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HomeMy WebLinkAbout1987-108ORDINANCE NO 87-108 ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 1987-A, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, Vernon's Article 2368a 1 permits the City to issue and sell for cash the Certificates of Obligation herein- after 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 Vernon's Article 2368a 1, and no petition has been filed protesting the issuance thereof THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS THAT 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 $1,100,000, FOR THE PURPOSE OF PAYING ALL OR A PORTION OF THE CITY'S CONTRACTUAL OBLIGA- TIONS TO BE INCURRED PURSUANT TO CONTRACTS FOR THE PURCHASE OF MATERIALS AND EQUIPMENT CONSTITUTING A MUNICIPAL RADIO COMMUNI- CATIONS SYSTEM, AND PAYING ALL OR A PORTION OF THE CONTRACTUAL OBLIGATIONS FOR PROFESSIONAL SERVICES OF ENGINEERING, ATTORNEYS, AND FINANCIAL ADVISORS IN CONNECTION WITH SUCH MUNICIPAL RADIO COMMUNICATIONS SYSTEM AND CERTIFICATES OF OBLIGATION Section 2 DESIGNATION OF THE CERTIFICATES Each cert- ificate issued pursuant to this Ordinance shall be designated "CITY OF DENTON CERTIFICATE OF OBLIGATION, SERIES 1987-A", and initially there shall be issued, sold, and delivered hereunder a single fully registered certificate, without interest cou- pons, 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 denomination or denominations of $5,000 or any integral multi- ple 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 exchanged 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, NUMBFR, MATURI- TIES, 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 June 1, 1987, in the denomination and aggregate principal amount of $1,100,000, numbered R-1, payable in annual installments of principal to the initial registered owner thereof, to -wit PRUDENTIAL-BACHE SECURITIES, INC , or to the registered assignee or assignees of said Certificate or any portion or portions thereof (in each case, the "regis- tered 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, (ii) may be converted and exchanged for other Certificates, (iii) 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 Certif- icate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Certificate, shall be substantially as follows OA FORM OF INITIAL CERTIFICATE NO R-1 $1,100,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 1987-A THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to PRUDENTIAL-BACHE SECURITIES, INC , or to the registered assignee or assignees of this Certificate or any portion or portions hereof (in each case, the "regis- tered owner") the aggregate principal amount of $1,100,000 (ONE MILLION ONE HUNDRED THOUSAND DOLLARS) in annual installments of principal due and payable on JULY 1 in each of the years, and in the respective principal amounts, as set forth in the following schedule PRINCIPAL PRINCIPAL YEAR AMOUNT YEAR AMOUNT 1989 $120,000 1994 $125,000 1990 120,000 1995 125,000 1991 120,000 1996 125,000 1992 120,000 1997 125,000 1993 120,000 and to pay interest, from the date of this Certificate herein- after stated, on the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the rates as follows 8 75% per annum on the above installment due in 1989 8 75% per annum on the above installment due in 1990 6 10% per annum on the above installment due in 1991 6 00% per annum on the above installment due in 1992 6 20% per annum on the above installment due in 1993 6 40% per annum on the above installment due in 1994 6 50% per annum on the above installment due in 1995 6 50% per annum on the above installment due in 1996 6 00% per annum on the above installment due in 1997 3 with said interest being payable on JANUARY 1, 1988, and semi- annually on each JULY 1 and JANUARY 1 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 in lawful money of the United States of America, without exchange or collection charges The install- ments of principal and the interest on this Certificate are payable to the registered owner hereof through the services of MBANK DALLAS, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying Agent/Registrar" for this Certificate Payment of all principal 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 on the 15th 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 cove- nants 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/Regis- trar, 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 inter- est 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 which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to closet and payment on such date shall have the same force and effect as if made on the original date payment was due THIS CERTIFICATE has been authorized in accordance with the Constitution and laws of the State of Texas FOR THE PURPOSE OF PAYING ALL OR A PORTION OF THE CITY'S CONTRACTUAL OBLIGA- TIONS TO BE INCURRED PURSUANT TO CONTRACTS FOR THE PURCHASE OF MATERIALS AND EQUIPMENT CONSTITUTING A MUNICIPAL RADIO 4 COMMUNICATIONS SYSTEM, AND PAYING ALL OR A PORTION OF THE CONTRACTUAL OBLIGATIONS FOR PROFESSIONAL SERVICES OF ENGINEER- ING, ATTORNEYS, AND FINANCIAL ADVISORS IN CONNECTION WITH SUCH MUNICIPAL RADIO COMMUNICATIONS SYSTEM AND CERTIFICATES OF OBLIGATION 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 assign- ment, 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 trans- ferred 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 Certifi- cate 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 aggre- gate 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 5 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 certifi- cate 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 de- livered 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 Certifi- cate 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 0 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 this Certificate additionally is 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 parity 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 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 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 JUNE 1, 1987 City Secretary, Mayor, City of Denton, Texas City of Denton, Texas (CITY SEAL) 7 FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certify that this Certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Certificate has been registered by the Comptroller of Public Accounts of the State of Texas Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 6 ADDITIONAL CHARACTERISTICS OF THE CERTIFI- CATES Registration and Transfer (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of MBANR DALLAS, 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, (1) 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 delivered in 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 princi- pal 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, trans- ferred, 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 exchanged 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 repre- sentative to evidence an assignment thereof Upon surrender of any Certificates or any portion or portions thereof for trans- fer of registration, an authorized representative of the Paying Agent/Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Certificate or Certificates, having the characteristics herein 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 trans- ferred, 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 ex- change of Certificates by any registered owner of a Certifi- cate 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, premium, 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) Went of Certificates and Interest The Issuer hereby further appo nts 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 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 (d) Conversion and Exchan a or Re lacement Authenti- cation Each Cert f cate ssued and del vered pursuant to this 10 Ordinance, to the extent of the unpaid principal balance or principal amount thereof, may, upon surrender of such Certifi- cate 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 represen- tatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be con- verted 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 as- signed 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 11 scheduled Record Date shall bear interest from the interest payment date next preceding the date on 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 delivery 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 conver- sion 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 MBANK DALLAS, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar By 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 Certif- icate 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 Certif- icate 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 12 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 conver- sion 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 Authentica- tion 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 Certif- icate 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, 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 Certif- icates or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Certificate or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date (e) In General All Certificates issued in conversion and exchange or replacement of any other Certificate or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Certificates to be payable only to the registered owners thereof, (ii) may be transferred and assigned, (iii) may be converted and exchanged for other Certificates, (iv) shall have the characteristics, (v) shall be signed and sealed, and (vi) the principal of and interest on the Certificates shall be pay- able, all as provided, and in the manner required or indicated, in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordi- nance (f) Pa ent of Fees and Charges The Issuer hereby covenants with t e reg stered 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 (ii) 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 13 conversion and exchange of Certificates solely to the extent above provided in this Ordinance (g) Substitute Payinq A ent/Re istrar The Issuer covenants with the reg stered 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 Certifi- cates 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 promptly it will 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 promptly shall transfer and deliver the Regis- tration Books (or a copy thereof), along with all other perti- nent 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 mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar By accepting the position and perform- ing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a cer- tified 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 replace- ment of any other Certificate or portion thereof, including the 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 14 FORM OF SUBSTITUTE CERTIFICATE NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 1987-A INTEREST RATE MATURITY DATE CUSIP NO ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a a political subdivision of the State of Texas, hereby promises 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 from JUNE 1, 1987, to the maturity date specified above, at the interest rate per annum specified above, with interest being payable on JANUARY 1, 1988, and semiannually on each JULY 1 and JANUARY 1 thereafter, except that if the date of authentication of this Certificate is later than DECEMBER 15, 1987, 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 Certificate at maturity, at the principal corporate trust office of MBANK DALLAS, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying Agent/Regis- trar" 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/- 15 Registrar by United States mail, 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 on the 15th 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 cove- nants 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 inter- est 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 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 THIS CERTIFICATE is one of an issue of Certificates initially dated JUNE 1, 1987, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $1,100,000, FOR THE PURPOSE OF PAYING ALL OR A PORTION OF THE CITY'S CONTRACTUAL OBLIGATIONS TO BE INCURRED PURSUANT TO CONTRACTS FOR THE PURCHASE OF MATERIALS AND EQUIP- MENT CONSTITUTING A MUNICIPAL RADIO COMMUNICATIONS SYSTEM, AND PAYING ALL OR A PORTION OF THE CONTRACTUAL OBLIGATIONS FOR PROFESSIONAL SERVICES OF ENGINEERING, ATTORNEYS, AND FINANCIAL ADVISORS IN CONNECTION WITH SUCH MUNICIPAL RADIO COMMUNICATIONS SYSTEM AND CERTIFICATES OF OBLIGATION THIS CERTIFICATE OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be trans- ferred 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, evidenc- ing assignment of this Certificate or any portion or portions hereof in any integral multiple of $5,000 to the assignee or 16 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 Certifi- cates), 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 Certifi- cate 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 Certifi- cate 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 shall pay any taxes or 17 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 following principal or interest payment date IN THE EVENT any Paying Agent/Registrar for the Certifi- cates 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 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 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 parity 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 m Issuer, and agrees that the terms and provisions of this Certificate and the Certificate Ordinance constitute a contract between each registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the facsimile signature of the Mayor of the Issuer and countersigned with the 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 (facsimile signature) City Secretary, City of Denton, Texas (facsimile signature) Mayor, City of Denton, Texas (CITY SEAL) 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 MBANK DALLAS, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Dated BY Authorized Representative 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 (Ass gnee s Social (print or typewrite Assignee is name and Security or Taxpayer address, including zip code) Identification Number) 19 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 This signature must be guaranteed by a member of the New York Stock Exchange or a commercial bank or trust company Registered Owner NOTICE This signature must correspond with the name of the Registered Owner appear- ing on the face of this Cer- tificate 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 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 certiricates as e to provide and maintain a sinker principal of its Certificates as never less than 28 of the origii Certificates as a sinking fund e, be based on the latest approved full allowance being made for tax tax collection Said rate and z hereby levied, and is hereby orde taxable property in the Issuer f( Certificates or interest thereon and said tax shall be assessed ar deposited to the credit of the a ucn inceresc neuomes uue, aiiu g fund adequate to pay the such principal matures (but tal principal amount of the ich year), and said tax shall :ax rolls of the Issuer, with delinquencies and the cost of mount of ad valorem tax is red to be levied, against all )r each year while any of the are outstanding and unpaid, d collected each such year and Eoresaid Interest and Sinking 20 Fund Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Certificates, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law Section 9 SURPLUS REVENUES The Certificates addi- tionally 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 main- tenance 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 here- after authorizing (1) all bonds and (ii) all other obligations not on a parity with the Certificates, which 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 depos- ited to the credit of the Interest and Sinking Fund and used to pay such principal and/or interest A maximum aggregate of $10,000 of Surplus Revenues may be used to pay principal and/or interest on the Certificates and any obligations on a parity 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 parity with the Certificates and any other then outstanding parity obligations, with the Certificates and all such additional parity 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 parity 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 Reve- nues as described above 21 Section 10 DEFEASANCE OF CERTIFICATES (a) Any Certif- icate 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 (ii) shall have been provided for on or before such due date by irrevocably deposit- ing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without rein- vestment, 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/Regis- trar may at the written direction of the Issuer also be in- vested in Government Obligations, maturing in the amounts and times as hereinbefore 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, which may be United States Treasury obligations such as its State and Local Government Series, which may be in book -entry form (d) Until all Defeased Certificates shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Certifi- cates the same as if they had not been defeased, and the Issuer 22 shall make proper arrangements to provide and pay for such services as required by this Ordinance Section 11 DAMAGED, MUTILATED, LOST, STOLEN, OR DE- STROYED CERTIFICATES (a) Replacement Certificates In the event any outstanding Certificate is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new certificate of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Certificate, in replacement for such Certificate in the manner hereinafter provided (b) Application for Replacement Certificates Applica- tion for replacement of damaged, mutilated, lost, stolen, or destroyed Certificates shall be made by the registered owner thereof to the Paying Agent/Registrar In every case of loss, theft, or destruction of a Certificate, the registered owner applying for a replacement certificate shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto Also, in every case of loss, theft, or destruction of a Certificate, the registered owner shall furnish to the Issuer and 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 Certifi- cate 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) Charge for Issuing Replacement Certificates Prior to the issuance of any replacement certificate, the Paying Agent/Registrar shall charge the registered owner of such Certificate with all legal, printing, and other expenses in connection therewith Every replacement certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Certificate shall be found at any time, or be enforceable by anyone, and shall be entitled 23 to all the benefits of this Ordinance equally and proportion- ately with any and all other Certificates duly issued under this Ordinance (e) Authority 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 author- ity 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, AND CUSIP NUMBERS 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 Certifi- cate, and the seal of said Comptroller shall be impressed, or placed in facsimile, on 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 de- livered 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 Section 13 COVENANTS REGARDING TAX-EXEMPT STATUS OF CERTIFICATES The Issuer hereby covenants to take such action or refrain from such action necessary to ensure the status of the Certificates as obligations described in section 103 of the Internal Revenue Code of 1986 or any predecessor thereof In particular, but not by way of limitation, the Issuer covenants as follows (a) None of the proceeds of the Certificates (in- cluding investment earnings thereon) or of the facilities financed with the proceeds of the Certificates will be 24 used, directly or indirectly, in the trade or business of any person or entity other than the Issuer For purposes of the foregoing, any use of such proceeds or facilities in any manner contrary to the guidelines set forth in Revenue Procedures 82-14 and 82-15, 1982-1 C B 459, 460, or any amendments, revisions or supplements thereto, shall constitute the use of such proceeds or facilities in the trade or business of such person or entity, (b) None of the proceeds of the Certificates (in- cluding investment earnings thereon) will be used, direct- ly or indirectly, to finance loans to any persons or other entities, (c) Not by way of limitation, the Issuer will take such action or will refrain from any action which would adversely affect the exemption from federal income taxa- tion of the interest paid on the Certificates, including without limitation any action that would permit any of the Certificates to be treated as "private activity bonds" within the meaning of section 141 of the Code, and will take, or require to be taken, such acts as may be reason- ably within its ability and as may from time to time be required under applicable law or regulation to continue to cause interest on the Certificates to be excludable from gross income of the holder, including the preparation and filing of any statements or information reports required to be filed by the Issuer in order to maintain the tax- exempt status of the interest on the Certificates, and (d) The Issuer has not taken, has no present inten- tion of taking any action and knows of no action taken or intended which would cause interest on the Certificates to be includable in the gross income of any certificatehol- ders for federal income tax purposes Section 14 COVENANTS REGARDING ARBITRAGE (a) A Rebate Fund is hereby established by the Issuer Such Fund shall be for the sole benefit of the United States of America and 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 purpose of compliance with section 148 of the Internal Revenue Code of 1986 (the "Code") (b) At the close of each "Certificate Year," the Issuer shall compute the amount of "Excess Earnings," if any, for the period beginning on the date of delivery of the Initial Certif- icate and ending at the close of such "Certificate Year" and transfer to the Rebate Fund an amount equal to the difference, if any, between the amount then in the Rebate Fund and the 25 Excess Earnings so computed The term "Certificate Year" means with respect to the Certificates each one-year period ending on the anniversary of the date of delivery of the Initial Certifi- cate If, at the close of any Certificate Year, the amount in the Rebate Fund exceeds the amount that would be required to be paid to the United States of America under paragraph (d) below if the Certificates had been paid in full, such excess may be transferred from the Rebate Fund and paid to the Issuer, to be used for such purposes for which, or to be redeposited to such fund from which, such amounts were originally derived (c) In general, "Excess Earnings" for any period of time means the sum of (i) the excess of -- (A) the aggregate amount earned during such period of time on all "Nonpurpose Obligations" (including gains on the disposition of such obli- gations) in which "Gross Proceeds" of the issue are invested (other than amounts attributable to an excess described in this subparagraph (c)(1)), over (B) the amount that would have been earned during such period of time if the "Yield" on such Nonpurpose Obligations (other than amounts attrib- utable to an excess described in this subparagraph (c)(i)) had been equal to the yield on the issue, plus (ii) any income during such period of time attrib- utable to the excess described in subparagraph (c)(i) above "Excess Earnings" will not include amounts, if any, which need not be taken into account under the special rules of section 148(f)(4)(A) and (B) of the Code relating to bona fide debt service funds and the six-month temporary investment period The terms "Nonpurpose Obligations," "Gross Proceeds" and "Yield" shall have the meanings prescribed by section 148 of the Code and shall be applied in the manner prescribed in such section (d) The Issuer shall pay to the United States of America at least once every five -years an amount that ensures that at least 90 percent of the Excess Earnings from the date of delivery of the Certificates to the close of the period for which the payment is being made will have been paid The Issuer shall pay to the United States of America not later than 60 days after the Certificates have been paid in full 100 M percent of the amount then required to be paid under section 148(f) of the Code as a result of Excess Earnings (e) The Issuer shall keep such records as will enable the Issuer to fulfill its responsibilities under this section and section 148(f) of the Code and shall retain such records for at least six years following the final payment of principal and interest on the Certificates (f) The Issuer will not use any portion of the proceeds of the Certificates directly or indirectly to acquire "higher yielding investments," or to replace funds which were used directly or indirectly to acquire "higher yielding invest- ments " The term higher yielding investments means any invest- ment property (as defined in section 148(b)(2) of the Code) which produces a yield over the term of the issue which is materially higher than the yield on the issue (as defined above) The foregoing limitation on higher yielding invest- ments shall not apply to -- (1) proceeds of the Certificates invested for a reasonable temporary period of 3 years or less until such proceeds are needed for the purpose for which the certifi- cates are issued, or (2) amounts invested in a bona fide debt service fund if the gross earnings on such fund are less than $100,000 in any certificate year (g) The Issuer covenants to restrict the use of Initial Certificate proceeds in such manner and to such extent, as may be necessary, so that the Certificates will not constitute arbitrage bonds under section 148 of the Code Any authorized representative of the Issuer having responsibility with respect to the issuance of the Certificates is authorized and directed, alone or in conjunction with any other official, employee or consultant of the Issuer to give an appropriate certificate on behalf of the Issuer, for inclusion in the transcript of proceedings for the Certificates, setting forth the facts, estimates and circumstances and reasonable expectations per- taining to section 148 of the Code and, to the extent appli- cable, section 149(d) of the Code (h) The requirements of this Section are subject to, and shall be interpreted in accordance with section 148 of the Code Section 15 SALE OF INITIAL CERTIFICATE The Initial Certificate is hereby sold and shall be delivered to Prudential-Bache Securities, Inc and Associates, for cash for 27 the par value thereof and accrued interest thereon to date of delivery It is hereby officially found, determined, 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 June 2, 1987, 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 repre- sentations contained in said Official Notice of Sale and Official Statement are true and correct in all material re- spects, to the best knowledge and belief of the City Council and the Issuer Section 16 FURTHER PROCEDURES The Mayor of the Issuer, the City Secretary 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, acknowl- edge, 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 Ordi- nance, the Certificates, the sale of the Certificates, and the Notice of Sale and Official Statement 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 W, GENERAL CERTIFICATE THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON We, the undersigned officers of the City of Denton, Texas (the "Issuer") hereby certify as follows 1 That this certificate is executed for and on behalf of said Issuer with reference to the issuance of the proposed City of Denton Certificates of Obligation, Series 1987-A, dated June 1, 1987, in the aggregate principal amount of $1,100,000, authorized by ordinance of the City Council on June 16, 1987 (the "Ordinance"), initially issued and delivered as a single fully registered certificate payable in installments to the registered owner, but convertible into fully registered certi- ficates in any multiple of $5,000 (collectively, the "Certifi- cates") 2 That said Issuer is a duly incorporated Home Rule City, having more than 5000 inhabitants, operating and existing under the Constitution and laws of the State of Texas and the duly adopted Home Rule Charter of said City, which Charter has not been changed or amended since the passage of the ordinance authorizing the issuance of the General Obligation Bonds, Series 1987, dated April 1, 1987 3 That no litigation of any nature has ever been filed pertaining to, affecting, questioning, or contesting (a) the Ordinance which authorized said Issuer's proposed Certificates described in paragraph 1 of this certificate, (b) the issuance, execution, delivery, payment, security, or validity of said proposed Certificates, (c) the authority of the governing body and the officers of said Issuer to issue, execute, and deliver said Certificates, (d) the validity of the corporate existence of said Issuer, (e) the current Tax Rolls of said Issuer, or (f) the Home Rule Charter of said Issuer, and that no litiga- tion is pending pertaining to, affecting, questioning, or contesting the current boundaries of said Issuer 4 That attached to this certificate and marked "Exhibit A" is a true, full, and correct schedule and statement of the aforesaid proposed Certificates, and of all presently outstand- ing tax indebtedness of said Issuer 5 That the currently effective ad valorem tax appraisal roll of said Issuer (the "Tax Roll") is the Tax Roll prepared and approved during the calendar year 1986, being the most recently approved Tax Roll of said Issuer, that the taxable property in said Issuer has been appraised, assessed, and valued as required and provided by the Texas Constitution and Property Tax Code (collectively, "Texas law"), that the Tax Roll for said year has been submitted to the City Council of said Issuer as required by Texas law, and has been approved and recorded by said City Council, and according to the Tax Roll for said year the net aggregate taxable value of taxable property in said Issuer (after deducting the amount of all applicable exemptions required or authorized under Texas law), upon which the annual ad valorem tax of said Issuer has been imposed and levied, is $1,820,463,940 6 That the Certificates additionally are payable from and secured by certain surplus revenues (not to exceed $10,000 in aggregate amount) derived by the City 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), which revenues are designated or defined as the "Surplus Revenues" in the Ordinance, and except for the Certificates, said Surplus Revenues are not pledged to the payment of any obligations of the Issuer 7 That no petition has been filed protesting the issu- ance of the aforesaid Certificates 8 That no default exists in connection with any bonds or other obligations issued by the Issuer or the ordinances authorizing same 9 That to the best of our knowledge and belief the statements and information set forth in the Official Statement dated June 2, 1987, pertaining to the Certificates and the City, and particularly (i) the Utility System operating state- ments, rates for services, and revenues and expenditures, (ii) debt service requirements for both tax and revenue bonds, and (iii) all other information set forth therein, are true and correct in all material respects SIGNED AND SEALED the _ ty Secretary (SEAL) day of yor 1987 "EXHIBIT A" Certificates of Obligation, Series 1987-A, dated 6/1/87, bearing interest, and maturing as set forth in the Ordinance authorizing said Certificates General Obligation Refunding Bonds, Series 1985, dated November 1, 1985, now outstanding in the principal amount of $22,866,730 25, bearing interest, and maturing in the amounts on February 15 of the years, as follows (CURRENT INTEREST BONDS, $21,430,000) 6 30% 11910M-881 6 60% 2,365M-89, 6 90% 11760M-901 7 10% 1,755M-91, 7 30% 1,745M-92, 7 50% 1,765M-93, 7 70% 1,820M-94, 7 90% 1,740M-95, 8 00% 1,825M-96, 8 10% 1,745M-97j 8 20% 11480M-98, 8 30% 1,520M-99 (CAPITAL APPRECIATION BONDS, $1,436,730 25) 8 70% $450,807 70 - 2000 8 80% 326,699 60 - 2001 9 00% 273,727 95 - 2002 9 10% 232,457 50 - 2003 9 10% 153,037 50 - 2004 Certificates of Obligation, Series 1987, dated January 1, 1987, now outstanding in the principal amount of $500,000, bearing interest, and maturing in the amounts on July 1 of the years, as follows 9 00% 25M-88/92, 8 00% 25M-931 6 20% 25M-94, 6 30% 25M-951 6 40% 25M-96s 6 50% 25M-971 6 60% 25M-98j 6 70% 25M-99, 6 80% 25M-2000: 6 90% 25M-011 7 00% 25M-02/06, 6 00% 25M-07 General Obligation Bonds, Series 1987, outstanding in the principal amount interest, and maturing in the amounts as follows 9 40% 175M-88/94, 9 20% 175M-95, 8 00% 175M-96/98, 7 60% 175M-991 7 70% 175M-2000, 7 80% 175M-01, 7 90% 175M-02, 8 00% 175M-03/05, 6 40% 175M-06/07 dated April 1, 1987, now of $3,500,000, bearing on July 1 of the years, Total outstanding General Obligation indebtedness $26,866,730 25 CERTIFICATE FOR ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 1987-A, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON We, the undersigned officers of said City, hereby certify as follows 1 The City Council of said City convened in REGULAR MEETING ON THE 16TH DAY OF JUNE, 1987, at the Municipal Building (City Hall), and the roll was called of the duly constituted officers and members of said City Council, to -wit Jennifer K Walters, City Secretary Ray Stephens, Mayor Jim Alexander Bob Gorton Linnie McAdams Randall Boyd Jane Hopkins Hugh Ayer and all of said persons were present, except the following absentees , thus consti- tuting a quorum Whereupon, among other business, the follow- ing was transacted at said Meeting a written ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 1987-A, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO was duly introduced for the consideration of said City Council and duly read It was then duly moved and seconded that said Ordinance be passed, and, after due discussion, said motion, carrying with it the passage of said Ordinance, prevailed and carried by the following vote AYES All members of said City Council shown present above voted "Aye" NOES None 2 That a true, full, and correct copy of the aforesaid Ordinance passed at the Meeting described in the above and foregoing paragraph is attached to and follows this Certifi- cate, that said Ordinance has been duly recorded in said City Council's minutes of said Meeting, that the above and foregoing paragraph is a true, full, and correct excerpt from said City Council's minutes of said Meeting pertaining to the passage of said Ordinance, that the persons named in the above and forego- ing paragraph are the duly chosen, qualified, and acting officers and members of said City Council as indicated therein, that each of the officers and members of '-aid City Council was duly and sufficiently notified officially and personally, in advance, of the time, place, and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and considered for passage at said Meeting, and that said Meeting was open to the public, and public notice of the time, place, and purpose of said meeting was given, all as required by Vernon's Ann Civ St Article 6252-17 3 That the Mayor of said City has approved, and hereby approves, the aforesaid Ordinance, that the Mayor and the City Secretary of said City have duly signed said Ordinance, and that the Mayor and the City Secretary of said City hereby de- clare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Ordi- nance for all purposes SIGNED AND SEALED the 16th day of June, 1987 aw.. - _�&, 149� - Cilty ecretary Mayor (SEAL) - - - - - - - - - - - - - - - - - - - - - - - - We, the undersigned, being respectively the City Attorney and the Bond Attorneys of the City of Denton, Texas, hereby certify that we prepared and approved as to legality the attached and following Ordinance prior to its passage as aforesaid