2010-161
ORDINANCE NO. 2010- 161
AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED TO
THE ISSUANCE, SALE AND DELIVERY OF UP TO $643000,000 IN PRINCIPAL
AMOUNT OF "CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 201011 ;
AUTHORIZING THE ISSUANCE OF THE CERTIFICATES; APPROVING AND
AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID
CERTIFICATES; AND ENACTING OTHER PROVISIONS RELATING TO THE
SUBJECT
THE STATE OF TEXAS :
COUNTY OF DENTON :
CITY OF DENTON :
WHEREAS,the City Council of the City of Denton, Texas (the "Issuer"), deems it advisable to issue
Certificates of Obligation in the amount of $61,085,000 for the purposes hereinafter set forth; and
WHEREAS, the Certificates of Obligation hereinafter authorized and designated are to be issued and
delivered for cash pursuant to Subchapter C of Chapter 271, Texas Local Government Code and Subchapter
B, Chapter 1502, Texas Government Code; and
WHEREAS, the City Council has heretofore passed a resolution authorizing and directing the City
Secretary to give notice of intention to issue Certificates of Obligation, and said notice has been duly
published in a newspaper of general circulation in said Issuer, said newspaper being a"newspaper" as
defined in §2051.044, Texas Government Code; and
WHEREAS, the Issuer received no petition from the qualified electors of the Issuer protesting the
issuance of such Certificates of Obligation; and
WHEREAS, it is officially found, determined, and declared that the meeting at which this Ordinance
has been adopted was open to the public and public notice of the time, place and subject matter of the public
business to be considered and acted upon at said meeting, including this Ordinance, was given, all as required
by the applicable provisions of Texas Government Code Chapter 551; Now, Therefore
THE COUNCIi, OF THE CITY OF DENTON HEREBY ORDAINS:
Section 1. RECITALS, AMOUNT AND PURPOSE OF THE CERTIFICATES. The recitals set
forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth
in this Section. The Certificates of Obligation of the City of Denton, Texas (the "Issuer") are hereby
authorized to be issued and delivered in the aggregate principal amount of $61,085,000, for the purpose of '
paying all or a portion of the Issuer's contractual obligations incurred pursuant to contracts for the purchase,
construction and acquisition of certain real and personal property, to wit: (a) acquiring, constructing,
installing and equipping additions, extensions, renovations and improvements to the Issuer's waterworks and
sewer system; (b) acquiring, constructing, installing and equipping additions, extensions, renovations and
improvements. to the Issuer's electric light and power system; (c) acquiring, constructing, installing and
equipping additions, extensions, renovations and improvements the Issuer's solid waste disposal system; (d)
renovations to, and equipping of, existing municipal buildings, including Main City Hall; and (e) acquisition
of vehicles and equipment for the Issuer's motor pool; and also for the purpose of paying all or a portion ōf
the Issuer's contractual obligations for professional services, including engineers, architects, attorneys, map
makers, auditors, and financial advisors, in connection with said Certificates of Obligation (collectively, the
"Projects").
Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND MATURITIES AND
INTEREST RATES OF CERTIFICATES. Each certificate issued pursuant to this Ordinance shall be
designated: "CITY OF DENTON CERTIFICATE OF OBLIGATION, SERIES 201051 " and initially there
shall be issued, sold, and delivêred hereunder one fully registered certificate, without interest coupons, dated
June 15, 2010, in the principal amount.stated ábove and in the denominations hereinafter stated, numbered
T 1, with certificates issued in replacement thereof being in the denominations and principal amounts
hereinafter stated and numbered consecutively from R-1 upward, payable to the respective Registered
Owners thereof (with the initial certificate being made payable to the initial purchaser as described in Section
10 hereof), or to the registered assignee or assignees of said certificates or any portion or portions thereof
(in each case, the "Registered Owner"), and said certificates shall mature and be payable serially on February
15 in each of the years and in the principal amounts, respectively, and shall bear interest from the dates set
forth in the FORM OF CERTIFICATE set forth in Section. 4 of this Ordinance to their respective dates of
maturity or redemption prior to maturity at the rates per annum, as set forth in the following schedule:
Principal Interest Principal Interest
Years Amount Rates Years Amount Rates
2011 $232205000 2.000% 2021 $2,5505000 5.000%
2012 35055,000 3.000 2022 2,685,000 4.000
2013 33555000 4.000 2023 2,835,000 4.000
2014 3,250,000 4.000 2024 2,995,000 4.000
2015 3,355,000 4.000 2025 3,155,000 4.000
2016 2,495,000 5.000 2026 3,330,000 4.000
2017 2,5653000 5.000 2027 35510,000 4.000
2018 25650,000 5.000 2028 3,7055000 4.000
2019 2,725,000 5.000 2029 3,915,000 4.125
2020 2,8155000 5.000 2030 4,120,000 4.125
The term "Certificates" as used in this Ordinance shall mean and include collectively the certificates of
obligation initially issued and delivered pursuant to this Ordinance and all substitute certificates of obligation
exchanged therefor, as well as all other substitute certificates of obligation and replacement certificates of
obligation issued pursuant hereto, and the term "Certificate" shall mean any of the Certificates.
Section 3. CHARACTERISTICS OF THE CERTICATES.
(a) Reg_istration, Transfer, Conversion and Exchange; Authentication. The Issuer shall keep or cause
to be kept at the principal corporate trust office of The Bank of New York Mellon Trust Company, National
Association, Dallas, Texas, (the "Paying Agent/Registrar"), books or records for the registration of the
transfer, conversion and exchange of the Certificates (the "Itegistration Books"), and the Issuer hereby
appoints the Paying Agent/Registrar as its registrár and transfer agent to keep such books or records and
make such registrations of transfers, conversions and exchanges under such reasonable regulations as the
Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such
registrations, transfers, conversions and exchanges as herein provided. The Paying Agent/Registrar shall
obtain and recoŕd in the Registration Books the address of thê Registered Owner of each Certificate to which
payments with respect to the Certificates shall be mailed, as herein provided; but it shall be the duty of each
Registered Owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be
mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall
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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. The Issuer shall pay the
Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer,
conversion, exchange and delivery of a substitute Certificate or Certificates. Registration of assignments,
transfers, conversions and exchanges of Certificates shall be made in the manner provided and with the effect
stated in the FORIVI OF CERTIFICATE set forth in this Ordinance. Each substitute Certificate shall bear
a letter andlor number to distinguish it from each other Certificate.
Except as provided in Section 3(c) of this Ordinance, an authorized representative of the Paying
Agent/Registrar shall, before the delivery of any such Certificate, date and manually sign said Certificate,
and no such Certíficate shall be deemed to be issued or outstanding unless such Certificate is so executed.
The Paying Agent/Registrar promptly shall cancel all paid Certificates and Certificates surrendered for
conversion and exchange. 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 of any Certificate or portion thereof, and the Paying Agent/Registrar shall provide for the printing,
execution, and delivery of the substitute Certificates ín the manner prescribed herein, and said Certificates
shall be printed or typed on paper of customary weight and strength. Pursuant to Chapter 1201, Government
Code, as amended, the duty of conversion and exchange of Certificates as aforesaid is hereby imposed upon
the Paying Agent/Registrar, and, upon the execution of said Certificate, the converted and exchanged
Certificate shall be valid, incontestable, and enforceable in the same manner and with the sáme effect as the
Certificates that initially were issued and delivered pursuant to this Ordinance, approved by the Attorney
General of the State of Texas (the "Attorney General") and registered by the Comptroller of Public Accounts
of the State of Texas (the "Comptroller").
(b) 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, all as
provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by
the Issuer and the Paying AgentfRegistrar 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 past due interest shall be sent at least five (5) business days prior to the Special Recōrd Date
by United States mail, first-class postage prepaid, to the address of each Registered Owner appearing on the
Registration Books at the close of busíness on the last business day next preceding the date of mailing of
such notice.
(c) In General. The Certificates (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 (notice of whích shall be given to the Paying
Agent/Registrar by the Issuer at least 50 days prior to any such redemption date), (iii) may be converted and
exchanged for other Certificates, (iv) may be transferred and assigned, (v) shall have the characteristics, (vi)
shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Certificates shall
be payable, and (viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain
duties and responsibilities with respect to the Certificates, all as provided, and in the manner and to the effect
as required or indicated, in the FORM OF CERTIFICATE set forth in this Ordinance. The 'Certificate
initially issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated
by the Paying Agent/Registŕar, but on each substitute Certificate issued in conversion of and exchange for
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any Certificate or Certificates issued under this Ordinance the Paying Agent/Registrar shall execute the
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM
OF CERTIFICATE.
(d) Paying A e~ntlRegistrar for the Certificates. 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 entity to act as and perform the
services of Paying Agent/Registrar for the Certificates under this Ordinance, and that the Paying
AgentlRegistrar will be a single entity. The Issuer reserves the right to, and may, at its option, change the
Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be
effective not later than 60 days prior to the next principal or interest payment date after such notice. In the
event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition,
or other method) should resign or otherwise cease to act as such, the Issuer covenants that promptly it will
appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act
as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the
previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy
thereof), along with all other pertinent books and records relating to the Certificates, to the new Paying
AgentlRegistrar 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.
(e) Authentication. Except as provided below, no Certificate shall be valid or obligatory for any
purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the
Certificate of Paying AgentlRegistrar substantially in the form provided in this Ordinance, duly authenticated
by manual execution of the Paying Agent/Registrar. It shall not be required that the same authorized
representative of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the
Certificates. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial
Certificate delivered on the closing date shall have attached thereto the Comptroller's Registration Certificate
substantially in the form provided in this Ordinance, manually executed by the Comptroller or by her duly
authorized agent, which certificate shall be evidence that the Initial Certificate has been duly approved by
the Attorney General and that it is a valid and binding obligation of the Issuer, and has been registered by
the Comptroller.
(f) Book-Entry-Only System. The Certificates issued in exchange for the Certificate initially issued
to the initial purchaser specified herein shall be initially issued in the form of a separate single fully
registered Certificate for each of the maturities thereof. Upon initial issuance, the ownership of each such
Certificate shall be registered in the name of Cede & Co., as nominee of The Depository Trust Company,
New Yōrk, New York ("DTC"), and except as provided in subsection (g) hereof, all of the outstanding
Certificates shall be registered in the name of Cede & Co., as nominee of DTC.
With respect to Certificates registered in the name of Cede & Co., as nominee of DTC, the Issuer
and the Paying AgentlRegistrar shall have no responsibility or obligation to any securities brokers and
dealers; banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC
was created ("DTC Participant") to hold securities to facilitate the clearance and settlement of securities
transactions among DTC Participants or to any person on behalf of whom such a DTC Participant holds an
interest in the Certificates. Without limiting the immediately preceding sentence, the Issuer and the Paying
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AgentlRegistrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of
DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Certificates, (ii) the
. delivery to any DTC Participant or any other person, other than a Registered Owner of Certificates, as shown
on the Registration Books, of any notice with respect to the Certificates, or (iii) the payment to any DTC
Participant or any other person, other than a Registered Owner of Certificates, as shown in the Registration
Books of any amount with respect to principal of or interest on the Certificates. Notwithstanding any other
provision of this Ordinance to the contrary, the Issuer and the Paying Agent/Registrar shall be entitled to treat
and consider the person in whose name each Certificate is registered in the Registration Books as the
absolute owner of such Certificate for the purpose of payment of principal and interest with respect to such
Cêrtificate, for the purpose of registering transfers with respect to such Certificate, and for all other purposes
whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Certificates only to or
upon the order of the Registered Owners, as shown in the Registration Books as provided in this Ordinance,
or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective
to fully satisfy and discharge the Issuer's obligations with respect to payment of principal of and interest on
the Certificates to the extent of the sum or sums so paid. No person other than a Registered Owner, as shown
in the Registration Books, shall receive a Certificate evidencing the obligation of the Issuer to make
payments of principal and interest pursuant tō this Ordinance. Upon delivery by DTC to the Paying
Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks being mailed
to the Registered Owner at the close of business on the Record date, the words "Cede & Co." in this
Ordinance shall refer to such new nominee of DTC.
The previous execution and delivery of the Blanket Issuer Letter of Representations with respect to
obligations of the Issuer is hereby ratified and confirmed; and the provisions thereof shall be fully applicable
to the Certificates.
(g) Successor Securities De.pository; Transfers Outside Book-Entry-Only System. In the event that
the Issuer determines that DTC is incapable of discharging its responsibilities described herein and in the
Blanket Issuer Letter of Representations to DTC or that it is in the best interest of the beneficial owners of
the Certificates that they be able to obtain certificated Certificates, the Issuer shall (i) appoint a successor
securities depository, qualified to act as such under Section 17A of the Securities and Exchange Act of 1934,
as amended, notify DTC and DTC Participants of the appointment of such successor securities depository
and transfer one or more separate Certificates to such successor securities depository or (ii) notify DTC and
DTC Participants of the availability through DTC of Certificates and transfer one or more separate
certificated Certificates to DTC Participants having Certificates credited to their DTC accounts. In such
event, the Certificates shall no longer be restricted to being registered in the Registration Books in the name
of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository,
or its nominee, or in whatever name or names Registered Owners transferring or exchanging Certificates
shall designate, in accordance with the provisions of this Ordinance.
(h) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary,
so long as any Certificate is registered in the name of Cede & Co., as nominee of DTC, all payments with
respect to principal of and interest on such Certificate and all notices with respect to such Certificate shall
be made and given, respectively, in the manner provided in the Blanket Issuer Letter of Representations to
DTC.
(i) Cancellation of Initial Certificate. On the closing date, one initial Certificate representing the
entire principal amount of the Certificates, payable in stated installments to the purchaser designated in
Section 10 or its designee, executed by manual or facsimile signature of the Mayor and City Secretary of the
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Issuer, approved by the Attorney General, and registered and manually signed by the Comptroller, will be
delivered to such purchaser or its designee. Upon payment for the initial Certificate, the Paying
Agent/Registrar shall cancel the initial Certificate and deliver to DTC on behalf of such purchaser one
registered definitive Certificate for each year of maturity of the Certificates, in the aggregate principal
amount of all of the Certificates for such maturity. To the extent that the Paying Agent/Registrar is eligible
to participate in DTC's FAST System; pursuant to an agreement between the Paying Agent/Registrar and
DTC, the Paying Agent/Registrar shall hold the definitive Certificates in safekeeping for DTC.
0) Conditional Notice of Redemption. With respect to any optional redemption of the Certificates,
unless the prerequisites to such redemption required by this Ordinance have been met and moneys sufFicient
to pay the principal of and premium, if any, and interest on the Certificates to be redeemed shall have been
received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice shall
state that said redemption may, at the option of the Issuer, be conditional upon the satisfaction of such
prerequisites and receipt of such moneys by the Paying AgentlRegistrar on or prior to the date fixed for such
redemption, or upon any prerequisite set forth in such notice of redemption. If a conditional notice of
redemption is given and such prerequisites to the redemption and sufficient moneys are not received, such
notice shall be of no force and effect, the Issuer shall not redeem such Certificates and the Paying
Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect
that the Certificates have not been redeemed.
Section 4. FORM OF CERTIFICATES. The form of the Certificates, including the form of Paying
AgentlRegistrar's Authentication Certificate, the form of Assignment and the form of. Comptroller's
Registration Certificate to be attached to the Certificates initially issued and delivered pursuant to this
Ordinance, shall be, respectively, substantially as follows, with such appropriate variations, omissions or
insertions as are permitted or required by this Ordinance.
(a) [Form of Certificate]
NO. R- UNITED STATES OF AMERICA PRINCIPAL
STATE OF TEXAS AMOUNT
CITY OF DENTON $
CERTIFICATE OF OBLIGATION
SERIES 2010
Interest Rate Dated Date Maturity Date CUSIP No.
June 15, 2010 February 15;
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
ON THE MATURITY DATE specified above, the City of Denton, in Denton County, Texas (fhe
"Issuer"), being a political subdivision and municipal corporation of the State of Texas, hereby promises to
pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered
Owner"), on the Maturity Date specified above, the Principal Amount specified above. The Issuer promises
to pay interest on the unpaid principal amount hereof (calculated on the basis of a 360-day year of twelve
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30-day months) from June 15, 2010 at the Interest Rate per annum specified above. Interest is payable on
February 15, 2011 and semiannually on each August 15 and February 15 thereafter to the Maturity Date
specified above, or the date of redemption prior to máturity; except, if this Certificate is required to be
authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such
Principal Amount shall bear interest from the interest payment date next preceding the date of authentication,
unless such date of authentication is after any Record Date 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; provided, however, that if on the date of authentication hereof the interest on the Certificate
or Certificates, if any, for which this Certificate is being exchanged is due but has not been paid, then this
Certificate shall bear interest from the date to which such interest has been paid in full.
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, or upon
the date fixed for its redemption prior to maturity, at the principal corporate trust office of The Bank of New
York Mellon Trust Company, National Association, Dallas, Texas, which is the "Paying Agent/Registrar"
for this Certificate. The payment of interest on this Certificate shall be made by the Paying AgentlRegistrar
to the Registered Owner hereof on each interest payment date by check or draft, dated as of such interest
payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required
by the ordinance authorizing the issuance of this Certificate (the "Certificate Ordinance") to be on deposit
with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft shall be
sent by the Paying AgentlRegistrar by United States mail, first-class postage prepaid, on each such interest
payment date, to the Registered Owner hereof, at its address as it appeared on the last business day of the
month preceding each such date (the "Record Date") on the Registration Books kept by the Paying
AgentJRegistrar, as hereinafter described. In addition, interest may be paid by such other method, acceptable
to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Registered Owner. In the
event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date
for such interest payment (a "Special Record Date") will be established by the Paying AgentlRegistrar, 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 (which shall be 15 days after the
Special Record Date) shall be sent at least five business days prior to the Special Record Date by United
States mail, first-class postage prepaid, to the address of each Registered Owner of a Certificate appearing
on the Registration Books at the close of business on the last business day next preceding the date of mailing
of such notice.
ANY ACCRUED INTEREST due at maturity or upon the redemption of this Certificate prior to
maturity as provided herein shall be paid to the Registered Owner upon presentation and surrender of this
Certificate for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar.
The Issuer covenants with the Registered Owner of this Certificate that on or before each principal payment
date, interest payment date, and accrued interest payment date for this Certificate it will make available to
the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Certificate Ordinance, the
amounts required to provide for the payment, in immediately available funds, of all principal of and interest
on the Certificates, when due.
,
IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday,
Sunday, a legal holiday or a day on which banking institutions in the city where the principal corporate trust
office of 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 that is not such a Saturday, Sunday, legal holiday or
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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 a series of Certificates dated June 15,*2010, authorized in accordance
with the Constitution and laws of the State of Texas in the principal amount of $61,085,000 for the purpose
of paying all or a portion of the Issuer's contractual obligations incurred pursuant to contracts for the
purchase, construction and acquisition of certain real and personal property, to wit: (a) acquiring,
constructing, installing and equipping additions, extensions, renovations and improvements to the Issuer's
waterworks and sewer system; (b) acquiring, constructing, installing and equipping additions, extensions,
renovations and improvements to the Issuer's electric light and power system; (c) acquiring, constructing,
installing and equipping additions, extensions, renovations and improvements the Issuer's solid waste
disposal system; (d) renovations to, and equipping of, existing municipal buildings, including Main City Hall;
and (e) acquisition of vehicles and equipment for the Issuer's motor pool; and also for the purpose of paying
all or a portion of the Issuer's contractual obligations for professional services, including engineers,
architects, attorneys, map makers, auditors, and financial advisors, in connection with said Certificates.
ON FEBRUARY 15, 2020, or on any date thereafter, the Certificates of this series may be redeemed,
prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and
lawful source, as a whole, or in part, and, if in part, the particular Certificates, or portions thereof, to bê
redeêmed shall be selected and designated by the Issuer (provided that a portion of a Certificate may be
redeemed only in an integral multiple of $5,000), at a redemption price equal to the principal amount to be
redeemed plus accrued interest to the date fixed for redemption.
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 of
the Registered Owner to 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 that are to tie so redeemed. If such
written notice of redemption is sent and if due provision for such payment is made, all as provided above,
the Certificates or portions thereof that 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 from the Paying AgentlRegistrar 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 aggŕegate 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.
IF AT THE TIME OF MAILING of notice of optional redemption there shall not have either been
deposited with the Paying Agent/Registrar or legally authorized escrow agent immediately available funds
sufficient to redeem all.the Certificates called for redemption, such notice may statelhat it is conditional, and
is subject to the deposit of the redemption moneys with the Paying Agent/Registrar or legally authorized
escrow agent at or prior to the redemption date. If such redemption is not effectuated, the Paying
Agent/Registrar shall, within five days thereafter, give notice in the manner in which the notice of
redemption was given that such moneys were not so received and shall rescind the redemption.
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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 assigned, transferred, 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 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 of this Certificate to the Paying Agent/Registrar for cancellation, all in accordance with
the form and procedures 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 registered. The Form of Assignment printed or endorsed on this
Certificate may be executed by the Registered Owner to evidence the assignment hereof, but such method
is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used
to evidence the assignment of this Certificate or any portion or portions hereof from time to time by the
Registered Owner. The Paying Agent/Registrar's reasonable standard or customary fees and charges for
assigning, transferring, converting and exchanging any Certificate or portion thereof will be paid by the
Issuer. In any circumstance, any taxes or governmental charges required to be paid with respect thereto shall
be paid by the one requesting such assignment, transfer, conversion or exchange, as a condition precedent
to the exercise of such privilege. The Paying Agent/Registrar shall not be required to make any such transfer,
conversion, or exchange (i) during the period commencing with the close of business on any Record Date
and ending with the opening of business on the next following principal or interest payment date, or (ii) with
respect to any Certificate or any portion thereof called for redemption prior to maturity, within 45 days prior
to its redemption date.
IN THE EVENT any Paying AgentlRegistrar 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 cause written notice thereof to be mailed
to the Registered Owners of the Certificates.
IT IS HEREBY certified, recited and covenanted that this Certificate has been duly and validly
authorized, issued and delivered; that all acts, conditions and things required or proper to be performed, exist
and be done precedent to or in the authorization, issuance and delivery of this Certificate have been
performed, existed and been done in accordance with law; 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 said Issuer,
and have been pledged for.such payment, within the limit prescribed by law; and that this Certificate is
additionally secured by and payable from a limited pledge (not to exceed $1,000) of the surplus revenues
derived by the Issuer from the ownership and operation of the Issuer's Utility System (consisting ofthe
Issuer'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 Issuer's Utility System, on a parity with, or with respect to said
revenues, superior in lien to, this Certificate.
9
THE ISSUER HAS RESERVED THE RIGHT to amend the Certificate Ordinance as provided
therein, and under some (but not all) circumstances amendments thereto must be approved by the Registered
Owners of a majority in aggregate principal amount of the outstanding Certificates.
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, ánd 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 (or in the Mayor's absence, of the Major Pro-Tem) and
countersigned with the manual or facsimile signature of the City Secretary of said Issuer, and has caused the
official seal of the Issuer to be duly impressed, or placed in facsimile, on this Certificate.
(signature) (sianature)
City Secretary Mayor
(SEAL)
(b) [Form of Paying Agent/Registrar's Authentication Certificate]
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Certificate is not accompanied by an executed Comptroller's Registration
Certificate)
It is hereby certified that this Certificate has been issued under the provisions of the Certificate
Ordinance described in the text of this Certificate; and that this Certificate has been issued in conversion or
replacement of, or in exchange for, a certificate, certificates, or a portion of a certificate or certificates of a
series that originally was approved by the Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas.
Dated:
The Bank of New York Mellon Trust Company,
National Association, Dallas, Texas
Paying Agent/Registrar
By:
Authorized Representative
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(c) [Form of Assignment]
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers unto
Please insert Social Security or Taxpayer ldentification Number of Transferee
(Please print or typewrite name and address, including zip code, of Transferee.)
the within Certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
, attorney, to register the transfer of the within
Certificate on the books kept for registration thereof, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by an NOTICE: The signature above must correspond
eligible guarantor institution participating in a with the name of the Registered Owner as it
securities transfer association recognized appears upon the front of this Certificate in every
signature guarantee prōgram. particular, without alteration or enlargement or
any change whatsoever.
(d) [Form of Comptroller's Registration Certificate]
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Certificate of Obligation has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and that this Certificate of Obligation 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)
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(e) [Initial Certificate Insertions]
(i) The initial Certificate shall be in the form set forth in paragraph (a) of this Section, except
that:
A. immediately under the name of the Certificate, the headings "Interest Rate" and
"Maturity Date" shall both be completed with the words "As shown below" and "CUSIP No.
" shall be deleted.
B. the first paragraph shall be deleted and the following will be inserted:
"THE CITY OF DENTON, TEXAS, in Denton County, Texas (the "Issuer"), being a political subdivision
and municipal corporation of the State of Texas, hereby promises to pay to the Registered Owner specified
above, or registered assigns (hereinafter called the "Registered Owner"), on February 15 in each of the years,
in the principal installments and bearing interest at the per annum rates set forth in the following schedule:
Years Principal Installments Interest Rates
(Information from Section 2 to be inserted)
The Issuer promises to pay interest on the unpaid principal amount hereof (calculated on the basis of a 360-
day year of twelve 30-day months) from June 15, 2010 at the respective Interest Rate per annum specified
above. Interest is payable on February 15, 2011, and semiannually on each August 15 and February 15
thereafter to the date of payment of the principal installment specified above, or the date of redemption prior
to maturity; except, that if this Certificate is required to be authenticated and the date of its authentication
is later than the first Record Date (hereinafter defined), such Principal Amount shall bear interest frōm the
interest payment date next preceding the date of authentication, unless such date of authentication is after
any Record Date 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; provided, however, that if on the
date of authentication hereof the interest on the Certificate or Certificates, if any, for which this Certificate
is being exchanged is due but has not been paid, thên this Certificate shall bear interest from the date to
which such interest has been paid in full."
C. Thê Initial Certificate shall be numbered "T 1."
Section 5. INTEREST AND SINKING FU1VD; SURPLUS REVENUES.
(a) 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 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%
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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 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.
(b) The Certificates are additionally secured by revenues 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) that remain after the payment of all maintenance and operation
expenses thereof, and all debt service; i-eserve and other requirements in connection with all of the Issuer's
revenue obligations (now or hereafter outstanding) or contractual obligations (now or hereafter existing)
which are payable from all or any part of the net revenues ofthe Issuer's Utility System, constituting "Surplus
Revenues", not to exceed $1,000. The Issuer shall deposit such Surplus Revenues to the credit of the Interest
and Sinking Fund created pursuant to this Section, to the extent necessary to pay the principal and interest
on the Certificates. Notwithstanding the requirements of this Section, if Surplus Revenues or other lawfully
available moneys of the Issuer are actually on deposit or budgeted and appropriated to be deposited in the
Interest and Sinking Fund in advance of the time when ad valorem taxes are scheduled to be levied for any
year, then the amount of taxes that otherwise would have been required to be levied pursuant to subsection
(a) of this Section may be reduced to the extent and by the amount of the Surplus Revenues or other lawfully
available funds then on deposit or budgeted and appropriated to be deposited in the Interest and Sinking
Fund. If Surplus Revenues are budgeted and appropriated for deposit into the Interest and Sinking Fund, the
Issuer:
(i) shall transfer and deposit in the Interest and Sinking Fund each month an amount of not less than
1/ 12th of the annual debt service on the Certificates to be paid from Surplus Revenues until the amount
on deposit in the Interest and Sinking Fund equals the amount required for annual debt service on the
Certificates;
(ii) shall establish, adopt and maintain an annual budget that provides for either the monthly deposit
of sufficient Surplus Revenues and/or tax revenues, the monthly deposit of any other legally available
funds on hand at the time of the adoption of the annual budget, or a combination thereof, into the
Interest and Sinking Fund for the repayment of the Certificates; and
(iii) shall at all times maintain and collect sufficient Utility System rates and charges in conjunction
with any other legally available funds that, after payment of the costs of operating and maintaining the
Utility System, produce revenues in an amount not less than the debt service requirements of all
outstanding Utility System revenue bonds of the Issuer and other obligations of the Issuer which are
secured in whole or in part by a pledge of revenues of the Utility System and for which the Issuer is
budgeting the repayment of such obligations from the revenues of the Utility System, or the Issuer shall
provide documentation which evidences the levy of an ad valorem tax rate dedicated to the Interest and
Sinkirig Fund, in conjunction with any other legally available funds except Utility System rates and
charges, sufficient for the repayment of Utility System debt service requirements.
(c) Chapter 1208, Texas Government Code, ápplies to the issuance of the Certificates and the pledge
of the taxes and Surplus Revenues granted by the Issuer under this Section and Section 9, respectively, and
is therefore valid, effective, and perfected. Should Texas law be amended at any time while the Certificates
13
are outstanding and unpaid, the result of such amendment being that the pledge of the taxes and Surplus
Revenues granted by the Issuer under this Section is to be subject to the filing requirements of Chapter 9,
Texas Business & Commerce Code, in order to preserve to the Registered Owners of the Certificates a
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 of a security interest in said pledge to occur.
Section 6. 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 tlie extent provided
in subsection (d) of this Section, when payment of the principal of such Certificate, plus interest thereon to
the due date (whether such due date be by reason of maturity or otherwise) 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 AgentlRegistrar in
accordance with an escrow agreement or other instrument (the "Future Escrow Agreement") for such
payment (1) lawful money of the United States of America sufficient to make such payment or
(2) Government Obligations that mature as to principal and interest in such amounts and at such times as will
insure the availability, without reinvestment, of sufficient money to provide for such payment, and when
proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its
services until all Defeased Certificates shall have become due and payable. At such time as a Certificate
shall be deemed to be a Defeased Certificate hereunder, as aforesaid, such Certificate and the interest thereon
shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied
and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such
money or Government Obligations. Notwithstanding any other provision of this Ordinance to the contrary,
it is hereby provided that any determination not to redeem Defeased Certificates that is made in conjunction
with the payment arrangements specified in Subsection (a)(i) or (ii) of this Section shall not be irrevocable,
provided that: (1) in the proceedings providing for such payment arrangements, the Issuer expressly reserves
the right to call the Defeased Certificates for redemption; (2) gives notice of the reservation of that right to
the Registered Owners of the Defeased Certificates immediately following the making of the payment
arrangements; and (3) directs that notice of the reservation be included in any redemption notices that it
authorizes.
(b) Any moneys so deposited with the Paying AgentlRegistrar may at the written direction of the
Issuer 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 that 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. Any Future
Escrow Agreement pursuant to which the money and/or Government Obligations are held for the payment
of Defeased Certificates may contain provisions permitting the investment or reinvestment of such moneys
in Government Obligations or the substitution of other Government Obligations upon the satisfaction of the
requirements specified in Subsection (a)(i) or (ii) of this Section. All income from such Government
Obligations received by the Paying Agent/Registrar which is not required for the payment of the Defeased
Certificates, with respect to which such money has been so deposited, shall be remitted to the Issuer or
deposited as directed in writing by the Issuer.
, (c) The term "Government Obligations" means (i) direct, noncallable obligations of the United States
of America, including obligations that are unconditionally guaranteed by the United States of America., (ii)
noncallable obligations of an agency or instrumentality ofthe United States ofAmerica, including obligations
14
that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the
governing body of the Issuer 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, 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, ori the date the governing body of the Issuer
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.
(e) In the event that the Issuer elects to defease less than all of the principal amount of Certificates of
a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount of Certificates by
such random method as it deems fair and appropriate.
Section 7. 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 of damaged, mutilated,
lost, stolen or destroyed Certificates shall be made by the Registered Owner thereof to the Paying
AgentlRegistrar. 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 furnísh
to the Issuer and to the Paying Agent/Regístrar 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 Ordinance, in the event
any such Certificate shall have matured, and no default has occurred that is then continuing in the payment
of the principal of, redemption premium, if any, or interest on the Certificate, the Issuer may authorize the
payment of the same (without surrender thereof except in the case of a damaged or mutilated Certificate)
instead of issuing a replacement Certificate, provided security or indemnity is furnished as above provided
in this Section.
(d) Charize 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 provísions 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.
15
(e) Authority for Issuing Replacement Certificates. In accordance with Sec. 1206.022, Government
Code, this Section 7 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 3(a) ofthis Ordinance for Certificates issued
in conversion and exchange for other Certificates.
. Section 8. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES; BOND
COUNSEL'S OPINION; CUSIP NUMBERS AND CONTINGENT INSURANCE PROVISION, IF
OBTAINED; ENGAGEMENT OF BOND COUNSEL. -
(a) The Mayor of the Issuer is hereby authorized to have control of the Certificates initially issued and
delivered hereunder and all necessary records and proceedings pertaining to the Certificates pending their
delivery and their investigation, examination, and approval by the Attorney General, and their registration
by the Comptroller. Upon registration of the Certificates said Comptroller (or a deputy designated in writing
to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such
Certificates, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Certificate.
The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the
option of the Issuer, be printed on the Certificates issued and delivered under this Ordinance, but neither shall
have any legal effect, and shall be solely for the convenience and information of the Registered Owners of
the Certificates. In addition, if bond insurance is obtained, the Certificates may bear an appropriate legend
as provided by the insurer.
(b) The obligation of the initial purchaser to accept delivery of the Certificates is subject to the initial
purchaser being furnished with the final, approving opinion of McCall, Parkhurst & Horton L.L.P., bond
counsel to the Issuer, which opinion shall be dated as of and delivered on the date of initial delivery of the
Certificates to the initial purchaser. The engagement of such firm as bond counsel to the Issuer in connection
with the issuance, sale and delivery of the Certificates is hereby approved and confirmed. The execution and
delivery of an engagement letter between the Issuer and such firm, with respect to such services as bond
counsel, is hereby authorized in such form as may be approved by the Mayor, and the Mayor is hereby
authorized to execute such engagement letter.
Section 9. 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
that 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
(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 Ordinance or any underlying arrangement, directly or
indirectly, secure or provide for the payment of more than 10 percent of the debt service on the
Certificates, in contravention of section 141(b)(2) of the Code;
16
(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
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" that is "related" and not "disproportionate," within the meaning of
section 141(b)(3) of the Code, to the governmental use;
(3) to take any action to assure that no amount that 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 that 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 that were used, directly or indirectly, to acquire investment property (as
defined in section 148(b)(2) of the Code) that 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 30 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 rules and regulations of the United States Department of the Treasury
("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 requiŕements of section 148 of the Code (relating to arbitrage) and, to thê 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) Rebate Fund. In order to facilitate compliance with the above covenant (a)(8), a"Rebate Fund"
is hereby established by the Issuer for the sole benefit of the United States of America, and such Rebate Fund
shall not be subject to the claim of any other person, includíng without limitation the Certificateholders. The
Rebate Fund is established for the additional purpose of compliance with section 148 of the Code.
17
(c) Use of Proceeds. Fōr purposes of the foregoing covenants (a)(1) and (a)(2), 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 of the Issuer that the covenants contained
herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the
United States Department of the Treasury pursuant thereto. In the event that regulations or rulings are
hereafter promulgated that 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 affect the exemption from
federal income taxation of interest on the Certificates under section 103 of the Code. In the event that
regulations or rulings are hereafter promulgated that impose additional requirements 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, that may be permitted by the Code as are consistent with the
purpose for the issuance of the Certificates.
(d) Allocation of, and Limitation on, Expenditures for the Projects. The Issuer covenants to account
for the expenditure of sale proceeds and investment earnings to be used for the construction and acquisition
of the Projects on its books and records by allocating proceeds to expenditures within 18 months of the later
of the date that (1) the expenditure is made, or (2) the Proj ects is completed. The foregoing notwithstanding,
the Issuer shal l not expend proceeds of the sale of the Certificates or investment earnings thereon more than
60 days after the earlier of (1) the fifth anniversary of the delivery of the Certificates, or (2) the date the
Certificates are retired, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such
expenditure will not adversely affect the status, for federal income tax purposes, of the Certificates or the
interest thereon. 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. This Ordinance is intended to satisfy the official intent
requirements set forth in section 1.150-2 of the Treasury Regulations.
(e) Disposition of Projects. The Issuer covenants that the Projects 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 of the foregoing, the portion of the
property comprising personal property and disposed in - the ordinary course shall not be treated as a
transaction resulting in the receipt of cash or other compensation. 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 proposes from gross income of the interest.
(f) Reimbursement. This Ordínance is intended to satisfy the official intent requirements set forth in
section 1.150-2 of the Treasury Regulations.
Section 10. SALE OF CERTIFICATES AND APPROVAL OF OFFICIAL STATEMENT; FURTHER
PROCEDURES.
(a) The Certificates are hereby sold and shall be delivered to Bank of America Merrill Lynch,
(the"Purchaser") for cash for the par value thereof and accrued interest thereon to date of delivery, plus a
cash premium of $2,411,015.98. The Certificates shall initially be registered in the name of such purchaser
18
or its designee. It is officially found, determined, and declared that the Certificates have been sold at public
sale to the bidder offering the lowest interest cost, after receiving sealed bids pursuant to an Notice of Sale
and Bidding Instructions and Preliminary Official Statement prepared and distributed in connection with the
sale of the Certificates. Said Notice of Sale and Bidding Instructions and Preliminary Official Statement,
and any addenda, supplement, or amendment thereto have been and are hereby approved by the governing
body of the Issuer, and their use in the offer and sale of the Certificates is hereby approved. The Initial
Certificate shall be registered in the name of the -Purchaser or its designee.
(b) The Issuer hereby approves the form and content of the Official Statement relating to the
Certificates and any addenda, supplement or amendment thereto, and approves the distribution of such
Official Statement in the reoffering of the Certificates by the Purchaser in final form, with such changes
therein or additions thereto as the officer executing the same may deem advisable, such determination to be
conclusively evidenced by his execution thereof. The distribution and use of the Preliminary Official
Statement dated June 3, 2010, prior to the date hereof is hereby ratified and confirmed.
(c) The Mayor and Mayor Pro Tem, the City Manager and City Secretary 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 a
Paying Agent/Registrar Agreement with the Paying Agent/Registrar and all other instruments, whether or
not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this
Ordinance, the Certificates, the sale of the Certificates, the Notice of Sale and Bidding Instructions and the
Official Statement. In case any officer whose signature shall appear on any Certificate shall cease to be such
offĩcer 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 11. INTEREST EARNINGS ON CERTIFICATE PROCEEDS. Interest earnings derived from
the investment of proceeds from the sale of the Certificates shall be used along with other Certificate
proceeds for the Projects; provided that after completion of such purpose, 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 that are required to be rebated to the
United States of America pursuant to Section 9 hereof in order to prevent the Certificates from being
arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section.
Section 12. 'CONSTRUCTION FUND.
(a) The Issuer hereby creates and establishes and shall maintain on the books of the Issuer a separate
fund to be entitled the "Series 2010 Certificates of Obligation Construction Fund" (the "Construction Fund")
for use by the Issuer for payment of all lawful costs associated with the acquisition and construction of the
Projects as hereinbefore provided. Upon payment of all such costs, any moneys remaining on deposit in said
fund shall be transferred to the Interest and Sinking fund. Amounts so deposited to the Interest and Sinking
Fund shall be used in the manner described in Section 5 of this Ordinance.
(b) The Issuer may invest proceeds of the Certificates (including investment earnings thereon) and
amounts deposited into the Interest and Sinking Fund in investments authorized by the Public Funds
Investment Act, Chapter 2256, Texas Government Code, as amended; provided, however, that the Issuer
hereby covenants that the proceeds of the sale of the Certificates will be used as soon as practicable for the
purposes for which the Certificates are issued.
19
(c) All deposits authorized or required by this Ordinance shall be secured to the fullest extent required
by law for the security of public funds.
Section 13. COMPLIANCE WITH RULE 15c2-12.
(a) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms
below:
"MSRB" means the Municipal Securities Rulemaking Board.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
(b) Annual Reports.
(i) The Issuer shall provide annually to the MSRB, in a designated electronic format as
prescribed by the MSRB, within six months after the end of each fiscal year ending in or after 2010,
financial information and operating data with respect to the Issuer of the general type included in the
final Official Statement authorized by Section 10 of this Ordinance, being the information described
in Exhibit A hereto. 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
completed within such period, then the Issuer shall provide unaudited financial statements within such
peŕiod, and audited financial statements for the applicable fiscal year to the MSRB, when and if the
audit report on such statements become available. A11 documents provided to the MSRB pursuant to
this Section shall be accompanied by identifying information as prescribed by the MSRB.
(ii) If the Issuer changes its fiscal year, it will notify the MSRB 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 the
MSRB or filed with the SEC.
(c) Material Event Notices. The Issuer shall notify the MSRB, in a designated electronic format as
prescribed by the MSRB, in a timely manner, of any of the following events with respect to the Certificates,
if such event is material within the meaning of the federal securities laws:
1. 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;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Certificates;
7. Modifications to rights of holders of the Certificates;
20
8. Certificate calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Certificates; and
11. Rating changes.
The Issuer shall notify the MSRB of any failure by the Issuer to provide financial information or operating
data in accordance with subsection (b) of this Section by the time required by such subsection.
(d) 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 notice of any
deposit made in accordance with this Ordinance or applicable law that causes the Certificates no longer
to be outstanding.
(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) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTIlNG 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
RElVIEDY 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 this 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 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) of the outstanding
21
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. 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. 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 (b) 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.
Section 14. METHOD OF AMENDMENT. - The Issuer heŕeby reserves the right to amend this
Ordinance subject to the following terms and conditions, to-wit:
(a) The Issuer may from time to time, without the consent of any holder, except as otherwise required
by paragraph (b) below, amend or supplement this Ordinance in order to (i) cure any ambiguity, defect or
omission in this Ordinance that does not materially adversely affect the interests of the holders, (ii) grant
additional rights or security for the benefit of the holders, (iii) add events of default as shall not be
inconsistent with the provisions of this Ordinance and that shall not materially adversely affect the interests
of the holders, (iv) qualify this Ordinance under the Trust Indenture Act of 1939, as amended, or
corresponding provisions of federal laws from time to time in effect, or (v) make such other provisions in
regard to matters or questions arising under this Ordinance as shall not be inconsistent with the provisions
of this Ordinance and that shall not in the opinion of the Issuer's Bond Counsel materially adversely affect
the interests of the holders.
(b) Except as provided in paragraph (a) above, the holders of Certificates aggregating in principal
amount a majority of the aggregate principal amount of then outstanding Certificates that are the subject of
a proposed amendment shall have the right from time to time to approve any amendment hereto that may be
deemed necessary or desirable by the Issuer; provided, however, that without the consent of 100% of the
holders in aggregate principal amount of the then outstanding Certificates, nothing herein contained shall
permit or be construed to permit amendment of the terms and conditions of this Ordinance or in any of the
Certificates so as to:
(1) Make any change in the maturity of any of the outstanding Certificates;
(2) Reduce the rate of interest borne by any of the outstanding Certificates;
(3) Reduce the amount of the principal of, or redemption premium, if any, payable on any
outstanding Certificates;
(4) -Modify the terms of payment of principal or of interest or redemption premium on
outstanding Certificates or any of them or impose any condition with respect to such payment;
or
(5) Change the minimum percentage of the principal amount of Certificates necessary for
consent to such amendment.
22
(c) If at any time the Issuer shall desire to amend this Ordinance under this Section, the Issuer shall
send by U.S. mail to each Registered Owner of the affected Certificates a copy of the proposed amendment
and cause notice of the proposed amendment to be published at least once in a financial publication published
in The City of New York, New York or in the State of Texas. Such published notice shall briefly set forth
the nature of the proposed amendment and shall state that a copy thereof is on file at the office of the Issuer
for inspection by all holders of such Certificates.
(d) Whenever at any time within one year from the date of publication of such notice the Issuer shall
receive an instrument or instruments executed by the holders of at least a majority in aggregate principal
amount of all of the Certificates then outstanding that are required for the amendment, which instrument or
instruments shall refer to the proposed amendment and that shall specifically consent to and approve such
amendment, the Issuer may adopt the amendment in substantially the same form.
(e) Upon the adoption of any amendatory Ordinance pursuant to the provisions of this Section, this
Ordinance shall be deemed to be modified and amended in accordance with such amendatory Ordinance, and
the respective rights, duties, and obligations of the Issuer and all holders of such affected Certificates shall
thereafter be determined, exercised, and enforced, subject in all respects to such amendment.
(f) Any consent given by the holder of a Certificate pursuant to the provisions of this Section shall be
irrevocable for a period of six months from the date of the publication of the notice provided for in this
Section, and shall be conclusive and binding upon all future holders of the same Certificate during such
period. Such consent may be revoked at any time after six months from the date of the publication of said
notice by the holder who gave such consent, or by a successor in title, by filing notice with the Issuer, but
such revocation shall not be effective if the holders of a majority in aggregate principal amount of the
affected Certificates then outstanding, have, prior to the attempted revocation, consented to and approved
the amendment.
For the purposes of establishing ownership of the Certificates, the Issuer shall rely solely upon the
registration of the ownership of such Certificates on the registratiōn books kept by the Paying
AgentlRegistrar.
Section 15. DEFAULT AND REMEDIES.
(a) Events of Default. Each of the following occurrences or events for the purpose of this Ordinance
is hereby declared to be an Event of Default:
(i) the failure to make payment of the principal of or interest on any of the Certificates when the
same becomes due and payable; or
(ii) default in the performance or observance of any other covenant, agreement or obligation of
the Issuer, the failure to perform which materially, adversely affects the rights of the Registered
Owners of the Certificates, including, but not limited to, their prospect or ability to be repaid in
accordance with this Ordinance, and the continuation thereof for a period of 60 days after notice of
such default is given by any Registered Owner to the Issuer.
(b) Remedies for Default.
(i) Upon the happening of any Event of Default, then and in every case, any Registered Owner
or an authorized representative thereof, including, but not limited to, a trustee or trustees therefor, may
23
proceed against the Issuer for the purpose of protecting and enforcing the rights of the Registered
Owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at
law, in any court of competent jurisdiction, for any relief permitted by law, including the specific
performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that
may be unlawful or in violation of any right of the Registered Owners hereunder or ariy combination
of such remedies.
(ii) It is provided that all such proceedings shall be instituted and maintained for the equal
benefit of all Registered Owners of Certificates then outstanding.
(c) Remedies Not Exclusive.
(i) No remedy herein conferred or reserved is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or under the Certificates or now or hereafter existing at law or in
equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to
accelerate the debt evidenced by the Certificates shall not be available as a remedy under this
Ordinance.
(ii) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of
any other available remedy.
(iii) By accepting the delivery of a Certificate authorized under this Ordinance, such Registered
Owner agrees that the certifications required to effectuate any covenants or representations contained
in this Ordinance do not and shall never constitute or give rise to a personal or pecuniary liability or
charge against the officers, employees or agents of the Issuer or the members of its governing body.
Section 16. APPROPRIATION. To pay the debt service coming due on the Certificates prior to
receipt of the taxes levied to pay such debt service, there is hereby appropriated from current funds on hand,
which are hereby certified to be on hand and available for such purpose, an amount, which together with
capitalized interest received from the sale of the Certificates, will be sufficient to pay such debt service, and
such amount shall be used for no other purpose.
Section 17. DISPOSITION OF FUNDS. The accrued interest received from the sale of the
Certificates shall be deposited to the Interest and Sinking Fund. The premium received from the sale of the
Certificates shall be applied as follows: the sum of $210,000.00 shall be applied to pay costs of issuance;
and the sum of $2,201,015.99 shall be deposited into the Construction Fund to be used for the payment of
all lawful costs associated with the acquisition and construction of the Projects as hereinbefore provided.
The remainder of the proceeds of the sale of the Certificates shall be deposited to a Construction Fund to be
used for the payment of all lawful costs associated with the acquisition and construction of the Projects as
hereinbefore provided.
Section 18. EFFECTIVE DATE. In accordance with the provisions of Texas Government Code
Section 1201.028, this Ordinance shall be effective immediately upon its adoption by the City Council.
Section 19. SEVERABII,ITY. If any section, article, paragraph, sentence, clause, phrase or word in
this Ordinance, or application thereof to any persons or circumstances is held invalid or unconstitutional by
a court of competent jurisdiction, such holding shall not affect the validity of the remaining portion of this
Ordinance, despite such invalidity, which remaining portions shall remain in full force and effect.
24
PASSED, APPROVED AND EFFECTIVE this June 15, 2010.
Mayor, Ci o enton, Texas
ATTEST:
City Fccretar~UCity of Denton, Texas
APPROVED AS TO LEGAL FORM:
<
Lp ~
City Attorney, City of Denton, Texas
EXHIB IT A
Annual Financial Statements and Operating Data
The following information is referred to in Section 13(b) of this Ordinance:
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 ín the Appendix or under the headings of the Official
Statement referred to) below:
Tables 1 through 5, inclusive, and 7 through 14, inclusive
APPENDIX B(FINANCIAL STATEMENTS FOR THE LAST COMPLETED FISCAL YEAR WHICH
WILL BE UNAUDITED, UNLESS AN AUDIT IS PERFORIVIED IN WHICH EVENT THE AUDITED
FINANCIAL STATEMENTS WILL BE 1VIADE AVAILABLE)
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 paragraph above.
A-1
CERTIFICATE FOR
AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED TO
THE ISSUANCE, SALE AND DELIVERY OF UP TO $64,000,000 IN PRINCIPAL
AMOUNT OF "CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 2010";
AUTHORIZING THE ISSUANCE OF THE CERTIFICATES; APPROVING AND
AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID
CERTIFICATES; 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 15TM DAY OF
JLTNE, 2010, at the Municipal Building (City Hall), and the roll was called of the duly constituted officers
and members of said City Council, to-wit:
Mark Burroughs, Mayor Pete Kamp, Mayor Pro Tem
Jim Engelbrecht Charlye Heggins
Dalton Gregory Chris Watts
James King
and all of said persons were present, except /V OY/"p, thus constitut-
ing 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 UP TO $64,000,000 IN PRINCIPAL AMOUNT OF
"CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 2010"; AUTHORIZING THE
ISSUANCE OF THE CERTIFICATES; APPROVING AND AUTHORIZING INSTRUMENTS
AND PROCEDURES RELATING TO SAID CERTIFICATES; 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: rI
NOES: ~
ABSTENTIONS: ~
2. That a true, full, and correct copy of the aforesaid Ordinance passed at the Meeting described ín
the above and foregoing paragraph is attached to and follows this Certificate; that said Ordina.nce has been duly
recorded in said City Council's minutes of said Meeting; that the above a.nd foregoing paragraph is a true, full,
and correct excerpt from said City Council's -minutes of said Meeting pertaini-ng 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 Meêting; 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 15' day of JUNE, 2
n~
a
City ~ecretary
(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.
~ City Attorney
• -
Bond Attorneys
FEDERAL TAX CERTIFICATE
In General.
1.1. The undersigned is the Mayor of the City of Denton, Texas (the "Issuer").
1.2. This Certificate is executed for the purpose of establishing the reasonable expectations of the
Issuer as to future events regarding the Issuer's General Obligation Bonds, Series 2010 and Certificates of
Obligation, Series 2010 (collectively, the "Obligations"). The Obligations are being issued pursuant to rivo
ordinances of the Issuer (the "Ordinances") adopted on the date of sale of the Obligations. The Ordinances
are incorporated herein by reference.
1.3. To the best of the undersigned's knowledge, information and belief, the expectations
contained in this Federal Tax Certificate are reasonable.
1.4. The undersigned is an officer of the Issuer delegated with the responsibility of issuing and
delivering the Obligations.
1.5. The undersigned is not aware of any facts or circumstances that-,vould cause him to question
the accuracy of the representations made by the Undeiv riters in the Undeiv niter Certificates and the
Schedules prepared by First Southwest Company (the "Financial Advisor") attached hereto as Exhibit "D."
The Purpose of the Obligations and Useful Lives of Projects.
2.1. The Obligations are being issued pursuant to the Ordinances (a) to provide for the payment
of costs of issuing the Obligations and (b) to make street improvements and for park land acquisitions and
improvements, to acquire, construct, install and equip additions, extensions, renovations and improvements
to the Issuer's waterworks and sewer system, electric light and poNver system, solid Nvaste disposal system and
to provide for the renovations to, and equipping of, existing municipal buildings and the acquisition of
vehicles and equipment for the Issuer's motor pool (the "Projects").
2.2. The Issuer expects that the aggregate useful lives of the Projects exceed 22 years from the
later of the date the Projects are placed in service or the date on which the Obligations are issued.
2.3. All earnings, such as interest and dividends, received from the investment of the proceeds
of the Obligations during the period of acquisition and construction of the Projects and not used to pay
interest on the Obligations, will be used to pay the costs of the Projects, unless required to be rebated and paid
to the United States in accordance Nvith section 148(f) of the Internal Revenue Code of 1986 (the "Code").
The proceeds of the Obligations, together Nvith any investment earnings thereon, are expected not to exceed
the amount necessary for the governmental purpose ofthe Obligations. The Issuer expects that no disposition
proceeds will arise in connection Nvith the Projects or the Obligations.
Expenditure of Bond Proceeds and Use of Projects.
3.1. The Issuer will incur, Nvithin six months after the date of issue of the Obligations, a binding
obligation to commence the Projects, either by entering into contracts for the construction of the Projects or
by entering into contracts for architectural or engineering services for such Projects, or contracts for the
development, purchase of construction materials, or purchase of equipment, for the Projects, Nvith the amount
to be paid under such contracts to be in excess of five percent of the proceeds which are estimated to be used
for the cost of the Projects.
3.2. After entering into binding obligations, Nvork on such Projects will proceed promptly with
due diligence to completion.
3.3. All original proceeds derived from the sale of the Obligations to be applied to the Projects
and all investment earnings thereon (other than any amounts required to be rebated to the United States
pursuant to section 148(f) of the Code) will be expended for the Projects no later than a date which is three
years after the date of issue of the Obligations.
3.4. The Orderprovides thatallocations of proceeds to expenditures forthe Projects are expected
not to be later than 18 months after the later of the date of the expenditure or the date that the Projects are
placed in service, but, in any event, not longer than 60 days after the earlier of five years of the date hereof
or the date the Obligations are retired.
3.5. Only Projects costs paid or incurred by the Issuer within 60 days prior to the date the Issuer
approved the funding ofthe Projects (the "60-day period") through its declaration of official intent ("Qualified
Costs") will be paid or reimbursed with Bond proceeds. For this purpose Qualified Costs also include
preliminaiv expenditures, incurred prior to the 60-day period before the approval of the Issuer through its
declaration of official intent, up to an amount not in excess of 20 percent of the aggregate amount of the
Obligations. No Qualified Cost represents the cost of property or land acquired from a related party.
3.6. The Issuer will not invest the proceeds prior to such expenditure in any guaranteed
investment contract or other non-purpose investment with a substantially guaranteed yield for a period equal
to or greater than four years.
3.7. Other than members of the general publi c, the Issuer expects that throughout the lesser of the
term of the Obligations, or the useful lives of the Projects, the only user of the Projects will be the Issuer or
the Issuer's employees and agents. The Issuer will be the manager of the Projects. In no event will the
proceeds of the Obligations or facilities financed therewith be used for private business use in an amount
greater than $15 million. The Issuer does not expect to enter into long-term sales of output from the Projects,
except on the basis of generally-applicable and uniformly applied rates. The Issuer may apply different rates
for different classes of customers, including volume purchasers, which are reasonable and customary-.
3.8. Except as stated below, the Issuer expects not to sell or otheitivise dispose of property
constituting the Projects prior to the earlier of the end of such property's useful life or the final maturity of
the Obligations. The Ordinances provide that the Issuer will not sell or othei-vvise dispose of the Projects
unless the Issuer receives an opinion ofnationally-recognized bond counsel that such sale or other disposition
will not adversely affect the tax-exempt status of the Obligations.
3.9. For purposes of Subsection 3.8 hereof, the Issuer has not included the portion of the Projects
comprised of personal property that is disposed in the ordinaiv course at a price that is expected to be less
than 25 percent of the original purchase price. The Issuer, upon any disposition of such property, will transfer
the receipts from the disposition of such property to the general operating fund and expend such receipts
within six months for other governmental programs.
4. Interest and Sinkin4 Funds.
4.1. Separate and special Interest and Sinking Funds have been created and established, other than
as described herein, solely to pay the principal of and interest on the Obligations (the "Bona Fide Debt
Service Portion"). The Bona Fide Debt Service Portion constitutes a fund that is used primarily to achieve
a proper matching of revenues and debt service within each bond year. Such portion will be completely
depleted at least once each year except for an amount not in excess of the greater of (a) one-twelfth of the debt
service on the Obligations for the previous year, or (b) the previous year's earnings on such portion of the
Interest and Sinking Funds. Amounts deposited in the Interest and Sinking Funds constituting the Bona Fide
Debt Service Portion will be spent within a thirteen-month period beginning on the date of deposit, and any
amount received from the investment of money held in the Interest and Sinking Funds will be spent within
a one-year period beginning on the date of receipt.
4.2. Any money deposited in the Interest and Sinking Funds and any amounts received from the
investment thereof that accumulate and remain on hand therein after thirteen months from the date of deposit
of any such money or one year after the receipt of any such amounts from the investment thereof shall
constitute a separate portion of the Interest and Sinking Funds. The yield on any investments allocable to the
portion of the Interest and Sinking Funds exceeding the sum of (a) the Bona Fide Debt Service Portion and
(b) an amount equal to the lesser of five percent of the sale and investment proceeds of the Obligations or
$100,000 will be restricted to a yield that does not exceed the yield on the Obligations.
Yield.
Other than any qualified guarantee referred to in the Certificates of Undeiv niter, the Issuer has not
entered into any qualified guarantee or qualified hedge Nvith respect to the Obligations. The yield on the
Obligations will not be affected by subsequent unexpected events, except to the extent provided in section
1.148-4(h)(3) of the Treasuiv Regulations when and if the Issuer enters into a qualified hedge or into any
transaction transferring, waiving or modifying any right that is part of the terms of any Bond. The Issuer will
consult Nvith nationally recognized bond counsel prior to entering into any of the foregoing transactions.
6. Invested Sinking Fund Proceeds, Replacement Proceeds.
6.1. The Issuer has, in addition to the moneys received from the sale of the Obligations, certain
other moneys that are invested in various funds which are pledged for various purposes. These other funds
are not available to accomplish the purposes described in Section 2 of this Certificate.
6.2. Other than the Interest and Sinking Funds, there are, and will be, no other funds or accounts
established, or to be established, by or on behalf of the Issuer (a) which are reasonably expected to be used,
or to generate earnings to be used, to pay debt service on the Obligations, or (b) which are reserved or pledged
as collateral for payment of debt service on the Obligations and for which there is reasonable assurance that
amounts therein will be available to pay such debt service if the Issuer encounters financial difficulties.
Accordingly, there are no other amounts constituting "gross proceeds" ofthe Obligations, Nvithin the meaning
of section 148 of the Code.
7. Other Obligations.
There are no other obligations of the Issuer that (a) are sold at substantially the same time as the
Obligations, i.e., within 15 days of the date of sale of the Obligations, (b) are sold pursuant to a common plan
of financing Nvith the Obligations, and (c) will be payable from the same source of funds as the Obligations.
Federal Tax Audit Responsibilities.
The Issuer acknowledges that in the event of an examination by the Internal Revenue Service (the
"Service") to determine compliance of the Obligations with the provisions of the Code as they relate to tax--
exempt obligations, the Issuer will respond, and will direct its agents and assigns to respond, in a
commercially reasonable manner to any inquiries from the Service in connection with such an examination.
The Issuer understands and agrees that the examination may be subject to public disclosure under applicable
Texas lave.
9. Record Retention.
The Issuer has covenanted in the Ordinances that it will comply with the requirements of the Code
relating to the exclusion of the interest on the Obligations under section 103 of the Code. The Service has
determined that certain materials, records and information should be retained by the issuers of tax-exempt
obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations
under section 103 of the Code. ACCORDINGLY, THE ISSUER SHALL TAKE STEPS TO ENSURE
THAT ALL MATERIALS, RECORDS AND INFORMATION NECESSARY TO CONFIRM THE
EXCLUSION OF THE INTEREST ON THE OBLIGATIONS UNDER SECTION 103 OF THE CODE
ARE RETAINED FOR THE PERIOD BEGINNING ON THE ISSUE DATE OF THE OBLIGATIONS
AND ENDING THREE YEARS AFTER THE DATE THE OBLIGATIONS ARE RETIRED. The
Issuer acknowledges receipt of the letter attached hereto as Exhibit "B" which, in part, discusses specific
guidance by the Service 'kvith respect to the retention of records relating to tax-exempt bond transactions. The
Issuer also acknowledges that the letter does not constitute an opinion of Bond Counsel as to the proper
record retention policy applicable to any specific transaction. The foregoing requirement mandates issuers
of tax-exempt bonds to adopt written procedures to ensure compliance with the federal tax covenants and
representations contained in the Bond documents, including the federal tax certificate. Accordingly, the
Issuer represents that it has adopted orvvill adopt such procedures to monitor compliance with the limitations
on private use and the payment of arbitrage rebate.
10. Rebate to United States.
The Issuer has covenanted in the Ordinances that it will comply with the requirements of the Code,
including section 148(f) of the Code, relating to the required rebate to the United States. Specifically, the
Issuer will take steps to ensure that all earnings on gross proceeds of the Obligations in excess of the yield
on the Obligations required to be rebated to the United States will be timely paid to the United States. The
Issuer acknowledges receipt of the memorandum attached hereto as Exhibit "A" which discusses regulations
promulgated pursuant to section 148(f) of the Code. This memorandum does not constitute an opinion of
Bond Counsel as to the proper federal tax or accounting treatment of any specific transaction.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
DATED as of July 20, 2010.
CTTY OF T)RNTON_ TRXAS
By
City of Denton, Texas, General Obligation Bonds, Series 2010
City of Denton, Texas, Certificates of Obligation, Series 2010
The undersigned represents that, to the best of the undersigned's knov ledge, information and belief,
the Schedules attached hereto as Exhibit "D" are, as of July 20, 2010, accurate and complete. We understand
that the foregoing information N-ill be relied upon by the Issuer N-ith respect to certain of the representations
set forth in this Federal Tax Certificate and by McCall, Parkhurst & Horton L.L.P. (i) in connection 'with
rendering its opinion to the Issuer that interest on the Bonds is excludable from gross income thereof for
income tax purposes, and (ii) for purposes of completing the IRS Form 8038-G. The undersigned is certifying
only as to facts in existence on the date hereof. Nothing herein represents the undersigned's interpretation
of any laN-,-s or the application of any laN-,-s to these facts.
FIRST SOUTHWEST COMPANY
Bv:
Name:
Title:
City of Denton, Texas, General Obligation Bonds, Series 2010
City of Denton, Texas, Certificates of Obligation, Series 2010
Exhibit "B"
LAW OFFICES
WCALL, PARKHURST & HI
600 CONGRESS AVENUE 717 NORTH HARWOOD
SUITE 1800 SUITE 900
AUSTIN, TEXAS 78701-3248 DALLAS, TEXAS 75201-6587
TELEPHONE: (512) 478-3805 TELEPHONE: (214) 754-9200
FACSIMILE: (512) 472-0871 FACSIMILE: (214) 754-9250
June 15, 2010
Mr. Bid an Langley
Director of Finance
City of Denton, Texas
215 E. McIinnev Street
Denton, Texas 76201
Re: City of Denton, Texas
General Obligation Bonds, Series 2010 and
Certificates of Obligation, Series 2010
Dear Mr. Langley:
ORTON L.L.P.
700 N. ST. MARY'S STREET
SUITE 1525
SAN ANTONIO, TEXAS 78205-3503
TELEPHONE: (210) 225-2800
FACSIMILE: (210) 225-2984
As you know, the City- of Denton, Texas (the "Issuer") will issue the captioned obligations in order
to provide for the acquisition and construction of the projects. As aresult of that issuance, the federal income
tax laws impose certain restrictions on the investment and expenditure of amounts to be used for the projects
or to be deposited to the interest and sinking funds for the captioned obligations. The purpose of this letter
is to set forth, in somewhat less technical language, those provisions of the tax lave which require the timely
use of bond proceeds and that investment of these amounts be at a yield which is not higher than the yield
on the captioned obligations. For this purpose, please refer to line 21(e) of the Form 8038-G included in the
transcript of proceedings for the yield on the captioned obligations. Please note that the Form 8038-G has
been prepared based on the information provided by or on your behalf by your financial advisor. Accordingly,
while vve believe that the information is correct you may wish to have the vield confirmed before vour rebate
consultant or the paying agent attempt to rely on it.
Generally, the federal tax laws provide that, unless excepted, amounts to be used for the projects or
to be deposited to the interest and sinking funds must be invested in obligations the combined yield on which
does not exceed the yield on the obligations. Importantly, for purposes of administrative convenience, the
obligations, however, have been structured in such a way as to avoid, for the most part, this restriction on
investment yield. They also contain certain covenants relating to expenditures of proceeds designed to alert
you to unintentional failures to comply with the laws affecting expenditures of proceeds and dispositions of
property.
First, the sale and investment proceeds to be used for the new money projects may be invested for
up to three years without regard to yield. (Such amounts, however, may be subject to rebate.) Thereafter,
they must be invested at or below the bond yield. Importantly, expenditure of these proceeds must be
accounted in your books and records. Allocations of these expenditures must occur within 18 months of the
later of the date paid or the date the projects are completed. The foregoing notxvithstanding, the allocation
should not occur later than 60 days after the earlier of (1) of five years after the delivery date of the
obligations or (2) the date the obligations are retired unless you obtain an opinion of bond counsel.
Second, the interest and sinking funds are made up of amounts which are received annually for the
payment of current debt service on all the Issuer's outstanding obligations. Any taxes or revenues deposited
to the interest and sinking funds which are to be used for the payment of current debt service on the captioned
obligations, or any other outstanding obligations, are not subject to yield restriction. By definition, current
debt service refers only to debt service to be paid within one year of the date of receipt of these amounts. For
the most part, this Nvould be debt service in the current fiscal year. These amounts deposited to the account
for current debt service may be invested Nvithout regard to any constraint imposed by the federal income tax
laws.
Third, a portion of the interest and sinking funds is permitted to be invested without regard to yield
restriction as a "minor portion." The "minor portion" exception is available for de minimis amounts of taxes
or revenues deposited to the interest and sinking funds. The maximum amount that may be invested as part
of this account may not exceed the lesser of five percent of the principal amount of the obligations or
$100,000.
Accordingly, you should review the current balance in the interest and sinking funds in order to
determine if such balance exceeds the aggregate amounts discussed above. Additionally, in the future it is
important that you be aNvare of these restrictions as additional amounts are deposited to the interest and
sinking funds. The amounts in these funds which are subject to yield restriction -,would only be the amounts
which are in excess of the sum of (1) the current debt service account and (2) the "minor portion" account.
Moreover, to the extent that additional obligations are issued by the Issuer, whether for new money projects
or for refunding, these amounts Nvill change in their proportion.
The Ordinances contain covenants that require the Issuer to comply with the requirements of the
federal tax laws relating to the tax-exempt obligations. The Internal Revenue Service (the "Service") has
determined that certain materials, records and information should be retained by the issuers of tax-exempt
obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations
under the Internal Revenue Code. Accordingly, the Issuer should retain such materials, records and
information for the period beginning on the issue date of the captioned obligations and ending three
years after the date the captioned obligations are retired. Please note this federal tax law standard may
vary from state law standards. The material, records and information required to be retained Nvill generally
be contained in the transcript of proceedings for the captioned obligations, however, the Issuer should collect
and retain additional materials, records and information to ensure the continued compliance Nvith federal tax
law requirements. For example, beyond the transcript of proceedings for the obligations, the Issuer should
keep schedules evidencing the expenditure of bond proceeds, documents relating to the use of bond-financed
property- by governmental and any private parties (e.g., leases and management contracts, if any) and
schedules pertaining to the investment of bond proceeds. In the event that you have questions relating to
record retention, please contact us.
Finally, you should notice that the Ordinances contain a covenant that limits the ability of the Issuer
to sell or otheixvise dispose of bond-financed property for compensation. Beginning for obligations issued
after May 15, 1997 (including certain refunding obligations), or in cases in which an issuer elects to apply
new private activity- bond regulations, such sale or disposition causes the creation of a class of proceeds
referred to as "disposition proceeds." Disposition proceeds, like sale proceeds and investment earnings, are
tax-restricted funds. Failure to appropriately account, invest or expend such disposition proceeds Nvould
adversely affect the tax-exempt status of the obligations. In the event that you anticipate selling property,
even in the ordinary- course, please contact us.
Obviously, this letter only presents a fundamental discussion of the yield restriction rules as applied
to amounts deposited to the interest and sinking funds. Moreover, this letter does not address the rebate
consequences with respect to the interest and sinking funds and you should review the memorandum attached
to the Federal Tax Certificate as Exhibit "A" for this purpose. If you have certain concerns with respect to
the matters discussed in this letter or wish to ask additional questions with regards to certain limitations
imposed, please feel free to contact our firm. Thank you for your consideration and vve look foiXvard to our
continued relationship.
Vein truly yours,
MCCALL, PARKHURST & HORTON L.L.P.
cc: Mr. Gregor- C. Schaecher
Exhibit "C"
CERTIFICATE OF ELECTION PURSUANT TO SECTION 148(f)(4)(C)
OF THE INTERNAL REVENUE CODE OF 1986
I, the undersigned, being the duly authorized representative of the City of Denton, Texas (the "Issuer")
hereby state that the Issuer elects the provisions of section 148(f)(4)(C) of the Internal Revenue Code of
1986 (the "Code"), relating to the exception to arbitrage rebate for temporary investments, as more
specifically designated below, with respect to the Issuer's General Obligation Bonds, Series 2010 and
Certificates of Obligation, Series 2010 (collectively, the "Obligations") which are being issued on the date
of delivery of the Obligations in a face amount equal to $62,200,000. The CUSIP Number for the
Obligations is stated on the Form 8038-G filed in connection with the Obligations. The Issuer intends to
take action to comply with the two-year temporary investments exception to rebate afforded construction
Obligations under section 148(f)(4)(C) of the Code. Capitalized terms have the same meaning as defined
in the Federal Tax Certificate.
11 1. PENALTY ELECTION. In the event that the Issuer should fail to expend the "available
construction proceeds" of the Obligations in accordance with the provisions of section 148(f)(4)(C) of the
Code, the Issuer elects, in lieu of rebate, the penalty provisions of section 148(17)(4)(C)(vii)(I) of the Code.
11 2. RESERVE FUND ELECTION. The Issuer elects to exclude from "available
construction proceeds, "within the meaning of section 148(f)(4)(C)(vi) of the Code, of the Obligations,
earnings on the Reserve Fund in accordance with section 148(f)(4)(C)(vi)(IV) of the Code.
11 3. MULTIPURPOSE ELECTION. The Issuer elects to treat that portion of the Obligations
the proceeds of which are to be used for the payment of expenditures for construction, reconstruction or
rehabilitation of the Projects, as defined in the instrument authorizing the issuance of the Obligations, in
an amount which is currently expected to be equal to $ , as a separate issue in accordance with
the provisions of section 148(f)(4)(C)(y)(II) of the Code. (Note: This election is not necessary unless, less
than 75 percent of the proceeds of the Obligations will be used for construction, reconstruction or
renovation.)
11 4. ACTUAL FACTS. For purposes of determining compliance with section 148(f)(c) of
the Code (other than qualification of the Obligations as a qualified construction issue), the Issuer elects to
use actual facts rather than reasonable expectations.
11 5. NO ELECTION.
The Issuer understands that the elections which are adopted as evidenced by the check in the box adjacent
to the applicable provision are irrevocable. Further, the Issuer understands that qualification of the
Obligations for eligibility for the exclusion from the rebate requirement set forth in section 148(f) of the
Code is based on subsequent events and is unaffected by the Issuer's expectations of such events as of the
date of delivery of the Obligations. Aeeordingly, while failure to execute this certificate and to desiynate
the intended election does not nreelude aualifieation. it would nreelude the Issuer from the relief
afforded by such election.
DATED:
Mayor
City of Denton, Texas
215 E. McKirmev Street
Denton, Texas 76201
Employer I.D. Number: 75-6000514
Exhibit "D"
SCHEDULES OF FINANCIAL ADVISOR
[To be attached hereto]
FINAL
$4,115,000
City of Denton, Texas
General Obligation Bonds, Series 2010
Sources & Uses
Dated 06/15/2010 1 Delivered 07/20/2010
Sources Of Funds
Par Amount of Bonds
$4,115,000.00
Reoffering Premium
109,725.90
Accrued Tnterest fmm 06/15/2010 to 07/20/2010
16,120.78
Total Sources
$4,240,846.68
Uses Of Funds
Original Issue Discount (OID)
24,632.00
Total Underwriter's Discount (0.948%)
39,005.90
Costs of Issuance
46,088.00
Deposit to Debt Service Fund
16,120.78
Deposit to Project Construction Fund
4,115,000.00
Total Uses
$4,240,846.68
6/15/2010 1 12:16 PM
First • Company
Public Finance Department
Page 1
FINAL
$4,115,000
City of Denton, Texas
General Oblig
ation Bonds, Series
2010
Debt Service Schedule
Part 1 of 2
Date
Princip
al
Coupon
Interest
Total P+I
Fiscal Total
07/20/2010
-
-
-
-
02/15/2011
105,000
.00
4.000%
110,542.
50
215,542.50
08/15/2011
-
-
80,806.
88
80,806.88
-
09/30/2011
-
-
-
-
296,349.
38
02/15/2012
140,000
.00
4.000%
80,806.
88
220,806.88
-
08/15/2012
-
-
78,006.
88
78,006.88
-
09/30/2012
-
-
-
-
298,813.
76
02/15/2013
145,000.
00
4.000%
78,006.
88
223,006.88
-
08/15/2013
-
-
75,106.
88
75,106.88
-
09/30/2013
-
-
-
-
298,113.
76
02/15/2014
150,000.
00
4.000%
75,106.
88
225,106.88
-
08/15/2014
-
-
72,106.
88
72,106.88
-
09/30/2014
-
-
-
-
297,213.
76
02/15/2015
155,000.
00
4.000%
72,106.
88
227,106.88
-
08/15/2015
-
-
69,006.
88
69,006.88
-
09/30/2015
-
-
-
-
296,113.
76
02/15/2016
165,000.
00
4.000%
69,006.
88
234,006.88
-
08/15/2016
-
-
65,706.
88
65,706.88
-
09/30/2016
-
-
-
-
299,713.
76
02/15/2017
170,000.
00
4.000%
65,706.
88
235,706.88
-
08/15/2017
-
-
62,306.
88
62,306.88
-
09/30/2017
-
-
-
-
298,013.
76
02/15/2018
180,000.
00
4.000%
62,306.
88
242,306.88
-
08/15/2018
-
-
58,706.
88
58,706.88
-
09/30/2018
-
-
-
-
301,013.
76
02/15/2019
190,000.
00
4.000%
58,706.
88
248,706.88
-
08/15/2019
-
-
54,906.
88
54,906.88
-
09/30/2019
-
-
-
-
303,613.
76
02/15/2020
195,000.
00
4.000%
54,906.
88
249,906.88
-
08/15/2020
-
-
51,006.
88
51,006.88
-
09/30/2020
-
-
-
-
300,913.
76
02/15/2021
205,000.
00
4.000%
51,006.
88
256,006.88
-
08/15/2021
-
-
46,906.
88
46,906.88
-
09/30/2021
-
-
-
-
302,913.
76
02/15/2022
215,000.
00
4.000%
46,906.
88
261,906.88
-
08/15/2022
-
-
42,606.
88
42,606.88
-
09/30/2022
-
-
-
-
304,513.
76
02/15/2023
225,000.
00
4.000%
42,606.
88
267,606.88
-
08/15/2023
-
-
38,106.
88
38,106.88
-
09/30/2023
-
-
-
-
305,713.
76
02/15/2024
235,000.
00
3.800%
38,106.
88
273,106.88
-
08/15/2024
-
-
33,641.
88
33,641.88
-
09/30/2024
-
-
306,748.
76
6/15/2010 1 12:16 PM
First •
Com
pany
Public Finance
Department
FINAL
$4,115,000
City of Denton, Texas
General Obligation Bonds, Series 2010
Debt Service Schedule
Part 2 of 2
Date Principal
Coupon
Interest
Total P+I
Fiscal Total
02/15/2025 245,000.00
3.875%
33,641.88
278,641.88
08/15/2025 -
-
28,895.00
28,895.00
-
09/30/2025 -
-
-
-
307,536.88
02/15/2026 255,000.00
4.000%
28,895.00
283,895.00
-
08/15/2026 -
-
23,795.00
23,795.00
-
09/30/2026 -
-
-
-
307,690.00
02/15/2027 265,000.00
4.000%
23,795.00
288,795.00
-
08/15/2027 -
-
18,495.00
18,495.00
-
09/30/2027 -
-
-
-
307,290.00
02/15/2028 280,000.00
4.125%
18,495.00
298,495.00
-
08/15/2028 -
-
12,720.00
12,720.00
-
09/30/2028 -
-
-
-
311,215.00
02/15/2029 290,000.00
4.250%
12,720.00
302,720.00
-
08/15/2029 -
-
6,557.50
6,557.50
-
09/30/2029 -
-
-
-
309,277.50
02/15/2030 305,000.00
4.300%
6,557.50
311,557.50
-
09/30/2030 -
-
-
-
311,557.50
Total $4,115,000.00
$1,949,330.14
$6,064,330.14
-
Yield Statistics
Accrucd Interestfrom 06/15/2010 to 07/20/2010
16,120.78
B,nd Year D Ilars
$48,063.33
Avcra,c I ife
11.680 Years
Average Coupon
4.0557531%
Net Interest Cost (NIC)
3.9598630%
Truc Tntcrest Cost (TIC)
3.9226397%
Bond Y ield for Arbitrage Purposes
3.6951059%
All Inclusive Cost (AIC)
4.0480725%
IRS Form 8038
Net Interest Cost
3.8231473%
Weighted Average Maturity
11.509 Years
6/15/2010 1 12:16 PM
First • Company
Finance Public Department
FINAL
$4,115,000
City of Denton, Texas
General Obligation Bonds, Series 2010
Debt Service Schedule
Date
Principal
Coupon
Interest
Total P+I
09/30/2010
-
-
-
-
09/30/2011
105,000.00
4.000%
191,349.38
296,349.38
09/30/2012
140,000.00
4.000%
158,813.76
298,813.76
09/30/2013
145,000.00
4.000%
153,113.76
298,113.76
09/30/2014
150,000.00
4.000%
147,213.76
297,213.76
09/30/2015
155,000.00
4.000%
141,113.76
296,113.76
09/30/2016
165,000.00
4.000%
134,713.76
299,713.76
09/30/2017
170,000.00
4.000%
128,013.76
298,013.76
09/30/2018
180,000.00
4.000%
121,013.76
301,013.76
09/30/2019
190,000.00
4.000%
113,613.76
303,613.76
09/30/2020
195,000.00
4.000%
105,913.76
300,913.76
09/30/2021
205,000.00
4.000%
97,913.76
302,913.76
09/30/2022
215,000.00
4.000%
89,513.76
304,513.76
09/30/2023
225,000.00
4.000%
80,713.76
305,713.76
09/30/2024
235,000.00
3.800%
71,748.76
306,748.76
09/30/2025
245,000.00
3.875%
62,536.88
307,536.88
09/30/2026
255,000.00
4.000%
52,690.00
307,690.00
09/30/2027
265,000.00
4.000%
42,290.00
307,290.00
09/30/2028
280,000.00
4.125%
31,215.00
311,215.00
09/30/2029
290,000.00
4.250%
19,277.50
309,277.50
09/30/2030
305,000.00
4.300%
6,557.50
311,557.50
Total
$4,115,000.00
-
$1,949,330.14
$6,064,330.14
Yield Statistics
Accrued Interestfrom 06/15/2010 to 07/20/2010
16,120.78
Bond Year Dollars
$48,063.33
Average Life
11.680 Years
Average Coupon
4.0557531%
Net Interest Cost (NIC)
3.9598630%
True Interest Cost (TIC)
3.9226397%
Bond Yield for Arbitrage Purposes
3.6951059%
All Inclusive Cost (AIC)
4.0480725%
IRS Form 8038
Net Interest Cost
3.8231473%
Weighted Average Maturity
11.509 Years
6/15/2010 1 12:16 PM
First • C
ompany
Finance Public Departme
nt
_r-
FINAL
$4,115,000
City of Denton, Texas
General Obligation Bonds,
Series 2010
Pricing Summary
Type of
Maturity
Maturity Bond
Coupon
Yield
Value
Price
Dollar Price
02/15/2011 Serial Coupon
4.000%
0.650%
105,000.00
101.900%
106,995.00
02/15/2012 Serial Coupon
4.000%
1.000%
140,000.00
104.659%
146,522.60
02/15/2013 Serial Coupon
4.000%
1.400%
145,000.00
106.538%
154,480.10
02/15/2014 Serial Coupon
4.000%
1.750%
150,000.00
107.751%
161,626.50
02/15/2015 Serial Coupon
4.000%
2.100%
155,000.00
108.236%
167,765.80
02/15/2016 Serial Coupon
4.000%
2.550%
165,000.00
107.482%
177,345.30
02/15/2017 Serial Coupon
4.000%
2.900%
170,000.00
106.535%
181,109.50
02/15/2018 Serial Coupon
4.000%
3.100%
180,000.00
106.029%
190,852.20
02/15/2019 Serial Coupon
4.000%
3.300%
190,000.00
105.186%
199,853.40
02/15/2020 Serial Coupon
4.000%
3.500%
195,000.00
104.034%
202,866.30
02/15/2021 Serial Coupon
4.000%
3.600%
205,000.00
103.211%
c
211,582.55
02/15/2022 Serial Coupon
4.000%
3.700%
215,000.00
102.396%
c
220,151.40
02/15/2023 Serial Coupon
4.000%
3.800%
225,000.00
101.589%
c
228,575.25
02/15/2024 Serial Coupon
3.800%
3.900%
235,000.00
98.951%
232,534.85
02/15/2025 Serial Coupon
3.875%
3.950%
245,000.00
99.172%
242,971.40
02/15/2026 Serial Coupon
4.000%
4.050%
255,000.00
99.424%
253,531.20
02/15/2027 Serial Coupon
4.000%
4.150%
265,000.00
98.213%
260,264.45
02/15/2028 Serial Coupon
4.125%
4.250%
280,000.00
98.461%
275,690.80
02/15/2029 Serial Coupon
4.250%
4.350%
290,000.00
98.732%
286,322.80
02/15/2030 Serial Coupon
4.300%
4.450%
305,000.00
98.050%
299,052.50
Total
-
-
$4,115,000.00
-
$4,200,093.90
Bid Information
Par Amount of Bonds
$4,115,000.00
Reoffering Premium or (Discount)
85,093.90
Gross Production
$4,200,093.90
Total Underwriter's Discount (0.948%)
$(39,005.90)
Bid (101.120%)
4,161,088.00
Accrued Interest from 06/15/2010 to 07/20/2010
16,120.78
Total Purchase Price
$4,177,208.78
Bond Year Dollars
$48,063.33
Average Life
11.680 Years
Average Coupon
4.0557531%
Net Interest Cost (NIC)
3.9598630%
True Interest Cost (TIC)
3.9226397%
6/15/2010 1 12:16 PM
First • Com
pany
Public Finance Department
Page 5
FINAL
$61,085,000
City of Denton, Texas
Certificates of Obligation, Series 2010
Sources & Uses
Dated 06/15/2010 1 Delivered 07/20/2010
Sources Of Funds
Par Amount of Bonds
$61,085,000.00
Reoffering Premium
2,964,761.30
Accrued Tnterest fmm 06/15/2010 to 07/20/2010
246,603.56
Total Sources
$64,296,364.86
Uses Of Funds
Original Issue Discount (OID)
246,662.60
Total Underwriter's Discount (0.503%)
307,082.72
Costs of Issuance
210,000.00
Deposit to Debt Service Fund
246,603.56
Deposit to Project Construction Fund
63,286,015.98
Total Uses
$64,296,364.86
6/15/2010 1 12:13 PM
First • Company
Public Finance Department
Page 1
FINAL
$61,085,000
City of Denton, Texas
Certificates of Obli
gation, Series 2010
Debt Service Schedule
Part 1 of 2
Date
Principal
Coupon
Interest
Total P+I
Fiscal Total
07/20/2010
-
02/15/2011
2,220,000.00
2.000%
1,690,995.83
3,910,995.83
08/15/2011
-
1,246,046.88
1,246,046.88
09/30/2011
-
5,157,042.71
02/15/2012
3,055,000.00
3.000%
1,246,046.88
4,301,046.88
08/15/2012
-
1,200,221.88
1,200,221.88
09/30/2012
-
5,501,268.76
02/15/2013
3,155,000.00
4.000%
1,200,221.88
4,355,221.88
08/15/2013
-
1,137,121.88
1,137,121.88
09/30/2013
-
5,492,343.76
02/15/2014
3,250,000.00
4.000%
1,137,121.88
4,387,121.88
08/15/2014
-
1,072,121.88
1,072,121.88
09/30/2014
-
5,459,243.76
02/15/2015
3,355,000.00
4.000%
1,072,121.88
4,427,121.88
08/15/2015
-
1,005,021.88
1,005,021.88
09/30/2015
-
5,432,143.76
02/15/2016
2,495,000.00
5.000%
1,005,021.88
3,500,021.88
08/15/2016
-
942,646.88
942,646.88
09/30/2016
-
-
-
4,442,668.76
02/15/2017
2,565,000.00
5.000%
942,646.88
3,507,646.88
08/15/2017
-
878,521.88
878,521.88
09/30/2017
-
-
-
4,386,168.76
02/15/2018
2,650,000.00
5.000%
878,521.88
3,528,521.88
08/15/2018
-
812,271.88
812,271.88
09/30/2018
-
-
-
4,340,793.76
02/15/2019
2,725,000.00
5.000%
812,271.88
3,537,271.88
08/15/2019
-
744,146.88
744,146.88
09/30/2019
-
-
-
4,281,418.76
02/15/2020
2,815,000.00
5.000%
744,146.88
3,559,146.88
08/15/2020
-
673,771.88
673,771.88
09/30/2020
-
-
-
4,232,918.76
02/15/2021
2,550,000.00
5.000%
673,771.88
3,223,771.88
08/15/2021
-
610,021.88
610,021.88
09/30/2021
-
-
-
3,833,793.76
02/15/2022
2,685,000.00
4.000%
610,021.88
3,295,021.88
08/15/2022
-
556,321.88
556,321.88
09/30/2022
-
-
-
3,851,343.76
02/15/2023
2,835,000.00
4.000%
556,321.88
3,391,321.88
08/15/2023
-
499,621.88
499,621.88
09/30/2023
-
-
-
3,890,943.76
02/15/2024
2,995,000.00
4.000%
499,621.88
3,494,621.88
08/15/2024
-
439,721.88
439,721.88
09/30/2024
-
-
-
3,934,343.76
02/15/2025
3,155,000.00
4.000%
439,721.88
3,594,721.88
6/15/2010 1 12:13 PM
First •
Company
Public Finance Depa
rtment
_g-
FINAL
$61,085,000
City of Denton, Texas
Certificates of Obligation, Series 2010
Debt Service Schedule
Part 2 of 2
Date Principal Coupon
Interest
Total P+I
Fiscal Total
08/15/2025
376,621.88
376,621.88
09/30/2025 -
-
-
3,971,343.76
02/15/2026 3,330,000.00 4.000%
376,621.88
3,706,621.88
08/15/2026 -
310,021.88
310,021.88
09/30/2026 -
-
-
4,016,643.76
02/15/2027 3,510,000.00 4.000%
310,021.88
3,820,021.88
08/15/2027 -
239,821.88
239,821.88
09/30/2027 -
-
-
4,059,843.76
02/15/2028 3,705,000.00 4.000%
239,821.88
3,944,821.88
08/15/2028 -
165,721.88
165,721.88
09/30/2028 -
-
-
4,110,543.76
02/15/2029 3,915,000.00 4.125%
165,721.88
4,080,721.88
08/15/2029 -
84,975.00
84,975.00
09/30/2029 -
-
-
4,165,696.88
02/15/2030 4,120,000.00 4.125%
84,975.00
4,204,975.00
09/30/2030 -
-
4,204,975.00
Total $61,08_5,000.00
$27,680,483._51
$88,76_5,483._51
-
Yield Statistics
Accrued Intcrestfrom 06/15/2010 to 07/20/2010
246,603.56
B,nd fear D Ilars
$656,813.33
Average Life
10.752 Years
Average Coupon
4.2143608%
Net Interest Cost (NIC)
3.8472830%
True Interest Cost (TIC)
3.7531718%
Bond Yield for Arbitrage Purposes
3.6951059%
All Inclusive Cost (AIC)
3.7905202%
IRS Form 8038
Net Interest Cost
3.6740516%
Weighted Average Maturity
10.544 Years
6/15/2010 1 12:13 PM
First • Company
Finance Public Department
_r-
FINAL
$61,085,000
City of Denton, Texas
Certificates of Obligati
on, Series 2010
Debt Service Schedule
Date
Principal
Coupon
Interest
Total P+I
09/30/2010
-
09/30/2011
2,220,000.00
2.000%
2,937,042.71
5,157,042.71
09/30/2012
3,055,000.00
3.000%
2,446,268.76
5,501,268.76
09/30/2013
3,155,000.00
4.000%
2,337,343.76
5,492,343.76
09/30/2014
3,250,000.00
4.000%
2,209,243.76
5,459,243.76
09/30/2015
3,355,000.00
4.000%
2,077,143.76
5,432,143.76
09/30/2016
2,495,000.00
5.000%
1,947,668.76
4,442,668.76
09/30/2017
2,565,000.00
5.000%
1,821,168.76
4,386,168.76
09/30/2018
2,650,000.00
5.000%
1,690,793.76
4,340,793.76
09/30/2019
2,725,000.00
5.000%
1,556,418.76
4,281,418.76
09/30/2020
2,815,000.00
5.000%
1,417,918.76
4,232,918.76
09/30/2021
2,550,000.00
5.000%
1,283,793.76
3,833,793.76
09/30/2022
2,685,000.00
4.000%
1,166,343.76
3,851,343.76
09/30/2023
2,835,000.00
4.000%
1,055,943.76
3,890,943.76
09/30/2024
2,995,000.00
4.000%
939,343.76
3,934,343.76
09/30/2025
3,155,000.00
4.000%
816,343.76
3,971,343.76
09/30/2026
3,330,000.00
4.000%
686,643.76
4,016,643.76
09/30/2027
3,510,000.00
4.000%
549,843.76
4,059,843.76
09/30/2028
3,705,000.00
4.000%
405,543.76
4,110,543.76
09/30/2029
3,915,000.00
4.125%
250,696.88
4,165,696.88
09/30/2030
4,120,000.00
4.125%
84,975.00
4,204,975.00
Total
$61,08_5,000.00
-
$27,680,483._51
$88,76_5,483._51
Yield Statistics
Accrued Interestfrom 06/15/2010 to 07/20/2010
246,603.56
Bond Year Dollars
$656,813.33
Average Life
10.752 Years
Average Coupon
4.2143608%
Net Interest Cost (NIC)
3.8472830%
True Interest Cost (TIC)
3.7531718%
Bond Yield for Arbitrage Purpose
s
3.6951059%
All Inclusive Cost (AIC)
3.7905202%
IRS Form 8038
Net Interest Cost
3.6740516%
Weighted Average Maturity
10.544 Years
6/15/2010 1 12:13 PM
First • C
ompany
Finance Public Departm
ent
_r-
FINAL
$61,085,000
City of Denton, Texas
Certificates of Obligation,
Series 2010
Pricing Summary
Type of
Maturity Bond
Coupon
Yield
Maturity Value
Price
Dollar Price
02/15/2011 Serial Coupon
2.000%
0.400%
2,220,000.00
100.909%
2,240,179.80
02/15/2012 Serial Coupon
3.000%
0.720%
3,055,000.00
103.551%
3,163,483.05
02/15/2013 Serial Coupon
4.000%
1.200%
3,155,000.00
107.063%
3,377,837.65
02/15/2014 Serial Coupon
4.000%
1.650%
3,250,000.00
108.112%
3,513,640.00
02/15/2015 Serial Coupon
4.000%
2.050%
3,355,000.00
108.463%
3,638,933.65
02/15/2016 Serial Coupon
5.000%
2.550%
2,495,000.00
112.643%
2,810,442.85
02/15/2017 Serial Coupon
5.000%
2.870%
2,565,000.00
112.668%
2,889,934.20
02/15/2018 Serial Coupon
5.000%
3.090%
2,650,000.00
112.801%
2,989,226.50
02/15/2019 Serial Coupon
5.000%
3.300%
2,725,000.00
112.597%
3,068,268.25
02/15/2020 Serial Coupon
5.000%
3.480%
2,815,000.00
112.279%
3,160,653.85
02/15/2021 Serial Coupon
5.000%
3.610%
2,550,000.00
111.160%
c 2,834,580.00
02/15/2022 Serial Coupon
4.000%
3.730%
2,685,000.00
102.154%
c 2,742,834.90
02/15/2023 Serial Coupon
4.000%
3.830%
2,835,000.00
101.349%
c 2,873,244.15
02/15/2024 Serial Coupon
4.000%
3.930%
2,995,000.00
100.551%
c 3,011,502.45
02/15/2025 Serial Coupon
4.000%
4.000%
3,155,000.00
100.000%
3,155,000.00
02/15/2026 Serial Coupon
4.000%
4.050%
3,330,000.00
99.424%
3,310,819.20
02/15/2027 Serial Coupon
4.000%
4.100%
3,510,000.00
98.803%
3,467,985.30
02/15/2028 Serial Coupon
4.000%
4.150%
3,705,000.00
98.139%
3,636,049.95
02/15/2029 Serial Coupon
4.125%
4.200%
3,915,000.00
99.037%
3,877,298.55
02/15/2030 Serial Coupon
4.125%
4.270%
4,120,000.00
98.087%
4,041,184.40
Total
-
-
$61,085,000.00
-
$63,803,098.70
Bid Information
Par Amount of Bonds
$61,085,000.00
Reoffering Premium or (Discount)
2,718,098.70
Gross Production
$63,803,098.70
Total Underwriter's Discount (0.503%)
$(307,082.72)
Bid (103.947%)
63,496,015.98
Accrued Interest from 06/15/2010 to 07/20/2010
246,603.56
Total Purchase Price
$63,742,619.54
Bond Year Dollars
$656,813.33
Average Life
10.752 Years
Average Coupon
4.2143608%
Net Interest Cost (NIC)
3.8472830%
True Interest Cost (TIC)
3.7531718%
6/15/2010 1 12:13 PM
First • Com
pany
Public Finance Department
Page 5