03-04 - OORDINANCE NO.03-04 OF THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS,
PROVIDINGFORTHE ISSUANCE OFTOWN OF PROSPER, TEXASTAXNOTES, SERIES
2003, IN THE AGGREGATE PRINCIPAL AMOUNT OF S325,000, BEARING INTEREST AT
5%; TO SECURE FUNDS FOR THE PURCHASE OF A FIRE TRUCK; PRESCRIBING THE
FORM OF ANTICIPATION NOTES; LEVYING AD VALOREM TAXES; MAKING
CERTAIN OTHER COVENANTS OF THE TOWN REGARDING THE TAX NOTES AND
THE FUNDS FROM WTIICH SAID NOTES ARE TO BE PAID
THE STATE OF TEXAS §
COUNTY OF COLLIN §
TOWN OF PROSPER §
WHEREAS, pursuant to Chapter 1431, Texas Govz`znment Code (hereinafter called the "Act"),
the Town Council is authorized and empowered to issue tax :rotes to pay contractual obligations incurred
or to be incurred (i) for the construction of any public work and (ii) for the purchase of materials, supplies,
equipment, machinery, buildings. lands and rights -of -way for -he CiWs authorized needs and purposes; and
WHEREAS, in accordance with the provisions of the Act. the Town Council hereby finds and
determines that tax notes should be issued and sold at this time to finance the costs associated with
contractual obligations of the Town for the purpose of purch2sing a municipal fire truck; and
WHEREAS, the governing body of the Issuer deems it appropriate to adopt this Ordinance (the
"Note Ordinance") and issue the Town of Prc-sper, Texas Tax Notes, Series 2003 (the "Notes") herein
authorized as permitted by the Act.
NOW, THEREFORE. BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF
PROSPER:
Section 1. AMOUNT AND PURPOSE OF THE NOTES. The Votes of the Town of Prosper
(the "Issuer") are hereby authorized to be issued and delin-ered in the aggregate principal amount of
S325.000, for the purpose of purchasing a municipal tine trwk.
Section2. DATE, DENONLINATION. NU!I BERS. AND MATURITIES OF THE NOTE.
The Note initially authorized hereby shall be dated March 1,:003, shall be issued and delivered in the form
of a fully -registered note, without coupons (such note is hereinafter referred to as the "Note" and the series
of which it is issued is hereinafter referred to as the "Notes"). payable in installments to the registered
owners thereof, or registered assigns, all in the manner hereinafter provided, with the Note to be numbered
R-1, in the denomination and principal amount of S325,000 initially payable to Prosper State Bank, with
the principal of said Note to be payable on the dates and in the amounts as set forth in the FORM OF
NOTE in Section 5. The date of delivery of the Note to the initial purchaser thereof shall be referred to
in the Note and this Note Ordinance as the "Delivery Date".
Section 3. INTEREST ON THE NOTE. The Note initially authorized hereby shall bear
interest on the unpaid balance of the principal amount thereof from the Delivery Date (which date shall be
indicated by the Paying Agent/Registrar in the Delivery Certificate appearing on the Note) to the scheduled
due date, or date of prepayment or redemption prior to the scheduled due date, of the principal installments
of the Note, at the rates set forth in the FORM OF NOTE set forth in Section 5. The interest shall be
calculated and payable on the dates and in the manner provided in the FORM OF NOTE set forth in
Section 5.
Section 4. GENERAL CHARACTERISTICS.
(a) In General The Note initially authorized hereby shall be issued, shall be payable, may or
shall be prepaid or redeemed prior to the scheduled principal installment payment dates, may be transferred
and assigned, shall have the characteristics, and shall be signed and executed (and the Note shall be
sealed), all as provided, and in the manner indicated, in the FORM OF NOTE set forth in Section 5. After
the Note has been authorized to be issued by the Town Council of the Issuer, and prior to the delivery of
the Note, the Comptroller of Public Accounts shall execute the Comptroller's Registration Certificate as
provided in Section 5. In addition, on the date of delivery of the Note to the initial purchaser thereof, the
Paying Agent/Registrar shall fill in the date of delivery of the Note in the Delivery Certificate appearing on
the Note as provided in Section 5.
(b) Registration Books. The Issuer shall keep or cause to be kept at the principal operations
office of the Paying Agent/Registrar books for the registration and transfer of the Note (the "Note
Registration Books") and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer
agent to keep such books and make such registrations and transfers under such reasonable regulations as
the Issuer or the Paying Agent/Regis= may prescribe; and the Paying Agent/Registrar will register or
transfer as herein provided, the Note upon presentation thereof at such office.
Registration of any Note may be transferred (in whole, not in part) only on the Note Registration
Books upon surrender thereof by the registered owner in person or by its duly authorized attorney, by
proper written instrument of transfer, in the form and with guaranty of signatures satisfactory to the Paying
Agent/Registrar, duly executed by such owner or attorney. Upon such surrender for transfer of registration,
the Paying Agent/Registrar shall make notation of such transfer on such Note in the assignment section
appearing thereon and in the Note Registration Books. Such transfers of registration shall be made without
charge to the owner of such Note, but any taxes or other governmental charges required to be paid with
respect to the same shall be paid by the Bondholder requesting such transfer of registration, as a condition
precedent to the exercise of such privilege.
The Paying Agent/Registrar shall not be required to make transfers of any Note within five (5) days
prior to an interest payment date or redemption date or subsequent to the date of mailing of notice of
redemption of such Note or a portion thereof, anything in such Note to the contrary notwithstanding.
(c) Payment to registered owner. The person in whose name any Note shall be registered on
the Note Registration Books may be deemed and treated as the absolute owner thereof for all purposes
of this Note Ordinance whether or not such Note shall be oNtrdue, and neither the Issuer nor the Paying
Agent/Registrar shall be affected by any notice to the contrary, and payment of, or on account of, the
principal of, premium, if any, agreed liquidated damages, if any, and interest on any such Note shall be
made only to such registered owner thereof, but such registration may be changed as provided herein. All
such payments shall be valid and effectual to satisfy and discharge the liability upon such Note to the extent
of the sum or sums so paid.
(d) Notation of Payment and Prepqyment. The Issuer hereby appoints Prosper State Bank,
Prosper, Texas as the Paying Agent/Registrar- for the Note. Upon the prepayment or partial redemption
of the Note, the Paying Agent/Registrar. shall note in the Prepayment Record appearing on such Note the
amount of such prepayment or partial redemption, the date said payment was made and the remaining
unpaid principal balance of said Note and shall then have said entry signed by an authorized official of the
Paying Agent/Registrar. The Paying Agent/Registrar shall also record such information in the Note
Registration Books, and the Paying Agent/Registrar shall aL;o record in the Note Registration Books all
payments of principal installments on such Note when made on their respective due dates.
Section 5. FORM OF NOTE. The form of the Note, together with the forms of the various
certificates and forms to appear on the Note, shall be, respectively, substantially as follows, with necessary
and appropriate variations, omissions, and insertions as permitted or required by this Note Ordinance:
NO. R-
FORM OF NOTE
UNITED STATES OF .A.NLERICA
STATE OF TEXAS
COUNTY OF COLLIN
TOWN OF PROSPER TEXAS
TAX NOTE, SERIES 2003
PRINCIPAL
AMOUNT
S325,000
THE TOWN OF PROSPER (he "Issuer"). in Coa County, being a political subdivision of the
State of Texas, acting in accordance w lh the provisions of Chapter 1431. Texas Government Code (the
"Act") hereby promises to pay to
or its registered assigns (hereinafter called the "registered owner") the principal amount of
THREE HUNDRED TWENTY-FIVE THOUSAND DOLLARS
in installments on the dates and in the amounts hereinafter described, and to pay interest thereon, from the
date of delivery hereof (which date appears in the Delivery Certificate endorsed on this Note), on the
balance of said principal amount from time to time remaining unpaid, at a rate per annum of 5% (provided
that such principal and interest are payable solely from the sources and in the manner hereinafter described,
and solely as authorized and provided in the Act).
THIS NOTE IS DATED as of March 1, 2003 (the "Dated Date"), but interest accrues hereon
from the date of delivery hereof. The principal amount and interest of this Note shall be paid in annual
installments on March 1 of each year, commencing March 1, 2004 (each such payment date, a "Payment
Date"), and in the amounts set forth in Schedule A to this Note, with the last installment due on March 1,
2008.
THE PRINCIPAL OF and interest on this Note shall be payable in any coin or currency of the
United States of America which on the respective Payment Date therefor is legal tender for the payment
of public and private debts. The principal of and interest on this Note shall be payable to the registered
owner by check or draft mailed by Prosper State Bank, Prosper, Texas or its successor as Paying
Agent/Registrar (the "Paying Agent/Regist &') to the person in whose name this Note is registered at the
close of business on the Record Date for each Payment Date, which shall be the last day (whether or not
a business day) of the calendar month next preceding such Payment Date.
THIS NOTE is the sole note of the authorized series of the Issuer designated "Town of Prosper,
Texas Tax Notes, Series 2003," in the aggregate principal amount of $325,000 (the "Notes"), issued for
the purpose of providing funds for the purchase of a municipal fire truck.
THIS NOTE SHALL BE SUBJECT TO REDEMPTION and payment prior to maturity by the
Issuer as a whole at any time or in part on any Payment Date at a redemption price equal to 100% of the
principal amount thereof, plus accrued interest thereon to the redemption date, without premium.
IN THE EVENT THAT LESS than the entire amount of the outstanding principal installments of
this Note is to be prepaid and redeemed, the principal installments being prepaid or redeemed shall be
applied in inverse order of the due dates of the outstanding principal installments of the Note.
THE NOTE OF THIS SERIES is issuable in the form of one fully -registered Note without coupons
in the denomination of $325,000.
UPON THE PREPAYMENT OR PARTIAL REDEIVIPTION of this Note, the Paying
Agent/Registrar, shall note in the Prepayment Record appearing on this Note the amount of such
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IN WITNESS WHEREOF, the Issuer has caused this Note to be signed with the manual or
facsimile signature of the Mayor of the Issuer, countersigned with the manual or facsimile signature of the
Town Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed or placed
in facsimile on this Note, which is dated March 1, 2003.
Town Secretary Mayor
(TOWN SEAL)
FORM OF DELIVERY CERTIFICATE
The following shall be printed on the back of said Note:
"the Note was delivered to and paid for by the Purchaser thereof on
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Note has been examined, certified as to validity, and approved by the
Attorney General of the State of Texas, and that this Note 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)
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Note 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 Note has been issued under the provisions of the Note Ordinance
described on the face of this Note; and that this Mote has been issued in conversion of and exchange for
or replacement of a Note, notes, or a portion of a Note or notes of an issue which 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:
PROSPER STATE BANK
Authorized Representative
(FORM OF ASSIGNMELNT)
FOR VALLE RECEIVED, the undersigned hereby sells, assigns and transfers unto
Print or Type Name, Address and Social Security Number
or other Taxpayer Identification Number of Transferee
the within Bond and all rights thereunder. and hereby irrevocably constitutes and appoints _
attorney to transfer the within Bond on the books kept by the Trustee for
the rea stration and transfer of Notes, with full power of substimtion in the premises.
Dated:
assignee Signature:
Printed Name:
NOTICE: The signature to this assignment must corresaond «ith the name as it appears upon the face of
the within Note in every particular.
Signature Guaranteed By:
Title:
SCHEDULE A
AMORTIZATION SCHEDULE
Principal
Payment
Payment
Date
Balance
Amount
Principal
Interest
Ending Balance
1
3-01-04
5325,000.00
S74,299.45
558,816.81
$15,482.64
$266,183.19
2
3-01-05
266,183.19
75,066.81
61,757.65
13,309.16
204,425.54
3
3-01-06
204,425.54
75,066.81
64,945.53
10,221.28
139,580.01
4
3-01-07
139,580.01
75,066.81
68,087.81
6,979.00
71,492.20
5
3-01-08
71,492.20
75,066.81
71,492.20
3,574.61
0.00
[FORM OF PREPAYMENT RECORD]
PREPAYMENT RECORD
Note: In the event that less than the entire amount of the outstanding principal installments of this Note is
to be prepaid and redeemed, the principal installments being prepaid or redeemed shall be applied in
inverse order of the due dates of the outstanding principal installments of this Note.
Principal Name and Title of
Prepayment Remaining Authorized Officer
Date of or Principal making Entry
Payment Redemption Balance
Signature of Authorized
Officer
Section 6. INTEREST AND SINKING FUND. Town of Prosper, Texas Tax Notes, Series
2003 Interest and Sinking Fund, hereinafter called the "Interest and Sinking Fund" is hereby authorized and
shall be established and maintained in a depository bank of the Issuer, so long as the Notes, or interest
thereon, are outstanding and unpaid.
8
Section 7. TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund")
is hereby created solely for the benefit of the Notes, and the Interest and Sinking Fund shall be established
and maintained by the Issuer at an official depository bank of the Issuer. The 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 Notes_ All ad valerem taxes levied and collected for and on
account of said Notes shall be deposited, as collected to the credit of the Interest and Sinking Fund.
During each year while any of said Notes are outstanding and unpaid, the governing body of said Issuer
shall compute and ascertain a rate and amount of ad valorem ax which together with any other lawfully
available funds that are on deposit in the Interest and Sinking Fund at the time of such levy will be sufficient
to pay the interest on said Motes as such interest comes due, and to provide and maintain a sinking fund
adequate to pay the principal of such Notes as such principal matures (but never less than 2% of the original
principal amount of said Notes as a Sinking Fund each year). and said tax shall be based on the latest
approved tax rolls of said Issuer, with full allowance 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 propertyin said Issuer for each year while any of said Notes 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 said Notes. as such interest comes due and such principal matures, are hereby pledged for
such payment, within the limit prescribed by law. In addition, until expended for the herein authorized
purposes, the proceeds of the Notes are pledged to the payment of the principal and interest on the Notes.
Section 8. DEFEASANCE OF MOTES.
(a) Any Note and the interest thereon shall be deemed to be paid, retired, and no longer
outstanding (a "Defeased Note") within he meaning of this Ordinance, except to the extent provided in
Subsection (d) of this Section, when payment of the principal of such Note, 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 ( ) shall have been provided for on or before
such due date by irrevocably depositing with or make avaible to the Paving Agent/Registrar for such
payment (1) lawful money of the United States of America sufficient to make such payment or (2)
Government Obligations which mature as to pri�-ipal and interest in such amounts and at such times as will
insure the availability, without reinvestment, or Sufficient mosey to provide for such payment, and when
proper arrangements have been made b\ the Issuer with the Paying Agent/Registrar for the payment of its
services until all Defeased Notes shall have become due anc payable. At such time as a Note shall be
deemed to be a Defeased Note hereunder. as aforesaid. such Note and the interest thereon shall no longer
be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied as provided
in this Ordinance, and such principal and interes shallie payable solely from such money or Government
Obligations.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of
the Issuer also be invested in Go,. emment Obligations. maturng in the amounts and times as hereinbefore
E
set forth, and all income from such Government Obligations received by the Paying Agent/Registrar/
Registrar which is not required for the payment of the Notes 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.
(c) The tern "Government Obligations" as used in this Section, shall mean direct obligations
of the United States of America, including obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America, which may be United States Treasury
obligations such as its State and Local Government Series, which may be in book -entry form.
(d) Until all Defeased Notes shall have become due and payable, the Paying Agent/Registrar
shall perform the services of Paying Agent/Registrar for such Defeased Notes 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.
Section 9. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED NOTES.
(a) Replacement Notes. In the event any outstanding Note is damaged, mutilated, lost, stolen,
or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new Note
of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or
destroyed Note, in replacement for such Note in the manner hereinafter provided.
(b) Application for Replacement Notes. Application for replacement ofdamaged, mutilated,
lost, stolen, or destroyed Notes shall be made by the registered owner thereof to the Paying
Agent/Registrar/ Registrar. In every case of loss, theft, or destruction of a Note, the registered owner
applying for a replacement Note shall famish 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 Note, 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 Note, as the case may be. In every case of damage or mutilation of a Note, the
registered owner shall surrender to the Paying Agent/Registrar for cancellation the Note so damaged or
mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the
event any such Note shall have matured, and no default has occurred which is then continuing in the
payment of the principal of, redemption premium, if any, or interest on this Note, the Issuer may authorize
the payment of the same (without surrender thereof except in the case of a damaged or mutilated Note)
instead of issuing a replacement Note, provided security or indemnity is furnished as above provided in this
Section 9.
to
(d) Charge for Issuin- Replacement Notes. Prior to the issuance of any replacement Note,
the Paying Agent/Registrar shall charge the registered owner of such Note with all legal, printing, and other
expenses in connection therewith Every replacement Note issued pursuant to the provisions of this Section
by virtue of the fact that any Note is lost, stolen, or destroyed shall constitute a Note of the Issuer whether
or not the lost, stolen, or destroyed Note 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 Notes duly
issued under this Ordinance.
(e) Authority for Issuing Replacement Notes. In accordance with Tex. Gov't Code Ann.
Chapter 1201, Subchapter D, this Section of this Ordinance shall constitute authority for the issuance of
any such replacement certificate without necessity of further action by the Issuer or any other body or
person, and the duty of the replacement of such notes is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Notes in the form and
manner and with the effect, as provided in Section 4(a) of this Ordinance for Notes issued in exchange of
other Notes.
Section 10. CUSTODY. APPROVAL, AND REGISTRATION OF NOTES. The Mayor of
the Issuer is hereby authorized to have control of the Notes initially issued and delivered hereunder and all
necessary records and proceedings pertaining to the Dotes 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 Notes, and the seal of said
Comptroller shall be impressed, or placed in facsimile. on such Certificate.
Section 11. REMEDIES IN EVENT OF DEFAULT. In additional to all of the rights and
remedies provided by the laws of the State of Texas. the IssL:.r covenants and agrees that in the event of
default in payment of principal or interest on any of the Notes when due, or, in the event it fails to make the
payments required to be made into the Interest and Sinking Fund or defaults in the observance of
performance of any other of the contracts, covenants. conditions or obligations set forth in this Ordinance
or in the Notes, the following remedies shall be available:
(a) the registered owners shall be entitled to a writ of mandamus issued by a court of
competent jurisdiction compelling and requiring the Issuer and the officials thereof to observe and perform
the contracts, covenants, obligations or conditions prescribed in this Ordinance; and
(b) any delay or omission to exercise any right or power accruing upon any default shall not
impair any such right or power nor be construed to be a waiver of any such default or acquiescence therein,
and every such right and power may be exercised from time to time and as often as may be deemed
expedient.
Section 11. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE
NOTES. The Issuer covenants to take any action necessary to assure, or refrain from any action which
would adversely affect, the treatment of the Notes as obligations 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 Notes or
the projects financed therewith (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 Note 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 Notes, 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 Notes 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" which 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 Notes (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 which would otherwise result in the Notes being treated
as "specified 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 Notes 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 Notes, directly or indirectly, to
acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as
defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the
Notes, other than investment property acquired with —
(1) proceeds of the Notes 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,
1%
(2) amounts invested in a bona fide debt service fimd, 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 Notes;
(g) to otherwise restrict the use of the proceeds of the Notes or amounts treated as proceeds
of the Notes, as may be necessary, so that the Notes 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 ref endings); 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 Notes) 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 Notes 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 bondholders. 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 Notes. It is the understanding of the Issuer that the coveaants 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 which modify
or expand provisions of the Code, as applicable to the Notes, 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 Notes under section 103 of the Code. In the event that regulations or rulings are hereafter
promulgated which impose additional requirements \t hich are applicable to the Notes, 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 Notes under
section 103 of the Code. In furtherance of such intention. he Issuer hereby authorizes and directs the
Superintendent to execute any documents, certificates or reports required by the Code and to make such
elections, on behalf of the Issuer. which may be permitted by the Code as are consistent with the purpose
for the issuance of the Notes.
Section 12. DESIGNATION AS QUALIFIED TAX-EXEMPT OBLIGATIONS. The Issuer
hereby designates the Notes as "qualified tax-exempt obligations" as defined in section 265(b)(3) of the
Internal Revenue Code of 1986 (the "Code"), conditioned upon the purchaser identified in Section 15
hereof certifying that the aggregate initial offering price of the Notes to the public (excluding any accrued
interest) is no greater than $10 million. Assuming such condition is met, in furtherance of such designation,
the Issuer represents, covenants and warrants the following: (a) that during the calendar year in which the
Notes are issued, the Issuer (including any subordinate entities) has not designated nor will designate bonds,
which when aggregated with the Notes, will result in more than $10,000,000 of "qualified tax-exempt
bonds" being issued; (b) that the Issuer reasonably anticipates that the amount of tax-exempt obligations
issued during the calendar year in which the Notes are issued by the Issuer (or any subordinate entities) will
not exceed $10,000,000; and, (c) that the Issuer will take such action or refrain from such action as
necessary, and as more particularly set forth in Section 11 hereof, in order that the Notes will not be
considered "private activity bonds" within the meaning of section 141 of the Code.
Section 13. DISPOSITION OF PROJECT. The Issuer covenants that the property financed
with the proceeds of the Notes as describe in Section 1 of this Note Ordinance (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 Notes. 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 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 14. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE
PROJECT. 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 sale proceeds or
investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the delivery
of the Notes, or (2) the date the Notes 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 tar
purposes, of the Notes 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 15. SALE OF NOTES. The Notes are hereby sold and shall be delivered to Prosper State
Bank, Prosper, Texas for the par value thereof in accordance with the Private Placement Letter presented
to the Town Council on the date of adoption of this Ordinance. The Mayor is authorized to accept the
14
offer of the Prosper State Bank in the Private Placement Letter and the Town Secretary is authorized to
attest the signature of the Mayor thereon.
Section 16. PUBLIC NOTICE. It is hereby officially found and determined that public notice of
the time, place and purpose of said meeting was given, all as required by the Government Code, Chapter
551.
Section 17. ORDINANCE EFFECTIVE ON PASSAGE. This Ordinance shall become effective
immediately upon passage.
Section 18. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend this
Note Ordinance subject to the following terms and conditions, to -wit:
(a) The Issuer may from time to time, without the consent of any registered owner, except as
otherwise required by paragraph (b) below, amend or supplement this Note Ordinance in Note Ordinance
to (i) cure any ambiguity, defect or omission in this Note Ordinance that does not materially adversely affect
the interests of the registered owners, (ii) grant additional rights or security for the benefit of the registered
owners, (iii) add events of default as shall not be inconsistent with the provisions of this Note Ordinance
and which shall not materially adversely affect the interests of the registered owners, (v) qualify this Note
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 Note Ordinance as shall not be inconsistent with the provisions of this Note Ordinance and which shall
not in the opinion of bond counsel to the Issuer materially adversely affect the interests of the registered
owners.
(b) Except as provided in paragraph (a) above, the registered owner of the Note shall have
the right from time to time to approve any amendment hereto %vhich may be deemed necessary or desirable
by the Issuer.
(c) If at any time the Issuer shall desire to amend this Note Ordinance under this Section, the
Issuer shall send by U.S. mail to the registered owner of the Note a copy of the proposed amendment.
(d) Whenever at any time Aithin one year from the date of mailing of such notice the Issuer shall
receive an instrument or instruments executed by the registered owner. which instrument or instruments shall
refer to the proposed amendment and which shall specificalN, consent to and approve such amendment,
the Issuer may adopt the amendment in substantially the same form-
(e) Upon the adoption of any amendatory Note Ordinance pursuant to the provisions of this
Section, this Note Ordinance shall be deemed to be modified and amended in accordance with such
amendatory Note Ordinance, and the respective rights, duties, and obligations of the Issuer and all
registered owners of such affected Notes shall thereafter be determined, exercised, and enforced, subject
in all respects to such amendment.
15
For the purposes of establishing ownership of the Notes, 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 19. NO RULE 15c2-12 UNDERTAKING. The offering of the Notes is exempt from
the requirements of Rule 15c2-12 and the Issuer has therefore not made an undertaking with respect to
the Notes in accordance with such Rule.
Section 20. INCONSISTENT PROVISIONS. All indentures, Note Ordinances or resolutions,
or parts thereof, which are in conflict or inconsistent with any provision of this Note Ordinance are hereby
repealed to the extent of such conflict and the provisions of this Note Ordinance shall be and remain
controlling as to the matters contained herein.
Section 21. GOVERNING LAW. This Note Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
Section 22. SEVERABILITY. If any provision of this Note Ordinance or the application thereof
to any circumstance shall be held to be invalid, the remainder of this Note Ordinance and the application
thereofto other circumstances shall nevertheless be valid, and this governing body hereby declares that this
Note Ordinance would have been enacted without such invalid provision.
16
CERTIFICATE FOR ORDINANCE
THE STATE OF TEXAS §
COUNTY OF COLLIN §
TOWN OF PROSPER §
We, the undersigned officers of said Town, hereby certify as follows:
The Town Council of said Town convened in SPECIAL MEETING ON THE 18TH
DAY OF FEBRUARY, 2003, at the designated meeting place, and the roll was called of the duly
constituted officers and members of said Town Council, to wit:
Jim Dunmire, Mayor
Larry Tracey
Jeff Walker
Charles Niswanger
Michael Perry
Russell Kaker
Amber Phillips, Town Secretary
and all of said persons were present, except the following absentees: thus
constituting a quorum. Whereupon, among other business, the following transacted at said
Meeting: a written
ORDINANCE NO. 03-04 OF THE TOWN COUNCIL OF THE TOWN OF PROSPER, TEXAS,
PROVIDING FOR THE ISSUANCE OF TOWN OF PROSPER, TEXAS TAX NOTES, SERIES
2003, IN THE AGGREGATE PRINCIPAL AMOUNT OF $325,000, BEARING INTEREST AT
5%; TO SECURE FUNDS FOR THE PURCHASE OF A FIRE TRUCK; PRESCRIBING THE
FORM OF ANTICIPATION NOTES; LEVYING AD VALOREM TAXES; MAKING CERTAIN
OTHER COVENANTS OF THE TOWN REGARDING THE TAX NOTES AND THE FUNDS
FROM WHICH SAID NOTES ARE TO BE PAID.
was duly introduced for the consideration of said Town Council. It was then duly moved and
seconded that said Ordinance be adopted and, after due discussion, said motion, carrying with it the
adoption of said Ordinance, prevailed and carried, with all members of the Town Council shown
present above voting "Aye," except as shown below:
NOES: ABSTENSIONS:
2. A true, full and correct copy of the aforesaid Ordinance adopted at the Meeting
described in the above and foregoing paragraph is attached to and follows this Certificate; said
Ordinance has been duly recorded in said Town Council's minutes of said Meeting; the above and
foregoing paragraph is a true, full and correct excerpt from said Town Council's minutes of said
Meeting pertaining to the adoption of said Ordinance; the persons named in the above and foregoing
paragraph are the duly chosen, qualified and acting officers and members of said Town Council as
indicated therein; each of the officers and members of said Town Council was duly and sufficiently
notified officially and personally, in advance, of the time, place and purpose of the aforesaid Meeting,
and that said Ordinance would be introduced and considered for adoption at said Meeting, and each
of said officers and members consented, in advance, to the holding of said Meeting for such purpose,
and said Meeting was open to the public and public notice of the time, place and purpose of said
meeting was given, all as required by Chapter 551, Texas Government Code.
SIGNED AND SEALED the 18`h DAY OF FEBRUARY, 2003
Town Secretary
(SEAL)
I
t
Mayor