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HomeMy WebLinkAbout1998-086ORDINANCE NO 98- 00 ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 1998, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO, AND PROVIDING AN EFFECTIVE DATE THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, the Certificate of Obligation Act of 1971, as amended and codified (the "Act") permits the City to issue and sell for cash the Certificates of Obligation hereinafter authorized, and WHEREAS, the City has duly caused notice of its intention to issue the Certificates of Obligation hereinafter authorized to be published at the times and in the manner required by the Act and no petition has been filed protesting the issuance thereof, NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS Section 1 AMOUNT AND PURPOSE OF THE CERTIFICATES The certificate or certificates of the City of Denton, Texas (the "Issuer") are hereby authorized to be issued and delivered in the aggregate principal amount of $5,625,000, for the purpose of paying all or a portion of the City's Contractual Obligations incurred pursuant to contracts for the purchase of certain real and personal property, to -wit (a) a city-wide information management computer system, (b) police department radio equipment, (c) renovations to the Denton Municipal Complex, (d) renovations to fire stations and (e) a city-wide automated flood warning system, and also for the purpose of paying all or a portion of the City's Contractual Obligations for professional services of Engineering, Attor- neys, and Financial Advisors in connection with the above contracts and said Certificates of Obligation Section 2 DESIGNATION OF THE CERTIFICATES Each certificate issued pursuant to this Ordinance shall be designated "CITY OF DENTON CERTIFICATE OF OBLIGATION, SERIES 1998", and initially there shall be issued, sold, and delivered hereunder a single fully registered certificate, without interest coupons, payable in installments of principal (the "Initial Certificate"), but the Initial Certificate may be assigned and transferred and/or converted into and exchanged for a like aggregate principal amount of fully registered certificates, without interest coupons, having serial maturities, and in the denormnation or denommations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided The term "Certificates" as used in this Ordinance shall mean and include collectively the Initial Certificate and all substitute certificates ex- changed therefor, as well as all other substitute certificates and replacement certificates issued pursuant hereto, and the term "Certificates" shall mean any of the Certificates Section 3 INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL CERTIFICATE (a) The Initial Certificate is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Certificate, without interest coupons, dated April 1, 1998, in the denomination and aggregate principal amount of $5,625,000, numbered R-1, payable in annual installments of principal to the initial registered owner thereof, to -wit SALOMON SMITH BARNEY or to the registered assignee or assignees of said Certificate or any portion or portions thereof (in each case, the "registered owner"), with the annual installments of principal of the Initial Certificate to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance (b) The Initial Certificate (i) may be assigned and transferred, (n) may be converted and exchanged for other Certificates, (in) shall have the characteristics, and (iv) shall be signed and sealed, and the principal of and interest on the Initial Certificate shall be payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance Section 4 INTEREST The unpaid principal balance of the Initial Certificate shall bear interest from the date of the Initial Certificate to the respective scheduled due dates of the installments of principal of the Initial Certificate, and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance Section 5 FORM OF INITIAL CERTIFICATE The form of the Initial Certificate, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Certificate, shall be substantially as follows 2 FORM OF INITIAL CERTIFICATE NO R-1 $5,625,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 1998 THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to SALOMON SMITH BARNEY or to the registered assignee or assignees of this Certificate or any portion or portions hereof (in each case, the "registered owner") the aggregate principal amount of $5,625,000 (FIVE MILLION SIX HUNDRED TWENTY FIVE THOUSAND DOLLARS) in annual installments of principal due and payable on February 15, 1999 in each of the years, and in the respective principal amounts, as set forth in the following schedule PRINCIPAL PRINCIPAL YE AMOUNT YEAR AMOUNT 1999 $555,000 2009 $ 60,000 2000 690,000 2010 65,000 2001 725,000 2011 70,000 2002 770,000 2012 70,000 2003 805,000 2013 75,000 2004 370,000 2005 395,000 2006 410,000 2016 255,000 2007 55,000 2008 60,000 2018 195,000 and to pay interest, calculated on the basis of a 360-day year composed of twelve 30-day months, from the date of this Certificate hereinafter stated, on the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the rates as follows 4 00% per annum on the above installment due in 1999 4 00% per annum on the above installment due in 2000 4 00% per annum on the above installment due in 2001 5 00% per annum on the above installment due to 2002 5 00% per annum on the above installment due in 2003 3 5 00% per annum on the above installment due in 2004 4 50% per annum on the above installment due in 2005 4 30% per annum on the above installment due in 2006 4 45% per annum on the above installment due in 2007 4 50% per annum on the above installment due in 2008 4 60% per annum on the above installment due in 2009 4 70% per annum on the above installment due in 2010 4 80% per annum on the above installment due in 2011 4 90% per annum on the above installment due in 2012 5 00% per annum on the above installment due in 2013 5 00% per annum on the above installment due in 2016 5 00% per annum on the above installment due in 2018 with said interest being first due and payable on February 15, 1999, and semiannually on each August 15 and February 15 thereafter while this Certificate or any portion hereof is outstanding and unpaid THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Certificate are payable to lawful money of the United States of America, without exchange or collection charges The installments of principal and the interest on this Certificate are payable to the registered owner hereof through the services of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying Agent/Registrar" for this Certificate Payment of all princi- pal of and interest on this Certificate shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and/or interest payment date by check dated as of such 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 shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described The Issuer covenants with the registered owner of this Certificate that on or before each principal and/or 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 this Certificate, when due IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Rpgistrar is located are authorized by law or executive order to close, then the date for such payment � shall be the next succeeding day which 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 ll THIS CERTIFICATE has been authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $5,625,000 for the purpose of paying all or a portion of the City's Contractual Obligations incurred pursuant to contracts for the purchase of certain real and personal property, to -wit (a) a city-wide information management computer system, (b) police department radio equipment, (c) renovations to the Denton Municipal Complex, (d) renovations to fire stations and (e) a city-wide automated flood warning system, and also for the purpose of paying all or a portion of the City's Contractual Obligations for professional services of Engineering, Attor- neys, and Financial Advisors in connection with the above contracts and said Certificates of Obligation ON FEBRUARY 15, 2008, or on any date whatsoever thereafter, the unpaid installments of principal of this Certifiate of Obligation may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, and, if in part, the particular portion of this Certificate of Obligation to be prepaid or redeemed shall be selected and designated by the Issuer (provided that a portion of this Certificate of Obligation may be redeemed only in an integral multiple of $5,000), at the prepayment or redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption THE CERTIFICATES of this Series scheduled to mature on FEBRUARY 15, 2016 and FEBRUARY 15, 2018 are subject to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, with money from the Mandatory Redemption Account of the Interest and Sinking Fund, with the particular Certificates or portion thereof to be redeemed to be selected by the Paying Agent/Registrar, by lot or other customary method (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 par or principal amount thereof and accrued interest to the date of redemption, on the dates, and in the principal amounts, respectively, as shown in the following schedules February 15. 2016 Maturity Mandatory Redemption Dates Principal Amounts February 15, 2014 $ 80,000 February 15, 2015 85,000 February 15, 2016 90,000 *payable at maturity FebruM 15, 2018 Matunty Mandatory Redemption Dates Principal Amounts February 15, 2017 $ 95,000 February 15, 2018 100,000 *payable at maturity The principal amount of the Certificates required to be redeemed on each such redemption date pursuant to the foregoing operation of the Mandatory Redemption Account shall be reduced, at the option of the Issuer, by the principal amount of any Certificates, which at least 45 days prior to the mandatory sinking fund redemption date, (1) shall have been acquired by the Issuer and delivered to the Paying Agent/Registrar for cancellation, or (2) shall have been purchased and cancelled by the Paying Agent/Registrar at the request of the Issuer at a price not exceeding the principal amount of such Certificates plus accrued interest to the date of purchase, or (3) have been redeemed pursuant to the optional redemption provisions set forth above and not theretofore credited against a mandatory sinking fund redemption During any period in which ownership of the Certificates is determined by a book entry at a securities depository for the Certificates, if fewer than all of the Certificates of the same maturity and bearing the same interest rate are to be redeemed, the particular Certificates of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between the Issuer and the securities depository AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner hereof By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepay- ment or redemption price for this Certificate or the portion hereof which is to be so prepaid or re- deemed, plus accrued interest thereon to the date fixed for prepayment or redemption If such written notice of prepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Certificate, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment The Paying Agent/Registrar shall record in the Registration Books all such prepayments or redemptions of principal of this Certificate or any portion hereof THIS CERTIFICATE, to the extent of the unpaid principal balance hereof, or any unpaid portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Certificates, upon the terms and conditions set forth in the Certificate Ordinance Among other requirements for such transfer, this Certificate must be presented and surrendered to the Paying Agent/Registrar for cancellation, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner 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 transferred and registered Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Certificate or any such portion or portions hereof by the initial registered owner hereof A new certificate or certificates payable to such assignee or assignees (which then will be the new registered owner or owners of such new Certificate or Certificates) or to the initial registered owner as to any portion of this Certificate which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent/Regis- trar in conversion of and exchange for this Certificate or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this Certificate or any portion hereof The registered owner of this Certificate shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Certificate to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary AS PROVIDED above and in the Certificate Ordinance, this Certificate, to the extent of the unpaid principal balance hereof, may be converted into and exchanged for a like aggregate principal amount of fully registered certificates, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Certificate which is not being assigned and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute certificate issued in exchange for any portion of this Certificate shall have a single stated principal maturity date), 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 If this Certificate or any portion hereof is assigned and transferred or converted each certificate issued in exchange for any portion hereof shall have a single stated principal maturity date corresponding to the due date of the installment of principal of this Certificate or portion hereof for which the substitute certificate is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof No such certificate shall be payable in installments, but shall have only one stated principal maturity date AS PROVIDED IN THE CERTIFICATE ORDINANCE, THIS CERTIFICATE IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the certificates issued and delivered in exchange for this Certificate or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Certificate Ordinance The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging this Certificate or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange 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 IN THE EVENT any Paying Agent/Registrar for this Certificate 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 promptly will cause written notice thereof to be mailed to the registered owner of this Certificate 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 the 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 the Issuer, and have been pledged irrevocably for such payment, within the limit prescribed by law, and that, together with other panty obligations, this Certificate additionally is payable from and secured by certain surplus revenues (not to exceed $10,000 in 7 aggregate amount) derived by the Issuer from the ownership and operation of the City's Utility System (consisting of the City's combined waterworks system, sanitary sewer system, and electric light and power system), all as provided in the Certificate Ordinance THE ISSUER has reserved the right to issue, in accordance with law, and in accordance with the Certificate Ordinance, other and additional obligations, and to enter into contracts, payable from ad valorem taxes and/or revenues of the City's Utility System, on a panty with, or with respect to said revenues, superior in hen to, this Certificate 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 the registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the manual signature of the Mayor of the Issuer and countersigned and attested with the manual signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed on this Certificate, and has caused this Certificate to be dated April 1, 1998 ATTEST CITY OF DENTON, TEXAS By By Jennifer Walters City Secretary, City of Denton, Texas (CITY SEAL) Jack Miller Mayor, City of Denton, Texas (INSERT BOND INSURANCE LEGEND, IF ANY) H FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS CONeTROLLER'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 (COMPTROLLERS SEAL) Section 6 ADDITIONAL CHARACTERISTICS OF THE CERTIFICATES Re tg_stration and Transfer (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS (the "Paying Agent/Registrar") books or records of the registration and transfer 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 transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe, and the Paying Agent/Registrar shall make such transfers and registrations 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 Registration of each Certificate may be transferred in the Registration Books only upon presentation and surrender of such Certificate to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, (i) evidencing the assignment of the Certificate, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Certificate or any such portion thereof registered in the name of such assignee or assignees Upon the assignment and transfer of any Certificate or any portion thereof, a new substitute Certificate or Certificates shall be issued in conversion and exchange therefor in the manner herein provided The Initial Certificate, to the extent of the unpaid principal balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof All Certificates issued and de- livered to conversion of and exchange for the Initial Certificate shall be in any denomination or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Certificate shall have a single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provided If the Initial Certificate or any portion thereof is assigned and transferred or converted the Initial Certificate must be surrendered to the Paying Agent/Registrar for cancellation, and each Certificate issued in exchange for any portion of the Initial Certificate shall have a single stated principal maturity date, and shall not be payable in installments, and each such Certificate shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Certificate is being exchanged, and each such Certificate shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being ex- changed If only a portion of the Initial Certificate is assigned and transferred, there shall be delivered to and registered in the name of the initial registered owner substitute Certificates in exchange for the unassigned balance of the Initial Certificate in the same manner as if the initial registered owner were the assignee thereof If any Certificate or portion thereof other than the Initial Certificate is assigned and transferred or converted each Certificate issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Certificate for which it is exchanged A form of assignment shall be printed or endorsed on each Certificate, excepting the Initial Certificate, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof Upon surrender of any Certificates or any portion or portions thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall make such transfer to the Registration Books, and shall deliver a new fully registered substitute Certificate or Certificates, having the characteristics herem described, payable to such assignee or assignees (which then will be the registered owner or owners of such new Certificate or Certificates), or to the previous registered owner in case only a portion of a Certificate is being assigned and transferred, all in conversion of and exchange for said assigned Certificate or Certificates or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section 6(d), below, for the conversion and exchange of Certificates by any registered owner of a Certificate The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer and delivery of a substitute Certificate or Certificates, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to make transfers of registration of any Certificate or any portion thereof 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 (b) Ownership of Certificates The entity in whose name any Certificate shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such Certificate shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary, and payment of, or on account of, the principal of, prennum, if any, and interest on any such Certificate shall be made only to such registered owner All such payments shall be valid and effectual to satisfy and discharge the liability upon such Certificate to the extent of the sum or sums so paid (c) Pgvment 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, and to act as its agent to convert and exchange or replace Certificates, all as provided in this 10 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 Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be fifteen (15) days after the Special Record Date) 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 Holder of a Certificate appeanng on the registration books of the Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such notice (d) Conversion and Exchanize or Replacement Authentication Each Certificate issued and delivered pursuant to this Ordinance, to the extent of the unpaid principal balance or principal amount thereof, may, upon surrender of such Certificate at the principal corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the regis- tered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered certificates, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Certificate shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid principal balance or principal amount of any Certificate or Certificates so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be If the Initial Certificate is assigned and transferred or converted each substitute Certificate issued in exchange for any portion of the Initial Certificate shall have a single stated principal maturity date, and shall not be payable in installments, and each such Certificate shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Certificate is being exchanged, and each such Certificate shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged If any Certificate or portion thereof (other than the Initial Certificate) is assigned and transferred or converted, each Certificate issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Certificate for which it is being exchanged Each substitute Certificate shall bear a letter and/or number to distinguish it from each other Certificate The Paying Agent/Registrar shall convert and exchange or replace Certificates as provided herein, and each fully registered certificate delivered in conversion of and exchange for or replacement of any Certificate or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Certificates for all purposes of this Ordinance, and may again be converted and exchanged or replaced It is specifically provided that any Certificate authenticated in conversion of and exchange for or replacement of another Certificate on or prior to the first scheduled Record Date for the Initial Certificate shall bear interest from the date of the Initial Certificate, but each substitute Certificate so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on 11 which such substitute Certificate was so authenticated, unless such Certificate is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest from such next following interest payment date, provided, however, that if at the time of de- livery of any substitute Certificate the interest on the Certificate for which it is being exchanged is due but has not been paid, then such Certificate shall bear interest from the date to which such interest has been paid in full THE INITIAL CERTIFICATE 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 or replacement of any Certificate or Certificates issued under this Ordinance there shall be printed a certificate, in the form substantially as follows "PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been issued under the provisions of the Certificate Ordinance described on the face of this Certificate, and that this Certificate has been issued in conversion of and exchange for or replacement of a certificate, certificates, or a portion of a certificate or certificates of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas Dated CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Authorized Representative" An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Certificate, date and manually sign the above 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 Certificates surrendered for conversion and exchange or replacement 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 or replacement 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 of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength Pursuant to Vernon's Ann Tex Civ St Art 717k-6, and particularly Section 6 thereof, the duty of conversion and exchange or replacement of Certificates as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Certificate shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Certificate which originally was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Certificate or any portion thereof, but the one requesting any such transfer, 12 conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange or replacement of Certificates or any portion thereof 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 (e) In General All Certificates issued in conversion and exchange or replacement of any other Certificate or portion thereof, (n) 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, (u) may be transferred and assigned, (ui) may be converted and exchanged for other Certificates, (iv) shall have the characteristics, (v) shall be signed and sealed, and (vn) the principal of and interest on the Certificates shall be payable, all as provided, and in the manner required or indicated, in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordinance (f) moment of Fees and Charges The Issuer hereby covenants with the registered owners of the Certificates that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Certificates, when due, and (in) pay the fees and charges of the Paying Agent/Registrar for services with respect to the transfer of registration of Certificates, and with respect to the conversion and exchange of Certificates solely to the extent above provided in this Ordinance (g) Substitute Paying A ent/Registrar The Issuer covenants with the registered owners of the Certificates that at all times while the Certificates are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying Agent/Registrar for the Certificates under this Ordinance, and that the Paying Agent/Registrar will be one entity The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such notice In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that it will promptly appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar shall promptly transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Certificates, to the new Paying Agent/Registrar designated and appointed by the Issuer Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Certificates, by United States mad, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar Section 7 FORM OF SUBSTITUTE CERTIFICATES The form of all Certificates issued in conversion and exchange or replacement of any other Certificate or portion thereof, including the 13 form of paying Agent/Registrar's Certificate to be printed on each of such Certificates, and the Form of Assignment to be printed on each of the Certificates, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance NO INTEREST RATE FORM OF SUBSTITUTE CERTIFICATE (Book -Entry Only Legend, if appropriate) UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 1998 ORIGINAL DATE MATURITY DATE OF ISSUE CUSIP NO ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby prormses to pay to or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon, calculated on the basis of a 360-day year composed of twelve 30-day months, from April 1, 1998, to the maturity date specified above, at the interest rate per annum specified above, with interest being first due and payable on February 15, 1999, and semiannually on each August 15 and February 15 thereafter, except that if the date of authentication of this Certificate 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 (hereinafter defined) 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 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 14 Certificate at maturity, at the principal corporate trust office of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, 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 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 the Certificates (the "Certificate Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the Paying Agent/Registrar by United States mad, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described However, the payment of such interest may be made by any other method acceptable to the Paying Agent/Registrar and requested by, and at the risk and expense of, the regis- tered owner hereof The Issuer covenants with the registered owner of this Certificate that on or before each principal payment date, interest payment date, and accrued interest payment date for this Certificate it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Certificate Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Certificates, when due IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the 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 winch 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 an issue of Certificates initially dated April 1, 1998, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $5,625,000, for the purpose of paying all or a portion of the City's Contractual Obligations incurred pursuant to contracts for the purchase of certain real and personal property, to -wit (a) a city-wide information management computer system, (b) police department radio equipment, (c) renovations to the Denton Municipal Complex, (d) renovations to fire stations and (e) a city-wide automated flood warning system, and also for the purpose of paying all or a portion of the City's Contractual Obligations for professional services of Engineering, Attorneys, and Financial Advisors in connection with the above contracts and said Certificates of Obligation ON FEBRUARY 15, 2008, or on any date whatsoever thereafter, the Certificates of this Series may be redeemed prior to their scheduled maturities, 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 the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption 15 THE CERTIFICATES of this Series scheduled to mature on FEBRUARY 15, 2016 and FEBRUARY 15, 2018 are subject to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, with money from the Mandatory Redemption Account of the Interest and Sinking Fund, with the particular Certificates or portion thereof to be redeemed to be selected by the Paying Agent/Registrar, by lot or other customary method (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 par or principal amount thereof and accrued interest to the date of redemption, on the dates, and in the principal amounts, respectively, as shown in the following schedules February 15. 2016 Maturity Mandatory Redemption Dates Principal Amounts February 15, 2014 $ 80,000 February 15, 2015 85,000 February 15, 2016 90,000 *payable at maturity Febru 15, 2018 Matuntv Mandatory Redemption Dates Principal Amounts February 15, 2017 $ 95,000 February 15, 2018 100,000 *payable at maturity The principal amount of the Certificates required to be redeemed on each such redemption date pursuant to the foregoing operation of the Mandatory Redemption Account shall be reduced, at the option of the Issuer, by the principal amount of any Certificates, which at least 45 days prior to the mandatory sinking fund redemption date, (1) shall have been acquired by the Issuer and delivered to the Paying Agent/Registrar for cancellation, or (2) shall have been purchased and cancelled by the Paying Agent/Registrar at the request of the Issuer at a price not exceeding the principal amount of such Certificates plus accrued interest to the date of purchase, or (3) have been redeemed pursuant to the optional redemption provisions set forth above and not theretofore credited against a mandatory sinking fund redemption During any period in which ownership of the Certificates is determined by a book entry at a securities depository for the Certificates, if fewer than all of the Certificates of the same maturity and bearing the same interest rate are to be redeemed, the particular Certificates of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between the Issuer and the securities depository AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner hereof By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepay- ment or redemption price for this Certificate or the portion hereof which is to be so prepaid or re- deemed, plus accrued interest thereon to the date fixed for prepayment or redemption If such written notice of prepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Certificate, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being 16 outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment The Paying Agent/Registrar shall record in the Registration Books all such prepayments or redemptions of principal of this Certificate or any portion hereof THIS CERTIFICATE OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Certificates, upon the terms and conditions 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 transferred and registered The form of Assignment printed or endorsed on this Certificate shall be executed by the registered owner or its duly authorized attorney or representative, to evidence the assignment hereof A new Certificate or Certificates payable to such assignee or assignees (which then will be the new registered owner or owners of such new Certificate or Certificates), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Certificate, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Certificate, all in the form and manner as provided in the next paragraph hereof for the conversion and exchange of other Certificates The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to make transfers of registration of this Certificate or any portion hereof 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 The registered owner of this Certificate shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Certificate to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary 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 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 maturity date, and bearing interest at the same rate, in any 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 sur- render of this Certificate to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Certificate Ordinance The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Certificate or any portion thereof, but the one requesting such transfer, conversion, and exchange 17 shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange during the period commencing with the close of business on any Record Date and ending with the opening of business on the next follow- ing principal or interest payment 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 will promptly 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 the 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 the Issuer, and have been pledged irrevocably for such payment, within the limit prescribed by law, and that, together with other panty obligations, this Certificate, and the other Certificates of this Series, additionally are payable from and secured by certain surplus revenues (not to exceed $10,000 in aggregate amount) derived by the Issuer from the ownership and operation of the City's Utility System (consisting of the City's combined waterworks system, sanitary sewer system, and electric light and power system), all as provided in the Certificate Ordinance THE ISSUER has reserved the right to issue, in accordance with law, and in accordance with the Certificate Ordinance, other and additional obligations, and to enter into contracts, payable from ad valorem taxes and/or revenues of the City's Utility System, on a panty with, or with respect to said revenues, superior in lien to, this Certificate 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 E. IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned and attested with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Certificate ATTEST By Jenmfer Walters City Secretary, City of Denton, Texas (CITY SEAL) CITY OF DENTON, TEXAS al Jack Miller Mayor, City of Denton, Texas FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Certificate has been issued under the provisions of the Certificate Ordinance described on the face of this Certificate, and that this Certificate has been issued in conversion of and exchange for or replacement of a certificate, certificates, or a portion of a certificate or certificates of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas Dated CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Authorized Representative (INSERT BOND INSURANCE LEGEND, IF ANY) M v - o 76 FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Certificate, or duly authorized representative or attorney thereof, hereby assigns this Certificate to (Assignee's Social (print or typewrite Assignee's name and Security or Taxpayer address, including zip code) Identification Number and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Certificate on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises Dated Signature Guaranteed NOTICE Signature(s) must be guaranteed by an eligible guarantor institution participating in a securities transfer association recognized signature guarantee program Registered Owner NOTICE This signature must correspond with the name of the Registered Owner appearing on the face of this Certificate Section 8 TAX LEVY A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the benefit of the Certificates, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an official depository bank of the Issuer A Mandatory Redemption Account is hereby established within the Interest and Sinking Fund The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of the Certificates All ad valorem taxes levied and collected for and on account of the Certificates shall be deposited, as collected, to the credit of the Interest and Sinking Fund During each year while any of the Certificates or interest thereon are outstanding and unpaid, the governing body of the Issuer shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Certificates as such interest becomes due, and to provide and maintain a sinking fund adequate to pay the principal of its Certificates as such 20 principal matures (but never less than 21/6 of the original principal amount of the Certificates as a sinking fund each year), including such amounts as are necessary to satisfy the mandatory sinking fund schedule for the Certificates maturing February 15, 2016 and February 15, 2018 as set forth in the Form of Initial Certificate and the Form of Substitute Certificate contained herein, which amounts shall be deposited into the Mandatory Redemption Account, with such mandatory redemption constituting payment at maturity Said tax shall be based on the latest approval tax rolls of the Issuer, with full allowance being made for tax delinquencies and the cost of tax collection Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the Issuer for each year while any of the Certificates or interest thereon 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 Imatures, are hereby pledged for such payment, within the limit prescribed by law Section 9 SURPLUS REVENUES The Certificates additionally shall be payable from and secured by surplus revenues, to the extent hereinafter permitted, derived by the Issuer from the ownership and operation of the Issuer's Utility System (consisting of its combined waterworks system, sanitary sewer system, and electric light and power system) remaining after (a) payment of all amounts constituting operation and maintenance expenses of said Utility System, and (b) payment of all debt service, reserve, and other requirements and amounts required to be paid under all ordinances heretofore or hereafter authorizing (i) all bonds and (n) all other obligations not on a panty with the Certificates, winch are payable from and secured by any Utility System revenues, and (c) payment of all amounts payable from any Utility System revenues pursuant to contracts heretofore or hereafter entered into by the Issuer in accordance with law (the "Surplus Revenues") If, for any reason, the Issuer fails to deposit ad valorem taxes levied pursuant to Section 8 hereof to the credit of the Interest and Sinking Fund in an amount sufficient to pay, when due, the principal of and interest on the Certificates, then Surplus Revenues, to the extent hereinafter permitted, shall be deposited to the credit of the Interest and Sinking Fund and used to pay such principal and/or interest A maximugi aggregate of $10,000 of Surplus Revenues may be used to pay principal and/or interest on the Certificates and any obligations on a panty therewith The Certificates and any obligations on a parity therewith are not, and shall not be deemed to be, payable from or secured by any Surplus Revenues in excess of an aggregate of $10,000 Until and unless an aggregate of $10,000 of Surplus Revenues actually is used to pay any such principal and/or interest, additional obligations, payable from and secured by all or any remaining unused part of said aggregate of $10,000 of Surplus Revenues, may be issued by the Issuer on a panty with the Certificates and any other then outstanding panty obligations, with the Certificates and all such additional panty obligations to be payable from and secured equally and ratably by all or any remaining unused part of said aggregate The Issuer reserves, and shall have, the right to issue bonds, and other obligations not on a panty with the Certificates, and to enter into contracts, in accordance with applicable laws, to be payable from and secured by any Utility System revenues other than the aggregate of $10,000 of Surplus Revenues as described above The Certificates are on a panty with those issues of City of Denton Certificates of Obligation, Series 1987, Series 1989, Series 1989-A, Series 1991, Series 1992, Series 1993, Series 1993-A Senes 1994, Series 1995 and Series 1996 (the "Outstanding Certificates"), as permitted in the Ordinances authorizing same, and it is hereby found and determined that none of the above 21 defined Surplus Revenues have ever been used to pay any principal and/or interest on the Outstanding Certificates Section 10 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, when payment of the principal of such Certificate, plus interest thereon to the due date either (i) shall have been made or caused to be made in accordance with the terms thereof, or (u) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Regiistrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to 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 herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as herembefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which 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 (c) The term "Government Obligations" as used in this Section shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, winch may be United States Treasury obligations such as its State and Local Government Series, which may be in book -entry form (d) Until all Defeased 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 Section i 1 DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES (a) Replacement Certificates In the event any outstanding Certificate is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new certificate of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Certificate, in replacement for such Certificate in the manner hereinafter provided 22 (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/R$gistrar such security or indemnity as may be required by them to save each of them harmless from anydoss 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 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 of any such Certificate shall have matured, and no default has occurred which is then continuing in the payment of the principal of, 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) C_harg§ for Issuing_ Replacement Certificates Prior to the issuance of any replacement certificate, the Paying Agent/Registrar shall charge the registered owner of such Certificate with all legal, printing, and other expenses in connection therewith Every replacement certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Certificate shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Certificates duly issued under this Ordinance (e) Authonly for Issuing Replacement Certificates In accordance with Section 6 of Vernon's Ann Tex Civ St Art 717k-6, this Section 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 6(d) of this Ordinance for Certificates issued in conversion and exchange for other Certificates Section 12 CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES, CERTIFICATE COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE The Mayor of the Issuer is hereby authorized to have control of the Initial Certificate issued hereunder and all necessary records and proceedings pertaining to the Initial Certificate pending its delivery and its investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas Upon registration of the Initial Certificate said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the Initial Certificate, and the seal of said Comptroller shall be impressed, or placed in facsimile, on 23 the Initial 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 Initial Certificate or on any Certificates issued and delivered in conversion of and exchange or replacement of any Certificate, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Certificates The preamble to this Ordinance is hereby adopted and made a part hereof for all purposes If insurance is obtained on any of the Certificates, the Initial Certificate and all other Certificates shall bear an appropriate legend concerning insurance as provided by the insurer Section 13 COVENANTS REGARDING TAX -EXEMPTION The Issuer covenants to refrain from taking any action which would adversely affect, and to take any action required to ensure, the treatment of the Certificates as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (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 or the project financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use", as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the project 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 project financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate", within the meaning of section 141(b)(3) of the Code, to the governmental use, (c) to take any action to assure that no amount which 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 which 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, 24 (f) to refrain from using any portion or indirectly, to acquire or to replace funds which investment property (as defined in section 148(b)( lugher yield over the term of the Certificates, othe f the proceeds of the Certificates, directly ere used, directly or indirectly, to acquire of the Code) which produces a materially 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 certificate for a period of 30 days or less, until such proceeds are needed for the purpose for which the certificates are issued, (2) amounts invested in a b of section 1 148-1(b) of the Treasury (3) amounts deposited in any r fund to the extent such amounts do not amount (or, in the case of a discount, the (g) to otherwise restrict the use of treated as proceeds of the Certificates, as may otherwise contravene the requirements of secs Section 149(g) of the Code (relating to hedge I 149(d) of the Code (relating to advance refund (h) to pay to the United States of period (beginning on the date of delivery of the ( to 90 percent of the "Excess Earnings", within the to pay to the United States of America, not later t paid in full, 100 percent of the amount then requir, under section 148(f) of the Code The Issuer understands that the term "proceeds" in the Treasury Regulations and, in the case of refundir proceeds of the refunded bonds expended prior to the understanding of the Issuer that the covenants container with the Code and any regulations or rulings promulgate pursuant thereto In the event that regulations or ruling or expand provisions of the Code, as applicable to the Ce comply with any covenant contained herein to the extent opinion of nationally -recognized bond counsel, will not a income taxation of interest on the Certificates under se regulations or rulings are hereafter promulgated which applicable to the Certificates, the Issuer agrees to coml extent necessary and reasonably possible, in the opinion preservelthe exemption from federal income taxation of nit of the Code In furtherance of such intention, the Issuer 1 O. debt service fund, within the meaning ions. and :asonably required reserve or replacement exceed 10 percent of the stated principal issue price) of the Certificates, proceeds of the Certificates or amounts necessary, so that the Certificates do not 148 of the Code (relating to arbitrage), ds), and, to the extent applicable, section A and enca at least once during each five-year tificates) an amount that is at least equal eaning of section 148(f) of the Code and t 60 days after the Certificates have been to be paid as a result of Excess Eanungs includes "disposition proceeds" as defined g bonds, transferred proceeds (if any) and date of issuance of the Bonds It is the I herein are intended to assure compliance d by the U S Department of the Treasury are hereafter promulgated which modify, tificates, the Issuer will not be required to hat such modification or expnasron, in the aversely affect the exemption from federal ction 103 of the Code In the event that impose additional requirements which are 1y with the additional requirements to the of nationally -recognized bond counsel, to -rest on the Certificates under section 103 Hereby authorizes and directs the Mayor of the Issuer to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Certificate 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 owners of the Certificates The Rebate Fund is established for the additional purpose of compliance with Section 148 of the Code Section 14 SALE OF INITIAL CERTIFICATE The Initial Certificate is hereby sold and shall be delivered to Salomon Smith Barney, for cash for the par value thereof and accrued interest thereon to date of delivery, plus a cash premium of $1,279 20 It is hereby officially found, deter- mined, and declared that the Initial Certificate has been sold at public sale to the bidder offering the lowest interest cost, after receiving sealed bids pursuant to an Official Notice of Sale and Bidding Instructions and Official Statement dated March 24, 1998, prepared and distributed in connection with the sale of the Initial Certificate Said Official Notice of Sale and Bidding Instructions and Official Statement, and any addenda, supplement, or amendment thereto have been and are hereby approved by the Issuer, and their use in the offer and sale of the Certificates is hereby approved It is further officially found, determined, and declared that the statements and representations contained in said Official Notice of Sale and Official Statement are true and correct in all material respects, to the best knowledge and belief of the City Council and the Issuer Section 15 ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this Ordinance (the "Project") on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed The foregoing notwithstanding, the Issuer shall not expend sale proceeds or investment earnings thereon more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the 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 tax-exempt status of the Certificates 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 16 DISPOSITION OF PROJECT The Issuer covenants that the property constituting 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 Section 17 INTEREST EARNINGS ON CERTIFICATE PROCEEDS Interest earnings derived from the investment of proceeds from the sale of the Initial Certificate shall be used along with other proceeds for the purposes for which the Certificates are issued, provided that after 26 completion of such purposes, 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 which are required to be rebated to the United States of America pursuant to Section 13 hereof in order to prevent the Certificates from being "arbitrage bonds" within the meaning of the Code shall be so rebated and not considered as interest earnings for the purposes of this Section Section 18 DTC REGISTRATION The Certificates initially shall be issued and delivered in such manner that no physical distribution of the Certificates will be made to the public, and The Depository Trust Company ('DTC"), New York, New York, initially will act as depository for the Certificates DTC has represented that it is a limited purpose trust company incorporated under the laws of the State of New York, a member of the Federal Reserve System, a 'blearing corporation" within the meaning of the New York Uniform Commercial Code, and a 'blearing agency" registered under Section 17A of the federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but in no way verifies, such representations The Initial Certificate authorized by this Ordinance shall be delivered to and registered in the name of the Purchaser However, it is a condition of delivery and sale that the Purchaser, immediately after such delivery, shall cause the Paying Agent/Registrar, as provided for in this Ordinance, to cancel said Initial Certificate and deliver in exchange therefor a substitute Certificate for each maturity of such Initial Certificate, with each such substitute Certificate to be registered in the name of CEDE & CO , the nominee of DTC, and it shall be the duty of the Paying Agent/Registrar to take such action It is expected that DTC will hold the Certificates on behalf of the Purchaser and/or the DTC Participants, as defined and described in the Official Statement refereed to and approved in Section 14 hereof (the 'DTC Participants") So long as each Certificate is registered in the name of CEDE & CO , the Paying Agent/Registrar shall treat and deal with DTC in all respects the same as if it were the actual and beneficial owner thereof It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Certificates by DTC Participants in integral amounts of $5,000, with transfers of ownership being effected on the records of DTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Certificates initially deposited with DTC shall be immobdized and not be further exchanged for substitute Certificates except as hereinafter provided The Issuer is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, will not be responsible or liable for maintaining, supervising, or reviewing the records of DTC or the DTC Participants, or protecting any interests or rights of the beneficial owners of the Certificates It shall be the duty of the Purchaser and the DTC Participants to make all arrangements with DTC to establish this book -entry system, the beneficial ownership of the Certificates, and the method of paying the fees and charges of DTC The Issuer does not represent, nor does it in any way covenant that the initial book -entry system established with DTC wijl be maintained in the future The Issuer reserves the right and option at any time in the future, in its sole discretion, to terminate the DTC (CEDE & CO ) book -entry only registration requirement described above, and to permit the Certificates to be registered in the name of any owner If the Issuer exercises its right and option to terminate such requirement, it shall give written notice of such termination to the Paying Agent/Registrar and to DTC, and thereafter the Paying Agent/Rpgistrar shall, upon presentation and proper request, register any Certificate in any name as provided for in this Ordinance Notwithstanding the initial establishment of the foregoing book -entry system with DTC, if for any reason any of the originally delivered substitute Certificates is duly filed 27 with the Paying Agent/Registrar with proper request for transfer and substitution, as provided for in this Ordinance, substitute Certificates will be duly delivered as provided in this Ordinance, and there will be no assurance or representation that any book -entry system will be maintained for such Certificates Section 19 COMPLIANCE WITH RULE 1 Sc2-12 (a) Annual Rem (i) The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after 1998, financial information and operating data with respect to the Issuer of the general type included in the final Official Statement authorized by Section 14 of this Ordinance, being the information described in Exhibit A hereto, which Exhibit is attached to and incorporated in this Ordinance as if written word for word herein Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit A hereto, or such other accounting principles as the Issuer may be required to employ from time to time pursuant to state law or regulation, and (2) audited, if the Issuer commissions an audit of such statements and the audit is completed within the period during which they must be provided If the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required time and will provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements become available (ii) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID 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 tbrth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC (b) Material Event Notices, The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Certificates, if such event is material within the meaning of the federal securities laws Certificates, Principal and interest payment delinquencies, Non-payment related defaults, Unscheduled draws on debt service reserves reflecting financial difficulties, Unscheduled draws on credit enhancements reflecting financial difficulties, Substitution of credit or liquidity providers, or their failure to perform, Adverse tax opinions or events affecting the tax-exempt status of the T. Modifications to rights of holders of the Certificates, Certificate calls, 9 Defeasances, 10 Release, substitution, or sale of property securing repayment of the Certificates, and 11 Rating changes The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordance with subsection (a) of this Section by the time required by such subsection (c) Limitations Disclaimers and Amendments. (i) The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remams an "obligated person" with respect to the Certificates within the meaning of the Rule, except that the Issuer in any event will give the notice required by Subsection (b) hereof of any Certificate calls and defeasance that cause the Issuer to no longer be such an "obligated person" (n) 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 decilsion to invest in or sell Certificates at any future date (in) UNDER NO CIRCUMSTANCES SHALL THE ISSUER, ITS OFFICERS, AGENTS AND EMPLOYEES, BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE (iv) No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer under federal and state securities laws O (v) The provisions of this Section may be amended by the Issuer from time to time to adapt to changed circumstances that anse 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) ether (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 matenally 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 (a) 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 (d) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below "MSRB" means the Municipal Securities Rulemaking Board "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time "Rule" means SEC Rule 15c2-12, as amended from time to time "SEC" means the United States Securities and Exchange Commission "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time Section 20 FURTHER PROCEDURES The Mayor of the Issuer, the City Secretary of the Issuer, 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 under the corporate seal and on behalf of the Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Certificate Ordinance, the Certificates, the sale of the Certificates, and the Notice of Sale and Official Statement, and the Assistant City Manager/Finance of the City shall cause the expenses of issuance of the Rl Certificates to be paid from the proceeds of sale of the Initial Certificate or from other lawfully available funds of the Issuer In case any officer whose signature shall appear on any Certificate shall cease to, be such officer before the delivery of such Certificate, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery Section 21 OPEN MEETINGS The City Council has found and determined that the meeting at which this Ordinance is considered is open to the public and that notice thereof was given in accordancewith the provisions of the Texas Open Meetings, Law, Tex Gov't Code, Chapter 551, as amended Section 22 EFFECTIVE DATE This Ordinance shall become effective immediately upon its passage and approval 31 PASSED AND APPROVED this the 7th day of April, 1998 ATTEST nmfer alters, ity Secretary APPROVED AS TO LEGAL FORM Herbert L Prouty, City Attorney ��i00�� -�O'AI r.. Jack N&11114ayor ' 32 EXHIBIT A DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 19 of this Ordinance Annual Financial Statements and Operating Data The financial information and operating data with respect to the Issuer to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the tables of the Official Statement referred to) below Tables numbered 1 through 14, inclusive, under the captions "Tax Information', "Debt Service Requirements" and "Financial Information" in the Official Statement Appendix B in the Official Statement Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in the paragraph above LAW OFFICES M9CALL, PARKHURST a HORTON L L P 600 CONGRESS AVENUE 1250 ONE AMERICAN CENTER AUSTIN TEXAS 787013248 TELEPHONE 5124783805 FACSIMILE 5(24720871 Honorable Mayor and Council of the City of Denton Denton, Texas Ladies and Gentlemen 717 NORTH HARWOOD NINTH FLOOR DALLAS TEXAS 752016587 TELEPHONE 2W 7549200 FACSIMILE 2147549250 April 7, 1998 700 N ST MARY S STREET 1225 ONE RIVERWALK PLACE SAN ANTONIO TEXAS 78205 3503 TELEPrvoNE 210 225 2800 FACSIMILE 210 2252984 Re City of Denton Certificate of Obligation, being the "Initial Certificate" proposed to be authorized by the ordinance described below In compliance with Section 9 02 and Section 9 04 of the City Charter of the City of Denton, you are advised that the bids for the captioned Initial Certificate received by the City pursuant to its Official Statement and Notice of Sale and Bidding Instructions dated April 7, 1998, have been tabulated, and that we find, based on calculations perforated by First Southwest Company, as financial advisor, that the bid of a syndicate managed or headed by the following SALOMON SMITH BARNEY with the installments of principal of the Initial Certificate to bear interest at the rates therein specified, with such bidder to pay par and accrued interest to date of delivery, plus a cash premium of $1,279 20, for the Initial Certificate, is the lowest and best bid received, and we recommend that it be accepted We further certify that we have examined the ordinance (the "Certificate Ordinance") presently placed before the Mayor and Council for the purpose of authorizing the issuance, sale, and delivery of said Initial Certificate, and, in our opinion, the said proposed Certificate Ordinance is legal, and the certificates to be issued thereunder will be general obligations of the City payable from ad valorem taxes levied and ordered to be levied against all taxable property in the City, within the limit prescribed by law, and additionally are payable from and secured by certain surplus revenues (not to exceed $10,000 in aggregate amount) derived by the Issuer from the ownership and operation of the City's Utility System (consisting of the City's combined waterworks system, sanitary sewer system, and electric light and power system) Respectfully, r-4 C C i Q L SL fL. 1 fir, Z�• L