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<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>We are circulating the following information, compiled by
the General Counsel for the State Regents in 1998 and still relevant, as a
response to a question posed on the reason why an institution will be required
to sign a lease agreement for their capital bond projects.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>This information explains the differences between the
current 2005 capital bond structure and those issued in the 1992 G.O. Bond
issue. The current revenue bond structure, also referred to as a
“lease, lease-back structure,” is the same structure we utilized
for the 1999 OCIA issuance. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>1. General obligation (G.O.) bonds cannot be issued
without a vote of the people.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>2. General obligation bonds put the full faith and
credit of State behind the bonds<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>3. General obligation bonds create a debt within the
meaning of the constitution.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>4. Revenue Bonds can be issued with a vote of the
people<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>5. Revenue Bonds must be
“self-liquidating” or “profit-producing.”<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>6. Ordinarily the revenue stream to liquidate such
revenue bonds will come from fees collected in relation to the asset<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>7. The revenue stream to liquidate such bonds may come
from monies appropriated by the Legislature to agencies that rent, lease or
lease-purchase the facilities constructed, improved, and/or purchased.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>8. When the monies are to be appropriated by the
Legislatures to an agency, the ownership of the improvement is vested in the
agency with the authorization to issue the bonds, in this case the Oklahoma
Capital Improvement Authority, which then leases it to another agency
(institution) for a periodic payment; the lease-purchase payment constitutes
the revenue stream that makes the bonds revenue bonds rather than G.O. bonds. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'>9. The <st1:place w:st="on"><st1:State w:st="on">Oklahoma</st1:State></st1:place>
Supreme Court has upheld this financing methodology in a series of cases going
back to 1960.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 face=Arial><span style='font-size:10.0pt;
font-family:Arial'><o:p> </o:p></span></font></p>
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