2007-155ORDINANCE NO. 2007-155
AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED TO
THE ISSUANCE, SALE AND DELIVERY OF THE "CITY OF DENTON
CERTIFICATES OF OBLIGATION ($11,445,000), SERIES 2007"; AUTHORIZING TIE
ISSUANCE OF THE CERTIFICATES OF OBLIGATION; APPROVING AND
AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID
CERTIFICATES OF OBLIGATION; AND ENACTING OTHER PROVISIONS
RELATING TO THE SUBJECT.
THE STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON
WHEREAS, the Certificate of Obligation Act of 1971, Subchapter C of Chapter 271 of the Texas
Local Government Code, as amended (the "Act") permits the City to issue and sell for cash the Certificates of
Obligation hereinafter authorized; and
WHEREAS, the City has duly caused notice of its intention to issue the Certificates of Obligation
hereinafter authorized to be published at the times and in the manner required by the Act and no petition has
been filed protesting the issuance thereof, NOW, THEREFORE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
Section 1. AMOUNT AND PURPOSE OF THE CERTIFICATES. The certificate or certificates
of the City of Denton, Texas (the "Issuer") are hereby authorized to be issued and delivered in the aggregate
principal amount of $11,445,000, for the purpose of paying all or a portion ofthe City's contractual obligations
incurred pursuant to contracts for the purchase of certain real and personal property, to-wit: (a) design,
construction and equipping of a public safety training facility; (b) renovations and improvements to existing
City buildings, including the acquisition and installation of replacement heating, venting and air conditioning
equipment; (c) improvements to the City's solid waste disposal system and acquisition of related equipment;
(d) acquisition and installation of security, multi-media and other technology equipment for City buildings,
including the municipal court in City Hall East; (e) acquisition of fire engines and vehicles and equipment for
the City's motor pool; (f) construction and equipping of a multi-modal transit station; and also for the purpose
of paying all or a portion of the City's contractual obligations for professional services, including engineers,
architects, attorneys, map makers, auditors, and financial advisors, in connection with the preparation of the
City's Capital Improvement Plan (including an animal services facilities master plan), and with said Certificates
of Obligation.
Section 2. DESIGNATION OF THE CERTIFICATES. Each certificate issued pursuant to this
Ordinance shall be designated: "CITY OF DENTON CERTIFICATE OF OBLIGATION, SERIES 2007",
and initially there shall be issued, sold, and delivered hereunder a single fully registered certificate, without
interest coupons, payable in installments of principal (the "Initial Certificate"), but the Initial Certificate may
be assigned and transferred and/or converted into and exchanged for a like aggregate principal amount of fully
registered certificates, without interest coupons, having serial maturities, and in the denomination or
denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided. The term
"Certificates" as used in this Ordinance shall mean and include collectively the Initial Certificate and all
substitute certificates exchanged therefor, as well as all other substitute certificates and replacement certificates
issued pursuant hereto, and the term "Certificates" shall mean any of the Certificates.
Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL
REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL CERTIFICATE.
(a) The Initial Certificate is hereby authorized to be issued, sold, and delivered hereunder as a
single fully registered Certificate, without interest coupons, dated July 15, 2007, in the denomination and
aggregate principal amount of $11,445,000, numbered R-1, payable in annual installments of principal to the
initial registered owner thereof, to-wit:
RBC DAIN RAUSCHER INC.
or to the registered assignee or assignees of said Certificate or any portion or portions thereof (in each case,
the "registered owner"), with the annual installments of principal of the initial Certificate to be payable on the
dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL
CERTIFICATE set forth in this Ordinance.
(b) The Initial Certificate (i) may or shall be prepaid or redeemed prior to the respective scheduled
due dates of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and
exchanged for other Certificates, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the
principal of and interest on the Initial Certificate shall be payable, all as provided, and in the manner required
or indicated, in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance,
Section 4. INTEREST. The unpaid principal balance of the Initial Certificate shall bear interest from
the date of the Initial Certificate to the respective scheduled due dates of the installments of principal of the
Initial Certificate, and said interest shall be payable, all in the manner provided and at the rates and on the dates
stated in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance.
Section 5. FORM OF INITIAL CERTIFICATE. The form of the Initial Certificate, including the
form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed
on the Initial Certificate, shall be substantially as follows.
NO. R-1
FORM OF INITIAL CERTIFICATE
$11,445,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON CERTIFICATE OF OBLIGATION
SERIES 2007
THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of
the State of Texas, hereby promises to pay to
or to the registered assignee or assignees of this Certificate or any portion or portions hereof (in each case, the
"registered owner") the aggregate principal amount of
$11,445,000
(ELEVEN MILLION FOUR HUNDRED FORTY FIVE THOUSAND DOLLARS)
in annual installments of principal due and payable on February 15 in each of the years, and in the respective
principal amounts, as set forth in the following schedule, and to pay interest, from the date of this Certificate
hereinafter stated, on the balance of each such installment of principal, respectively, from time to time
remaining unpaid, at the rates per annum as follows:
PRINCIPAL
INTEREST
YEAR
AMOUNT
RATE(%)
YEAR
2008
$945,000
5.000
2018
2009
1,035,000
5.000
2019
2010
1,080,000
5.000
2020
2011
1,145,000
5.000
2021
2012
1,195,000
5.000
2022
2013
495,000
5.000
2023
2014
515,000
5.000
2024
2015
545,000
5.000
2025
2016
570,000
4.500
2026
2017
595,000
4.500
2027
PRINCIPAL INTEREST
AMOUNT RATE(%)
$270,000
4.500
280,000
4.500
295,000
4.500
305,000
4.600
320,000
4.600
335,000
4.625
355,000
4.625
370,000
4.700
390,000
4.700
405,000
4.700
Interest shall first be due and payable on February 15, 2008, and semiannually on each August 15 and
February 15 thereafter while this Certificate or any portion hereof is outstanding and unpaid. Said interest shall
be calculated on the basis of a 360-day year composed of twelve 30-day months.
THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Certificate are payable
in lawful money of the United States of America, without exchange or collection charges. The installments of
principal and the interest on this Certificate are payable to the registered owner hereof through the services of
THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS,
which is the "Paying Agent/Registrar" for this Certificate. Payment of all principal of and interest on this
Certificate shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and/or
interest payment date by check dated as of such date, drawn by the Paying Agent/Registrar on, and payable
solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Certificate (the
"Certificate Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter pro-
vided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first-class postage
prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of
the registered owner, as it appeared at the close of business on the last day of the month next preceding each
such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter
described. The Issuer covenants with the registered owner of this Certificate that on or before each principal
and/or interest payment date for this Certificate it will make available to the Paying Agent/Registrar, from the
"Interest and Sinking Fund" created by the Certificate Ordinance, the amounts required to provide for the
payment, in immediately available funds, of all principal of and interest on this Certificate, when due.
IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days
thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the
Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer,
Notice ofthe Special Record Date and ofthe scheduled payment date ofthe past due interest ("Special Payment
Date", which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business
days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each
Holder of a Certificate appearing on the registration books of the Paying Agent/Registrar at the close of
business on the 15th business day next preceding the date of mailing of such notice.
IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday,
Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar
is located are authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made on the original
date payment was due.
THIS CERTIFICATE has been authorized in accordance with the Constitution and laws of the State
of Texas in the principal amount of $11,445,000 for the purpose of paying all or a portion of the City's
contractual obligations incurred pursuant to contracts for the purchase of certain real and personal property,
to-wit: (a) design, construction and equipping of a public safety training facility; (b) renovations and
improvements to existing City buildings, including the acquisition and installation of replacement heating,
venting and air conditioning equipment; (c) improvements to the City's solid waste disposal system and
acquisition of related equipment; (d) acquisition and installation of security, multi-media and other technology
equipment for City buildings, including the municipal court in City Hall East; (e) acquisition of fire engines
and vehicles and equipment for the City's motor pool; (f) construction and equipping of a multi-modal transit
station; and also for the purpose of paying all or a portion ofthe City's contractual obligations for professional
services, including engineers, architects, attorneys, map makers, auditors, and financial advisors, in connection
with the preparation of the City's Capital Improvement Plan (including an animal services facilities master
plan), and with said Certificates of Obligation.
ON FEBRUARY 15, 2017, or on any date whatsoever thereafter, the unpaid installments of principal
of this Certificate of Obligation may be prepaid or redeemed prior to their scheduled due dates, at the option
of the Issuer, with funds derived from any available source, as a whole, or in part, at the prepayment or
redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for prepayment
or redemption. If less than all of the Certificates are to be redeemed, the Issuer may select the maturities of
the Certificates to be redeemed. If less than all of the Certificates of any maturity are to be redeemed, the
Paying Agent/Registrar shall determine by lot the Certificates, or portions thereof, within such maturity to be
redeemed.
AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice
of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner hereof.
By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the
Paying Agent/Registrar for the payment of the required prepayment or redemption price for this Certificate or
the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for
prepayment or redemption. If such written notice of prepayment or redemption is given, and if due provision
for such payment is made, all as provided above, this Certificate, or the portion thereof which is to be so
prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due
date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded
as being outstanding except for the right ofthe registered owner to receive the prepayment or redemption price
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plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of
the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all
such prepayments or redemptions of principal of this Certificate or any portion hereof.
THIS CERTIFICATE, to the extent of the unpaid principal balance hereof, or any unpaid portion
hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be
transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the
capacity of registrar for the Certificates, upon the terms and conditions set forth in the Certificate Ordinance.
Among other requirements for such transfer, this Certificate must be presented and surrendered to the Paying
Agent/Registrar for cancellation, together with proper instruments of assignment, in form and with guarantee
of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner
of this Certificate, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or
assignees in whose name or names this Certificate or any such portion or portions hereof is or are to be trans-
ferred and registered. Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar
may be used to evidence the assignment of this Certificate or any such portion or portions hereof by the initial
registered owner hereof. A new certificate or certificates payable to such assignee or assignees (which then
will be the new registered owner or owners of such new Certificate or Certificates) or to the initial registered
owner as to any portion of this Certificate which is not being assigned and transferred by the initial registered
owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this Certificate or
any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for
the conversion and exchange of this Certificate or any portion hereof. The registered owner of this Certificate
shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all
purposes, including payment and discharge of liability upon this Certificate to the extent of such payment, and
the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary.
AS PROVIDED above and in the Certificate Ordinance, this Certificate, to the extent of the unpaid
principal balance hereof, may be converted into and exchanged for a like aggregate principal amount of fully
registered certificates, without interest coupons, payable to the assignee or assignees duly designated in writing
by the initial registered owner hereof, or to the initial registered owner as to any portion of this Certificate
which is not being assigned and transferred by the initial registered owner, in any denomination or
denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each
substitute certificate issued in exchange for any portion of this Certificate shall have a single stated principal
maturity date), upon surrender of this Certificate to the Paying Agent/Registrar for cancellation, all in
accordance with the form and procedures set forth in the Certificate Ordinance. If this Certificate or any
portion hereof is assigned and transferred or converted each certificate issued in exchange for any portion
hereof shall have a single stated principal maturity date corresponding to the due date of the installment of
principal of this Certificate or portion hereof for which the substitute certificate is being exchanged, and shall
bear interest at the rate applicable to and borne by such installment of principal or portion thereof. No such
certificate shall be payable in installments, but shall have only one stated principal maturity date. AS
PROVIDED IN THE CERTIFICATE ORDINANCE, THIS CERTIFICATE IN ITS PRESENT FORM
MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more
assignees, but the certificates issued and delivered in exchange for this Certificate or any portion hereof may
be assigned and transferred, and converted, subsequently, as provided in the Certificate Ordinance. The Issuer
shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and
exchanging this Certificate or any portion thereof, but the one requesting such transfer, conversion, and
exchange shall pay any taxes or governmental charges required to be paid with respect thereto. The Paying
Agent/Registrar shall not be required to make any such assignment, conversion, or exchange during the period
commencing with the close of business on any Record Date and ending with the opening of business on the next
following principal or interest payment date.
IN THE EVENT any Paying Agent/Registrar for this Certificate is changed by the Issuer, resigns, or
otherwise ceases to act as such, the Issuer has covenanted in the Certificate Ordinance that it promptly will
appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof
to be mailed to the registered owner of this Certificate.
IT IS HEREBY certified, recited, and covenanted that this Certificate has been duly and validly
authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist,
and be done precedent to or in the authorization, issuance, and delivery of this Certificate have been performed,
existed, and been done in accordance with law; that this Certificate is a general obligation of the Issuer, issued
on the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment of
the interest on and principal of this Certificate, as such interest comes due and such principal matures, have
been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged
irrevocably for such payment, within the limit prescribed by law; and that, together with other parity
obligations, this Certificate additionally is payable from and secured by certain surplus revenues (not to exceed
$10,000 in aggregate amount) derived by the Issuer from the ownership and operation of the City's Utility
System (consisting of the City's combined waterworks system, sanitary sewer system, and electric light and
power system), all as provided in the Certificate Ordinance.
THE ISSUER has reserved the right to issue, in accordance with law, and in accordance with the
Certificate Ordinance, other and additional obligations, and to enter into contracts, payable from ad valorem
taxes and/or revenues of the City's Utility System, on a parity with, or with respect to said revenues, superior
in lien to, this Certificate.
BY BECOMING the registered owner of this Certificate, the registered owner thereby acknowledges
all of the terms and provisions of the Certificate Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Certificate Ordinance is duly recorded and available for inspection in the official minutes
and records of the governing body of the Issuer, and agrees that the terms and provisions of this Certificate and
the Certificate Ordinance constitute a contract between the registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the manual or
facsimile signature of the Mayor of the Issuer and countersigned and attested with the manual or facsimile
signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed, or
placed in facsimile, on this Certificate, and has caused this Certificate to be dated July 15, 2007.
ATTEST: CITY OF DENTON, TEXAS
By:
Jennifer Walters
City Secretary, City of Denton, Texas
By:
Perry R. McNeill
Mayor, City of Denton, Texas
(CITY SEAL)
(INSERT BOND INSURANCE LEGEND, IF ANY)
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Certificate has been examined, certified as to validity, and approved by the
Attorney General of the State of Texas, and that this Certificate has been registered by the Comptroller of
Public Accounts of the State of Texas.
Witness my signature and seal this
Comptroller of Public Accounts
of the State of Texas
(COMPTROLLER'S SEAL)
Section 6. ADDITIONAL CHARACTERISTICS OF THE CERTIFICATES. Registration and
Transfer. (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of THE BANK
OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS (the "Paying
Agent/Registrar") books or records of the registration and transfer of the Certificates (the "Registration
Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep
such books or records and make such transfers and registrations under such reasonable regulations as the Issuer
and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfers and
registrations as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books
the address of the registered owner of each Certificate to which payments with respect to the Certificates shall
be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying
Agent/Registrar in writing ofthe address to which payments shall be mailed, and such interest payments shall
not be mailed unless such notice has been given. The Issuer shall have the right to inspect the Registration
Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar
shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their
inspection by any other entity. Registration of each Certificate may be transferred in the Registration Books
only upon presentation and surrender of such Certificate to the Paying Agent/Registrar for transfer of
registration and cancellation, together with proper written instruments of assignment, in form and with
guarantee of signatures satisfactory to the Paying Agent/Registrar, (i) evidencing the assignment of the
Certificate, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and
(ii) the right of such assignee or assignees to have the Certificate or any such portion thereof registered in the
name of such assignee or assignees. Upon the assignment and transfer of any Certificate or any portion
thereof, a new substitute Certificate or Certificates shall be issued in conversion and exchange therefor in the
manner herein provided. The Initial Certificate, to the extent of the unpaid principal balance thereof, may be
assigned and transferred by the initial registered owner thereof once only, and to one or more assignees
designated in writing by the initial registered owner thereof. All Certificates issued and delivered in conversion
of and exchange for the Initial Certificate shall be in any denomination or denominations of any integral
multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Certificate shall have a
single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE
CERTIFICATE set forth in this Ordinance, and shall have the characteristics, and may be assigned,
transferred, and converted as hereinafter provided. If the Initial Certificate or any portion thereof is assigned
and transferred or converted the Initial Certificate must be surrendered to the Paying Agent/Registrar for
cancellation, and each Certificate issued in exchange for any portion of the Initial Certificate shall have a single
stated principal maturity date, and shall not be payable in installments; and each such Certificate shall have
a principal maturity date corresponding to the due date of the installment of principal or portion thereof for
which the substitute Certificate is being exchanged; and each such Certificate shall bear interest at the single
rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged.
If only a portion of the Initial Certificate is assigned and transferred, there shall be delivered to and registered
in the name of the initial registered owner substitute Certificates in exchange for the unassigned balance ofthe
Initial Certificate in the same manner as if the initial registered owner were the assignee thereof. If any
Certificate or portion thereof other than the Initial Certificate is assigned and transferred or converted each
Certificate issued in exchange therefor shall have the same principal maturity date and bear interest at the same
rate as the Certificate for which it is exchanged. A form of assignment shall be printed or endorsed on each
Certificate, excepting the Initial Certificate, which shall be executed by the registered owner or its duly
authorized attorney or representative to evidence an assignment thereof. Upon surrender of any Certificates
or any portion or portions thereof for transfer of registration, an authorized representative of the Paying
Agent/Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered
substitute Certificate or Certificates, having the
characteristics herein described, payable to such assignee or assignees (which then will be the registered owner
or owners of such new Certificate or Certificates), or to the previous registered owner in case only a portion
of a Certificate is being assigned and transferred, all in conversion ofand exchange for said assigned Certificate
or Certificates or any portion or portions thereof, in the same form and manner, and with the same effect, as
provided in Section b(d), below, for the conversion and exchange of Certificates by any registered owner of
a Certificate. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for
making such transfer and delivery of a substitute Certificate or Certificates, but the one requesting such transfer
shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying
Agent/Registrar shall not be required to make transfers of registration of any Certificate or any portion thereof
during the period commencing with the close of business on any Record Date and ending with the opening of
business on the next following principal or interest payment date.
(b) Ownership of Certificates. The entity in whose name any Certificate shall be registered in the
Registration Books, at any time shall be deemed and treated as the absolute owner thereof for all purposes of
this Ordinance, whether or not such Certificate shall be overdue, and the Issuer and the Paying Agent/Registrar
shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium,
if any, and interest on any such Certificate shall be made only to such registered owner. All such payments
shall be valid and effectual to satisfy and discharge the liability upon such Certificate to the extent of the sum
or sums so paid.
(c) Payment of Certificates and Interest. The Issuer hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of and interest on the Certificates, and to
act as its agent to convert and exchange or replace Certificates, all as provided in this Ordinance. The Paying
Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar
with respect to the Certificates, and of all conversions and exchanges of Certificates, and all replacements of
Certificates, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled
payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special
Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such
interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment
date of the past due interest ("Special Payment Date", which shall be fifteen (15) days after the Special Record
Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first
class postage prepaid, to the address of each Holder of a Certificate appearing on the registration books of the
Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of
such notice.
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(d) Conversion and Exchange or Replacement; Authentication. Each Certificate issued and
delivered pursuant to this Ordinance, to the extent of the unpaid principal balance or principal amount thereof,
may, upon surrender of such Certificate at the principal corporate trust office of the Paying Agent/Registrar,
together with a written request therefor duly executed by the registered owner or the assignee or assignees
thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory
to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as
appropriate, be converted into and exchanged for fully registered certificates, without interest coupons, in the
form prescribed in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordinance, in the denomina-
tion of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each
substitute Certificate shall have a single stated maturity date), as requested in writing by such registered owner
or such assignee or assignees, in an aggregate principal amount equal to the unpaid principal balance or
principal amount of any Certificate or Certificates so surrendered, and payable to the appropriate registered
owner, assignee, or assignees, as the case may be. If the Initial Certificate is assigned and transferred or
converted each substitute Certificate issued in exchange for any portion of the Initial Certificate shall have a
single stated principal maturity date, and shall not be payable in installments; and each such Certificate shall
have a principal maturity date corresponding to the due date of the installment of principal or portion thereof
for which the substitute Certificate is being exchanged; and each such Certificate shall bear interest at the single
rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged.
If any Certificate or portion thereof (other than the Initial Certificate) is assigned and transferred or converted,
each Certificate issued in exchange therefor shall have the same principal maturity date and bear interest at the
same rate as the Certificate for which it is being exchanged. Each substitute Certificate shall bear a letter
and/or number to distinguish it from each other Certificate. The Paying Agent/Registrar shall convert and
exchange or replace Certificates as provided herein, and each fully registered certificate delivered in conversion
of and exchange for or replacement of any Certificate or portion thereof as permitted or required by any provi-
sion of this Ordinance shall constitute one of the Certificates for all purposes of this Ordinance, and may again
be converted and exchanged or replaced. It is specifically provided that any Certificate authenticated in
conversion of and exchange for or replacement of another Certificate on or prior to the first scheduled Record
Date for the Initial Certificate shall bear interest from the date of the Initial Certificate, but each substitute
Certificate so authenticated after such first scheduled Record Date shall bear interest from the interest payment
date next preceding the date on which such substitute Certificate was so authenticated, unless such Certificate
is authenticated after any Record Date but on or before the next following interest payment date, in which case
it shall bear interest from such next following interest payment date; provided, however, that if at the time of
delivery of any substitute Certificate the interest on the Certificate for which it is being exchanged is due but
has not been paid, then such Certificate shall bear interest from the date to which such interest has been paid
in full. THE INITIAL CERTIFICATE issued and delivered pursuant to this Ordinance is not required to be,
and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Certificate issued in
conversion of and exchange for or replacement of any Certificate or Certificates issued under this Ordinance
there shall be printed a certificate, in the form substantially as follows:
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Certificate has been issued under the provisions of the Certificate
Ordinance described on the face of this Certificate; and that this Certificate has been issued in conversion of
and exchange for or replacement of a certificate, certificates, or a portion of a certificate or certificates of an
issue which originally was approved by the Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas.
TIE BANK OF NEW YORK TRUST COMPANY,
NATIONAL ASSOCIATION, DALLAS, TEXAS,
. Paying Agent/Registrar
Dated
By
"Authorized Representative"
An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Certificate,
date and manually sign the above Certificate, and no such Certificate shall be deemed to be issued or
outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all
Certificates surrendered for conversion and exchange or replacement. No additional ordinances, orders, or
resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as
to accomplish the foregoing conversion and exchange or replacement of any Certificate or portion thereof, and
the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Certificates
in the manner prescribed herein. Pursuant to Chapter 1201, Texas Government Code, the duty of conversion
and exchange or replacement of Certificates as aforesaid is hereby imposed upon the Paying Agent/Registrar,
and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and
exchanged or replaced Certificate shall be valid, incontestable, and enforceable in the same manner and with
the same effect as the Initial Certificate which originally was issued pursuant to this Ordinance, approved by
the Attorney General, and registered by the Comptroller of Public Accounts. The Issuer shall pay the Paying
Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any
Certificate or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay
any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the
exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to
make any such conversion and exchange or replacement of Certificates or any portion thereof during the period
commencing with the close of business on any Record Date and ending with the opening of business on the next
following principal or interest payment date.
(e) In General. All Certificates issued in conversion and exchange or replacement of any other
Certificate or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the
principal of and interest on such Certificates to be payable only to the registered owners thereof, (ii) may or
shall be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be
converted and exchanged for other Certificates, (v) shall have the characteristics, (vi) shall be signed and
sealed, and (vii) the principal of and interest on the Certificates shall be payable, all as provided, and in the
manner required or indicated, in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordinance.
(f) Payment of Fees and Charges. The Issuer hereby covenants with the registered owners of the
Certificates that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for
its services with respect to the payment of the principal of and interest on the Certificates, when due, and (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 exchange of Certificates solely to the extent above
provided in this Ordinance.
(g) Substitute Paving Agent/Registrar. The Issuer covenants with the registered owners of the
Certificates that at all times while the Certificates are outstanding the Issuer will provide a competent and
legally qualified bank, trust company, financial institution, or other agency to act as and perform the services
of Paying Agent/Registrar for the Certificates under this Ordinance, and that the Paying Agent/Registrar will
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be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon
not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior
to the next principal or interest payment date after such notice. In the event that the entity at any time acting
as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise
cease to act as such, the Issuer covenants that it will promptly appoint a competent and legally qualified bank,
trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance.
Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar shall promptly transfer
and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating
to the Certificates, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any
change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the
new Paying Agent/Registrar to each registered owner of the Certificates, by United States mail, first-class
postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the
position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions
of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar.
Section 7. FORM OF SUBSTITUTE CERTIFICATES. The form of all Certificates issued in
conversion and exchange or replacement of any other Certificate or portion thereof, including the form of
Paying Agent/Registrar's Certificate to be printed on each of such Certificates, and the Form of Assignment
to be printed on each of the Certificates, shall be, respectively, substantially as follows, with such appropriate
variations, omissions, or insertions as are permitted or required by this Ordinance.
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 2007
INTEREST RATE MATURITY DATE DATED DATE CUSIP NO.
ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas
(the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to
or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount
of
and to pay interest thereon, calculated on the basis of a 360-day year composed of twelve 30-day months, from
July 15, 2007, to the maturity date specified above, at the interest rate per annum specified above; with interest
being first due and payable on February 15, 2008, and semiannually on each August 15 and February 15
thereafter, except that if the date of authentication of this Certificate is later than the first Record Date
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(hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding
the date of authentication, unless such date of authentication is after any Record Date (hereinafter defined) but
on or before the next following interest payment date, in which case such principal amount shall bear interest
from such next following interest payment date.
THE PRINCIPAL OF AND INTEREST ON this Certificate are payable in lawful money of the
United States of America, without exchange or collection charges. The principal of this Certificate shall be
paid to the registered owner hereof upon presentation and surrender of this Certificate at maturity, at the
principal corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, NATIONAL
ASSOCIATION, DALLAS, TEXAS, which is the "Paying Agent/Registrar" forthis Certificate. The payment
of interest on this Certificate shall be made by the Paying Agent/Registrar to the registered owner hereof on
each interest payment date by check dated as of such interest payment date, drawn by the Paying Agent/Regis-
trar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the
Certificates (the "Certificate Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose
as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first-
class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the
registered owner, as it appeared at the close of business on the last day of the month next preceding each such
date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter
described. However, the payment of such interest may be made by any other method acceptable to the Paying
Agent/Registrar and requested by, and at the risk and expense of, the registered owner hereof, The Issuer
covenants with the registered owner of this Certificate that on or before each principal payment date, interest
payment date, and accrued interest payment date for this Certificate it will make available to the Paying
Agent/Registrar, from the "Interest and Sinking Fund" created by the Certificate Ordinance, the amounts
required to provide for the payment, in immediately available funds, of all principal of and interest on the
Certificates, when due.
IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days
thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the
Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer.
Notice of the Special Record Date and of the scheduled payment date ofthe past due interest ("Special Payment
Date", which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business
days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each
Holder of a Certificate appearing on the registration books of the Paying Agent/Registrar at the close of
business on the 15th business day next preceding the date of mailing of such notice.
IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday,
Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar
is located are authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made on the original
date payment was due.
THIS CERTIFICATE is one of an issue of Certificates initially dated July 15, 2007, authorized in
accordance with the Constitution and laws of the State of Texas in the principal amount of $11,445,000, for
the purpose of paying all or a portion of the City's contractual obligations incurred pursuant to contracts for
the purchase of certain real and personal property, to-wit: (a) design, construction and equipping of a public
safety training facility; (b) renovations and improvements to existing City buildings, including the acquisition
and installation of replacement heating, venting and air conditioning equipment; (c) improvements to the City's
solid waste disposal system and acquisition of related equipment; (d) acquisition and installation of security,
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multi-media and other technology equipment for City buildings, including the municipal court in City Hall East;
(e) acquisition of fire engines and vehicles and equipment for the City's motor pool; (f) construction and
equipping of a multi-modal transit station; and also for the purpose of paying all or a portion of the City's
contractual obligations for professional services, including engineers, architects, attorneys, map makers,
auditors, and financial advisors, in connection with the preparation of the City's Capital Improvement Plan
(including an animal services facilities master plan), and with said Certificates of Obligation.
ON FEBRUARY 15, 2017, or on any date whatsoever thereafter, the Certificates of this Series may
be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any
available and lawful source, as a whole, or in part, at the redemption price of the par or principal amount
thereof, plus accrued interest to the date fixed for redemption, If less than all of the Certificates are to be
redeemed, the Issuer may select the maturities of the Certificates to be redeemed. If less than all of the
Certificates of any maturity are to be redeemed, the Paying Agent/Registrar shall determine by lot the
Certificates, or portions thereof, within such maturity to be redeemed.
AT LEAST 30 days prior to the date fixed for any redemption of Certificates or portions thereof prior
to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States
mail, first-class postage prepaid, to the registered owner of each Certificate to be redeemed at its address as
it appeared on the 45th day prior to such redemption date; provided, however, that the failure to send, mail,
or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity
or effectiveness of the proceedings for the redemption of any Certificate. By the date fixed for any such
redemption due provision shall be made with the Paying Agent/Registrar for the payment of the required
redemption price for the Certificates or portions thereof which are to be so redeemed, plus accrued interest
thereon to the date fixed for redemption. If such written notice of redemption is given and if due provision for
such payment is made, all as provided above, the Certificates or portions thereof which are to be so redeemed
thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear
interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the
right of the registered owner to receive the redemption price plus accrued interest from the Paying
Agent/Registrar out of the funds provided for such payment. If a portion of any Certificate shall be redeemed
a substitute Certificate or Certificates having the same maturity date, bearing interest at the same rate, in any
denomination or denominations in any integral multiple of $5,000, at the written request of the registered
owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the
registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the
Certificate Ordinance.
THIS CERTIFICATE OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL
MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer
kept by the Paying Agent/Registrar acting in the capacity of registrar for the Certificates, upon the terms and
conditions set forth in the Certificate Ordinance. Among other requirements for such assignment and transfer,
this Certificate must be presented and surrendered to the Paying Agent/Registrar, together with proper
instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar,
evidencing assignment of this Certificate or any portion or portions hereof in any integral multiple of $5,000
to the assignee or assignees in whose name or names this Certificate or any such portion or portions hereof is
or are to be transferred and registered. The form of Assignment printed or endorsed on this Certificate shall
be executed by the registered owner or its duly authorized attorney or representative, to evidence the assignment
hereof. A new Certificate or Certificates payable to such assignee or assignees (which then will be the new
registered owner or owners of such new Certificate or Certificates), or to the previous registered owner in the
case of the assignment and transfer of only a portion of this Certificate, may be delivered by the Paying
Agent/Registrar in conversion of and exchange for this Certificate, all in the form and manner as provided in
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the next paragraph hereof for the conversion and exchange of other Certificates. The Issuer shall pay the
Paying Agent/Registrar's standard or customary fees and charges for making such transfer, but the one
requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect
thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of this Certificate
or any portion hereof during the period commencing with the close of business on any Record Date and ending
with the opening of business on the next following principal or interest payment date. The registered owner
of this Certificate shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute
owner hereof for all purposes, including payment and discharge of liability upon this Certificate to the extent
of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the
contrary.
ALL CERTIFICATES OF THIS SERIES are issuable solely as fully registered certificates, without
interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Certificate
Ordinance, this Certificate, may, at the request of the registered owner or the assignee or assignees hereof, be
converted into and exchanged for a like aggregate principal amount of fully registered certificates, without
interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be,
having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in
any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or
assignees, as the case may be, upon surrender ofthis Certificate to the Paying Agent/Registrar for cancellation,
all in accordance with the form and procedures set forth in the Certificate Ordinance. The Issuer shall pay the
Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging
any Certificate or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay
any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the
exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to
make any such conversion and exchange during the period commencing with the close of business on any
Record Date and ending with the opening of business on the next following principal or interest payment date.
IN THE EVENT any Paying Agent/Registrar for the Certificates is changed by the Issuer, resigns, or
otherwise ceases to act as such, the Issuer has covenanted in the Certificate Ordinance that it promptly will
appoint a competent and legally qualified substitute therefor, and will promptly cause written notice thereof
to be mailed to the registered owners of the Certificates.
IT IS HEREBY certified, recited, and covenanted that this Certificate has been duly and validly
authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist,
and be done precedent to or in the authorization, issuance, and delivery ofthis Certificate have been performed,
existed, and been done in accordance with law; that this Certificate is a general obligation of the Issuer, issued
on the full faith and credit thereof, and that annual ad valorem taxes sufficient to provide for the payment of
the interest on and principal of this Certificate, as such interest comes due and such principal matures, have
been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged
irrevocably for such payment, within the limit prescribed by law; and that, together with other parity
obligations, this Certificate, and the other Certificates ofthis Series, additionally are payable from and secured
by certain surplus revenues (not to exceed $10,000 in aggregate amount) derived by the Issuer from the
ownership and operation of the City's Utility System (consisting of the City's combined waterworks system,
sanitary sewer system, and electric light and power system), all as provided in the Certificate Ordinance.
THE ISSUER has reserved the right to issue, in accordance with law, and in accordance with the
Certificate Ordinance, other and additional obligations, and to enter into contracts, payable from ad valorem
taxes and/or revenues of the City's Utility System, on a parity with, or with respect to said revenues, superior
14
in lien to, this Certificate.
BY BECOMING the registered owner of this Certificate, the registered owner thereby acknowledges
all of the terms and provisions of the Certificate Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Certificate Ordinance is duly recorded and available for inspection in the official minutes
and records of the governing body of the Issuer, and agrees that the terms and provisions of this Certificate and
the Certificate Ordinance constitute a contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the manual or
facsimile signature of the Mayor of the Issuer and countersigned and attested with the manual or facsimile
signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed,
or placed in facsimile, on this Certificate.
ATTEST:
By:
Jennifer Walters
City Secretary, City of Denton, Texas
(CITY SEAL)
CITY OF DENTON, TEXAS
By:
Perry R. McNeill
Mayor, City of Denton, Texas
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Certificate has been issued under the provisions of the Certificate
Ordinance described on the face of this Certificate; and that this Certificate has been issued in conversion of
and exchange for or replacement of a certificate, certificates, or a portion of a certificate or certificates of an
issue which originally was approved by the Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas.
THE BANK OFNEWYORKTRUST COMPANY,
NATIONAL ASSOCIATION, DALLAS, TEXAS,
Paying Agent/Registrar
Dated
Authorized Representative
By.
(INSERT BOND INSURANCE LEGEND, IF ANY)
15
FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Certificate, or duly authorized
representative or attorney
thereof, hereby assigns this Certificate to
(Assignee's Social
Security or Taxpayer
Identification Number
(print or typewrite Assignee's name and
address, including zip code)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration of this Certificate on the Paying Agent/Registrar's Registration Books with
full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by
an eligible guarantor institution participating in
a securities transfer association recognized
signature guarantee program.
Registered Owner
NOTICE: This signature must correspond with
the name of the Registered Owner appearing on
the face of this Certificate in every particular
without alteration or enlargement or any change
whatsoever.
Section 8. TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund") is
hereby created solely for the benefit of the Certificates, and the Interest and Sinking Fund shall be established
and maintained by the Issuer at an official depository bank of the Issuer. The Interest and Sinking Fund shall
be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying
the interest on and principal of the Certificates. All ad valorem taxes levied and collected for and on account
of the Certificates, together with any premium and accrued interest received upon sale of the Certificates, shall
be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the
Certificates or interest thereon are outstanding and unpaid, the governing body of the Issuer shall compute and
ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required
to pay the interest on the Certificates as such interest becomes due, and to provide and maintain a sinking fund
adequate to pay the principal of its Certificates as such principal matures or is scheduled for redemption (but
never less than 2% of the original principal amount of the Certificates as a sinking fund each year). Said tax
shall be based on the latest approval tax rolls of the Issuer, with full allowance being made for tax
delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is
16
hereby ordered to be levied, against all taxable property in the Issuer for each year while any of the Certificates
or interest thereon are outstanding and unpaid; and said tax shall be assessed and collected each such year and
deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide
for the payment of the interest on and principal of the Certificates, as such interest comes due and such
principal matures or is scheduled for redemption, are hereby pledged for such payment, within the limit
prescribed by law.
Section 9. SURPLUS REVENUES. The Certificates additionally shall be payable from and secured
by surplus revenues in accordance with Section 1502 ofthe Texas Government Code, as amended, to the extent
hereinafter permitted, derived by the Issuer from the ownership and operation of the Issuer's Utility System
(consisting of its combined waterworks system, sanitary sewer system, and electric light and power system)
remaining after (a) payment of all amounts constituting operation and maintenance expenses of said Utility
System, and (b) payment of all debt service, reserve, and other requirements and amounts required to be paid
under all ordinances heretofore or hereafter authorizing (i) all bonds and (ii) all other obligations not on a parity
with the Certificates, which are payable from and secured by any Utility System revenues, and (c) payment of
all amounts payable from any Utility System revenues pursuant to contracts heretofore or hereafter entered into
by the Issuer in accordance with law (the "Surplus Revenues"). If, for any reason, the Issuer fails to deposit
ad valorem taxes levied pursuant to Section 8 hereof to the credit of the Interest and Sinking Fund in an amount
sufficient to pay, when due, the principal of and interest on the Certificates, then Surplus Revenues, to the
extent hereinafter permitted, shall be deposited to the credit of the Interest and Sinking Fund and used to pay
such principal and/or interest. A maximum aggregate of $10,000 of Surplus Revenues may be used to pay
principal and/or interest on the Certificates and any obligations on a parity therewith. The Certificates and any
obligations on a parity therewith are not, and shall not be deemed to be, payable from or secured by any
Surplus Revenues in excess of an aggregate of $10,000. Until and unless an aggregate of $10,000 of Surplus
Revenues actually is used to pay any such principal and/or interest, additional obligations, payable from and
secured by all or any remaining unused part of said aggregate of $10,000 of Surplus Revenues, may be issued
by the Issuer on a parity with the Certificates and any other then outstanding parity obligations, with the
Certificates and all such additional parity obligations to be payable from and secured equally and ratably by
all or any remaining unused part of said aggregate. The Issuer reserves, and shall have, the right to issue
bonds, and other obligations not on a parity with the Certificates, and to enter into contracts, in accordance with
applicable laws, to be payable from and secured by any Utility System revenues other than the aggregate of
$10,000 of Surplus Revenues as described above. The Certificates are on a parity with those issues of City
of Denton Certificates of Obligation, Series 1998, Series 1999, Series 2000, Series 2001, Series 2002, Series
2003, Series 2004, Series 2005 and Series 2006 (the "Outstanding Certificates"), as permitted in the
Ordinances authorizing same; and it is hereby found and determined that none of the above defined Surplus
Revenues have ever been used to pay any principal and/or interest on the Outstanding Certificates.
Section 10. DEFEASANCE OF CERTIFICATES. (a) Any Certificate and the interest thereon shall
be deemed to be paid, retired, and no longer outstanding (a "Defeased Certificate") within the meaning of this
Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the principal of
such Certificate, plus interest thereon to the due date either (i) shall have been made or caused to be made in
accordance with the terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably
depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the
United States of America sufficient to make such payment or (2) Government Obligations which mature as to
principal and interest in such amounts and at such times as will insure the availability, without reinvestment,
of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer
with the Paying Agent/Registrar for the payment of its services until all Defeased Certificates shall have
become due and payable. At such time as a Certificate shall be deemed to be a Defeased Certificate hereunder,
as aforesaid, such Certificate and the interest thereon shall no longer be secured by, payable from, or entitled
17
to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such
principal and interest shall be payable solely from such money or Government Obligations.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the
Issuer also be invested in Government Obligations, maturing in the amounts and times as 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 (i) direct, noncallable
obligations ofthe United States of America, including obligations that are unconditionally guaranteed
by the United States of America., (ii) noncallable obligations of an agency or instrumentality of the
United States of America, including obligations that are unconditionally guaranteed or insured by the
agency or instrumentality and that, on the date of the purchase thereof are rated as to investment
quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (iii)
noncallable obligations of a state or an agency or a county, municipality, or other political subdivision
of a state that have been refunded and that, on the date the governing body of the District adopts or
approves the proceedings authorizing the financial arrangements are rated as to investment quality
by a nationally recognized investment rating firm not less than AAA or its equivalent.
(d) Until all Defeased Certificates shall have become due and payable, the Paying Agent/Registrar
shall perform the services of Paying Agent/Registrar for such Defeased Certificates the same as if they had not
been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required
by this Ordinance.
Section 11. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES.
(a) Replacement Certificates. In the event any outstanding Certificate is damaged, mutilated, lost, stolen, or
destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new certificate of
the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed
Certificate, in replacement for such Certificate in the manner hereinafter provided.
(b) Application for Replacement Certificates. Application for replacement ofdamaged, mutilated,
lost, stolen, or destroyed Certificates shall be made by the registered owner thereof to the Paying
Agent/Registrar. In every case of loss, theft, or destruction of a Certificate, the registered owner applying for
a replacement certificate shall furnish to the Issuer and to the Paying Agent/Registrar such security or
indemnity as may be required by them to save each of them harmless from any loss or damage with respect
thereto. Also, in every case of loss, theft, or destruction of a Certificate, the registered owner shall furnish to
the Issuer and the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such
Certificate, as the case may be. In every case of damage or mutilation of a Certificate, the registered owner
shall surrender to the Paying Agent/Registrar for cancellation the Certificate so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event
of any such Certificate shall have matured, and no default has occurred which is then continuing in the payment
of the principal of, or interest on the Certificate, the Issuer may authorize the payment of the same (without
surrender thereof except in the case of a damaged or mutilated Certificate) instead of issuing a replacement
Certificate, provided security or indemnity is furnished as above provided in this Section.
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(d) Charge for Issuing Replacement Certificates. Prior to the issuance of any replacement
certificate, the Paying Agent/Registrar shall charge the registered owner of such Certificate with all legal,
printing, and other expenses in connection therewith. Every replacement certificate issued pursuant to the
provisions of this Section by virtue of the fact that any Certificate is lost, stolen, or destroyed shall constitute
a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Certificate shall be found at
any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and
proportionately with any and all other Certificates duly issued under this Ordinance.
(e) Authority for Issuing Enlacement Certificates. In accordance with Chapter 1201, Texas
Government Code, this Section of this Ordinance shall constitute authority for the issuance of any such
replacement certificate without necessity of further action by the governing body of the Issuer or any other body
or person, and the duty of the replacement of such certificates is hereby authorized and imposed upon the
Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Certificates in the
form and manner and with the effect, as provided in Section 6(d) of this Ordinance for Certificates issued in
conversion and exchange for other Certificates.
Section 12. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES;
CERTIFICATE COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE. The
Mayor of the Issuer is hereby authorized to have control of the Initial Certificate issued hereunder and all
necessary records and proceedings pertaining to the Initial Certificate pending its delivery and its investigation,
examination, and approval by the Attorney General of the State of Texas, and its registration by the
Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial Certificate said
Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually
sign the Comptroller's Registration Certificate on the Initial Certificate, and the seal of said Comptroller shall
be impressed, or placed in facsimile, on the Initial Certificate. The approving legal opinion of the Issuers Bond
Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Initial Certificate
or on any Certificates issued and delivered in conversion of and exchange or replacement of any Certificate,
but neither shall have any legal effect, and shall be solely for the convenience and information of the registered
owners of the Certificates. The preamble to this Ordinance is hereby adopted and made a part hereof for all
purposes. If insurance is obtained on any of the Certificates, the Initial Certificate and all other Certificates
shall bear an appropriate legend concerning insurance as provided by the insurer.
Section 13. COVENANTS REGARDING TAX-EXEMPTION OF INTEREST ON THE
CERTIFICATES. (a) Covenants. The Issuer covenants to take any action necessary to assure, or refrain from
any action which would adversely affect, the treatment of the Certificates as obligations described in section
103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable
in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer
covenants as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds of the
Certificates or the projects financed therewith (less amounts deposited to a reserve fund, if any) are
used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10
percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not
received by the Issuer, with respect to such private business use, do not, under the terms of this Order
or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than
10 percent of the debt service on the Certificates, in contravention of section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private business use" described
in subsection (1) hereof exceeds 5 percent of the proceeds of the Certificates or the projects financed
19
therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent
is used for a "private business use" which is "related" and not "disproportionate," within theme Mig
of section 141(b)(3) of the Code, to the governmental use;
(3) to take any action to assure that no amount which is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Certificates (less amounts deposited into a reserve
fund, if any) is directly or indirectly used to finance loans to persons, other than state or local
governmental units, in contravention of section 141(c) of the Code;
(4) to refrain from taking any action which would otherwise result in the Certificates
being treated as "private activity bonds" within the meaning of section 141(b) of the Code;
(5) to refrain from taking any action that would result in the Certificates being "federally
guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Certificates, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment
property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over
the term of the Certificates, other than investment property acquired with
(A) proceeds of the Certificates invested for a reasonable temporary period of 3 years
or less or, in the case of a refunding bond, for a period of 90 days or less until such proceeds
are needed for the purpose for which the bonds are issued,
(B) amounts invested in a bona fide debt service fund, within the meaning of section
1.148-1(b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or replacement fund to the
extent such amounts do not exceed 10 percent of the proceeds of the Certificates;
(7) to otherwise restrict the use of the proceeds of the Certificates or amounts treated as
proceeds of the Certificates, as may be necessary, so that the Certificates do not otherwise contravene
the requirements of section 148 ofthe Code (relating to arbitrage) and, to the extent applicable, section
149(d) of the Code (relating to advance refundings); and
(8) to pay to the United States of America at least once during each five-year period
(beginning on the date of delivery of the Certificates) an amount that is at least equal to 90 percent of
the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United
States of America, not later than 60 days after the Certificates have been paid in full, 100 percent of
the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code.
(b) Proceeds. The Issuer understands that the term "proceeds" includes "disposition proceeds"
as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and
proceeds of the refunded bonds expended prior to the date of issuance of the Certificates. It is the
understanding ofthe Issuer that the covenants contained herein are intended to assure compliance with the Code
and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the
event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as
applicable to the Certificates, the Issuer will not be required to comply with any covenant contained herein to
the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely
20
affect the exemption from federal income taxation of interest on the Certificates under section 103 ofthe Code.
In the event that regulations or rulings are hereafter promulgated which impose additional requirements which
are applicable to the Certificates, the Issuer agrees to comply with the additional requirements to the extent
necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income
taxation of interest on the Certificates under section 103 of the Code. In furtherance of such intention, the
Issuer hereby authorizes and directs the Mayor to execute any documents, certificates or reports required by
the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are
consistent with the purpose for the issuance of the Certificates.
Section 14. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT.
The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for
the purposes described in Section 1 of this Ordinance (the "Project") on its books and records in accordance
with the requirements of the Internal Revenue Code. The Issuer recognizes that in order for the proceeds to
be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 18
months of the later of the date that (1) the expenditure is made, or (2) the Project is completed; but in no event
later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding,
the Issuer recognizes that in order for proceeds to be expended under the Internal Revenue Code, the sale
proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifth
anniversary of the delivery of the Certificates, or (2) the date the Certificates are retired. The Issuer agrees
to obtain the advice of nationally-recognized bond counsel if such expenditure fails to comply with the
foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Certificates.
For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that
such failure to comply will not adversely affect the excludability for federal income tax purposes from gross
income of the interest.
Section 15. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the
Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or
other compensation, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such sale
or other disposition will not adversely affect the tax-exempt status of the Certificates. For purposes hereof,
the Issuer shall not be obligated to comply with this covenant if it obtains a legal opinion that such failure to
comply will not adversely affect the excludability for federal income tax purposes from gross income of the
interest.
Section 16. INTEREST EARNINGS ON CERTIFICATE PROCEEDS; USE OF ACCRUED
INTEREST AND PREMIUM RECEIVED FROM SALE OF CERTIFICATES. (a) Interest Earnings.
Interest earnings derived from the investment of proceeds from the sale of the Initial Certificate shall be used
along with other proceeds for the purposes for which the Certificates are issued; provided that after completion
of such purposes, if any of such interest earnings remain on hand, such interest earnings shall be deposited in
the Interest and Sinking Fund. It is further provided, however, that any interest earnings on certificate proceeds
which are required to be rebated to the United States of America pursuant to Section 13 hereof in order to
prevent the Certificates from being "arbitrage bonds" within the meaning of the Code shall be so rebated and
not considered as interest earnings for the purposes of this Section.
(b) Use of Accrued Interest and Premium. The accrued interest received from the sale of the Bonds
in the amount of $55,361,76 shall be deposited to the Interest and Sinking Fund. The net premium received
from the sale of the Bonds in the amount of $211,637.35 shall be applied as follows: the sum of $60,300.75
shall be applied to pay the underwriters' discount; the sum of $96,366.60 shall be applied to pay costs of
issuance; and the sum of $55,000.00 shall be deposited into the construction account referenced in the
following sentence and used for the purposes referenced in Section 1 of this Certificate Ordinance. The
21
remainder of the proceeds of the sale of the Bonds in the amount of $11,445,000 shall be deposited to a
construction account and used for the purposes referenced in Section 1 of this Certificate Ordinance.
Section 17. SALE OF INITIAL CERTIFICATE; BOND INSURANCE. (a) The Initial Certificate
is hereby sold and shall be delivered to RBC DAIN RAUSCHER INC., as representative of the underwriters,
in accordance with the Purchase Contract dated the date of this meeting and presented to the City Council of
the City at this meeting. The City Council hereby finds that the terms of the Purchase Contract are the most
advantageous terms for the City that are reasonably available. The Mayor of the Issuer is authorized and
directed to execute, on behalf ofthe Issuer, said Purchase Contract in the form and substance submitted at this
meeting.
(b) The Issuer approves the insurance ofthe Certificates by MBIA Insurance Corporation and the
payment of the premium on the Insurance Policy, and agrees to comply with the terms of the "Provisions
Relating to Bond Insurance" attached hereto as Exhibit B and incorporated herein.
Section 18. OFFICIAL STATEMENT. An Official Statement dated as of the date of this meeting
has been prepared in connection with the sale of the Initial Certificate and the Certificates, in the form and
substance submitted at this meeting. Said Official Statement and any supplement or. addenda thereto have been
and are hereby approved, and their use in the offer and sale of the Certificates is hereby approved. It is further
officially found, determined, and declared that the statements and representations contained in said Official
Statement are true and correct in all material respects, to the best knowledge and belief of the Issuer. The
distribution and use ofthe Preliminary Official Statement dated July b, 2007, prior to the date hereof is hereby
ratified and approved.
Section 19. DTC REGISTRATION. The Certificates initially shall be issued and delivered in such
manner that no physical distribution of the Certificates will be made to the public, and The Depository Trust
Company ('DTC"), New York, New York, initially will act as depository for the Certificates. DTC has
represented that it is a limited purpose trust company incorporated under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York
Uniform 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 in no way verifies, such representations. The
Initial Certificate authorized by this Ordinance shall be delivered to and registered in the name ofthe Purchaser.
However, it is a condition of delivery and sale that the Purchaser, immediately after such delivery, shall cause
the Paying Agent/Registrar, as provided for in this Ordinance, to cancel said Initial Certificate and deliver in
exchange therefor a substitute Certificate for each maturity of such Initial Certificate, with each such substitute
Certificate to be registered in the name of CEDE & CO., the nominee of DTC, and it shall be the duty of the
Paying Agent/Registrar to take such action. It is expected that DTC will hold the Certificates on behalf of the
Purchaser and/or the DTC Participants, as defined and described in the Official Statement referred to and
approved in Section 18 hereof (the "DTC Participants"). So long as each Certificate is rcgistered in the name
of CEDE & CO., the Paying Agent/Registrar shall treat and deal with DTC in all respects the same as if it
were the actual and beneficial owner thereof. It is expected that DTC will maintain a book entry system which
will identify beneficial ownership of the Certificates by DTC Participants in integral amounts of $5,000, with
transfers of ownership being effected on the records of DTC and the DTC Participants pursuant to rules and
regulations established by them, and that the substitute Certificates initially deposited with DTC shall be
immobilized and not be further exchanged for substitute Certificates except as hereinafter provided. The Issuer
is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges
with respect to its services, will not be responsible or liable for maintaining, supervising, or reviewing the
records of DTC or the DTC Participants, or protecting any interests or rights of the beneficial owners of the
Certificates. It shall be the duty of the Purchaser and the DTC Participants to make all arrangements with
22
DTC to establish this book-entry system, the beneficial ownership ofthe Certificates, and the method ofpaying
the fees and charges of DTC. The Issuer does not represent, nor does it in any way covenant that the initial
book-entry system established with DTC will be maintained in the future. The Issuer reserves the right and
option at any time in the future, in its sole discretion, to terminate the DTC (CEDE & CO.) book-entry only
registration requirement described above, and to permit the Certificates to be registered in the name of any
owner. If the Issuer exercises its right and option to terminate such requirement, it shall give written notice of
such termination to the Paying Agent/Registrar and to DTC, and thereafter the Paying Agent/Registrar shall,
upon presentation and proper request, register any Certificate in any name as provided for in this Ordinance.
Notwithstanding the initial establishment of the foregoing book-entry system with DTC, if for any reason any
of the originally delivered substitute Certificates is duly filed with the Paying Agent/Registrar with proper
request for transfer and substitution, as provided for in this Ordinance, substitute Certificates will be duly
delivered as provided in this Ordinance, and there will be no assurance or representation that any book-entry
system will be maintained for such Certificates.
Section 20. CONTINUING DISCLOSURE. (a) Annual Reports. (i) The Issuer shall provide
annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after
2007, financial information and operating data with respect to the Issuer ofthe general type included in the final
Official Statement authorized by Section 18 of this Ordinance, being the information described in Exhibit A
hereto, which Exhibit is attached to and incorporated in this Ordinance as if written word for word herein. Any
financial statements so to be provided shall be (1) prepared in accordance with the accounting principles
described in Exhibit A hereto, or such other accounting principles as the Issuer may be required to employ from
time to time pursuant to state law or regulation, and (2) audited, if the Issuer commissions an audit of such
statements and the audit is completed within the period during which they must be provided. If the audit of
such financial statements is not complete within such period, then the Issuer shall provide unaudited financial
statements by the required time and will provide audited financial statements for the applicable fiscal year to
each NRMSIR and any SID, when and if the audit report on such statements become available.
(ii) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change
(and of the date of the new fiscal year end) prior to the next date by which the Issuer otherwise would be
required to provide financial information and operating data pursuant to this Section. The financial information
and operating data to be provided pursuant to this Section may be set forth in full in one or more documents
or may be included by specific reference to any document (including an official statement or other offering
document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID
or filed with the SEC.
(b) Material Event Notices. The Issuer shall notify any SID and each NRMSIR, in a timely
manner, of any of the following events with respect to the Certificates, if such event is material within the
meaning of the federal securities laws:
Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
23
Adverse tax opinions or events affecting the tax-exempt status of the Certificates;
Modifications to rights of holders of the Certificates;
Certificate calls;
9. Defeasances;
10, Release, substitution, or sale of property securing repayment of the Certificates; and
11. Rating changes.
The Issuer shall notify any SID and each NRMSIR, in a timely manner, of any failure by the Issuer to provide
financial information or operating data in accordance with subsection (a) of this Section by the time required
by such subsection.
(c) Limitations Disclaimers and Amendments. (i) The Issuer shall be obligated to observe and
perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an
"obligated person" with respect to the Certificates within the meaning of the Rule, except that the Issuer in any
event will give the notice required by Subsection (b) hereof of any Certificate calls and defeasance that cause
the Issuer to no longer be such an "obligated person
(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 give any benefit or any legal
or equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only the
financial information, operating data, financial statements, and notices which it has expressly agreed to provide
pursuant to this Section and does not hereby undertake to provide any other information that may be relevant
or material to a complete presentation of the Issuer's financial results, condition, or prospects or hereby
undertake to update any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The Issuer does not make any representation or warranty concerning such information or its
usefulness to a decision to invest in or sell Certificates at any future date.
(iii) 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 observing or performing its obligations under this Section shall
comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer
under federal and state securities laws.
(v) The provisions of this Section may be amended by the Issuer from time to time to adapt to
changed circumstances that arise from a change in legal requirements, a change in law, or a change in the
identity, nature, status, or type of operations of the Issuer, but only if (1) the provisions of this Section, as so
24
amended, would have permitted an underwriter to purchase or sell Certificates in the primary offering of the
Certificates in compliance with the Rule, taking into account any amendments or interpretations of the Rule
since such offering as well as such changed circumstances and (2) either (a) the registered owners of a majority
in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that
authorizes such an amendment) ofthe outstanding Certificates consent to such amendment or (b) a person that
is unaffiliated with the Issuer (such as nationally recognized bond counsel) determined that such amendment
will not materially impair the interest of the registered owners and beneficial owners of the Certificates. If the
Issuer so amends the provisions of this Section, it shall include with any amended financial information or
operating data next provided in accordance with subsection (a) of this Section an explanation, in narrative
form, of the reason for the amendment and of the impact of any change in the type of financial information or
operating data so provided. The Issuer may also amend or repeal the provisions of this continuing disclosure
agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction
enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions
of this sentence would not prevent an underwriter from lawfully purchasing or selling Certificates in the
primary offering of the Certificates.
(d) Definitions. As used in this Section, the following terms have the meanings ascribed to such
terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR' means each person whom the SEC or its staffhas determined to be a nationally recognized
municipal securities information repository within the meaning of the Rule from time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department, officer, or
agency thereof as, and determined by the SEC or its staff to be, a state information depository within the
meaning of the Rule from time to time.
Section 21. PROTECTION OF PLEDGE. Chapter 1208, Government Code, applies to the issuance
of the Certificates and the pledge of the taxes and surplus revenues granted by the Issuer under Sections 8 and
9 of this Ordinance, and is therefore valid, effective, and perfected. If Texas law is amended at any time while
the Certificates are outstanding and unpaid such that the pledge of the taxes and surplus revenues granted by
the Issuer under Sections 8 and 9 of this Ordinance is to be subject to the filing requirements of Chapter 9,
Texas Business & Commerce Code, then in order to preserve to the registered owners of the Certificates the
perfection of the security interest in said pledge, the Issuer agrees to take such measures as it determines are
reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Texas
Business & Commerce Code and enable a filing to perfect the security interest in said pledge to occur.
Section 22. FURTHER PROCEDURES. The Mayor of the Issuer, the City Secretary ofthe Issuer,
and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby
expressly authorized, empowered, and directed from time to time and at any time to do and perform all such
acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf
of the Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order
to carry out the terms and provisions of this Certificate Ordinance, the Certificates, the sale of the Certificates,
the Notice of Sale and Bidding Instructions and the Official Statement; and the Assistant City Manager/Fiscal
25
and Municipal Services of the City shall cause the expenses of issuance of the Certificates to be paid from the
proceeds of sale of the Initial Certificate or from other lawfully available funds of the Issuer. In case any
officer whose signature shall appear on any Certificate shall cease to be such officer before the delivery of such
Certificate, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer
had remained in office until such delivery.
Section 23. OPEN MEETINGS. The City Council has found and determined that the meeting at
which this Ordinance is considered is open to the public and that notice thereof was given in accordance with
the provisions of the Texas Open Meetings, Law, Tex. Gov't. Code, Chapter 551, as amended.
Section 24. EFFECTIVE DATE. This Ordinance shall become effective immediately upon its passage
and approval.
26
PASSED AND APPROVED this the 17th day of July, 2007.
erry R. Bill, Mayor
ATTEST:
om I I' in G
Je ' er W ers, City Secretary
APPROVED AS TO LEGAL FORM:
Edi
By:
27
EXHIBIT A
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 20 of this Ordinance:
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the Issuer to be provided annually in
accordance with such Section are as specified (and included in the Appendix or under the tables of the Official
Statement referred to) below:
Tables numbered I through 5 and 7 through 14, inclusive, underthe captions "Tax Information", "Debt
Information" and "Financial Information" in the Official Statement.
Appendix B in the Official Statement.
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in the
notes to the financial statements referred to in the paragraph above.
A-1
EXHIBIT B
PROVISIONS RELATING TO BOND INSURANCE
1. Additional Definitions.
(a) "Insurance Policy" means the insurance policy issued by the Insurer guaranteeing the scheduled
payment of principal of and interest on the Certificates when due.
(b) "Insurer" means MBIA Insurance Corporation, or any successor thereto or assignee thereof.
2. Awlicability of Provisions. Notwithstanding anything to the contrary set forth in the Ordinance,
the provisions set forth in this Exhibit B shall control so long as the Certificates are insured by the Insurer and
the Insurer is not in default under the Insurance Policy.
3. Documents and Notices to be Delivered to Insurer, Consent of Insurer.
(a) The Insurer shall receive, on an annual basis, copies ofthe Issuer's audited financial statements
and annual budget.
(b) Any notice that is required to be given to a Certificateholder or to the Paying Agent/Registrar
pursuant to the Ordinance shall also be provided to the Insurer. All notices required to be given to the Insurer
under the Ordinance shall be in writing and shall be sent by registered or certified mail addressed to MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance.
(c) The Insurer shall receive notice of the resignation or removal of the Paying Agent/Registrar
and the appointment of a successor thereto.
(d) The Insurer must be given notice of any amendments to the Ordinance, and the Insurer's
consent shall be required for all amendments ofthe Ordinance for which Certificateholder consent is required.
Any amendments to the Ordinance which are consented to by the Insurer shall be sent to Standard & Poor's.
(e) In connection with the issuance of additional general obligation bonds, the Issuer shall, upon
request, deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such
additional bonds.
4. Pavments Under the Policy: Other Required Provisions.
(a) In the event that, on the second Business Day, and again on the Business Day, prior to the payment
date on the Certificates, the Paying Agent/Registrar has not received sufficient moneys to pay all principal of
and interest on the Certificates due on the second following or following, as the case may be, Business Day,
the Paying Agent/Registrar shall immediately notify the Insurer or its designee on the same Business Day by
telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency.
(b) If the deficiency is made up in whole or in part prior to or on the payment date, the Paying
Agent/Registrar shall so notify the Insurer or its designee.
(c) In addition, if the Paying Agent/Registrar has notice that any Certificateholder has been
required to disgorge payments of principal or interest on the Certificate to a trustee in Bankruptcy or creditors
B-1
or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such Certificateholder within the meaning of any applicable bankruptcy laws, then the
Paying Agent/Registrar shall notify the Insurer or its designee of such fact by telephone or telegraphic notice,
confirmed in writing by registered or certified mail.
(d) The Paying Agent/Registrar is hereby irrevocably designated, appointed, directed and
authorized to act as attorney-in-fact for Certificateholders as follows:
(i) If and to the extent there is a deficiency in amounts required to pay interest on the
Certificates, the Paying Agent/Registrar shall (a) execute and deliver to U. S. Bank Trust National Association,
or its successors under the Policy (the "Insurance Paying Agent/Trustee"), in form satisfactory to the Insurance
Paying Agent/Trustee, an instrument appointing the Insurer as agent for such Certificateholders in any legal
proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest
to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective
Certificateholders (and not as Paying Agent/Registrar) in accordance with the provisions of the Policy payment
from the Insurance Paying Agent/Trustee with respect to the claims for interest so assigned, and (c) disburse
the same to such respective Certificateholders; and
(ii) If and to the extent of a deficiency in amounts required to pay principal of the
Certificates, the Paying Agent/Registrar shall (a) execute and deliver to the Insurance Paying Agent/Trustee
in form satisfactory to the Insurance Paying Agent/Trustee an instrument appointing the Insurer as agent for
such Certificateholder in any legal proceeding relating to the payment of such principal and an assignment to
the Insurer of any of the Certificate surrendered to the Insurance Paying Agent/Trustee of so much of the
principal amount thereof as has not previously been paid or for which moneys are not held by the Paying
Agent/Registrar and available for such payment (but such assignment shall be delivered only if payment from
the Insurance Paying Agent/Trustee is received), (b) receive as designee of the respective Certificateholders
(and not as Paying Agent/Registrar) in accordance with the provisions of the Policy payment therefor from the
Insurance Paying Agent/Trustee, and (c) disburse the same to such Certificateholders.
(e) Payments with respect to claims for interest on and principal of Certificates disbursed by the
Paying Agent/Registrar from proceeds of the Policy shall not be considered to discharge the obligation of the
Issuer with respect to such Certificates, and the Insurer shall become the owner of such unpaid Certificate and
claims for the interest in accordance with the provisions of the assignment made to it under the provisions of
this subsection or otherwise.
(f) Irrespective of whether any such assignment is executed and delivered, the Issuer hereby, and
the Paying Agent/Registrar through its acceptance in the Paying Agent/Registrar Agreement of its obligations
to perform hereunder, agree for the benefit of the Insurer that:
(i) They recognize that to the extent the Insurer makes payments, directly or indirectly
(as by paying through the Paying Agent/Registrar), on account of principal of or interest on the Certificates,
the Insurer will be subrogated to the rights of such Certificateholders to receive the amount of such principal
and interest from the Issuer, as provided and solely from the sources stated in this Ordinance and the
Certificates; and
(ii) They will accordingly pay to the Insurer the amount of such principal and interest
(including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which
principal and interest shall be deemed past due and not to have been paid), as provided in this Ordinance and
the Certificates, but only from the sources and in the manner provided herein for the payment of principal of
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and interest on the Certificates to Certificateholders, and will otherwise treat the Insurer as the owner of such
rights to the amount of such principal and interest.
5. Reimbursement. The Issuer agrees to reimburse the Insurer immediately and unconditionally
upon demand, to the extent permitted by law, for all reasonable expenses, including attorneys' fees and
expenses, incurred by the Insurer in connection with (i) the enforcement by the Insurer of the Issuer's
obligations, or the preservation or defense of any rights of the Insurer, under this Ordinance and any other
document executed in connection with the issuance of the Certificates, and (ii) any consent, amendment, waiver
or other action with respect to the Ordinance or any related document, whether or not granted or approved,
together with interest on all such expenses from and including the date incurred to the date of payment at
Citibank's Prime Rate plus 3% or the maximum interest rate permitted by State law, whichever is less. In
addition, the Insurer reserves the right to charge a fee in connection with its review of any such consent,
amendment or waiver, whether or not granted or approved. The obligation of the Issuer to make the payments
and reimbursements described in this paragraph shall be subject to annual appropriation by the Issuer.
6. Use of Insurer's Name. The Issuer agrees not to use Insurer's name in any public document
including, without limitation, a press release or presentation, announcement or forum without Insurer's prior
consent; provided however, such prohibition on the use of the Insurer's name shall not relate to the use of the
Insurer's standard approved form of disclosure in public documents executed in connection with the
Certificates; and provided further such prohibition shall not apply to the use of the Insurer's name in order to
comply with public notice, public meeting or public reporting requirements.
7. Tender Agreements. The Issuer shall not enter into any agreement nor shall it consent to or
participate in any arrangement pursuant to which Certificates are tendered or purchased for any purpose other
than the redemption and cancellation or legal defeasance of such Certificates without the prior written consent
of Insurer.
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CERTIFICATE FOR
AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED TO THE
ISSUANCE, SALE AND DELIVERY OF THE "CITY OF DENTON CERTIFICATES OF
OBLIGATION ($11,445,000), SERIES 2007"; AUTHORIZING THE ISSUANCE OF THE
CERTIFICATES OF OBLIGATION; APPROVING AND AUTHORIZING INSTRUMENTS AND
PROCEDURES RELATING TO SAID CERTIFICATES OF OBLIGATION; AND ENACTING
OTHER PROVISIONS RELATING TO THE SUBJECT.
THE STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON
We, the undersigned officers of said City, hereby certify as follows:
1. The City Council of said City convened in a REGULAR MEETING ON THE 17TH DAY OF
JULY, 2007, at the Municipal Building (City Hall), and the roll was called ofthe duly constituted officers and
members of said City Council, to-wit:
Perry McNeill, Mayor Pete Kamp, Mayor Pro Tem
Jack Thomson Charlye Heggins
Bob Montgomery Chris Watts
Joe MuIroy
and all of said persons were present, thus constituting a quorum. Whereupon, among other business, the
following was transacted at said Meeting: a written
AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED TO THE
ISSUANCE, SALE AND DELIVERY OF THE "CITY OF DENTON CERTIFICATES OF
OBLIGATION ($11,445,000), SERIES 2007"; AUTHORIZING THE ISSUANCE OF THE
CERTIFICATES OF OBLIGATION; APPROVING AND AUTHORIZING INSTRUMENTS AND
PROCEDURES RELATING TO SAID CERTIFICATES OF OBLIGATION; AND ENACTING
OTHER PROVISIONS RELATING TO THE SUBJECT.
was duly introduced for the consideration of said City Council and duly read. It was then duly moved and
seconded that said Ordinance be passed; and, after due discussion, said motion, carrying with it the passage
of said Ordinance, prevailed and carried by the following vote:
AYES: 7
NOES: 0
ABSTENTIONS: 0
2. That a true, full, and correct copy of the aforesaid Ordinance passed at the Meeting described in
the above and foregoing paragraph is attached to and follows this Certificate; that said Ordinance has been duly
recorded in said City Council's minutes of said Meeting; that the above and foregoing paragraph is a true, full,
and correct excerpt from said City Council's minutes of said Meeting pertaining to the passage of said
Ordinance; that the persons named in the above and foregoing paragraph are the duly chosen, qualified, and
acting officers and members of said City Council as indicated therein; and that each of the officers and
members of said City Council was duly and sufficiently notified officially and personally, in advance, of the
time, place, and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and considered
for passage at said Meeting; and that said Meeting was open to the public, and public notice of the time, place,
and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code.
3. That the Mayor of said City has approved, and hereby approves, the aforesaid Ordinance; that the
Mayor and the City Secretary of said City have duly signed said Ordinance; and that the Mayor and the City
Secretary of said City hereby declare that their signing of this Certificate shall constitute the signing of the
attached and following copy of said Ordinance for all purposes.
SIGNED AND SEALED the 17th day of July, 2007.
City ecretary Mayor
(SEAL)
We, the undersigned, being respectively the City Attorney and the Bond Attorneys of the City of
Denton, Texas, hereby certify that we prepared and approved. as to legality the attached and following
Ordinance prior to its passage as aforesaid.
LL?Q