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2000-164 ORDINANCE NO 2000-164 ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON CERTIFICATES OF OBLIGATION, SERIES 2000, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO, AND PROVIDING AN EFFECTIVE DATE TI-IE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, the CerUficate of Obhganon Act of 1971, as araeoded and codified (the "Act") and Chapters 1207 and 1501 of the Texas Government Code, as amended, penmt the City to ~ssue and sell for cash the Cernfieates of Obhganon hereinafter anthonzed, and WHEREAS, the City has duly caused nonce of ~ts mtennon to ~ssue the Ceruficates of Obhgat~on hereinafter anthonzed to be pubhshed atthe tunes and ua the manner reqmred by the Act and no petmon has been filed protesting the ~ssuance thereof, NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS Seenen 1 AMOUNT AND PURPOSE OF THE CERTIFICATES The certificate or certificates of the C~ty of Denton, Texas (the "Issuer") are hereby anthonzed to be ~ssued and delivered m the aggregate pnne~pal amount of $3,125,000, for the purpose of paying all or a portren of the C~ty's contractual obllgataons recurred pursuant to contracts for the purchase of certain real and personal property, to-wxt (a) renovation to C~ty Hall East (located at 501 Fhckory), Co) enmmamcanons eqmpment for C~ty Hall (located at 215 E Mcganney) and C~ty Hall West (located at 221 N Elm), and (c) fuel and mamtenanco facfl~nes for the C~ty's vehicles, and also for the purpose of paying all or a port,on of the C~ty's contractual obhganons for professional serv~cos of engineers, architects, attorneys, map makers, auchtors, and financial advisors tn conne, ct~on wxth the preparanon of the C~ty's Comprehensive Development Plan and w~th the above contracts and smd Cernficates of Obhganon Section 2 DESIGNATION OF THE CERTIFICATES Each certificate issued pursuant to th~s Ordinance shall be designated "CITY OF DENTON CERTIFICATE OF OBLIGATION, SERIES 2000", and annally there shall be msued, sold, and dehvered hereunder a single fully regastered certificate, vnthout interest coupons, payable tn installments of principal (the "Imtml CerUfieate"), but the lmual Certificate may be assigned and transferred and/or converted into and exchanged for a hke aggregate pnnc~pal amount of fully registered cerUficates, vathout interest coupons, having serial matunnes, and m the denommaUon or deoonu- nanons of $5,000 or any integral mulnple of $5,000, all m the manner hereinafter provided The term "Cemficates" as used m flus Ordinance shall mean and include collecnvely the Imnal Cernficate and all subsmute certificates exchanged therefor, as well as all other subsUtute certificates and replacement comficates ~ssued pursuant hereto, and the term "Cemficates" shall mean any of the Cemflcates Sectmn 3 INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL CERTIFICATE (a) The Imtaal Cemficate ~s hereby anthonzed to be ~ssued, sold, and dehvered hereunder as a single fully registered Certaficate, w~thout interest coupons, dated May 1, 2000, m the denonunanon and aggregate FIRST SOUTHWEST COMPANY or to the registered assignee or assignees of smd Certificate or any portion or portions thereof (m each case, the "registered owner"), with the annual installments of principal of the Initial Certificate to be payable on the dates, respectavely, and in the principal amounts, respectively, stated m the FORM OF INITIAL CERTIFICATE set forth m this Ordinance (b) The Imtlal Certificate 0) may be assigned and transferred, (ii) may be converted and exchanged for other CerUfieates, (m) shall have the characteristics, and (iv) shall be signed and sealed, and the principal of and interest on the Initial Certificate shall be payable, all as provided, and in the manner required or mch- cated, in the FORM OF INITIAL CERTIFICATE set forth m this Ordinance SceUon4 INTEREST TheunpaidprmelpalbalanceofthelmtmlCcrtlficateshallbearmterestfrom the date of the lmual Cerufieate to the respeeUve scheduled due dates of the ~nstallments of principal of the Imtml Certificate, and said interest shall be payable, all m the manner prowded and at the rates and on the dates stated m the FORM OF INITIAL CERTIFICATE set forth m flus Ordinance Section 5 FORM OF INITIAL CERTIFICATE Thc form of the Imnal Certificate, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on thc Imtaal Certificate, shall be substantially as follows FORM OF INITIAL CERTIFICATE NO R-1 $3,125,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 2000 THE CITY OF DENTON, m Denton County, Texas (the "Issuer"), being a pohUcal subdivision of the State of Texas, hereby pronuses to pay to FIRST SOUTHWEST COMPANY or to thc registered assignee or assignees of flus Certificate or any portion or portions hereof (m each case, the "registered owner**) the aggregate prmctpal amount of $3,125,000 (THREE MILLION ONE HUNDRED TWENTY FIVE THOUSAND DOLLARS) in annual installments of principal due and payable on February 15 m each of the years, and m the respective principal amounts, as set forth m the following schedule, and to pay interest, from the date of flus Ce~ficate hereinafter slated, on the balance of each such installment of principal, respectively, from tune to time remaimng unpmd, at the rates per annum as follows PRINCIPAL INTEREST PRINCIPAL INTEREST YEAR AMOUNT RATE(%) YEAR AMOUNT RATE(%) 2001 160,000 6 125 2011 155,000 5 300 2002 160,000 6 125 2012 155,000 5 400 2003 160,000 6 125 2013 155,000 5 500 2004 160,000 6 125 2014 155,000 5 600 2005 160,000 6 125 2015 155,000 5 650 2006 155,000 6 125 2016 155,000 5 700 2007 155,000 6 000 2017 155,000 5 750 2008 155,000 6 000 2018 155,000 5 800 2009 155,000 6 000 **** ******* ***** 2010 155,000 5 250 2020 310,000 5 875 Interest shall first be due and payable on February 15, 2001, and senuannually on each February 15 andAugust 15thereafierwluleflusBondoranypomonhereof~soutstandmgandunpaid Sa~dmterestshall be calculated on the bas~s ora 360-day year composed of twelve 30-day months THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON flus Certificate are payable tn lawful money of the Umted States of America, w~thout exchange or collectxon charges The installments of principal and the interest on flus Certificate are payable to the regmered owner hereof through the servtces of BANK ONE, TEXAS, N A, FORT WORTH, TEXAS, winch is the "Paying Agent/Registrar" for flus Certificate Payment of all prmcxpal of and interest on flus Certxficate shall be made by the Paying AgenffRes~strar to the registered owner hereof on each principal and/or interest payment date by check dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer reqmred by the ordinance authorizing the xssuance of flus Certificate (the "Certificate Ordinance") to be on deposxt w~th the Paying Agent/Regmtrar for such purpose as hereinafter prowded, and such check shall be sent by the Paytng Ageat/Reg~strar by Umted States mall, first-class postage prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the last day of tho month next preceding each such date (the "Record Date") on the Reg~stratl0n Books kept by the Paying Agent/Regqstrar, as herema~er described The Issuer covenants with the registered owner of flus Cemfieate that on or before each pnncipal and/or interest payment date for this Certificate it wall make available to the Paying Ageat/Reg~strar, from the "Interest and Stoking Fund" created bythe Certificate Ordinance, the mounts reqmred to prowde for the payment, m mune&ately avmlable funds, of all pnnc~pal of and interest on flus Cemflcate, when due IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for flurry (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be estabhshed by the Paying Aslent/Reglstrar, ffand when funds for the payment of such interest have been received from the Issuer NoUco of the Spccxal Record Date and of the scheduled payment date of the past due interest ("Specxal Payment Date", winch shall be fifteen (15) days after thc Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by Umted States mall, first class postage prepaxd, to the address of each Holder of a Certtficate appearing on the rcglstratmn books of the Paying Agent/Registrar at the close of business on the 15th business day next prexw,,dmg the date of madmg of such notice IF THE DATE for thc payment of the pnne~pal of or interest on thxs Cemfieate shall be a Saturday, Sunday, a legal hohday, or a day on winch banking mstauuons in the C~ty where the Paying Agent/Regmrar is located are authorized by law or executive order to close, then the date for such payment shall bc the next succeeding day wluch xs not such a Saturday, Sunday, legal holiday, or day on wtuch banking mstamt~ons are authonzed to close, and payment on such date shall have the same force and effect as if made on the original date payment was due THIS CERTIFICATE has been anthonzed m accordance w~th the Constitution and laws of the State of Texas m the pnnc~pal amount of $3,125,000 for the purpose of paying all or a portion of the Oty's contractual obhgat~ons incurred pursuant to contracts for the purchase of certain real and personal property, to-war (a) renovation to C~ty Hall East (located at 5011-hckory), (b) commumcataons equipment for C~ty Hall (located at 215 E McKmney) and Oty Hall West (located at 221 N Elm), and (c) fuel and maintenance faohtles for the C~ty's vebacles, and also for the purpose of paying all or a pomon &the City's contractual obligations for professmnal serwces of engineers, arcbateets, attorneys, map makers, auditors, and financial adwsors m connection ~th the preparaUon of the C~ty's Comprehensive Development Plan and w~th the above contracts and smd Certificates of Obhganon ON FEBRUARY 15, 2010, or on any date whatsoever thereafter, the unpaid installments of pnnc~pal of tins Certificate of Obhgatloo may be prepaid or redeemed prior to their scheduled due dates, at the optmn of the Issuer, w~th funds derived from any avadable source, as a whole, or m part, and, ifm part, the particular portion of flus Cemficate of Obhgatlon to be prepaid or redeemed shall be selected and designated by the Issuer (prowded that a portaon of tins Certificate of Obhgat~on may be redeemed only m an mtegral multiple of $5,000), at the prepayment or redemption price of the par or principal amount thereof, plus accrued mterest to the date fixed for prepayment or redemption THE CERTIFICATES ofthas Senee scheduled to mature on FEBRUARY 15, 2020 are subject to mandatory redemptaoo prior to their scheduled matuntaes, and shall be redeemed by the Issuer, m part, prior to their scheduled matuntaes, w~th money from the Mandatory Redemption Account of the Interest and Sinking Fund, with the pamcular Certificates or portmn thereof to be redeemed to be selected by the Paying Agent/Registrar, by lot or other customary method (provxded that a portaon cfa Cemficate may be redeemed only in an integral multiple of $5,000), at a redemption price equal to the par or pnnc~pal amount thereof and accrued interest to the date of redemption, on the dates, and m the principal amounts, respeetavely, as shown m the following schedule February 15, 2020 M~ntY Mandatory Pnnclpal Redemotlon D~$ Amounts February 15, 2019 155,000 February 15, 2020 (maturity) 155,000 The pnn¢lpal amount of the Certificates rcqmred to be redeemed on the Mandatory Redemptmn Dates pursuant to the foregoing shall be reduced, at the optmn of the Issuer by the pnnopal amount of any Certificates out of the maturity scheduled for February 15, 2020 wbach, at least 45 days prior to the aforesaid appropriate redempuon date (1) shall have been acquired by the Issuer at a price not exceedmg the pnnc~pal amount of such Certificates plus accrued interest to the date of purchase thereof, and dehvered to the Paying Agent/Registrar for cancellatmn, or (2) as shall have been redeemed pursuant to the optmnal redemptmn prows~ons hereof and not prewously erediWxt to the mandatory stoking fund redemption During any period m wluch ownerslup of the Certafi~ates as determined by a book entry at a seeuntaes depository for the Ce~flcates, if fewer than all of the Ce~flcates of the same matanty and beanng such interest rate shall be selected m accordance w~th the arrangements between the Issuer and the seeunt~es depository 4 AT LEAST 30 days prior to the date fixed for any such prepayment or redempt,on a written not,ce of such prepayment or redemption shall be mailed by the Paying Agent/Reg,strar to the reg, stered owner hereof By the date fixed for any such prepayment or redempt,on due prov,sion shall be made by the Issuer w,th the Paying Agent/Registrar for the payment of the requ,red prepayment or redempt,on pr,ce for flus Certificate or the port,on hereof wh,ch is to be so prepa,d or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption If such written notice of prepayment or redemption ,s gtven, and ffdue prov,slon for such payment ,s made, all as prowded above, flus Certificate, or the pon,on thereof wh, ch ,s to be so prepmd or redeemed, thereby automat,cally shall be treated as prepaid or redeemed prior to ,ts scheduled due date, and shall not bear interest aider the date fixed for ,ts prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redempt,on price plus accrued interest to the date fixed for prepayment or redempt,on fi.om the Paying AgentYReg,strar out of the funds provided for such payment The Paying Agent/Regtstrar shall record m the Reg,straUon Books all such prepayments or redempt,ons ofprmexpal of flus Cert,ficate or any port~on hereof THIS CERTIFICATE, to the extent of the unpa,d prme,pal balance hereof, or any unpa,d pon,on hereof,n any integral mnlt,ple of $5,000, may be ass,gned by the ,mt,al reg,stered owner hereof and shall be transferred only m the Regxstrat,on Books of the Issuer kept by the Paying Agent/Registrar acting m the capac,ty of registrar for the Certxfieates, upon the terms and ooncht,ons set forth m the Certificate Ordinance Among other reqmr~raents for such transfer, this Certificate must be presented and surrendered to the Paying Agent/Registrar for cancellation, together w~th proper mstrnments of ass,gnment, ,n form and w,th guarantee of s,guatores sat,sfaetory to the Paying Agent/Registrar, ev,dencmg assxgnment by the matml registered owner of this CerUficate, or any portion or portions hereof m any integral mult,ple of $5,000, to the assxguee or ass~guees m whose name or names tins CerUflcate or any such pomon or poruons hereof~s or are to be trans- ferred and regustered Any instrument or instruments ofass,gmnent sat,sfaetory to the Pay,ng AgentYReg~strar may be used to e~dence the assignment of flus Cemficate or any such pon,on or porUons hereof by the ant,al reg,stered owner hereof A new cerUficate or cert,ficates payable to such ass,guee or assxgnees (wh,ch then will be the new regxstered owner or owners of such new Cemficate or Cert,ficates) or to the nuUal registered owner as to any pomon of flus CerUfieate wtueh ,s not being ass,gued and transferred by the anual reg,stered owner, shall be dehvered by the Paying Agent/Registrar m oonvers,on of and exchange for flus CerUficate or any pon,on or porUons hereof, but solely m the form and manner as provsded m the next paragraph hereof for the convemen and exchange of flus CerUficate or any poruon hereof The reg,stered owner of flus Cert,ficate shall be deemed and treated by the Issuer and the Paymg AgenffReg~strar as the absolute owner hereof for all purposes, including payment and d,scharge ofhabfixty upon flus Certificate to the extent of such payment, and the Issuer and the Paymg Agent/Reg,strar shall not be affected by any not,ce to the contrary AS PROVIDED above and m the Certificate Ordinance, flus Ceruficate, to the extent of the unpatd print,pal balance hereof, may be converted into and exchanged for a hke aggregate prmc,pal amount of fully regxstered cerUfieates, w~thout mU:rest coupons, payable to the ass,guee or assxgnces duly designated m writing by the n'ut,al registered owner hereof, or to the untml registered owner as to any poruon of flus Cert,ficate wh,ch ,s not being assxgned and transferred by the nut, al registered owner, m any denommat,on or denominations m any integral mulUple of $5,000 (subject to the requxrement heremai~er stated that each subsutute cerUficate issued m exchange for any port~on of flus Cert,ficate shall have a single stated prmc,pal maturity date), upon surrender of tins CerUficate to the Paying Agent/Reg,strar for cancellat,on, all m accordance with the form and procedures set forth m the Ceruficate Ordinance If flus Ceruficate or any pon,on hereof is assigned and transferred or converted each cert,ficate issued m exchange for any portion hereof shall have a single stated principal matonty date corresponding to the due date of the installment of prme,pal 0fflus Ceruficate or porUon hereof for wh,eh the subst,tute cert,ficate ,s being exchanged, and shall bear ,nter~st at the rate apphcable to and borne by such installment of pnncxpal or pon,on thereof No such cert,flcate shall be payable m installments, but shall have only one stated prmcxpal maturity date AS PROVIDED IN THE CERTIFICATE ORDINANCE, THIS CERTIFICATE IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more asstgnees, but the cerUficates tssued and dehvered m exchange for flus Certificate or any portton hereof may be asstgned and transferred, and converted, subsequently, as provtded tn the Certtficate Ordinance The Issuer shall pay the Paying Agent/R~g~strar's standard or customary fees and charges for transferring, converting, and exchangtn8 flus Certxflcate or any port,on thereof, but the one requestmg such transfer, conversion, and exchange s~ll pay any taxes or governmental charges reqmred to be pard wah respect thereto The Paying Agent/Registrar shall not be required to make any such asstgnment, convemon, or exchange during the period commencing w~th the close ofbusmess on any Record Date and ending wtth the opening of business on the next following pnnc~pal or interest payment date IN THE EVENT any Paying Agent/Regxstrar for flus Certificate ts changed by the Issuer, restgas, or otherwise ceases to act as such, the Issuer has covenanted m the Certtficate Ordinance that ~t promptly appoint a competent and legally quahfied substaute therefor, and promptly will cause written not,ce thereof to be marled to the registered owner ofth~s Cert~ficat~ IT IS HEREBY certified, recxted, and covenanted that tlus Certificate has been duly and vahdly authorized, tssued, and dehvered, that all acts, cond~ttons, and things requtred or proper to be performed, erast, and be done precedent to or m the authonzatton, ~ssuance, and dehvery oftlus Certxficate have been performed, created, and been done m accordance with law, that flus Certtficate xs a general obhgatmn of the Issuer, tssued on the full faith and credit thereof, and that asmual ad valorem taxes sufficient to provide for the payment of the mterest on and pnnctpal of tins Certificate, as such interest comes due and such principal matures, have been lev~od and ordered to be lev~ed against all taxable property m the Issuer, and have been pledged trrevocably for such payment, w~thm the lmut prescribed by law, and that, together wah other panty obhgattons, flus Comflcate addmonally xs payable from and secured by certain surplus revenues (not to exceed $10,000 m a~gregate amount) derived by the Issuer from the ownerslup and operatmn of the Ctty's Ut~hty System (consisting of the Cay's combmed waterworks system, samtary sewer system, and eleetnc hght and power system), all as provxded m the Cemficate Ordinance THE ISSUER has reserved the right to ~ssue, m accordance vath law, and m accordance wxth the Cemficate Ordinance, other and a~khtaonal obhgataons, and to enter rote contracts, payable from ad valorem taxes and/or revenues of the Cay's Utlhty System, on a panty vath, or w~th respect to smd revenues, superior tn hen to, this Certlficat~ BY BECOMING the registered owner of flus Certxflcate, the regtstered owner thereby acknowledges all of the terms and provmons of the Certificate Ordinance, agrees to be bound by such terms and prows~ons, acknowledges that the Certificate Ordinance ~s duly recorded and available for inspection m the offictal minutes and records of the governing body of the Issuer, and agrees that the terms and provmons oftlus Certificate and the CerUfieate Ordinance consUtot~ a contract between the regxstered owner hercof and the Issuer 6 IN WITNESS WHEREOF, the Issuer has caused flus Certificate to be signed w~th the manual or facsumle signature of the Mayor of the Issuer and ceunterslgned and attested w~th the manual or facsimile slgnatare of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly anpressed, or placed m facsmule, on flus Certificate, and has caused this Certificate to be dated May 1, 2000 ATTEST CITY OF DENTON, TEXAS By By Jenmfer Walters Jack Miller 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 flus Certificate has been examined, certtfied as to vahchty, and approved by the Attorney General oftha State of Texas, and that flus Certificate has been regxstcred by the Comptroller of Public Accounts of the State of Texas Waness my s~gnatare and seal flus Comptroller of Pubhc Accounts of the State of Texas (COMPTROLLER'S SEAL) Soct~on 6 ADDITIONAL CHARACTERISTICS OF THE CERTIFICATES RemstraUon and Transfer (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of BANK ONE, TEXAS, N A, FORT WORTH, TEXAS (the "Paym8 Agent/Registrar") books or records of the reglstraUon and transfer of the Cemficates (the "Registration Books"), and the Issuer hereby appomts the Paying Agent/Re~strar as ~ts registrar and transfer agent to keep such books or records and make such transfers and reg~strauona under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe, and the Paym8 Agent/Registrar shall make such transfers and reglstrattons as hereto provided The Paying Agent/Registrar shall obtain and record m the Reg~strataon Books the address of the registered owner of each Certificate to wluch payments w~th respect to the Certaficates shall be mmled, as hereto prowded, but it shall be the duty of each registered owner to notify the Paying Agent/Regxstrar m writing of the address to wluch payments shall be mailed, and such mterest payments shall not be marled unless such notaee has been given The Issuer shall have the right to respect the Reg~strataon Books durm8 regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Reggstrar shall keep the Registration Books confidential and, unless otherwise rexlulred by law, shall not pernut their inspection by any other enuty RegistraUon of each 7 CertificateI may be transferred m the Regl~tration Books only upon presentation and surrender of such Certlficatelto the Paying Agent/Registrar fei' transfer of registration and cancellation, together vath proper wnttea instruments of assignment, m fermi and with guarantee of signatures satisfactory to the Paying Agent/Registrar, (0 evtdencmg the assignmet~t of the Certificate, or any portion thereofin any integral multiple of $5,000, to the assignee or assignees theroof, and (n) the right of such assignee or assignees to have the Certificate,or any such port,on thereof registered m the name of such assignee or ass~gneas Upon the assignment and transfer of any Cemficate or any portion thereof, a new substitute Cemficate or Certificates shall be issued m convomon and exchange therefor in the manner hereto prowded The Initial Certificate, to the extent ,of the unpmd pnncipal balance thereof, may bo assigned and transferred by the antml registered owner thereof once only, and to one or mor~ assignees designated m writing by the lmtial registered owner thereof All Certificates issued and delivered m conversion of and exchange for the Initial Certificate shall be m any den0nanataon or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Cemficate shall l~ve a single stated pnncipal maturity date), shall be m the form prescnbed,m the FORM OF SUBSTITUTE CERTIFICATE set forth m tins Ordinance, and shall have the characterizes, and may be assigned, transferred, and converted as hereinafter provided If the Imtial Certificate or any portion thereof is assign~l and transferred or converted the Imt~al Cemficate must be surrendered to the Paying Agent/Registrar for eancellataon, and each Certificate issued m exchange for any portion of the Imtial Certificate shall have a single stated principal maturity date, and shall not be payable m installments, and caoh such Cemficato shalllhavo a pnnclpal maturity date corresponding to the due date of the installment of principal or pomon thereof, for winch the substitute Certificate is being exchanged, and each such Certificate shall bear interest at the single rate apphcable to and borne by such installment of principal or portion thereof for winch it ~s being exchanged If only a portion of the Initial Cemfieate is assigned and transferred, there shall be delivered to and registered m the name of the nutial registered owner substitute Certificates m exchange for the unassigned balance of the Imtial Cemficate m the same manner as if the lmtial registered 0wner were the assignee thereof Ifany Certificate or port~on thereofother than the Imtial Certificate is assigned and transferred or converted each Certificate issued m exchange therefor shall have the same print,pal maturity date and bear interest at tile same rate as the Certificate for winch it is exchanged A form of assignment shall be printed or endorsed os each Certificate, excepting the Imtlal Cemficate, which shall be executed by the registered owner or its duly luthonzed attorney or representative to evidence an assignment thereof Upon surrender of any Cemficates or any pomon or portions thereof for transfer of reg, stratlon, an anthonzed, reprosentatave of the Paying Agent/Registrar shall make such transfer m the R~glstrataon Books, and shall d011ver a now fully registered substitute Certaficate or Certificates, having the charactenstacs hereto described, payable to such assignee or assignees (winch then vall be the registered owner or owners of such new Cemflcate or Cemficatos), or to the prowous registered owner m case only a portion cfa Cemfieate is being assigned and transferred, all m converalon of and exchange for smd assigned Certificate or Certificates or any porUon or pomons thereof, m the sa~ne form and manner, and with the same effect, as provided m Section 6(ti), below, for the conversion and exchange of Certificates by any registered owner of a Cemfieate The Issuer~ shall pay the Paying Agent/Rogl~trar's standard or customary fees and charges for making such transfer and delivery cfa substitute Cemfloato or Certificates, but the one requesting such transfer shal pay any taxes or other governmental charges required to bo paid w~th respect thereto The Paying Agent/Registrar shall not b~ required to make transfers ofregl~tratmn of any Cert,fieate or any portion thereof during the period commencing w~th the close of business on an~ Record Date and ending w~th the opening of business on the next following pnn¢lpal or interest payment date, (b) e f C s Thq entity m whose name any Certificate shall be registered m thc Registratidn Books at any ttmc shall be deemed and treated as thc absolute owner thereof for all purposes of tins Ordinance, whether or not such Ccmficate shall be overdue, and the Issuer and thc Paying Agent/Registrar shall not be affected by any notate to the contrary, and payment of, or on account of, the principal of, prermum, if any, and interest on any such Certificate shall be made only to such registered owner All such payments shall be valid and effectual to satisfy and discharge the liability upon such Certificate to the extent of the sum or sums so paid (c) Payment of Certificates and Interest The Issuer hereby further appoints the Paying Ageat/Reg~strar to act as the paying agent for paying the principal of and interest on the Certificates, and to act as its ageat to convert and exchange or r~place Certificates, all as provided m flus Ordinance The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Certificates, and of all conversions and exchanges of Certificates, and all replacements of Certificates, as prowded m tlus Ordinance However, m the event of a nonpayment of interest on a scheduled payment date, and for tlurty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Ageat/Registrar, if and when funds for the payment of such interest have been received from the Issuer Notace of the Special Record Date and of the scheduled payment date of the,past duo mtercet ("Special Payment Date", wbach shall be fii~eea (15) days after the Special Record Date) shall be seat at least five (5) business days prior to the Special Record Date by United States marl, first class postage prepaid, to the address of each Holder ora Certificate appeanng on the registration books of the Paymg Agant/Registrar at the close of business on the 15th business day next preceding the date of reading of such notlc~ (d) Conversion and Exchange or Reolacemeat, Autheatlcatlon Each Certificate issued and dehvered pursuant tO th~s Ordinance, to the exteat of the unpmd pnncipal balance or pnnclpal amount thereof, may, upon surrender of such Certificate at the pnncipal 0orporate trust offic~ of the Paying Agent/l~gistrar, together w~th a wnttea request therefor duly executed by the registered owner or the asslgne~ or assignees thereof, or its or their duly anthonzed attorneys or representatives, w~th guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the op/aon of the registered owner or such assignee or assignccs, as appropriate, be converted rote and exchanged for fully registered cc~flcates, w~thout interest coupons, m the form prcscnbed in the FORM OF SUBSTITUTE CERTIFICATE set forth m tins Ordinance, m the deaommatlon of $5,000, or any integral multiple of $5,000 (subject to thc requirement hcremai~cr stated that each substitute Certificate shall have a single stated maturity date), as requested m writing by such registered owner or such assignee or assignees, m an aggregate principal amount equal to the unpaid principal balance or pnnclpal amount of any Certificate or Certificates so surrendcred, and payable to the appropriate reglstercd owner, assignee, or assign- ees, as tho case may be If the lmtlal Certaficate is assigned and transferred or converted each substitute Certificate issued m ~change for any portion of the Imtaal Certificate shall have a single stated pnnclpal maturity date, and shall not be payable m mstallmeats, and each such Cert~ficatc shall have a principal maturity date corrcspondmg to the due date of the mgtallmeat of principal or portion thereof for wluch the substitute Certificate is bemg exchanged, and each such Cert~ficata shall bear mtercst at thc single rate apphcablc to and borne by such installment of principal or pomon thereof for winch It Is being cxchangcd Ifany Cemficate or port,on thereof (other than the lmt~al Certificate) is assigned and transferred or converted, each Ccrtaficate issued m exchange therefor shall have the same pnncipal maturity date and bear mtcrcst at thc samc rate as thc Certificate for wluch it is being exchanged Each substatute Certificate shall bear a lctter and/or number to chstmgnish it from each other Cemficatc The Paying Agent/Registrar shall convcrt and cxchangc or rcplacc Certificates as provaded hereto, and each fully registered earuflcate dehvcred m conversion of and exchange for or replacement of any Certificate or port, on thereof as pcrnutted or rcqmred by any prowsion of flus Orchnancc shall constatute one of the Comficates for all purposes of this Ordinance, and may again be converted land exchanged or replaced Itl is specifically provided that any Certificate authenticated m conversion of and exchange for or replacom0nt of another Cemficatc on or pnor to thc first scheduled Record Date for t.he Imtaal Cemficatc shall bear interest from the date of thc Imtial Certificate, but each substitute Certificata so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next prccedmg the date on wluch such substatutc Certificate was so authenticated, unlcss such Certificate ns autheatlcated after any Record Date but on or bcforc the ncxt following interest payment date, m which case 9 tt shall bear tnterest from such next following tmerest payment date, pmvtded, however, that ~fat the ttme of delivery of any substttote Certtficate the interest on the Certtficate for whmh ~t ts being exchanged ts due but has not be,n pard, then such Cemficate shall bear interest from the date to winch such mterest has been pa~d mfull THE INITIAL CERTIFICATE issued and dehvcmd pursuant to thts Ordinance ts not requtred to be, and shall not be, authenttcated by the Paying Agent/Registrar, but on each substtmte Cemficate tssued tn converston of and exchange for or replacement of any Certtficate or Cemficates tssued under flus Ordinance there shall be printed a certtficate, m the form substantially as follows "PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It la hereby cemfiod that tlus Comficate has been tssued under the provtstons of the Cemficate Ordinance described on the face of flus Cemficate, and that th~s Cemficate has been tssued tn convemon of and exchange for or replacement of a certificate, ecrttficates, or a portton of a cemficate or certtficates of an tssue wtuch originally was approved by the Attorney General of the State of Texas and regtstered by the Comptroller of Pubhc Accounts of tho State of Texas BANK ONE, TEXAS, N A FORT WORTH, TEXAS Paying Agent/Registrar Dated By Authorized Representative" An authorized ropresentaUve of the Paying AgenffReg~strar shall, before the delivery of any such Certificate, date and manually stgn the above Cemficate, and no such Certificate shall be deemed to be ~ssued or out- stanchng unless such Cemficate xs so executed The Paying Agent/Registrar promptly shall cancel all Certificates surrendered for convemon and exchange or replacement No adcht~onal 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 aecomphsh the forebore8 conversion and exchange or replacement of any Cemficate or pomon thereof, and the Paying Agent/RoSlStrar shall promde for the printing, execution, and dehvery of the substttute Certificates tn the manner prescribed harem, and smd Cemficates shall be of type composlUon printed on paper with hthographed or stcel engraved borders of enstomary we~ght and strength Pursuant to Chaptsr 1201, Texas Government Coda, the duty of conversion and exchange or replacement of Certificates as aforesaid ts hereby unposed upon the Paying Agent/R~glstrar, and, upon the executmn of the above Paying Agent/Reglstrar's Authentication Certfficato, the converted and exchanged or replaced Cemficate shall be valid, incontestable, and enforceable m the same manner and w~th the same effect as the Imtlal Certfficate wluch originally was tssued pursuant to flus Ordinance, approved by the Attorney General, and registered by the Comptroller of Pubhc Accounts The Issuer shall pay the Paying Asent/Reglstrar's standard or customary fees and charges for transferring, convertlnS, and excha~mg any Certificate or any pomon thereof, but the one requesting any such transfer, convemon, and exchange shall pay any taxes or governmental charges reqmred to be prod vath respect thereto as a condition precedent to the exercise of such pnwlege of conversion and exchange The Paying Agent/Regtstrar shall not be reqmred to make any such convemon and exchange or replacement of Cemficates or any pomon thereof during tho period commencing with the close of business on any Record Date and ending vath the opemng of business on the next following prmctpal or interest payment date (e) In General All Cemficates issued mconverston and exchange or replacement of any other Cemficate or portton thereof, (i) shall be issued m fully regtstemd form, wtthout interest coupons, wtth the prmctpal of and interest on such Cemficates to be payable only to the registered owners thereof, (n) may be transferred and assigned, (m) may be converted and exchanged for other Certificates, 0v) shall have the characteristics, (v) shall be signed and sealed, and (vi) the principal of and interest on the Certificates shall be payable, all as provided, and m the manner required or tndicated, in the FORM OF SUBSTITUTE CERTIFICATE set forth m tins Ordinance (0 P~.yment of Fees and Char, cs The Issuer hereby covenants with the registered owners of the Certificates that ~t will 0) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services w~th respect to the payment of the principal of and interest on the Certificates, when due, and (u) pay the fees and charges of the Paying Agent/Registrar for services with respect to the transfer of registration of Certificates, and with respect to the conversion and exchange of Certificates solely to the extent above provided m this Ordinance (g) Sgbstatute Pawn,, A,,ent/Remstrar The Issuer covenants with the registered owners of the Certificates that at all times whde the Certificates are outstanding the Issuer will provide a competent and legally qualified bank, trust company, finaneml institution, or other agency to act as and perform the services of Paying Agent/Regmtrar for the Certificates under tins Ordinance, and that the Paying Agent/Registrar will be one entity The Issuer reeerves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 120 days wnttan notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the nex~ pnneipal or interest payment date after such notice In the event that the entity at any tune acting as Paying Agent/Registrar (or its successor by merger, aeqmsitton, or other method) should resign or otherwise cease to act as such, the Issuer covenants that ~t v~ll promptly appoint a competent and legally qualified bank, trust company, financml mst~tut~on, or other agency to act as Paymg Agent/Registrar under this Ordinance Upon any change m the Paying Ageat/Reg~strar, the prewous Paying Agent/Registrar shall promptly transfer and deliver the Registrat~on Books (or a copy thereof), along w~th all other perUnent books and records relating to the Certificates, to the new Paymg Agent/Registrar designated and appointed by the Issuer Upon any change m the 1)aymg Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying AganffReglstrar to each registered owner of the Certificates, by Umted States mini, first-class postage prepaid, which oottee also shall g~ve the address of the new Payang Agent/Registrar By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the prov~sions of tbas Ordinance, and a eertafied copy of this Ordinance shall be delivered to each Paying Agent/Registrar Section 7 FORM OF SUBSTITUTE CERTIFICATES The form of all Certificates issued m conversion and exchange or replacement of any other Certificate or po~on thereof, mcludmg the form of Paying Agent/Reg~strar's Certificate to be printed on each of such Certificates, and the Form of Assignment to be printed on each of the Certafieates, shall be, respectavely, substantially as follows, with such appropriate vananons, onussmns, or msemons as are penmtted or reqmred by tins Ordinance FORM OF SUBSTITUTE CERTIFICATE (Book-Entry Only Legend, if appropnate) NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON CERTIFICATE OF OBLIGATION SERIES 2OOO 11 ORIGINAL DATE INTEREST RATE MATURITY DATE OF ISSUE CUSIP NO % ON THE MATURITY DATE specified above the CITY OF DENTON, an Denton County, Texas (the "Issuer"), being a pohtacal subdawslon of the State of Texas, hereby promises to pay to or to the registered assignee hereof(e~ther being hereinafter called the "regastered owner") the prmcapal amount of and to pay interest thereon, calculated on the basis ofa 360-day year composed of twelve 30-day months, from May 1, 2000, to the maturity date specified above, at the interest rate per annum specified above, w~th interest being first duo and payable on February 15, 2001, and senuannually on each August 15 and February 15 thereafter, except that if the date of anthent~cat~un of flus Certaficate as later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date ofantheaticaUon, unless such date of authent~catton ~s after any Record Date (hereinafter defined) but on or before the next following interest payment date, m winch case such pnnclpal amount shall bear interest from such next following interest payment date THE PRINCIPAL OF AND INTEREST ON flus Certificate are payable m lawful money of the Umted States of America, without exchange or collectian charges The pnnc~pal of flus Cernficate shall be paid to the registered owner hereof upon presentataon and surrender of flus Certaficate at maturity, at the prmcapal corporate trust office of BANK ONE, TEXAS, N A, FORT WORTH, TEXAS, which as the "Paying Agent/Registrar" for flus Certificate The payment of interest on flus Certificate shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check dated as of such interest payment date, drawn bythe Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the ~ssuanee of the CerUficates (the "Certaficate Or(finance") to be on deposit w~th the Paying AgenffRe$~strar for such purpose as hereinafter provided, and such check shall be sent by the Paying Agent/Registrar by Umted States marl, first-class postage prepmd, on each such mterest payment date, to the regastered owner hereof, at the address of the registered owner, as at appeared at the close of business on the last,day of the month next preceding each such date (the "Record Date") on the Reg~strataon Books kept by the paying Agent/Registrar, as hereinafter described However, the payment of such interest may be made by any other method acceptable to the Paying Agent/Regastrar and requested by, and at the risk and expense of, the registered owner hereof The Issuer covenants v~th the registered owner of flus Certificate that on or before each pnnclpal payment date, interest payment date, and accrued interest payment date for flus Certificate it will make available to the Paying Agent/Registrar, from the "Interest and Stoking Fund" created by the Cemficate Ordinance, the amounts required tn provade for the payment, m unmethately avmlable 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 flurry (30) days thereafter, a new record date for such interest payment (a "Special Record Date") wall be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been receaved from the Issuer Notace of the Special Record Date and of the scheduled payment date of the past due interest ("Specml Payment Date", which shall be fifteen 05) days after the Special Record Date) shall be sent at least five (5) business days prior to the Specml Record Date by Umted States mml, first class postage prepmd, to the address of each 12 Holder of a Certificate appearing on the reglstrauon books of the Paying Agent/Registrar at the close of business on the 15th business day next pr~.ethng the date of totaling of such notice IF THE DATE/'or the payment of the pnnclpal of or interest on flus Certificate shall be a Saturday, Sunday, a legal holiday, or a day on wtuch banlang mst~tuuons m the Ctty where the Paying Agent/Regtstrar ns located are authorized by law or executive order to close, then thc date for such payment shall bc the next suoeeedmg day wluch is not such a Saturday, Sunday, legal hohday, or day on wtuch banking mstttuUons are authorized to close, and payment on such date shall have thc same force and effect as tf made on the original date payment was due TI~S CERTIFICATE is one of an tssue of Cemficates unually dated May 1, 2000, anthonzed m accordance w~th the ConsUtuUon and laws of the State of Texas m the pnnctpal amount of $3,125,000, for the purpose of paying all or a portion of the CIW's contractual obhgaUons mcurred pursuant to contracts for the purchase of certain real and personal property, to-w~t (a) renovaUon to City Hall East (located at 501 l-hckory), (b) communications equipment for City Hall (located at 215 E McKmney) and City Hall West (located at 221 N Elm), and (c) fuel and mamtenanee facdtUes for the City's vetucles, and also for the purpose of paying all or a portaon of the City's contractual obligations for professional serwces of engineers, arclmects, attorneys, map makers, auditors, and financtal adwsors m connec~on w~th the preparaUon of the Ctty's Comprehenstve Development Plan and wtth the above contracts and smd Certaficates of Obligation ON FEBRUARY 15, 2010, or on any date whatsoever thereafter, the Certtficates of flus Sones may be redeemed prior to their scheduled maturities, at the option of the Issuer, w~th funds derived from any avadable and lawful source, as a whole, or m part, and, tf tn part, the parucular CerUficates, or porUoas thereof, to be redeemed shall be selected and designated by the Issuer (provided that a pomon ora Cerhficate may be redeemed only m an integral muluple of $5,000), at the redempUon price of the par or prmctpal amount thereof, plus accrued interest to the date fixed for redempUon THE CERTIFICATES of flus Sones scheduled to mature on FEBRUARY 15, 2020 are subject to mandatory redempUon prior to their scheduled matunttes, and shall be redeemed by the Issuer, m part, pr~or to their scheduled matuntaes, v~th money from thc Mandatory Redemption Account of the Interest and Stoking Fund, w~th the particular Ceruficates or portion thereof to be redeemed to be selected by the Paying Agent/Registrar, by lot or other customary method (prowded that a portion of a Certaficate may be redeemed only tn an integral mulUple of $5,000), at a redemption price equal to the par or prmctpal amount thereof and accrued interest to the date of redemptton, on the dates, and m the principal amounts, respecttvely, as shown m the following schedule February 15.2020 Maturity Mandatory Prmctpal Red~m~tion Dates Amounts February 15, 2019 155,000 February 15, 2020 (maturity) 155,000 The principal amount of the Certificates required to be redeemed on thc Mandatory Redemptaon Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the pnnclpal amount of any Cemficates out of the maturity scheduled for February 15, 2020 whtch, at least 45 days prior to the aforesaid appropriate redempuon date (1) shall have been acqmred by the Issuer at a price not exceethng the principal amount of such Cemficates plus accrued interest to the date of purchase thereof, and delivered to the Paying AgentJReglstrar 13 not premously credited to the mandatory stoking fund redemption Dunng any period in which ownership of the Cemfi~ates is detenmned by a book entry at a securities depository for the Certfficates, if fewer than all of the Certificates of the same maturity and bearing such interest rate shall be selected m accordance wath the arrangements between the Issuer and the securities depository AT LEAST 30 days prior to the date fixed for any redemption of Certificates or port~ons thereof prior to maturity a written notme of such redemptton shall be sent by the Paying Agent/Registrar by Umted States mall, first-class postage prep~ud, to the registered owner of each Certfficate to be redeemed at its address as it appeared on the 45th day prior to such mdemptmn date, provtded, however, that the failure to send, mall, or receive such notme, or any defect ther~m or m the seadmg or mailing thereof, shall not affect the vahchty or effectiveness of the proceedings for the redemption of any Cemficate By the date fixed for any such redemption due prows~on shall be made w~th the Paying Agent/Registrar for the payment of the reqmred redemption price for the Certificates or port~ons thereof wtuch are to be so redeemed, plus accrued interest thereon to tho date fixed for redemptmn Ifsuch written not,ce of redemption ts g~ven and if due provlston for such payment ~s made, all as prowded above, the Cemficates or pomons thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled matont~es, and they shall not bear interest after the date fixed for redemptmn, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus acemed interest from the Paying Agent/Registrar out of the funds provided for such payment If a pomon of any Certificate shall be redeemed a submmte Certificate or Certificates hamg the same maturity date, bearing interest at the same rate, m any danommatton or denommatmns m any integral multiple of $5,000, at the written request of the registered owner, and m a~regute pnncipal amount equal to the unredeemed portxon thereof, will be tssued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as pmwded m the BoM Ordinance THIS CERTIFICATE OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 my be asstgued and shall be transferred only m the Registration Books of the Issuer kept by the Paying Agent/Registrar acting m the eapamty of registrar for the Certificates, upon the terms and concht~ons,set forth m the Cemficate Ordinance Among other reqmrements for such asslgument and transfer, this Certificate must be presented and surrendered to the Paying Agent/Registrar, together w~th proper tnstm- ments of assl~nent, m form and w~th guarantee of sxgnatnres satisfactory to the Paying Asent/Reg~strar, evidencing assignment ofttus Certificate or any portion or pomons hereof m any tntegral multiple of $5,000 to the assignee or ass~guees m whose name or names flus CerUficate or any such porUon or portions hereof is or are to be transferred and registered The form of Assxgument pnnted or endorsed on tlus Certificate shall be executed by the registered owner or ~ts duly anthonzed attorney or representative, to ewdence the ass~gument hereof A new Cemficate or Cemfieates payable to such assignee or ass~guees (wluch then will be the new registered owner or owners of such new Certtfieate or Certificates), or to the premous registered owner m the case of the ass~gument and transfer of only a portion of th~s Certificate, may be delivered by the Paying Agent/Registrar m conversion of and exchange for flus Cemfieate, all m the form and manner as prowded tn the next paragraph hereof for the conversion and exchange of other Cemfieates The Issuer shall pay the Paying Agtent/Reg~strar's standard or customary fees and charges for making such transfer, but the one request- mg such transfer shall pay any taxes or other governmental charges reqmmd to be prod w~th respect thereto The Paying Agent/Registrar shall not be reqmmd to make transfers of mgistraUon of flus Certificate or any posen hereof dunng th~ period commencing w~th the close of business on any Record Date and ending wath the opemng ofbustness on the next following principal or interest payment date The registered owner oftlus Cemfieatc shall be daemed and treated by the Issuer and the Paying AgentYReglstrar as the absolute owner hereof for all purposes, including payment and d~scharge of habfllty upon tlus Cemfieate to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary 14 ALL CERTIFICATES OF THIS SERIES are ~ssuable solely as fully registered certificates, w~thout interest coupons, m the denommatmn of any integral mulUple of $5,000 As provided m the Certificate Orthnanee,l flus Cemficate, may, at the request o£the registered owner or the assignee or ass~gnces hereof, be converted ~nto and exchanged for a hke aggregate pnnc~pal amount of fully registered certificates, vothout interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, hawng the ~ame maturity date, and bearing interest at the same rate, m any denommaUon or denominations m any integral multiple of $5,000 as requested m writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of flus Certaficate to the Paymg Agent/Registrar for cancellation, all m accordance w~th the form and proeeflures set forth m the Certificate Ordinance The Issuer shall pay the Paying Agont/Reg~strar's standard or customary fees and charges for transferring, converting, and exchanging any Certificate or any port,un thereof, but the one requesting such transfer, cunvers~on, and exchange shall pay any taxes or governmental charges reqmrext to be paid wnh respect thereto as a condmon precedent to the exercise o£ such pnwlege of convers~un and exchange The Paying Agent/Registrar shall not be required to make any such conversmn and exchange daring the period commencing vath the close of busmess on any Record Date and ending w~th the opening of business on the next following principal or interest payment date ~ THE EVENT any Paying Agent/Registrar for the Certificates ~s changed by the Issuer, res~gas, or otherwise Ceases to act as such, the Issuer has covenanted m the Cemfieate Ordinance that ~t promptly will appoint a oompetent and legally qualified substatute therefor, and will promptly cause written noUce thereof to be totaled to the registered owners of the Cemfieates IT IS HEREBY certified, recited, and covenanted that flus Cemficate has been duly and vahdly authorized, ~ssuad, and dehvered, that all acts, con&tmns, and flungs reqmred or proper to be performed, eyast, and be done precedent to or m the authorization, ~ssuance, and dehvery of flus Cemficate have been performed, ex~sted, and been done m accordance w~th law, that flus Certificate is a general obhgataun of the Issuer, ~ssued on the full faith and credit thereof, and that annual ad valorem taxes sufficient to prowde for the payment of the mteres~ on and prmc~pal of flus Ceruficate, as such interest comes due and such principal matures, have been levted and ordered to be lewed against all taxable property m the Issuer, and have been pledged ~rrevoeabl~ for such payment, w~flun the hm~t prescribed by law, and that, together with other panty obhgauonS, flus Certaficate, and the other Certificates of flus Series, addatmnally are payable from and secured by certain ,surplus revenues (not to exceed $10,000 m aggregate amount) derived by the Issuer from the ownership and operataon of the C~ty's Utlhty System (consisting of the City's combined waterworks system, samtary sewer system, and electric h~t and power system), all as provided m the Cemficate Ordinance TI~ ISSUER has reserved the right to issue, m accordance wath law, and m accordance voth the CemficatelOrdmanco, other and additional obhgat~ons, and to enter rotc contracts, payable fi.om ad valorem taxes and/or revenues of the C~ty's Utahty System, on a panty w~th, or wath respect to smd revenues, superior In hen to, flus Certificate BY BECOMING the re~stered owner of flus Certaflcate, the registered owner thereby acknowledges all of the terms and prows~ans of the Certaficate Ordinance, agrees to be bound by such terms and prows~ons, acknowledges that the Certificate Ordinance Is duly recorded and available for inspection m the officml minutes and records of the governing body of the Issuer, and agrees that the terms and prov~s~ons of flus Certificate and the CertafiCate Ordinance constatute a contract between each registered owner hereof and the Issuer 15 IN WITNESS WHEREOF, the Issuer has caused tbas Certificate to be signed with the manual or facsimile signature o£the Mayor of the Issuer and countersigned and attested w~th the manual or facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed m facsumle, on ttus Certificate ATTEST CITY OF DENTON, TEXAS By By Jenmfer Walters Jack Miller City Se0r~ary, City of Denton, Texas Mayor, City of Demon, Texas (CITY SEAL) FORM OF PAYING AGENT/REGISTRAR'S AUTI-IENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It Is hereby certafied that t.has Certificate has been issued under the provisions of the Certificate Ordinance described on the face of flus Cemficate, and that tlus Certificate has been ~ssued m conversion of and exchange for or replacement ofa eemficate, cemficates, or a pomon ora certificate or eemficates of an ~ssue wluch 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 BANK ONE, TEXAS, N A FORT WORTH, TEXAS Paying Agent/Registrar Dated By Authorized Representative (INSERT BOND INSURANCE LEGEND, IF ANY) 16 FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner ofthas Certificate, or duly authorized representaave or attorney thereof, hereby assigns flus Certificate to / / (Asslgnee's Social (pnnt or typewrite Asslgnee's name and Security or Taxpayer address, mchadmg zip code) Identlfieataon Number and hereby irrevocably constatotes and appomts attorney to transfer the registration ofthas Ceruficate on the Paying Agent/Registrar's Registration Books ~th full power of substituUon in the prermses Dated S~gnature Guaranteed NOTICE S~8nature(s) must be guaranteed by Registered Owner an ehglble~guarantor mst~tuUon partmpatmg m NOTICE Th~s s~gnatore must correspond w~th a secunUes transfer association recogmzed the name of the Registered Owner appeanng on signature guarantee program the face of this Certificate m every particular without alteration or enlargement or any change whatsoever Section 8 TAX LEVY A speeual Interest and Sinking Fund (the "Interest and Stoking Fund") is hereby created solely for the benefit oft.he Cemficates, and the Interest and Stoking Fund shall be established and mamtamed by tho Issuer at an official flepos~tory bank of the Issuer The Interest and Stoking 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 pnnc~pal of the Certificates All ad valorem taxes lev~ed and oollected for and on account of the Cer/aficates shall be deposited, as collected, to the crecht of the Interest and Stoking Fund Dunng each year whale any of the cemfieates or interest thereon are outstanding and unpaid, the govermng body of the Issuer shall compute and ascertain a rate and amount of ad valorem tax which vail 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 stoking fund adequate to pay the pnne~pal of its Certlfieates as such pnn¢lpal matures (but never less than 2% of the original pnnclpal amount of the Certificates as a stoking fund each year) Smd tax shall be based on the latest approval tax rolls of the Issuer, vath full allowance being made for tax delinquencies and the cost of tax collection Smd rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, agamst all taxable property m the Issuer for each year whale any of the Certificates or interest, thereon are outstanding and anpmd, and smd tax shall be assessed and collected each such year and 17 deposited to the crecht of the aforesaid Interest and Stoking Fund Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Certificates, as such interest comes due and such principal matures, are hereby pledged for such payment, within the lunlt prescribed by law Section 9 SURPLUS REVENUES The Certificates adchtionally shall be payable from and secured by surplus,revenues, to the extent hereinafter perrmtted, derived by the Issuer from the ownersbap and operation of the Issuer's Utility System (consisting of its combined waterworks system, samtary sewer system, and electric light and power system) remamang after (a) payment of all amounts constituting operation and main- tenance expenses of said Utility System, and (b) payment of all debt service, reserve, and other requirements and amounts required to be paid under all ordinances heretofore or hereafter authorizing (l) all bonds and (ii) all other obligations not on a panty with the Certificates, which are payable from and secured by any Utility System revenues, and (c) payment of all amounts payable from any Utility System revenues pursuant to contracts heretofore or hereafter entered rote 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 Stoking Fund m an amount sufficient to pay, when due, the principal of and interest on the CerUficates, then Surplus Revenues, to the extent hereinafter pernutted, shall be deposited to the crecht of the Interest and Smlmag Fund and used to pay such prmmpal and/or interest A maxunum aggregate of $10,000 of Surplus Revenues may be used to pay pnnclpal and/or interest on the Certificates and any obligations on a panty therewith The Cemfinates and any obhgations on a parity therewith are not, and shall not be deemed to be, payable from or secured by any Surplus Revenues m excess of an aggregate orS10,000 Until and unless an aggregate ors 10,000 of Surplus Revenues actually is used to pay any such principal and/or interest, adchtional obligations, payable from and secured by all or any remaining unused part of sad aggregate of $10,000 of Surplus Revenues, may be issued by the Issuer on a panty with the Certificates and any other then outstanding panty obhgations, with the Certificates and all such adchUonal panty obligations to be payable from and Secured equally and ratably by all or any remaining unused part of smd aggregate The Issuer reserves, and shall have, the right to issue bonds, and other obligations not on a panty vath the Certificates, and to enter rote contracts, m 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 panty wath those issues of City of Denton Cemficates of Obhgatlon, Series 1993, Series 1993-A, Sones 1994, Series 1995, Series 1996, Series 1998 and Series 1999 (the "Outstanding Certificates"), as pemuttod m 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 pnncipal and/or interest on the Outstanding Certificates Sectionl0 DEFEASANCE OF CERTIFICATES (a) Any Certlficate and the lnterest thereon shall be deemed to bo paid, retired, and no longer outstanding (a "Defeased Certificate") within the meaning oftlus Ordinance, except to the extent prowded m subsection (d) of tlus Section, when payment of the principal of such Certificate, plus interest thereon to the due date either 0) shall have been made or caused to be made tn accorrlanc~ with the terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably depositing,with or m_~tkmg available to the Paying Agent/Registrar for such payment (1) lawful money of the Umted States of America sufficient to make such payment or (2) Government Obligations wtuch mature as to principal and interest m such amounts and at such times as will insure the availability, without remvestment, of sufficient money to prowda for such payment, and when proper arrangements have been made by the Issuer w~th the Paying Agent/Registrar for thc payment of its services until all Dcfcased Certificates shall have become due and payable At such time as a Certificate shall bo deemed to be a Dcfeased Certificate hereunder, as aforesaid, such Certificate and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, tho ad valorem taxes harem lowed and pledged as provided mttus Ordinance, and such principal and interest shall bc payable solely from such money or Government Obligations 18 (b) Any moneys so deposited vath the Paying AgentJRegistrar may at the written direction of the Issuer also be invested m Government Obligations, maturing m the amounts and times as hereinbefore set forth, and all mcome from such Government Obhgatmns received by the Paying Agent/Registrar which is not required for the payment of the Certificates and interest thereon, vath respect to wbach such money has been so deposited, shall be turned over to the Issuer, or deposited as directed m writing by the Issuer (c) The term "Government Obhgataons" as used in this Sectaon shall mean direct obligations of the Umted States of America, including obligations the principal of and interest on which are unconchtlonally guaranteed by the Umted States of America, wbach may be United States Treasury obligations such as its State and Local Government Series, wbach may be m book-entry form (d) Untal all Defeased Certificates shall have become due and payable, the Paying AgentdReg~strar shall perform the services of Paying Agent/Registrar for such Defeased Cemficates 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 tbas Ordinance Section 11 DAMA(JED, MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATES (a) Renlaeement Certificates In the event any outstanding Certificate Is damaged, mutalated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new certificate of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Certificate, m replacement for such Certificate m the manner hereinafter prowded (b) APl~l~catmn for Renlacement Certaficates Application for replacement of damaged, mutilated, lost, stolen, or destroyed Certificates shall be made by the registered owner thereof to the Paying Agent/Registrar In every case ofloss, theft, or destructaon of a Certificate, the registered owner applying for a replacement certificate shall furmsh to the Issuer and to the Paying Agent/Registrar such security or lndemmty as may be required by them to save eanh of them harmless from any loss or damage vath respect thereto Also, m every case ofloss, theft, or destruction of a Ceruficate, the registered owner shall furmsh to the Issuer and the Paying Agent/Registrar evidence to their satasfaction of the loss, theft, or destruction of such Certificate, as the ease may be In every case of damage or mutilation ora Certificate, the registered owner shall surrender to the Paying Agent/Registrar for cancellataon the Certificate so damaged or mutalated (c) ~ Notwithstanding the foregoing prov~sions of tins Sectaon, m the event of any such Certificate shall have matured, and no default has oocurred wbach is then continuing m the payment of the prmcapal of, or interest on the Certaficate, the Issuer may authorize the payment of the same (vathout surrender thereof except m the case of a damaged or mutilated Certaficate) instead of lssumg a replacement Certificate, provided security or mdemmty is furmshed as above proxaded m tins Section (d) Charee for Issume Reolacement Certificates Prior to the issuance of any replacement certificate, the Paying Agent/Registrar shall charge the registered owner of such Certaficate vnth all legal, printing, and other expenses m coune~on therevath Every replacement certificate issued pursuant to the provisions ofttus Section by v~rtue of the fact that any Certaficate is lost, stolen, or destroyed shall constitute a contractual obhgataon of the Issuer whether or not the lost, stolen, or destroyed Ceruficate shall be found at any tune, or be enforceable by anyone, and shall be entitled to all the benefits of tins Ordinance equally and propomonately vnth any and all other Ceraficates duly issued under ttus Ordinance (e) 3,,th~nW for Issume Reolacement Certaficates In accordance w~th Chapter 1201, Texas Government Code, tins Section of flus Ordinance shall constitute authority for the issuance of any such replacement ceraficate without necessity of further action by the governing body of the Issuer or any other body 19 or person, and the duty of the replacement of such certificates is hereby authorized and ~mposed upon the Paying AgentFReglstrar, and the Paying Agent/Registrar shall authenticate and deliver such Certificates ~n the form and manner and voth the effect, as provided m Section 6(d) of this Ordmance for Certificates ,ssued in conversion and exchange for other Certificates Sectmn 12 CUSTODY, APPROVAL, AND REGISTRATION OF CERTIFICATES, CERTIFICATE COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE The Mayor of the Issuer is hereby anthonzed to have control of the Initial Certificate issued hereunder and all necessary records and proceedings pertaining to the Imtial Certificate pending ns delivery and its mvestigat~on, exanunatlon, and approval by the Attorney General of the State of Texas, and ~ts registration by the Comptroller of Public Accounts of the State of Texas Upon registration of the Imtial Certificate said Comptroller of Pubhc Accounts (or a deputy designated m writing to act for said Comptroller) shall manually sign the Comptroller's Registrataon Certificate on the Imtaal Certificate, and the seal of said Comptroller shall be impressed, or placed m facsmule, on the Imtlal Certificate The approving legal opimon ofthe Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be pnnted on the Initial Certificate or on any Cert,ficates issued and delivered m conversion of and exchange or replacement of any Ceruficate, but nelthe~ shall have any legal effect, and shall be solely for the ennvemence and mf'ormatlon of the registered owners of,the Cert,ficates The preamble to flus Ordinance is hereby adopted and made a part hereof for all purposes If insurance Is obtamed un any of the Certificates, the Imtlal Ceruflcate and all other Certificates shall bear an appropnate legend coneermng insurance as provided by the insurer Sectiunl3 COVENANTSREGARDINGTAX-EXEMPTION TheIssuercovenantstoreframfrom takang any action wtuch would adversely afl. t, and to take any action required to ensure, the treatment of the Cert, ficates as obligations described m section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not mcludable m the "gross mcome" of the holder for purposes of federal income taxation In furtherance thereof, the Issuer covenants as follows , (a) to take any aeUon to assure that no more than l0 percent of the proceeds of the Certificates or the project financed therewth (less amounts deposited to a reserve fund, If any) are used for any "private busmess use", as defined m secUon 141(b)(6) of the Code or, if more than l0 percent of the proceeds or the project financed therevoth are so used, such amounts, whether or not received by the Issuer, w~th respect to such private business use, do not, under the terms of flus Ordinance or any underlying arrangement, directly or mdirectly, secure or provide for the payment of more than l0 percent of the debt senace un the Cemficates, m contraventmn of section 141 (b)(2) of the Code, (b) to take any action to assure that m the event that the "private business use" descnbed m subsectmn (a) hereof exceeds 5 percent of the proceeds of the Cemficates or the project financed therevath (less amounts deposited rote a reserve fund, if any) then the amount m excess of 5 percent is used for a "private busmees use" which is "related" and not "disproportionate", w~flun the meaning of section 141 (b)(3) of the Code, to the governmental use, (c) to take any acUon to assure that no amount which is greater than the lesser of $~,000,000, or 5 percent of the proceeds of the Certificates (less amounts deposited into a reserve fund, if any) is directly or mdirectly used to finance loans to persons, other than state or local governmental umts, m contraventton of sectton 14 l(c) of the Code, (d) to refrain from talong any action which would otherwise result m the Certificates being treated as "private activity bonds" within the meaning of section 141(b) of the Code, 2O (e) to reft'am from taking any action that would result in the Certificates being "federally guaranteed" within the meaning of section 149(b) of the Code, (f) to reft.am fi.om using any portion of the proceeds of the Certificates, directly or indirectly, to acquire or to replace funds which were used, chrectly or indirectly, to acquire investment property (as defined m section 145Co)(2) of the Code) which produces a materially tugher yield over the term of the Certificates, other than investment property acquired with -- (1) proceeds of the Certificates invested for a reasonable temporary period of 3 years or less, or m the case ora refunding certificate for a period of 30 days or less, until such proceeds are needed for the purpose for which the certificates are ,ssued, (2) amounts invested m a bona fide debt service fund, within the meaning of section 1 148-1(b) of the Treasury Regulations, and (3) amounts deposited m any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated pnnclpal amount (or, m the case of a discount, the issue price) of the Certificates, (g) to othervase restrict the use of the proceeds of the Certificates or amounts treated as proceeds of the Certificates, as may be necessary, so that the Certificates do not othenvlse contravene the requirements ofsectmn 148 of the Code (relating to arbitrage), Semen 149(g) of the Code (relating to hedge bonds), and, to the extent applicable, semen 149(d) of the Code (relating to advance refundmgs), and (h) to pay to the Umted States of America at least once durmg each five-year period (beginning on the date ofdehvery of the Cemficates) an amount that is at least equal to 90 percent of the "Excess Earnings", vathm the meaning of sectaon 148(0 of the Code and to pay to the Umted States of America, not later that 60 days after the Certificates have been paid m full, 100 percent of the amount then required to be prod as a result of Excess Earnings under sectaon 148(f) of the Code For purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds" mchides "d~sposltlon proceeds" as defined m the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (~f any) and proceeds ~f th~ refunded b~ods ~xpended pn~r t~ the date ~f issuance ~f the B~nds It is the understanding of the Issuer that the covenants contained hereto are intended to assure compliance w~th the Code and any regulat~ons or rulmgs promulgated by the U S Department ofthe Treasury pursuant thereto In the event that regulations or ruhags are hereafter promulgated which modify, or expand provisions of the Code, as applicable to the Ce~ficates, the Issuer ~nll not be required to comply with any covenant contained herein to tho e~ent that such failure to comply, m the oplmon of nationally-recogmzed bond counsel, will not adversely affect the exemption from federal raceme taxation of interest on the Certificates under section 103 of the Code In the event that regulations or rulings are herea~er promulgated wluch unpose adchtional requirements which are applicable to the Certificates, the Issuer agrees to comply w~th the add~tional requirements to the extent n~essary and reasonably possible, m the opuuon of nationally-recogmzed bond counsel, to preserve the exemption fi.om federal raceme taxation of interest on the Certificates under section 103 of the Code In furtherance of such retention, the Issuer hereby anthorlzes and directs the Mayor to execute any documents, certificates or reports required by the Code and to make such elect~ons, on behalf of the Issuer, which may be permitted by the Code as are consistent v~th the purpose for the issuance of the Certificate The Issuer covenants to comply w~th the covenants m flus section after defeasance of the Certificates 21 In order to facilitate compliance with the above covenant (h), a "Rebate Fund" ,s hereby established by the IssRer for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including v, uthout hnutatlon, the owners of the Certificates The Rehate Fund ~s estabhshed for the additional purpose ofcomphance with Secttnn 145 of the Code Seetmn 14 SALE OF INITIAL CERTIFICATE The Imual Certificate is hereby sold and shall be dehvered tO F~rst Southwest Company, for cash for the par value thereof and accrued interest thereon to date ofdehvery, plus a cash prenuum of $-0- Such prenuum shall, uponrece~pt, be deposlted ~nto the Interest and Smk~ng Fund It ,s hereby officmlly found, determined, and declared that the ImUal Certificate has been sold at public sale to the bidder offenng the lowest interest cost, after rece~wng sealed b~ds pursuant to an Official Not,ce of Sale and Bidding Instructions and Officsal Statement dated April 18, 2000, prepared and d~stnbuted in connection with the sale of the Imt~al Cemficate Sa~d Official Nouce of Sale and B~ddtng Instructmns and Official Statement, and any addenda, supplement, or amendment thereto have been and are hereby approved by the Issuer, and thezr use m the offer and sale of the Certaficates ~s hereby approved It is further officially found, determined, and declared that the statements and representations contained m said Officsal Notice of Sale and Ot:ficlal Statement are true and oorreet m all material respects, to the best knowledge and behefofthe City Council and the Issuer Section 15 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 m Section 1 of this Ordinance (the "Prejeot") on ~ts books and records m accordance with the requirements of the Internal Revenue Code The Issuer reoogmzes that m order for the preoeeds to be considered used for the reimbursement of costs, the proceeds must be allocated to expenchtores within lg months of the later of the date that (1) the expend~tore ~s made, or (2) the Project is completed, but m no event later than three years afar the date on which the original expenditure is paid The foregoing notwithstanding, the Issuer recogmzes that m 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 (l) the fifth anmversary of the delivery of the Cemficates, or (2) the date the Cemficates are retired The Issuer agrees to obtain the advise of nationally-recognized bond oounsel if such expenditure fags to comply with the foregoing to assure that such expenchture 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 flit obtains an opuuon that such failure to comply will not adversely affect the exchidabthty for federal raceme tax purposes from gross raceme of the interest S¢cttonlfi DISPOSITION OF PROSECT The lssuer covenants that the property const~tutmg the Project will not be sold or otherwise chsposed m a transacuon resulting m the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opimon of natlonally-recogmzed bond counsel that such sale or other (hsposmon will not adversely atTeot the tax-exempt status of the Certificates For purposes hereof, the Issuer shall not be obligated to comply voth this covenant flit obtains a legal optmon that such fmlure to comply will not adversely affect the excludability for federal raceme tax purposes from gross tnoome of the interest Section 17 INTEREST EARNINGS ON CERTIFICATE PROCEEDS Interest earnings derived from the mvestment of proceeds from the sale of the huttal CerUficate shall be used along with other proceeds for thc purposes for which the Certificates are issued, prowded that after completion of such purposes, if any of such interest eanungs remain on hand, such interest earnings shall be deposited m thc Interest and Stoking Fund It ~$ further provided, however, that any interest earnings on certificate proceeds which are rcqmred to be rebated to the Umted States of America pursuant to Section 13 hereof tn order to prevent the Certificates 22 from being "arbitrage bonds" waflun the meamng of the Code shall be so rebated and not considered as ~nterest earmngs for the purposes of tlus Section Sectmn 18 DTC REGISTRATION The Certtficates uut~ally shall be tssued and dehvered m such manner that no physical chstnbut~on of the Certificates wall be made to the pubhc, and The Depository Trust Company ("DTC"), New York, New York, antmlly wall act as depository for the Certfficates DTC has represented that tt as a lumted purpose trust company incorporated under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporatton" waflun the meaning of the New York Utnform Commercml Code, and a "clearing agency" regxstered under Sectxon 17A of the federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but ~n no way ver~fies, such representations The Imtxal Ce~ficate authorized by flus Ordinance shall be dehvered to and registered m the name of the Pumhaser However, ~t ~s a conchtxon of dehvery and sale that the Purchaser, munechately after such dehvery, shall cause the Paying Agent/Registrar, as prowded for m flus Ordinance, to cancel smd Imt~al Certificate and dehver m exchange therefor a substitute Certfficate for each maturity of such Itntxal Certificate, wath each such substitute Certaficate to be registered m the name of CEDE & CO, the nominee of DTC, and tt shall be the duty of the Paying Agent/Registrar to take such action It ts expected that DTC wall hold the Certaficates on behalf of the Purchaser and/or the DTC Partmxpants, as defined and described m the Official Statement referred to and approved m Sectaon 14 hereof (the "DTC Pamc~pants") So long as each Certificate ~s registered m the name of CEDE & CO, the Paying AgentJRegxstrar shall treat and deal wath DTC m all respects the same as ~f tt were the actual and beneficial owoer thereof It ~s expected that DTC will maintain a book entry system wbach wdl xdent~fy beneficxal ownersbap oft.he Cemficates by DTC Pamc~pants m integral amounts of $5,000, wath transfers of ownerslup being effected on the records of DTC and the DTC Partm~pants pursuant to rules and regulataons established by them, and that the substitute Certmficates antaally deposaed wath DTC shall be ~mmobfl~zed and not be further exchanged for substitute Cemficates except as hereinafter provided The Issuer ~s not responsible or hable for any functaons of DTC, wall not be responsible for paying any fees or charges wath respect to xts servaces, wall not be responsable or hable for maintaining, supervising, or reviewing the records o~ DTC or the DTC Participants, or protecting any interests or rights of the beaefic~al owners of the Cemfieates It shall be the duty of the Purchaser and the DTC Participants to make all arrangements wath DTC to establish flus book-entry system, the beneficial ownerslup of the Certxficates, and the method of paying the fees and charges of DTC The Issuer does not represent, nor does ~t m any way covenant that the antml book-entry system established wath DTC wall be maintained m the future The Issuer reserves the right and optmon at any tune m the future, m ~ts sole d~scret~on, to terminate the DTC (CEDE & CO ) book-entry only registration requirement described above, and to pertmt the Certxficates to be registered m the name of any owner If the Issuer exercises ~ts right and optton to temunate such requtrement, xt shall give written nottce of such termmataon to the Paying Agent/Registrar and to DTC, and thereafter the Paying AgentJRegistrar shall, upon presentataon and proper request, register any Certafieate m any name as prowded for m flus Ordinance Notwithstanding tho tint,al estabhshraent of the foregoing book-entry system wath DTC, tffor any reason any of the originally dehvered substitute Cemficates ~s duly filed with the Paying Agent/Registrar wath proper request for transfer and substitution, as provided for m this Ordmanea, submtute Cemficates wall be duly delivered as provaded m flus Ordinance, and there wall be no assurance or representauon that any book-entry system wall be maintained for such Certificates Section 19 CONTINUING DISCLOSURE (a) Annual Reoorts (0 The Issuer shall provide annually tO each NRMSIR and any SID, waflun slx months after the end of each fiscal year ending m or after 1999, financial mformat~on and operating data wath respect to the Issuer of the general type included m the final Offictal Statement authorized by Section 14 of flus Ordinance, being the mformat~on described m Exlab~t A hereto, wbach Exhxbit xs attached to and incorporated m flus Ordinance as ffwntXen word for word hereto Any finanmal statements so to be prowded shall be (1) prepared tn accordance wath the accounting pnnc~ples 23 described m Exlubit A hereto, or such other accounting pnnclples as the Issuer may be required to employ from Ume to t~me pursuant to state law or regulation, and (2) audited, ffthe Issuer conumssmns an aucht of such statements, and the aucht is completed w~thm the period durmg wtnch they must be prowded If the audit of such financial statements ~s not complete w~flun such period, then the Issuer shall prowde unandlted finanaal statements~by the required Ume and yell provide audited financial statements for the apphcable fiscal year to each NRMSIR and any SID, when and ~fthe audit report on such statements become available (u) If the Issuer changes its fiscal year, ~t will not~fy each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prmr to the next date by winch the Issuer otherwise would be reqmred to prowde financial mformauon and operating data pursuant to thts Section The finanaal mformaUon and operating data to be provided pursuant to this Section may be set forth m full m one or more documents or may be included by specific reference to any document (mcludmg an offictal statement or other offering document, if it ~s available from the MSRB) that theretofore has been prowded to each NRMSIR and any SID or filed wth the SEC (b) Material Event Notices The Issuer shall notary any SID and e~ther each NRMSIR or the MSRB, m a Uraely manner, of any of the following events w~th respect to the Certificates, ffsuch event ~s material w~thm the meaning of the federal securities laws 1 Prmapal and interest payment delinquencies, 2 Non-payment related defaults, 3 Unscheduled draws on debt service reserves reflecting finanaal d~fficnlUes, 4 Unscheduled draws on crecht enhancements reflecting financml d~fficulues, 5 Subst~tution of credat or hqmchty prowders, or their failure to perform, 6 Adverse tax opunons or events affectmg the tax-exempt status of tho Certificates, 7 Mod~flcaUons to rights of holders of the Cemficates, 8 Ceruficate calls, 9 Defeasanees, 10 Release, substatut~on, or sale of property securing repayment of the Cert~ficatas, and 11 Rating changes The Issuer shall notify any SID and either each NRMSIR or the MSRB, m a tunely manner, of any failure by the Issuer to prowde financial mformatmn or operatmg data m accordance w~th subsecUon (a) of tins Section by the tune required by such subsection (e) Lmutauons. Disclaimers. and Amendmen'~s. (0 The Issuer shall be obhgat~l to observe and perform the covenants specified m flus Se~taon for so long as, but only for so long as, the Issuer remains an 'obhgated~person' w~th respect to the Certafieates w~thln the meaning of the Rule, except that the Issuer m any 24 event will give the notice required by Subsection (b) hereof of any Certificate calls and defeasance that cause the Issuer to no longer be such an "obligated person" (ii) The provisions of flus Section are for the sole benefit of the registered owners and beneficial owners of rise Certificates, and nottung in flus Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or clann hereunder to any other person The Issuer undertakes to prowde only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to flus 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, cond~tion, or prospects or hereby undertake to update any mfurmat~on provided m accordance vath flus Section or otherwise, except as expressly provided hereto The Issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest m or sell Certificates at any future date (iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER, ITS OFFICERS, AGENTS AND EMPLOYEES, BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE (iv) No default by the Issuer m observing or perfornung its obligations under flus Section shall comprise a breach of or default under the Orclmance for purposes of any other prowslon of ti'us Ordinance Nothing m flus Section is intended or shall act to &sclarm, waive, or otherwise hmlt the duties of the Issuer under federal and state securities laws (v) The provisions of flus Section may be amended by the Issuer from ttme to tune to adapt to changed circumstances that arise from a change m legal requirements, a change m law, or a change m the identity, nature, status, or type ofoperatlens of the Issuer, but only if(l) the provisions of flus Section, as so amended, would have penmtted an underwriter to purchase or sell Certificates in the primary offenng of the Certificates in compliance vath the Rule, tiling mU) account any amendments or interpretations of the Rule since such offenng a~ well as such changed circumstances and (2) either (a) the registered owners of a majority m aggregate principal amount (or any greater amount required by any other provision of flus Ordmance that anthonzes such an amendment) of the outstanchag Certlfinates consent to such amendment or (b) a person that is unaffihated w~th the Issuer (such a~ natmnally recogmzed bond counsel) determined that such amendment will not materially unpmr the interest of the registered owners and beneficial owners ofthe Certificates Ifthe Issuer so amends the provismns of flus Section, it shall include vath any amended financial information or operating data next provided m acenrdance vath subsection (a) of this Section an explanation, in narrative form, of the reason for the amendment and of the unpact of any change in the type of financial mformanon or operating data so provided The Issuer may also amend or repeal the provisions of flus continuing chsclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of tho Rule are mvahd, but only if and to the extent that the provisions of flus sentence would not prevent an underwriter from lawfully purchasing or selling Certificates m the primary offering of the Certificates 25 (d) D~finlttons As used m this Section, the following terms have the meanings ascribed to such terms below "MSRB' means the Mumclpal Securities R. ulemakmg Board "NRMSII~' means each person whom the SEC or tis staffhas dcterrmned to be a nationally recogmzed mumc~pal securities lILFormatlon repository within the meamng of the Rule from time to tune "l~.ule" means SEC R. ule 15c2-12, as amended from tm~e to tune "SEC" means the Umted States Securities and Exchange Commission "SID" means any person designated by the State o£ Texas or an authorized deparlment, officer, or agency thereof as, and determined by the SEC or ~ts staff to be, a state m£orma*aon depository w~thm the meaning of thc Rule from time to time Section 20 FURTHER PROCEDURES The Mayor of the 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 Ituthonzed, empowered, and directed from time to tune and at any tune to do and perform all such acts and things and to execute, acknowledge, and deliver m the name and under the corporate seal and on behalf of the Issuer all such instruments, whether or not hereto mentioned, as may be necessary or desirable m order to carry out the terms and proxasloas oftius Certaficato Ordinance, thc Cerfaficates, the sale of the Cemficates, and the Notice of Sale and Official Statement, and thc Assistant City Manager/Finance of the City shall cause the expenses of issuance of the Certificates to be pa~d from the proceeds of sale of the Imtlal Certificate or fi.om other lawfully avadable funds ofthe Issuer In case any officer whose signature shall appear on any Certificate shall cease to be such officer before the dehvery of such Cemfieate, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained m office until such dehvery Section 21 OPEN MEETINGS The City Council has found and determined that the meeting at which tins Ordinance is considered is open to thc pubhc and that notice thereof was given m accordance with the prowslons of the T~xas Open M~angs, Law, Tex Gov't Code, Chapter 551, as amended Section22 EFFECTIVEDATE Tb. xsOrdmanceshallbecomceffectlveunmedlatelyuponitspassage and approval 26 PASSED AND APPROVED tbas the 2nd day of May, 2000 Jack ~ ATTEST ]mfer Wa~rs, City Secretary -- APPROVED AS TO LEGAL FORM Herber~ L Prouty, City Attorney 27 EXHIBIT A DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following mformauon is referred to m Section 19 of this Ordinance Annual Financial Statements and Operating Data The financial lnfonnaUon and operating data w~th respect to the Issuer to be provided annually accordance with such Section are as specified (and included in the Appendtx or under the tables of the Official Statement referred to) below Tables numbered 1 through 14, reclusive, under the captions "Tax Information", "Debt Serwce Requirements" and "Financial Information" m the Official Statement Appendix B m the Officml Statement Accounting Principles The accounting principles referred to m such Section are the accounting prmc:ples described m the notes to the financial statements referred to m the paragraph above