Ubs Investment Bank

NEW ISSUE-FULL BOOK-ENTRY INSURED RATING: Moody's: Aaa: S&P: AAA UNDERLYING RATING: Moody's: Aa3: S&P: A+ (See "RATINGS" and ''BOND INSURANCE" herein.) In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California ("Bond Counsel"), under existing statutes, regulations, mlings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. In addition, the difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to the Bond constitutes original issue discount. (See "LEGAL MATTERS - Tax Matters" herein with respect to tax consequences relating to the Bonds.) $76,954,040,30 MORGAN HILL UNIFIED SCHOOL DISTRICT (Santa Clara County, California) 2006 General Obligation Refunding Bonds Dated: Date of Delivery Due: August 1, as shown on inside cover The Morgan Hill Unified School District (Santa Clara County, California) 2006 General Obligation Refunding Bonds (the "Bonds"), in the aggregate principal amount of $76,954,040.30, are being issued by the Morgan Hill Unified School District (the "District") to advance refund the District's outstanding General Obligation Bonds, Election of 1999, Series 2000 and General Obligation Bonds, Election of 1999, Series 2002 (collectively, the "Refunded Bonds"), which were authorized at an election of the registered voters of the District held on June 8, 1999, at which two-thirds or more of the persons voting on the proposition voted to authorize the issuance and sale of $72,500,000 principal amount of general obligation bonds of the District, and to pay costs of issuance associated with the Bonds. The Bonds are general obligations of the District, payable solely from the proceeds of ad valorem taxes, which the Board of Supervisors of Santa Clara County is empowered and obligated to levy, without limitation of rate or amount, upon all property within the District subject to taxation by the District (except upon certain personal property which is taxable at limited rates). The Bonds will be issued in book-entry fonn only, and will be initially issued and registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (collectively referred to herein as "DTC"). Purchasers of the Bonds (the "Beneficial Owners") will not receive physical certificates representing their interests in the Bonds. Interest with respect to the Current Interest Bonds accrues from the Date of Delivery and is payable semiannually on February 1 and August 1 of each year, commencing February 1, 2007. Payment to owners of $1,000,000 or more in principal amount of the Current Interest Bonds, at the owner's option, will be made by wire transfer. The Current Interest Bonds are issuable as fully registered Bonds in denominations of $5,000 or any integral multiple thereof. The Capital Appreciation Bonds are dated the Date of Delivery and accrete interest from such date, compounded semiannually on February 1 and August 1 of each year, commencing February 1, 2007, and are payable only at maturity. The Capital Appreciation Bonds are issuable as fully registered Bonds in Maturity Value amounts of $5,000 or any integral multiple thereof. Payments of principal and Maturity Value of and interest on the Bonds will be made by U.S. Bank National Association, as Bond Registrar and Paying Agent, to DTC for subsequent disbursement to DTC Participants who will remit such payments to the Beneficial Owners of the Bonds. (See "APPENDIX F - Book-Entry Only System.") The Current Interest Bonds are subject to redemption prior to maturity as described herein. The Capital Appreciation Bonds are not subject to redemption prior to maturity. The scheduled payment of the principal of and interest on the Bonds when due will be guaranteed under an insurance policy issued concurrently with the delivery of the Bonds by Ambac Assurance Corporation (the "Insurer"). (See "BOND INSURANCE" herein and "APPENDIX E - Fonn of Bond Insurance Policy.") Ambac Maturity Schedule (See inside front cover) This cover page contains infonnation for general reference only. It is not a summary of all the provisions of the Bonds. Investors must read the entire official statement to obtain infonnation essential in making an infonned investment decision. The Bonds are offered when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, Bond Counsel to the District. It is anticipated that the Bonds in definitive form will be available for delivery to Cede & Co., as nominee of The Depository Tmst Company, on or about August 22, 2006, in New York, New York. STONE & YOUNGBERG LLC UBS INVESTMENT BANK The date of this Official Statement is August 4, 2006. MATURITY SCHEDULE Base CUSIP(l): 617403 $68,180,000.00 Current Interest Serial Bonds Maturity Principal Interest Maturity Principal Interest August 1 Amount Rate Yield CUSIP(l) August 1 Amount Rate Yield CUSJP(l) --- ---- --- 2007 $3,785,000 4.000% 3.500% CMO 2013 $6,570,000 5.000% 3.800% DB3 2008 3,660,000 4.000 3.560 CNS 2017 8,750,000 5.000 4.080* CX6 2009 4,140,000 4.000 3.620 CP3 2018 9,705,000 5.000 4.150* CY4 2010 4,660,000 4.000 3.660 CQ! 2019 10,740,000 4.750 4.220* CZ! 2011 5,215,000 5.000 3.700 CR9 2020 5,090,000 5.000 4.240* DAS 2012 5,865,000 5.000 3.740 CS? $8,774,040.30 Capital Appreciation Bonds Maturity Denominational Accretion Yield to Maturity August 1 Amount Rate Maturity Value CUSJP(l) ---- 2014 $3,071,226.00 11.250% 4.250% $7,325,000 CU2 2015 2,923,801.80 11.250 4.350 7,780,000 cvo 2016 2,779,012.50 11.250 4.420 8,250,000 cws * Yield to call at par on August l, 2016. (/) CUSIP Copyright 2006, American Bankers Association. CUSIP data herein is provided by Standard & Poor's CUSIP service bureau, a division of The McGraw Hill Companies. MORGAN HILL UNIFIED SCHOOL DISTRICT BOARD OF EDUCATION Mike Hickey, President Peter Mandel, Vice President Amina Khemici, Member Julia Hover-Smoot, Member Don Moody, Member Kathleen Sullivan,Member Shelle Thomas,Member DISTRICT ADMINISTRATION Dr. Alan Nishino, Superintendent Bonnie Tognazzini, Deputy Superintendent, Business Services Michael Johnson, Assistant Superintendent, Educational Services Stan Rose, Assistant Superintendent, Human Resources PROFESSIONAL SERVICES Bond Counsel Stradling Y occa Carlson & Rauth, a Professional Corporation San Francisco, California Underwriters Stone & Youngberg LLC San Francisco, California UBS Securities LLC San Francisco, California Financial Advisor California Financial Services Mission Vie;o, California Verification Agent Causey Demgen & Moore, Inc. Denver, Colorado Bond Registrar, Transfer Agent, Paying Agent & Escrow Agent U.S. Bank National Association St. Paul, Minnesota This Official Statement does not constitute an offering of any security other than the original offering of the Bonds of the District. No dealer, broker, salesperson or other person has been authorized by the District to give any information or to make any representations other than as contained in this Official Statement, and if given or made, such other information or representation not so authorized should not be relied upon as having been given or authorized by the District. The issuance and sale of the Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions provided thereunder by Section 3(a)2 and 3(a)l2, respectively, for the issuance and sale of municipal securities. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. The information set forth herein, other than that provided by the District, has been obtained from sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the District. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. 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, give nse to any implication that there has been no change in the affairs of the District since the date hereof. Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements." Such statements are generally identifiable by the terminology used, such as ''plan," ''expect," ''estimate," ''budget," ''project," ''forecast" or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

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