$4,155,000* HOPKINS COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION SCHOOL BUILDING REVENUE BONDS SERIES 2014

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1 This Preliminary Official Statement has been prepared for submission to prospective bidders for the bonds herein described and is in a form "deemed final" by the Corporation for purposes of SEC Rule 15c2-12(b)(1), but is subject to revision, amendment and completion in a final Official Statement. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the bonds in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED JUNE 25, 2014 (Bonds to be sold July 2, 2014 at 11:30 A.M. E.D.S.T.) In the opinion of Bond Counsel, subject to the conditions set forth in "Tax Exemption" herein, under existing laws, interest on the Bonds is excluded from gross income for federal and Kentucky income tax purposes and is not an item of tax preference for purposes of computing the federal alternative minimum tax. Interest on the Bonds held by corporations is includable in the computation of such corporation s adjusted current earnings for the purpose of computing the alternative minimum tax imposed on corporations. Bond Counsel is further of the opinion that the Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and its political subdivisions. See "Tax Exemption" herein. NEW ISSUE BANK QUALIFIED Dated: Date of Delivery RATING: " " Moody s (See "Rating" Herein) $4,155,000* HOPKINS COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION SCHOOL BUILDING REVENUE BONDS SERIES 2014 Due Date: August 1, as defined below Old National Trust Company, Evansville, Indiana, has been designated as Paying Agent and Registrar. The Bonds will be fully registered bonds in denominations of $5,000 or any integral multiple thereof without coupons. The Bonds will be issuable under a book entry system, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. There will be no distribution of the Bonds to the ultimate purchasers. See "BOOK ENTRY AND DTC" herein. Principal and interest on the Bonds will be paid by the Paying Agent and Registrar, directly to DTC or Cede & Co., its nominee. DTC will in turn remit such principal and interest to the DTC Participants (as defined herein) for subsequent distribution to the Beneficial Owners (as defined herein) of the Bonds. The Bonds will bear interest payable beginning February 1, 2015, and thereafter on each August 1 and February 1 until final maturity. Cusip# Interest Price/ Cusip# Interest Date Amount* Rate Yield Date Amount* Rate 8/1/15 $170,000 % 8/1/25 $210,000 % 8/1/16 170,000 8/1/26 210,000 8/1/17 170,000 8/1/27 215,000 8/1/18 175,000 8/1/28 225,000 8/1/19 175,000 8/1/29 230,000 8/1/20 180,000 8/1/30 240,000 8/1/21 190,000 8/1/31 250,000 8/1/22 190,000 8/1/32 260,000 8/1/23 200,000 8/1/33 275,000 8/1/24 200,000 8/1/34 220,000 The Bonds are subject to redemption prior to maturity in whole or in part on and after August 1, 2024 at par. Electronic bids for the Bonds must be submitted through PARITY Competitive Bidding System. Price/ Yield The Bonds are offered, subject to prior sale, when, as and if issued by the Corporation, subject to prior approval of legality by Rubin & Hays, Louisville, Kentucky, Bond Counsel. Delivery of the Bonds is expected on or about July 16, *Preliminary, subject to adjustment J.J.B. HILLIARD, W.L. LYONS, LLC Louisville, Kentucky Fiscal Agent

2 HOPKINS COUNTY SCHOOL DISTRICT FINANCE CORPORATION Corporation Officers Steven Faulk President Suzanne Duncan Vice President Linda Zellich Secretary Eydie Tate Treasurer Shannon Embry Director Randy Franklin Director Mike Morgan Director HOPKINS COUNTY BOARD OF EDUCATION Board Members Steven Faulk Chairperson Suzanne Duncan Vice Chairperson Shannon Embry Randy Franklin Mike Morgan Linda Zellich Superintendent BOND COUNSEL Rubin & Hays Louisville, Kentucky FISCAL AGENT J.J.B. Hilliard, W.L. Lyons, LLC Louisville, Kentucky REGISTRAR/PAYING AGENT BANK Old National Trust Company Evansville, Indiana i

3 REGARDING USE OF THIS OFFICIAL STATEMENT This Official Statement does not constitute an offering of any security other than the original offering of the Bonds of the Hopkins County School District Finance Corporation or the Hopkins County Board of Education identified on the cover page hereof. No person has been authorized by the Hopkins County School District Finance Corporation or the Hopkins County Board of Education to give any information or to make any representation other than that contained in the Official Statement, and if given or made such other information or representation must not be relied upon as having been given or authorized by the Hopkins County School District Finance Corporation or the Hopkins County Board of Education or the Fiscal Agent. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Bonds by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Hopkins County School District Finance Corporation or the Hopkins County Board of Education since the date hereof. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency, except the Hopkins County School District Finance Corporation or the Hopkins County Board of Education, will pass upon the accuracy or adequacy of this Official Statement or approve the Bonds for sale. (The Remainder of This Page Intentionally Left Blank) ii

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5 TABLE OF CONTENTS Page Introductory Statement... 1 Book Entry and DTC... 1 The Bonds... 3 Hopkins County School District Finance Corporation... 3 Security for the Bonds... 3 Kentucky School Facilities Construction Commission... 4 The Project... 4 Disposition of Bond Proceeds... 5 Miscellaneous Resolution and Lease Provisions... 5 State Support of Education... 6 Kentucky Department of Education Supervision... 6 Revenue Sources Within the Hopkins County School District... 7 Tax Base Information... 7 Tax Exemption... 8 Qualified Tax-Exempt Obligations... 9 Continuing Disclosure Compliance Absence of Material Litigation Fiscal Agent Rating No Legal Opinion Expressed as to Certain Matters Completeness of Official Statement Approval of Official Statement Appendix A: Appendix B: Appendix C: Appendix D: Tax Base and Operating Data Outstanding Bonds of the District Demographic and Economic Data Estimated Commission Debt Service Requirements on Series 2014 Bonds; and Total Annual District Debt Service Requirements iii

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7 OFFICIAL STATEMENT $4,155,000* HOPKINS COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION SCHOOL BUILDING REVENUE BONDS SERIES 2014 INTRODUCTORY STATEMENT This Official Statement, including the cover page, is furnished in connection with the offering of $4,155,000* in principal amount of Hopkins County School District Finance Corporation School Building Revenue Bonds, Series 2014 (the "Bonds") of the Hopkins County School District Finance Corporation (the "Corporation"). The Bonds will be issued under and in full compliance with the Constitution and Statutes of the Commonwealth of Kentucky including, among others, Section through , and Section through and of the Kentucky Revised Statutes (the "KRS"). The Bonds will be issued in accordance with a resolution (the "Resolution") adopted by the Corporation. BOOK ENTRY AND DTC The following information regarding DTC and Cede and Co. will be applicable to the Bonds as long as a book entry system is utilized. The Corporation does not assume any responsibility for the accuracy or completeness of the information set forth under this caption "Book Entry", and the Corporation is not required to supervise, and will not supervise, the operation of the book entry system described herein. The Depository Trust Company ( DTC ), New York, NY, will act as securities depository for the Bonds (the "Bonds"). The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fullyregistered bond certificate will be issued for the Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized bookentry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of bond certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. *Preliminary, subject to adjustment 1

8 To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Corporation as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Corporation or Paying Agent, on payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, Paying Agent or Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Corporation or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to Corporation or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, bond certificates are required to be printed and delivered. The Corporation may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Corporation believes to be reliable, but the Corporation takes no responsibility for the accuracy thereof. Conveyance of notices and other communications by DTC to DTC Participants, by DTC Participants to Indirect Participants, and by DTC Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory and regulatory requirements as may be in effect from time to time. The Corporation and the Paying Agent cannot and do not represent or give any assurances that DTC, the DTC Participants or Indirect Participants or others will distribute payments of debt service charges on the Bonds paid to DTC or its nominee, as the registered owner, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will serve and act in the manner described in this Official Statement. 2

9 THE BONDS The Bonds will be dated the date of issuance, will be issued in the principal amount of $4,155,000* in fully registered form and in denominations of $5,000 or any integral multiples thereof, will mature as to principal on August 1, 2015 and on each August 1 thereafter until final maturity, and will bear interest as set forth on the cover page of this Official Statement. Bonds maturing on and after August 1, 2025, shall be subject to redemption at the option of the Corporation prior to maturity, in whole or in part, in any order of their maturities (less than all of a single maturity to be selected by lot), on any date falling on or after August 1, 2024, at par, plus unpaid interest accrued to the date of redemption. Not less than thirty days and not more than 60 days before the redemption date of any Bonds, the Paying Agent is required to cause a notice of redemption to be mailed first class postage prepaid by regular United States mail to all Registered Owners of Bonds to be redeemed in whole or in part at their registered addresses. Failure to mail any notice or any defect in any notice with respect to any Bonds shall not affect the validity of the redemption of any other Bonds. Such redemption notice must set forth the details with respect to the redemption. Interest accruing on the Bonds will be payable semiannually on February 1 and August 1 of each year (commencing February 1, 2015) from the later of the date of issuance, or the most recent interest payment date to which interest has been paid or duly provided for. The interest installment on each Bond will be paid to the person who is the Registered Owner thereof as of the close of business on the Record Date for such interest installment at the address of such Registered Owner as it appears on the books of the Paying Agent, which Record Date will be the 15th day (whether or not a business day) of the calendar month next preceding such interest payment date. Payment of interest will be made by check or draft mailed on or before each Interest Payment Date to the person who is the Registered Owner. Principal will be paid when due upon delivery of the Bond for payment at the principal office of the Paying Agent. The Bonds are transferable upon presentation and surrender thereof to the Paying Agent, duly endorsed for transfer or accompanied by an assignment duly executed by the Registered Owner or his authorized representative. The Paying Agent will not be obligated to transfer or exchange any Bond a) during any period beginning five days prior to the selection by the Paying Agent of Bonds to be redeemed prior to maturity and ending on the date of mailing of notice of any such redemption or, b) if such Bond has been selected or called for redemption in whole or in part. HOPKINS COUNTY SCHOOL DISTRICT FINANCE CORPORATION The Corporation has been formed in accordance with the provisions of KRS Sections through and Section , and KRS Chapter 273 and KRS , as a non-profit, non-stock corporation for the purpose of financing necessary school building facilities for and on behalf of the Board of Education of the Hopkins County School District (the "Board"). Under the provisions of existing Kentucky law, the Corporation is permitted to act as an agency and instrumentality of the Board for financing purposes. The Board of Directors of the Corporation is made up of the incumbent members of the Board. SECURITY FOR THE BONDS The Bonds have been duly authorized by a Resolution (the "Bond Resolution") duly passed by the Board of Directors of the Corporation, pursuant to the authority of Sections through , inclusive, and through , inclusive, and of the Kentucky Revised Statutes. The Bonds were issued for the purpose of financing the cost, not otherwise provided, of the construction of a new career/technology center (the "Project"). The site of the Project (the "Project Site") has been conveyed to the Corporation by the Board of Education of Hopkins County, Kentucky (the "Board of Education"). It is reported that contracts for the work have been awarded (with 100% completion bond furnished), and that the proceeds of such Bonds (and the investment of such proceeds pending disbursement), together with additional sums otherwise made available to the Corporation by the Board of Education, will be adequate to assure payment of all anticipated costs of completing the Project, and all reasonably anticipated contingencies. *Preliminary, subject to adjustment 3

10 The Bonds, in the opinion of Bond Counsel, will constitute legal, valid and binding special obligations of the Hopkins County School District Finance Corporation, payable solely from and secured by an exclusive pledge of and a lien on the revenues of the Project, which revenues are derived from payments to be made under the Contract, Lease and Option (the "Lease") between the Corporation and the Board of Education, on a year-to-year basis, the initial period of which expires on June 30, 2015 (February 1, 2015, being the first interest payment date, and August 1, 2015 being the date of the first principal maturity), with the Board of Education having the exclusive option to renew thereafter from year to year (July 1 of each year to June 30 of each ensuing year) for periods of one year at a time until the final maturity of the Bonds (August 1, 2034). In the Lease, the Board of Education agrees to pay annually (as long as the Lease remains in force) rentals in an amount sufficient to pay the principal of and interest on the Bonds as same become due, plus the annual maintenance and insurance costs. Although the Board of Education is obligated to pay the Corporation annual rentals in the full amount of the principal and interest requirements on the Bonds for each year in which the Lease is renewed, the Board of Education has entered into a Participation Agreement by and between the Board of Education and the Kentucky School Facilities Construction Commission (the "Commission"). Under the terms of the Participation Agreement, the Commission has agreed to pay annually, directly to the Paying Agent for the Bonds, for the Board of Education's benefit, a stated Agreed Participation, subject to the constitutional restrictions limiting the commitment of state agencies to the then current biennial period; said amount to be applied only to the principal of and interest on the Bonds so long as the Board of Education renews the Lease. Under the Lease, the Board of Education has pledged and assigned all of its rights under the Participation Agreement in and to the Agreed Participation to the Corporation in order to secure the Bonds. KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION The Kentucky School Facilities Construction Commission (the "Commission") is an independent corporate agency and instrumentality of the Commonwealth of Kentucky established pursuant to the provisions of Sections through of the Kentucky Revised Statutes (the "Act"), for the purpose of assisting local school districts in meeting the school construction needs of the Commonwealth in a manner in which will ensure an equitable distribution of funds based upon unmet need. Pursuant to the provisions of the Act, the Regulations of the Kentucky Board of Education and the Commission, the Commission has determined that the Board is eligible for participation from the Commission in meeting the costs of construction of the Project and has entered into a Participation Agreement with the Board whereunder the Commission agrees to pay an Agreed Participation of 100% of the total debt service requirements to be applied only to the payment of the principal and interest requirements on the Bonds; provided, however, that the contractual commitment of the Commission to pay the annual Agreed Participation is limited to the biennial budget period of the Commonwealth, with the first such biennial period terminating on June 30, 2015; the right is reserved in the Commission to terminate the commitment to pay the Agreed Participation every two years thereafter. The obligation of the Commission to make payments of the Agreed Participation shall be automatically renewed each two years for a period of two years unless the Commission shall give notice of its intention not to participate not less than sixty days prior to the end of its biennium; however, by the execution of the Participation Agreement, the Commission has expressed its present intention to continue to pay the Agreed Participation in each successive biennial budget period until the retirement of all of the Bonds, but such execution does not obligate the Commission to do so. The Extraordinary Session of the General Assembly of the Commonwealth adopted the State s Budget for the biennium ending June 30, Inter alia, the Budget provides $99,040,000 in FY and $106,264,000 in FY to pay debt service on existing and future bond issues; $100,000,000 of the Commission s previous Offers of Assistance made during the last biennium; and authorizes $100,000,000 in additional Offers of Assistance for the current biennium to be funded in the Budget for the biennium ending June 30, THE PROJECT In 2011 the Corporation and the Board began construction of a new single story 39,700 square foot, career and technology center located on a tract of land situated along the west side of Kentucky Highway 336 (Grapevine Road) opposite the southbound ramp of the Pennyrile Parkway at Earlington, Kentucky (the "2011 Project"). On April 5, 2011, the Corporation issued its Hopkins County School District Finance Corporation School Building Revenue Bonds, Series 2011A in the original amount of $9,030,000 (the "Series 2011A Bonds") to provide funding for the construction of the 2011 Project. 4

11 Construction proceeded on the 2011 Project but was halted in December, 2011 when the Corporation and the Board determined that the foundation for the 2011 Project was compromised by the collapse of an underground mine located under the construction site. The 2011 Project was approximately 60% complete. Prior to the start of construction of the 2011 Project, the Corporation and the Board had received geological surveys from certified engineers that the soils and base under the 2011 Project were adequately stable and sturdy for the construction and installation of the 2011 Project. After review by the Corporation and the Board and reports by the Project architects and independent geological engineers, it was determined to abandon the 2011 Project and its site and seek a new site for construction of the proposed Project. The Board and the Corporation have filed litigation seeking monetary damages for the failures and negligence of the 2011 Project consultants and contractors associated with the 2011 Project. The Project shall be financed from (i) the proceeds of the Bonds; (ii) the unspent proceeds of the Series 2011A Bonds, (iii) proceeds of the Hopkins County School District Finance Corporation School Building Revenue Bonds Anticipation Notes to be issued simultaneously with the Bonds and estimated to be in original amount of $2,485,000 (the Notes ), and (iv) if necessary, other funds of the Board. Upon completion of the construction of the Project, the Corporation will issue its Project Bonds in an amount necessary to pay the principal and interest due on the Bonds to the extent other Corporation or Board revenues, including any monetary or liquidated damages, are inadequate to pay the debt service thereon. The estimated sources and uses of funds for the Project Bonds and Notes are as follows: Sources of Funds* School Building Revenue Bonds Series 2014 School Building Revenue Bond Anticipation Notes Series 2014 (2) Total Par Amount of Issuance $4,155, $2,485, $ 6,640, Other Sources of Funds (1) -- 4,989, ,989, Total Sources $4,155, $7,474, $11,629, Uses of Funds* Project Fund Deposits $4,033, $7,347, $11,381, Capitalized Interest Fund -- 83, , Total Underwriter s Discount 83, , , Costs of Issuance & Surplus Funds 38, , , Total Uses $4,155, $7,474, $11,629, *Preliminary, subject to adjustment (1) Includes proceeds from 2011 Bonds, cash requirements and stored materials. (2) In addition to the Bonds, it is anticipated that the Corporation will issue simultaneously with delivery of the Bonds, its Series 2014 Bond Anticipation Notes ( BANs or Notes ) that will be used to supplement the Bonds in financing the costs of the Bonds. The Bond proceeds will be applied as follows: DISPOSITION OF BOND PROCEEDS (a) (b) There shall be paid any and all expenses incident to the issuance, sale and delivery of the Bonds, including the fees of the Fiscal Agent, the rating fee and such other appropriate expenses as may be approved by the Corporation and Board. There shall next be deposited to the District s depository bank, Fifth Third Bank, Madisonville, Kentucky (the Depository), the remainder of the Bond proceeds (to be accounted for as a construction account on the District s accounting system). MISCELLANEOUS RESOLUTION AND LEASE PROVISIONS In the Resolution the Corporation has reserved the right to make provision for discharge of the pledges and liens securing the Bonds by depositing in or for the credit of the Bond Fund moneys sufficient to pay the principal, premium and interest requirements on the Bonds to a certain date of redemption or to the date of maturity, or by depositing in the Bond Fund obligations of the United States Government which, together with earnings thereon, will produce such amounts for payment of the Bonds. 5

12 The Resolution and the Lease contain tax covenants, representations and warranties to the effect that the Corporation and the Board are in compliance with, and will comply with, the requirements of the United States Internal Revenue Code of 1986, as amended (the "Code"), so that the Bonds will not become "arbitrage bonds" within the meaning of the Code. STATE SUPPORT OF EDUCATION The 1990 Regular Session of the General Assembly of the Commonwealth enacted a comprehensive legislative package known as the Kentucky Education Reform Act ("KERA") designed to comply with the mandate of the Kentucky Supreme Court that the General Assembly provide for an efficient an equitable system of schools throughout the State. KERA became fully effective on July 13, Elementary and Secondary Education in the Commonwealth is supervised by the Commissioner of Education as the Chief Executive Officer of the State Department of Education ( DOE ), an appointee of the reconstituted Kentucky Board of Education (the State Board ). Some salient features of KERA are as follows: KRS establishes the fund to Support Education Excellence in Kentucky ("SEEK") funded from biennial appropriations from the General Assembly for distribution to school districts. The base funding level guaranteed to each school district by SEEK for operating and capital expenditures is determined in each fiscal year by dividing the total annual SEEK appropriations by the statewide total of pupils in average daily attendance ("ADA") in the preceding fiscal year; the ADA for each district is subject to adjustment to reflect the number of at risk students (approved for free lunch programs under state and federal guidelines), numbers and types of exceptional children, and transportation costs. KRS (2) provides that for fiscal years beginning July 1, 1990 each school district may levy an equivalent tax rate which will produce up to 15% of those revenues guaranteed by SEEK. Any increase beyond the 4% annual limitation imposed by KRS ("House Bill 44") is not subject to the recall provisions of that Section. Revenue generated by the 15% levy is to be equalized at 150% of the state-wide average per pupil equalized assessment. KRS (2) permits school districts to levy up to 30% of the revenue guaranteed by the SEEK program, plus the revenue produced by the 15% levy, but said additional tax will not be equalized with state funds and will be subject to recall by a simple majority of those voting on the question. KRS (1) also provides that in order to be eligible for participation from the Commission for debt service on bond issues the district must levy a tax which will produce revenues equivalent to $.05 per $100 of the total assessed value of all property in the district (including tangible and intangible property and motor vehicles) in addition to the minimum $.30 levy. A district having a special voted tax which is equal to or higher than the required $.05 tax, must commit and segregate for capital purposes at least an amount equal to the required $.05 tax. Those districts which levy the additional $.05 tax are also eligible for participation in the Facilities Support Program of Kentucky ("FSPK") for which funds are appropriated separately from SEEK funds and are distributed to districts in accordance with a formula taking into account outstanding debt and funds available for payment from both local and state sources. KRS provides that as of July 1, 1994 all real property located in the Commonwealth subject to local taxation shall be assessed at 100% of fair cash value. KRS provides for the establishment of the State Board for Elementary and Secondary Education consisting of eleven members appointed by the Governor and confirmed by the Senate and House of Representatives of the Kentucky General Assembly. Seven members shall represent each of the Supreme Court districts throughout the Commonwealth and four members shall represent the state at large. KENTUCKY DEPARTMENT OF EDUCATION SUPERVISION Pursuant to the provisions of KRS , it is provided that a local school district budget failing to provide payments for rentals in connection with outstanding revenue bonds for school purposes shall be disapproved. State Department of Education approval of a bond issue and its associated financial, educational and construction plans, is required prior to its issuance and will have been received prior to the sale of this issue. State supervision also extends to other areas of local school finance, including supervision of general operations such as the examination of business methods and accounts of a school district, requirements of prompt, detailed reports of receipts and expenditure and the annual approval of an operating budget as a prerequisite to such operation. All local boards who have entered into contracts for the issuance of bonds must arrange for insurance protection in an amount equal to the full insurable value of the buildings or to the continuous retention of such insurance. This State Department 6

13 of Education supervision and control is believed to be a major contribution toward the maintenance of Kentucky's perfect record of no defaults in payment of its revenue bonds for school purposes. THE STATE DEPARTMENT OF EDUCATION HAS ADOPTED A POLICY WHICH REQUIRES THAT ANNUAL BUDGETS OF LOCAL SCHOOL BOARDS PROVIDE FOR RENTAL PAYMENTS FOR DEBT SERVICE IN ORDER FOR SUCH BUDGETS TO BE APPROVED BY SAID DEPARTMENT. Capital Outlay Allotment REVENUE SOURCES WITHIN THE HOPKINS COUNTY SCHOOL DISTRICT Kentucky s SEEK Capital Outlay Program provides for the annual payment to all districts for capital construction or acquisition. Funds from the Capital Outlay Allotment are not directly pledged for debt service, but as a practical matter, and to the extent needed, have been and will continue to be applied to debt service through rental payments on the lease agreement. The State establishes a formula which results in the allocation of funds for capital expenditures in school districts at $100 per ADA pupil of the SEEK allotment for the current biennium which is required to be segregated into the Capital Outlay Allotment Fund which may be used only for (1) direct payment of construction costs; (2) debt service on voted and funding bonds; (3) lease rental payments in support of bond issues; (4) reduction of deficits resulting from over expenditures for emergency capital construction; and (5) a reserve for each of the categories enumerated in 1 through 4 above. The Capital Outlay Allotment to the District for the most recent four year period can be found in APPENDIX A. General Property and Motor Vehicle Tax The Board levies a tax at a rate per $100 on real estate, personal property and motor vehicles. See APPENDIX A for the most recent five year period of rates assessed. SEEK Program Fund The SEEK Program Fund allocates biennial appropriations from the General Assembly to each Kentucky school district. The base level is determined for each fiscal year by dividing the total SEEK appropriation by the statewide total of pupils in average daily attendance. Each district s share of the SEEK Program is subject to adjustment to reflect several factors. See STATE SUPPORT OF EDUCATION for more details. See APPENDIX A for a recent history of the SEEK Program Fund appropriations to the District. FSPK Program The FSPK Program provides funds for districts to support debt service and capital expenditures. The amount of FSPK funds each district receives is based on a funding formula that takes into consideration a district s average daily attendance and the amount of local revenue generated on a district s tax base relative to a state-wide average assessment. Homestead Exemption TAX BASE INFORMATION Section 170 of the Kentucky Constitution was amended by the voters of the Commonwealth of Kentucky at the General Election held November 2, 1971, to exempt from property taxes the first $6,500 of single-unit residential property of taxpayers 65 years of age or older. Following that election, the 1972 General Assembly amended KRS Chapter 132 to permit counties and school districts to adjust their local tax revenues through increases in taxes on non-exempt property by amounts equivalent to the revenues lost through application of this homestead exemption. In subsequent sessions of the General Assembly the "single-unit" qualification has been enlarged so as to provide for the exemption to apply to real property "held by legal or equitable title, by the entireties, jointly, in common, as a condominium" maintained as the permanent residence of the owner; and that the $6,500 exemption "shall be construed to mean $6,500 in terms of the purchasing power of the dollar in Every two years thereafter, if the cost of living index of the U.S. Department of Labor has changed as much as one (1) percent, the maximum 7

14 exemption shall be adjusted accordingly." In fiscal year , approximately $140,695,640 of such property was exempt from property taxes in the District. The local general property tax rate on non-exempt property has been adjusted so as to recover tax revenues equivalent to the revenues lost through application of the homestead exemption. The amount of the individual exemption as of January 1, 2014 was $36,000. Limitation on Taxation The 1990 Regular Session of the Kentucky General Assembly in enacting the "KERA" legislative package amended the provisions of KRS which prohibited school districts from levying ad valorem property taxes which would generate revenues in excess of 4% of the previous year's revenues without said levy being subject to recall, to permit exception to the referendum under (1) KRS (12) (a new section of the statute) and (2) and amended KRS Under KRS (12)(a) for fiscal years beginning July 1, 1990 school districts are permitted to levy a "minimum equivalent tax rate" of thirty cents ($.30) for general school purposes. The equivalent tax rate is defined as the rate which results when the income collected during the prior year from all taxes (including occupational or utilities) levied by the District for school purposes divided by the total assessed value of property plus the assessment of motor vehicles certified by the State Revenue Cabinet. Failure to levy the minimum equivalent rate subjects the board of the district to removal. The exception provided by KRS (1)(a) permits school districts to levy an equivalent tax rate as defined in KRS (12)(a) which will produce up to 15% of those revenues guaranteed by the program to support education excellence in Kentucky. Levies permitted by this section of the statute are not subject to public hearing or recall provisions as set forth in KRS Please see APPENDIX A for tax base data to include assessments and tax receipts. TAX EXEMPTION In the opinion of Rubin & Hays, Municipal Bond Counsel, Louisville, Kentucky, the principal of the Bonds is not subject to Kentucky ad valorem taxation and the interest on the Bonds is excludable from gross income for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax on individuals and corporations; however, for purposes of computing the alternative minimum tax imposed on certain corporations (as defined for federal income tax purposes) such interest is taken into account in determining adjusted current earnings. In addition, interest on the Bonds is not subject to Kentucky income taxation, subject to certain exceptions set out below. The legal opinion of Rubin & Hays is subject to the condition that the Corporation comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes, including the requirement as to any required rebate (and reports with reference thereto) to the United States of America of certain investment earnings on the proceeds of the Bonds. The purchaser will be furnished said opinions, printed bond forms, and the usual closing documents, which will include a certificate that there is no litigation pending or threatened at the time of delivery of the issue affecting the validity of the Bonds. From time to time, legislative proposals may be made that, if enacted into law, would eliminate the exclusion of interest on tax-exempt bonds from gross income for federal income tax purposes or would otherwise diminish the advantages of ownership of tax-exempt bonds for one or more categories of taxpayers, including any such proposals that, by their terms, would be effective with respect to tax-exempt bonds issued or purchased prior to enactment of the proposal. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to state income taxation, or otherwise prevent owners of the Bonds from realizing the full current benefit of the tax status of such interest, as well as, also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any such pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. In order to assure the purchasers of the Bonds that interest thereon will continue to be excludable from gross income for federal income tax purposes and exempt from Kentucky income taxation (subject to certain exceptions set out below), the Corporation has covenanted in its Resolution authorizing the Bonds that (1) the Corporation will take all actions necessary to comply with the provisions of the Code, (2) the Corporation will take no actions which will violate any of the provisions of the Code, or that would cause the Bonds to become "private activity bonds" within the meaning of the Code, (3) none of the proceeds of the Bonds will be used for any purpose which would cause the 8

15 interest on the Bonds to become subject to federal income taxation, and that the Corporation will comply with any and all requirements as to rebate (and reports with reference thereto) to the United States of America of certain investment earnings on the proceeds of the Bonds. The Bonds are not "private activity bonds" within the meaning of the Code, and the Corporation has been advised by Bond Counsel, and therefore believes, that interest on the Bonds is not included as an item of tax preference in calculating the alternative minimum tax for individuals. Provisions of the Code applicable to corporations (as defined for federal income tax purposes), would impose an alternative minimum tax on a portion of the excess of "adjusted current earnings" over "alternative minimum taxable income" for taxable years beginning after 1989, and could therefore subject all or a portion of the interest on the Bonds received by corporations to alternative minimum taxation. The tax-exempt status of the Bonds is subject to the following exceptions: 1. With respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15% of the sum of certain items, including interest on the Bonds. 2. Interest on the Bonds earned by certain foreign corporations doing business in the United States of America could be subject to a branch profits tax imposed by Section 884 of the Code. 3. Passive investment income, including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income. 4. Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, receipts or accruals of interest on the Bonds. The Corporation has reserved the right to amend the Resolution authorizing the Bonds without obtaining the consent of the owners of the Bonds (i) to whatever extent shall, in the opinion of Bond Counsel, be deemed necessary to assure that interest on the Bonds shall be exempt from federal income taxation, and (ii) to whatever extent shall be permissible (without jeopardizing such tax exemption or the security of the owners of the Bonds) to eliminate or reduce any restrictions concerning the Project, the investment of the proceeds of the Bonds, or the application of such proceeds or of the revenues of the Project. The purchasers of the Bonds will be deemed to have relied fully upon these covenants and undertakings on the part of the Corporation as part of the consideration for the purchase of the Bonds. To the extent that the Corporation obtains an opinion of nationally recognized bond counsel to the effect that non-compliance with any of the covenants contained in the Resolution authorizing the Bonds would not subject interest on the Bonds to federal income taxation or Kentucky income taxation, the Corporation is not required to comply with such covenants and requirements. If, prior to the delivery of the Bonds, any event shall occur which alters the tax-exempt status of the Bonds, the purchaser shall have the privilege of voiding the purchase contract by giving immediate written notice to the Corporation, whereupon the amount of the good faith deposit of the purchaser will be returned to the purchaser, and all respective obligations of the parties will be terminated. Bond Counsel has reviewed the Official Statement with regard to all matters pertaining to the legality and tax exemption of the Bonds, including statements concerning the authority, purpose and security of such Bonds; but Bond Counsel has not reviewed any of the financial statements or calculations, such as debt service requirements, budget estimates, enrollment, capital outlay, estimated revenues, expenditures or other financial information in the Official Statement, and expresses no opinion thereon or assumes any responsibility in connection therewith. QUALIFIED TAX-EXEMPT OBLIGATIONS Pursuant to the provisions of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, the Board and the Corporation, by the adoption of respective Resolutions, have designated the Bonds as "qualified tax-exempt obligations" within the meaning of the Code and certified that they do not reasonably anticipate that the total principal amount of tax-exempt obligations which will be issued by the Board or the Corporation during the calendar year ending December 31, 2014, will exceed $10,000,000. 9

16 CONTINUING DISCLOSURE COMPLIANCE In accordance with the requirements of Rule 15c2-12 and amended and interpreted from time to time (the "Rule") promulgated by the Securities and Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, the Hopkins County School District Finance Corporation (the "Corporation") and the Board of Education of Hopkins County, Kentucky, (the "Board") have agreed to file or cause to be filed with the Municipal Securities Rulemaking Board (the "MSRB"), or any successor thereto for purposes of its Rule, through the continuing disclosure service portal provided by the MSRB's Electronic Municipal Market Access ("EMMA") system as described in 1934 Act Release No , or any similar system that is acceptable to the Securities and Exchange Commission, audited financial statements prepared in accordance with the comprehensive cash basis of accounting prescribed by the Commonwealth of Kentucky whereby certain revenues and the related assets are recognized when received rather than when earned, and certain expenses are recognized when paid rather than when a liability is incurred, and financial information and operating data (commencing with the fiscal year ended June 30, 2015), and certain operating and financial information generally consistent with the information contained in Appendix A. The Corporation and the Board have reserved the right to modify from time to time the specific types of information provided or the format of the presentation of such information, to the extent necessary or appropriate in the judgment of the Corporation and the Board; provided that the Corporation and the Board have agreed that any such modification will be done in a manner consistent with the Rule. The annual financial information and operating data, including audited financial statements, will be made available on or before December 31 of each calendar year. The annual financial information and operating data will be made available, in addition to the MSRB, to each holder or beneficial owner of Bonds who makes request for such information. The Corporation and the Board have agreed to file or cause to be filed, in a timely manner not in excess of 10 business days after occurrence of such event, with the MSRB through EMMA, notice of the occurrence of any of the following events with respect to the Bonds: (a) principal and interest payment delinquencies; (b) non-payment related defaults, if material; (c) unscheduled draws on debt service reserves reflecting financial difficulties; (d) unscheduled draws on credit enhancements reflecting financial difficulties; (e) substitution of credit or liquidity providers, or their failure to perform; (f) 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-exempt status of the Bonds; (g) modifications to rights of the Bondholders, if material; (h) Bond calls, if material and tender offers; (i) defeasances; (j) release, substitution or sale of property securing repayment of the Bonds, if material; (k) rating changes; (l) bankruptcy, insolvency, receivership or similar event of the Corporation or the Board; (m) consummation of a merger, consolidation, or acquisition involving the Corporation or the Board or the sale of all or substantially all of the assets of the Corporation or the Board, other than in the ordinary course of business, the entry into a definitive agreement to undertake such action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and/or (n) appointment of a successor or additional trustee or the change of name of a trustee, if material. The Corporation and the Board may from time to time choose to provide notice of the occurrence of certain other events, in addition to those listed above, if such other event is material with respect to the Bonds, but the Corporation and the Board have not undertaken to commit to provide any such notice of the occurrence of any material event except those events listed above. The Board has filed all of its financial reports as required by its Continuing Disclosure Agreements. However, for fiscal years 2009 and 2011 the Board made filings beyond the time permitted. Filings for those fiscal years were late due to unavailability of audited financial reports within the required time period. Audited financial reports for the fiscal years were filed when available. 10

17 Pursuant to the Disclosure Agreement, the Corporation and Board have instituted written procedures to implement the requirements of the Rule. In particular the Disclosure Agreement provides that: (i) the Board's Finance Officer shall be responsible for providing or causing to provide to the Agent the information to be filed with EMMA; (ii) the Board's Finance Officer will consult by October 1 of each year with the auditor for the Issuer and the Board to determine if the audited financial statements for the Issuer and the Board will be completed on or before December 1 of each year; (iii) within 15 business days of the receipt and completion of the Annual Report, the Board's Finance Officer shall file or caused to be filed the Annual Report with EMMA; (iv) the Board's Finance Officer will create an internal tickler system to cause compliance with the reporting requirements of the Rule; and (v) each year, the Board's Finance Officer will report to the Corporation and the Board that the reporting requirements of the Rule have been met or if unable to be met the reasons therefor and the information reported to EMMA relating to the failure to meet the reporting requirements of the Rule. The Corporation and the Board have reserved the right to terminate their obligation to provide annual financial information and notices of material events, as set forth above, if and when the Corporation and the Board no longer remain an obligated person with respect to the Bonds within the meaning of the Rule. The Corporation and the Board have agreed that their undertaking pursuant to the Rule is intended to be for the benefit of the holders or beneficial owners of the Bonds, and shall be enforceable by such holders or beneficial owners; provided that the right to enforce the provisions of this undertaking shall be limited to a right to obtain specific enforcement of the Corporation s and Board s obligations hereunder and any failure by the Corporation or the Board to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. Financial information regarding the Corporation and the Board may be obtained from the Superintendent, Hopkins County School District, 320 South Seminary Road, Madisonville, Kentucky 42431, (270) ABSENCE OF MATERIAL LITIGATION There is no controversy or litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the Board or Corporation taken with respect to the issuance or sale thereof. FISCAL AGENT J.J.B. Hilliard, W.L. Lyons, LLC, Louisville, Kentucky, will act as Fiscal Agent to the Board and the Corporation in connection with the issuance of the Bonds and will receive a fee, payable from Bond proceeds, for their services as Fiscal Agent. RATING The Board and the Corporation have received a rating of " " on the Bonds from Moody's Investors Service ("Moody's"). Any explanation of the significance of such rating may be obtained only from Moody's. The Board and Corporation furnished to Moody's certain information and materials about the Bonds and themselves. Generally, rating agencies base their ratings on such information and materials and on investigations, studies and assumptions by the rating agencies. There is no assurance that such rating will continue for any given period of time or that it may not be lowered or withdrawn entirely by Moody's. Any such downward change in or withdrawal of such rating could have an adverse effect on the market price of the Bonds. Due to the ongoing uncertainty regarding the economy and debt of the United States of America, including, without limitation, the general economic conditions in the country and developments arising from the Budget Control Act of 2011, including the deliberations and results thereof of the Joint Select Committee on Deficit Reduction, and other political and economic developments that may affect the financial condition of the United States government, the United States debt limit, and the bond ratings of the United States and its instrumentalities, obligations issued by state and local governments, such as the Bonds, could be subject to a rating downgrade. Additionally, if a significant default or other financial crisis should occur in the affairs of the United States or of any of its agencies or political 11

18 subdivisions, then such event could also adversely affect the market for and ratings, liquidity, and market value of outstanding debt obligations, including the Bonds. NO LEGAL OPINION EXPRESSED AS TO CERTAIN MATTERS The statements contained in the Official Statement under the headings Introductory Statement, Book Entry and DTC, The Bonds, Hopkins County School District Finance Corporation, Security for the Bonds, Kentucky School Facilities Construction Commission, The Project, Disposition of Bond Proceeds, Miscellaneous Resolution and Lease Provisions, State Support of Education, Kentucky Department of Education Supervision, Revenue Sources within the Hopkins County School District, Tax Base Information, Tax Exemption, Qualified Tax-Exempt Obligations and Continuing Disclosure Compliance have been reviewed by Rubin & Hays, Bond Counsel, and they are of the opinion that the statements (except as to such matters as tax rates and income or projected income contained in said paragraphs as to which no opinion is expressed) contained under such headings are substantially correct. Bond Counsel has not undertaken to review the accuracy or completeness of financial, statistical and geographical information contained in this Official Statement. COMPLETENESS OF OFFICIAL STATEMENT This Official Statement does not, as of its date, contain any untrue statement of a material fact or omit to state a material fact which should be included herein for the purpose for which the Official Statement is to be used or which is necessary in order to make the statements contained herein, in the light of the circumstances under which they were made, not misleading in any material respect. APPROVAL OF OFFICIAL STATEMENT The Corporation has approved and caused this "Official Statement" to be executed and delivered by its President. In making this "Official Statement" the Corporation relies upon information furnished to it by the Board and does not assume any responsibility as to the accuracy of completeness of any of the information in this Official Statement. The financial information supplied by the Board and reported herein, is represented by the Board to be correct. Additional financial information for the District to include audited financial reports is available upon request to the District s Fiscal Agent, J.J.B. Hilliard, W.L. Lyons, LLC (502) HOPKINS COUNTY BOARD OF EDUCATION By /s/ Steven Faulk Chairperson HOPKINS COUNTY SCHOOL DISTRICT FINANCE CORPORATION By /s/ Steven Faulk President KENTUCKY SCHOOL FACILITIES CONSTRUCTION COMMISSION By /s/ Kristi Culpepper Executive Director 12

19 APPENDIX A HOPKINS COUNTY (KENTUCKY) SCHOOL DISTRICT FINANCE CORPORATION Tax Base and Operating Data

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