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1998-086 O ANCENO o r ANCE ISSUANCE, S E, DELI, Y CITY DEN'rON CE T CATES OBliGATION, SE S 99,, ? .OWG AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO, AND PROVIDING AN EFFECTIVE DATE THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, the Certtlicate of Obhgat~on Act of 1971, as amended and cod,fled (the "Act") pernuts the C~ty to msue and sell for cash the Cert,ficates of Obhgat~on here, nailer authorized, and WHEREAS, the C,ty has duly caused not,ce of its intention to issue the Certificates of Obhgat, on here,nailer anthonzed to be pubhshed at the times and ,n the manner requ,red by the Act and no petition has been filed protesting the msuance thereof, NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS Section 1 AMOUNT AND PURPOSE OF THE CEKTIFICATES The certificate or certificates of the C,ty of Denton, Texas (the "Issuer") are hereby authorized to be issued and dehvered m the aggregate pnnapal amount of $5,625,000, for the purpose of paying all or a portion of the City's Contractual Obhgat~ons ,ncurred pursuant to contracts for the purchase of certmn real and personal property, to-vat (a) a mty-w, de ,nformat, on management computer system, (b) police department radio eqmpment, (c) renovations to the Denton Mumclpal Complex, (d) renovat,ons to fire stations and (e) a c,ty-vade automated flood warning system, and also for the purpose of paying all or a port,on of the C~ty's Contractual Obhgations for profess,onal services of Englneenng, Attor- neys, and Fmancml Advmors m connect, on w~th the above contracts and sand Cert,ficates of Obi,gat,on Sectton 2 DESIGNATION OF THE CERTIFICATES Each cert,ficate msued pursuant to this Ordinance shall be demgnated "CITY OF DENTON CERTIFICATE OF OBLIGATION, SERIES 1998", and lmtmlly there shall be ,ssued, sold, and dehvered hereunder a single fully regmtered certificate, vathout ,nterest coupons, payable ,n installments of pnnc,pal (the "Imt,al Certificate"), but the Imtml Certificate may be asmgned and transferred and/or converted ,nto and exchanged for a hke aggregate pnnc~pal amount of fully registered cert,ficates, vathout interest coupons, having serial matunttes, and m the denonnnatlon or denonunatlons of $5,000 or any mtegral multiple of $5,000, all m the manner herannatter prov, ded The term "Certificates" as used m ttus Ordinance shall mean and include collecUvely the Initial Certificate and all substitute cert,ficates ex- changed therefor, as well as all other subst,tute cemficates and replacement cert,ficates ,ssued pursuant hereto, and the term "Cert,ficates" shall mean any of the Cert,ficates Section 3 INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL CERTIFICATE (a) The In,t, al Certificate is hereby authorized to be issued, sold, and delivered hereunder as a s,ngle fully reg, stered Cert, ficate, without ,nterest coupons, dated April I, 1998, in the denommat, on and aggregate pnnclpal amount of $5,625,000, numbered R-l, payable ~n annual installments of pr,ncipal to the ,mtlal registered owner thereof, to-wit SALOMON SMITH BARNEY or to the regastered assagnee or assagnees of sand Certificate or any portion or portaons thereof 0n each case, the "regastered owner"), wath the annual installments of pnncapal of the Initial Cert,ficate to be payable on the dates, respectavely, and ,n the pnnclpal amounts, respect,vely, stated m the FORM OF INITIAL CERTIFICATE set forth an tbas Ordinance (b) The In,tlal Cert,ficate 0) may be aasagned and transferred, (n) may be converted and exchanged for other Cert~cates, (an) shall have the charactenstacs, and 0v) shall be sagned and sealed, and the pnnclpal of and anterest on the Imtaal Certificate shall be payable, all as provided, and in the manner required or md~cated, m the FORM OF INITIAL CERTIFICATE set forth ,n flus Ordinance Sectaon 4 INTEREST The unpaid pnnclpal balance of the Imtlal Certificate shall bear interest from the date of the Imt~al Certtficate to the respe~ve scheduled due dates of the installments of pnnclpal of the Imtaal Cemficate, and sand anterest shall be payable, all an the manner prov, ded and at the rates and on the dates stated an the FORM OF INITIAL CERTIFICATE set forth m ti'ns Ordinance Scion 5 FORM OF INITIAL CERTIFICATE The fonu of the Imt,al Certa'icate, including the form of Keg, stratmn Certaficate of the Comptroller of Publ, c Accounts of the State of Texas to be endorsed on the Imt, al Certaficate, 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, tn Denton County, Texas (the "Issuer"), betng a poht~cal subd~vtston of the State of Texas, hereby prormses to pay to SALOMON SMITH BARNEY or to the registered assignee or assignees ofth~s Certificate or any port~on or portions hereof 0n each case, the "registered owner") the aggregate pnnc~pal amount of $5,625,000 (FIVE MILLION SIX HUNDRED TWENTY FIVE THOUSAND DOLLARS) tn annual installments ofpnnctpal due and payable on February 15, 1999 tn each of the years, and m the respeettve pnne~pal amounts, as set forth tn the following schedule PRINCIPAL PRINCIPAL YEAR ~ YEAR A~OUNT 1999 $555,000 2009 $ 60,000 2000 690,000 2010 65,000 2001 725,000 20] 1 70,000 2002 770,000 2012 70,000 2003 805,000 2013 75,000 2004 370,000 2005 395,000 2006 4 ] 0,000 2016 255,000 2007 55,000 2008 60,000 2018 195,000 and to pay tnterest, calculated on the bas, s ora 360-day year composed of twelve 30-day months, from the date of th~s Cemficate hereinafter stated, on the balance of each such mstallment of pnnc~pal, respecttvely, from t~me to t~me remmmng unpmd, at the rates as follows 4 00% per annum on the above installment due tn 1999 4 00% per annum on the above installment due ~n 2000 4 00% per annum on the above installment due tn 2001 5 00% per annum on the above installment due m 2002 5 00% per annum on the above installment due m 2003 5 00% per annum on the above installment due in 2004 4 50% per annum on the above installmem due m 2005 4 30% per annum on the above mstallmem due m 2006 4 45% per annum on the above installment due ,n 2007 4 50% per annum on the above installment due ,n 2008 4 60% per annum on the above installment due in 2009 4 70% per annum on the above installment due tn 2010 4 80% per annum on the above mstallmem 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 w~th smd interest being first due and payable on February 15, 1999, and semiannually on each August 15 and February 15 therea_~er while flus Certificate or any portion hereof is outstanding and unpmd THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Certificate are payable m lawful money of the Umted States of America, without exchange or collection charges The installments of pnnclpal and the interest on this Certificate are payable to the registered owner hereof through the servtces of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying Agent/Regastrar" for this Certificate Payment of all pnncl- pal of and interest on this Certificate shall be made by the Paying Agent/Registrar to the registered owner hereof on each pnnclpal 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 authonzang the issuance of this Certificate (the "Certificate Ordinance") to be on deposit vath the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the Paying Agent/Registrar by Umted States mml, first-class postage prepmd, on each such pnncipal and/or interest payment date, to the re/0stered 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 precedmg each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described The Issuer covenants vath the registered owner of this Certificate that on or before each pnncipal and/or interest payment date for this Certificate it vall make available to the Paying Agent/Registrar, from the "Interest and Smlang Fund" created by the Certificate Ordinance, the amounts required to provide for the payment, m immediately available funds, of all pnncipal of and interest on this Certificate, when due IF THE DATE for the payment of the pnnclpal of or interest on this Certificate shall be a Saturday, Sunday, a legal holiday, or a day on which banlang mmtutions m the City where the Paying AgenffReg~strar 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 banlong restitutions 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 4 THIS CERTIFICATE has been authorized ~n accordance with the Constitution and laws of the State o£ Texas m the pnne~pal amount of $5,625,000 for the purpose of paying all or a port~on of the C~ty's Contractual Obhgat~ons recurred pursuant to contracts for the purchase of certmn real and personal property, to-w~t (a) a c~ty-w~de mformauon management computer system, (b) pohce department radio equipment, (c) renovations to the Denton Mumc~pal Complex, (d) renovations to fire stauons and (e) a c~ty-w~de automated flood warmng system, and also for the purpose of paying all or a port,on of the C~ty's Contractual Obhgat~ons for professional serwces of Eng~neenng, Attor- neys, and Financial Adwsors m connection w~th the above contracts and sa~d Certificates of Obhgat~on ON FEBRUARY 15, 2008, or on any date whatsoever thereai~er, the unpaid installments of principal of this Cert~fiate of Obhgat~on may be prepaid or redeemed prior to their scheduled due dates, at the optaon of the Issuer, w~th funds derived from any available source, as a whole, or in part, and, ffm part, the particular port,on of tbas Certificate of Obhgat~on to be prepaid or redeemed shall be selected and designated by the Issuer (prowded that a port,on ofth~s Certificate of Obhgat~on may be redeemed only m an integral multiple of $$,000), at the prepayment or redemption price of the par or pnncapal amount thereof, plus accrued ~nterest to the date fixed for prepayment or redemption THE CERTIFICATES oftt~s Series scheduled to mature on FEBRUARY 15, 2016 and FEBRUARY 15, 2018 are sub.~eet to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, ~n part, prior to their scheduled matunties, w~th money from the Mandatory Redemption Account of the Interest and Stoking Fund, w~th the particular Certificates or port,on thereof to be redeemed to be selected by the Paying Agent/Registrar, by lot or other customary method (prowded that a port~on of a Certificate may be redeemed only in an ~ntegral multiple of $5,000) at a redemption price equal to the par or pnnc~pal amount thereof and accrued interest to the date of redemption, on the dates, and m the pnnc~pal amounts, respectively, as shown m the following schedules February 15. 2016 Maturity Mandatory Redemption Dates Pnnclpal Amounts February 15, 2014 $ 80,000 February 15, 2015 85,000 February 15, 2016 90,000 *payable at maturity February_ 15. 2018 Maturity Mandatory_ Redemption Dates Pnnc~pal Amounts February 15, 2017 $ 95,000 February 15, 2018 100,000 *payable at maturity The pnn¢lpal amount of the Certificates reqmred to be redeemed on each such redempuon date pursuant to the foregomg operatmn oi'the Mandatory Redemption Account shall be reduced, at the option o£the Issuer, by the pnnc~pal amount of any Certificates, which at least 45 days pnor to the mandatory stoking fund redemp~on date, (1) shall have been acquired by the Issuer and dehvered to the Paying AgenffReglstrar for cancellation, or (2) shall have been purchased and cancelled by the Paying Agenl~'Reg~strar at the request of the Issuer at a price not exceeding the pnnc~pal amount of such Certificates plus accrued interest to the date of purchase, or (3) have been redeemed pursuant to the optional redemption provlstons set forth above and not theretofore credited against a mandatory smlang fund redemptton Dunng any period tn wluch ownership of the Certificates is deterrmned by a book entry at a securities depository for the Cemficates, tf fewer than all of the Certrficates of the same maturity and beanng the same interest rate are to be redeemed, the pamcular Certificates of such maturity and beanng such interest rate shall be selected in accordance wtth 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 redemptton shall be mailed by the Paying Agent/Regtstrar to the registered owner hereof By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer wath the Paying Agent/Regtstrar for the payment of the reqmred prepay- ment or redemption price for tbas Certificate or the portton hereof which ts to be so prepatd or re- deemed, plus accrued interest thereon to the date fixed for prepayment or redemption If such written notice of prepayment or redemption ts gtven, and ffdue provision for such payment is made, all as prowded above, th~s Certrfieate, or the pomon thereofwluch 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 mterest at~er the date fixed for tts prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemptton price plus accrued mterest to the date fixed for prepayment or redemption from the Paying A~ent/Reg~strar out of the funds prowded for such payment The Paymg Agent/Regtstrar shall record in the Reg~stratton Books all such prepayments or redemptions ofpnnclpal ofttus Certtficate or any portton hereof THIS CERTIFICATE, to the extent of the unpatd pnnctpal balance hereof, or any unpaid portion hereof m any tntegral multtple of $5,000, may be assigned by the mttlal registered owner hereof and shall be transferred only tn the Registration Books of the Issuer kept by the Paying AgenffReg~strar acting m the capacity ofregtstrar for the Certtficates, upon the terms and condtttons set forth tn the Certtfieate Ordinance Among other reqmrements for such transfer, tlus Certfficate must be presented and surrendered to the Paymg Agent/Registrar for cancellation, together wath proper instruments ofasslsnment, m form and w~th guarantee of signatures satisfactory to the Paying Agent~eg~strar, evtdencmg assignment by the tmttal registered owner of tins Certtficate, or any portton or porttons hereof m any integral multtple of $5,000, to the asstgnee or asstgnees tn whose name or names tiaa Cemficate or any such portion or porttons hereof is or are to be transferred and registered Any instrument or instruments of asstgnment sattsfactory to the Paymg Agent/Regtstrar may be t;sed to evidence the asstgnment ofttus Certtficate or any such portion or porttons hereof by the mlttal regtstered owner hereof A new certtficate or certificates payable to such assignee or asstgnees (which then will be the new registered owner or owners of such new Certificate or Certrficates) or to the tmttal regnstered owner as to any portion oftbas Certtficate which is not being asstgued and transferred by the mmal registered owner, shall be dehvered by the Paying Agent/Regts- trar m convemon of and exchange for fins Certificate or any portion or portions hereof, but solely m the form and manner as provided m the next paragraph hereof for the converston and exchange of tbas Certificate or any portton hereof The regtstered 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, 6 ~ncludmg payment and d~scharge of hablhty 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 m the Certificate Ordinance, this Certificate, to the extent oftha unp~ud pnnctpal balance hereof, may be converted into and exchanged for a like aggregate pnnc~pal amount of fully registered certL§cates, w~thout interest coupons, payable to the assignee or assignees duly designated m writing by the imtial registered owner hereof, or to the ~nmal registered owner as to any port~on of this Certificate which ~s not bemg assigned and transferred by the m~tial registered owner, m any denonunation or denormnatlons m any ~ntegral multtple of $5,000 (subject to the requirement heremaf~er stated that each submtute certificate issued in exchange for any portton of this Certificate shall have a single stated pnncipal maturity date), upon surrender of this Certmficate to the Paying Agent/Registrar for cancellatton, all in accordance with the form and procedures set forth m the Certrficate Ordinance Ifthis Certaficate or any port~on hereof ~s assigned and transferred or converted each certificate ~ssued m exchange for any portion hereof shall have a single stated pnnc~pal maturity date corresponding to the due date of the installment of pnnc~pal of this Cemficate or pomon hereof for which the sub~tute certtficate ~s betng exchanged, and shall bear mnterest at the rate apphcable 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 pnnc~pal 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 ~ssued and dehvered In exchange for this Certmficate or any port~on hereof may be assigned and transferred, and converted, subsequently, as provided mn the Certrficate Ordinance The Issuer shall pay the Paying Agent/Reg~strar's standard or customary fees and charges for transferring, converting, and exchanging this Cemficate or any pomon thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges reqmred to be pard wath respect thereto The Paymg Agent/Registrar shall not be reqmred to make any such assignment, conversion, or exchange dunng the period commencmng w~th the close of bus~ness on any Record Date and ending wath the opemng of business on the next followmng principal or interest payment date IN THE EVENT any Paying Agent/Registrar for this Cemficate ~s changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted ~n the Certificate Ordinance that mt promptly wtll appoint a competent and legally quahfied substttute therefor, and promptly will cause written not,ce thereof to be marled to the rel0stered owner of this Cemficate IT IS HEREBY cemfied, rectted, and covenanted that this Cemficate has been duly and vahdly authorized, ~ssued, and delivered, that all acts, conditions, and things reqmred or proper to be performed, erdst, and be done precedent to or m the authorization, issuance, and delivery of this Certrficate have been performed, exasted, and been done in accordance wath law, that tlus Certificate ts a general obhgat~on of the Issuer, issued on the full fatth 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 lnterest comes due and such pnncipal matures, have been levied and ordered to be lewed agmnst all taxable property m the Issuer, and have been pledged ~rrevocably for such payment, within the hm~t prescribed by law, and that, together wroth other panty obhgatlons, this Cemficate addmonally ts payable from and secured by cemun surplus revenues (not to exceed $10,000 mn 7 aggregate amount) derived by the Issuer from the ownership and operation of the C~ty's Utility System (consisting of the City's combined waterworks system, sanitary sewer system, and electric light and power system), all as prowded in the Certificate Ordinance THE ISSUER has reserved the right to issue, in accordance with law, and in accordance w~th the Certfficate Ordinance, other and additional obligations, and to enter into contracts, payable from ad valorem taxes and/or revenues of the City's Utihty System, on a panty uath, 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 provmons, acknowledges that the Certificate Ordinance is duly recorded and available for inspection m the official nunutes and records of the govermng body of the Issuer, and agrees that the terms and provisions oft}as Certificate and the Certificate Ordinance constitute a contract between the registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused t}as Certificate to be signed w~th 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 t}as Certificate, and has caused this Certificate to be dated April 1, 1998 ATTEST CITY OF DENTON, TEXAS By By Jennifer Walters Jack M~ller City Secretary, City of Denton, Texas Mayor, City of Denton, Texas (CITY SEAL) (INSERT BOND INSURANCE LEGEND, IF ANY) 8 FORM OF REGISTRATION CERTIFICATE OF TIlE 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 s,gnature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Se~on 6 ADDITIONAL CHARACTERISTICS OF THE CERTIFICATES Re~,lstration and Transfer (a) The Issuer shall keep or cause to be kept at the pnnclpal 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 AgentgRegistrar as as registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the Issuer and Palong Agent/Registrar may prescnbe, and the Palnng Agent/Registrar shall make such transfers and registrations as herein provided The Paying Agent/Registrar shall obtain and record m the Registration Books the address of the registered owner of each Certificate to which payments w~th 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 mmled, and such interest payments shall not be marled unless such notice has been given The Issuer shall have the right to inspect the Registration Books dunng regular business hours of the Palong Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless other~ase required by law, shall not perrmt their inspection by any other entity Registration of each Certificate may be transferred m 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 mstruments of assignment, in form and vath guarantee of signatures satisfactory to the Paying Agent/Registrar, (0 exndencmg the assignment of the Certificate, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (il) the right of such assignee or assignees to have the cemficate 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 Cemficate or Certificates shall be issued in conversion and exchange therefor in the manner herein proxaded The Imtial cemficate, to the extent of the unpaid pnncipal balance thereof, may be assigned and transferred by the imtlal registered owner thereof once only, and to one or more assignees designated m writing by the lmtlal registered owner thereof All Certificates issued and de- hvered 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 9 each substttute Certificate shall have a stngle stated pnnc~pal maturity date), shall be ~n the form prescribed ~n the FORM OF SUBSTITUTE CERTIFICATE set forth In th~s Ordinance, and shall have the charactanst~cs, and may be assxgned, transferred, and converted as hereinafter prowded If the Imttal Certificate or any port~on thereof ~s assigned and transferred or converted the Imt~al Certificate must be surrendered to the Paying Agent/Registrar for cancellatton, and each Certificate ~ssued m exchange for any portion of the Imt~al Certificate shall have a single stated prmc~pal maturity date, and shall not be payable m ~nstallments, and each such Certificate shall have a principal maturity date corresponding to the due date of the installment of prlnc~pal or port~on thereof for which the substitute Ceratlcate ~s being exchanged, and each such Certfl~cate shall bear interest at the single rate apphcable to and borne by such mstallment of pnnc~pal or portion thereof for which ~t ~s being ex- changed If only a poraon of the Iruaal Certtficate ~s assigned and transferred, there shall be dehvered to and rag~stered m the name of the uutlal registered owner substitute Certtficates ~n exchange for the unassigned balance of the Irat~al Certificate ~n the same manner as tfthe nnt~al registered owner were the assignee thereof If any Certificate or port~on thereof other than the Imtlal Certificate is assigned and transferred or converted each Certificate ~ssued m exchange therefor shall have the same pnnc~pal maturity date and bear interest at the same rate as the Certificate for which it ~s exchanged A form of assignment shall be pnnted or endorsed on each Certtficate, excepting the Imtlal Certificate, which shall be executed by the registered owner or ~ts duly authortzed attorney or representative to ewdence an assignment thereof Upon surrender of any Certificates or any portion or porttons thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall make such transfer in the Registration Books, and shall dehver a new fully registered substitute Certificate or Certificates, having the characteristics hereto described, payable to such assignee or assignees (which then w~ll be the rag~stered owner or owners of such new Certificate or Certificates), or to the prewous registered owner ~n case only a port~on of a Certificate ~s being assigned and transferred, all ~n conversion of and exchange for smd assigned Certificate or Certificates or any port,on or portions thereof, in the same form and manner, and w~th the same effect, as provtded m 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/Re/0strar's standard or customary fees and charges for malang such transfer and dehvery of a substitute Certificate or Certificates, but the one requesting such transfer shall pay any taxes or other governmental charges required to be pa~d unth respect thereto The Paying Agent/Rag~strar shall not be required to make transfers of registration of any Certificate or any portion thereof dunng the period commencing vnth the close of bus~ness on any Record Date and ending with the opemng of busmess on the next following pnnclpal or ~nterest payment date (b) Ownership of Certificates The entity ~n whose name any Certificate shall be registered m the Rag~stratlon Books at any time shall be deemed and treated as the absolute owner thereof for all purposes ofttus Ordinance, whether or not such Certificate shall be overdue, and the Issuer and the Paying Agen',/Re/0strar shall not be affected by any not,ce to the contrary, and payment of, or on account of, the pnnc~pal of, prenuum, if any, and ~nterest on any such Certificate shall be made only to such registered owner All such payments shall be valid and effectual to satisfy and d~scharge the hab~hty upon such Certificate to the extent of the sum or sums so pa~d (c) Pa_vment of Certificates and Interest The Issuer hereby further appoints the Paying Agent/Rag~strar to act as the paying agent for paying the pnnctpal of and ~nterest on the Certificates, and to act as ~ts agent to convert and exchange or replace Certificates, all as provided ~n this 10 Ordinance The Paying Agent~eg~strar shall keep proper records of all payments made bY the Issuer and the Paying Agent/Regtstrar w~th respect to the Certificates, and of all conversions and exchanges of Cemficates, and all replacements of Certificates, as provided m this Ordinance However, m the event ora nonpayment of interest on a scheduled payment date, and for tlurty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Ke~strar, ~f 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", wtuch 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 Umted States mini, 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 busmess day next preceding the date of marling of such nottce (d) Convemon and Excb.nge or Kenlacement. Authentication Each Certificate tssued and delivered pursuant to thts Ordinance, to the extent of the unpatd principal balance or pnncipal amount thereof, may, upon surrender of such Certificate at the principal corporate trust office of the Paying Agent/Kegtstrar, together xanth a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or ~ts or thetr duly authorized attorneys or representatives, wtth guarantee of stgnatures satisfactory to the Paying Agent/Registrar, may, at the option of the regis- tered owner or such asstgnee or assignees, as appropriate, be converted into and exchanged for fully registered certtficates, wtthout interest coupons, ~n the form prescribed tn the FORM OF SUBSTITUTE CERTIFICATE set forth tn tlus Ordinance, m the denormnation of $5,000, or any tntegral multtple of $5,000 (subject to the reqmrement hereinafter stated that each substitute Certificate shall have a single stated maturity date), as requested in wnung by such registered owner or such assignee or asstgnees, m an aggregate pnnctpal amount equal to the unpmd pnnclpal balance or pnnc~pal amount of any Certtficate or Certtficates so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be If the Imttal Certtficate ts asstgned and transferred or converted each substttute Cemficate tssued tn exchange for any pomon of the Initial Cemflcate shall have a single stated pnnclpal maturity date, and shall not be payable tn installments, and each such Certificate shall have a pnncipal matunty date correspondmg to the due date of the installment of principal or port,on thereof for wtuch the substitute Certificate is being exchanged, and each such Certtficate shall bear interest at the single rate applicable to and borne by such mstallment ofpnnctpal or pomon thereof for wluch it Is being exchanged If any Certtficate or portton thereof (other than the Imt~al Certtficate) ts asstgned and transferred or converted, each Certtficate tssued in exchange therefor shall have the same prmctpal maturity date and bear interest at the same rate as the Certtficate for wluch tt ts being exchanged Each substitute Certificate shall bear a letter and/or number to dtstmgmsh ~t from each other Certificate The Paying Agent/Registrar shall convert and exchange or replace Certificates as prowded hereto, and each fully registered certtficate delivered in converston of and exchange for or replacement of any Certificate or portton thereof as pernutted or reqmred by any provision ofthts Ordinance shall constttute one of the Certtficates for all purposes oftlus Ordinance, and may agmn be converted and exchanged or replaced It ~s spectfically proxaded that any Certtficate authenticated m conversion of and exchange for or replacement of another Certificate on or prior to the first scheduled Record Date for the Imttal Certtficate shall bear ~nterest from the date of the huttal Cemficate, but each substttute Certificate so authenttcated after such first scheduled Record Date shall bear interest from the mterest payment date next preceding the date on ll winch such substitute Certificate was so authenticated, unless such Certificate ts authenucated after any Record Date but on or before the next following mterast payment date, tn winch case tt shall bear mterest fi.om such next following interest payment date, provided, however, that tf at the time of de- hvery of any substitute Certificate the interest on the Certificate for winch it ts bemg exchanged ts due but has not been pad, then such Certificate shall bear interest from the date to winch such interest has been pa~d m full THE INITIAL CERTIFICATE issued and dehvered pursuant to tins Ordinance ts not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Certificate issued m convemon of and exchange for or replacement of any Certificate or Certificates issued under tins Ordinance there shall be pnnted a certificate, tn the form substantially as follows "PAYING AGENT/REGISTKAR'S AUTHENTICATION CERTIFICATE It ts hereby certified that tbs Certificate has been issued under the prowstons of the Certificate Ordinance described on the face of tins Certificate, and that tins Certificate has been issued tn conversion of and exchange for or replacement of a certificate, certificates, or a portion of a certificate or certificates of an issue winch 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 CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Dated By Authorized Representative" An authorized representative of the Pa3qng Agent/Registrar shall, before the dehvery 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 Cemficate ts so executed The Paying Agent/Keg~strar promptly shall cancel all Certificates surrendered for convemon and exchange or replacement No additional ordinances, orders, or rasolutlons need be passed or adopted by the govermng body of the Issuer or any other body or person so as to accomphsh the foregomg convemon and exchange or replacement of any Certificate or portion thereof, and the Paling Agent/Registrar shall provide for the pnnting, execution, and dehvery of the substitute Certificates tn the manner prescnbed hereto, and said Certificates shall be of type composmon pnnted on paper vath hthographed or steel engraved borders of customary weight and strength Pursuant to Vernon's Ann Tex Crv St Art 717k-6, and particularly Section 6 thereof, the duty of conversion and exchange or replacement of Certificates as aforesaid is hereby nuposed upon the Paying Agent/Registrar, and, upon the execution of the above Paymg Agent/Reglstrar's Authentication Certificate, the converted and exchanged or replaced Cemficate shall be vahd, incontestable, and enforceable in the same manner and vnth the same effect as the Imttal Certificate winch ongmally was issued pursuant to tins Ordinance, approved by the Attorney General, and registered by the Comptroller of Pubhc Accounts The Issuer shall pay the Paying AgentJRegtstrar's standard or customary fees and charges for transfemng, converting, and exchanging any Certificate or any portion thereof, but the one requestmg 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 dunng the period commencing with the close of business on any Record Date and ending w~th the opening of business on the next following pnncipal or interest payment date (e) In Oeneral All Certificates issued in conversion and exchange or replacement of any other Certificate or portion thereof, 0) shall be issued in fully registered form, without interest coupons, with the pnncipal of and interest on such Certificates to be payable only to the registered owners thereof, 00 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 pnncipal 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) Payment of Fees and Charges The Issuer hereby covenants with the registered owners of the Certificates that it will (1) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the pnnclpal 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 conversion and exchanse of Certificates solely to the extent above provided in this Ordinance (g) Substitute Paying Agent/Remstrar The Issuer covenants with the registered owners of the Certificates that at all times wtule 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 servaces 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/P~gistrar, to be effective not later than 60 days prior to the next pnncipal 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 Agnnt/Reglstrar, the previous Paying Agent/Registrar shall promptly transfer and dehver 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 wntten notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Certificates, by Umted States mad, first-class postage prepaid, wbach 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 ofPalnng AgenffRegtstrafs Certificate to be pnnted on each of such Certificates, and the Form of Assignment to be pnnted on each of the Certtficates, shall be, respectively, substantially as follows, with such appropriate variations, ormsslons, or insertions as are perrmtted or required by this Ordinance FORM OF SUBSTITUTE CERTIFICATE (Book-Entry Only Legend, if appropriate) NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 1998 ORIGINAL DATE ~ KATE MAT~ OF ISSUE CUSIP NO % ON THE MATURITY DATE specrlled 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 pnnclpal 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 speafied above, vath interest being first due and payable on February 15, 1999, and senuannually on each August 15 and February 15 thereafter, except that ~fthe date of authentication of this Certificate is later than the first Record Date (hereinafter defined), such pnnclpal amoum shall bear interest from the interest payment date next precedm8 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, m 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 Umted States of America, vathout exchange or collection charges The pnncipal of this Certificate shall be pa~d to the registered owner hereof upon presentation and surrender of this 14 Certificate at maturity, at the principal corporate trust of[ice of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS, which ~s the "Paying Agent/Registrar" for this Cemficate 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 ~nterest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance anthonzmg the ~ssuance of the Certtficates (the "Certificate Ordinance") to be on deposit w~th the Paying Agent/Registrar for such purpose as hereinafter prowded, and such check shall be sent by the Paying Agent/Registrar by Umted States marl, first-class postage prepatd, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as ~t 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 here~naiter described However, the payment of such interest may be made by any other method acceptable to the Paying A_gent/Reg~strar and requested by, and at the risk and expense of, the reg~s- tared owner hereof The Issuer covenants w~th the registered owner of this Certificate that on or before each pnnc~pal payment date, interest payment date, and accrued ~nterest payment date for this Cemficate it will make available to the Paying Agant/Reg~strar, from the "Interest and Smlang Fund" created by the Certtficate Ordinance, the amounts required to provide for the payment, ~n ~mmed~ately available funds, of all pnne~pal of and interest on the Certificates, when due IF THE DATE for the payment of the pnnc~pal of or Interest on this Certificate shall be a Saturday, Sunday, a legal hohday, or a day on which banking mst~tUtlOnS ~n the City where the Paying Agent/Re/0strar ~s located are authonzed by law or executive order to close, then the date for such payment shall be the next succeeding day which ~s not such a Saturday, Sunday, legal hohday, or day on wbach banking mst~tut~ons 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 ~ssue of Certificates m~t~ally dated April 1, 1998, authorized m accordance w~th the Constitution and laws of the State of Texas tn the pnnclpal amount of $5,625,000, for the purpose of paying all or a port~on of the C~ty's Contractual Obhgat~ons ~ncurred pursuant to contracts for the purchase of certain real and personal property, to-w~t (a) a cny-w~de mfonnat~on management computer system, (b) pohce department radio equipment, (c) renovatmns to the Denton Mumc~pal Complex, (d) renovations to fire stations and (e) a clty-w~de automated flood warmng system, and also for the purpose of paying all or a portion of the C~ty's Contractual Obhgataons for professional sar,aces of Engmeenng, Attorneys, and Financial Advisors m councet~on w~th the above contracts and smd Certificates of Obhgat~on 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, w~th funds derived from any av~ulable and lawful source, as a whole, or ~n part, and, ~fln part, the particular Certificates, or porttons thereof, to be redeemed shall be selected and designated by the Issuer (provided that a port,on ora Certificate may be redeemed only m an integral multiple of $5,000), at the redamptmn price of the par or pnnc~pal amount thereof, plus accrued interest to the date fixed for redemptmn 15 THE CERTIFICATES ofttus 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 Smkang 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 m an integral multiple of $5,000) at a redemption price equal to the par or pnnclpal amount thereof and accrued interest to the date of redemption, on the dates, and in the pnnclpal amounts, respectively, as shown in the following schedules February_ 15. 2016 Maturity Mandatory Redemption Dates Pnncipal Amounts February 15, 2014 $ 80,000 February 15, 2015 85,000 February 15, 2016 90,000 *payable at maturity February_ 15.2018 Maturity Mlmdatory Redemption Dates Pnnclpal Amounts February 15, 2017 $ 95,000 February 15, 2018 100,000 *payable at maturity The pnnclpal 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 pnnelpal amount of any Certificates, which at least 45 days prior to the mandatory stoking fund redemlYaon date, (1) shall have been acquired by the Issuer and delivered to the Paying AgenffRegmrar 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 pnncipal amount of such Cemficates 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 smlong fund redemption Dunng any period in whtch ownershtp of the Certificates is deterrmned by a book entry at a securities depository for the Certificates, if fewer than all of the Certrficates of the same maturity and bearing the same interest rate are to be redeemed, the particular Certificates of such maturity and beanng such interest rate shall be selected in accordance w~th the arrangements between the Issuer and the secunties 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 w~th the Paying Agent/Registrar for the payment of the required prepay- ment or redemption price for flus Certificate or the portion hereof whmh 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 prepaymant or redemption is given, and if due provision for such payment is made, all as provided above, tbas cemfieate, or the portion thereof whmh 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 at, er the date fixed for its prepayment or redemption, and shall not be regarded as being 16 outstandmg except for the right of the regtstered owner to recetve the prepayment or redemptton prme plus accrued interest to the date fixed for prepayment or redemptton from the Paying Agent/~81strar out of the funds proxnded for such payment The Paying AgenffRegtstrar shall record tn the Reg~stratton Books all such prepayments or redempttons of pnnctpal of thts Certtficate or any portton hereof THIS CERTIFICATE OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only m the Reg~stratton Books of the Issuer kept by the Paying Agent/Registrar acting ~n the capactty of registrar for the Cemficates, upon the terms and condmona set forth m the Certificate Ordtnance Among other reqmrements for such asstgnment and transfer, th~a Certtficate must be presented and surrendered to the Paytng Agent/Registrar, together w~th proper instruments of asstgnment, tn form and w~th guarantee of stgnaturea satisfactory to the Paying Agent/Registrar, evidencing asstgnment ofttus Certtficate or any pomon or port~ona hereof~n any integral multiple of $5,000 to the asstgnee or assignees tn whose name or names th~s Cemficate or any such portton or porttons hereof~s or are to be transferred and registered The form of Asstgnment pnnted or endorsed on tbas Certtficate shall be executed by the reg~sterext owner or ~ts duly authorized attorney or representattve, to evtdence the asstgnment hereof A new Certificate or Cemficates payable to such asstgnee or asstgnees (wbach then w~ll be the new regtstered owner or owners of such new Certfficate or Certificates), or to the prevtous registered owner m the case of the asstgnment and transfer of only a portton oftbas Certtficate, may be dehvered by the Paying A~ent/Reg~strar tn convemon of and exchange for tbas Certtficate, all tn the form and manner as provided m the next paragraph hereof for the convemon and exchange of other Certtficates The Issuer shall pay the Paying Agent/Regtstrar's standard or customary fees and charges for malang such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges reqmred to be pa~d vath respect thereto The Paying Agent/Regtstrar shall not be reqmred to make transfers of registration oftl~s cemficate or any portton hereof during the period commencing w~th the dose of business on any Record Date and endtng vath the opemng of business on the next following pnnc~pal or mterest payment date The registered owner ofttus Certtficate shall be deemed and treated by the lasuer and the Paying AgenffRegtstrar as the absolute owner hereof for all purposes, including payment and d~scharge of habd~ty upon ttus Certtficate to the extent of such payment, and the Issuer and the Paying Agent/Regtstrar shall not be affected by any notice to the contrary ALL CERTIFICATES OF THIS SERIES are tssuable solely as fully regtstered certificates, w~thout interest coupons, m the denomination of any integral multiple of $5,000 As provtded tn the Certtficate Ordinance, th~s Certificate, may, at the request of the registered owner or the asstgnee or asstgnens hereof, be converted mto and exchanged for a hke aggregate pnnctpal amount of fully regtsterod certificates, w~thout interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and beanng interest at the same rate, m any denomanat~on or denonunat~ons m any mtegral multtple of $5,000 as requested tn wntmg by the appropriate registered owner, assignee, or asstgnees, as the case may be, upon sur- render of this Certificate to the Paying Agent/Registrar for cancellation, all tn accordance w~th the form and procedures set forth m the Cemficate Ordinance The Issuer shall pay the Paying Agent/Registrars standard or customary fees and charges for transfemng, convertmg, and exchangmg any Certrlieate or any port~on 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 exerclse of such pn~¢ge of converslon and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange dunng the period commencing w~th the close of busmess on any Record Date and ending w~th the opening of business on the next follow- lng pnnclpal or interest payment date IN THE EVENT any Paying Agent/Registrar for the Certificates is changed by the Issuer, resigns, or othervase ceases to act as such, the Issuer has covenanted m the Certificate Ordinance that it promptly vail appoint a competent and legally quahfied substitute therefor, and vall 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 dehvered, that all acts, conditions, and things required or proper to be performed, exast, and be done precedent to or in the authorization, issuance, and delivery of this Certificate have been performed, existed, and been done m 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 prowde for the payment of the interest on and pnnclpal of this Certificate, as such interest comes due and such pnnclpal matures, have been levied and ordered to be levied agama all taxable property m the Issuer, and have been pledged irrevocably for such payment, within the hirat 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 m aggregate amount) denved 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 an 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 Utthty System, on a panty wath, or w~th 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 provis~ons of the Certificate Ordinance, agrees to be bound by such terms Md prov~sions, acknowledges that the Certificate Ordinance Is duly recorded and available for mspecta0n m the official rmnutes and records of the govermng body of the Issuer, and agrees that the terms and prowsions of this Certificate and the Certificate Ordinance constitute a contract between each registered owner hereof and the Issuer 18 IN WITNESS WHEREOF, the Issuer has caused tl~s Certificate to be s~gned w~th the manual or facs~n~le s~gnature of the Mayor of the Issuer and countersigned and attested w~th the manual or facstnul¢ s~gnature of the C~ty Secretary of the Issuer, and has caused the officml seal of the Issuer to be duly ~mpressed, or placed m fanslmde, on th~s Certificate ATTEST CITY OF DENTON, TEXAS By By. Jenmfer Walters Jack Miller C~ty Secretary, C~ty of Denton, Texas Mayor, C~ty of Denton, Texas (CITY SEAL) FORM OF PAYING AGENT/1LEGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It ,s hereby certtfied that th~s Certtficate has been tssued under the prows~ons of the Certificate Ordinance described on the face of thts Certificate, and that th~s Certificate has been issued m conversion of and exchange for or replacement of a cemficate, certificates, or a portion of a certificate or certificates of an tssue wtuch originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Pubhc Accounts of the State of Texas CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Dated By Authorized Representative (INSERT BOND INSURANCE LEGEND, IF ANY) 19 FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Certtficate, or duly authorized representat,ve or attorney thereof, hereby assigns this Certificate to / / (Ass~gnee's Soaal (pnnt or typewrite Ass~gnee's name and Secunty or Taxpayer address, including zip code) Ident~fication Number and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Certificate on the Paying Agent/Reg~strar's Reg~h~tion Books w~th full power of substitution In the premises Dated Signature Guaranteed NOTICE Signature(s) must be Registered Owner guaranteed by an ehglble guarantor NOTICE Tlus signature must mstnution partlapatmg in a correspond w~th the name of the securities transfer assoaatlon Registered Owner appeanng on recogmzed signature guarantee the face of this Certificate program Section 8 TAX LEVY A special Interest and Smhng Fund (the "Interest and Smkang Fund") Is hereby created solely for the benefit of the Cemficates, and the Interest and Smlang Fund shall be estabbshed and m/untamed by the Issuer at an official depository bank of the Issuer A Mandatory Redemption Account is hereby estabhshed vathm the Interest and Smhng Fund The Interest and Slnhng 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 pnnclpal 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 Smhng Fund Dunng each year while any of the Certificates or interest thereon are outstanding and unpond, the governing body of the Issuer shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to r/use and produce the money required to pay the interest on the Certificates as such interest becomes due, and to provide and mamt/un a sinking fund adequate to pay the pnnc~pal of its Certificates as such 20 principal,matures (but never less than 2% of the original pnnclpal 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 matunng February 15, 2016 and February 15, 2018 as set forth in the Form of Imtlal 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 le,aed, 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 pnnclpal of the Certificates, as such Interest comes due and such pnnclpallmatures, are hereby pledged for such payment, vathln the hnut prescribed by law Section 9 SURPLUS REVENUES The Certificates additionally shall be payable from and secured by surplus revenues, to the extent hereinafter pernutted, derived by the Issuer from the ownership and operation of the Issuer's Utility System (consisting of ItS combined waterworks system, samtary sewer system, and electnc light and power system) remaimng after (a) payment of all amounts con~tutmg operation and maintenance expenses of said Utility System, and Co) 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 00 all other obligations not on a panty vath the Certificates, which are payable from and secured by any Utility System revenues, and (c) payment of all amounts payable from any Utlhty System revenues pursuant to contracts heretofore or hereafter entered into by the Issuer in accordance w~th law (the "Surplus Revenues") If, for any reason, the Issuer falls to deposit ad valorem taxes lewed pursuant to Section 8 hereof to the credit of the Interest and Sinking Fund Lq an amount sufficient to pay, when due, the pnncipal of and interest on the Cextliicates, 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 pnncipal and/or interest A maximum aggregate of $10,000 of Surplus Revenues may be used to pay pnnclpal and/or interest on the Certificates and any obligations on a panty therewith The Certificates and any obligations on a panty tllerevath are not, and shall not be deemed to be, payable from or secured by any Surplus Revenues m excess of an aggregate orS10,000 Untd and unless an aggregate of $10,000 of Surplus Revenues actually Is used to pay any such pnnclpal and/or interest, additional obligations, payable from and secured by all or any remaimng unused part of smd 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 fi'om and sent/red equally and ratably by all or any remaimng unused part of said aggregate The Issuer reserves, and shall have, the right to issue bonds, and other obhgatlons not on a panty with the Certificates, and to enter into contracts, In accordance w~th applicable laws, to be payable from end secured by any Utlhty System revenues other than the aggregate of $10,000 of Surplus Revenues as descnbed above The Certificates are on a panty vath those Issues of CIty of Dent°n Certificates °f Obligation, Series 1987, Series 1989, Series 1989-A, Series 1991, Series 1992, Senes 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 prmapal and/or interest on the Outstanding Certificates Section l0 DEFEASANCE OF CERTIFICATES (a) Any Certificate and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a 'Defeased Certificate") vnthm the meamng of this Ordinance, except to the extent prowded in subsection (d) of this Section, when payment oftha pnnapal of such Cert~cate, plus interest thereon to the due date either (0 shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably depositing with or malang available to the Paying A~ent/Re~s~rar for such payment (1) lawful money of the Umted States of America sufficient to make such payment or (2) Government Obligations which mature as to pnnapal and interest in such amounts and at such times as will insure the availability, vnthout remvestment, of sufficient money to prowde 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 afore~d, such CeW. ficate and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein lewed and pledged as provided m this Ordinance, and such pnncipal and interest shall be payable solely from such money or Government Obligations (b) Any moneys so deposited with the Paying AgenffReg~strar may at the wntten direction of the Issuer also be invested in Government Obligations, matunng 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 pnnclpal of and interest on which are unconditionally guaranteed by the Umted States of America, which may be Umted States Treasury obhgations 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 serwces of Paying Agent/Registrar for such Defeased Certificates the same as fi`they had not been defeased, and the Issuer shall make proper arrangements to prowde and pay for such services as required by this Ordinance Section 11 DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES (a) P.e?lscement Certificates In the event any outstanding Certificate is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be pnnted, executed, and delivered, a new certificate of the same pnnclpal 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) Apphcation 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 ora Certificate, the registered owner applying for a replacement certificate shall furmsh to the Issuer and to the Paying AgentJROijstrar such security or mdemruty as may be requu'ed by them to save each of them harmless from any,loss or damage w~th respect thereto Also, in every case of loss, theft, or destruction ora Certificate, the registered owner shall furmsh to the Issuer and the Paying Agent/Registrar evtdence to their satlsf'actlon 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) ~ Notvnthstandmg the foregoing provis~ons oftlus Section, m the event of any such Certificate shall have matured, and no default has occurred which is then contmmp~ m the payment of the pnnclpal of, or interest on the Certificate, the Issuer may anthonze the payment of the same (w~thout surrender thereof except in the case of a damaged or mutilated Certificate) mstead of issuing a replacement Certificate, provided security or lndemmty is furmshed as above prowded in this Section (d) Char_~e for Issum_~ Replacement Certificates Prior to the issuance of any replacement certificate, the Paying Agent/Registrar shall charge the registered owner of such Certificate w~th all legal, printing, and other expenses in connection therewith Every replacement certificate issued pursuant to the prowsions of this Section by v~rtue 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 entatled to all the benefits ofttus Ordinance equally and proportionately voth any and all other Certificates duly issued under flus Ordinance (e) Al~thontv for Issulnc, Replacement Certificates In accordance wth Section 6 of Vemon's Ann Tex Clv St Art 717k-6, th~s Section of this Ordinance shall constitute authority for the issuance of any such replacement certificate w~thout necessity of further action by the govermng 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 pertmmng to the Imtlal 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 Pubhc Accounts (or a deputy designated in writing to act for smd Comptroller) shall manually s~gn the Comptroller's Registration Certificate on the Initial Certificate, and the seal of smd Comptroller shall be ~mpressed, or placed in facsimile, on 23 the Initial Certificate The approving legal oplmon 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 m eonvemon of and exchange or replacement of any Certificate, but neither .,hall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Cemfieates The preamble to this Ordinance is hereby adopted and made a pan hereof for all purposes If insurance is obtained on any of the Certificates, the Imual Certificate and all other Certificates shall bear an appropriate legend concermng Insurance as prowded by the insurer Section 13 COVENANTS REGARDING TAX-EXEMPTION The Issuer covenants to refrain fi.om tal~ng any action whmh would adversely affect, and to take any action required to ensure, the treatment of the Certificates as obligations desenbed in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on wl~ch 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, ffany) 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 therewth are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under ~he terms of flus Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt serwce on the Certificates, m 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 m subsection (a) harenfexceeds $ percent of the proceeds of the Certificates or the project financed therewith (less amounts deposited rotc a reserve fund, if any) then the amount m excess of 5 percent is used for a "private business use" wbach is "related" and not "&spropomonate", withn the meamng 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 Cemficates (less amounts deposited into a reserve fund, ffany) is directly or indirectly used to finance loans to persons, other than state or local governmental umts, in contravention of section 141 (c) of the Code, (d) to reft.mn fi.om taking any action which would otherwise result m the Certificates being treated as "pnvate acttwty bonds" within the meaning of sectton 141 (b) of the Code, (e) to refrain fi.om taking any action that would result in the Certificates being "federally guaranteed" vathm the meaning of section 149(b) of the Code, 24 (f) to reft'am from using any portion r fthe proceeds of the Certificates, directly or indirectly, to acclutre or to replace funds which v 'ere used, directly or indirectly, to acquire investment property (as defined m section 148Co)(2 ~ of the Code) which produces a materially lugher y~eld over the term of the Certificates, other hah investment property acquired with -- (1) proceeds of the Ce~rficates nvested for a reasonable temporary period of 3 years or less, or in the case of a refu~ idlng 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 m a bona fide debt service fund, within the meamng of section 1 148-1(b) of the Treasury Rel ~ulatlons, and (3) amounts deposited m any ~ .'asonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated principal amount (or, in the case ora discount, the issue price) of the Certificates, (g) to otherwise restrict the use of th ~ proceeds of the Certificates or amounts treated as proceeds of the Certificates, as may b,: necessary, so that the Certificates do not otherwise contravene the requirements of sectlop 148 of the Code (relating to arbitrage), Section 149(8) of the Code (relating to hedge bonds), and, to the extent applicable, section 149(d) of the Code (relating to advance refundings), and ! (h) to pay to the United States of ~A~nerica at least once during, each five-year period (begmmng on the date of dehvery of the C .'rtlficates) an amount that is at least equal to 90 percent of the "Excess Earmngs", within the ~ neamng of section 148(0 of the Code and to pay to the United States of.America, not later tl~ at 60 days after the Certificates have been paid in full, 100 percent of the amount then require to he prod as a result ofExcass Earrangs under section 148(0 of the Code The Issuer understands that the term "proceeds*' ~cludes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refundm ~ bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds It is the understanding of the Issuer that the covenants contame( herein are intended to assure compliance with the Code and any regulations or rulings promulgat~ by the U S Department of the Treasury pursuant thereto In the event that regulations or ruhng. ~re hereafter promulgated which modify, or expand provisions of the Code, as applicable to the Ce~ ficates, the Issuer will not be required to comply with any covenant contained herein to the extent 1 hat such modification or expnasion, in the opinion ofrmUonally-recogmzed bond counsel, will not a lversely affect the exemption from federal income taxation of interest on the Certificates under se ~tion 103 of the Code In the event that regulations or rulings are hereafter promulgated which repose additional requirements which are applicable to the Certificates, the Issuer agrees to com[ ly with the additional requirements to the extent necessary and reasonably possible, in the opinion ~f nationally-recogmzed bond counsel, to preserve*the exemption from federal income taxation of mt ,rest on the Certificates under section 103 of the Code In furtherance of such intention, the Issuer [ ereby authorizes and directs the Mayor of 25 the Issuer to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, wluch may be permitted by the Code as are consistent w~th the purpose for the issuance of the Certificate In order to facd~tate compliance w~th the above covenant (h), a "Rebate Fund" is hereby estabhshed by the Issuer for the sole benefit oftbe United States of America, and such fund shall not be subject to the claim of any other person, including w~thout hmltation, the owners of the CerUficates TheRebateFund~sestabhshedfortheadd~tionalpurposeofcomphancew~thSectlon 148 of the Code Section 14 SALE OF INITIAL CERTIFICATE The Imtlal Certificate Is hereby sold and shall be delivered to Salomon Snuth Barney, for cash for the par value thereof and accrued interest thereon to date of dehvery, plus a cash preanum of $1,279 20 It is hereby officially found, deter- nuned, and declared that the Imtlal Certificate has been sold at public sale to the b~dder offenng the lowest interest cost, aider receiving sealed b~ds pursuant to an Official Not~ce 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 B~ddlng 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, detemuned, and declared that the statements and representations contmned m smd Officml Notice of Sale and Official Statement are true and correct in all material respects, to the best knowledge and behefofthe City Councd and the Issuer Section 15 ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROIECT The Issuer covenants to account for the expenditure of sale proceeds and investment earmngs to be used for the purposes described m Section 1 oftlus Ordinance (the "Project") on its books and records by allocating proceeds to expenditures w~thln 18 months of the later of the date that (1) the expenditure ~s made, or (2) the Project is completed The foregoing notwithstanding, the Issuer shall not expend sale proceeds or investment earmngs thereon more than 60 days after the earher of(l) the fifth anmversary of the dehvery of the Certificates, or (2) the date the Certificates are retired, unless the Issuer obtams an op~mon of natlonally-recogmzed bond counsel that such expenditure wdl not adversely affect the tax-axempt status of the Certificates For purposes hereof, the Issuer shall not be obhgated to comply voth tlus covenant ~f~t obtains an opinion that such fmlure to comply w~ll not adversely affect the excludabd~ty for federal income tax purposes from gross income of the interest Section 16 DISPOSITION OF PRO~ECT The Issuer covenants that the property constituting the Project wdl not be sold or otherwise &sposed in a transaction resulting m the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an oplmon of nationally- recognLzed bond counsel that such sale or other disposition w~ll not adversely affect the tax-exempt status oftbe Certificates Section 17 INTEREST EARNINGS ON CERTIFICATE PROCEEDS Interest earnings derived from the investment of proceeds from the sale of the Imtlal Certificate shall be used along with other proceeds for the purposes for which the Certificates are issued, prowded that after 26 completion of such purposes, if any of such interest earnings remain on hand, such interest earmngs shall be deposited m the Interest and Smkmg Fund It is further provided, however, that any interest earmngs on certificate proceeds which are required to be rebated to the Umted States of America pursuant to Section 13 hereof in order to prevent the Certificates from being "arbitrage bonds" w~tlun the meaning oftbe Code shall be so rebated and not considered as interest earmngs for the purposes of this Section Section 18 DTC REGISTRATION The Certificates lmt~ally shall be issued and delivered m such manner that no physical distribution of the Certificates wall be made to the public, and The Depository Trust Company ("DTC"), New York, New York, imtially wall act as depository for the Certificates DTC has represented that It Is a limited purpose trust company incorporated under the laws oftbe State of New York, a member of the Federal Reserve System, a "cleanng corporation" wathn the meamng of the New York Umform Commercial Code, and a "clearing agency" registered under Section 17A of the federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but m no way verifies, such representations The Imtlal Certificate authorized by tlus Ordinance shall be delivered to and registered m the name of the Purchaser However, n Is a condition of delivery and sale that the Purchaser, immediately after such delivery, shall cause the Paymg Agent/Registrar, as prowded for m tbas Ordinance, to cancel smd Imtlal Certificate and deliver m exchange therefor a substitute Certificate for each maturity of such Imtlal Certificate, wath each such substitute Certificate to be registered in the name of CEDE & CO, the nonunee of DTC, and ~t shall be the duty of the Paymg Agent/Registrar to take such action It is expected that DTC wall hold the Certdicates on behalf of the Purchaser and/or the DTC Participants, as defined and described m the Officual Statement referred to and approved m Section 14 bereof (tbe "DTC Participants") So long as each Certificate is registered in the name of CEDE & CO, the Paymg Agent/Registrar shall treat and deal wath DTC m all respects the same as if it were the actual and beneficial owner thereof It Is expected that DTC will mmntam a hook entry system wluch will identify beneficial ownerslup of the Certificates by DTC Participants m Integral amounts of $$,000, vnth transfers of ownerstup being effected on the records of DTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Certificates imtially deposited with DTC shall be immobfltzed and not be further exchanged for substitute Certificates except as heremaf~er provided The Issuer is not responsible or liable for any functions of DTC, vnll not be responsible for paymg any fees or charges w~th respect to Its serwces, wall not be responsible or l~able for mmntaimng, super~smg, or reviewmg the records of DTC or the DTC Participants, or protecting any interests or nffhts ofibe beneficial owners of the Certificates It shall be the duty of the Purchaser and the DTC Participants to make all arrangements w~th DTC to establish flus book-entry system, the beneficial ownership of the Certificates, and the method ofpaymg the fees and charges of DTC The Issuer does not,represent, nor does it m any way covenant that the m~tlal book-antry system established wath DTC w~]l be mmntamed in the future The Issuer reserves the right and option at any time in the future, m its sole discretion, to terminate the DTC (CEDE & CO ) book-entry only registration reqtnrement descnbed above, and to pertmt 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 Paymg Agent/Registrar and to DTC, and thereafter the Paymg Agant/Reglstrar shall, upon presentation and proper request, register any Certificate in any name as prosnded for m tbs Ordmance Notvnthstandmg the watial estabhshment of the foregomg book-entry system v~th DTC, tffor any reason any oftbe originally delivered substitute Certificates is duly filed 27 vath the Paying A~ent/Rei~strar vath proper request for transfer and substitution, as provided for in this Ordllaauce, substitute Certificates will be duly delivered as provided in this Ordinance, and there will be no assurance or representation that any book-antry system vail be mmntmned for such Certificates Section 19 COMPLIANCE WITH RULE 15c2-12 (a) AnnualRe.oorts. (0 Thelssuer shall provide annually to each NRMSIR and any SID, vathin slx months a/ret the and of each fiscal year ending in or after 1998, financial reformation and operating data vath respect to the Issuer of the general type mchided m the final Official Statement authonzed by Section 14 of this Ordinance, being the mforlllatlon descnbed in E~b~t A hereto, which Exhibit is attached to and Incorporated in this Ordinance as ~fwntten word for word hereto Any financial statements so to be provided shall be (1) prepared m accordance vath the accounting pnnciples described in Exhibit A hereto, or such other accounting pnnaplas 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 dunng which they must be provided If the audit of such financial statements is not complete vathin such period, then the Issuer shall provide unaudited financial statements by the required tune and vail pro,nde 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 0I) 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 othervase would be required to pro,nde financial information and operating data pursuant to tins Section The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any documer~t (including an offiaal statement or other offenng document, if it IS available from the MSRB) ~hat theretofore has been prowded to each NRMSIR and any SID or filed vath the SEC (b) ~ The Issuer shall notify any S[D and either each NRMSIR or the MSRB, In a timely manner, of any of the follovang events vath respect to the Certificates, if such event is material vothin the meaning of the federal securities laws 1 Pnnclpal and interest payment delinquencies, 2 Non-payment related defaults, 3 Unscheduled draws on debt serwce reserves reflecting financial difficulties, 4 Unscheduled draws on credit enhancements reflecting financial difficulties, 5 Substitution of credit or liquidity providers, or their failure to perform, 6 Adverse tax opinions or events affecting the tax-exempt status of the Certificates, 28 7 Modifications to rights of holders of the Certificates, 8 Certificate calls, 9 Defeasances, 10 Release, substitution, or sale of property secunng repayment of the Certificates, and 11 Rating changes The Issuer shall notl~j any SID and either each NPdvlSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide tinancud information or operating data In accordance with subsection (a) of this Section by the time required by such subsection (c) IJ~m~tatlons. Disclaimers. and Amendments. (0 The Issuer shall be obligated to observe and perform the covenants specLfied m this Section for so long as, but only for so long as, the Issuer remains an "obhgated person" vath respect to the Certificates within the meaning of the Rule, except that the Issuer in any event will g~ve 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" (ii) 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 gtve any benefit or any legal or equitable right, remedy, or clmm hereunder to any other person The Issuer undertakes to provide only the iinancml reformation, operating data, financial statements, and notices winch 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 prowded in accordance with this Section or otherwise, except as expressly provided herein The Issuer does not make any representation or warranty concermng such information or its usefulness to a dec0alon to invest in or sell Certificates at any future date (tn) UNDERNO 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 obsennng or perfomung 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 flus Section is intended or shall act to discla~m, waive, or otherwise limit the duties of the Issuer under federal and state securities laws 29 (v) Tho prowslons of this Section may be mended by the Issuer from time to tlme to adapt to changed cn'cumstances that arise from a change m legal reqmrements, a change ~n law, or a change m the Identity, nature, status, or type of operations of the Issuer, but only if(l) the provaslons ofth~s Sectlon,~as so amended, would have perrmtted an underwriter to purchase or sell Certificates In the primary off'enng of the Ce~ficates m compliance wath the Rule, taking into account any amendments or mterpl~at~ons of the Rule since such offering as well as such changed circumstances and (2) e~ther (a) the registered owners of a majority m aggregate pnnclpal amount (or any greater amount required by any other provision of tlus Ordinance that authorizes such an amendment) of the outstanding Certificates consent to such amendment or (b) a person that is unaffiliated wath the Issuer (such as nanonally recognized bond counsel) deternuned that such amendment wall not materially impmr the ~nterest of the registered owners and beneficml owners of the Certificates If the Issuer so amends the provisions of tins Section, It shall include wath any amended financial information or operating data next prowded m accordance wath subsection (a) ofttus Section an explanation, ~n narrative form, of the reason for the amendment and of the impact of any change ~n the type of financml Information or operating data so provided The Issuer may also amend or repeal the prowslons of tl'us continuing disclosure agreement ~fthe SEC amends or repeals the applicable proxnslon of the Rule or a court of final jurisdiction enters judgment that such proxaslons of the Rule are ~nval~d, but only ~f and to the extent that the provisions oftlus sentence would not prevent an underwriter from lawfully purchasing or selhng Certificates m the primary offenng of the Certificates (d) ~ As used m this Section, the following terms have the meamngs ascribed to such terms below "MSRB" means the Municipal Securities Rulemalong Board '~qRMSIR'* means each person whom the SEC or its staffhas determined to be a nationally recogmzed municipal securities ~nformatlon repository wath~n the meamng of the Rule from t~me to t~me "Rule" means SEC Rule 15c2-12, as amended from time to time "SEC" means the United States Securities and Exchange Comnuss~on "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 ~ts staff to be, a state information depository wattun the meamng of the Rule from time to time Section 20 FURTHER PROCEDURES The Mayor of the Issuer, the C~ty 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 end tlungs and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalfofthe Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable m order to carry out the terms and provisions of this Certificate Ordman~e, the Certdicates, the sale of the Certificates, and the Notice of Sale and Official Statement, and the, Assistant C~ty Manager/Financa of the City shall cause the expenses of ~ssuance of the 30 Certificates to be paid from the pwceeds of sale of the Imtial Certificate or from other lawfully avadable 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 ar/d sufficient for all purposes the same as If such officer had remained in office until such delivery Section 21 OPEN MEETrNGS The C~ty Council has found and detemuned that the meeting at wluch th~s Ordinance ~s considered is open to the public and that not~ce thereof was g~ven m accordance with 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 munedmtely upon ~ts passage and approval 31 PASSED AND APPROVED th~s the 7th day of April, 1998 Jack eM~r~ayor ATTEST ~/nm fer~/~lt er~, ~2~ty-S ~r ei~ APPROVED AS TO LEGAL FORM Herbert L Prouty, City Attorney 32 EXHIBIT A DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following reformation is referred to in Section 19 oftlus Ordinance Annual Flnancial Statements and Operating Data The financial reformation and operating data vnth respect to the Issuer to be prowded annually in accordance vnth 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 pnnc~ples referred to in such Section are the accounting pnnclplas described in the notes to the financial statements referred to in the paragraph above LAW OFFICES M(~CALL, PARKHURST & HORTON L L P 600 CONGRESS AVENUE 717 NORTH HARWOOD 700 N ST MARYS STREET Apnl 7, 1998 Honorable Mayor and Council of the City of Denton Denton, Texas Ladies end Gentlemen Re City of Denton Cemficate of Obhgat~on, being thc "Imtinl Certificate" proposed to be authorized by the ordinance described below In comphence with Section 9 02 end Section 9 04 of the City Charter of the City of Denton, you are adwsed that the bids for the captioned Imual Cer+dficate received by thc City pursuent to its Official Statement end Notice of Sale end Bidding Instructions dated April 7, 1998, have been tabulated, end that we fred, based on calcelaUom performed by F~st Southwest Company, as financial advisor, that the bid of a syn&cnte managed or headed by the following SALOMON SMITH BARNEY w~th the installments of pnnclpal of the Imtinl Certificate to bear interest at the rates thereto specified, unth 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 end best bid received, end we recommend that it be accepted We further ceftin- that we have examined the ordinance (the "Certificate Or&nence") presently placed before the Mayor and Council for tbe purpose of authorizing the issuance, sale, and dehv~ of said Imtinl Certificate, and, in our opuuon, the said proposed Certificate Ordinence is legal, end the certificates to be issued thereunder wdl be general obligations of the City payable from ad valorem taxes levied end ordered to be levied against all taxable property m the City, within the lumt prescribed by law, and additionally are payable from end secured by ce~aln 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 CRy's combined waterworks system, sanitary sewer system, end electric light end power system) Respectfully,