15-42 - O
ORDINANCE NO. 15-__
OF THE TOWN OF PROSPER, TEXAS
AUTHORIZING THE ISSUANCE OF
TOWN OF PROSPER, TEXAS
COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATES OF OBLIGATION, SERIES 2015
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........................................................2
Section 3. Characteristics of the Certificates........................................2
Section 4. Form of Certificates...................................................6
Section 5. Interest and Sinking Fund.............................................13
Section 6. Surplus Revenues....................................................13
Section 7. Defeasance of Certificates.............................................13
Section 8. Damaged, Mutilated, Lost, Stolen, or Destroyed Certificates..................15
Section 9. Custody, Approval, and Registration of Certificates; Bond Counsel's Opinion
and Engagement; Attorney General Filing Fee; CUSIP Numbers;
Other Procedures and Agreements.........................................16
Section 10. Covenants Regarding Tax Exemption of Interest on the Certificates...........17
Section 11. Sale of Certificates; Approval of Official Statement; Application of Proceeds...19
Section 12. Allocation of Certificate Proceeds......................................19
Section 13. Disposition of Project................................................20
Section 14. Interest Earnings on Certificate Proceeds; Appropriation....................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................................25
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................................................26
Section 24. Remedies Not Exclusive.............................................26
Section 25. Effective Date.....................................................26
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ORDINANCE NO. 15-__
AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF PROSPER, TEXAS
COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION,
SERIES 2015; 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 $8,060,000 for paying all or
a portion of the Issuer's contractual obligations incurred in connection with (i) construction and
equipping of a fire station and the acquisition and installation of a public safety radio system, (ii)
constructing, improving, extending, expanding, upgrading and developing streets and roads, bridges
and intersections including, utility relocation, landscaping, sidewalks, traffic safety and operational
improvements, installation of median lighting, the purchase of any necessary right-of-way, drainage
and other related costs and (iii) 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,
as amended, 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, to the time of adoption of this Ordinance, 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 $8,060,000 for paying all or a portion of the
Issuer's contractual obligations incurred in connection with (i) construction and equipping of a fire
station and the acquisition and installation of a public safety radio system, (ii) constructing,
improving, extending, expanding, upgrading and developing streets and roads, bridges and
intersections including, utility relocation, landscaping, sidewalks, traffic safety and operational
improvements, installation of median lighting, the purchase of any necessary right-of-way, drainage
and other related costs and (iii) paying legal, fiscal, engineering and architectural fees in connection
with these projects (collectively, the "Project").
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 2015", and initially there shall be issued,
sold, and delivered hereunder one fully registered certificate, without interest coupons, dated July
15, 2015, 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 February 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, 2016, as follows:
PrincipalInterestPrincipalInterest
YearAmountRateYearAmountRate
20172026
20182027
20192028
20202029
20212030
20222031
20232032
20242033
20252034
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
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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
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.
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(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
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
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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
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.
Notwithstanding any other provision of this Ordinance to
(f)Payments to Cede & Co.
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.
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(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
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 PRINCIPAL
STATE OF TEXAS AMOUNT
TOWN OF PROSPER, TEXAS $
COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATE OF OBLIGATION, SERIES 2015
Interest RateDate of Initial DeliveryMaturity DateCUSIP No.
August 13, 2015February 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,
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2016 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
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.
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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
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 July 15, 2015, authorized in
accordance with the Constitution and laws of the State of Texas in the principal amount of
$8,060,000 for the purpose of paying all or a portion of the Town's contractual obligations incurred
in connection with (i) construction and equipping of a fire station and the acquisition and installation
of a public safety radio system, (ii) constructing, improving, extending, expanding, upgrading and
developing streets and roads, bridges and intersections including, utility relocation, landscaping,
sidewalks, traffic safety and operational improvements, installation of median lighting, the purchase
of any necessary right-of-way, drainage and other related costs and (iii) paying legal, fiscal,
engineering and architectural fees in connection with these projects.
THE CERTIFICATES OF THIS SERIES maturing on February 15 in each of the years
______________ are subject to mandatory redemption prior to maturity in part at random, by lot or
other customary method selected by the Paying Agent/Registrar, at par plus accrued interest to the
redemption date, and without premium, with funds on deposit in the Interest and Sinking Fund.
Such Certificates shall be redeemed by the Paying Agent/Registrar on February 15 in each of the
years and in the principal amounts, respectively, as are set forth in the following schedule:
Certificates MaturingCertificates MaturingCertificates Maturing
2/15/202/15/202/15/20
PrincipalPrincipalPrincipal
YearAmountYearAmountYearAmount
(1)
Final maturity of Certificate.
The principal amount of the Certificates required to be redeemed pursuant to the operation of such
mandatory sinking fund shall be reduced by the principal amount of any Certificates which, at least
45 days prior to the mandatory sinking fund redemption date (i) shall have been purchased by the
Issuer and delivered to the Paying Agent/Registrar for cancellation or (ii) redeemed pursuant to the
optional redemption provision described below and not theretofore credited against a mandatory
sinking fund requirement.
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IN ADDITION TO THE FOREGOING MANDATORY REDEMPTION, the Certificates
of this series maturing on and after February 15, 2026 may be redeemed prior to their scheduled
maturities on any date on or after February 15, 2025, at the option of the Issuer, 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
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
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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.
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
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Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on
this Certificate.
(signature) (signature)
Town SecretaryMayor
(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
_______________________________________________________________________________.
Please insert Social Security or Taxpayer Identification Number of Transferee
______________________________________________________________________________
(Please print or typewrite name and address, including zip code, of Transferee.)
______________________________________________________________________________
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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 guaranteedNOTICE: The signature above must
by an eligible guarantor institutioncorrespond with the name of the registered
participating in a securities transferowner as it appears upon the front of this
association recognized signature guaranteeCertificate in every particular, without
program.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:
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
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each of the years, in the principal installments and bearing interest at the per annum rates set forth
in the following schedule:
PrincipalInterestPrincipalInterest
YearsInstallmentsRatesYearsInstallmentsRates
20172026
20182027
20192028
20202029
20212030
20222031
20232032
20242033
20252034
2035
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, 2016 and
semiannually on each August 15 and February 15 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
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
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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
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, and
thereafter the Issuer will have no further responsibility with respect to amounts available to the
Paying Agent/Registrar (or other financial institution permitted by applicable law) for the payment
of such Defeased Bonds, including any insufficiency therein caused by the failure of the Paying
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Agent/Registrar (or other financial institution permitted by applicable law) to receive payment when
due on the 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.
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
15
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.
. In accordance with Subchapter D
(e)Authority for Issuing Replacement Certificates
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.
Section 9. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES; BOND
COUNSEL'S OPINION AND ENGAGEMENT; ATTORNEY GENERAL FILING FEE; CUSIP
NUMBERS; OTHER PROCEDURES AND AGREEMENTS. (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
16
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
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
17
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
–
(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
18
(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
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 PROCEEDS. (a) The Certificates are hereby initially sold and shall be
delivered to Coastal Securities, Inc. and Robert W. Baird & Co. (the "Underwriters") for cash at a
19
price set forth below, pursuant to the terms and provisions of a Bond Purchase Agreement that the
Mayor of the Issuer is hereby authorized to execute and deliver. The Certificates shall initially be
registered in the name of "Coastal Securities, Inc." The Certificates are sold to the Underwriters at
a price of $__________ (representing the par amount of the Certificates, plus an aggregate net
original issue premium of $____________, less Underwriter's discount on the Certificates of
$_______). It is hereby officially found, determined, and declared that the terms of this sale are the
most advantageous reasonably obtainable.
(b) The proceeds from the sale of the Certificates shall be applied as follows: (i) the amount
of $________ shall be deposited to the Interest and Sinking Fund, (ii) the amount of $____________
shall be deposited to the construction fund of the Issuer to be used for the acquisition of the Project
and (iii) 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 July __, 2015 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
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.
20
Section 14. INTEREST EARNINGS ON CERTIFICATE PROCEEDS; APPROPRIATION.
(a) Interest earnings, if any, 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.
(b) To pay interest coming due on the Certificates on February 15, 2016, there is hereby
appropriated from current funds on hand, which are hereby certified to be on hand and available for
such purpose, an amount sufficient to pay such debt service, and such amount shall be used for no
other purpose.
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 2015 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, 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
financial information and operating data with respect to the District of the general type included in
this Official Statement in Tables 1 through 5 and 7 through 14 (the "Annual Operating Report").
The Issuer will additionally provide financial statements of the Issuer (the "Financial Statements"),
that will be (A) prepared in accordance with the accounting principles described in the notes to the
financial statements that are attached to the Official Statement as Appendix B, or such other
accounting principles as the Issuer may be required to employ from time to time pursuant to state
law or regulation, and shall be in substantially the form included in the final Official Statement and
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(B) audited, if the Issuer commissions an audit of such Financial Statements and the audit is
completed within the period during which they must be provided. The Issuer will update and
provide the Annual Operating Report within six months after the end of each fiscal year and the
Financial Statements within 12 months of the end of each fiscal year, in each case beginning with
the fiscal year ending in and after 2015. The Issuer may provide the Financial Statements earlier,
including at the time it provides its Annual Operating Report, but if the audit of such Financial
Statements is not complete within 12 months after any such fiscal year end, then the Issuer shall file
unaudited Financial Statements within such 12-month period and audited Financial Statements for
the applicable fiscal year, when and if the audit report on such Financial Statements becomes
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.
(iii) 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
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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 (ii) of this Section by the time
required by subsection (ii). As used in clause (iii)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
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.
(iv) Limitations, Disclaimers, and Amendments. (A) 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.
(B) 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.
(C) 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.
(D) 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
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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.
(E) 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
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
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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;
(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
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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
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
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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 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.
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