and Turf 5/8 x 3/4 $300.00 3/4 x 3/4 450.00 1 750.00 1 1/2 1,500.00 2 2,400.00 3 4,500.00 4 7,500.00 6 15,000.00 8 N/A Multifamily Per Unit Cost 144.00 Turf Uses(per acre) Golf Course turf areas 3,680.00 Lakes&open water 4,640.00 Turf for cemeteries,parks& schools 2,880.00 Turf areas with 10 acres or more turf 2,880.00 N/A=Not applicable. Source: The Town. 111 23 TABLE 4 ORO VALLEY WATER UTILITY RATE SCHEDULE POTALBE WATER DEVELOPMENT IMPACT FEES • The following rates were effective July 5,2000: - — - — Single-Family ------ Commercial/----- - Irrigation Residential Industrial (non-Turf) Meter Size Fees Fees (a) Fees 5/8 x 3/4 $1,774 $4,080 $3,193 3/4 x 3/4 1,774 N/A N/A 1 4,435 10,200 7,983 1 1/2 8,870 20,400 15,965 2 14,192 32,640 25,544 3 ---- 65,280 51,088 4 ____ 102,000 79,825 6 ---- 204,000 159,650 8 ---- 408,000 319,300 N/A=Not applicable. Source: The Town. The meter component of the fee for master-metered residential uses is the higher of$834 per unit or the single- family residential fee(s)for the master meter(s)(1). (1) The total Potable Water System Development Fee for commercial/industrial and master-metered residential uses is the sum of the meter component set forth above and the following supplemental fee based on fire • flow for uses requiring more than 1,000 gallons per meter of fire flow (based on the total area of development and the fire flow requirement as determined by the fire department of the Town). Individually metered residential units pay the single-family residential fee for each meter. Turf usage fee is$18,351 per acre of turf. Source: The Town. 24 • TABLE 5 TOWN OF ORO VALLEY WATER UTILITY NEW DEVELOPMENT CONSTRUCTION INSPECTION FEES Length of Water Main •. _hiar s•ection Fee a 0-500 $1,350.00 501 or more 1,350.00+ 1.30 per foot Repeat Pressure Test(per test) 72.00 Repeat Bacteria Test(per test) 85.00 For inspection services during Labor Costs+30%Benefits other than normal working hours (a) Fees are collected prior to project acceptance. Source: The Town. TABLE 6 TOWN OF ORO VALLEY WATER UTILITY NEW DEVELOPMENT HYDRAULIC &DESIGN REVIEW FEES(a) Hydraulic Review Fee Design Review Fee Base Sheet $155.00 $260.00 Each Additional Sheet 25.00 15.00 Plan Revision N/A 15.00 each (a) Fees include 2 hydraulic reviews and 2 design reviews. Additional review to be $85.00 per review. Fees to be collected prior to receipt of approved plans. Source: The Town. All water meters remain the property of the Town and the Town is responsible for meter maintenance. The Town estimates that approximately 92%of the water system connections are customers with a 5/8"meter. 25 The following table presents the Water System meter connections at the time the Water System was acquired by the Corporation, the meters connected from fiscal years 1996/97 through 2005/06, meters projected to be connected during fiscal years 2006/07 through 2010/11 and a running total number of meters connected or projected to be • connected during each year show. All projections are forward-looking statements and must be viewed with an abundance of caution. -TA-BICE7— NUMBER OF METERS CONNECTED Fiscal Meters Running Year Connected Total Pre—05/01/96 (a) 10,703 10,703 1995/96(b) 152 10,855 1996/97 629 11,484 1997/98 807 12,291 1998/99 984 13,275 1999/00 (c) 1,006 14,281 2000/01 787 15,068 2001/02 507 15,575 2002/03 470 16,045 2003/04 533 16,578 2004/05 377 16,955 2005/06 508 17,463 2006/07 (d) 400 17,733 2007/08 (d) 400 18,133 2008/09 (d) 400 18,533 2009/10 (d) 400 18,933 2010/11 (d) 400 19,333 ill (a) Connections existing at the time the Town acquired the two private water companies. (b) Connections added between May lSI and June 30, 1996. (c) Fiscal year 1999/00 includes 924 Metropolitan Domestic Water Improvement District of Pima County,' Arizona connections which became customers of the Water System in July 1999. (d) These projections are forward-looking statements. No assurance can be given that these projections will be met. Source: The Town. 26 • Water Rates 1 The Water System has separate rate schedules for potable and reclaimed water. The following rates plus the applicable proportionate part of any taxes or any governmental impositions which are assessed on water sales, apply to all individually metered water services: 1'A-BiE- SCHEDULE OF POTABLE WATER RATES (a) METER BASE RATE COMMODITY COMMODITY COMMODITY SIZE includes TIER 1 TIER 2 TIER 3 (in inches) ZERO gallons $2.08 per 1,000 gals. $2.81 per 1,000 gals. $3.76 per 1,000 gals. 5/8 x 3/4 $13.25 0- 10,000 10,001 -25,000 Over 25,000 3/4 x 3/4 19.90 0- 10,000 10,001 -25,000 Over 25,000 1 33.00 0- 16,000 16,001 -27,000 Over 27,000 1.5 66.30 0-38,000 38,001 -64,000 Over 64,000 2 106.00 0-80,000 80,001 - 134,000 Over 134,000 3 212.00 0- 186,000 186,001 -311,000 Over 311,000 4 332.00 0- 169,000 169,001 -283,000 Over 283,000 6 663.00 0- 1,800,000 1,800,001 -3,006,000 Over 3,006,000 8 1,325.00 0- 1,800,000 1,800,001 -3,006,000 Over 3,006,000 Gals.=Gallons. III (a) Groundwater preservation fee of$0.25 per 1,000 gallons applies to potable water customers. Source: The Town. Golf courses using potable water will be billed at Tier 1 rates. Tier 2 and Tier 3 will be implemented for any usage in excess of ADWR allotment and will be billed after ADWR annual report is filed. 1111 27 TABLE 9 SCHEDULE OF RECLAIMED WATER RATES(a) ill METER BASE RATE COMMODITY COMMODITY COMMODITY SIZE includes TIER 1 TIER 2 TIER 3 • . '. •- ; i a. ions $2.08 ier 1 000 oats. SI.-81-per 1;000-gam — 53 1,000 gals. 5/8 x 3/4 $13.25 All Usage N/A N/A 3/4 x 3/4 19.90 All Usage N/A N/A 1 33.00 All Usage N/A N/A 1.5 66.30 All Usage N/A N/A 2 106.00 All Usage N/A N/A 3 212.00 All Usage N/A N/A 4 332.00 All Usage N/A N/A 6 663.00 All Usage N/A N/A 8 1,325.00 All Usage N/A N/A Gals.=Gallons. N/A=Not applicable. (a) Groundwater preservation fee of$0.21 per 1,000 gallons applies to reclaimed water customers. Source: The Town. TABLE 10 411 SCHEDULE OF CONSTRUCTION WATER RATES METER BASE RATE COMMODITY COMMODITY COMMODITY SIZE includes TIER 1 TIER 2 TIER 3 (in inches) ZERO gallons S4.76 per 1,000 gals. 1.5 $66.30 $4.76 N/A N/A 2 106.00 4.76 N/A N/A 3 212.00 4.76 N/A N/A 4 332.00 4.76 N/A N/A 6 663.00 4.76 N/A N/A 8 1,325.00 4.76 N/A N/A Gals. =Gallons. N/A=Not applicable. (a) Groundwater preservation fee of$0.25 per 1,000 gallons applies to all construction water use. Source: The Town. 28 ill The following table lists the number of customers connected and the respective water revenues for each type of 111 customer for fiscal year 2005/06(the most recently completed fiscal year). TABLE 11 NUMBER OF CONNECTIONS BY TYPE FOR-FISCAL YEAR-200 - - - Number Percentage Percentage of of Water of User Type Connections Total Revenues Total Residential 16,454 94.3% $7,150,410 66.9% Commercial 244 1.4 585,397 5.5 Irrigation 386 2.2 920,999 8.6 Construction 369 2.1 368,597 3.5 Turf 6 0.0 964,000 9.0 Wholesale/Unmetered 1 0.0 64,174 0.6 Turf-Reclaimed 3 0.0 635,373 5.9 Totals 17,463 100.0% $10,688,950 100.0% Source: The Town. TABLE 12 SCHEDULE OF THE 15 LARGEST WATER SYSTEM CUSTOMERS 0 FOR FISCAL YEAR 2005/06 Annual Annual Water Gallons Water System Customer Charges Delivered* Hilton El Conquistador Golf Course&Country Club $ 747,384 372,028 Stone Canyon Golf Course 336,132 227,936 Golf Club at Vistoso Highlands 215,113 148,067 Sun City Golf Course 297,127 139,170 La Cholla Air Park 59,341 26,070 Hilton El Conquistador Resort 72,294 23,256 Rockridge Apartments 74,760 23,126 La Reserve Apartments 61,518 18,916 Northwest Medical Center 59,847 16,915 Sun City Community Association 66,998 15,653 Pusch Ridge Christian Academy 48,188 13,622 The Boulder Apartments 37,656 11,762 Casas Adobes Baptist Church 41,332 9,986 Pusch Ridge Apartments 23,097 7,102 Ventana Medical 24,008 6,651 TOTAL $2,164,785 1,060,260 * 000's omitted. Source: The Town. 111 29 Net Water System Revenues Coverage of Water System-related Debt Service As stated under "SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2007 BONDS - Town's • Intention to Pay Rental Payments from Net Water System Revenues,"the Town intends to pay the Rental Payments relating to the Water System Related debt service from Net Water System Revenues. The following table illustrates the Water System's revenues, expenditures, Water System supported debt service (including debt service for outstanding Wader Revenue-Bonds)and-Net Water-SYStem Revenues for-the past--five fiscal years and projections for the next fiscal year. Such projections are forward-looking statements and must be viewed with an abundance of caution. See "ESTIMATED DEBT SERVICE REQUIREMENTS AND DEBT SERVICE COVERAGE." See also "SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2007 BONDS - Consequences of Insufficient Net Water System Revenues to Pay Rental Payments." TABLE 13 TOWN OF ORO VALLEY WATER UTILTIY HISTORICAL AND PROJECTED WATER SYSTEM REVENUES,EXPENSES,DEBT SERVICE AND COVERAGE Historical Projected(a)(b) 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Revenues: Water revenues $ 8,176,260 $ 8,599,299 $ 9,093,069 $ 9,709,471 $ 10,745,087 $10,658,500 $ 10,978,255 Water connection fees 1,185,386 1,082,727 1,668,623 886,402 1,838,526 1,084,700 1,117,241 Alternative water impact fees 194,099 188,250 248,093 147,450 246,737 153,000 157,590 Other revenues 536,881 510,444 907,761 1,208,089 1,208,042 1,299,800 1,338,794 Interest income 498,535 (50,977) 285,118 593,514 951,230 350,000 360,500 Total revenues $ 10,591,162 $ 10,329,743 $ 12,202,664 $ 12,544,926 $ 14,989,621 $13,546,000 $13,952,380 Expenses: Personnel $ 1,334,751 $ 1,519,058 $ 1,647,054 $ 1,708,883 $ 1,863,839 $ 2,178,533 $ 2,243,889 Operations&maintenance 2,469,772 3,018,553 2,421,088 2,488,645 2,813,618 3,183,037 3,278,528 CAP Capital Costs 98,642 365,681 215,936 188,944 161,952 151,830 237,015 CAP Groundwater Replenishment District costs 111,484 173,864 259,659 361,828 472,387 429,500 1,012,000 Depreciation and amortization 1,337,923 1,552,721 1,764,055 1,944,885 2,238,848 2,341,900 2,412,157 Total expenditures (with depreciation&amortization) $ 5,352,572 $ 6,629,877 $ 6,307,792 $ 6,693,185 $ 7,550,644 $ 8,284,800 $ 9,183,589 Total expenditures (without depreciation&amortization) $ 4,014,649 $ 5,077,156 $ 4,543,737 $ 4,748,300 $ 5,311,796 $ 5,942,900 $ 6,771,432 1/1 Net Water system revenues (with depreciation&amortization) $ 5,238,590 $ 3,699,866 $ 5,894,872 $ 5,851,741 $ 7,438,977 $ 5,261,200 $ 4,768,791 Net Water system revenues (without depreciation&amortization) $ 6,576,513 $ 5,252,587 $ 7,658,927 $ 7,796,626 $ 9,677,825 $ 7,603,100 $ 7,180,948 Water supported debt service(c): 1996 Water related debt service $ 1,935,563 $ 1,938,313 $ 1,454,400 $ 1,453,550 $ 1,450,950 $ - $ - 1999 Water related debt service 269,130 269,285 263,685 263,285 271,985 272,514 271,979 2000 Water Development Fees Debt Service 1,309,590 1,076,673 615,200 - - - - 2001 Water related debt service 426,950 436,226 413,896 415,659 413,829 357,636 304,108 2003 Refunding debt service - - 367,419 498,654 500,019 647,569 548,512 2003 Water related debt service - - 1,247,396 2,205,623 2,543,323 2,548,923 2,542,673 Series 2007 Water related debt service - - - - - 157,613 788,064 Total water supported debt service $ 3,941,232 $ 3,720,496 $ 4,361,996 $ 4,836,771 $ 5,180,106 $ 3,984,255 $ 4,455,336 Net water system revenues debt service coverage(d) 1.67x 1.41x 1.76x 1.61x 1.87x 1.91x 1.61x (a) THESE PROJECTIONS ARE FORWARD-LOOKING STATEMENTS AND MUST BE VIEWED WITH AN ABUNDANCE OF CAUTION. (b) The Town System increasing Water System rates and charges by 6.0%in 2006/07. (c) Net of the obligations to be refunded. (d) Net Water System Revenues debt service coverage based on the Net Water System Revenues (without depreciation and amortization) divided by the Total water supported debt service for each respective fiscal year. Source: The Town. 30 ill 11 THE TOWN'S GENERAL FUND The following table sets forth the Town's general fund revenues, expenditures, other financing sources and uses, excess of revenues and other sources over expenditures and other uses, and beginning and ending general fund balances for the fiscal years indicated. Figures for fiscal years 2001/02 through and including 2005/06 are taken —from---the—audited financial statements oLthe Town which are prepared using generally accepted accounting principles. Projected fiscal year 2006/07 amounts are "forward looking" statements-which should be considered with an abundance of caution. Historical trends should not be used to predict future trends. TABLE 14 TOWN OF ORO VALLEY,ARIZONA GENERAL FUND SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCE Audited Projected 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07(a) REVENUES: Taxes(a) $ 6,674,725 $ 6,217,798 $ 8,270,653 $ 8,591,533 $ 11,058,064 $ 10,819,815 Intergovernmental Grants&Aid 7,097,629 7,589,237 7,736,382 8,490,885 9,800,799 9,983,875 Fines(b) and Forfeitures(c) 203,385 225,207 217,920 208,672 213,750 712,500 Licenses and Permits 1,415,028 1,759,118 2,503,802 2,498,282 2,385,102 2,629,000 Charges for Services 503,314 598,383 785,299 831,087 901,983 - Contributions and Donations - 37,331 30,141 - 11,221 - Interest 285,819 (109,421) 164,067 255,010 495,252 - Other 88,795 117,365 129,630 136,251 152,556 1,781,300 TOTAL REVENUES $16,268,695 $16,435,018 $ 19,837,894 $21,011,720 $25,018,727 $ 25,926,490 EXPENDITURES: 10 Current General Government $ 6,052,145 $ 6,330,236 $ 5,793,887 $ 5,455,609 $ 6,731,169 $ 9,447,237 Public Safety 8,416,448 8,724,667 9,313,688 9,860,461 11,491,434 13,560,349 Culture and Recreation 1,474,667 2,394,212 2,540,949 2,640,777 2,848,558 3,798,119 TOTAL EXPENDITURES $15,943,260 $17,449,115 $ 17,648,524 $ 17,956,847 $21,071,161 $ 26,805,705 OTHER FINANCING SOURCES: Operating Transfer In $ - $ 193,194 $ - $ - $ - $ - Operating Transfer Out (1,155,104) (1,134,954) (1,246,168) (1,196,616) (1,328,347) - TOTAL OTHER FINANCING SOURCES(USES) $(1,155,104) $ (941,760) $ (1,246,168) $ (1,196,616) $ (1,328,347) $ - Excess(Deficiency)of Revenue Over Expenditures and Other Sources(Uses) $ (829,669) $(1,955,857) $ 943,202 $ 1,858,257 $ 2,619,219 $ (879,215) Fund Balance at Beginning of Year $11,226,863 $10,397,194 $ 8,441,337 $ 9,886,015 $ 11,744,272 $ 11,538,788 FUND BALANCE AT END OF YEAR $10,397,194 $ 8,441,337 $ 9,384,539 $ 11,744,272 $ 14,363,491 $ 10,659,573 (a) The projected amounts for fiscal year 2006/07 should be analyzed with an abundance of caution and are not intended as statements or representations offact or certainty;no representation is made as to the correctness of such amounts or that they will be realized. [To be updated.] (b) These amounts are pledged to the payment of the obligations described under APPENDIX B— "TOWN OF ORO VALLEY,ARIZONA -FINANCIAL DATA -Current Year Statistics -Municipal Property Corporation Bonds and Excise Tax Revenue Obligations." (c) The amounts attributable to "Forfeitures"are pledged for other specific uses and are not pledged to the payment of the obligations described under footnote (b). Source: Audited financial statements and fiscal year 2006/07 budget of the Town. 10 31 LITIGATION Representatives of the Town will certify that no litigation or administrative action or proceeding is pending or,to the best of their knowledge, threatened, restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Series 2007 Bonds or contesting or questioning the proceedings and authority under which the Series 2007 Bonds-have-been authorized and_are to_be_issued, secured, sold; executed or delivered, or the validity of the Series 2007 Bonds. LEGAL MATTERS The Series 2007 Bonds are sold with the understanding that the Corporation will furnish the Underwriter with the approving opinion of Gust Rosenfeld P.L.C.,Phoenix, Arizona,Bond Counsel. The proposed form of such opinion is included in this Official Statement as APPENDIX E. Bond Counsel is to render such opinion upon the validity and enforceability of the Series 2007 Bonds under Arizona law and on the exclusion of the interest income on the Series 2007 Bonds from gross income for purposes of calculating federal income taxes and of the exemption of the interest income on the Series 2007 Bonds from State income taxes. (See "TAX EXEMPTION" herein.) Fees of Bond Counsel are contingent upon the sale of the Series 2007 Bonds and are expected to be paid from proceeds of the sale of the Series 2007 Bonds. Bond Counsel will opine to the Underwriter upon the information on the cover,in Appendices D,E and F and under the headings entitled "INTRODUCTORY STATEMENT," "THE SERIES 2007 BONDS," "PLAN OF REFUNDING," "SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2007 BONDS," "TAX EXEMPTION," "BOND PREMIUM," "ORIGINAL ISSUE DISCOUNT," "POLITICAL CONTRIBUTIONS" (only as it relates to Bond Counsel),"RELATIONSHIPS AMONG PARTIES"(only as it relates to Bond Counsel) and "CONTINUING DISCLOSURE" (except for statements concerning compliance with existing continuing disclosure obligations)but otherwise has not participated in the preparation of this Official Statement and will not opine upon its accuracy, completeness or sufficiency. Bond Counsel has not examined nor attempted to examine or verify any of the financial or statistical statements or data contained in this Official Statement and will also express no opinion with respect thereto. 411 Certain legal matters will be passed upon solely for the benefit of the Underwriter by Greenberg Traurig, LLP, Phoenix,Arizona,counsel to the Underwriter. The various legal opinions to be delivered concurrently with the delivery of the Series 2007 Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment,of the transaction opined upon,or of the future performance of parties to the transaction.Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. TAX EXEMPTION In the opinion of Gust Rosenfeld P.L.C.,Phoenix. Arizona, Bond Counsel, under existing laws, regulations ruli igs and judicial decisions, and assuming continuing compliance with certain covenants by the Corporation and the Town as described below, interest income on the Series 2007 Bonds is excluded from gross income for federal income tax purposes and is exempt from State of Arizona income taxes. A form of such opinion is included herein in APPENDIX E—"FORM OF APPROVING LEGAL OPINION." The Code imposes various restrictions, conditions and requirements relating to the continued exclusion of interest income on the Series 2007 Bonds from gross income for federal income tax purposes, including a requirement that the Corporation rebate to the federal government certain of its investment earnings with respect to the Series 2007 Bonds. The Corporation and the Town have covenanted to comply with the provisions of the Code relating to such matters. Failure to comply with such restrictions,conditions and requirements could result in the interest income on 32 1111 the Series 2007 Bonds being included as gross income for federal income tax purposes,under certain circumstances, from the date of issuance.The opinion of Bond Counsel assumes continuing compliance with such covenants. The Code also imposes an "alternative minimum tax" ("AMT") upon certain corporations and individuals. The AMT is equal to the excess (if any) of a taxpayer's "tentative minimum tax" for a taxable year over its regular income tax liability for the taxable year. The tentative minimum tax is based upon taxpayer's"alternative minimum taxable-income"-f A TPS—A taxpayer's-AMTI-is-its taxable income with_certain adjustments. Interest income on the Series 2007 Bonds is not an item of tax preference to be included in the AMTI of individuals or corporations. Notwithstanding the preceding sentence, included in the adjustments of AMTI for corporations is an adjustment increasing any such corporation's AMTI by 75% of the excess (if any) of such corporation's "adjusted current earnings" over the corporation's AMTI for the taxable year (determined without regard to such adjustment for excess current earnings and the alternative tax net operating loss deduction). A corporation's "adjusted current earnings"includes all tax-exempt interest,including the interest on the Series 2007 Bonds. Although Bond Counsel will render an opinion that,as of the delivery of the Series 2007 Bonds,interest income on the Series 2007 Bonds, is excluded from gross income for federal income tax purposes, the accrual or receipt of interest on the Series 2007 Bonds,may otherwise affect a beneficial owner's federal tax liability. Certain taxpayers may experience other tax consequences.Taxpayers purchasing the Series 2007 Bonds,including without limitation, corporations subject to the branch profits tax, financial institutions,certain insurance companies,certain subchapter S corporations,individuals who receive Social Security or Railroad Retirement benefits and taxpayers who have or are deemed to have incurred indebtedness to purchase or carry tax-exempt obligations should consult their tax consultants as to the applicability of such tax consequences to the respective beneficial owner. The nature and extent of these other tax consequences will depend upon the beneficial owner's particular tax status and the beneficial owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. The Series 2007 Bonds are not"private activity bonds,"within the meaning of Section 141 of the Code. 111 Under existing federal tax law, if the Series 2007 Bonds are determined to be invalid for failure to comply with a substantive or procedural requirement of local law,the Series 2007 Bonds will be deemed not to be an obligation of the Town and interest on the Series 2007 Bonds will not be excludable from gross income for federal income tax purposes. From time to time, there are legislative proposals in Congress which, if enacted could alter or amend the federal tax matters referred to above or adversely affect the market value of the Series 2007 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to obligations (such as the Series 2007 Bonds)issued prior to enactment. BOND PREMIUM The difference between the principal amount of the Series 2007 Bonds maturing on July 1, 20 , through and including July 1, 20 (referred to in this section as the "Premium Bonds"), and the initial offering price to the public(excluding bond houses,brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers)at which price a substantial amount of the Premium Bonds of the same maturity was sold constitutes to an initial purchaser amortizable bond premium which is not deductible from gross income for Federal income tax purposes. The amount of amortizable bond premium for a taxable year is determined actuarially on a constant interest rate basis over the term of each Premium Bond. For purposes of determining gain or loss on the sale or other disposition of a Premium Bond,an initial purchaser who acquires such obligation in the initial offering to the public at the initial offering price is required to decrease such purchaser's adjusted basis in such Premium Bond annually by the amount of amortizable bond premium for the taxable year. The amortization of bond premium may be taken into account as a reduction in the amount of tax-exempt income for purposes of determining various other tax consequences of owning the Premium Bonds. Owners of the Premium Bonds are advised that they should consult with their own advisors with respect to the state and local tax consequences of owning the Premium Bonds. 33 ORIGINAL ISSUE DISCOUNT The Series 2007 Bonds maturing on July 1, 20 , through and including July 1, 20 (referred to in this section • collectively as"Original Discount Obligations"),will be sold at an original issue discount. The difference between the initial public offering price, including any pre-issuance accrued interest,of an Original Discount Obligation(the "Issue Price"), and the amount payable at maturity of the Original Discount Obligation will be treated as "original issue discount. With-respect to a taxpayer who purchases an Original DiscountObligation inthe initialpublic offering at the Issue Price and who holds the Original Discount Obligation to maturity, the full amount of original issue discount will constitute interest income which is not includable in the gross income of the beneficial owner of the Original Discount Obligation for Federal income tax purposes or Arizona income tax purposes and that owner will not, under present Federal income tax law or present Arizona income tax law, realize taxable gain upon payment of the Original Discount Obligation at its maturity. The original issue discount on each Original Discount Obligation is treated for Federal income tax purposes and Arizona income tax purposes as accruing daily over such Original Discount Obligation's term on the basis of a constant interest rate compounded at the end of each six-month period (or shorter period from the date of original issue)ending on January 1 and July 1 (with straightline interpolation between compounding dates). The amount of original issue discount accruing each period will be added to the beneficial owner's tax basis for an Original Discount Obligation. The beneficial owner's tax basis in an Original Discount Obligation will be decreased by the payment of any amounts (such as interest payments)to the beneficial owner under the terms of the Original Discount Obligation. The adjusted tax basis will be used to determine taxable gain or loss.upon disposition of an Original Discount Obligation. An owner of an Original Discount Obligation who disposes of the Original Discount Obligation prior to maturity should consult his or her tax advisor as to the amount of original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or disposition of the Original Discount Obligation prior to maturity. The Code contains certain provisions relating to the accrual of original issue discount in the case of subsequent purchasers Of an Original Discount Obligation. Beneficial owners who do not purchase an Original Discount Obligation in the initial offering should consult their own tax advisors with respect to the tax consequences of the beneficial ownership of the Original Discount Obligation. • AP ortion of the original issue discount that accrues in each year to an owner of an Original Discount Obligation may result in certain collateral Federal income tax consequences for which the beneficial owner's own tax advisor should be consulted. The owners of Original Discount Obligations in states other than Arizona should consult their own tax advisors with respect to the state and local tax consequences. In the case of income tax laws of states other than Arizona, it is possible that under the applicable provisions governing the determination of state or local income taxes, accrued interest on the Original Discount Obligations may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment received by the beneficial owner until a later year. RATINGS The Town, on behalf of the Corporation,has applied for credit ratings on the Series 2007 Bonds from Standard& Poor's Rating Services,a division of the McGraw-Hill Companies,("S&P")and Fitch Ratings Inc. ("Fitch"). Such ratings will reflect only the view of S&P and Fitch. An explanation of the significance of the rating assigned by S&P may be obtained from S&P at 55 Water Street, New York, New York 10004. An explanation of a rating assigned by Fitch may be obtained from Fitch at One State Street Plaza,New York,New York 10004. Such ratings may be revised downward or withdrawn entirely by S&P and Fitch if,in their respective judgment,circumstances so warrant.Any downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2007 Bonds.The Town has covenanted in its continuing disclosure undertaking that it will file notice of any formal change in any such rating relating to Series 2007 Bonds. See"CONTINUING DISCLOSURE." 34 • 111 UNDERWRITING The Series 2007 Bonds will be purchased by Stone & Youngberg LLC (the "Underwriter"), at an aggregate net purchase price of$ pursuant to a bond purchase contract(the"Series 2007 Bond Purchase Agreement") entered into between the Corporation and the Underwriter. The Series 2007 Bonds are sold to produce the yields Shown on the inside front cover, the Underwriter's-compensation will be $ . The--Series 2007--Bond Purchase Agreement provides that the Underwriter will purchase all of the Series 2007 Bonds so offered if any are purchased. The Underwriter may offer and sell the Series 2007 Bonds to certain dealers (including dealers depositing Series 2007 Bonds into unit investment trusts) and others at yields higher or lower or prices higher or lower than the public offering yields or prices stated on the inside cover page hereof. The offering yields or prices set forth on the inside cover page may be changed, from time to time, by the Underwriter. The Corporation, the Town and the Underwriter have agreed that if any financial consulting relationship between them has existed with respect to the Series 2007 Bonds such relationship is terminated,and the Corporation and the Town have consented to the acquisition or participation in the purchase of the Series 2007 Bonds on a negotiated basis by the Underwriter. POLITICAL CONTRIBUTIONS To the best knowledge of appropriate representatives thereof, the Underwriter, Bond Counsel and Counsel to the Underwriter have not made political contributions to any person who currently holds a seat on the Council of the Town or a seat on the Board of Directors of the Corporation with respect to their election to that seat. RELATIONSHIP AMONG PARTIES Bond Counsel has represented, and continues to represent,the Underwriter with respect to financings other than for the Corporation and the Town and will continue to do so if requested in the future. Bond Counsel has also previously acted as bond counsel with respect to other obligations underwritten by the Underwriter and will continue to do so if requested in the future. Counsel to the Underwriter has represented the Underwriter with respect to financings other than for the Corporation and the Town and will continue to do so if requested in the future. Counsel to the Underwriter acts as bond counsel for various municipal entities for which the Underwriter may provide financial consultant services or act as underwriter. CONTINUING DISCLOSURE The Town will covenant for the benefit of certain owners of the Series 2007 Bonds to provide certain financial information and operating data relating to the Town by not later than February 1 in each year commencing February 1, 2008 (the "Annual Reports"), and to provide notices of the occurrence of certain enumerated events, if material (the"Notices of Material Events"). The Annual Reports will be filed by the Town with the Central Post Office(the "CPO"),operated by the Texas Municipal Advisory Office for transmission. If the CPO is not an acceptable central post office pursuant to the Rule (as defined below)then the Annual Reports will be sent to each NRMSIR and any State Information Depository("SID")in existence at the time of a filing. (There is not currently a SID for Arizona.) The Notices of Material Events will be filed by the Town with the CPO for the transmission to the same entities as well as with the Municipal Securities Rulemaking Board. These covenants will be made in order to assist the Underwriter in complying with the Securities and Exchange Commission Rule 15c2-12(b)(5) (the "Rule"). The form of the undertaking necessary pursuant to the Rule is included as APPENDIX E hereto. A failure by the Town to comply with these covenants must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Series 2007 Bonds in the secondary market. Also pursuant to Arizona Law, the ability of the Town to comply with such covenants is subject to annual appropriation of funds sufficient to provide for the costs of compliance with such covenants. Should the Town not comply with such covenants due to a failure to appropriate for such purpose,the Town has covenanted to provide notice of such fact to the CPO for transmission to the NRMSIRs and the SID if then in existence. Absence of continuing disclosure, due to non-appropriation or otherwise, could adversely affect the Series 2007 Bonds and 111 35 specifically their market price and transferability. The Town has been in and is currently in material compliance P Y with all existing continuing disclosure undertakings in all material respects. [To be coiifirined f • CERTIFICATION CONCERNING OFFICIAL STATEMENT The documents delivered in connection with the issuance of the Series 2007 Bonds will include a certificate to the effect that, to the knowledge of appropriate representatives of the Town after appropriate review, the statements contained in this Official Statement relating to the Town and the Corporation were at the time of the sale,and at the time of delivery of the Series 2007 Bonds, true, correct and complete in all material respects and were not misleading and did not omit matters which, in light of the circumstances under which they are made, would make such statements misleading. GENERAL PURPOSE FINANCIAL STATEMENTS The General Purpose Financial Statements of the Town for the period ended June 30, 2006, a copy of which are included in APPENDIX C of this Official Statement, have been audited by Cronstrom, Osuch & Company, P.C., Certified Public Accountants, to the extent and for the period indicated in their report thereon. The Town neither requested nor obtained the consent of Cronstrom, Osuch & Company, P.C. to include their report and Cronstrom, Osuch & Company, P.C. has performed no procedures subsequent to rendering their opinion on the financial statements. CONCLUDING STATEMENT To the extent that any statements made in this Official Statement involve matters of opinion or estimates,whether or not expressly stated to be such, they are made as such and not as representations of fact or certainty and no representation is made that any of these statements have been or will be realized.All financial and other information in this Official Statement has been derived from official records and other sources and is believed by the Town to be • accurate and reliable. The presentation of information, including tables of receipts from taxes and other sources, is intended to show recent historic information, and is not intended to indicate future or continuing trends in the financial position or other affairs of the Town and the Corporation. No representation is made that past experience, as is shown by that financial and other information,will necessarily continue or be repeated in the future. MISCELLANEOUS The agreement of the Corporation with the holders of the Series 2007 Bonds is fully set forth in the Town Lease and the Indenture and neither any advertisement of the Series 2007 Bonds nor this Official Statement is to be construed as constituting any agreement with the purchasers of the Series 2007 Bonds. The execution and delivery of this Official Statement have been duly authorized and approved by the Corporation and the Town. TOWN OF ORO VALLEY TOWN OF ORO VALLEY,ARIZONA M[TNI C IPAL PROPERTY CORPORATION By: By: President Mayor 36 • APPENDIX A TOWN OF ORO VALLEY,ARIZONA GENERAL ECONOMIC AND DEMOGRAPHIC INFORMATION The fol of -wing information regarding-the-Town-is-provided for background information only. No-representation-is made as to the relevance of the data to the repayment of the Series 2007 Bonds. The Series 2007 Bonds are payable solely from payments to be paid by the Town under the Purchase Agreement which are secured by Excise Taxes as described under the heading "SECURITY FOR AND SOURCES OF PAYMENTS OF THE SERIES 2007 BONDS." General The Town incorporated in 1974 and is located in northwestern Pima County, Arizona (the"County"). The Town is approximately six miles north of the city limits of the City of Tucson,Arizona("Tucson"). A farming area 30 years ago, it is now a part of the Tucson Metropolitan area. The Town covers an area of approximately 34 square miles and is located at an elevation of 2,620 feet at the base of the Santa Catalina Mountains. The following table illustrates population statistics for the State,the County and the Town. POPULATION STATISTICS State of Pima Town of Arizona County Oro Valley 2005 Estimate(a) 6,044,985 957,635 39,400 2000 Census 5,130,632 843,746 29,700 1990 Census 3,665,339 666,957 6,670 1980 Census 2,716,546 531,443 1,489 1970 Census 1,775,3 99 351,667 581 1960 Census 1,302,161 265,660 N/A (a) Estimate as of July 1, 2005. Source: Arizona Department of Economic Security, Population Statistics Unit and the United States Census Bureau. Municipal Government and Organization The Town government operates under the Council-Manager form of government. Policymaking and legislative authority are vested in the Town Council,which consists of a Mayor and six Councilmembers. Councilmembers are elected to four-year staggered terms. The Mayor is directly elected by the qualified voters of the Town and the Vice- Mayor is selected by the Council from among its members. The Town Council is responsible, among other things, for the adoption of local ordinances,budget adoption,the development of citizen advisory committees and the hiring of the Town Manager. The Manager is responsible for implementation of the policies of the Town Council. The Town Manager appoints all department heads except the Town Clerk, Chief of Police, Town Engineer and Magistrate. 111 A-1 Employment and Employers The Town's economy is linked closely with that of Tucson. Due to the Town's proximity to Tucson,the majority of ill the residents of the Town commute to the Tucson Metropolitan area for employment. The tables hereafter illustrate several of the major employers within the Town,followed by tables of the major manufacturing employers and non- manufacturing employers of Tucson. MAJOR EMPLOYERS Town of Oro Valley,Arizona Approximate Number of Employer Product/Service Employees Honeywell International Inc. Technology/Aerospace Manufacturer 800 Amphitheater Public Schools Education 645 Ventana Medical Systems Health Care 715 Northwest Medical Center Health Care 450 Hilton El Conquistador Resort Resort 440 Town of Oro Valley Government 335 Fry's Food Stores Grocery 270 Hilton El Conquistador Country Club Country Club 260 Home Depot Home Improvement 160 Northwest Medical Center Urgent Care Health Care 150 Stone Canyon Golf/Golf Club at Vistoso Country Club/Golf Course 130 Source: 2006 Arizona Industrial Directory and 2006 Arizona Services Directory, publications of the Greater Phoenix Chamber of Commerce,the Town and an individual employer survey. ill A-2 III le MAJOR MANUFACTURING EMPLOYERS Tucson Metropolitan Area Approximate Number of Employer Product Employees Raytheon Missile Systems Missiles and Components 11,000 ASARCO Incorporated Copper and Metal Mining 1,800 International Business Machines Corp. (IBM Corporation) Software Manufacturing 1,700 Rain Bird Corporation Injection Molded Plastics 1,240 Ecolab Inc. Motor Vehicle Air Cleaners 1,000 Texas Instruments Semiconductors 920 Honeywell Aerospace Products 890 Bombardier Aerospace Aircraft Maintenance and Service Center 850 Tucson Newspapers Inc. Newspaper Publishing 850 Eurofresh,Inc. Natural Resources and Mining 810 Misys Healthcare Systems Software Solutions 600 S I Inc. Vinyl Windows and Patio Doors 500 G W Plastics Arizona Inc. Plastic Injection Molds 450 Hart&Cooley(a) Air Conditioning System Components 415 Kalil Bottling Co. Bottling 310 Intuit Inc. Financial and Business Software 300 Precision Shooting Equipment Sporting Goods 275 0 Ventana Medical Systems Inc. Medical Equipment 275 Maxi Switch Inc. Computer Peripheral Equipment 250 Pepsi-Cola Bottling Co. of Tucson Bottling 240 Sargent Controls&Aerospace Military Aerospace Components 230 Universal Avionics Systems Corp. Avionics Systems 225 New Southwest Door Co. Inc. Wooden Doors and Metal Hardware 220 Abrams Airborne Manufacturing Inc. Sheet Metal and Machining 205 Spectra Physics Laser Beam Alignment Devices 205 (a) Formerly Air System Components. Source: Inside Tucson Business—2006 Book of Lists, Tucson Chamber of Commerce,Arizona Daily Star—Star 200, March 2006, 2006 Harris Arizona Industrial Directory, a publication of the Greater Phoenix Chamber of Commerce and an individual employers. 111 A-3 MAJOR NON-MANUFACTURING EMPLOYERS Tucson Metropolitan Area • Approximate Number of Employer --------Service/Sector— – Employees U.S. Army Intelligence Center&Fort Huachuca Military 13,100 The University of Arizona Education 10,300 State of ArizonaGovernment 9,740 Davis-Monthan Air Force Base Military 8,235 Tucson Unified School District Education 7,625 Pima County Government 6,765 City of Tucson Government 5,305 Phelps Dodge Mining Co. Mining 4,125 Tohono O'odham Nation Tribal Government 3,665 Carondelet Health Network Healthcare 3,475 TMC Healthcare Healthcare 3,400 Wal-Mart Stores,Inc. Retail 2,665 U.S.Border Patrol Government Law Enforcement 2,500 Pima Community College Education 2,250 Northwest Medical Center Healthcare 2,200 Pascua Yaqui Tribe Tribal Government 2,185 Amphitheater Unified School District Education 2,175 Sunnyside Unified School District Education 2,125 CheckMate Professional Employer Human Resources 2,035 Fry's Food&Drug Stores Retail Grocery 1,700 Bashas'Inc. Retail Grocery 1,695 • American Airlines Inc. Airline 1,680 Home Depot Retail Home Improvement 1,600 Safeway,Inc. Retail Grocery 1,400 University Physicians Healthcare 1,400 Walgreens Co. Retail Pharmacy 1,400 Source: Inside Tucson Business–2006 Book of Lists, Tucson Chamber of Commerce, Davis-Monthan Air Force Base 355 WG/PA 355th Wing Public Affairs, Arizona Daily Star – Star 200, March 2006 and 2006 Harris Arizona Industrial Directoty, a publication of the Greater Phoenix Chamber of Commerce. As indicated by the above table, Davis-Monthan Air Force Base(the"Base")is a major employer in the City. The military and civilian personnel employees at the Base constituted an annual payroll of over$428.6 million in 2004. The estimated total economic impact of the Base and its related activities on the City and the surrounding area is approximately $919.9 million. (The estimated total economic impact is computed by taking total military and civilian pay, total construction and services and expenditures for other materials, equipment and supplies and multiplying by an average national multiplier.) From time-to-time, the Base has been included on the lists of bases considered for closure or realignment by the Defense Base Closure and Realignment Commission(the"DBCR Commission");however,the Base is not currently scheduled for closure or realignment. The Base is one of the rapid response "lead bases" in the United States Air Force and remains a premier training facility. There can be no assurances that the Base will not be included on future lists of bases scheduled for closure or realignment of the DBCR Commission. Any such closure or A-4 • 111 realignment would be subject to review and approval by, among others, the Department of Defense and the President of the United States of America. If such closure or realignment occurs, it would have a negative, unquantifiable effect on the City. The_f_ollowng table_illustrates annual unemployment averages for the Town,Tucson, the County,the State and the United States. UNEMPLOYMENT AVERAGES Calendar Town of City of Pima State of United States Year Oro Valley Tucson County Arizona of America 2006 2.8% 4.5% 4.1% 4.2% 4.6% 2005 3.2 4.6 4.6 4.7 5.1 2004 3.2 4.6 4.6 5.0 5.5 2003 3.7 5.3 5.3 5.7 6.0 2002 3.9 5.6 5.6 6.1 5.8 Source: Arizona Department of Economic Security, Research Administration, CES/LAUS Unit and the United States Department of Labor,Bureau of Labor Statistics. I 1 A-5 Construction The following charts illustrate a building permit summary for residential and non-residential construction and new • housing starts for the Town. VALUE OF BUILDING PERMITS Town of Oro Valley,Arizona (5000's omitted) Calendar Year Residential Commercial Other Total 2006(a) $ 72,478 $ 20,530 $ 123 $ 93,131 2005 86,315 21,206 34,889 142,410 2004 120,425 4,982 3,103 128,510 2003 109,397 3,002 5,936 118,335 2002 85,413 3,109 1,100 89,622 2001 122,784 6,144 5,190 134,118 (a) Data through September 30, 2006. Source: Arizona Real Estate,Arizona State University's Polytechnic campus. Note that the data is obtained from the municipal divisions that issue such permits. Construction is valued on the basis of estimated cost,not on market price or value of construction at the time the permit is issued. The year in which the permit is issued is not be construed as the year of construction. NEW HOUSING STARTS 411 Town of Oro Valley,Arizona Calendar Total New Year Housing Units 2006(a) 285 2005 366 2004 496 2003 460 2002 429 2001 738 (a) Data through September 30, 2006. Source: Arizona Real Estate,Arizona State University's Polytechnic campus. Note that the data is obtained from the municipal divisions that issue such permits. The date on which is issued is not be construed as the date of construction. A-6 • Education The University of Arizona (the "University") was established in 1885 and is the oldest institution of higher education in the State. The University is also one of the largest employers in Tucson. The University has 15 colleges offering 118 bachelor degree programs, 109 masters programs,82 doctoral programs and three professional programs. The University had approximately 34,300 students enrolled for the spring 2006 semester. This eIu ollE cl riles st dents in continuing ed.-. S.. •• _•• _• -•• - '•-• •• •• • • • • on-campus non-credit students. Also located within the Tucson Metropolitan Area is Pima County Community College. Pima County Community College offers two-year academic, vocational and technical programs. The spring 2006 semester enrollment was approximately 28,320. Tourism The Tucson Metropolitan area attracts a significant number of vacationers and conventioneers. Some recreational and sightseeing attractions within driving distance of the Town include Catalina State Park, the Arizona Sonora Desert Museum,Mission San Xavier del Rae,Kitt Peak National Observatory,Mount Lemmon, Organ Pipe Cactus National Monument, Saguaro National Park and Sabino Canyon. The following table illustrates the approximate number of visitors to Organ Pipe Cactus National Monument and Saguaro National Park in the years indicated. NUMBER OF VISITORS Calendar Organ Pipe Cactus Saguaro Year National Monument National Park 2007(a) 133,590 N/A 2006 1,608,289 3,140,393 2005 1,413,969 3,629,550 2004 1,374,148 3,601,636 2003 1,478,490 3,662,531 2002 1,577,727 3,437,608 N/A=Not available. (a) Data as offanuary 2007. Source: The National Park Service,United States Department of the Interior. 111 A-7 • Below is a partial list of the larger hotel and resorts in Tucson's Metropolitan area,based on number of units. HOTELS AND RESORTS 11 Tucson Metropolitan Area Number of Approximate Number _ • - : - .;___ of Em- •lo ees a_ JW Marriott Starr Pass Resort& Spa 575 680 The Westin La Paloma Resort& Spa 487 465 Hilton El Conquistador Golf&Tennis Resort 428 510 Loews Ventana Canyon Resort 398 430 Radisson Hotel City Center 307 120 Holiday Inn Palo Verde Airport 301 100 Radisson Suites Tucson 299 40 Doubletree Hotel at Reid Park 295 185 Inn Suites Tucson City Center 280 90 Marriott University Park Hotel 250 220 Westward Look Resort 244 235 Hilton Tucson East 233 145 Sheraton Tucson Hotel&Suites 216 85 (a) Number of full-time equivalent employees. Source: Inside Tucson Business—2006 Book of Lists, Tucson Chamber of Commerce,Arizona Daily Star—Star 200, March 2006 and individual employers. Transportation • Industry, business and residents benefit from the transportation network available to the metropolitan Tucson area. Rail,air and highway facilities are developed throughout the area. The City is traversed by Interstates 10 and 19, as well as United States Highways 86, 89 and 93. Interstate 10 connects the City with Phoenix,Arizona to the north and Los Angeles,California to the west. Interstate 19 provides access to Nogales,Arizona,and Mexico to the south and United States Highway 86b connects with the direct route to the Gulf of California vacation areas. The Southern Pacific Railroad, as well as interstate motor freight services supplied by many carriers, facilitate the transportation of area products and supplies. Inter-city transportation service is provided by Greyhound-Trailways. Tucson International Airport, located approximately eight miles from Tucson, provides local, regional and transcontinental air service through a number of major airlines and has capacity for 7 million passengers annually. Construction for the $30.9 million concourse renovation project at the TAA includes modification of the security checkpoints to ease congestion;relocation of United States Customs and Border Protection for international arrivals; additional restrooms;reconfiguring gates and hold rooms;and free wireless Internet access throughout the terminal. Completion is expected by December 2007. The TAA is also conducting an environmental impact study for a$65 million project to increase airspace capacity. As a part of this project, one of the runways will be relocated southwest of its current alignment to provide three commercial carrier runways. If this project receives federal approval in the spring of 2007,completion is expected in 2012. A-8 411111 • AIRLINES SERVING TUCSON INTERNATIONAL AIRPORT Aerolitoral Delta/Sky West Airlines Southwest Airlines Alaska Airlines Frontier Airlines United/Lufthansa Airlines American Airlines JetBlue U.S.Airways Continental Airlines Northwest Airlines Source: Tucson Airport Authority. NUMBER OF PASSENGERS ARRIVING AND DEPARTING TUCSON INTERNATIONAL AIRPORT Calendar Year Arrivals Departures Total 2007(a) 183,627 167,754 345,768 2006 2,104,946 2,121,813 4,226,759 2005 2,062,502 2,067,819 4,130,321 2004 1,880,250 1,890,195 3,770,445 2003 1,747,754 1,761,114 3,508,868 2002 1,746,825 1,761,058 3,507,883 2001 1,809,491 1,818,307 3,627,798 (a) Data through January 2007. Source: Tucson Airport Authority. 111 A-9 APPENDIX B TOWN OF ORO VALLEY,ARIZONA • FINANCIAL DATA Current Year Statistics(For Fiscal Year 2006/07) Town of Oro Valley,Arizona General Obligation Bonds None g Certificates of Participation None Municipal p y Pro ert Corporation Excise Tax Revenue Bonds $ 37,975,000*(a)(b) Excise Tax Revenue Obligations 6,595,000 (b) Municipal Property Corporation Water Project Revenue Bonds 29,205,000 3,760,000 Improvement Bonds Outstanding 468,769,764 (c) Secondary Assessed Valuation 445,484,302 (c) Primary Assessed Valuation 3,984,599,733 (d) Estimated Net Full Cash Value * Subject to change. (a) Includes the Series 2007 Bonds. (b) Net of the Obligations Being Refunded. (c) State property taxes are divided into two categories: primary and secondary. Secondary property taxes are those taxes and assessments imposed to pay principal and interest on bonded indebtedness and certain other obligations, those imposed for special districts other than school districts and those imposed to exceed a budget, expenditure or tax limitation pursuant to voter approval. Primary property taxes are all ad valorem taxes other than secondary property taxes. Annual increases in the valuation of certain types of property for rimaproperty tax purposes and the amount of primary property taxes which may be levied in any year primary property are subject to certain limitations. These limitations do not apply with respect to secondarytaxes. See "PROPERTY TAXES — Ad Valorem Taxes — Property Tax Assessment Ratios"for the method of determination of such categories. (d) Estimatednet full cash value is the total market value of the property less net exempt property within the District. Source: Property er Tax Rates and Assessed Values, Arizona Tax Research Foundation and State and County Abstract of the Assessment Roll,Arizona Department of Revenue. B-1 111 Municipal Property Corporation Excise Tax Revenue Bonds to be Outstanding Town of Oro Valley,Arizona Obligations Balance Issue Original Maturity Balance Being to be Series Purpose Amount Dates Outstanding Refunded* Outstanding* 1996 Water Company Acquisitions $28,400,000 7-1-97/26 $ 15,375,000 ($15,375,000) $ 1999 Construct,Acquire and Equip Facilities 4,930,000 1-1-00/19 2,730,000 2,730,000 2001 Improve,Construct and Equip Facilities 9,010,000 7-1-01/20 6,305,000 (3,440,000) 2,865.000 2003 Refunding 15,750,000 7-1-04/19 15,255,000 15,255,000 Total Municipal Property Corporation Excise Tax Revenue Bonds Outstanding $ 20,850,000 Plus: Series 2007 Bonds $ 17,125,000* Total Municipal Property Corporation Excise Tax Revenue Bonds to be Outstanding $ 37,975,000* * Subject to change. Source: The Town. Excise Tax Revenue Obligations to be Outstanding Town of Oro Valley,Arizona Obligations Balance 111 Issue Original Maturity Balance Being to be Series Purpose Amount Dates Outstanding Refunded* Outstanding* 2000 Purchase Land $ 2,580,000 7-1-01/20 $ 745,000 ($200,000) $ 545,000 2005 Purchase Land,Construct Municipal Operations Center 6,205,000 7-1-06/25 6,050,000 6,050,000 Total Excise Tax Revenue Obligations to be Outstanding $ 6,595,000* * Subject to change. Source: The Town. Municipal Property Corporation Water Project Revenue Bonds Outstanding Town of Oro Valley,Arizona Issue Original Maturity Balance Series Purpose Amount Dates Outstanding 2003 Water System Improvements $ 31,750,000 7-1-04/28 $ 29,205,000 Source: The Town. B-2 Oracle Road Improvement District Improvement Bonds Outstanding Town of Oro Valley,Arizona II Issue Original Maturity Balance Series Purpose Amount Dates Outstanding 2005 Oracle Road Improvements $ 3,945,000 1-1-07/21 $ 3,760,000 Source: The Town. Under Arizona law,the Town is required to enforce the collection of the installments of such special assessments of the Oracle Road Improvement District through sales of the assessment liens upon delinquency. If there are no purchasers at the lien sale, the Town is required to "buy in"the liens and to pay the delinquency amount from the district general fund. Thus, the Town becomes the contingent guarantor of any of its improvement district obligations. 41111 B-3 11110 APPENDIX C TOWN OF ORO VALLEY,ARIZONA AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2006 APPENDIX D • SUMMARIES OF THE PRINCIPAL DOCUMENTS (To be provided by Bond Counsel) 10 APPENDIX E FORM OF APPROVING LEGAL OPINION APPENDIX F FORM OF CONTINUING DISCLOSURE UNDERTAKING [To be provided by Bond Counsel] 110 APPENDIX G BOOK-ENTRY-ONLY SYSTEM BOOK-ENTRY-ONLY SYSTEM The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Series 2007 41111 Bonds. The Series 2007 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee)or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Series 2007 Bonds, each in the aggregate principal amount of such matunty,and will be deposited with DTC. DTC, the world's largest securities depository, is a limited.purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System,a"clearing corporation"within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues,and money market instruments from over 100 countries that DTC's participants rp ("Direct Participants")deposit with DTC.DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates.the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust&Clearing Corporation("DTCC").DTCC,in turn,is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation(NSCC,FICC,and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers,Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers,banks,trust companies,and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant,either directly or indirectly("Indirect Participants"). DTC has Standard &Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Series 2007 Bonds under the DTC system must be made by or through Direct Participants, which will • receive a credit for the Series 2007 Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond("Beneficial Owner")is in turn to be recorded on the Direct and Indirect Participants'records.Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction,as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2007 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2007 Bonds, except in the event that use of the book- entry system for the Series 2007 Bonds is discontinued. To facilitate subsequent transfers,all Series 2007 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2007 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2007 Bonds;DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2007 Bonds are credited,which may or may not be the Beneficial Owners.The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them,subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2007 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2007 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Series 2007 Bonds may wish to ascertain that the nominee holding the Series 2007 Bonds for their benefit has agreed to obtain and transmit notices G-1 • to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the 110 registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2007 Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede& Co. (nor any other DTC nominee)will consent or vote with respect to Series 2007 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the bond registrar and paying agent for the Series 2007 Bonds as soon as possible after the record date.The Omnibus Proxy assigns Cede&Co.'s consenting or voting rights to those Direct Participants to whose accounts Series 2007 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payment of principal of and interest on the Series 2007 Bonds and the redemption price of any Bond will be made to Cede&Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Corporation or the Town or the Trustee for the Series 2007 Bonds, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the bond registrar and paying agent for the Series 2007 Bonds or the Corporation or Town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of and interest on the Series 2007 Bonds and the redemption price of any Series 2007 Bonds will be made to Cede&Co.(or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Corporation or Town or bond registrar and paying agent for the Series 2007 Bonds, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 111 DTC may discontinue providing its services as depository with respect to the Series 2007 Bonds at any time by giving reasonable notice to the Corporation,Town or Trustee for the Series 2007 Bonds. Under such circumstances, in the event that a successor depository is not obtained,Bond certificates are required to be printed and delivered. The Corporation or Town may decide to discontinue use of the system of book-entry-only transfers through DTC(or a successor securities depository).In that event,Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Corporation or Town believes to be reliable, but the Corporation or Town takes no responsibility for the accuracy thereof. • 111 G-2 APPENDIX H SPECIMEN INSURANCE POLICY DRAFT 111 02/26/07 03/07/07 $ , 000 TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION EXCISE TAX REVENUE REFUNDING BONDS, SERIES 2007 BOND PURCHASE AGREEMENT , 2007 Town of Oro Valley Municipal Property Corporation Oro Valley, Arizona On the basis of the representations, warranties and covenants contained in this Bond Purchase Agreement and upon the terms and con- ditions contained herein, the undersigned, on behalf of Stone & Young- berg LLC (the "Underwriter") , hereby offers to enter into the follow- ing agreement with the Town of Oro Valley Municipal Property Corpora- tion (the "Corporation") in connection with the purchase and sale of the captioned Bonds (the "Bonds") . Upon the Corporation's written acceptance of this offer and the execution and delivery by the Town of Oro Valley, Arizona (the "Town") , of the Letter of Representation, dated the date hereof and in the form of the Exhibit hereto (the "Letter of Representation") , this Bond Purchase Agreement will be binding upon the Corporation and upon the Underwriter. This offer is made subject to the Corporation's written acceptance hereof and subject to the execution and delivery of the Letter of Representation on or before 11:59 p.m. , MST, on the date indicated hereinabove, and, if not so accepted or if the Letter of Representation is not so executed and delivered, this offer will be subject to withdrawal by the Underwriter upon notice delivered to the Corporation at any time prior to the acceptance hereof by the Corporation and execution and delivery of the Letter of Representation. Terms not otherwise defined in this Bond Purchase Agreement shall have the same meanings set forth in the "Indenture" or "Official Statement" (as such terms are defined herein) . The Bonds shall be as described in, and shall be issued and secured under and pursuant to the provisions of a Trust Indenture, dated as of April 1, 1996 (the "Indenture") , as supplemented by a 111 First Supplement to Trust Indenture, dated as of June 1, 1999 (the "First Supplemental Indenture") , by a Second Supplement to Trust Indenture, dated as of April 1, 2001 (the "Second supplemental Supplement to Trust Indenture, dated as of Indenture►►) , by a Third Su pp December 1, 2003 (the "Third Supplemental Indenture") and by a Fourth2007 Supplement to Trust Indenture, to be dated as of Indenture" and the (the "Fourth Supplemental Indenture as supplemented •- First Supplemental Indenture, the Second Supplemental Inden- enta n•en � - - - ourth Supplemental ture, the Third Supplem - Indenture, the "Indentures") , between the Corporation and Wells Fargo Bank, N.A. , as trustee (together with its successors, if any, as trustee under the Indentures, the "Trustee") . Concurrently with the execution of the Fourth Supplemental Inden- ture, ll enter into a Fourth Amendment and the Town will the Corporation as o f 1, 2007 (the to Lease-Purchase Agreement, to be datedBement dated "Fourth Amendment") ,, which amends the Lease-Purchase Agreement, as of April 1, 1996 (the "1996 Lease-Purchase Agreement") , as amended by the First Amendment to Lease-Purchase Agreement, dated as of June "First 1999 (the " st Amendment") , the Second Amendment to Lease-Pur- chase Agreement, dated as of April 1, 2001 (the "Second Amendment") , to and the Third AmendmentLease-Purchase Agreement, dated as of December 1, 2003 (the "Third Amendment�� and the 1996 Lease-Purchase Agreement as amended bythe First Amendment, the Second Amendment, the • Amendment and the Fourth Amendment, the "Lease-Purchase Agree- ment") , gree- Third ►► Corporation, as lessor, the Town, as lessee, and ment ) , between the p ental ents made by the Town pursuant to the the Trustee. The r pa� to paythe principal of and Lease-Purchase Agreement will be used premium, if any, and other and interest requirements on the Bonds parity bonds issued under the Indentures. 4111 The payment of principal al of and interest on the Bonds when due will financial guaranty insurance policy (the "Bond be insured by a Insurance Policy") to be issued by (the "Bond Insurer") . The Bonds will be offered bymeans of the Preliminary Official 2007 (including the Statement of the Corporation, dated , Statement") , and all appendices, the "Preliminary Official - cover page pp relating to the Bonds and the final Official Statement of• the Corpora • date of this Bond Purchase Agreement (including the Corpora- tion, dated the "Official cial Statement") , relating to cover page and all appendices, the a written under- taking, to be dated Bonds . The Town will enter into and deliver ted the date of initial delivery of the Bonds (the "Continuing Disclosure Undertaking") , to provide, or cause to be pro- vided, ongoing disclosure for the benefit of the owners of the Bonds as described in the Continuing ontinuin Disclosure Undertaking for purposes of urities Exchange Act of 1934 Rule 15c2-12 promulgated under the Sec (the "Disclosureof the Bonds Rule") . The proceeds of the sale together with certain other funds will be deposited with the Trustee, as depository trustee, and used to finance the refunding of certain obligations described in the Official Statement and to pay costs of Bonds . The Corporation, the Town and Wells Fargo Bank issuance of the p Arizona, N.A. , as depository trustee (the "Depository Trustee") will execute and deliver a Depository Trust Agreement, to be dated as of p Y 2 1111 such refunding.2007 (the "Depository Trust Agreement") , to accomplish 111 (This Bond Purchase Agreement, the Indentures, the Lease-Purchase Agreement, Depository the De ository Trust Agreement, and any and all such other agreements and documents as may be required to be executed, delivered and/or received in order to carry oit, gi ve effect to, and consummate the transactions contemplated herein and in the Official Statement are referred to herein as the "Corporation Documents. " The Letter of Representation, the Lease-Purchase Agreement, the Depository Trust Agreement, the Continuing Disclosure Undertaking and any and all such other agreements and documents as may be required to be executed, / delivered and/or received in order to carry out, give effect to, and consummate the transactions contemplated herein and in the Official Statement are referred to herein as the "Town Documents. ") 1 . Purchase and Sale of the Bonds. (a) The Underwriter hereby agrees to purchase from the Corporation, and the Corporation hereby agrees to sell and deliver to the Underwriter, all, but not less than all, of the Bonds. Inasmuch as this purchase and sale represents a negotiated transaction, the Corporation understands, and hereby confirms, that the Underwriter is not acting as a fiduciaryor agent of the Corporation, but rather is acting solelyin its capacity as Underwriter for its own account. The Underwriter has been duly authorized to execute this contract and to act hereunder. (b) The principal amount of the Bonds to be issued, the dated date therefor, the maturities and optional redemption provisions and interest rates per annum are set forth in the Schedule hereto. (c) The purchase price for the Bonds shall be $ (the "Purchase Price") . The Purchase Price represents: Par amount of Bonds $ Net Original Issue Premium (Underwriter's Discount) Purchase Price $ For the convenience of the Corporation, the Underwriter will, at or before the time of Closing, pay on behalf of the Corporation to the Bond Insurer as payment of the bond insurance premium for the Bond Insurance Policy on the Bonds, resulting ina net amount to paidby be the Underwriter to the Corporation at the time of Closing of $ plus such accrued interest. 2. Public Offering. The Underwriter intends to make a bona fidepublic ublic offering of the Bonds at the offering prices or yields set forth in the Schedule, and based upon those initial offering prices or fields the Underwriter would receive compensation of $ 111 Y however, the Underwriter may offer a portion of the Bonds for sale to selected dealers who are members of the National Association of Secu- 3 reties Dealers, Inc. and who agree to resell the Bonds to the public on terms consistent with this Bond Purchase Agreement and the Under- writer reserves the right to change such offering prices or yields as 1110 the Underwriter shall deem necessary in connection with the marketing of the Bonds and to offer and sell the Bonds to certain dealers ( including depositing de ositing the Bonds into investment trusts) and others at prices lower than the initial offering prices or at yields than the initial yields set forth in the Schedule and in the higher Official Statement. The Underwriter also reserves the right to over- allot or effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail open the o en market and to discontinue such stabilizing, if commenced, at any time. None of such activities shall affect the principal amounts, maturity dates, interest rates, redemption or other provision of the Bonds or the amount to be paid by the Underwriter to the Corporation for the Bonds. 3. The Official Statement. (a) The Preliminary Official Statement has been prepared for use in connection with the public offering, sale and distribution of the Bonds bythe Underwriter. The Corporation hereby deems the PreliminaryOfficial Statement "final" as of its date for purposes of the Disclosure Rule, except for the omission of such information which is dependent upon the final pricing of the Bonds for completion, all p p as permitted to be excluded by Section (b) (1) of the Disclosure Rule. (b) The Corporation hereby authorizes the Official State- 4110 men t and the information therein contained to be used by the Under- writer in connection with the public offering and the sale of the Bondsp The Corporation consents to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection public the offering of the Bonds . The Corporation shall provide, provided,cause to be to the Underwriter as soon as practicable after the date of the Corporation's acceptance of this Bond Purchase Agreement (but, in anyevent, not later than within seven (7) business � days after the Corporation' s acceptance of this Bond Purchase Agree- ment and in sufficient time to accompany any confirmation that requests payment from any customer) copies of the Official Statement q P Ym which is complete as of the date of its delivery to the Underwriter in suchuantit as the Underwriter shall request in order for the Under- writer comply q Y iter to com 1 with Section (b) (4) of the Disclosure Rule and the rules of the Municipal Securities Rulemaking Board. (c) If, after the date of this Bond Purchase Agreement to and includingthe date the Underwriter is no longer required to provide an Official Statement to potential customers who request the samep"end of the underwriting ursuant to the Disclosure Rule (the earlier of (i) 90 days from theperiod" (as defined in Rule) and (ii) the time when the Official Statement is available to any person from a nationally recognized municipal securities repository, but in no case less than 25 days after the "end of the underwriting period" for the Bonds) , Corporation Cor oration becomes aware of any fact or event which might110 4 or would cause the Official Statement, as then supplemented or 111 amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, not misleading, or if it is necessary to amend or supplement the Official Statement to comply with law, the Corporation will notify the Underwriter (and for the purposes of this clause provide the Underwrite - • - - - : --_ : - _ •-_ o•- time to time request) , and if, in the opinion of the Underwriter, such fact or event requires preparation and publication of a supplement or amendment to the Official Statement, the Corporation will forthwith prepare and furnish, at the Corporation's own expense (in a form and manner approved by the Underwriter) , a reasonable number of copies of either amendments or supplements to the Official Statement so that the statements in the Official Statement as so amended and supplemented will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or so that the Official Statement will comply with law. If such notification shall be subse- quent to the Closing, the Corporation shall furnish such legal opin- ions, certificates, instruments and other documents as the Underwriter may deem necessary to evidence the truth and accuracy of such supple- ment or amendment to the Official Statement. (d) The Underwriter hereby agrees to file the Official Statement with a nationally recognized municipal securities informa- tion repository. Unless otherwise notified in writing by the Under- !, writer, the Corporation can assume that the "end of the underwriting period" for purposes of the Rule is the date of the Closing. 4 . Representations, Warranties, and Covenants of the Corpora- tion. orpora- tion. The undersigned, on behalf of the Corporation, but not individ- ually, hereby, as applicable, represents and warrants to and covenants with the Underwriter that: (a) The Corporation is a nonprofit corporation duly created, organized and existing under the laws of the State of Arizona (the "State") and has full legal right, power and authority, and at the date of the Closing will have full legal right, power and author- ity (i) to enter into, execute and deliver the Corporation Documents, (ii) to sell, issue and deliver the Bonds to the Underwriter as pro- vided herein, and (iii) to carry out and consummate the transactions contemplated by the Corporation Documents and the Official Statement, and the Corporation has complied, and will at the Closing be in com- pliance in all respects, with the terms of the Corporation Documents as they pertain to such transactions; (b) By all necessary official action of the Corporation prior to or concurrently with the acceptance hereof, the Corporation has duly authorized all necessary action to be taken by it for (i) the execution and delivery of the Corporation Documents and the issuance and sale of the Bonds, (ii) the approval, execution and delivery of, 10 and the performance by the Corporation of the obligations on its part, contained in the Bonds and the Corporation Documents and (iii) the 5 of all by it other transactions contemplated by the Official Statement and the Corporation Documents. (c) The Corporation Documents constitute legal, valid and • Corporation, enforceable in accordance with binding obligations of the p theirp insolvenc reorganiza- respective terms, subject to bankruptcy, Y tion, moratorium and other similar laws and principles of equity the enforcement of creditors ' rights; the relating to or of fecting Bonds, when issued, deliveredpaid and for, in accordance with the will constitute legal, Indentures and this Bond Purchase Agreement,obligations of the Corporation entitled to the bene- valid and binding o g fits of the Indentures and enforceable in accordance with, their terms, • insolvency, reorganization, moratorium and other subject to bankruptcy Y . similar laws and principles of equity relating to or affectingthe enforcement of creditors ' rights; upon the issuance, authentication and delivery of the Bonds as aforesaid, the Indentures will provide, e holders from time to time, of the Bonds, the for the benefit of th ' le all valid and binding pledge of and lien it purports to create as g Y set forth in the Indentures; (d) The Corporation is not in breach of or default in any material respect applicable under anya licable constitutional provision, law or or the United States or any administrative regulation of the State applicable bond, judgment or decree or any loan agreement, indenture,� g note, resolution, agreement or other instrument to which the Corpora- tion is a party or to which the Corporation is or any of its property e subject and no event has occurred and is or assets are otherwis � ' e of time or the giving continuing which constitutes or with the p assa g 4111 of notice, default or both, would constitute a default or event of by the Corporation under anyof the foregoing; and the execution and delivery of the Bonds and the Corporation Documents and compliance the Corporation' s with the provisions onpart contained therein, will p of or default under any not conflict with or constitute a breach constitutionalprovision, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other r ration is or to which instrument to which the Corporation is a party or to which the Corpo- rationof its property or assets are otherwise any subject nor will anysuch execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Corporation to be pledged to secure the Bonds or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Indentures; e) All authorizations, approvals, licenses, permits, con- sents and ordersany governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a to, or the absence condition precedent of which would materiallydue performance by the Corporation of its adversely affect the and the Bonds have been obligations under the Corporation Documents may y obtained, except for such approvals, consents and orders as duly p 6 be required under the "blue sky" or securities laws of any jurisdic- tion in connection with the offering and sale of the Bonds; (f) The Bonds conform to the descriptions thereof con- tained in the Official Statement under the captions "THE SERIES 2007 BONDS; " the Indentures and the Lease-Purchase Agreement conform to the descriptions thereof contained in the Official Statement under the captions "THE SERIES 2007 BONDS, " and APPENDIX A - "SUMMARIES OF THE PRINCIPAL DOCUMENTS; " and the proceeds of the sale of the Bonds will be applied generally as described in the Official Statement; (g) There is no legislation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened against the Corporation, affecting the existence of the Corporation or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the collection of payments promised for the payment of principal of and interest on the Bonds pursuant to the Indentures or in any way contesting or affecting the validity or enforceability of the Bonds, the Corporation Documents, or contesting the exclusion from gross income of interest on the Bonds for federal income tax purposes or State income tax purposes, or contesting in any way the complete- ness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto, or contesting the powers of the Corporation or any authority for the issuance of the Bonds or the execution and delivery of the Corporation Documents, nor is there any basis therefor, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforce- ability of the Bonds or the Corporation Documents; (h) As of the date thereof, the Preliminary Official Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or neces- sary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (i) At the time of the Corporation's acceptance hereof and (unless the Official Statement is amended or supplemented pursuant to paragraph (c) of Section 3 of this Bond Purchase Agreement) at all times subsequent thereto during the period up to and including the date of the Closing, the Official Statement does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (j ) If the Official Statement is supplemented or amended pursuant to paragraph (c) of Section 3 of this Bond Purchase Agree- ment, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) 10 at all times subsequent thereto during the period up to and including the date of the Closing the Official Statement as so supplemented or 7 amended will not contain any untrue statement of a material fact or omit to state any material factrequired wired to be stated therein or nec- essary to make the statements therein, in light of the circumstances under which made, not misleading; (k) The Corporation will 11 a pp y,1 or cause to be applied, in and subject to the the proceeds from sale of the Bonds as provided all of the terms and provisions of the Indentures and will not take or action or omission will adversely affect omit to take any action which income tax purposes or the exclusion from gross income for federal State income tax purposes of the interest on the Bonds; p (1) The Corporation will furnish such information and take such action in cooperation with the execute such instruments and nest (A) to (y) qual- Underwrit er as the Underwriter may reasonably req ify the Bonds for offer and sale under the "blue sky" or other secur - such states and other jurisdictions in ties laws and regulations of i nate and (z) determine the United States as the Underwriter may desg s for investment under the laws of such the eligibility of the Bonds to continue such qualifications states and other jurisdictions and (B) retg in effect of the Bonds (pro- so lore as required for the distribution Corporation will not be required to qualify vided, however, that the Corpor file general or special consents to as a foreign corporation or toany diction) and will advise service of process under the laws of any jurisdiction) • of receipt by the Corporation of any noti- fication with respect to the suspension of q any jurisdiction Bonds for sale in or the initiation or threat of any 1110 proceeding for that purpose; (m) The financial statements of, and other financial information regarding, the Town in the Official Statement fairly and results of the Town as of the dates present the financial positionThere has been no adverse for the periods therein set forth. results of andposition,a material nature in such financial the change of of the operations or condition, financial or otherwise, Town, andhe proceeding art to any litigation or other p g pending or Town is not a party would have a threatened which, if decided adversely to the. Town, materially adverse effect on the financial condition of the Town; (n) Prior to the Closing, the Corporation will not offer notes or other obligations for borrowed money or or issue any bonds, a incur any material liabilities, direct or contingent, payable from or secured by any of the revenues or assets which will secure the Bonds without the prior riapproval of the Underwriter; and pp si ned by any official of the Corpo- (o) Any certificate, g • th the transactions con- ration authorized to do so in connection with deemed a repre- templated by this Bond Purchase Agreement, shall be e Cor oration to the Underwriter as to the sentation and warranty by th p statements made therein. 8 5 . Closing. 111 (a) At 8 : 00 a.m. MST time, on , 2007, or at such other time and date as shall have been mutually agreed upon by the Corporation and the Underwriter (the "Closing") , the Corporation will, subject ect to the terms and conditions hereof, deliver the Bonds to the Underwriter in the aggregate principal amount of each such matu- rity duly executed and authenticated, together with the other docu- ments hereinafter mentioned, and the Underwriter will, subject to the terms and conditions hereof, accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 of this Bond Purchase Agreement by a certified or bank cashier's check or checks or wire transfer payable in immediately available funds to the order of the Corporation. Payment for the Bonds as aforesaid shall be made at the ym offices of Gust Rosenfeld, P.L.C. , "Bond Counsel" or such other place as shall have been mutually agreed upon by the Corporation and the Underwriter. (b) Delivery ositor of the Bonds shall be made through the facil- ities of Depository The De Trust Company, New York, New York, including, provided for bythe Underwriter, a "Fast Automated Securities if be delivered in definitive fully Transfer. " The Bonds shall registered form, bearing CUSIP numbers without coupons, with one Bond for each maturityof the Bonds, all as provided in the Fourth Supplemental Indenture, and shall be made available to the Underwriter at least one business day before the Closing for purposes of • 111 inspection. 6. Closing Conditions. The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations, warran- ties and covenants of the Corporation contained herein and to be con- tained in the documents and instruments to be delivered at the Closing and upon the performance by the Corporation of its obligations here- p under both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriter's obligations under this Bond Purchase Agreementpurchase,to to accept delivery of and to pay for the Bonds upon be conditioned u on the performance by the Corporation of its obligationsperformed to be hereunder and under such documents and instruments, and the performance by the Town of its obligations to be performed med hereunder and under the Letter of Representation and under such do cuments and instruments, at or prior to the Closing, and shall also be subject to the following additional conditions, including the delivery by the Corporation and the Town of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Underwriter: (a) representations resentations and warranties of the Corporation p contained herein and of the Town in the Letter of Representation shall be true, complete and correct on the date hereof and on and as of the date of the Closing, as if made on the date of the Closing; (b) The Corporation and the Town each shall have performed and complied with all agreements and conditions required by this Bond 9 Purchase Agreement to be performed or complied with by it prior to or at the Closing; (c) At the time of the Closing, (i) the Corporation Docu- ments, the Town Documents and the Bonds shall be in full force and heretofore approved by the Underwriter and shall effect in the form p e not have been amended, modified or supplcmented, and thOfficial Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriter, and (ii) all actions of the Corporation and of the Town required to be taken by the performed shall be in order for Bond Counsel and Greenberg Traurig, LLP "Counsel to the Underwriter, " to deliver their respec- � tive opinions referred to hereafter; (d) At the time of the Closing, all official action of the Corporation relating to the Bonds and the Corporation Documents and all official action of the Town relating to the Town Documents shall be in full force and effect and shall not have been amended, modified or supplemented; prior or At to the Closing, the Corporation Documents shall have been dulyexecuted and delivered by the Corporation, the Town Documents shall have been duly executed by the Town, and the Corporation shall have dulyexecuted and delivered, and the Trustee shall have duly authenticated, the Bonds; prior At or to the Closing, the Bond Insurance Policy shall have been dulyexecuted, issued and delivered by the Bond111/ Insurer; (g) At the time of the Closing, there g or anyshallnot have occurred any changedevelopment involving a prospective change in the condition, financial or otherwise, or in the revenues or the Town from that set forth in the Official Statement operations of ' ' ter is material and adverse and that in the judgment of the Underwri ► to that makes it, in the judgment of the Underwriter, impracticable market the Bonds on the terms and in the manner contemplated in the Official Statement; (h) Neither the Corporation nor the Town shall have failed to pay principal or interest when due on any of its outstanding obli- gations for borrowed money; p (i) All steps to be taken and all instruments and other documents to be executed, and all other legal matters in connection with the transactions contemplated by this Bond Purchase Agreement shall be reasonablysatisfactory in legal form and effect to the Underwriter; (j ) At or prior to the Closing, the Underwriter shall have received copies of each of the following documents: 10 1111 (1) the Official Statement, and each supplement or 111 amendment thereto, if any, executed on behalf of the Corporation by its President and on behalf of the Town by its Mayor, or such other officials as may have been agreed to by the Underwriter, and the reports and audits referred to or appearing in the Official Statement; (2) the Corporation Doc11 metes--and the Town Documents with such supplements or amendments as may have been agreed to by the Underwriter as well as a specimen of the Bonds and the resolutions of the Mayor and Council of the Town and the Board of Directors of the Corporation approving the same; (3) the approving opinion of Bond Counsel with respect to the Bonds, in substantially the form attached to the Official Statement; (4 ) a supplemental opinion of Bond Counsel addressed to the Underwriter, substantially to the effect that: (i) the Corporation Documents and the Town Documents have each been duly approved and the execution and deliver thereof duly authorized by all necessary actions and are each in full force and effect and are legal, valid and binding obligations of the respective parties thereto; (ii) the Bonds are exempted securities under the 111 Securities Act of 1933, as amended (the "1933 Act") , and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and it is not necessary, in connection with the offering and sale of the Bonds, to register the Bonds under the 1933 Act or to qualify the Indentures under the Trust Indenture Act; and (iii) the statements and information contained in the Official Statement on the cover page thereof, under the captions "INTRODUCTORY STATEMENT, " "THE SERIES 2007 BONDS, " "PLAN OF REFUND- ING, " "SECURITY FOR AND SOURCES OF PAYMENT OF THE SERIES 2007 BONDS, " "LEGAL MATTERS, " "TAX EXEMPTION, " "BOND PREMIUM, " "ORIGINAL ISSUE DIS- COUNT, " "POLITICAL CONTRIBUTIONS" (as it relates to Bond Counsel only) , "RELATIONSHIPS AMONG PARTIES" (as it relates to Bond Counsel only) and "CONTINUING DISCLOSURE" therein and in APPENDIX D - "SUM- MARIES OF THE PRINCIPAL DOCUMENTS, " APPENDIX E - "FORM OF APPROVING LEGAL OPINION" and APPENDIX F - "FORM OF CONTINUING DISCLOSURE CERTIFICATE" thereto fairly and accurately summarized the matters purported to be summarized therein; (5) an opinion, dated the date of the Closing and addressed to the Underwriter, of Counsel to the Underwriter, to the effect that based upon their participation in the preparation of the Official Statement as Counsel to the Underwriter and their participa- tion at conferences at which the Official Statement was discussed, but without having undertaken to determine independently the accuracy, 11 completeness or fairness of the statements contained in the Official Statement, such counsel has no reason to believe that the Official 11 • statement of a material fact or omits to Statement contains any untrue the statements therein, in state a material fact necessary to make misleading light of the circumstances under which they were made, not ' cial forecast, technical and statistica l (except for (a) any f roan � Statement and the infor- statements and data included in the Officialand informa- tion ' n. the Bond Insurer and (b) the statements _ .• e•ardl over page and under tion contain ed in the Official Statemen on p g appendices described in subparagraph 4 (iii) the captions and in the expressed) ;in each case as to which no view need be expr ) ; (6) an opinion of counsel to the Corporation and the Town, addressed ed to the Underwriter, to the effect that: p (i) the Corporation is a nonprofit corporation, ' and existing under the laws of the State, duly incorporated, organized p, enterinto, exe- cute Documents, full legal right, power and authority (A) to and and has g (B) to sell, issue deliver the Corporation andprovided herein, and (C) to deliver the Bonds to the Underwriter, as p the Corpora- tion the transactions contemplatedby p carry out and consummateand the Corporation has ' on Documents and the Official Statement, respects, ti and will at the Closing be in compliance in allp complied, with the terms of the Corporation Documents as they pertain to such transactions; (ii) the Town is a municipal corporation, duly • existingunder the laws of the State, and incorporated, organized and t power and authority (A) to enter into, execute has full legal righ 11/1 and (B) to carry out and consummate the and deliver the Town Documents Documents, and the Official transactions contemplated by the TownClosingbe in Statement, and the Town has complied, and will ate com- pliance in all respects, with the terms of the Town Documents as t y pertain to such transactions; • all necessary official action of the (iii) by the concurrentlywith the acceptance hereof, Corporation prior to or to be taken by it for (A) the approval,Corporation has duly authorized all necessary action erformance roval execution and delivery of, and thep obligations on its part, contained in the by the Corporation of theg B the consummation by it of Bonds and the Corporation Documents and (B) and the all other transactions contemplated by the Official Statement Corporation Documents; byall necessary official action of the (iv) the Town has Town prior to or concurrently with the acceptance hereof, duly authorized all necessary action to be taken by it for (A) the approval execution and deliveryof,r and performance by the Town of the consummationwn Documents, and (B) the obligations on its part, contained in the To the Towby it of all of the transactions contemplated by Documents and the Official Statement; (v) all proceedings s pertinent to the validity • Bonds and all actions enforceability of the necessary to levy and t of rincipal and inter- collect the Excise Taxes securing the paymen p 12 est on the Bonds have been dulyand validly adopted or undertaken in 110 pp compliance with all applicable procedural requirements of the Corpora- tion and the Town and in compliance with the Constitution and laws of the State; p (vi) the Corporation Documents have been duly delivered by the Corporation, and constitute authorized, executed and Corporation enforceable valid and binding obligations of the p terms, legal, tion in accordance with their respective t , against the Corpora except to the extent limited by bankruptcy, insolvency, reorganiza- tion, , • similar laws and equitable principles of moratorium or other the enforcement of credi- tors ' application relating to or affecting rights; (vii) the Town Documents have been duly author- ized, executed and deliveredby the Town, and constitute legal, valid • the Town enforceable against the Town in and binding obligations of to the extent limited by bankruptcy, Y accordance with their respective terms, except insolvency, reorganization, moratorium or other similar laws and equitable principles les of general application relating to or affecting the enforcement of creditors' rights; i the distribution, use and execution, as (vii ) applicable, of the Preliminary Official Statement and the Official Statement hasduly Town and been authorized by the Corporation and the. ent as it relates to the Town and the Corporation, the Official Statem � of a material fact or omit to 111 does not contain any untrue statement or necessary to state a material fact required to be stated therein make the statements made therein, in light of the circumstances under which they were made, not misleading; ix all authorizations, approvals, licenses, • orders of any governmental authority, legisla- tivepermits, consents and agencyor commission having jurisdiction of the body, board, h are re uired for the due authorization of, which would matter whic q constitute a condition precedent to, or the absence of which would materially adversely affect the due performance by the Corporation of its the Corporation Documents and the Bonds or by obligations under p the Town of its obligations under the Town Documents have been obtained; x there is no litigation, action, suit, pro- ceeding, ( ) . investigation, at law or in equity, before or by inquiry or g pending or, to the court,a government agency, public board or body, Yg bnsigner, after due inquiry threatened against the best knowledge of the g , Corporation, affectingthe corporate existence of the Corporation or es the titles of its officers to their respective offices, or to the best knowledge of against the the signer, after due inquiry, threatened Town or affecting the titles of its officers to their respective offices, or affecting or seekingto prohibit, restrain or enjoin the the lev and collection of sale, issuance or delivery of the Bonds or Y 111 the Excise Taxes interest on securingthe payment of principal of and the Bonds pursuant to the Indentures or in any way contesting or 13 • enforceability of the Bonds, the Corporation affecting the validity or enfor y exclusion from gross Documents, the Town Documents, or contesting the income of interest on the Bonds for federal income tax purposes or 1111 State income tax purposes, or contesting in any way the completeness r Official Statement or the Official or accuracy of the Preliminary Statement or any supplement or amendment thereto, or contesting the powers of the Corporationor a-n uthority for the issuance of the �-a Cor oration Documents or Bonds or the execution and delivery of the p or contesting the power of the Town to execute and deliver theTown Docu- ments, nor, to the best knowledge of the signer, afterdue inquiry, is there any basis therefor, wherein an unfavorable decision, ruling or • adverselyaffect the validity or enforceabil- ityfinding would materially r the Town Documents; of the Bonds, the Corporation Documents, o (xi) the execution and delivery of the Corpora- tion Documents andp compliance by the Corporation with the provisions hereof and thereof, under the circumstances contemplated herein and therein, will not conflict with or constitute on the part of the Cor- poration a material breach of or a default under any agreement or or violate any exist- ing to which the Corporation is a party, instrument or consent decree to w administrative regulation, court order, la , which the Corporation is subject; and (xii)i the execution and delivery of the Town Documents and compliance by the Town with the provisions thereof, under the circumstances contemplated therein, will not conflict with or constitute on the part of the Town a material breach or a default reement or instrument to which the Town is a party, or under any ag g or law, administrative regulation, court order, 1110 violate any existing consent decree to which the Town is subject; (7) a certificate, dated the date of Closing, of appropriate representatives of the Corporation to the effect that (i) the representations and warranties of the Corporation contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and all the been complied and covenants have with and all the condi- tions satisfied which on its part were to be complied with or to be p ii e extent possible before, the Closing; (ii) no satisfied at, or to th • is pendingor, to the best knowledge of the litigation or proceeding court or administrative signer (s) after due inquiry, threatened in any contest the body nor is there a basis for litigation which would (a) or officials of the Corporation to hold and right of the members respective positions, (b) contest the due incorpora- tion,exercise their p of the Corporation, (c) contest organization and valid existencethe Bonds or the due authorization and execution of the validity, Corporation Documents or (d) attempt to limit, enjoin or otherwise • the Corporation from functioning and collecting restrict or prevent p the Corporation Documents, and other income; Rental Payments under p authorizing the execution, (iii) the resolutions of the Corporation delivery and/or performancethe Bonds and of the Official Statement, have been duly adopted by the Corporation, the Corporation Documents modified, amended or are in full force and effect and have not been11/1 14 ed and (iv) to the best knowledge of the signer (s) , after due repealed, inquiry, no event has occurred since the date of the Official State- ment which should be disclosed in the Official Statement for the pur- pose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein, in light of the circumstances under which made, not misleading in any respect as of the time of the Closing, and the information contained in the Official Statement is correct in all material respects and, as of the date of the Official Statement did not, and as of the date of the Closingdoes not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (8) a certificate, dated the date of the Closing, of appropriaterepresentatives resentatives of the Town to the effect that (i) the p representations and warranties of the Corporation contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and all the agreements and covenants have been complied with and all the conditions satisfied which on its part were to be complied with or to be satisfied at, or to the extent possible before, the Closing; (ii) no litigation or against proceedinga ainst it is pending or, to the best knowledge of the signer (s) after due inquiry, threatened in any court or administrative body nor is there a basis for litigation which would (a) contest the right of the officials of the Town to hold and exercise their respec- tivep ositions, (b) contest the due incorporation, organization and valid existence of the Town, (c) contest the validity, due authoriza- tion and execution of the Town Documents, or (d) attempt to limit, enjoin or otherwise restrict or prevent the Town from functioning and collecting revenues, including the collection of the Excise Taxes securing the payment of the principal of and interest on the Bonds; (iii) the resolutions of the Town authorizing the execution, delivery and/orp erformance of the Town Documents have been duly adopted by the Town, are in full force and effect and have not been modified, amended or repealed, and (iv) to the best knowledge of the signer(s) , after due inquiry, no event has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is to be used or which is necessary to disclose therein in order to make the statements and information therein, in light of the circumstances under which made, not misleading in any respect as of the time of the Closing, and the information contained in the Official Statement is correct in all material respects and, as of the date of the Official Statement did not, and as of the date of the Closing does not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; (9) a certificate, dated the date of the Closing, of appropriate ro riate representatives of the Town and the Corporation in form and substance satisfactory to Bond Counsel and Counsel to the Under- writer (a) setting forth the facts, estimates and circumstances in 15 existence on the date of the Closing, which establish that it is not expected that the proceeds of the Bonds will be used in a manner that1111 would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code") , and any applicable regulations (whether final, temporary or proposed), issued pursuant to the Code, and (b) certifying that to the best of the knowledge and belief of the Corporation and the Town there are no other facts, estimates or circumstances that would materially change the conclusions, representations and expectations contained in such certificate; (10) a certificate, dated the date of the Closing, of the Trustee and the Depository Trustee to the effect that (i) the Bonds have been duly authenticated by an authorized officer of the Trustee; (ii) the Fourth Supplemental Indenture and the Depository Trust Agreement have been duly executed and delivered by an authorized officer of the Trustee and the Depository Trustee, respectively; and (iii) the resolutions of the Trustee and the Depository Trustee authorizing the execution and delivery and/or performance of the Fourth Supplemental Indenture by the Trustee and the Depository Trust Agreement by the Depository Trustee, respectively, have been duly adopted by the Trustee and the Depository Trustee, respectively, are in full force and effect and have not been modified, amended or repealed; (11) the filing copy of the Report of Bond and Secu- rity Issuance Pursuant to A.R.S. § 35-501B of the Arizona Department of Revenue for the Bonds; 4110 (12) the filing copy of the Information Return Form 8038-G (IRS) for the Bonds; (13) evidence that Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, and Fitch Ratings have issued ratings of "AAA" and "AAA, " respectively, for the Bonds based on issuance of the Bond Insurance Policy and underlying, uninsured ratings of "A" and "A+, " (???] respectively, for the Bonds (collectively, the "Ratings") , and that the Ratings are then in effect; (14) a copy of the Bond Insurance Policy together with an opinion of counsel to the Bond Insurer in form and substance satisfactory to the Underwriter; (15) a certificate of Bond Insurer with respect to the accuracy of statements contained in the Official Statement regarding the Bond Insurance Policy and Bond Insurer and the due authorization execution issuance and delivery of the Bond Insurance Policy; (16) any other certificates and opinions required by the Indentures for the issuance thereunder of the Bonds; and 11/1 16 111 (17) such additional legal opinions, certificates, instruments and other documents as the Underwriter or Counsel to the Underwriter may reasonably request to evidence the troth and accuracy, as of the date hereof and as of the date of the Closing, of the Corpo- ration's representations and warranties contained herein and of the Town's representations and warranties in the Letter of Representation and of the statements and information contained in the Official State- ment and the due performance or satisfaction by the Corporation and the Town on or prior to the date of the Closing of all the respective agreements then to be performed and conditions then to be satisfied by the Corporation and the Town, respectively; All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Under- writer. If the Corporation shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason per- mitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the Corporation shall be under any further obligation hereunder, except that the respective 11 obligations of the Corporation and the Underwriter set forth in Sections 4 and 8 (c) hereof shall continue in full force and effect. 7. Termination. The Underwriter shall have the right to cancel its obligation to purchase the Bonds if, between the date of this Bond Purchase Agreement and the Closing, the market price or marketability of the Bonds shall be materially adversely affected, in the sole judgment of the Underwriter, by the occurrence of any of the following: (a) legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Depart- ment of the United States or the Internal Revenue Service or any mem- ber of the Congress or the Arizona Legislature or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed) , press release, statement or other form of notice by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to impose, directly or indirectly, federal income taxation or State income taxation upon interest received on obligations of theg eneral character of the Bonds or, with respect to State taxation, of the interest on the Bonds as described in the Official Statement, or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax 17 income uences or State conseqtax consequences of any of the transac- tions contemplated herein; d in or enacted (or resolution (b) legislation introduce injunction issued by the 110 Congress or an passed) by order, decree, or g or an order, ruling, regulation an court of competent jurisdictioflior other form of notice Y or proposed) , press re3�-eaae (final, temporary, of the Securities and Exchange Commis- issued or made by or on behalf jurisdiction of the sub- ject• anyother governmental agency having Commis- sion, or of the general character matter, to the effect that obligations arran arrangements, are not including any or all underlying g of the Bonds, other requirements of the 1933 Act, exempt from registration under or qualification under or p the Indentures are not exempt from the issuance, or that or that requirements of the Trust Indenture Act, r of the other character or sale of obligations of the general offering, Bo , arrangements, as contemplated hereby or nds including any or all underlying is or would be in violation of the federal}�y the Official Statement or otherwise, in effect; securities law as amended and t en securities commission or other or (c) any state blue skyshall have withheld registration, governmental agency or body as described herein, or exemp- tion or clearance of the offering of the Bonds issued a stop order or similar ruling relating thereto; (d) a general suspension of trading in securities on the rican Stock Exchange, the establish- New York Stock Exchange or the Ame the establishment of ment of minimum prices on either such exchange,g , upon trading material restriction (not in force as of the date hereof) p securities generally by any governmental authority or any national 11/1 in moratorium declared by federal, securities exchange, a general bankin State of New York, or State officials authorized to do so; or other national securi- ties (e) the New York Stock Exchange• impose, as to the or anygovernmental authority, shallp exchange any the general character of the . Bonds, Bonds or as to obligations of increase materially those or material restrictions not now . in force, credit by, or the force, with respect to the extension of now in underwriters; charge to the net capital requirements of, the federal or state Constitution or (f) any amendment to body, regulatory action by anyfederal or state court, legislative 1 adversely affecting the tax status bod or other authority material y Y� income securities (or interest of the Corporation, its property, • enforceability of the assessments or the eon or the validity or enfor Y Bonds; thereon) ,� of and interest on the levy of taxes to pay principal (g) any event occurring,ren or information becoming known which, in the judgment o f the Underwriter, makes untrue in any mate- rial respectinformation contained in the Official any statement or Statement, or ct has the effect that the Official Statementany contains afany l untrue statement of material fact or omits to state a materia required to be stated therein or necessary to make the statements 18 11/1 therein, in the light of the circumstances under which they were made, 1110 not misleading; (h) there shall have occurred since the date of this Bond Purchase Agreement anymaterially adverse change in the affairs or financial condition of the Corporation or the Town; (i) the United States shall have become engaged in hostil- ities which have resulted in a declaration of war or a national emer- gency or there shall have occurred any other outbreak or escalation of hostilities or a national or international calamity or crisis, financial or otherwise; (j ) any fact or event shall exist or have existed that, in the Underwritersjudgment, requires or has required an amendment of or supplement to the Official Statement; (k) there shall have occurred any downgrading, or any notice shall have been given of (A) any intended or potential or (B) down- grading anyreview or possible change that does not indicate a possible upgrade, in the rating accorded any of the Corporation's pg , obligations; (1) United States Treasury Certificate of Indebtedness, Notes or Bonds-State and Local Government Series or acceptable open market securities shall be unavailable for purchase and/or delivery in 110 the amounts, maturities and prices or yields required pursuant to the Depository Trust Agreement or (m) the purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any appli- cablegovernmental law, authority, board, agency or commission. 8 . Expenses. (a) The Underwriter shall be under no obligation to pay, and the Corporation shall pay, any expenses incident to the perform- ance nce of the Corporation' s obligations hereunder, including, but not limited to (i) the costs for initial delivery of the Bonds through the facilities of The Depository Trust Company, (ii) the fees and dis- bursements rsements of Bond Counsel, Counsel to the Underwriter and Counsel to the Corporation and the Town; (iii) the fees and disbursements of the p Trustee and anyother engineers, accountants, and other experts, consultants or advisers retained by the Corporation; (iv) reimburse- ment of certain out-of-pocket expenses of the Underwriter customarily by Corporation,the Cor oration, including advertisement in local media, and (v) the fees for bond ratings and credit enhancement fees or premiums. (b) The Underwriter shall pay (i) all advertising expenses placed in non-local media by the Underwriter in connection with the public offeringof the Bonds; and (ii) all other expenses incurred by 19 them in connection with the public offering of the Bonds, except the fees and disbursements of Counsel to the Underwriter. 1111 Purchase Agreement(c) If this Bond shall be terminated by on thepart of the ' ter because of any failure or refusal , - the Underwri • with the term or to fulfill any of the condi- tions Corporation to comply , _ . reason the Corpo- ration0 tions of this Bond Purchase Agreeme� , ' ons under this Bond shall be unable to perform its obligati Pur- chase Agreement, the Corporation will reimburse the Underwriter for all out-of-pocket reasonably incurred by the Underwriter in connection with this Bond Purchase Agreement or the offering contemplated here- under. notice or other communication to be given to 9. Notices. Any even b the Corporation under this Bond Purchase Agreement may be g y delivering the same in writing to the Town of Oro Valley Municipal ' North La Canada Drive, Oro Valley, Arizona Property Corporation, 11000 to begiven to the Under- and anynotice or other communication liverin 85737, Bond Purchase Agreement may be given by de g writer under this LLC, Suite 280, 2555 East the same in writing to Stone & Youngberg CamelbackAttention: Mark Reader, Road, Phoenix, Arizona 85016, Managing Director. 10. Parties in Interest. This Bond Purchase Agreement as here- the entire agreement between us and tofore specified shall constituteration the Town and the is made solely for the benefit of the Corpo and (including Underwriter ( g successors or assigns of the Underwriter) no other person shall acquire or have any right hereunder or by virtue hereof. This Bond Purchase Agreement may not be assigned by the 411/g Corporation' s representations, warranties and Corporation. All of the Agreement shall remain agreements contained in this Bond Purchaseg investi- gations of (i) any operative and in full force and effect, regardlessr• (ii) delivery p made byor on behalf of any of the Underwrite of and payment for the Bondspursuant ursuant to this Bond Purchase Agreement; and (iii) any termination of this Bond Purchase Agreement. 11. Effectiveness. This Bond Purchase Agreement shall become effective upon the acceptance hereof by the Corporation and shall be valid and enforceable at the time of such acceptance. As required by - Revised Statutes, as the provisions of Section 38 511, Arizona subdivi- sions notice is hereby given that the State, its political Town) or anydepartment or agency of either may, (including the anycontract, without within three years after its execution, cancel , 1 obligation, made by the State, its politica penalty or furthergany person subdi- visions, the departments or agencies of either if or any of p negotiating, securing, drafting significantly involved in initiating, g its political g tin the contract on behalf of the State, . or creating subdi- visions, the departments or agencies of either is, atany or any of p time while the contract or anyextension of the contract is in effect, an employee or agent of anyother party to the contract in any capac- ity arty of the contract with respect to or a consultant to any p ancellation shall be effec- tive when written notice subject matter of the contract. The c e from the Governor or the chief executive 20 officer or governing body of the political subdivision is received by 111 all other parties to the contract unless the notice specifies a later time. The State, its political subdivisions or any department or agency of either 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 State, its politi- cal subdivisions or any department or agency of either from any other party to the contract arising as the result of the contract. This section is not intended to expand or enlarge the rights of the Town hereunder except as required by such Section. Each of the parties hereto hereby certifies that it is not presently aware of any violation of such Section which would adversely affect the enforce- ability of this Agreement and covenants that it shall take no action which would result in a violation of such Section. 12 . Choice of Law. This Bond Purchase Agreement shall be gov- erned by and construed in accordance with the law of the State. 13. Severability. If any provision of this Bond Purchase Agreement shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it con- flicts with any provisions of any Constitution, statute, rule of pub- lic policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any 110 other provision or provisions of this Bond Purchase Agreement invalid, inoperative or unenforceable to any extent whatever. 14 . Business Day. For purposes of this Bond Purchase Agree- ment, "business day" means any day on which the New York Stock Exchange is open for trading. 15 . Section Headings. Section headings have been inserted in this Bond Purchase Agreement as a matter of convenience of reference only, and it is agreed that such section headings are not a part of this Bond Purchase Agreement and will not be used in the interpreta- tion of any provisions of this Bond Purchase Agreement. 16. Counterparts. This Bond Purchase Agreement may be executed in several counterparts each of which shall be regarded as an original (with the same effect as if the signatures thereto and hereto were upon the same document) and all of which shall constitute one and the same document. 21 If you agree with the foregoing, please sign the enclosed s Bond Purchase Agreement and return it to the counterpart of this Underwriters . This Bond Purchase Agreement shall become a binding you 110 and the Underwriters when at least the counter- agreement between part of this letter shall have been signed by or on behalf of each of the parties hereto and the Letter of Representation shall have been signed on behalf of the Town. Very truly yours, STONE & YOUNGBERG LLC By Authorized Officer Accepted and agreed to on the date indicated at the top of the first page hereof TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION 410 By Name. Title. 327764362.2-3/7/2007 22 SCHEDULE $ , 000 TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION EXCISE TAX REVENUE REFUNDING BONDS, SERIES 2007 Bonds dated as of: 1, 2007 MATURITY SCHEDULE Year Interest Price (July 1) Amount Rate or Yield 2007 $ , 000 0 2008 , 000 2009 , 000 2010 , 000 2011 1000 2012 , 000 2013 , 000 2014 , 000 2015 , 000 2016 , 000 2017 , 000 2018 1000 2019 , 000 (Plus Interest Accrued from 1, 2007) Redemption Bonds maturing before or on July 1, 20 , are not subject to redemption prior to their stated maturity date. Bonds maturing on or after July 1, 20 may be prior rior to maturity, in whole or in part, on any Interest Payment Date, in the order of maturities desig- nated by the Town on or after July 1, 20 , at the redemption price accrued interest on such amount thereof, plus equal to the principal premium. amount to the date fixed for redemption, but without EXHIBIT $ , 000 1110 TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION EXCISE TAX RE t ' ' ` SERIES 2007 Letter of Representation of the Town of Oro Valley, Arizona 2007 Town of Oro Valley Municipal Property Corporation Oro Valley, Arizona Stone & Youngberg LLC Phoenix, Arizona Property Corporation (the The Town of Oro Valley Municipalizona (the "Town") pro- poseand the "Corporation") Town of Oro Valley, Ar to Lease-Purchase Agreement, to to enter into a Fourth Amendment „ th Amendment") , which as of 1, 2 007 (the Four be dated dated as of April 1, 1996 (the ds the Lease-Purchase Agreement, the First Amendment to amen as amended by "1996 Lease-Purchase Agreement") , 1999 (the "First Amend- Agreement, dated as of June 1, ent dated=: as- Lease-Purchaseg Amendment to the Lease-Purchase Agreement, nt to ment") , the Second Amendment") , and the Third Amendment of April 1, 2001 (the "Second Am December 1, 2003 (the "Third p dated as of D the Lease-Purchase Agreement, Agreement as amended by the Amendment" and the 1996 Lease-Purchase g d Amendment and the the Third First Amendment, the Second Amendment, pursuant to a Bnd the "Lease-Purchase Agreement") . o purchase Fourth Amendment, 2007 (the "Bond dated Purchase Agreement, LLC (the "Underwriter") and the Corporation, the Corporation p Agreement") , between Stone & Youngberg , 000 aggregate proposes to issue $ p Refunding Bonds, Series amount principalof its Excise Tax Revenue be issued and secured pursuant to (the "Bonds") . The Bonds willas 2007 April 1, 1996 (the "Indenture") ,a Trust Indenture, dated as of p dated as of First Supplement to Trust Indenture, supplemented by a June 1, 1999 (the "First Supplemental Indenture") , a Second Supplement to it 1, 2001 (the "Second Supple- Trust Indenture, dated as of AprIndenture, dated as of ure" a Third a Fourth mental Indenture") , Supplement to Trust"Third Supplemental Indenture") , and December 1, 2003 (the 1, 2007 Supplement to Trust Indenture, to be dated as of110 Page 1 of Exhibit 111 (the "Fourth Supplemental Indenture" and the Indenture as supplemented by the First Supplemental Indenture, the Second Supplemental Inden- ture the Third Supplemental Indenture and the Fourth Supplemental Indenture the "Indentures") , between the Corporation and Wells Fargo Bank, N.A. , as trustee (with its successors in such capacity, the "Trustee") , pursuant to which certain of the Corporation's rights under the Lease-Purchase Ag -- -• - •e assigned to the Trustee pursuant to the Indentures to pay, when due, the principal of and interest on the Bonds . The Bonds and the security therefor are more fully described in the Official Statement of the Corporation, dated the date of this Letter of Representation (the "Official Statement") . The Town will enter into and deliver a written undertaking, to be dated the date of initial delivery of the Bonds (the "Continuing Disclosure Undertaking") , to provide, or cause to be provided, ongoing disclosure for the benefit of the owners of the Bonds as described in the Continuing Disclosure Undertaking for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Disclosure Rule") . The Corporation, the Town and Wells Fargo Bank Arizona, N.A. will execute and deliver a Depository Trust Agreement, to be dated as of 1, 2007 (the "Depository Trust Agreement") , to provide for the use of a portion of the proceeds of the sale of the Bonds . (This Letter of Representation, the Lease-Purchase Agreement, the Continuing Disclosure Undertaking, the Depository Trust Agreement and any and all other agreements and documents as may be required to be executed, delivered and/or received in order to carry out, give effect to, and consummate the transactions contemplated herein and in the I/0 Official Statement are referred to as the "Town Documents. ") All capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such words and terms in the Bond Purchase Agreement. In order to induce the Corporation and Underwriter to enter into the Bond Purchase Agreement and to make the offering and sale of the Bonds therein contemplated, the Town hereby represents, warrants and agrees with the Corporation and Underwriter as follows: 1 . The Town is a political subdivision of the State of Arizona (the "State") , and is validly existing as a municipal corporation duly created, organized and existing under the laws of the State and has full legal right, power and authority, and at the date of the Closing will have full legal right, power and authority (i) to enter into, execute and deliver the Town Documents, and (ii) to carry out and consummate the transactions contemplated by the Town Documents, and the Official Statement, and the Town has complied, and will at the Closing be in compliance in all respects, with the terms of the Town Documents as they pertain to such transactions. 2 . By all necessary official action of the Town prior to or concurrently with the acceptance hereof, the Town has duly authorized all necessary action to be taken by it for (i) the approval, execution and delivery of, and the performance by the Town of the obligations on 10 its part, contained in the Town Documents and (ii) the consummation by Page 2 of Exhibit it of all other transactions contemplated by the Official Statement and the Town Documents . 3 . The Town Documents constitute legal, valid and binding the 1111 Town, enforceable in accordance with their respec- tiveobligations of venc reorganization, mora- torium terms, subject to bankruptcy, insolvency, g similar laws and principles of equity relating to or and other affecting the enforcement of creditors ' rights. 4 . The Town is not in breach of or default in any material applicable constitutional provision, law or adminis- trativerespect under any pp the State or the United States or any applicable regulation of indenture, or decree or anyloan agreement, bond, note, reso- lution, agreement or other instrument to which the Town is a party or to which the Town is or anyof its property or assets are otherwise subject, and no event has occurred and is continuing which constitutes or with the p passage of time or the giving of notice, or both, would constitute a default or event of default by the Town under any of the foregoing; and the execution and delivery of the Town Documents and compliance with the provisions on the Town's part contained therein, will not conflict ict with or constitute a breach of or default under any constitutional provision, administrative regulation, judgment, decree, indenture bond, note, resolution, agreement or other loan agreement, instrument to which the Town is a party or to which the Town is or to which any of its property or assets are otherwise subject nor will any p y such execution, delivery, adoption or compliance result in the crea- tion or impositionan of lien, charge or other security interest or Y encumbrance of anynature whatsoever upon any of the property or assets of the Town securingthe Bonds or under the terms of any such 110 law, regulation or instrument. 5 . All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization of, which would constitute a condi- tion precedent to, or the absence of which would materially adversely affect the due performance bythe Town of its obligations under the Town Documents have been duly obtained. g 6. There is no legislation, action, suit, proceeding, inquiry ' on at law or in equity, before or by any court, or investigation, vernment a ency, public board or body, pending or, to the best go g knowledge of the Town after due inquiry, threatened against the Town, affecting the existence of the Town or the titles of its officersto e offices or affecting or seeking to prohibit, their respectiv ' of taxes securing the payment of restrain or enjoin the collection pp the Indentures or principal of and interest on the Bonds pursuant to in any way contesting testin or affecting the validity or enforceability of the Town Documents, or contesting in any way the completeness or Y accuracy of the supplement Official Statement or the Official State- ment or any pp lement or amendment thereto, or contesting the powers n authorityfor the execution and delivery of the of the Town or any Town Documents, nor, to the best knowledge of the Town, is there any 1111 Page 3 of Exhibit basis therefor, wherein an unfavorable decision, ruling or finding 111 would materially adversely affect the validity or enforceability of the Town Documents. 7 . As of the date thereof, the Preliminary Official Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 8 . At the time of the Underwriter's acceptance hereof and (unless the Official Statement is amended or supplemented pursuant to paragraph (d) of Section 3 of the Bond Purchase Agreement) at all times subsequent thereto during the period up to and including the date of the Closing, the Official Statement does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 9. If the Official Statement is supplemented or amended pursu- ant to paragraph (c) of Section 3 of the Bond Purchase Agreement, at the time of each supplement or amendment thereto and (unless subse- quently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto during the period up to and including the date of the Closing the Official Statement as so supplemented or I/0 amended will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circum- stances under which made, not misleading. 10. The financial statements of, and other financial informa- tion regarding the Town, in the Official Statement fairly present the financial position and results of the Town as of the dates and for the periods therein set forth. Prior to the Closing, there will be no- adverse change of a material nature in such financial position, results of operations or condition, financial or otherwise, of the Town, and the Town is not a party to any litigation or other proceed- ing pending or threatened which, if decided adversely to the Town, would have a materially adverse effect on the financial condition of the Town. 11 . Any certificate, signed by any official of the Town author- ized to do so in connection with the transactions contemplated by this Letter of Representation, shall be deemed a representation and war- ranty by the Town to the Underwriter as to the statements made therein. 12 . The Town hereby authorizes the use of the Official State- ment, including all amendments and supplements thereto, by the Under- writer in connection with the public offering and sale of the Bonds, ratifies and consents to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection with the Page 4 of Exhibit agrees public offering and sale of the Bonds and g Tees to cause reasonableto the Under- the Official Statement to be delivered quantities of (7 ) business days of the date ' without charge, within seven Under- writer, o of the Official Statement will 11/1 hereof, provided that at least one copy be manually authorized officer. executed on behalf of the Town by an ereof, the Town hereby diems the Pre- liminary13 . By its execution h � and within the Official Statement final for the purposes for information permitted to be meaning of the Disclosure Rule, except provided, however, that the omitted therefrom by the Disclosure Rule, ovidedhe finality of the foregoing does not include a representation as to contained in such form of the Preliminary statements and information Official Statement concerning the Corporation. eand agreements contained herein The representations, warrantiesg ase Agreement and the Closingg shall survive Date under the Bond Purch • or on behalf of the Underwriter or any any investigation made by Underwriter of any matters person who controls (as aforesaid) the contemplated in or related to the transactions hereby and byatement. the Bond Purchase Agreement and the Official St shall be binding upon and inure This Letter of Representationthe Underwriter, and the lel to the benefit of the Corporation, controlling the Cor- so y cont g Town and, to the extent set forth herein, persons Town, and their respective personal oration, the Underwriter, or the other person or firm Cor- poration, and no representatives, successors, assigns, p under or by virtue of this Letter of shall acquire or have any right obis ation, covenant or Representation. No recourse under or upon any g be had ' n this Letter of Representation shall 1111 agreement contained 1 a ainst any officer of the Town as an individual. g ' of Section 38-511, Arizona Revised As required by the provisions that the State, its Statutes, as amended, notice is hereby givendepartment or Stat , or divisions (including the Town) any p political sub cancel • within three years after its execution, agency of either may,anyfurther obligation, made by the contract, without penalty or State, its political subdivisions, or any of the departments or . significantly involved in initiating, agencies of either if any person g negotiating, securing, drafting or creating the contract on behalf of the State, its political subdivisions, or any of the departments or of eitagenciesher ther is, at any time while the contract or any extension an employee or agent of any other party of the contract is in effect, capacity or a consultant to any other party of to the contract in any p y matter of the contract. The the contract with respect to the subjectfrom the Governor shall be effective when written notice cancellation or governing or the chief executive officer body of the political to the contract unless is received by all other parties subdivisionThe State, its political subdivi- Bions or anymay the notice specifies a later time. recoup any fee or department or agency of either commission paid or due to any person significantly involved in ' drafting or creating the contract initiating, negotiating, securing,litical subdivisions or any department on behalf of the State, its p° or agency to the contract arising as of either from any other party g Y Page 5 of Exhibit the result of the contract. This section is not intended to expand or except enlarge the rights of the Town hereunderas required by such parties hereto hereby certifies that it is not g of the Section. Each ' of such Section which would adversely presently aware of any violation and covenants that it affect the enforceability of this Agreement h would result in a violation of suc shall take no action in ha Section. Very truly yours, TOWN OF ORO VALLEY, ARIZONA By Mayor ATTEST: Town Clerk 111 Accepted by STONE & YOUNGBERG LLC By Authorized Officer 11 Page 6 of Exhibit RESOLUTION NO. MPC 07-01 RESOLUTION APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION • AND DELIVERY OF THE FOURTH AMENDMENT TO THE LEASE-PURCHASE AGREEMENT AMONG THIS CORPORATION, THE TOWN OF ORO VALLEY AND WELLS—FARGO BANK, N.A.; AT—PROVING THE FORM AND AUTHORIZING THE EXECUTION OF THE FOURTH SUPPLEMENT TO THE INDENTURE BETWEEN THIS CORPORATION AND WELLS FARGO BANK, N.A.; AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $22,000,000 THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION EXCISE TAX REVENUE REFUNDING BONDS, SERIES 2007 BY THIS CORPORATION; APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF A PURCHASE CONTRACT WITH RESPECT TO THE SERIES 2007 BONDS; SETTING CONDITIONS AND PARAMETERS WITH RESPECT TO SUCH SALE; AUTHORIZING THE PREPARATION AND APPROVAL OF PRELIMINARY AND FINAL OFFICIAL STATEMENTS PERTAINING TO THE 07 AUTHORIZING THE TOWN MANAGER OF THE TOWN OF SERIES 20 BONDS; ORO VALLEY TO DEEM SUCH PRELIMINARY AND FINAL OFFICIAL STATEMENTS "FINAL"; AUTHORIZING THE APPOINTMENT OF A DEPOSITORY APPROVING THE FORM AND AUTHORIZING THE EXECUTION OF A TRUSTEE; DEPOSITORY TRUST AGREEMENT; AUTHORIZING MULTIPLE SERIES OF BONDS; AU THORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION; AND DELEGATING CERTAIN DUTIES. WHEREAS, as of April 1, 1996, the Town of Oro Valley (the "Town") and the 411) Town of Oro MunicipalProperty Valley Pro erty Corporation (the "Corporation") entered into a Lease- Purchase Agreement recorded in Docket 10375 at Page 1317, Official Records of Pima County, Pima County Recorder's Office (the "Lease-Purchase Agreement"); and WHEREAS, as of June 1, 1999, the Town and the Corporation entered into a First g Amendment to Lease-Purchase Agreement recorded in Docket 11087 at Page 866, Official Records of Pima CountyRecorder's Office (the "First Amendment"); and WHEREAS, as of November 1, 2000, the Town entered into a Purchase Agreement (the "Series 2000 Purchase Agreement") by and between the Town, as Buyer, and Wells Fargo Bank, N.A., as Trustee (the "Series 2000 Trustee"); and WHEREAS, as of April 1, 2001, the Town and the Corporation entered into a Second Amendment to Lease-Purchase Agreement recorded in Docket 11546 at Page 2861 Official Records of Pima CountyRecorder's Office (the "Second Amendment"); and WHEREAS, as of December 1, 2003, the Town and the Corporation entered into a Third Amendment to Lease-Purchase Agreement (the "Third Amendment"); and p WHEREAS, as of September 1, 2005, the Town entered into a Purchase Agreement (the "Series 2005 Purchase Agreement") by and between the Town, as Buyer, and The p Bank of10 New York Trust Company,N.A., as Trustee (the "Series 2005 Trustee"); and KCH:joy 713210.03 03/06/07 WHEREAS, the Town, the Corporation and Norwest Bank Arizona, N.A. (now 110 as trustee (the "Trustee" , entered into a Trust Indenture dated as of Wells Far o Bank, N.A.), ) • g "1996 �► • of $28,400,000 Town of Oro April1 1996 the Indenture ); providing for the issuance Valley Municipal PropertyCorporation Water System Acquisition Bonds, Series 1996 (the "Series o rp Y 1996 Bonds"); and the Town, the Corporation and the Trustee. entered into a First WHEREAS, � Supplement to Indenture dated as of June 1, 1999 (the "First Supplement") providing for the issuance of$4,930,000 000 Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 1999 (the "Series 1999 Bonds"); and WHEREAS,REAS the Town entered into a Trust Agreement dated as of November 1, "Series 2000Trust Agreement") by 2000 (the " and between the Town, as Buyer, and the Series greement 2000 Trustee, providing for the issuance of $2,580,000 Excise Tax Revenue Obligations, Series 2000 (the "Series 2000 Obligations"); and the Town, the Corporation and the Trustee entered into a Second WHEREAS, � dated as of April 1, 2001 (the "Second Supplement") providing for the Supplement to Indenturep issuance of$9,010,000 Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 2001 (the "Series 2001 Bonds"); and WHEREAS,, the Town, Corporation Co oration and the Trustee entered into a Third Supplement to Indenture dated �►as of December 1, 2003 (the Third Supplement") providing for the issuance11 Town of Oro ValleyMunicipal Property Corporation Excise Tax of $15,750,000 Revenue RefundingBonds, Series 2003 (the "Series 2003 Bonds"); and WHEREAS, the Town entered into a Trust Agreement dated as of September 1, Agreement") byand between the Town, as Buyer, and The Bank of 2005 (the "Series 2005 Trustg ) . N.A. as Trustee (the "Series 2005 Trustee"), providing for the New York Trust Company,issuance of $6,215,000 Excise Tax Revenue Obligations, Series 2005 (the "Series 2005 Obligations"); and the Town and the Corporation now wish to issue a series of The WHEREAS, � Town of Oro Valley Municipal Property Corporation al Pro ert Co oration Excise Tax Revenue Refunding Bonds, "Series2007 Bonds") as "Additional Obligations" as defined in the 1996 Series 2007 (the proceeds thereof to (1) refund certain outstanding obligations of the Indenture and to use the Corporation and the Town (the "ObligationsBeingRefunded") and (2) pay the costs of issuance of the Series 2007 Bonds; and WHEREAS, the Series 2007 Bonds will be issued through a fourth supplement to the 1996 Indenture to be dated as of the dated date of the Series 2007 Bonds as provided herein "Fourth 1996 Indenture, as supplemented by the First Supplement, the (the Supplement ) Second Supplement, the Third Supplement and the Fourth Supplement, is referred to herein as the "Trust Indenture"); and toprovide for payment of the Series 2007 Bonds, the Corporation WHEREAS, p Y "Fourth the Town will enter into the fourth amendment to the Lease-Purchase Agreement (the Amendment") to be dated as of the dated date of the Series 2007 Bonds as provided herein (the KCH:joy 713210.03 03/06/07 -2- Lease-Purchase Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment, is referred to herein as the "Lease"); and • WHEREAS, the Corporation wishes to aid the Town by refunding the Obligations Being Refunded; and WHEREAS, this Corporation deems it necessary to refund the Obligations Being Refunded through the Fourth Amendment and the Fourth Supplement and to issue and sell not to exceed $22,000,000 of the Series 2007 Bonds and to increase the Rental Payments (as defined in pursuant Trust Indenture) to be made bythe Town to the terms of the Lease to cover the increased debt service caused bythe issuance of the Series 2007 Bonds; and WHEREAS, the Reserve Fund (as such term and all other initially capitalized hereinafter defined or defined in the Indenture) was funded with respect to terms used herein are he deposit Series 1996 Bonds bythe de osit of cash in the aggregate amount of$1,970,000; and defeasance of all of the Series 1996 Bonds, that portion of the WHEREAS, upon Series 1996 Bonds maybe released and the amount therein used to Reserve Fund funded for the refund ap ortion of the Obligations Being Refunded; and WHEREAS, there have beenplaced on file with the Secretary of the Corporation. the at which this 2007 Corporation Resolution was adopted (i) and presented to the meeting urth Su lement• proposed form of the Fourth Amendment; (ii) the proposed form of the Fo pp Purchase A reement (the "Series 2007 Purchase Agreement"), (iii) the proposed form of the Bondg of a "Ori inal Series 2007 Purchaser"); (iv) the proposed formfrom Stone & Youngberg LLC (the g "Series2007 • to be dated the dated date of the Series 2007 Bonds (the • Depository Trust Agreement depository trustee (the • and amongWells Fargo Bank, N.A., as dep ry Depository Trust Agreement") by "Series 2007 Depository Trustee"), the Town and the Corporation; and (v) a draft of a preliminary " Official Statement") relating to the Series 2007 Bonds; and official statement Preliminary WHEREAS, the Series 2007 Bonds will be sold through negotiation to the Original Series 2007 Purchaser, pursuant to the Series 2007 Purchase Agreement and in accordance with the conditions and parameters set forth herein; and WHEREAS, if it is determined to be in the best interest of the Town and the • authorized herein maybe issued in more than one series, with Corporation, the bonds ies desi nations, in the aggregate not to exceed the maximum amount permitted distinguishing ser g hereby; and WHEREAS, to refund the Obligations Being Refunded, the Corporation hereby adopts this s 2007 Corporation Resolutionapproves and a roves and authorizes the execution of the Fourth Amendment, the Fourth Supplement, the Series 2007 Depository Trust Agreement and the Series 2007 Purchase Agreement and the issuance and sale of the Series 2007 Bonds; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION, THAT: • KCH:joy 713210.03 03/06/07 -3- Section 1. Definitions. "First Amendment" means the First Amendment to the Lease-Purchase Agreement dated as of June 1, 1999. "First S �-p-u -l�--r�,eSupplement nt" means the First Su to Trust Indenture dated as of June 1, 1999. "Fourth Amendment" means the Fourth Amendment to the Lease-Purchase Agreement, dated as of the dated date of the Series 2007 Bonds. "Fourth Supplement" means the Fourth Supplement to Trust Indenture, dated as of the dated date of the Series 2007 Bonds. "Indenture" means the Trust Indenture, as supplemented by the First Supplement, the Second Supplement, the Third Supplement and the Fourth Supplement and all later supplements. " means the Lease-Purchase Agreement,reement, as amended by the First g Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment and all later amendments. "Obligations Being Refunded" means the Series 1996 Bonds Being Refunded, the Series 1999 Bonds Being Refunded, the Series 2000 Obligations Being Refunded, the Series 2001 Bonds Being Refunded, the Series 2003 Bonds Being Refunded, and the Series 2005 Obligations Being Refunded. "Original Series 2007 Purchaser" means Stone & Youngberg LLC, the original purchaser of the Series 2007 Bonds. "Rental Payments" means the payments to be made by the Town under the Lease. "Second Amendment" means the Second Amendment to the Lease-Purchase Agreement, dated as of April 1, 2001. "Second Supplement" means the Second Supplement to Trust Indenture, dated as of April 1, 2001. "Series 1996 Bonds" means The Town of Oro Valley Municipal Property Corporation Municipal Water System Acquisition Bonds, Series 1996. "Series 1996 Bonds Being Refunded" means that portion of the Series 1996 Bonds being refunded with the proceeds of the Series 2007 Bonds. "Series 1999 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 1999. 111 "Series 1999 Bonds Being Refunded" means that portion of the Series 1999 Bonds being refunded with the proceeds of the Series 2007 Bonds. KCH:joy 713210.03 03/06/07 -4- Series 2000 Obligations" means the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2000. • "Series 2000 Obligations Being Refunded" means that portion of the Series 2000 Obligations beingrefunded with the proceeds of the Series 2007 Bonds. that Trust Agreement 2000 Trust Agreement" means dated as of between Wells Fargo Bank, N.A., as Trustee, and the Town of Oro November 1, 2000, by and Valley, Arizona, as Buyer. "Series 2000 Trustee" means Wells Fargo Bank, N.A., acting as Trustee under the Series 2000 Trust Agreement. "Series 2001 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Bonds, Series 2001. "Series 2001 Bonds BeingRefunded" means that portion of the Series 2001 Bonds beingrefunded with the proceeds of the Series 2007 Bonds. "Series 2003 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2003. "Series 2003 Bonds Being Refunded" means that portion of the Series 2003 Bonds beingrefunded with the proceeds of the Series 2007 Bonds. "Series 2005Obligations"Obli ations" means the Town of Oro Valley, Arizona, Excise Tax Revenue Obligations, Series 2005. "Series 2005Obligations Obli ations Being Refunded" means that portion of the Series 2005 Obligations beingrefunded with the proceeds of the Series 2007 Bonds. Agreement dated as of means that Trust "Series 2005Trust Agreement" September 1, 2005, by and between The Bank of New York Trust Company, N.A., as Trustee, and the Town of Oro Valley, Arizona, as Buyer. "Series 2005 Trustee" means The Bank of New York Trust Company, N.A., acting as Trustee under the Series 2005 Trust Agreement. "Series 2007 Bonds" means The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007. p "Series 2007 Depository Trust Agreement" means the Depository Trust Agreement dated as of the dated date of the Series 2007 Bonds by and among the Depository Trustee, the Town and the Corporation. "Series 2007 Depository Trustee" means Wells Fargo Bank, N.A., or any successor thereto, depository as de osito trustee under the Series 2007 Depository Trust Agreement. • KCH:'Joy 713210.03 03/06/07 -5- Series 2007 Purchase Agreement" means the Purchase Agreement pertaining to 10 ' ' Series 2007 Bonds amongthe Original Series 20073 Purchaser, the the initial purchase of the Corporation and the Town. "Series 2007 Continuing Disclosure Agreement" means the Continuing Disclosure Undertaking ofsubstantially the Town in the form attached to the Preliminary Official Statementertainin to the Series 2007 Bonds. p g "Series 2007 Rental Payments" means the additional Rental Payments to be made by the Town under the Fourth Amendment which are assigned by the Corporation to the Trustee by the Fourth Supplement. "Third Amendment" means the Third Amendment to the Lease-Purchase Agreement, dated as of the dated date of the Series 2003 Bonds. "ThirdSupplement" the Third Supplement to Trust Indenture, dated as of means pp the dated date of the Series 2003 Bonds. Section 2. Findings and Determinations. � A. On behalf of this Corporation, this Board finds and determines as follows: 1. The Series 2007 Bonds will be issued as "Additional Obligations" for purposes of the Lease and the Indenture. Such1111 Additional Obligations are hereby authorized to be issued to refund 2. g rp certain obligations of the Corporation and the Town which financed facilities suitable for use by the Town or its agencies or instrumentalities. Obligations is hereby determined and Additional 3. The issuance of such declared to be necessary purpose for the u ose of refunding the Obligations Being Refunded. 4. Corporationcompliance This is in with all covenants and undertakings set forth in the Lease and in the Indenture. S. The proceeds of the sale of the Series 2007 Bonds will be applied solely to bonds or other obligations which had been issued to finance the cost of refinance or refund g . ' ' constructing, reconstructingor improving domestic water systems, buildings, acquiring, constru g, real andpersonal properties suitable for use by and leasing to the Town or its equipment and other p p instrumentalities, and to paythe costs of issuance of the Series 2007 Bonds and the agencies or issuance thereof is herebydetermined and declared by this Corporation to be necessary for that purpose. 6. The Series 2007 Bonds, as Additional Obligations (as defined in the wall and ratablysecured bythe Lease without preference as to priority of Indenture), shall be equally any of the Series 2007 Bonds over the Series 1999 Bonds, the Series 2001 Bonds, the Series 2003 10 Bonds and any other bonds or other obligations, except as expressly provided in the Indenture. KCH:joy 713210.03 03/06/07 -6- 7. The conditions of Section 3.03, 3.05 and 7.05 of the Lease are, as of the date hereof, and will be, at the date of issuance of the Series 2007 Bonds, fully satisfied. B. Further, on behalf of this Corporation, this Board finds and determines that 411 the refunding ofObligationsBeing the Refunded pursuant to the terms of the Lease, the issuance of the Series 2007pursuant Bonds to the Indenture, the entry into the Fourth Amendment, the Fourth Supplement, Depository Series 2007 De ository Trust Agreement and the Series 2007—Purchase Agreement are all in furtherance of the Corporation and the Town's purposes, in the publicinterest and will enhance the standard of living within the Town. Section 3. Authorization of the Series 2007 Bonds. This Board hereby authorizes the sale, issuance and deliveryof the Series 2007 Bonds by the Corporation. The Series 2007 Bonds shall be designated "The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue RefundingBonds, Series 2007" and shall be issued in a principal amount of not to exceed $22,000,000.000. The Series 2007 Bonds shall be in the denomination of$5,000 or any integral multiples thereof; all Series 2007 Bonds shall be dated April 1, 2007, or such later date as set forth in the Seriesg is 2007 Purchase Agreement, and shall bear interest from such date payable year,January 1 and Julyeach 1 of commencing January 1, 2008 or such later date as the President of this Corporation, with the concurrence of the Mayor of the Town, may approve. The o yield on the Series 2007 Bonds shall not exceed 5.5% per annum, and the Series 2007 Bonds shall y (30)mature on July 1 in not to exceed thirtears from the date of the Series 2007 Bonds. This Y present hereby requires that the value of the debt service savings, net of all costs associated with the Bonds shall be not less than 2.5% of the principal amount of the Obligations Being Refunded. provisions forms, terms and of the Series 2007 Bonds and the provisions for the signatures, authentication, payment,a ment, reg istration, transfer, exchange, redemption and number shall be as set forth in the Indenture and as such, are hereby approved. If the terms and conditions of the Series 2007 Purchase Agreement meet the terms and conditions for the Bonds onds set forth herein, then the sale of the Series 2007 Bonds to the Original Series 2007Purchaser pursuant to the provisions of the Series 2007 Purchase Agreement is hereby authorized. The Series 2007 Bonds shall be delivered to or upon the order of the Original Series 2007uponreceipt Purchaser i t of payment therefor. The officers, employees and are herebyvested with all power and authority to issue, sell and deliver the attorneys of the Town Series 2007 Bonds in accordance herewith. Section 4. Authorization of Documents. provisions form, terms and of the Fourth Amendment, the Series 2007 Purchase Agreement, the Fourth Supplement and the Series 2007 Depository Trust Agreement are of such documents (including the exhibits thereto) presented at the substantially in the form meeting of this Board at which this Resolution was adopted or on file with the Town are hereby approved, with such insertions, deletions and changes as shall be approved by the Mayor or the • Town, with the concurrence of the President. The President, with the Finance Director of the concurrence of the Mayor of the Town, is specifically authorized to insert the final terms and conditions of the Series 2007 Bonds in anyof the foregoing documents, so long as such term and ' ' the parameters of this 2007 Corporation Resolution. The President, with the conditions are within KCH:joy 713210.03 03/06/07 -7- concurrence of the Mayor of the Town, is hereby authorized and directed to execute and deliver those documents which are to be executed byor for this Corporation and such other documents and instruments and make such certifications and declarations as are necessary to complete the transaction and the execution of such documents shall be conclusive evidence of such approval. � efnndin. of 0�lioations Beim Refunded. The refunding of the • herebyauthorized. The Finance Director of the Town shall Obligations Being Refunded is determine and identify the principal amounts and maturity dates of the Series 1996 Bonds, the Series 1999 Bonds, the Series 2000Obligations,Obligations the Series 2001 Bonds, the Series 2003 Bonds and the Series 2005 Obligations which will constitute the Obligations Being Refunded, and the dates on which they shall be redeemed in advance of maturity. Proceeds of the Series 2007 Bonds will be deposited with the Series 2007 Depository Trustee pursuant to the Series 2007 Depository in U.S. Government securities, the maturing principal and interest Trust Agreement and investedand a ment of the debt service on the Obligations Being Refunded y . Obligations BeingRefunded on the dates set therefor. The Series 2007 the redemption of the Depository Trustee is authorized and directed, as provided in the Series 2007 Depository Trust trustee of any to transfer to each applicable series of Obligations Being Refunded such amounts at such times as necessary to make such payments. Section 6. The Official Statement. The Preliminary Official Statement on file for use with respect the Corporation is hereby approved to the sale of the Series 2007 Bonds. the final preparation aration of the Preliminary Official Statement. The The Town Manager shall oversee p • the Town Manager, is authorized and empowered on behalf of President, with the concurrence of g thissuch preliminaryofficial statement "final" for all purposes of Section Corporation to deem "Rule"), and and Regulations, Securities Exchange Act of 1934 (the Ru ), 240.15c2-12, General Rules g � 2007 distribution bythe Town, the Corporation and the Original Series its circulation and The Town and the Corporation will cause the final official Purchaser are hereby approved. 1 Statement "Official Statement") in substantially the form of the Preliminary Official statement (the and distributed with the Series 2007 Bonds. The President, with referred to above to be prepared y the concurrence of the Mayor of the Town, is authorized to act on behalf of this Corporation to approve, execute and deliver the Official Statement on behalf of this Corporation and such execution by the President shall be deemed conclusive evidence of approval of the Official Statement and that the Official Statement has been "deemed final" pursuant to the Rule. Section 7. Request for Trustees and Town Action. This Corporation hereby to take anyand all actions necessary to cause the issuance, sale requests the Town and the Trustee 07 Bonds and the refunding of the Obligations Being Refunded. This and delivery of the Series 20 q Corporation hereby requests the Town, the Trustee, the Series 2000 Trustee, the Series 2005 Trustee and the SeriesDepository 2007 De ositor Trustee to take any and all action necessary in connection with the execution and delivery of the Fourth Amendment, the Fourth Supplement, the Series 2007 Purchase Agreement, the Series 2007 Depository Trust Agreement and the Continuing Disclosure Agreement. The Trustee, the Series 2000 Trustee, the Series 2005 Trustee and the Series 2007 Depository Trustee are authorized and directed to take all action necessary to refund the Obligations Being Refunded, as applicable, in accordance with instructions from the Finance Director of the Town. KCH:joy 713210.03 03/06/07 -8- Section 8. The Purchase Agreement and Insurance. This Corporation the execution of, and requests the Town to hereby authorizes execute and enter into, the Series q 2007 Purchase Agreementupon approval of the final terms and conditions and to cause the Series • pp 2007 Bonds to be sold to the Original Series 2007 Purchaser pursuant to the terms thereof. The Series 2007 Bond proceeds shall be used onlyto refund the Obligations Being Refunded and pay - f_th_e_issuance sale and insurance, if applicable, pertaining to the Series a11-costs-s--and-e��ns�--e , 2007 Bonds. The Corporation expend the Series 2007 Bond proceeds to purchase bond rp may insurance or other credit enhancements for all or part of the Series 2007 Bonds and to purchase reserve fund guarantees or suretybonds to fund any required reserve fund. The Corporation, the Town and the Trustee are authorized and directed to pay or cause to be paid such premiums, fees all other fees, costs and or costs, together withexpenses of issuance, from the Series 2007 Bond proceeds. Section 9. Pledge of Excise Taxes. To secure the payment of the increased � Rental Payments provided for in the Fourth Amendment, the Corporation hereby accepts the Town's pledge of the Excise Taxes. Section 10. Resolution a Contract. After any of the Series 2007 Bonds are Trustee to the Original Series 2007 Purchaser thereof upon receipt of payment delivered by the g p therefor, this 2007 Corporation Resolution shall be and remain irrepealable until the Series 2007 Bonds and the interest thereon shall have been fully paid, cancelled and discharged. Section 1q 1. Liquidation of Reserve Fund. If the Series 1996 Bonds Being Refunded include all the remainingSeries 1996 Bonds, the Trustee is directed to sell, as directed portion the Finance Director, the of the Reserve Fund funded with the proceeds of the Series1111 proceeds Bonds and transfer the from the sale to the Depository Trustee to contribute to the refunding of the Obligations Being Refunded. Section 12. Issuance in One or More Series. If it is advantageous to the Corporation and the Town, as determined bythe Finance Director of the Town, the Series 2007 more than one series from time to time, without further action of the Bonds may be issued in Board or the Council, providedaggregate principal that the re ate amount of all such series not exceed in more than one series, each series shall be designated to distinguish it $22,000,000. If issued from the others, and shall have such dated date, interest rates, maturity dates, principal amounts, redemption provisions and other terms as are determined pursuant to the provisions hereof, and all references herein to the Series 2007 Bonds, the Fourth Amendment, the Fourth Supplement, the g Series 2007 Purchase Agreement, the Series 2007 Depository Trust Agreement and other documents shall also refer to the bonds and corresponding similar documents entered into from time to time for each separate series with such titles, dated date and other designations as may be appropriate ro riate to distinguish the documents of each series. Section 13. Authorization and Ratification. All actions of the officers and the Town or the agents of this Corporation, Mayor and Town Council of the Town which conform rp to the purposes and intent of this 2007 Corporation Resolution and which further the issuance and sale of the Series 2007 Bonds and the refunding of the Obligations Being Refunded as contemplated by this 2007 Corporation Resolution, whether heretofore or hereafter taken are ratified, confirmed approved.roveproper a dThe officers and agents of this Corporation are authorized and directed to do all such acts and things and to execute and deliver all such 411111 KCH:joy 713210.03 03/06/07 -9- documents on behalf of this Corporation be necessary to carry out the terms and intent of o rp on as may this 2007 Corporation Resolution. Section 14. Severability. If any section, paragraph, clause or phrase of this 2007 Corporation Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or phrase shall not affect any of the remaining provisions of this 2007 Corporation Resolution. Section 15. Waiver of Inconsistency. All orders and resolutions or parts thereof inconsistent herewith are hereby waived to the extent only of such inconsistency. This waiver shall not be construed as reviving any order, resolution or ordinance or any part thereof. PASSED, ADOPTED AND APPROVED on March 14, 2007. President, The Town of Oro Valley Municipal Property Corporation ATTEST: 10 Secretary, The Town of Oro Valley Municipal Property Corporation APPROVED AS TO FORM: GUST ROSENFELD P.L.C. Bond Counsel 1111 KCH:joy 713210.03 03/06/07 -10- CERTIFICATION I, , the duly appointed and acting Secretary of The • Town of Oro Valley Municipal Property Corporation, do hereby certify that the above and foregoing Resolution No. passed MPC was duly by the Board of Directors of The Town of Oro-Va . '.. •.- Co soration at a re•Y ularl scheduled meeting held on March 14, 2007 and the- 4 - vote was aye's, nay's and absent, that the President and Secretary were present thereat. DATED: , , 2007. Secretary, The Town of Oro Valley Municipal Property Corporation 111111 KCH joy 713210.03 03/06/07 -1 1- 1110 DEPOSITORY TRUST AGREEMENT This Depository Trust Agreement dated as of , 2007, by and between THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION (the "Corporation"), the TOWN OFOR -L-EY;A ZONA cf e own , an FARGO BANK, N.A., a national banking association authorized to do trust business in the State of Arizona, as depository trustee (the "Depository Trustee") and as trustee (the "Refunded Trustee") for the Obligations Being Refunded (as defined herein); WITNES SETH: WHEREAS, the following bonds of the Town have been issued and are currently outstanding (the "Obligations Being Refunded"): Redemption Principal Premium on Issue Original Maturities Amount Being Redemptio Obligations (Dated Principal Being Refunded n Date Being Date) Name Amount Refunded _ (July 1) Refunded 04/01/96 Municipal Water System $ 2,77 ,000 2010 $ 2,775,000 2008 1.0% Acquisition Bonds, Series 12,600,000 2026 12,600,000 2008 1.0% 10 1996 1.0% 11/01/00 Excise Tax Revenue 200,000 2020 200,000 2010 1.0% Obligations, Series 2000 04/01/01 Excise Tax Revenue Bonds, 3,925,000 2020 3,440,000 * 2011 1.0% Series 2001 * Redemption allocated to mandatory redemption requirements in the years 2015 to and including 2019. ; and WHEREAS, the Refunded Trustee is the trustee for the Obligations Being Refunded; and WHEREAS, by a resolution adopted on , 2007 (the "Corporation Resolution"), the Board of Directors of the Corporation has authorized the sale and execution and delivery of$ in aggregate principal amount of the Corporation's Excise Tax Revenue Refunding Bonds, Series 2007 (the "Bonds"), issued to refund the Obligations Being Refunded; and WHEREAS, by a resolution adopted on , 2007 (the "Town Resolution"), the Mayor and Council of the Town have also authorized the sale and execution and 111 delivery of the Bonds to refund the Obligations Being Refunded; and KCH:joy 714683 03/02/07 p WHEREAS, the Corporation Resolution and the Town Resolution authorize and and the Town to enter into an irrevocable trust agreement with the direct the Corporation . . and of the moneys and securities to be held in 40 Depository Trustee for the safekeeping handling trust topay the Obligations Being Refunded; and -- - E� A�S- D.e _oslt Trustee agrees to accept and administer the trust W-H p �� created hereby; NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements hereinafter set forth it is hereby agreed as follows: p Section 1. Deposit With Depository Trustee. Pursuant to this Agreement, the Depository Trustee has received for deposit to the account of the Town the following amounts: Bond proceeds $ Debt Service ReserveFundproceeds TOTAL applied as follows: (a) $ to refund the Obligations Being Such amounts shall be Refunded, and (b) $ to pay costs of issuance. Section 2. Trust Account. Excluding the $ that shall be held by the Depository Trustee in a costs of issuance account separate from the Trust Account (as hereafter defined) andto pay usedcosts of issuance, the Depository Trustee shall hold the moneys nts made with such moneys and all earnings from investment and so deposited, all investments • moneys and all other moneys received by the Depository Trustee from the reinvestment of such y Corporation or the Town hereunder as a special fund and separate trust account separate from all other funds and investments deposited with the Depository Trustee (the "Trust Account"). Section 3. Government Obligations. On the date of initial delivery of the Bonds, the Depository Trustee shall invest the Trust Account in United States Treasury Obligations, State and Local Government Series (the "Government Obligations") as follows: be applied to create a portfolio of moneys and Government Obligations as $ shallpp described in Exhibit A hereto (the "restricted obligations") and $ will be held uninvested as an initial cash deposit to the Trust Account. The investment income from the Government Obligations shall be collected and received by the DepositoryTrustee and credited to the Trust Account. The Depository Trustee shall keep adequate records of suchmoneys, Government Obligations and investment earnings so as top ermit the portfolio to be accounted for separately. The Depository Trustee shall not sell or redeem such Government Obligations in advance of their maturitydates except as provided in Section 5 hereof. Section 4. Code Provisions. The parties recognize that certain amounts credited to the Trust Account and invested in the restricted obligations are, at the time of execution KCH j oy 714683 03/02/07 -2- ins as to investment under the Internal Revenue and deliveryof this Agreement, subject to restrictions order for the interest on the Bonds and the Obligations of 1986, as amended (the "Code"), in tin Code income for purposes of calculating to be, or continue to be, excluded from gross Being Refunded 1 applicable restrictions, and subject to income taxes. In order to comply with such currently pp federal the provisions of Section 5 hereof, the following provisions shall apply with respect to reinvestment of amounts-credited to the Trust Account: ' maturingprincipal of or interest on the Government Amounts received as p p (a) amounts are to be used to pay principal to the portfolio prior to the date such Obligations credited . BeingRefunded and are not to be or redemption premium on the Obligations of or interestp reinvested. means of an actuarial method of yield Yields are to be calculated by .(b) when used in computing the present whereby "yield" means the discount rate that, . . calculation wh yBonds of all unconditionally payable date the investment is first allocated to the - value as of the intervals and financial conventions investment (using the same compoundingrecei is from the value of all p Bonds), produces an amount equal to the present used to compute the yield on the - will not be p for the investments. The Depository Trustee unconditionally payable payments responsible for the calculation of any yield. Government Obligation used in determining its the market The purchase price of a b This (c) price of the Government Obligation on an established market. yield must be and that a lower interest rate than is apremium may not be paid to adjust the yield - 11, means that - time of execution and delivery of this Agreement, ifa usuallypaid may not be accepted. At the fide bid price purchased on an established market or a bona Government Obligation cannot be the moneys • not exceed the yield restriction applicable to y cannot be established at a yield that does Indebtedness, investmentslimited to United States Treasury Certificates of to be invested, are Notes and - whichfield no more than the restrictedd Bonds-State and Local Government Series y yield. g (d) Notwithstanding the foregoing, any fore oiamounts held in the Trust Account may be invested in investments having anyyield if the parties hereto receive an opinion in form and of municipal bonds whose them of bond counsel experienced in the field substance satisfactory to bonds to the effect that such generally accepted by purchasers of municipal opinions are g y Obligations investment will not cause any of the Bonds or the g ations Being Refunded to become the meaning of Section 148 of the Code, and will not otherwise cause arbitrage bonds within the mea g gross income for or the Obligations interest on the Bonds Being Refunded to become included as g purposes of calculating federal income taxes. reinvestment of maturing principal Amounts received from il of and interest make (e) if any, prior to the date such amounts are to be used to on Government Obligations, y - • to this Section 4 and which are not needed payments on the Obligations Being Refunded pursuant Refunded maybe withdrawn from the Trust provide for payments on the Obligations Being with to p y Town and applied for the benefit of the Town in accordance Account and returned to the pp applicable law. 111 KCH j oy 714683 03/02/07 -3- Section 5. Investment Instructions. The Depository Trustee may sell or redeem Trust Account investments in advance of their maturity dates and invest the proceeds of such sale or redemption oy r other moneys credited to the Trust Account in connection with such ent onlyon receipt of written instructions from the sale or redemption in Governm Obligations up Finance Director of the Town to do so, and receipt by the parties hereto of: opinion in form and substance satisfactory to them of Bond Counsel to (a) An will not cause the interest on the Obligations Being Refunded or the the effect that such action Bonds to become "arbitrage bonds" within the meaning of Section 148 of the Code, and will not rp the Co oration or the Town to issue obligations the interest on which adversely affect the right of excluded from gross income for federal income tax purposes; and is p (b) A report from a nationally recognized accountant or firm of accountants verifying the accuracy of f the arithmetic computations of the adequacy of the proceeds from the liquidation together with anyother moneys and the maturing principal of and interest on any Government Obligations to be credited to the Trust Account in accordance with the Finance Director'sins to a when due, the principal of and interest and any redemption instructions,, p y' • at maturityor upon prior premiums on the Obligations Being Refunded as the same becomes due p g redemption. an Upon such sale or redemption of investments and reinvestment any amounts p Y Trust Account toprovide for payment of the Obligations Being Refunded, as not needed in the shown by the p may accountant's report, be withdrawn from the Trust Account and returned to the Finance Director and applied for the benefit of the Town in accordance with applicable law. 41111 Theparties hereto acknowledge and agree that on the date the Bonds are (c) • delivered against payment therefor (the "Delivery Date"), the Depository Trustee is to issued and g p Y receive the Government Obligations referred to above in Section 3. If the Depository Trustee shall • g• �� Securities"), DepositoryTrustee shall not receive anyof the obligations (the Failed Escrow Securities ), the r accept, as temporary substitutes cash or, at the same purchase price, other Government Obligations ("Substitute Escrow Securities") payments the a ments on which are scheduled to provide, as determined by an independent certified public accountant, along with such cash, at least the same amounts of moneys on or before the same dates as the Failed Escrow Securities for which they are substituted. rely upon Depository Trustee mayu on a report of an independent firm of certified public that the condition in the preceding sentence is satisfied.) If Substitute Escrow accountants delivered, thereafter, upon delivery to the Depository Trustee of Failed Escrow Securities are � p . with anyamounts paid thereon subsequent to the Delivery Date, the Securities, together Depository Trustee shall return an amount of such cash and Substitute Escrow Securities, and any q amount paid thereon subsequent to the Delivery Date, corresponding to the Failed Escrow Securities which the Substitute Escrow Securities replaced. Section 6. Moneys Not Invested. Any Trust Account moneys which are not at n Government Obligations shall be held as a demand deposit by the Depository any time invested i Trustee and shall be secured as deposits of public moneys. Section 7. Timely Payments. The Depository Trustee shall make timely payments from the Trust Account to the Refunded Trustees in the amounts and on the dates sufficient to pay principal, applicable al interest and anya licable premium coming due on each series of the KCH:joy 714683 03/02/07 -4- Obligations Being Refunded. Unless otherwise directed by the Finance Director, in order to determine the amounts and the dates on which principal, interest and applicable premium is due on each series of the Obligations Being Refunded, the Depository Trustee may rely upon the debt service schedules with respect to each series of the Obligations Being Refunded as appear in the Verification Report prepared by [Grant Thornton, LLP,] certified public accountants, in conn ' h the i ssu,nce of the Bonds. Section 8. Notices. (a) On the date of initial issuance of the Bonds, the Corporation and the Town hereby irrevocably instruct the Depository Trustee that all of the Obligations Being Refunded shall be redeemed on the respective redemption dates shown in the Verification Report (b) Prior to the date of mailing the notice of advance refunding pursuant to subsection (c) and if any of the Obligations Being Refunded of any issue comprise less than all the bonds of any maturity of such issue, the Refunded Trustee for that issue is instructed to select such Obligations Being Refunded from among all of the obligations of the applicable maturity of such issue in the manner prescribed in the trust agreement applicable to such issue. (c) The Depository Trustee shall mail a notice of advance refunding of the Obligations Being Refunded in substantially the form of Exhibit B hereto to all registered owners of the Obligations Being Refunded and to the services and nationally recognized municipal securities information repositories listed in Exhibit B. Such notice shall be mailed within thirty (30) days of the date of issuance of the Bonds. (d) The Depository Trustee shall mail to the owners of the respective Obligations Being Refunded the notices of redemption in substantially the form of Exhibit C hereto at the times and in the manner set forth in each Bond Being Refunded. (e) The Town agrees to pay the expenses of the Depository Trustee in giving all notices required hereunder pursuant to the registrar contract relative to the Obligations Being Refunded. Section 9. Insufficient Funds. If at any time or times there are insufficient funds on hand in the Trust Account to pay the principal of and interest and any redemption premium on the Obligations Being Refunded as the same becomes due, or for the payment of the fees and expenses of the Depository Trustee, the Depository Trustee shall promptly notify the Town of such deficiency. Section 10. Reports. On or before each January 15 and July 15 during the term hereof, the Depository Trustee shall submit to the Town a report covering all moneys it has received and all payments it has made under the provisions hereof during the six-month period ending on the preceding June 30 and December 31 (except for the first such report, due July 15, 2007, which will cover the period commencing with the date on which the Bonds were issued to and including June 30, 2007). Each such report shall also list all investments and moneys in the 111 Trust Account as of the report date. KCH:joy 714683 03/02/07 -5- Section 11. Depository Trustee Fees. For services hereunder, the Depository Trustee shall entitledbe Depository to the De osito Trustee's fees set forth in Exhibit D attached hereto, 40 such fees being due upon the initial deposit of moneys with the Depository Trustee and representing payment ofDepository the De osito Trustee's initial fee and prepayment of the annual Depository Trustee's fees for services hereunder during the term hereof. The Depository Trustee shall not - - erm4ien o -moneys_i_n-th-e_Trus unt for the failure to create or-p it-to be-cr-eatedan-Y n- pay any suchDepository fees. The De osito Trustee shall be reimbursed for all out of pocket costs. Section 12. Transfer Upon Full Payment. When all amounts payable on the Obligations Being Refunded have become due and the Depository Trustee has on deposit all payment necessary for the a ment of such amounts, and in any event on the business day g following the date the last of the Obligations Being Refunded matures or is to be redeemed, the Depository Trustee shall transfer all moneys and investments credited to the Trust Account not required for payment of principal,al interest and premium, if any, with respect to the Obligations Being Refunded to the Finance Director for the Town's benefit. Section 13. Agreement Irrevocable. The parties recognize that the owners of the Obligations BeingRefunded have a beneficial vested interest in the moneys and investments held in the Trust Account and that the Bonds will be delivered to and accepted by the owners thereof in reliance upon on the irrevocable character of the trust so created. Therefore, this Agreements shall not be revoked, and shall not be amended in any manner which may adversely ht herein sought to be protected, until the provisions hereof have been fully carried affect the rights g out. Section 14. Non-Liability. The Depository Trustee shall not be liable for any act done or step taken or omitted byit or for any mistake of fact or law or for anything which it may do or refrainexcept from doing for its negligence or its default in the performance of any obligation imposed upon it hereunder. The Depository Trustee shall not be liable or responsible for any loss resultingany from investment made pursuant to this Agreement in compliance with the provisions hereof. Section Corporation,15. Audit. The Cor oration, the Town and the Auditor General of the State of Arizona, shall have the right to audit the books, records and accounts of the Depository Trustee insofar as they pertain to the trust created hereunder. Section 16. Costs of Issuance. The Depository Trustee is hereby authorized solelyfrom moneys deposited with the Depository Trustee for the purpose of and directed to pay, Y p paying the costs of issuance ($ ), the costs and expenses as set forth in Exhibit D Amounts deposited with the Depository Trustee for such purpose shall be held in a hereto. p separate account. Anyamounts remaining on the date six (6) months following the date the Bonds are issued shall be transferred to the Town and deposited to the Debt Service Fund and used to pay interest on the Bonds on the next succeeding interest payment date. Section 17. Depository Trustee Responsibility. In the event the Depository Trustee is requiredor permitted hereby, or is requested hereunder, to take any action (or refrain anyaction) as the Depository Trustee, the performance (or nonperformance) of which from taking p rY the Depository Trustee's sole judgment, subject the Depository Trustee to unreasonable would, in p ry KCH:joy 714683 03/02/07 -6- ' Trustee shall have no duty to take (or refrain from risk of liabilityor expense, the Depository • rs ' Trustee has been furnished with indemnity adequate, kin anysuch action until the Depository taking) officers, employees, agents inits to the Depository Trustee, its directors,sole protect reasonable costs and expenses from and against such liability or expense, and all . and attorneys for, g its dutyas to anysuch (including nes' fees in connection therewith, or untilreasonable attor y ) nd all • ref competent�urisdiction a• — oared_b n (or inaction �� ha-v-e�-een finally a�}u-� � _ •actio �� • - appeal or seek appellate review have expired. applicable periods in which to pp pp To the extent permitted by law, the Town will indemnify and hold the Depository its agents and attorneys harmless for, from and against any Trustee, directors, officers, employees, g � • ' from the expense (includingreasonable attorneys fees) arising judgment or lilt loss, liability,Trustee's obligations hereunder except any such loss, liability, Depository performance of its obi g , p rysuccessful allegation of the Depository Trustee's judgment or expense resulting from the breach of trust. The rights of the Depository Trustee to such negligence or willful misconduct or indemnification shall survive the termination of this Agreement. counsel, chosen by it with Depository Trustee may consult with independent The Dep ry for action taken or not taken in good faith in reliance upon reasonable care, and shall not be liable • counsel. The Depository Trustee shall not be liable for the the written advice or opinion of such p rY ' others to it under this Agreement as to the sufficiency of accuracyof any calculations provided by st and ins deposited with it to pay the principal of and interest the moneys or Government Obligat o p • the Obligations Being Refunded at the respective maturities or redemption premiums, if any, on g ito Trustee Obligations BeingRefunded. Furthermore, the Depository may Pearlier redemption of the Ob g as to the truth, accuracy andof, and be protected conclusively rely in good faith correctness calculation, notice, • refrainingfrom actingupon, any written opinion, calcu , and indemnified in acting or instruction, request, certificate, document or opinion furnished to the Depository Trustee in • bythe proper party pursuant hereto and it need not accordance herewith and signed or presented p p . i investigateoffact or matter stated in such opinion, calculation, notice, the truth or accuracy any instruction, request, certificate or opinion. n time and be discharged of the duties and The Depository Trustee may at any resignin the DepositoryTrustee resigns, or is dissolved, liquidated or obligations created hereby. If the g or is otherwise becomes incapable of acting hereunder, process of being dissolved or liquidated or . 1i officer or officers or of a receiver appointed by a court, a taken under the control of any public effective be appointed. No resignation or removal may become successor Depository Trustee may pp no appointment Depository Trustee shall have been appointed. In the event thatpp until a successor Dep ry Depository Trustee occurs within sixty (60) days, the holder of any of the of a successorp ry retiring Depository Trustee may apply to any court of Being Refunded or the retiring p rY the Obligationsappointment of a successor Depository Trustee acceptable to competent jurisdiction for the Town, and such court may thereupon, after suchnotice as it shall deem proper, appoint a successor Trustee appointed under Trustee acceptable to the Town. Any successor Depository pp Depository p the Corporation and the shall execute, acknowledge and deliver to its predecessor, p this Agreement Town an instrument in writing accepting such appointment and thereupon, such successor • deed or conveyance, shall become fully vested with Depository Trustee, without any further act, Y p ry obligations of its predecessor; but, such predecessor all111 rights, estates, powers, trusts, duties and g . request of such successor Depository Trustee, execute, shall, nevertheless, on the writtenq liver an instrument transferring to such successor Depository Trustee all of acknowledge and de y KCH j oy 714683 03/02/07 of suchpredecessor hereunder; and every the estates, properties, rights, powers and trusts • shall deliver all securities and moneys held by it to the successor predecessor Depository Trustee Depository Trustee. • Depository Trustee may be merged or converted or Any corporation into which the p ry . - ' -- - - - nsal-i-date- oran corporation resulting from any merger, conversion or with whrch it ma�b�o �- �' • Trustee shall be aparty, or any corporation succeeding to ---- ----consolidation to which the Depository • • business of the Depository Trustee, shall be the all or substantially all of the corporate trust enc Depository Trustee hereunder, provided such corporation, association or agency successor of the Dep ry under this Section, without the execution or filing of any shall be otherwise qualified and eligible ud paper or any further act on the part of any of the parties hereto. Section 18. SY Severability. Ifsection, paragraph, subdivision, sentence, any decision shall anyreason be held illegal or unenforceable, such clause or phrase hereof shall for have portions hereof. The parties declare that they would not affect the validity of the remaining and each and everyother section, paragraph, subdivision, sentence, executed this Agreement paragraphs, hereof irrespective of the fact that any one or more sections, clause and phrase p phrases hereof maybe held to be illegal, invalid or subdivisions, sentences, clauses or hereof contains an ambiguity which may be construed as either unenforceable. If any provision e valid or invalid, the valid construction shall be adopted. Section 19. Applicable La Agreement This A reement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Arizona and expresses the entire understanding of the parties hereto. • This Agreement may be executed in several • Section 20. Counterparts. g • ' original, but all of which together shall constitute but one counterparts, each of which shall be an g , instrument. • Interest. The Town hereby gives notice to the Section 21. Conflict of Arizona Revised Statutes, as amended, provides that the Depository Trustee that Section 38-511, pexecution thereof cancel any contract without penalty or Town may within three (3) years after the Town, if anyperson significantly involved in initiating, further obligation, made by negotiating, securing, drafting or creating such agreements on behalf of the Town is at any time n thereof is in effect, an employee or agent of any other party while such contract or any extension in an capacityor a consultant to any other party to the contract with respect ect to the to the contract y subject matter of the contract. • KCH:joy 714683 03/02/07 -8- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be 110 executed as of the day and year first above written. TOWN OF ORO VALLEY, ARIZONA By Finance Director THE TOWN OF ORO VALLEY, ARIZONA MUNICIPAL PROPERTY CORPORATION By President WELLS FARGO BANK, N.A., as Depository Trustee 111 By Title: KCH:joy 714683 03/02/07 -9- EXHIBIT A REFUNDING BOND PROCEEDS • United States Treasury Obligations, State and Local Government Series to be acquired for ("Restricted Obli ). $ of the proceeds from the Bonds $ Obligations"). shall be held uninvested as an initial cash deposit to the Trust Account. Security Maturity Par Amount Coupon Type Date and Price Rate SLGS SLGS SLGS SLGS SLGS SLGS SLGS SLGS SLGS SLGS SLGS • SLGS SLGS SLGS SLGS • KCH:joy 714683 03/02/07 A-1 DEBT SERVICE RESERVE FUND PROCEEDS • United States Treasury Obligations, State and Local Government Series to be acquired for $ ( -Restr-ict-ed--Ob1igat-ions" . $ of the proceeds from the Debt Service Reserve Fund shall be held uninvested as an initial cash deposit to the Trust Account. Security Maturity Par Amount Coupon Type Date and Price Rate SLGS SLGS SLGS SLGS SLGS SLGS SLGS SLGS SLGS SLGS SLGS 11) SLGS SLGS SLGS SLGS KCH:joy 714683 03/02/07 A-2 EXHIBIT B-1 NOTICE OF ADVANCE REFUNDING 411 Redemption Principal Premium on Maturities Amount Being Redemptio Obligations (Dated Principal Original M Being Being Refunded n Date (July 1) Refunded Date) Name Amount Refunded - 2,775,000 2008 1.0% Water System $ 2,775,000 2010 $ 04/01/96 Municipal y 000 2026 12,600,000 2008 1.0% Acquisition Bonds, Series 1.0% 1996 ExTax Revenue 200,000 2020 200,000 2010 1.0% 11/01/00 E. Obligations, Series 2000 - 2020 3,440,000 * 2011 1.0% 04/01/01 ,000 Excise Tax Revenue Bonds, 3,92 Series 2001 * Redemption allocated to mandatory redemption requirements uirements in the years 2015 to and including 2019. q Such to as the "Obligations Being Refunded". obligations are hereinafter referred ns BeingRefunded have been refunded Notice is hereby given that the Obligations 'Q ions • maturityand that an irrevocable trust has 0 been established and funded with obligations prior to in order to provide for the payment of the issuedguaranteed bythe United States of America by or Obligations Being Refunded. The Obligations Being Refunded will be paid on the dates and in the amounts (plus g date), as set forth above. to the interest accrued thereonredemption WELLS FARGO BANK, N.A. THIS IS NOT A REDEMPTION NOTICE registered owners of the Obligations Being beprovided by first class mail to all g This notice shall or facsimile to the entities listed below. and shall also be provided by first class mailwhich Refunded ' shall be delivered within thirty (30) days following the issuance of the bonds Such notices refund the Obligations Being Refunded. • KCH:joy 714683 03/02/07 B-1 EXHIBIT B-2 List of Services Municipal calls: The Depository Trust Company Midwest Securities Trust Company 711 Stewart Avenue Capital Structures-Call Notification Garden City,NY 11530 440 So—lith-EaSAICStreet Chicago, IL 60605 Bearer bond calls: Financial Information, Inc.'s Financial Daily Called Bond Service Post Office Box 473 Jersey City, NJ 07303 Kenny Information Service's Notification Services 65 Broadway New York,NY 10006 Moody's Municipal and Government 99 Church Street New York, NY 10007 and to: www.DisclosureUSA.org 1111 KCH:joy 714683 03/02/07 B-2 EXHIBIT C-1 NOTICE OF REDEMPTION • of the following obligations: Tortions-o�The Tow - f-Ofo-v-allyyMunicipal-P-roPertyCopror t on, Municipal Water System Acquisition Bonds, April 1996, dated A ril 1, 1996 maturing July 1, 2010 and July 1, 2026. that the below-described principal amount of the above- referencedNotice is hereby given outstanding have been called for redemption and will be redeemed on obligations o g July 1, 2008. The maturitydates and amounts of the obligations to be redeemed are as follows: Redemption p Maturity Principal Principal Redemption Premium(as a Date Amount Amount Date Percentage cusIp (July1) Coupon Outstanding Refunded (July 1) of Principal) o 2010 5.200% $ 2,775,000 $ 2,775,000 2008 1.0% 2025 5.375% 12,600,000 12,600,000 2008 1.0% Owners of the above-described obligations called for redemption are notified to present the same at the corporate trust operations office of Wells Fargo Bank, N.A., on or after the p date set for redemption, where redemption will be made by payment of the face amount of each such obligation plus accrued interest to the date set for redemption plus the respective premium set forth above. All obligations ations so called for redemption must be surrendered and no interest will be ID paid on the above-described obligations from and after the redemption date. DATED: WELLS FARGO BANK, N.A. The following is not part of this notice: Not more than sixty nor less than thirty days prior to the date set for redemption, the Depository y em Trustee shall cause a notice of any such redemption to be mailed to the registered owner of each p e obligation to be redeemed at the address shown on the registration book maintained by the applicable Refunded Trustee. KCH:joy 714683 03/02/07 C-1 EXHIBIT C-2 NOTICE OF REDEMPTION of the following obligations: P-onion---of-Town-of-Ore-Valley,Arizona;-Excise-a.x_Revenue_Obligations? Series 2000, dated November 1, 2000 maturing July 1, 2020. Notice is hereby given that the below-described principal amount of the above- referenced obligations outstanding have been called for redemption and will be redeemed on July 1, 2010. The maturity dates and amounts of the obligations to be redeemed are as follows: Redemption Maturity Principal Principal Redemption Premium(as a Date Amount Amount Date Percentage CUSIP (July 1) Coupon Outstanding Refunded (July 1) of Principal) 2020 5.20% $200,000 $200,000 2010 1.0% Owners of the above-described obligations called for redemption are notified to present the same at the corporate trust operations office of Wells Fargo Bank, N.A., on or after the date set for redemption, where redemption will be made by payment of the face amount of each such obligation plus accrued interest to the date set for redemption plus the respective premium set forth above. All obligations so called for redemption must be surrendered and no interest will be paid on the above-described obligations from and after the redemption date. DATED: WELLS FARGO BANK, N.A. The following is not part of this notice: Not more than sixty nor less than thirty days prior to the date set for redemption, the Depository Trustee shall cause a notice of any such redemption to be mailed to the registered owner of each obligation to be redeemed at the address shown on the registration book maintained by the applicable Refunded Trustee. KCH:joy 714683 03/02/07 C-2 EXHIBIT C-3 NOTICE OF REDEMPTION • of the following obligations: ---- - -Portions- f The Town of-Oro ValleyMunici p a1-Pro ertYCorporation,_Excise Tax_Revenue Bonds, Series 2001, dated April 1, 2001 maturing July 1, 2020. • below-described principal amount of the above- referencedNotice is hereby given that the p p ndin have been called for redemption and will be redeemed on obligations outstanding July 1, 2011. The maturitydates and amounts of the obligations to be redeemed are as follows: Redemption Maturity Principal Principal Redemption Premium(as a Date Amount Amount Date Percentage 1) Coupon Outstanding Refunded (July 1) of Principal) CUSIP (July P ° 2020 5.00% $3,925,000 $3,440,000 * 2011 1.0% * Redemption allocated to mandatory redemption requirements in the year 2020. Owners of the above-described obligations ations called for redemption are notified to present the same at the corporate trust operations office of Wells Fargo Bank, N.A., on or after the p where date set for redemption, redem tion will be made by payment of the face amount of each such obligation plus accrued interest to the date set for redemption plus the respective premium set tins so called for redemption forth above. All obligations must be surrendered and no interest will be paid on the above-described obligations from and after the redemption date. DATED: WELLS FARGO BANK, N.A. The following is not part of this notice: than sixtynor less than thirtydays prior to the date set for redemption, the Depository Not more notice of anysuch redemption to be mailed to the registered owner of each Trustee shall cause a o p obligation to be redeemed at the address shown on the registration book maintained by the applicable Refunded Trustee. • KCH:joy 714683 03/02/07 C-3 EXHIBIT D EXPENSES _- The-following-expenses are-to-be--paid--by tie-Depos-i rustee-f--om Bond Proceeds deposited with the Depository Trustee for that purpose: Bond Counsel Fee $ Official Statement Printing Underwriter's Counsel Bond Ratings CPA Verification Depository Trustee Fees and initial Registrar and Paying Agent Fees Emuni Posting Auditor's Consent DTC/CUSIP Miscellaneous TOTAL $ KCH:joy 714683 03/02/07 D-1 S THE TOWN OF ORO VALLEY MUNICIPAL PROPERTY CORPORATION EXCISE TAX REVENUE REFUNDING BONDS,SERIES 2007 CONTINUING DISCLOSURE CERTIFICATE (CUSIP 68702L) —__-- --_-----------_-_-- ____-- --- .__-__ -. -- _-----_ . _-(the_"Disclosure Certificate''}-is_undertaken_b-y-the-s'ownof Oro Valley, This Continuing Disclosure Certificate The Town of Oro Valley Municipal "Town"), as the obligated person, in connection with the issuance by Arizona (the To ), g "Corporation") the Corporation's Town of Oro Valley Municipal Property Corporation Property Corporation (the of rP �� of the initial sale and delivery of Excise Tax Revenue Refunding Bonds, Series 2007 (the "Bonds"). In consideration the Bonds,the Town covenants as follows: Certificate. This Disclosure Certificate is for the benefit of the Section 1. Purpose of the Disclosure with. the Rule(as defined herein). Bondholders and in order to assist the Participating Underwriter in complying Section 2. Definitions. ed herein shall have the following meanings, unless Any capitalized term used otherwise defined herein: "Annual Report" shall mean the annual reportided bythe Town pursuant to, and as described in, Sections provided 3 and 4 of this Disclosure Certificate. "Bondholder" shall mean any beneficial owner of the Bonds(when the Bonds are in Book-Entry-Only form)or registered owner when the Bonds are not in Book-Entry-Only form. "Bond Counsel" shall mean Gust Rosenfeld P.L.C. or such other nationally recognized bond counsel as may be selected by the Town. entityapproved as a Central Post Office by the Securities and Exchange Central Post Office" shall mean an PP Rule for distribution to the as a single point for filing under the Repositories. At present the Internet-basedxas under the name of"Disclosure USA" at filingsystem operated by the Municipal Advisory Council of Te electronic the following Internet address site: www.DisclosureUSA.org is approved for such purpose. "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. NationallyRecognized Municipal Securities Information Repository for "National Repository" shall mean any g purposes of the Rule. official statement dated ,2007,relating to the Bonds. "Official Statement"shall mean the final off c the original underwriter of the Bonds required to comply with the Rule "Participating Underwriter shall mean in connection with offering of the Bonds. Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adoptedby the Securities and Exchange Commission under the Securities Exchange e Act of 1934,as the same may be amended from time to time. "State Repository" shall mean any public or privaterepository re osito 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. • vnv.:.... 1 1 n7to n� 111, Section 3. Provision of Annual Reports. 11) (a) The Town shall or shall cause the Dissemination Agent to, not later than February 1 of each year(the , "FilingcommencingFebruary1, 2008, provide to the Central Post Office an Annual Report for the fiscal year Date"), ending on the precedingJune 30 which is consistent with the requirements of Section 4 of this Disclosure Certificate. fifteen (15) Business Days prior to such Filing Date, the Town shall provide the Annual Report to the Not later than Dissemination Agent(if other than the Town). If the Town is unable or for any reason fails to provide to the Central Post Office an Annual Report or (b) ' thereof bythe FilingDate required in subsection (a)above, the Town shall promptly send a notice to the anypart Central Post Office 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 top provide to the Central Post Office a copy of its audited financial statements within 30 days of receipt thereof by then the Town shall promptly send a notice to the Central Post Office in substantially the form attached as the Town, 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 the Central Post Office or, if none, each National Repository and each State Repository, if any; and(if the Dissemination Agent is other than the Town);and (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 wasP rovided to the Central Post Office or listing all the Repositories to which it was provided. 111 Section 4. Content of Annual Reports. (a) The Annual Report may be submitted as a single document or as separate documents comprising a package,e,and may incorporate orate by reference other information as provided in this Section, including the audited financial statements of the Town; provided, however, that if the audited financial statements of the Town are not available at the time of the filingof the Annual Report, the Town shall file unaudited financial statements of the Town with the Annual financial statements of the Town are available, the same shall be submitted to the Central Report and, when the audited financ Post Office 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 Tables and of the Official Statement: (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 -2- v .:-.. '»4'740 n,Inn In^r 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 the Central Post Office, 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 Bonds, if material: (1) Principal and interest payment delinquencies; (2) Non-payment related defaults; (3) Unscheduled draws on debt service reserves reflecting financial 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 Bonds; (7) Modifications to rights of Bondholders; (8) Bond calls; (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the Bonds;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 the Central Post Office and the Municipal Securities Rulemaking Board; 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 Bonds. 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 Bonds,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 Bondholders, as determined by Bond Counsel. Notice of any amendment to the accounting principles shall be sent within 30 days to the Repositories. Section 9. Central Post Office. In the event the Central Post Office, as determined by the Securities and Exchange Commission, is not an acceptable filing repository for purposes of the Rule, the District shall, or shall cause _3_ t nu.:.... 1 A'7C0 the Dissemination Agent to, file all items required under this Disclosure Certificate to be filed with the Central Post 11 Office with each National Repository and,if any,the State Repository. Section 10. 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 obligation under this Disclosure Certificate to update such information or include it Certificate, the Town shall have no o g in any future Annual Report or notice of occurrence of a Listed Event. . .... . ..__.. .. - Section Section 11. Default. In the event of a failure of the Town to comply with any provision of this Disclosure . Certificate any Bondholder may specific s ecific 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 Bonds or the resolution authorizing the Bonds. • ComplianceThe Town herebycovenants to comply with the terms of this Section 12. by the Town. ith the undertakingcontained Disclosure Certificate. The Town expressly acknowledges and agrees that compliance w in this Disclosure Certificate is its sole responsibility and the responsibility of the Dissemination Agent, if any, and that P �' thereto for, the with such compliance, or monitoring thereof, is not the responsibility of, and no duty is presentrespect Participating Underwriter,Bond Counsel or the Town's financial advisor. Section 13. Limited Source for Payment of Costs; Subject to Appropriation. The costs of the Town's compliance with the undertaking to provide information under this Disclosure Certificate is payable solely from Excise Official Statement. The Town may use other funds to pay such costs but use of other funds is Taxes, as defined in the Off subject to appropriation. Disclosure Certificate shall inure solely to the benefit of the Town, the Section 14. Beneficiaries. This rights emination A ent the Participating Underwriter and Bondholders, and shall create noin any other person or Diss g entity. ID Section 15. Governing Law. This Disclosure Certificate shall be governed by the law of the State of Arizona and any action to enforce this Disclosure Certificate must be brought in an Arizona state court. The terms and provisions of this Disclosure Certificate shall be interpreted in a manner consistent with the interpretation of such terms and provisions under Rule 15c2-12 and the federal securities law. Section 16. Notice Concerning Cancellation of Contracts. To the extent applicable by provision of law, this Disclosure Certificate is subject to cancellation pursuant to Arizona Revised Statutes, Section 38-511,as amended. Date: ,2007. TOWN OF ORO VALLEY,ARIZONA By: Its Finance Director IP 4-vMv -4- TM T_T.:.... .:.... '71 A'le o WI//101/1-1'7 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT • Name of Obligated Person: Town of Oro Valley, Arizona Name of Issuer. The-Town of Oro Valley Municipal PropertyCorporation Name of Bond Issue: $ The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007 Dated date of Bonds: 2007 CUSIP: 68702E an Annual Report IS HEREBY GIVEN that the Town has not provided with respect to the above- named2007 The Town anticipates as required by Section 3(a) of the Disclosure Certificate dated Bondsq 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. The Town of Oro Valley Municipal Property Corporation Name of Bond Issue: $ The Town of Oro Valley Municipal Property Corporation Excise Tax Revenue Refunding Bonds, Series 2007 Dated date of Bonds: , 2007 CUSIP: 68702E NOTICE IS HEREBY GIVEN that the Town failed to provide its audited financial statements with its Annual of receipt as required by Section 4(a)of the Disclosure Certificate dated Report or, if not then available, within 30 days p q 2007 with respect to the above-named Bonds. The Town anticipates that the audited financial statements for the fiscal year ended June 30, will be filed by Dated: Town of Oro Valley, Arizona By: Its: • KCH j oy 714768 03/02/07