06.25.2013 Town Council Packet
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Prosper is a place where everyone matters.
1. Call to Order/Roll Call.
2. Invocation, Pledge of Allegiance and Pledge to the Texas Flag.
3. Announcements of upcoming events.
4. Presentations.
4a. Presentation of a meritorious service medal to a Town of Prosper police officer.
(GM)
5. CONSENT AGENDA
(Items placed on the Consent Agenda are considered routine in nature and are considered
non-controversial. The Consent Agenda can be acted upon in one motion. A majority
vote of the Council is required to remove any item for discussion and separate action.
Council members may vote nay on any single item without comment and may submit
written comments as part of the official record.)
5a. Consider and act upon minutes from the following Council meeting. (RB)
Regular Meeting – June 11, 2013
5b. Consider and act upon authorizing the Town Manager to execute the amended
Memorandum of Understanding (MOU) by and between the Town of Prosper,
Texas, Police Department and the Prosper Independent School District Police
Department. (GM)
5c. Consider and act upon an Assignment of Development Agreement by and among
PDC 380 Prosper, Ltd., John E. Papagolos, and Barry T. Milton; and adopting
Resolution No. 13-41 authorizing the Town Manager to acknowledge same.
(HW)
6. CITIZEN COMMENTS:
(The public is invited to address the Council on any topic. However, the Council is
unable to discuss or take action on any topic not listed on this agenda. Please
complete a “Public Comments Form” and present it to the Town Secretary prior to the
meeting.)
AGENDA
Meeting of the Prosper Town Council
Prosper Municipal Chambers
108 W. Broadway, Prosper, Texas
Tuesday, June 25, 2013
Meeting begins at 6:00 p.m.
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Other Comments by the Public -
REGULAR AGENDA:
(If you wish to address the Council during the regular agenda portion of the meeting,
please fill out a “Speaker Request Form” and present it to the Town Secretary prior to the
meeting. Citizens wishing to address the Council for items listed as public hearings will
be recognized by the Mayor. Those wishing to speak on a non-public hearing related
item will be recognized on a case-by-case basis, at the discretion of the Mayor and Town
Council.)
DEPARTMENT ITEMS:
7. Consider and act upon all matters incident and related to the issuance and sale of the
Town of Prosper, Texas, General Obligation Refunding Bonds, Series 2013, including
the adoption of Ordinance No. 13-42 authorizing the issuance of such Bonds, approving
an Official Statement, a Bond Purchase Agreement, a Paying Agent/Registrar
Agreement, and an engagement letter of Bond Counsel. (HJ)
8. Consider and act upon all matters incident and related to the issuance and sale of the
Town of Prosper, Texas, Combination Tax and Surplus Revenue Certificates of
Obligation, Series 2013, including the adoption of Ordinance No. 13-43 authorizing the
issuance of such Certificates, approving an Official Statement, a Bond Purchase
Agreement, a Paying Agent/Registrar Agreement, and an engagement letter of Bond
Counsel. (HJ)
9. Consider and act upon authorizing the Town Manager to accept in writing an Agreement
by Independent Bank to be bound by the terms and conditions of the Town’s Bank
Depository Services Request for Proposal. (HJ)
10. Consider and act upon authorizing the Town Manager to enter into contracts for
employee benefits with United Healthcare for medical and dental group insurance and
Alliance Work Partners to include WellCoach resources and services. (BR)
11. EXECUTIVE SESSION:
Recess into Closed Session in compliance with Section 551.001 et. seq. Texas
Government Code, as authorized by the Texas Open Meetings Act, to deliberate
regarding:
11a. Section 551.087. To discuss and consider economic development incentives.
11b. Section 551.072. To discuss and consider purchase, exchange, lease or value of
real property for municipal purposes and all matters incident and related thereto.
12. To reconvene in Regular Session and take any action necessary as a result of the Closed
Session.
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13. Possibly direct Town staff to schedule topic(s) for discussion at a future meeting.
14. Adjourn.
CERTIFICATION
I, the undersigned authority, do hereby certify that this Notice of Meeting was posted on the inside window at the
Town Hall of the Town of Prosper, Texas, 121 W. Broadway Street, Prosper, Texas, a place convenient and readily
accessible to the general public at all times, and said Notice was posted on the following date and time:
On June 21, 2013, at 5:00 p.m. and remained so posted at least 72 hours before said meeting was convened.
________________________________
Robyn Battle, Town Secretary
If during the course of the meeting covered by this Notice, the Town Council should determine that a closed or
executive meeting or session of the Town Council or a consultation with the attorney/special counsel for the Town
should be held or is required, then such closed or executive meeting or session or consultation with the
attorney/special counsel as authorized by the Texas Open Meetings Act, Texas Government Code, §551.001, et seq.,
will be held by the Town Council at the date, hour and place given in this Notice or as soon after the commencement
of the meeting covered by this Notice as the Town Council may conveniently meet in such closed or executive
meeting or session or consult with the attorney/special counsel for the Town concerning any and all subjects and for
any and all purposes permitted by the Act, including, but not limited to, the following sections and purposes:
Texas Government Code:
§551.071 - Consultation with the attorney/special counsel for the Town.
§551.072 - Discussion regarding the purchase, exchange, lease or value of real property.
§551.074 - Discussion regarding personnel matters.
NOTICE
Pursuant to Town of Prosper Ordinance Number 07-04, all speakers other than Town of Prosper Staff are limited to
three (3) minutes per person, per item, which may be extended for an additional two (2) minutes with approval of a
majority vote of the Town Council.
NOTICE OF ASSISTANCE AT PUBLIC MEETINGS: The Prosper Town Council Meetings are wheelchair
accessible. Persons with disabilities who plan to attend this meeting and who may need auxiliary aids or services
such as Interpreters for persons who are deaf or hearing impaired, readers, or large print, are requested to contact the
Town Secretary’s Office at (972) 569-1011. BRAILLE IS NOT AVAILABLE.
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Prosper is a place where everyone matters.
1. Call to Order/Roll Call.
The meeting was called to order at 6:01 p.m.
Council Members Present:
Mayor Ray Smith
Mayor Pro Tem Meigs Miller
Deputy Mayor Pro Tem Kenneth Dugger
Council Member Curry Vogelsang
Council Member Danny Wilson
Council Members Absent:
Council Member Mike Korbuly
Council Member Jason Dixon
Staff Members Present:
Harlan Jefferson, Town Manager
Robyn Battle, Town Secretary
Terrence Welch, Town Attorney
Hulon T. Webb, Jr., Executive Director of Development and Community Services
Chris Copple, Director of Development Services
Robert Winningham, Executive Director, Prosper Economic Development Corporation
Matt Furr, Parks & Recreation Superintendent
2. Invocation, Pledge of Allegiance and Pledge to the Texas Flag.
Pastor John Fowler of First Presbyterian Church of Prosper led the invocation.
3. Announcements of upcoming events.
Mayor Pro Tem Miller made the following announcements:
The first of three water conservation seminars will be held on Monday, June 17th, from
6:30 p.m. to 8:30 p.m. at the pavilion at Frontier Park. The first seminar, “Sprinkler
System Basics,” will teach residents how to properly utilize their sprinkler systems and
make basic repairs and adjustments. A question and answer session will follow the
presentation. All three seminars in this series are free and open to the public. These
seminars are being held as a result of the North Texas Municipal Water District initiation
Stage 3 Water Conservation measures.
MINUTES
Meeting of the Prosper Town Council
Prosper Municipal Chambers
108 W. Broadway, Prosper, Texas
Tuesday, June 11, 2013
6:00 p.m. Regular Meeting
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A community informational meeting on West Nile Virus will be held on Monday, June
24th, from 6 p.m. to 7 p.m. in Municipal Chambers. Representatives from Municipal
Mosquito will provide information on how residents can protect themselves against the
virus. Attendees will have the opportunity to ask questions following the presentation.
This meeting is free and open to the public.
TxDOT and Mario Sinacola & Sons have scheduled a three week closure of Frontier
Parkway between Preston Road and Preston Hills Circle. The closure will provide a safe
working environment for construction activities while expediting construction of the
intersection. The new intersection is scheduled to be reopened on July 10, 2013.
The Town Council would like to congratulate the Prosper High School Class of 2013 on
their graduation on Friday, May 31st. We wish them well in their future endeavors.
Mayor Smith announced that the Collin County Commissioner’s Court approved the
County’s participation in the Town of Prosper TIRZ #2 Plan.
4. CONSENT AGENDA
(Items placed on the Consent Agenda are considered routine in nature and are considered
non-controversial. The Consent Agenda can be acted upon in one motion. A majority
vote of the Council is required to remove any item for discussion and separate action.
Council members may vote nay on any single item without comment and may submit
written comments as part of the official record.)
4a. Consider and act upon minutes from the following Council meetings. (RB)
Regular Meeting – May 28, 2013
4b. Consider and act upon whether to direct staff to submit a written notice of
appeal on behalf of the Town Council to the Development Services
Department, pursuant to Chapter 4, Section 1.5(C)(7) and 1.6(B)(7) of the
Town’s Zoning Ordinance, regarding action taken by the Planning & Zoning
Commission on any site plan or preliminary site plan. (CC)
4c. Consider and act upon the monthly financial reports for April 2013. (HJ)
4d. Consider and act upon Ordinance No. 13-38 approving and adopting rate
schedule “RRM – Rate Review Mechanism” for ATMOS Energy
Corporation, Mid-Tex Division. (HJ)
Council Member Wilson made a motion and Mayor Pro Tem Miller seconded the motion
to approve all items on the Consent Agenda. The motion was approved by a vote of 5-0.
5. CITIZEN COMMENTS:
(The public is invited to address the Council on any topic. However, the Council is
unable to discuss or take action on any topic not listed on this agenda. Please complete a
“Public Comments Form” and present it to the Town Secretary prior to the meeting.)
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Bruce Carlin, 921 Grapevine Court, Prosper Texas, spoke regarding the prioritization of
road projects identified as part of the Town’s CIP plan due to safety concerns on some of
the Town’s major roadways.
There were no other Citizen Comments.
REGULAR AGENDA:
(If you wish to address the Council during the regular agenda portion of the meeting,
please fill out a “Speaker Request Form” and present it to the Town Secretary prior to the
meeting. Citizens wishing to address the Council for items listed as public hearings will
be recognized by the Mayor. Those wishing to speak on a non-public hearing related
item will be recognized on a case-by-case basis, at the discretion of the Mayor and Town
Council.)
DEPARTMENT ITEMS:
6. Consider and act upon recommendation by the Prosper Economic Development
Corporation for adoption of Tax Abatement Policy 2013. (RW)
Prosper Economic Development Corporation (PEDC) Executive Director Robert
Winningham presented the item before Council. The State Comptroller’s Office requires
that a city or town offering tax abatement as an incentive for economic development
submit a set of guidelines approved by the city or town’s council. The last time tax
abatement guidelines were passed by the Prosper Town Council was in 2005. The PEDC
Executive Director and the Town Manager have developed a set of guidelines for tax
abatement to be offered to existing or new businesses that create new taxable investment.
The PEDC Board recommended approval of the PEDC Tax Abatement Policy 2013 at its
meeting held on May 22, 2013.
After discussion, Council Member Vogelsang made a motion and Council Member
Wilson seconded the motion to approve the Prosper Economic Development Corporation
Tax Abatement Policy 2013. The motion was approved by a vote of 5-0.
7. Discussion on installation of recycling bins at Frontier Park. (MF)
Parks & Recreation Superintendent Matt Furr presented the item before Council. On
May 14, 2013, a local Brownie troop made a presentation to the Town Council on their
recent recycling project at Frontier Park. The troop requested that recycling receptacles
be placed in Frontier Park. Staff was asked to bring back a discussion item to the Town
Council on the installation of recycling bins at Frontier Park. Town staff has researched
this item and is recommending a recycling bin trial program at Frontier Park. IESI will
install ten blue recycle bins next to the standard trash bins at each baseball/softball field.
Mr. Furr further explained the details of this trial program. At the end of the trial
program, staff will coordinate with IESI on the possibility of installing additional
recycling bins at Frontier Park, and expanding the program to include additional areas
within the park. Town staff requested that the Town Council provide direction regarding
this item.
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After discussion, Deputy Mayor Pro Tem Dugger made a motion and Council Member
Wilson seconded the motion to approve the installation of ten blue recycling bins at
Frontier Park as a trial program for the 2013 PYSA Fall baseball/softball season as
depicted on the location map provided by Town staff. The motion was approved by a
vote of 5-0.
8. Consider and act upon Ordinance No. 13-40 amending the Town of Prosper’s
Annual Budget for the fiscal year beginning on October 1, 2012, and ending on
September 30, 2013, as adopted by Ordinance No. 12-28 and amended by Ordinance
Nos. 12-39, 13-05, and 13-12, for adjustments to the General Fund and Storm
Drainage Utility Fund. (HJ)
Town Manager Harlan Jefferson presented the item before Council. This item represents
the fourth mid-year budget adjustment for the Fiscal Year 2012-2013 Annual Budget.
Amendments such as these are presented to the Town Council throughout the fiscal year
to resolve variances in the Annual Budget and to reallocate resources to cover
unanticipated expenditures. The proposed budget amendments to the General Fund will
reallocate funds for previously budgeted special events, a vehicle, practice field
improvements, and other parks expenditures. The budget amendment for the Storm
Drainage Utility Fund is for a project in the northeast part of the community. The
proposed amendments will be more than offset by revenues for the current fiscal year,
and will not negatively affect fund balances at year end. Hulon Webb, Executive
Director of Development and Community Services, answered questions regarding
practice field improvements. Town staff recommended approval of this item.
After discussion, Deputy Mayor Pro Tem Dugger made a motion and Mayor Pro Tem
Miller seconded the motion to approve Ordinance No. 13-40 amending the Town of
Prosper’s Annual Budget for the fiscal year beginning on October 1, 2012, and ending on
September 30, 2013, as adopted by Ordinance No. 12-28 and amended by Ordinance
Nos. 12-39, 13-05, and 13-12, for adjustments to the General Fund and Storm Drainage
Utility Fund. The motion was approved by a vote of 5-0.
9. EXECUTIVE SESSION:
Mayor Pro Tem Miller made a motion and Council Member Wilson seconded the motion
to recess into Executive Session at 6:55 p.m. The motion was approved by a vote of 5-0.
Recess into Closed Session in compliance with Section 551.001 et. seq. Texas
Government Code, as authorized by the Texas Open Meetings Act, to deliberate
regarding:
9a. Section 551.087. To discuss and consider economic development incentives.
9b. Section 551.072. To discuss and consider purchase, exchange, lease or value of
real property for municipal purposes and all matters incident and related
thereto.
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10. To reconvene in Regular Session and take any action necessary as a result of the
Closed Session.
The Regular Session was reconvened at 7:42 p.m. No action was taken as a result of
Executive Session.
11. Possibly direct Town staff to schedule topic(s) for discussion at a future meeting.
Prosper Frontier Park maintenance structure (Gator Barn).
Hulon Webb, Executive Director of Development and Community Services
reviewed this project with Council. Due to cost concerns, the decision was made
by Town staff to delay this project until the development of Phase II of Frontier
Park.
Fee structures for local youth sports organizations
This item is scheduled for the July 23, 2013, Town Council meeting.
Long-term planning for the future locations of fire stations and other Town
facilities.
This item is scheduled for the July 9, 2013, Town Council meeting.
12. Adjourn.
Deputy Mayor Pro Tem Dugger made a motion and Council Member Wilson seconded
the motion to adjourn the meeting at 7:53 p.m., on Tuesday, June 11, 2013. The motion
was approved by a vote of 5-0.
These minutes approved on the 25th day of June, 2013.
APPROVED:
Ray Smith, Mayor
ATTEST:
Robyn Battle, Town Secretary
To: Mayor and Town Council
From: Gary R. McHone, CPM, Asst. Chief of Police
Through: Harlan Jefferson, Town Manager
Re: Town Council Meeting – June 25, 2013
Agenda Item:
Consider and act upon authorizing the Town Manager to execute the amended Memorandum of
Understanding (MOU) by and between the Town of Prosper, Texas, Police Department and the
Prosper Independent School District Police Department.
Description of Agenda Item:
This item is an updated MOU by and between the Town of Prosper, Texas, Police Department
and the Prosper Independent School District Police Department, which clarifies operational
guidelines between the two agencies. The amended Memorandum of Understanding provides
more detailed descriptions of roles and responsibilities as it relates to critical incident response,
as well as investigations, between the Town of Prosper PD and the Prosper ISD PD.
Legal Obligations and Review:
Terry Welch with Brown & Hofmeister, L.L.P., has reviewed the proposed MOU as to form and
legality.
Attached Documents:
1. Memorandum of Understanding
Town Staff Recommendation:
Town staff recommends that the Town Council approve the amended/updated MOU between
Prosper Police Department and Prosper ISD Police Department.
Proposed Motion: I move to authorize the Town Manager to execute the amended
Memorandum of Understanding (MOU) by and between the Town of Prosper, Texas, Police
Department and the Prosper Independent School District Police Department.
Prosper is a place where everyone matters.
POLICE
Item 5b
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MEMORANDUM OF UNDERSTANDING
Prosper ISD Police Department
And the
Town of Prosper Police Department
Purpose:
State law requires Police and ISD Police agencies with “overlapping jurisdiction” to enter into an
“MOU” that details efforts for reasonable communications and operations. This MOU is meant
to address requirements of the Texas Education Code (TEC37.081). It is further designed to
address the commitment to excellence and community safety that both agencies share.
Jurisdiction:
Town of Prosper Police Department (Prosper PD) primary jurisdiction is defined as, “any area
within the incorporated boundaries of the Town of Prosper and other areas within the State of
Texas as defined by law.”
Prosper Independent School District Police Department (Prosper ISD PD) primary jurisdiction
has been defined by the Prosper ISD School Board as, “any territory within the boundaries of the
school district and all property that is outside the boundaries of the district that is owned,
controlled, leased, or rented by the district.”
Agreements:
Both agencies agree that community and school safety is their ultimate goal. Both agencies agree
that they will take a “team” approach to law enforcement activities within the community and
schools. Both agencies will cooperate and work together for the betterment of the Town of
Prosper and the Prosper Independent School District.
1) Town of Prosper will provide dispatch services in accordance with the cooperative Interlocal
Agreement signed by both parties.
2) Both agencies agree that they will provide support services (back-up) for officers when
requested and resources are available.
3) Both agencies agree that, in the event of a major incident, “Incident Command System” (ICS)
procedures will be used. The agency that provides the most significant resources will be in
command of the incident. Both agencies agree that in the event of a major incident that each
agency will be represented in the “command center” and input will be considered before action is
taken, unless circumstances demand an immediate action.
Item 5b
Page 2 of 4
4) Both agencies agree to share information on criminal activity and juvenile arrest, as
appropriate and directed by state and federal law, for the purposes of school and community
safety. Both agencies agree the information will be considered “confidential” and “need to
know” only.
5) Agencies agree to communicate with each other in advance, as deemed appropriate and within
the scope of law enforcement related functions and in accordance with any associated
operational guidelines or policies, when there is significant police activity affecting schools
and/or the community.
6) Both parties agree to participate in yearly coordinated drills as required by state statute. The
event will be scheduled at a mutually agreeable time so that all parties can exact the most benefit
from the exercise. Both parties agree to be involved in the planning, funding, and
implementation process.
7) Prosper ISD agrees to provide transportation and facility services to the Prosper community in
the event of a large scale disaster. Priority will be given to the school and student community in
the event of such disaster.
8) Both parties agree to notify and provide training opportunities to officers of each department
when they are available. The cost of such training, if any, will be the responsibility of the
recipient’s department.
9) Both parties also agree that should there be an investigation involving a Prosper ISD student,
faculty or staff member that originates within the Town of Prosper and/or is under the primary
jurisdiction of the Prosper PD, that Prosper PD shall continue the investigation until its
completion. During the course of such an investigation, Prosper PD will keep Prosper ISD PD
apprised of the investigation as necessary, as the Town of Prosper PD will maintain oversight of
such an investigation regardless of the location. An investigation initiated by the Prosper ISD PD
shall be investigated by the PISD PD until its completion and during the course of such an
investigation, PISD PD will keep Prosper PD apprised of said investigation, as the Prosper ISD
PD shall maintain oversight of investigation regardless of the location.
10) Both parties also agree that incidents pertaining to Truancy; Parent Contributing to Non-
Attendance, and Failure to Attend School will be handled strictly by the Prosper ISD PD unless
assistance is required by the Prosper PD.
11) Both parties agree that any incident involving an Active Shooter will require the Prosper PD
to be the primary jurisdiction with the assistance of the Prosper ISD PD and any other agency
that may be required in the course of the incident. The Command Center for such incident will
be initiated and operated by the Prosper PD with the assistance of the Prosper ISD PD.
Item 5b
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TERMS:
A. INITIAL TERM: This MOU shall begin on the ___________ day of ___________,
2013 and will continue in force for one year unless earlier termination as provided herein.
B. RENEWAL TERM: This MOU will renew automatically each year unless the Town or
the ISD notifies the other party in writing at least ninety (90) days prior to the expiration
of this MOU, of its intent not to renew this MOU.
PROSPER ISD LIAISON:
The Prosper ISD designates Chief Kelly Davidson as representative to act on behalf of the
Prosper ISD to serve as the “liaison” for Prosper ISD. The Prosper ISD Liaison will devote
sufficient time and attention to the execution of said duties on behalf of the PISD PD and will
provide direct supervision of the Prosper ISD PD employees and agents, if any, in the
furtherance of the purposes, terms and conditions of this MOU for the mutual benefit of the
Prosper ISD PD and the Prosper PD.
PISD Liaison: Chief Kelly Davidson
Prosper High School
301 Eagle Lane
Prosper, Texas 75078
(469)219-2180 Ext. 80175
PROPSER PD LIAISON:
The Town will designate the Assistant Police Chief of the Prosper Police Department or his
designee to act on behalf of the Town, and serve as “liaison” for the Town. The Prosper PD
Liaison will devote sufficient time and attention to the execution of said duties on behalf of the
Prosper PD and will provide direct supervision of the Prosper PD employees and agents, if any,
in the furtherance of the purposes, terms and conditions of this MOU for the mutual benefit of
the Prosper PD and the Prosper ISD PD.
Prosper PD Liaison: Assistant Chief Gary McHone
101 S. Main St.
P.O. Box 307
Prosper, Texas 75078
(972)347-9002
Item 5b
Page 4 of 4
Enacted this __________ day of ___________, 2013.
__________________________________
Harlan Jefferson, Town Manager
Town of Prosper, Texas
__________________________________
Dr. Drew Watkins, Superintendent of Schools
Prosper Independent School District
Item 5b
To: Mayor and Town Council
From: Hulon T. Webb, Jr., P.E., Executive Director of Development
and Community Services
Through: Harlan Jefferson, Town Manager
Re: Town Council Meeting – June 25, 2013
Agenda Item:
Consider and act upon an Assignment of Development Agreement by and among PDC 380
Prosper, Ltd., John E. Papagolos, and Barry T. Milton; and adopting Resolution No. 13-41
authorizing the Town Manager to acknowledge same.
Description of Agenda Item:
On October 26, 2004, PDC 380 Prosper, Ltd., Mustang-Midway Plano, Ltd., and the Town of
Prosper, Texas, entered into a Development Agreement for the Lakes of La Cima Development.
The only remaining obligation of PDC 380 Prosper, Ltd., under the Development Agreement, is
the reimbursement of the impact fees collected by the Town. PDC 380 Prosper, Ltd., would like
to dissolve the entity and has requested the Town acknowledge the attached Assignment of
Development Agreement to John E. Papagolos and Barry T. Milton.
Budget Impact:
There are no significant budget implications associated with this item.
Legal Obligations and Review:
Terry Welch with Brown & Hofmeister, L.L.P., prepared the attached assignment and
Resolution.
Attached Documents:
1. Assignment of Development Agreement
2. Resolution
Town Staff Recommendation:
Town staff recommends that the Town Council approve an Assignment of Development
Agreement by and among PDC 380 Prosper, Ltd., John E. Papagolos, and Barry T. Milton, and
adopt Resolution No. 13-41 authorizing the Town Manager to acknowledge same.
Proposed Motion: I move to approve Resolution No. 13-41, authorizing the Town Manger to
acknowledge an Assignment of Development Agreement by and among PDC 380 Prosper, Ltd.,
John E. Papagolos, and Barry T. Milton.
DEVELOPMENT
SERVICES
Prosper is a place where everyone matters.
Item 5c
1
ASSIGNMENT OF DEVELOPMENT AGREEMENT
THIS ASSIGNMENT OF DEVELOPMENT AGREEMENT (this “Assignment”) is
entered into effective as of the ____ day of June, 2013 (the “Effective Date”), by and among
PDC 380 PROSPER, LTD., a Texas limited partnership (“Assignor”), JOHN E, PAPAGOLOS,
an individual (“Papagolos”), and BARRY T. MILTON, an individual (“Milton”) (Papagolos and
Milton are hereinafter collectively referred to as the “Assignees”).
W I T N E S S E T H:
WHEREAS, Assignor, Mustang-Midway Plano, Ltd., a Texas limited partnership
(“Mustang”) and the Town of Prosper, Texas (the “Town”), have entered into that certain
Developer’s Agreement dated to be effective as of October 26, 2004 (the “Original Development
Agreement”) as amended by (i) that certain First Amendment to Developer’s Agreement dated to
be effective as of June 22, 2005 (the “First Amendment”), (ii) that certain Second Amendment to
Developer’s Agreement dated to be effective as of June 8, 2010 (the “Second Amendment”), (iii)
that certain Third Amendment to Developer’s Agreement dated to be effective as of June 8, 2010
(the “Third Amendment”), and (iv) that certain Fourth Amendment to Developer’s Agreement
dated to be effective as of June 8, 2010 (the “Fourth Amendment”; the Original Development
Agreement, the First Amendment, the Second Amendment, the Third Amendment and the
Fourth Amendment are hereinafter collectively referred to as the “Development Agreement”)
regarding the disbursement of funds by the Town to Assignor; and
WHEREAS, Assignor now desires to assign to Assignees all of Assignor’s rights, title
and interests in, to, under, pursuant to, and/or in connection with the Development Agreement,
and Assignees desire to accept such assignment and assume all of Assignor’s remaining
obligations under the Development Agreement, subject to the terms and provisions of this
Assignment; and
WHEREAS, the Town Council of the Town of Prosper, Texas, has authorized the Town
Manager to acknowledge this Assignment on behalf of the Town of Prosper, Texas.
NOW, THEREFORE, for and in consideration of the premises, covenants and
agreements set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Assignor hereby conveys, transfers and assigns to each Assignee one-half (1/2) of
all of Assignor’s rights, title and interests in, to, under, pursuant to, and/or in connection with the
Development Agreement, including, without limitation, all rights to receive all Improvements
Reimbursement Amount (as defined in the Development Agreement) remaining to be paid to
Assignor pursuant to the Development Agreement. Without limiting the foregoing, it is the
intention of the Parties hereto that all payments of the Improvements Reimbursement Amount
due to Assignor after the Effective Date hereof be paid directly to each Assignee in equal shares.
2. Assignees hereby accept the assignment of the Development Agreement from
Assignor and assume all of Assignor’s remaining obligations, covenants and/or conditions under
or relating to the Development Agreement which arise after the Effective Date of this
Assignment.
Item 5c
2
3. Assignor hereby represents, warrants and covenants to Assignees that the
Development Agreement reflects the entire understanding and agreement regarding the subject
matter thereof, and that there are no remaining duties or obligations of the Assignor under or
relating to the Development Agreement. Assignor hereby further represents, warrants and
covenants that Assignor (i) has fully disclosed all significant liabilities, obligations and other
matters within its current actual knowledge arising under or in connection with or otherwise
relating to the Development Agreement; (ii) has not heretofore assigned or transferred any of its
rights arising under the Development Agreement; (iii) has not granted any options, warrants or
other rights in or to the Development Agreement; and (iv) has paid all fees and costs, if any,
arising under, relating to any work or services provided by Assignor or on Assignor’s behalf in
connection with, or otherwise relating to the Development Agreement.
4. Assignor shall promptly deliver to Assignees (i) copies of any and all other
documents or information received by Assignor after the Effective Date of this Assignment
pertaining to the Development Agreement; and (ii) all other information and materials delivered
to Assignor, in Assignor’s possession or prepared by or on behalf of Assignor relating to the
Development Agreement.
5. From and after the Effective Date of this Assignment, Assignor hereby agrees to
immediately remit to Assignees in equal shares any and all Improvements Reimbursement
Amount that Assignor receives pursuant to the Development Agreement, which remittance shall
occur within three (3) business days of receipt by Assignor.
6. Assignor hereby agrees to indemnify and hold Assignees harmless from and
against any and all liabilities, damages, costs and expenses (including, without limitation,
intended and by way of example only, reasonable attorneys’ fees, disbursements and amounts
paid in settlement of claims) arising out of the failure of Assignor to fulfill all obligations under
the Development Agreement which accrued prior to the Effective Date of this Assignment.
7. This Assignment shall be binding upon and inure to the benefit of Assignor,
Assignees and their respective successors and assigns. This Assignment shall not be modified,
except in writing executed by both parties hereto. This Assignment shall be governed by,
construed and enforced in accordance with the laws of the State of Texas. Subject only to the
First Amendment entered into contemporaneously herewith, this Assignment constitutes the
entire agreement of the parties hereto with respect to the Development Agreement and
supersedes all prior and contemporaneous understandings and Agreement between the parties
with respect to the Development Agreement.
[THE BALANCE OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK]
Item 5c
3
IN WITNESS WHEREOF, Assignor and Assignees have executed this Assignment to
be effective as of the date first written above.
ASSIGNOR:
PDC 380 PROSPER, LTD.,
a Texas limited partnership
By: 380 Prosper, Inc.,
a Texas corporation,
its General Partner
By:
John E. Papagolos, President
ASSIGNEES:
John E. Papagolos
Barry T. Milton
CONSENTED AND APPROVED BY:
TOWN OF PROSPER, TEXAS
By:
Name: Harlan Jefferson
Title: Town Manager
Date:
Item 5c
4
ACKNOWLEDGEMENT
STATE OF TEXAS §
§
COUNTY OF §
This instrument was acknowledged before me on the ______ day of _______, 2013, by
John E. Papagolos, President of 380 Prosper, Inc., a Texas corporation, General Partner of PDC
380 Prosper, Ltd., a Texas limited partnership, known to me to be the person who executed this
agreement in the capacity and for the purposes therein stated.
My Commission Expires:
Notary Public in and for the State of Texas
STATE OF TEXAS §
§
COUNTY OF §
This instrument was acknowledged before me on the ______ day of _______, 2013, by
John E. Papagolos, an individual, known to me to be the person who executed this agreement in
the capacity and for the purposes therein stated.
My Commission Expires:
Notary Public in and for the State of Texas
STATE OF TEXAS §
§
COUNTY OF §
This instrument was acknowledged before me on the ______ day of _______, 2013, by
Barry T. Milton, an individual, known to me to be the person who executed this agreement in the
capacity and for the purposes therein stated.
My Commission Expires:
Notary Public in and for the State of Texas
Item 5c
5
STATE OF TEXAS §
§
COUNTY OF COLLIN §
This instrument was acknowledged before me on the ______ day of _______, 2013, by
Harlan Jefferson, Town Manager of the Town of Prosper, Texas, known to me to be the person
who executed this agreement in the capacity and for the purposes therein stated.
My Commission Expires:
Notary Public in and for the State of Texas
Item 5c
Resolution No. 13-41, Page 1
TOWN OF PROSPER, TEXAS RESOLUTION NO. 13-41
A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF PROSPER,
TEXAS, AUTHORIZING THE TOWN MANAGER OF THE TOWN OF
PROSPER, TEXAS, TO ACKNOWLEDGE ON BEHALF OF THE TOWN THE
ASSIGNMENT OF DEVELOPMENT AGREEMENT BY AND AMONG PDC 380
PROSPER, LTD., JOHN E. PAPAGOLOS AND BARRY T. MILTON, AS MORE
FULLY DESCRIBED HEREIN; MAKING FINDINGS; AND PROVIDING FOR AN
EFFECTIVE DATE.
WHEREAS, PDC 380 Prosper, Ltd. (“Assignor”), Mustang-Midway Plano, Ltd., and the
Town of Prosper, Texas (the “Town”), entered into a Developer’s Agreement dated to be
effective as of October 26, 2004, as amended by (i) the First Amendment to Developer’s
Agreement dated to be effective as of June 22, 2005, (ii) the Second Amendment to
Developer’s Agreement dated to be effective as of June 8, 2010, (iii) the Third Amendment to
Developer’s Agreement dated to be effective as of June 8, 2010, and (iv) the Fourth
Amendment to Developer’s Agreement dated to be effective as of June 8, 2010 (collectively, the
“Development Agreement”) regarding the disbursement of funds by the Town to Assignor; and
WHEREAS, Assignor now desires to assign to Assignees John E. Papagolos and Barry
T. Milton (“Assignees”) all of Assignor’s rights, title and interests in, to, under, pursuant to,
and/or in connection with the Development Agreement, and Assignees desire to accept such
assignment and assume all of Assignor’s remaining obligations under the Development
Agreement, subject to the terms and provisions of this Assignment; and
WHEREAS, the Assignment of Development Agreement provides for the Town’s
acknowledgment of said Agreement, and the Town Council of the Town of Prosper, Texas,
desires to authorize the Town Manager to acknowledge the Assignment of Development
Agreement on behalf of the Town of Prosper, Texas, and the Town Attorney has approved
same.
NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF
PROSPER, TEXAS, THAT:
SECTION 1
All of the above premises are found to be true and correct and are incorporated into the
body of this Resolution as if copied in their entirety.
SECTION 2
The Town Manager of the Town of Prosper, Texas, is hereby authorized to acknowledge
the Assignment of Development Agreement on behalf of the Town, and take any and all other
actions necessary to effectuate the same.
Item 5c
Resolution No. 13-41, Page 2
SECTION 3
This Resolution is effective immediately upon its passage.
DULY PASSED AND APPROVED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER,
TEXAS, THIS 25TH DAY OF JUNE, 2013.
___________________________________
Ray Smith, Mayor
ATTEST:
_________________________________
Robyn Battle, Town Secretary
APPROVED AS TO FORM AND LEGALITY:
_________________________________
Terrence S. Welch, Town Attorney
Item 5c
Page 1 of 2
To: Mayor and Town Council
From: Harlan Jefferson, Town Manager
Re: Town Council Meeting – June 25, 2013
Agenda Item:
Consider and act upon all matters incident and related to the issuance and sale of the Town of
Prosper, Texas, General Obligation Refunding Bonds, Series 2013, including the adoption of
Ordinance No. 13-42 authorizing the issuance of such Bonds, approving an Official Statement,
a Bond Purchase Agreement, a Paying Agent/Registrar Agreement and an engagement letter of
Bond Counsel.
Description of Agenda Item:
The purpose of this refunding is to refinance debt from 2004 and 2012 issuances. The specifics
related to each issue is as follows:
2012 General Obligation Bonds - In order to meet the seller’s request to close the purchase
transaction of the Sexton Farms land prior to December 31, 2012, and to fund the full purchase
price at closing, the Town authorized First Southwest Company (Town Financial Advisors) to
conduct a private sale of taxable general obligation bonds (short-term) in the principal amount of
$3,880,000 having a maximum term of 16 months. The bonds include a call provision whereby
beginning February 13, 2013, the Town had the option to refund said issue in order to extend
the term of the bond issue as originally contemplated in the Town’s plan for long-term financing
of parks and recreation projects as authorized by the voters in 2011.
2004 Certificates of Obligation - In the way of background information for the 2004 Certificates
of Obligation, our records show that that issue was in the amount of $10,500,000 and that it
funded a variety of projects: (i) constructing and equipping municipal buildings, to-wit: a town
hall, fire stations, police facilities, court facilities, and acquiring interests in land for such
buildings; (ii) extending, constructing, and improving the Town's sewer system, including,
constructing sewage lift stations, and extending and upgrading sewage collection lines and
force mains throughout the Town; (iii) constructing and improving the Town's water system,
including the construction of elevated and ground water storage facilities and acquiring interests
in land for such storage facilities, extending the water distribution system including extending
and upgrading water lines and constructing pumping stations to improve access to, and the flow
of water in the Town; and (iv) constructing and equipping municipal park improvements and
acquiring interests in land for parks and open space.
The Bonds will be priced earlier in the day on June 25, 2013; therefore, the final pricing and cost
savings will be presented during the Council meeting. The Town’s Financial Advisor, Jason
Hughes will be present at the June 25, 2013, Town Council meeting to discuss the issuance
and/or answer any questions that may arise.
Prosper is a place where everyone matters.
ADMINISTRATION
Item 7
Page 2 of 2
Budget Impact:
Because the Town is proposing to refund debt from 2004 and 2012, no additional ongoing costs
will be incurred. The approval of the refunding will reduce the interest cost on the 2004 debt
and restructure the timeframe in which the 2012 debt will be repaid.
Legal Obligations and Review:
Dan Culver, with McCall, Parkhurst & Horton L.L.P., serves as the Town’s Bond Counsel and
has written the ordinance and made comment to the official statement.
Attached Documents:
1. Timetable for Series 2013 Bonds
2. Draft Ordinance – final terms will be set once pricing is confirmed the day of this meeting
3. Preliminary Official Statement
4. Bond Purchase Agreement
5. Paying Agent/Registrar Agreement
6. Bond Counsel Engagement Letter
Town Staff Recommendation:
Town staff recommends that the Town Council approve this item.
Proposed Motion:
I move to act upon all matters incident and related to the issuance and sale of the Town of
Prosper, Texas, General Obligation Refunding Bonds, Series 2013, including the adoption of
Ordinance No. 13-42 authorizing the issuance of such Bonds, approving an Official Statement,
a Bond Purchase Agreement, a Paying Agent/Registrar Agreement and an engagement letter of
Bond Counsel.
Item 7
Apr-13 May-13 Jun-13 Jul-13
SMTWTFS SMTWTFS SMTWTFS SMTWTFS
123456 1234 1 123456
78910111213 567891011 2345678 78910111213
14 15 16 17 18 19 20 12 13 14 15 16 17 18 9 10 11 12 13 14 15 14 15 16 17 18 19 20
21 22 23 24 25 26 27 19 20 21 22 23 24 25 16 17 18 19 20 21 22 21 22 23 24 25 26 27
28 29 30 26 27 28 29 30 31 23 24 25 26 27 28 29 28 29 30 31
30
Complete
By Day Event
26-Apr-13 Friday First Southwest requests information for preparation
of the Official Statement
14-May-13 Tuesday Town Council meeting to approve publication of the Notice of
Intent for the Certificates
16-May-13 Thursday First Southwest receives requested information.
First Southwest begins preparation of the Official Statement
21-May-13 Tuesday Draft Official Statement distributed to the Town and
Bond Counsel
22-May-13 Wednesday 1st Notice of Intent published for Certificates
28-May-13 Tuesday First Southwest receives comments on Official Statement
29-May-13 Wednesday 2nd Notice of Intent published for Certificates
30-May-13 Friday Distribute POS to Rating Agency
Rating Conference Call/Meeting
17-Jun-13 Monday Receive Rating
18-Jun-13 Tuesday Electronically mail Official Statement to Potential Purchasers
25-Jun-13 Tuesday Pricing
25-Jun-13 Tuesday Town Council passes Ordinance authorizing issuance
of the Bonds and Certificates
25-Jul-13 Thursday Closing and Delivery of Funds to the Town
Week of 6/3 - 6/7
Town of Prosper, TX
General Obligation Refunding Bonds, Series 2013
4/25/2013
Acct # 0643-011
Preliminary Schedule of Events
Combination Tax & Revenue Certificates of Obligation, Series 2013
Item 7
ORDINANCE
OF THE TOWN OF PROSPER, TEXAS
AUTHORIZING THE ISSUANCE OF
TOWN OF PROSPER, TEXAS
GENERAL OBLIGATION REFUNDING BONDS,
SERIES 2013
Item 7
i
TABLE OF CONTENTS
Section 1. Recitals, Amount and Purpose of the Bonds ................................2
Section 2. Designation, Date, Denominations, Numbers, Maturities of Bonds and
Interest Rates ...........................................................2
Section 3. Characteristics of the Bonds ............................................3
Section 4. Form of Bonds .......................................................6
Section 5. Interest and Sinking Fund .............................................13
Section 6. Continued Perfection of Security Interest .................................13
Section 7. Defeasance of Bonds .................................................13
Section 8. Damaged, Mutilated, Lost, Stolen, or Destroyed Bonds ......................15
Section 9. Custody, Approval, and Registration of Bonds; Bond Counsel's Opinion
and Engagement; Attorney General Filing Fee; CUSIP Numbers; Other Procedures . . 16
Section 10. Covenants Regarding Tax Exemption of Interest on the Bonds ...............16
Section 11. Sale of Bonds; Approval of Official Statement ............................18
Section 12. Allocation of Bond Proceeds ..........................................19
Section 13. Disposition of Project................................................19
Section 14. Approval of Escrow Agreement and Transfer of Funds .....................19
Section 15. Redemption of Refunded Obligations ...................................20
Section 16. Compliance with Rule 15c2-12 ........................................20
Section 17. Method of Amendment ..............................................23
Section 18. Inconsistent Provisions ..............................................24
Section 19. Governing Law ....................................................25
Section 20. Severability .......................................................25
Section 21. Events of Default ...................................................25
Item 7
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Section 22. Remedies for Default ................................................25
Section 23. Remedies Not Exclusive .............................................25
Section 24. Effective Date .....................................................26
Schedule I Schedule of Refunded Obligations .................................... I-1
Exhibit A Continuing Disclosure Information.................................... A-1
Exhibit B Notice of Defeasance and Redemption..................................B-1
Item 7
AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF PROSPER, TEXAS
GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013; LEVYING AN ANNUAL
AD VALOREM TAX FOR THE PAYMENT OF SAID BONDS; APPROVING AN
OFFICIAL STATEMENT; CALLING CERTAIN OUTSTANDING OBLIGATIONS FOR
REDEMPTION PRIOR TO MATURITY; APPROVING THE USE OF AN ESCROW
AGREEMENT AND PAYING AGENT/REGISTRAR AGREEMENT; ENGAGING BOND
COUNSEL; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT
THE STATE OF TEXAS §
COLLIN AND DENTON COUNTIES §
TOWN OF PROSPER §
WHEREAS, certain previously issued and outstanding obligations of the Town of Prosper,
Texas (the "Issuer") described in Schedule I attached hereto and incorporated herein (collectively,
the "Refunded Obligations") are intended to be and shall be refunded pursuant to this Ordinance;
WHEREAS, Chapter 1207, Texas Government Code, authorizes the Issuer to issue refunding
bonds and to deposit the proceeds from the sale thereof, together with any other available funds or
resources, directly with a paying agent for the Refunded Obligations or a trust company or
commercial bank that does not act as a depository for the Issuer and is named in these proceedings,
and such deposit, if made before the payment dates of the Refunded Obligations, shall constitute the
making of firm banking and financial arrangements for the discharge and final payment of the
Refunded Obligations;
WHEREAS, Chapter 1207, Texas Government Code, further authorizes the Issuer to enter
into an escrow or similar agreement with such paying agent for the Refunded Obligations or trust
company or commercial bank with respect to the safekeeping, investment, reinvestment,
administration and disposition of any such deposit, upon such terms and conditions as the Issuer and
such paying agent or trust company or commercial bank may agree;
WHEREAS, U.S. Bank National Association is a paying agent for the Refunded Obligations,
and the Escrow Agreement, wherein U.S. Bank National Association is the Escrow Agent,
hereinafter authorized constitutes an escrow agreement of the kind authorized and permitted by said
Chapter 1207;
WHEREAS, the Town Council hereby finds and declares a public purpose and it is in the
best interests of the Issuer to refund the Refunded Obligations in order to restructure its debt for tax
rate management purposes, and that such refunding will result in a gross, future value debt service
loss of approximately $________, but a net present value debt service savings of $_______ to the
Issuer;
WHEREAS, all the Refunded Obligations mature or are subject to redemption prior to
maturity within 20 years of the date of the bonds hereinafter authorized;
Item 7
2
WHEREAS, the Bonds hereinafter authorized to be issued and are to be issued, sold and
delivered pursuant to the general laws of the State of Texas, including Texas Government Code,
Chapter 1207, as amended; and
WHEREAS, it is officially found, determined, and declared that the meeting at which this
Ordinance has been adopted was open to the public and public notice of the time, place and subject
matter of the public business to be considered and acted upon at said meeting, including this
Ordinance, was given, all as required by the applicable provisions of Texas Government Code,
Chapter 551; Now, Therefore
BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER:
Section 1. RECITALS, AMOUNT AND PURPOSE OF THE BONDS. The recitals set
forth in the preamble hereof are incorporated herein and shall have the same force and effect as if
set forth in this Section. The bonds of the Issuer are hereby authorized to be issued and delivered
in the aggregate principal amount of $_____________ for the purpose of refunding certain
outstanding obligations of the Issuer referenced in the preamble hereto and described in Schedule
I hereto and to pay the costs incurred in connection with the issuance of the Bonds.
Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, MATURITIES OF
BONDS AND INTEREST RATES. Each certificate issued pursuant to this Ordinance shall be
designated: "TOWN OF PROSPER, TEXAS, GENERAL OBLIGATION REFUNDING BOND,
SERIES 2013", and initially there shall be issued, sold, and delivered hereunder one fully registered
bond, without interest coupons, dated June 15, 2013, in the principal amount stated above and in the
denominations hereinafter stated, numbered T-1, with bonds issued in replacement thereof being in
the denominations and principal amounts hereinafter stated and numbered consecutively from R-1
upward, payable to the respective Registered Owners thereof (with the initial certificate being made
payable to the initial purchaser as described in Section 11 hereof), or to the registered assignee or
assignees of said bonds or any portion or portions thereof (in each case, the "Registered Owner").
The Bonds shall mature on August 15 in the years and in the principal amounts and interest rates set
forth below, interest on each Bond accruing on the basis of a 360-day year of twelve 30-day months
from the date of initial delivery of the Bonds to the purchaser thereof or the most recent interest
payment date to which interest has been paid or provided for at the per annum rates of interest,
payable semiannually on February 15 and August 15 of each year until the principal amount shall
have been paid or provision for such payment shall have been made, commencing February 15,
2014, as follows:
Year
Principal
Amount
Interest
Rate Year
Principal
Amount
Interest
Rate
2014 2024
2015 2025
2016 2026
2017 2027
2018 2028
Item 7
3
2019 2029
2020 2030
2021 2031
2022 2032
2023 2033
Section 3. CHARACTERISTICS OF THE BONDS. (a) Registration, Transfer, Conversion
and Exchange; Authentication. The Issuer shall keep or cause to be kept at the corporate trust office
of U.S. Bank National Association, Dallas, Texas, the "Paying Agent/Registrar"), books or records
for the registration of the transfer, conversion and exchange of the Bonds (the "Registration Books"),
and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep
such books or records and make such registrations of transfers, conversions and exchanges under
such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying
Agent/Registrar shall make such registrations, transfers, conversions and exchanges as herein
provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address
of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed,
as herein provided; but it shall be the duty of each registered owner to notify the Paying
Agent/Registrar in writing of the address to which payments shall be mailed, and such interest
payments shall not be mailed unless such notice has been given. The Issuer shall have the right to
inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but
otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless
otherwise required by law, shall not permit their inspection by any other entity. The Issuer shall pay
the Paying Agent/Registrar's standard or customary fees and charges for making such registration,
transfer, conversion, exchange and delivery of a substitute Bond or Bonds. Registration of
assignments, transfers, conversions and exchanges of Bonds shall be made in the manner provided
and with the effect stated in the FORM OF BOND set forth in this Ordinance. Each substitute Bond
shall bear a letter and/or number to distinguish it from each other Bond.
Except as provided in Section 3(c) of this Ordinance, an authorized representative of the
Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign said
Bond, and no such Bond shall be deemed to be issued or outstanding unless such Bond is so
executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered
for conversion and exchange. No additional ordinances, orders, or resolutions need be passed or
adopted by the governing body of the Issuer or any other body or person so as to accomplish the
foregoing conversion and exchange of any Bond or portion thereof, and the Paying Agent/Registrar
shall provide for the printing, execution, and delivery of the substitute Bonds in the manner
prescribed herein, and said Bonds shall be printed or typed on paper of customary weight and
strength. Pursuant to Chapter 1201, Government Code, and particularly Subchapter D thereof, the
duty of conversion and exchange of Bonds as aforesaid is hereby imposed upon the Paying
Agent/Registrar, and, upon the execution of said Bond, the converted and exchanged Bond shall be
valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds that
initially were issued and delivered pursuant to this Ordinance, approved by the Attorney General
and registered by the Comptroller of Public Accounts.
Item 7
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(b) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all
as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all
payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds, and of all
conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance.
However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30)
days thereafter, a new record date for such interest payment (a "Special Record Date") will be
established by the Paying Agent/Registrar, if and when funds for the payment of such interest have
been received from the Issuer. Notice of the past due interest shall be sent at least five (5) business
days prior to the Special Record Date by United States mail, first-class postage prepaid, to the
address of each registered owner appearing on the Registration Books at the close of business on the
last business day next preceding the date of mailing of such notice.
(c) In General. The Bonds (i) shall be issued in fully registered form, without interest
coupons, with the principal of and interest on such Bonds to be payable only to the registered owners
thereof, (ii) may be redeemed prior to their scheduled maturities (notice of which shall be given to
the Paying Agent/Registrar by the Issuer at least 35 days prior to any such redemption date), (iii)
may be converted and exchanged for other Bonds, (iv) may be transferred and assigned, (v) shall
have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal
of and interest on the Bonds shall be payable, and (viii) shall be administered and the Paying
Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the
Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM
OF BOND set forth in this Ordinance. The Bond initially issued and delivered pursuant to this
Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but
on each substitute Bond issued in conversion of and exchange for any Bond or Bonds issued under
this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S
AUTHENTICATION BOND, in the form set forth in the FORM OF BOND.
(d) Book-Entry Only System. The Bonds issued in exchange for the Bond initially
issued to the initial purchaser specified herein shall be initially issued in the form of a separate single
fully registered Bond for each of the maturities thereof. Upon initial issuance, the ownership of each
such Bond shall be registered in the name of Cede & Co., as nominee of The Depository Trust
Company, New York, New York ("DTC"), and except as provided in subsection (f) hereof, all of
the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Issuer
and the Paying Agent/Registrar shall have no responsibility or obligation to any securities brokers
and dealers, banks, trust companies, clearing corporations and certain other organizations on whose
behalf DTC was created ("DTC Participant") to hold securities to facilitate the clearance and
settlement of securities transactions among DTC Participants or to any person on behalf of whom
such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding
sentence, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with
respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect
to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person,
Item 7
5
other than a Registered Owner of Bonds, as shown on the Registration Books, of any notice with
respect to the Bonds, or (iii) the payment to any DTC Participant or any other person, other than a
Registered Owner of Bonds, as shown in the Registration Books of any amount with respect to
principal of or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the
contrary, the Issuer and the Paying Agent/Registrar shall be entitled to treat and consider the person
in whose name each Bond is registered in the Registration Books as the absolute owner of such
Bond for the purpose of payment of principal and interest with respect to such Bond, for the purpose
of registering transfers with respect to such Bond, and for all other purposes whatsoever. The
Paying Agent/Registrar shall pay all principal of and interest on the Bonds only to or upon the order
of the Registered Owners, as shown in the Registration Books as provided in this Ordinance, or their
respective attorneys duly authorized in writing, and all such payments shall be valid and effective
to fully satisfy and discharge the Issuer's obligations with respect to payment of principal of and
interest on the Bonds to the extent of the sum or sums so paid. No person other than a Registered
Owner, as shown in the Registration Books, shall receive a Bond evidencing the obligation of the
Issuer to make payments of principal and interest pursuant to this Ordinance. Upon delivery by
DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to
substitute a new nominee in place of Cede & Co., and subject to the provisions in this Ordinance
with respect to interest checks being mailed to the Registered Owner at the close of business on the
Record date, the words "Cede & Co." in this Ordinance shall refer to such new nominee of DTC.
(e) Successor Securities Depository; Transfers Outside Book-Entry Only System. In the
event that the Issuer determines that DTC is incapable of discharging its responsibilities described
herein and in the representations letter of the Issuer to DTC or that it is in the best interest of the
beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Issuer shall (i)
appoint a successor securities depository, qualified to act as such under Section 17A of the Securities
and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of
such successor securities depository and transfer one or more separate Bonds to such successor
securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of
Bonds and transfer one or more separate certificated Bonds to DTC Participants having Bonds
credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being
registered in the Registration Books in the name of Cede & Co., as nominee of DTC, but may be
registered in the name of the successor securities depository, or its nominee, or in whatever name
or names Registered Owners transferring or exchanging Bonds shall designate, in accordance with
the provisions of this Ordinance.
(f) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to
the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all
payments with respect to principal of and interest on such Bond and all notices with respect to such
Bond shall be made and given, respectively, in the manner provided in the representations letter of
the Issuer to DTC.
(g) Cancellation of Initial Bond. On the closing date, one initial Bond representing the
entire principal amount of the Bonds, payable in stated installments to the purchaser designated in
Section 11 or its designee, executed by manual or facsimile signature of the Mayor (or in the
Item 7
6
absence thereof, by the Mayor Pro-tem) and Town Secretary of the Issuer, approved by the Attorney
General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the
State of Texas, will be delivered to such purchaser or its designee. Upon payment for the initial
Bond, the Paying Agent/Registrar shall cancel the initial Bond and deliver to the Depository Trust
Company on behalf of such purchaser one registered definitive Bond for each year of maturity of
the Bonds, in the aggregate principal amount of all of the Bonds for such maturity.
(h) Conditional Notice of Redemption. With respect to any optional redemption of the
Bonds, unless certain prerequisites to such redemption required by this Ordinance have been met
and moneys sufficient to pay the principal of and premium, if any, and interest on the Bonds to be
redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice
of redemption, such notice shall state that said redemption may, at the option of the Issuer, be
conditional upon the satisfaction of such prerequisites and receipt of such moneys by the Paying
Agent/Registrar on or prior to the date fixed for such redemption, or upon any prerequisite set forth
in such notice of redemption. If a conditional notice of redemption is given and such prerequisites
to the redemption and sufficient moneys are not received, such notice shall be of no force and effect,
the Issuer shall not redeem such Bonds and the Paying Agent/Registrar shall give notice, in the
manner in which the notice of redemption was given, to the effect that the Bonds have not been
redeemed.
Section 4. FORM OF BONDS. The form of the Bonds, including the form of Paying
Agent/Registrar's Authentication Bond, the form of Assignment and the form of Registration Bond
of the Comptroller of Public Accounts of the State of Texas to be attached to the Bonds initially
issued and delivered pursuant to this Ordinance, shall be, respectively, substantially as follows, with
such appropriate variations, omissions or insertions as are permitted or required by this Ordinance.
(a) [Form of Bond]
NO. R- UNITED STATES OF AMERICA
STATE OF TEXAS
TOWN OF PROSPER, TEXAS
GENERAL OBLIGATION REFUNDING BOND,
SERIES 2013
PRINCIPAL
AMOUNT
$
Interest Rate Date of Initial Delivery Maturity Date CUSIP No.
July 25, 2013 August 15,____
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
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ON THE MATURITY DATE specified above, the Town of Prosper, in Collin and Denton
Counties, Texas (the "Issuer"), being a political subdivision and municipal corporation of the State
of Texas, hereby promises to pay to the Registered Owner specified above, or registered assigns
(hereinafter called the "Registered Owner"), on the Maturity Date specified above, the Principal
Amount specified above. The Issuer promises to pay interest on the unpaid principal amount hereof
(calculated on the basis of a 360-day year of twelve 30-day months) from the Date of Initial Delivery
set forth above at the Interest Rate per annum specified above. Interest is payable on February 15,
2014 and semiannually on each August 15 and February 15 thereafter to the Maturity Date specified
above, or the date of redemption prior to maturity; except, if this Bond is required to be
authenticated and the date of its authentication is later than the first Record Date (hereinafter
defined), such Principal Amount shall bear interest from the interest payment date next preceding
the date of authentication, unless such date of authentication is after any Record Date but on or
before the next following interest payment date, in which case such principal amount shall bear
interest from such next following interest payment date; provided, however, that if on the date of
authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being
exchanged is due but has not been paid, then this Bond shall bear interest from the date to which
such interest has been paid in full.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the
United States of America, without exchange or collection charges. The principal of this Bond shall
be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity, or
upon the date fixed for its redemption prior to maturity, at the corporate trust office of U.S. Bank
National Association in Dallas, Texas, which is the "Paying Agent/Registrar" for this Bond. The
payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered
owner hereof on each interest payment date by check or draft, dated as of such interest payment date,
drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by
the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with
the Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft shall
be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each
such interest payment date, to the registered owner hereof, at its address as it appeared on the last
day of the month preceding each such date (the "Record Date") on the Registration Books kept by
the Paying Agent/Registrar, as hereinafter described. In addition, interest may be paid by such other
method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the
registered owner. In the event of a non-payment of interest on a scheduled payment date, and for
30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be
established by the Paying Agent/Registrar, if and when funds for the payment of such interest have
been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date
of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least
five business days prior to the Special Record Date by United States mail, first-class postage
prepaid, to the address of each owner of a Bond appearing on the Registration Books at the close
of business on the last business day next preceding the date of mailing of such notice.
ANY ACCRUED INTEREST due at maturity or upon the redemption of this Bond prior to
maturity as provided herein shall be paid to the registered owner upon presentation and surrender
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of this Bond for redemption and payment at the corporate trust office of the Paying Agent/Registrar.
The Issuer covenants with the registered owner of this Bond that on or before each principal
payment date, interest payment date, and accrued interest payment date for this Bond it will make
available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond
Ordinance, the amounts required to provide for the payment, in immediately available funds, of all
principal of and interest on the Bonds, when due.
IF THE DATE for the payment of the principal of or interest on this Bond shall be a
Saturday, Sunday, a legal holiday or a day on which banking institutions in the city where the
corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive
order to close, then the date for such payment shall be the next succeeding day that is not such a
Saturday, Sunday, legal holiday or day on which banking institutions are authorized to close; and
payment on such date shall have the same force and effect as if made on the original date payment
was due.
THIS BOND is one of a series of Bonds dated June 15, 2013, authorized in accordance with
the Constitution and laws of the State of Texas in the principal amount of $_____________ for the
public purposes of refunding certain outstanding obligations of the Issuer and to pay the costs
incurred in connection with the issuance of the Bonds.
THE BONDS OF THIS SERIES having stated maturities on and after August 15, 2024 may
be redeemed prior to their scheduled maturities, at the option of the Issuer, on August 15, 2023 or
on any date thereafter, with funds derived from any available and lawful source, as a whole, or in
part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and
designated by the Issuer (provided that a portion of a Bond may be redeemed only in an integral
multiple of $5,000), at a redemption price equal to the principal amount to be redeemed plus accrued
interest to the date fixed for redemption.
AT LEAST 30 DAYS prior to the date fixed for any redemption of Bonds or portions thereof
prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by
United States mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such
redemption, to the registered owner of each Bond to be redeemed at its address as it appeared on the
45th day prior to such redemption date; provided, however, that the failure of the registered owner
to receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the
validity or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for
any such redemption due provision shall be made with the Paying Agent/Registrar for the payment
of the required redemption price for the Bonds or portions thereof that are to be so redeemed. If
such written notice of redemption is sent and if due provision for such payment is made, all as
provided above, the Bonds or portions thereof that are to be so redeemed thereby automatically shall
be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the
date fixed for redemption, and they shall not be regarded as being outstanding except for the right
of the registered owner to receive the redemption price from the Paying Agent/Registrar out of the
funds provided for such payment. If a portion of any Bond shall be redeemed, a substitute Bond or
Bonds having the same maturity date, bearing interest at the same rate, in any denomination or
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denominations in any integral multiple of $5,000, at the written request of the registered owner, and
in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the
registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as
provided in the Bond Ordinance.
ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without
interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond
Ordinance, this Bond may, at the request of the registered owner or the assignee or assignees hereof,
be assigned, transferred, converted into and exchanged for a like aggregate principal amount of fully
registered bonds, without interest coupons, payable to the appropriate registered owner, assignee or
assignees, as the case may be, having the same denomination or denominations in any integral
multiple of $5,000 as requested in writing by the appropriate registered owner, assignee or
assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for
cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance.
Among other requirements for such assignment and transfer, this Bond must be presented and
surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form
and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment
of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or
assignees in whose name or names this Bond or any such portion or portions hereof is or are to be
registered. The form of Assignment printed or endorsed on this Bond may be executed by the
registered owner to evidence the assignment hereof, but such method is not exclusive, and other
instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the
assignment of this Bond or any portion or portions hereof from time to time by the registered owner.
The Paying Agent/Registrar's reasonable standard or customary fees and charges for assigning,
transferring, converting and exchanging any Bond or portion thereof will be paid by the Issuer. In
any circumstance, any taxes or governmental charges required to be paid with respect thereto shall
be paid by the one requesting such assignment, transfer, conversion or exchange, as a condition
precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to
make any such transfer, conversion, or exchange (i) during the period commencing with the close
of business on any Record Date and ending with the opening of business on the next following
principal or interest payment date, or (ii) with respect to any Bond or any portion thereof called for
redemption prior to maturity, within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns,
or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly
will appoint a competent and legally qualified substitute therefor, and cause written notice thereof
to be mailed to the registered owners of the Bonds.
IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly
authorized, issued and delivered; that all acts, conditions and things required or proper to be
performed, exist and be done precedent to or in the authorization, issuance and delivery of this Bond
have been performed, existed and been done in accordance with law; that this Bond is a general
obligation of said Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes
sufficient to provide for the payment of the interest on and principal of this Bond, as such interest
comes due and such principal matures, have been levied and ordered to be levied against all taxable
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property in said Issuer, and have been pledged for such payment, within the limit prescribed by law,
all as provided in the Bond Ordinance.
BY BECOMING the registered owner of this Bond, the registered owner thereby
acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such
terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for
inspection in the official minutes and records of the governing body of the Issuer, and agrees that
the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each
registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or
facsimile signature of the Mayor (or in the absence thereof, by the Mayor Pro-tem) of the Issuer and
countersigned with the manual or facsimile signature of the Town Secretary of said Issuer, and has
caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond.
(signature) (signature)
Town Secretary Mayor
(SEAL)
(b) [Form of Paying Agent/Registrar's Authentication Bond]
PAYING AGENT/REGISTRAR'S AUTHENTICATION BOND
(To be executed if this Bond is not accompanied by an
executed Registration Bond of the Comptroller
of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond
Ordinance described in the text of this Bond; and that this Bond has been issued in conversion or
replacement of, or in exchange for, a certificate, bonds, or a portion of a bond or bonds of a series
that originally was approved by the Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas.
Dated: _______________________________________________
U.S. Bank National Association
Dallas, Texas
Paying Agent/Registrar
By:______________________________
Authorized Representative
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(c) [Form of Assignment]
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________.
Please insert Social Security or Taxpayer Identification Number of Transferee
______________________________________________________________________________
(Please print or typewrite name and address, including zip code, of Transferee.)
______________________________________________________________________________
the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
___________________________________________, attorney, to register the transfer of the within
Bond on the books kept for registration thereof, with full power of substitution in the premises.
Dated: ___________________________
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a securities transfer
association recognized signature guarantee
program.
NOTICE: The signature above must
correspond with the name of the registered
owner as it appears upon the front of this Bond
in every particular, without alteration or
enlargement or any change whatsoever.
(d) [Form of Registration Bond of the Comptroller of Public Accounts]
COMPTROLLER'S REGISTRATION BOND: REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity and approved by
the Attorney General of the State of Texas, and that this Bond has been registered by the
Comptroller of Public Accounts of the State of Texas.
Witness my signature and seal this
__________________________________________
Comptroller of Public Accounts of the State of Texas
(COMPTROLLER'S SEAL)
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(e) [Initial Bond Insertions]
(i) The initial Bond shall be in the form set forth is paragraph (a) of this Section, except
that:
A. immediately under the name of the Bond, the headings "Interest Rate" and
"Maturity Date" shall both be completed with the words "As shown below" and
"CUSIP No. _____" shall be deleted.
B. the first paragraph shall be deleted and the following will be inserted:
"THE TOWN OF PROSPER, TEXAS (the "Issuer"), being a political subdivision and
municipal corporation of the State of Texas, hereby promises to pay to the Registered Owner
specified above, or registered assigns (hereinafter called the "Registered Owner"), on August15 in
each of the years, in the principal installments and bearing interest at the per annum rates set forth
in the following schedule:
Years
Principal
Installments
Interest
Rates Years
Principal
Installments
Interest
Rates
2014 2024
2015 2025
2016 2026
2017 2027
2018 2028
2019 2029
2020 2030
2021 2031
2022 2032
2023 2033
The Issuer promises to pay interest on the unpaid principal amount hereof (calculated on the basis
of a 360-day year of twelve 30-day months) from the Date of Initial Delivery set forth above at the
respective Interest Rate per annum specified above. Interest is payable on February 15, 2014 and
semiannually on each August 15 and February 15 and thereafter to the date of payment of the
principal installment specified above, or the date of redemption prior to maturity; except, that if this
Bond is required to be authenticated and the date of its authentication is later than the first Record
Date (hereinafter defined), such Principal Amount shall bear interest from the interest payment date
next preceding the date of authentication, unless such date of authentication is after any Record Date
but on or before the next following interest payment date, in which case such principal amount shall
bear interest from such next following interest payment date; provided, however, that if on the date
of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being
exchanged is due but has not been paid, then this Bond shall bear interest from the date to which
such interest has been paid in full."
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C. The Initial Bond shall be numbered "T-1."
Section 5. INTEREST AND SINKING FUND. A special "Interest and Sinking Fund" is
hereby created and shall be established and maintained by the Issuer at an official depository bank
of the Issuer. Said Interest and Sinking Fund shall be kept separate and apart from all other funds
and accounts of the Issuer, and shall be used only for paying the interest on and principal of the
Bonds. All amounts received from the sale of the Bonds as accrued interest and ad valorem taxes
levied and collected for and on account of the Bonds shall be deposited, as collected, to the credit
of said Interest and Sinking Fund. During each year while any of the Bonds are outstanding and
unpaid, the governing body of the Issuer shall compute and ascertain a rate and amount of ad
valorem tax that will be sufficient to raise and produce the money required to pay the interest on the
Bonds as such interest comes due, and to provide and maintain a sinking fund adequate to pay the
principal of the Bonds as such principal matures (but never less than 2% of the original amount of
the Bonds as a sinking fund each year); and said tax shall be based on the latest approved tax rolls
of the Issuer, with full allowances being made for tax delinquencies and the cost of tax collection.
Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against
all taxable property in the Issuer, for each year while any of the Bonds are outstanding and unpaid,
and said tax shall be assessed and collected each such year and deposited to the credit of the
aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment
of the interest on and principal of the Bonds, as such interest comes due and such principal matures,
are hereby pledged for such payment, within the limit prescribed by law.
Section 6. CONTINUED PERFECTION OF SECURITY INTEREST. Chapter 1208,
Government Code, applies to the issuance of the Bonds and the pledge of the ad valorem taxes
granted by the Issuer under Section 5 of this Ordinance, and such pledge is therefore valid, effective,
and perfected. If Texas law is amended at any time while the Bonds are outstanding and unpaid
such that the pledge of the taxes granted by the Issuer under Section 5 of this Ordinance is to be
subject to the filing requirements of Chapter 9, Business & Commerce Code, then in order to
preserve to the registered owners of the Bonds the perfection of the security interest in said pledge,
the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas
law to comply with the applicable provisions of Chapter 9, Business & Commerce Code and enable
a filing to perfect the security interest in said pledge to occur.
Section 7. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be
deemed to be paid, retired and no longer outstanding (a "Defeased Bond") within the meaning of this
Ordinance, except to the extent provided in subsection (d) of this Section 7, when payment of the
principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of
maturity or otherwise) either (i) shall have been made or caused to be made in accordance with the
terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably
depositing with or making available to the Paying Agent/Registrar in accordance with an escrow
agreement or other instrument (the "Future Escrow Agreement") for such payment (1) lawful money
of the United States of America sufficient to make such payment or (2) Defeasance Securities that
mature as to principal and interest in such amounts and at such times as will insure the availability,
without reinvestment, of sufficient money to provide for such payment, and when proper
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arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its
services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall
be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall
no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes or
revenues herein levied and pledged as provided in this Ordinance, and such principal and interest
shall be payable solely from such money or Defeasance Securities. Notwithstanding any other
provision of this Ordinance to the contrary, it is hereby provided that any determination not to
redeem Defeased Bonds that is made in conjunction with the payment arrangements specified in
subsection 7(a)(i) or (ii) shall not be irrevocable, provided that: (1) in the proceedings providing for
such payment arrangements, the Issuer expressly reserves the right to call the Defeased Bonds for
redemption; (2) gives notice of the reservation of that right to the owners of the Defeased Bonds
immediately following the making of the payment arrangements; and (3) directs that notice of the
reservation be included in any redemption notices that it authorizes.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written
direction of the Issuer be invested in Defeasance Securities, maturing in the amounts and times as
hereinbefore set forth, and all income from such Defeasance Securities received by the Paying
Agent/Registrar that is not required for the payment of the Bonds and interest thereon, with respect
to which such money has been so deposited, shall be turned over to the Issuer, or deposited as
directed in writing by the Issuer. Any Future Escrow Agreement pursuant to which the money
and/or Defeasance Securities are held for the payment of Defeased Bonds may contain provisions
permitting the investment or reinvestment of such moneys in Defeasance Securities or the
substitution of other Defeasance Securities upon the satisfaction of the requirements specified in
subsection 7(a)(i) or (ii). All income from such Defeasance Securities received by the Paying
Agent/Registrar that is not required for the payment of the Defeased Bonds, with respect to which
such money has been so deposited, shall be remitted to the Issuer or deposited as directed in writing
by the Issuer.
(c) The term "Defeasance Securities" means any securities and obligations now or
hereafter authorized by Texas law that are eligible to refund, defease or otherwise discharge
obligations such as the Bonds.
(d) Until all Defeased Bonds shall have become due and payable, the Paying
Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the
same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and
pay for such services as required by this Ordinance.
(e) In the event that the Issuer elects to defease less than all of the principal amount of
Bonds of a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount
of Bonds by such random method as it deems fair and appropriate.
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Section 8. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS.
(a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost,
stolen or destroyed, the Paying Agent/Registrar shall cause to be printed, executed and delivered,
a new certificate of the same principal amount, maturity and interest rate, as the damaged, mutilated,
lost, stolen or destroyed Bond, in replacement for such Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged,
mutilated, lost, stolen or destroyed Bonds shall be made by the registered owner thereof to the
Paying Agent/Registrar. In every case of loss, theft or destruction of a Bond, the registered owner
applying for a replacement certificate shall furnish to the Issuer and to the Paying Agent/Registrar
such security or indemnity as may be required by them to save each of them harmless from any loss
or damage with respect thereto. Also, in every case of loss, theft or destruction of a Bond, the
registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their
satisfaction of the loss, theft or destruction of such Bond, as the case may be. In every case of
damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar
for cancellation the Bond so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in
the event any such Bond shall have matured, and no default has occurred that is then continuing in
the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may
authorize the payment of the same (without surrender thereof except in the case of a damaged or
mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished
as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement
certificate, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal,
printing, and other expenses in connection therewith. Every replacement certificate issued pursuant
to the provisions of this Section by virtue of the fact that any Bond is lost, stolen or destroyed shall
constitute a contractual obligation of the Issuer whether or not the lost, stolen or destroyed Bond
shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of
this Ordinance equally and proportionately with any and all other Bonds duly issued under this
Ordinance.
(e) Authority for Issuing Replacement Bonds. In accordance with Subchapter D of
Chapter 1201, Government Code, this Section 8 of this Ordinance shall constitute authority for the
issuance of any such replacement certificate without necessity of further action by the governing
body of the Issuer or any other body or person, and the duty of the replacement of such bonds is
hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar
shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided
in Section 3(a) of this Ordinance for Bonds issued in conversion and exchange for other Bonds.
Section 9. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND
COUNSEL'S OPINION AND ENGAGEMENT; ATTORNEY GENERAL FILING FEE; CUSIP
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NUMBERS; OTHER PROCEDURES. (a) The Mayor of the Issuer is hereby authorized to have
control of the Bonds initially issued and delivered hereunder and all necessary records and
proceedings pertaining to the Bonds pending their delivery and their investigation, examination, and
approval by the Attorney General of the State of Texas, and their registration by the Comptroller of
Public Accounts of the State of Texas. Upon registration of the Bonds said Comptroller of Public
Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the
Comptroller's Registration Bond attached to such Bonds, and the seal of said Comptroller shall be
impressed, or placed in facsimile, on such Bond. The approving legal opinion of the Issuer's Bond
Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Bonds
issued and delivered under this Ordinance, but neither shall have any legal effect, and shall be solely
for the convenience and information of the registered owners of the Bonds.
(b) The Mayor, Town Manager, Finance Director and Town Secretary and all other officers,
employees and agents of the Issuer, and each of them, shall be and they are hereby expressly
authorized, empowered and directed from time to time and at any time to do and perform all such
acts and things and to execute, acknowledge and deliver in the name and on behalf of the Issuer a
Paying Agent/Registrar Agreement with the Paying Agent/Registrar and all other instruments,
whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms
and provisions of this Ordinance, the Bonds, the sale of the Bonds and the Official Statement
relating to the Bonds. In case any officer whose signature shall appear on any Bond shall cease to
be such officer before the delivery of such Bond, such signature shall nevertheless be valid and
sufficient for all purposes the same as if such officer had remained in office until such delivery.
(c) The obligation of the initial purchaser to accept delivery of the Bonds is subject to
the initial purchaser being furnished with the final, approving opinion of McCall, Parkhurst &
Horton L.L.P., bond counsel to the Issuer, which opinion shall be dated as of and delivered on the
date of initial delivery of the Bonds to the initial purchaser. The engagement of such firm as bond
counsel to the Issuer in connection with issuance, sale and delivery of the Bonds is hereby approved
and confirmed. The execution and delivery of an engagement letter between the Issuer and such
firm, with respect to such services as bond counsel, is hereby authorized in such form as may be
approved by the Mayor of the Issuer and the Mayor is hereby authorized to execute such
engagement letter.
(d) In accordance with the provisions of Section 1202.004, Tex. Gov't Code Ann., in
connection with the submission of the Bonds by the Attorney General of Texas for review and
approval, a statutory fee (an amount equal to 0.1% principal amount of the Bonds, subject to a
minimum of $750 and a maximum of $9,500) is required to be paid to the Attorney General upon
the submission of the transcript of proceedings for the Bonds. The Issuer hereby authorizes and
directs that a check in the amount of the Attorney General filing fee for the Bonds, made payable
to the "Texas Attorney General," be promptly furnished to the Issuer's Bond Counsel, for payment
to the Attorney General in connection with his review of the Bonds.
Section 10. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE
BONDS. The Issuer covenants to take any action necessary to assure, or refrain from any action that
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would adversely affect, the treatment of the Bonds as Obligation described in section 103 of the
Code, the interest on which is not includable in the "gross income" of the holder for purposes of
federal income taxation. In furtherance thereof, the Issuer covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of
the Bonds (less amounts deposited to a reserve fund, if any) are used for any "private
business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the
proceeds or the projects financed therewith are so used, such amounts, whether or not
received by the Issuer, with respect to such private business use, do not, under the terms of
this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for
the payment of more than 10 percent of the debt service on the Bonds, in contravention of
section 141(b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use"
described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" that is "related" and not
"disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental
use;
(c) to take any action to assure that no amount that is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve
fund, if any) is directly or indirectly used to finance loans to persons, other than state or local
governmental units, in contravention of section 141(c) of the Code;
(d) to refrain from taking any action that would otherwise result in the Bonds
being treated as "private activity bonds" within the meaning of section 141(b) of the Code;
(e) to refrain from taking any action that would result in the Bonds being
"federally guaranteed" within the meaning of section 149(b) of the Code;
(f) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds that were used, directly or indirectly, to acquire
investment property (as defined in section 148(b)(2) of the Code) that produces a materially
higher yield over the term of the Bonds, other than investment property acquired with –
(1) proceeds of the Bonds invested for a reasonable temporary period of
3 years or less or, in the case of a refunding bond, for a period of 30 days or less until
such proceeds are needed for the purpose for which the bonds are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning
of section 1.148-1(b) of the Treasury Regulations, and
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(3) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of the
Bonds;
(g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated
as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise
contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the
extent applicable, section 149(d) of the Code (relating to advance refundings); and
(h) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90
percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to
pay to the United States of America, not later than 60 days after the Bonds have been paid
in full, 100 percent of the amount then required to be paid as a result of Excess Earnings
under section 148(f) of the Code.
In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby
established by the Issuer for the sole benefit of the United States of America, and such Fund shall
not be subject to the claim of any other person, including without limitation the certificateholders.
The Rebate Fund is established for the additional purpose of compliance with section 148 of the
Code.
For purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds"
includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding
bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date
of issuance of the Bonds. It is the understanding of the Issuer that the covenants contained herein
are intended to assure compliance with the Code and any regulations or rulings promulgated by the
U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are
hereafter promulgated that modify or expand provisions of the Code, as applicable to the Bonds, the
Issuer will not be required to comply with any covenant contained herein to the extent that such
failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the
exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In
the event that regulations or rulings are hereafter promulgated that impose additional requirements
applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent
necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from
federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of
such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents,
certificates or reports required by the Code and to make such elections, on behalf of the Issuer, that
may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds.
Section 11. SALE OF BONDS; APPROVAL OF OFFICIAL STATEMENT. (a) The
Bonds are hereby initially sold and shall be delivered to _______________ (the "Underwriters") for
cash at a price set forth below, pursuant to the terms and provisions of a Purchase Contract that the
Mayor of the Issuer is hereby authorized to execute and deliver. The Bonds shall initially be
registered in the name of "__________". The Bonds are sold to the Underwriters at a price of
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$___________ (representing the par amount of the Bonds, plus an aggregate original issue premium
of $___________, less Underwriter's discount on the Bonds of $___________). The net original
issue premium shall be applied to pay a portion of the Underwriter's discount. It is hereby officially
found, determined, and declared that the terms of this sale are the most advantageous reasonably
obtainable.
(b) The Issuer hereby approves the form and content of the Official Statement relating to the
Bonds and any addenda, supplement or amendment thereto, and approves the distribution of such
Official Statement in the reoffering of the Bonds by the Underwriter in final form, with such changes
therein or additions thereto as the officer executing the same may deem advisable, such
determination to be conclusively evidenced by his execution thereof. The distribution and use of
the Preliminary Official Statement dated June __, 2013 prior to the date hereof is hereby ratified and
confirmed.
Section 12. ALLOCATION OF BOND PROCEEDS. The Issuer covenants to account for
the expenditure of sale proceeds and investment earnings to be used for the construction and
acquisition of the projects financed with proceeds of the Refunded Obligations (the "Project") on
its books and records by allocating proceeds to expenditures within 18 months of the later of the date
that (1) the expenditure is made, or (2) the Project is completed. The foregoing notwithstanding, the
Issuer shall not expend proceeds of the sale of the Bonds or investment earnings thereon more than
60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the
Bonds are retired, unless the Issuer obtains an opinion of nationally-recognized bond counsel that
such expenditure will not adversely affect the status, for federal income tax purposes, of the Bonds
or the interest thereon. For purposes hereof, the Issuer shall not be obligated to comply with this
covenant if it obtains an opinion that such failure to comply will not adversely affect the
excludability for federal income tax purposes from gross income of the interest.
Section 13. DISPOSITION OF PROJECT. The Issuer covenants that the Project will not
be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other
compensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such
sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes
of the foregoing, the portion of the property comprising personal property and disposed in the
ordinary course shall not be treated as a transaction resulting in the receipt of cash or other
compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant
if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for
federal income tax proposes from gross income of the interest.
Section 14. APPROVAL OF ESCROW AGREEMENT AND TRANSFER OF FUNDS.
The Mayor or the Town Manager of the Issuer is hereby authorized and directed to execute and
deliver the Escrow Agreement with U.S. Bank National Association, in substantially the form
presented at this meeting. In addition, the Mayor or other officer of the Issuer is authorized to
purchase such securities, to execute subscriptions for the purchase of U. S. Treasury Securities, State
and Local Government Series, or other open market securities that are authorized investments for
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the defeasance of the Refunded Obligations, if any such investments are required, and to authorize
such contributions of funds, as may be necessary for the Escrow Fund.
Section 15. REDEMPTION OF REFUNDED OBLIGATIONS.
(a) The Issuer hereby directs that certain of the Refunded Obligations be called for
redemption on the dates and as set forth on Schedule I. Each of such Refunded Obligations shall
be redeemed at the redemption price of par plus accrued interest. The Mayor of the Issuer is hereby
authorized and directed to issue or cause to be issued the Notice of Redemption of the Refunded
Obligations in the forms set forth in Exhibit B attached hereto to the paying agent/registrars for the
Refunded Obligations.
(b) In addition, the paying agent/registrars for the Refunded Obligations are hereby directed
to provide the appropriate notices of redemption and defeasance as specified by the ordinances
authorizing the issuance of the Refunded Obligations and are hereby directed to make appropriate
arrangements so that the Refunded Obligations may be redeemed on their redemption dates. The
Refunded Obligations shall be presented for redemption at the respective paying agent/registrar
therefore, and shall not bear interest after the date fixed for redemption.
(c) The source of funds for payment of the principal of and interest on the Refunded
Obligations on their respective redemption dates shall be from the funds placed in escrow with the
Escrow Agent, pursuant to the Escrow Agreement approved in Section 14 of this Ordinance.
Section 16. COMPLIANCE WITH RULE 15c2-12.
(a) Definitions. As used in this Section, the following terms have the meanings ascribed to
such terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
(b) Annual Reports. (i) The Issuer shall provide annually to the MSRB, in the electronic
format prescribed by the MSRB, within six months after the end of each fiscal year commencing in
2013, financial information and operating data with respect to the Issuer of the general type included
in the final Official Statement authorized by this Ordinance, being the information described in
Exhibit A attached hereto. Any financial statements so to be provided shall be (1) prepared in
accordance with the accounting principles described in the financial statements of the Issuer
appended to the Official Statement, or such other accounting principles as the Issuer may be required
to employ from time to time pursuant to state law or regulation, and (2) audited, if the Issuer
commissions an audit of such statements and the audit is completed within the period during which
they must be provided. If the audit of such financial statements is not completed within such period,
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then the Issuer shall provide unaudited financial information within such period, and audited
financial statements for the applicable fiscal year to the MSRB, when and if the audit report on such
statements become available.
(ii) If the Issuer changes its fiscal year, it will notify the MSRB of the change (and of the
date of the new fiscal year end) prior to the next date by which the Issuer otherwise would be
required to provide financial information and operating data pursuant to this Section. The financial
information and operating data to be provided pursuant to this Section may be set forth in full in one
or more documents or may be included by specific reference to any documents available to the
public on the MSRB's internet website or filed with the SEC.
(c) Event Notices. The Issuer shall notify the MSRB, in a timely manner not in excess of
ten Business Days after the occurrence of the event, of any of the following events with respect to
the Bonds:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or
final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB)
or other material notices or determinations with respect to the tax status of the
Bonds, or other material events affecting the tax status of the Bonds;
7. Modifications to rights of holders of the Bonds, if material;
8. Bond calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds, if
material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the Issuer;
13. The consummation of a merger, consolidation, or acquisition involving the Issuer or
the sale of all or substantially all of the assets of the Issuer, other than in the ordinary
course of business, the entry into a definitive agreement to undertake such an action
or the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms, if material; and
14. Appointment of a successor Paying Agent/Registrar or change in the name of the
Paying Agent/Registrar, if material.
The Issuer shall notify the MSRB, in a timely manner, of any failure by the Issuer to provide
financial information or operating data in accordance with subsection (c) of this Section by the time
required by subsection (c). As used in clause (c)12 above, the phrase "bankruptcy, insolvency,
receivership or similar event" means the appointment of a receiver, fiscal agent or similar officer
for the Issuer in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state
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or federal law in which a court of governmental authority has assumed jurisdiction over substantially
all of the assets or business of the Issuer, or if jurisdiction has been assumed by leaving the Board
and officials or officers of the Issuer in possession but subject to the supervision and orders of a
court or governmental authority, or the entry of an order confirming a plan of reorganization,
arrangement or liquidation by a court or governmental authority having supervision or jurisdiction
over substantially all of the assets or business of the Issuer.
(d) Limitations, Disclaimers, and Amendments. (i) The Issuer shall be obligated to observe
and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer
remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that
the Issuer in any event will give notice of any deposit made in accordance with this Ordinance or
applicable law that causes the Bonds no longer to be outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Issuer
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly provided
herein. The Issuer does not make any representation or warranty concerning such information or
its usefulness to a decision to invest in or sell Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART
FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON
ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF
ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR
SPECIFIC PERFORMANCE.
(iv) No default by the Issuer in observing or performing its obligations under this Section
shall comprise a breach of or default under the Ordinance for purposes of any other provision of this
Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the Issuer under federal and state securities laws.
(v) The provisions of this Section may be amended by the Issuer from time to time to adapt
to changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the Issuer, but only if (1) the provisions
of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in
the primary offering of the Bonds in compliance with the Rule, taking into account any amendments
or interpretations of the Rule since such offering as well as such changed circumstances and (2)
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either (a) the registered owners of a majority in aggregate principal amount (or any greater amount
required by any other provision of this Ordinance that authorizes such an amendment) of the
outstanding Bonds consent to such amendment or (b) a person that is unaffiliated with the Issuer
(such as nationally recognized bond counsel) determined that such amendment will not materially
impair the interest of the registered owners and beneficial owners of the Bonds. If the Issuer so
amends the provisions of this Section, it shall include with any amended financial information or
operating data next provided in accordance with subsection (b) of this Section an explanation, in
narrative form, of the reason for the amendment and of the impact of any change in the type of
financial information or operating data so provided. The Issuer may also amend or repeal the
provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable
provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule
are invalid, but only if and to the extent that the provisions of this sentence would not prevent an
underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds.
Section 17. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend
this Ordinance subject to the following terms and conditions, to-wit:
(a) The Issuer may from time to time, without the consent of any holder, except as
otherwise required by paragraph (b) below, amend or supplement this Ordinance in order to (i) cure
any ambiguity, defect or omission in this Ordinance that does not materially adversely affect the
interests of the holders, (ii) grant additional rights or security for the benefit of the holders, (iii) add
events of default as shall not be inconsistent with the provisions of this Ordinance and which shall
not materially adversely affect the interests of the holders, (v) qualify this Ordinance under the Trust
Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time
in effect, or (iv) make such other provisions in regard to matters or questions arising under this
Ordinance as shall not be inconsistent with the provisions of this Ordinance and which shall not in
the opinion of the Issuer's Bond Counsel materially adversely affect the interests of the holders.
(b) Except as provided in paragraph (a) above, the holders of Bonds aggregating in
principal amount 51% of the aggregate principal amount of then outstanding Bonds which are the
subject of a proposed amendment shall have the right from time to time to approve any amendment
hereto which may be deemed necessary or desirable by the Issuer; provided, however, that without
the consent of 100% of the holders in aggregate principal amount of the then outstanding Bonds,
nothing herein contained shall permit or be construed to permit amendment of the terms and
conditions of this Ordinance or in any of the Bonds so as to:
(1) Make any change in the maturity of any of the outstanding Bonds;
(2) Reduce the rate of interest borne by any of the outstanding Bonds;
(3) Reduce the amount of the principal of, or redemption premium, if any,
payable on any outstanding Bonds;
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(4) Modify the terms of payment of principal or of interest or redemption
premium on outstanding Bonds or any of them or impose any condition with respect
to such payment; or
(5) Change the minimum percentage of the principal amount of any series of
Bonds necessary for consent to such amendment.
(c) If at any time the Issuer shall desire to amend this Ordinance under this Section, the
Issuer shall send by U.S. mail to each registered owner of the affected Bonds a copy of the proposed
amendment and cause notice of the proposed amendment to be published at least once in a financial
publication published in The City of New York, New York or in the State of Texas. Such published
notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof
is on file at the office of the Issuer for inspection by all holders of such Bonds.
(d) Whenever at any time within one year from the date of publication of such notice the
Issuer shall receive an instrument or instruments executed by the holders of at least 51% in
aggregate principal amount of all of the Bonds then outstanding which are required for the
amendment, which instrument or instruments shall refer to the proposed amendment and which shall
specifically consent to and approve such amendment, the Issuer may adopt the amendment in
substantially the same form.
(e) Upon the adoption of any amendatory Ordinance pursuant to the provisions of this
Section, this Ordinance shall be deemed to be modified and amended in accordance with such
amendatory Ordinance, and the respective rights, duties, and obligations of the Issuer and all holders
of such affected Bonds shall thereafter be determined, exercised, and enforced, subject in all respects
to such amendment.
(f) Any consent given by the holder of a Bond pursuant to the provisions of this Section
shall be irrevocable for a period of six months from the date of the publication of the notice provided
for in this Section, and shall be conclusive and binding upon all future holders of the same Bond
during such period. Such consent may be revoked at any time after six months from the date of the
publication of said notice by the holder who gave such consent, or by a successor in title, by filing
notice with the Issuer, but such revocation shall not be effective if the holders of 51% in aggregate
principal amount of the affected Bonds then outstanding, have, prior to the attempted revocation,
consented to and approved the amendment.
For the purposes of establishing ownership of the Bonds, the Issuer shall rely solely upon
the registration of the ownership of such Bonds on the registration books kept by the Paying
Agent/Registrar.
Section 18. INCONSISTENT PROVISIONS. All indentures, ordinances or resolutions, or
parts thereof, that are in conflict or inconsistent with any provision of this Ordinance are hereby
repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain
controlling as to the matters contained herein.
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Section 19. GOVERNING LAW. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
Section 20. SEVERABILITY. If any provision of this Ordinance or the application thereof
to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application
thereof to other circumstances shall nevertheless be valid, and this governing body hereby declares
that this Ordinance would have been enacted without such invalid provision.
Section 21. EVENTS OF DEFAULT. Each of the following occurrences or events for the
purpose of this Ordinance is hereby declared to be an event of default (an "Event of Default"):
(i) the failure to make payment of the principal of or interest on any of the Bonds when the
same becomes due and payable; or
(ii) default in the performance or observance of any other covenant, agreement or obligation
of the Issuer, the failure to perform which materially, adversely affects the rights of the
Registered Owners, including, but not limited to, their prospect or ability to be repaid in
accordance with this Ordinance, and the continuation thereof for a period of 60 days after
notice of such default is given by any Registered Owner to the Issuer.
Section 22. REMEDIES FOR DEFAULT. (a) Upon the happening of any Event of Default,
then and in every case, any Registered Owner or an authorized representative thereof, including, but
not limited to, a trustee or trustees therefor, may proceed against the may proceed against the Issuer
or the Town Council of the Issuer, as appropriate for the purpose of protecting and enforcing the
rights of the Registered Owners under this Ordinance, by mandamus or other suit, action or special
proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by
law, including the specific performance of any covenant or agreement contained herein, or thereby
to enjoin any act or thing that may be unlawful or in violation of any right of the Registered Owners
hereunder or any combination of such remedies.
(b) It is provided that all such proceedings shall be instituted and maintained for the equal
benefit of all Registered Owners of Bonds then outstanding.
Section 23. REMEDIES NOT EXCLUSIVE. (a) No remedy herein conferred or reserved
is intended to be exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under
the Bonds or now or hereafter existing at law or in equity; provided, however, that notwithstanding
any other provision of this Ordinance, the right to accelerate the debt evidenced by the Bonds shall
not be available as a remedy under this Ordinance.
(b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver
of any other available remedy.
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(c) By accepting the delivery of a Bond authorized under this Ordinance, such Registered
Owner agrees that the certifications required to effectuate any covenants or representations
contained in this Ordinance do not and shall never constitute or give rise to a personal or pecuniary
liability or charge against the officers, employees or trustees of the Issuer or the Town Council of
the Issuer.
Section 24. EFFECTIVE DATE. In accordance with the provisions of V.T.C.A.,
Government Code, Section 1201.028, this Ordinance shall be effective immediately upon its
adoption by the Town Council.
Item 7
I-1
SCHEDULE I
SCHEDULE OF REFUNDED OBLIGATIONS
Description Maturities
Principal
Amount
Outstanding
Principal
Amount
Refunded
Combination Tax and Revenue Certificates of
Obligation, Series 2004 8/15/2014 $550,000 $550,000
8/15/2015 570,000 570,000
8/15/2016 595,000 595,000
8/15/2017 620,000 620,000
8/15/2018 645,000 645,000
8/15/2019 670,000 670,000
8/15/2020 700,000 700,000
8/15/2021 730,000 730,000
8/15/2022 765,000 765,000
8/15/2023 800,000 800,000
8/15/2024 835,000 835,000
Total $7,480,000 $7,480,000
The Series 2004 Certificates are called for redemption on February 15, 2014, at par plus accrued interest.
Description Maturities
Principal
Amount
Outstanding
Principal
Amount
Refunded
General Obligation Bonds, Taxable Series 2012 2/15/2014 $3,880,000 $3,880,000
Total $3,880,000 $3,880,000
______________
(1) The Series 2012 Bonds are called for redemption on August 1, 2013, at par plus accrued interest.
Item 7
A-1
Exhibit A
Continuing Disclosure Information
The following information is referred to in Section 16(a) of this Ordinance:
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the Issuer to be provided annually in
accordance with such Section are as specified (and included in the Appendices of the Official
Statement referred to) below:
The quantitative financial information and operating data pertaining to the Issuer of the general type
included in Tables numbered 1 through 5 and 7 through 14 and in Appendix B to the Official
Statement.
The financial statements of the Issuer that will be provided will be unaudited, unless an audit is
performed, in which event the audited financial statements will be made available.
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in the
notes to the financial statements that are attached to the Official Statement as Appendix C, or such
other accounting principles as the Issuer may be required to employ from time to time pursuant to
state law or regulation.
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B-1
Exhibit B
NOTICE OF DEFEASANCE AND REDEMPTION
TOWN OF PROSPER, TEXAS
(COLLIN AND DENTON COUNTIES, TEXAS)
NOTICE IS HEREBY GIVEN that the Town of Prosper, Texas has called for early redemption the
outstanding certificates of obligation of the Town described as follows:
Town of Prosper, Texas Combination Tax and Revenue Certificates of Obligation, Series
2004 (the "Series 2004 Certificates") dated February 1, 2004, bearing interest at the rates
shown below and maturing on February 15 in the years and in the amounts shown below.
Such Bonds have been called for redemption on February 15, 2014 at the redemption price
of par and accrued interest to the date fixed for redemption:
Maturity Date
(Aug. 15)Principal AmountOutstanding Principal AmountRefunded Interest Rate CUSIP No.
8/15/2014 $550,000 $550,000 4.000% 743596DD7
8/15/2015 570,000 570,000 4.000 743596DE5
8/15/2016 595,000 595,000 4.125 743596DF2
8/15/2017 620,000 620,000 4.250 743596DG0
8/15/2018 645,000 645,000 4.250 743596DH8
8/15/2019 670,000 670,000 4.250 743596DJ4
8/15/2020 700,000 700,000 4.250 743596DK1
8/15/2021 730,000 730,000 4.250 743596DL9
8/15/2022 765,000 765,000 4.375 743596DM7
8/15/2023 800,000 800,000 4.375 743596DN5
8/15/2024 835,000 835,000 4.500 743596DP0
aggregating $7,780,000 in principal amount. Provision has been made as of July 25, 2013 for the Series 2004
Certificates shown above to be paid from amounts held in an escrow account administered by U.S. Bank
National Association, Dallas, Texas, which is the Escrow Agent for the Series 2004 Certificates, until the date
of redemption specified above, when the redemption price shall be paid upon presentation of the Series 2004
Certificates to the Paying Agent/Registrar for the Series 2004 Certificates, at following address:
If by Mail: If by Hand or Overnight Mail:
U.S. Bank
Corporate Trust Services
P.O. Box 64111
St. Paul, MN 55164-0111
U.S. Bank
Corporate Trust Services
60 Livingston Avenue
1st Floor - Bond Drop Window
St. Paul, MN 55107
Upon presentation of the Series 2004 Certificates at the Paying Agent/Registrar on the aforementioned
redemption date, the holder thereof shall be entitled to receive the redemption price equal to par plus accrued
interest to the redemption date and thereafter the Series 2004 Certificates shall no longer bear interest.
TOWN OF PROSPER, TEXAS
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B-2
Exhibit B, Continued
NOTICE OF DEFEASANCE AND REDEMPTION
TOWN OF PROSPER, TEXAS
(COLLIN AND DENTON COUNTIES, TEXAS)
NOTICE IS HEREBY GIVEN that the Town of Prosper, Texas has called for early redemption the
outstanding certificates of obligation of the Town described as follows:
Town of Prosper, Texas General Obligation Bonds, Taxable Series 2012 (the "Series 2012
Bonds") dated September 1, 2012, bearing interest at the rate shown below and maturing on
February 15, 2014 and in the amounts shown below. Such Bonds have been called for
redemption on August 1, 2013 at the redemption price of par and accrued interest to the date
fixed for redemption:
Maturity Date
(Feb. 15)Principal AmountOutstanding Principal AmountRefunded Interest Rate
2/15/2014 $3,880,000 $3,880,000 1.04%
aggregating $3,880,000 in principal amount. Provision has been made as of July 25, 2013 for the Series 2012
Bonds shown above to be paid from amounts held in an escrow account administered by U.S. Bank National
Association, Dallas, Texas, which is the Escrow Agent for the Series 2012 Bonds, until the date of redemption
specified above, when the redemption price shall be paid upon presentation of the Series 2012 Bonds to the
Paying Agent/Registrar for the Series 2012 Bonds, at following address:
Regions Bank
1900 5th Avenue North, Suite 2400
Birmingham, Alabama 35203
Upon presentation of the Series 2012 Bonds at the Paying Agent/Registrar on the aforementioned redemption
date, the holder thereof shall be entitled to receive the redemption price equal to par plus accrued interest to
the redemption date, and thereafter the Series 2012 Bonds shall no longer bear interest.
TOWN OF PROSPER, TEXAS
Item 7
1
(See “Continuing Disclosure of
Information” herein)
PRELIMINARY OFFICIAL STATEMENT
Dated _____________, 2013
NEW ISSUE - Book-Entry-Only
In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under
statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "Tax
Matters" herein, including the alternative minimum tax on corporations.
THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
$11,040,000*
TOWN OF PROSPER, TEXAS
(Collin and Denton Counties)
GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013
Dated Date: June 15, 2013 Due: August 15, as shown on page 2
Interest to Accrue From Date of Delivery
PAYMENT TERMS . . . Interest on the $11,040,000* Town of Prosper, Texas, General Obligation Refunding Bonds, Series 2013 (the
"Bonds", which, together with the $5,500,000* Town of Prosper, Texas Combination Tax and Surplus Revenue Certificates of
Obligation, Series 2013 (the “Certificates”) [see page 3 of the Official Statement] being issued concurrently with the Bonds, are referred
to herein collectively as the “Obligations”), will accrue from the date of delivery and will be payable February 15 and August 15 of each
year commencing February 15, 2014, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The
definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC")
pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of
$5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the owners thereof. Principal of, premium, if
any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the
amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds -
Book-Entry-Only System" herein. The initial Paying Agent/Registrar is U.S. Bank National Association, Dallas, Texas (see "The
Obligations - Paying Agent/Registrar").
AUTHORITY FOR ISSUANCE . . . The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, particularly
Chapter 1207, Texas Government Code, as amended. The Bonds constitute direct obligations of the Town, payable from a continuing
ad valorem tax levied on all taxable property within the Town, within the limits prescribed by law, as provided in the ordinance
authorizing the Bonds (see "The Obligations - Authority for Issuance").
PURPOSE . . . Proceeds from the sale of the Bonds will be used to (i) refund a portion of the Town’s outstanding debt (the “Refunded
Obligations”) (see “Plan of Financing”; also see Schedule I attached hereto for a detailed description of the Refunded Obligations), and
(ii) pay the costs associated with the issuance of the Bonds.
CUSIP PREFIX: 743596
MATURITY SCHEDULE & 9 DIGIT CUSIP
See Schedule on Page 2
SEPARATE ISSUES . . . The Bonds are being offered by the Town concurrently with the issuance of the Certificates under a common
Official Statement. The Bonds and Certificates are separate and distinct securities offerings being issued and sold independently except
for this Official Statement, and while they share certain common attributes, each issue is separate from the other and should be reviewed
and analyzed independently, including without limitation the type of obligation being offered, its terms for payment, the rights of the
Town to redeem the Obligations, the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations
and other features.
LEGALITY . . . The Bonds are offered for delivery when, as and if issued and received by the Underwriter and subject to the approving
opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, Dallas, Texas (see
Appendix C, "Form of Bond Counsel's Opinion"). Certain legal matters will be passed upon for the Underwriter by Andrews Kurth
LLP, Houston, Texas, Counsel for the Underwriter.
DELIVERY . . . It is expected that the Bonds will be available for delivery through DTC on July 25, 2013.
RBC CAPITAL MARKETS BOSC, INC.
A SUBSIDIARY OF BOK FINANCIAL CORPORATION
* Preliminary, subject to change. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. 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 sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction Ratings:
Moody’s: “Aa3”
(see “Other Information –
Ratings” herein)
Item 7
2
CUSIP Prefix: 743596 (1\
MATURITY SCHEDULE*
Maturity Principal Interest Initial CUSIP
(8/15) Amount Rate Yield Suffix(1)
2014 655,000$
2015 695,000
2016 715,000
2017 750,000
2018 780,000
2019 810,000
2020 835,000
2021 865,000
2022 905,000
2023 945,000
2024 985,000
2025 200,000
2026 210,000
2027 215,000
2028 225,000
2029 230,000
2030 240,000
2031 250,000
2032 260,000
2033 270,000
(Interest to accrue from the date of delivery)
_______________
(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global
Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This
data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the
Town, the Financial Advisor nor the Underwriter shall be responsible for the selection or correctness of CUSIP numbers set
forth herein.
REDEMPTION OPTION . . . The Town reserves the right, at its option, to redeem Bonds having stated maturities on and after
August 15, 2024, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 15, 2023, or any
date thereafter, at the par value thereof plus accrued interest to the date of redemption (see “The Obligations – Optional
Redemption”).
* Preliminary, subject to change.
Item 7
3
(See “Continuing Disclosure of
Information” herein)
PRELIMINARY OFFICIAL STATEMENT
Dated _____________, 2013
NEW ISSUE - Book-Entry-Only
In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax purposes under statutes,
regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "Tax Matters" herein,
including the alternative minimum tax on corporations.
THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
$5,500,000*
TOWN OF PROSPER, TEXAS
(Collin and Denton Counties)
COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2013
Dated Date: June 15, 2013 Due: August 15, as shown on page 4
Interest to Accrue From Date of Delivery
PAYMENT TERMS . . . Interest on the $5,500,000* Town of Prosper, Texas Combination Tax and Surplus Revenue Certificates of Obligation,
Series 2013 (the “Certificates”, which, together with the $11,040,000* Town of Prosper, Texas General Obligation Refunding Bonds, Series 2013
(the “Bonds”) [see page 1 of the Official Statement] being issued concurrently with the Certificates, are referred to herein collectively as the
“Obligations”), will accrue from the date of delivery and will be payable February 15, 2014, and each August 15 and February 15 thereafter until
maturity or prior redemption. Interest on the Certificates will be calculated on the basis of a 360-day year consisting of twelve 30-day months.
The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company, New
York, New York (“DTC”) pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired
in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Certificates will be made to the owners
thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will
make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the
Certificates. See “The Obligations - Book-Entry-Only System” herein. The initial Paying Agent/Registrar is U.S. Bank National Association,
Dallas, Texas (see “The Obligations - Paying Agent/Registrar”).
AUTHORITY FOR ISSUANCE . . . The Certificates are issued pursuant to the Constitution and general laws of the State of Texas, particularly
Chapter 271, Subchapter C, Texas Local Government Code (the “Certificate of Obligation Act of 1971”), as amended, and constitute direct
obligations of the Town of Prosper, Texas (the “Town”), payable from the levy and collection of a continuing and direct annual ad valorem tax
levied on all taxable property within the Town, within the limits prescribed by law, and from a pledge of the surplus net revenues of the Town’s
waterworks and sewer system, as provided in the ordinance authorizing the Certificates (see “The Obligations - Authority for Issuance of the
Certificates”).
PURPOSE . . . Proceeds from the sale of the Certificates will be used for: (i) paying all or a portion of the Town's contractual obligations incurred
in connection with extending, constructing and improving the Town's water system, including constructing improvements to pump stations and
extending water lines; and (ii) payment of the costs associated with the issuance of the Certificates.
CUSIP PREFIX: 743596
MATURITY SCHEDULE & 9 DIGIT CUSIP
See Schedule on Page 2
SEPARATE ISSUES . . . The Certificates are being offered by the Town concurrently with the issuance of the Bonds under a common Official
Statement. The Certificates and Bonds are separate and distinct securities offerings being issued and sold independently except for this Official
Statement, and while they share certain common attributes, each issue is separate from the other and should be reviewed and analyzed
independently, including without limitation the type of obligation being offered, its terms for payment, the rights of the Town to redeem the
Obligations, the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations, the rights of their respective
holders and the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations and other features.
LEGALITY . . . The Certificates are offered for delivery when, as and if issued and received by the Underwriter and subject to the approving
opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel (see Appendix C,
“Forms of Bond Counsel's Opinions”). Certain legal matters will be passed upon for the Underwriter by Andrews Kurth LLP, Houston, Texas,
Counsel for the Underwriter.
DELIVERY . . . It is expected that the Certificates will be available for delivery through DTC on or about July 25, 2013.
RBC CAPITAL MARKETS BOSC, INC.
A SUBSIDIARY OF BOK FINANCIAL CORPORATION
* Preliminary, subject to change. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. 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 sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction Ratings:
Moody’s: “Aa3”
(see “Other Information – Ratings”
herein)
Item 7
4
CUSIP Prefix: 743596 (1\
MATURITY SCHEDULE*
Maturity Principal Interest Initial CUSIP
(8/15) Amount Rate Yield Suffix(1)
2014 180,000$
2015 195,000
2016 205,000
2017 210,000
2018 220,000
2019 230,000
2020 235,000
2021 245,000
2022 255,000
2023 265,000
2024 280,000
2025 285,000
2026 295,000
2027 305,000
2028 315,000
2029 330,000
2030 340,000
2031 355,000
2032 370,000
2033 385,000
(Interest to accrue from Date of Delivery)
_______________
(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global
Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This
data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the
Town, the Financial Advisor nor the Underwriter shall be responsible for the selection or correctness of CUSIP numbers set
forth herein.
REDEMPTION OPTION . . . The Town reserves the right, at its option, to redeem Certificates having stated maturities on and after
August 15, 2024, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 15, 2023, or any
date thereafter, at the par value thereof plus accrued interest to the date of redemption (see “The Obligations – Optional
Redemption”).
* Preliminary, subject to change.
Item 7
5
For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document constitutes an Official Statement of
the Town with respect to the Obligations that has been deemed "final" by the Town as of its date except for the omission of no more than the
information permitted by Rule 15c2-12.
No dealer, broker, salesman or other person has been authorized by the Town to give any information, or to make any representations other than those
contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been
authorized by the Town. This Official Statement does not constitute an offer to sell Obligations in any jurisdiction to any person to whom it is unlawful
to make such offer in such jurisdiction.
Certain information set forth herein has been obtained from the Town and other 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 Financial Advisor or the Underwriter. Any information and
expressions of opinion herein contained 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 Town or other matters described
herein since the date hereof. See "Continuing Disclosure of Information" for a description of the Town's undertaking to provide certain
information on a continuing basis.
This Official Statement contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance and
achievements to be different from future results, performance and achievements expressed or implied by such forward-looking statements. Investors
are cautioned that the actual results could differ materially from those set forth in the forward-looking statements.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this
Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and
circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
THE OBLIGATIONS ARE EXEMPT FROM REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND,
CONSEQUENTLY, HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE
OBLIGATIONS IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTION IN WHICH THESE
SECURITIES HAVE BEEN REGISTERED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF.
NEITHER THE TOWN NOR ITS FINANCIAL ADVISOR NOR THE UNDERWRITER MAKE ANY REPRESENTATION OR WARRANTY WITH
RESPECT TO THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY
(“DTC”) OR ITS BOOK-ENTRY- ONLY SYSTEM, AS SUCH INFORMATION HAS BEEN PROVIDED BY DTC.
TABLE OF CONTENTS
OFFICIAL STATEMENT SUMMARY .............................. 6
TOWN OFFICIALS, STAFF AND CONSULTANTS ....... 9
ELECTED OFFICIALS ....................................................... 9
SELECTED ADMINISTRATIVE STAFF ............................... 9
CONSULTANTS AND ADVISORS ...................................... 9
INTRODUCTION ................................................................ 11
PLAN OF FINANCING ...................................................... 11
THE OBLIGATIONS .......................................................... 12
TAX INFORMATION ........................................................ 17
TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL
OBLIGATION DEBT ............................................. 21
TABLE 2 - TAXABLE ASSESSED VALUATIONS BY
CATEGORY ......................................................... 22
TABLE 3 - VALUATION AND GENERAL OBLIGATION
DEBT HISTORY ................................................... 23
TABLE 4 - TAX RATE, LEVY AND COLLECTION
HISTORY ............................................................. 23
TABLE 5 - TEN LARGEST TAXPAYERS ........................ 23
TABLE 6 - ESTIMATED OVERLAPPING DEBT ............... 24
DEBT INFORMATION ...................................................... 25
TABLE 7 - PRO-FORMA GENERAL OBLIGATION DEBT
SERVICE REQUIREMENTS ................................... 25
TABLE 8 - INTEREST AND SINKING FUND BUDGET
PROJECTION ....................................................... 26
TABLE 9 - COMPUTATION OF SELF-SUPPORTING
DEBT ................................................................. 26
TABLE 10 - AUTHORIZED BUT UNISSUED GENERAL
OBLIGATION BONDS .......................................... 26
TABLE 11 – OTHER OBLIGATIONS ................................ 26
FINANCIAL INFORMATION .......................................... 29
TABLE 12 - CHANGES IN NET ASSETS ........................ 29
TABLE 12 -A - GENERAL FUND REVENUES AND
EXPENDITURE HISTORY ..................................... 30
TABLE 13 - MUNICIPAL SALES TAX HISTORY ............ 31
TABLE 14 - CURRENT INVESTMENTS ............................ 34
TAX MATTERS ................................................................... 34
CONTINUING DISCLOSURE OF INFORMATION ...... 36
OTHER INFORMATION ................................................... 37
RATINGS ....................................................................... 37
LITIGATION ................................................................... 37
REGISTRATION AND QUALIFICATION OF OBLIGATIONS
FOR SALE ............................................................ 37
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS .................................... 37
LEGAL MATTERS .......................................................... 38
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION ..................................................... 38
FINANCIAL ADVISOR .................................................... 38
UNDERWRITER ............................................................. 39
FORWARD-LOOKING STATEMENTS DISCLAIMER .......... 39
SCHEDULE OF REFUNDED
OBLIGATIONS ........................................... Schedule I
APPENDICES
GENERAL INFORMATION REGARDING THE TOWN ....... A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT ... B
FORM OF BOND COUNSEL'S OPINION .......................... C
The cover page hereof, this page, the appendices included
herein and any addenda, supplement or amendment hereto, are
part of the Official Statement.
Item 7
6
OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Obligations to potential investors is made only by means of this entire Official
Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire
Official Statement.
THE TOWN ................................... The Town of Prosper is a political subdivision and municipal corporation of the State, located
in Collin and Denton Counties, Texas. The Town covers approximately 27 square miles (see
"Introduction - Description of the Town").
THE OBLIGATIONS....................... The Bonds are issued as $11,040,000* General Obligation Refunding Bonds, Series 2013.
The Bonds are issued as serial Bonds maturing on August 15 of each year in the years 2014
through 2033 (see "The Obligations - Description of the Obligations").
The Certificates are issued as $5,500,000* Combination Tax and Revenue Certificates of
Obligation, Series 2013. The Certificates are issued as serial Certificates maturing on August
15 of each year in the years 2014 through 2033 (see “The Obligations – Description of the
Obligations”).
The Bonds and the Certificates are sometimes referred to collectively herein as the
“Obligations.”
PAYMENT OF INTEREST .............. Interest on the Obligations accrues from the date of delivery, and is payable February 15,
2014, and each August 15 and February 15 thereafter until maturity (see "The Bonds -
Description of the Bonds").
AUTHORITY FOR ISSUANCE.......... The Bonds are issued pursuant to the Constitution and general laws of the State of Texas,
including particularly Texas Government Code Chapter 1207, as amended, and the ordinance
authorizing the issuance of the Bonds to be adopted by the Town Council of the Town (see
“The Obligations - Authority for Issuance of the Bonds”).
The Certificates are issued pursuant to the Constitution and general laws of the State of Texas,
particularly Chapter 271, Subchapter C, Texas Local Government Code (the Certificate of
Obligation Act of 1971), as amended, and the ordinance authorizing the issuance of the
Certificates to be adopted by the Town Council of the Town (see “The Obligations -
Authority for Issuance of the Certificates”).
SECURITY FOR THE
BONDS ........................................... The Bonds constitute direct obligations of the Town payable from a continuing ad valorem tax
levied, within the limits prescribed by law, on all taxable property within the Town (see "The
Bonds - Security and Source of Payment").
SECURITY FOR THE
CERTIFICATES .............................. The Certificates constitute direct obligations of the Town payable from the levy and
collection of a continuing and direct annual ad valorem tax levied on all taxable property
within the Town, within the limits prescribed by law, and from a pledge of the surplus net
revenues of the Town’s waterworks and sewer system.
QUALIFIED TAX-EXEMPT
OBLIGATIONS ............................... The Town will not designate the Obligations as "Qualified Tax-Exempt Obligations" for
financial institutions (see "Tax Matters - Qualified Tax-Exempt Obligations for Financial
Institutions").
OPTIONAL REDEMPTION ............. The Town reserves the right, at its option, to redeem Obligations of having stated maturities
on and after August 15, 2024, in whole or in part in principal amounts of $5,000 or any
integral multiple thereof, on August 15, 2023, or any date thereafter, at the par value thereof
plus accrued interest to the date of redemption (see “The Obligations - Optional
Redemption”).
TAX EXEMPTION .......................... In the opinion of Bond Counsel, the interest on the Obligations will be excludable from gross
income for federal income tax purposes under existing law, subject to the matters described
under the caption "Tax Matters" herein, including the alternative minimum tax on
corporations.
* Preliminary, subject to change.
Item 7
7
USE OF PROCEEDS ....................... Proceeds from the sale of the Bonds will be used to (i) refund a portion of the Town’s
outstanding debt (the “Refunded Obligations”) (see “Plan of Financing”; also see Schedule I
attached hereto for a detailed description of the Refunded Obligations) and (ii) pay the costs
associated with the issuance of the Bonds.
Proceeds from the sale of the Certificates will be used for: (i) paying all or a portion of the
Town's contractual obligations incurred in connection with extending, constructing and
improving the Town's water system, including constructing improvements to pump stations
and extending water lines; and (ii) payment of the costs associated with the issuance of the
Certificates.
RATINGS ...................................... The presently outstanding tax supported debt of the Town is rated "Aa3" by Moody's
Investors Service, Inc. ("Moody's"), without regard to credit enhancement. Application has
been made to Moody’s for a contract rating on the Obligations (see "Other Information -
Ratings").
BOOK-ENTRY-ONLY
SYSTEM ...................................... The definitive Obligations will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial
ownership of the Obligations may be acquired in denominations of $5,000 or integral
multiples thereof. No physical delivery of the Obligations will be made to the beneficial
owners thereof. Principal of, premium, if any, and interest on the Obligations will be payable
by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so
paid to the participating members of DTC for subsequent payment to the beneficial owners of
the Obligations (see "The Obligations - Book-Entry-Only System").
PAYMENT RECORD ..................... The Town has never defaulted in payment of its general obligation tax debt.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
Item 7
8
SELECTED FINANCIAL INFORMATION
Per Per Ratio
Fiscal Capita Capita Tax Debt
Year Estimated Taxable Taxable Funded Tax Funded to Taxable % of
Ended Town Assessed Assessed Debt at Tax Assessed Total Tax
9/30 Population(1)Valuation(2)Valuation End of Year(3)Debt Valuation Collections
2009 7,150 997,044,689$ 139,447$ 37,330,000$ 5,221$ 3.74% 99.90%
2010 9,940 1,042,515,717 104,881 36,180,000 3,640 3.47% 99.70%
2011 11,600 1,147,384,655 98,912 36,585,000 3,154 3.19% 99.80%
2012 12,190 1,231,371,717 101,015 44,190,000 3,625 3.59% 99.52%
2013 13,531 1,347,409,280 99,579 50,875,000 (4)3,760 (4)3.78%(4)98.83%(5)
(1) Source: Town Officials
(2) As reported by the Collin County and Denton County Appraisal Districts on the Town’s annual State property tax reports;
subject to change during the ensuing year.
(3) Includes self-supporting debt.
(4) Projected. Excludes the Refunded Obligations. Includes the Obligations.
(5) Collections as of March 31, 2013.
GENERAL FUND CONSOLIDATED STATEMENT SUMMARY
2012 2011 2010 2009 2008
Beginning Balance 5,568,868$ 5,073,909$ (1)4,397,604$ 4,007,041$ 3,093,165$
Total Revenues 8,996,594 7,301,464 6,690,620 5,916,036 5,848,471
Total Expenditures 8,576,902 8,044,141 8,139,132 5,737,739 6,695,968
Other Financing Sources (Uses) 1,091,784 1,237,636 2,022,083 212,266 1,761,373
Net Funds Available 1,511,476 494,959 573,571 390,563 913,876
Ending Balance 7,080,344$ 5,568,868$ 4,971,175$ 4,397,604$ 4,007,041$
For Fiscal Year Ended September 30,
(1) Restated.
For additional information regarding the Town, please contact:
Harlan Jefferson Jason L. Hughes
Town Manager Senior Vice President
Town of Prosper or First Southwest Company
P.O. Box 307 325 N. St. Paul Street, Suite 800
Prosper, Texas 75078 Dallas, Texas 75201
(972) 569-1011 (214) 953-8707
Item 7
9
TOWN OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICIALS
Length of Term
Town Council Service Expires Occupation
Ray Smith 6 Years May, 2016 Banking/Finance
Mayor
Meigs Miller 5 Years May, 2016 IT Consultant/Sales
Mayor Pro-Tem
Kenneth Dugger 6 Years May, 2015 Banking IT Professional
Deputy Mayor Pro-Tem
Michael Korbuly 1 Year May, 2016 Security Industry Professional
Councilmember
Curry Vogelsang Jr.2 Years May, 2014 CPA
Councilmember
Danny Wilson 5 Years May, 2014 Insurance/Finance
Councilmember
Jason Dixon 3 Years May, 2015 Insurance Consultant
Councilmember
SELECTED ADMINISTRATIVE STAFF
Total
Length of Length of
Service Governmental
Name Position to Town Service
Harlan Jefferson Town Manager 4 Months 30 Years
Robyn Battle Town Secretary 1 Month 6 Years
Matthew Garrett Finance Director 5 Years 11 Years
Lori Heikkinen Accounting Manager 1 Year 4 Years
Frank Jaromin Public Works Director 7 Years 21 Years
Hulon Webb Exec. Director of Development and Community Services 7 Years 18 Years
Chris Copple Director of Development Services 7 Years 9 Years
CONSULTANTS AND ADVISORS
Auditors ........................................................................................................................................................ Davis Kinard & Co, PC
Abilene, Texas
Bond Counsel ............................................................................................................................. McCall, Parkhurst & Horton L.L.P.
Dallas, Texas
Financial Advisor ...................................................................................................................................... First Southwest Company
Dallas, Texas
Item 7
10
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
Item 7
11
PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$11,040,000*
TOWN OF PROSPER, TEXAS
GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013
AND
$5,500,000*
TOWN OF PROSPER, TEXAS
COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2013
INTRODUCTION
This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of
$11,040,000* Town of Prosper, Texas, General Obligation Refunding Bonds, Series 2013 (the “Bonds”) and $5,500,000*
Combination Tax and Surplus Revenue Certificates of Obligation, Series 2013 (the “Certificates”, and together with the Bonds,
herein collectively referred to as the “Obligations”). Capitalized terms used in this Official Statement have the same meanings
assigned to such terms in the respective ordinances (the “Bond Ordinance” with respect to the Bonds and the “Certificate
Ordinance” with respect to the Certificates) to be adopted on the date of sale of the Obligations which will authorize the issuance
of the Obligations, and collectively, the “Ordinances”, except as otherwise indicated herein.
There follows in this Official Statement descriptions of the Obligations and certain information regarding the Town and its
finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to
each such document. Copies of such documents may be obtained from the Town's Financial Advisor, First Southwest Company,
Dallas, Texas.
DESCRIPTION OF THE TOWN . . . The Town is a political subdivision and a home rule municipality under the laws of the State.
The Town was incorporated in 1914. The Town operates with a Town Council comprised of the Mayor and six
Councilmembers. The term of office is three years. The Town Manager is the chief administrative officer for the Town. Some
of the services that the Town provides are: public safety (police and fire protection), highways and streets, water and sanitary
sewer utilities, health and social services, culture-recreation, public improvements, planning and zoning, and general
administrative services. The 2012 estimated population for the Town was 12,190, while the estimated 2013 population is 13,531.
A Home Rule Charter was approved by the qualified voters of the Town at an election held November 7, 2006. The Town
covers approximately 27 square miles.
PLAN OF FINANCING
PURPOSE . . . The Bonds are being issued for the purpose of refunding a portion of the Town’s outstanding debt (the “Refunded
Obligations”) to restructure debt service and obtain debt service savings, and to pay the costs of issuance of the Bonds. See Schedule
I for a detailed listing of the Refunded Obligations and their redemption dates.
The Certificates are being issued for the purposes of: (i) paying all or a portion of the Town's contractual obligations incurred in
connection with extending, constructing and improving the Town's water system, including constructing improvements to pump
stations and extending water lines, and (ii) and to pay the costs of issuance of the Certificates.
REFUNDED OBLIGATIONS . . . The principal and interest due on the Refunded Obligations are to be paid on the dates fixed for their
redemption or at their maturity from funds to be deposited with U.S. Bank National Association, Dallas, Texas, the escrow agent
for the Refunded Obligations (the “Escrow Agent”). The Bond Ordinance provides that proceeds from the sale of the Bonds,
together with other available Town funds, in any are required, will be irrevocably deposited with the Escrow Agent in an amount
sufficient to accomplish the discharge and final payment of the Refunded Obligations on the respective redemption dates and/or
maturity dates of the Refunded Obligations. Such funds will be held uninvested by the Escrow Agent pending their
disbursement to redeem the Refunded Obligations on the respective redemption dates and/or maturity dates of the Refunded
Obligations.
* Preliminary, subject to change.
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First Southwest Company, in its capacity as Financial Advisor to the Town, will certify as to the sufficiency of the amounts
initially deposited with the Escrow Agent to pay the principal of and interest on the Refunded Obligations when due on the
redemption date. By the deposit of the proceeds of the Bonds and other funds of the Town, if any are required, with the Escrow
Agent pursuant to the Escrow Agreement, the Town will have effected the defeasance of the Refunded Obligations in accordance
with applicable State law and the ordinances authorizing the Refunded Obligations. As a result of such defeasance, the
Refunded Obligations will be outstanding only for the purpose of receiving payments from the Escrow Fund held for such
purpose by the Escrow Agent, and the Refunded Obligations will not be deemed as being outstanding obligations of the Town
payable from taxes or revenues of the Town, nor for the purpose of applying any limitation on the issuance of debt.
The Town has covenanted in the Escrow Agreement to make timely deposits to the Escrow Fund from lawfully available funds
of any additional amounts required to make payments on the Refunded Obligations, if for any reason, the cash balances on
deposit or scheduled to be on deposit in the Escrow Fund should be insufficient to make such payment.
SOURCES AND USES OF OBLIGATION PROCEEDS . . . Proceeds from the sale of the Obligations, together with a contribution to the
refunding by the Town, are expected to be expended as follows:
Sources of Funds The Bonds The Certificates
Par Amount of the Obligations -$ -$
Reoffering Premium
Transfer from Existing Interest and Sinking Fund
Total Sources of Funds -$ -$
Uses of Funds
Deposit to Interest and Sinking Fund -$ -$
Deposit to Project Construction Fund
Deposit to Escrow Fund
Underwriter's Discount
Costs of Issuance
Total Uses of Funds -$ -$
THE OBLIGATIONS
DESCRIPTION OF THE OBLIGATIONS . . . The Obligations are dated June 15, 2013 (the “Dated Date”), and mature on August 15 in
each of the years and in the amounts shown on pages 2 and 4. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest on the Obligations will accrue from the date of initial delivery and is payable
February 15, 2014 and on each August 15 and February 15 thereafter until maturity or redemption prior to maturity. The
definitive Obligations will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will
be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company, New York, New York
(“DTC”) pursuant to the Book-Entry-Only System described herein. No physical delivery of the Obligations will be made to
the owners thereof. Principal of, premium, if any, and interest on the Obligations will be payable by the Paying
Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for
subsequent payment to the beneficial owners of the Obligations. See “The Obligations - Book-Entry-Only System” herein.
Interest on the Obligations shall be paid to the registered owners appearing on the registration books of the Paying
Agent/Registrar at the close of business on the Record Date (hereinafter defined), and such interest shall be paid (i) by check sent
United States Mail, first class postage prepaid to the address of the registered owner recorded in the registration books of the
Paying Agent/Registrar or (ii) by such other method, acceptable to the Paying Agent/Registrar requested by, and at the risk and
expense of, the registered owner. Principal of the Obligations will be paid to the registered owner at their stated maturity or upon
earlier redemption upon presentation to designated payment/transfer office of the Paying Agent/Registrar; provided, however,
that so long as Cede & Co. (or other DTC nominee) is the registered owner of the Obligations, all payments will be made as
described under “The Obligations - Book-Entry-Only System” herein. If the date for any payment on the Obligations shall be a
Saturday, Sunday, a legal holiday or a day when banking institutions in the city where the designated payment/transfer office of
the Paying Agent/Registrar is located are authorized to close, then the date for such payment shall be the next succeeding day
which is not such a day, and payment on such date shall have the same force and effect as if made on the date payment was due.
AUTHORITY FOR ISSUANCE OF THE BONDS. . . The Bonds are being pursuant to the Constitution and general laws of the State of
Texas (the "State"), particularly Chapter 1207, Texas Government Code, as amended, and the Bond Ordinance.
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AUTHORITY FOR ISSUANCE OF THE CERTIFICATES . . . The Certificates are issued pursuant to the Constitution and general laws
of the State, particularly Chapter 271, Subchapter C, Texas Local Government Code, (the “Certificate of Obligation Act of
1971”), as amended, and the Certificate Ordinance.
SECURITY AND SOURCE OF PAYMENT . . .
Tax Pledge . . . The Obligations constitute direct obligations of the Town payable from an annual direct and continuing ad
valorem tax levied against all taxable property within the Town, within the limits prescribed by law (see "The Obligations - Tax
Rate Limitation" below).
Pledge of Surplus Waterworks and Sewer System Net Revenues for Certificates . . . The Certificates are additionally secured by a
lien on and pledge of the revenues of the Issuer's combined Waterworks and Sewer System (the “System”) remaining after
payment of all operation and maintenance expenses thereof, and all debt service, reserve and other requirements in connection
with all of the Issuer's revenue obligations (now or hereafter outstanding), which are payable from all or part of said revenues, as
provided in the Certificate Ordinance.
TAX RATE LIMITATION . . . All taxable property within the Town is subject to the assessment, levy and collection by the Town
of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem
tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the Town, and
limits its maximum ad valorem tax rate to $2.50 per $100 Taxable Assessed Valuation for all Town purposes. The Home Rule
Charter of the Town adopts the constitutionally authorized maximum tax rate of $2.50 per $100 taxable assessed valuation.
Administratively, the Attorney General of the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for
ad valorem tax debt service. Also, see “Tax Information – General Obligation Debt Limitation.”
OPTIONAL REDEMPTION . . . The Town reserves the right, at its option, to redeem Obligations having stated maturities on and
after August 15, 2024, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 15, 2023, or
any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Obligations of
either series are to be redeemed, the Town may select the maturities of Obligations to be redeemed. If less than all the
Obligations of any maturity are to be redeemed, the Paying Agent/Registrar (or DTC while the Obligations are in Book-Entry-
Only form) shall determine by lot the Obligations, or portions thereof, within such maturity to be redeemed. If an Obligation (or
any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been
given, such Obligation (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date
and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption
price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date.
NOTICE OF REDEMPTION AND OTHER NOTICES . . . Not less than 30 days prior to a redemption date for the Obligations, the
Town will cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each registered owner of
an Obligation to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of
the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. Any
notice of redemption so mailed will be conclusively presumed to have been duly given irrespective of whether received by the
owner of the Obligation. If such notice of redemption is given and if due provision for such payment is made and all other
conditions to redemption are satisfied, all as provided above, the Obligations or portions thereof which are to be so redeemed
thereby automatically will be treated as redeemed prior to their scheduled maturities, and they will not bear interest after the date
fixed for redemption, and they will not be regarded as being outstanding except for the right of the registered owner to receive
the redemption price from the Paying Agent/Registrar out of the funds provided for such payment.
With respect to any optional redemption of the Obligations unless certain prerequisites to such redemption required by the
respective Ordinance have been met and money sufficient to pay the principal of and premium, if any, and interest on the
Obligations to be redeemed will have been received by the Paying Agent/Registrar prior to the giving of such notice of
redemption, such notice may state that said redemption will, at the option of the Town, be conditional upon the satisfaction of
such prerequisites and receipt of such money by the Paying Agent/Registrar on or prior to the date fixed for such redemption or
upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites
to the redemption are not fulfilled, such notice will be of no force and effect, the Town will not redeem such Obligations and the
Paying Agent/Registrar will give notice in the manner in which the notice of redemption was given, to the effect that such
Obligations have not been redeemed.
The Paying Agent/Registrar and the Town, so long as a Book-Entry-Only System is used for the Obligations, will send any
notice of redemption relating to the Obligations, notice of proposed amendment to the Ordinances or other notices with respect to
the Obligations only to DTC. Any failure by DTC to advise any DTC participant, or of any DTC participant or indirect
participant to notify the Beneficial Owner, will not affect the validity of the redemption of the Obligations called for redemption
or any other action premised on any such notice. Redemption of portions of the Obligations by the Town will reduce the
outstanding principal amount of such Obligations held by DTC. In such event, DTC may implement, through its Book-Entry-
Only System, a redemption of such Obligations held for the account of DTC participants in accordance with its rules or other
agreements with DTC participants and then DTC participants and indirect participants may implement a redemption of such
Obligations from the Beneficial Owners. Any such selection of Obligations within a maturity to be redeemed will not be
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governed by the respective Ordinances and will not be conducted by the Town or the Paying Agent/Registrar. Neither the Town
nor the Paying Agent/Registrar will have any responsibility to DTC participants, indirect participants or the persons for whom
DTC participants act as nominees, with respect to the payments on the Obligations or the providing of notice to DTC
participants, indirect participants, or Beneficial Owners of the selection of portions of the Obligations for redemption. (See "The
Obligations - Book-Entry-Only System" herein.)
AMENDMENTS . . . In the Ordinances, the Town has reserved the right to amend the Ordinances without the consent of any holder
for the purpose of amending or supplementing the Ordinances to (i) cure any ambiguity, defect or omission therein that does not
materially adversely affect the interests of the holders, (ii) grant additional rights or security for the benefit of the holders, (iii)
add events of default as shall not be inconsistent with the provisions of the Ordinances that do not materially adversely affect the
interests of the holders, (iv) qualify the Ordinances under the Trust Indenture Act of 1939, as amended, or corresponding
provisions of federal laws from time to time in effect or (v) make such other provisions in regard to matters or questions arising
under the Ordinances that are not inconsistent with the provisions thereof and which, in the opinion of Bond Counsel for the
Town, do not materially adversely affect the interests of the holders.
The Ordinances further provide that the holders of the Obligations aggregating in principal amount 51% of the outstanding
Obligations shall have the right from time to time to approve any amendment not described above to the Ordinances if it is
deemed necessary or desirable by the Town; provided, however, that without the consent of 100% of the holders in original
principal amount of the then outstanding Obligations so affected, no amendment may be made for the purpose of: (i) making any
change in the maturity of any of the outstanding Obligations; (ii) reducing the rate of interest borne by any of the outstanding
Obligations; (iii) reducing the amount of the principal of, or redemption premium, if any, payable on any outstanding
Obligations; (iv) modifying the terms of payment of principal or of interest or redemption premium on outstanding Obligations,
or imposing any condition with respect to such payment; or (v) changing the minimum percentage of the principal amount of the
Obligations necessary for consent to such amendment. Reference is made to the Ordinances for further provisions relating to the
amendment thereof.
DEFEASANCE. . .The Ordinances provide for the defeasance of the Obligations when the payment of the principal on the
Obligations, plus interest on the Obligations to the due date thereof is provided by irrevocably depositing with the Paying
Agent/Registrar or authorized escrow agent, in trust (1) money sufficient to make such payment and/or (2) Defeasance Securities
to mature as to principal and interest in such amounts and at such times to insure the availability, without reinvestment, of
sufficient money to make such payment, and all necessary and proper fees, compensation and expenses of the paying agent for
the Obligations. The Ordinances provide that the term "Defeasance Securities" means any securities and obligations now or
hereafter authorized by State law that are eligible to discharge obligations such as the Obligations. Current State law permits
defeasance with the following types of securities: (a) direct, noncallable obligations of the United States of America, including
obligations that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or
instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the
agency or instrumentality and that, on the date the governing body of the Town approves the proceedings authorizing the
issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than
AAA or its equivalent, and (c) noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that on the date the governing body of the Town approves the proceedings authorizing the issuance of
refunding bonds have been refunded and are rated as to investment quality by a nationally recognized investment rating firm not
less than AAA or its equivalent. There is no assurance that the current law will not be changed in a manner which would permit
investments other than those described above to be made with amounts deposited to defease the Obligations. Because the
Ordinances do not contractually limit such investments, registered owners will be deemed to have consented to defeasance with
such other investments, notwithstanding the fact that such investments may not be of the same investment quality as those
currently permitted under State law. The Town has the right, subject to satisfying the requirements of (1) and (2) above, to
substitute other Defeasance Securities for the Defeasance Securities originally deposited, to reinvest the uninvested moneys on
deposit for such defeasance and to withdraw for the benefit of the Town moneys in excess of the amount required for such
defeasance. Upon such deposit as described above, such Obligations shall no longer be regarded to be outstanding or unpaid.
There is no assurance that the ratings for U.S. Treasury securities used as Defeasance Securities or that for any other Defeasance
Security will be maintained at any particular rating category.
BOOK-ENTRY-ONLY SYSTEM . . . This section describes how ownership of the Obligations is to be transferred and how the
principal of, premium, if any, and interest on the Obligations are to be paid to and credited by The Depository Trust Company
(“DTC”), New York, New York, while the Obligations are registered in its nominee name. The information in this section
concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this
Official Statement. The Town believes the source of such information to be reliable, but takes no responsibility for the accuracy
or completeness thereof.
The Town cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Obligations, or
redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to
DTC or its nominee (as the registered owner of the Obligations), or redemption or other notices, to the Beneficial Owners, or
that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The
current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to
be followed in dealing with DTC Participants are on file with DTC.
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The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Obligations. The
Obligations will be issued as fully-registered Obligations 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 Obligation certificate will be
issued for each maturity of the Obligations, each in the aggregate principal amount of such maturity, and will be deposited with
DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law,
a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a
“clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for
over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments
(from over 100 countries) that DTC’s participants (“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 is the holding company for DTC, National Securities Clearing Corporation and
Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated
subsidiaries. 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 a Standard & Poor’s rating of AA+. The DTC Rules applicable to
its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at
www.dtcc.com.
Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for
the Obligations on DTC’s records. The ownership interest of each actual purchaser of each Obligation (“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 Obligations 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 Obligations, except in the event that use of the book-entry system for the
Obligations is discontinued.
To facilitate subsequent transfers, all Obligations 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 Obligations 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 Obligations; DTC’s records reflect only
the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial
Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations
may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the
Obligations, such as redemptions, tenders, defaults, and proposed amendments to the Obligation documents. For example,
Beneficial Owners of Obligations may wish to ascertain that the nominee holding the Obligations 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 a maturity are being redeemed, DTC’s practice is to
determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Obligations unless authorized by
a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to
the Town 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 Obligations are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
All payments on the Obligations 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 Town or the Paying Agent/Registrar, 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 Obligations held for the accounts of customers in bearer form or registered in “street
name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent/Registrar, or the Town, subject to
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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 the Town or the Paying Agent/Registrar, 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 Obligations at any time by giving reasonable notice
to the Town or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained,
Obligation certificates are required to be printed and delivered.
The Town may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities
depository). In that event, Obligation certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Town
believes to be reliable, but neither the Town nor the Underwriters take any responsibility for the accuracy thereof.
Use of Certain Terms in Other Sections of this Official Statement . . . In reading this Official Statement it should be
understood that while the Obligations are in the Book-Entry-Only System, references in other sections of this Official Statement
to registered owners should be read to include the person for which the Participant acquires an interest in the Obligations, but (i)
all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described above,
notices that are to be given to registered owners under the Ordinances will be given only to DTC.
Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to
accuracy or completeness by, and is not to be construed as a representation by the Town, the Financial Advisor, or the
Underwriter.
Effect of Termination of Book-Entry-Only System . . . In the event that the Book-Entry-Only System of the Obligations is
discontinued for either or both series, printed Obligations of the respective series will be issued to the DTC Participants or the
holder, as the case may be, and such Obligations will be subject to transfer, exchange and registration provisions as set forth in
the Ordinances and summarized under “The Obligations - Transfer, Exchange and Registration” below.
PAYING AGENT/REGISTRAR . . . The initial Paying Agent/Registrar is U.S. Bank National Associations, Dallas, Texas. In the
Ordinances, the Town retains the right to replace the Paying Agent/Registrar with respect to either or both series. The Town
covenants to maintain and provide a Paying Agent/Registrar at all times until the Obligations are duly paid and any successor
Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other
entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the
Obligations. Upon any change in the Paying Agent/Registrar for the Obligations, the Town agrees to promptly cause a written
notice thereof to be sent to each registered owner of the Obligations by United States mail, first class, postage prepaid, which
notice shall also give the address of the new Paying Agent/Registrar.
TRANSFER, EXCHANGE AND REGISTRATION . . . In the event the Book-Entry-Only System should be discontinued, the
Obligations of the respective series may be transferred and exchanged on the registration books of the Paying Agent/Registrar
only upon presentation and surrender to the Paying Agent/Registrar and such transfer or exchange shall be without expense or
service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such
registration, exchange and transfer. Obligations may be assigned by the execution of an assignment form on the respective
Obligations or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Obligations will
be delivered by the Paying Agent/Registrar, in lieu of the Obligations being transferred or exchanged, at the designated office of
the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his
designee. To the extent possible, new Obligations issued in an exchange or transfer of Obligations will be delivered to the
registered owner or assignee of the registered owner in not more than three business days after the receipt of the Obligations to
be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly
authorized agent, in form satisfactory to the Paying Agent/Registrar. New Obligations registered and delivered in an exchange
or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the
Obligations surrendered for exchange or transfer. See "The Obligations - Book-Entry-Only System" herein for a description of
the system to be utilized initially in regard to ownership and transferability of the Obligations.
RECORD DATE FOR INTEREST PAYMENT . . . The record date ("Record Date") for the interest payable on the Obligations on any
interest payment date means the close of business on the last business day of the preceding month.
In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such
interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment
of such interest have been received from the Town. Notice of the Special Record Date and of the scheduled payment date of the
past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five
business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of
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a Obligation appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day
next preceding the date of mailing of such notice.
OBLIGATIONHOLDERS’ REMEDIES . . . The Ordinances provide that if the Town defaults in the payment of the Obligations when
due, or if it fails to make payments into any fund or funds created in the respective Ordinance, or defaults in the observation or
performance of any other covenants, conditions, or obligations set forth in the respective Ordinance and the continuation thereof
for a period of 60 days after notice of such default is given by any registered owner to the Town, the registered owners may seek
a writ of mandamus to compel Town officials to carry out their legally imposed duties with respect to the respective Obligations.
The issuance of a writ of mandamus is controlled by equitable principles, and with the discretion of the court, but may not be
arbitrarily refused. There is no acceleration of maturity of the Obligations in the event of default and, consequently, the remedy of
mandamus may have to be relied upon from year to year. The Ordinances do not provide for the appointment of a trustee to
represent the interest of the bondholders upon any failure of the Town to perform in accordance with the terms of the Ordinances,
or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative
of, and be financed by, the registered owners. The Texas Supreme Court has ruled in Tooke v. City of Mexia, 197 S.W.3rd 325
(Tex. 2006), that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in “clear and
unambiguous” language. Because it is unclear whether the Texas legislature has effectively waived the Town’s sovereign
immunity from a suit for money damages, holders may not be able to bring such a suit against the Town for breach of the
Obligations or Ordinances covenants. Even if a judgment against the Town could be obtained, it could not be enforced by direct
levy and execution against the Town's property. Further, the registered owners cannot themselves foreclose on property within the
Town or sell property within the Town to enforce the tax lien on taxable property to pay the principal of and interest on the
Obligations. Furthermore, the Town is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code
(“Chapter 9”). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged
source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically
recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit,
without Bankruptcy Court approval, the prosecution of any other legal action by creditors or bondholders of an entity which has
sought protection under Chapter 9. Therefore, should the Town avail itself of Chapter 9 protection from creditors, the ability to
enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy
Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy
Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to the
enforceability of the Ordinances and the Obligations are qualified with respect to the customary rights of debtors relative to their
creditors and may be limited by general principles of equity which permit the exercise of judicial discretion and by governmental
immunity.
TAX INFORMATION
AD VALOREM TAX LAW . . . The appraisal of property within the Town is the responsibility of the Collin County and Denton County
Appraisal Districts (the "Appraisal Districts"). Excluding agricultural and open-space land, which may be taxed on the basis of productive
capacity, the Appraisal Districts are required under the Property Tax Code to appraise all property within the Appraisal Districts on the
basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property,
different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market data
comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further
limits the appraised value of a residence homestead for a tax year to an amount that would not exceed either the lesser of (1) the
property's market value in the most recent tax year in which it the market value was determined by the Appraisal Districts or (2)
the sum of (a) 10% of the property's appraised value in the preceding tax year, plus (b) the property's appraised value the
preceding tax year, plus (c) the market value of all new improvements to the property. The value placed upon property within the
Appraisal Districts is subject to review by an Appraisal Review Board, consisting of members appointed by the Board of Directors of the
respective Appraisal District. The Appraisal Districts are required to review the value of property within the respective Appraisal District
at least every three years. The Town may require annual review at its own expense, and is entitled to challenge the determination of
appraised value of property within the Town by petition filed with the respective Appraisal Review Board.
Reference is made to the, Property Tax Code, for identification of property subject to taxation; property exempt or which may be
exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and limitations
applicable to the levy and collection of ad valorem taxes.
Article VIII of the State Constitution ("Article VIII") and State law provide for certain exemptions from property taxes, the valuation
of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation.
Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) An
exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled
from all ad valorem taxes thereafter levied by the political subdivision; (2) An exemption of up to 20% of the market value of
residence homesteads. The minimum exemption under this provision is $5,000.
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The governing body of a county, municipality or junior college, may, on its own initiative or by a petition and referendum
process, freeze the total amount of ad valorem taxes levied on the residence homestead of a disabled person or persons 65 years
of age or older to the amount of taxes imposed in the year such residence qualified for such exemption. Such freeze on ad
valorem taxes is transferable to a different residence homestead. Also, a surviving spouse of a taxpayer who qualifies for the
freeze on ad valorem taxes is entitled to the same exemption so long as the property was the residence homestead of the
surviving spouse when the deceased spouse died and remains the residence homestead of the surviving spouse and the spouse
was at least 55 years of age at the time of the death of the individual’s spouse. If improvements (other than repairs or
improvements required to comply with governmental requirements) are made to the property, the value of the improvements is
taxed at the then current tax rate, and the total amount of taxes imposed is increased to reflect the new improvements with the
new amount of taxes then serving as the ceiling on taxes for the following years. Once established, the tax rate limitation may
not be repealed or rescinded.
In the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be
levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt
if cessation of the levy would impair the obligation of the contract by which the debt was created.
State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse
or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or
personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000; provided,
however, that beginning in the 2009 tax year, a disabled veteran who receives from the from the United States Department of
Veterans Affairs or its successor 100 percent disability compensation due to a service-connected disability and a rating of 100
percent disabled or of individual unemployability is entitled to an exemption from taxation of the total appraised value of the
veteran’s residence homestead.
Under Article VIII and State law, the governing body of a county, municipality or junior college district, may freeze the total
amount of ad valorem taxes levied on the residence homestead of a disabled person or persons 65 years of age or older to the
amount of taxes imposed in the year such residence qualified for such exemption. Also, upon receipt of a petition signed by five
percent of the registered voters of the county, municipality or junior college district, an election must be held to determine by
majority vote whether to establish such a limitation on taxes paid on residence homesteads of persons 65 years of age or who are
disabled. Upon providing for such exemption, such freeze on ad valorem taxes is transferable to a different residence homestead
and to a surviving spouse living in such homestead who is disabled or is at least 55 years of age. If improvements (other than
maintenance or repairs) are made to the property, the value of the improvements is taxed at the then current tax rate, and the total
amount of taxes imposed is increased to reflect the new improvements with the new amount of taxes then serving as the ceiling
on taxes for the following years. Once established, the tax rate limitation may not be repeated or rescinded.
Article VIII provides that eligible owners of both agricultural land (Section 1-d) and open-space land (Section 1-d-1), including open-
space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such property
appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section 1-d
and 1-d-1.
Nonbusiness personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body
of a political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation.
Article VIII, Section 1-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as
goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication.
Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal.
Article VIII, Section 1-n of the Texas Constitution provides for the exemption from taxation of "goods in transit." "Goods in
transit" is defined by a provision in the Tax Code, which is effective for tax years 2008 and thereafter, as personal property
acquired or imported into Texas and transported to another location in the State or outside of the State within 175 days of the
date the property was acquired or imported into Texas. The exemption excludes oil, natural gas, petroleum products, aircraft and
special inventory, including motor vehicle, vessel and out board motor, heavy equipment and manufactured housing inventory.
The Tax Code provision permits local governmental entities, on a local option basis, to take official action by January 1 of the
year preceding a tax year, after holding a public hearing, to tax goods in transit during the following tax year. A taxpayer may
receive only one of the freeport exemptions or the goods in transit exemptions for items of personal property.
The Town and the other taxing bodies within its territory may agree to jointly create tax increment financing zones, under which the
tax values on property in the zone are "frozen" at the value of the property at the time of creation of the zone. The Town also may
enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to
construct certain improvements on its property. The Town in turn agrees not to levy a tax on all or part of the increased value
attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10
years.
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Cities are also authorized, pursuant to Chapter 380, Texas Local Government Code (“Chapter 380”) to establish programs to promote
state or local economic development and to stimulate business and commercial activity in the Town. In accordance with a program
established pursuant to Chapter 380, the Town may make loans or grant of public fund for economic development purposes,
however, no obligations secured by ad valorem taxes may be issued for such purposes unless approved by voters of the Town.
EFFECTIVE TAX RATE AND ROLLBACK TAX RATE . . . By each September 1 or as soon thereafter as practicable, the Town
Council adopts a tax rate per $100 taxable value for the current year. The Town Council will be required to adopt the annual tax
rate for the Town before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the
Town. If the Town Council does not adopt a tax rate by such required date the tax rate for that tax year is the lower of the
effective tax rate calculated for that tax year or the tax rate adopted by the Town for the preceding tax year. The tax rate consists
of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service.
Under the Property Tax Code, the Town must annually calculate and publicize its “effective tax rate” and “rollback tax rate”. A
tax rate cannot be adopted by the Town Council that exceeds the lower of the rollback tax rate or the effective tax rate until two
public hearings have been held on the proposed tax rate following notice of such public hearings (including the requirement that
notice be posted on the Town’s website if the Town owns, operates or controls an internet website and public notice be given by
television if the Town has free access to a television channel) and the Town Council has otherwise complied with the legal
requirements for the adoption of such tax rate. If the adopted tax rate exceeds the rollback tax rate the qualified voters of the
Town by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current
year to the rollback tax rate.
"Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values
(adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included
in this year's taxable values.
"Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's
values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted)
divided by the anticipated tax collection rate.
The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize
an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the
rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year.
Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the
calculation of the various defined tax rates.
PROPERTY ASSESSMENT AND TAX PAYMENT . . . Property within the Town is generally assessed as of January 1 of each year.
Business inventory may, at the option of the taxpayer, be assessed as of September. Oil and gas reserves are assessed on the
basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October
1 of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by
State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment
due on August 1.
PENALTIES AND INTEREST . . . Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows:
Cumulative Cumulative
Month Penalty Interest Total
February 6% 1% 7%
March 7 2 9
April 8 3 11
May 9 4 13
June 10 5 15
July 12 6 18
After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent
in July, a 15% attorney's collection fee is added to the total tax penalty and interest charge. Under certain circumstances, taxes
which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no
additional penalties or interest assessed. In general, property subject to the Town's lien may be sold, in whole or in parcels,
pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against
an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities,
including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents
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governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and
obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many
cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court.
TOWN APPLICATION OF TAX CODE . . . The Town grants an exemption to the market value of the residence homestead of
persons 65 years of age or older in the amount of $10,000; the disabled are not granted this exemption.
The Town has established a freeze on the taxes on residence homesteads of persons who are 65 years of age or who are disabled,
as may be done on a local option basis.
The Town has not granted an additional exemption of 20% of the market value of residence homesteads; the minimum
exemption that can be received being $5,000.
See Table 1 for a listing of the amounts of the exemptions described above.
Ad valorem taxes are not levied by the Town against the exempt value of residence homesteads for the payment of debt.
The Town does not tax nonbusiness personal property. However, the Town does tax leased vehicles that are considered
nonbusiness personal property. The Town contracts with the Collin County Tax Assessors Office to collect the Town’s taxes.
The Town does not permit split payments of taxes, and discounts on early payment of taxes are not allowed.
The Town does not tax freeport property.
The Town does collect the additional one-half cent sales tax for reduction of ad valorem taxes.
The Town has adopted a tax abatement policy.
TAX INCREMENT FINANCING ZONES . . . . The Town created a tax increment financing zone number 1 (“TIFZ #1”) in October of
2008. In anticipation of a planned development of a major corridor to the Town, the Town has entered into a memorandum of
understanding with a real estate investment and development company regarding the creation of a TIFZ #1 covering
approximately 700 acres along such corridor. The Town has also entered into a Development Agreement, relating to a 2,100
acre mixed use development consisting of residential, retail and commercial uses, which provides for impact fee credits by the
Town as certain costs of public infrastructure constructed by the developer and included within the Town’s Capital Improvement
Program.
The Town created a tax increment financing zone number 2 (“TIFZ #2”) in January of 2013. On December 31, 2012, the Town
Council approved by Contract 511 a Development and Financing Agreement with MSW Prosper 380, LP, outlines in
considerable detail the development intended to be created within the zone. TIFZ #2 is comprised of an approximate 157-acre
tract of land generally located at the northwestern quadrant of Highway 380 and the North Texas Tollway.
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TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT
2012/13 Market Valuation Established by Collin County and Denton County Appraisal Districts 1,831,837,588$
(excluding totally exempt property)
Less Exemptions/Reductions at 100% Market Value:
Over 65 Exemptions (Local Options)3,500,000$
Homestead Cap Adjustment 1,430,854
Disabled Veterans 2,896,460
Pollution Control 2,419,836
Productivity Loss 474,178,976
Prorated Exempt 2,182 484,428,308$
2012/13 Taxable Assessed Valuation 1,347,409,280$
General Obligation Debt Payable from Ad Valorem Taxes as of 5/1/13 (1)35,390,000$
The Bonds(2)11,040,000
The Certificates(2)5,500,000 51,930,000$
Less: Self-Supporting Debt(3)18,082,600
Net General Obligation Debt Payable from Ad Valorem Taxes as of 5/1/13 33,847,400$
General Obligation Interest and Sinking Fund as of 4/15/13 2,055,281$
Ratio Net General Obligation Tax Debt to Taxable Assessed Valuation 2.51%
2013 Estimated Population - 13,531
Per Capita Taxable Assessed Valuation - $99,579
Per Capita Net General Obligation Debt Payable from Ad Valorem Taxes - $2,501
(1) Includes self-supporting debt. Excludes the Refunded Obligations. Preliminary, subject to change.
(2) Preliminary, subject to change.
(3) General obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue
systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 9. It is the
Town’s current policy to provide these payments from respective system revenues; this policy is subject to change in the
future.
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TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY
Taxable Appraised Value for Fiscal Year Ended September 30,
2013 2012 2011
% of % of % of
Category Amount Total Amount Total Amount Total
Real, Residential, Single-Family 1,003,002,504$ 54.75% 908,147,255$ 53.27% 836,494,899$ 52.03%
Real, Residential, Multi-Family 44,648,923 2.44% 38,448,995 2.26% 40,433,158 2.52%
Real, Vacant Lots/Tracts 34,753,233 1.90% 36,643,934 2.15% 28,517,534 1.77%
Real, Acreage (Land Only) 504,964,022 27.57% 502,888,117 29.50% 490,205,706 30.49%
Real, Farm and Ranch Improvements 21,306,562 1.16% 22,079,429 1.30% 20,152,079 1.25%
Real, Commercial & Industrial 89,140,634 4.87% 87,691,638 5.14% 80,868,737 5.03%
Real and Intangible Personal, Utilities 9,348,660 0.51% 9,032,754 0.53% 7,860,593 0.49%
Tangible Personal, Commercial & Industrial 31,490,253 1.72% 26,653,015 1.56% 26,500,425 1.65%
Tangible Personal, Other 167,935 0.01% 165,592 0.01% 164,592 0.01%
Real, Inventory 93,014,862 5.08% 72,896,802 4.28% 76,417,403 4.75%
Total Appraised Value Before Exemptions 1,831,837,588$ 100.00% 1,704,647,531$ 100.00% 1,607,615,126$ 100.00%
Less: Total Exemptions/Reductions 484,428,308 473,275,814 460,230,471
Taxable Assessed Value 1,347,409,280$ 1,231,371,717$ 1,147,384,655$
2010 2009
% of % of
Category Amount Total Amount Total
Real, Residential, Single-Family 765,257,767$ 52.59% 683,060,387$ 46.48%
Real, Residential, Multi-Family 15,298,152 1.05% 1,495,350 0.10%
Real, Vacant Lots/Tracts 27,669,773 1.90% 30,062,961 2.05%
Real, Acreage (Land Only) 441,323,216 30.33% 529,712,101 36.05%
Real, Farm and Ranch Improvements 9,065,544 0.62% 10,194,596 0.69%
Real, Commercial & Industrial 62,228,824 4.28% 54,603,029 3.72%
Real and Intangible Personal, Utilities 7,954,142 0.55% 7,236,213 0.49%
Tangible Personal, Business 27,364,776 1.88% 25,498,146 1.74%
Tangible Personal, Other 180,552 0.01% 171,740 0.01%
Real, Inventory 98,861,556 6.79% 127,499,908 8.68%
Total Appraised Value Before Exemptions 1,455,204,302$ 100.00% 1,469,534,431$ 100.00%
Less: Total Exemptions/Reductions 412,688,585 472,489,742
Taxable Assessed Value 1,042,515,717$ 997,044,689$
Taxable Appraised Value for Fiscal Year Ended September 30,
NOTE: Valuations shown are certified taxable assessed values reported by the Appraisal Districts to the State Comptroller of
Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal
Districts updates records.
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TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY
Per Ratio
Fiscal Per Capita Gross Capita Tax Debt
Year Estimated Taxable Taxable Funded Tax Funded to Taxable
Ended City Assessed Assessed Debt at Tax Assessed
9/30 Population(1)Valuation (2)Valuation End of Year (3)Debt Valuation
2009 7,150 997,044,689$ 139,447$ 37,330,000$ 5,221$ 3.74%
2010 9,940 1,042,515,717 104,881 36,180,000 3,640 3.47%
2011 11,600 1,147,384,655 98,912 36,585,000 3,154 3.19%
2012 12,190 1,231,371,717 101,015 44,190,000 3,625 3.59%
2013 13,531 1,347,409,280 99,579 50,875,000 (4)3,760 (4)3.78%(4)
(1) Source: Town officials.
(2) As reported by the Appraisal Districts on Town's annual State Property Tax Reports filed with the Comptroller of Public
Accounts; subject to change during the ensuing year.
(3) Includes self-supporting debt.
(4) Projected. Excludes the Refunded Obligations. Includes the Obligations.
TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY
Fiscal
Year Total Interest % of % of
Ended Tax General and Sinking Current Total
9/30 Rate Fund Fund Tax Levy Collections Collections
2009 $ 0.520000 $ 0.305011 $ 0.214989 5,218,951$ 98.66% 99.90%
2010 0.520000 0.314084 0.205916 5,404,368 98.77% 99.70%
2011 0.520000 0.334742 0.185258 5,932,358 99.44% 99.80%
2012 0.520000 0.316937 0.203063 6,380,037 99.11% 99.52%
2013 0.520000 0.316914 0.203086 6,936,463 98.83%
(1)98.83%(1)
(1) Collections through March 31, 2013.
TABLE 5 - TEN LARGEST TAXPAYERS
2012/13 % of Total
Taxable Taxable
Assessed Assessed
Name of Taxpayer Nature of Property Valuation Valuation
Western Rim Investors 2007-4 LP Residential Development 43,186,691$ 3.21%
Prosper Land Company Ltd Property/Development 8,795,126 0.65%
Saddle Creek Investments Ltd Residential Development 6,755,986 0.50%
Five SAC Self-Storage Corp. Public Storage 6,529,887 0.48%
CC Joint Ventures Ltd Property/Development 6,435,078 0.48%
Quail Landing Phase I LP Property/Development 6,250,270 0.46%
Preston Development Ltd Property/Development 5,438,247 0.40%
Beazer Homes Texas LP Property/Development 5,374,764 0.40%
Sanders, Deion Luwynn Residence 5,364,323 0.40%
Sa'Hood Trust Residence 4,595,277 0.34%
98,725,649$ 7.33%
GENERAL OBLIGATION DEBT LIMITATION . . . No general obligation debt limitation is imposed on the Town under current State
law or the Town's Home Rule Charter (see "The Obligations - Tax Rate Limitation").
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TABLE 6 - ESTIMATED OVERLAPPING DEBT
Expenditures of the various taxing entities within the territory of the Town are paid out of ad valorem taxes levied by such
entities on properties within the Town. Such entities are independent of the Town and may incur borrowings to finance their
expenditures. This statement of direct and estimated overlapping ad valorem tax bonds ("Tax Debt") was developed from
information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the
amounts relating to the Town, the Town has not independently verified the accuracy or completeness of such information, and no
person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have
issued additional bonds since the date hereof, and such entities may have programs requiring the issuance of substantial amounts
of additional bonds, the amount of which cannot be determined. The following table reflects the estimated share of overlapping
Tax Debt of the Town.
Direct and
2012/13 Total Overlapping Authorized
Taxable 2012/13 Funded Estimated Funded But Unissued
Assessed Tax Debt As Of % Debt As Of Debt As Of
Jurisdiction Value Rate 5/1/2013 Applicable 5/1/2013 5/1/2013
Town of Prosper, Texas 1,347,409,280$ 0.5200$ 33,847,400$ (1)100.00% 33,847,400$ 21,040,000$
Collin County 69,300,274,160 0.2400 365,175,000 1.95% 7,120,913 184,555,000
Collin County Community College District 71,134,134,559 0.0863 40,210,000 1.95% 784,095 -
Denton County 54,586,142,483 0.2829 550,880,000 0.24% 1,322,112 235,126,687
Prosper Independent School District 2,070,361,686 1.6700 235,169,110 65.91% 154,999,960 622,500,000
Total Direct and Overlapping Funded Debt 198,074,480$
Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation . . . . . . . . . . . . . . . . . . . . . . 14.70%
Per Capita Direct and Overlapping Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,639$
(1) Excludes self-supporting debt and the Refunded Obligations, includes the Obligations. Preliminary, subject to change.
(2) Excludes the Obligations. Preliminary, subject to change.
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25 DEBT INFORMATION TABLE 7 - PRO-FORMA GENERAL OBLIGATION DEBT SERVICE REQUIREMENTS TotalYearLess: Net Debt % ofEndingOutstanding Debt Service(1)The Bonds(2)The Certificates(3)Self-Supporting Paid by Principal9/30 Principal Interest Total Principal Interest Total Principal Interest TotalDebt Service(4)Taxes Retired2013 2,375,000$ 1,715,371$ 4,090,371$ -$ -$ -$ -$ -$ -$ 1,700,761$ 2,389,610$ 2014 1,905,000 1,417,764 3,322,764 655,000 436,043 1,091,043 180,000 218,414 398,414 1,672,456 3,139,765 2015 1,965,000 1,355,704 3,320,704 695,000 398,356 1,093,356 195,000 202,869 397,869 1,666,206 3,145,723 2016 2,365,000 1,286,218 3,651,218 715,000 375,769 1,090,769 205,000 196,531 401,531 1,861,661 3,281,857 2017 2,375,000 1,209,424 3,584,424 750,000 345,381 1,095,381 210,000 187,819 397,819 1,821,774 3,255,850 27.40%2018 2,075,000 1,132,348 3,207,348 780,000 313,506 1,093,506 220,000 178,894 398,894 1,817,112 2,882,636 2019 1,855,000 1,054,579 2,909,579 810,000 280,356 1,090,356 230,000 169,544 399,544 1,632,094 2,767,385 2020 1,940,000 973,991 2,913,991 835,000 254,031 1,089,031 235,000 162,069 397,069 1,636,119 2,763,973 2021 2,015,000 888,679 2,903,679 865,000 226,894 1,091,894 245,000 154,431 399,431 1,630,138 2,764,866 2022 2,110,000 798,114 2,908,114 905,000 190,131 1,095,131 255,000 144,019 399,019 1,635,997 2,766,267 56.27%2023 2,080,000 703,545 2,783,545 945,000 151,669 1,096,669 265,000 133,181 398,181 1,513,125 2,765,270 2024 2,180,000 605,939 2,785,939 985,000 111,506 1,096,506 280,000 121,919 401,919 1,514,823 2,769,541 2025 2,285,000 501,419 2,786,419 200,000 79,494 279,494 285,000 112,819 397,819 974,562 2,489,170 2026 2,395,000 389,288 2,784,288 210,000 72,994 282,994 295,000 103,556 398,556 975,541 2,490,297 2027 1,570,000 271,338 1,841,338 215,000 65,644 280,644 305,000 93,231 398,231 484,014 2,036,199 83.49%2028 1,650,000 189,794 1,839,794 225,000 57,850 282,850 315,000 82,175 397,175 484,064 2,035,755 2029 1,735,000 103,781 1,838,781 230,000 49,413 279,413 330,000 70,363 400,363 483,399 2,035,158 2030 595,000 49,969 644,969 240,000 40,500 280,500 340,000 57,575 397,575 363,194 959,850 2031 610,000 30,388 640,388 250,000 31,200 281,200 355,000 44,400 399,400 362,144 958,844 2032 630,000 10,238 640,238 260,000 21,200 281,200 370,000 30,200 400,200 360,769 960,869 98.77%2033- - - 270,000 10,800 280,800 385,000 15,400 400,400 - 681,200 100.00%36,710,000$ 14,687,887$ 51,397,887$ 11,040,000$ 3,512,737$ 14,552,737$ 5,500,000$ 2,479,408$ 7,979,408$ 24,589,949$ 49,340,083$ (1) "Outstanding Debt" does not include lease/purchase obligations or the Refunded Obligations; preliminary, subject to change. (2) Average life of the Bonds – 8.322 years. Interest on the Bonds has been calculated at an average rate of 3.823% for purposes of illustration. Preliminary, subject to change. (3) Average life of the Certificates - 11.795 years. Interest on the Certificates has been calculated at an average rate of 3.822% for purposes of illustration. Preliminary, subject to change. (4) General obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 9. It is the Town’s current policy to provide these payments from respective system revenues; this policy is subject to change in the future. Item 7
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TABLE 8 - INTEREST AND SINKING FUND BUDGET PROJECTION
Tax Supported Debt Service Requirements, Fiscal Year Ending 9/30/13(1) 4,090,371$
Interest and Sinking Fund, 9/30/12 889,632$
Budgeted Interest and Sinking Fund Tax Levy 2,724,956
Investment Income 12,000
Budgeted Transfer from Enterprise Fund 1,700,761 5,327,349
Estimated Balance, Fiscal Year Ending 9/30/13 1,236,978$
(1) Includes self-supporting debt and the Obligations. Excludes the Refunded Obligations. Preliminary, subject to change.
TABLE 9 - COMPUTATION OF SELF-SUPPORTING DEBT
Net System Revenue Available in FY 11/12 3,235,077$
Less: Requirements for Revenue Bonds in FY 12/13 -
Balance Available for Other Purposes 3,235,077$
Requirements for System Tax Bonds in FY 12/13 1,700,761
Percentage of System General Obligation Bonds Self-Supporting 100%
TABLE 10 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS
Amount Remaining
Date Amount Issued Unissued
Purpose Authorized Authorized to Date Balance
City Hall and Multi-Purpose Center 5/14/2011 1,250,000$ -$ 1,250,000$
Public Works Facility 5/14/2011 450,000 - 450,000
Public Safety Facility and Equipment 5/14/2011 3,850,000 - 3,850,000
Parks & Recreation Facilities and Equipment 5/14/2011 6,200,000 4,200,000 2,000,000
Streets & Roads 5/14/2011 13,290,000 3,810,000 9,480,000
25,040,000$ 8,010,000$ 17,030,000$
ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT . . . The Town does not anticipate the issuance of additional general
obligation debt in the next 12 months.
TABLE 11 – OTHER OBLIGATIONS
The Town entered into a capital lease agreement for two police vehicles with Ford Motor Credit Company. As of September 30,
2012, the vehicles had a carrying value of $38,646. Capital lease expenditures for 2012 were $20,663, which included interest of
$1,371. The effective interest rate is 7.1%
PENSION FUND
Plan Description - The Town provides pension benefits for all of its eligible employees through a non-traditional, joint
contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple-
employer public employee retirement system. The plan provisions that have been adopted by the Town are within the options
available in the governing state statutes of TMRS.
TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required
supplementary information (RSI) for TMRS. The report also provides detailed explanations of the contributions, benefits and
actuarial methods and assumptions used by the System. This report may be obtained by writing to TMRS, P.O. Box 149153,
Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is available on the TMRS’ website at
www.TMRS.com.
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The plan provisions are adopted by the governing body of the Town, within the options available in the state statutes governing
TMRS. Plan provisions for the Town were as follows:
Employee deposit rate 7.0%
Matching ratio (City to employee)2 to 1
Years required for vesting 5
Service retirement eligibility
(expressed as age/years of service)60/5, 0/20
Updated service credit 100% repeating transfers
Annuity increase to retirees 70% of CPI, repeating
Contributions - Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary,
using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service
cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate
finances the portion of an active member's projected benefit allocated annually; the prior service contribution rate amortizes the
unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service
contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits
and Annuity Increases.
The Town contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the Town make contributions
monthly. Since the Town needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay
between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect.
Fiscal Annual Actual Percent Net Pension
Year Pension Contributions of APC Obligation
Ended Cost (APC) Made Contributed (NPO)
2010 381,905$ 381,905$ 106%(21,191)$
2011 389,749 407,378 105%(17,629)
2012 436,397 446,794 102%(46,443)
Three Year Trend Information for TMRS
Annual Required Contribution (ARC)436,751$
Interest on Net Pension Obligation (2,523)
Adjustment to the ARC 2,169
Annual Pension Cost (APC)436,397
Contributions Made (446,794)
Increase (Decrease) in Net Pension Obligation (10,397)
Net Pension Obligation/(Asset), Beginning of Year (36,046)
Net Pension Obligation/(Asset), End of Year (46,443)$
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The required contribution rates for fiscal year 2012 are determined as part of the December 31, 2009 and 2010 actuarial
valuations. Additional information as of the latest actuarial valuation, December 31, 2011, also follows:
Valuation Date 12/31/2009 12/31/2010 12/31/2011
Actuarial Cost Method Projected Unit Credit Projected Unit Credit Projected Unit Credit
Amortization Method Level Percent Level Percent Level Percent
of Payroll of Payroll of Payroll
GASB 25 Equivalent Single 23.3 years;22.5 years;21.5 years;
Amortization Period closed period closed period closed period
Amortization Period for new 25 years 25 years 25 years
Gaines/Losses
Asset Valuation Method 10-year Smoothed 10-year Smoothed 10-year Smoothed
Market Market Market
Actuarial Assumptions:
Investment Rate of Return*7.5%7.0%7.0%
Projected Salary Increases* Varies by Varies by Varies by
age and service age and service age and service
*Includes Inflation at 3.0%3.0%3.0%
Cost-of-Living Adjustments 2.1%2.1%2.1%
Actuarial Assumptions
Funded Status and Funding Progress –Actuarial valuations involve estimates of the value of reported amounts and assumptions
about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual
results are compared to past expectations and new estimates are made about the future.
Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each
valuation, and reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include
techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets.
The schedule of funding progress below presents multi-year trend information about whether the actuarial value of the plan
assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
U.A.A.L. as a
Actuarial Actuarial Unfunded Percentage
Actuarial Value of Accrued AAL Funded Covered of Covered
Valuation Assets Liability (UAAL) Ratio Payroll Payroll
Date (a) (AAL)(b) (b)-(a) (a)/(b) (c) [(b)-(a)/(c)]
12/31/09 2,288,445$ 3,343,417$ 1,054,972$ 68.4% 3,719,393$ 28.4%
12/31/10 3,175,249 4,606,199 1,430,950 68.9% 3,828,422 37.4%
12/31/11 4,072,790 5,493,307 1,420,517 74.1% 4,160,807 34.1%
Schedule of Funding Progress for TMRS
OTHER POST-EMPLOYMENT BENEFITS
The Town does not supply any other additional benefits to retired employees other than those described above.
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FINANCIAL INFORMATION
TABLE 12 - CHANGES IN NET ASSETS
Revenues 2012 2011 2010 2009 2008
Program Revenues
Charges for Services 2,304,052$ 1,226,483$ 1,069,437$ 921,363$ 2,505,378$
Operating Grants and Contributions 265,757 349,877 2,224,037 1,396,991 451,967
Capital Grants and Contributions 5,355,990 2,907,683 - - -
General Revenues
Property Taxes 6,391,826 5,986,296 5,504,833 5,296,120 4,428,507
Sales Taxes 1,941,832 1,320,686 1,308,750 1,077,127 1,287,511
Franchise Taxes 504,731 424,485 398,817 428,027 340,714
Impact & Escrow Fees 627,788 53,351 2,687,964 - -
Unrestricted Investment Earnings 162,583 154,577 338,898 455,815 596,140
Miscellaneous 864,681 530,408 115,786 440,228 1,941,982
Total Revenues 18,419,240$ 12,953,846$ 13,648,522$ 10,015,671$ 11,552,199$
Expenditures
General Government 1,712,306$ 1,622,024$ 1,233,969$ 1,507,786$ 975,644$
Police 1,853,994 1,588,611 1,402,835 1,198,529 1,034,071
Court 236,652 231,747 217,592 227,419 186,611
Fire and Ambulance 2,249,804 2,287,665 2,249,048 2,130,712 1,450,528
Streets 1,616,307 2,369,730 1,609,155 1,355,747 1,443,744
Parks 1,461,739 677,679 832,873 444,129 130,282
Engineering 144,489 158,863 145,762 141,611 151,263
Library 84,534 69,748 84,574 - -
Communications - - - - 11,198
Inspections 601,959 560,175 501,362 486,008 415,299
Planning 326,279 380,712 310,924 401,602 323,395
Interest and Fiscal Charges 1,108,187 1,138,952 895,015 1,275,691 458,709
Total Expenditures 11,396,250$ 11,085,906$ 9,483,109$ 9,169,234$ 6,580,744$
Transfers 351,714 434,125 15,118 (2,707,882) (1,237,049)
Change in Net Assets 7,374,704 2,302,065 4,180,531 (1,861,445) 3,734,406
Beginning Fund Balance, Oct. 1 53,704,046$ (1)51,735,807$ (1)47,452,542$ (1)47,923,987$ 44,189,581$ (2)
Ending Fund Balance, Sept. 30 61,078,750$ 54,037,872$ 51,633,073$ 46,062,542$ 47,923,987$
Fiscal Year Ended September 30,
(1) Restated.
(2) In accordance with current Governmental Accounting Standards Board pronouncements, the Governmental Activities Net
Assets as of September 30, 2007 has been increase by $33,472,800 from $10,716,781 to $44,189,581, to record the
estimated value of streets and other infrastructure built by developers and taken over by the Town.
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TABLE 12 -A - GENERAL FUND REVENUES AND EXPENDITURE HISTORY
2012 2011 2010 2009 2008
Revenues
Property Taxes 3,881,649$ 3,868,027$ 3,351,840$ 3,060,078$ 2,319,049$
Franchise, Sales and Other Taxes 2,446,563 1,745,171 1,707,567 1,505,154 1,628,225
Licenses, Zoning Fees and Permits 1,570,762 670,199 672,418 549,536 1,193,843
Charges for Services 192,213 163,188 169,955 133,306 160,948
Grant Income 198,129 284,645 344,447 275,469 130,000
Interest 55,198 69,567 112,861 92,728 117,298
Fines, Warrants and Seizures 537,670 386,001 215,746 226,678 234,746
Contributions - - - - -
Miscellaneous 114,410 114,666 115,786 73,087 64,362
Total Revenues 8,996,594$ 7,301,464$ 6,690,620$ 5,916,036$ 5,848,471$
Expenditures
General Government 1,572,159$ 1,524,824$ 1,067,175$ 939,080$ 903,491$
Police 1,742,499 1,470,908 1,319,106 1,072,158 937,327
Court 235,392 217,117 213,287 213,807 183,982
Fire and Ambulance 2,128,974 2,129,840 2,067,707 1,897,490 1,243,116
Streets 338,718 302,862 342,158 257,066 351,841
Parks 791,024 529,756 338,788 159,729 96,779
Library 84,534 69,748 84,574 - -
Engineering 154,829 164,812 145,762 137,741 142,297
Communications - - - - 11,198
Inspections 617,822 567,513 498,348 469,804 401,317
Planning 332,860 385,206 310,924 390,628 316,843
Debt Service 20,663 35,230 42,933 40,580 -
Capital Outlay 557,428 646,325 1,708,370 159,656 2,107,777
Total Expenditures 8,576,902$ 8,044,141$ 8,139,132$ 5,737,739$ 6,695,968$
Excess (Deficiency) of Revenues
Over (Under) Expenditures 419,692 (742,677) (1,448,512) 178,297 (847,497)
Other Financing Sources (Uses) 1,091,784 1,237,636 2,022,083 212,266 1,761,373
Beginning Fund Balance, Oct. 1 5,568,868 5,073,909 (1)4,397,604 4,007,041 3,093,165
Ending Fund Balance, Sept. 30 7,080,344$ 5,568,868$ 4,971,175$ 4,397,604$ 4,007,041$
Fiscal Year Ended September 30,
(1) Restated.
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TABLE 13 - MUNICIPAL SALES TAX HISTORY
The Town has adopted the Municipal Sales and Use Tax Act, V.T.C.A., Tax Code, Chapter 321, which grants the Town the power to
impose and levy a 1% Local Sales and Use Tax within the Town; the proceeds are credited to the General Fund and are not pledged
to the payment of the Certificates. Collections and enforcements are effected through the offices of the Comptroller of Public
Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the Town monthly. In 1995, the
voters of the Town approved the imposition of an additional sales and use tax of one-half of one percent (½% of 1%) for economic
development and an additional sales and use tax of one-half of one percent (½ of 1%) for property tax reduction. Collection for the
additional tax went into effect on October 1, 1995. The sales tax for economic development is collected solely for the benefit of
Prosper Economic Development Corporation (the “Corporation”), and may be pledged only to secure payment of sales tax revenue
bonds issued by the Corporation. In addition, the Corporation’s sales tax revenues may be used for a variety of economic
development and public purposes that do not involve the issuance of sales tax revenue bonds.
Fiscal
Year % of Equivalent of
Ended 1.5% Total Ad Valorem Ad Valorem Per
9/30 Collected (1)Tax Levy Tax Rate Capita
2009 1,079,226$ 20.68% 0.1082$ 150.94$
2010 1,305,580 25.02% 0.1252 131.35
2011 1,315,910 25.21% 0.1147 113.44
2012 1,937,918 37.13% 0.1574 158.98
2013 1,531,655 (2)29.35% 0.1137 113.20
(1) Includes collections of the one-half-cent for property tax relief but excludes collections of the one-half-cent tax for
economic development.
(2) Collections through May 2013.
FINANCIAL POLICIES
Basis of Accounting . . . The accounts of the Town are organized and operated on the basis of funds and account groups. A fund
is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according
to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual
provisions. The minimum numbers of funds are maintained consistent with legal and managerial requirements. Account groups
are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds.
The Town has the following fund types and account groups:
Governmental funds are used to account for the Town’s general government activities. Governmental fund types use the flow of
current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of
accounting revenues are recognized when susceptible to accrual (i.e., when they are “measurable and available”). “Measurable”
means the amount of the transaction can be determined and “available” means collectible within the current period or soon
enough thereafter to pay liabilities of the current period. The Town considers all revenues available if they are collected within
60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on
general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are
recognized when the obligations are expected to be liquidated with expendable available financial resources.
Property taxes, franchise taxes, licenses and interest are susceptible to accrual. Sales taxes collected and held by the state at year
end on behalf of the Town are also recognized as revenue. Other receipts and taxes become measurable and available when cash
is received by the Town and are recognized as revenue at that time.
The Town of Prosper maintains seven governmental funds. The Major Governmental funds include the following fund types:
General Fund . . . The general fund is the government’s primary operating fund. It accounts for all financial resources of the
general government, except those required to be accounted for in another fund.
Impact Fee Fund . . . The impact fee fund accounts for impact fees charged to new developments in accordance with Chapter
395 of the Texas Local Government Code to finance new construction or expansion of capital improvements such as water
treatment and distribution facilities, storm and wastewater facilities, and transportation facilities.
Debt Service Fund . . . The debt service fund accounts for the servicing of general long-term debt not being financed by
proprietary funds.
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Capital Projects Fund . . . The capital projects fund is used to account for the acquisition and construction of capital assets
financed primarily through the issuance of debt, such as general obligation bonds, certificates of obligation, tax notes or other
revenue bonds.
Budgetary Procedures . . . Annual budgets are adopted on a basis consistent with generally accepted accounting principles.
Annual appropriated budgets are legally adopted for the governmental funds and water and sewer funds. All annual
appropriations lapse at fiscal year end. Project length financial plans are adopted for all capital projects funds.
The Town follows these procedures in establishing the budgetary data reflected in the financial statements.
1. Prior to August 16, the Town Manager submits to the Town Council a proposed operating budget for the fiscal year
commencing the following October 1. The operating budget includes proposed expenditures and the means of
financing them.
2. Public hearings are conducted to obtain taxpayer comments.
3. The budget is legally enacted and ratified through the passage of an ordinance.
4. Formal budgetary integration, using the modified accrual basis, is employed as a management control device during
the year for the General Fund, Debt Service Fund and Capital Projects Funds.
5. The budget approved for the discretely presented component unit follows similar approval procedures.
6. The budget approved for the Water and Sewer Fund follows similar approval procedures.
Encumbrances for goods or purchased services are documented by purchase orders or contracts. Encumbered amounts lapse at
year end. At year end, encumbrances are canceled or re-appropriated as part of the following year budget.
The Town invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by
the Town Council. Both state law and the Town’s investment policies are subject to change.
LEGAL INVESTMENTS . . . Under Texas law, the Town is authorized to invest in (1) obligations, including letters of credit, of the
United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3)
collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security
for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal and interest of which
are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their
respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any
state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6) bonds
issued, assumed, or guaranteed by the State of Israel, (7) effective September 1, 2005, certificates of deposit (i) issued by a
depository institution that has its main office or a branch office in the State of Texas, that are guaranteed or insured by the
Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by
Obligations described in clauses (1) through (6) or in any other manner and amount provided by law for Town deposits, or (ii)
where; (a) the funds are invested by the Town through a depository institution that has a main office or branch office in this state
and that is selected by the Town; (b) the depository institution selected by the Town arranges for the deposit of funds in one or
more federally insured depository institutions, wherever located; (c) the certificates of deposit are insured by the United States or
an instrumentality of the United States; (d) the depository institution acts as a custodian for the Town with respect to the
certificates of deposit; and (e) at the same time that the certificates of deposit are issued, the depository institution selected by the
Town receives deposits from customers of other federally insured depository institutions, wherever located, that is equal to or
greater than the funds invested by the Town through the depository institution selected under clause (ii)(a) above, (8) fully
collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1),
and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9)
bankers’ acceptances with a stated maturity of 270 days or less from the date of its issuance, if the short-term obligations of the
accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency,
(10) commercial paper that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies
or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or
state bank, (11) no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission that
have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a
stable net asset value of $1 for each share, (12) no-load mutual funds registered with the Securities and Exchange Commission that
have an average weighted maturity of less than two years, invest exclusively in obligations described in the preceding clauses, and
are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or
its equivalent, and (13) public funds investment pools that have an advisory board which includes participants in the pool and are
continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its
equivalent or no lower than investment grade with a weighted average maturity no greater than 90 days. Texas law also permits the
Town to invest bond proceeds in a guaranteed investment contract, subject to limitations as set forth in the Public Funds Investment
Act, Texas Government Code, Chapter 2256 (the "PFIA").
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A political subdivision such as the Town may enter into securities lending programs if (i) the securities loaned under the program are
100% collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either
secured by (a) obligations that are described in clauses (1) through (6) above, (b) irrevocable letters of credit issued by a state or
national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its equivalent or (c)
cash invested in obligations described in clauses (1) through (6) above, clauses (10) through (12) above, or an authorized investment
pool; (ii) securities held as collateral under a loan are pledged to the Town, held in the Town’s name and deposited at the time the
investment is made with the Town or a third party designated by the Town; (iii) a loan made under the program through either a
primary government securities dealer or a financial institution doing business in the State of Texas; and (iv) the agreement to lend
securities has a term of one year or less.
The Town may invest in such obligations directly or through government investment pools that invest solely in such obligations
provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service
or no lower than investment grade by at least one nationally recognized rating service and has or which has a weighted average
maturity no greater than 90 days. The Town is specifically prohibited from investing in (1) obligations whose payment represents the
coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal
(2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears
no interest (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years and (4) collateralized
mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index.
INVESTMENT POLICIES . . . Under Texas law, the Town is required to invest its funds under written investment policies that primarily
emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of
investment management; and that includes a list of authorized investments for Town funds, maximum allowable stated maturity of
any individual investment, and the maximum average dollar-weighted maturity allowed for pooled fund groups. All Town funds
must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each fund's
investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2)
preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield.
Under Texas law, Town investments must be made "with judgment and care, under prevailing circumstances, that a person of
prudence, discretion, and intelligence would exercise in the management of the person’s own affairs, not for speculation, but for
investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment
officers of the Town shall submit an investment report detailing: (1) the investment position of the Town, (2) that all investment
officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value, and the
ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end
of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which
each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment
strategy statements and (b) state law. No person may invest Town funds without express written authority from the Town Council.
ADDITIONAL PROVISIONS . . . Under Texas law, the Town is additionally required to: (1) annually review its adopted policies and
strategies; (2) require any investment officers with personal business relationships or relatives with firms seeking to sell securities to the
Town to disclose the relationship and file a statement with the Texas Ethics Commission and the Town Council; (3) require the
registered principal of firms seeking to sell securities to the Town to: (a) receive and review the Town’s investment policy, (b)
acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c)
deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on investments and
adherence to the Town’s investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer, and
investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse
repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7) restrict its investment in non-money
market mutual funds in the aggregate to no more than 15 percent of its monthly average fund balance, excluding bond proceeds and
reserves and other funds held for debt service, and to invest no portion of bond proceeds, reserves and funds held for debt service, in
mutual funds; and (8) require local government investment pools to conform to the new disclosure, rating, net asset value, yield
calculation, and advisory board requirements.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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TABLE 14 - CURRENT INVESTMENTS
As of March 31, 2013, the Town's investable funds were invested in the following categories:
% of
Description Portfolio Book Value Market Value
Bank Deposits 55.50% 26,657,462$ 26,657,462$
Certificates of Deposit 13.18% 6,330,768 6,330,768
TexSTAR (1)17.79% 8,543,633 8,543,633
TexPool 13.54% 6,503,570 6,503,570
Total 100.00% 48,035,433$ 48,035,433$
(1) TexSTAR is a local government investment pool for whom First Southwest Asset Management, Inc., an affiliate of First
Southwest Company, the Town’s financial advisor, provides customer service and marketing for the pool. TexSTAR
currently maintains a “AAAm” rating from Standard & Poor’s and has an investment objective of achieving and
maintaining a stable net asset value of $1.00 per share. Daily investments or redemptions of funds is allowed by the
participants.
TAX MATTERS
OPINION . . . On the date of initial delivery of the Obligations, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel
to the Town, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing
on the date thereof ("Existing Law") (1) interest on the Obligations for federal income tax purposes will be excludable from the
"gross income" of the holders thereof and (2) the Obligations will not be treated as "specified private activity bonds" the interest
on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code
of 1986 (the "Code"). Except as stated above, Bond Counsel will express no opinion as to any other federal, state or local tax
consequences of the purchase, ownership or disposition of the Obligations. See Appendix C -- Form of Opinion of Bond
Counsel.
In rendering its opinion, Bond Counsel to the Town will rely upon (a) certain information and representations of the Town,
including information and representations contained in the Town's federal tax certificate, (b) covenants of the Town contained in
the Obligation documents relating to certain matters, including arbitrage and the use of the proceeds of the Bonds and the
Refunded Obligations and the property financed or refinanced therewith and (c) the verification report of Grant Thornton LLP..
Failure by the Town to observe the aforementioned representations or covenants could cause the interest on the Obligations to
become taxable retroactively to the date of issuance.
The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the
issuance of the Obligations in order for interest on the Obligations to be, and to remain, excludable from gross income for federal
income tax purposes. Failure to comply with such requirements may cause interest on the Obligations to be included in gross
income retroactively to the date of issuance of the Obligations. The opinion of Bond Counsel to the Town is conditioned on
compliance by the Town with such requirements, and Bond Counsel to the Town has not been retained to monitor compliance
with these requirements subsequent to the issuance of the Obligations.
Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the reliance on the
aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. The Existing
Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the
Department of the Treasury. There can be no assurance that such Existing Law or the interpretation thereof will not be changed
in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Obligations.
A ruling was not sought from the Internal Revenue Service by the Issuer with respect to the Obligations or the project financed
with proceeds of the Obligations or the Refunded Obligations. No assurances can be given as to whether the Internal Revenue
Service will commence an audit of the Obligations, or as to whether the Internal Revenue Service would agree with the opinion
of Bond Counsel. If an Internal Revenue Service audit is commenced, under current procedures the Internal Revenue Service is
likely to treat the Issuer as the taxpayer and the Obligationholders may have no right to participate in such procedure. No
additional interest will be paid upon any determination of taxability.
FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT . . . The initial public offering price to be paid
for one or more maturities of the Obligations (the "Original Issue Discount Obligations") may be less than the principal amount
thereof or one or more periods for the payment of interest on the bonds may not be equal to the accrual period or be in excess of
one year. In such event, the difference between (i) the "stated redemption price at maturity" of each Original Issue Discount
Obligation, and (ii) the initial offering price to the public of such Original Issue Discount Obligation would constitute original
issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the bonds less the
amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods
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(or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed
one year.
Under Existing Law, any owner who has purchased such Original Issue Discount Obligation in the initial public offering is
entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original
Issue Discount Obligation equal to that portion of the amount of such original issue discount allocable to the accrual period. For
a discussion of certain collateral federal tax consequences, see the discussion set forth below.
In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Obligation prior to stated
maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Obligation in the
hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such
Original Issue Discount Obligation was held by such initial owner) is includable in gross income.
Under Existing Law, the original issue discount on each Original Issue Discount Obligation is accrued daily to the stated
maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual
anniversary dates of the date of the Obligations and ratably within each such six-month period) and the accrued amount is added
to an initial owner's basis for such Original Issue Discount Obligation for purposes of determining the amount of gain or loss
recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each
accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods
multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and
properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period
on such Original Issue Discount Obligation.
The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue
Discount Obligations which are not purchased in the initial offering at the initial offering price may be determined according to
rules which differ from those described above. All owners of Original Issue Discount Obligations should consult their own tax
advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued
upon redemption, sale or other disposition of such Original Issue Discount Obligations and with respect to the federal, state, local
and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount
Obligations.
Prospective purchasers should be aware that because the first interest payment will be made more than one year after the issue
date of the Obligations, the first payment may be treated as original issue discount. While such treatment of the payment will not
adversely affect the excludability of the interest portion of the payment from a holder's gross income, special tax accounting
treatment may apply. This tax accounting treatment would cause a portion of the interest payment to be recognized in the
taxable year in which the Obligations are purchased, rather than the taxable year in which the payment is received by the holder.
This treatment may accelerate any alternative minimum tax consequences for corporations, the recognition of any portion of the
payment which is treated as market discount and any other collateral federal income tax consequences for certain holders.
Prospective purchasers should consult their tax advisors for advice regarding such consequences.
COLLATERAL FEDERAL INCOME TAX CONSEQUENCES . . . The following discussion is a summary of certain collateral federal
income tax consequences resulting from the purchase, ownership or disposition of the Obligations. This discussion is based on
Existing Law, which is subject to change or modification, retroactively.
The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as
financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social
Security or Railroad Retirement benefits, individuals allowed an earned income credit, certain S corporations with Subchapter C
earnings and profits, foreign corporations subject to the branch profits tax, taxpayers qualifying for the health insurance premium
assistance credit and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt
obligations.
THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE
SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND
DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE
OBLIGATIONS.
Interest on the Obligations will be includable as an adjustment for “adjusted current earnings” to calculate the alternative
minimum tax imposed on corporations by section 55 of the Code.
Under section 6012 of the Code, holders of tax-exempt obligations, such as the Obligations, may be required to disclose interest
received or accrued during each taxable year on their returns of federal income taxation.
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Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt
obligation, such as the Obligations, if such obligation was acquired at a "market discount" and if the fixed maturity of such
obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the
extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of
market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less
than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price"
(i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same
ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days
between the acquisition date and the final maturity date.
STATE, LOCAL AND FOREIGN TAXES . . . Investors should consult their own tax advisors concerning the tax implications of the
purchase, ownership or disposition of the Obligations under applicable state or local laws. Foreign investors should also consult
their own tax advisors regarding the tax consequences unique to investors who are not United States persons.
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinances, the Town has made the following agreement for the benefit of the holders and beneficial owners of the
Obligations. The Town is required to observe the agreement for so long as it remains obligated to advance funds to pay the
Obligations. Under the agreement, the Town will be obligated to provide certain updated financial information and operating
data annually, and timely notice of specified material events, to certain information vendors. This information will be available
to securities brokers and others who subscribe to receive the information from the vendors.
ANNUAL REPORTS . . . The Town will provide certain updated financial information and operating data to certain information
vendors annually. The information to be updated includes all quantitative financial information and operating data with respect
to the Town of the general type included in this Official Statement under Tables numbered 1 through 5, and 7 through 14 and in
Appendix B. The Town will update and provide this information within six months after the end of each fiscal year. The Town
will provide the updated information to the Municipal Securities Rulemaking Board (the “MSRB”) through the “EMMA”
information system in accordance with recent amendments to Rule 15c2-12 (the “Rule”) promulgated by the United States
Securities and Exchange Commission (the “SEC”).
The Town may provide updated information in full text or may incorporate by reference certain other publicly available
documents, as permitted by the Rule. The updated information will include audited financial statements, if the Town
commissions an audit and it is completed by the required time. If audited financial statements are not available by the required
time, the Town will provide unaudited financial information by the required time and audited financial statements when and if
the audit report becomes available. Any such financial statements will be prepared in accordance with the accounting principles
described in Appendix B or such other accounting principles as the Town may be required to employ from time to time pursuant
to state law or regulation.
The Town’s current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each
year, unless the Town changes its fiscal year. If the Town changes its fiscal year, it will notify the MSRB of the change.
EVENT NOTICES . . . The Town will provide notice to the MSRB of any of the following events with respect to the Obligations, if
such event is material within the meaning of the federal securities laws: (1) non-payment related defaults; (2) modifications to
rights of Obligationholders; (3) Obligation calls; (4) release, substitution, or sale of property securing repayment of the
Obligations; (5) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or
substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms; and (6) appointment of a successor or additional trustee or the change of name of a trustee. The Town will
also provide notice to the MSRB of any of the following events with respect to the Obligations without regard to whether such
event is considered material within the meaning of the federal securities laws: (1) principal and interest payment delinquencies;
(2) unscheduled draws on debt service reserves reflecting financial difficulties; (3) unscheduled draws on credit enhancements
reflecting financial difficulties; (4) substitution of credit or liquidity providers, or their failure to perform; (5) adverse tax
opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed
Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Obligations, or other
events affecting the tax status of the Obligations; (6) tender offers; (7) defeasances; (8) rating changes; and (9) bankruptcy,
insolvency, receivership or similar event of an obligated person. The Town will provide notice of the aforementioned events to
the MSRB in a timely manner (but not in excess of ten business days after the occurrence of the event). Neither the Obligations
nor the Ordinances make any provision for debt service reserves, credit enhancement, or liquidity enhancement. In addition, the
Town will provide timely notice of any failure by the Town to provide information, data, or financial statements in accordance
with its agreement described above under "Annual Reports". The Town will provide each notice described in this paragraph to
the MSRB.
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AVAILABILITY OF INFORMATION FROM MSRB . . . The Town has agreed to provide the foregoing information only as described
above. Investors will be able to access continuing disclosure information filed with the MSRB free of charge at
www.emma.msrb.org.
LIMITATIONS AND AMENDMENTS . . . The Town has agreed to update information and to provide notices of specified events only
as described above. The Town has not agreed to provide other information that may be relevant or material to a complete
presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided,
except as described above. The Town makes no representation or warranty concerning such information or concerning its
usefulness to a decision to invest in or sell Obligations at any future date. The Town disclaims any contractual or tort liability for
damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made
pursuant to its agreement, although holders of Obligations may seek a writ of mandamus to compel the Town to comply with its
agreement.
The Town may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a
change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Town, if (i)
the agreement, as amended, would have permitted an underwriter to purchase or sell Obligations in the offering described herein
in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment,
as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the
outstanding Obligations consent to the amendment or (b) any person unaffiliated with the Town (such as nationally recognized
bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the
Obligations. If the Town so amends the agreement, it has agreed to include with the next financial information and operating
data provided in accordance with its agreement described above under “Annual Reports” an explanation, in narrative form, of the
reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided.
COMPLIANCE WITH PRIOR UNDERTAKINGS . . . During the last five years, the Town has complied in all material respects with
all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12.
OTHER INFORMATION
RATINGS
The presently outstanding tax supported debt of the Town is rated "Aa3" by Moody's, without regard to credit enhancement.
Application has been made to Moody’s for a contract rating on the Obligations. An explanation of the significance of such rating
may be obtained from the company furnishing the rating. The rating reflects only the respective view of such organization and
the Town makes no representation as to the appropriateness of the rating. There is no assurance that such rating will continue for
any given period of time or that it will not be revised downward or withdrawn entirely by such rating company, if in the
judgment of such company, circumstances so warrant. Any such downward revision or withdrawal of such rating, may have an
adverse effect on the market price of the Obligations.
Due to uncertainty surrounding efforts to address the deficits and debt burden of the United States of America, obligations issued
by state and local governments in the United States, such as the Obligations, could be subject to a rating downgrade.
Additionally, if a significant default or other financial crisis should occur in the affairs of the United States of America or of any
of its agencies or political subdivisions, then such event could also adversely affect the market for and ratings, liquidity, and
market value of outstanding debt obligations, including the Obligations. Any such downward revision or withdrawal of such
rating, may have an adverse effect on the market prices of the Obligations.
LITIGATION
It is the opinion of the Town Attorney and Town Staff that there is no pending litigation against the Town that would have a
material adverse financial impact upon the Town or its operations.
REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE
The sale of the Obligations has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the
exemption provided thereunder by Section 3(a)(2); and the Obligations have not been qualified under the Securities Act of Texas
in reliance upon various exemptions contained therein; nor have the Obligations been qualified under the securities acts of any
jurisdiction. The Town assumes no responsibility for qualification of the Obligations under the securities laws of any
jurisdiction in which the Obligations may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of
responsibility for qualification for sale or other disposition of the Obligations shall not be construed as an interpretation of any
kind with regard to the availability of any exemption from securities registration provisions.
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
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Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Obligations
are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized
investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political
subdivisions or public agencies of the State of Texas. With respect to investment in the Obligations by municipalities or other
political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas
Government Code, requires that the Obligations be assigned a rating of not less than "A" or its equivalent as to investment
quality by a national rating agency. See "Other Information - Ratings" herein. In addition, various provisions of the Texas
Finance Code provide that, subject to a prudent investor standard, the Obligations are legal investments for state banks, savings
banks, trust companies with at capital of one million dollars or more, and savings and loan associations. The Obligations are
eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for
those deposits to the extent of their market value. No review by the Town has been made of the laws in other states to determine
whether the Obligations are legal investments for various institutions in those states.
LEGAL MATTERS
The Town will furnish the Underwriter a complete transcript of proceedings had incident to the authorization and issuance of the
Obligations, including the unqualified approving legal opinion of the Attorney General of Texas as to the Obligations to the
effect that the Obligations are valid and legally binding obligations of the Town, and based upon examination of such transcript
of proceedings, the approving legal opinion of Bond Counsel to like effect and to the effect that the interest on the Obligations
will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters
described under "Tax Matters" herein, including the alternative minimum tax on corporations, a form of which opinion is
attached to this Official Statement as Appendix C. Though it represents the Financial Advisor and the Underwriter from time to
time in matters unrelated to the issuance of the Obligations, Bond Counsel has been engaged by and only represents the Town in
connection with the issuance of the Obligations. The customary closing papers, including a certificate to the effect that no
litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Obligations which would
affect the provision made for their payment or security, or in any manner questioning the validity of said Obligations will also be
furnished. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Official Statement, and
such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information
contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information under the captions and
subcaptions “Plan of Financing” (excluding the Information under the Subcaption “Sources and Uses of Obligation Proceeds”),
“The Obligations” (excluding the Information under the Subcaptions, “Book-Entry-Only System” and “Obligationholders’
Remedies”), “Tax Matters”, “Continuing Disclosure Information” (excluding the Information under the Subcaption
“Compliance with Prior Undertakings”), “Other Information - Registration and Qualification of Obligations for Sale”, “Other
Information - Legal Investments and Eligibility to Secure Public Funds in Texas” and “Other Information - Legal Matters”
(excluding the last sentence of the first paragraph thereof) in the Official Statement and such firm is of the opinion that the
information relating to the Obligations and the legal issues contained under such captions and subcaptions is an accurate and fair
description of the laws and legal issues addressed therein and, with respect to the Obligations, such information conforms to the
provisions of the Ordinances. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the
Obligations is contingent upon the sale and delivery of the Obligations. Certain legal matters will be passed upon for the
Underwriter by Andrews Kurth LLP, Houston, Texas, Counsel to the Underwriter, whose legal fees are contingent upon the sale
and delivery of the Obligations.
The legal opinions to be delivered concurrently with the delivery of the Obligations express the professional judgment of the attorneys
rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an
insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties
to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from Town records, audited financial statements
and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained
herein will be realized. All of the summaries of the statutes, documents and ordinances contained in this Official Statement are
made subject to all of the provisions of such statutes, documents and ordinances. These summaries do not purport to be complete
statements of such provisions and reference is made to such documents for further information. Reference is made to original
documents in all respects.
FINANCIAL ADVISOR
First Southwest Company is employed as Financial Advisor to the Town in connection with the issuance of the Obligations. The
Financial Advisor's fee for services rendered with respect to the sale of the Obligations is contingent upon the issuance and
delivery of the Obligations. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility
for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax
status of the Obligations, or the possible impact of any present, pending or future actions taken by any legislative or judicial
bodies.
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The Financial Advisor to the Town has provided the following sentence for inclusion in this Official Statement. The Financial
Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the
Town and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this
transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information.
UNDERWRITER
The Underwriter has agreed, subject to certain conditions, to purchase the Bonds from the Town, at an underwriting discount of
$____________. The Underwriter will be obligated to purchase all of the Bonds if any Bonds are purchased. The Bonds to be
offered to the public may be offered and sold to certain dealers (including the Underwriter and other dealers depositing Bonds
into investment trusts) at prices lower than the public offering prices of such Bonds and such public offering prices may be
changed, from time to time, by the Underwriter.
The Underwriter has agreed, subject to certain conditions, to purchase the Certificates from the Town, at an underwriting
discount of $__________. The Underwriter will be obligated to purchase all of the Certificates if any Certificates are purchased.
The Certificates to be offered to the public may be offered and sold to certain dealers (including the Underwriter and other
dealers depositing Certificates into investment trusts) at prices lower than the public offering prices of such Certificates and such
public offering prices may be changed, from time to time, by the Underwriter.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the
information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal
securities laws as applied to the facts and circumstances of this transaction, but he Underwriter does not guarantee the accuracy
or completeness of such information.
FORWARD-LOOKING STATEMENTS DISCLAIMER
The statements contained in this Official Statement, and in any other information provided by the Town, that are not purely
historical, are forward-looking statements, including statements regarding the Town's expectations, hopes, intentions, or
strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking
statements included in this Official Statement are based on information available to the Town on the date hereof, and the Town
assumes no obligation to update any such forward-looking statements. The Town's actual results could differ materially from
those discussed in such forward-looking statements.
The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently
subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying
assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and
regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers,
business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions
related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market
conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Town. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this Official Statement will prove to be accurate.
The Ordinances authorizing the issuance of the Obligations will also approve the form and content of this Official Statement, and
any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Obligations by the
Underwriter.
Mayor
Town of Prosper, Texas
ATTEST:
Town Secretary
Item 7
Schedule I
SCHEDULE OF REFUNDED OBLIGATIONS*
Principal Principal
Original Original Interest Amount Amount
Dated Date Maturity Rate Outstanding Refunded
2/1/2004 8/15/2014 4.000% 550,000$ 550,000$
8/15/2015 4.000% 570,000 570,000
8/15/2016 4.125% 595,000 595,000
8/15/2017 4.250% 620,000 620,000
8/15/2018 4.250% 645,000 645,000
8/15/2019 4.250% 670,000 670,000
8/15/2020 4.250% 700,000 700,000
8/15/2021 4.250% 730,000 730,000
8/15/2022 4.375% 765,000 765,000
8/15/2023 4.375% 800,000 800,000
8/15/2024 4.500% 835,000 835,000
7,480,000$ 7,480,000$
Combination Tax and Revenue Certificate of Obligation, Series 2004
The 2014– 2024 maturities will be redeemed prior to original maturity on February 15, 2014, at par.
Principal Principal
Original Original Interest Amount Amount
Dated Date Maturity Rate Outstanding Refunded
9/1/2012 2/15/2014 1.040% 3,880,000$ 3,880,000$
3,880,000$ 3,880,000$
General Obligation Bonds, Taxable Series 2012
The 2014 maturity will be redeemed prior to original maturity on August 1, 2013, at par.
Item 7
APPENDIX A
GENERAL INFORMATION REGARDING THE TOWN
Item 7
A - 1
THE TOWN
LOCATION AND POPULATION
The Town of Prosper is a growing residential community located towards the northwest corner of Collin County and extends into
Denton County to the west. The Town is approximately 35 miles north of downtown Dallas on State Highway 289. The Town
is approximately 27 square miles of land area. The 2012 estimated population for the Town was 12,190, while the estimated
2013 population is 13,531.
EMPLOYERS IN THE TOWN
Listed below are some of the companies located in the Town and the types of business.
Approximate
Number of
Name of Business Type of Business Employees
Prosper ISD Public Education 680
Mahard Egg Farm Farm/Agricultural Producer 100
Town of Prosper Local Government 89
Gentle Creek Golf Club 50
Dairy Manufacturers, Inc. Manufacturer 35
ProBuild Lumber Supplier 30
CVS Pharmacy 25
Crossland Construction Builder 20
Lattimore Materials Concrete Manufacturing 20
Prosper Bank Bank 20
Source: The Town.
EMPLOYMENT STATISTICS
2013(1)2012 2011 2010 2009
Collin County
Civilian Labor Force 452,612 447,064 435,101 421,754 409,675
Total Employment 426,696 419,914 404,549 390,106 379,610
Unemployment 25,915 27,150 30,552 31,648 30,065
Unemployment Rate 5.7%6.1%7.0%7.5%7.3%
Dallas Metropolitan Statistical Area
Civilian Labor Force 2,251,052 2,224,664 2,193,374 3,211,927 2,106,231
Total Employment 2,108,345 2,074,834 2,021,610 2,945,951 1,940,415
Unemployment 142,707 149,830 171,764 265,976 165,816
Unemployment Rate 6.3%6.7%7.8%8.3%7.9%
State of Texas
Civilian Labor Force 12,684,714 12,597,465 12,451,504 12,136,384 11,930,847
Total Employment 11,867,347 11,742,600 11,464,525 11,141,903 11,020,226
Unemployment 817,367 854,865 986,979 994,481 910,621
Unemployment Rate 6.4%6.8%7.9%8.2%7.6%
Average Annual
(1) Figures through April 2013.
Source: Texas Workforce Commission.
Item 7
APPENDIX B
EXCERPTS FROM THE
TOWN OF PROSPER, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2012
The information contained in this Appendix consists of excerpts from the Town of Prosper,
Texas Annual Financial Report for the Year Ended September 30, 2012, and is not intended
to be a complete statement of the Town's financial condition. Reference is made to the
complete Report for further information.
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APPENDIX C
FORM OF BOND COUNSEL'S OPINION
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HOU:3326832.1
TOWN OF PROSPER, TEXAS
(A political subdivision and municipal corporation of
the State of Texas located within Collin and Denton Counties)
$11,040,0001
GENERAL OBLIGATION REFUNDING BONDS
SERIES 2013
___________________________________
PURCHASE AGREEMENT
_____________________________________
June 25, 2013
Honorable Mayor and Town Council
Town of Prosper, Texas
P.O. Box 307
Prosper, Texas 75078
Ladies and Gentlemen:
The undersigned, RBC Capital Markets, LLC(the “Representative”), acting on its own
behalf and on behalf of the other underwriters listed on Schedule I hereto (collectively, the
“Underwriters”) and not acting as fiduciary or agent for you, offers to enter into the following
agreement (this “Agreement”) with the Town of Prosper, Texas (the “Issuer”) which, upon the
Issuer’s written acceptance of this offer, will be binding upon the Issuer and upon the
Underwriters. This offer is made subject to the Issuer’s written acceptance hereof on or before
10:00 p.m., Prosper, Texas time, on June 25, 2013, and, if not so accepted, will be subject to
withdrawal by the Underwriters upon written notice delivered to the Issuer at any time prior to
the acceptance hereof by the Issuer. Terms not otherwise defined in this Agreement shall have
the same meanings set forth in the Ordinance (as defined herein) or in the Official Statement (as
defined herein).
1. Purchase and Sale of the Bonds. Subject to the terms and conditions and in
reliance upon the representations, warranties and agreements set forth herein, the Underwriters
hereby agree to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to the
Underwriters, all, but not less than all, of the Issuer’s $11,040,000 General Obligation Refunding
Bonds, Series 2013 (the “Bonds”). The Issuer acknowledges and agrees that (i) the purchase and
sale of the Bonds pursuant to this Agreement is an arm’s-length commercial transaction between
the Issuer and the Underwriters, (ii) in connection therewith and with the discussions,
undertakings, and procedures leading up to the consummation of this transaction, the
1 Preliminary, subject to change.
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HOU:3326832.1 2
Underwriters are and have been acting solely as principals and are not acting as the agents or
fiduciaries of the Issuer, (iii) the Underwriters have not assumed an advisory or fiduciary
responsibility in favor of the Issuer with respect to the offering contemplated hereby or the
discussions, undertakings, and procedures leading thereto (regardless of whether the
Underwriters have provided other services or are currently providing other services to the Issuer
on other matters) and the Underwriters have no obligation to the Issuer with respect to the
offering contemplated hereby except the obligations expressly set forth in this Agreement, and
(iv) the Issuer has consulted its own legal, financial, and other advisors to the extent it has
deemed appropriate. The Representative represents that it has been duly authorized by the
Underwriters to execute this Agreement and to act hereunder.
The principal amount of the Bonds to be issued, the dated date therefor, the maturities
and redemption provisions and interest rates per annum are set forth in Schedule II hereto. The
Bonds shall be as described in, and shall be issued and secured under and pursuant to the
provisions of an ordinance adopted by the Issuer on June 24, 2013 (the “Ordinance”).
The purchase price for the Bonds shall be $____________ (representing the par amount
of the Bonds, plus a reoffering premium of $________________ and less an underwriting
discount of $__________).
Delivered to the Issuer herewith as a good faith deposit is a corporate check of the
Representative payable to the order of the Issuer in the amount of $110,400. In the event the
Issuer accepts this Agreement, such check shall be held by the Issuer as security for the
performance of the Underwriters of their obligation to purchase, accept delivery of and pay for
the Bonds under this Agreement. Such check shall be held uncashed by the Issuer until the time
of Closing, at which time such check shall be returned uncashed to the Representative. In the
event that the Issuer does not accept this Agreement, such check will be immediately returned to
the Representative. Should the Issuer fail to deliver the Bonds at the Closing, or should the
Issuer be unable to satisfy the conditions of the obligations of the Underwriters to purchase,
accept delivery of and pay for the Bonds, as set forth in this Agreement (unless waived by the
Representative), or should such obligations of the Underwriters be terminated for any reason
permitted by this Agreement, such check shall immediately be returned to the Representative. In
the event that the Underwriters fail (other than for a reason permitted hereunder) to purchase,
accept delivery of and pay for the Bonds at the Closing as herein provided, such check shall be
cashed and the amount thereof retained by the Issuer as and for fully liquidated damages, and not
as a penalty for such failure of the Underwriters, and for any defaults hereunder on the part of the
Underwriters. Acceptance of such check by the Issuer shall constitute a full release and
discharge of all claims and damages for such failure and/or any and all such defaults, and the
Issuer shall have no further action for damages, specific performance, or any other legal or
equitable relief against the Underwriters. The Underwriters and the Issuer understand that in
such event the Issuer’s actual damages may be greater or may be less than such amount.
Accordingly, the Underwriters hereby waive any right to claim that the Issuer’s actual damages
are less than such amount, and the Issuer’s acceptance of this Agreement shall constitute a
waiver of any right the Issuer may have to additional damages from the Underwriters. The
Representative hereby agrees not to stop or cause payment on the check to be stopped unless the
Issuer has breached any material term of this Agreement.
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HOU:3326832.1 3
2. Public Offering. The Underwriters agree to make a bona fide public offering of
all of the Bonds at a price not to exceed the public offering price set forth on page 2 of the
Official Statement and may subsequently change such offering prices or yields without any
requirement of prior notice. The Underwriter may offer and sell the Bonds to certain dealers
(including dealers depositing Bonds into investment trusts) and others at a price lower than the
public offering price stated on page 2 of the Official Statement. The Underwriters may offer and
sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and
others at prices lower than the public offering prices or yields stated on page 2 of the Official
Statement; provided that on or before the Closing, the Representative shall execute and deliver to
McCall, Parkhurst & Horton, L.L.P., Dallas, Texas (“Bond Counsel”) an issue price certificate
for the Bonds prepared by Bond Counsel verifying the initial offering prices at which the
Representative reasonably expected to sell or in fact sold a substantial amount of each stated
maturity of the Bonds to the public.
3. The Official Statement.
(a) The Issuer previously has delivered, or caused to be delivered, to the
Underwriters the Preliminary Official Statement dated June 18, 2013 (the “Preliminary
Official Statement”) in a “designated electronic format,” as defined in the Municipal
Securities Rulemaking Board (“MSRB”) Rule G-32 (“Rule G-32”). The Issuer will
prepare, or cause to be prepared, a final Official Statement relating to the Bonds, which
will be (i) dated the date of this Agreement, (ii) complete within the meaning of the
United States Securities and Exchange Commission’s Rule 15c2-12, as amended (the
“Rule”), (iii) in a “designated electronic format” and (iv) substantially in the form of the
most recent version of the Preliminary Official Statement provided to the Underwriters
before the execution hereof. Such final Official Statement, including the cover page
thereto, all exhibits, schedules, appendices, maps, charts, pictures, diagrams, reports, and
statements included or incorporated therein or attached thereto, and all amendments and
supplements thereto that may be authorized for use with respect to the Bonds, is herein
referred to as the “Official Statement.” Until the Official Statement has been prepared
and is available for distribution, the Issuer shall provide to the Underwriter sufficient
quantities (which may be in electronic format) of the Preliminary Official Statement as
the Underwriters deem necessary to satisfy the obligation of the Underwriters under the
Rule with respect to distribution to each potential customer, upon request, of a copy of
the Preliminary Official Statement.
(b) The Preliminary Official Statement has been prepared for use by the
Underwriters in connection with the public offering, sale and distribution of the Bonds.
The Issuer hereby represents and warrants that the Preliminary Official Statement has
been deemed final by the Issuer as of its date, except for the omission of such information
which is dependent upon the final pricing of the Bonds for completion, all as permitted to
be excluded by Section (b)(1) of the Rule.
(c) The Issuer hereby authorizes the Official Statement and the information
therein contained to be used by the Underwriters in connection with the public offering
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HOU:3326832.1 4
and the sale of the Bonds. The Issuer consents to the use by the Underwriters prior to the
date hereof of the Preliminary Official Statement in connection with the public offering
of the Bonds. The Issuer shall provide, or cause to be provided, to the Underwriters as
soon as practicable after the date of the Issuer’s acceptance of this Agreement (but, in any
event, not later than within seven (7) business days after the Issuer’s acceptance of this
Agreement and in sufficient time to accompany any confirmation that requests payment
from any customer) copies of the Official Statement which is complete as of the date of
its delivery to the Underwriters. The Issuer shall provide the Official Statement, or cause
the Official Statement to be provided, (i) in a “designated electronic format” consistent
with the requirements of Rule G-32 and (ii) in a printed format in such quantity as the
Representative shall reasonably request in order for the Underwriters to comply with
Section (b)(4) of the Rule and the rules of the MSRB.
(d) If, after the date of this Agreement to and including the date the
Underwriters are no longer required to provide an Official Statement to potential
customers who request the same pursuant to the Rule (the earlier of (i) ninety (90) days
from the “end of the underwriting period” (as defined in the Rule) and (ii) the time when
the Official Statement is available to any person from the MSRB, but in no case less than
twenty-five (25) days after the “end of the underwriting period” for the Bonds), the Issuer
becomes aware of any fact or event which might or would cause the Official Statement,
as then supplemented or amended, to contain any untrue statement of a material fact or to
omit to state a material fact required to be stated therein, or necessary to make the
statements therein in light of the circumstances under which they were made, not
misleading, or if it is necessary to amend or supplement the Official Statement to comply
with law, the Issuer will notify the Representative (and for the purposes of this clause
provide the Representative with such information as it may from time to time reasonably
request), and if, in the reasonable opinion of the Representative, such fact or event
requires preparation and publication of a supplement or amendment to the Official
Statement, the Issuer will forthwith prepare and furnish, at the Issuer’s own expense (in a
form and manner approved by the Representative), either an amendment or a supplement
to the Official Statement so that the statements in the Official Statement as so amended
and supplemented will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein, or necessary to make the statements therein
in light of the circumstances under which they were made, not misleading or so that the
Official Statement will comply with law; provided, however, that for all purposes of this
Agreement and any certificate delivered by the Issuer in accordance herewith, the Issuer
makes no representations with respect to the descriptions in the Preliminary Official
Statement or the Official Statement of The Depository Trust Company, New York, New
York (“DTC”), or its book-entry-only system. If such notification shall be subsequent to
the Closing, the Issuer shall furnish such legal opinions, certificates, instruments and
other documents as the Representative may deem reasonably necessary to evidence the
truth and accuracy of such supplement or amendment to the Official Statement. The
Issuer shall provide any such amendment or supplement, or cause any such amendment
or supplement to be provided, in a “designated electronic format” consistent with the
requirements of Rule G-32.
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HOU:3326832.1 5
(e) The Representative hereby agrees to file the Official Statement with the
MSRB through its Electronic Municipal Market Access (“EMMA”) system on or before
the date of the Closing. Unless otherwise notified in writing by the Representative, the
Issuer can assume that the “end of the underwriting period” for purposes of the Rule is
the date of the Closing.
4. Representations, Warranties and Covenants of the Issuer. The Issuer hereby
represents and warrants to and covenants with the Underwriters that:
(a) The Issuer is a home rule city duly created and existing under the laws of
the State of Texas (the “State”) and is issuing the Bonds pursuant to the provisions of
Chapter 1207, Texas Government Code, as amended (the “Act”) and has full legal right,
power and authority under the Act, and at the date of the Closing will have full legal
right, power and authority (i) to enter into, execute and deliver this Agreement, the
Ordinance, the escrow agreement defined in the Ordinance (the “Escrow Agreement”)
and the Continuing Disclosure Undertaking (as defined in Section 6(j)(3) hereof) (this
Agreement, the Escrow Agreement and the Ordinance (including the Continuing
Disclosure Undertaking set forth in the Ordinance) are hereinafter referred to as the
“Issuer Documents”), (ii) to sell, issue and deliver the Bonds to the Underwriter as
provided herein, and (iii) to carry out and consummate the transactions described in the
Issuer Documents and the Official Statement, and the Issuer has complied, and will at the
Closing be in compliance in all material respects, with the terms of the Act and the Issuer
Documents as they pertain to such transactions;
(b) By all necessary official action of the Issuer prior to or concurrently with
the acceptance hereof, the Issuer has duly authorized all necessary action to be taken by it
for (i) the adoption of the Ordinance and the issuance and sale of the Bonds, (ii) the
approval, execution and delivery of, and the performance by the Issuer of the obligations
on its part, contained in the Bonds and the Issuer Documents and (iii) the consummation
by it of all other transactions described in the Official Statement and the Issuer
Documents and any and all such other agreements and documents as may be required to
be executed, delivered and/or received by the Issuer in order to carry out, give effect to,
and consummate the transactions described herein and in the Official Statement;
(c) The Issuer Documents constitute legal, valid and binding obligations of
the Issuer subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws and principles of equity relating to or affecting the enforcement of creditors’
rights; the Bonds, when issued, delivered and paid for, in accordance with the Ordinance
and this Agreement, will constitute legal, valid and binding obligations of the Issuer,
entitled to the benefits of the Ordinance and enforceable in accordance with their terms,
by mandamus or other relief permitted by law, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws and principles of equity relating to or
affecting the enforcement of creditors’ rights and upon the issuance, authentication and
delivery of the Bonds as aforesaid, the Ordinance will provide, for the benefit of the
holders, from time to time, of the Bonds, the legally valid and binding pledge of and lien
on the ad valorem tax revenues the Ordinance purports to create;
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HOU:3326832.1 6
(d) To the best of its knowledge, after due and proper inquiry, on the date
hereof and on the date of Closing, the Issuer is not in material breach of or default under
any applicable constitutional provision, law or administrative regulation of the State or
the United States relating to the Issuer’s ability to borrow money or otherwise obtain
credit or any applicable judgment or decree that would have a material adverse effect
upon the operations or financial condition of the Issuer; or any loan agreement, indenture,
bond, note, resolution, agreement or other instrument to which the Issuer is a party or to
which the Issuer is otherwise subject, and no event has occurred and is continuing which
constitutes or with the passage of time or the giving of notice, or both, would constitute a
default or event of default by the Issuer under any of the foregoing to the extent it relates
to the Issuer’s ability to borrow money or otherwise obtain credit; and the execution and
delivery of the Bonds, the Issuer Documents and the adoption of the Ordinance and
compliance with the provisions on the Issuer’s part contained therein, will not conflict
with or constitute a material breach of or default under any constitutional provision, law
or administrative regulation, judgment or decree, or any loan agreement, indenture, bond,
note, resolution, agreement or other instrument to which the Issuer is a party or to which
the Issuer is otherwise subject or under the terms of any such law, regulation or
instrument, to the extent it relates to the Issuer’s ability to borrow money or otherwise
obtain credit;
(e) All authorizations, approvals, licenses, permits, consents and orders of any
governmental authority, legislative body, board, agency or commission having
jurisdiction of the matters which are required for the due authorization of, which would
constitute a condition precedent to, or the absence of which would materially adversely
affect the due performance by the Issuer of its obligations under the Issuer Documents
and the Bonds have been duly obtained or will be obtained prior to Closing, except for
such approvals, consents and orders as may be required under the Blue Sky or securities
laws of any jurisdiction in connection with the offering and sale of the Bonds;
(f) The Bonds and the Ordinance conform to the descriptions thereof
contained in the Official Statement under the captions “THE OBLIGATIONS”; the
proceeds of the sale of the Bonds will be applied generally as described in the Official
Statement under the subcaption “THE OBLIGATIONS– Sources and Uses of Obligation
Proceeds” and the Continuing Disclosure Undertaking conforms to the description
thereof contained in the Official Statement under the caption “CONTINUING
DISCLOSURE OF INFORMATION”;
(g) During the last five (5) years the Issuer has complied in all material
respects with its previous Continuing Disclosure Undertakings made by it in accordance
with the Rule;
(h) Except to the extent disclosed in the Official Statement, there is no
litigation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, government agency, public board or body, pending or, to the best
knowledge of the Issuer after due inquiry, threatened against the Issuer, affecting the
Item 7
HOU:3326832.1 7
existence of the Issuer or the titles of its officers to their respective offices, or affecting or
seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Bonds or the
collection of taxes pledged to the payment of principal of and interest on the Bonds
pursuant to the Ordinance or in any way contesting or affecting the validity or
enforceability of the Bonds or the Issuer Documents, or contesting the exclusion from
gross income of interest on the Bonds for federal income tax purposes, or contesting in
any way the completeness or accuracy of the Preliminary Official Statement or the
Official Statement or any supplement or amendment thereto, or contesting the powers of
the Issuer or any authority for the issuance of the Bonds, the adoption of the Ordinance or
the execution and delivery of the Issuer Documents, nor, to the best knowledge of the
Issuer, is there any basis therefor, wherein an unfavorable decision, ruling or finding
would materially adversely affect the validity or enforceability of the Bonds or the Issuer
Documents; provided, however, that for all purposes of this Agreement and any
certificate delivered by the Issuer in accordance herewith, the Issuer makes no
representations with respect to the descriptions in the Preliminary Official Statement or
the Official Statement of The Depository Trust Company, New York New York, or its
book-entry-only system;
(i) As of the date thereof, the Preliminary Official Statement did not contain
any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(j) At the time of the Issuer’s acceptance hereof and (unless the Official
Statement is amended or supplemented pursuant to paragraph (d) of Section 3 of this
Agreement) at all times subsequent thereto during the period up to and including twenty-
five (25) days subsequent to the “end of the underwriting period,” the Official Statement
does not and will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(k) If the Official Statement is supplemented or amended pursuant to
paragraph (d) of Section 3 of this Agreement, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such paragraph) at all times subsequent thereto during the period up to and including
twenty-five (25) days subsequent to the “end of the underwriting period”, the Official
Statement as so supplemented or amended will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which made, not
misleading;
(l) The Issuer will apply, or cause to be applied, the proceeds from the sale of
the Bonds as provided in and subject to all of the terms and provisions of the Ordinance
and not take or omit to take any action which action or omission will adversely affect the
exclusion from gross income for federal income tax purposes of the interest on the
Bonds;
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HOU:3326832.1 8
(m) The Issuer will furnish such information and execute such instruments and
take such action in cooperation with the Underwriters, at the sole expense of the
Underwriters, as the Representative may reasonably request (1) to (i) qualify the Bonds
for offer and sale under the Blue Sky or other securities laws and regulations of such
states and other jurisdictions in the United States as the Representative may designate and
(ii) determine the eligibility of the Bonds for investment under the laws of such states and
other jurisdictions and (2) to continue such qualifications in effect so long as required for
the distribution of the Bonds (provided, however, that the Issuer will not be required to
qualify as a foreign corporation or to file any general or special consents to service of
process under the laws of any jurisdiction) and will advise the Representative
immediately of receipt by the Issuer of any notification with respect to the suspension of
the qualification of the Bonds for sale in any jurisdiction or the initiation or threat of any
proceeding for that purpose;
(n) The financial statements of, and other financial information regarding, the
Issuer in the Official Statement fairly present the financial position, results of operations
and condition of the Issuer as of the dates and for the periods therein set forth, and there
has been no adverse change of a material nature in such financial position, results of
operations or condition, financial or otherwise, of the Issuer since the dates of such
statements and information;
(o) The Issuer is not a party to any litigation or other proceeding pending or,
to its knowledge, threatened which, if decided adversely to the Issuer, would have a
materially adverse effect on the financial condition of the Issuer;
(p) Prior to the Closing, the Issuer will not offer or issue any bonds, notes or
other obligations for borrowed money or incur any material liabilities, direct or
contingent, payable from or secured by any of the revenues or assets which will secure
the Bonds, (except the Issuer’s Combination Tax and Surplus Revenue Certificates of
Obligation, Series 2013) except as may be incurred in the ordinary course of business,
without the prior approval of the Representative, which approval shall not be
unreasonably withheld;
(q) The Issuer, to the extent heretofore requested by the Underwriters, has
delivered to the Underwriters true, correct, complete, and legible copies of all
information, applications, reports, or other documents of any nature whatsoever
submitted to any rating agency for the purpose of obtaining a rating for the Bonds or to
any municipal bond insurance company to obtain a municipal bond insurance policy on
the Bonds and, in each instance, true, correct, complete, and legible copies of all
correspondence or other communications relating thereto;
(r) Any certificate, signed by any official of the Issuer authorized to do so in
connection with the transactions described in this Agreement, shall be deemed a
representation and warranty by the Issuer to the Underwriters as to the statements made
therein; and
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HOU:3326832.1 9
(s) The Issuer covenants that between the date hereof and the Closing it will
not intentionally take actions which will cause the representations and warranties made in
this Section to be untrue as of the Closing.
By delivering the Official Statement to the Underwriters, the Issuer shall be deemed to
have reaffirmed, with respect to such Official Statement, the representations, warranties and
covenants set forth above with respect to the Preliminary Official Statement.
5. Closing.
(a) At 10:00 a.m. Prosper, Texas, time, on July 25, 2013, or at such other time
and date as shall have been mutually agreed upon by the Issuer and the Underwriters (the
“Closing”), the Issuer will, subject to the terms and conditions hereof, deliver the Bonds
to the Underwriters one initial Bond representing the entire principal amount (the “Initial
Bond”) duly executed and authenticated, together with the other documents hereinafter
mentioned, and the Underwriters will, subject to the terms and conditions hereof, accept
such delivery and pay the purchase price of the Bonds as set forth in Section 1 of this
Agreement in immediately available funds by wire transfer to the account of the Issuer as
indicated by U.S. Bank National Association, Dallas Texas (the “Paying
Agent/Registrar”). Payment for the Bonds as aforesaid shall be made at the offices of the
Paying Agent/Registrar or such other place as shall have been mutually agreed upon by
the Issuer and the Representative. The Initial Bonds shall be registered in the name of the
Representative.
(b) Delivery of the definitive Bonds shall be made to The Depository Trust
Company, New York, New York (“DTC”). The definitive Bonds shall be delivered in
definitive fully registered form, bearing CUSIP numbers without coupons, with one Bond
for each maturity of the Bonds registered in the name of Cede & Co., all as provided in
the Ordinance and shall be made available to the Underwriters at least one (1) business
day before Closing for purposes of inspection (i) DTC or (ii) at the Paying
Agent/Registrar, if the definitive Bonds are to be held in safekeeping for DTC by the
Paying Agent Registrar pursuant to DTC’s FAST System.
6. Closing Conditions. The Underwriters have entered into this Agreement in
reliance upon the representations, warranties and agreements of the Issuer contained herein, and
in reliance upon the representations, warranties and agreements to be contained in the documents
and instruments to be delivered at the Closing and upon the performance by the Issuer of its
obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly,
the Underwriters’ obligations under this Agreement to purchase, to accept delivery of and to pay
for the Bonds shall be conditioned upon the performance by the Issuer of its obligations to be
performed hereunder and under such documents and instruments at or prior to the Closing, and
shall also be subject to the following additional conditions, including the delivery by the Issuer
of such documents as are enumerated herein, in form and substance reasonably satisfactory to the
Underwriters:
Item 7
HOU:3326832.1 10
(a) The representations and warranties of the Issuer contained herein shall be
true, complete and correct in all material respects on the date hereof and on and as of the
date of the Closing, as if made on the date of the Closing;
(b) The Issuer shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by it prior to or
at the Closing;
(c) At the time of the Closing, (i) the Issuer Documents and the Bonds shall
be in full force and effect and shall not have been amended, modified or supplemented,
and the Official Statement shall not have been supplemented or amended, except in any
such case as may have been agreed to by the Representative; (ii) the net proceeds of the
sale of the Bonds and any funds to be provided by the Issuer shall be deposited and
applied as described in the Official Statement and in the Ordinance and (iii) all actions of
the Issuer required to be taken by the Issuer shall be performed in order for Bond Counsel
and counsel to the Underwriters to deliver their respective opinions referred to hereafter;
(d) At the time of the Closing, all official action of the Issuer relating to the
Bonds and the Issuer Documents shall be in full force and effect and shall not have been
amended, modified or supplemented except as may have been approved by the
Underwriters;
(e) At or prior to the Closing, the Ordinance shall have been duly executed
and delivered by the Issuer and the Issuer shall have duly executed and delivered and the
Paying Agent/Registrar shall have duly authenticated the Bonds;
(f) At the time of the Closing, there shall not have occurred any change or
any development involving a prospective change in the condition, financial or otherwise,
or in the revenues or operations of the Issuer, from that set forth in the Official Statement
that in the reasonable judgment of the Representative is material and adverse and that
makes it, in the reasonable judgment of the Representative, impracticable to market the
Bonds on the terms and in the manner described in the Official Statement;
(h) The Issuer shall not have failed to pay principal or interest when due on
any of its outstanding obligations for borrowed money;
(i) All steps to be taken and all instruments and other documents to be
executed, and all other legal matters in connection with the transactions described in this
Agreement shall be reasonably satisfactory in legal form and effect to the Representative,
to Bond Counsel and to counsel for the Underwriters; and
(j) At or prior to the Closing, the Underwriters shall have received copies of
each of the following documents:
(1) The Official Statement, and each supplement or amendment
thereto, if any, as may have been agreed to by the Representative;
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HOU:3326832.1 11
(2) A copy of the Ordinance, certified as having been duly adopted
and in full force and effect, with such supplements or amendments as may have
been agreed to by the Underwriters;
(3) A copy of the executed Escrow Agreement;
(4) The undertaking of the Issuer set forth in the Ordinance (the
“Continuing Disclosure Undertaking”) which satisfies the requirements of
Section (d)(2) of the Rule;
(5) The approving opinion of McCall, Parkhurst & Horton L.L.P.,
Dallas, Texas (“Bond Counsel”), with respect to the Bonds, in substantially the
form attached to the Official Statement;
(6) A supplemental opinion of Bond Counsel addressed to the Issuer
and the Underwriters substantially to the effect that:
(i) the Ordinance has been duly adopted and is in full force
and effect;
(ii) the Bonds are exempt securities that do not require
registration under the Securities Act of 1933, as amended (the “1933
Act”), and the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), and it is not necessary, in connection with the offering
and sale of the Bonds to register the Bonds under the 1933 Act or to
qualify the Ordinance under the Trust Indenture Act; and
(iii) the statements and information contained in the Official
Statement under the captions and subcaptions “The Plan of Financing”
(exclusive of “Sources and Uses of Obligation Proceeds”), "The
Obligations" (exclusive of subcaptions "Book-Entry-Only System"
“Sources and Uses of Obligation Proceeds” and “Obligationholders’
Remedies”), "Tax Matters," and "Continuing Disclosure of Information"
(except for the information under the subcaption “Compliance with Prior
Undertakings”) and the subcaptions “Other Information - Registration and
Qualification of Obligations for Sale,” “Other Information - Legal
Investments and Eligibility to Secure Public Funds in Texas” and “Other
Information - Legal Matters” (except for the last sentence of the first
paragraph thereof) in the Official Statement and such firm is of the
opinion that the information relating to the Bonds and the legal issues
contained under such captions and subcaptions is an accurate and fair
description of the laws and legal issues addressed therein and, with respect
to the Bonds, such information conforms to the Ordinance;
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HOU:3326832.1 12
(7) An opinion, dated the date of the Closing and addressed to the
Underwriters, of counsel to the Underwriters, to the effect that:
(i) the Bonds are exempt securities under the 1933 Act and the
Trust Indenture Act and it is not necessary, in connection with the offering
and sale of the Bonds, to register the Bonds under the 1933 Act and the
Ordinance need not be qualified under the Trust Indenture Act; and
(ii) based upon their participation in the preparation of the
Official Statement as counsel for the Underwriters and their participation
at conferences at which the Official Statement was discussed, but without
having undertaken to determine independently the accuracy, completeness
or fairness of the statements contained in the Official Statement, such
counsel has no reason to believe that the Official Statement contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (except for any financial,
forecast, technical and statistical statements and data included in the
Official Statement and the information regarding DTC and its book-entry-
only system, in each case as to which no view need be expressed);
(8) A certificate, dated the date of the Closing, of an appropriate
official of the Issuer to the effect that (i) the representations and warranties of the
Issuer contained herein are true and correct in all material respects on and as of
the date of the Closing as if made on the date of the Closing; (ii) no litigation,
proceeding or tax challenge against the Issuer is pending or, to the best of his or
her knowledge, threatened in any court or administrative body nor is there a basis
for litigation which would (a) contest the right of the council members, officers or
officials of the Issuer to hold and exercise their respective positions, (b) contest
the due organization and valid existence of the Issuer, (c) contest the validity, due
authorization and execution of the Bonds or the Issuer Documents or (d) attempt
to limit, enjoin or otherwise restrict or prevent the Issuer from functioning and
collecting ad valorem taxes, including for payments on the Bonds, pursuant to the
Ordinance, or the levy or collection of the ad valorem taxes pledged or to be
pledged to pay the principal of and interest on the Bonds, or the pledge thereof;
(iii) all official action of the Issuer relating to the Official Statement, the Bonds
and the Issuer Documents have been duly taken by the Issuer, are in full force and
effect and have not been modified, amended, supplemented or repealed; (iv) to the
best of his or her knowledge, no event affecting the Issuer has occurred since the
date of the Official Statement which should be disclosed in the Official Statement
for the purpose for which it is to be used or which it is necessary to disclose
therein in order to make the statements and information therein, in light of the
circumstances under which made, not misleading in any material respect as of the
time of the Closing, and the information contained in the Official Statement is
correct in all material respects and, as of the date of the Official Statement did
not, and as of the date of the Closing does not, contain any untrue statement of a
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HOU:3326832.1 13
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not misleading; and (v) there has not been any
material adverse change in the financial condition of the Issuer since
September 30, 2012, the latest date as of which audited financial information is
available;
(9) A certificate of the Issuer in form and substance satisfactory to
Bond Counsel and counsel to the Underwriters setting forth the facts, estimates
and circumstances in existence on the date of the Closing, which establish that it
is not expected that the proceeds of the Bonds will be used in a manner that would
cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the
Internal Revenue Code of 1986, as amended (the “Code”), and any applicable
regulations (whether final, temporary or proposed), issued pursuant to the Code;
(10) The approving opinion of the Attorney General of the State of
Texas and the registration certificates of the Comptroller of Public Accounts of
the State of Texas in respect of the Bonds;
(11) The certificate of the Issuer’s financial advisor of the sufficiency of
the deposit with the Escrow Agent for the payment of the Refunded Bonds;
(12) Any other certificates and opinions required by the Ordinance for
the issuance thereunder of the Bonds;
(11) Evidence satisfactory to the Representative that the Bonds have
been rated “Aa3” by Moody’s Investor Services and that such rating is in effect as
of the date of the Closing; and
(12) Such additional legal opinions, certificates, instruments and other
documents as Bond Counsel, the Underwriters or counsel to the Underwriters may
reasonably request to evidence the truth and accuracy, as of the date hereof and as
of the date of the Closing, of the Issuer’s representations and warranties contained
herein and of the statements and information contained in the Official Statement
and the due performance or satisfaction by the Issuer on or prior to the date of the
Closing of all the respective agreements then to be performed and conditions then
to be satisfied by the Issuer.
All of the opinions, letters, certificates, instruments and other documents mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions
hereof if, but only if, they are in form and substance reasonably satisfactory to the
Representative.
If the Issuer shall be unable to satisfy the conditions to the obligations of the
Underwriters to purchase, to accept delivery of and to pay for the Bonds contained in this
Agreement, or if the obligations of the Underwriters to purchase, to accept delivery of and to pay
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HOU:3326832.1 14
for the Bonds shall be terminated for any reason permitted by this Agreement, this Agreement
shall terminate and neither the Underwriters nor the Issuer shall be under any further obligation
hereunder, except that the respective obligations of the Issuer and the Underwriters set forth in
Sections 1 (with respect to the Check), 4 and 8 hereof shall continue in full force and effect.
7. Termination. The Underwriters shall have the right to cancel its obligation to
purchase the Bonds if, between the date of this Agreement and the Closing, the market price or
marketability of the Bonds shall be materially adversely affected, in the reasonable judgment of
the Representative by the occurrence of any of the following:
(a) legislation shall be enacted by or introduced in the Congress of the United States
or recommended to the Congress for passage by the President of the United States, or the
Treasury Department of the United States or the Internal Revenue Service or favorably reported
for passage to either House of the Congress by any committee of such House to which such
legislation has been referred for consideration, a decision by a court of the United States or of the
State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final,
temporary or proposed), press release, statement or other form of notice by or on behalf of the
Treasury Department of the United States, the Internal Revenue Service or other governmental
agency shall be made or proposed, the effect of any or all of which would be to impose, directly
or indirectly, federal income taxation upon interest received on obligations of the general
character of the Bonds, of the interest on the Bonds as described in the Official Statement, or
other action or events shall have transpired which may have the purpose or effect, directly or
indirectly, of changing the federal income tax consequences of any of the transactions described
herein, or any other similar action or event shall have occurred which, in the reasonable
judgment of the Representative, materially adversely affect the market for the Bonds or the
market price generally of obligations of the general character of the Bonds;
(b) legislation introduced in or enacted (or resolution passed) by the Congress or an
order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling,
regulation (final, temporary, or proposed), press release or other form of notice issued or made
by or on behalf of the Securities and Exchange Commission, or any other governmental agency
having jurisdiction of the subject matter, to the effect that obligations of the general character of
the Bonds, including any or all underlying arrangements, are not exempt from registration under
or other requirements of the 1933 Act, or that the Ordinance is not exempt from qualification
under or other requirements of the Trust Indenture Act, or that the issuance, offering, or sale of
obligations of the general character of the Bonds, including any or all underlying arrangements,
as described herein or in the Official Statement or otherwise, is or would be in violation of the
federal securities laws as amended and then in effect;
(c) a general suspension of trading in securities on the New York Stock Exchange,
the establishment of minimum prices on either such exchange, the establishment of material
restrictions (not in force as of the date hereof) upon trading securities generally by any
governmental authority or any national securities exchange, a general banking moratorium
declared by federal, State of New York, or State officials authorized to do so;
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HOU:3326832.1 15
(d) the New York Stock Exchange or other national securities exchange or any
governmental authority shall impose, as to the Bonds or as to obligations of the general character
of the Bonds, any material restrictions not now in force, or increase materially those now in
force, with respect to the extension of credit by, or the charge to the net capital requirements of,
the Underwriters, which change shall occur subsequent to the date hereof and shall not be due to
the malfeasance, misfeasance or nonfeasance of the Underwriters;
(e) any amendment to the federal or State Constitution or action by any federal or
state court, legislative body, regulatory body, or other authority materially adversely affecting
the tax status of the Issuer, its property, income, securities (or interest thereon), or the validity or
enforceability of the levy of taxes to pay principal of and interest on the Bonds;
(f) any state blue sky or securities commission or other governmental agency or body
in any state in which more than 10% of the Bonds have been offered and sold shall have
withheld registration, exemption or clearance of the offering of the Bonds as described herein, or
issued a stop order or similar ruling relating thereto;
(g) any event occurring, or information becoming known which, in the reasonable
judgment of the Underwriters, makes untrue in any material respect any statement or information
contained in the Official Statement, or has the effect that the Official Statement contains any
untrue statement of material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading;
(h) there shall have occurred since the date of this Agreement any materially adverse
change in the affairs or financial condition of the Issuer, except for changes which the Official
Statement discloses are expected to occur;
(i) between the date of this Agreement and the date of the closing, the United States
shall have become engaged in new hostilities which have resulted in a declaration of war or a
national emergency, or there shall have occurred any other outbreak or escalation of hostilities or
a national or international calamity or crisis, financial or otherwise, the effect of such outbreak,
calamity or crisis on the financial markets of the United States being such as, in the reasonable
opinion of the Representative, would materially and adversely affect the ability of the
Underwriters to market the Bonds;
(j) any fact or event shall exist or have existed that, in the Representative’s
reasonable judgment, requires or has required an amendment of or supplement to the Official
Statement;
(k) there shall have occurred any downgrading, or any notice shall have been given of
(1) any intended or potential downgrading or (2) any possible change that does not indicate a
possible upgrade, in a rating accorded any of the Issuer’s obligations that are secured in a like
manner as the Bonds (including the rating to be accorded the Bonds); or
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HOU:3326832.1 16
(l) the purchase of and payment for the Bonds by the Underwriters, or the resale of
the Bonds by the Underwriters, on the terms and conditions herein provided shall be prohibited
by any applicable law, governmental authority, board, agency or commission; provided that such
prohibition is not caused by the action or failure to act, of the Underwriters.
With respect to the condition described in subparagraph (l) above, the Underwriters are
not aware of any current, pending or proposed law or government inquiry or investigation, as of
the date of execution of this Agreement, which would permit the Underwriters to invoke their
termination rights hereunder.
8. Expenses.
(a) The Underwriters shall be under no obligation to pay, and the Issuer shall
pay, any expenses incident to the performance of the Issuer’s obligations hereunder,
including, but not limited to (i) the cost of preparation and printing of the Bonds; (ii) the
fees and disbursements of Bond Counsel and the Issuer’s Financial Advisor; (iii) the fees
and disbursements of any other engineers, accountants, and other experts, consultants or
advisers retained by the Issuer; (iv) the fees for bond ratings and municipal bond
insurance, if any; (v) the costs of preparing, printing and mailing the Preliminary Official
Statement and the Official Statement; (vi) the fees and expenses of the Paying
Agent/Registrar and the Escrow Agent; (vii) advertising expenses (except any advertising
expenses of the Underwriters as set forth below); (viii) the out-of-pocket, miscellaneous
and closing expenses, including the cost of travel, of the officers and council members of
the Issuer; (ix) the Attorney General’s review fee; and (x) any other expenses mutually
agreed to by the Issuer and the Representative to be reasonably considered expenses of
the Issuer which are incident to the transactions described herein.
(b) The Underwriters shall pay (i) the cost of preparation and printing of this
Agreement, the Blue Sky Survey and Legal Investment Memorandum, if any; (ii) all
advertising expenses in connection with the public offering of the Bonds; and (iii) all
other expenses incurred by it in connection with the public offering of the Bonds,
including the fees and disbursements of counsel retained by the Underwriters.
9. Notices. Any notice or other communication to be given to the Issuer under this
Agreement may be given by delivering the same in writing to Town of Prosper, Texas, P.O. Box,
307, Texas 75078; Attention: Town Manager and any notice or other communication to be given
to the Underwriters under this Agreement may be given by delivering the same in writing to
RBC Capital Markets, LLC, 200 Crescent Court, Suite 200, Dallas, Texas 75201, Attention:
Matt Boles.
10. Parties in Interest. This Agreement as heretofore specified shall constitute the
entire agreement between us and is made solely for the benefit of the Issuer and the Underwriters
(including successors or assigns of the Underwriters) and no other person shall acquire or have
any right hereunder or by virtue hereof. This Agreement may not be assigned by the Issuer. All
of the Issuer’s representations and warranties contained in this Agreement shall remain operative
and in full force and effect, regardless of (i) any investigations made by or on behalf of the
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HOU:3326832.1 17
Underwriters; (ii) delivery of and payment for the Bonds pursuant to this Agreement; and
(iii) any termination of this Agreement.
11. Effectiveness. This Agreement shall become effective upon the acceptance
hereof by the Issuer and shall be valid and enforceable in accordance with its terms at the time of
such acceptance.
12. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State.
13. Severability. If any provision of this Agreement shall be held or deemed to be or
shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provision or
provisions of any constitution, statute, rule of public policy or any other reason, such
circumstances shall not have the effect of rendering the provision in question invalid, inoperative
or unenforceable in any other case or circumstance, or of rendering any other provision or
provisions of this Agreement invalid, inoperative or unenforceable to any extent whatever.
14. Business Day. For purposes of this Agreement, “business day” means any day on
which the New York Stock Exchange is open for trading.
15. Section Headings. Section headings have been inserted in this Agreement as a
matter of convenience of reference only, and it is agreed that such section headings are not a part
of this Agreement and will not be used in the interpretation of any provisions of this Agreement.
16. Counterparts. This Agreement may be executed in several counterparts each of
which shall be regarded as an original (with the same effect as if the signatures thereto and
hereto were upon the same document) and all of which shall constitute one and the same
document.
17. No Personal Liability. None of the members of the Town Council, nor any
officer, agent, or employee of the Issuer, shall be charged personally by the Underwriters with
any liability, or be held liable to the Underwriters under any term or provision of this Agreement,
or because of execution or attempted execution, or because of any breach or attempted or alleged
breach, of this Agreement.
[Execution Page Follows.]
Item 7
Execution Page
Town of Prosper, Texas, General Obligation Refunding Bonds, Series 2013
HOU:3326832.1
If you agree with the foregoing, please sign the enclosed counterpart of this Agreement
and return it to the Underwriters. This Agreement shall become a binding agreement between
the Issuer and the Underwriters when at least one counterpart hereof shall have been signed by or
on behalf of each of the parties hereto.
RBC CAPITAL MARKETS, LLC, as
Representative of the Underwriters
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
ACCEPTED AND AGREED to as of________, 2013 at _______(a.m./p.m.)
TOWN OF PROSPER, TEXAS
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
Item 7
HOU:3326832.1
Schedule I
RBC Capital Markets, LLC
200 Crescent Court, Suite 1500
Dallas, TX 75201
BOSC, Inc.
333 West Campbell
Suite 350
Richardson, TX 75080
Item 7
HOU:3326832.1
Schedule II
$_________
Town of Prosper, Texas
General Obligation Refunding Bonds
Series 2013
Interest Accrues From: Date of Delivery
Item 7
PAYING AGENT/REGISTRAR AGREEMENT
THIS AGREEMENT is entered into as of June 15, 2013 (this "Agreement"), by and between
the Town of Prosper, Texas (the "Issuer"), and U.S. Bank National Association, in Dallas, Texas,
a national banking association duly organized and existing under the laws of the United States of
America (the "Bank").
RECITALS
WHEREAS, the Issuer has duly authorized and provided for the issuance of its General
Obligation Refunding Bonds, Series 2013 (the "Securities") in the aggregate principal amount of
$11,040,000, such Securities to be issued in fully-registered form only as to the payment of principal
and interest thereon; and
WHEREAS, the Securities are scheduled to be delivered to the initial purchasers thereof on
or about July 25, 2013; and
WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection
with the payment of the principal of, premium, if any, and interest on said Securities and with
respect to the registration, transfer and exchange thereof by the registered owners thereof; and
WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and
has full power and authority to perform and serve as Paying Agent/Registrar for the Securities;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE ONE
APPOINTMENT OF BANK AS
PAYING AGENT AND REGISTRAR
Section 1.01. Appointment.
The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities.
As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer
the principal, premium (if any), and interest on the Securities as the same become due and payable
to the registered owners thereof, all in accordance with this Agreement and the "Order" (hereinafter
defined).
The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar
for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records
as to the ownership of said Securities and with respect to the transfer and exchange thereof as
provided herein and in the "Order."
The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and
Registrar for the Securities.
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2
Section 1.02. Compensation.
As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees
to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this
Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in
effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer
on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon
the first day of the following Fiscal Year.
In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Bank in accordance with any of the
provisions hereof (including the reasonable compensation and the expenses and disbursements of
its agents and counsel).
ARTICLE TWO
DEFINITIONS
Section 2.01. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
"Acceleration Date" on any Security means the date on and after which the principal or any
or all installments of interest, or both, are due and payable on any Security which has become
accelerated pursuant to the terms of the Security.
"Bank Office" means the principal corporate trust office of the Bank as indicated on the
signature page hereof. The Bank will notify the Issuer in writing of any change in location of the
Bank Office.
"Financial Advisor" means First Southwest Company.
"Fiscal Year" means the fiscal year of the Issuer, ending September 30.
"Holder" and "Security Holder" each means the Person in whose name a Security is registered
in the Security Register.
"Issuer Request" and "Issuer Order" means a written request or order signed in the name of the
Issuer by the Mayor or Mayor Pro-tem of the Issuer, any one or more of said officials, delivered to
the Bank.
"Legal Holiday" means a day on which the Bank is required or authorized to be closed.
"Order" means the order, ordinance or resolution of the governing body of the Issuer pursuant
to which the Securities are issued, certified by the Secretary of the Board of Trustees or any other
officer of the Issuer and delivered to the Bank.
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3
"Person" means any individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or political subdivision
of a government.
"Predecessor Securities" of any particular Security means every previous Security evidencing
all or a portion of the same obligation as that evidenced by such particular Security (and, for the
purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement
Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the
Order).
"Record Date" means the last business day of the month next preceding payment.
"Redemption Date" when used with respect to any Bond to be redeemed means the date fixed
for such redemption pursuant to the terms of the Order.
"Responsible Officer" when used with respect to the Bank means the Chairman or Vice-
Chairman of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee
of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary,
the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or
Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar
to those performed by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Security Register" means a register maintained by the Bank on behalf of the Issuer providing
for the registration and transfer of the Securities.
"Stated Maturity" means the date specified in the Order the principal of a Security is scheduled
to be due and payable.
Section 2.02. Other Definitions.
The terms "Bank," "Issuer" and "Securities (Security)" have the meanings assigned to them
in the recital paragraphs of this Agreement.
The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and
functions of this Agreement.
ARTICLE THREE
PAYING AGENT
Section 3.01. Duties of Paying Agent.
As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it
for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each
Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender
of the Security to the Bank at the Bank Office.
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4
As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it
for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each
Security when due, by computing the amount of interest to be paid each Holder and preparing and
sending checks by United States Mail, first class postage prepaid, on each payment date, to the
Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the
address appearing on the Security Register or by such other method, acceptable to the Bank,
requested in writing by the Holder at the Holder's risk and expense.
The Bank is also authorized to transfer funds relating to the closing and initial delivery of the
securities in the manner disclosed in the closing memorandum as prepared by the Financial Advisor
or other agent. The Bank may act on a facsimile or e-mail transmission of the closing memorandum
acknowledged by the financial advisor or the Issuer as the final closing memorandum. The Bank
shall not be liable for any losses, costs or expenses arising directly or indirectly from the Bank's
reliance upon and compliance with such instructions.
Section 3.02. Payment Dates.
The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on
the dates specified in the Order.
ARTICLE FOUR
REGISTRAR
Section 4.01. Security Register - Transfers and Exchanges.
The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books
and records (herein sometimes referred to as the "Security Register") and, if the Bank Office is
located outside the State of Texas, a copy of such books and records shall be kept in the State of
Texas, for recording the names and addresses of the Holders of the Securities, the transfer, exchange
and replacement of the Securities and the payment of the principal of and interest on the Securities
to the Holders and containing such other information as may be reasonably required by the Issuer
and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers,
exchanges and replacement of Securities shall be noted in the Security Register.
Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied
by a written instrument of transfer, the signature on which has been guaranteed by an officer of a
federal or state bank or a member of the National Association of Securities Dealers, in form
satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing.
The Bank may request any supporting documentation it feels necessary to effect a re-
registration, transfer or exchange of the Securities.
To the extent possible and under reasonable circumstances, the Bank agrees that, in relation
to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be
completed and new Securities delivered to the Holder or the assignee of the Holder in not more than
three (3) business days after the receipt of the Securities to be canceled in an exchange or transfer
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and the written instrument of transfer or request for exchange duly executed by the Holder, or his
duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar.
Section 4.02. Certificates.
At any time that the Securities are not subject to a book-entry-only system of registration and
transfer, the Issuer shall provide an adequate inventory of printed Securities to facilitate transfers
or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in
safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining
such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt
securities of other political subdivisions or corporations for which it serves as registrar, or that is
maintained for its own securities.
Section 4.03. Form of Security Register.
The Bank, as Registrar, will maintain the Security Register relating to the registration,
payment, transfer and exchange of the Securities in accordance with the Bank's general practices and
procedures in effect from time to time. The Bank shall not be obligated to maintain such Security
Register in any form other than those that the Bank has currently available and currently utilizes at
the time.
The Security Register may be maintained in written form or in any other form capable of being
converted into written form within a reasonable time.
Section 4.04. List of Security Holders.
The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the
required fee, a copy of the information contained in the Security Register. The Issuer may also
inspect the information contained in the Security Register at any time the Bank is customarily open
for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or
to convert the information into written form.
The Bank will not release or disclose the contents of the Security Register to any person other
than to, or at the written request of, an authorized officer or employee of the Issuer, except upon
receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to
the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so
that the Issuer may contest the court order or such release or disclosure of the contents of the
Security Register.
Section 4.05. Cancellation of Certificates.
All certificates surrendered to the Bank, at the designated Payment/Transfer Office, for
payment, redemption, transfer or replacement, shall be promptly canceled by the Bank. The Bank
will provide to the Issuer, at reasonable intervals determined by it, a certificate evidencing the
destruction of canceled certificates.
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Section 4.06. Mutilated, Destroyed, Lost or Stolen Securities.
The Issuer hereby instructs the Bank, subject to the applicable provisions of the Order, to
deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost or stolen
Securities as long as the same does not result in an over-issuance.
In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion,
may execute and deliver a replacement Security of like form and tenor, and in the same
denomination and bearing a number not contemporaneously outstanding, in exchange and
substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or
stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory
to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership
thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the
Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with
the preparation, execution and delivery of a replacement Security shall be borne by the Holder of
the Security mutilated, or destroyed, lost or stolen.
Section 4.07. Transaction Information to Issuer.
The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish
the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has
delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities
it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant
to Section 4.06.
ARTICLE FIVE
THE BANK
Section 5.01. Duties of Bank.
The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care
in the performance thereof.
Section 5.02. Reliance on Documents, Etc.
(a) The Bank may conclusively rely, as to the truth of the statements and correctness of the
opinions expressed therein, on certificates or opinions furnished to the Bank.
(b) The Bank shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the
pertinent facts.
(c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or
otherwise incur any financial liability for performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not
assured to it.
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(d) The Bank may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note, security, or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties. Without limiting the generality of the foregoing
statement, the Bank need not examine the ownership of any Securities, but is protected in acting
upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer
executed in accordance with Section 4.01 hereof, which appears on its face to be signed by the
Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the
facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note, security or other paper or document supplied by Issuer.
(e) The Bank may consult with counsel, and the written advice of such counsel or any opinion
of counsel shall be full and complete authorization and protection with respect to any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(f) The Bank may exercise any of the powers hereunder and perform any duties hereunder
either directly or by or through agents or attorneys of the Bank.
Section 5.03. Recitals of Issuer.
The recitals contained herein with respect to the Issuer and in the Securities shall be taken as
the statements of the Issuer, and the Bank assumes no responsibility for their correctness.
The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or
any other Person for any amount due on any Security from its own funds.
Section 5.04. May Hold Securities.
The Bank, in its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Issuer with the same rights it would have if it were not
the Paying Agent/Registrar, or any other agent.
Section 5.05. Moneys Held by Bank.
The Bank shall deposit any moneys received from the Issuer into a trust account to be held in
a fiduciary capacity for the payment of the Securities, with such moneys in the account that exceed
the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be
fully collateralized with securities or obligations that are eligible under the laws of the State of Texas
to secure and be pledged as collateral for trust accounts until the principal and interest on such
securities have been presented for payment and paid to the owner thereof. Payments made from
such trust account shall be made by check drawn on such trust account unless the owner of such
Securities shall, at its own expense and risk, request such other medium of payment.
Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the
Bank for the payment of the principal, premium (if any), or interest on any Security and remaining
unclaimed for three years after the final maturity of the Security has become due and payable will
be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Security shall
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hereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to
such monies shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and
dispose of the funds in compliance with Title Six of the Texas Property Code, as amended.
Section 5.06. Indemnification.
TO THE EXTENT PERMITTED BY LAW, THE ISSUER AGREES TO INDEMNIFY THE BANK, ITS
DIRECTORS, OFFICERS AND EMPLOYEES, AND HOLD IT HARMLESS AGAINST, ANY LOSS, LIABILITY
OR EXPENSE INCURRED WITHOUT NEGLIGENCE OR BAD FAITH ON ITS PART, ARISING OUT OF OR
IN CONNECTION WITH ITS ACCEPTANCE OR ADMINISTRATION OF ITS DUTIES HEREUNDER,
INCLUDING THE COST AND EXPENSE AGAINST ANY CLAIM OR LIABILITY IN CONNECTION WITH
THE EXERCISE OR PERFORMANCE OF ANY OF ITS POWERS OR DUTIES UNDER THIS AGREEMENT.
Section 5.07. Interpleader.
The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim,
demand, or controversy over its person as well as funds on deposit, in either a Federal or State
District Court located in the State and County where the administrative offices of the Issuer are
located, and agree that service of process by certified or registered mail, return receipt requested,
to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The
Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court
of competent jurisdiction in the State of Texas to determine the rights of any Person claiming any
interest herein.
Section 5.08. Depository Trust Company Services.
It is hereby represented and warranted that, in the event the Securities are otherwise qualified
and accepted for "Depository Trust Company" services or equivalent depository trust services by
other organizations, the Bank has the capability and, to the extent within its control, will comply
with the "Operational Arrangements," effective August 1, 1987, which establishes requirements for
securities to be eligible for such type depository trust services, including, but not limited to,
requirements for the timeliness of payments and funds availability, transfer turnaround time, and
notification of redemptions and calls.
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. Amendment.
This Agreement may be amended only by an agreement in writing signed by both of the parties
hereto.
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Section 6.02. Assignment.
This Agreement may not be assigned by either party without the prior written consent of the
other.
Section 6.03. Notices.
Any request, demand, authorization, direction, notice, consent, waiver or other document
provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or
delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this
Agreement.
Section 6.04. Effect of Headings.
The Article and Section headings herein are for convenience only and shall not affect the
construction hereof.
Section 6.05. Successors and Assigns.
All covenants and agreements herein by the Issuer shall bind its successors and assigns,
whether so expressed or not.
Any corporation or association into which the Bank may be converted or merged, or with
which it may be consolidated, or to which it may sell, lease, or transfer its corporate trust business
and assets as a whole or substantially as a whole, or any corporation or association resulting from
any such conversion, sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall
be and become successor Paying Agent/Registrar hereunder and vested with all of the powers,
rights, obligations, duties, remedies, discretions, immunities, privileges, and all other matters as was
its predecessor, without the execution or filing of any instruments or any further act, deed, or
conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 6.06. Severability.
In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 6.07. Benefits of Agreement.
Nothing herein, express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder.
Section 6.08. Entire Agreement.
This Agreement and the Order constitute the entire agreement between the parties hereto
relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this
Agreement and the Order, the Order shall govern.
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Section 6.09. Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same Agreement.
Section 6.10. Termination.
This Agreement will terminate (i) on the date of final payment of the principal of and interest
on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty
(60) days written notice; provided, however, an early termination of this Agreement by either party
shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer
and such appointment accepted and (b) notice has been given to the Holders of the Securities of the
appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually
agree that the effective date of an early termination of this Agreement shall not occur at any time
which would disrupt, delay or otherwise adversely affect the payment of the Securities.
The resigning Paying Agent/Registrar may petition any court of competent jurisdiction for the
appointment of a successor Paying Agent/Registrar if an instrument of acceptance by a successor
Paying Agent/Registrar has not been delivered to the resigning Paying Agent/Registrar within sixty
(60) days after the giving of such notice of resignation.
Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver
the Security Register (or a copy thereof), together with other pertinent books and records relating
to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer.
The provisions of Section 1.02 and of Article Five shall survive and remain in full force and
effect following the termination of this Agreement.
Section 6.11. Governing Law.
This Agreement shall be construed in accordance with and governed by the laws of the State
of Texas.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.
U.S. BANK, NATIONAL ASSOCIATION
By ____________________________________
Title ____________________________________
14241 Dallas Parkway, Suite 490
EX-TX-DCRE
Dallas, Texas 75254
TOWN OF PROSPER, TEXAS
By ________________________________________
Mayor
P.O. Box 307
Prosper, Texas 75078
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SCHEDULE A
Paying Agent/Registrar Fee Schedule
[To be supplied by the Bank]
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LAW OFFICES
M c CALL, PARKHURST & HORTON L.L.P.
600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N. ST. MARY'S STREET
1250 ONE AMERICAN CENTER NINTH FLOOR 1525 ONE RIVERWALK PLACE
AUSTIN, TEXAS 78701-3248 DALLAS, TEXAS 75201-6587 SAN ANTONIO, TEXAS 78205-3503
TELEPHONE: 512 478-3805 TELEPHONE: 214 754-9200 TELEPHONE: 210 225-2800
FACSIMILE: 512 472-0871 FACSIMILE: 214 754-9250 FACSIMILE: 210 225-2984
June 25, 2013
Mayor and Members of the Town Council
Town of Prosper
Town Hall
Prosper, Texas 75078
Re: Proposed Town of Prosper, Texas General Obligation Refunding Bonds, Series 2013
and
Proposed Town of Prosper, Texas, Combination Tax and Surplus Revenue Certificates of
Obligation, Series 2013
Ladies and Gentlemen:
The purpose of this engagement letter is to set forth certain matters concerning the services
we will perform as bond counsel to the Town of Prosper, Texas (the "Issuer") in connection with
the issuance of the above-referenced bonds (the "Bonds") and certificates of obligation (the
"Certificates" and collectively with the Bonds, the "Obligations"). We understand that the Bonds
are being issued for the purpose of refunding certain outstanding obligation of the Issuer of the
following series of bonds and certificates of obligation: Combination Tax and Revenue Certificates
of Obligation, Series 2004 and General Obligation Bonds, Taxable Series 2012 (collectively, the
"Refunded Obligations") and that the Certificates are being issued for the purpose of providing funds
for paying all or a portion of the Issuer's contractual obligations incurred in connection with
extending, constructing and improving the Issuer's water system, including constructing
improvements to pump stations and extending water lines and paying legal, fiscal, engineering and
architectural fees in connection with these projects. We also understand that the Obligations will
be secured by a pledge of an ad valorem tax levied by the Issuer within the limit prescribed by law,
and that the Certificates will additionally be secured by a pledge of the surplus net revenues of the
Issuer's combined water and sewer system. We further understand that the Obligations will be
authorized to be sold by the Town Council of the Issuer (the "Town Council") pursuant to respective
ordinances (collectively, the "Ordinance") adopted on the date hereof (the "Sale Date"), and that the
Bonds will be sold by negotiation to a purchaser or purchasers (collectively, the "Underwriter") on
the Sale Date.
A. THE FINANCING
As Bond Counsel to the Issuer, we would like for the Town Council to understand how the
issuance of the Obligations will be effected and the ramifications of the financing. I will briefly
describe the procedures and certain applicable law that pertains to the issuance of the Obligations,
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below. However, you should feel free to call me at any time to discuss any questions that you or
your staff may have.
(1) The Bonds are being issued to provide tax rate restructuring to accommodate the issuance
of the Certificates. You should discuss the full impact of the debt service restructuring with
First Southwest Company, your financial advisor.
(2) The Obligations will be "authorized to be issued" when and if the Town Council approves
the Ordinance. The Ordinance provides for the terms of the Obligations. Among the matters
approved in the Ordinance are: (i) the terms of the Obligations, including the principal
amortization schedule and interest rates and provision for certain of the Obligations to be
issued as current interest bonds that pay interest semiannually; (ii) the Issuer's commitment
to levy its debt service tax each year in an amount sufficient to pay the debt service on the
Obligations; (iii) the sale of the Obligations to the Underwriter; (iv) the approval of this
engagement letter; (v) approval of a paying agent agreement to whom you will make
semiannual payments sufficient to pay the debt service on the Obligations; (vi) instructions
to the paying agent for the Refunded Obligations to give notice to the holders of the
Refunded Obligations that they are being called for redemption; (vii) approval of an escrow
agreement whereby the proceeds of the Bonds will be used to pay the debt service on the
Refunded Obligations; and (viii) certain other covenants of the Issuer that are designed to
allow the Issuer to issue the Obligations as tax-exempt obligations. As you can see from the
foregoing description, the Ordinance is an omnibus undertaking of the Issuer that is intended
to provide for all actions and undertakings that are required for the issuance of the
Obligations. There will be other certificates and letters that will be required to be executed
by officers of the Issuer on the Sale Date, but they all spring from, and are authorized by, the
Ordinance.
(3) As noted above, the Obligations will be sold to the Underwriter in accordance with the
provisions of the Ordinance and, in addition, the Underwriter will want the Issuer to sign a
Bond Purchase Contract on the Sale Date that will set forth the terms of the sale of the
Obligations. We have reviewed but not drafted this Contract, and you should know that
while it is a fairly routine form of document for this type of transaction, it does commit the
Issuer to sell the Obligations to the Underwriter at the price to be negotiated between the
Issuer and the Underwriter. In addition, it contains representations of the Issuer to the
Underwriter to the effect that the Issuer is authorized to issue the Obligations and that it has
made full disclosure to the Underwriter and the bond investors of all material information.
As a condition to the Underwriter's payment for the Obligations, the Underwriter will require
this firm to deliver our Bond Counsel opinion to them, in which we will opine that the
Obligations are valid obligations of the Issuer and that, assuming ongoing compliance by the
Issuer with the provisions of the Ordinance, the interest on the Obligations will be exempt
from federal income taxation. The Bond Purchase Contract will also require the delivery of
an opinion of the Texas Attorney General approving the Obligations, as is required by State
law. We will review the Issuer's representations and agreements in the Bond Purchase
Contract to ensure that it is appropriate for the Issuer to make the representations and
agreements of the nature contained in the Purchase Contract. However, if there are any
unusual financial or legal circumstances affecting the Issuer that would make the covenants,
representations or statements made by the Issuer in the Bond Purchase Contract untrue, you
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should let the Underwriter, your financial advisor and/or the undersigned know about them
as soon as possible.
(4) The Underwriter will offer the Obligations into the public debt markets prior to the time that
the Town Council meets to accept the Underwriter's offer for the Obligations. Through this
process, the Obligations will be "priced" – i.e., interest rates and premiums or discounts, if
any, for the Obligations will be established. On the Sale Date, the Town Council will
consider the terms offered to the Issuer by the Underwriter based upon the market conditions
and other factors that determine interest rates and pricing information. In connection with
the offering of the Obligations, the Town Council will approve an offering document called
an "Official Statement" that contains financial and operating data concerning the Issuer, and
information that describes the Obligations. The Issuer is responsible for the information that
is contained in the Official Statement to the extent that it describes the Obligations and the
Issuer. Some information in the Official Statement has been prepared by others, including
the bond insurer, if any, and the Underwriter, and the Issuer is not responsible for that
information. As your Bond Counsel, we have reviewed the Official Statement to ensure that
the information describing the Obligations and the Ordinance are correct. As Bond Counsel
we do not review other areas of the Official Statement. If you know of any information that
an investor would consider to be material in order to make an investment decision, and that
information is omitted from, or incorrect in, the Official Statement, the Underwriter needs
to know, so that it can correct the Official Statement.
B. SCOPE OF ENGAGEMENT
In this engagement, we have performed, or expect to perform, the following duties:
(1) Subject to the completion of proceedings to our satisfaction, render our legal opinion
(the "Bond Opinion"), regarding the validity and binding effect of the Obligations,
the source of payment and security for the Obligations, and the excludability of
interest on the Obligations from gross income for federal income tax purposes.
(2) Prepare and review documents necessary or appropriate to the authorization,
issuance and delivery of the Obligations, coordinate the authorization and execution
of such documents, and review enabling legislation.
(3) Assist the Issuer in seeking from other governmental authorities such approvals,
permissions and exemptions as we determine are necessary or appropriate in
connection with the authorization, issuance and delivery of the Obligations, except
that we will not be responsible for any required federal or state securities law filings.
In this connection, we particularly undertake to assist the Issuer in having the
Obligations approved by the Public Finance Division of the Office of the Texas
Attorney General, and, following such approval, registered by the Texas Comptroller
of Public Accounts.
(4) Review legal issues relating to the structure of the Obligation issue.
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(5) Review those sections of the Official Statement to be disseminated in connection
with the sale of the Obligations which describe the Obligations, the Ordinance
pursuant to which they will be issued and the tax-exempt treatment of the interest on
the Obligations for purposes of federal income taxation.
(6) If requested, assist the Issuer in presenting information to bond rating organizations
and bond insurers relating to legal issues affecting the issuance of the Obligations.
(7) Draft the continuing disclosure undertaking of the Issuer.
Our Bond Opinion will be delivered by us on the date the Obligations are exchanged for their
purchase price (the "Closing"). The Issuer will be entitled to rely on our Bond Opinion.
The Bond Opinion will be based on facts and law existing as of its date. In rendering our
Bond Opinion, we will rely upon the certified proceedings and other certifications of public officials
and other persons furnished to us without undertaking to verify the same by independent
investigation, and we will assume continuing compliance by the Issuer with applicable laws relating
to the Obligations. During the course of this engagement, we will rely on you to provide us with
complete and timely information on all developments pertaining to any aspect of the Obligations and
their security. We understand that you will direct members of your staff and other employees of the
Issuer to cooperate with us in this regard.
Our duties in this engagement are limited to those expressly set forth above. Unless we are
separately engaged in writing to perform other services, our duties do not include any other services,
including the following:
(1) Except as described in sections A and B above, assisting in the preparation or review
of an official statement or any other disclosure document with respect to the
Obligations, assisting in the preparation of, or opining on, a continuing disclosure
undertaking pertaining to the Obligations or, after Closing, providing advice
concerning any actions necessary to assure compliance with any continuing
disclosure undertaking, or, in connection with the issuance of the Obligations,
performing an independent investigation to determine the accuracy, completeness or
sufficiency of any such document or rendering advice that the official statement or
other disclosure document does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
(2) Preparing requests for tax rulings from the Internal Revenue Service, or no action
letters from the Securities and Exchange Commission.
(3) Preparing state securities law memoranda or investment surveys with respect to the
Obligations.
(4) Drafting state constitutional or legislative amendments.
(5) Pursuing test cases or other litigation.
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(6) Making an investigation or expressing any view as to the creditworthiness of the
Issuer or the Obligations.
(7) Representing the Issuer in Internal Revenue Service examinations or inquiries, or
Securities and Exchange Commission investigations.
(8) After Closing, providing continuing advice to the Issuer or any other party
concerning any actions necessary to assure that interest paid on the Obligations will
continue to be excludable from gross income for federal income tax purposes (e.g.,
our engagement does not include rebate calculations for the Obligations).
(9) Negotiating the terms of, or opining as to, any investment contract.
(10) Addressing any other matter not specifically set forth above that is not required to
render our Bond Opinion.
ATTORNEY-CLIENT RELATIONSHIP
Upon execution of this engagement letter, the Issuer will be our client and an attorney-client
relationship will exist between us. We further assume that all other parties in this transaction
understand that we represent only the Issuer in this transaction, we are not counsel to any other
party, and we are not acting as an intermediary among the parties. Our services as bond counsel are
limited to those contracted for in this letter; the Issuer's execution of this engagement letter will
constitute an acknowledgment of those limitations. Our representation of the Issuer will not affect,
however, our responsibility to render an objective Bond Opinion.
Our representation of the Issuer and the attorney-client relationship created by this
engagement letter will be concluded upon issuance of the Obligations. Nevertheless, subsequent to
Closing, we will mail the appropriate Internal Revenue Service Form 8038, prepare and distribute
to the participants in the transaction a transcript of the proceedings pertaining to the Obligations.
CONFLICTS
As you are aware, our firm represents many political subdivisions and investment banking
firms, among others, who do business with political subdivisions. It is possible that during the time
that we are representing the Issuer, one or more of our present or future clients will have transactions
with the Issuer. It is also possible that we may be asked to represent, in an unrelated matter, one or
more of the entities involved in the issuance of the Obligations, including the Underwriter and the
Issuer's financial advisor. We do not believe such representation, if it occurs, will adversely affect
our ability to represent you as provided in this letter, either because such matters will be sufficiently
different from the issuance of the Obligations so as to make such representations not adverse to our
representation of you, or because the potential for such adversity is remote or minor and outweighed
by the consideration that it is unlikely that advice given to the other client will be relevant to any
aspect of the issuance of the Obligations. Execution of this letter will signify the Issuer's consent
to our representation of others consistent with the circumstances described in this paragraph.
FEES
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Based upon: (i) the terms, structure, size and schedule of the financing represented by the
Obligations; (ii) the duties we will undertake pursuant to this engagement letter; (iii) the time we
anticipate devoting to the financing; and (iv) the responsibilities we will assume in connection
therewith, our fee will be $6,000 for the first $1,000,000 in net proceeds of each series of the
Obligations, plus $1 per $1,000 of net proceeds of each series of the Obligations for all such
amounts above $1,000,000. Net proceeds include any net original issue premium, less the amount
of the purchaser's discount, plus the principal amount of the Obligations (accrued interest is
excluded from net proceeds). The fee includes our services rendered as Bond Counsel, but does not
include client charges made or incurred on your behalf, such as travel costs, photocopying,
deliveries, long distance telephone charges, telecopier charges, computer-assisted research and other
expenses. Our fee will be billed after the Closing. If the financing is not consummated, we
understand and agree that we will not be paid. In accordance with the terms of the Ordinance, the
Issuer will provide the filing fee of the Texas Attorney General to Bond Counsel on a timely basis
to permit the filing of the transcript of proceedings for the Obligations so that the Obligations may
be approved by the Attorney General in time to meet the closing date set forth in the Official
Statement.
RECORDS
At your request, papers and property furnished by you will be returned promptly upon receipt
of payment for outstanding fees and client charges. Our own files, including lawyer work product,
pertaining to the transaction will be retained by us. For various reasons, including the minimization
of unnecessary storage expenses, we reserve the right to dispose of any documents or other materials
retained by us after the termination of this engagement.
If the foregoing terms are acceptable to you, please so indicate by returning the enclosed
copy of this engagement letter dated and signed by an authorized officer, retaining the original for
your files. We look forward to working with you.
Respectfully yours,
Accepted and Approved
Town of Prosper, Texas
By:
Its: Mayor
Date: June 25, 2013
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Page 1 of 2
To: Mayor and Town Council
From: Harlan Jefferson, Town Manager
Re: Town Council Meeting – June 25, 2013
Agenda Item:
Consider and act upon all matters incident and related to the issuance and sale of the Town of
Prosper, Texas, Combination Tax and Surplus Revenue Certificates of Obligation, Series 2013,
including the adoption of Ordinance No. 13-43 authorizing the issuance of such Certificates,
approving an Official Statement, a Bond Purchase Agreement, a Paying Agent/Registrar
Agreement, and an engagement letter of Bond Counsel.
Description of Agenda Item:
On May 14, 2013, the Town Council approved a resolution directing staff to publish notice of the
Town’s intent to issue Town of Prosper Combination Tax and Surplus Revenue Certificates of
Obligation to fund the construction of water system improvements in an amount not to exceed
$5.5 million. This issuance was anticipated to complete work in progress on the pump station
expansion and second water line projects.
Last summer, the Town Council discussed plans to issue debt to facilitate approximately $9.1
million in water projects, $1.03 million in stormwater drainage projects, and possibly $550,000 to
reimburse the Town for the purchase of a replacement fire engine. Series 2012 Certificates of
Obligations (“2012 CO”) were issued generating the full $1.03 million for storm drainage projects
and $4.95 million in water projects. No debt was issued for the replacement fire engine, and
staff is recommending it be solely funded from the General Fund. With the 2012 CO proceeds
for water, the projects began construction, but require additional funding to complete.
The Certificates will be priced earlier in the day on June 25, 2013; therefore, the final pricing and
cost savings will be presented during the Council meeting. The Town’s Financial Advisor,
Jason Hughes will be present at the June 25, 2013, Town Council meeting to discuss the
issuance and/or answer any questions that may arise.
Budget Impact:
If the Certificates of Obligation are approved, the preliminary schedule calls for principal and
interest payments in 2014 of approximately $400,000 from the Water/Wastewater Fund. The
timing and amount will vary slightly depending on the final schedule and actual interest rate the
Town receives.
Legal Obligations and Review:
Dan Culver, with McCall, Parkhurst & Horton L.L.P., serves as the Town’s Bond Counsel and
has written the ordinance and made comment to the official statement.
Prosper is a place where everyone matters.
ADMINISTRATION
Item 8
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Attached Documents:
1. Timetable for Series 2013 Bonds
2. Draft Ordinance – final terms will be set once pricing is confirmed the day of this meeting
3. Preliminary Official Statement
4. Bond Purchase Agreement
5. Paying Agent/Registrar Agreement
6. Bond Counsel Engagement Letter
Town Staff Recommendation:
Staff recommends that the Town Council approve this item.
Proposed Motion: I move to act upon all matters incident and related to the issuance and sale
of the Town of Prosper, Texas, Combination Tax and Surplus Revenue Certificates of
Obligation, Series 2013, including the adoption of Ordinance No. 13-43 authorizing the issuance
of such Certificates, approving an Official Statement, a Bond Purchase Agreement, a Paying
Agent/Registrar Agreement, and an engagement letter of Bond Counsel.
Item 8
Apr-13 May-13 Jun-13 Jul-13
SMTWTFS SMTWTFS SMTWTFS SMTWTFS
123456 1234 1 123456
78910111213 567891011 2345678 78910111213
14 15 16 17 18 19 20 12 13 14 15 16 17 18 9 10 11 12 13 14 15 14 15 16 17 18 19 20
21 22 23 24 25 26 27 19 20 21 22 23 24 25 16 17 18 19 20 21 22 21 22 23 24 25 26 27
28 29 30 26 27 28 29 30 31 23 24 25 26 27 28 29 28 29 30 31
30
Complete
By Day Event
26-Apr-13 Friday First Southwest requests information for preparation
of the Official Statement
14-May-13 Tuesday Town Council meeting to approve publication of the Notice of
Intent for the Certificates
16-May-13 Thursday First Southwest receives requested information.
First Southwest begins preparation of the Official Statement
21-May-13 Tuesday Draft Official Statement distributed to the Town and
Bond Counsel
22-May-13 Wednesday 1st Notice of Intent published for Certificates
28-May-13 Tuesday First Southwest receives comments on Official Statement
29-May-13 Wednesday 2nd Notice of Intent published for Certificates
30-May-13 Friday Distribute POS to Rating Agency
Rating Conference Call/Meeting
17-Jun-13 Monday Receive Rating
18-Jun-13 Tuesday Electronically mail Official Statement to Potential Purchasers
25-Jun-13 Tuesday Pricing
25-Jun-13 Tuesday Town Council passes Ordinance authorizing issuance
of the Bonds and Certificates
25-Jul-13 Thursday Closing and Delivery of Funds to the Town
Week of 6/3 - 6/7
Town of Prosper, TX
General Obligation Refunding Bonds, Series 2013
4/25/2013
Acct # 0643-011
Preliminary Schedule of Events
Combination Tax & Revenue Certificates of Obligation, Series 2013
Item 8
ORDINANCE
OF THE TOWN OF PROSPER, TEXAS
AUTHORIZING THE ISSUANCE OF
TOWN OF PROSPER, TEXAS
COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2013
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TABLE OF CONTENTS
Section 1. Recitals, Amount and Purpose of the Certificates ............................1
Section 2. Designation, Date, Denominations, Numbers, Maturities of Certificates and
Interest Rates ...........................................................1
Section 3. Characteristics of the Certificates ........................................2
Section 4. Form of Certificates...................................................6
Section 5. Interest and Sinking Fund .............................................12
Section 6. Surplus Revenues....................................................13
Section 7. Defeasance of Certificates.............................................13
Section 8. Damaged, Mutilated, Lost, Stolen, or Destroyed Certificates ..................14
Section 9. Custody, Approval, and Registration of Certificates; Bond Counsel's Opinion
and Engagement; Attorney General Filing Fee; CUSIP Numbers; Other Procedures . . 15
Section 10. Covenants Regarding Tax Exemption of Interest on the Certificates ...........16
Section 11. Sale of Certificates; Approval of Official Statement; Application of
Premium..............................................................18
Section 12. Allocation of Certificate Proceeds ......................................19
Section 13. Disposition of Project................................................19
Section 14. Interest Earnings on Certificate Proceeds ................................20
Section 15. Construction Fund ..................................................20
Section 16. Compliance with Rule 15c2-12 ........................................20
Section 17. Method of Amendment ..............................................23
Section 18. Continued Perfection of Security Interest ................................24
Section 19. Inconsistent Provisions ..............................................25
Section 20. Governing Law ....................................................25
Section 21. Severability .......................................................25
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Section 22. Events of Default ...................................................25
Section 23. Remedies for Default ................................................25
Section 24. Remedies Not Exclusive .............................................26
Section 25. Effective Date .....................................................26
Exhibit A Continuing Disclosure Information ................................... A-1
Item 8
ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF PROSPER,
TEXAS COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF
OBLIGATION, SERIES 201; LEVYING AN ANNUAL AD VALOREM TAX FOR THE
PAYMENT OF SAID CERTIFICATES AND PROVIDING OTHER SECURITY;
APPROVING AN OFFICIAL STATEMENT AND A PAYING AGENT/REGISTRAR
AGREEMENT; ENGAGING BOND COUNSEL; AND ENACTING OTHER PROVISIONS
RELATING TO THE SUBJECT
THE STATE OF TEXAS §
COLLIN AND DENTON COUNTIES §
TOWN OF PROSPER §
WHEREAS, the Town Council of the Town of Prosper, Texas (the "Issuer") deems it
advisable to issue Certificates of Obligation in the principal amount of $5,550,000 for paying all or
a portion of the Issuer's contractual obligations incurred in connection with extending, constructing
and improving the Issuer's water system, including constructing improvements to pump stations and
extending water lines and paying legal, fiscal, engineering and architectural fees in connection with
these projects; and
WHEREAS, the Certificates of Obligation hereinafter authorized and designated are to be
issued and delivered for cash pursuant to Subchapter C of Chapter 271, Local Government Code and
Chapter 1502, Government Code, as amended; and
WHEREAS, the Town Council has heretofore passed a resolution authorizing and directing
the Town Secretary to give notice of intention to issue Certificates of Obligation; and
WHEREAS, said notice has been duly published in a newspaper of general circulation in the
Issuer, said newspaper being a "newspaper" as defined in §2051.044, Texas Government Code; and
WHEREAS, the Issuer received no petition from the qualified electors of the Issuer
protesting the issuance of such Certificates of Obligation; and
WHEREAS, it is considered to be to the best interest of the Issuer that said interest bearing
Certificates of Obligation be issued.
BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF PROSPER:
Section 1. RECITALS, AMOUNT AND PURPOSE OF THE CERTIFICATES. The
recitals set forth in the preamble hereof are incorporated herein and shall have the same force and
effect as if set forth in this Section. The certificates of the Issuer are hereby authorized to be issued
and delivered in the aggregate principal amount of $5,550,000 for the purpose of paying all or a
portion of the Issuer's contractual obligations incurred in connection with extending, constructing
and improving the Issuer's water system, including constructing improvements to pump stations and
extending water lines and paying legal, fiscal, engineering and architectural fees in connection with
these projects (collectively, the "Project").
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Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, MATURITIES OF
CERTIFICATES AND INTEREST RATES. Each certificate issued pursuant to this Ordinance shall
be designated: "TOWN OF PROSPER, TEXAS, COMBINATION TAX AND SURPLUS
REVENUE CERTIFICATE OF OBLIGATION, SERIES 2013", and initially there shall be issued,
sold, and delivered hereunder one fully registered certificate, without interest coupons, dated June
15, 2013, in the principal amount stated above and in the denominations hereinafter stated,
numbered T-1, with certificates issued in replacement thereof being in the denominations and
principal amounts hereinafter stated and numbered consecutively from R-1 upward, payable to the
respective Registered Owners thereof (with the initial certificate being made payable to the initial
purchaser as described in Section 11 hereof), or to the registered assignee or assignees of said
certificates or any portion or portions thereof (in each case, the "Registered Owner"). The
Certificates shall mature on August 15 in the years and in the principal amounts and interest rates
set forth below, interest on each Certificate accruing on the basis of a 360-day year of twelve 30-day
months from the date of initial delivery of the Certificates to the purchaser thereof or the most recent
interest payment date to which interest has been paid or provided for at the per annum rates of
interest, payable semiannually on February 15 and August 15 of each year until the principal amount
shall have been paid or provision for such payment shall have been made, commencing February
15, 2014, as follows:
Year
Principal
Amount
Interest
Rate Year
Principal
Amount
Interest
Rate
2014 2024
2015 2025
2016 2026
2017 2027
2018 2028
2019 2029
2020 2030
2021 2031
2022 2032
2023 2033
Section 3. CHARACTERISTICS OF THE CERTIFICATES. (a) Registration, Transfer,
Conversion and Exchange; Authentication. The Issuer shall keep or cause to be kept at the corporate
trust office of U.S. Bank National Association, Dallas, Texas, the "Paying Agent/Registrar"), books
or records for the registration of the transfer, conversion and exchange of the Certificates (the
"Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and
transfer agent to keep such books or records and make such registrations of transfers, conversions
and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may
prescribe; and the Paying Agent/Registrar shall make such registrations, transfers, conversions and
exchanges as herein provided. The Paying Agent/Registrar shall obtain and record in the
Registration Books the address of the registered owner of each Certificate to which payments with
respect to the Certificates shall be mailed, as herein provided; but it shall be the duty of each
registered owner to notify the Paying Agent/Registrar in writing of the address to which payments
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shall be mailed, and such interest payments shall not be mailed unless such notice has been given.
The Issuer shall have the right to inspect the Registration Books during regular business hours of
the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration
Books confidential and, unless otherwise required by law, shall not permit their inspection by any
other entity. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and
charges for making such registration, transfer, conversion, exchange and delivery of a substitute
Certificate or Certificates. Registration of assignments, transfers, conversions and exchanges of
Certificates shall be made in the manner provided and with the effect stated in the FORM OF
CERTIFICATE set forth in this Ordinance. Each substitute Certificate shall bear a letter and/or
number to distinguish it from each other Certificate.
Except as provided in Section 3(c) of this Ordinance, an authorized representative of the
Paying Agent/Registrar shall, before the delivery of any such Certificate, date and manually sign
said Certificate, and no such Certificate shall be deemed to be issued or outstanding unless such
Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Certificates
and Certificates surrendered for conversion and exchange. No additional ordinances, orders, or
resolutions need be passed or adopted by the governing body of the Issuer or any other body or
person so as to accomplish the foregoing conversion and exchange of any Certificate or portion
thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the
substitute Certificates in the manner prescribed herein, and said Certificates shall be printed or typed
on paper of customary weight and strength. Pursuant to Chapter 1201, Government Code, and
particularly Subchapter D thereof, the duty of conversion and exchange of Certificates as aforesaid
is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Certificate, the
converted and exchanged Certificate shall be valid, incontestable, and enforceable in the same
manner and with the same effect as the Certificates that initially were issued and delivered pursuant
to this Ordinance, approved by the Attorney General and registered by the Comptroller of Public
Accounts.
(b) Payment of Certificates and Interest. The Issuer hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of and interest on the Certificates,
all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all
payments made by the Issuer and the Paying Agent/Registrar with respect to the Certificates, and
of all conversions and exchanges of Certificates, and all replacements of Certificates, as provided
in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date,
and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record
Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such
interest have been received from the Issuer. Notice of the past due interest shall be sent at least five
(5) business days prior to the Special Record Date by United States mail, first-class postage prepaid,
to the address of each registered owner appearing on the Registration Books at the close of business
on the last business day next preceding the date of mailing of such notice.
(c) In General. The Certificates (i) shall be issued in fully registered form, without
interest coupons, with the principal of and interest on such Certificates to be payable only to the
registered owners thereof, (ii) may be redeemed prior to their scheduled maturities (notice of which
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shall be given to the Paying Agent/Registrar by the Issuer at least 35 days prior to any such
redemption date), (iii) may be converted and exchanged for other Certificates, (iv) may be
transferred and assigned, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and
authenticated, (vii) the principal of and interest on the Certificates shall be payable, and (viii) shall
be administered and the Paying Agent/Registrar and the Issuer shall have certain duties and
responsibilities with respect to the Certificates, all as provided, and in the manner and to the effect
as required or indicated, in the FORM OF CERTIFICATE set forth in this Ordinance. The
Certificate initially issued and delivered pursuant to this Ordinance is not required to be, and shall
not be, authenticated by the Paying Agent/Registrar, but on each substitute Certificate issued in
conversion of and exchange for any Certificate or Certificates issued under this Ordinance the
Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION
CERTIFICATE, in the form set forth in the FORM OF CERTIFICATE.
(d) Book-Entry Only System. The Certificates issued in exchange for the Certificate
initially issued to the initial purchaser specified herein shall be initially issued in the form of a
separate single fully registered Certificate for each of the maturities thereof. Upon initial issuance,
the ownership of each such Certificate shall be registered in the name of Cede & Co., as nominee
of The Depository Trust Company, New York, New York ("DTC"), and except as provided in
subsection (f) hereof, all of the outstanding Certificates shall be registered in the name of Cede &
Co., as nominee of DTC.
With respect to Certificates registered in the name of Cede & Co., as nominee of DTC, the
Issuer and the Paying Agent/Registrar shall have no responsibility or obligation to any securities
brokers and dealers, banks, trust companies, clearing corporations and certain other organizations
on whose behalf DTC was created ("DTC Participant") to hold securities to facilitate the clearance
and settlement of securities transactions among DTC Participants or to any person on behalf of
whom such a DTC Participant holds an interest in the Certificates. Without limiting the immediately
preceding sentence, the Issuer and the Paying Agent/Registrar shall have no responsibility or
obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC
Participant with respect to any ownership interest in the Certificates, (ii) the delivery to any DTC
Participant or any other person, other than a Registered Owner of Certificates, as shown on the
Registration Books, of any notice with respect to the Certificates, or (iii) the payment to any DTC
Participant or any other person, other than a Registered Owner of Certificates, as shown in the
Registration Books of any amount with respect to principal of or interest on the Certificates.
Notwithstanding any other provision of this Ordinance to the contrary, the Issuer and the Paying
Agent/Registrar shall be entitled to treat and consider the person in whose name each Certificate is
registered in the Registration Books as the absolute owner of such Certificate for the purpose of
payment of principal and interest with respect to such Certificate, for the purpose of registering
transfers with respect to such Certificate, and for all other purposes whatsoever. The Paying
Agent/Registrar shall pay all principal of and interest on the Certificates only to or upon the order
of the Registered Owners, as shown in the Registration Books as provided in this Ordinance, or their
respective attorneys duly authorized in writing, and all such payments shall be valid and effective
to fully satisfy and discharge the Issuer's obligations with respect to payment of principal of and
interest on the Certificates to the extent of the sum or sums so paid. No person other than a
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Registered Owner, as shown in the Registration Books, shall receive a Certificate evidencing the
obligation of the Issuer to make payments of principal and interest pursuant to this Ordinance. Upon
delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this
Ordinance with respect to interest checks being mailed to the Registered Owner at the close of
business on the Record date, the words "Cede & Co." in this Ordinance shall refer to such new
nominee of DTC.
(e) Successor Securities Depository; Transfers Outside Book-Entry Only System. In the
event that the Issuer determines that DTC is incapable of discharging its responsibilities described
herein and in the representations letter of the Issuer to DTC or that it is in the best interest of the
beneficial owners of the Certificates that they be able to obtain certificated Certificates, the Issuer
shall (i) appoint a successor securities depository, qualified to act as such under Section 17A of the
Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the
appointment of such successor securities depository and transfer one or more separate Certificates
to such successor securities depository or (ii) notify DTC and DTC Participants of the availability
through DTC of Certificates and transfer one or more separate certificated Certificates to DTC
Participants having Certificates credited to their DTC accounts. In such event, the Certificates shall
no longer be restricted to being registered in the Registration Books in the name of Cede & Co., as
nominee of DTC, but may be registered in the name of the successor securities depository, or its
nominee, or in whatever name or names Registered Owners transferring or exchanging Certificates
shall designate, in accordance with the provisions of this Ordinance.
(f) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to
the contrary, so long as any Certificate is registered in the name of Cede & Co., as nominee of DTC,
all payments with respect to principal of and interest on such Certificate and all notices with respect
to such Certificate shall be made and given, respectively, in the manner provided in the
representations letter of the Issuer to DTC.
(g) Cancellation of Initial Certificate. On the closing date, one initial Certificate
representing the entire principal amount of the Certificates, payable in stated installments to the
purchaser designated in Section 11 or its designee, executed by manual or facsimile signature of the
Mayor (or in the absence thereof, by the Mayor Pro-tem) and Town Secretary of the Issuer,
approved by the Attorney General of Texas, and registered and manually signed by the Comptroller
of Public Accounts of the State of Texas, will be delivered to such purchaser or its designee. Upon
payment for the initial Certificate, the Paying Agent/Registrar shall cancel the initial Certificate and
deliver to the Depository Trust Company on behalf of such purchaser one registered definitive
Certificate for each year of maturity of the Certificates, in the aggregate principal amount of all of
the Certificates for such maturity.
(h) Conditional Notice of Redemption. With respect to any optional redemption of the
Certificates, unless certain prerequisites to such redemption required by this Ordinance have been
met and moneys sufficient to pay the principal of and premium, if any, and interest on the
Certificates to be redeemed shall have been received by the Paying Agent/Registrar prior to the
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giving of such notice of redemption, such notice shall state that said redemption may, at the option
of the Issuer, be conditional upon the satisfaction of such prerequisites and receipt of such moneys
by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon any
prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given
and such prerequisites to the redemption and sufficient moneys are not received, such notice shall
be of no force and effect, the Issuer shall not redeem such Certificates and the Paying
Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the
effect that the Certificates have not been redeemed.
Section 4. FORM OF CERTIFICATES. The form of the Certificates, including the form
of Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form of
Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached
to the Certificates initially issued and delivered pursuant to this Ordinance, shall be, respectively,
substantially as follows, with such appropriate variations, omissions or insertions as are permitted
or required by this Ordinance.
(a) [Form of Certificate]
NO. R- UNITED STATES OF AMERICA
STATE OF TEXAS
TOWN OF PROSPER, TEXAS
COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATE OF OBLIGATION, SERIES 2013
PRINCIPAL
AMOUNT
$
Interest Rate Date of Initial Delivery Maturity Date CUSIP No.
July 25, 2013 August 15,____
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
ON THE MATURITY DATE specified above, the Town of Prosper, in Collin and Denton
Counties, Texas (the "Issuer"), being a political subdivision and municipal corporation of the State
of Texas, hereby promises to pay to the Registered Owner specified above, or registered assigns
(hereinafter called the "Registered Owner"), on the Maturity Date specified above, the Principal
Amount specified above. The Issuer promises to pay interest on the unpaid principal amount hereof
(calculated on the basis of a 360-day year of twelve 30-day months) from the Date of Initial Delivery
set forth above at the Interest Rate per annum specified above. Interest is payable on February 15,
2014 and semiannually on each August 15 and February 15 thereafter to the Maturity Date specified
above, or the date of redemption prior to maturity; except, if this Certificate is required to be
authenticated and the date of its authentication is later than the first Record Date (hereinafter
defined), such Principal Amount shall bear interest from the interest payment date next preceding
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the date of authentication, unless such date of authentication is after any Record Date but on or
before the next following interest payment date, in which case such principal amount shall bear
interest from such next following interest payment date; provided, however, that if on the date of
authentication hereof the interest on the Certificate or Certificates, if any, for which this Certificate
is being exchanged is due but has not been paid, then this Certificate shall bear interest from the date
to which such interest has been paid in full.
THE PRINCIPAL OF AND INTEREST ON this Certificate are payable in lawful money
of the United States of America, without exchange or collection charges. The principal of this
Certificate shall be paid to the registered owner hereof upon presentation and surrender of this
Certificate at maturity, or upon the date fixed for its redemption prior to maturity, at the corporate
trust office of U.S. Bank National Association in Dallas, Texas, which is the "Paying
Agent/Registrar" for this Certificate. The payment of interest on this Certificate shall be made by
the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check
or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and
payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of this
Certificate (the "Certificate Ordinance") to be on deposit with the Paying Agent/Registrar for such
purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar
by United States mail, first-class postage prepaid, on each such interest payment date, to the
registered owner hereof, at its address as it appeared on the last day of the month preceding each
such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as
hereinafter described. In addition, interest may be paid by such other method, acceptable to the
Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. In the
event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new
record date for such interest payment (a "Special Record Date") will be established by the Paying
Agent/Registrar, if and when funds for the payment of such interest have been received from the
Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest
(which shall be 15 days after the Special Record Date) shall be sent at least five business days prior
to the Special Record Date by United States mail, first-class postage prepaid, to the address of each
owner of a Certificate appearing on the Registration Books at the close of business on the last
business day next preceding the date of mailing of such notice.
ANY ACCRUED INTEREST due at maturity or upon the redemption of this Certificate
prior to maturity as provided herein shall be paid to the registered owner upon presentation and
surrender of this Certificate for redemption and payment at the corporate trust office of the Paying
Agent/Registrar. The Issuer covenants with the registered owner of this Certificate that on or before
each principal payment date, interest payment date, and accrued interest payment date for this
Certificate it will make available to the Paying Agent/Registrar, from the "Interest and Sinking
Fund" created by the Certificate Ordinance, the amounts required to provide for the payment, in
immediately available funds, of all principal of and interest on the Certificates, when due.
IF THE DATE for the payment of the principal of or interest on this Certificate shall be a
Saturday, Sunday, a legal holiday or a day on which banking institutions in the city where the
corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive
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order to close, then the date for such payment shall be the next succeeding day that is not such a
Saturday, Sunday, legal holiday or day on which banking institutions are authorized to close; and
payment on such date shall have the same force and effect as if made on the original date payment
was due.
THIS CERTIFICATE is one of a series of Certificates dated June 15, 2013, authorized in
accordance with the Constitution and laws of the State of Texas in the principal amount of
$5,550,000 for the purpose of paying all or a portion of the Issuer's contractual obligations incurred
in connection with extending, constructing and improving the Issuer's water system, including
constructing improvements to pump stations and extending water lines and paying legal, fiscal,
engineering and architectural fees in connection with these projects.
THE CERTIFICATES OF THIS SERIES having stated maturities on and after August 15,
2024 may be redeemed prior to their scheduled maturities, at the option of the Issuer, on August 15,
2023 or on any date thereafter, with funds derived from any available and lawful source, as a whole,
or in part, and, if in part, the particular Certificates, or portions thereof, to be redeemed shall be
selected and designated by the Issuer (provided that a portion of a Certificate may be redeemed only
in an integral multiple of $5,000), at a redemption price equal to the principal amount to be
redeemed plus accrued interest to the date fixed for redemption.
AT LEAST 30 DAYS prior to the date fixed for any redemption of Certificates or portions
thereof prior to maturity a written notice of such redemption shall be sent by the Paying
Agent/Registrar by United States mail, first-class postage prepaid, at least 30 days prior to the date
fixed for any such redemption, to the registered owner of each Certificate to be redeemed at its
address as it appeared on the 45th day prior to such redemption date; provided, however, that the
failure of the registered owner to receive such notice, or any defect therein or in the sending or
mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption
of any Certificate. By the date fixed for any such redemption due provision shall be made with the
Paying Agent/Registrar for the payment of the required redemption price for the Certificates or
portions thereof that are to be so redeemed. If such written notice of redemption is sent and if due
provision for such payment is made, all as provided above, the Certificates or portions thereof that
are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled
maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be
regarded as being outstanding except for the right of the registered owner to receive the redemption
price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of
any Certificate shall be redeemed, a substitute Certificate or Certificates having the same maturity
date, bearing interest at the same rate, in any denomination or denominations in any integral multiple
of $5,000, at the written request of the registered owner, and in aggregate principal amount equal
to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof
for cancellation, at the expense of the Issuer, all as provided in the Certificate Ordinance.
ALL CERTIFICATES OF THIS SERIES are issuable solely as fully registered certificates,
without interest coupons, in the denomination of any integral multiple of $5,000. As provided in
the Certificate Ordinance, this Certificate may, at the request of the registered owner or the assignee
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or assignees hereof, be assigned, transferred, converted into and exchanged for a like aggregate
principal amount of fully registered certificates, without interest coupons, payable to the appropriate
registered owner, assignee or assignees, as the case may be, having the same denomination or
denominations in any integral multiple of $5,000 as requested in writing by the appropriate
registered owner, assignee or assignees, as the case may be, upon surrender of this Certificate to the
Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth
in the Certificate Ordinance. Among other requirements for such assignment and transfer, this
Certificate must be presented and surrendered to the Paying Agent/Registrar, together with proper
instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying
Agent/Registrar, evidencing assignment of this Certificate or any portion or portions hereof in any
integral multiple of $5,000 to the assignee or assignees in whose name or names this Certificate or
any such portion or portions hereof is or are to be registered. The form of Assignment printed or
endorsed on this Certificate may be executed by the registered owner to evidence the assignment
hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the
Paying Agent/Registrar may be used to evidence the assignment of this Certificate or any portion
or portions hereof from time to time by the registered owner. The Paying Agent/Registrar's
reasonable standard or customary fees and charges for assigning, transferring, converting and
exchanging any Certificate or portion thereof will be paid by the Issuer. In any circumstance, any
taxes or governmental charges required to be paid with respect thereto shall be paid by the one
requesting such assignment, transfer, conversion or exchange, as a condition precedent to the
exercise of such privilege. The Paying Agent/Registrar shall not be required to make any such
transfer, conversion, or exchange (i) during the period commencing with the close of business on
any Record Date and ending with the opening of business on the next following principal or interest
payment date, or (ii) with respect to any Certificate or any portion thereof called for redemption
prior to maturity, within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent/Registrar for the Certificates is changed by the Issuer,
resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Certificate Ordinance
that it promptly will appoint a competent and legally qualified substitute therefor, and cause written
notice thereof to be mailed to the registered owners of the Certificates.
IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and
validly authorized, issued and delivered; that all acts, conditions and things required or proper to be
performed, exist and be done precedent to or in the authorization, issuance and delivery of this
Certificate have been performed, existed and been done in accordance with law; that this Certificate
is a general obligation of said Issuer, issued on the full faith and credit thereof; and that annual ad
valorem taxes sufficient to provide for the payment of the interest on and principal of this
Certificate, as such interest comes due and such principal matures, have been levied and ordered to
be levied against all taxable property in said Issuer, and have been pledged for such payment, within
the limit prescribed by law, and that this Certificate is additionally secured by and payable from a
pledge of the revenues of the Issuer's combined Waterworks and Sewer Systems remaining after
payment of all operation and maintenance expenses thereof, and all debt service, reserve and other
requirements in connection with all of the Issuer's revenue obligations (now or hereafter
outstanding) that are payable from all or part of said revenues, all as provided in the Certificate
Ordinance.
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BY BECOMING the registered owner of this Certificate, the registered owner thereby
acknowledges all of the terms and provisions of the Certificate Ordinance, agrees to be bound by
such terms and provisions, acknowledges that the Certificate Ordinance is duly recorded and
available for inspection in the official minutes and records of the governing body of the Issuer, and
agrees that the terms and provisions of this Certificate and the Certificate Ordinance constitute a
contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the
manual or facsimile signature of the Mayor (or in the absence thereof, by the Mayor Pro-tem) of the
Issuer and countersigned with the manual or facsimile signature of the Town Secretary of said
Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on
this Certificate.
(signature) (signature)
Town Secretary Mayor
(SEAL)
(b) [Form of Paying Agent/Registrar's Authentication Certificate]
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Certificate is not accompanied by an
executed Registration Certificate of the Comptroller
of Public Accounts of the State of Texas)
It is hereby certified that this Certificate has been issued under the provisions of the
Certificate Ordinance described in the text of this Certificate; and that this Certificate has been
issued in conversion or replacement of, or in exchange for, a certificate, certificates, or a portion of
a certificate or certificates of a series that originally was approved by the Attorney General of the
State of Texas and registered by the Comptroller of Public Accounts of the State of Texas.
Dated: _______________________________________________
U.S. Bank National Association
Dallas, Texas
Paying Agent/Registrar
By:______________________________
Authorized Representative
(c) [Form of Assignment]
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________.
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Please insert Social Security or Taxpayer Identification Number of Transferee
______________________________________________________________________________
(Please print or typewrite name and address, including zip code, of Transferee.)
______________________________________________________________________________
the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
___________________________________________, attorney, to register the transfer of the within
Certificate on the books kept for registration thereof, with full power of substitution in the premises.
Dated: ___________________________
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed
by an eligible guarantor institution
participating in a securities transfer
association recognized signature guarantee
program.
NOTICE: The signature above must
correspond with the name of the registered
owner as it appears upon the front of this
Certificate in every particular, without
alteration or enlargement or any change
whatsoever.
(d) [Form of Registration Certificate of the Comptroller of Public Accounts]
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Certificate has been examined, certified as to validity and approved
by the Attorney General of the State of Texas, and that this Certificate has been registered by the
Comptroller of Public Accounts of the State of Texas.
Witness my signature and seal this
__________________________________________
Comptroller of Public Accounts of the State of Texas
(COMPTROLLER'S SEAL)
(e) [Initial Certificate Insertions]
(i) The initial Certificate shall be in the form set forth is paragraph (a) of this Section,
except that:
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A. immediately under the name of the Certificate, the headings "Interest Rate"
and "Maturity Date" shall both be completed with the words "As shown below" and
"CUSIP No. _____" shall be deleted.
B. the first paragraph shall be deleted and the following will be inserted:
"THE TOWN OF PROSPER, TEXAS (the "Issuer"), being a political subdivision and
municipal corporation of the State of Texas, hereby promises to pay to the Registered Owner
specified above, or registered assigns (hereinafter called the "Registered Owner"), on August15 in
each of the years, in the principal installments and bearing interest at the per annum rates set forth
in the following schedule:
Years
Principal
Installments
Interest
Rates Years
Principal
Installments
Interest
Rates
2014 2024
2015 2025
2016 2026
2017 2027
2018 2028
2019 2029
2020 2030
2021 2031
2022 2032
2023 2033
The Issuer promises to pay interest on the unpaid principal amount hereof (calculated on the basis
of a 360-day year of twelve 30-day months) from the Date of Initial Delivery set forth above at the
respective Interest Rate per annum specified above. Interest is payable on February 15, 2014 and
semiannually on each August 15 and February 15 and thereafter to the date of payment of the
principal installment specified above, or the date of redemption prior to maturity; except, that if this
Certificate is required to be authenticated and the date of its authentication is later than the first
Record Date (hereinafter defined), such Principal Amount shall bear interest from the interest
payment date next preceding the date of authentication, unless such date of authentication is after
any Record Date but on or before the next following interest payment date, in which case such
principal amount shall bear interest from such next following interest payment date; provided,
however, that if on the date of authentication hereof the interest on the Certificate or Certificates,
if any, for which this Certificate is being exchanged is due but has not been paid, then this
Certificate shall bear interest from the date to which such interest has been paid in full."
C. The Initial Certificate shall be numbered "T-1."
Section 5. INTEREST AND SINKING FUND. A special "Interest and Sinking Fund" is
hereby created and shall be established and maintained by the Issuer at an official depository bank
of the Issuer. Said Interest and Sinking Fund shall be kept separate and apart from all other funds
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and accounts of the Issuer, and shall be used only for paying the interest on and principal of the
Certificates. All amounts received from the sale of the Certificates as accrued interest and ad
valorem taxes levied and collected for and on account of the Certificates shall be deposited, as
collected, to the credit of said Interest and Sinking Fund. During each year while any of the
Certificates are outstanding and unpaid, the governing body of the Issuer shall compute and ascertain
a rate and amount of ad valorem tax that will be sufficient to raise and produce the money required
to pay the interest on the Certificates as such interest comes due, and to provide and maintain a
sinking fund adequate to pay the principal of the Certificates as such principal matures (but never
less than 2% of the original amount of the Certificates as a sinking fund each year); and said tax
shall be based on the latest approved tax rolls of the Issuer, with full allowances being made for tax
delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby
levied, and is hereby ordered to be levied, against all taxable property in the Issuer, for each year
while any of the Certificates are outstanding and unpaid, and said tax shall be assessed and collected
each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad
valorem taxes sufficient to provide for the payment of the interest on and principal of the
Certificates, as such interest comes due and such principal matures, are hereby pledged for such
payment, within the limit prescribed by law.
Section 6. SURPLUS REVENUES. The Certificates are additionally secured by and
payable from a pledge of the revenues of the Issuer's combined Waterworks and Sewer Systems
remaining after payment of all operation and maintenance expenses thereof, and all debt service,
reserve and other requirements in connection with all of the Issuer's revenue obligations (now or
hereafter outstanding) that are payable from all or part of the Net Revenues of the Issuer's
Waterworks and Sewer Systems, constituting "Surplus Revenues." The Issuer shall deposit such
Surplus Revenues to the credit of the Interest and Sinking Fund created pursuant to Section 5, to the
extent necessary to pay the principal and interest on the Certificates. Notwithstanding the
requirements of Section 5, if Surplus Revenues are actually on deposit in the Interest and Sinking
Fund in advance of the time when ad valorem taxes are scheduled to be levied for any year, then the
amount of taxes that otherwise would have been required to be levied pursuant to Section 5 may be
reduced to the extent and by the amount of the Surplus Revenues then on deposit in the Interest and
Sinking Fund. The Issuer reserves the right, without condition or limitation, to issue other
obligations secured in whole or in part by a parity lien on and pledge of the Surplus Revenues, for
any purpose permitted by law.
Section 7. DEFEASANCE OF CERTIFICATES. (a) Any Certificate and the interest
thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Certificate")
within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section
7, when payment of the principal of such Certificate, plus interest thereon to the due date (whether
such due date be by reason of maturity or otherwise) either (i) shall have been made or caused to be
made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due
date by irrevocably depositing with or making available to the Paying Agent/Registrar in accordance
with an escrow agreement or other instrument (the "Future Escrow Agreement") for such payment
(1) lawful money of the United States of America sufficient to make such payment or (2) Defeasance
Securities that mature as to principal and interest in such amounts and at such times as will insure
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the availability, without reinvestment, of sufficient money to provide for such payment, and when
proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment
of its services until all Defeased Certificates shall have become due and payable. At such time as
a Certificate shall be deemed to be a Defeased Certificate hereunder, as aforesaid, such Certificate
and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of,
the ad valorem taxes or revenues herein levied and pledged as provided in this Ordinance, and such
principal and interest shall be payable solely from such money or Defeasance Securities.
Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any
determination not to redeem Defeased Certificates that is made in conjunction with the payment
arrangements specified in subsection 7(a)(i) or (ii) shall not be irrevocable, provided that: (1) in the
proceedings providing for such payment arrangements, the Issuer expressly reserves the right to call
the Defeased Certificates for redemption; (2) gives notice of the reservation of that right to the
owners of the Defeased Certificates immediately following the making of the payment
arrangements; and (3) directs that notice of the reservation be included in any redemption notices
that it authorizes.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written
direction of the Issuer be invested in Defeasance Securities, maturing in the amounts and times as
hereinbefore set forth, and all income from such Defeasance Securities received by the Paying
Agent/Registrar that is not required for the payment of the Certificates and interest thereon, with
respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited
as directed in writing by the Issuer. Any Future Escrow Agreement pursuant to which the money
and/or Defeasance Securities are held for the payment of Defeased Certificates may contain
provisions permitting the investment or reinvestment of such moneys in Defeasance Securities or
the substitution of other Defeasance Securities upon the satisfaction of the requirements specified
in subsection 7(a)(i) or (ii). All income from such Defeasance Securities received by the Paying
Agent/Registrar that is not required for the payment of the Defeased Certificates, with respect to
which such money has been so deposited, shall be remitted to the Issuer or deposited as directed in
writing by the Issuer.
(c) The term "Defeasance Securities" means any securities and obligations now or
hereafter authorized by Texas law that are eligible to refund, defease or otherwise discharge
obligations such as the Certificates.
(d) Until all Defeased Certificates shall have become due and payable, the Paying
Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Certificates
the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide
and pay for such services as required by this Ordinance.
(e) In the event that the Issuer elects to defease less than all of the principal amount of
Certificates of a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such
amount of Certificates by such random method as it deems fair and appropriate.
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Section 8. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
CERTIFICATES.
(a) Replacement Certificates. In the event any outstanding Certificate is damaged,
mutilated, lost, stolen or destroyed, the Paying Agent/Registrar shall cause to be printed, executed
and delivered, a new certificate of the same principal amount, maturity and interest rate, as the
damaged, mutilated, lost, stolen or destroyed Certificate, in replacement for such Certificate in the
manner hereinafter provided.
(b) Application for Replacement Certificates. Application for replacement of damaged,
mutilated, lost, stolen or destroyed Certificates shall be made by the registered owner thereof to the
Paying Agent/Registrar. In every case of loss, theft or destruction of a Certificate, the registered
owner applying for a replacement certificate shall furnish to the Issuer and to the Paying
Agent/Registrar such security or indemnity as may be required by them to save each of them
harmless from any loss or damage with respect thereto. Also, in every case of loss, theft or
destruction of a Certificate, the registered owner shall furnish to the Issuer and to the Paying
Agent/Registrar evidence to their satisfaction of the loss, theft or destruction of such Certificate, as
the case may be. In every case of damage or mutilation of a Certificate, the registered owner shall
surrender to the Paying Agent/Registrar for cancellation the Certificate so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in
the event any such Certificate shall have matured, and no default has occurred that is then continuing
in the payment of the principal of, redemption premium, if any, or interest on the Certificate, the
Issuer may authorize the payment of the same (without surrender thereof except in the case of a
damaged or mutilated Certificate) instead of issuing a replacement Certificate, provided security or
indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Certificates. Prior to the issuance of any
replacement certificate, the Paying Agent/Registrar shall charge the registered owner of such
Certificate with all legal, printing, and other expenses in connection therewith. Every replacement
certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate
is lost, stolen or destroyed shall constitute a contractual obligation of the Issuer whether or not the
lost, stolen or destroyed Certificate shall be found at any time, or be enforceable by anyone, and
shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all
other Certificates duly issued under this Ordinance.
(e) Authority for Issuing Replacement Certificates. In accordance with Subchapter D
of Chapter 1201, Government Code, this Section 8 of this Ordinance shall constitute authority for
the issuance of any such replacement certificate without necessity of further action by the governing
body of the Issuer or any other body or person, and the duty of the replacement of such certificates
is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar
shall authenticate and deliver such Certificates in the form and manner and with the effect, as
provided in Section 3(a) of this Ordinance for Certificates issued in conversion and exchange for
other Certificates.
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Section 9. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES; BOND
COUNSEL'S OPINION AND ENGAGEMENT; ATTORNEY GENERAL FILING FEE; CUSIP
NUMBERS; OTHER PROCEDURES. (a) The Mayor of the Issuer is hereby authorized to have
control of the Certificates initially issued and delivered hereunder and all necessary records and
proceedings pertaining to the Certificates pending their delivery and their investigation,
examination, and approval by the Attorney General of the State of Texas, and their registration by
the Comptroller of Public Accounts of the State of Texas. Upon registration of the Certificates said
Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall
manually sign the Comptroller's Registration Certificate attached to such Certificates, and the seal
of said Comptroller shall be impressed, or placed in facsimile, on such Certificate. The approving
legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of
the Issuer, be printed on the Certificates issued and delivered under this Ordinance, but neither shall
have any legal effect, and shall be solely for the convenience and information of the registered
owners of the Certificates.
(b) The Mayor, Town Manager, Finance Director and Town Secretary and all other officers,
employees and agents of the Issuer, and each of them, shall be and they are hereby expressly
authorized, empowered and directed from time to time and at any time to do and perform all such
acts and things and to execute, acknowledge and deliver in the name and on behalf of the Issuer a
Paying Agent/Registrar Agreement with the Paying Agent/Registrar and all other instruments,
whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms
and provisions of this Ordinance, the Certificates, the sale of the Certificates and the Official
Statement relating to the Certificates. In case any officer whose signature shall appear on any Bond
shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be
valid and sufficient for all purposes the same as if such officer had remained in office until such
delivery.
(c) The obligation of the initial purchaser to accept delivery of the Certificates is subject
to the initial purchaser being furnished with the final, approving opinion of McCall, Parkhurst &
Horton L.L.P., bond counsel to the Issuer, which opinion shall be dated as of and delivered on the
date of initial delivery of the Certificates to the initial purchaser. The engagement of such firm as
bond counsel to the Issuer in connection with issuance, sale and delivery of the Certificates is hereby
approved and confirmed. The execution and delivery of an engagement letter between the Issuer
and such firm, with respect to such services as bond counsel, is hereby authorized in such form as
may be approved by the Mayor of the Issuer and the Mayor is hereby authorized to execute such
engagement letter.
(d) In accordance with the provisions of Section 1202.004, Tex. Gov't Code Ann., in
connection with the submission of the Certificates by the Attorney General of Texas for review and
approval, a statutory fee (an amount equal to 0.1% principal amount of the Certificates, subject to
a minimum of $750 and a maximum of $9,500) is required to be paid to the Attorney General upon
the submission of the transcript of proceedings for the Certificates. The Issuer hereby authorizes
and directs that a check in the amount of the Attorney General filing fee for the Certificates, made
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payable to the "Texas Attorney General," be promptly furnished to the Issuer's Bond Counsel, for
payment to the Attorney General in connection with his review of the Certificates.
Section 10. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE
CERTIFICATES. The Issuer covenants to take any action necessary to assure, or refrain from any
action that would adversely affect, the treatment of the Certificates as Obligation described in
section 103 of the Code, the interest on which is not includable in the "gross income" of the holder
for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of
the Certificates (less amounts deposited to a reserve fund, if any) are used for any "private
business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the
proceeds or the projects financed therewith are so used, such amounts, whether or not
received by the Issuer, with respect to such private business use, do not, under the terms of
this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for
the payment of more than 10 percent of the debt service on the Certificates, in contravention
of section 141(b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use"
described in subsection (a) hereof exceeds 5 percent of the proceeds of the Certificates or
the projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" that is "related" and not
"disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental
use;
(c) to take any action to assure that no amount that is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Certificates (less amounts deposited into a
reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state
or local governmental units, in contravention of section 141(c) of the Code;
(d) to refrain from taking any action that would otherwise result in the
Certificates being treated as "private activity bonds" within the meaning of section 141(b)
of the Code;
(e) to refrain from taking any action that would result in the Certificates being
"federally guaranteed" within the meaning of section 149(b) of the Code;
(f) to refrain from using any portion of the proceeds of the Certificates, directly
or indirectly, to acquire or to replace funds that were used, directly or indirectly, to acquire
investment property (as defined in section 148(b)(2) of the Code) that produces a materially
higher yield over the term of the Certificates, other than investment property acquired with
–
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(1) proceeds of the Certificates invested for a reasonable temporary
period of 3 years or less or, in the case of a refunding bond, for a period of 30 days
or less until such proceeds are needed for the purpose for which the bonds are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning
of section 1.148-1(b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of the
Certificates;
(g) to otherwise restrict the use of the proceeds of the Certificates or amounts
treated as proceeds of the Certificates, as may be necessary, so that the Certificates do not
otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and,
to the extent applicable, section 149(d) of the Code (relating to advance refundings); and
(h) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Certificates) an amount that is at least equal
to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and
to pay to the United States of America, not later than 60 days after the Certificates have been
paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings
under section 148(f) of the Code.
In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby
established by the Issuer for the sole benefit of the United States of America, and such Fund shall
not be subject to the claim of any other person, including without limitation the certificateholders.
The Rebate Fund is established for the additional purpose of compliance with section 148 of the
Code.
For purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds"
includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding
bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date
of issuance of the Certificates. It is the understanding of the Issuer that the covenants contained
herein are intended to assure compliance with the Code and any regulations or rulings promulgated
by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are
hereafter promulgated that modify or expand provisions of the Code, as applicable to the
Certificates, the Issuer will not be required to comply with any covenant contained herein to the
extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not
adversely affect the exemption from federal income taxation of interest on the Certificates under
section 103 of the Code. In the event that regulations or rulings are hereafter promulgated that
impose additional requirements applicable to the Certificates, the Issuer agrees to comply with the
additional requirements to the extent necessary, in the opinion of nationally recognized bond
counsel, to preserve the exemption from federal income taxation of interest on the Certificates under
section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs
the Mayor to execute any documents, certificates or reports required by the Code and to make such
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elections, on behalf of the Issuer, that may be permitted by the Code as are consistent with the
purpose for the issuance of the Certificates.
Section 11. SALE OF CERTIFICATES; APPROVAL OF OFFICIAL STATEMENT;
APPLICATION OF PREMIUM. (a) The Certificates are hereby initially sold and shall be
delivered to _______________ (the "Underwriters") for cash at a price set forth below, pursuant to
the terms and provisions of a Purchase Contract that the Mayor of the Issuer is hereby authorized
to execute and deliver. The Certificates shall initially be registered in the name of "__________".
The Certificates are sold to the Underwriters at a price of $___________ (representing the par
amount of the Certificates, plus an aggregate original issue premium of $___________, less
Underwriter's discount on the Certificates of $___________). The net original issue premium shall
be applied to pay a portion of the Underwriter's discount. It is hereby officially found, determined,
and declared that the terms of this sale are the most advantageous reasonably obtainable.
(b) Excess proceeds from the sale of the Certificates in the amount of $______ shall be
deposited to the Interest and Sinking Fund. Proceeds of the sale of the Certificates (i) in the amount
of $___________ shall be deposited to the construction fund of the Issuer to be used for the
construction of the Project financed with the Certificates and (ii) in the amount of $_______ shall
be applied to pay the costs of issuance of the Certificates.
(c) The Issuer hereby approves the form and content of the Official Statement relating to the
Certificates and any addenda, supplement or amendment thereto, and approves the distribution of
such Official Statement in the reoffering of the Certificates by the Underwriter in final form, with
such changes therein or additions thereto as the officer executing the same may deem advisable,
such determination to be conclusively evidenced by his execution thereof. The distribution and use
of the Preliminary Official Statement dated June __, 2013 prior to the date hereof is hereby ratified
and confirmed.
Section 12. ALLOCATION OF CERTIFICATE PROCEEDS. The Issuer covenants to
account for the expenditure of sale proceeds and investment earnings to be used for the construction
and acquisition of the Project on its books and records by allocating proceeds to expenditures within
18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed.
The foregoing notwithstanding, the Issuer shall not expend proceeds of the sale of the Certificates
or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the
delivery of the Certificates, or (2) the date the Certificates are retired, unless the Issuer obtains an
opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the
status, for federal income tax purposes, of the Certificates or the interest thereon. For purposes
hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that
such failure to comply will not adversely affect the excludability for federal income tax purposes
from gross income of the interest.
Section 13. DISPOSITION OF PROJECT. The Issuer covenants that the Project will not
be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other
compensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such
Item 8
20
sale or other disposition will not adversely affect the tax-exempt status of the Certificates. For
purposes of the foregoing, the portion of the property comprising personal property and disposed
in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other
compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant
if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for
federal income tax proposes from gross income of the interest.
Section 14. INTEREST EARNINGS ON CERTIFICATE PROCEEDS. Interest earnings
derived from the investment of proceeds from the sale of the Certificates shall be used along with
other certificate proceeds for the Project; provided that after completion of such purpose, if any of
such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and
Sinking Fund. It is further provided, however, that any interest earnings on certificate proceeds that
are required to be rebated to the United States of America pursuant to Section 10 hereof in order to
prevent the Certificates from being arbitrage bonds shall be so rebated and not considered as interest
earnings for the purposes of this Section.
Section 15. CONSTRUCTION FUND. The Issuer hereby creates and establishes and shall
maintain on the books of the Issuer a separate fund to be entitled the "Series 2013 Combination Tax
and Surplus Revenue Certificate of Obligation Construction Fund" for use by the Issuer for payment
of all lawful costs associated with the acquisition and construction of the Project as hereinbefore
provided. Upon payment of all such costs, any moneys remaining on deposit in said Fund shall be
transferred to the Interest and Sinking Fund. Amounts so deposited to the Interest and Sinking Fund
shall be used in the manner described in Section 5 of this Ordinance.
Section 16. COMPLIANCE WITH RULE 15c2-12.
(a) Definitions. As used in this Section, the following terms have the meanings ascribed to
such terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
(b) Annual Reports. (i) The Issuer shall provide annually to the MSRB, in the electronic
format prescribed by the MSRB, within six months after the end of each fiscal year commencing in
2013, financial information and operating data with respect to the Issuer of the general type included
in the final Official Statement authorized by this Ordinance, being the information described in
Exhibit A attached hereto. Any financial statements so to be provided shall be (1) prepared in
accordance with the accounting principles described in the financial statements of the Issuer
appended to the Official Statement, or such other accounting principles as the Issuer may be required
to employ from time to time pursuant to state law or regulation, and (2) audited, if the Issuer
commissions an audit of such statements and the audit is completed within the period during which
Item 8
21
they must be provided. If the audit of such financial statements is not completed within such period,
then the Issuer shall provide unaudited financial information within such period, and audited
financial statements for the applicable fiscal year to the MSRB, when and if the audit report on such
statements become available.
(ii) If the Issuer changes its fiscal year, it will notify the MSRB of the change (and of the
date of the new fiscal year end) prior to the next date by which the Issuer otherwise would be
required to provide financial information and operating data pursuant to this Section. The financial
information and operating data to be provided pursuant to this Section may be set forth in full in one
or more documents or may be included by specific reference to any documents available to the
public on the MSRB's internet website or filed with the SEC.
(c) Event Notices. The Issuer shall notify the MSRB, in a timely manner not in excess of
ten Business Days after the occurrence of the event, of any of the following events with respect to
the Certificates:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or
final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB)
or other material notices or determinations with respect to the tax status of the
Certificates, or other material events affecting the tax status of the Certificates;
7. Modifications to rights of holders of the Certificates, if material;
8. Certificate calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Certificates, if
material;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the Issuer;
13. The consummation of a merger, consolidation, or acquisition involving the Issuer or
the sale of all or substantially all of the assets of the Issuer, other than in the ordinary
course of business, the entry into a definitive agreement to undertake such an action
or the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms, if material; and
14. Appointment of a successor Paying Agent/Registrar or change in the name of the
Paying Agent/Registrar, if material.
The Issuer shall notify the MSRB, in a timely manner, of any failure by the Issuer to provide
financial information or operating data in accordance with subsection (c) of this Section by the time
required by subsection (c). As used in clause (c)12 above, the phrase "bankruptcy, insolvency,
receivership or similar event" means the appointment of a receiver, fiscal agent or similar officer
Item 8
22
for the Issuer in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state
or federal law in which a court of governmental authority has assumed jurisdiction over substantially
all of the assets or business of the Issuer, or if jurisdiction has been assumed by leaving the Board
and officials or officers of the Issuer in possession but subject to the supervision and orders of a
court or governmental authority, or the entry of an order confirming a plan of reorganization,
arrangement or liquidation by a court or governmental authority having supervision or jurisdiction
over substantially all of the assets or business of the Issuer.
(d) Limitations, Disclaimers, and Amendments. (i) The Issuer shall be obligated to observe
and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer
remains an "obligated person" with respect to the Certificates within the meaning of the Rule, except
that the Issuer in any event will give notice of any deposit made in accordance with this Ordinance
or applicable law that causes the Certificates no longer to be outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Certificates, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Issuer
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly provided
herein. The Issuer does not make any representation or warranty concerning such information or
its usefulness to a decision to invest in or sell Certificates at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART
FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON
ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF
ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR
SPECIFIC PERFORMANCE.
(iv) No default by the Issuer in observing or performing its obligations under this Section
shall comprise a breach of or default under the Ordinance for purposes of any other provision of this
Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the Issuer under federal and state securities laws.
(v) The provisions of this Section may be amended by the Issuer from time to time to adapt
to changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the Issuer, but only if (1) the provisions
of this Section, as so amended, would have permitted an underwriter to purchase or sell Certificates
in the primary offering of the Certificates in compliance with the Rule, taking into account any
Item 8
23
amendments or interpretations of the Rule since such offering as well as such changed circumstances
and (2) either (a) the registered owners of a majority in aggregate principal amount (or any greater
amount required by any other provision of this Ordinance that authorizes such an amendment) of
the outstanding Certificates consent to such amendment or (b) a person that is unaffiliated with the
Issuer (such as nationally recognized bond counsel) determined that such amendment will not
materially impair the interest of the registered owners and beneficial owners of the Certificates. If
the Issuer so amends the provisions of this Section, it shall include with any amended financial
information or operating data next provided in accordance with subsection (b) of this Section an
explanation, in narrative form, of the reason for the amendment and of the impact of any change in
the type of financial information or operating data so provided. The Issuer may also amend or repeal
the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable
provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule
are invalid, but only if and to the extent that the provisions of this sentence would not prevent an
underwriter from lawfully purchasing or selling Certificates in the primary offering of the
Certificates.
Section 17. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend
this Ordinance subject to the following terms and conditions, to-wit:
(a) The Issuer may from time to time, without the consent of any holder, except as
otherwise required by paragraph (b) below, amend or supplement this Ordinance in order to (i) cure
any ambiguity, defect or omission in this Ordinance that does not materially adversely affect the
interests of the holders, (ii) grant additional rights or security for the benefit of the holders, (iii) add
events of default as shall not be inconsistent with the provisions of this Ordinance and which shall
not materially adversely affect the interests of the holders, (v) qualify this Ordinance under the Trust
Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time
in effect, or (iv) make such other provisions in regard to matters or questions arising under this
Ordinance as shall not be inconsistent with the provisions of this Ordinance and which shall not in
the opinion of the Issuer's Bond Counsel materially adversely affect the interests of the holders.
(b) Except as provided in paragraph (a) above, the holders of Certificates aggregating
in principal amount 51% of the aggregate principal amount of then outstanding Certificates which
are the subject of a proposed amendment shall have the right from time to time to approve any
amendment hereto which may be deemed necessary or desirable by the Issuer; provided, however,
that without the consent of 100% of the holders in aggregate principal amount of the then
outstanding Certificates, nothing herein contained shall permit or be construed to permit amendment
of the terms and conditions of this Ordinance or in any of the Certificates so as to:
(1) Make any change in the maturity of any of the outstanding Certificates;
(2) Reduce the rate of interest borne by any of the outstanding Certificates;
(3) Reduce the amount of the principal of, or redemption premium, if any,
payable on any outstanding Certificates;
Item 8
24
(4) Modify the terms of payment of principal or of interest or redemption
premium on outstanding Certificates or any of them or impose any condition with
respect to such payment; or
(5) Change the minimum percentage of the principal amount of any series of
Certificates necessary for consent to such amendment.
(c) If at any time the Issuer shall desire to amend this Ordinance under this Section, the
Issuer shall send by U.S. mail to each registered owner of the affected Certificates a copy of the
proposed amendment and cause notice of the proposed amendment to be published at least once in
a financial publication published in The City of New York, New York or in the State of Texas. Such
published notice shall briefly set forth the nature of the proposed amendment and shall state that a
copy thereof is on file at the office of the Issuer for inspection by all holders of such Certificates.
(d) Whenever at any time within one year from the date of publication of such notice the
Issuer shall receive an instrument or instruments executed by the holders of at least 51% in
aggregate principal amount of all of the Certificates then outstanding which are required for the
amendment, which instrument or instruments shall refer to the proposed amendment and which shall
specifically consent to and approve such amendment, the Issuer may adopt the amendment in
substantially the same form.
(e) Upon the adoption of any amendatory Ordinance pursuant to the provisions of this
Section, this Ordinance shall be deemed to be modified and amended in accordance with such
amendatory Ordinance, and the respective rights, duties, and obligations of the Issuer and all holders
of such affected Certificates shall thereafter be determined, exercised, and enforced, subject in all
respects to such amendment.
(f) Any consent given by the holder of a Certificate pursuant to the provisions of this
Section shall be irrevocable for a period of six months from the date of the publication of the notice
provided for in this Section, and shall be conclusive and binding upon all future holders of the same
Certificate during such period. Such consent may be revoked at any time after six months from the
date of the publication of said notice by the holder who gave such consent, or by a successor in title,
by filing notice with the Issuer, but such revocation shall not be effective if the holders of 51% in
aggregate principal amount of the affected Certificates then outstanding, have, prior to the attempted
revocation, consented to and approved the amendment.
For the purposes of establishing ownership of the Certificates, the Issuer shall rely solely
upon the registration of the ownership of such Certificates on the registration books kept by the
Paying Agent/Registrar.
Section 18. CONTINUED PERFECTION OF SECURITY INTEREST. Chapter 1208,
Government Code, applies to the issuance of the Certificates and the pledge of the ad valorem taxes
granted by the Issuer under Section 5 of this Ordinance and the pledge of the Surplus Revenues
under Section 6 of this Ordinance, and such pledge is therefore valid, effective, and perfected. If
Item 8
25
Texas law is amended at any time while the Certificates are outstanding and unpaid such that the
pledge of the taxes granted by the Issuer under Section 5 of this Ordinance or the pledge of the
Surplus Revenues under Section 6 of this Ordinance is to be subject to the filing requirements of
Chapter 9, Business & Commerce Code, then in order to preserve to the registered owners of the
Certificates the perfection of the security interest in said pledges, the Issuer agrees to take such
measures as it determines are reasonable and necessary under Texas law to comply with the
applicable provisions of Chapter 9, Business & Commerce Code and enable a filing to perfect the
security interest in said pledges to occur.
Section 19. INCONSISTENT PROVISIONS. All indentures, ordinances or resolutions, or
parts thereof, that are in conflict or inconsistent with any provision of this Ordinance are hereby
repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain
controlling as to the matters contained herein.
Section 20. GOVERNING LAW. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
Section 21. SEVERABILITY. If any provision of this Ordinance or the application thereof
to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application
thereof to other circumstances shall nevertheless be valid, and this governing body hereby declares
that this Ordinance would have been enacted without such invalid provision.
Section 22. EVENTS OF DEFAULT. Each of the following occurrences or events for the
purpose of this Ordinance is hereby declared to be an event of default (an "Event of Default"):
(i) the failure to make payment of the principal of or interest on any of the Certificates when
the same becomes due and payable; or
(ii) default in the performance or observance of any other covenant, agreement or obligation
of the Issuer, the failure to perform which materially, adversely affects the rights of the
Registered Owners, including, but not limited to, their prospect or ability to be repaid in
accordance with this Ordinance, and the continuation thereof for a period of 60 days after
notice of such default is given by any Registered Owner to the Issuer.
Section 23. REMEDIES FOR DEFAULT. (a) Upon the happening of any Event of Default,
then and in every case, any Registered Owner or an authorized representative thereof, including, but
not limited to, a trustee or trustees therefor, may proceed against the may proceed against the Issuer
or the Town Council of the Issuer, as appropriate for the purpose of protecting and enforcing the
rights of the Registered Owners under this Ordinance, by mandamus or other suit, action or special
proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by
law, including the specific performance of any covenant or agreement contained herein, or thereby
to enjoin any act or thing that may be unlawful or in violation of any right of the Registered Owners
hereunder or any combination of such remedies.
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(b) It is provided that all such proceedings shall be instituted and maintained for the equal
benefit of all Registered Owners of Certificates then outstanding.
Section 24. REMEDIES NOT EXCLUSIVE. (a) No remedy herein conferred or reserved
is intended to be exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under
the Certificates or now or hereafter existing at law or in equity; provided, however, that
notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by
the Certificates shall not be available as a remedy under this Ordinance.
(b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver
of any other available remedy.
(c) By accepting the delivery of a Certificate authorized under this Ordinance, such
Registered Owner agrees that the certifications required to effectuate any covenants or
representations contained in this Ordinance do not and shall never constitute or give rise to a
personal or pecuniary liability or charge against the officers, employees or trustees of the Issuer or
the Town Council of the Issuer.
Section 25. EFFECTIVE DATE. In accordance with the provisions of V.T.C.A.,
Government Code, Section 1201.028, this Ordinance shall be effective immediately upon its
adoption by the Town Council.
Item 8
A-1
Exhibit A
Continuing Disclosure Information
The following information is referred to in Section 16(a) of this Ordinance:
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the Issuer to be provided annually in
accordance with such Section are as specified (and included in the Appendices of the Official
Statement referred to) below:
The quantitative financial information and operating data pertaining to the Issuer of the general type
included in Tables numbered 1 through 5 and 7 through 14 and in Appendix B to the Official
Statement.
The financial statements of the Issuer that will be provided will be unaudited, unless an audit is
performed, in which event the audited financial statements will be made available.
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in the
notes to the financial statements that are attached to the Official Statement as Appendix C, or such
other accounting principles as the Issuer may be required to employ from time to time pursuant to
state law or regulation.
Item 8
1
(See “Continuing Disclosure of
Information” herein)
PRELIMINARY OFFICIAL STATEMENT
Dated _____________, 2013
NEW ISSUE - Book-Entry-Only
In the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income for federal income tax purposes under
statutes, regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "Tax
Matters" herein, including the alternative minimum tax on corporations.
THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
$11,040,000*
TOWN OF PROSPER, TEXAS
(Collin and Denton Counties)
GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013
Dated Date: June 15, 2013 Due: August 15, as shown on page 2
Interest to Accrue From Date of Delivery
PAYMENT TERMS . . . Interest on the $11,040,000* Town of Prosper, Texas, General Obligation Refunding Bonds, Series 2013 (the
"Bonds", which, together with the $5,500,000* Town of Prosper, Texas Combination Tax and Surplus Revenue Certificates of
Obligation, Series 2013 (the “Certificates”) [see page 3 of the Official Statement] being issued concurrently with the Bonds, are referred
to herein collectively as the “Obligations”), will accrue from the date of delivery and will be payable February 15 and August 15 of each
year commencing February 15, 2014, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The
definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC")
pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of
$5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the owners thereof. Principal of, premium, if
any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the
amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds -
Book-Entry-Only System" herein. The initial Paying Agent/Registrar is U.S. Bank National Association, Dallas, Texas (see "The
Obligations - Paying Agent/Registrar").
AUTHORITY FOR ISSUANCE . . . The Bonds are issued pursuant to the Constitution and general laws of the State of Texas, particularly
Chapter 1207, Texas Government Code, as amended. The Bonds constitute direct obligations of the Town, payable from a continuing
ad valorem tax levied on all taxable property within the Town, within the limits prescribed by law, as provided in the ordinance
authorizing the Bonds (see "The Obligations - Authority for Issuance").
PURPOSE . . . Proceeds from the sale of the Bonds will be used to (i) refund a portion of the Town’s outstanding debt (the “Refunded
Obligations”) (see “Plan of Financing”; also see Schedule I attached hereto for a detailed description of the Refunded Obligations), and
(ii) pay the costs associated with the issuance of the Bonds.
CUSIP PREFIX: 743596
MATURITY SCHEDULE & 9 DIGIT CUSIP
See Schedule on Page 2
SEPARATE ISSUES . . . The Bonds are being offered by the Town concurrently with the issuance of the Certificates under a common
Official Statement. The Bonds and Certificates are separate and distinct securities offerings being issued and sold independently except
for this Official Statement, and while they share certain common attributes, each issue is separate from the other and should be reviewed
and analyzed independently, including without limitation the type of obligation being offered, its terms for payment, the rights of the
Town to redeem the Obligations, the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations
and other features.
LEGALITY . . . The Bonds are offered for delivery when, as and if issued and received by the Underwriter and subject to the approving
opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton L.L.P., Bond Counsel, Dallas, Texas (see
Appendix C, "Form of Bond Counsel's Opinion"). Certain legal matters will be passed upon for the Underwriter by Andrews Kurth
LLP, Houston, Texas, Counsel for the Underwriter.
DELIVERY . . . It is expected that the Bonds will be available for delivery through DTC on July 25, 2013.
RBC CAPITAL MARKETS BOSC, INC.
A SUBSIDIARY OF BOK FINANCIAL CORPORATION
* Preliminary, subject to change. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. 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 sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction Ratings:
Moody’s: “Aa3”
(see “Other Information –
Ratings” herein)
Item 8
2
CUSIP Prefix: 743596 (1\
MATURITY SCHEDULE*
Maturity Principal Interest Initial CUSIP
(8/15) Amount Rate Yield Suffix(1)
2014 655,000$
2015 695,000
2016 715,000
2017 750,000
2018 780,000
2019 810,000
2020 835,000
2021 865,000
2022 905,000
2023 945,000
2024 985,000
2025 200,000
2026 210,000
2027 215,000
2028 225,000
2029 230,000
2030 240,000
2031 250,000
2032 260,000
2033 270,000
(Interest to accrue from the date of delivery)
_______________
(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global
Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This
data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the
Town, the Financial Advisor nor the Underwriter shall be responsible for the selection or correctness of CUSIP numbers set
forth herein.
REDEMPTION OPTION . . . The Town reserves the right, at its option, to redeem Bonds having stated maturities on and after
August 15, 2024, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 15, 2023, or any
date thereafter, at the par value thereof plus accrued interest to the date of redemption (see “The Obligations – Optional
Redemption”).
* Preliminary, subject to change.
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3
(See “Continuing Disclosure of
Information” herein)
PRELIMINARY OFFICIAL STATEMENT
Dated _____________, 2013
NEW ISSUE - Book-Entry-Only
In the opinion of Bond Counsel, interest on the Certificates will be excludable from gross income for federal income tax purposes under statutes,
regulations, published rulings and court decisions existing on the date thereof, subject to the matters described under "Tax Matters" herein,
including the alternative minimum tax on corporations.
THE CERTIFICATES WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
FOR FINANCIAL INSTITUTIONS
$5,500,000*
TOWN OF PROSPER, TEXAS
(Collin and Denton Counties)
COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2013
Dated Date: June 15, 2013 Due: August 15, as shown on page 4
Interest to Accrue From Date of Delivery
PAYMENT TERMS . . . Interest on the $5,500,000* Town of Prosper, Texas Combination Tax and Surplus Revenue Certificates of Obligation,
Series 2013 (the “Certificates”, which, together with the $11,040,000* Town of Prosper, Texas General Obligation Refunding Bonds, Series 2013
(the “Bonds”) [see page 1 of the Official Statement] being issued concurrently with the Certificates, are referred to herein collectively as the
“Obligations”), will accrue from the date of delivery and will be payable February 15, 2014, and each August 15 and February 15 thereafter until
maturity or prior redemption. Interest on the Certificates will be calculated on the basis of a 360-day year consisting of twelve 30-day months.
The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company, New
York, New York (“DTC”) pursuant to the Book-Entry-Only System described herein. Beneficial ownership of the Certificates may be acquired
in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Certificates will be made to the owners
thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will
make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the
Certificates. See “The Obligations - Book-Entry-Only System” herein. The initial Paying Agent/Registrar is U.S. Bank National Association,
Dallas, Texas (see “The Obligations - Paying Agent/Registrar”).
AUTHORITY FOR ISSUANCE . . . The Certificates are issued pursuant to the Constitution and general laws of the State of Texas, particularly
Chapter 271, Subchapter C, Texas Local Government Code (the “Certificate of Obligation Act of 1971”), as amended, and constitute direct
obligations of the Town of Prosper, Texas (the “Town”), payable from the levy and collection of a continuing and direct annual ad valorem tax
levied on all taxable property within the Town, within the limits prescribed by law, and from a pledge of the surplus net revenues of the Town’s
waterworks and sewer system, as provided in the ordinance authorizing the Certificates (see “The Obligations - Authority for Issuance of the
Certificates”).
PURPOSE . . . Proceeds from the sale of the Certificates will be used for: (i) paying all or a portion of the Town's contractual obligations incurred
in connection with extending, constructing and improving the Town's water system, including constructing improvements to pump stations and
extending water lines; and (ii) payment of the costs associated with the issuance of the Certificates.
CUSIP PREFIX: 743596
MATURITY SCHEDULE & 9 DIGIT CUSIP
See Schedule on Page 2
SEPARATE ISSUES . . . The Certificates are being offered by the Town concurrently with the issuance of the Bonds under a common Official
Statement. The Certificates and Bonds are separate and distinct securities offerings being issued and sold independently except for this Official
Statement, and while they share certain common attributes, each issue is separate from the other and should be reviewed and analyzed
independently, including without limitation the type of obligation being offered, its terms for payment, the rights of the Town to redeem the
Obligations, the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations, the rights of their respective
holders and the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations and other features.
LEGALITY . . . The Certificates are offered for delivery when, as and if issued and received by the Underwriter and subject to the approving
opinion of the Attorney General of Texas and the opinion of McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel (see Appendix C,
“Forms of Bond Counsel's Opinions”). Certain legal matters will be passed upon for the Underwriter by Andrews Kurth LLP, Houston, Texas,
Counsel for the Underwriter.
DELIVERY . . . It is expected that the Certificates will be available for delivery through DTC on or about July 25, 2013.
RBC CAPITAL MARKETS BOSC, INC.
A SUBSIDIARY OF BOK FINANCIAL CORPORATION
* Preliminary, subject to change. This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. 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 sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction Ratings:
Moody’s: “Aa3”
(see “Other Information – Ratings”
herein)
Item 8
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CUSIP Prefix: 743596 (1\
MATURITY SCHEDULE*
Maturity Principal Interest Initial CUSIP
(8/15) Amount Rate Yield Suffix(1)
2014 180,000$
2015 195,000
2016 205,000
2017 210,000
2018 220,000
2019 230,000
2020 235,000
2021 245,000
2022 255,000
2023 265,000
2024 280,000
2025 285,000
2026 295,000
2027 305,000
2028 315,000
2029 330,000
2030 340,000
2031 355,000
2032 370,000
2033 385,000
(Interest to accrue from Date of Delivery)
_______________
(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global
Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This
data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the
Town, the Financial Advisor nor the Underwriter shall be responsible for the selection or correctness of CUSIP numbers set
forth herein.
REDEMPTION OPTION . . . The Town reserves the right, at its option, to redeem Certificates having stated maturities on and after
August 15, 2024, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 15, 2023, or any
date thereafter, at the par value thereof plus accrued interest to the date of redemption (see “The Obligations – Optional
Redemption”).
* Preliminary, subject to change.
Item 8
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For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document constitutes an Official Statement of
the Town with respect to the Obligations that has been deemed "final" by the Town as of its date except for the omission of no more than the
information permitted by Rule 15c2-12.
No dealer, broker, salesman or other person has been authorized by the Town to give any information, or to make any representations other than those
contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been
authorized by the Town. This Official Statement does not constitute an offer to sell Obligations in any jurisdiction to any person to whom it is unlawful
to make such offer in such jurisdiction.
Certain information set forth herein has been obtained from the Town and other 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 Financial Advisor or the Underwriter. Any information and
expressions of opinion herein contained 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 Town or other matters described
herein since the date hereof. See "Continuing Disclosure of Information" for a description of the Town's undertaking to provide certain
information on a continuing basis.
This Official Statement contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance and
achievements to be different from future results, performance and achievements expressed or implied by such forward-looking statements. Investors
are cautioned that the actual results could differ materially from those set forth in the forward-looking statements.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this
Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and
circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
THE OBLIGATIONS ARE EXEMPT FROM REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND,
CONSEQUENTLY, HAVE NOT BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE
OBLIGATIONS IN ACCORDANCE WITH APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTION IN WHICH THESE
SECURITIES HAVE BEEN REGISTERED OR EXEMPTED SHOULD NOT BE REGARDED AS A RECOMMENDATION THEREOF.
NEITHER THE TOWN NOR ITS FINANCIAL ADVISOR NOR THE UNDERWRITER MAKE ANY REPRESENTATION OR WARRANTY WITH
RESPECT TO THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY
(“DTC”) OR ITS BOOK-ENTRY- ONLY SYSTEM, AS SUCH INFORMATION HAS BEEN PROVIDED BY DTC.
TABLE OF CONTENTS
OFFICIAL STATEMENT SUMMARY .............................. 6
TOWN OFFICIALS, STAFF AND CONSULTANTS ....... 9
ELECTED OFFICIALS ....................................................... 9
SELECTED ADMINISTRATIVE STAFF ............................... 9
CONSULTANTS AND ADVISORS ...................................... 9
INTRODUCTION ................................................................ 11
PLAN OF FINANCING ...................................................... 11
THE OBLIGATIONS .......................................................... 12
TAX INFORMATION ........................................................ 17
TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL
OBLIGATION DEBT ............................................. 21
TABLE 2 - TAXABLE ASSESSED VALUATIONS BY
CATEGORY ......................................................... 22
TABLE 3 - VALUATION AND GENERAL OBLIGATION
DEBT HISTORY ................................................... 23
TABLE 4 - TAX RATE, LEVY AND COLLECTION
HISTORY ............................................................. 23
TABLE 5 - TEN LARGEST TAXPAYERS ........................ 23
TABLE 6 - ESTIMATED OVERLAPPING DEBT ............... 24
DEBT INFORMATION ...................................................... 25
TABLE 7 - PRO-FORMA GENERAL OBLIGATION DEBT
SERVICE REQUIREMENTS ................................... 25
TABLE 8 - INTEREST AND SINKING FUND BUDGET
PROJECTION ....................................................... 26
TABLE 9 - COMPUTATION OF SELF-SUPPORTING
DEBT ................................................................. 26
TABLE 10 - AUTHORIZED BUT UNISSUED GENERAL
OBLIGATION BONDS .......................................... 26
TABLE 11 – OTHER OBLIGATIONS ................................ 26
FINANCIAL INFORMATION .......................................... 29
TABLE 12 - CHANGES IN NET ASSETS ........................ 29
TABLE 12 -A - GENERAL FUND REVENUES AND
EXPENDITURE HISTORY ..................................... 30
TABLE 13 - MUNICIPAL SALES TAX HISTORY ............ 31
TABLE 14 - CURRENT INVESTMENTS ............................ 34
TAX MATTERS ................................................................... 34
CONTINUING DISCLOSURE OF INFORMATION ...... 36
OTHER INFORMATION ................................................... 37
RATINGS ....................................................................... 37
LITIGATION ................................................................... 37
REGISTRATION AND QUALIFICATION OF OBLIGATIONS
FOR SALE ............................................................ 37
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE
PUBLIC FUNDS IN TEXAS .................................... 37
LEGAL MATTERS .......................................................... 38
AUTHENTICITY OF FINANCIAL DATA AND OTHER
INFORMATION ..................................................... 38
FINANCIAL ADVISOR .................................................... 38
UNDERWRITER ............................................................. 39
FORWARD-LOOKING STATEMENTS DISCLAIMER .......... 39
SCHEDULE OF REFUNDED
OBLIGATIONS ........................................... Schedule I
APPENDICES
GENERAL INFORMATION REGARDING THE TOWN ....... A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT ... B
FORM OF BOND COUNSEL'S OPINION .......................... C
The cover page hereof, this page, the appendices included
herein and any addenda, supplement or amendment hereto, are
part of the Official Statement.
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OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Obligations to potential investors is made only by means of this entire Official
Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire
Official Statement.
THE TOWN ................................... The Town of Prosper is a political subdivision and municipal corporation of the State, located
in Collin and Denton Counties, Texas. The Town covers approximately 27 square miles (see
"Introduction - Description of the Town").
THE OBLIGATIONS....................... The Bonds are issued as $11,040,000* General Obligation Refunding Bonds, Series 2013.
The Bonds are issued as serial Bonds maturing on August 15 of each year in the years 2014
through 2033 (see "The Obligations - Description of the Obligations").
The Certificates are issued as $5,500,000* Combination Tax and Revenue Certificates of
Obligation, Series 2013. The Certificates are issued as serial Certificates maturing on August
15 of each year in the years 2014 through 2033 (see “The Obligations – Description of the
Obligations”).
The Bonds and the Certificates are sometimes referred to collectively herein as the
“Obligations.”
PAYMENT OF INTEREST .............. Interest on the Obligations accrues from the date of delivery, and is payable February 15,
2014, and each August 15 and February 15 thereafter until maturity (see "The Bonds -
Description of the Bonds").
AUTHORITY FOR ISSUANCE.......... The Bonds are issued pursuant to the Constitution and general laws of the State of Texas,
including particularly Texas Government Code Chapter 1207, as amended, and the ordinance
authorizing the issuance of the Bonds to be adopted by the Town Council of the Town (see
“The Obligations - Authority for Issuance of the Bonds”).
The Certificates are issued pursuant to the Constitution and general laws of the State of Texas,
particularly Chapter 271, Subchapter C, Texas Local Government Code (the Certificate of
Obligation Act of 1971), as amended, and the ordinance authorizing the issuance of the
Certificates to be adopted by the Town Council of the Town (see “The Obligations -
Authority for Issuance of the Certificates”).
SECURITY FOR THE
BONDS ........................................... The Bonds constitute direct obligations of the Town payable from a continuing ad valorem tax
levied, within the limits prescribed by law, on all taxable property within the Town (see "The
Bonds - Security and Source of Payment").
SECURITY FOR THE
CERTIFICATES .............................. The Certificates constitute direct obligations of the Town payable from the levy and
collection of a continuing and direct annual ad valorem tax levied on all taxable property
within the Town, within the limits prescribed by law, and from a pledge of the surplus net
revenues of the Town’s waterworks and sewer system.
QUALIFIED TAX-EXEMPT
OBLIGATIONS ............................... The Town will not designate the Obligations as "Qualified Tax-Exempt Obligations" for
financial institutions (see "Tax Matters - Qualified Tax-Exempt Obligations for Financial
Institutions").
OPTIONAL REDEMPTION ............. The Town reserves the right, at its option, to redeem Obligations of having stated maturities
on and after August 15, 2024, in whole or in part in principal amounts of $5,000 or any
integral multiple thereof, on August 15, 2023, or any date thereafter, at the par value thereof
plus accrued interest to the date of redemption (see “The Obligations - Optional
Redemption”).
TAX EXEMPTION .......................... In the opinion of Bond Counsel, the interest on the Obligations will be excludable from gross
income for federal income tax purposes under existing law, subject to the matters described
under the caption "Tax Matters" herein, including the alternative minimum tax on
corporations.
* Preliminary, subject to change.
Item 8
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USE OF PROCEEDS ....................... Proceeds from the sale of the Bonds will be used to (i) refund a portion of the Town’s
outstanding debt (the “Refunded Obligations”) (see “Plan of Financing”; also see Schedule I
attached hereto for a detailed description of the Refunded Obligations) and (ii) pay the costs
associated with the issuance of the Bonds.
Proceeds from the sale of the Certificates will be used for: (i) paying all or a portion of the
Town's contractual obligations incurred in connection with extending, constructing and
improving the Town's water system, including constructing improvements to pump stations
and extending water lines; and (ii) payment of the costs associated with the issuance of the
Certificates.
RATINGS ...................................... The presently outstanding tax supported debt of the Town is rated "Aa3" by Moody's
Investors Service, Inc. ("Moody's"), without regard to credit enhancement. Application has
been made to Moody’s for a contract rating on the Obligations (see "Other Information -
Ratings").
BOOK-ENTRY-ONLY
SYSTEM ...................................... The definitive Obligations will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book-Entry-Only System described herein. Beneficial
ownership of the Obligations may be acquired in denominations of $5,000 or integral
multiples thereof. No physical delivery of the Obligations will be made to the beneficial
owners thereof. Principal of, premium, if any, and interest on the Obligations will be payable
by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so
paid to the participating members of DTC for subsequent payment to the beneficial owners of
the Obligations (see "The Obligations - Book-Entry-Only System").
PAYMENT RECORD ..................... The Town has never defaulted in payment of its general obligation tax debt.
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Item 8
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SELECTED FINANCIAL INFORMATION
Per Per Ratio
Fiscal Capita Capita Tax Debt
Year Estimated Taxable Taxable Funded Tax Funded to Taxable % of
Ended Town Assessed Assessed Debt at Tax Assessed Total Tax
9/30 Population(1)Valuation(2)Valuation End of Year(3)Debt Valuation Collections
2009 7,150 997,044,689$ 139,447$ 37,330,000$ 5,221$ 3.74% 99.90%
2010 9,940 1,042,515,717 104,881 36,180,000 3,640 3.47% 99.70%
2011 11,600 1,147,384,655 98,912 36,585,000 3,154 3.19% 99.80%
2012 12,190 1,231,371,717 101,015 44,190,000 3,625 3.59% 99.52%
2013 13,531 1,347,409,280 99,579 50,875,000 (4)3,760 (4)3.78%(4)98.83%(5)
(1) Source: Town Officials
(2) As reported by the Collin County and Denton County Appraisal Districts on the Town’s annual State property tax reports;
subject to change during the ensuing year.
(3) Includes self-supporting debt.
(4) Projected. Excludes the Refunded Obligations. Includes the Obligations.
(5) Collections as of March 31, 2013.
GENERAL FUND CONSOLIDATED STATEMENT SUMMARY
2012 2011 2010 2009 2008
Beginning Balance 5,568,868$ 5,073,909$ (1)4,397,604$ 4,007,041$ 3,093,165$
Total Revenues 8,996,594 7,301,464 6,690,620 5,916,036 5,848,471
Total Expenditures 8,576,902 8,044,141 8,139,132 5,737,739 6,695,968
Other Financing Sources (Uses) 1,091,784 1,237,636 2,022,083 212,266 1,761,373
Net Funds Available 1,511,476 494,959 573,571 390,563 913,876
Ending Balance 7,080,344$ 5,568,868$ 4,971,175$ 4,397,604$ 4,007,041$
For Fiscal Year Ended September 30,
(1) Restated.
For additional information regarding the Town, please contact:
Harlan Jefferson Jason L. Hughes
Town Manager Senior Vice President
Town of Prosper or First Southwest Company
P.O. Box 307 325 N. St. Paul Street, Suite 800
Prosper, Texas 75078 Dallas, Texas 75201
(972) 569-1011 (214) 953-8707
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TOWN OFFICIALS, STAFF AND CONSULTANTS
ELECTED OFFICIALS
Length of Term
Town Council Service Expires Occupation
Ray Smith 6 Years May, 2016 Banking/Finance
Mayor
Meigs Miller 5 Years May, 2016 IT Consultant/Sales
Mayor Pro-Tem
Kenneth Dugger 6 Years May, 2015 Banking IT Professional
Deputy Mayor Pro-Tem
Michael Korbuly 1 Year May, 2016 Security Industry Professional
Councilmember
Curry Vogelsang Jr.2 Years May, 2014 CPA
Councilmember
Danny Wilson 5 Years May, 2014 Insurance/Finance
Councilmember
Jason Dixon 3 Years May, 2015 Insurance Consultant
Councilmember
SELECTED ADMINISTRATIVE STAFF
Total
Length of Length of
Service Governmental
Name Position to Town Service
Harlan Jefferson Town Manager 4 Months 30 Years
Robyn Battle Town Secretary 1 Month 6 Years
Matthew Garrett Finance Director 5 Years 11 Years
Lori Heikkinen Accounting Manager 1 Year 4 Years
Frank Jaromin Public Works Director 7 Years 21 Years
Hulon Webb Exec. Director of Development and Community Services 7 Years 18 Years
Chris Copple Director of Development Services 7 Years 9 Years
CONSULTANTS AND ADVISORS
Auditors ........................................................................................................................................................ Davis Kinard & Co, PC
Abilene, Texas
Bond Counsel ............................................................................................................................. McCall, Parkhurst & Horton L.L.P.
Dallas, Texas
Financial Advisor ...................................................................................................................................... First Southwest Company
Dallas, Texas
Item 8
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Item 8
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PRELIMINARY OFFICIAL STATEMENT
RELATING TO
$11,040,000*
TOWN OF PROSPER, TEXAS
GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013
AND
$5,500,000*
TOWN OF PROSPER, TEXAS
COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION, SERIES 2013
INTRODUCTION
This Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of
$11,040,000* Town of Prosper, Texas, General Obligation Refunding Bonds, Series 2013 (the “Bonds”) and $5,500,000*
Combination Tax and Surplus Revenue Certificates of Obligation, Series 2013 (the “Certificates”, and together with the Bonds,
herein collectively referred to as the “Obligations”). Capitalized terms used in this Official Statement have the same meanings
assigned to such terms in the respective ordinances (the “Bond Ordinance” with respect to the Bonds and the “Certificate
Ordinance” with respect to the Certificates) to be adopted on the date of sale of the Obligations which will authorize the issuance
of the Obligations, and collectively, the “Ordinances”, except as otherwise indicated herein.
There follows in this Official Statement descriptions of the Obligations and certain information regarding the Town and its
finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to
each such document. Copies of such documents may be obtained from the Town's Financial Advisor, First Southwest Company,
Dallas, Texas.
DESCRIPTION OF THE TOWN . . . The Town is a political subdivision and a home rule municipality under the laws of the State.
The Town was incorporated in 1914. The Town operates with a Town Council comprised of the Mayor and six
Councilmembers. The term of office is three years. The Town Manager is the chief administrative officer for the Town. Some
of the services that the Town provides are: public safety (police and fire protection), highways and streets, water and sanitary
sewer utilities, health and social services, culture-recreation, public improvements, planning and zoning, and general
administrative services. The 2012 estimated population for the Town was 12,190, while the estimated 2013 population is 13,531.
A Home Rule Charter was approved by the qualified voters of the Town at an election held November 7, 2006. The Town
covers approximately 27 square miles.
PLAN OF FINANCING
PURPOSE . . . The Bonds are being issued for the purpose of refunding a portion of the Town’s outstanding debt (the “Refunded
Obligations”) to restructure debt service and obtain debt service savings, and to pay the costs of issuance of the Bonds. See Schedule
I for a detailed listing of the Refunded Obligations and their redemption dates.
The Certificates are being issued for the purposes of: (i) paying all or a portion of the Town's contractual obligations incurred in
connection with extending, constructing and improving the Town's water system, including constructing improvements to pump
stations and extending water lines, and (ii) and to pay the costs of issuance of the Certificates.
REFUNDED OBLIGATIONS . . . The principal and interest due on the Refunded Obligations are to be paid on the dates fixed for their
redemption or at their maturity from funds to be deposited with U.S. Bank National Association, Dallas, Texas, the escrow agent
for the Refunded Obligations (the “Escrow Agent”). The Bond Ordinance provides that proceeds from the sale of the Bonds,
together with other available Town funds, in any are required, will be irrevocably deposited with the Escrow Agent in an amount
sufficient to accomplish the discharge and final payment of the Refunded Obligations on the respective redemption dates and/or
maturity dates of the Refunded Obligations. Such funds will be held uninvested by the Escrow Agent pending their
disbursement to redeem the Refunded Obligations on the respective redemption dates and/or maturity dates of the Refunded
Obligations.
* Preliminary, subject to change.
Item 8
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First Southwest Company, in its capacity as Financial Advisor to the Town, will certify as to the sufficiency of the amounts
initially deposited with the Escrow Agent to pay the principal of and interest on the Refunded Obligations when due on the
redemption date. By the deposit of the proceeds of the Bonds and other funds of the Town, if any are required, with the Escrow
Agent pursuant to the Escrow Agreement, the Town will have effected the defeasance of the Refunded Obligations in accordance
with applicable State law and the ordinances authorizing the Refunded Obligations. As a result of such defeasance, the
Refunded Obligations will be outstanding only for the purpose of receiving payments from the Escrow Fund held for such
purpose by the Escrow Agent, and the Refunded Obligations will not be deemed as being outstanding obligations of the Town
payable from taxes or revenues of the Town, nor for the purpose of applying any limitation on the issuance of debt.
The Town has covenanted in the Escrow Agreement to make timely deposits to the Escrow Fund from lawfully available funds
of any additional amounts required to make payments on the Refunded Obligations, if for any reason, the cash balances on
deposit or scheduled to be on deposit in the Escrow Fund should be insufficient to make such payment.
SOURCES AND USES OF OBLIGATION PROCEEDS . . . Proceeds from the sale of the Obligations, together with a contribution to the
refunding by the Town, are expected to be expended as follows:
Sources of Funds The Bonds The Certificates
Par Amount of the Obligations -$ -$
Reoffering Premium
Transfer from Existing Interest and Sinking Fund
Total Sources of Funds -$ -$
Uses of Funds
Deposit to Interest and Sinking Fund -$ -$
Deposit to Project Construction Fund
Deposit to Escrow Fund
Underwriter's Discount
Costs of Issuance
Total Uses of Funds -$ -$
THE OBLIGATIONS
DESCRIPTION OF THE OBLIGATIONS . . . The Obligations are dated June 15, 2013 (the “Dated Date”), and mature on August 15 in
each of the years and in the amounts shown on pages 2 and 4. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest on the Obligations will accrue from the date of initial delivery and is payable
February 15, 2014 and on each August 15 and February 15 thereafter until maturity or redemption prior to maturity. The
definitive Obligations will be issued only in fully registered form in any integral multiple of $5,000 for any one maturity and will
be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company, New York, New York
(“DTC”) pursuant to the Book-Entry-Only System described herein. No physical delivery of the Obligations will be made to
the owners thereof. Principal of, premium, if any, and interest on the Obligations will be payable by the Paying
Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for
subsequent payment to the beneficial owners of the Obligations. See “The Obligations - Book-Entry-Only System” herein.
Interest on the Obligations shall be paid to the registered owners appearing on the registration books of the Paying
Agent/Registrar at the close of business on the Record Date (hereinafter defined), and such interest shall be paid (i) by check sent
United States Mail, first class postage prepaid to the address of the registered owner recorded in the registration books of the
Paying Agent/Registrar or (ii) by such other method, acceptable to the Paying Agent/Registrar requested by, and at the risk and
expense of, the registered owner. Principal of the Obligations will be paid to the registered owner at their stated maturity or upon
earlier redemption upon presentation to designated payment/transfer office of the Paying Agent/Registrar; provided, however,
that so long as Cede & Co. (or other DTC nominee) is the registered owner of the Obligations, all payments will be made as
described under “The Obligations - Book-Entry-Only System” herein. If the date for any payment on the Obligations shall be a
Saturday, Sunday, a legal holiday or a day when banking institutions in the city where the designated payment/transfer office of
the Paying Agent/Registrar is located are authorized to close, then the date for such payment shall be the next succeeding day
which is not such a day, and payment on such date shall have the same force and effect as if made on the date payment was due.
AUTHORITY FOR ISSUANCE OF THE BONDS. . . The Bonds are being pursuant to the Constitution and general laws of the State of
Texas (the "State"), particularly Chapter 1207, Texas Government Code, as amended, and the Bond Ordinance.
Item 8
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AUTHORITY FOR ISSUANCE OF THE CERTIFICATES . . . The Certificates are issued pursuant to the Constitution and general laws
of the State, particularly Chapter 271, Subchapter C, Texas Local Government Code, (the “Certificate of Obligation Act of
1971”), as amended, and the Certificate Ordinance.
SECURITY AND SOURCE OF PAYMENT . . .
Tax Pledge . . . The Obligations constitute direct obligations of the Town payable from an annual direct and continuing ad
valorem tax levied against all taxable property within the Town, within the limits prescribed by law (see "The Obligations - Tax
Rate Limitation" below).
Pledge of Surplus Waterworks and Sewer System Net Revenues for Certificates . . . The Certificates are additionally secured by a
lien on and pledge of the revenues of the Issuer's combined Waterworks and Sewer System (the “System”) remaining after
payment of all operation and maintenance expenses thereof, and all debt service, reserve and other requirements in connection
with all of the Issuer's revenue obligations (now or hereafter outstanding), which are payable from all or part of said revenues, as
provided in the Certificate Ordinance.
TAX RATE LIMITATION . . . All taxable property within the Town is subject to the assessment, levy and collection by the Town
of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem
tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the Town, and
limits its maximum ad valorem tax rate to $2.50 per $100 Taxable Assessed Valuation for all Town purposes. The Home Rule
Charter of the Town adopts the constitutionally authorized maximum tax rate of $2.50 per $100 taxable assessed valuation.
Administratively, the Attorney General of the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for
ad valorem tax debt service. Also, see “Tax Information – General Obligation Debt Limitation.”
OPTIONAL REDEMPTION . . . The Town reserves the right, at its option, to redeem Obligations having stated maturities on and
after August 15, 2024, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on August 15, 2023, or
any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Obligations of
either series are to be redeemed, the Town may select the maturities of Obligations to be redeemed. If less than all the
Obligations of any maturity are to be redeemed, the Paying Agent/Registrar (or DTC while the Obligations are in Book-Entry-
Only form) shall determine by lot the Obligations, or portions thereof, within such maturity to be redeemed. If an Obligation (or
any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been
given, such Obligation (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date
and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption
price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date.
NOTICE OF REDEMPTION AND OTHER NOTICES . . . Not less than 30 days prior to a redemption date for the Obligations, the
Town will cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to each registered owner of
an Obligation to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of
the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. Any
notice of redemption so mailed will be conclusively presumed to have been duly given irrespective of whether received by the
owner of the Obligation. If such notice of redemption is given and if due provision for such payment is made and all other
conditions to redemption are satisfied, all as provided above, the Obligations or portions thereof which are to be so redeemed
thereby automatically will be treated as redeemed prior to their scheduled maturities, and they will not bear interest after the date
fixed for redemption, and they will not be regarded as being outstanding except for the right of the registered owner to receive
the redemption price from the Paying Agent/Registrar out of the funds provided for such payment.
With respect to any optional redemption of the Obligations unless certain prerequisites to such redemption required by the
respective Ordinance have been met and money sufficient to pay the principal of and premium, if any, and interest on the
Obligations to be redeemed will have been received by the Paying Agent/Registrar prior to the giving of such notice of
redemption, such notice may state that said redemption will, at the option of the Town, be conditional upon the satisfaction of
such prerequisites and receipt of such money by the Paying Agent/Registrar on or prior to the date fixed for such redemption or
upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites
to the redemption are not fulfilled, such notice will be of no force and effect, the Town will not redeem such Obligations and the
Paying Agent/Registrar will give notice in the manner in which the notice of redemption was given, to the effect that such
Obligations have not been redeemed.
The Paying Agent/Registrar and the Town, so long as a Book-Entry-Only System is used for the Obligations, will send any
notice of redemption relating to the Obligations, notice of proposed amendment to the Ordinances or other notices with respect to
the Obligations only to DTC. Any failure by DTC to advise any DTC participant, or of any DTC participant or indirect
participant to notify the Beneficial Owner, will not affect the validity of the redemption of the Obligations called for redemption
or any other action premised on any such notice. Redemption of portions of the Obligations by the Town will reduce the
outstanding principal amount of such Obligations held by DTC. In such event, DTC may implement, through its Book-Entry-
Only System, a redemption of such Obligations held for the account of DTC participants in accordance with its rules or other
agreements with DTC participants and then DTC participants and indirect participants may implement a redemption of such
Obligations from the Beneficial Owners. Any such selection of Obligations within a maturity to be redeemed will not be
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governed by the respective Ordinances and will not be conducted by the Town or the Paying Agent/Registrar. Neither the Town
nor the Paying Agent/Registrar will have any responsibility to DTC participants, indirect participants or the persons for whom
DTC participants act as nominees, with respect to the payments on the Obligations or the providing of notice to DTC
participants, indirect participants, or Beneficial Owners of the selection of portions of the Obligations for redemption. (See "The
Obligations - Book-Entry-Only System" herein.)
AMENDMENTS . . . In the Ordinances, the Town has reserved the right to amend the Ordinances without the consent of any holder
for the purpose of amending or supplementing the Ordinances to (i) cure any ambiguity, defect or omission therein that does not
materially adversely affect the interests of the holders, (ii) grant additional rights or security for the benefit of the holders, (iii)
add events of default as shall not be inconsistent with the provisions of the Ordinances that do not materially adversely affect the
interests of the holders, (iv) qualify the Ordinances under the Trust Indenture Act of 1939, as amended, or corresponding
provisions of federal laws from time to time in effect or (v) make such other provisions in regard to matters or questions arising
under the Ordinances that are not inconsistent with the provisions thereof and which, in the opinion of Bond Counsel for the
Town, do not materially adversely affect the interests of the holders.
The Ordinances further provide that the holders of the Obligations aggregating in principal amount 51% of the outstanding
Obligations shall have the right from time to time to approve any amendment not described above to the Ordinances if it is
deemed necessary or desirable by the Town; provided, however, that without the consent of 100% of the holders in original
principal amount of the then outstanding Obligations so affected, no amendment may be made for the purpose of: (i) making any
change in the maturity of any of the outstanding Obligations; (ii) reducing the rate of interest borne by any of the outstanding
Obligations; (iii) reducing the amount of the principal of, or redemption premium, if any, payable on any outstanding
Obligations; (iv) modifying the terms of payment of principal or of interest or redemption premium on outstanding Obligations,
or imposing any condition with respect to such payment; or (v) changing the minimum percentage of the principal amount of the
Obligations necessary for consent to such amendment. Reference is made to the Ordinances for further provisions relating to the
amendment thereof.
DEFEASANCE. . .The Ordinances provide for the defeasance of the Obligations when the payment of the principal on the
Obligations, plus interest on the Obligations to the due date thereof is provided by irrevocably depositing with the Paying
Agent/Registrar or authorized escrow agent, in trust (1) money sufficient to make such payment and/or (2) Defeasance Securities
to mature as to principal and interest in such amounts and at such times to insure the availability, without reinvestment, of
sufficient money to make such payment, and all necessary and proper fees, compensation and expenses of the paying agent for
the Obligations. The Ordinances provide that the term "Defeasance Securities" means any securities and obligations now or
hereafter authorized by State law that are eligible to discharge obligations such as the Obligations. Current State law permits
defeasance with the following types of securities: (a) direct, noncallable obligations of the United States of America, including
obligations that are unconditionally guaranteed by the United States of America, (b) noncallable obligations of an agency or
instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the
agency or instrumentality and that, on the date the governing body of the Town approves the proceedings authorizing the
issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than
AAA or its equivalent, and (c) noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that on the date the governing body of the Town approves the proceedings authorizing the issuance of
refunding bonds have been refunded and are rated as to investment quality by a nationally recognized investment rating firm not
less than AAA or its equivalent. There is no assurance that the current law will not be changed in a manner which would permit
investments other than those described above to be made with amounts deposited to defease the Obligations. Because the
Ordinances do not contractually limit such investments, registered owners will be deemed to have consented to defeasance with
such other investments, notwithstanding the fact that such investments may not be of the same investment quality as those
currently permitted under State law. The Town has the right, subject to satisfying the requirements of (1) and (2) above, to
substitute other Defeasance Securities for the Defeasance Securities originally deposited, to reinvest the uninvested moneys on
deposit for such defeasance and to withdraw for the benefit of the Town moneys in excess of the amount required for such
defeasance. Upon such deposit as described above, such Obligations shall no longer be regarded to be outstanding or unpaid.
There is no assurance that the ratings for U.S. Treasury securities used as Defeasance Securities or that for any other Defeasance
Security will be maintained at any particular rating category.
BOOK-ENTRY-ONLY SYSTEM . . . This section describes how ownership of the Obligations is to be transferred and how the
principal of, premium, if any, and interest on the Obligations are to be paid to and credited by The Depository Trust Company
(“DTC”), New York, New York, while the Obligations are registered in its nominee name. The information in this section
concerning DTC and the Book-Entry-Only System has been provided by DTC for use in disclosure documents such as this
Official Statement. The Town believes the source of such information to be reliable, but takes no responsibility for the accuracy
or completeness thereof.
The Town cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Obligations, or
redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to
DTC or its nominee (as the registered owner of the Obligations), or redemption or other notices, to the Beneficial Owners, or
that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The
current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to
be followed in dealing with DTC Participants are on file with DTC.
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The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Obligations. The
Obligations will be issued as fully-registered Obligations 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 Obligation certificate will be
issued for each maturity of the Obligations, each in the aggregate principal amount of such maturity, and will be deposited with
DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law,
a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a
“clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for
over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments
(from over 100 countries) that DTC’s participants (“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 is the holding company for DTC, National Securities Clearing Corporation and
Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated
subsidiaries. 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 a Standard & Poor’s rating of AA+. The DTC Rules applicable to
its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at
www.dtcc.com.
Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for
the Obligations on DTC’s records. The ownership interest of each actual purchaser of each Obligation (“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 Obligations 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 Obligations, except in the event that use of the book-entry system for the
Obligations is discontinued.
To facilitate subsequent transfers, all Obligations 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 Obligations 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 Obligations; DTC’s records reflect only
the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial
Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations
may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the
Obligations, such as redemptions, tenders, defaults, and proposed amendments to the Obligation documents. For example,
Beneficial Owners of Obligations may wish to ascertain that the nominee holding the Obligations 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 a maturity are being redeemed, DTC’s practice is to
determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Obligations unless authorized by
a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to
the Town 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 Obligations are credited on the record date (identified in a listing attached to the Omnibus
Proxy).
All payments on the Obligations 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 Town or the Paying Agent/Registrar, 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 Obligations held for the accounts of customers in bearer form or registered in “street
name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent/Registrar, or the Town, subject to
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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 the Town or the Paying Agent/Registrar, 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 Obligations at any time by giving reasonable notice
to the Town or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained,
Obligation certificates are required to be printed and delivered.
The Town may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities
depository). In that event, Obligation certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Town
believes to be reliable, but neither the Town nor the Underwriters take any responsibility for the accuracy thereof.
Use of Certain Terms in Other Sections of this Official Statement . . . In reading this Official Statement it should be
understood that while the Obligations are in the Book-Entry-Only System, references in other sections of this Official Statement
to registered owners should be read to include the person for which the Participant acquires an interest in the Obligations, but (i)
all rights of ownership must be exercised through DTC and the Book-Entry-Only System, and (ii) except as described above,
notices that are to be given to registered owners under the Ordinances will be given only to DTC.
Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to
accuracy or completeness by, and is not to be construed as a representation by the Town, the Financial Advisor, or the
Underwriter.
Effect of Termination of Book-Entry-Only System . . . In the event that the Book-Entry-Only System of the Obligations is
discontinued for either or both series, printed Obligations of the respective series will be issued to the DTC Participants or the
holder, as the case may be, and such Obligations will be subject to transfer, exchange and registration provisions as set forth in
the Ordinances and summarized under “The Obligations - Transfer, Exchange and Registration” below.
PAYING AGENT/REGISTRAR . . . The initial Paying Agent/Registrar is U.S. Bank National Associations, Dallas, Texas. In the
Ordinances, the Town retains the right to replace the Paying Agent/Registrar with respect to either or both series. The Town
covenants to maintain and provide a Paying Agent/Registrar at all times until the Obligations are duly paid and any successor
Paying Agent/Registrar shall be a commercial bank or trust company organized under the laws of the State of Texas or other
entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the
Obligations. Upon any change in the Paying Agent/Registrar for the Obligations, the Town agrees to promptly cause a written
notice thereof to be sent to each registered owner of the Obligations by United States mail, first class, postage prepaid, which
notice shall also give the address of the new Paying Agent/Registrar.
TRANSFER, EXCHANGE AND REGISTRATION . . . In the event the Book-Entry-Only System should be discontinued, the
Obligations of the respective series may be transferred and exchanged on the registration books of the Paying Agent/Registrar
only upon presentation and surrender to the Paying Agent/Registrar and such transfer or exchange shall be without expense or
service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such
registration, exchange and transfer. Obligations may be assigned by the execution of an assignment form on the respective
Obligations or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Obligations will
be delivered by the Paying Agent/Registrar, in lieu of the Obligations being transferred or exchanged, at the designated office of
the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his
designee. To the extent possible, new Obligations issued in an exchange or transfer of Obligations will be delivered to the
registered owner or assignee of the registered owner in not more than three business days after the receipt of the Obligations to
be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly
authorized agent, in form satisfactory to the Paying Agent/Registrar. New Obligations registered and delivered in an exchange
or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount as the
Obligations surrendered for exchange or transfer. See "The Obligations - Book-Entry-Only System" herein for a description of
the system to be utilized initially in regard to ownership and transferability of the Obligations.
RECORD DATE FOR INTEREST PAYMENT . . . The record date ("Record Date") for the interest payable on the Obligations on any
interest payment date means the close of business on the last business day of the preceding month.
In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such
interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment
of such interest have been received from the Town. Notice of the Special Record Date and of the scheduled payment date of the
past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five
business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of
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a Obligation appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day
next preceding the date of mailing of such notice.
OBLIGATIONHOLDERS’ REMEDIES . . . The Ordinances provide that if the Town defaults in the payment of the Obligations when
due, or if it fails to make payments into any fund or funds created in the respective Ordinance, or defaults in the observation or
performance of any other covenants, conditions, or obligations set forth in the respective Ordinance and the continuation thereof
for a period of 60 days after notice of such default is given by any registered owner to the Town, the registered owners may seek
a writ of mandamus to compel Town officials to carry out their legally imposed duties with respect to the respective Obligations.
The issuance of a writ of mandamus is controlled by equitable principles, and with the discretion of the court, but may not be
arbitrarily refused. There is no acceleration of maturity of the Obligations in the event of default and, consequently, the remedy of
mandamus may have to be relied upon from year to year. The Ordinances do not provide for the appointment of a trustee to
represent the interest of the bondholders upon any failure of the Town to perform in accordance with the terms of the Ordinances,
or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative
of, and be financed by, the registered owners. The Texas Supreme Court has ruled in Tooke v. City of Mexia, 197 S.W.3rd 325
(Tex. 2006), that a waiver of sovereign immunity in a contractual dispute must be provided for by statute in “clear and
unambiguous” language. Because it is unclear whether the Texas legislature has effectively waived the Town’s sovereign
immunity from a suit for money damages, holders may not be able to bring such a suit against the Town for breach of the
Obligations or Ordinances covenants. Even if a judgment against the Town could be obtained, it could not be enforced by direct
levy and execution against the Town's property. Further, the registered owners cannot themselves foreclose on property within the
Town or sell property within the Town to enforce the tax lien on taxable property to pay the principal of and interest on the
Obligations. Furthermore, the Town is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code
(“Chapter 9”). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged
source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically
recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit,
without Bankruptcy Court approval, the prosecution of any other legal action by creditors or bondholders of an entity which has
sought protection under Chapter 9. Therefore, should the Town avail itself of Chapter 9 protection from creditors, the ability to
enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy
Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy
Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions relative to the
enforceability of the Ordinances and the Obligations are qualified with respect to the customary rights of debtors relative to their
creditors and may be limited by general principles of equity which permit the exercise of judicial discretion and by governmental
immunity.
TAX INFORMATION
AD VALOREM TAX LAW . . . The appraisal of property within the Town is the responsibility of the Collin County and Denton County
Appraisal Districts (the "Appraisal Districts"). Excluding agricultural and open-space land, which may be taxed on the basis of productive
capacity, the Appraisal Districts are required under the Property Tax Code to appraise all property within the Appraisal Districts on the
basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property,
different methods of appraisal may be used, including the cost method of appraisal, the income method of appraisal and market data
comparison method of appraisal, and the method considered most appropriate by the chief appraiser is to be used. State law further
limits the appraised value of a residence homestead for a tax year to an amount that would not exceed either the lesser of (1) the
property's market value in the most recent tax year in which it the market value was determined by the Appraisal Districts or (2)
the sum of (a) 10% of the property's appraised value in the preceding tax year, plus (b) the property's appraised value the
preceding tax year, plus (c) the market value of all new improvements to the property. The value placed upon property within the
Appraisal Districts is subject to review by an Appraisal Review Board, consisting of members appointed by the Board of Directors of the
respective Appraisal District. The Appraisal Districts are required to review the value of property within the respective Appraisal District
at least every three years. The Town may require annual review at its own expense, and is entitled to challenge the determination of
appraised value of property within the Town by petition filed with the respective Appraisal Review Board.
Reference is made to the, Property Tax Code, for identification of property subject to taxation; property exempt or which may be
exempted from taxation, if claimed; the appraisal of property for ad valorem taxation purposes; and the procedures and limitations
applicable to the levy and collection of ad valorem taxes.
Article VIII of the State Constitution ("Article VIII") and State law provide for certain exemptions from property taxes, the valuation
of agricultural and open-space lands at productivity value, and the exemption of certain personal property from ad valorem taxation.
Under Section 1-b, Article VIII, and State law, the governing body of a political subdivision, at its option, may grant: (1) An
exemption of not less than $3,000 of the market value of the residence homestead of persons 65 years of age or older and the disabled
from all ad valorem taxes thereafter levied by the political subdivision; (2) An exemption of up to 20% of the market value of
residence homesteads. The minimum exemption under this provision is $5,000.
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The governing body of a county, municipality or junior college, may, on its own initiative or by a petition and referendum
process, freeze the total amount of ad valorem taxes levied on the residence homestead of a disabled person or persons 65 years
of age or older to the amount of taxes imposed in the year such residence qualified for such exemption. Such freeze on ad
valorem taxes is transferable to a different residence homestead. Also, a surviving spouse of a taxpayer who qualifies for the
freeze on ad valorem taxes is entitled to the same exemption so long as the property was the residence homestead of the
surviving spouse when the deceased spouse died and remains the residence homestead of the surviving spouse and the spouse
was at least 55 years of age at the time of the death of the individual’s spouse. If improvements (other than repairs or
improvements required to comply with governmental requirements) are made to the property, the value of the improvements is
taxed at the then current tax rate, and the total amount of taxes imposed is increased to reflect the new improvements with the
new amount of taxes then serving as the ceiling on taxes for the following years. Once established, the tax rate limitation may
not be repealed or rescinded.
In the case of residence homestead exemptions granted under Section 1-b, Article VIII, ad valorem taxes may continue to be
levied against the value of homesteads exempted where ad valorem taxes have previously been pledged for the payment of debt
if cessation of the levy would impair the obligation of the contract by which the debt was created.
State law and Section 2, Article VIII, mandate an additional property tax exemption for disabled veterans or the surviving spouse
or children of a deceased veteran who died while on active duty in the armed forces; the exemption applies to either real or
personal property with the amount of assessed valuation exempted ranging from $5,000 to a maximum of $12,000; provided,
however, that beginning in the 2009 tax year, a disabled veteran who receives from the from the United States Department of
Veterans Affairs or its successor 100 percent disability compensation due to a service-connected disability and a rating of 100
percent disabled or of individual unemployability is entitled to an exemption from taxation of the total appraised value of the
veteran’s residence homestead.
Under Article VIII and State law, the governing body of a county, municipality or junior college district, may freeze the total
amount of ad valorem taxes levied on the residence homestead of a disabled person or persons 65 years of age or older to the
amount of taxes imposed in the year such residence qualified for such exemption. Also, upon receipt of a petition signed by five
percent of the registered voters of the county, municipality or junior college district, an election must be held to determine by
majority vote whether to establish such a limitation on taxes paid on residence homesteads of persons 65 years of age or who are
disabled. Upon providing for such exemption, such freeze on ad valorem taxes is transferable to a different residence homestead
and to a surviving spouse living in such homestead who is disabled or is at least 55 years of age. If improvements (other than
maintenance or repairs) are made to the property, the value of the improvements is taxed at the then current tax rate, and the total
amount of taxes imposed is increased to reflect the new improvements with the new amount of taxes then serving as the ceiling
on taxes for the following years. Once established, the tax rate limitation may not be repeated or rescinded.
Article VIII provides that eligible owners of both agricultural land (Section 1-d) and open-space land (Section 1-d-1), including open-
space land devoted to farm or ranch purposes or open-space land devoted to timber production, may elect to have such property
appraised for property taxation on the basis of its productive capacity. The same land may not be qualified under both Section 1-d
and 1-d-1.
Nonbusiness personal property, such as automobiles or light trucks, are exempt from ad valorem taxation unless the governing body
of a political subdivision elects to tax this property. Boats owned as nonbusiness property are exempt from ad valorem taxation.
Article VIII, Section 1-j, provides for "freeport property" to be exempted from ad valorem taxation. Freeport property is defined as
goods detained in Texas for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication.
Decisions to continue to tax may be reversed in the future; decisions to exempt freeport property are not subject to reversal.
Article VIII, Section 1-n of the Texas Constitution provides for the exemption from taxation of "goods in transit." "Goods in
transit" is defined by a provision in the Tax Code, which is effective for tax years 2008 and thereafter, as personal property
acquired or imported into Texas and transported to another location in the State or outside of the State within 175 days of the
date the property was acquired or imported into Texas. The exemption excludes oil, natural gas, petroleum products, aircraft and
special inventory, including motor vehicle, vessel and out board motor, heavy equipment and manufactured housing inventory.
The Tax Code provision permits local governmental entities, on a local option basis, to take official action by January 1 of the
year preceding a tax year, after holding a public hearing, to tax goods in transit during the following tax year. A taxpayer may
receive only one of the freeport exemptions or the goods in transit exemptions for items of personal property.
The Town and the other taxing bodies within its territory may agree to jointly create tax increment financing zones, under which the
tax values on property in the zone are "frozen" at the value of the property at the time of creation of the zone. The Town also may
enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to
construct certain improvements on its property. The Town in turn agrees not to levy a tax on all or part of the increased value
attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10
years.
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Cities are also authorized, pursuant to Chapter 380, Texas Local Government Code (“Chapter 380”) to establish programs to promote
state or local economic development and to stimulate business and commercial activity in the Town. In accordance with a program
established pursuant to Chapter 380, the Town may make loans or grant of public fund for economic development purposes,
however, no obligations secured by ad valorem taxes may be issued for such purposes unless approved by voters of the Town.
EFFECTIVE TAX RATE AND ROLLBACK TAX RATE . . . By each September 1 or as soon thereafter as practicable, the Town
Council adopts a tax rate per $100 taxable value for the current year. The Town Council will be required to adopt the annual tax
rate for the Town before the later of September 30 or the 60th day after the date the certified appraisal roll is received by the
Town. If the Town Council does not adopt a tax rate by such required date the tax rate for that tax year is the lower of the
effective tax rate calculated for that tax year or the tax rate adopted by the Town for the preceding tax year. The tax rate consists
of two components: (1) a rate for funding of maintenance and operation expenditures, and (2) a rate for debt service.
Under the Property Tax Code, the Town must annually calculate and publicize its “effective tax rate” and “rollback tax rate”. A
tax rate cannot be adopted by the Town Council that exceeds the lower of the rollback tax rate or the effective tax rate until two
public hearings have been held on the proposed tax rate following notice of such public hearings (including the requirement that
notice be posted on the Town’s website if the Town owns, operates or controls an internet website and public notice be given by
television if the Town has free access to a television channel) and the Town Council has otherwise complied with the legal
requirements for the adoption of such tax rate. If the adopted tax rate exceeds the rollback tax rate the qualified voters of the
Town by petition may require that an election be held to determine whether or not to reduce the tax rate adopted for the current
year to the rollback tax rate.
"Effective tax rate" means the rate that will produce last year's total tax levy (adjusted) from this year's total taxable values
(adjusted). "Adjusted" means lost values are not included in the calculation of last year's taxes and new values are not included
in this year's taxable values.
"Rollback tax rate" means the rate that will produce last year's maintenance and operation tax levy (adjusted) from this year's
values (adjusted) multiplied by 1.08 plus a rate that will produce this year's debt service from this year's values (unadjusted)
divided by the anticipated tax collection rate.
The Property Tax Code provides that certain cities and counties in the State may submit a proposition to the voters to authorize
an additional one-half cent sales tax on retail sales of taxable items. If the additional tax is levied, the effective tax rate and the
rollback tax rate calculations are required to be offset by the revenue that will be generated by the sales tax in the current year.
Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the
calculation of the various defined tax rates.
PROPERTY ASSESSMENT AND TAX PAYMENT . . . Property within the Town is generally assessed as of January 1 of each year.
Business inventory may, at the option of the taxpayer, be assessed as of September. Oil and gas reserves are assessed on the
basis of a valuation process which uses an average of the daily price of oil and gas for the prior year. Taxes become due October
1 of the same year, and become delinquent on February 1 of the following year. Taxpayers 65 years old or older are permitted by
State law to pay taxes on homesteads in four installments with the first due on February 1 of each year and the final installment
due on August 1.
PENALTIES AND INTEREST . . . Charges for penalty and interest on the unpaid balance of delinquent taxes are made as follows:
Cumulative Cumulative
Month Penalty Interest Total
February 6% 1% 7%
March 7 2 9
April 8 3 11
May 9 4 13
June 10 5 15
July 12 6 18
After July, penalty remains at 12%, and interest increases at the rate of 1% each month. In addition, if an account is delinquent
in July, a 15% attorney's collection fee is added to the total tax penalty and interest charge. Under certain circumstances, taxes
which become delinquent on the homestead of a taxpayer 65 years old or older incur a penalty of 8% per annum with no
additional penalties or interest assessed. In general, property subject to the Town's lien may be sold, in whole or in parcels,
pursuant to court order to collect the amounts due. Federal law does not allow for the collection of penalty and interest against
an estate in bankruptcy. Federal bankruptcy law provides that an automatic stay of action by creditors and other entities,
including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents
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governmental units from foreclosing on property and prevents liens for post-petition taxes from attaching to property and
obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many
cases post-petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court.
TOWN APPLICATION OF TAX CODE . . . The Town grants an exemption to the market value of the residence homestead of
persons 65 years of age or older in the amount of $10,000; the disabled are not granted this exemption.
The Town has established a freeze on the taxes on residence homesteads of persons who are 65 years of age or who are disabled,
as may be done on a local option basis.
The Town has not granted an additional exemption of 20% of the market value of residence homesteads; the minimum
exemption that can be received being $5,000.
See Table 1 for a listing of the amounts of the exemptions described above.
Ad valorem taxes are not levied by the Town against the exempt value of residence homesteads for the payment of debt.
The Town does not tax nonbusiness personal property. However, the Town does tax leased vehicles that are considered
nonbusiness personal property. The Town contracts with the Collin County Tax Assessors Office to collect the Town’s taxes.
The Town does not permit split payments of taxes, and discounts on early payment of taxes are not allowed.
The Town does not tax freeport property.
The Town does collect the additional one-half cent sales tax for reduction of ad valorem taxes.
The Town has adopted a tax abatement policy.
TAX INCREMENT FINANCING ZONES . . . . The Town created a tax increment financing zone number 1 (“TIFZ #1”) in October of
2008. In anticipation of a planned development of a major corridor to the Town, the Town has entered into a memorandum of
understanding with a real estate investment and development company regarding the creation of a TIFZ #1 covering
approximately 700 acres along such corridor. The Town has also entered into a Development Agreement, relating to a 2,100
acre mixed use development consisting of residential, retail and commercial uses, which provides for impact fee credits by the
Town as certain costs of public infrastructure constructed by the developer and included within the Town’s Capital Improvement
Program.
The Town created a tax increment financing zone number 2 (“TIFZ #2”) in January of 2013. On December 31, 2012, the Town
Council approved by Contract 511 a Development and Financing Agreement with MSW Prosper 380, LP, outlines in
considerable detail the development intended to be created within the zone. TIFZ #2 is comprised of an approximate 157-acre
tract of land generally located at the northwestern quadrant of Highway 380 and the North Texas Tollway.
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TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT
2012/13 Market Valuation Established by Collin County and Denton County Appraisal Districts 1,831,837,588$
(excluding totally exempt property)
Less Exemptions/Reductions at 100% Market Value:
Over 65 Exemptions (Local Options)3,500,000$
Homestead Cap Adjustment 1,430,854
Disabled Veterans 2,896,460
Pollution Control 2,419,836
Productivity Loss 474,178,976
Prorated Exempt 2,182 484,428,308$
2012/13 Taxable Assessed Valuation 1,347,409,280$
General Obligation Debt Payable from Ad Valorem Taxes as of 5/1/13 (1)35,390,000$
The Bonds(2)11,040,000
The Certificates(2)5,500,000 51,930,000$
Less: Self-Supporting Debt(3)18,082,600
Net General Obligation Debt Payable from Ad Valorem Taxes as of 5/1/13 33,847,400$
General Obligation Interest and Sinking Fund as of 4/15/13 2,055,281$
Ratio Net General Obligation Tax Debt to Taxable Assessed Valuation 2.51%
2013 Estimated Population - 13,531
Per Capita Taxable Assessed Valuation - $99,579
Per Capita Net General Obligation Debt Payable from Ad Valorem Taxes - $2,501
(1) Includes self-supporting debt. Excludes the Refunded Obligations. Preliminary, subject to change.
(2) Preliminary, subject to change.
(3) General obligation debt in the amounts shown for which repayment is provided from revenues of the respective revenue
systems. The amount of self supporting debt is based on the percentages of revenue support as shown in Table 9. It is the
Town’s current policy to provide these payments from respective system revenues; this policy is subject to change in the
future.
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TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY
Taxable Appraised Value for Fiscal Year Ended September 30,
2013 2012 2011
% of % of % of
Category Amount Total Amount Total Amount Total
Real, Residential, Single-Family 1,003,002,504$ 54.75% 908,147,255$ 53.27% 836,494,899$ 52.03%
Real, Residential, Multi-Family 44,648,923 2.44% 38,448,995 2.26% 40,433,158 2.52%
Real, Vacant Lots/Tracts 34,753,233 1.90% 36,643,934 2.15% 28,517,534 1.77%
Real, Acreage (Land Only) 504,964,022 27.57% 502,888,117 29.50% 490,205,706 30.49%
Real, Farm and Ranch Improvements 21,306,562 1.16% 22,079,429 1.30% 20,152,079 1.25%
Real, Commercial & Industrial 89,140,634 4.87% 87,691,638 5.14% 80,868,737 5.03%
Real and Intangible Personal, Utilities 9,348,660 0.51% 9,032,754 0.53% 7,860,593 0.49%
Tangible Personal, Commercial & Industrial 31,490,253 1.72% 26,653,015 1.56% 26,500,425 1.65%
Tangible Personal, Other 167,935 0.01% 165,592 0.01% 164,592 0.01%
Real, Inventory 93,014,862 5.08% 72,896,802 4.28% 76,417,403 4.75%
Total Appraised Value Before Exemptions 1,831,837,588$ 100.00% 1,704,647,531$ 100.00% 1,607,615,126$ 100.00%
Less: Total Exemptions/Reductions 484,428,308 473,275,814 460,230,471
Taxable Assessed Value 1,347,409,280$ 1,231,371,717$ 1,147,384,655$
2010 2009
% of % of
Category Amount Total Amount Total
Real, Residential, Single-Family 765,257,767$ 52.59% 683,060,387$ 46.48%
Real, Residential, Multi-Family 15,298,152 1.05% 1,495,350 0.10%
Real, Vacant Lots/Tracts 27,669,773 1.90% 30,062,961 2.05%
Real, Acreage (Land Only) 441,323,216 30.33% 529,712,101 36.05%
Real, Farm and Ranch Improvements 9,065,544 0.62% 10,194,596 0.69%
Real, Commercial & Industrial 62,228,824 4.28% 54,603,029 3.72%
Real and Intangible Personal, Utilities 7,954,142 0.55% 7,236,213 0.49%
Tangible Personal, Business 27,364,776 1.88% 25,498,146 1.74%
Tangible Personal, Other 180,552 0.01% 171,740 0.01%
Real, Inventory 98,861,556 6.79% 127,499,908 8.68%
Total Appraised Value Before Exemptions 1,455,204,302$ 100.00% 1,469,534,431$ 100.00%
Less: Total Exemptions/Reductions 412,688,585 472,489,742
Taxable Assessed Value 1,042,515,717$ 997,044,689$
Taxable Appraised Value for Fiscal Year Ended September 30,
NOTE: Valuations shown are certified taxable assessed values reported by the Appraisal Districts to the State Comptroller of
Public Accounts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal
Districts updates records.
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TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY
Per Ratio
Fiscal Per Capita Gross Capita Tax Debt
Year Estimated Taxable Taxable Funded Tax Funded to Taxable
Ended City Assessed Assessed Debt at Tax Assessed
9/30 Population(1)Valuation (2)Valuation End of Year (3)Debt Valuation
2009 7,150 997,044,689$ 139,447$ 37,330,000$ 5,221$ 3.74%
2010 9,940 1,042,515,717 104,881 36,180,000 3,640 3.47%
2011 11,600 1,147,384,655 98,912 36,585,000 3,154 3.19%
2012 12,190 1,231,371,717 101,015 44,190,000 3,625 3.59%
2013 13,531 1,347,409,280 99,579 50,875,000 (4)3,760 (4)3.78%(4)
(1) Source: Town officials.
(2) As reported by the Appraisal Districts on Town's annual State Property Tax Reports filed with the Comptroller of Public
Accounts; subject to change during the ensuing year.
(3) Includes self-supporting debt.
(4) Projected. Excludes the Refunded Obligations. Includes the Obligations.
TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY
Fiscal
Year Total Interest % of % of
Ended Tax General and Sinking Current Total
9/30 Rate Fund Fund Tax Levy Collections Collections
2009 $ 0.520000 $ 0.305011 $ 0.214989 5,218,951$ 98.66% 99.90%
2010 0.520000 0.314084 0.205916 5,404,368 98.77% 99.70%
2011 0.520000 0.334742 0.185258 5,932,358 99.44% 99.80%
2012 0.520000 0.316937 0.203063 6,380,037 99.11% 99.52%
2013 0.520000 0.316914 0.203086 6,936,463 98.83%
(1)98.83%(1)
(1) Collections through March 31, 2013.
TABLE 5 - TEN LARGEST TAXPAYERS
2012/13 % of Total
Taxable Taxable
Assessed Assessed
Name of Taxpayer Nature of Property Valuation Valuation
Western Rim Investors 2007-4 LP Residential Development 43,186,691$ 3.21%
Prosper Land Company Ltd Property/Development 8,795,126 0.65%
Saddle Creek Investments Ltd Residential Development 6,755,986 0.50%
Five SAC Self-Storage Corp. Public Storage 6,529,887 0.48%
CC Joint Ventures Ltd Property/Development 6,435,078 0.48%
Quail Landing Phase I LP Property/Development 6,250,270 0.46%
Preston Development Ltd Property/Development 5,438,247 0.40%
Beazer Homes Texas LP Property/Development 5,374,764 0.40%
Sanders, Deion Luwynn Residence 5,364,323 0.40%
Sa'Hood Trust Residence 4,595,277 0.34%
98,725,649$ 7.33%
GENERAL OBLIGATION DEBT LIMITATION . . . No general obligation debt limitation is imposed on the Town under current State
law or the Town's Home Rule Charter (see "The Obligations - Tax Rate Limitation").
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TABLE 6 - ESTIMATED OVERLAPPING DEBT
Expenditures of the various taxing entities within the territory of the Town are paid out of ad valorem taxes levied by such
entities on properties within the Town. Such entities are independent of the Town and may incur borrowings to finance their
expenditures. This statement of direct and estimated overlapping ad valorem tax bonds ("Tax Debt") was developed from
information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the
amounts relating to the Town, the Town has not independently verified the accuracy or completeness of such information, and no
person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have
issued additional bonds since the date hereof, and such entities may have programs requiring the issuance of substantial amounts
of additional bonds, the amount of which cannot be determined. The following table reflects the estimated share of overlapping
Tax Debt of the Town.
Direct and
2012/13 Total Overlapping Authorized
Taxable 2012/13 Funded Estimated Funded But Unissued
Assessed Tax Debt As Of % Debt As Of Debt As Of
Jurisdiction Value Rate 5/1/2013 Applicable 5/1/2013 5/1/2013
Town of Prosper, Texas 1,347,409,280$ 0.5200$ 33,847,400$ (1)100.00% 33,847,400$ 21,040,000$
Collin County 69,300,274,160 0.2400 365,175,000 1.95% 7,120,913 184,555,000
Collin County Community College District 71,134,134,559 0.0863 40,210,000 1.95% 784,095 -
Denton County 54,586,142,483 0.2829 550,880,000 0.24% 1,322,112 235,126,687
Prosper Independent School District 2,070,361,686 1.6700 235,169,110 65.91% 154,999,960 622,500,000
Total Direct and Overlapping Funded Debt 198,074,480$
Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation . . . . . . . . . . . . . . . . . . . . . . 14.70%
Per Capita Direct and Overlapping Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,639$
(1) Excludes self-supporting debt and the Refunded Obligations, includes the Obligations. Preliminary, subject to change.
(2) Excludes the Obligations. Preliminary, subject to change.
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TABLE 8 - INTEREST AND SINKING FUND BUDGET PROJECTION
Tax Supported Debt Service Requirements, Fiscal Year Ending 9/30/13(1) 4,090,371$
Interest and Sinking Fund, 9/30/12 889,632$
Budgeted Interest and Sinking Fund Tax Levy 2,724,956
Investment Income 12,000
Budgeted Transfer from Enterprise Fund 1,700,761 5,327,349
Estimated Balance, Fiscal Year Ending 9/30/13 1,236,978$
(1) Includes self-supporting debt and the Obligations. Excludes the Refunded Obligations. Preliminary, subject to change.
TABLE 9 - COMPUTATION OF SELF-SUPPORTING DEBT
Net System Revenue Available in FY 11/12 3,235,077$
Less: Requirements for Revenue Bonds in FY 12/13 -
Balance Available for Other Purposes 3,235,077$
Requirements for System Tax Bonds in FY 12/13 1,700,761
Percentage of System General Obligation Bonds Self-Supporting 100%
TABLE 10 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS
Amount Remaining
Date Amount Issued Unissued
Purpose Authorized Authorized to Date Balance
City Hall and Multi-Purpose Center 5/14/2011 1,250,000$ -$ 1,250,000$
Public Works Facility 5/14/2011 450,000 - 450,000
Public Safety Facility and Equipment 5/14/2011 3,850,000 - 3,850,000
Parks & Recreation Facilities and Equipment 5/14/2011 6,200,000 4,200,000 2,000,000
Streets & Roads 5/14/2011 13,290,000 3,810,000 9,480,000
25,040,000$ 8,010,000$ 17,030,000$
ANTICIPATED ISSUANCE OF GENERAL OBLIGATION DEBT . . . The Town does not anticipate the issuance of additional general
obligation debt in the next 12 months.
TABLE 11 – OTHER OBLIGATIONS
The Town entered into a capital lease agreement for two police vehicles with Ford Motor Credit Company. As of September 30,
2012, the vehicles had a carrying value of $38,646. Capital lease expenditures for 2012 were $20,663, which included interest of
$1,371. The effective interest rate is 7.1%
PENSION FUND
Plan Description - The Town provides pension benefits for all of its eligible employees through a non-traditional, joint
contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple-
employer public employee retirement system. The plan provisions that have been adopted by the Town are within the options
available in the governing state statutes of TMRS.
TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required
supplementary information (RSI) for TMRS. The report also provides detailed explanations of the contributions, benefits and
actuarial methods and assumptions used by the System. This report may be obtained by writing to TMRS, P.O. Box 149153,
Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is available on the TMRS’ website at
www.TMRS.com.
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The plan provisions are adopted by the governing body of the Town, within the options available in the state statutes governing
TMRS. Plan provisions for the Town were as follows:
Employee deposit rate 7.0%
Matching ratio (City to employee)2 to 1
Years required for vesting 5
Service retirement eligibility
(expressed as age/years of service)60/5, 0/20
Updated service credit 100% repeating transfers
Annuity increase to retirees 70% of CPI, repeating
Contributions - Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary,
using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service
cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate
finances the portion of an active member's projected benefit allocated annually; the prior service contribution rate amortizes the
unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service
contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits
and Annuity Increases.
The Town contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the Town make contributions
monthly. Since the Town needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay
between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect.
Fiscal Annual Actual Percent Net Pension
Year Pension Contributions of APC Obligation
Ended Cost (APC) Made Contributed (NPO)
2010 381,905$ 381,905$ 106%(21,191)$
2011 389,749 407,378 105%(17,629)
2012 436,397 446,794 102%(46,443)
Three Year Trend Information for TMRS
Annual Required Contribution (ARC)436,751$
Interest on Net Pension Obligation (2,523)
Adjustment to the ARC 2,169
Annual Pension Cost (APC)436,397
Contributions Made (446,794)
Increase (Decrease) in Net Pension Obligation (10,397)
Net Pension Obligation/(Asset), Beginning of Year (36,046)
Net Pension Obligation/(Asset), End of Year (46,443)$
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The required contribution rates for fiscal year 2012 are determined as part of the December 31, 2009 and 2010 actuarial
valuations. Additional information as of the latest actuarial valuation, December 31, 2011, also follows:
Valuation Date 12/31/2009 12/31/2010 12/31/2011
Actuarial Cost Method Projected Unit Credit Projected Unit Credit Projected Unit Credit
Amortization Method Level Percent Level Percent Level Percent
of Payroll of Payroll of Payroll
GASB 25 Equivalent Single 23.3 years;22.5 years;21.5 years;
Amortization Period closed period closed period closed period
Amortization Period for new 25 years 25 years 25 years
Gaines/Losses
Asset Valuation Method 10-year Smoothed 10-year Smoothed 10-year Smoothed
Market Market Market
Actuarial Assumptions:
Investment Rate of Return*7.5%7.0%7.0%
Projected Salary Increases* Varies by Varies by Varies by
age and service age and service age and service
*Includes Inflation at 3.0%3.0%3.0%
Cost-of-Living Adjustments 2.1%2.1%2.1%
Actuarial Assumptions
Funded Status and Funding Progress –Actuarial valuations involve estimates of the value of reported amounts and assumptions
about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual
results are compared to past expectations and new estimates are made about the future.
Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each
valuation, and reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include
techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets.
The schedule of funding progress below presents multi-year trend information about whether the actuarial value of the plan
assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
U.A.A.L. as a
Actuarial Actuarial Unfunded Percentage
Actuarial Value of Accrued AAL Funded Covered of Covered
Valuation Assets Liability (UAAL) Ratio Payroll Payroll
Date (a) (AAL)(b) (b)-(a) (a)/(b) (c) [(b)-(a)/(c)]
12/31/09 2,288,445$ 3,343,417$ 1,054,972$ 68.4% 3,719,393$ 28.4%
12/31/10 3,175,249 4,606,199 1,430,950 68.9% 3,828,422 37.4%
12/31/11 4,072,790 5,493,307 1,420,517 74.1% 4,160,807 34.1%
Schedule of Funding Progress for TMRS
OTHER POST-EMPLOYMENT BENEFITS
The Town does not supply any other additional benefits to retired employees other than those described above.
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FINANCIAL INFORMATION
TABLE 12 - CHANGES IN NET ASSETS
Revenues 2012 2011 2010 2009 2008
Program Revenues
Charges for Services 2,304,052$ 1,226,483$ 1,069,437$ 921,363$ 2,505,378$
Operating Grants and Contributions 265,757 349,877 2,224,037 1,396,991 451,967
Capital Grants and Contributions 5,355,990 2,907,683 - - -
General Revenues
Property Taxes 6,391,826 5,986,296 5,504,833 5,296,120 4,428,507
Sales Taxes 1,941,832 1,320,686 1,308,750 1,077,127 1,287,511
Franchise Taxes 504,731 424,485 398,817 428,027 340,714
Impact & Escrow Fees 627,788 53,351 2,687,964 - -
Unrestricted Investment Earnings 162,583 154,577 338,898 455,815 596,140
Miscellaneous 864,681 530,408 115,786 440,228 1,941,982
Total Revenues 18,419,240$ 12,953,846$ 13,648,522$ 10,015,671$ 11,552,199$
Expenditures
General Government 1,712,306$ 1,622,024$ 1,233,969$ 1,507,786$ 975,644$
Police 1,853,994 1,588,611 1,402,835 1,198,529 1,034,071
Court 236,652 231,747 217,592 227,419 186,611
Fire and Ambulance 2,249,804 2,287,665 2,249,048 2,130,712 1,450,528
Streets 1,616,307 2,369,730 1,609,155 1,355,747 1,443,744
Parks 1,461,739 677,679 832,873 444,129 130,282
Engineering 144,489 158,863 145,762 141,611 151,263
Library 84,534 69,748 84,574 - -
Communications - - - - 11,198
Inspections 601,959 560,175 501,362 486,008 415,299
Planning 326,279 380,712 310,924 401,602 323,395
Interest and Fiscal Charges 1,108,187 1,138,952 895,015 1,275,691 458,709
Total Expenditures 11,396,250$ 11,085,906$ 9,483,109$ 9,169,234$ 6,580,744$
Transfers 351,714 434,125 15,118 (2,707,882) (1,237,049)
Change in Net Assets 7,374,704 2,302,065 4,180,531 (1,861,445) 3,734,406
Beginning Fund Balance, Oct. 1 53,704,046$ (1)51,735,807$ (1)47,452,542$ (1)47,923,987$ 44,189,581$ (2)
Ending Fund Balance, Sept. 30 61,078,750$ 54,037,872$ 51,633,073$ 46,062,542$ 47,923,987$
Fiscal Year Ended September 30,
(1) Restated.
(2) In accordance with current Governmental Accounting Standards Board pronouncements, the Governmental Activities Net
Assets as of September 30, 2007 has been increase by $33,472,800 from $10,716,781 to $44,189,581, to record the
estimated value of streets and other infrastructure built by developers and taken over by the Town.
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TABLE 12 -A - GENERAL FUND REVENUES AND EXPENDITURE HISTORY
2012 2011 2010 2009 2008
Revenues
Property Taxes 3,881,649$ 3,868,027$ 3,351,840$ 3,060,078$ 2,319,049$
Franchise, Sales and Other Taxes 2,446,563 1,745,171 1,707,567 1,505,154 1,628,225
Licenses, Zoning Fees and Permits 1,570,762 670,199 672,418 549,536 1,193,843
Charges for Services 192,213 163,188 169,955 133,306 160,948
Grant Income 198,129 284,645 344,447 275,469 130,000
Interest 55,198 69,567 112,861 92,728 117,298
Fines, Warrants and Seizures 537,670 386,001 215,746 226,678 234,746
Contributions - - - - -
Miscellaneous 114,410 114,666 115,786 73,087 64,362
Total Revenues 8,996,594$ 7,301,464$ 6,690,620$ 5,916,036$ 5,848,471$
Expenditures
General Government 1,572,159$ 1,524,824$ 1,067,175$ 939,080$ 903,491$
Police 1,742,499 1,470,908 1,319,106 1,072,158 937,327
Court 235,392 217,117 213,287 213,807 183,982
Fire and Ambulance 2,128,974 2,129,840 2,067,707 1,897,490 1,243,116
Streets 338,718 302,862 342,158 257,066 351,841
Parks 791,024 529,756 338,788 159,729 96,779
Library 84,534 69,748 84,574 - -
Engineering 154,829 164,812 145,762 137,741 142,297
Communications - - - - 11,198
Inspections 617,822 567,513 498,348 469,804 401,317
Planning 332,860 385,206 310,924 390,628 316,843
Debt Service 20,663 35,230 42,933 40,580 -
Capital Outlay 557,428 646,325 1,708,370 159,656 2,107,777
Total Expenditures 8,576,902$ 8,044,141$ 8,139,132$ 5,737,739$ 6,695,968$
Excess (Deficiency) of Revenues
Over (Under) Expenditures 419,692 (742,677) (1,448,512) 178,297 (847,497)
Other Financing Sources (Uses) 1,091,784 1,237,636 2,022,083 212,266 1,761,373
Beginning Fund Balance, Oct. 1 5,568,868 5,073,909 (1)4,397,604 4,007,041 3,093,165
Ending Fund Balance, Sept. 30 7,080,344$ 5,568,868$ 4,971,175$ 4,397,604$ 4,007,041$
Fiscal Year Ended September 30,
(1) Restated.
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TABLE 13 - MUNICIPAL SALES TAX HISTORY
The Town has adopted the Municipal Sales and Use Tax Act, V.T.C.A., Tax Code, Chapter 321, which grants the Town the power to
impose and levy a 1% Local Sales and Use Tax within the Town; the proceeds are credited to the General Fund and are not pledged
to the payment of the Certificates. Collections and enforcements are effected through the offices of the Comptroller of Public
Accounts, State of Texas, who remits the proceeds of the tax, after deduction of a 2% service fee, to the Town monthly. In 1995, the
voters of the Town approved the imposition of an additional sales and use tax of one-half of one percent (½% of 1%) for economic
development and an additional sales and use tax of one-half of one percent (½ of 1%) for property tax reduction. Collection for the
additional tax went into effect on October 1, 1995. The sales tax for economic development is collected solely for the benefit of
Prosper Economic Development Corporation (the “Corporation”), and may be pledged only to secure payment of sales tax revenue
bonds issued by the Corporation. In addition, the Corporation’s sales tax revenues may be used for a variety of economic
development and public purposes that do not involve the issuance of sales tax revenue bonds.
Fiscal
Year % of Equivalent of
Ended 1.5% Total Ad Valorem Ad Valorem Per
9/30 Collected (1)Tax Levy Tax Rate Capita
2009 1,079,226$ 20.68% 0.1082$ 150.94$
2010 1,305,580 25.02% 0.1252 131.35
2011 1,315,910 25.21% 0.1147 113.44
2012 1,937,918 37.13% 0.1574 158.98
2013 1,531,655 (2)29.35% 0.1137 113.20
(1) Includes collections of the one-half-cent for property tax relief but excludes collections of the one-half-cent tax for
economic development.
(2) Collections through May 2013.
FINANCIAL POLICIES
Basis of Accounting . . . The accounts of the Town are organized and operated on the basis of funds and account groups. A fund
is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according
to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual
provisions. The minimum numbers of funds are maintained consistent with legal and managerial requirements. Account groups
are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds.
The Town has the following fund types and account groups:
Governmental funds are used to account for the Town’s general government activities. Governmental fund types use the flow of
current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of
accounting revenues are recognized when susceptible to accrual (i.e., when they are “measurable and available”). “Measurable”
means the amount of the transaction can be determined and “available” means collectible within the current period or soon
enough thereafter to pay liabilities of the current period. The Town considers all revenues available if they are collected within
60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on
general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are
recognized when the obligations are expected to be liquidated with expendable available financial resources.
Property taxes, franchise taxes, licenses and interest are susceptible to accrual. Sales taxes collected and held by the state at year
end on behalf of the Town are also recognized as revenue. Other receipts and taxes become measurable and available when cash
is received by the Town and are recognized as revenue at that time.
The Town of Prosper maintains seven governmental funds. The Major Governmental funds include the following fund types:
General Fund . . . The general fund is the government’s primary operating fund. It accounts for all financial resources of the
general government, except those required to be accounted for in another fund.
Impact Fee Fund . . . The impact fee fund accounts for impact fees charged to new developments in accordance with Chapter
395 of the Texas Local Government Code to finance new construction or expansion of capital improvements such as water
treatment and distribution facilities, storm and wastewater facilities, and transportation facilities.
Debt Service Fund . . . The debt service fund accounts for the servicing of general long-term debt not being financed by
proprietary funds.
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Capital Projects Fund . . . The capital projects fund is used to account for the acquisition and construction of capital assets
financed primarily through the issuance of debt, such as general obligation bonds, certificates of obligation, tax notes or other
revenue bonds.
Budgetary Procedures . . . Annual budgets are adopted on a basis consistent with generally accepted accounting principles.
Annual appropriated budgets are legally adopted for the governmental funds and water and sewer funds. All annual
appropriations lapse at fiscal year end. Project length financial plans are adopted for all capital projects funds.
The Town follows these procedures in establishing the budgetary data reflected in the financial statements.
1. Prior to August 16, the Town Manager submits to the Town Council a proposed operating budget for the fiscal year
commencing the following October 1. The operating budget includes proposed expenditures and the means of
financing them.
2. Public hearings are conducted to obtain taxpayer comments.
3. The budget is legally enacted and ratified through the passage of an ordinance.
4. Formal budgetary integration, using the modified accrual basis, is employed as a management control device during
the year for the General Fund, Debt Service Fund and Capital Projects Funds.
5. The budget approved for the discretely presented component unit follows similar approval procedures.
6. The budget approved for the Water and Sewer Fund follows similar approval procedures.
Encumbrances for goods or purchased services are documented by purchase orders or contracts. Encumbered amounts lapse at
year end. At year end, encumbrances are canceled or re-appropriated as part of the following year budget.
The Town invests its investable funds in investments authorized by Texas law in accordance with investment policies approved by
the Town Council. Both state law and the Town’s investment policies are subject to change.
LEGAL INVESTMENTS . . . Under Texas law, the Town is authorized to invest in (1) obligations, including letters of credit, of the
United States or its agencies and instrumentalities, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3)
collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security
for which is guaranteed by an agency or instrumentality of the United States, (4) other obligations, the principal and interest of which
are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their
respective agencies and instrumentalities, (5) obligations of states, agencies, counties, cities, and other political subdivisions of any
state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent, (6) bonds
issued, assumed, or guaranteed by the State of Israel, (7) effective September 1, 2005, certificates of deposit (i) issued by a
depository institution that has its main office or a branch office in the State of Texas, that are guaranteed or insured by the
Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or are secured as to principal by
Obligations described in clauses (1) through (6) or in any other manner and amount provided by law for Town deposits, or (ii)
where; (a) the funds are invested by the Town through a depository institution that has a main office or branch office in this state
and that is selected by the Town; (b) the depository institution selected by the Town arranges for the deposit of funds in one or
more federally insured depository institutions, wherever located; (c) the certificates of deposit are insured by the United States or
an instrumentality of the United States; (d) the depository institution acts as a custodian for the Town with respect to the
certificates of deposit; and (e) at the same time that the certificates of deposit are issued, the depository institution selected by the
Town receives deposits from customers of other federally insured depository institutions, wherever located, that is equal to or
greater than the funds invested by the Town through the depository institution selected under clause (ii)(a) above, (8) fully
collateralized repurchase agreements that have a defined termination date, are fully secured by obligations described in clause (1),
and are placed through a primary government securities dealer or a financial institution doing business in the State of Texas, (9)
bankers’ acceptances with a stated maturity of 270 days or less from the date of its issuance, if the short-term obligations of the
accepting bank or its parent are rated at least A-1 or P-1 or the equivalent by at least one nationally recognized credit rating agency,
(10) commercial paper that is rated at least A-1 or P-1 or the equivalent by either (a) two nationally recognized credit rating agencies
or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a U.S. or
state bank, (11) no-load money market mutual funds registered with and regulated by the Securities and Exchange Commission that
have a dollar weighted average stated maturity of 90 days or less and include in their investment objectives the maintenance of a
stable net asset value of $1 for each share, (12) no-load mutual funds registered with the Securities and Exchange Commission that
have an average weighted maturity of less than two years, invest exclusively in obligations described in the preceding clauses, and
are continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or
its equivalent, and (13) public funds investment pools that have an advisory board which includes participants in the pool and are
continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its
equivalent or no lower than investment grade with a weighted average maturity no greater than 90 days. Texas law also permits the
Town to invest bond proceeds in a guaranteed investment contract, subject to limitations as set forth in the Public Funds Investment
Act, Texas Government Code, Chapter 2256 (the "PFIA").
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A political subdivision such as the Town may enter into securities lending programs if (i) the securities loaned under the program are
100% collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either
secured by (a) obligations that are described in clauses (1) through (6) above, (b) irrevocable letters of credit issued by a state or
national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its equivalent or (c)
cash invested in obligations described in clauses (1) through (6) above, clauses (10) through (12) above, or an authorized investment
pool; (ii) securities held as collateral under a loan are pledged to the Town, held in the Town’s name and deposited at the time the
investment is made with the Town or a third party designated by the Town; (iii) a loan made under the program through either a
primary government securities dealer or a financial institution doing business in the State of Texas; and (iv) the agreement to lend
securities has a term of one year or less.
The Town may invest in such obligations directly or through government investment pools that invest solely in such obligations
provided that the pools are rated no lower than AAA or AAAm or an equivalent by at least one nationally recognized rating service
or no lower than investment grade by at least one nationally recognized rating service and has or which has a weighted average
maturity no greater than 90 days. The Town is specifically prohibited from investing in (1) obligations whose payment represents the
coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal
(2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security and bears
no interest (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years and (4) collateralized
mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index.
INVESTMENT POLICIES . . . Under Texas law, the Town is required to invest its funds under written investment policies that primarily
emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of
investment management; and that includes a list of authorized investments for Town funds, maximum allowable stated maturity of
any individual investment, and the maximum average dollar-weighted maturity allowed for pooled fund groups. All Town funds
must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each fund's
investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2)
preservation and safety of principal, (3) liquidity, (4) marketability of each investment, (5) diversification of the portfolio, and (6) yield.
Under Texas law, Town investments must be made "with judgment and care, under prevailing circumstances, that a person of
prudence, discretion, and intelligence would exercise in the management of the person’s own affairs, not for speculation, but for
investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment
officers of the Town shall submit an investment report detailing: (1) the investment position of the Town, (2) that all investment
officers jointly prepared and signed the report, (3) the beginning market value, any additions and changes to market value, and the
ending value of each pooled fund group, (4) the book value and market value of each separately listed asset at the beginning and end
of the reporting period, (5) the maturity date of each separately invested asset, (6) the account or fund or pooled fund group for which
each individual investment was acquired, and (7) the compliance of the investment portfolio as it relates to: (a) adopted investment
strategy statements and (b) state law. No person may invest Town funds without express written authority from the Town Council.
ADDITIONAL PROVISIONS . . . Under Texas law, the Town is additionally required to: (1) annually review its adopted policies and
strategies; (2) require any investment officers with personal business relationships or relatives with firms seeking to sell securities to the
Town to disclose the relationship and file a statement with the Texas Ethics Commission and the Town Council; (3) require the
registered principal of firms seeking to sell securities to the Town to: (a) receive and review the Town’s investment policy, (b)
acknowledge that reasonable controls and procedures have been implemented to preclude imprudent investment activities, and (c)
deliver a written statement attesting to these requirements; (4) perform an annual audit of the management controls on investments and
adherence to the Town’s investment policy; (5) provide specific investment training for the Treasurer, Chief Financial Officer, and
investment officers; (6) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse
repurchase agreement funds to no greater than the term of the reverse repurchase agreement; (7) restrict its investment in non-money
market mutual funds in the aggregate to no more than 15 percent of its monthly average fund balance, excluding bond proceeds and
reserves and other funds held for debt service, and to invest no portion of bond proceeds, reserves and funds held for debt service, in
mutual funds; and (8) require local government investment pools to conform to the new disclosure, rating, net asset value, yield
calculation, and advisory board requirements.
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TABLE 14 - CURRENT INVESTMENTS
As of March 31, 2013, the Town's investable funds were invested in the following categories:
% of
Description Portfolio Book Value Market Value
Bank Deposits 55.50% 26,657,462$ 26,657,462$
Certificates of Deposit 13.18% 6,330,768 6,330,768
TexSTAR (1)17.79% 8,543,633 8,543,633
TexPool 13.54% 6,503,570 6,503,570
Total 100.00% 48,035,433$ 48,035,433$
(1) TexSTAR is a local government investment pool for whom First Southwest Asset Management, Inc., an affiliate of First
Southwest Company, the Town’s financial advisor, provides customer service and marketing for the pool. TexSTAR
currently maintains a “AAAm” rating from Standard & Poor’s and has an investment objective of achieving and
maintaining a stable net asset value of $1.00 per share. Daily investments or redemptions of funds is allowed by the
participants.
TAX MATTERS
OPINION . . . On the date of initial delivery of the Obligations, McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel
to the Town, will render its opinion that, in accordance with statutes, regulations, published rulings and court decisions existing
on the date thereof ("Existing Law") (1) interest on the Obligations for federal income tax purposes will be excludable from the
"gross income" of the holders thereof and (2) the Obligations will not be treated as "specified private activity bonds" the interest
on which would be included as an alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code
of 1986 (the "Code"). Except as stated above, Bond Counsel will express no opinion as to any other federal, state or local tax
consequences of the purchase, ownership or disposition of the Obligations. See Appendix C -- Form of Opinion of Bond
Counsel.
In rendering its opinion, Bond Counsel to the Town will rely upon (a) certain information and representations of the Town,
including information and representations contained in the Town's federal tax certificate, (b) covenants of the Town contained in
the Obligation documents relating to certain matters, including arbitrage and the use of the proceeds of the Bonds and the
Refunded Obligations and the property financed or refinanced therewith and (c) the verification report of Grant Thornton LLP..
Failure by the Town to observe the aforementioned representations or covenants could cause the interest on the Obligations to
become taxable retroactively to the date of issuance.
The Code and the regulations promulgated thereunder contain a number of requirements that must be satisfied subsequent to the
issuance of the Obligations in order for interest on the Obligations to be, and to remain, excludable from gross income for federal
income tax purposes. Failure to comply with such requirements may cause interest on the Obligations to be included in gross
income retroactively to the date of issuance of the Obligations. The opinion of Bond Counsel to the Town is conditioned on
compliance by the Town with such requirements, and Bond Counsel to the Town has not been retained to monitor compliance
with these requirements subsequent to the issuance of the Obligations.
Bond Counsel's opinion represents its legal judgment based upon its review of Existing Law and the reliance on the
aforementioned information, representations and covenants. Bond Counsel's opinion is not a guarantee of a result. The Existing
Law is subject to change by the Congress and to subsequent judicial and administrative interpretation by the courts and the
Department of the Treasury. There can be no assurance that such Existing Law or the interpretation thereof will not be changed
in a manner which would adversely affect the tax treatment of the purchase, ownership or disposition of the Obligations.
A ruling was not sought from the Internal Revenue Service by the Issuer with respect to the Obligations or the project financed
with proceeds of the Obligations or the Refunded Obligations. No assurances can be given as to whether the Internal Revenue
Service will commence an audit of the Obligations, or as to whether the Internal Revenue Service would agree with the opinion
of Bond Counsel. If an Internal Revenue Service audit is commenced, under current procedures the Internal Revenue Service is
likely to treat the Issuer as the taxpayer and the Obligationholders may have no right to participate in such procedure. No
additional interest will be paid upon any determination of taxability.
FEDERAL INCOME TAX ACCOUNTING TREATMENT OF ORIGINAL ISSUE DISCOUNT . . . The initial public offering price to be paid
for one or more maturities of the Obligations (the "Original Issue Discount Obligations") may be less than the principal amount
thereof or one or more periods for the payment of interest on the bonds may not be equal to the accrual period or be in excess of
one year. In such event, the difference between (i) the "stated redemption price at maturity" of each Original Issue Discount
Obligation, and (ii) the initial offering price to the public of such Original Issue Discount Obligation would constitute original
issue discount. The "stated redemption price at maturity" means the sum of all payments to be made on the bonds less the
amount of all periodic interest payments. Periodic interest payments are payments which are made during equal accrual periods
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(or during any unequal period if it is the initial or final period) and which are made during accrual periods which do not exceed
one year.
Under Existing Law, any owner who has purchased such Original Issue Discount Obligation in the initial public offering is
entitled to exclude from gross income (as defined in section 61 of the Code) an amount of income with respect to such Original
Issue Discount Obligation equal to that portion of the amount of such original issue discount allocable to the accrual period. For
a discussion of certain collateral federal tax consequences, see the discussion set forth below.
In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Obligation prior to stated
maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Obligation in the
hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such
Original Issue Discount Obligation was held by such initial owner) is includable in gross income.
Under Existing Law, the original issue discount on each Original Issue Discount Obligation is accrued daily to the stated
maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual
anniversary dates of the date of the Obligations and ratably within each such six-month period) and the accrued amount is added
to an initial owner's basis for such Original Issue Discount Obligation for purposes of determining the amount of gain or loss
recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each
accrual period is equal to (a) the sum of the issue price and the amount of original issue discount accrued in prior periods
multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and
properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period
on such Original Issue Discount Obligation.
The federal income tax consequences of the purchase, ownership, redemption, sale or other disposition of Original Issue
Discount Obligations which are not purchased in the initial offering at the initial offering price may be determined according to
rules which differ from those described above. All owners of Original Issue Discount Obligations should consult their own tax
advisors with respect to the determination for federal, state and local income tax purposes of the treatment of interest accrued
upon redemption, sale or other disposition of such Original Issue Discount Obligations and with respect to the federal, state, local
and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount
Obligations.
Prospective purchasers should be aware that because the first interest payment will be made more than one year after the issue
date of the Obligations, the first payment may be treated as original issue discount. While such treatment of the payment will not
adversely affect the excludability of the interest portion of the payment from a holder's gross income, special tax accounting
treatment may apply. This tax accounting treatment would cause a portion of the interest payment to be recognized in the
taxable year in which the Obligations are purchased, rather than the taxable year in which the payment is received by the holder.
This treatment may accelerate any alternative minimum tax consequences for corporations, the recognition of any portion of the
payment which is treated as market discount and any other collateral federal income tax consequences for certain holders.
Prospective purchasers should consult their tax advisors for advice regarding such consequences.
COLLATERAL FEDERAL INCOME TAX CONSEQUENCES . . . The following discussion is a summary of certain collateral federal
income tax consequences resulting from the purchase, ownership or disposition of the Obligations. This discussion is based on
Existing Law, which is subject to change or modification, retroactively.
The following discussion is applicable to investors, other than those who are subject to special provisions of the Code, such as
financial institutions, property and casualty insurance companies, life insurance companies, individual recipients of Social
Security or Railroad Retirement benefits, individuals allowed an earned income credit, certain S corporations with Subchapter C
earnings and profits, foreign corporations subject to the branch profits tax, taxpayers qualifying for the health insurance premium
assistance credit and taxpayers who may be deemed to have incurred or continued indebtedness to purchase tax-exempt
obligations.
THE DISCUSSION CONTAINED HEREIN MAY NOT BE EXHAUSTIVE. INVESTORS, INCLUDING THOSE WHO ARE
SUBJECT TO SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND
DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE
OBLIGATIONS.
Interest on the Obligations will be includable as an adjustment for “adjusted current earnings” to calculate the alternative
minimum tax imposed on corporations by section 55 of the Code.
Under section 6012 of the Code, holders of tax-exempt obligations, such as the Obligations, may be required to disclose interest
received or accrued during each taxable year on their returns of federal income taxation.
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Section 1276 of the Code provides for ordinary income tax treatment of gain recognized upon the disposition of a tax-exempt
obligation, such as the Obligations, if such obligation was acquired at a "market discount" and if the fixed maturity of such
obligation is equal to, or exceeds, one year from the date of issue. Such treatment applies to "market discount bonds" to the
extent such gain does not exceed the accrued market discount of such bonds; although for this purpose, a de minimis amount of
market discount is ignored. A "market discount bond" is one which is acquired by the holder at a purchase price which is less
than the stated redemption price at maturity or, in the case of a bond issued at an original issue discount, the "revised issue price"
(i.e., the issue price plus accrued original issue discount). The "accrued market discount" is the amount which bears the same
ratio to the market discount as the number of days during which the holder holds the obligation bears to the number of days
between the acquisition date and the final maturity date.
STATE, LOCAL AND FOREIGN TAXES . . . Investors should consult their own tax advisors concerning the tax implications of the
purchase, ownership or disposition of the Obligations under applicable state or local laws. Foreign investors should also consult
their own tax advisors regarding the tax consequences unique to investors who are not United States persons.
CONTINUING DISCLOSURE OF INFORMATION
In the Ordinances, the Town has made the following agreement for the benefit of the holders and beneficial owners of the
Obligations. The Town is required to observe the agreement for so long as it remains obligated to advance funds to pay the
Obligations. Under the agreement, the Town will be obligated to provide certain updated financial information and operating
data annually, and timely notice of specified material events, to certain information vendors. This information will be available
to securities brokers and others who subscribe to receive the information from the vendors.
ANNUAL REPORTS . . . The Town will provide certain updated financial information and operating data to certain information
vendors annually. The information to be updated includes all quantitative financial information and operating data with respect
to the Town of the general type included in this Official Statement under Tables numbered 1 through 5, and 7 through 14 and in
Appendix B. The Town will update and provide this information within six months after the end of each fiscal year. The Town
will provide the updated information to the Municipal Securities Rulemaking Board (the “MSRB”) through the “EMMA”
information system in accordance with recent amendments to Rule 15c2-12 (the “Rule”) promulgated by the United States
Securities and Exchange Commission (the “SEC”).
The Town may provide updated information in full text or may incorporate by reference certain other publicly available
documents, as permitted by the Rule. The updated information will include audited financial statements, if the Town
commissions an audit and it is completed by the required time. If audited financial statements are not available by the required
time, the Town will provide unaudited financial information by the required time and audited financial statements when and if
the audit report becomes available. Any such financial statements will be prepared in accordance with the accounting principles
described in Appendix B or such other accounting principles as the Town may be required to employ from time to time pursuant
to state law or regulation.
The Town’s current fiscal year end is September 30. Accordingly, it must provide updated information by March 31 in each
year, unless the Town changes its fiscal year. If the Town changes its fiscal year, it will notify the MSRB of the change.
EVENT NOTICES . . . The Town will provide notice to the MSRB of any of the following events with respect to the Obligations, if
such event is material within the meaning of the federal securities laws: (1) non-payment related defaults; (2) modifications to
rights of Obligationholders; (3) Obligation calls; (4) release, substitution, or sale of property securing repayment of the
Obligations; (5) the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or
substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive
agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms; and (6) appointment of a successor or additional trustee or the change of name of a trustee. The Town will
also provide notice to the MSRB of any of the following events with respect to the Obligations without regard to whether such
event is considered material within the meaning of the federal securities laws: (1) principal and interest payment delinquencies;
(2) unscheduled draws on debt service reserves reflecting financial difficulties; (3) unscheduled draws on credit enhancements
reflecting financial difficulties; (4) substitution of credit or liquidity providers, or their failure to perform; (5) adverse tax
opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed
Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Obligations, or other
events affecting the tax status of the Obligations; (6) tender offers; (7) defeasances; (8) rating changes; and (9) bankruptcy,
insolvency, receivership or similar event of an obligated person. The Town will provide notice of the aforementioned events to
the MSRB in a timely manner (but not in excess of ten business days after the occurrence of the event). Neither the Obligations
nor the Ordinances make any provision for debt service reserves, credit enhancement, or liquidity enhancement. In addition, the
Town will provide timely notice of any failure by the Town to provide information, data, or financial statements in accordance
with its agreement described above under "Annual Reports". The Town will provide each notice described in this paragraph to
the MSRB.
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37
AVAILABILITY OF INFORMATION FROM MSRB . . . The Town has agreed to provide the foregoing information only as described
above. Investors will be able to access continuing disclosure information filed with the MSRB free of charge at
www.emma.msrb.org.
LIMITATIONS AND AMENDMENTS . . . The Town has agreed to update information and to provide notices of specified events only
as described above. The Town has not agreed to provide other information that may be relevant or material to a complete
presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided,
except as described above. The Town makes no representation or warranty concerning such information or concerning its
usefulness to a decision to invest in or sell Obligations at any future date. The Town disclaims any contractual or tort liability for
damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made
pursuant to its agreement, although holders of Obligations may seek a writ of mandamus to compel the Town to comply with its
agreement.
The Town may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a
change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Town, if (i)
the agreement, as amended, would have permitted an underwriter to purchase or sell Obligations in the offering described herein
in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment,
as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the
outstanding Obligations consent to the amendment or (b) any person unaffiliated with the Town (such as nationally recognized
bond counsel) determines that the amendment will not materially impair the interests of the holders and beneficial owners of the
Obligations. If the Town so amends the agreement, it has agreed to include with the next financial information and operating
data provided in accordance with its agreement described above under “Annual Reports” an explanation, in narrative form, of the
reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided.
COMPLIANCE WITH PRIOR UNDERTAKINGS . . . During the last five years, the Town has complied in all material respects with
all continuing disclosure agreements made by it in accordance with SEC Rule 15c2-12.
OTHER INFORMATION
RATINGS
The presently outstanding tax supported debt of the Town is rated "Aa3" by Moody's, without regard to credit enhancement.
Application has been made to Moody’s for a contract rating on the Obligations. An explanation of the significance of such rating
may be obtained from the company furnishing the rating. The rating reflects only the respective view of such organization and
the Town makes no representation as to the appropriateness of the rating. There is no assurance that such rating will continue for
any given period of time or that it will not be revised downward or withdrawn entirely by such rating company, if in the
judgment of such company, circumstances so warrant. Any such downward revision or withdrawal of such rating, may have an
adverse effect on the market price of the Obligations.
Due to uncertainty surrounding efforts to address the deficits and debt burden of the United States of America, obligations issued
by state and local governments in the United States, such as the Obligations, could be subject to a rating downgrade.
Additionally, if a significant default or other financial crisis should occur in the affairs of the United States of America or of any
of its agencies or political subdivisions, then such event could also adversely affect the market for and ratings, liquidity, and
market value of outstanding debt obligations, including the Obligations. Any such downward revision or withdrawal of such
rating, may have an adverse effect on the market prices of the Obligations.
LITIGATION
It is the opinion of the Town Attorney and Town Staff that there is no pending litigation against the Town that would have a
material adverse financial impact upon the Town or its operations.
REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE
The sale of the Obligations has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the
exemption provided thereunder by Section 3(a)(2); and the Obligations have not been qualified under the Securities Act of Texas
in reliance upon various exemptions contained therein; nor have the Obligations been qualified under the securities acts of any
jurisdiction. The Town assumes no responsibility for qualification of the Obligations under the securities laws of any
jurisdiction in which the Obligations may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of
responsibility for qualification for sale or other disposition of the Obligations shall not be construed as an interpretation of any
kind with regard to the availability of any exemption from securities registration provisions.
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS
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Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Obligations
are negotiable instruments governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized
investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political
subdivisions or public agencies of the State of Texas. With respect to investment in the Obligations by municipalities or other
political subdivisions or public agencies of the State of Texas, the Public Funds Investment Act, Chapter 2256, Texas
Government Code, requires that the Obligations be assigned a rating of not less than "A" or its equivalent as to investment
quality by a national rating agency. See "Other Information - Ratings" herein. In addition, various provisions of the Texas
Finance Code provide that, subject to a prudent investor standard, the Obligations are legal investments for state banks, savings
banks, trust companies with at capital of one million dollars or more, and savings and loan associations. The Obligations are
eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for
those deposits to the extent of their market value. No review by the Town has been made of the laws in other states to determine
whether the Obligations are legal investments for various institutions in those states.
LEGAL MATTERS
The Town will furnish the Underwriter a complete transcript of proceedings had incident to the authorization and issuance of the
Obligations, including the unqualified approving legal opinion of the Attorney General of Texas as to the Obligations to the
effect that the Obligations are valid and legally binding obligations of the Town, and based upon examination of such transcript
of proceedings, the approving legal opinion of Bond Counsel to like effect and to the effect that the interest on the Obligations
will be excludable from gross income for federal income tax purposes under Section 103(a) of the Code, subject to the matters
described under "Tax Matters" herein, including the alternative minimum tax on corporations, a form of which opinion is
attached to this Official Statement as Appendix C. Though it represents the Financial Advisor and the Underwriter from time to
time in matters unrelated to the issuance of the Obligations, Bond Counsel has been engaged by and only represents the Town in
connection with the issuance of the Obligations. The customary closing papers, including a certificate to the effect that no
litigation of any nature has been filed or is then pending to restrain the issuance and delivery of the Obligations which would
affect the provision made for their payment or security, or in any manner questioning the validity of said Obligations will also be
furnished. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Official Statement, and
such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information
contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information under the captions and
subcaptions “Plan of Financing” (excluding the Information under the Subcaption “Sources and Uses of Obligation Proceeds”),
“The Obligations” (excluding the Information under the Subcaptions, “Book-Entry-Only System” and “Obligationholders’
Remedies”), “Tax Matters”, “Continuing Disclosure Information” (excluding the Information under the Subcaption
“Compliance with Prior Undertakings”), “Other Information - Registration and Qualification of Obligations for Sale”, “Other
Information - Legal Investments and Eligibility to Secure Public Funds in Texas” and “Other Information - Legal Matters”
(excluding the last sentence of the first paragraph thereof) in the Official Statement and such firm is of the opinion that the
information relating to the Obligations and the legal issues contained under such captions and subcaptions is an accurate and fair
description of the laws and legal issues addressed therein and, with respect to the Obligations, such information conforms to the
provisions of the Ordinances. The legal fee to be paid Bond Counsel for services rendered in connection with the issuance of the
Obligations is contingent upon the sale and delivery of the Obligations. Certain legal matters will be passed upon for the
Underwriter by Andrews Kurth LLP, Houston, Texas, Counsel to the Underwriter, whose legal fees are contingent upon the sale
and delivery of the Obligations.
The legal opinions to be delivered concurrently with the delivery of the Obligations express the professional judgment of the attorneys
rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an
insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties
to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION
The financial data and other information contained herein have been obtained from Town records, audited financial statements
and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained
herein will be realized. All of the summaries of the statutes, documents and ordinances contained in this Official Statement are
made subject to all of the provisions of such statutes, documents and ordinances. These summaries do not purport to be complete
statements of such provisions and reference is made to such documents for further information. Reference is made to original
documents in all respects.
FINANCIAL ADVISOR
First Southwest Company is employed as Financial Advisor to the Town in connection with the issuance of the Obligations. The
Financial Advisor's fee for services rendered with respect to the sale of the Obligations is contingent upon the issuance and
delivery of the Obligations. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility
for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax
status of the Obligations, or the possible impact of any present, pending or future actions taken by any legislative or judicial
bodies.
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39
The Financial Advisor to the Town has provided the following sentence for inclusion in this Official Statement. The Financial
Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the
Town and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this
transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information.
UNDERWRITER
The Underwriter has agreed, subject to certain conditions, to purchase the Bonds from the Town, at an underwriting discount of
$____________. The Underwriter will be obligated to purchase all of the Bonds if any Bonds are purchased. The Bonds to be
offered to the public may be offered and sold to certain dealers (including the Underwriter and other dealers depositing Bonds
into investment trusts) at prices lower than the public offering prices of such Bonds and such public offering prices may be
changed, from time to time, by the Underwriter.
The Underwriter has agreed, subject to certain conditions, to purchase the Certificates from the Town, at an underwriting
discount of $__________. The Underwriter will be obligated to purchase all of the Certificates if any Certificates are purchased.
The Certificates to be offered to the public may be offered and sold to certain dealers (including the Underwriter and other
dealers depositing Certificates into investment trusts) at prices lower than the public offering prices of such Certificates and such
public offering prices may be changed, from time to time, by the Underwriter.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the
information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal
securities laws as applied to the facts and circumstances of this transaction, but he Underwriter does not guarantee the accuracy
or completeness of such information.
FORWARD-LOOKING STATEMENTS DISCLAIMER
The statements contained in this Official Statement, and in any other information provided by the Town, that are not purely
historical, are forward-looking statements, including statements regarding the Town's expectations, hopes, intentions, or
strategies regarding the future. Readers should not place undue reliance on forward-looking statements. All forward-looking
statements included in this Official Statement are based on information available to the Town on the date hereof, and the Town
assumes no obligation to update any such forward-looking statements. The Town's actual results could differ materially from
those discussed in such forward-looking statements.
The forward-looking statements included herein are necessarily based on various assumptions and estimates and are inherently
subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying
assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and
regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers,
business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions
related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market
conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Town. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this Official Statement will prove to be accurate.
The Ordinances authorizing the issuance of the Obligations will also approve the form and content of this Official Statement, and
any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Obligations by the
Underwriter.
Mayor
Town of Prosper, Texas
ATTEST:
Town Secretary
Item 8
Schedule I
SCHEDULE OF REFUNDED OBLIGATIONS*
Principal Principal
Original Original Interest Amount Amount
Dated Date Maturity Rate Outstanding Refunded
2/1/2004 8/15/2014 4.000% 550,000$ 550,000$
8/15/2015 4.000% 570,000 570,000
8/15/2016 4.125% 595,000 595,000
8/15/2017 4.250% 620,000 620,000
8/15/2018 4.250% 645,000 645,000
8/15/2019 4.250% 670,000 670,000
8/15/2020 4.250% 700,000 700,000
8/15/2021 4.250% 730,000 730,000
8/15/2022 4.375% 765,000 765,000
8/15/2023 4.375% 800,000 800,000
8/15/2024 4.500% 835,000 835,000
7,480,000$ 7,480,000$
Combination Tax and Revenue Certificate of Obligation, Series 2004
The 2014– 2024 maturities will be redeemed prior to original maturity on February 15, 2014, at par.
Principal Principal
Original Original Interest Amount Amount
Dated Date Maturity Rate Outstanding Refunded
9/1/2012 2/15/2014 1.040% 3,880,000$ 3,880,000$
3,880,000$ 3,880,000$
General Obligation Bonds, Taxable Series 2012
The 2014 maturity will be redeemed prior to original maturity on August 1, 2013, at par.
Item 8
APPENDIX A
GENERAL INFORMATION REGARDING THE TOWN
Item 8
A - 1
THE TOWN
LOCATION AND POPULATION
The Town of Prosper is a growing residential community located towards the northwest corner of Collin County and extends into
Denton County to the west. The Town is approximately 35 miles north of downtown Dallas on State Highway 289. The Town
is approximately 27 square miles of land area. The 2012 estimated population for the Town was 12,190, while the estimated
2013 population is 13,531.
EMPLOYERS IN THE TOWN
Listed below are some of the companies located in the Town and the types of business.
Approximate
Number of
Name of Business Type of Business Employees
Prosper ISD Public Education 680
Mahard Egg Farm Farm/Agricultural Producer 100
Town of Prosper Local Government 89
Gentle Creek Golf Club 50
Dairy Manufacturers, Inc. Manufacturer 35
ProBuild Lumber Supplier 30
CVS Pharmacy 25
Crossland Construction Builder 20
Lattimore Materials Concrete Manufacturing 20
Prosper Bank Bank 20
Source: The Town.
EMPLOYMENT STATISTICS
2013(1)2012 2011 2010 2009
Collin County
Civilian Labor Force 452,612 447,064 435,101 421,754 409,675
Total Employment 426,696 419,914 404,549 390,106 379,610
Unemployment 25,915 27,150 30,552 31,648 30,065
Unemployment Rate 5.7%6.1%7.0%7.5%7.3%
Dallas Metropolitan Statistical Area
Civilian Labor Force 2,251,052 2,224,664 2,193,374 3,211,927 2,106,231
Total Employment 2,108,345 2,074,834 2,021,610 2,945,951 1,940,415
Unemployment 142,707 149,830 171,764 265,976 165,816
Unemployment Rate 6.3%6.7%7.8%8.3%7.9%
State of Texas
Civilian Labor Force 12,684,714 12,597,465 12,451,504 12,136,384 11,930,847
Total Employment 11,867,347 11,742,600 11,464,525 11,141,903 11,020,226
Unemployment 817,367 854,865 986,979 994,481 910,621
Unemployment Rate 6.4%6.8%7.9%8.2%7.6%
Average Annual
(1) Figures through April 2013.
Source: Texas Workforce Commission.
Item 8
APPENDIX B
EXCERPTS FROM THE
TOWN OF PROSPER, TEXAS
ANNUAL FINANCIAL REPORT
For the Year Ended September 30, 2012
The information contained in this Appendix consists of excerpts from the Town of Prosper,
Texas Annual Financial Report for the Year Ended September 30, 2012, and is not intended
to be a complete statement of the Town's financial condition. Reference is made to the
complete Report for further information.
Item 8
APPENDIX C
FORM OF BOND COUNSEL'S OPINION
Item 8
HOU:3326824.1
TOWN OF PROSPER, TEXAS
(A political subdivision and municipal corporation of
the State of Texas located within Collin and Denton Counties)
$5,500,0001
COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
SERIES 2013
___________________________________
PURCHASE AGREEMENT
_____________________________________
June 25, 2013
Honorable Mayor and Town Council
Town of Prosper, Texas
P.O. Box 307
Prosper, Texas 75078
Ladies and Gentlemen:
The undersigned, RBC Capital Markets, LLC. (the “Representative”), acting on its own
behalf and on behalf of the other underwriters listed on Schedule I hereto (collectively, the
“Underwriters”) and not acting as fiduciary or agent for you, offers to enter into the following
agreement (this “Agreement”) with the Town of Prosper, Texas (the “Issuer”) which, upon the
Issuer’s written acceptance of this offer, will be binding upon the Issuer and upon the
Underwriters. This offer is made subject to the Issuer’s written acceptance hereof on or before
10:00 p.m., Prosper, Texas time, on June 25, 2013, and, if not so accepted, will be subject to
withdrawal by the Underwriters upon written notice delivered to the Issuer at any time prior to
the acceptance hereof by the Issuer. Terms not otherwise defined in this Agreement shall have
the same meanings set forth in the Ordinance (as defined herein) or in the Official Statement (as
defined herein).
1. Purchase and Sale of the Certificates. Subject to the terms and conditions and in
reliance upon the representations, warranties and agreements set forth herein, the Underwriters
hereby agree to purchase from the Issuer, and the Issuer hereby agrees to sell and deliver to the
Underwriters, all, but not less than all, of the Issuer’s $5,550,000* Combination Tax and Surplus
Revenue Certificates of Obligation, Series 2013 (the “Certificates”). The Issuer acknowledges
and agrees that (i) the purchase and sale of the Certificates pursuant to this Agreement is an
arm’s-length commercial transaction between the Issuer and the Underwriters, (ii) in connection
1 Preliminary, subject to change
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HOU:3326824.1 2
therewith and with the discussions, undertakings, and procedures leading up to the
consummation of this transaction, the Underwriters are and have been acting solely as principals
and are not acting as the agents or fiduciaries of the Issuer, (iii) the Underwriters have not
assumed an advisory or fiduciary responsibility in favor of the Issuer with respect to the offering
contemplated hereby or the discussions, undertakings, and procedures leading thereto (regardless
of whether the Underwriters have provided other services or are currently providing other
services to the Issuer on other matters) and the Underwriters have no obligation to the Issuer with
respect to the offering contemplated hereby except the obligations expressly set forth in this
Agreement, and (iv) the Issuer has consulted its own legal, financial, and other advisors to the
extent it has deemed appropriate. The Representative represents that it has been duly authorized
by the Underwriters to execute this Agreement and to act hereunder.
The principal amount of the Certificates to be issued, the dated date therefor, the
maturities and redemption provisions and interest rates per annum are set forth in Schedule II
hereto. The Certificates shall be as described in, and shall be issued and secured under and
pursuant to the provisions of an ordinance adopted by the Issuer on June 25, 2012 (the
“Ordinance”).
The purchase price for the Certificates shall be $____________ (representing the par
amount of the Certificates, plus a reoffering premium of $_______and less an underwriting
discount of $_________).
Delivered to the Issuer herewith as a good faith deposit is a corporate check of the
Representative payable to the order of the Issuer in the amount of $55,000. In the event the
Issuer accepts this Agreement, such check shall be held by the Issuer as security for the
performance of the Underwriters of their obligation to purchase, accept delivery of and pay for
the Certificates under this Agreement. Such check shall be held uncashed by the Issuer until the
time of Closing, at which time such check shall be returned uncashed to the Representative. In
the event that the Issuer does not accept this Agreement, such check will be immediately
returned to the Representative. Should the Issuer fail to deliver the Certificates at the Closing, or
should the Issuer be unable to satisfy the conditions of the obligations of the Underwriters to
purchase, accept delivery of and pay for the Certificates, as set forth in this Agreement (unless
waived by the Representative), or should such obligations of the Underwriters be terminated for
any reason permitted by this Agreement, such check shall immediately be returned to the
Representative. In the event that the Underwriters fail (other than for a reason permitted
hereunder) to purchase, accept delivery of and pay for the Certificates at the Closing as herein
provided, such check shall be cashed and the amount thereof retained by the Issuer as and for
fully liquidated damages, and not as a penalty for such failure of the Underwriters, and for any
defaults hereunder on the part of the Underwriters. Acceptance of such check by the Issuer shall
constitute a full release and discharge of all claims and damages for such failure and/or any and
all such defaults, and the Issuer shall have no further action for damages, specific performance,
or any other legal or equitable relief against the Underwriters. The Underwriters and the Issuer
understand that in such event the Issuer ’s actual damages may be greater or may be less than
such amount. Accordingly, the Underwriters hereby waive any right to claim that the Issuer’s
actual damages are less than such amount, and the Issuer’s acceptance of this Agreement shall
constitute a waiver of any right the Issuer may have to additional damages from the
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HOU:3326824.1 3
Underwriters. The Representative hereby agrees not to stop or cause payment on the check to be
stopped unless the Issuer has breached any material term of this Agreement.
2. Public Offering. The Underwriters agree to make a bona fide public offering of
all of the Certificates at a price not to exceed the public offering price set forth on page 2 of the
Official Statement and may subsequently change such offering prices or yields without any
requirement of prior notice. The Underwriter may offer and sell the Certificates to certain
dealers (including dealers depositing Certificates into investment trusts) and others at a price
lower than the public offering price stated on page 2 of the Official Statement. The Underwriters
may offer and sell Certificates to certain dealers (including dealers depositing Certificates into
investment trusts) and others at prices lower than the public offering prices or yields stated on
page 2 of the Official Statement; provided that on or before the Closing, the Representative shall
execute and deliver to McCall, Parkhurst & Horton, L.L.P., Dallas, Texas (“Bond Counsel”) an
issue price certificate for the Certificates prepared by Bond Counsel verifying the initial offering
prices at which the Representative reasonably expected to sell or in fact sold a substantial
amount of each stated maturity of the Certificates to the public.
3. The Official Statement.
(a) The Issuer previously has delivered, or caused to be delivered, to the
Underwriters the Preliminary Official Statement dated June 18, 2013 (the “Preliminary
Official Statement”) in a “designated electronic format,” as defined in the Municipal
Securities Rulemaking Board (“MSRB”) Rule G-32 (“Rule G-32”). The Issuer will
prepare, or cause to be prepared, a final Official Statement relating to the Certificates,
which will be (i) dated the date of this Agreement, (ii) complete within the meaning of
the United States Securities and Exchange Commission’s Rule 15c2-12, as amended (the
“Rule”), (iii) in a “designated electronic format” and (iv) substantially in the form of the
most recent version of the Preliminary Official Statement provided to the Underwriters
before the execution hereof. Such final Official Statement, including the cover page
thereto, all exhibits, schedules, appendices, maps, charts, pictures, diagrams, reports, and
statements included or incorporated therein or attached thereto, and all amendments and
supplements thereto that may be authorized for use with respect to the Certificates, is
herein referred to as the “Official Statement.” Until the Official Statement has been
prepared and is available for distribution, the Issuer shall provide to the Underwriter
sufficient quantities (which may be in electronic format) of the Preliminary Official
Statement as the Underwriters deem necessary to satisfy the obligation of the
Underwriters under the Rule with respect to distribution to each potential customer, upon
request, of a copy of the Preliminary Official Statement.
(b) The Preliminary Official Statement has been prepared for use by the
Underwriters in connection with the public offering, sale and distribution of the
Certificates. The Issuer hereby represents and warrants that the Preliminary Official
Statement has been deemed final by the Issuer as of its date, except for the omission of
such information which is dependent upon the final pricing of the Certificates for
completion, all as permitted to be excluded by Section (b)(1) of the Rule.
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HOU:3326824.1 4
(c) The Issuer hereby authorizes the Official Statement and the information
therein contained to be used by the Underwriters in connection with the public offering
and the sale of the Certificates. The Issuer consents to the use by the Underwriters prior
to the date hereof of the Preliminary Official Statement in connection with the public
offering of the Certificates. The Issuer shall provide, or cause to be provided, to the
Underwriters as soon as practicable after the date of the Issuer’s acceptance of this
Agreement (but, in any event, not later than within seven (7) business days after the
Issuer’s acceptance of this Agreement and in sufficient time to accompany any
confirmation that requests payment from any customer) copies of the Official Statement
which is complete as of the date of its delivery to the Underwriters. The Issuer shall
provide the Official Statement, or cause the Official Statement to be provided, (i) in a
“designated electronic format” consistent with the requirements of Rule G-32 and (ii) in a
printed format in such quantity as the Representative shall reasonably request in order for
the Underwriters to comply with Section (b)(4) of the Rule and the rules of the MSRB.
(d) If, after the date of this Agreement to and including the date the
Underwriters are no longer required to provide an Official Statement to potential
customers who request the same pursuant to the Rule (the earlier of (i) ninety (90) days
from the “end of the underwriting period” (as defined in the Rule) and (ii) the time when
the Official Statement is available to any person from the MSRB, but in no case less than
twenty-five (25) days after the “end of the underwriting period” for the Certificates), the
Issuer becomes aware of any fact or event which might or would cause the Official
Statement, as then supplemented or amended, to contain any untrue statement of a
material fact or to omit to state a material fact required to be stated therein, or necessary
to make the statements therein in light of the circumstances under which they were made,
not misleading, or if it is necessary to amend or supplement the Official Statement to
comply with law, the Issuer will notify the Representative (and for the purposes of this
clause provide the Representative with such information as it may from time to time
reasonably request), and if, in the reasonable opinion of the Representative, such fact or
event requires preparation and publication of a supplement or amendment to the Official
Statement, the Issuer will forthwith prepare and furnish, at the Issuer’s own expense (in a
form and manner approved by the Representative), either an amendment or a supplement
to the Official Statement so that the statements in the Official Statement as so amended
and supplemented will not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein, or necessary to make the statements therein
in light of the circumstances under which they were made, not misleading or so that the
Official Statement will comply with law; provided, however, that for all purposes of this
Agreement and any certificate delivered by the Issuer in accordance herewith, the Issuer
makes no representations with respect to the descriptions in the Preliminary Official
Statement or the Official Statement of The Depository Trust Company, New York, New
York (“DTC”), or its book-entry-only system. If such notification shall be subsequent to
the Closing, the Issuer shall furnish such legal opinions, certificates, instruments and
other documents as the Representative may deem reasonably necessary to evidence the
truth and accuracy of such supplement or amendment to the Official Statement. The
Issuer shall provide any such amendment or supplement, or cause any such amendment
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HOU:3326824.1 5
or supplement to be provided, in a “designated electronic format” consistent with the
requirements of Rule G-32.
(e) The Representative hereby agrees to file the Official Statement with the
MSRB through its Electronic Municipal Market Access (“EMMA”) system on or before
the date of the Closing. Unless otherwise notified in writing by the Representative, the
Issuer can assume that the “end of the underwriting period” for purposes of the Rule is
the date of the Closing.
4. Representations, Warranties and Covenants of the Issuer. The Issuer hereby
represents and warrants to and covenants with the Underwriters that:
(a) The Issuer is a home rule city duly created and existing under the laws of
the State of Texas (the “State”) and is issuing the Certificates pursuant to the provisions
of Chapter 271, Subchapter C, Texas Government Code, as amended (the “Act”) and has
full legal right, power and authority under the Act, and at the date of the Closing will
have full legal right, power and authority (i) to enter into, execute and deliver this
Agreement, the Ordinance, and the Continuing Disclosure Undertaking (as defined in
Section 6(j)(3) hereof) (this Agreement and the Ordinance (including the Continuing
Disclosure Undertaking set forth in the Ordinance) are hereinafter referred to as the
“Issuer Documents”), (ii) to sell, issue and deliver the Certificates to the Underwriter as
provided herein, and (iii) to carry out and consummate the transactions described in the
Issuer Documents and the Official Statement, and the Issuer has complied, and will at the
Closing be in compliance in all material respects, with the terms of the Act and the Issuer
Documents as they pertain to such transactions;
(b) By all necessary official action of the Issuer prior to or concurrently with
the acceptance hereof, the Issuer has duly authorized all necessary action to be taken by it
for (i) the adoption of the Ordinance and the issuance and sale of the Certificates, (ii) the
approval, execution and delivery of, and the performance by the Issuer of the obligations
on its part, contained in the Certificates and the Issuer Documents and (iii) the
consummation by it of all other transactions described in the Official Statement and the
Issuer Documents and any and all such other agreements and documents as may be
required to be executed, delivered and/or received by the Issuer in order to carry out, give
effect to, and consummate the transactions described herein and in the Official Statement;
(c) The Issuer Documents constitute legal, valid and binding obligations of
the Issuer subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws and principles of equity relating to or affecting the enforcement of creditors’
rights; the Certificates, when issued, delivered and paid for, in accordance with the
Ordinance and this Agreement, will constitute legal, valid and binding obligations of the
Issuer, entitled to the benefits of the Ordinance and enforceable in accordance with their
terms, by mandamus or other relief permitted by law, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws and principles of equity relating to or
affecting the enforcement of creditors’ rights and upon the issuance, authentication and
delivery of the Certificates as aforesaid, the Ordinance will provide, for the benefit of the
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HOU:3326824.1 6
holders, from time to time, of the Certificates, the legally valid and binding pledge of and
lien on the ad valorem tax revenues the Ordinance purports to create;
(d) To the best of its knowledge, after due and proper inquiry, on the date
hereof and on the date of Closing, the Issuer is not in material breach of or default under
any applicable constitutional provision, law or administrative regulation of the State or
the United States relating to the Issuer’s ability to borrow money or otherwise obtain
credit or any applicable judgment or decree that would have a material adverse effect
upon the operations or financial condition of the Issuer; or any loan agreement, indenture,
bond, note, resolution, agreement or other instrument to which the Issuer is a party or to
which the Issuer is otherwise subject, and no event has occurred and is continuing which
constitutes or with the passage of time or the giving of notice, or both, would constitute a
default or event of default by the Issuer under any of the foregoing to the extent it relates
to the Issuer’s ability to borrow money or otherwise obtain credit; and the execution and
delivery of the Certificates, the Issuer Documents and the adoption of the Ordinance and
compliance with the provisions on the Issuer’s part contained therein, will not conflict
with or constitute a material breach of or default under any constitutional provision, law
or administrative regulation, judgment or decree, or any loan agreement, indenture, bond,
note, resolution, agreement or other instrument to which the Issuer is a party or to which
the Issuer is otherwise subject or under the terms of any such law, regulation or
instrument, to the extent it relates to the Issuer’s ability to borrow money or otherwise
obtain credit;
(e) All authorizations, approvals, licenses, permits, consents and orders of any
governmental authority, legislative body, board, agency or commission having
jurisdiction of the matters which are required for the due authorization of, which would
constitute a condition precedent to, or the absence of which would materially adversely
affect the due performance by the Issuer of its obligations under the Issuer Documents
and the Certificates have been duly obtained or will be obtained prior to Closing, except
for such approvals, consents and orders as may be required under the Blue Sky or
securities laws of any jurisdiction in connection with the offering and sale of the
Certificates;
(f) The Certificates and the Ordinance conform to the descriptions thereof
contained in the Official Statement under the captions “THE OBLIGATIONS”; the
proceeds of the sale of the Certificates will be applied generally as described in the
Official Statement under the subcaption “THE OBLIGATIONS – Sources and Uses of
Obligation Proceeds” and the Continuing Disclosure Undertaking conforms to the
description thereof contained in the Official Statement under the caption “CONTINUING
DISCLOSURE OF INFORMATION”;
(g) During the last five (5) years the Issuer has complied in all material
respects with its previous Continuing Disclosure Undertakings made by it in accordance
with the Rule;
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HOU:3326824.1 7
(h) Except to the extent disclosed in the Official Statement, there is no
litigation, action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, government agency, public board or body, pending or, to the best
knowledge of the Issuer after due inquiry, threatened against the Issuer, affecting the
existence of the Issuer or the titles of its officers to their respective offices, or affecting or
seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the Certificates or
the collection of taxes pledged to the payment of principal of and interest on the
Certificates pursuant to the Ordinance or in any way contesting or affecting the validity
or enforceability of the Certificates or the Issuer Documents, or contesting the exclusion
from gross income of interest on the Certificates for federal income tax purposes, or
contesting in any way the completeness or accuracy of the Preliminary Official Statement
or the Official Statement or any supplement or amendment thereto, or contesting the
powers of the Issuer or any authority for the issuance of the Certificates, the adoption of
the Ordinance or the execution and delivery of the Issuer Documents, nor, to the best
knowledge of the Issuer, is there any basis therefor, wherein an unfavorable decision,
ruling or finding would materially adversely affect the validity or enforceability of the
Certificates or the Issuer Documents; provided, however, that for all purposes of this
Agreement and any certificate delivered by the Issuer in accordance herewith, the Issuer
makes no representations with respect to the descriptions in the Preliminary Official
Statement or the Official Statement of The Depository Trust Company, New York New
York, or its book-entry-only system;
(i) As of the date thereof, the Preliminary Official Statement did not contain
any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(j) At the time of the Issuer’s acceptance hereof and (unless the Official
Statement is amended or supplemented pursuant to paragraph (d) of Section 3 of this
Agreement) at all times subsequent thereto during the period up to and including twenty-
five (25) days subsequent to the “end of the underwriting period,” the Official Statement
does not and will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(k) If the Official Statement is supplemented or amended pursuant to
paragraph (d) of Section 3 of this Agreement, at the time of each supplement or
amendment thereto and (unless subsequently again supplemented or amended pursuant to
such paragraph) at all times subsequent thereto during the period up to and including
twenty-five (25) days subsequent to the “end of the underwriting period”, the Official
Statement as so supplemented or amended will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which made, not
misleading;
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HOU:3326824.1 8
(l) The Issuer will apply, or cause to be applied, the proceeds from the sale of
the Certificates as provided in and subject to all of the terms and provisions of the
Ordinance and not take or omit to take any action which action or omission will
adversely affect the exclusion from gross income for federal income tax purposes of the
interest on the Certificates;
(m) The Issuer will furnish such information and execute such instruments and
take such action in cooperation with the Underwriters, at the sole expense of the
Underwriters, as the Representative may reasonably request (1) to (i) qualify the
Certificates for offer and sale under the Blue Sky or other securities laws and regulations
of such states and other jurisdictions in the United States as the Representative may
designate and (ii) determine the eligibility of the Certificates for investment under the
laws of such states and other jurisdictions and (2) to continue such qualifications in effect
so long as required for the distribution of the Certificates (provided, however, that the
Issuer will not be required to qualify as a foreign corporation or to file any general or
special consents to service of process under the laws of any jurisdiction) and will advise
the Representative immediately of receipt by the Issuer of any notification with respect to
the suspension of the qualification of the Certificates for sale in any jurisdiction or the
initiation or threat of any proceeding for that purpose;
(n) The financial statements of, and other financial information regarding, the
Issuer in the Official Statement fairly present the financial position, results of operations
and condition of the Issuer as of the dates and for the periods therein set forth, and there
has been no adverse change of a material nature in such financial position, results of
operations or condition, financial or otherwise, of the Issuer since the dates of such
statements and information;
(o) The Issuer is not a party to any litigation or other proceeding pending or,
to its knowledge, threatened which, if decided adversely to the Issuer, would have a
materially adverse effect on the financial condition of the Issuer;
(p) Prior to the Closing, the Issuer will not offer or issue any bonds, notes or
other obligations for borrowed money or incur any material liabilities, direct or
contingent, payable from or secured by any of the revenues or assets which will secure
the Certificates (except for the Issuer’s General Obligation Refunding Bonds, Series
2013), except as may be incurred in the ordinary course of business, without the prior
approval of the Representative, which approval shall not be unreasonably withheld;
(q) The Issuer, to the extent heretofore requested by the Underwriters, has
delivered to the Underwriters true, correct, complete, and legible copies of all
information, applications, reports, or other documents of any nature whatsoever
submitted to any rating agency for the purpose of obtaining a rating for the Certificates or
to any municipal bond insurance company to obtain a municipal bond insurance policy
on the Certificates and, in each instance, true, correct, complete, and legible copies of all
correspondence or other communications relating thereto;
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HOU:3326824.1 9
(r) Any certificate, signed by any official of the Issuer authorized to do so in
connection with the transactions described in this Agreement, shall be deemed a
representation and warranty by the Issuer to the Underwriters as to the statements made
therein; and
(s) The Issuer covenants that between the date hereof and the Closing it will
not intentionally take actions which will cause the representations and warranties made in
this Section to be untrue as of the Closing.
By delivering the Official Statement to the Underwriters, the Issuer shall be deemed to
have reaffirmed, with respect to such Official Statement, the representations, warranties and
covenants set forth above with respect to the Preliminary Official Statement.
5. Closing.
(a) At 10:00 a.m. Prosper, Texas, time, on July 25, 2013, or at such other time
and date as shall have been mutually agreed upon by the Issuer and the Underwriters (the
“Closing”), the Issuer will, subject to the terms and conditions hereof, deliver the
Certificates to the Underwriters one initial Certificate representing the entire principal
amount (the “Initial Certificate”) duly executed and authenticated, together with the other
documents hereinafter mentioned, and the Underwriters will, subject to the terms and
conditions hereof, accept such delivery and pay the purchase price of the Certificates as
set forth in Section 1 of this Agreement in immediately available funds by wire transfer
to the account of the Issuer as indicated by U.S. Bank National Association, Dallas Texas
(the “Paying Agent/Registrar”). Payment for the Certificates as aforesaid shall be made
at the offices of the Paying Agent/Registrar or such other place as shall have been
mutually agreed upon by the Issuer and the Representative. The Initial Certificates shall
be registered in the name of the Representative.
(b) Delivery of the definitive Certificates shall be made to The Depository
Trust Company, New York, New York (“DTC”). The definitive Certificates shall be
delivered in definitive fully registered form, bearing CUSIP numbers without coupons,
with one Certificate for each maturity of the Certificates registered in the name of Cede
& Co., all as provided in the Ordinance and shall be made available to the Underwriters
at least one (1) business day before Closing for purposes of inspection (i) DTC or (ii) at
the Paying Agent/Registrar, if the definitive Certificates are to be held in safekeeping for
DTC by the Paying Agent Registrar pursuant to DTC’s FAST System.
6. Closing Conditions. The Underwriters have entered into this Agreement in
reliance upon the representations, warranties and agreements of the Issuer contained herein, and
in reliance upon the representations, warranties and agreements to be contained in the documents
and instruments to be delivered at the Closing and upon the performance by the Issuer of its
obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly,
the Underwriters’ obligations under this Agreement to purchase, to accept delivery of and to pay
for the Certificates shall be conditioned upon the performance by the Issuer of its obligations to
be performed hereunder and under such documents and instruments at or prior to the Closing,
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HOU:3326824.1 10
and shall also be subject to the following additional conditions, including the delivery by the
Issuer of such documents as are enumerated herein, in form and substance reasonably
satisfactory to the Underwriters:
(a) The representations and warranties of the Issuer contained herein shall be
true, complete and correct in all material respects on the date hereof and on and as of the
date of the Closing, as if made on the date of the Closing;
(b) The Issuer shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by it prior to or
at the Closing;
(c) At the time of the Closing, (i) the Issuer Documents and the Certificates
shall be in full force and effect and shall not have been amended, modified or
supplemented, and the Official Statement shall not have been supplemented or amended,
except in any such case as may have been agreed to by the Representative; (ii) the net
proceeds of the sale of the Certificates and any funds to be provided by the Issuer shall be
deposited and applied as described in the Official Statement and in the Ordinance and
(iii) all actions of the Issuer required to be taken by the Issuer shall be performed in order
for Bond Counsel and counsel to the Underwriters to deliver their respective opinions
referred to hereafter;
(d) At the time of the Closing, all official action of the Issuer relating to the
Certificates and the Issuer Documents shall be in full force and effect and shall not have
been amended, modified or supplemented except as may have been approved by the
Underwriters;
(e) At or prior to the Closing, the Ordinance shall have been duly executed
and delivered by the Issuer and the Issuer shall have duly executed and delivered and the
Paying Agent/Registrar shall have duly authenticated the Certificates;
(f) At the time of the Closing, there shall not have occurred any change or
any development involving a prospective change in the condition, financial or otherwise,
or in the revenues or operations of the Issuer, from that set forth in the Official Statement
that in the reasonable judgment of the Representative is material and adverse and that
makes it, in the reasonable judgment of the Representative, impracticable to market the
Certificates on the terms and in the manner described in the Official Statement;
(h) The Issuer shall not have failed to pay principal or interest when due on
any of its outstanding obligations for borrowed money;
(i) All steps to be taken and all instruments and other documents to be
executed, and all other legal matters in connection with the transactions described in this
Agreement shall be reasonably satisfactory in legal form and effect to the Underwriters,
to Bond Counsel and to counsel for the Representative; and
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HOU:3326824.1 11
(j) At or prior to the Closing, the Underwriters shall have received copies of
each of the following documents:
(1) The Official Statement, and each supplement or amendment
thereto, if any, as may have been agreed to by the Representative;
(2) A copy of the Ordinance, certified as having been duly adopted
and in full force and effect, with such supplements or amendments as may have
been agreed to by the Underwriters;
(3) The undertaking of the Issuer set forth in the Ordinance (the
“Continuing Disclosure Undertaking”) which satisfies the requirements of
Section (d)(2) of the Rule;
(4) The approving opinion of McCall, Parkhurst & Horton L.L.P.,
Dallas, Texas (“Bond Counsel”), with respect to the Certificates, in substantially
the form attached to the Official Statement;
(5) A supplemental opinion of Bond Counsel addressed to the Issuer
and the Underwriters substantially to the effect that:
(i) the Ordinance has been duly adopted and is in full force
and effect;
(ii) the Certificates are exempt securities that do not require
registration under the Securities Act of 1933, as amended (the “1933
Act”), and the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), and it is not necessary, in connection with the offering
and sale of the Certificates to register the Certificates under the 1933 Act
or to qualify the Ordinance under the Trust Indenture Act; and
(iii) the statements and information contained in the Official
Statement under the captions and subcaptions “Plan of Financing”
(excluding the information under the subcaption “Sources and Uses of
Obligation Proceeds”), "The Obligations" (exclusive of subcaptions
"Book-Entry-Only System," “Sources and Uses of Obligation Proceeds”
and “Obligationholders’ Remedies”), "Tax Matters," and "Continuing
Disclosure of Information" (except for the information under the
subcaption “Compliance with Prior Undertakings”) and the subcaptions
“Other Information - Registration and Qualification of Obligations for
Sale,” “Other Information - Legal Investments and Eligibility to Secure
Public Funds in Texas” and “Other Information - Legal Matters” (except
for the last sentence of the first paragraph thereof) in the Official
Statement and such firm is of the opinion that the information relating to
the Certificates and the legal issues contained under such captions and
subcaptions is an accurate and fair description of the laws and legal issues
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HOU:3326824.1 12
addressed therein and, with respect to the Certificates, such information
conforms to the Ordinance;
(6) An opinion, dated the date of the Closing and addressed to the
Underwriters, of counsel to the Underwriters, to the effect that:
(i) the Certificates are exempt securities under the 1933 Act
and the Trust Indenture Act and it is not necessary, in connection with the
offering and sale of the Certificates, to register the Certificates under the
1933 Act and the Ordinance need not be qualified under the Trust
Indenture Act; and
(ii) based upon their participation in the preparation of the
Official Statement as counsel for the Underwriters and their participation
at conferences at which the Official Statement was discussed, but without
having undertaken to determine independently the accuracy, completeness
or fairness of the statements contained in the Official Statement, such
counsel has no reason to believe that the Official Statement contains any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (except for any financial,
forecast, technical and statistical statements and data included in the
Official Statement and the information regarding DTC and its book-entry-
only system, in each case as to which no view need be expressed);
(7) A certificate, dated the date of the Closing, of an appropriate
official of the Issuer to the effect that (i) the representations and warranties of the
Issuer contained herein are true and correct in all material respects on and as of
the date of the Closing as if made on the date of the Closing; (ii) no litigation,
proceeding or tax challenge against the Issuer is pending or, to the best of his or
her knowledge, threatened in any court or administrative body nor is there a basis
for litigation which would (a) contest the right of the council members, officers or
officials of the Issuer to hold and exercise their respective positions, (b) contest
the due organization and valid existence of the Issuer, (c) contest the validity, due
authorization and execution of the Certificates or the Issuer Documents or (d)
attempt to limit, enjoin or otherwise restrict or prevent the Issuer from functioning
and collecting ad valorem taxes, including for payments on the Certificates,
pursuant to the Ordinance, or the levy or collection of the ad valorem taxes
pledged or to be pledged to pay the principal of and interest on the Certificates, or
the pledge thereof; (iii) all official action of the Issuer relating to the Official
Statement, the Certificates and the Issuer Documents have been duly taken by the
Issuer, are in full force and effect and have not been modified, amended,
supplemented or repealed; (iv) to the best of his or her knowledge, no event
affecting the Issuer has occurred since the date of the Official Statement which
should be disclosed in the Official Statement for the purpose for which it is to be
used or which it is necessary to disclose therein in order to make the statements
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HOU:3326824.1 13
and information therein, in light of the circumstances under which made, not
misleading in any material respect as of the time of the Closing, and the
information contained in the Official Statement is correct in all material respects
and, as of the date of the Official Statement did not, and as of the date of the
Closing does not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading; and (v) there has not been any material adverse change in the
financial condition of the Issuer since September 30, 2012, the latest date as of
which audited financial information is available;
(8) A certificate of the Issuer in form and substance satisfactory to
Bond Counsel and counsel to the Underwriters setting forth the facts, estimates
and circumstances in existence on the date of the Closing, which establish that it
is not expected that the proceeds of the Certificates will be used in a manner that
would cause the Certificates to be “arbitrage bonds” within the meaning of
Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), and
any applicable regulations (whether final, temporary or proposed), issued
pursuant to the Code;
(9) The approving opinion of the Attorney General of the State of
Texas and the registration certificates of the Comptroller of Public Accounts of
the State of Texas in respect of the Certificates;
(10) Any other certificates and opinions required by the Ordinance for
the issuance thereunder of the Certificates;
(11) Evidence satisfactory to the Representative that the Certificates
have been rated “Aa3” by Moody’s Investor Services and that such rating is in
effect as of the date of the Closing; and
(12) Such additional legal opinions, certificates, instruments and other
documents as Bond Counsel, the Underwriters or counsel to the Underwriters may
reasonably request to evidence the truth and accuracy, as of the date hereof and as
of the date of the Closing, of the Issuer’s representations and warranties contained
herein and of the statements and information contained in the Official Statement
and the due performance or satisfaction by the Issuer on or prior to the date of the
Closing of all the respective agreements then to be performed and conditions then
to be satisfied by the Issuer.
All of the opinions, letters, certificates, instruments and other documents mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions
hereof if, but only if, they are in form and substance reasonably satisfactory to the
Representative.
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If the Issuer shall be unable to satisfy the conditions to the obligations of the
Underwriters to purchase, to accept delivery of and to pay for the Certificates contained in this
Agreement, or if the obligations of the Underwriters to purchase, to accept delivery of and to pay
for the Certificates shall be terminated for any reason permitted by this Agreement, this
Agreement shall terminate and neither the Underwriters nor the Issuer shall be under any further
obligation hereunder, except that the respective obligations of the Issuer and the Underwriters set
forth in Sections 1 (with respect to the Check), 4 and 8 hereof shall continue in full force and
effect.
7. Termination. The Underwriters shall have the right to cancel its obligation to
purchase the Certificates if, between the date of this Agreement and the Closing, the market price
or marketability of the Certificates shall be materially adversely affected, in the reasonable
judgment of the Representative by the occurrence of any of the following:
(a) legislation shall be enacted by or introduced in the Congress of the United States
or recommended to the Congress for passage by the President of the United States, or the
Treasury Department of the United States or the Internal Revenue Service or favorably reported
for passage to either House of the Congress by any committee of such House to which such
legislation has been referred for consideration, a decision by a court of the United States or of the
State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final,
temporary or proposed), press release, statement or other form of notice by or on behalf of the
Treasury Department of the United States, the Internal Revenue Service or other governmental
agency shall be made or proposed, the effect of any or all of which would be to impose, directly
or indirectly, federal income taxation upon interest received on obligations of the general
character of the Certificates, of the interest on the Certificates as described in the Official
Statement, or other action or events shall have transpired which may have the purpose or effect,
directly or indirectly, of changing the federal income tax consequences of any of the transactions
described herein, or any other similar action or event shall have occurred which, in the
reasonable judgment of the Representative, materially adversely affect the market for the
Certificates or the market price generally of obligations of the general character of the
Certificates;
(b) legislation introduced in or enacted (or resolution passed) by the Congress or an
order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling,
regulation (final, temporary, or proposed), press release or other form of notice issued or made
by or on behalf of the Securities and Exchange Commission, or any other governmental agency
having jurisdiction of the subject matter, to the effect that obligations of the general character of
the Certificates, including any or all underlying arrangements, are not exempt from registration
under or other requirements of the 1933 Act, or that the Ordinance is not exempt from
qualification under or other requirements of the Trust Indenture Act, or that the issuance,
offering, or sale of obligations of the general character of the Certificates, including any or all
underlying arrangements, as described herein or in the Official Statement or otherwise, is or
would be in violation of the federal securities laws as amended and then in effect;
(c) a general suspension of trading in securities on the New York Stock Exchange,
the establishment of minimum prices on either such exchange, the establishment of material
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restrictions (not in force as of the date hereof) upon trading securities generally by any
governmental authority or any national securities exchange, a general banking moratorium
declared by federal, State of New York, or State officials authorized to do so;
(d) the New York Stock Exchange or other national securities exchange or any
governmental authority shall impose, as to the Certificates or as to obligations of the general
character of the Certificates, any material restrictions not now in force, or increase materially
those now in force, with respect to the extension of credit by, or the charge to the net capital
requirements of, the Underwriters, which change shall occur subsequent to the date hereof and
shall not be due to the malfeasance, misfeasance or nonfeasance of the Underwriters;
(e) any amendment to the federal or State Constitution or action by any federal or
state court, legislative body, regulatory body, or other authority materially adversely affecting
the tax status of the Issuer, its property, income, securities (or interest thereon), or the validity or
enforceability of the levy of taxes to pay principal of and interest on the Certificates;
(f) any state blue sky or securities commission or other governmental agency or body
in any state in which more than 10% of the Certificates have been offered and sold shall have
withheld registration, exemption or clearance of the offering of the Certificates as described
herein, or issued a stop order or similar ruling relating thereto;
(g) any event occurring, or information becoming known which, in the reasonable
judgment of the Underwriters, makes untrue in any material respect any statement or information
contained in the Official Statement, or has the effect that the Official Statement contains any
untrue statement of material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading;
(h) there shall have occurred since the date of this Agreement any materially adverse
change in the affairs or financial condition of the Issuer, except for changes which the Official
Statement discloses are expected to occur;
(i) between the date of this Agreement and the date of the closing, the United States
shall have become engaged in new hostilities which have resulted in a declaration of war or a
national emergency, or there shall have occurred any other outbreak or escalation of hostilities or
a national or international calamity or crisis, financial or otherwise, the effect of such outbreak,
calamity or crisis on the financial markets of the United States being such as, in the reasonable
opinion of the Representative, would materially and adversely affect the ability of the
Underwriters to market the Certificates;
(j) any fact or event shall exist or have existed that, in the Representative’s
reasonable judgment, requires or has required an amendment of or supplement to the Official
Statement;
(k) there shall have occurred any downgrading, or any notice shall have been given of
(1) any intended or potential downgrading or (2) any possible change that does not indicate a
Item 8
HOU:3326824.1 16
possible upgrade, in a rating accorded any of the Issuer’s obligations that are secured in a like
manner as the Certificates (including the rating to be accorded the Certificates); or
(l) the purchase of and payment for the Certificates by the Underwriters, or the resale
of the Certificates by the Underwriters, on the terms and conditions herein provided shall be
prohibited by any applicable law, governmental authority, board, agency or commission;
provided that such prohibition is not caused by the action or failure to act, of the Underwriters
With respect to the condition described in subparagraph (l) above, the Underwriters are
not aware of any current, pending or proposed law or government inquiry or investigation, as of
the date of execution of this Agreement, which would permit the Underwriters to invoke their
termination rights hereunder..
8. Expenses.
(a) The Underwriters shall be under no obligation to pay, and the Issuer shall
pay, any expenses incident to the performance of the Issuer’s obligations hereunder,
including, but not limited to (i) the cost of preparation and printing of the Certificates; (ii)
the fees and disbursements of Bond Counsel and the Issuer’s Financial Advisor; (iii) the
fees and disbursements of any other engineers, accountants, and other experts,
consultants or advisers retained by the Issuer; (iv) the fees for bond ratings and municipal
bond insurance, if any; (v) the costs of preparing, printing and mailing the Preliminary
Official Statement and the Official Statement; (vi) the fees and expenses of the Paying
Agent/Registrar; (vii) advertising expenses (except any advertising expenses of the
Underwriters as set forth below); (viii) the out-of-pocket, miscellaneous and closing
expenses, including the cost of travel, of the officers and council members of the Issuer;
(ix) the Attorney General’s review fee; and (x) any other expenses mutually agreed to by
the Issuer and the Representative to be reasonably considered expenses of the Issuer
which are incident to the transactions described herein.
(b) The Underwriters shall pay (i) the cost of preparation and printing of this
Agreement, the Blue Sky Survey and Legal Investment Memorandum, if any; (ii) all
advertising expenses in connection with the public offering of the Certificates; and (iii)
all other expenses incurred by it in connection with the public offering of the Certificates,
including the fees and disbursements of counsel retained by the Underwriters.
9. Notices. Any notice or other communication to be given to the Issuer under this
Agreement may be given by delivering the same in writing to Town of Prosper, Texas, P.O. Box,
307, Texas 75078; Attention: Town Manager and any notice or other communication to be given
to the Underwriters under this Agreement may be given by delivering the same in writing to
RBC Capital Markets, LLC, 200 Crescent Court, Suite 200, Dallas, Texas 75201, Attention:
Matt Boles.
10. Parties in Interest. This Agreement as heretofore specified shall constitute the
entire agreement between us and is made solely for the benefit of the Issuer and the Underwriters
(including successors or assigns of the Underwriters) and no other person shall acquire or have
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HOU:3326824.1 17
any right hereunder or by virtue hereof. This Agreement may not be assigned by the Issuer. All
of the Issuer’s representations and warranties contained in this Agreement shall remain operative
and in full force and effect, regardless of (i) any investigations made by or on behalf of the
Underwriters; (ii) delivery of and payment for the Certificates pursuant to this Agreement; and
(iii) any termination of this Agreement.
11. Effectiveness. This Agreement shall become effective upon the acceptance
hereof by the Issuer and shall be valid and enforceable in accordance with its terms at the time of
such acceptance.
12. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State.
13. Severability. If any provision of this Agreement shall be held or deemed to be or
shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provision or
provisions of any constitution, statute, rule of public policy or any other reason, such
circumstances shall not have the effect of rendering the provision in question invalid, inoperative
or unenforceable in any other case or circumstance, or of rendering any other provision or
provisions of this Agreement invalid, inoperative or unenforceable to any extent whatever.
14. Business Day. For purposes of this Agreement, “business day” means any day on
which the New York Stock Exchange is open for trading.
15. Section Headings. Section headings have been inserted in this Agreement as a
matter of convenience of reference only, and it is agreed that such section headings are not a part
of this Agreement and will not be used in the interpretation of any provisions of this Agreement.
16. Counterparts. This Agreement may be executed in several counterparts each of
which shall be regarded as an original (with the same effect as if the signatures thereto and
hereto were upon the same document) and all of which shall constitute one and the same
document.
17. No Personal Liability. None of the members of the Town Council, nor any
officer, agent, or employee of the Issuer, shall be charged personally by the Underwriters with
any liability, or be held liable to the Underwriters under any term or provision of this Agreement,
or because of execution or attempted execution, or because of any breach or attempted or alleged
breach, of this Agreement.
[Execution Page Follows.]
Item 8
Execution Page
Town of Prosper, Texas, Combination Tax and Surplus Revenue
Certificates of Obligation, Series 2013
HOU:3326824.1
If you agree with the foregoing, please sign the enclosed counterpart of this Agreement
and return it to the Underwriters. This Agreement shall become a binding agreement between
the Issuer and the Underwriters when at least one counterpart hereof shall have been signed by or
on behalf of each of the parties hereto.
RBC CAPITAL MARKETS, LLC., as
Representative of the Underwriters
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
ACCEPTED AND AGREED as of _________, 2013 at _____(p.m/a.m.)
TOWN OF PROSPER, TEXAS
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
____________________________________
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HOU:3326824.1
Schedule I
RBC Capital Markets, LLC
200 Crescent Court, Suite 1500
Dallas, TX 75201
BOSC, Inc.
333 West Campbell
Suite 350
Richardson, TX 75080
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HOU:3326824.1
Schedule II
$5,755,000
Town of Prosper, Texas
Combination Tax and Surplus Revenue
Certificates of Obligation
Series 2013
Interest Accrues From: Date of Delivery
Maturity
(Feb. 15)(a)
Principal
Amount
Interest
Rate Yield
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
(a) The Certificates stated to mature on and after February 15, 2024 are subject to optional redemption, in whole or
in part, prior to maturity on February 15, 2023 or any date thereafter at the par value thereof plus accrued interest
to the date fixed for redemption.
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PAYING AGENT/REGISTRAR AGREEMENT
THIS AGREEMENT is entered into as of June 15, 2013 (this "Agreement"), by and between
the Town of Prosper, Texas (the "Issuer"), and U.S. Bank National Association, in Dallas, Texas,
a national banking association duly organized and existing under the laws of the United States of
America (the "Bank").
RECITALS
WHEREAS, the Issuer has duly authorized and provided for the issuance of its Combination
Tax and Surplus Revenue Certificates of Obligation, Series 2013 (the "Securities") in the aggregate
principal amount of $5,550,000, such Securities to be issued in fully-registered form only as to the
payment of principal and interest thereon; and
WHEREAS, the Securities are scheduled to be delivered to the initial purchasers thereof on
or about July 25, 2013; and
WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection
with the payment of the principal of, premium, if any, and interest on said Securities and with
respect to the registration, transfer and exchange thereof by the registered owners thereof; and
WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and
has full power and authority to perform and serve as Paying Agent/Registrar for the Securities;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE ONE
APPOINTMENT OF BANK AS
PAYING AGENT AND REGISTRAR
Section 1.01. Appointment.
The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities.
As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer
the principal, premium (if any), and interest on the Securities as the same become due and payable
to the registered owners thereof, all in accordance with this Agreement and the "Order" (hereinafter
defined).
The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar
for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records
as to the ownership of said Securities and with respect to the transfer and exchange thereof as
provided herein and in the "Order."
The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and
Registrar for the Securities.
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Section 1.02. Compensation.
As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees
to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this
Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in
effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer
on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon
the first day of the following Fiscal Year.
In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Bank in accordance with any of the
provisions hereof (including the reasonable compensation and the expenses and disbursements of
its agents and counsel).
ARTICLE TWO
DEFINITIONS
Section 2.01. Definitions.
For all purposes of this Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
"Acceleration Date" on any Security means the date on and after which the principal or any
or all installments of interest, or both, are due and payable on any Security which has become
accelerated pursuant to the terms of the Security.
"Bank Office" means the principal corporate trust office of the Bank as indicated on the
signature page hereof. The Bank will notify the Issuer in writing of any change in location of the
Bank Office.
"Financial Advisor" means First Southwest Company.
"Fiscal Year" means the fiscal year of the Issuer, ending September 30.
"Holder" and "Security Holder" each means the Person in whose name a Security is registered
in the Security Register.
"Issuer Request" and "Issuer Order" means a written request or order signed in the name of the
Issuer by the Mayor or Mayor Pro-tem of the Issuer, any one or more of said officials, delivered to
the Bank.
"Legal Holiday" means a day on which the Bank is required or authorized to be closed.
"Order" means the order, ordinance or resolution of the governing body of the Issuer pursuant
to which the Securities are issued, certified by the Secretary of the Board of Trustees or any other
officer of the Issuer and delivered to the Bank.
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3
"Person" means any individual, corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or political subdivision
of a government.
"Predecessor Securities" of any particular Security means every previous Security evidencing
all or a portion of the same obligation as that evidenced by such particular Security (and, for the
purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement
Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the
Order).
"Record Date" means the last business day of the month next preceding payment.
"Redemption Date" when used with respect to any Bond to be redeemed means the date fixed
for such redemption pursuant to the terms of the Order.
"Responsible Officer" when used with respect to the Bank means the Chairman or Vice-
Chairman of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee
of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary,
the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or
Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar
to those performed by any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Security Register" means a register maintained by the Bank on behalf of the Issuer providing
for the registration and transfer of the Securities.
"Stated Maturity" means the date specified in the Order the principal of a Security is scheduled
to be due and payable.
Section 2.02. Other Definitions.
The terms "Bank," "Issuer" and "Securities (Security)" have the meanings assigned to them
in the recital paragraphs of this Agreement.
The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and
functions of this Agreement.
ARTICLE THREE
PAYING AGENT
Section 3.01. Duties of Paying Agent.
As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it
for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each
Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender
of the Security to the Bank at the Bank Office.
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4
As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it
for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each
Security when due, by computing the amount of interest to be paid each Holder and preparing and
sending checks by United States Mail, first class postage prepaid, on each payment date, to the
Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the
address appearing on the Security Register or by such other method, acceptable to the Bank,
requested in writing by the Holder at the Holder's risk and expense.
The Bank is also authorized to transfer funds relating to the closing and initial delivery of the
securities in the manner disclosed in the closing memorandum as prepared by the Financial Advisor
or other agent. The Bank may act on a facsimile or e-mail transmission of the closing memorandum
acknowledged by the financial advisor or the Issuer as the final closing memorandum. The Bank
shall not be liable for any losses, costs or expenses arising directly or indirectly from the Bank's
reliance upon and compliance with such instructions.
Section 3.02. Payment Dates.
The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on
the dates specified in the Order.
ARTICLE FOUR
REGISTRAR
Section 4.01. Security Register - Transfers and Exchanges.
The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books
and records (herein sometimes referred to as the "Security Register") and, if the Bank Office is
located outside the State of Texas, a copy of such books and records shall be kept in the State of
Texas, for recording the names and addresses of the Holders of the Securities, the transfer, exchange
and replacement of the Securities and the payment of the principal of and interest on the Securities
to the Holders and containing such other information as may be reasonably required by the Issuer
and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers,
exchanges and replacement of Securities shall be noted in the Security Register.
Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied
by a written instrument of transfer, the signature on which has been guaranteed by an officer of a
federal or state bank or a member of the National Association of Securities Dealers, in form
satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing.
The Bank may request any supporting documentation it feels necessary to effect a re-
registration, transfer or exchange of the Securities.
To the extent possible and under reasonable circumstances, the Bank agrees that, in relation
to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be
completed and new Securities delivered to the Holder or the assignee of the Holder in not more than
three (3) business days after the receipt of the Securities to be canceled in an exchange or transfer
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5
and the written instrument of transfer or request for exchange duly executed by the Holder, or his
duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar.
Section 4.02. Certificates.
At any time that the Securities are not subject to a book-entry-only system of registration and
transfer, the Issuer shall provide an adequate inventory of printed Securities to facilitate transfers
or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in
safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining
such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt
securities of other political subdivisions or corporations for which it serves as registrar, or that is
maintained for its own securities.
Section 4.03. Form of Security Register.
The Bank, as Registrar, will maintain the Security Register relating to the registration,
payment, transfer and exchange of the Securities in accordance with the Bank's general practices and
procedures in effect from time to time. The Bank shall not be obligated to maintain such Security
Register in any form other than those that the Bank has currently available and currently utilizes at
the time.
The Security Register may be maintained in written form or in any other form capable of being
converted into written form within a reasonable time.
Section 4.04. List of Security Holders.
The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the
required fee, a copy of the information contained in the Security Register. The Issuer may also
inspect the information contained in the Security Register at any time the Bank is customarily open
for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or
to convert the information into written form.
The Bank will not release or disclose the contents of the Security Register to any person other
than to, or at the written request of, an authorized officer or employee of the Issuer, except upon
receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to
the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so
that the Issuer may contest the court order or such release or disclosure of the contents of the
Security Register.
Section 4.05. Cancellation of Certificates.
All certificates surrendered to the Bank, at the designated Payment/Transfer Office, for
payment, redemption, transfer or replacement, shall be promptly canceled by the Bank. The Bank
will provide to the Issuer, at reasonable intervals determined by it, a certificate evidencing the
destruction of canceled certificates.
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Section 4.06. Mutilated, Destroyed, Lost or Stolen Securities.
The Issuer hereby instructs the Bank, subject to the applicable provisions of the Order, to
deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost or stolen
Securities as long as the same does not result in an over-issuance.
In case any Security shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion,
may execute and deliver a replacement Security of like form and tenor, and in the same
denomination and bearing a number not contemporaneously outstanding, in exchange and
substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or
stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory
to the Bank of the destruction, loss or theft of such Security, and of the authenticity of the ownership
thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the
Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with
the preparation, execution and delivery of a replacement Security shall be borne by the Holder of
the Security mutilated, or destroyed, lost or stolen.
Section 4.07. Transaction Information to Issuer.
The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish
the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has
delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities
it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant
to Section 4.06.
ARTICLE FIVE
THE BANK
Section 5.01. Duties of Bank.
The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care
in the performance thereof.
Section 5.02. Reliance on Documents, Etc.
(a) The Bank may conclusively rely, as to the truth of the statements and correctness of the
opinions expressed therein, on certificates or opinions furnished to the Bank.
(b) The Bank shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the
pertinent facts.
(c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or
otherwise incur any financial liability for performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not
assured to it.
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(d) The Bank may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, note, security, or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties. Without limiting the generality of the foregoing
statement, the Bank need not examine the ownership of any Securities, but is protected in acting
upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer
executed in accordance with Section 4.01 hereof, which appears on its face to be signed by the
Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the
facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note, security or other paper or document supplied by Issuer.
(e) The Bank may consult with counsel, and the written advice of such counsel or any opinion
of counsel shall be full and complete authorization and protection with respect to any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(f) The Bank may exercise any of the powers hereunder and perform any duties hereunder
either directly or by or through agents or attorneys of the Bank.
Section 5.03. Recitals of Issuer.
The recitals contained herein with respect to the Issuer and in the Securities shall be taken as
the statements of the Issuer, and the Bank assumes no responsibility for their correctness.
The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or
any other Person for any amount due on any Security from its own funds.
Section 5.04. May Hold Securities.
The Bank, in its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Issuer with the same rights it would have if it were not
the Paying Agent/Registrar, or any other agent.
Section 5.05. Moneys Held by Bank.
The Bank shall deposit any moneys received from the Issuer into a trust account to be held in
a fiduciary capacity for the payment of the Securities, with such moneys in the account that exceed
the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be
fully collateralized with securities or obligations that are eligible under the laws of the State of Texas
to secure and be pledged as collateral for trust accounts until the principal and interest on such
securities have been presented for payment and paid to the owner thereof. Payments made from
such trust account shall be made by check drawn on such trust account unless the owner of such
Securities shall, at its own expense and risk, request such other medium of payment.
Subject to the Unclaimed Property Law of the State of Texas, any money deposited with the
Bank for the payment of the principal, premium (if any), or interest on any Security and remaining
unclaimed for three years after the final maturity of the Security has become due and payable will
be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Security shall
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8
hereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to
such monies shall thereupon cease. If the Issuer does not elect, the Bank is directed to report and
dispose of the funds in compliance with Title Six of the Texas Property Code, as amended.
Section 5.06. Indemnification.
TO THE EXTENT PERMITTED BY LAW, THE ISSUER AGREES TO INDEMNIFY THE BANK, ITS
DIRECTORS, OFFICERS AND EMPLOYEES, AND HOLD IT HARMLESS AGAINST, ANY LOSS, LIABILITY
OR EXPENSE INCURRED WITHOUT NEGLIGENCE OR BAD FAITH ON ITS PART, ARISING OUT OF OR
IN CONNECTION WITH ITS ACCEPTANCE OR ADMINISTRATION OF ITS DUTIES HEREUNDER,
INCLUDING THE COST AND EXPENSE AGAINST ANY CLAIM OR LIABILITY IN CONNECTION WITH
THE EXERCISE OR PERFORMANCE OF ANY OF ITS POWERS OR DUTIES UNDER THIS AGREEMENT.
Section 5.07. Interpleader.
The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim,
demand, or controversy over its person as well as funds on deposit, in either a Federal or State
District Court located in the State and County where the administrative offices of the Issuer are
located, and agree that service of process by certified or registered mail, return receipt requested,
to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The
Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court
of competent jurisdiction in the State of Texas to determine the rights of any Person claiming any
interest herein.
Section 5.08. Depository Trust Company Services.
It is hereby represented and warranted that, in the event the Securities are otherwise qualified
and accepted for "Depository Trust Company" services or equivalent depository trust services by
other organizations, the Bank has the capability and, to the extent within its control, will comply
with the "Operational Arrangements," effective August 1, 1987, which establishes requirements for
securities to be eligible for such type depository trust services, including, but not limited to,
requirements for the timeliness of payments and funds availability, transfer turnaround time, and
notification of redemptions and calls.
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6.01. Amendment.
This Agreement may be amended only by an agreement in writing signed by both of the parties
hereto.
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Section 6.02. Assignment.
This Agreement may not be assigned by either party without the prior written consent of the
other.
Section 6.03. Notices.
Any request, demand, authorization, direction, notice, consent, waiver or other document
provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or
delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this
Agreement.
Section 6.04. Effect of Headings.
The Article and Section headings herein are for convenience only and shall not affect the
construction hereof.
Section 6.05. Successors and Assigns.
All covenants and agreements herein by the Issuer shall bind its successors and assigns,
whether so expressed or not.
Any corporation or association into which the Bank may be converted or merged, or with
which it may be consolidated, or to which it may sell, lease, or transfer its corporate trust business
and assets as a whole or substantially as a whole, or any corporation or association resulting from
any such conversion, sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall
be and become successor Paying Agent/Registrar hereunder and vested with all of the powers,
rights, obligations, duties, remedies, discretions, immunities, privileges, and all other matters as was
its predecessor, without the execution or filing of any instruments or any further act, deed, or
conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 6.06. Severability.
In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 6.07. Benefits of Agreement.
Nothing herein, express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder.
Section 6.08. Entire Agreement.
This Agreement and the Order constitute the entire agreement between the parties hereto
relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this
Agreement and the Order, the Order shall govern.
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Section 6.09. Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which shall constitute one and the same Agreement.
Section 6.10. Termination.
This Agreement will terminate (i) on the date of final payment of the principal of and interest
on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon sixty
(60) days written notice; provided, however, an early termination of this Agreement by either party
shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer
and such appointment accepted and (b) notice has been given to the Holders of the Securities of the
appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually
agree that the effective date of an early termination of this Agreement shall not occur at any time
which would disrupt, delay or otherwise adversely affect the payment of the Securities.
The resigning Paying Agent/Registrar may petition any court of competent jurisdiction for the
appointment of a successor Paying Agent/Registrar if an instrument of acceptance by a successor
Paying Agent/Registrar has not been delivered to the resigning Paying Agent/Registrar within sixty
(60) days after the giving of such notice of resignation.
Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver
the Security Register (or a copy thereof), together with other pertinent books and records relating
to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer.
The provisions of Section 1.02 and of Article Five shall survive and remain in full force and
effect following the termination of this Agreement.
Section 6.11. Governing Law.
This Agreement shall be construed in accordance with and governed by the laws of the State
of Texas.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and
year first above written.
U.S. BANK, NATIONAL ASSOCIATION
By ____________________________________
Title ____________________________________
14241 Dallas Parkway, Suite 490
EX-TX-DCRE
Dallas, Texas 75254
TOWN OF PROSPER, TEXAS
By ________________________________________
Mayor
P.O. Box 307
Prosper, Texas 75078
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SCHEDULE A
Paying Agent/Registrar Fee Schedule
[To be supplied by the Bank]
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LAW OFFICES
M c CALL, PARKHURST & HORTON L.L.P.
600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N. ST. MARY'S STREET
1250 ONE AMERICAN CENTER NINTH FLOOR 1525 ONE RIVERWALK PLACE
AUSTIN, TEXAS 78701-3248 DALLAS, TEXAS 75201-6587 SAN ANTONIO, TEXAS 78205-3503
TELEPHONE: 512 478-3805 TELEPHONE: 214 754-9200 TELEPHONE: 210 225-2800
FACSIMILE: 512 472-0871 FACSIMILE: 214 754-9250 FACSIMILE: 210 225-2984
June 25, 2013
Mayor and Members of the Town Council
Town of Prosper
Town Hall
Prosper, Texas 75078
Re: Proposed Town of Prosper, Texas General Obligation Refunding Bonds, Series 2013
and
Proposed Town of Prosper, Texas, Combination Tax and Surplus Revenue Certificates of
Obligation, Series 2013
Ladies and Gentlemen:
The purpose of this engagement letter is to set forth certain matters concerning the services
we will perform as bond counsel to the Town of Prosper, Texas (the "Issuer") in connection with
the issuance of the above-referenced bonds (the "Bonds") and certificates of obligation (the
"Certificates" and collectively with the Bonds, the "Obligations"). We understand that the Bonds
are being issued for the purpose of refunding certain outstanding obligation of the Issuer of the
following series of bonds and certificates of obligation: Combination Tax and Revenue Certificates
of Obligation, Series 2004 and General Obligation Bonds, Taxable Series 2012 (collectively, the
"Refunded Obligations") and that the Certificates are being issued for the purpose of providing funds
for paying all or a portion of the Issuer's contractual obligations incurred in connection with
extending, constructing and improving the Issuer's water system, including constructing
improvements to pump stations and extending water lines and paying legal, fiscal, engineering and
architectural fees in connection with these projects. We also understand that the Obligations will
be secured by a pledge of an ad valorem tax levied by the Issuer within the limit prescribed by law,
and that the Certificates will additionally be secured by a pledge of the surplus net revenues of the
Issuer's combined water and sewer system. We further understand that the Obligations will be
authorized to be sold by the Town Council of the Issuer (the "Town Council") pursuant to respective
ordinances (collectively, the "Ordinance") adopted on the date hereof (the "Sale Date"), and that the
Bonds will be sold by negotiation to a purchaser or purchasers (collectively, the "Underwriter") on
the Sale Date.
A. THE FINANCING
As Bond Counsel to the Issuer, we would like for the Town Council to understand how the
issuance of the Obligations will be effected and the ramifications of the financing. I will briefly
describe the procedures and certain applicable law that pertains to the issuance of the Obligations,
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below. However, you should feel free to call me at any time to discuss any questions that you or
your staff may have.
(1) The Bonds are being issued to provide tax rate restructuring to accommodate the issuance
of the Certificates. You should discuss the full impact of the debt service restructuring with
First Southwest Company, your financial advisor.
(2) The Obligations will be "authorized to be issued" when and if the Town Council approves
the Ordinance. The Ordinance provides for the terms of the Obligations. Among the matters
approved in the Ordinance are: (i) the terms of the Obligations, including the principal
amortization schedule and interest rates and provision for certain of the Obligations to be
issued as current interest bonds that pay interest semiannually; (ii) the Issuer's commitment
to levy its debt service tax each year in an amount sufficient to pay the debt service on the
Obligations; (iii) the sale of the Obligations to the Underwriter; (iv) the approval of this
engagement letter; (v) approval of a paying agent agreement to whom you will make
semiannual payments sufficient to pay the debt service on the Obligations; (vi) instructions
to the paying agent for the Refunded Obligations to give notice to the holders of the
Refunded Obligations that they are being called for redemption; (vii) approval of an escrow
agreement whereby the proceeds of the Bonds will be used to pay the debt service on the
Refunded Obligations; and (viii) certain other covenants of the Issuer that are designed to
allow the Issuer to issue the Obligations as tax-exempt obligations. As you can see from the
foregoing description, the Ordinance is an omnibus undertaking of the Issuer that is intended
to provide for all actions and undertakings that are required for the issuance of the
Obligations. There will be other certificates and letters that will be required to be executed
by officers of the Issuer on the Sale Date, but they all spring from, and are authorized by, the
Ordinance.
(3) As noted above, the Obligations will be sold to the Underwriter in accordance with the
provisions of the Ordinance and, in addition, the Underwriter will want the Issuer to sign a
Bond Purchase Contract on the Sale Date that will set forth the terms of the sale of the
Obligations. We have reviewed but not drafted this Contract, and you should know that
while it is a fairly routine form of document for this type of transaction, it does commit the
Issuer to sell the Obligations to the Underwriter at the price to be negotiated between the
Issuer and the Underwriter. In addition, it contains representations of the Issuer to the
Underwriter to the effect that the Issuer is authorized to issue the Obligations and that it has
made full disclosure to the Underwriter and the bond investors of all material information.
As a condition to the Underwriter's payment for the Obligations, the Underwriter will require
this firm to deliver our Bond Counsel opinion to them, in which we will opine that the
Obligations are valid obligations of the Issuer and that, assuming ongoing compliance by the
Issuer with the provisions of the Ordinance, the interest on the Obligations will be exempt
from federal income taxation. The Bond Purchase Contract will also require the delivery of
an opinion of the Texas Attorney General approving the Obligations, as is required by State
law. We will review the Issuer's representations and agreements in the Bond Purchase
Contract to ensure that it is appropriate for the Issuer to make the representations and
agreements of the nature contained in the Purchase Contract. However, if there are any
unusual financial or legal circumstances affecting the Issuer that would make the covenants,
representations or statements made by the Issuer in the Bond Purchase Contract untrue, you
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should let the Underwriter, your financial advisor and/or the undersigned know about them
as soon as possible.
(4) The Underwriter will offer the Obligations into the public debt markets prior to the time that
the Town Council meets to accept the Underwriter's offer for the Obligations. Through this
process, the Obligations will be "priced" – i.e., interest rates and premiums or discounts, if
any, for the Obligations will be established. On the Sale Date, the Town Council will
consider the terms offered to the Issuer by the Underwriter based upon the market conditions
and other factors that determine interest rates and pricing information. In connection with
the offering of the Obligations, the Town Council will approve an offering document called
an "Official Statement" that contains financial and operating data concerning the Issuer, and
information that describes the Obligations. The Issuer is responsible for the information that
is contained in the Official Statement to the extent that it describes the Obligations and the
Issuer. Some information in the Official Statement has been prepared by others, including
the bond insurer, if any, and the Underwriter, and the Issuer is not responsible for that
information. As your Bond Counsel, we have reviewed the Official Statement to ensure that
the information describing the Obligations and the Ordinance are correct. As Bond Counsel
we do not review other areas of the Official Statement. If you know of any information that
an investor would consider to be material in order to make an investment decision, and that
information is omitted from, or incorrect in, the Official Statement, the Underwriter needs
to know, so that it can correct the Official Statement.
B. SCOPE OF ENGAGEMENT
In this engagement, we have performed, or expect to perform, the following duties:
(1) Subject to the completion of proceedings to our satisfaction, render our legal opinion
(the "Bond Opinion"), regarding the validity and binding effect of the Obligations,
the source of payment and security for the Obligations, and the excludability of
interest on the Obligations from gross income for federal income tax purposes.
(2) Prepare and review documents necessary or appropriate to the authorization,
issuance and delivery of the Obligations, coordinate the authorization and execution
of such documents, and review enabling legislation.
(3) Assist the Issuer in seeking from other governmental authorities such approvals,
permissions and exemptions as we determine are necessary or appropriate in
connection with the authorization, issuance and delivery of the Obligations, except
that we will not be responsible for any required federal or state securities law filings.
In this connection, we particularly undertake to assist the Issuer in having the
Obligations approved by the Public Finance Division of the Office of the Texas
Attorney General, and, following such approval, registered by the Texas Comptroller
of Public Accounts.
(4) Review legal issues relating to the structure of the Obligation issue.
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(5) Review those sections of the Official Statement to be disseminated in connection
with the sale of the Obligations which describe the Obligations, the Ordinance
pursuant to which they will be issued and the tax-exempt treatment of the interest on
the Obligations for purposes of federal income taxation.
(6) If requested, assist the Issuer in presenting information to bond rating organizations
and bond insurers relating to legal issues affecting the issuance of the Obligations.
(7) Draft the continuing disclosure undertaking of the Issuer.
Our Bond Opinion will be delivered by us on the date the Obligations are exchanged for their
purchase price (the "Closing"). The Issuer will be entitled to rely on our Bond Opinion.
The Bond Opinion will be based on facts and law existing as of its date. In rendering our
Bond Opinion, we will rely upon the certified proceedings and other certifications of public officials
and other persons furnished to us without undertaking to verify the same by independent
investigation, and we will assume continuing compliance by the Issuer with applicable laws relating
to the Obligations. During the course of this engagement, we will rely on you to provide us with
complete and timely information on all developments pertaining to any aspect of the Obligations and
their security. We understand that you will direct members of your staff and other employees of the
Issuer to cooperate with us in this regard.
Our duties in this engagement are limited to those expressly set forth above. Unless we are
separately engaged in writing to perform other services, our duties do not include any other services,
including the following:
(1) Except as described in sections A and B above, assisting in the preparation or review
of an official statement or any other disclosure document with respect to the
Obligations, assisting in the preparation of, or opining on, a continuing disclosure
undertaking pertaining to the Obligations or, after Closing, providing advice
concerning any actions necessary to assure compliance with any continuing
disclosure undertaking, or, in connection with the issuance of the Obligations,
performing an independent investigation to determine the accuracy, completeness or
sufficiency of any such document or rendering advice that the official statement or
other disclosure document does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
(2) Preparing requests for tax rulings from the Internal Revenue Service, or no action
letters from the Securities and Exchange Commission.
(3) Preparing state securities law memoranda or investment surveys with respect to the
Obligations.
(4) Drafting state constitutional or legislative amendments.
(5) Pursuing test cases or other litigation.
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(6) Making an investigation or expressing any view as to the creditworthiness of the
Issuer or the Obligations.
(7) Representing the Issuer in Internal Revenue Service examinations or inquiries, or
Securities and Exchange Commission investigations.
(8) After Closing, providing continuing advice to the Issuer or any other party
concerning any actions necessary to assure that interest paid on the Obligations will
continue to be excludable from gross income for federal income tax purposes (e.g.,
our engagement does not include rebate calculations for the Obligations).
(9) Negotiating the terms of, or opining as to, any investment contract.
(10) Addressing any other matter not specifically set forth above that is not required to
render our Bond Opinion.
ATTORNEY-CLIENT RELATIONSHIP
Upon execution of this engagement letter, the Issuer will be our client and an attorney-client
relationship will exist between us. We further assume that all other parties in this transaction
understand that we represent only the Issuer in this transaction, we are not counsel to any other
party, and we are not acting as an intermediary among the parties. Our services as bond counsel are
limited to those contracted for in this letter; the Issuer's execution of this engagement letter will
constitute an acknowledgment of those limitations. Our representation of the Issuer will not affect,
however, our responsibility to render an objective Bond Opinion.
Our representation of the Issuer and the attorney-client relationship created by this
engagement letter will be concluded upon issuance of the Obligations. Nevertheless, subsequent to
Closing, we will mail the appropriate Internal Revenue Service Form 8038, prepare and distribute
to the participants in the transaction a transcript of the proceedings pertaining to the Obligations.
CONFLICTS
As you are aware, our firm represents many political subdivisions and investment banking
firms, among others, who do business with political subdivisions. It is possible that during the time
that we are representing the Issuer, one or more of our present or future clients will have transactions
with the Issuer. It is also possible that we may be asked to represent, in an unrelated matter, one or
more of the entities involved in the issuance of the Obligations, including the Underwriter and the
Issuer's financial advisor. We do not believe such representation, if it occurs, will adversely affect
our ability to represent you as provided in this letter, either because such matters will be sufficiently
different from the issuance of the Obligations so as to make such representations not adverse to our
representation of you, or because the potential for such adversity is remote or minor and outweighed
by the consideration that it is unlikely that advice given to the other client will be relevant to any
aspect of the issuance of the Obligations. Execution of this letter will signify the Issuer's consent
to our representation of others consistent with the circumstances described in this paragraph.
FEES
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Based upon: (i) the terms, structure, size and schedule of the financing represented by the
Obligations; (ii) the duties we will undertake pursuant to this engagement letter; (iii) the time we
anticipate devoting to the financing; and (iv) the responsibilities we will assume in connection
therewith, our fee will be $6,000 for the first $1,000,000 in net proceeds of each series of the
Obligations, plus $1 per $1,000 of net proceeds of each series of the Obligations for all such
amounts above $1,000,000. Net proceeds include any net original issue premium, less the amount
of the purchaser's discount, plus the principal amount of the Obligations (accrued interest is
excluded from net proceeds). The fee includes our services rendered as Bond Counsel, but does not
include client charges made or incurred on your behalf, such as travel costs, photocopying,
deliveries, long distance telephone charges, telecopier charges, computer-assisted research and other
expenses. Our fee will be billed after the Closing. If the financing is not consummated, we
understand and agree that we will not be paid. In accordance with the terms of the Ordinance, the
Issuer will provide the filing fee of the Texas Attorney General to Bond Counsel on a timely basis
to permit the filing of the transcript of proceedings for the Obligations so that the Obligations may
be approved by the Attorney General in time to meet the closing date set forth in the Official
Statement.
RECORDS
At your request, papers and property furnished by you will be returned promptly upon receipt
of payment for outstanding fees and client charges. Our own files, including lawyer work product,
pertaining to the transaction will be retained by us. For various reasons, including the minimization
of unnecessary storage expenses, we reserve the right to dispose of any documents or other materials
retained by us after the termination of this engagement.
If the foregoing terms are acceptable to you, please so indicate by returning the enclosed
copy of this engagement letter dated and signed by an authorized officer, retaining the original for
your files. We look forward to working with you.
Respectfully yours,
Accepted and Approved
Town of Prosper, Texas
By:
Its: Mayor
Date: June 25, 2013
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Page 1 of 2
To: Mayor and Town Council
From: Harlan Jefferson, Town Manager
Re: Town Council Meeting – June 25, 2013
Agenda Item:
Consider and act upon authorizing the Town Manager to accept in writing an Agreement by
Independent Bank to be bound by the terms and conditions of the Town’s Bank Depository
Services Request for Proposal.
Description of Agenda Item:
The Town’s five-year bank depository relationship with Independent Bank will expire on June
30, 2013. Therefore, the Town of Prosper solicited sealed proposals for bank depository
services and staff has completed the review of responses. Requests for Proposals (RFPs) were
distributed to the financial institutions within the Town limits. The following two bidders
responded with proposals: Independent Bank and American Bank of Texas.
The RFP required each proposal to be evaluated to determine “the best value” for the Town.
The evaluation of the proposals were made on, but not limited to, the criteria in no particular
order of priority, as follows:
Ability to perform and provide the required and requested services;
Reputation of bidder and quality of services;
Cost of services;
Funds availability;
Interest paid on interest bearing accounts and deposits;
Earnings credit calculation on accounts balances;
Completeness of bid and agreement to points outlined in the RFP;
Convenience of locations;
Previous service relationship with Prosper; and
Financial strength and stability of the institution.
Independent Bank met the ten criteria and proposed a fee schedule mirroring the fee schedule
in place with the existing arrangement. A summary of the financial impact of the proposal can
be found below.
Estimated Monthly Fees $ 0
Monthly Average Earnings Credit Rate $ 0
Net Monthly Fees $ 0
Estimated Monthly Earnings $ 14,531
24-Month Initial Term $ 348,744
Prosper is a place where everyone matters.
ADMINISTRATION
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Page 2 of 2
Independent Bank’s interest rates on the Town’s deposits are superior to the other local
investment options available to the Town. A comparison of the options can be found below.
Interest Rate Comparison:
Organization Rate
Independent Bank (Current) 1.0000%
Independent Bank (Proposed) 0.7500%
Collin Bank CDs 0.4500%
TexStar 0.1125%
TexPool 0.0920%
From the review, staff is recommending that Independent Bank be selected as the Town’s
provider of bank depository services. Independent Bank is the low bidder meeting the RFP
specifications.
The proposed term for the depository services is a two-year period beginning on July 1, 2013,
and ending on June 30, 2015. The relationship may be extended for three one-year periods,
subject to the approval of the Town Council and Independent Bank. Under state law, a
municipality can execute a depository services agreement whose terms do not exceed five
years.
Budget Impact:
The precise amount of budgetary impact is dependent on daily balances and interest rates.
Because interest rates have decreased slightly, we expect a reduction in interest income.
However, the proposed interest rates are very competitive.
Legal Obligations and Review:
Terry Welch with Brown & Hofmeister, L.L.P., has reviewed the proposal as to form and legality.
Attached Documents:
1. Bank Depository Proposal from Independent Bank
Town Staff Recommendation:
Staff recommends that the Town Council approve this item.
Proposed Motion: I move to authorize the Town Manager to accept in writing an Agreement by
Independent Bank to be bound by the terms and conditions of the Town’s Bank Depository
Services Request for Proposal.
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Page 1 of 2
To: Mayor and Town Council
From: Baby Raley, Human Resources Director
Through: Harlan Jefferson, Town Manager
Re: Town Council Meeting – June 25, 2013
Agenda Item:
Consider and act upon authorizing the Town Manager to enter into contracts for employee
benefits with United Healthcare for medical and dental group insurance and Alliance Work
Partners to include WellCoach resources and services.
Description of Agenda Item:
The Town has historically provided a competitive and innovative benefits package to
employees, offering a selection which best suits employees’ individual and family needs.
Providing these options has benefitted not only recruitment efforts, but also retention of
employees. Options include primary benefits consisting of basic life insurance, accidental death
and dismemberment insurance, short- and long-term disability insurance, and major medical
(cost shared with employees) and health savings accounts (HSA). Town Staff solicited requests
for proposals for medical and dental group insurance in order to seek cost-effective insurance
benefits for the Town.
Medical proposals were sent to 7 carriers: Aetna, Assurant, Blue Cross Blue Shield, CIGNA,
Humana, TML Intergovernmental Employee Benefits Pool, and United Healthcare (current
carrier). After evaluation of the proposals, staff, the Employee Benefits Committee and Council
Benefits Subcommittee recommends United Healthcare as the group medical provider for
employees and their eligible dependents.
Dental proposals were sent to 19 carriers: Aetna, Amalgamated Life, AIG Benefits, Ameritas
Life Insurance (current carrier), American United Life (AUL), Blue Cross Blue Shield, CIGNA,
Delta Dental, Dental Select, Dearborn National, Humana, Lincoln Financial, MetLife, Mutual of
Omaha, Principal, Sun Life Financial, United Concordia, United Healthcare (UHC), and UNUM.
After evaluation of the proposals, staff, the Employee Benefits Committee and Council Benefits
Subcommittee recommends United Healthcare as the group dental provider for employees and
their eligible dependents with enhanced benefit plans.
Staff, the Employee Benefits Committee and Council Benefits Subcommittee recommends an
enhancement to the Employee Assistance Program through Alliance Work Partners (current
provider) by adding wellness resources (a.k.a. “WellCoach”) for employees online. By adding
WellCoach features, employees will be able to obtain online support 24/7 for health and
wellness including an online smoking cessation program. Alliance Work Partners has assisted
employees and family members with excellent counseling service, treatment, and resources as
well as served the Town with incident response assistance.
HUMAN RESOURCES
Prosper is a place where everyone matters.
Item 10
Page 2 of 2
The recommended benefit plans continue to support the Town’s consumer-driven health
philosophy and meet the Town’s goals.
Budget Impact:
The estimated annual Town medical cost increase for employees based on United Healthcare’s
proposal is $472,725 (17.1% change over current).
The estimated annual employee dental cost based on United Healthcare’s proposal is $52,966
(less than the current and renewal rate).
The estimated Town annual cost for Alliance Work Partner’s additional wellness resources is
$2,425.20 ($0.10 additional cost per employee per month over current - $2.05).
Attached Documents:
1. Town of Prosper Benefits Renewal Presentation
2. 2012-2013 Current Rates and 2013-2014 Renewal Rates
Town Staff Recommendation:
Staff recommends that the Town Council authorize the Town Manager to enter into contracts for
employee benefits with United Healthcare for medical and dental group insurance and Alliance
Work Partners.
Proposed Motion: I move to authorize the Town Manager to enter into contracts for employee
benefits with United Healthcare for medical and dental group insurance and Alliance Work
Partners to include WellCoach resources and services.
Item 10
Town of ProsperEmployee Benefits RenewalEmployee Benefits Renewal PresentationPresented By: Brent Weegar, MBAPrincipal1PrincipalIPS Advisors, Inc.Item 10
2013 - 2014 RenewalHealth Plan – United Healthcare Renewal: +29% Increase or $133,982$,Renegotiated to +18.1% or $83,520Best Market Alternative: Aetna +24%Dental Plan – AmeritasRenewal:+27% Increase or $6,885R ti t d t 27% I $6 885 ( h )Renegotiated to +27% Increase or $6,885 (no change)Move UHC for -4.29% reductionAncillary Benefit Plan – Sun Life – Rate Guarantee (Except STD)Basic Life – AD&D Voluntary Life –AD&D2yShort Term Disability – Renewed at Rate PassLong Term DisabilityItem 10
Per Capita Claims Vs. Per Capita Premium $6,549$4,607$4 318$4,631$5,431$5,000$6,000$7,000By Year$3,183$2,723$2,338$3,392$3,611$3,450$3,761$4,318$2,000$3,000$4,000$,$0$1,000Claims %ΔPremium %ΔLoss Ratio2007‐2008 $3,183 n/a $4,607 n/a 69.1%ClaimsPremium2008‐2009 $2,723‐14.5% $3,450‐25.1% 78.9%2009‐2010 $2,338‐14.1% $3,761 9.0% 62.2%2010‐2011 $3,392 45.1% $4,318 14.8% 78.6%32011‐2012 $3,611 6.4% $4,631 7.3% 78.0%2012‐2013 $6,549 81.4% $5,431 17.3% 120.6%Item 10
2012-2013 MERP Claims by20122013 MERP Claims by Plan to Date$37,459.95$35,000.00$40,000.00$20,000.00$25,000.00$30,000.00$6,220.19$5 000 00$10,000.00$15,000.00$0.00$5,000.004MERP BUY UPMERP COREItem 10
MERP Fi i l P fMERP Financial Performance$60,000$70,000$30,000$40,000$50,000$0$10,000$20,000Claims %ΔBudget %Δ2008‐2009$42 363n/a$40 770n/aClaimsBudget20082009$42,363n/a$40,770n/a2009‐2010 $36,502‐13.8% $46,980 15.2%2010‐2011 $48,826 33.8% $48,950 4.2%2011‐2012 $46,533‐4.7% $44,050‐10.0%2012‐2013 $52,416 12.6% $57,201 29.9%5Note: 2012 – 2013 Annualized claims and annualized budget based off current months enrollmentItem 10
2013–2014Renewal Strategy2013 2014 Renewal StrategyHealth Plan: Elimination of Buy Up Plan to offer dual plan with Core Plan and HSA PlanHSA PlanBuy up plan participants make up 85.8% of all MERP claims. Buy Up plan out of Pocket cost of $950 is well beneath normative data.Implementation of Compass Professional Health ServicesE l t i dA lPh i lI ti (C tl $25Evaluate increased Annual Physical Incentive (Currently $25, estimated 57% participation)Implementation of Tobacco CessationDental: Switching carriers from Americas to United Healthcare for reduction in price and receive a package discount on medical rate.Ancillary Plan/STD:Elimination of Employer Paid Short Term Disability with Sun Life Typically not provided as employer fundedVery low utilization rate6Very low utilization rateTown contributes $8,800 annuallyEmployee paid options with AFLACItem 10
HealthPlan FinancialsHealth Plan FinancialsRe‐Negotiated Town Financials CurrentgRenewal Removal of Buy‐UpMedical Premium $472,520 $558,149 $552,851MERP Cost $57,201 $67,799 $49,820HSA Funding $21,750 $21,750 $21,750//$Compassn/an/a$5,280Total Cost $551,471 $647,698 $629,701% Change n/a 17.4% 14.2%$ Change n/a $96,226 $78,230EmployeeCost$147 649$174 973$155 158Employee Cost$147,649$174,973$155,158% Change n/a 18.5% 5.1%$ Change n/a $27,324 $7,509Town Cost $403,823 $472,725 $474,543% Changen/a17.1%17.5%Assumes current Subsidy Assumes All Buy-Up g$ Change n/a $68,902 $70,720% Town Cost 73% 73% 75%7levels and enrollmentemployees enroll in Core MERP and Core MERP increased $5 for COMPASSItem 10
Employee Contribution OptionsEmployee Contribution Options Current RatesHSA Plan Core Plan Buy Up PlanEmployee Only$0.00$25.00$47.42Employee + Spouse$185.89$294.99 $382.82Employee + Children$114.39$191.15 $253.82El +Fil$300 28$461 15$589 21Renewal Rates(AssumesElimination of Buy Up Strategy)Employee + Family$300.28$461.15$589.21(Assumes Elimination of Buy Up Strategy) HSA Plan$ Δfrom Current Core Plan$ Δfrom CurrentEmployee Only $0.00 $0.00 $34.40 $9.40Employee + Spouse$223 03$37 14$359 31$64 31Employee + Spouse$223.03$37.14$359.31$64.31Employee + Children $137.24 $22.85 $236.26 $45.12Employee + Family $360.27 $59.99 $556.18 $95.038Item 10
Other Lines of Coverage FinancialsOther Lines of Coverage FinancialsCurrent Renewal RecommendationDental Premium $25,306 $32,191 $24,613Life $16,723 $16,723 $16,723STD $8,881 $8,881 $0LTD$11,630 $11,630 $11,630Total$62,541 $69,426 $52,966% Changen/a 11.0%‐15.3%$ Changen/a $6,885‐$9,575Town Paid Only9Item 10
2013-2014Recommendations2013 2014 RecommendationsHealth Plan – United Healthcare Removal of Buy Up plan is recommended.Addition of Compass Professional Health Services is recommended.Wellness ProgramIt is recommended to continue the annual physical incentive andIt is recommended to continue the annual physical incentive and increase it by $10 per month. Add online Health Risk Assessment requirement for employee and spouse, as applicable.Il i fTb i i ddfImplementation of a Tobacco cessation program is recommended for 2013-2014 plan year to give employees the opportunity to complete a on-line cessation program with Alliance Work Partners for a cost of $0.10 PEPM. A Tobacco user surcharge is recommended for the 20142015 l2014-2015 plan year.10Item 10
2013 - 2014 RecommendationsDental Plan - AmeritasChange carriers to United Healthcare for a decrease in cost and package discounts on medical.Ancillary Benefit Plan – Sun LifeRates for Life, Optional Life and LTD are guaranteed until 8/1/14.Rates for Short Term Disability renewed at rate passypRemoval of employer paid STD and implementation of employee paid STD with AFLAC is recommended11Item 10
APPENDICES12Item 10
Pl D i O ti f20132014Plan Design Option for 2013 -2014Member PaysCore PlanHSA OptionDeductible - Individual $1,000$3,000CoinsuranceThen 30% up to Out of Pocket MaximumThen 0%Total Out of Pocket –Individual$2,200 – This amount includes the deductible$4,000 – This amount includes the deductibleMaximum MERP / HSA Up to $2,800 $750 ReimbursementPreventive CarePCP CopaySpecialist CopayER Copay$0$30$60$250$0 no DeductibleDeductible AppliesDeductible AppliesDeductible AppliesER Copay$250Deductible AppliesDrug Copays$10 / $35 / $60x 2.5 MailDeductible applies then $15 / $35 / 60 x 3 Mail13Item 10
HSA Plan$3,000 Ind / 100% / $4,000 OOPTotal Rate UHC Rate HSA Per Month Town PaysTown Pays % of Medical RateEmployee Pays by TierTotal Employee PaysEmployee $348.49 $285.99 $62.50 $348.49 100.0%$0.00$0.00 + Spouse$434.28 $371.78 $62.50 $248.3950.0%$185.89$185.89 + Children$291.28 $228.78 $62.50 $176.8950.0%$114.39$114.39 + Family$663.06 $600.56 $62.50 $362.7850.0%$300.28$300.28Core Plan$1,000 Ded. / 70% / $2,200 OOPTotal Rate UHC Rate MERP Rate Town Pays Town Pays % Employee Pays Total Employee PaysEmployee $346.16 $312.24 $33.92 $321.1692.8%$25.00$25.00 + Spouse$449.99 $405.90 $44.09 $180.0040.0%$269.99$294.99 + Children$276.91 $249.78 $27.13 $110.7640.0%$166.15$191.15 + Family$726.92 $655.68 $71.24 $290.7740.0%$436.15$461.15Buy Up Plan$500 Ded. / 90% / $950 OOPTotal Rate UHC Rate MERP Rate Town Pays Town Pays % Employee Pays Total Employee PaysEmployee $368.58 $312.24 $56.34 $321.1687.1%$47.42$47.42 + Spouse$479.14 $405.90 $73.24 $143.7430.0%$382.82$382.82 + Children$294.85 $249.78 $45.07$88.4630.0%$253.82$253.82 + Family$773.99 $655.68 $118.31 $232.2030.0%$589.21$589.21Dental Plan CoreTotal RateTown Pays Town Pays % Employee Pays Total Employee PaysEmployee $24.81$24.81100.0%$0.00$0.00 + Spouse$28.12$0.000.0%$28.12$28.12 + Children$37.71$0.000.0%$37.71$37.71 + Family$65.83$0.000.0%$65.83$65.83Dental Plan Buy UpTotal RateTown Pays Town Pays % Employee Pays Total Employee PaysEmployee $33.37$24.8174.3%$8.56$8.56 + Spouse$34.70$0.000.0%$34.70$43.26 + Children$57.62$0.000.0%$57.62$66.18 + Family$92.32$0.000.0%$92.32$100.88Vision PlanTotal RateTown Pays Town Pays % Employee Pays Total Employee PaysEmployee $5.24$0.000.0%$5.24$5.24 + Spouse$4.72$0.000.0%$4.72$9.96 + Children$5.24$0.000.0%$5.24$10.48 + Family$10.20$0.000.0%$10.20$15.44HSA Plan$3,000 Ind / 100% / $4,000 OOPTotal Rate % Change UHC Rate % Change HSA Per Month % Change Town Pays % Change Town Pays % Employee PaysTotal Employee Pays% ChangeEmployee $402.62 15.5% $340.1218.9%$62.500.0%$402.6215.5% 100.0%$0.00$0.000.0% + Spouse$508.55 17.1% $446.0520.0%$62.500.0%$285.5315.0% 50.0%$223.03$223.0320.0% + Children$336.98 15.7% $274.4820.0%$62.500.0%$199.7412.9% 50.0%$137.24$137.2420.0% + Family$783.03 18.1% $720.5320.0%$62.500.0%$422.7716.5% 50.0%$360.27$360.2720.0%Core Plan$1,000 Ded. / 70% / $2,200 OOPTotal Rate % Change UHC Rate % Change MERP Rate % Change Town Pays % Change Town Pays % Employee PaysTotal Employee Pays% ChangeEmployee $412.15 19.1% $366.9617.5%$40.1918.5%$377.7517.6%‐8.3%$34.40$34.4037.6% + Spouse$538.17 19.6% $480.9318.5%$52.2418.5%$213.2718.5%‐60.4% $324.90$359.3121.8% + Children$333.10 20.3% $295.9518.5%$32.1518.5%$131.2418.5%‐60.6% $201.86$236.2623.6% + Family$866.30 19.2% $776.8918.5%$84.4118.5%$344.5218.5%‐60.2% $521.78$556.1820.6%Dental Plan CoreTotal Rate % ChangeTown Pays % Change Town Pays % Employee PaysTotal Employee Pays% ChangeEmployee $24.13‐2.7%$24.13‐2.7% 100.0%$0.00$0.000.0% + Spouse$27.02‐3.9%$0.000.0%0.0%$27.02$27.02‐3.9% + Children$33.99‐9.9%$0.000.0%0.0%$33.99$33.99‐9.9% + Family$63.86‐3.0%$0.000.0%0.0%$63.86$63.86‐3.0%Dental Plan Buy UpTotal Rate % ChangeTown Pays % Change Town Pays % Employee PaysTotal Employee Pays% ChangeEmployee $29.03‐13.0%$24.13‐2.7% 83.1%$4.90$4.90‐42.8% + Spouse$39.07 12.6%$0.00 0.0% 0.0% $39.07 $43.97 1.6% + Children$55.11‐4.4%$0.000.0%0.0%$55.11$60.01‐9.3% + Family$93.49 1.3%$0.00 0.0% 0.0% $93.49 $98.39‐2.5%Vision PlanTotal Rate % ChangeTown Pays % Change Town Pays % Employee PaysTotal Employee Pays% ChangeEmployee $5.24 0.0%$0.00 0.0% 0.0% $5.24 $5.24 0.0% + Spouse$4.72 0.0%$0.00 0.0% 0.0% $4.72 $9.96 0.0% + Children$5.24 0.0%$0.00 0.0% 0.0% $5.24 $10.48 0.0% + Family$10.20 0.0%$0.00 0.0% 0.0% $10.20 $15.44 0.0%2012-2013 Current Rates2013-2014 Renewal RatesItem 10