PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 2, 2017

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1 This Preliminary Official Statement is in a form "deemed final" by the Issuer for purposes of SEC Rule 15c2-12(b)(1), but is subject to revision, amendment and completion in a final Official Statement. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these Bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER 2, 2017 NEW ISSUE BANK QUALIFIED RATING: Moody's: "A1" See "Bond Rating" herein. In the opinion of Bond Counsel, based upon present laws, regulations, rulings and decisions in effect on the date of delivery of the Bonds, and assuming continuing compliance with certain covenants made by the Issuer and the County, interest on the Bonds is excludable from gross income for federal income tax purposes upon the conditions and subject to the limitations set forth herein under "Tax Exemption". Receipt of interest on the Bonds may result in other federal income tax consequences to certain holders of the Bonds. Interest on the Bonds is exempt from income taxation and the Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and any of its political subdivisions. $653,000* MASON COUNTY, KENTUCKY PUBLIC PROPERTIES CORPORATION FIRST MORTGAGE REVENUE BONDS (COURT FACILITIES PROJECT), SERIES 2017 Dated: Date of Issuance Due: December 1 as shown below Interest on the Bonds is payable each June 1 and December 1, beginning June 1, The Bonds are issuable in book entry form only, registered initially in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Investors will not receive certificates representing their interest in the Bonds purchased. Individual purchases will be made in book-entry form only, in the denomination of $1,000 or any integral multiple thereof. Principal of and premium, if any, for the Bonds will be payable at the principal corporate trust office of the Bank of Maysville, Maysville, Kentucky, Trustee, Paying Agent and Registrar (the "Trustee"). The Bonds are subject to redemption prior to maturity as described herein. The Bonds do not constitute a debt, liability, or obligation of the County of Mason, Kentucky (the "County") or the Mason County, Kentucky Public Properties Corporation (the "Issuer"), or a pledge of the full faith and credit of the County or the Issuer, but are payable solely from rental income derived from an annually renewable lease agreement (see "The Lease" herein). Year of Maturity Amount* $ 68,000 68,000 69,000 71,000 72,000 Interest Rate % Price or Yield Year of Maturity Amount* $74,000 75,000 77,000 79,000 Interest Rate % Price or Yield The Bonds are offered when, as and if issued and accepted by the Underwriters, subject to the approval of legality and tax exemption by Rubin & Hays, Bond Counsel, Louisville, Kentucky. The Bonds are offered when, as and if issued and accepted by the Underwriters, subject to the approval of legality and tax exemption by Rubin & Hays, Bond Counsel, Louisville, Kentucky. Bids on the Bonds will be accepted until 11:00 A.M., E.T., on November 9, 2017 via PARITY in accordance with the Official Terms and Conditions. This Official Statement is deemed final for the purposes of SEC Rule 15c2-12(b)(1). Delivery of the Bonds is expected on or about November 30, *Preliminary, subject to adjustment

2 REGARDING USE OF THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Bonds of the Mason County, Kentucky Public Properties Corporation (the "Issuer") identified on the cover page hereof. No person has been authorized by the Issuer to give any information or to make any representation other than that contained in the Official Statement, and if given or made such other information or representation must not be relied upon as having been given or authorized by the Issuer, the County or Ross, Sinclaire & Associates, LLC, the Financial Advisor. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Mason County, Kentucky Public Properties Corporation First Mortgage Revenue Bonds (Court Facilities Project), Series 2017 by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer since the date hereof. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency, except the Issuer and the County, will pass upon the accuracy or adequacy of this Official Statement or approve the Bonds for sale. This Official Statement includes the front cover page immediately preceding this page and all Appendices hereto.

3 MASON COUNTY, KENTUCKY PUBLIC PROPERTIES CORPORATION Joseph Pfeffer, President and Director Kim Muse, Treasurer Stephanie Schumacher, Secretary Annette Walters, Director Phil Day, Director Joseph McKay, Director COUNTY OF MASON, KENTUCKY Joseph Pfeffer, County Judge/Executive Annette Walters, Magistrate Phil Day, Magistrate Joseph McKay, Magistrate John F. Estill, Esq., County Attorney Stephanie Schumacher, County Clerk Kim Muse, County Treasurer BOND COUNSEL Rubin & Hays Louisville, Kentucky FINANCIAL ADVISOR Ross, Sinclaire & Associates, LLC Lexington, Kentucky TRUSTEE, BOND REGISTRAR AND PAYING AGENT Bank of Maysville Maysville, Kentucky

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5 TABLE OF CONTENTS Introduction... 1 The County... 2 The Issuer... 2 Administrative Office of the Courts The Bonds The Project... 9 Estimated Sources and Uses of Funds Security and Sources of Payment... 9 The Lease The Mortgage Litigation Tax Exemption Bank Qualification Disclosure Compliance; Exemption Financial Advisor Underwriting Bond Rating Concluding Statement Page Estimated Annual Debt Service Requirements Demographic and Economic Data, Tax Base and Financial Information for the County Audited Financial Statements for the year ended June 30, 2015 Form of Legal Opinion Appendix A Appendix B Appendix C Appendix D

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7 OFFICIAL STATEMENT $653,000* MASON COUNTY, KENTUCKY PUBLIC PROPERTIES CORPORATION FIRST MORTGAGE REVENUE BONDS (COURT FACILITIES PROJECT), SERIES 2017 INTRODUCTION The purpose of this Official Statement, which includes the cover page and Appendices hereto, is to set forth certain information pertaining to the Mason County, Kentucky Public Properties Corporation First Mortgage Revenue Bonds (Court Facilities Project), Series 2017 (the "Bonds"). The Mason County, Kentucky Public Properties Corporation (the "Issuer") was established by the County of Mason, Kentucky (the "County") to act as the agency and instrumentality of the County in acquiring, developing and financing public improvements and public projects. The Issuer, at the direction of the Fiscal Court of the County, adopted a resolution (the "Resolution") authorizing the Bonds for the purpose of financing the cost of certain repairs and reconstruction to the existing court facilities located in Maysville, Kentucky (the "Project"). The Bonds are special and limited obligations of the Issuer, being issued at the request of the County, and do not constitute a debt, liability or general obligation of the Issuer or the County within the meaning of the Constitution and laws of the Commonwealth of Kentucky, or a pledge of the faith and credit or the taxing power of the County. The Bonds will be secured by a foreclosable mortgage lien on the Project, pursuant to a Mortgage Deed of Trust between the Issuer and the Bank of Maysville, Maysville, Kentucky (the "Trustee") dated as of November 1, 2017 (the "Mortgage"). The Bonds will also be secured by the assignment by the Issuer of all of its right, title and interest to a Lease Agreement among the Issuer, the County and the Kentucky Administrative Office of the Courts (the "AOC") dated as of November 1, 2017 (the "Lease"). This Official Statement should be considered in its entirety, and no one subject discussed should be considered more or less important than any other by reason of its location in the text. Reference should be made to laws, reports or other documents referred to in this Official Statement for more complete information regarding their contents. Prior to issuance and delivery of the Bonds, copies of the Mortgage and the Lease may be obtained at the office of the Financial Advisor, Ross, Sinclaire & Associates, LLC, 325 West Main Street, Suite 300, Lexington, Kentucky *Preliminary, subject to adjustment

8 THE COUNTY The County is a political subdivision of the Commonwealth of Kentucky. The County is governed by a Fiscal Court consisting of an elected County Judge/Executive and three (3) elected County Magistrates. These four members comprise the Fiscal Court. There is no limitation for succession by any member of the Fiscal Court. Economic, demographic, tax base and financial data regarding the County is included in Appendices B and C. THE ISSUER The Issuer is a nonprofit, non-stock public corporation organized and existing under the laws of the Commonwealth of Kentucky, including particularly Section and Sections to , inclusive, of the Kentucky Revised Statutes. The Issuer's principal purpose is to act as an agency and instrumentality of the County in the planning, promotion, development, financing and acquisition of public improvements and public projects for the County which may properly be undertaken by the County pursuant to the general statutory laws of Kentucky, including Chapter 58 of the Kentucky Revised Statutes (the "Act"). Any bonds, notes or other indebtedness issued or contracted by the Issuer shall, prior to the issuance or incurrence thereon, be specifically approved by the County acting by and through its Fiscal Court as its duly authorized and empowered governing body. The Court of Justice ADMINISTRATIVE OFFICE OF THE COURTS In 1975, Kentucky voters elected to unify the Commonwealth s fragmented judicial system by amending the Constitution to provide for a four (4) tiered court system referred to as the Court of Justice. The tiered system consists of two appellate levels and two trial levels. Appellate courts include the Supreme Court (the State s court of last resort) and the Court of Appeals (an intermediate appellate court). The trial courts are divided into circuit courts (courts which have general jurisdiction) and the district courts (courts with limited jurisdiction). Supreme Court. The Supreme Court consists of seven (7) justices, elected from Kentucky's seven appellate districts and serve eight year terms. A Chief Justice is chosen by the seven justices for a four-year term. The Chief Justice is the administrative head of the State s court system. 2

9 Court of Appeals. The Court of Appeals is made up of fourteen (14) judges, two elected from each of Kentucky's seven appellate districts. Each member on the Court of Appeals serves for a term of eight years. Circuit Court. Circuit courts are considered as the court of general jurisdiction and normally hear civil matters involving more than $5,000. Circuit judges have jurisdiction over cases involving capital offenses and felonies, divorces, adoptions, termination of parental rights, land disputes and contested probates of will. Circuit courts have the power to issue injunctions, writs of prohibition, writs of mandamus and hear appeals from district courts and administrative agencies. Circuit judges serve eight year terms and are assigned to one or more counties depending upon population and caseload. District Court. District courts have limited jurisdiction and are often referred to as the peoples court. District courts hear matters involving civil matters less than $5,000, juvenile offenses, city and county ordinances, traffic offenses, probates of will, felony preliminaries, cases involving guardianship, conservatorship, voluntary or involuntary commitment and domestic violence and abuse. District judges serve four year terms and are assigned to one or more counties depending upon population and caseload. Administrative Office of the Courts The Administrative Office of the Courts ( AOC ) serves as the staff for the Court of Justice, administered by the Commonwealth s Chief Justice of the Supreme Court. AOC s primary duties involve: - Prepare the biannual budget and administer the funds and accounts of the Court of Justice - Maintain data processing systems for the purpose of publishing statistical reports, evaluating special projects and operating case management systems - Disperse and maintain supplies and equipment - Provide offices and court space for the entire court system - Supervise the State Law Library - Oversee the pretrial and juvenile services programs The Court of Justice is funded through State appropriations from the Kentucky s General Assembly. With the exception of certain fees that are dedicated to specific use and application, fines and all other revenues collected by the Court of Justice are deposited to the State s General Fund. The Court of Justice is funded by four separate appropriations: Court Operations and Administration, Judicial Retirement System, Local Facilities Fund and Capital Projects. A summary of the Court of Justice Budget and the Local Facilities Fund are set forth in Appendix D. Rental payments of AOC as provided in the Lease are budgeted each biennium in the Local Facilities Fund of the Court of Justice budget. Under the Supreme Court Rule and KRS 26A.090 through 26A.130, AOC provides for office and court facilities to governmental units through its "Use Allowance" and "Operating Costs Allowance." 3

10 The Use Allowance is compensation to the governmental unit operating the court facility for capital costs of the facility based upon a statutory formula. Application of the formula results in AOC being obligated for 100% of the debt service requirements for the Bonds once it occupies the Project. See "SECURITY AND SOURCES OF PAYMENT" for more information. The Operating Costs Allowance is compensation for the expenses borne by the governmental unit providing janitorial, insurance, maintenance, repair and upkeep of the court facility. General THE BONDS The Bonds will be dated the date of issuance, will bear interest from that date as described herein, payable semi-annually on June 1 and December 1 of each year commencing June 1, The Bonds will mature on December 1 of each year, in the years and in the principal amounts as set forth on the cover page of this Official Statement. Registration, Payment and Transfer The Bonds are to be issued in denominations of $1,000 and any integral multiple thereof. All Bonds shall be registered as to both principal and interest on the registration books maintained at the principal corporate trust office of the Bank of Maysville, Maysville, Kentucky, acting as registrar (the "Trustee", the "Paying Agent" or the "Registrar"). No transfer of any Bonds shall be valid unless made on said books at the request of the registered owner in person or by his attorney duly authorized in writing, and similarly noted on such Bond. Bonds may be exchanged for Bonds of other authorized denominations upon surrender of the Bonds to be exchanged to the Registrar with a written request for such exchange, duly executed by the owner thereof or by his duly authorized attorney. The Registrar shall not be required to transfer or exchange any Bond on any date which is after the fifteenth day of the month preceding any interest payment date, or during any period beginning 15 days prior to the selection by the Registrar of the date on which any Bonds are to be redeemed prior to maturity and ending on the date of mailing of notice of any such redemption. The person in whose name a Bond is registered upon the books of the Issuer shall be deemed the owner thereof for all purposes. Interest on each Bond shall be payable by check or draft mailed to the registered owner thereof as of the fifteenth day of the month immediately preceding that date for payment of such interest at the address shown on the registration books kept by the Registrar. The principal of and premium, if any, on the Bonds shall be payable, without exchange or collection charges, in lawful money of the United States of America upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. 4

11 Denominations and Places of Payment The Bonds will be issued originally solely in book-entry form to The Depository Trust Company ("DTC"), New York, New York or its nominee, Cede & Co., to be held in DTC's book-entry only system. So long as the Bonds are held in the book-entry only system, DTC (or a successor securities depository) or its nominee will be the registered owner or holder of the Bonds for all purposes of the Mortgage, the Bonds and this Official Statement. See "Book-Entry Only System" below. In the event that the Bonds are not held in a book-entry only system, the principal of and any premium on the Bonds will be payable when due upon presentation and surrender thereof at the principal corporate trust office of the Paying Agent in Louisville, Kentucky. Interest on the Bonds is to be paid on each Interest Payment Date to the persons in whose name the Bonds are registered (the "Bondowners") at the address appearing on the registration books for the Bonds (the "Register") on the fifteenth (15th) day of the month preceding the applicable Interest Payment Date by check or draft which the Paying Agent shall cause to be mailed on such Interest Payment Date. If and to the extent that the Issuer fails to make payment or provision for payment of interest on any Bond on an Interest Payment Date, the Paying Agent will establish a special record date for the payment of that defaulted interest, as described in the Mortgage. Book-Entry Only System The Bonds initially will be issued solely in book-entry form to be held in the book-entry only system maintained by DTC. So long as such book-entry system is used, only DTC will receive or have the right to receive physical delivery of Bonds and, except as otherwise provided therein with respect to Beneficial Owners (as defined below) of Beneficial Ownership Interests (as defined below), Beneficial Owners will not be or be considered to be, and will not have any rights as, owners or holders of the Bonds under the Mortgage. The following information about the book-entry only system applicable to the Bonds has been supplied by DTC. The Issuer, the Paying Agent, the Underwriter or the Financial Advisor makes no representations, warranties or guarantees with respect to its accuracy or completeness. DTC will act as securities depository for the Bonds. The 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 the Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's largest 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 DTC holds and provides asset servicing for over 2 million issues of U.S. and non-u.s. equity issues, 5

12 corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, 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 Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 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 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 Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all 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 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 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 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 6

13 regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the 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 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds 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 County or the Paying Agent, 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 nor its nominee, Paying Agent, or County, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of County or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Issuer may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. 7

14 The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof. Optional Redemption Defeasance The Bonds are not subject to optional redemption prior to maturity. The Issuer reserves the right at all times during the term of the Lease, to make provision for discharge of all Bonds by depositing into the Sinking Fund moneys sufficient to pay all principal and interest requirements on the Bonds to and on the first or next date of redemption, or to the date of maturity, together with sufficient additional moneys to redeem and discharge all outstanding Bonds on such redemption date, or to deposit into the Sinking Fund such principal amount of permissible Investment Obligations as shall, with earnings thereon, produce an identical result. THE PROJECT The proceeds of the Bonds are being used to construct certain repairs to the existing court facilities, including replacement of the roof, front entrance upgrades, window replacements on the first and second floors and various other items. ESTIMATED SOURCES AND USES OF FUNDS The table below shows the estimated sources and uses of Bond proceeds and other funds: Estimated Sources of funds: Par amount of Bonds $ Total Estimated Sources of Funds $ Estimated Use of funds: Construction Fund $ Discount Costs of Issuance 1 Rounding Total Estimated Uses of Funds $ 1 Includes Financial Advisor, Bond Counsel, Trustee, rating, printing and advertising. 8

15 SECURITY AND SOURCES OF PAYMENT Security The Bonds will, upon their issuance, be secured by a foreclosable mortgage lien on the Project. The Bonds will also be secured by the assignment by the Issuer to the Trustee of all of its right, title and interest in and to the Lease pursuant to which agreement the Project is leased by the Issuer to the County and the AOC for automatically renewable periods to the final maturity date of the Bonds. Payments by the County and the AOC to the Issuer under the Lease are equal to the payments of principal and interest on the Bonds (for a further descriptions of such payments, see "The Lease" herein). Sources of Payment The only source of funds expected by the Issuer to meet the debt service on the Bonds are the rental payments of the County and the AOC for the Project. AOC must appropriate certain available revenues each biennium from its budget to meet the rental payments for its leasing of the Project, which rental payments are then assigned to the Trustee to meet 100% of the debt service requirements on the Bonds. AOC is legally obligated only for the rental period ending each June 30 of an even numbered year so long as any of the Bonds remain outstanding, and AOC has covenanted in the Lease that it will request a biennial appropriation at least equal to the Use Allowance and Operating Costs Allowance from the Kentucky General Assembly in order to continue to meet the rental payments and pay for the insurance, utilities, repair and upkeep of the Project. Rental payments from the County and the AOC shall be payable semiannually on or before each Interest Payment Date directly to the Trustee of the Bonds in ample amounts and in ample time to allow the Issuer to pay the interest and principal requirements of the Bonds as same fall due. THE LEASE The following is a summary of certain of the terms and provision of the Lease. Terms not otherwise defined herein shall have the meanings given in the Lease and/or the Mortgage. Lease Period and Amount The Lease provides that the County and the AOC shall lease from the Issuer, the Project and the Project Site, together with all of the improvements thereon for an initial period ending June 30, 2018, at an agreed and stipulated rental equal to (i) 100% (the "AOC's Proportional Share") of the annual principal and interest of the Bonds which are due and payable during any lease period (the "Use Allowance") and (ii) the annual expenses borne by the Issuer or County for utilities, janitorial services, property insurance and necessary maintenance, repair and upkeep of the judicial center, which does not increase the permanent value or expected life of the 9

16 judicial center, but keep the judicial center in efficient operating condition, including, at the election of the AOC, capital costs of interior or mechanical renovations for the benefit of the County (the "Operating Allowance"). Following the initial term of the Lease, nothing in the Lease shall be construed as binding the County and the AOC for the payment of rentals beyond the rental for the current term of one year, but the County and the AOC shall in each year become indebted to the Issuer for the rentals stipulated for such year only upon the exercise of its option to renew. Option to Renew On July 1 of each even numbered year, the Lease may be renewed by the AOC for another biennial period of two years, provided that if the Lease is so renewed the rentals for each such biennial period during which the Lease remains in effect, as regards AOC, shall be a sum equal to the Use Allowance. The Lease renewal shall automatically be considered to have been affirmatively exercised each even numbered year by AOC, unless notice of its election not to exercise the option for the biennial period be given by AOC to the Issuer, the Trustee and the County in writing at least 60 days prior to the renewal date thereof. Pursuant to the terms of the Lease Agreement, the County is not an obligated party with respect to the principal and interest on the Bonds, nor does the County have the right to lease any of the Project or Project Site. The County is, however, obligated to fulfill the requirements of the Lease Agreement in compliance with the AOC Act. The AOC is required to reimburse the County pursuant to the Lease Agreement and the AOC Act. On July 1 of each year, the County's obligations under the Lease Agreement shall automatically be considered to have been affirmatively renewed unless the County shall provide notice of its election not to renew its obligations for another period of one year, such notice to be given to the Issuer and the Trustee, in writing, at least 60 days prior to the renewal date therein. The County hereby expresses its present intention to renew its obligations under the Lease Agreement in accordance with its terms and in accordance with its obligations under the AOC Act on a year to year basis, until all of the Bonds, to be issued by the Issuer, are fully paid, canceled and retired, whether at maturity or by call for redemption, but such expression of intention shall not be construed as a present election on the part of the County. Intent to Renew In the Lease, the County and the AOC express the intention to renew the Lease in accordance with its terms, and in accordance with the options to renew as set forth therein, until all of the Bonds to be issued by the Issuer at the direction of the County are fully paid, cancelled and retired, whether at maturity or by call for redemption, but such expression of intention shall not be construed as a present election on the part of the County or the AOC to extend the Lease beyond the original term. 10

17 Operation, Maintenance and Repair The Lease, provides among other things, that the County and the AOC agree to take good care of the Project, to maintain and repair the same at the expense of the County and the AOC, to keep all of the lease premises and improvements thereon in good repair, working order and condition, and to return the same in as good condition as when received by the County, ordinary wear and tear, accident, damage by fire and the elements, and other unavoidable casualties excepted. Insurance The Lease provides that the County will, during the original term of the Lease and during each extended term of one year, keep all insurable improvements presently existing, and all insurable improvements to be constructed and located upon the Project Site, insured to the full insurable value thereof against fire, flood and windstorm to the extent such insurance is obtainable (with standard comprehensive coverage endorsement) in good and solvent insurance companies, to be approved by the Trustee; and the County will make said policies payable to the County, the Issuer, and the Trustee as their respective interests may appear, or cause said policies to be endorsed in an appropriate manner so that in the event of loss the proceeds thereof will be payable to the County, the Issuer, and the Trustee, as their respective interests may appear. Release of Land The Issuer may cancel the Lease with respect to certain portions of the Project Site under the circumstances and subject to the conditions set forth in the Mortgage. Amendments The parties may supplement or make any amendment or change in the Lease (i) to cure any formal defect or ambiguity as permitted by the Mortgage, (ii) to conform the provisions of the Lease to any amended provisions of the Mortgage, (iii) to make necessary or advisable amendments in connection with the issuance of renewal bonds or additional bonds in accordance with the terms of the Mortgage or any supplemental Mortgage, (iv) to achieve compliance with any federal tax law, (v) to maintain or improve any rating on the Bonds, (vi) to provide for the release of land pursuant to and subject to the conditions specified in the Mortgage or any supplemental mortgage, (vii) to achieve compliance with any applicable statutory change, case law or Kentucky Supreme Court Mandate, or (viii) to amend the AOC's Proportionate Share. Amendment of AOC Proportionate Share for Change in Occupancy. The parties to the Lease reserve the right to amend the provisions of the Lease to reduce the AOC Rental Payments, upon satisfaction of each of the following conditions: 11

18 (a) the amended Lease shall provide for the County's assumption of the AOC Rental Payments which are to be reduced; and (b) Moody's and any other rating agency then rating the Bonds shall have confirmed in writing that the rating on the Bonds in effect immediately preceding such amendment shall not be withdrawn or lowered as a result of the amendment of the Lease; and (c) if required, the State Local Debt Officer of the Commonwealth of Kentucky shall have approved in writing the amendments to the Lease and the County's assumption of the AOC Rental Payments which are to be reduced as a result of an amendment to the Lease; and (d) if the Bonds are, at the time of such proposed reduction of the AOC Rentals, insured with a municipal bond insurance policy and the reduction is to result in the AOC Proportionate Share being reduced below 85%, the issuer of the municipal bond insurance policy shall have consented in writing to such reduction. Procedures Upon Default of the County or AOC In the event AOC shall elect not to renew the Lease at any time, or fail to pay the stipulated AOC Rentals, or the County shall elect not to renew the Lease at any time, or fail to pay the stipulated County Proportionate Share, then and in that event and upon any ensuing default in the payment of the principal of or interest on the Bonds, the Mortgage, as the case may be, shall be enforced, which enforcement may, under the terms of the Mortgage, include foreclosure of the liens created by the Mortgage and sale of the Project. No such sale or foreclosure, however, shall give rise to any right to a deficiency judgment against the County or AOC or the Issuer in any sum, and until such sale the County may at any time, by payment of all costs of action and charges of Trustee, and by discharge of principal of and interest on the Bonds, receive unencumbered fee simple title to the Project. In the event of any such enforcement by the Trustee (whether occasioned by the default of AOC or the County or by the failure of the Issuer to apply the Use Allowance to the payment of the Bonds and interest) from the proceeds of any operation of the Project or foreclosure and sale of the Project by the Trustee there shall first be paid all expenses incident to said enforcement, as provided in the Mortgage, and thereafter the Bonds and interest then outstanding shall be paid and retired, and if there shall remain any excess after paying such expenses and the claims of Owners, the entire amount of such excess shall be paid over in cash to the County. Notwithstanding the foregoing, as an alternative remedy, the Trustee is entitled to enter upon the premises, evict AOC and the County and relet the Project under such terms and conditions as it deems prudent; the proceeds of such reletting to be applied to the payment of the principal and interest requirements on the Bonds. 12

19 Rights of the AOC and the County Survive Events of Default Should AOC fail to pay the stipulated Rentals due under the Lease, or during any year for which it is renewed, and the County fails to cure such default by AOC within 30 days, at the times therein stipulated, all rights of AOC and all future options therein granted to the AOC or County in respect of payments in whole of the Bonds shall in any event remain in full force and effect; provided that the Trustee under the Mortgage shall, upon the occurrence of an event of default, be entitled to take certain actions for the benefit of the Owners of the Bonds, including foreclosure of the mortgage lien on the Project Site and sale thereof, but no such sale shall result or give rise to a deficiency judgment of any type or in any amount against AOC or the County or the Issuer, and until such sale AOC or the County may at any time discharge the Bonds and the interest thereon, in which event the County shall receive unencumbered fee simple title to the Project Site and the Project. Rights of AOC Survive Defaults by Others If AOC shall renew the Lease from biennium to biennium, in the manner herein provided, and shall promptly pay in each year the AOC Use Allowance therein stipulated for each year, and shall well and truly keep and perform each and every covenant and condition herein stipulated for performance by them, or cause same to be well and truly kept and performed, then it is specifically agreed that the Lease and all rights of AOC under the terms thereof shall continue in full force and effect the AOC shall have the right to the possession and use of the Project therein described, and AOC shall have the right to continue renewing the Lease as therein provided, notwithstanding any failure on the part of the Issuer to apply the Use Allowance so paid to it by AOC to the retirement of the principal and interest of the Bonds, and notwithstanding any default in the payment of the Bonds or interest resulting from such failure on the part of the Issuer, even though the rights securing the Bonds may be enforced by the Trustee for the benefit of the Owners of the Bonds; and such enforcement, either voluntary or involuntary, shall not be cause for cancellation or avoidance of the Lease by the AOC, the County or the Issuer. Conveyance of the Project If the AOC renews the Lease from biennium to biennium and pays the rentals for each year as therein provided and when from such rentals the Issuer shall have fully paid and retired all of the Bonds, then the Issuer covenants and agrees that it will immediately procure the release, on the records of the Clerk of the County, of the Mortgage, as the case may be, securing the Bonds, and the Issuer further covenants and agrees that it will thereupon convey the Project Site and the Project to the County free and clear of all liens and encumbrances created by and under the Mortgage, as the case may be, such steps to be taken at the expense of the County; all subject to the rights of the Owners of any Additional Bonds. 13

20 Assignment of Rights to Trustee The Issuer has assigned (i) the Lease, (ii) the lease rentals and all other rights, title and interest of the Issuer arising under the terms of the Lease and (iii) the pledged receipts to the Trustee for the Bondholders, as additional security for the Bonds. The County has agreed to make its rental payments in the amounts stipulated, directly to the Trustee, for application in strict accordance with the terms and provisions of the Mortgage. THE MORTGAGE The following is a summary of certain of the terms and provisions of the Mortgage entered into by the Issuer and the Trustee, in order to secure the payment of principal and interest on the Bonds. The Mortgage imposes a foreclosable first mortgage lien on the Project and Project Site. Funds and Accounts Upon delivery of the Bonds to the purchaser or purchasers thereof and receipt of the purchase price, the same shall forthwith in each case be deposited with the Trustee, as trust funds, and the Trustee shall hold, treat and disburse the same, as follows: (1) Cost of Issuance Fund. There shall be deposited in the Cost of Issuance Fund the amount of moneys necessary to pay the cost of issuance of the Bonds from the proceeds of the Bonds. The Trustee shall disburse amounts for the payment of such costs at the direction of the Issuer Representative. Amounts remaining on deposit in the Costs of Issuance Fund upon the payment of all such costs shall be transferred to the Construction Fund. Moneys in the Costs of Issuance Fund shall not be invested. (2) Sinking Fund. The Trustee shall deposit in the Sinking Fund upon receipt all funds received pursuant to payments made by the County or the AOC pursuant to the Lease and any other amounts which, under the terms of this Mortgage are to be applied to the payment of principal and interest on the Bonds. Except as provided in the Mortgage, the Sinking Fund and the moneys and investments therein shall be used solely and exclusively for the payment of principal and interest on the Bonds as they fall due at stated maturity, or by redemption or pursuant to any mandatory sinking fund requirements or upon acceleration, all as provided therein. Moneys in the Sinking Fund shall be invested and reinvested by the Trustee in Permitted Investments at the direction of the Issuer. The investments of funds may be made or transacted by the Trustee through the Trustee's or its affiliate's investment department. Investment of moneys in the Sinking Fund shall mature or be redeemable at the times and in the amounts necessary to provide moneys to pay principal of and interest on the Bonds as they become due at stated maturity, by redemption or pursuant to any mandatory sinking fund requirements. 14

21 An investment made from moneys credited to the Sinking Fund shall constitute part of the Sinking Fund, including but not limited to all proceeds of sale and income from investment of moneys credited thereto. The Sinking Fund shall be used solely and only and, pursuant to the Mortgage, is pledged for the payment of the interest on and principal of the Bonds. (3) Rebate Fund. From and after the issuance of the Bonds, the Rebate Fund shall be held and maintained by the Trustee as a trust fund. There shall be deposited in the Rebate Fund such amounts as are required to prevent the Bonds to be classified as "arbitrage bonds" within the meaning of Sections 103(b)(2) and 148 of the Code. Investment of Funds Moneys held in any of the aforementioned funds (other than the Costs of Issuance Fund and Rebate Fund) may be invested until required for the purposes intended in one or more of the following "Permitted Investments": (a) (b) Obligations of the United States and of its agencies and instrumentalities, including obligations subject to repurchase agreements, if delivery of these obligations subject to repurchase agreements is taken either directly or through an authorized custodian. These investments may be accomplished through repurchase agreements reached with sources including, but not limited to, national or state banks chartered in Kentucky; Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency, including but not limited to: (a) (b) (c) (d) (e) United States Treasury; Export-Import Bank of the United States; Farmers Home Administration; Government National Mortgage Corporation; and Merchant Marine bonds; (c) Obligations of any corporation of the United States government, including but not limited to: (a) (b) (c) (d) (e) (f) (g) Federal Home Loan Mortgage Corporation; Federal Farm Credit Banks; Bank for Cooperatives; Federal Intermediate Credit Banks; Federal Land Banks; Federal Home Loan Banks; Federal National Mortgage Association; and 15

22 (h) Tennessee Valley Authority; (d) (e) (f) (g) (h) (i) (j) Certificates of deposit issued by or other interest bearing accounts of any bank or savings and loan institution which are insured by the Federal Deposit Insurance Corporation or similar entity, including the Trustee or any of its affiliates, or which are collateralized, to the extent uninsured, by any obligations, including surety bonds, permitted by KRS (4); Uncollateralized certificates of deposit issued by any bank or savings and loan institution, including the Trustee or any of its affiliates, rated in one (1) of the three (3) highest categories by a nationally recognized rating agency; Bankers' acceptances for banks, including the Trustee or any of its affiliates, rated in one (1) of the three (3) highest categories by a nationally recognized rating agency; Commercial paper rated in the highest category by a nationally recognized rating agency; Bonds or certificates of indebtedness of the State and of its agencies and instrumentalities; Securities issued by a state or local government, or any instrumentality of agency thereof, in the United States, and rated in one (1) of the three (3) highest categories by a nationally recognized rating agency; and Shares of mutual funds, each of which shall have the following characteristics: (a) (b) (c) (d) The mutual fund shall be an open-end diversified investment company registered under the Federal Investment Company Act of 1940, as amended; The management company of the investment company shall have been in operation for at least five (5) years; All of the securities in the mutual fund shall be investments in any one or more of the investments described in (a) through (i) above; and. They may include, without limitation, any mutual fund for which the Trustee or an affiliate of the Trustee serves as investment manager, administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (1) the Trustee or an affiliate of the Trustee receives fees from such funds for services rendered, (2) the Trustee charges and collects fees for services rendered pursuant to the Mortgage, which fees are separate from the fees received from such funds, and (3) services performed for such funds and pursuant to the Mortgage may at time duplicate those provided to such funds by the Trustee or its affiliates. 16

23 Additional Covenants In the Mortgage, the Issuer, among other covenants, has covenanted as follows: (1) Payments. To punctually pay the principal of and interest on the Bonds when due, and at the place and in the manner prescribed in the Mortgage from the funds pledged. (2) Assessments and Maintenance. To cause the County pursuant to the terms of the Lease, to pay any and all improvement assessments against the Project and to properly maintain the Project. (3) Tax Covenant. The Issuer covenants that it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of the interest on the Bonds under Section 103(a) of the Code. The Issuer will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the Issuer, or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" within the meaning of Sections 103(b)(2) and 148 of the Code. To that end, the Issuer will comply with all requirements of Sections 103(b)(2) and 148 of the Code to the extent applicable to the Bonds. In the event that at any time the Issuer is of the opinion that for purposes of the Mortgage it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under the Mortgage, the Issuer shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions. (4) Insurance of Project. The Issuer further covenants and agrees that it will, at all times hereafter until the Bonds shall be fully paid, require the County (to the extent such insurance is obtainable) to keep all insurable real properties and improvements thereon to be insured against loss or damage by fire and windstorm to their full insurable value, with standard comprehensive coverage endorsement, and the Issuer will cause all such insurance policies to be made payable in case of loss to the Trustee. (5) Accounts and Reports. The Issuer shall keep, or cause to be kept, proper books of record and account in which complete and accurate entries shall be made of all its transactions relating to the Project, and all Funds established by the Mortgage, which shall at all reasonable times be subject to the inspection of the Trustee and the holders of an aggregate of not less than five percent (5%) in principal amount of Bonds then Outstanding or their representatives duly authorized in writing. (6) Enforcement of the Lease. To enforce the Lease and all other contracts and agreements in respect of the Project to which the Issuer is or will be a party, to the fullest extent provided and permitted by law. 17

24 Additional Bonds While any of the Bonds are outstanding, the Issuer shall not issue any Additional Bonds payable from the revenues of said Project and/or secured by a lien against said Project unless the pledge and/or lien to secure same are made inferior and subordinate in all respects to the pledge and lien securing the Bonds herein authorized, as the case may be; provided, however, the Issuer reserves the right to issue Additional Bonds, payable from the income and revenues of the Project and secured by a parity first mortgage lien on the Project, and ranking on a parity with the Bonds herein authorized, but only if and to the extent that the issuance of such Additional Bonds may be necessary to pay the costs, not otherwise available, of the completion of the Project or for making additions, extensions or improvements to the Project. Such Additional Bonds shall be secured by the same lien and security as the Bonds herein authorized, regardless of the time of their issuance and delivery. Prior to the issuance of such Additional Bonds (a) there shall be procured and filed with the Secretary of the Issuer and with the Trustee, a certificate of an authorized official of the County explaining in detail the reason or reasons for the deficiency in the Bond proceeds, and making detailed recommendations as to the issuance of the Additional Bonds, together with the amount thereof, (b) the issuance thereof shall be approved by the State Local Debt Officer of the Commonwealth of Kentucky and the Fiscal Court of the County and (c) a Supplemental Lease Agreement shall have been entered into by and between the Issuer and the County and the AOC, whereunder the respective annual rental or lease payments to be made by the County and the AOC pursuant to the Lease shall be automatically increased to such sum as is necessary to pay principal and interest requirements on the Additional Bonds as well as the principal amount of Bonds, and that the County and the AOC will additionally pay the costs of operating, maintaining and insuring the Project as completed. The Issuer further reserves the right to issue Additional Bonds which may be on a parity as to security with the Bonds in order to refund a portion of the Bonds then Outstanding under the Mortgage; provided that Additional Bonds for such purpose may only be issued if the annual principal and interest payments on the Bonds after issuance of the Additional Bonds will be no greater in any fiscal year than the annual principal and interest payments on the Bonds prior to the issuance of the Additional Bonds and that the final maturity date of the Bonds is no later than their original final maturity date. Release of Land In the event, but only in the event, the Governing Body of the County adopts a Resolution or Ordinance determining that an addition to the Project financed by the proceeds of such Bonds, is reasonably necessary, the County may request that the Trustee, upon behalf of all of the owners of the outstanding Bonds execute a deed conveying to the County and releasing from the mortgage lien herein created an amount of such vacant property reasonably necessary for the operation of such addition, together with reasonable rights of ingress, egress and parking, such conveyance to be made not earlier than the beginning of construction with reference to such new addition. Upon such deed being executed and delivered such vacant property and such 18

25 rights shall be released completely from the lien created by the Mortgage. If the financing of such addition is to be accomplished in cooperation with the Issuer, such a deed of conveyance need not be made, it being sufficient that the Trustee, the Issuer and the County enter into a written recordable instrument providing that such land shall be released from such lien in order to finance such addition. Such an addition shall be financed only on the basis that when all the indebtedness incurred in connection with such addition is paid, the County shall receive the complete title to all the properties constituting such addition. However, the right to release provided for in the Mortgage, shall not be effected, upon there being any default in the payment of the interest of or the principal on any of the Bonds therein authorized or after there has been a default in the performance of any covenant therein contained. Furthermore, there shall be retained by the Issuer a sufficient amount of vacant property, reasonably necessary for parking and the use of the facilities as they shall exist, prior to such release. Nothing in connection with the construction or operation of such additional facilities shall impair in any way the operation of the Project, or the revenues and rental income derived therefrom, as evidenced by a certificate of the President or other County official and an official of the AOC. Amendments Notwithstanding any other provisions of the Mortgage, the Trustee and the Issuer may at any time and from time to time supplement or make any amendment or change in the Mortgage (i) to cure any formal defect or ambiguity if, in the opinion of the Trustee, such amendment or change is not adverse to the interest of the holders of the Bonds, (ii) to grant to or confer upon the Trustee for the benefit of the holders of the Bonds any additional rights, remedies, powers, authority or security which may lawfully be granted or conferred and which are not contrary to or inconsistent with the Mortgage, (iii) to make necessary or advisable amendments in connection with the issuance of renewal bonds or additional bonds in accordance with the terms of the Mortgage, (iv) to permit the Trustee to comply with any obligations imposed on it by law, (v) to achieve compliance with any federal tax law, (vi) to maintain or improve any rating on the Bonds or (vii) to provide for the release of land pursuant to and subject to the conditions specified in the Mortgage. Any other amendment or change shall be subject to the written consent of the holders of at least two-thirds (2/3) in principal amount of the Bonds outstanding at the time such consent is given, or in case less than all of the Bonds then outstanding are affected by the modification or amendment, of the holders of at least two-thirds (2/3) of the principal amount of the Bonds so affected. Nothing shall permit, however, or be construed as permitting (a) without consent of the holder of each Bond so affected, (i) an extension of the maturity of the principal of or the interest on any Bond, (ii) a reduction in the principal amount of any Bond or the rate of interest or premium thereon, or (iii) a reduction in the amount or extension of time of paying of any 19

26 mandatory sinking fund requirements or (b) without the consent of the holders of all Bonds then outstanding, (i) the creation of a privilege or priority of any Bond over any other Bond, or (ii) a reduction in the aggregate principal amount of the Bonds required for consent to amendments. Events of Default and Remedies Events of Default. Each of the following events is an "Event of Default" under the Mortgage: (1) the County and the AOC shall elect not to renew the Lease, which has been assigned to the Trustee as security for the Bonds, or (2) the County and the AOC shall fail for any reason to make the required semiannual rental payments to the Trustee, or (3) there shall be any default in the payment of the principal of or the interest on the Bonds, when due, or (4) the Issuer shall fail or refuse to comply with the provisions of the Act, or shall default in the performance or observance of any other of the covenants, agreements or conditions on its part contained in the Mortgage, any authorizing resolution of the Issuer, or the Bonds, or the County and the AOC shall default in the performance or observance of any covenant, other than payment of rental agreements or conditions on its part contained in the Mortgage or the Lease, and such failure, refusal or default shall continue for a period of forty-five (45) days after written notice thereof by the Trustee, or by owners of not less than five percent (5%) in principal amount of the outstanding Bonds. Remedies. Upon the happening and continuance of any Event of Default, the Trustee may, subject to its right to be indemnified to its satisfaction, proceed to protect and enforce its rights and the rights of the Bondowners by such of the following remedies, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce such rights: (a) by enforcement of the foreclosable mortgage lien on the Project and improvements granted by the Mortgage, and in such event the Trustee shall take over possession, custody and control of the Project and shall operate or carry out a decretal sale of same with due regard to state and Federal law and the covenants contained in the Lease for the benefit of the owners of the Bonds; provided, however, that no such foreclosure sale shall result in a deficiency judgment of any type or in any amount against the County, the AOC or the Issuer, and until such sale the County or the AOC may at any time by the discharge of the Bonds and interest thereon receive unencumbered fee simple title to the mortgaged facilities; provided that in the event of any such enforcement of said lien by the Trustee, there shall first be paid all expenses incident to said enforcement, and thereafter the Bonds then outstanding shall be paid and retired; 20

27 (b) by mandamus or other suit, action or proceeding at law or in equity, to enforce all rights of the Bondowners, including the right to require the Issuer to enforce fully the Lease and to charge, collect and fully account for the rents payable thereunder and to require the Issuer to carry out any and all other covenants or agreements with the Bondowners and to perform its duties under the Act; (c) by bringing suit upon the Bonds; (d) by action or suit in equity, require the Issuer to account as if it were the trustee of an express trust for the owners of the Bonds; (e) by action or suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the owners of the Bonds; (f) by declaring all Bonds due and payable, and if all defaults shall be made good, then, with the written consent of the owners of not less than fifty percent (50%) in principal amount of the outstanding Bonds, by annulling such declaration and its consequences; (g) in the event that all Bonds are declared due and payable, by selling Permitted Investments of the Issuer (to the extent not theretofore set aside for redemption of Bonds for which call has been made), and enforcing all courses in action of the Issuer to the fullest legal extent in the name of the Issuer for the use and benefit of the owners of the Bonds. In the event of such foreclosure and sale of the Project under judgment to satisfy the lien securing the Bonds, all sums realized from such sale shall be applied to the extent necessary to pay the costs and expenses of such foreclosure (including necessary legal fees and the fees and expenses of the Trustee and/or its counsel), together with the amounts necessary to satisfy all rights of the Bondowners; provided, further, that all sums, if any, realized from such sale in excess of the amount necessary to pay the costs and expenses of such foreclosure and the principal and interest owed to the Bondowners, shall be paid to and become the property of the County. In the event of default, each defaulted Bond shall continue to bear interest after maturity at the interest rate applicable to such respective Bonds until the necessary funds are made available for the payment thereof. Provided, however, that no action taken in connection with the enforcement of the lien herein granted, prior to foreclosure and sale of the Project, shall in any way impair or affect the unqualified right of the County to receive unencumbered fee simple title to the Project at such time as all of the Bonds herein authorized and any Additional Bonds ranking on a parity therewith, shall have been paid as to principal and interest, or provision made for the payment and satisfaction of the Bonds have been paid. 21

28 LITIGATION No litigation or administrative action or proceeding is pending or, to the best of the knowledge of the County or the Issuer, threatened, restraining or enjoining or seeking to restrain or enjoin, the issuance and delivery of the Bonds, the collection of revenues or the use of revenues to pay debt service on the Bonds, or contesting or questioning the proceedings and authority under which the Bonds have been authorized and are to be issued or delivered, or the validity of the Bonds, or to prevent or restrict the operations of the Issuer. Federal Tax Exemption TAX EXEMPTION In the opinion of Bond Counsel, the form of which is attached hereto as Appendix D, based upon certain covenants, representations and certifications of the Issuer, which Bond Counsel has not independently verified, and assuming continuing compliance therewith, as set forth below, interest on the Bonds is excludable from gross income for federal income tax purposes under existing laws, regulations, rulings and decisions in effect of the date of delivery of the Bonds. The County and the Issuer are required by the Internal Revenue Code of 1986, as amended (the "Code") to comply on an ongoing basis with certain obligations in order for the interest on the Bonds to be and remain excludable from gross income for federal income tax purposes. Failure to meet those obligations could result in the interest on the Bonds becoming subject to federal income taxation, retroactive to the date of the Bonds. The County and the Issuer have covenanted to comply with all such obligations. Interest on the Bonds will be included in effectively connected earnings and profits for purposes of computing the branch profits tax on certain foreign corporations doing business in the United States of America. In addition, the Code disallows certain federal income tax deductions of certain financial institutions and property and casualty insurance companies which acquire the Bonds. Bond Counsel has not opined on any other federal income tax consequences arising for holders of the Bonds. From time to time, legislation is proposed which, if enacted, could alter one or more of the federal tax matters referred to above or would adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any of such proposals may be enacted and whether, if enacted, such proposals will apply to obligations (such as the Bonds) issued prior to enactment. 22

29 Kentucky Tax Exemption Under present law, the Bonds are exempt from ad valorem taxation and interest thereon is exempt from income taxation by the Commonwealth of Kentucky and any political subdivisions thereof. Prior to any purchase of the Bonds prospective purchasers of the Bonds are advised to consult their own tax advisors as to the impact of the Code, upon their acquisition, holding or disposition of the Bonds. BANK QUALIFICATION The Code provides for the disallowance of any deduction for interest expenses incurred by banks and certain other financial institutions attributable to carrying certain tax-exempt obligations, such as the Bonds, acquired after August 7, 1986, except with respect to certain financial institutions (within the meaning of Section 265(b)(5) of the Code). The Bonds are eligible for such limited exception and are considered "qualified tax-exempt obligations" within the meaning of Section 265 of the Code. DISCLOSURE COMPLIANCE; EXEMPTION Bond Counsel has advised the County and the Issuer that as a result of the aggregate principal amount of the Bonds being offered not exceeding $1,000,000, the Bonds are not an "Offering" as defined in Rule 15c2-12 (the "Rule") promulgated by the Securities and Exchange Commission (the "SEC"), and accordingly, said Bonds are exempt from the application of the Rule. The County and the Issuer have been late in making certain required filings under the terms of the continuing disclosure agreements executed in connection with other outstanding municipal offerings. The County has filed Material Event Notices on October 25, 2017 indicating its failure to file on a timely basis the following information: (a) Failure to file annual operating data for fiscal years ending June 30, 2012, 2013, 2014, 2015 and 2016; (b) Failure to file annual financial information for fiscal years ending June 30, 2011, 2012, 2013, 2014 and 2015; (c) Failure to file annual financial information for fiscal year ending June 30, Financial information regarding the County and the Issuer can be obtained from its County Treasurer, 31 West Third Street, Maysville, Kentucky 41056, telephone: (606) On March 14, 2017, the County adopted written guidelines and procedures to insure that continuing disclosure undertakings can be met on a timely basis, to the extent the County can control the preparation process. 23

30 FINANCIAL ADVISOR Ross, Sinclaire & Associates, LLC ( RSA ), Lexington, Kentucky, has acted as Financial Advisor to the Issuer in connection with the issuance of the Bonds and will receive a fee, payable from Bond proceeds, for their services as Financial Advisor, contingent upon the issuance and sale of the Bonds. In this capacity, RSA has compiled certain data relating to the Bonds that is contained in this Official Statement. RSA is not obligated to undertake, and has not undertaken, either to make an independent verification of or to assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. UNDERWRITING The Bonds are being purchased by (the "Underwriter") pursuant to a public bid submitted to the Issuer. The Underwriter has agreed to purchase the Bonds at a price of $, which represents the aggregate principal amount of the Bonds, plus the original issue premium, less original issue discount, less the Underwriter s discount. The Bonds are offered for sale to the public at the initial prices stated on the cover page of this Official Statement. The initial public offering prices set forth on the cover page may be changed at any time by the Underwriter. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. BOND RATING Moody's Investors Service, Inc. has assigned the Bonds a rating of "A1". Such rating reflects only the opinion of Moody's Investors Service, Inc., and an explanation of the significance of such rating may be obtained directly therefrom. There can be no assurance that a rating will continue for any period of time or that it will not be revised downward or withdrawn entirely by said rating agency if, in its judgment, circumstances so warrant. Any revision or withdrawal of a rating may have an adverse effect on the market price of the Bonds. CONCLUDING STATEMENT The Issuer has approved and caused this Official Statement to be executed and delivered by its President. In making this Official Statement the Issuer relied upon information furnished to it by the County and does not assume any responsibility as to the accuracy or completeness of any of the information in this Official Statement. The financial information supplied by the County and reproduced herein is represented by the County to be correct. No dealer, broker, salesman or other person has been authorized by the Issuer, the County or the Financial Advisor to give any information or representations, other than those contained in this Official Statement, and if given or made, such information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. Except when otherwise indicated, the information set forth herein has been obtained from the County and believed to be reliable; 24

31 however, such information has not been verified as to accuracy or completeness by, and is not to be construed as a representation by the Financial Advisor or by Bond Counsel. The delivery of this Official Statement at any time does not imply that information herein is correct as of any time subsequent to the date hereof. MASON COUNTY, KENTUCKY P U B L I C P R O P E R T I E S CORPORATION By /s/ Joseph Pfeffer President 25

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33 APPENDIX A Mason County, Kentucky Public Properties Corporation First Mortgage Revenue Bonds (Court Facilities Project) Series 2017 Estimated Annual Debt Service Requirements

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35 Estimated Annual Debt Service Requirements Payment Date Principal Interest Total 1-Jun ,040 7,040 1-Dec-18 68,000 7,001 75,001 1-Jun ,559 6,559 1-Dec-19 68,000 6,559 74,559 1-Jun ,049 6,049 1-Dec-20 69,000 6,049 75,049 1-Jun ,463 5,463 1-Dec-21 71,000 5,463 76,463 1-Jun ,788 4,788 1-Dec-22 72,000 4,788 76,788 1-Jun ,032 4,032 1-Dec-23 74,000 4,032 78,032 1-Jun ,181 3,181 1-Dec-24 75,000 3,181 78,181 1-Jun ,244 2,244 1-Dec-25 77,000 2,244 79,244 1-Jun ,185 1,185 1-Dec-26 79,000 1,185 80,185 Totals 653,000 81, ,045 Note: All figures rounded to nearest dollar

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37 APPENDIX B Mason County Public Properties Corporation First Mortgage Revenue Bonds (Court Facilities Project) Series 2017 Demographic and Economic Data, Tax Base and Financial Information for Mason County

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39 MASON COUNTY, KENTUCKY Maysville, the county seat of Mason County had an estimated 2016 population of 8,866. Maysville is located in Eastern Kentucky and is 63 miles southeast of Cincinnati, Ohio; 65 miles east of Lexington, Kentucky; and 134 miles east of Louisville, Kentucky. Mason County had an estimated population of 17,190 persons in The Economic Framework The total number of people employed in Mason County in 2016 averaged 6,774. Manufacturing firms in the County reported 1,339 employees; trade, transportation, and public utilities 1,678 jobs; 192 people were employed in service occupations; and construction provided 671 jobs. Labor Supply There is a current estimated labor supply of 4,675 persons available for industrial jobs in the labor market area. That is an unemployment rate of 6.4%. Transportation U.S. Highway 75 and 64 are the only major interstates close to Mason County. The nearest commercial airline service is in Cincinnati, Ohio at the Cincinnati/Norther Kentucky International Airport, which is located 63 miles northwest of Maysville. Power and Fuel Electric power is provided to Mason County by East Kentucky Power Cooperative, Fleming-Mason Energy Cooperative and Kentucky Utilities. Natural gas services are provided by Columbia Gas of Kentucky Inc, Delta Natural Gas and Western Lewis-Rectorville Water and Gas District. Education The Mason County School system provides primary education to the residents of Mason County. There are 29 colleges and universities and 15 technology centers (ATC) within 60 miles of Bardwell. LABOR MARKET STATISTICS The Maysville Labor Market Area includes Bracken, Mason, Lewis, Robertson, Fleming and Nicholas counties in Kentucky. Also included are Brown, Adams and Highland counties in Ohio. Population Estimate Year Description Mason County 17,458 17,298 17,122 17,077 17,190 Maysville 8,997 8,918 8,831 8,809 8,866 Labor Market Area 179,258 Source: U.S. Department of Commerce, Bureau of the Census 178, , , ,473

40 Population Projections Estimate Year Description Mason County 17,106 17,074 16,941 16,725 Source: Kentucky State Data Center, University of Louisville and Kentucky Cabinet for Economic Development Unemployment Statistics Year Ending December Description County of Mason Civilian Labor Force 7,619 7,801 7,748 7,405 7,216 Employment 6,901 7,016 7,136 6,958 6,774 Unemployment Unemployment Rate 9.40% 10.10% 7.90% 6.00% 6.10% State of Kentucky: Civilian Labor Force 12,057,415 2,058,186 2,005,603 1,975,251 1,991,974 Employment 1,889,568 1,892,027 1,875,932 1,871,826 1,892,273 Unemployment 167, , , ,425 99,701 Unemployment Rate 8.20% 8.10% 6.50% 5.20% 5.00% US Comparable Rate: Unemployment Rate 8.10% 7.40% 6.20% 5.30% N/A Source: The Kentucky Department for Employment Services Structure LOCAL GOVERNMENT Maysville s Government structure consists of a Mayor and four Commissioners. The Mayor serves a four-year term while the Council Members serve two-year terms. Mason County is served by a Judge/Executive and three Commissioners. The Judge/Executive and Magistrates are elected to serve a fouryear term. Planning and Zoning Mandatory state codes enforced Kentucky Plumbing Code, National Electric Code, Kentucky Boiler Regulations and Standards, Kentucky Building Code (modeled after BOCA code). Sales and Use Tax A state sales and use tax is levied at the rate of 6.0% on the purchase or lease price of taxable goods and on utility services. Local sales taxes are not levied in Kentucky.

41 State and Local Property Taxes The Kentucky Constitution requires the state to tax all classes of taxable property, and state statutes allow local jurisdictions to tax only a few classes. All locally taxed property is subject to county taxes and school district taxes (either a county school district or an independent school district). Property located inside the city limits may also be subject to city property taxes. Property assessments in Kentucky are at 100% fair cash value. Accounts receivable are taxed at 85% of face value. Special local taxing jurisdictions (fire protection districts, watershed districts and sanitation districts) levy taxes within their operating areas (usually a small portion of community or county). The table below lists the assessed property valuation of the county as reported by the Department of Revenue, Frankfort, Kentucky: Tax Year Description Real Estate $917,664,414$1,018,620,395 $1,037,693,467 $1,038,922,633 $1,041,129,375 Tangible Property 219,764, ,913, ,188, ,709, ,065,128 Motor Vehicle 98,324, ,865, ,961, ,370, ,485,564 Watercraft 1,913,218 1,831,157 1,805,230 1,973,849 1,958,888 Totals: $1,237,665,935$1,340,230,324 $1,361,648,203 $1,375,976,522 $1,073,864,072 % Increase (Decrease) % 1.60% 1.05% -0.24% Ten Largest Taxpayers The following table lists the ten largest real property taxpayers of the County as reported by the Mason County Property Valuation Administrator. Real Tangible Total R.E. & Rank Tax Payer Property Property Tangible 1. International Paper / Inland Paperboard $23,508,758 $110,773,074 $134,281, Mitsubishi 13,731,167 82,376,354 96,107, Carmeuse Lime & Stone Inc / Dravo Lime Co. 8,343,000 53,502,693 61,845, Meadowview Regional 20,352,511 11,134,859 31,847, Walmart RE Business / Walmart Stores East LP 10,134,561 7,896,202 18,030, Lowe s Home Centers 7,388,780 3,707,449 11,096, Midland Maysville LLC 7,525,000-7,525, Caterpillar Financial Services - 6,716,752 6,716, Triad Exchange, LLC 5,667,035-5,667, Kroger Company # ,462,286 4,462,286

42 Tax Collection History The following table lists the tax collection history of all taxes collected by the county as reported by the Auditor of Public Accounts, Frankfort, Kentucky for the last five available tax years: Tax Collection History Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year % Collected Real Estate Total Taxes Due 1,864, ,856, ,870, ,892, ,927, Total Taxes Paid 1,851, ,838, ,849, ,876, ,910, % Collected 99.27% 99% 98.86% 99.15% 99.13% Public Schools EDUCATION Mason County Schools Total Enrollment ( ) 2,730 Pupil-Teacher Ratio 16.4

43 Colleges and Universities Institution Location Enrollment Fall 2015 Morehead State University Morehead 10,872 Northern Kentucky University Highland Heights 14,699 Shawnee State University Portsmouth, OH 3,881 Kentucky Christian University Grayson 606 Georgetown College Georgetown 1,364 Thomas Moore College Crestview Hills 1,909 Mount St Joseph University Cincinnati, OH 2,073 Union Institute & University Cincinnati, OH 1,396 University of Cincinnati Cincinnati, OH 36,042 University of Cincinnati Blue Ash College Cincinnati, OH 5,065 Xavier University Cincinnati, OH 6,260 Transylvania University Lexington 1,053 University of Kentucky Lexington 29,727 Wilmington College Wilmington, OH 1,112 Midway University Midway 1,055 Ohio University Southern Campus Ironton, OH 2,073 Vocational Training Vocational training is available at both the state vocational-technical schools and the area vocational education centers. The state vocational-technical schools are post-secondary institutions. The area vocational education centers are designed to supplement the curriculum of high school students. Both the state vocationaltechnical schools and the area vocational education centers offer evening courses to enable working adults to upgrade current job skills. Arrangements can be made to provide training in the specific production skills required by an industrial plant. Instruction may be conducted either in the vocational school or in the industrial plant, depending upon the desired arrangement and the availability of special equipment.

44 Bluegrass State Skills Corporation The Bluegrass State Skills Corporation, an independent public corporation created and funded by the Kentucky General Assembly, provides programs of skills training to meet the needs of business and industry from entry level to advanced training, and from upgrading present employees to retraining experienced workers. The Bluegrass State Skills Corporation is the primary source for skills training assistance for a new or existing company. The Corporation works in partnership with other employment and job training resources and programs, as well as Kentucky's economic development activities, to package a program customized to meet the specific needs of a company. Institution Location Cumulative Enrollment Mason County ATC Maysville 201 Foster Meade Career and Technical Center Vanceburg 994 Harrison County ATC Cynthiana 681 Campbell County ATC Alexandria 292 Montgomery County ATC Mt. Sterling 557 Carter County Career and Technical Center Olive Hill 186 Chapman Vocational Education Center Covington 980 Clark County ATC Winchester 704 Kenton County Academies of Innovation and Fort Mitchell 826 Technology Elkhorn Crossing School Georgetown 860 Greenup County ATC Greenup 530 Eastside Technical Center Lexington 906 Southside Technical Center Lexington 471 Morgan County ATC West Liberty 669 Boone County ATC Hebron 251 Russell ATC Russell 522 FINANCIAL INSTITUTIONS Institution Total Assets Total Deposits Bank of Maysville $124,197,000 $100,552,000 First Bank of Kentucky Corporation $124,197,000 N/A Security Bancorp of Maysville, Inc $53,146,000 N/A Security Bank & Trust Company $53,146,000 $40,844,000 Source: McFadden American Financial Dictionary July December 2017 Edition

45 EXISTING INDUSTRY Firm Product Total Employed Maysville Carlson Software Inc Computer repair 20 Carmeuse Lime & Stone Lime & calcinating plant fines 140 Comprehend Inc Headquarters; mental health, developmental 66 disabilities and addiction services Crounse Corporation Marine Cargo transportation 165 Federal Mogul Motor Plus Automotive distribution center 110 Glenro Inc Industrial ovens, flat bed lamination equipment 25 Green Tokai Co Ltd Weather stripping, auto trim 265 HL Spurlock Power Station Electric coal generating plant 211 International Paper Manufacture recycled liner board and medium 113 JBR Industrial Services Inc Services for manufacturing plant closures, 15 consolidations and relocations MACA Plastics Inc Plastic injection molding 26 Maysville Materials Co Asphalt 14 Mitsubishi Electric Automotive America Inc Automotive electronics including vehicle entertainment system, ignition coils and engine control units Ranger Steel Inc Power and communication line and related 31 structures construction Regal Beloit Office and administrative/it services 86 Standard Supply Co Inc Concrete blocks & precast concrete products 20 Stober Drives Inc Manufacture and assemble gearbox and 120 components The Ledger-Independent Newspaper publishing 28 UPS Small package distribution 31 Wald LLC Conveyor system components 78 Source: Kentucky Directory of Manufacture 416

46 PROPERTY TAX RATES The following table lists the tax rates for the last five (5) available years as reported by the Department of Revenue, Frankfort Kentucky: Tax Year Tax Year Tax Year Tax Year Tax Year Real Motor Real Motor Real Motor Real Motor Real Motor Estate Tangible Vehicle Estate Tangible Vehicle Estate Tangible Vehicle Estate Tangible Vehicle Estate Tangible Vehicle County- Extension Services $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ General $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Health $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Library $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Totals: $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Schools- Mason County Schools $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ City- Maysville $ $ $ $ $ $ $ $ $ $ $ $ $ $ $0.2460

47 APPENDIX C Mason County, Kentucky Public Properties Corporation First Mortgage Revenue Bonds (Court Facilities Project) Series 2017 Audited Financial Statements for the year ended June 30, 2015

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49 $ 1687 /0123$ !#!', #2$%!&!'(')'* ,!!" ,! -,&%(,)%' "'