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2007-241Vy~ ORDINANCE N0.2007~ AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED TO THE ISSUANCE, SALE AND DELIVERY OF THE "CITY OF DENTON CERTIFICATES OF OBLIGATION ($7,065,000), SERIES 2007A"; A UTHORIZING THE ISSUANCE OF THE CERTIFICATES OF OBLIGATION; APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID CERTIFICATES OF OBLIGATION; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT. THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, the Certificate of Obligation Act of 1971, Subchapter C of Chapter 271 of the Texas Local Government Code, as amended (the "Act") permits the City to issue and sell for cash the Certificates of Obligation hereinafter authorized; and WHEREAS, the City has duly caused notice of its intention to issue the Certificates of Obligation hereinafter authorized to be published at the times and in the manner required by the Ac[ and no petition has been filed protesting the issuance thereof, NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: Section 1. AMOUNT AND PURPOSE OF THE CERTIFICATES. The certificate or certificates of the City of Denton, Texas (the "City" or the "Issuer") are hereby authorized to be issued and delivered in the aggregate principal amount of $7,065,000, for the purpose of paying all or a portion of the City's contractual obligations incurred pursuant to contracts for the purchase ofcertain real and personal property, to-wit: improvements to the City's drainage and storm sewer systems and acquisition of related equipment; and also for the purpose of paying all or a portion of the City's contractual obligations for professional services, including engineers, azchitects, attorneys, map makers, auditors, and financial advisors, in connection with said Certificates of Obligation. Section 2. DESIGNATION OF THE CERTIFICATES. Each certificate issued pursuant to this Ordinance shall be designated: "CITY OF DENTON CERTIFICATE OF OBLIGATION, SERIES 2007A", and initially there shall be issued, sold, and delivered hereunder a single fully registered certificate, without interest coupons, payable in installments ofprincipal (the "Initial Certificate"), but the Initial Certificate may be assigned and transferred and/or converted into and exchanged for a like aggregate principal amount of fully registered certificates, without interest coupons, having serial maturities, and in the denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided. The term "Certificates" as used in this Ordinance shall mean and include collectively the Initial Certificate and all substitute certificates exchanged therefor, as well as all other substitute certificates and replacement certificates issued pursuant hereto, and the term "Certificates" shall mean any of the Certificates. Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL CERTIFICATE. (a) The Initial Certificate is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Certificate, without interest coupons, dated October 1, 2007, in the denomination and aggregate principal amount of $7,065,000, numbered R-l, payable in annual installments ofprincipal to the initial registered owner thereof, to-wit: CIT[GROUP GLOBAL MARKETS, INC. or to the registered assignee or assignees of said Certificate or any portion or portions thereof (in each case, the "registered owner"), with the annual installments of principal of the Initial Certificate to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance. (b) The Initial Certificate (i) may or shall be prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and exchanged for other Certificates, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest on the Initial Certificate shall be payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance. Section 4. INTEREST. The unpaid principal balance ofthe Initial Certificate shall bear interest from the date of the Initial Certificate to the respective scheduled due dates of the instal Invents of principal of the Initial Certificate, and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL CERTIFICATE set forth in this Ordinance. Section 5. FORM OF INITIAL CERTIFICATE. The form of the Initial Certificate, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Certificate, shall be substantially as follows: FORM OF INITIAL CERTIFICATE NO. R-1 $7,065,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 2007A THE CITY OF DENTON, in Denton County, Texas (the "City" or the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to CITIGROUP GLOBAL MARKETS, INC. or to the registered assignee or assignees of this Certificate or any portion or portions hereof (in each case, the "registered owner") the aggregate principal amount of $7,065,000 (SEVEN MILLION SIXTY FIVE THOUSAND DOLLARS) in annual instalments of principal due and payable on February l5 in each of the years, and in the respective principal amounts, asset forth in the following schedule, and to pay interest, from the date of this Certificate hereinafter stated, on the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the rates per annum as follows: PRINCIPAL INTEREST PRINCIPAL INTEREST YEAR AMOUNT RATE(%1 YEAR AMOUNT RATE(%) 2009 $215,000 5.000 2019 $350,000 4.100 2010 225,000 5.000 2020 365,000 4.150 2011 240,000 5.000 2021 385,000 4.200 2012 250,000 5.000 2022 400,000 4.250 2013 260,000 5.000 2023 420,000 4.300 2014 275,000 5.000 2024 440,000 4.350 2015 290,000 5.000 2025 465,000 4.400 2016 305,000 5.000 2026 485,000 4.450 2017 315,000 5.000 2027 510,000 4.500 2018 335,000 4.000 2028 535,000 4.500 Interest shall first be due and payable on August 15, 2008, and semiannually on each February 15 and August 15 thereafter while this Certificate or any portion hereof is outstanding and unpaid. Said interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. THE INSTALLMENTS OF PRINCIPAL OF AND THE INTERESTON this Certificate arepayable in lawful money of the United States of America, without exchange or collection charges. The installments of principal and the interest on this Certificate are payable to the registered owner hereofthrough the services of THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying AgenURegistrar" for this Certificate. Payment of all principal of and interest on this Certificate shall be made by the Paying AgentRegistrar to the registered owner hereof on each principal and/or interest payment date by check dated as of such date, drawn by the Paying Agent/Registrnr on, and payable solely from, funds ofthe Issuer required by the ordinance authorizing the issuance of this Certificate (the "Certificate Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying AgenURegistrar by United States mail, first-class postage prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeazed at the close of business on the last day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying AgenURegistrar, as hereinafter described. The Issuer covenants with the registered owner of this Certificate that on or before each principal and/or interest payment date for this Certificate it will make available to the Paying AgenURegistrar, from the "Interest and Sinking Fund" created by the Certificate Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on this Certificate, when due. IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying AgenURegistrar, if and when funds for the payment of such interest have been received from the Issuer. Notice ofthe Special Record Date and ofthe scheduled payment date ofthe past due interest ("Special Payment Date", which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Certificate appearing on the registration books of the Paying AgentRegistrar at the close of business on the 15th business day next preceding the date of mailing of such notice. IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. TH[S CERTIFICATE has been authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $7,065,000 for the purpose of paying all or a portion of the City's contractual obligations incurred pursuant to contracts for the purchase of certain real and personal property, to-wit: improvements to the City's drainage and storm sewer systems and acquisition of related equipment; and also for the purpose of paying all or a portion of the City's contractual obligations for professional services, including engineers, architects, attorneys, map makers, auditors, and financial advisors, in connection with said Certificates of Obligation. ON FEBRUARY 15, 2017, or on any date whatsoever thereafter, the unpaid installments of principal of this Certificate of Obligation may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, at the prepayment or redemption price ofthe par or principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption. [f less than all of the Certificates are to be redeemed, the Issuer may select the maturities of the Certificates to be redeemed. If less than all of the Certificates of any maturity are to be redeemed, the Paying AgentRegistrar shall determine by lot the Certificates, or portions thereof, within such maturity to be redeemed. AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying AgentRegistrar to the registered owner hereof. By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying AgenURegistrar for the payment of the required prepayment or redemption price for this Certificate or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption. If such written notice of prepayment or redemption is given, and ifdue provision for such payment is made, all as provided above, this Certificate, or the portion thereofwhich is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying AgenURegistrar out of the funds provided for such payment. The Paying AgenURegistrar shall record in the Registration Books all such prepayments or redemptions of principal ofthis Certificate or any portion hereof. THIS CERTIFICATE, to the extent of the unpaid principal balance hereof, or any unpaid portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registraz acting in the capacity ofregistrar for the Certificates, upon the terms and conditions set forth in the Certificate Ordinance. Among other requirements for such transfer, this Certificate must be presented and surrendered to the Paying AgenURegistraz for cancellation, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying AgenURegistrar, evidencing assignment by the initial registered owner of this Certificate, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or assignees in whose name or names this Certificate or any such portion or portions hereof is orare to betrans- ferredandregistered. AnyinstrumentorinstrumentsofassignmentsatisfactorytothePayingAgent/Registrar may be used to evidence the assignment ofthis Certificate or any such portion or portions hereof by the initial registered owner hereof. Anew certificate or certificates payable to such assignee or assignees (which then will be the new registered owner or owners of such new Certificate or Certificates) or to the initial registered owner as to any portion of this Certificate which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this Certificate or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this Certificate or any portion hereof. The registered owner of this Certificate shall be deemed and treated by the Issuer and the Paying AgenURegistraz as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Certificate to the extent of such payment, and the Issuer and the Paying AgenURegistrar shall not be affected by any notice to the contrary. AS PROVIDED above and in the Certificate Ordinance, this Certificate, to the extent of the unpaid principal balance hereof, may be converted into and exchanged for a like aggregate principal amount of fully registered certificates, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Certificate which is not being assigned and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute certificate issued in exchange for any portion ofthis Certificate shall have a single stated principal maturity date), upon surcender of this Certificate to the Paying AgenURegistrar for cancellation, all in accordance with the form and procedures set forth in the Certificate Ordinance. If this Certificate or any portion hereof is assigned and transferred or converted each certificate issued in exchange for any portion hereof shall have a single stated principal maturity date corresponding to the due date of the installment of principal ofthis Certificate or portion hereof for which the substitute certificate is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof. No such certificate shall be payable in installments, but shall have only one stated principal maturity date. AS PROVIDED IN THE CERTIFICATE ORDINANCE, THIS CERTIFICATE IN ITS PRESENTFORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the certificates issued and delivered in exchange for this Certificate or any portion hereofmay be assigned and transferred, and converted, subsequently, as provided in the Certificate Ordinance. The Issuer shall pay the Paying AgenURegistrar's standard or customary fees and charges for transferring, converting, and exchanging this Certificate or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto. The Paying AgenURegistrar shall not be required to make any such assignment, conversion, or exchange during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date. IN THE EVENT any Paying AgenURegistraz for this Certificate is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Certificate Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner ofthis Certificate. IT 1S HEREBY certified, recited, and covenanted that this Certificate has been duly and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery ofthis Certificate have been performed, existed, and been done in accordance with law; that this Certificate is a general obligation of the Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal ofthis Certificate, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the Issuer, and have been pledged ircevocably for such payment, within the limit prescribed by law; and that, together with other pazity obligations, this Certificate additionally is payable from and secured by certain surplus revenues (not to exceed $10,000 in aggregate amount) derived by the Issuer from the ownership and operation of the City's Utility System (consisting ofthe City's combined waterworks system, sanitary sewer system, and electric light and power system), all as provided in the Certificate Ordinance. THE ISSUER has reserved the right to issue, in accordance with law, and in accordance with the Certificate Ordinance, other and additional obligations, and to enter into contracts, payable from ad valorem taxes and/or revenues of the City's Utility System, on a parity with, or with respect to said revenues, superior in lien to, this Certificate. BY BECOMING the registered owner ofthis Certificate, the registered owner thereby acknowledges all ofthe terms and provisions of the Certificate Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Certificate Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Certificate and the Certificate Ordinance constitute a contract between the registered owner hereof and the ]suer. IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned and attested with the manual or facsimile signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Certificate, and has caused this Certificate to be dated October 1, 2007. ATTEST: sy: CITY OF DENTON, TEXAS Jennifer Walters Perry R. McNeill City Secretary, City of Denton, Texas Mayor, City of Denton, Texas (CITY SEAL) (INSERT BOND INSURANCE LEGEND, IF ANY) FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS: COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Certificate has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Certificate has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this (COMPTROLLER'S SEAL) Comptroller of Public Accounts of the State of Texas Section 6. ADDITIONAL CHARACTERISTICS OF THE CERTIFICATES. Recistration and Transfer. (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS (the "Paying Agent/Begistrar") books or records of the registration and transfer of the Certificates (the "Registration Books"), and the Issuer hereby appoints the Paying AgenURegistrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the Issuer and Paying AgenURegistrar may prescribe; and the Paying AgenURegistrar shall make such transfers and registrations as herein provided. The Paying AgenURegistrar shall obtain and record in the Registration Books the address of the registered owner of each Certificate to which payments with respect to the Certificates shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying AgentRegistrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall have the right to inspect the Registration Books during regular business hours ofthe Paying AgenURegistrar, but otherwise the Paying AgenURegistrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each Certificate may be transferred in the Registration Books only upon presentation and surrender of such Certificate to the Paying AgenURegistrar for transfer of registration and cancellation, together with proper written instruments of assignment, inform and with guarantee of signatures satisfactory to the Paying AgentRegistrar, (i) evidencing the assignment of the Certificate, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Certificate or any such portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of any Certificate or any portion thereof, a new substitute Certificate or Certificates shall be issued in conversion and exchange therefor in the manner herein provided. The Initial Certificate, to the extent of the unpaid principal balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof. All Certificates issued and delivered in conversion of and exchange for the Initial Certificate shall be in any denomination or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Certificate shall have a single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provided. If the Initial Certificate or any portion thereof is assigned and transferred or converted the Initial Certificate must be surrendered to the Paying AgenURegistrar for cancellation, and each Certificate issued in exchange for any portion of the Initial Certificate shall have a single stated principal maturity date, and shall not be payable in installments; and each such Certificate shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Certificate is being exchanged; and each such Certificate shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If only a portion of [he Initial Certificate is assigned and transferred, there shall be delivered to and registered in the name of the initial registered owner substitute Certificates in exchange for the unassigned balance of the Initial Certificate in the same manner as if the initial registered owner were the assignee thereof. If any Certificate or portion thereof other than the Initial Certificate is assigned and transferred or converted each Certificate issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Certificate for which it is exchanged. A farm of assignment shall be printed or endorsed on each Certificate, excepting the Initial Certificate, which shall be executed by the registered owner or. its duly authorized attorney or representative to evidence an assignment thereof. Upon surrender of any Certificates or any portion or portions thereof for transfer of registration, an authorized representative of the Paying AgenURegistrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Certificate or Certificates, having the characteristics herein described, payable to such assignee or assignees (which then will be the registered owner or owners of such new Certificate or Certificates), or to the previous registered owner in case only a portion of a Certificate is being assigned and transferred, all in conversion of and exchange for said assigned Certificate or Certificates or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section 6(d), below, for the conversion and exchange of Certificates by any registered owner of a Certificate. The Issuer shall pay the Paying AgenURegistrar's standard or customary fees and charges for making such transfer and delivery of a substitute Certificate or Certificates, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying AgenURegistrar shall not be required to make transfers ofregistration ofany Certificate or any portion thereof during the period commencing with the c]ose of business on any Record Dale and ending with the opening of business on the next following principal or interest payment date. (b) Ownership of Certificates. The entity in whose name any Certificate shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such Certificate shall be overdue, and the Issuer and the Paying AgentRegistrar shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any such Certificate shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Certificate to the extent of the sum or sums so paid. (c) Pavment of Certificates and Interest. The Issuer hereby further appoints the Paying AgenURegistrar to act as the paying agent for paying the principal of and interest on the Certificates, and to act as its agent to convert and exchange or replace Certificates, all as provided in this Ordinance. The Paying AgenURegistrar shall keep proper records of al I payments made by the Issuer and the Paying Agent/Registrar with respect to the Certificates, and of all conversions and exchanges of Certificates, and all replacements of Certificates, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying AgenURegistrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be fifteen (IS) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Certificate appearing on the registration books ofthe Paying AgenURegistrar at the close of business on the 15th business day next preceding the date of mailing of such notice. (d) Conversion and Exchanee or Replacement: Authentication. Each Certificate issued and delivered pursuant to this Ordinance, to the extent ofthe unpaid principal balance or principal amount thereof, may, upon surrender of such Certificate at the principal corporate trust office of [he Paying AgenURegistrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guazantee of signatures satisfactory to the Paying AgenURegistraz, may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered certificates, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Certificate shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid principal balance or principal amount of any Certificate or Certificates so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be. If the Initial Certificate is assigned and transferred or converted each substitute Certificate issued in exchange for any portion of the Initial Certificate shall have a single stated principal maturity date, and shall not be payable in installments; and each such Certificate shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Certificate is being exchanged; and each such Certificate shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. Ifany Certificate or portion thereof (other than the Initial Certificate) is assigned and transferred or converted, each Certificate issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Certificate for which it is being exchanged. Each substitute Certificate shall bear a letter and/or number to distinguish it from each other Certificate. The Paying AgenURegistrar shall convert and exchange or replace Certificates as provided herein, and each fully registered certificate delivered in conversion of and exchange for or replacement of any Certificate or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Certificates for all purposes of this Ordinance, and may again be converted and exchanged or replaced. It is specifically provided that any Certificate authenticated in conversion of and exchange for or replacement of another Certificate on or prior to the first scheduled Record Date for the Initial Certificate shall bear interest From the date of the Initial Certificate, but each substitute Certificate so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Certificate was so authenticated, unless such Certificate is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest from such next following interest payment date; provided, however, that if at the time of delivery of any substitute Certificate the interest on the Certificate for which it is being exchanged is due but has not been paid, then such Certificate shall bear interest from the date to which such interest has been paid in full. THE INITIAL CERTIFICATE issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying AgenURegistrar, but on each substitute Certificate issued in conversion of and exchange for or replacement of any Certificate or Certificates issued under this Ordinance there shall be printed a certificate, in the form substantially as follows: "PAYING AGENT/REGISTRAR'SAUTHENTlCATION CERTIFICATE It is hereby certified that this Certificate has been issued under the provisions of the Certificate Ordinance described on the face of this Certificate; and that this Certificate has been issued in conversion of and exchange for or replacement of a certificate, certificates, or a portion of a certificate or certificates of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. THE BANK OF NE W YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS, Paying AgenURegistrar Dated By "Authorized Representative" An authorized representative of the Paying AgenURegistrar shall, before the delivery of any such Certificate, date and manually sign the above Certificate, and no such Certificate shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying AgentBegistrar promptly shall cancel all Certificates surrendered for conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Certificate or portion thereof, and the Paying AgentRegistrar shall provide for the printing, execution, and delivery of the substitute Certificates in the manner prescribed herein. Pursuant to Chapter 1201, Texas Government Code, the duty of conversion and exchange or replacement of Certificates as aforesaid is hereby imposed upon the Paying AgentRegistrar, and, upon the execution of the above Paying AgenURegistrar'sAuthenticotion Certificate, the converted and exchanged or replaced Certificate shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Certificate which originally was issued pursuant to this Ordinance, approved by the Attomey General, and registered by the Comptroller of Public Accounts. The Issuer shall pay the Paying AgenURegistrar's standard or customary fees and charges for transferring, converting, and exchanging any Certificate or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying AgenURegistrar shall not be required to make anyl such conversion and exchange or replacement of Certificates or any portion thereof during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date. (e) In General. All Certificates issued in i onversion and exchange or replacement of any other Certificate or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Certificates to be payable only to the registered owners thereof, (ii) may or shall be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for other Certificates, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Certificates shall be payable, all as provided, and in the manner required or indicated, in the FORM OF SUBSTITUTE CERTIFICATE set forth in this Ordinance. (f) Payment of Fees and Charges. The the Certificates that it will (i) pay the standard or cus for its services with respect to the payment of the prig (ii) pay the fees and charges of the Paying Agent registration ofCertificates, and with respect to the con above providedin this Ordinance. • hereby covenants with the registered owners of y fees and charges of the Paying AgentRegistrar of and interest on the Certificates, when due, and trar for services with respect to the transfer of .nand exchange of Certificates solely to the extent (g) Substitute Paving A enURe ig stray. The Issuer covenants with the registered owners of the Certificates that at all times while the Certificates are~outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying AgenURegistrar for the Certificates under this Ordinance, and that the Paying Agent/RegistrarwiIl be one entity. The Issuer reserves the right to, and may,~at its option, change the Paying AgentRegistrar upon not less than 120 days written notice to the Paying AgenURegistrar, to be effective not later than 60 days prior to [he next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying AgenURegistrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that it will promptly appoint a competent and legally qualified bank, trust company, financial institution, orb other agency to act as Paying AgentRegistrar under this Ordinance. Upon any change in the Paying AgenURegistrar, the previous Paying AgenURegistrar shall promptly transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Certificates, to the new Paying AgenURegistraz designated and appointed by the Issuer. Upon any change in the Paying Agent/Reg~strar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying AgentRegistrar 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/Begistraz. By accepting the position and performing as such, each Paying Agent/Registraz shall be deemed to have agreed to the provisions of this Orditance, and a certified copy of this Ordinance shall be delivered to each Paying AgenURegistrar. Section 7. FORM OF SUBSTITUTE CERTIFICATES. The form of all Certificates issued in conversion and exchange or replacement of any other Certificate or portion thereof, including the forth of Paying AgenURegistrar's Certificate to be printed on each of such Certificates, and the Form of Assignment to be printed on each ofthe Certificates, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted ors requited by this Ordinance. FORM OF SUBSTITUTE CERTIFICATE (Book-Entry Only Legend, if appropriate) NO. INTEREST RATE UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON PRINCIPAL AMOUNT CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 2007A MATURITY DATE DATED DATE October 1, 2007 CUSIP NO. ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texa<. (the "City" or the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon, calculated on the basis of a 360-day year composed of twelve 30-day months, from October 1, 2007, to the maturity date specified above, at the interest rate per annum specified above; with interest being first due and payable on August 15, 2008, and semiannually on each February 15 and August 15 thereafter, except that if the date of authentication of this Certificate is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is afrer any Record Date (hereinafter defined) but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date. THE PRINCIPAL OF AND INTEREST ON this Certificate are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Certificate shall be paid [o the registered owner hereof upon presentation and surrender of this Certificate at maturity, at the principal corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the "Paying AgenURegistrar" for this Certificate. The payment of interest on this Certificate shall be made by the Paying AgenURegistrar to the registered owner hereof on each interest payment date by check dated as of such interest payment date, drawn by the Paying AgenURegistrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Certificates (the "Certificate Ordinance") to be on deposit with the Paying AgenURegistrar for such purpose as hereinafter provided; and such check shall be sent by the Paying AgenURegistraz by United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying AgentRegistrar, as hereinafter described. However, the payment of such interest maybe made by any other method acceptable to the Paying AgentRegistrar and requested by, and at the risk and expense of, the registered owner hereof. The Issuer covenants with the registered owner of this Certificate that on or before each principal payment date, interest payment date, and accrued interest payment date for this Certificate it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Certificate Ordinance, the amounts required [o provide for the payment, in immediately available funds, of all principal of and interest on the Certificates, when due. IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying AgenURegistrar, if and when funds for the payment of such interest have been received from the Issuer. Notice ofthe Special Record Date and ofthe scheduled payment date ofthe past due interest ("Special Payment Date", which shall be fifteen (I 5) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Certificate appearing on the registration books of the Paying AgenURegistrar at the close of business on the ISth business day next preceding the date of mailing of such notice. IF THE DATE for the payment of the principal of or interest on this Certificate shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS CERTIFICATE is one of an issue of Certificates initially dated October 1, 2007, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $7,065,000, for the purpose of paying all or a portion of the City's contractual obligations incurred pursuant to contracts for the purchase of certain real and personal property, to-wit: improvements to the City's drainage and storm sewer systems and acquisition of related equipment; and also for the purpose of paying all or a portion of the City's contractual obligations for professional services, including engineers, architects, attorneys, map makers, auditors, and financial advisors, in connection with said Certificates of Obligation. ON FEBRUARY 15, 2017, or on any date whatsoever thereafter, the Certificates of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the Issuer may select the maturities of the Certificates to be redeemed. If less than all of the Certificates of any maturity are to be redeemed, the Paying AgentRegistrar shall determine by lot the Certificates, or portions thereof, within such maturity to be redeemed. AT LEAST 30 days prior to the date fixed for any redemption of Certificates or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying AgenURegistrar by United States mail, first-class postage prepaid, to the registered owner of each Certificate to be redeemed at its address as it appeared on the 45th day prior to such redemption date; provided, however, that the failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Certificate. By the date fixed for any such redemption due provision shall be made with the Paying AgenURegistrar for the payment of the required redemption price for the Certificates of portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption. [f such written notice of redemption is given and if due provision for such payment is made, all as provided above, the Certificates or portions thereof which are to be so redeemed thereby automatical]y shall be treated as redeemed priorto their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest from the Paying AgenURegistrar 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 12 rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon [he surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Certificate Ordinance. THIS CERTIFICATE OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shal I be transferred only in the Registration Books of the Issuer kept by the Paying AgentRegistrar acting in the capacity of registraz for the Certificates, upon the terms and conditions setforthintheCertificateOrdinance. Among other requirementsforsuchassignmentandtransfer, this Certificate must be presented and surrendered to the Paying AgenURegistrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying AgenURegistrar, evidencing assignment of this Certificate or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Certificate or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Certificate shall be executed by the registered owner or its duly authorized attorney or representative, to evidence the assignment hereof. Anew Certificate or Certificates payable to such assignee or assignees (which then will be the new registered owner or owners of such new Certificate or Certificates), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Certificate, may be delivered by the Paying AgenURegistrar in conversion of and exchange for this Certificate, all in the form and manner as provided in the next paragraph hereof for the conversion and exchange of other Certificates. The Issuer shall pay the Paying AgenURegistrar s standard or customary fees and charges for making such transfer, but [he one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registtar shall not be required to make transfers of registration ofthis Certificate or any portion hereof during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date. The registered owner of this Certificate shall be deemed and treated by the Issuer and the Paying AgenURegistrar as the absolute owner hereof for al] purposes, including payment and discharge of liability upon this Certificate to the extent of such payment, and the Issuer and the Paying AgenURegistrar shall not be affected by any notice to the contrary. ALL CERTIFICATES OF THIS SERIES are issuable solely as fully registered certificates, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Certificate Ordinance, this Certificate, may, at the request of the registered owner or the assignee or assignees hereof, be converted into and exchanged for a like aggregate principal amount of ful ly registered certificates, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon sursender of this Certificate to the Paying AgenURegistrar for cancellation, all in accordance with the form and procedures set forth in the Certificate Ordinance. The Issuer shall pay the Paying AgenURegistrar's standard or customary fees and charges for transferring, converting, and exchanging any Certificate or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying AgenURegistrar shall not be required to make any such conversion and exchange during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date. IN THE EVENT any Paying AgenURegistrar for the Certificates is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Certificate Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and will promptly cause written notice thereof to be mailed to the registered owners of the Certificates. 13 IT IS HEREBY certified, recited, and covenanted that this Certificate has been duly and validly authorized, issued, and delivered; that al] acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery ofthis Certificate have been performed, existed, and been done in accordance with law; that this Certificate is a general obligation of the Issuer, issued on the full faith and credit thereof; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal ofthis Certificate, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in [he Issuer, and have been pledged irrevocably for such payment, within the limit prescribed by law; and that, together with other parity obligations, this Certificate, and the other Certificates of this Series, additionally are payable from and secured by certain surplus revenues (not to exceed $10,000 in aggregate amount) derived by the Issuer from the ownership and operation of the City's Utility System (consisting of the City's combined waterworks system, sanitary sewer system, and electric light and power system), all as provided in the Certificate Ordinance. THE ISSUER has reserved the right to issue, in accordance with law, and in accordance with the Certificate Ordinance, other and additional obligations, and to enter into contracts, payable from ad valorem taxes and/or revenues of the City's Utility System, on a parity with, or with respect to said revenues, superior in lien to, this Certificate. BY BECOMING the registered owner ofthis Certificate, the registered ownerthereby acknowledges all of the terms and provisions of the Certificate Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Certificate Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Certificate and the Certificate Ordinance constitute a contract between each registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Certificate to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned and attested with the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer [o be duly impressed, or placed in facsimile, on this Certificate. ATTEST: By: Jennifer Walters City Secretary, City of Denton, Texas CITY OF DENTON, TEXAS Perry R. McNeill Mayor, City of Denton, Texas (CITY SEAL) FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE 1[ is hereby certified that this Certificate has been issued under the provisions of the Certificate Ordinance described on the face ofthis Certificate; and that this Certificate has been issued in conversion of and exchange for or replacement of a certificate, certificates, or a portion of a certificate or certificates of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. 14 THE BANK OF NE W YORK TRUST COMPANY, NATIONAL ASSOCIATION, DALLAS, TEXAS, Paying Agent/Registrar Dated BY. Authorized Representative (INSERT BOND INSURANCE LEGEND, IF ANY) FORM OF ASSIGNMENT: ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner ofthis Certificate, or duly authorized representative or attorney thereof, hereby assigns this Certificate to / / (Assignee's Social Security or Taxpayer Identification Number (print or typewrite Assignee's name and address, including zip code) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Certificate on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises. Dated: 15 Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participafing in a securities transfer association recognized signature guarantee program. Registered Owner NOTICE: This signaturemustcorrespondwith the name ofthe Regi stered Owner appearing on the face of this Certificate in every particular without alteration or enlargement or any change whatsoever. Section 8. TAX LEVY. A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby created solely for the benefit ofthe Certificates, and the Interest and Sinking Fund shall be established and maintained by the Issuer at an official depository bank of the Issuer. A Mandatory Redemption Account is hereby established within the Interest and Sinking Fund. The interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying the interest on and principal of [he Certificates. All ad valorem taxes levied and collected for and on account of the Certificates, together with any premium and accrued interest received upon sale of the Certificates, shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Certificates or interest thereon are outstanding and unpaid, the governing body of the Issuer shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Certificates as such interest becomes due, and to provide and maintain a sinking fund adequate to pay the principal of its Certificates as such principal matures or is scheduled for redemption (but never less than 2% ofthe original principal amount of the Certificates as a sinking fund each year), including such amounts as are necessary to satisfy the mandatory sinking fund schedule for the Certificates maturing February 15, 20_ and February l5, 20_ as set forth in the Form of Initial Certificate and the Form of Substitute Certificate contained herein, which amounts shall be deposited into the Mandatory Redemption Account, with such mandatory redemption constituting payment at maturity. Said tax shall be based on the latest approval tax rolls of the Issuer, with full allowance being made far 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 [he Certificates, as such interest comes due and such principal matures or is scheduled for redemption, are hereby pledged for such payment, within the limit prescribed by law. Section 9. SURPLUS REVENUES. The Certificates additionally shall be payable from and secured by surplus revenues in accordance with Section 1502 of the Texas Government Code, as amended, to the extent hereinafter permitted, derived by the Issuer from the ownership and operation of the Issuer's Utility System (consisting of its combined waterworks system, sanitary sewer system, and electric light and power system) remaining after (a) payment of all amounts constituting operation and maintenance expenses of said Utility System, and (b) payment of all debt service, reserve, and other requirements and amounts required to be paid under all ordinances heretofore or hereafter authorizing (i) all bands and (ii) all other obligations not on a parity with the Certificates, which aze payable from and secured by any Utility System revenues, and (c) payment of all amounts payable from any Utility System revenues pursuant to contracts heretofore or hereafter entered into by the Issuer in accordance with law (the "Surplus Revenues"). If, for any reason, the Issuer fails to deposit ad valorem taxes levied pursuant to Section 8 hereof to the credit of the Interest and Sinking Fund in an amount sufficient to pay, when due, the principal of and interest on the Certificates, then 16 Surplus Revenues, to the extent hereinafter permitted, shall be deposited to the credit of the Interest and Sinking Fund and used to pay such principal and/or interest. A maximum aggregate of $10,000 of Surplus Revenues may be used to pay principal and/or interest on the Certificates and any obligations on a parity therewith. The Certificates and any obligations on a pazity therewith aze not, and shall not be deemed to be, payable from or secured by any Surplus Revenues in excess of an aggregate of $10,000. Until and unless an aggregate of $10,000 of Surplus Revenues actually is used to pay any such principal and/or interest, additional obligations, payable from and secured by all or any remaining unused part of said aggregate of $10,000 of Surplus Revenues, may be issued by the Issuer on a parity with the Certificates and any other then outstanding parity obligations, with the Certificates and all such additional parity obligations to be payable from and secured equally and ratably by all or any remaining unused part of said aggregate. The Issuer reserves, and shall have, the right to issue bonds, and other obligations not on a parity with the Certificates, and to enter into contracts, in accordance with applicable laws, to be payable from and secured by any Utility System revenues other than the aggregate of $10,000 of Surplus Revenues as described above. The Certificates are on a parity with those issues of City of Denton Certificates of Obligation, Series 1998, Series 1999, Series 2000, Series 2001, Series 2002, Series 2003, Series 2004, Series 2005, Series 2006 and Series 2007 (the "Outstanding Certificates"), as permitted in the Ordinances authorizing same; and it is hereby found and determined that none of the above defined Surplus Revenues have ever been used to pay any principal and/or interest on the Outstanding Certificates. Section 10. DEFEASANCE OF CERTIFICATES. (a) Any Certificate and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Certificate")within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Certificate, plus interest thereon to the due date either (i) shall have been made or caused to be made in accordance with the teens thereof, or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registraz for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Certificates shall have become due and payable. At such time as a Certificate shall be deemed to be a Defeased Certificate hereunder, as aforesaid, such Certificate and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any moneys so deposited with the Paying Agent/Registraz may at the written direction of the Issuer also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Govemment Obligations received by the Paying Agent/Registrar which is not required for the payment of the Certificates and interest thereon, with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. (c) The term "Government Obligations" as used in this Section shall mean (i) direct, noncallable obligations 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 of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the purchase thereof are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the District adopts or approves the proceedings authorizing the 17 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 AgenURegistrar shall perform the services of Paying AgenURegistrar for such Defeased Certificates the same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 11. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES. (a) Replacement Certificates. In the event any outstanding Certificate is damaged, mutilated, lost, stolen, or destroyed, the Paying AgenURegistrar 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 far Replacement Certificates. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Certificates shall be made by the registered owner thereofto the Paying AgenURegistrar In every case of loss, theft, or destruction of a Certificate, [he registered owner applying for a replacement certificate shall furnish to the Issuer and to the Paying AgenURegistrar 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 fumish to the Issuer and the Paying AgenURegistrar evidence to their satisfaction ofthe 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 AgenURegistrar for cancellation the Certificate so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event of any such Certificate shall have matured, and no default has occurred which is then continuing in the payment of the principal of, or interest on the Certificate, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Certificate) instead of issuing a replacement Certificate, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Certificates. Prior to the issuance of any replacement certificate, the Paying AgenURegistrar shall charge the registered owner of such Certificate with all legal, printing, and other expenses in connection therewith. Every replacement certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the last, stolen, or destroyed Certificate shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Certificates duly issued under this Ordinance. (e) Authority for Issuing Replacement Certificates. In accordance with Chapter 1201, Texas Government Code, this Section of this Ordinance shall constitute authority for the issuance of any such replacement certificate without necessity of further action by the governing body of the issuer or any other body or person, and the duty of the replacement of such certificates is hereby authorized and imposed upon the Paying AgenURegistrar, and the Paying AgenURegistrar shall authenticate and deliver such Certificates in the form and manner and with the effect, as provided in Section 6(d) of this Ordinance for Certificates issued in conversion and exchange for other Certificates. Section 12. CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES; CERTIFICATE COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE. The Mayor of the Issuer is hereby authorized to have control of the Initial Certificate issued hereunder and al I necessary records and proceedings pertaining to the Initial Certificate pending its delivery and its investigation, exami- nation, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller 18 of Public Accounts of the State of Texas. Upon registration of the Initial Certificate said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the Initial Certificate, and the seal of said Comptroller shall be impressed, or placed in facsimile, on the Initial Certificate. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSP numbers may, at the option ofthe Issuer, be printed on the Initial Certificate or on any Certificates issued and delivered in conversion of and exchange or replacement of any Certificate, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Certificates. The preamble to this Ordinance is hereby adapted and made a part hereof for al I purposes. If insurance is obtained on any of the Certificates, the Initial Certificate and al I other Certificates shall bear an appropriate legend concerning insurance as provided by the insurer. Section 13. COVENANTS REGARDING TAX-EXEMPTION OF INTEREST ON THE CERTIFICATES. (a) Covenants. The Issuer covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Certificates as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (1) to take any action to assure that no more than ] 0 percent of the proceeds of the Certificates or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(6)(6) of the Code or, if more than 10 percent of the proceeds or [he projects financed therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Order or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Certificates, in contravention of section 141(6)(2) of the Code; (2) to take any action to assure that in the event that the "private business use" described in subsection (l) hereofexceeds 5 percent ofthe 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 fora "private business use" which is "related" and not "disproportionate," within the meaning of section 141(6)(3) of the Code, to the governmental use; (3) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Certificates (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section ] 41(c) of the Code; (4) to refrain from taking any action which would otherwise result in the Certificates being treated as "private activity bonds" within the meaning of section 141(6) of the Code; (5) to refrain from taking anyactionthatwouldresultintheCertificatesbeing"federally guaranteed" within the meaning of section 149(6) of the Code; (6) to refrain from using any portion of the proceeds of the Certificates, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(6)(2) ofthe Code) which produces a materially higher yield over the term of the Certificates, other than investment property acquired with -- (A) proceeds of the Certificates invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 90 days or less until such proceeds are needed for the purpose for which the bonds are issued, 19 (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Certificates; (7) to otherwise restrict the use of the proceeds of the Certificates or amounts treated as proceeds ofthe Certificates, as may be necessary, so that the Certificates do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Certificates) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Certificates have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. (b) Proceeds. The Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Certificates. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by [he U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Certificates, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely 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 which impose additional requirements which are applicable to the Certificates, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on [he Certificates under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Certificates. Section 14. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section 1 of this Ordinance (the "Project") on its books and records in accordance with the requirements of the Internal Revenue Code. The Issuer recognizes that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 18 months of the later of the date that (I) the expenditure is made, or (2) the Project is completed; but in no event later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding, the Issuer recognizes that in order for proceeds to be expended under the Internal Revenue Code, the sale proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Certificates, or (2) the date the Certificates are retired. The Issuer agrees to obtain the advice of nationally-recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Certificates. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. 20 Section l5. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion ofnationally-recognized bond counsel that such sale or other disposition will not adversely affect [he tax-exempt status of the Certificates. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 16. INTEREST EARNINGS ON CERTIFICATE PROCEEDS; USE OF ACCRUED INTEREST AND PREMIUM RECEIVED FROM SALE OF CERTIFICATES. (a) Interest Earnines. Interest earnings derived from the investment of proceeds from the sale ofthe Initial Certificate shall be used along with other proceeds For the purposes for which the Certificates are issued; provided that after completion of such purposes, if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however, that any interest earnings on certificate proceeds which are required to be rebated to the United States of America pursuant to Section 13 hereof in order to prevent the Certificates from being "arbitrage bonds" within the meaning of the Code shall be so rebated and not considered as interest earnings for the purposes of this Section. (b) Use of Accrued Interest and Premium. The accrued interest received from the sale of the Bonds shall be deposited to the Interest and Sinking Fund. The cash premium received from the sale of the Bonds in the amount of $35,276.15 shall be applied to pay costs of issuance with any remaining amount to be deposited into the Interest and Sinking Fund. The remainder of the proceeds of the sale of the Bonds in the amount of $7,065,000.00 shall be deposited to a construction account and used for the purposes referenced in Section l of this Certificate Ordinance. Section 17. SALE OF INITIAL CERTIFICATE. The Initial Certificate is hereby sold and shall be delivered to Citigroup Global Markets, Inc., for cash for the par value thereof and accrued interest thereon to date of delivery plus a cash premium of$35,276.15. It is hereby officially found, determined, and declared that the Initial Certificate has been sold at public sale to the bidder offering the lowest interest cost, after receiving sealed bids pursuant to aNotice ofSale and Bidding Instructions and Preliminary Official Statement dated September 2l, 2007, prepared and distributed in connection with the sale ofthe Initial Certificate. 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 [he governing body of the Issuer, and their use in the offer and sale of the Certificate is hereby approved. It is further officially found, determined, and declared that the statements and representations contained in said Notice of Sale and Bidding Instructions and Preliminary Official Statement are true and corcect in all material respects, to the best knowledge and belief of the governing body of the Issuer. Section 18. OFFICIAL STATEMENT. An Official Statement dated as ofthe date ofthis meeting has been prepared in connection with the sale of the Initial Certificate and the Certificates, in the form and substance submitted at this meeting. Said Official Statement and any supplement or addenda thereto have been and are hereby approved, and their use in the offer and sale of the Certificates is hereby approved. It is further officially found, determined, and declared that the statements and representations contained in said Official Statement are true and correct in al] material respects, to the best knowledge and belief of the Issuer. Section 19. DTC REGISTRATION. The Certificates initially shall be issued and delivered in such manner that no physical distribution of the Certificates wil I be made to the public, and The Depository Trust Company ("DTC"), New York, New York, initially will act as depositary for the Certificates. DTC has represented that it is a limited purpose trust company incorporated under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered under Section 17A ofthe federal Securities 21 Exchange Act of 1934, as amended, and the Issuer accepts, but in no way verifies, such representations. The Initial Certificate authorized by this Ordinance shall be delivered to and registered in the name of the Purchaser. However, it is a condition of delivery and sale that the Purchaser, immediately after such delivery, shall cause the Paying AgenURegistrar, as provided for in this Ordinance, to cancel said Initial Certificate and deliver in exchange therefor a substitute Certificate for each maturity of such Initial Certificate, with each such substitute Certificate to be registered in the name of CEDE & CO., the nominee of DTC, and it shall be the duty of the Paying AgenURegistrar to take such action. [t is expected that DTC will hold the Certificates on behalf of the Purchaser and/or the DTC Participants, as defined and described in the Official Statement referred to and approved in Section 18 hereof (the "DTC Participants"). So long as each Certificate is registered in the name of CEDE & CO., the Paying AgentRegistrar shall treat and deal with DTC in all respects the same as if it were the actual and beneficial owner thereof. It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Certificates by DTC Participants in integral amounts of $5,000, with transfers of ownership being effected on the records of DTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Certificates initially deposited with DTC shall be immobilized and not be further exchanged for substitute Certificates except as hereinafrer provided. The Issuer is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, will not be responsible or liable for maintaining, supervising, or reviewing the records of DTC or the DTC Participants, or protecting any interests or rights of the beneficial owners of the Certificates. It shall be the duty of the Purchaser and the DTC Participants to make all arrangements with DTC to establish this book-entry system, the beneficial ownership of the Certificates, and the method of paying the fees and charges of DTC. The Issuer does not represent, nor does it in any way covenant that the initial book-entry system established with DTC will be maintained in the future. The Issuer reserves the right and option at any time in the future, in its sole discretion, to terminate the DTC (CEDE & CO.) book-entry only registration requirement described above, and to permit the Certificates to be registered in the name of any owner. If the Issuer exercises its right and option to terminate such requirement, it shall give written notice of such termination to the Paying AgenURegistrar and to DTC, and thereafterthePaying AgentRegistrar shall, upon presentation and proper request, register any Certificate in any name as provided for in this Ordinance. Notwithstanding the initial establishment of the foregoing book-entry system with DTC, if for any reason any of the originally delivered substitute Certificates is duly filed with the Paying AgenURegistrar with proper request for transfer and substitution, as provided far in this Ordinance, substitute Certificates will be duly delivered as provided in this Ordinance, and there will be no assurance or representation that any book-entry system will be maintained for such Certificates. Section 20. CONTINUING DISCLOSURE. (a) Annual Reports. (i) The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after 2007, financial information and operating data with respect to the Issuer of the general type included in the final Official Statement authorized by Section 18 of this Ordinance, being the information described in Exhibit A hereto, which Exhibit is attached to and incorporated in this Ordinance as if written word for word herein. Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit A hereto, or such other accounting principles as the Issuer may be required to employ from time to time pursuant to state law or regulation, and (2) audited, if the Issuer commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required time and will provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements become available. (ii) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more 22 documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or fi]ed with the SEC. (b) Material Event Notices. The Issuer shall notify any SID and each NRMSIR, in a timely manner, of any of the following events with respect to the Certificates, if such event is material within the meaning of the federal securities laws: 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; 8. Certificate calls; 9. Defeasances; 10. Release, substitution, or sale of property securing repayment ofthe Certificates; and 1 1. Rating changes. The Issuer shall notify any SID and each NRMSIR, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordance with subsection (a) ofthis Section by the time required by such subsection. (c) Limitations. Disclaimers, and Amendments. (i) The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Certificates within the meaning of the Rule, except that the Issuer in any event will give the notice required by Subsection (b) hereof of any Certificate calls and defeasance that cause the Issuer to no longer be such an "obligated person". (ii) The provisions ofthis Section are for the sole benefit ofthe 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. 23 (iii) UNDERNOCIRCUMSTANCESSHALLTHEISSUER,ITSOFFICERS,AGENTSAND EMPLOYEES, BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. (iv) No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance far 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 incompliance 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 Certificates consent to such amendment or (b) a person that is unaffiliated with the Issuer (such as nationally recognized bond counsel) determined that such amendment will not materially impair the interest of the registered owners and beneficial owners of the Certificates. If the Issuer so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with subsection (a) of this Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of 5nancial information or operating data so provided. The Issuer may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction entersjudgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Certificates in the primary offering of the Certificates. (d) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Rule" means SEC Rule 15c2-12, as amended from time to time. SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. Section 21. PROTECTION OF PLEDGE. Chapter 1208, Government Code, applies to the issuance of the Certificates and the pledge ofthe taxes and surplus revenues granted by the Issuer under Sections 8 and 24 9 of this Ordinance, and is therefore valid, effective, and perfected. if Texas law is amended at any time while the Certificates are outstanding and unpaid such that the pledge of the taxes and surplus revenues granted by the Issuer under Sections 8 and 9 of this Ordinance is to be subject to the filing requirements of Chapter 9, Texas Business & Commerce Code, then in order to preserve to the registered owners of the Certificates the perfection of the security interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Texas Business & Commerce Cade and enable a filing to perfect the security interest in said pledge to occur. Section 22. FURTHER PROCEDURES. The Mayor ofthe Issuer, the City Secretary of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the teens and provisions of this Certificate Ordinance, the Certificates, the sale of the Certificates, the Notice of Sale and Bidding Instructions and the Official Statement; and the Assistant City Manager of the City shall cause the expenses of issuance of the Certificates to be paid from the proceeds of sale of the Initial Certificate or from other lawfully available funds of the Issuer. In case any officer whose signature shall appear on any Certificate shall cease to be such officer before the delivery of such Certificate, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. Section 23. OPEN MEETINGS. The City Council has found and determined that the meeting at which this Ordinance is considered is open to the public and that notice thereof was given in accordance with the provisions of the Texas Open Meetings, Law, Tex. Gov't. Code, Chapter 551, as amended. Section 24. EFFECTIVE DATE. This Ordinance shall become effective immediately upon its passage and approval. 25 PASSED AND APPROVED this the 2nd da of October, 2007. Perry cNeill, Mayor ~~Q~//~~ ATTEST: J fifer Walt, City Secretary APPROVED AS TO LEGAL FORM: EXffiBIT A DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 20 of this Ordinance: Annual Financial Statements and Operating Data The financial information and operating data with respect to the Issuer to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the tables of the Official Statement referred to) below: Tables numbered 1 through 5 and 7 through l4, inclusive, under the captions "Tax Information", "Debt Information" and "Financial Information" in the Official Statement. Appendix B in the Official Statement. Acwunting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in the paragraph above.