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Home My WebLink About1988-127ORDINANCE NO 88-0 ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 1988, AND APPROVING AND AUTHORIZING INSTRUMENTS AND THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, the City of Denton, Texas, heretofore has duly issued the following revenue bonds City of Denton Utility System Revenue Refunding Bonds, Series 1983, dated March 1, 1983, City of Denton Utility System Revenue Bonds, Series 1984, dated March 1, 1984, City of Denton Utility System Revenue Bonds, Series 1984-A, dated October 1, 1984, and City of Denton Utility System Revenue Refunding Bonds, Series 1987, dated January 1, 1987, and WHEREAS, the City Council of the City of Denton deems it necessary and to additional UtilitydSystem e authorize, RevenueBonds hereinafter d scr bed,e and WHEREAS, the bonds hereinafter authorized are to be issued, sold, and delivered pursuant to Vernon's Ann Tex C1v St Articles 2368a and 1111 through 1118, the city's Home Rule Charter, and other applicable laws THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS THAT Section 1 AMOUNT AND PURPOSE OF THE BONDS The bond or bonds of the City of Denton, Texas (the "Issuer") are hereby ered in the aggregate ci- authorized amount of $3,500,1000ed aFOR THE nd vPURPOSE OF OBTAINING MONEYn palFOR IMPROVEMENTS AND EXTENSIONS OF THE CITY OF DENTON UTILITY SYSTEM, WHICH CONSISTS OF THE CITY'S COMBINED WATERWORKS, SEWER, AND ELECTRIC LIGHT AND POWER SYSTEM Section 2 DESIGNATION OF THE BONDS Each bond issued pursuant to this Ordinance shall be designated "CITY OF DENTON UTILITY SYSTEM REVENUE BOND, SERIES 198811, and initially there shall be issued, sold, and delivered hereunder a leifully registered bond, without interest coupons, payable installments of principal (the "Initial Bond"), but the Initial Bond may be assigned and transferred and/or converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, having serial maturities, and in the denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner herein- after provided The term "Bonds" as used in this Ordinance shall mean and include collectively the Initial Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds Section 3 INITIAL DATE, DENOMINATION, NUMBER, MATURI- TIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND (a) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated AUGUST 1, 1988, in the denomination and aggregate principal amount of $3,500,0001 numbered R-1, payable in annual installments of principal to the initial registered reof, to-wlt RAUSCHERwPIERCE ner eREFSNES, INC , or to the registered assignee or assignees of said Bond or any portion or portions thereof (in each case, the "registered owner"), with the annual installments of principal of the Inithetprincipalt a ountsl,a respectively, stated P intheFORMy, and n OF INITIAL BOND set forth in this Ordinance (b) The Initial Bond (1) may and shall be prepaid or redeemed prior to the respective scheduled due dates of in- stallments of principal thereof, (ii) may be assigned and transferred, (ill) may be converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest on the Initial Bond shall be payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL BOND set forth in this Ordinance Section 4 INTEREST The unpaid principal balance of the Initial Bond shall bear interest from the date of the Initial Bond to the respective scheduled due dates, or to the respec- tive ateof tof he payent Initialo Bond, and osLd f the interestallments shall be of daateslestated in themanner FORMrOFrovided and at the rates on he INITIAL AL BOND set forth in this this Ordinance Section 5 FORM OF INITIAL BOND The form of the Initial Bond, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Bond, shall be substantially as fol- lows $3,500,000 NO R-1 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 1988 THE CITY OF DENTON, in Denton County, Texas (the "Issu- er"), being a political subdivision of the State of Texas, hereby promises to pay to RAUSCHER PIERCE REFSNES, INC , Bond or or to the registered portions hereofe ( n eachgcase,othe 1"regi teredny portion or owner") the aggregate principal amount of $3,500,000 (THREE MILLION FIVE HUNDRED THOUSAND DOLLARS) in annual installments of principalue respecand tive ayable oncDECEMBER 1 in each of the years, and n the ipal amounts, as set forth in the following schedule PRINCIPAL PRINCIPAL YEAR MO AUNT -- YEAR AMOUNT 1989 $175,000 1999 $175,000 175,000 1990 175,000 2000 2001 175,000 1991 175,000 175,000 2002 175,000 1992 199 175,000 2003 175,000 175,000 1994 175,000 2004 2005 175,000 1995 175,000 175,000 2006 175,000 199 175,000 2007 175,000 1997 1998 175,000 2008 175,000 and to pay interest, from the date of this Bond hereinafter installmenth stated, on f time to time such remaining rates unpaid, at the rates respectivelyy,, om as follows 3 9 75% per annum on the above installment due in 1989 9 75% per annum on the above installment due in 1990 9 75% per annum on the above installment due in 1991 9 75% per annum on the above installment due in 1992 9 75% per annum on the above installment due in 1993 9 75% per annum on the above installment due in 1994 9 75% per annum on the above installment due in 1995 8 125% per annum on the above installment due in 1996 6 90% per annum on the above installment due in 1997 7 00% per annum on the above installment due in 1998 7 00% per annum on the above installment due in 1999 7 00% per annum on the above installment due in 2000 7 00% per annum on the above installment due in 2001 7 00% per annum on the above installment due in 2002 7 00% per annum on the above installment due in 2003 7 00% per annum on the above installment due in 2004 7 00% per annum on the above installment due in 2005 7 00% per annum on the above installment due in 2006 6 75% per annum on the above installment due in 2007 6 75% per annum on the above installment due in 2008 with said interest being payable on DECEMBER 1, 1988, and semi- annually on each JUNE 1 and DECEMBER 1 thereafter while this Said iond or anynterest shall beocalculated on hehereof isandinbasis ofdaunpaid 360-day year composed of twelve 30-day months THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges The install- ments of principal and the interest on this Bond are payable to the registered owner hereof throughFORT WORTH, services of TEXAS the AMERICAN BANK/FORT WORTH, N A , princi- pal Agent/Registrar" for this Bond Payment of all p pal of and interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each princi- pal and/or interest payment a Paying Agent/Registrar gk or raft, dated as of on, and payable such date, drawn by Y g solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the "Bo for dinance") to h purpose be on deposit with the PayingAgent/Registrar be as hereinafter provided, and such check or draft shall first - sent by the Paying Agent/Registrar by United States mail, class postage prepaid, on each such principal and/or interest payment date, to the registered owner her eofthe lath day dof ethe ss f the registered owner, as it appeared on month next preceding each such date (the A'Record Date") o as he Registration Books kept by the Paying gent Re / g venants with the _ tereednofter wner of this dBond hthat son or uer g before each principal and/or interest payment date for this Bond it will make 4 available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" suant to the amounts requiredtomaintained provide i efor the payment, Ordinance, n immediately available funds, of all principal of and interest on this Bond, when due IF THE DATE for the payment of the principal of or inter- est a day on which banking institutions talons Sunday, the a city legawherelthe� or Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close, and payment on such date shall have the same force and effect as if made on the original date payment was due THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas FOR THE PURPOSE OF OBTAINING MONEY FOR IMPROVEMENTS AND EXTENSIONS OF THE CITY OF CONSISTSDENTON UTILITY SYSTEM, WHICH IOMBINED WATERWORKS, SEWER,, AND ELECTRICLIGHT AND POWER SYSTEM ON DECEMBER 1, 1998, or on any interest payment date thereafter, the unpaid installments of principal of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any source,available aawhole, rt, the particularportionofthisBond to be prepaid �or redeeif in med shall be selected and designated by the issuer (provided that a portion of this Bond may be redeemed only in an integral multiple of $5,000), at the prepayment or redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying fixed Agent/Registrar any such the registered owner hereof By a prepayment or redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepayment or redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption If such written notice of prepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treted as ands shall not pbear interest after rthe date to its cfixed efor u date, its 5 prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued inter- est to the date fixed for prepayment or redemption from the Paying payment Age The RPaying rAg nt/Registrarout of the nshallds ovided for record in the Registration Books all such prepayments or redemptions of principal of this Bond or any portion hereof THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and condiments for such tr nsfer,ditions set forth in the Bond Ordinance Among other requ this Bond must be presented and surrendered to the Paying Agent/ - Registrar for cancellation, together with proper instruments of assignment, in form and with guarantee of signatures satisfac- tory to the Paying Agent/Registrar, evidencing assign inn ot by the initial registered owner of this Bond, or any p to the portions hereof in any integral multiple of $5,000, assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to instruments boftransferrassignmen and instrument or registered Any istrar may be used to satisfactory to the Paying Agent Re / g evidence the assignment of this Bond or any such portion or portions hereof by the initial registered owner hereof A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of this Bond which is not being assigned by initialregistered owner, shallbe delivered by transferred Payinge Agent/Registrar in conversion of but xcha gin thefor his Boand r any portion or portions hereof, Y manner as provided in the next paragraph onion hereoeof for f conve The d_ sion and exchange of this Bond or any p registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar absolute discharge eowner hereof for all purposes, including payment and liability upon this Bond to the extent of such payment, and the issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggre- fulybonds, without gate principal amountable tolthe rasa gneedor assig see duly interest coupons, payable 0 owner designated in writing by the initial registeredhereofthis or to the initial registered owner as to any portion of rond which is not being assigned and egistered owner, in any denom n t on transferred sdenom ininlanyl integral multiple of $5,000 (subject to the requirement here- inafter stated that each substitute bond issued in exchange for any portion of this Bond shall have a single stated principal maturity date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance If this Bond or any portion hereof is assigned and transferred or converted each bond issued in exchange for any portion hereof shall have a single stated principal maturity date correspond- ing to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being excandhborne,bynsuchall bear i installment of principal ornterest at the tporticable to onhereof l be ect to ch bonds, respectively, maturity on the same dates and for jthe same epricesoaspther to corresponding installment of principal of this Bond or portion hereof for which they are being exchanged No such bond shall be payable in installments, but shall have only one stated principal maturity date AS PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORN MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond Ordinance The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging this Bond or any portion thereof, but the one a questing taxes or transfer, conversion, and exchange shall pay y governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any or portion thereof called for within 45 days priortoitst or prepayment for n priorr to to maturity, redemption date IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinanceal fiedhatt promptly will appoint a competent and cause legally wr ,ten notice sub- stitute therefor, and promptly thereof to be mailed to the registered owner of this Bond 7 IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, sold, and delivered, that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have performedbeen h law, that this Bond, as special obligation of the issuer, �secured by and payable, together with other bonds, from a first lien on and pledge of the "Pledged Revenues", which include initially the "Net Revenues of the System" as such terms are defined in the Bond Ordinance, with the System consisting electric light and power entire combined waterworks, sewer, andsystem THE ISSUER has reserved the right, subject to the restric- tion stated in the Bond Ordinance, to issue Additional Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues" on a parity with this Bond THE REGISTERED OWNER hereof shall never have the right to demand payment of this Bond or the interest hereon out of any wfunds hatsoevered or to other than raised specifiedyinathe1B taxation from any source Ordinance BY BECOMING the registered owner of this Bond, the regis- tered owner thereby acknowledges all of the terms and provi- sions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the issuer, and agrees that the terms and provisions of this Bond and the Bond Ordi- nance constitute a contract between the registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual signature of the Mayor of the Issuer and countersigned with the manual signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed on this Bond, and has caused this Bond to be dated AUGUST 1, 1988 City Secretary, City of Denton, Texas (CITY SEAL) Mayor, City of Denton, Texas 8 ORS. OF REGISTRATION CERTIFICATE OF THE ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certify that this b the Attorney 1Generalcerti- fied as to validity, and approvedY and s been the comptrollerofTexas, hat this Bond n the State of Public Accounts of theState ofeby Texas Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 6 ADDITIONAL CHARACTERISTICS OF THE BONDS Reaistra+ion and Transfer (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of TEXAS AMERICAN BANK/FORT WORTH, N A , FORT WORTH, TEXAS (the "Paying Agent/Registrar") books or records of the registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such ations under such regulations rasa the Issuerfers and andPaying Agent/Registrar nay e prescribe, and the Paying Agent/Registrar shall make such transfers and registrations as herein provided The Paying Agent/Registrar shall obtain and record in the Registration Books eaddress registered t payments withrespect to theBonds shall be mailed, ashereinh provided, but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Regis- tration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity Registration of each Bond may be transferred in the Registra- tion Books only upon presentation and surrender of such Bond tc the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satis- factory to the Paying Agent/Registrar, evidencing (1) the assignment of the Bond, or any portion thereof in any integral U multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any such portion thereof registered in the name of such assignee or assignees Upon the assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued in conversion and exchange therefor in the manner herein provided The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof All Bonds issued and de- livered in conversion of and exchange for the Initial Bond shall be o any 00 (subject to thenminations of any requirement hereinafter integral multiple at each s ( j stated that each substitute Bond shall have a single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, and shall have the characteristics, and may be assigned, trans- ferred, and converted as hereinafter provided If the Initial Bond or any portion thereof is assigned and transferred or converted the Initial Bond must be and surrendered to the Pain g Agent/Registrar for cancellation, exchange for any portion of the Initial Bond shall have a inn installments, and seach maturity sucBond shall date, and shave ahall o principal t be payable maturity date corresponding to the due date of the installment of of for nd is being exchanged, and each such which esubstitute such Bondshallbearinteresto eingat the single rate applicable to and borne by such installment of principal or portion t is being nd hanged If only a p of e Initial Bond assigned a portion hn istrans- ferred, there shall be delivered to and registered in the name of the initial registered owner substitute Bonds in exchange for the unassigned balance of the Initial Bond in the same manner as if the initial registered owner were the assignee thereof If any Bond or portion thereof other than the Initial Bond is assigned and transferred or converted each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is exchanged A form of assignment shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof Upon surrender of any Bonds or any portion or portions thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described, payable to such assignee or assignees (which then will be the registered owner or owners of such new Bond or 10 Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and transferred, all in conversion of and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section 6(d), below, for the conversion and exchange of Bonds by any registered owner of a Bond The Issuer shall pay the Paying Agent/ Registrar's standard or customary fees and charges for making such transfer and delivery of a substitute Bondor Bonds,s or but the one requesting such transfer shall pay y her governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to make transfers of registration of any Bond or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of burinesors on the next following principal or inter payment hereof called for with respect to any Bond or any portion redemption prior to maturity, within 45 days prior to its redemption date (b) gXngrahin of Bonds The entity in whose name any Bond shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such Bond shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary, a f annd ymeand f, or on account of, the principal of, premium, interest on any such Bond shall be made only to such registered owner All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid (c) pvment o Bonds and Interest The Issuer hereby further appoints the Paying Agent/Registrar to act as the Paying agent to act paying nitshagentntopal of and interest on convert and exchange or e replace Bonds, all as provided in this Ordinance The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds, and all replacements f of all conversions porovided in these ordinance s of s and (d) 11 1- cation Each Bond issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed inc of 1 balance or principal amount thereof, may, p on such Bond at the principal corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed thereoft bythe titsregistered their duly authorizedassignee attorneys assignees 11 representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the regis- tered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, in the denomina- tion of $5,000 or any integral requirement hereinafter stated multiple each5substitute,000 eBondct o the shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unre- deemed principal balance or principal amount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be If the Initial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments, and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged, and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged If a portion of any Bond (other than the Initial Bond) shall be redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having maturitythe same date, me rate, in the denominationorden minationsnofrest at the a any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation If any Bond or portion thereof (other than the Initial Bond) is assigned and transferred or converted, each Bond issued in exchange therefor shall have the same principal the same rate uwhich it is being ex hanged date and bear interest at Each substitute a Bond eshall Bond for bear a letter and/or number to distinguish it from each other Bond The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided herein, and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may againbe converted and exchanged or replaced It is specifically provided that any Bond authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each substitute Bond so authenti- cated after such first Scheduled date next preceding e d to er- estfrom the interest paym nthon 12 which such substitute Bond was so authenticated, unless such Bond e authenticated interest payment date,teinut on which ocasefite the next following shall bear interest from such next following interest payment date, provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it ch Bondssbeing exchanged is due but has not been paid, bear interest from the date to which such interest has been to this ordinance is not required to INITIAL BOND issued and and l shall d not be, o authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed a certificate, in the form substantially as follows "PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in this Bond, and that this Bond has been issued in conversion of anands exchange for or replacement of a bond, bonds, or a portion b the bond or bonds of an issue which originally was approved Y Attorney comptrollernofal of the State of Public Accounts of theas and State ofregistered by the Texas TEXAS AMERICAN BANK/FORT WORTH, N A , FORT WORTH, TEXAS Paying Agent/Registrar Dated By Authorized Representative" An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so ex- ecuted The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execu- tion, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strengthparticularly section 6 thereof, the Civ. St Art 717k-6, and 13 duty rsion nd of conv excha e or nt of Bonds as aforesaid is ehereby si posed upon the Paying eAgent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which originally was issued pursuant to this Ordinance, ap- proved by the Attorney General, and registered by the comptrol- ler trol- ler of Public Accounts The Issuer shall pay Paying g Agent/Registrar's standard or customary fees a B nd aore any r transferring, converting, and exchanging any portion thereof, but the one requesting any taxes such governmental conversion, and exchange shall pay Y charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion andhe periodreplacement or commenci g with or any portion thereof (i) during the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or r 5i days thereof called for redemption prior to maturity, within prior to its redemption date (e) rn General All Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, (1) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may and shall be redeemed prior to their i scheduled maturities, andlex- may be transferred and assigned, ( may be changed for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM OF SUBSTITUTE BOND set forth in this Ordinance (f) _Pay.ent of Fees+ and Charges The Issuer hereby covenants with the registered owners of the Bonds that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the Bonds, when payment of the print feesfanddchargessof othe hPaying Agent/ due, and (ii) pay the Registrar for services with respect to the transfer of regis- tration of Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided in this ordinance (9) Subgtit»te paying nrt4ntiueaiatrar The Issuer covenants with the registered owners of the Bonds that at all 14 the issuer will times while the Bonds areoutstanding bank trust company, financial competent and legally qualified institution, or other agency to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar willatb oneentity ychaThe Issuer reserves the right to, and may,option, the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later date afterysuchinotice theInethe ev ntpthatrthetentity patmany time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or other- wise cease to act as such, the Issuer covenants that bankrotrustly it will appoint a competent and legally qualified company, financial institution, or other agency to act as Paying Agent/Registrar under this the ordinance Upon Agentchange- in the Paying Agent/Registrar, previous Paying trar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent booksnd records relating to the Bonds, to the new Paying Agent/Regis- trar designated and appointed by the Issuer Upon any change in the Paying Agent/Registrar, the Issuer promptly will causeia written notice thereof to be sent by the new Paying Ag / 4 strar to each registered owner of the Bonds, by United States mail, first-class postage prepaid, which notice also accepting shall e the address of the new Paying Agent/Registrar By the ositin gis- trarpshallobeadeemed ito have aagreed �toathe ch pprovisions aying toa of this delivered to each Paying Agent/Registrar arof s Ordinance shall be Section 7 FORM OF SUBSTITUTE BONDS The form of all Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, including the form of Paying Agent/Registrar's Certificate to be printed on each of such Bonds, and the Form of Assignment to be printed on each of the Bonds, shall be, respectively, substantially as follows, with such oiate variations, omissions, or insertions as are permitted orrequired by this ordinance rOR?R OF SUBSTITUTE BOND NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 1988 15 the ON THE MATURITY DATE specified above beingCaT OF NTON, in Denton County, Texas (the "Issuer"), ical subdivision of the State of Texas, hereby promises to pay to or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon from AUGUST 1, 1988, to the maturi- ty date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above, with interest being payable on DECEMBER 1, 1988, and semiannually on each JUNE 1 and DECEMBER 1 thereafter, except that if the date of authentication of this Bond is later than NOVEMBER 15, 1988, such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date (herein- after defined) but on or before the next following interest payment date, in which case such principal t payment untd all bear eaid interest from such next following P yment interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity t n the principal date its redemption prior to maturity, theP Pal corporate FORT trust office of TEXAS AMERICAN BANK/Fend WORTH, strar"Afor this WORTH, TEXAS, which is the "Paying Ag / g Bond The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and r required y th ordinancelauthorizing e solely othe f issuance unds of t of the he eBonds (the "B nde Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided, and such check or draft shall be sent by the Paying Agent/Registrar by United States ail, paymentmdate, ftosthe lregistered ass eowner ahereof, id, on eaththe cinterest address of the registered owner, as it appeared on the 15th day of the month next Registration Books Books kepteceding hby the such aPaying te e 'o he Agent/Registrar, nt/Registrar,as 16 hereinafter described Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner at the principal corpor- ate trust office of the Paying Agent/Registrar upon presen- tation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Regis- trar The Issuer covenants with the registered owner of this Bond fore each al paymentat on date,o and eaccrued interest payment interestent date, date for hisBond it will make available to the Paying Agent/Registrar, from the "Intereed amounts required ton provide cfor reatthe b paymey thent, n immediately e ely available funds, of all principal of and interest on the Bonds, when due IF THE DATE for the payment of the principal of or inter- est on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close, and payment on such date shall have the same force and effect as if made on the original date payment was due THIS BOND is one of an issue of Bonds initially dated AUGUST 1, 1988, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of 500tOOOf FOR EXTENSIONS OF ETHERCITY OF DE TON POSE OF OBTAINING SYSTEM, WHICH IMPROVEMENTS AND CONSISTS OF THE CITY'S COMBINED WATERWORKS, SEWER, AND ELECTRIC LIGHT AND POWER SYSTEM ON DECEMBER 1, 1998, or on any interest payment date thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds �,ed from any available and lawful and, if i part, the particular Bonds, or portioas a ns orin part thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed only in n theaparntegral or principalle Of amount thereof,a e redemon price of plusaccrued interest to the date fixed for redemption AT LEAST 30 days prior to the date fixed for any redemp- tion of Bonds or portions thereof prior to maturity a written notice of such redemption shall be published once in a finan- cial amongpublication securities� dealersJournal, in Thereporter offNewgeneral York,circulation 17 (including, but not limited to, The Bond Buyer and The Wall Street Journal), or in the State of Texas (including, but not limited to, The Texas Bond Reporter) Such notice also shall be sent by the Paying Agent/Registrar by United States mail, firs-clashe datetfixedsfor sany esuch redemption, to the register repaid, not less than 30 days prior to t d owner of h Bond to be redeemed at its address as it appeared on the each day prior to such redemption date, provided, however, that 45tthe failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing thereof, shall not ctiveness of the affect theor redemption ofis for the lany tBond,effe and it is hereby specifi roceeally provided that the publication of such notice as required above shall be the only notice actually required in connection with or as a prerequisite the d to fixed fo the r redemption ny osuchany redemptionportions provision there- of BY istrar for the payment shall be made with the Paying Agent Re / 9 of the required redemption price for the Bonds or portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption If such written pnotice of ayment ismade,redemption as is published r via d abovand e, the due provision ndssornfor portionsh thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemp- tion, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest from the Paying Agent/ Registrar out of the funds provided for such payment If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same in any $5 OO,denomination writtendenominations in the registered integral multi owners owner, and in aggregate principal amount equal to the unre- deemed portion thereof, will be issued to the registered owner upon the er thereof providedfor in the Bond ion, at Ordinance he expense of Ordinance THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTE- GRAL MULTIPLE OF $5,000 may be assigned and shall be trans- ferred only in the Registration Books of the issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon theothers requirementsn ions set for such forth d Ordinance Amongassignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfac- tory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name 18 or names this Bond or any such portion or portions hereof is or are to be transferred and registered The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner or its duly authorized attorney or representa- tive, to evidence the assignment hereof A new Bond or Bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds), or to ttransferprevioof only ae porti red n of this Bond, may be deliveredowner in the case of the and thishBondl,iall ng in the Agent/Registrar nand manner as provided incthe gnext r paragraph hereof for the conversion and exchange of other Bonds The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such trans- fer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof to its redemption date rT The oregistered owner nof5 this prior caled for redemption pBond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of $5,000 As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the reest of the the signees� registered hereof, be convertedinto erassignee r andexchangedfor alike aggregate principally registered Tthout owner, interest coupons, payable assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integralmultiplOf e registered $5,000 as requested in writing by the appropriate owner, assignee, or assignees, as the case may be, upon sur- render of this Bond to the Paying Agent/Registrar for cancella- tion, all in accordance with the form and procedures set forth in the Bond Ordinance The Issuer shall pay the Paying Agent/ - Registrar's standard or customary fees and charges for trans- ferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and 19 exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date IN THE EVENT any Paying Agent/Registrar otherwise forceathe es tBonds is o act as changed by the issuer, resigns, or such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substi- tute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and lidly livered, that all acts, conditions,authorized, issued, andthingsrequired or e proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law, that this Bond is a special obligation of the Issuer, secured by and payable, together with other bonds, from a first lien on and pledge of the "Pledged Revenues", which include initially the "Net Revenues of the System", as such terms are defined in the Bond Ordinance, with the System consisting of the City's entire combined waterworks, sewer, and electric light and power system THE ISSUER has reserved the right, subject to the restric- tion stated in the Bond Ordinance, to issue Additional Bonds payable "pledged fRevenues" rom and eonr a parity with this Bond ed by a first lien on dand esedge of e series of which it is a part THE y ent of REISTEthisNER Bond or f shall never have the right to demand payment the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specified in the Bond ordinance BY BECOMING the registered owner of this Bond, the regis- tered owner thereby acknowledges all of the terms and provi- sions of the Bond ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and e issuer, and records of terms t and governinghe body oof this h Bond and the Bonde6 Wo Ordinance constitute a contract between each registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed countersigned with lthe ifgnature f facsimile signature the of the City of the er secretary e Issuer to be duly impressed, or placedin official l facsimile, of theon this Bond (facsi " i„natiiral City secretary, City of Denton, Texas (farsimiip sianature) mayor, City of Denton, Texas (CITY SEAL) ORS OF PAIING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in this Bond, and that this Bond has been issued in conversion of and exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney comptrollernofal of tpublic he of the State ofState of Texas and registered by the Texas TEXAS AMERICAN BANK/FORT WORTH, N A , FORT WORTH, TEXAS Paying Agent/Registrar Dated By Authorized Representative ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to / / (Ass gnee's Soc al (print or typewrite Assignees name and Security or Taxpayer address, including zip code) Identification Number 21 and hereby irrevocably constitutes and appoints attorney zv a..a ---- -- Paying Agent/Registrar's Reg substitution in the premises Dated• Signature Guaranteed NOTICE The signature must be guaranteed by a member of the New York Stock Exchange or a commercial bank or trust company T on tion Books with full power of ------------ Registered Owner NOTICE The signature above must correspond with the name of the Registered Owner ap- pearing on the face of this Bond Section 8 DEFINITIONS As used in this Ordinance the following terms shall have specificallyhindicatessset forth below, unless otherwise (a) The terms "City" and "Issuer" shall mean the City of Denton, in Denton County, Texas (b) The term "City Council" or "Council" shall mean the governing body of the City (c) The term "Bonds" shall mean collectively the Initial Bond as def ined. and all substitute bonds described xchang d therefor f andisallother and substitute bonds and replacement bonds, issued pursuant to and as provided in this Ordinance (d) The term "Parity Bonds" shall mean collectively (1) the outstanding City of Denton Utility System Refunding Revenue Bonds, Series 1983, authorized by ordinance the ots passed ding City f, 1983 (the "Series 1983 Bonds"), Denton Utility System Revenue Bonds, Series 1984, authorized by ordinance passed on February 21, 1984 (the "Series 1984 Bonds"), (iii) the outstanding City of Denton Utility System Revenue Bonds, Series 1984-A, authorized by ordinance thessed on September 25, 1984 (the Series 1984-A Bonds), (iv) standing City of Denton Utility System Revenue Refunding Bonds, Series 1987, authorized by ordinance passed eds n January 27, 1987 (the "Series 1987 Bonds"), and ( ) the 22 (e) The term "Additional Bonds" shall mean the additional inrthe future, initrevenue naccordance ds which hwith tSection 25 ofy reserves ethis hordinance t to e (f) The term "System" shall mean (1) the City's entire existing waterworks and sewer system and the City's entire existing electric light and power system, together with all future extensions, improvements, enlargements, and additions thereto, and all replacements thereof, and (2) any other related facilities, all or any part of the revenues or incomin from which do, in the future, at the option of the City, andaccordance with law, become "Pledged Revenues" as hereinafter defined, provided that, notwithstanding the foregoing, and to the extent now or hereafter authorized or permitted by law, the term System shall not mean any water, sewer, electric, or other facilities of any kind which are declared not to be a part of the ired the System, the proceeds ifromch rthe cisr issuance of "special Facilities constructed y with Bonds", which are hereby defined as being special revenue obligations of the City which are not payable from or secured by any Pledged Revenues, but which are secured by and payable from liens on and pledges of any other revenues, sources, or payments, including, but not limited to, special contract revenues or payments received from any other legal entity in connection with such facilities, and such revenues, sources, or payments shall not be considered as or constitute Gross Rev- enues of the System, unless and to the extent otherwise pro- vided in the ordinance or ordinances authorizing the issuance of such "Special Facilities Bonds" (g) The terms "Gross Revenues of the System" and "Gross Revenues" shall mean all revenues and income of every nature derived or received by the City from the operation and owner - rest income rom the shiof the or System, posit of including t y in anyhe Fund f Fund created this Ordinance (h) The terms "Net Revenues of the system", and "Net Revenues" shall mean all Gross Revenues after deducting there- from an amount equal to the current expenses of operation and maintenance of the System, including all salaries, labor, matercientiservicei,airs, and provided,ehowever,�sthatessary to only such ender repairs effi- cient extensions, as in the judgment of the City Council, reasonably and fairly exercised by the adoption of appropriate resolu- tions, are necessary to keep the System in operation and render adeqatty and the thereof, or suchuasemig might be necessary i to meet sominhabitants physical accident or or condition shallicbewould deducted mainse impair the determining "Nets Revenues" iional 23 Payments required to be made by the City for water supply or water facilities, sewer services or sewer facilities, fuel supply, and for the purchase of electric power, which payments under law constitute operation and maintenance expenses of any part of the System, shall constitute and be regarded as ex- penses of operation and maintenance of the System under this ordbearegarded pascexpenses iation nofaoperation and mortization hmaintenance all not constitute of the System (i) The term "Pledged Revenues" shall mean (1) the Net Revenues, plus (2) any additional revenues, income, or other resources which are expected to be available to City on a regular periodic basis, including, limitation, any, grants, donations, or income received or to be received from the United States Government, or any other public or private source, whether pursuant to an agreement or otherwise, which hti tthehe pfutureayment may,of at the option of the City, be pledged Parity Bonds or Additional Bonds (j) The term "year" or "fiscal year" shall mean the fiscal year used by the City in connection with the operation of the System (k) The term "Government Obligations" shall mean direct obligations of the United States of America, including obliga- tions the principal of and interest on which are uncondition- ally guaranteed by the United States of America, which may be United uch as Governmenttes Series, and which may beobligations sin book i nt y ts State Local Section 9 PLEDGE (a) The Bonds are "Additional Bonds" as permitted by Sections 24 and 25 of the ordinance passed on March 10, 1983, authorizing the Series 1983 Bonds, and it is hereby determined, declared, and resolved that all of the Parity Bonds (including the Bonds) are secured and payable equally and ratably on a parity, and that Sections 8 through28, of this Ordinance are supplemental to and cumulative of Sec- tions h27 of haforesaid ordinance 10, 1983, with sections8 through28 ofthis ordinance being applicable to all of the Parity Bonds (b) The Parity Bonds and any Additional Bonds, and the interest thereon, including any interest coupons appertaining theren and pledge of the are and shall be secured bRevenues, and they and payable m Pledged t lieno 24 Revenues are further pledged to the establishment and mainte- this nance the by any Fundscreated dauthorizing ordinance, issuanceany of any s Additional Bonds The Parity Bonds and any Additional Bonds are not and will not be secured by or payable from mortgage or deed of trust on any real, personal, properties p rt constituting the System Section created and there shall be established and maintained on the books of the City, hereby and accounted for separate and apart on special fund to be entitled from all other funds of the City, a s p the "City of Denton Utility System Fund" (the "System Fund") All Gross Revenues shall unless otherwisetproviSystem in this immedi- ately ordi- nance upon receipt, nance All current expenses of operation and maintenance of the System shall be paid from such Gross Revenues credited to the System Fund as a first charge against same Before making any deposits hereinafter required to be made from the System amount at shallhe city retain System at leastequalto one -sixth ofthe amount budgeted for the then current fiscal year for the current operation and maintenance expenses of the System ND or the sole Section y1 INTEREST in the principal D SINKIof and interest F erest purpose of paying all Parity g Bonds and Additional Bonds, there heretofore has been and is herby creatd and there ll be thee ebooks ofe the City, and aaccount d for separ to d and maintained and apart n apart from all other funds of the City, a separate fund to be en- titled the "City of Denton Utility System Revenue Bonds Inter- est and Sinking Fund" (the "Interest and Sinking Fund") Section 12 RESERVE FUND There heretofore has been and is hereby created and there shall be initially at Texas American Bank/Fort Worths Ne an A Fort Worth,l Texas, and thereafter, at the option of the City, established and maintained at any time at any national bank having a capital and surplus in entitled the "City of sDenton Utility of Oparate d System Bonds and tobe Additional Bonds Reserve Fund" (the "Reserve Fund") The Reserve Fund shall be used to pay the principal of and interest on any Parity Bonds or Additional Bonds when and to the extent the amounts in the Interest and Sinking Fund available for such payment are insufficient for such purpose, and may be used for the purpose of finally retiring the last of any Parity Bonds or Additional Bonds Section 13 EXTENSION AND IMPROVEMENT FUND There heretofore has been and is hereby created and there shall be 25 established and maintained on the books of the City, and accountCity, ae separate separate fund to apart from all be entitled the other "C "city funds the Denton n Utility System Extension and Improvement Fund" (the "Extension and Improvement Fund") The Extension and Improvement Fund shall be used for the purpose of paying the costs of improve- ments, enlargements, extensions, additions, replacements, or other capital expenditures related to the System, or for paying the costs of unexpected or extraordinary repairs or replace- ments of the System for which System funds are not available, or for paying unexpected or extraordinary expenses of operation and maintenance of the System for which System funds are not otherwise available, or for any other lawful purpose section 14 EMERGENCY FUND There is hereby created and there shall be established and maintained on the books of the City, and accounted for separate and apart from all other funds of the City, a separate fund to be entitled the "City of Denton Utility System Emergency Fund" (the "Emergency Fund") e Emergency Fund shall be used for the purpose of paying unex- pected or extraordinary expenses of repair, replacement, operation, and maintenance of the System for which neither System funds nor the moneys in the Extension and Improvement availableFund are Emergency simultaneously with the delivery of the Series 1983Bonds Ftod the initial purchasers thereof from lawfully available funds of the City the amount of $250,000 All investment interest income from the Emergency Fund shall be transferred to the System Fund as received Section 15 DEPOSITS OF PLEDGED REVENUES Pledged Revenues shall be credited to or deposited in the Interest and Sinking Fund, the Reserve Fund, the Extension and Improvement Fund, and other funds when and as required by this Ordinance and any ordinance authorizing the issuance of Additional Bonds Section 16 INVESTMENTS Money in any Fund established pursuant to this Ordinance or any ordinance authorizing the issuance of Additional Bonds, may, at the option of the City, The placed in time deposits or certificates of deposit secured by obligations of the type hereinafter described, or be in- vested in Government Obligations (as defined in Section 8 hereof) or obligations guaranteed or insured by the United States of America, which, in the opinion of the Attorney General of the or repr represent its States, obligations, backed by its f ull faith d s, orinvested in credit obligations of ins, butenotlities of limited to,e United evidences of America, including, indebted- ness issued, insured, or guaranteed by such governmental agencies as the Federal Land Banks, Federal Intermediate Credit 26 Banks, Banks for Cooperatives, Federal Home Loan Banks, Govern- ment National Mortgage Association, United States Postal Service, Farmers Home Administration, Federal Home Loan Mort- gage Association, Small Business Administration, Federal Housing Association, or Participation Certificates in the Fedral Assets andeinvestments Fshall ibe made Trust,ng provided such emanner aslwill, such an s the opinion of the City, permit the money required to be expended from any Fund to be available at the proper time or times as expected to be needed Such investments (except United States Treasury Obligations --State and Local Government Series invest- ments held in book entry form, which shall at all times be valued at cost) shall be valued in terms of current market value as of the last day of each fiscal year Unless otherwise set forth herein, all interest and income derived from such deposits and investments immediately shall be credited to, and any losses debited to, the Fund from which the deposit or investment was made, and surpluses in any Fund shall or may be disposed of as hereinafter provided Such investments shall be sold promptly when necessary to prevent any default in con- nection with the Parity Bonds or Additional lnBo nds consistent with the ordinances, respectively, g their issuance Section 17 FUNDS SECURED That money in all Funds created by this Ordinance, to the extent not invested, shall be secured in the manner prescribed by law Section 18 PRIORITY OF DEPOSITS AND PAYMENTS FROM SYSTEM PledgedTRev Revenues n ithenll system the Fund dwhenits andand as required nts m red by this Ordinance and any ordinance authorizing any Additional Bonds, and such deposits irrevocable priorities, r respectively llowing manner and with the following First, ttantsrrqand SkiFund, in hemoueuiredbythsOrdinance and any ordinance authorizing any Additional Bonds, Second, to the Reserve Fund, when and in the amounts required by this Ordinance and any ordinance authorizing any Additional Bonds, and Third, to the as requirednbynSection 21e nt Fund, when andof this ordinance Section 19 INTEREST AND SINKING FUND REQUIREMENTS The City shall cause to be deposited to the credit of the Interest received and Sinking Fund the accrued interest and any premium from the sale of the Initial Bond, and on or before the 25th day of each month, the City shall cause to be deposited to the 27 credit of the Interest and Sinking Fund, in approximately equal monthly payments, amounts sufficient, together with any other funds on hand therein, to pay all of the interest or principal and interest coming due, including the principal amount of any Parity Bonds required to be redeemed prior to maturity pursuant to any mandatory redemption requirements, on the Parity Bonds and any Additional Bonds on the next succeeding interest payment date Any moneys so deposited in the Interest and Sinking Fund with respect to a mandatory redemption require- ment, together with other lawfully available funds of the City, may be used by the City, to purchase, in advance of a mandatory redemption date and at a price not exceeding the principal amount thereof plus accrued interest thereon to the date of purchase, Parity Bonds which would be subject to being chosen for mandatory nt shallon on cancelsuch mandatory any Parity Bonds so redemption e purchased The Paying Agent Section 20 RESERVE FUND REQUIREMENTS There is now on hand in the Reserve Fund an amount of money and Government lleasta eObligtiqual toons cthe s average annual in excess of 3proncipal andwhich interestis at requirements of the Series 1983 Bonds, the Series 1984 Bonds, the Series 1984-A Bonds, and the Series 1987 Bonds (the "Required Reserve Amount"), except and provided that following the issuance and delivery of the Initial Bond (Series 1988) the Required Reserve Amount shall become and be an amount of money and investments equal to the average annual principal and interest requirements of all outstanding Parity Bonds and Additional Bonds, provided further, however, that the Required Reserve Amount shall never be less than $3,000,000 if the maximum annual principal and interest requirements on all outstanding Parity Bonds and Additional Bonds exceeds $3,000,000 Immediately after the issuance and delivery of the Initial Bond thereshall the be proceedsofed the sales credit Reserve Fund, ofthe Initial P Bond, money sufficient to cause the Reserve Fund to contain an aggregate amount of money and investments equal to the average annual principal and in the sthen Required requirements Reserve Am unt)of all then t standing Parity Bonds After the delivery of any future Additional Bonds the City shall cause the Reserve Fund to be increased, if and to the extent necessary, so that such Fund will contain an amount of money and investments equal to the Required Reserve Amount Any increase in the Required Reserve Amount may be funded from Pledged Revenues, or from proceeds from the sale of any Addi- tional Bonds, or any other available source or combination of sources All or any part of the Required Reserve Amount not funded initially and immediately after the delivery of any installment or issue of Additional Bonds shall be funded, within not more than five years from the date of such delivery, 28 by deposits of Pledged Revenues in approximately equal monthly installments on or before the 25th day of each month Princi- pal amounts of the Parity Bonds and any Additional mandatory Bonds which must be redeemed pursuant to any applicable redemp- tion requirements shall be deemed to be maturing amounts of principal for the purpose of calculating principal and interest requirements on such bonds When and so long as the amount in the Reserve Fund is not less than the Required Reserve Amount no deposits shall be made to the credit of the Reserve Fund, Reservebut when and if the Fund at any time contains less than the Required Reserve Amount,then the City shall transfer from Pledged Revenues in the System Fund, and deposit to the credit of the Reserve Fund, 1 monthly 0 h of the Reserveday Amount, of each month, a sum equal to / until the Reserve Fund is restored to the Required Reserve Amount The City specifically covenants that when and so long as the Reserve Fund contains the Required Reserve Amount, the c�ity sall case all Amounthto beudeposited oto the credit of the Int unts in exces of the Reuired Reserve re tand Sinking Fund Section 21 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS During each year, subject and subordinate to making the re- quired deposits to the credit of the Interest and Sinking Fund and the Reserve Fund, the City shall be required to deposit to the credit of the Extension and Improvement Fund, from Pledged Revenues in the System Fund, n amount equal o 8% the "Adjusted Gross Revenues of thesystem", which t ich term isf hereby defined to mean the following the Gross Revenues of the System for such year after deducting from such Gross Revenues an amount equal to the current expenses of operation and maintenance of the System for such year which are directly attribut- able to (i) all fuel costs related to the production roductin of electric energy by the City and/or (ii) the pur- chase of electric energy by the City Additional excess Pledged Revenues may, at the option of the City Council, be deposited to the credit of the Improvement Fund as permitted by Section 22 (b) hereof, but no such addi- tional deposit is required All investment interest income from the Extension and Improvement Fund shall be retained in and remain a part of such Fund Section 22 DEFICIENCIES, EXCESS PLEDGED REVENUES (a) If on any occasion there shall not be sufficient Pledged Revenues to make the required deposits into the Interest and Sinking Fund or the Reserve Fund, such deficiency shall be made 29 up as soon as possible from the next available Pledged Rev- enues (b) Subject to making the required deposits to the credit of the various Funds when and as required by this Ordinance or any ordinance authorizing the issuance of Additional Bonds, any surplus Pledged Revenues may be used by the City for any lawful purpose Section 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS On or before December 1, 1988, and semiannually on or before each June 1 and December 1 thereafter while any of the Parity Bonds or Additional Bonds are outstanding therefori out of nd unpad the ity shall make available to the Paying Agents out of the Reserve Interest and Sinking Fund, or if on necessary, of such dates, the Fund, money sufficient to pay, principal of and interest on the Parity Bonds and Additional Bonds as the same matures and comes due, or to redeem the Additional aBs prior to maturity, on Parity Bonretheoption of the City At mandatory Bonds or at ents shall either deliver direction of the City the Paying Ag paid Parity Bonds and Additional Bonds, and any interest coupons appertaining thereto, to the City or destroy all paid Parity Bonds and Additional Bonds, and any coupons appertaining thereto, and furnish the City with an appropriate certificate of cancellation or destruction Section 24 FINAL DEPOSITS (a) Any Parity Bond or Additional Bond shall be deemed to be paid, retired, and no longer outstanding within the meaning of this Ordinance when payment of the principal of, redemption premium, if any, on thehduerdate thereof A(wh (whether such duedditional Bond, l date beus eby reasonst of o Paity Bond or of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms giving of any ice of redemp- tioneor provision for the proper giving required of such tnotice having been made), or (ii) shall have been provided by irrevocably depositing with or making available to a Paying Agent therefor, in trust and irrevocably set aside exclusively for such pay- ment, (1) money sufficient to make such payment or (2) Govern- ment Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of such Paying Agent pertaining to the Parity Bonds and Addi- tional Bonds with respect towh the provided for ch such deposit is ate de shall have been paid or the paym61 satisfaction of such paying agent At such time as a Bond or Additional Bond shall be deemed to be paid hereunder, as 30 aforesaid, it shall no longer be secured by or entitled to the benefits of this Ordinance or a lien on and pledge of the Pledged Revenues, and shall be entitled to payment solely from such money or Government Obligations (b) Any moneys so deposited with a paying agent may at the direction of the City also be invested in Government obligations, maturing in the amounts and times as hereinbefore set forth, and all income from all Government Obligations in the hands of the paying agent pursuant to this Section which is not required for the payment of the Parity Bonds and Additional Bonds, the redemption premium, if any, and interest thereon, bet turnde overo to the City moredeposited y has naso directed by shall which such by the City Section 25 ADDITIONAL BONDS (a) The City shall have the right and power at any time and from time to time, and in one or series or and additional parity issues, parity rev nue bonds (herein cissue alled"Additionaler Bonds"), in accordance with law, in any amounts, for any lawful purpose, including the refunding of any Parity Bonds or Addi- tional Bonds, or other obligations Such Additional Bonds, if and when authorized, issued, and delivered in accordance with this Ordinance, shall be payable from and secured by an irrev- ocable first lien on and pledge of the Pledged Revenues, equally ects ndsndany anaother outstanding Additional pBondswith the Parity B (b) The principal of all Additional Bonds must be sched- uled paid is scheduled to be paid or m ture ears in which such principal Section 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS Additional d only with this Ordinance, and dnosinstallmenthall be ,16Series, iorissue accordance ofAdditional Bonds shall be issued or delivered unless (a) The Mayor of the City and the City Secretary sign a written certificate to the effect that the City is not in default as to any covenant, condition, or obligation in connec- tion with all then outstanding Parity Bonds and Additional Bonds, and the ordinances authorizing same, and that the Interest a d Sinking rgquired to be therein (b) Fund each contains the amount (b) An independent certified public accountant, or in- dependent firm of certified public accountants, acting by and through tpublic the effect that, in his nornitssopinion,igns a�rduringitten c certifi- cate either 31 the next preceding fiscal year, or any twelve consecutive monthcalendar period out of the lperiod preceding the month in which the ordinance authorizing athey issuance of the then proposed Additional 29Bonds imes ansapassed, mount the Pledged Revenues were at least (1) ual to the average annual principal and interest requirements, and (ii) 1 to times an amount equal to the principal and interest requirements during the fiscal year during which such require- ments are scheduled to be the greatest, of all Parity Bonds and Additional Bonds which are scheduled to be outstanding after the delivery of the then proposed Additional Bonds It is specifically provided, however, that in calculating the amount of Pledged Revenues for the purposes of this subsection (b), if there has been any increase in the rates or charges for ser- vices of the System which is then in effect, but which was not in effect during all or any part of the entire period for which the Pledged Revenues are being calculated (hereinafter referred to as the "entire period") then the certified public account- ant, or in lieu of the certified public accountant a firm of consulting engineers, shall determine and certify the amount of a sum Pledged Revenues as being the total of (1)to the Revenues for the entire period, plus (ii) equal aggregate amount by which the actual billings to customers of ve been ifcreased esucht increased rates Sysem during the norti r charges had beene period would in effect during the entire period (c) Provision shall be made in the ordinance authorizing their issuance Amount asrrequireding the by sectionerve Fund to the Required 20 hereof (e) All calculations of average annual principal and interest requirements of any bonds made in connection with the issuance of any then proposed Additional Bonds shall be made as of the date of such Additional Bonds, and also in making calculations for such purpose, and for any other purpose under this ordinance, principal amounts of any bonds which must bemandatory redeemed prior to maturity pursuant to any app e redemption requirements shall be deemed to be maturing amounts of principal of such bonds Section 27 GENERAL COVENANTS The City further cove- nants and agrees that in accordance with and to the extent required or permitted by law (a) Performance It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provi- sions contained in this ordinance, and each ordinance authoriz- ing the issuance of Additional Bonds, and in each and every Parity Bond and Additional Bond, that it will promptly pay or 32 cause to be paid the principal of and interest on every Parity Bond and Additional Bond, on the dates and in the places and manner prescribed in such ordinances and Parity Bonds or Additional Bonds, and that It will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Interest and Sinking Fund and the Reserve Fund, and any holder of the Parity Bonds or Addi- tional Bonds may require the City, its officials, and em- ployees, to carry out, respect, or enforce the covenants and obliatins of this issuanceoof Additional dBonds, byrall ylegal nand eauthorizing equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings, court of competent and employees jurisdiction, against the City, its Officials, (b) CitvI The City is a duly created and existing home rule city of the State of Texas, and is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds and Additional Bonds, that all action on its part for the creation and issuance of the said obligations has been or will be duly and effectively taken, and that said obligations in the hands of the holders and owners thereof are and will be valid and enforceable special obligations of the City in accordance with their terms (c) Ig The City has or will obtain lawful constituting title to the lands, buildings, structures, and the System, that it warrants that It will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Parity Bonds and Additional Bonds, against the claims and demands of all qualified to pledge persons Pledged Revenues t Revenuestot Is lawfully qu the and prescribed herein, and hasBonds Additional lawfullyexercis d Bonds rights anner (d) Liens The City willand m time toatime ll and before taxes, assess - the same become delinquent pay which shall law- ments, and governmental charges, if any, fully imposed upon it, or the System, that it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with hereof,the liens he s g hereunder shallbe fully preserved iin ty of t the manner providedd herein, and that it will not create or suffer to be created any whichn nmight or could Abe prior materialtonthe liens hhereofer ,l or door charge or eof ht couldr be ymatter or thinimpaired, provided,1B however@ that noreby thliens such itor ax, 33 assessment, or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good faith by the City (e) o_p r tion of System No Free Service While the Parity Bonds or any Additional Bonds are outstanding and unpaid the City shall continuously and efficiently operate the System, and shall maintain the system in good condition, repair, and working order, all at reasonable cost No free service of the System shall be allowed, and should the City or any of its agencies, instrumentalities, lessors, or concessionaires ke use of the services and facilities of the System, payment monthly of the standard retail price of the services provided shall be made by the City or any of its agencies, instrumen- talities, lessors, or concessionaires out of funds from sources other than theues of less ade m surplus hereof (f) EUrth9X Fncumrrance While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the City shall not additionally encumber the Pledged Revenues in any manner, except as permitted in this Ordinance in connection with Additional Bonds, unless said encumbrance lade junior covenants, subordinate in all respects to the liens, pledges, and agreements of this ordinance and any ordinance authorizing the issuance of Additional Bonds, but the right of the City to issue revenue bonds payable from a subordinate lien on surplus Pled ed Revenues is specifically recognized and retained, as permitted under Section 22(b) hereof) (g) �a�e or Disoosai of Property While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the City shall not sell, convey, mortgage, encumber, lease, or in any manner transfer title to, or dedicate toother or,or substanti- wise dispose of, the System, Ysignificant al part thereof, provided that whenever the City deems it neces- sary to dispose of any property, machinery, fixtures, or equipment, or dedicate such property to other use, it may do so either when it has made arrangements to replace the same or provide substitutes therefor, or it is determined by resolution of the City Council that no such replacement or substitute is necessary (h) Insurance (1) The City shall cause to be insured such parts of the System as would usually be insured by corpor- ations operating like properties, with a responsible insurance com any or companies, against risks, accidents, or casualties aga nst which and to the extent insurance is usually carried by 34 corporations operating like properties, including, to the extent reasonably obtainable, fire and extended coverage insurance, insurance against damage by floods, and use and occupancy insurance Public liability and property damage insurance also shall be carried unless the City Attorney gives a written opinion to the effect that the City is not liable for claims which would be protected by such insurance All insur- ance premiums shall be paid as an expense of operation of the System At any time while any contractor engaged in construc- tion be required bebt fully carrryresponsible ontherefor, theworkthe beingCity shall con- structed if the contractor is required to carry appropriate insurance All such policies shall be open to the inspection of times Bonhlders and their Uponothe happening of representatives damage l covered reasonable insurance from one or more of said causes, the City shall make due proof of loss and shall do all things necessary or in f desir- able to cause the insuring companies to make payment directly to the City The proceeds of insurance covering such property, together with any other funds necessary and available for such purpose, shall be used forthwith by the City for repairing the property damaged or replacing the property destroyed, provided, however, that if said insurance proceeds and other funds are insufficient for such purpose, then said insurance proceeds pertaining to the System shall be deposited in a special and to be designated the, at an ofcial Insurance Acco ntepoTheory of of the City, Insurance Account shall be held until such time as other funds become available which, together with the Insurance Account, will be sufficient to make the repairs or replacements origin- ally required (2) The annual audit hereinafter required may contain a section commenting on whether or not the City has complied with the requirements of this Section with respect to the mainte- nance of insurance, and shall state whether or not all insur- ance premiums upon the insurance policies to which reference is made have been paid (i) A "LSachet and Rate Covenant The City shall prepare, prior to the beginning of each fiscal year, an annual budget, in accordance with law, reflecting an estimate of cash receipts and disbursements for the ensuing fiscal year in sufficient detail to indicate the probable Gross Revenues and Pledged Revenues for such fiscal year The City shall fix, establish, maintainand collect, such rates, charges, and fees for the use and availability of the System at all times as are necessary (1) to produce Gross Revenues sufficient, together with any other Pledged Revenues, to pay all current operation and maintenance expenses of the System, and (2) to produce an 35 amount of Pledged Revenues during each fiscal year at least equal to the greater of 1 25 times the average annual principal and interest requirements of all then outstanding Parity Bonds Additionaland h principal and interest requirements of all then outstanding/s Parity Bonds and Additional Bonds (j) Records The City shall keep proper books of record and account in which full, true, proper, and correct entries will be made of all dealings, activities, and transactions relating to the System, the Pledged Revenues, and the Funds created pursuant to this Ordinance, and all books, documents, and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any Bondholder or citizen of the City To the extent consistent with the provi- sions of this Ordinance, the City shall keep its books and records in a manner conforming to standard accounting practices as usually would be followed by private corporations owning and operating a similar System, with appropriate recognition being given to essential differences between municipal and corporate accounting practices (k) Audits After the close of each fiscal year while anying,oanthe auditrity willBbeds or made ofythedbooksal Bonds are o utstand- and accounts relating to the system and the Pledged Revenues by an independent certified public accountant or an independent firm of certified public accountants As soon as practicable after the close of each such year, and when said audit has been completed and made available to the City, a copy of such audit for the preceding year shall be mailed to the Municipal Advisory Council of Revenues and to each ing agent for anany Bondholders who bondspayable sot request tinged writing The annual audit reports shall be open to the inspec- tion of the Bondholders and their agents and representatives at all reasonable times (1) c�c•ernmentai Aaencies It will comply with all of the terms and conditions of any and all franchises, permits, and authorizations applicable to or necessary with respect to the System, and which have been obtained from any governmental agency, and the City has or will obtain and keep in full force and effect all franchises, permits, authorization, and other requirements applicable to or necessary operation, n spend ect tothe acquisition, construction, equipment, mainte- nance of the System (m) �jQ Comoeti on It will not operate, or grant any franchise or, to the extent it legally may, permit the acquisi- tion, construction, or operation of, any facilities which would 36 with the nd to e extent hat it be al comae,thenCity will prohibit a any such competingtfacili- legally may, Y ties (n) Arbitrage The City covenants to and with the purchasers of the Parity Bonds and any Additional Bonds that no use will be made of the proceeds of any of such bonds at any time throughout the term of any of such bonds which, if such use had been reasonably expected on the date of would of such bonds to and payment therefor by the purchasers, have caused any of such bonds to be arbitrage bonds within the meaning of section 103(c) of the Internal Revenue Code of 1954, as amended, or the Internal Revenue Code of 1986, or any regulations or rulings pertaining thereto, and by this covenant the City is obligated to comply with the requirements of the aforesaid codes re ulationsapplicable toand arbitrage bonds ertinent ar The City ment of the Treasury regulations further covenants that the proceeds of all such bonds will not y so as to cause all or otherwise be used such bonds to or be or become anypart of h arbitrage bonds within the meaning of the aforesaid Codes, or any regulations pertain- ing thereto section 28 AMENDMENT OF ORDINANCE (a) The holders or owners of Parity Bonds and Additional Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Parity Bonds and Additional Bonds shall have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary herein desirable contained yshall the city, provided, however, co diti nab in this rdinaonstrued to nceor inermit etheeParity Bo ds orof the e Addind tional Bonds so as to (1) Make any change in the maturity of the out- standing Parity Bonds or Additional Bonds, (2) Reduce the rate of interest borne by any of the outstanding Parity Bonds or Additional Bonds, (3) Reduce the amount of the principal payable on the outstanding Parity Bonds or Additional Bonds, (4) Modify the terms of payment of principal of or tionalinterest Bonds, ornthe imposeuanyanding conditionstwithnds or ddi- respectto such payment, (5) Affect the rights of the holders or owners of less than all of the Parity Bonds and Additional Bonds 37 then outstanding, (6) Change the minimum percentage of the prin- cipal amount of Parity Bonds and Additional Bonds neces- sary for consent to such amendment (b) if at any time the City shall desire to amend the Ordinance under this Section, the City shall cause notice of the hed roposedndment to neinuThescitylofaNewnancial York, Neb lica- New York, once during each calendar week for at least two successive calendar weeks Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agents for inspection by all holders or owners of Parity Bonds and Addi- tional Bonds Such publication is not required, however, if notice in writing is given to each holder or owner of Parity Bonds and Additional Bonds (c) Whenever at any time not less than thirty days, and within one year, from the date of the first publication of said notice or other service of written notice the City shall receive an instrument or instruments executed by the holders or owners of at least 51% in aggregate principal amount of all Parity Bonds and Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agents, the City Council may pass the amendatory ordinance in substantially the same form (d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be amended in accordance with such amendatory ordi- nances and the respective rights, duties, and obligations under this Ordinance of the City, and all the holders or owners of then outstanding Parity Bonds and Additional Bonds and all future Parity Bonds and Additional Bonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such amendments (e) Any consent given by the holder or owner of a Parity Bond or Additional Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders or owners of the same Parity Bond or Additional Bond during such period Such consent may be revoked at any time after six months such noticeby theholdermhefirst of the orownerwho gave such consent, or by 38 a successor in title, by filing notice thereof with the paying agents and the City, but such revocation shall not be effective if the holders or owners of 51% in aggregate principal amount of the then outstanding Parity Bonds and Additional Bonds as in this Section defined have, prior to the attempted revocation, consented to, and approved the amendment (f) For the purpose of this Section, the fact of the holding of Parity Bonds or Additional Bonds which are in bearer, coupon form, by any bondholder and the amount and numbers of such bearer Parity Bonds or Additional Bonds and the date of their holding same, may be proved by the affidavit of the person claiming to be such holder or owner, or by a certi- ficate executed by any trust company, bank, banker, or any other depository wherever situated showing that at the date therein mentioned such person had on deposit with such trust company, bank, banker, or other depository, the Parity Bonds and Additional Bonds described in such certificate The City may conclusively assume that such ownership continues until written notice to the contrary is served upon the City The sbe d of terminedall gistered from the regi tration bo ks k ptAdditional byBonds shall registrar therefor Section 29 DAMAGED, MUTILATED, LOST, STOLEN, OR DE- STROYED BONDS (a) ReDl ement Bonds In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be print- ed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided (b) Ann1 t Bonds Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar In every case of loss, theft, or a destruction of a Bond, the registered owner applying replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or muti- lated 39 (c) N is s Occurred Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is than con- tinuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the paymnt othe same case of a damaged or (withoutsurrender rBond) r insteadthereoof except in t of issuing o e replacement Bond, provided security or indemnity is furnished as above provided in this Section (d) =Uscaor Tssu;na Replacement Bonds Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance s In accordance (e) Tasuer for Tssuina Re�acement Bond with Section 6 of Vernon's Ann Tex Civ St Art 717k-6, this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Regis- trar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion and exchange for other Bonds Section 30 COVENANTS REGARDING TAX -EXEMPTION The Issuer covenants to take any action or refrain from any action which would adversely affect the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation In furtherance thereof, the Issuer covenants as follows (a) to take any action to assure that no more than 10 percent of the proceeds of the Bonds amounts deposited to a reserve fund, if any) are used any "private business use", as definin section of the proceeds6) of the Code or, if more than 10 percent so used, that amounts, whether or not received by the Issuer, with respect to such private business use, do not, 40 under the terms of this Resolution or any ornderlyingprovidefor arrangement, directly or indirectly, securethe payment of more than 10 percent of the debt service the n the Bonds, in contravention of section 141(b)(2) Code, (b) to take any action to assure that in the event that the "private business use" described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use,, which is "related" and not "disproportion- ate", within the meaning of section 141(b)(3) of the Code, to the governmental use, (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts depos- ited into a reserve fund, if any) is directly or indirect- ly used to finance loans governmental units, to oin persons, other t han state r local gcontravention of section 141(c) of the Code, (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code, (e) to refrain from taking any action onteeat within would result in the Bonds being federallyCoda the meaning of section 149(b) of the (f) to refrain from using any portion of the pro- ceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with -- (1) proceeds of the $ invested l ssfor until reasonable temporary period of 3years such proceeds are needed for the purpose for which the Bonds are issued, (2) amounts invested in a bona fide debt service fund, ofhin the the Treasury Reg of section 1 103-13(b)(12) Regulations, and 41 (3) amounts deposited in any reasonably re- quired reserve or replacement fund of thee extent such amounts do not exceed 10 percent the Bonds, (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings), (h) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings", within the meaning of section 148(f) of the Code and to pay to the United States of America, not later that 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be id as a Codand of Excess Earnings under section148(f) of (i) to maintain such records as will enable the Issuer to fulfill its responsibilities under this section and section 148 of the Code and he retain payuch ment records princi- pal at least six years following P yment pal and interest on the Bonds It is the understanding of the Issuer that the covenants contained and any regulationsorrulings spromulgated nby thece h th e Code Department of the Treasury pursuant thereto In the event that regulations or rulings are hereafter promulgated which modify, or expand provisions of the Code, as applicable to the Bonds, issuerthe will not be contained herein to the required t nt thatcomply such modification or covenant expansion, in the opinion of nationally -recognized bond coun- sel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code In the event that regulations or rulings are hereaf- ter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional national ly-rrecognized bond counsel, irements to the extent lto preserve the exemp- ecessary, in the tion of from federal income taxation of interest on the Bonds under section 103 of the Code Section 31 DESIGNATION AS QUALIFIED TAX-EXEMPT BONDS The Issuer hereby designates the Bonds as "qualified tax-exempt 42 bonds" as defined in Section 265(b)(3) of the Internal Revenue Code of 1986 (the "Code") In furtherance of such designation, the Issuer represents, covenants, and warrants the following (a) that during the calendar year in which the Bonds are isued, the Issuer (including any subordinate entities) has not desig- nated nor will designate bonds, which when aggregated with the Bonds will result in more than $10,000,000 of "qualified tax-exempt bonds" being issued, (b) that the Issuer reasonably anticipates that the amount of tax-exempt obligations ti issued the during the calendar year in which the Bonds are isued, Y Issuer (or any subordinate entities) will not exceedor $10,000,000, and, (c) that the Issuer willke such more parti ularly refrain from such action as necessary, and as set forth in Section 30, hereof, in order thath the the Bonds will not be considered "Private activity bonds" ng of section 141 of the Code Section 32 CUSTODY, APPROVAL, AND ANDZINSUTRANCE F BONDS, The BOND COUNSEL'S OPINION, CUSIP NUMBERS, Mayor of the Issuer is hereby authorized to have control of the Initial Bond issued hereunder and all necessaryending its delivery proceedings pertaining to the Initial Bond p oval by the Attor- and its investigation, examination, and approval ney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas Upon registration of theInitial d inlwr writing rtolact er ofor usaid Accounts (or a deputy sign the Comptroller's Registration Comptroller) shall manually g Certificate on the Ind, or placed in facsimile,ond, and the seal f on he Initial ler shall be said comptrol- impressed, Bond The approving legal opinion of ate the optionoof Counsel the and the assigned CUSIP numbers may, Issuer, be printed on the Initial Bond or on any Bonds issued and delivered in conversion of and exchangeeffect, orreplacement shall any Bond, but neither shall have any leg al solely for be the convenience and informaturchaserlon of of the owners of the Bonds If the pthe Bons, exercises its option to obtain insurance on Instructions a and permitted in the Notice of Sale and Bidding official Statement hereinafter described, theInitial nd lc n cern ng and insurance as provided byall other Bonds shall the ar alnsrr appropriate Section 33 SALE OF INITIAL BOND The Initial Bond is hereby sold and shall be delivered to RAUSCHER PIERCE REFSNES, INC AND ASSOCIATES, for cash for the par value ug thereof Pre premium and of accrued interest thereon to date of delivery, determined, and $ _0_ It is hereby officially found, a public sale to declared that the initial Bond has been sold after receiving the bidder offeringthe lowest interest cost, 43 sealed bids pursuant to an Official Notice of Sale and1Bidding Instructions and Official Statement dated July 19, , prepared and distributed in connection with the sale of the Initial Bond Said Official Notice of Sale and Bidding In- structions and official Statement, and any addenda, sup pbymthel or amendment thereto have been and are hereby approved Issuer, and their use in the offer and sale of the Bonds is hereby approved It is further officially found, determined, and declared that the statements and representations contained in said Official Notice of Sale and Official Statement are true and correct in all material respects, to the best knowledge and belief of the City Council Section 34 FURTHER PROCEDURES The Mayor of the Issuer, the City Secretary Secretary of the Issuer, and all other and each of officers, employees, and agents of the Issuer, them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowl- edge, and deliver in the name and under the corporate seal and on behalf of the Issuer be ne eBslary or desirableinorderor to herein mentioned, as may carry out the terms and provisions of this Bond Ordinance, the Bonds, the sale of the Bonds, and the Notice of Sale and official Statement, and the Director of Finance of the City ssuance of t fromltheu expenses of sale of the Initial Bo d Bondsp case the aid In case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signa- ture shall nevertheless be valid and sufficient for all purpos- es the same as if such officer had remained in office until such delivery 44 CERTIFICATE FOR ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY of UE BONDS, SERIES 1958, CITY OF DENTON UTILITY SYSTEM REVEN AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES ING TH 0 THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON We, the undersigned officers of said City, hereby certify as follows 1 The City council of said City convened in REGULAR MEETING ON THE 2ND DAY or AUGUST, called at the Municipal Building (City Hall), and the roll was of the duly constituted officers and members of said City Council, to -wit Jennifer K Walters, City Secretary Ray Stephens, Mayor Linnie McAdams Hugh Ayer Jim Alexander Jane Hopkins Bob Gorton Randall Boyd and all of said persons were present, except the following absentees Boyd, thus constituting a quorum Whereupon, among other business, the following was transacted at said Meeting a written ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF ERIES 1988, CITY APPROVINGNANDIAUTHORIZING INSTRUMENTSLITY SYSTEM REVENUE DANDS ANDPROCEDURES RELATING THERETO was duly introduced r the and duly read it was then duly moved andf said t Council secondat hat said ordinance be passed, and, after due discussion, said motion, carrying with it the passage of said ordinance, prevailed and carried by the following vote AYES All members of said City Council shown present above voted "Aye", except Jane Hopkins NOES None ABSTENTIONS Jane Hopkins 2 That a true, full, and correct copy of the aforesaid ordinance passed at the Meeting described in the above and foregoing paragraph is attached to and follows this Certifi- cate, that said Ordinance has been duly recorded in said City Council's minutes of said Meeting, that the above and foregoing paragraph is a true, full, and correct rpt from said the passage City Council's minutes of said Meeting pertaining of said Ordinance, that the persons named in the above and fore- going paragraph are the duly chosen, qualified, and acting officers and members of said City Council as indicated therein, and that each of the officers and ers of said City was duly and sufficiently notified officially and personally, in advance, of the time, place, and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and considered for passage at said Meeting, and that said Meeting was open to the public, and public notice of the time, place, and purpose of said meeting was given, all as required by Vernon's Ann Tex Civ St Article 6252-17 3 That the Mayor of said City has approved, and hereby approves, the said City have ordinance, that signedhe saidyor and ordinance, and y aforesaid andd Secretary that the Mayor and the City Secretary of said City hereby declare that their signing of this Certificate shallsaidconstitute the signing of the attached and following copy Of ordi- nance for all purposes SIGNED AND SEALED the 2nd y ecretary (SEAL) day of August, 1988 utriil-� May r We, the undersigned, being respectively the City Attorney Attorneysand the Bond certify that weprepared and approved Dastto� hereby legality the attached and following Ordinance prior to its passage as aforesaid 1 City Atr.Orey Bond Attorneys GENERAL CERTIFICATE THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON We, the undersigned, hereby officially certify that we are the Mayor and City Secretary, respectively, of the City of Denton, Texas (the "Issuer"), and we further certify as follows 1 That this certificate is executed for and on behalf of said Issuer with reference to the issuance of the proposed City of Denton Utility System Revenue Bonds, Series 1988, dated August 1, 1988, authorized by an ordinance passed by the City Council of said Issuer on August 2, 1988, initially issued and delivered as a single fully registered bond payable in install- ments to the registered owner, but convertible into fully registered bonds in any multiple of $5,000 (the "Bonds") 2 That said Issuer is a duly incorporated Home Rule City, having more than 5000 inhabitants, operating and existing under the Constitution and laws of the State of Texas and the duly adopted Home Rule Charter of said City, which Charter has not been changed or amended since the passage of the ordinance authorizing the issuance of the City of Denton General obliga- tion Bonds, Series 1988, dated January 1, 3 That no litigation of any nature has ever been filed pertaining to, affecting, or contesting (a) the paragraphh1 ofdthis d certificate (the proposed described Bonds 1988in which Bond �� (b) the issuance, execution, delivery, payment, ordinance") the authority security, or validity of said proposed Bonds, (c) of the governing body and the officers of said issuer to issue, execute, and deliver said Bonds, (d) the title of the present members and officers of the City Council ld f said Issuer corporate their respective offices, or (e) the existence or the Charter of said issuer 4 That none of the Pledged Revenues, as defined in the Series 1988 Bond Ordinance, have been pledged or encumbered to the payment of any debt or obligation whatsoever, except in connection with the aforesaid proposed Bonds, and the outstand- ing bonds of the following issues City of Denton Utility System Revenue Refunding gzed Bonds, Series 1983 (the Series 1983 Bonds"), by Ordinance passed on March 10, 1983 (the 111983 Bond Ordi- nance"), city of litSystem Revenue Bonds, Series 1984 (the "oid") Series1984 Bons , authorized by Ordinance passed on February 21, 1984 (the 111984 Bond Ordinance"), City of Denton Utility System Revenue Bonds, Series 1984-A (the Series 111984-A Bonds"), authorized by Ordinance passed on September 25, 1984 (the 111984-A Bond Ordi- nance"), and City of Denton Utility System Revenue Refunding Bonds, Series 1987 (the "Series 1987 Bonds"), authorized by Ordinance passed on January 27, 1987 (the 111987 Bond Ordinance") 5 That the City is not in default as to any covenant, condition, or obligation in connection with the above described outstanding Bonds and the Bond Ordinances, respectively, authorizing same, and that the Interest and Sinking Fund and the Reserve Fund created and maintained by said Bond Ordinances for the benefit of the above described outstanding Bonds and all Additional Bonds issued pursuant to said Bond Ordinances each contains the amount now required to be therein 6 That the statements and information setforth in the Official Statement dated July 19, 1988, pertaining aforesaid proposed Bonds and the Issuer, and particularly the utility coveraSystem factors et forth therein are true and corrects andcoverage and the Water, Sewer, and Electric Rates set forth therein are currently in effect and were authorized by ordinances duly passed by the City Council 7 That no petition has been filed protesting the issu- ance of the Bonds or seeking a referendum vote on the question as to the issuance of the Bonds �� SIGNED AND SEALED this'"" day of 1988 C Be a at City of Denton Mayo1V City of Denton ( TY SEAL)