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HomeMy WebLinkAbout1983-026ORDINANCE tB3-a(( AUTHORIZING THE ISSUANCE OF CITY OF DENTON, TEXAS UTILITY SYSTEM REVENUE REFUNDING BONDSf SERIES 1983 THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, the City of Denton, Texas (the "City") has duly issued, and there are now outstanding, pursuant to Vernon's Ann. Tex Civ. St Articles 1111 through 1118 and other appli- cable laws, the following series or issues of revenue bonds which are secured solely by a first lien on and pledge of the net revenues of the City's entire waterworks and sewer system City of Denton Water and Sewer System Revenue Bonds, Series 1960, dated July 15, 1960, now outstanding in the aggregate principal amount of - - - - - - - - - ------ - --- -- $ 730,000 City of Denton Water and Sewer System Revenue Bonds, Series 1962, dated January 15, 1962, now outstanding in the aggregate principal amount of - - - - - - - - - - - - - - - - - - 390,000 City of Denton Water and Sewer System Revenue Bonds, Series 1964, dated July 15, 1964, now outstanding in the aggregate principal amount of - - - - - - - - - - - -- -- - - - - -- 20,000 City of Denton Water and Sewer System Revenue Bonds, Series 1966, dated January 15, 1966, now outstanding in the aggregate principal amount of - - - - - - - - - --- -- ---- 200,000 City of Denton Water and Sewer System Revenue Bonds, Series 1969, dated April 15, 1969, now outstanding in the aggregate principal amount of - - - - - - - - - - - - -- - - -- 370,000 City of Denton Water and Sewer System Revenue Bonds, Series 1972, dated July 15, 1972, now outstanding in the aggregate principal amount of - - - - ------ --- --- ------ 970,000 City of Denton Water and Sewer System Revenue Bonds, Series 1974, dated July 15, 1974, now outstanding in the aggregate principal amount of - - - ----- - - -- ---- - -- - -- 11525,000 City of Denton Water and Sewer System Revenue Bonds, Series 1977, dated June 15, 1977, now outstanding in the aggregate principal amount of - - - ----- ----- -- -- - - - -- 450,000 City of Denton Water and Sewer System Revenue Bonds, Series 1979, dated March 15, 1979, now outstanding in the aggregate principal amount of - - - - - - - - - - - -- --- - - -- -- 3,800,000 City of Denton Water and Sewer System Revenue Bonds, Series 1982, dated May 15, 1982, now outstanding in the aggregate principal amount of - - - - - - --------- - - ----- 10500000 (collectively the "Water and Sewer System Revenue Bonds"), and WHEREAS, the City has duly issued, and there now outstand- ing, pursuant to Vernon's Ann Tex Civ St Articles 1111 through 1118 and other applicable laws, the following series or issues of revenue bonds which are secured solely by a first lien on and pledge of the net revenues of the City's electric light and power system City of Denton Electric System Revenue Refund- ing Bonds, Series 1978, dated April 1, 1978, now outstanding in the aggregate principal amount of - - - - - - - - - - - - - - - - - - $19,255,000 City of Denton Electric System Revenue Bonds, Series 1982, dated April 1, 1982, now out standing in the aggregate principal amount of - - - - - - - - - - - - - - - - - - - - - - 3,000,000 (collectively the "Electric System Revenue Bonds"), and WHEREAS, the above Water and Sewer System Revenue Bonds and Electric System Revenue Bonds hereinafter collectively are called the "Outstanding Bonds", and WHEREAS, the Outstanding Bonds are the only bonds or other obligations secured by or payable from a first lien on and pledge of the net revenues of the City's waterworks and sewer system and the City's electric light and power system, and WHEREAS, the City Council of the City is the governing body of the City, and WHEREAS, the refunding bonds hereinafter authorized are to be issued and delivered pursuant to Vernon's Ann Tex Civ St Article 717k, as amended, and other applicable laws, for the purpose of refunding all of the Outstanding Bonds THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS Section 1 BONDS AUTHORIZED That the City's bonds are hereby authorized to be issued in the principal amount of $25,280,000, FOR THE PURPOSE OF REFUNDING ALL OF THE OUTSTANDING CITY OF DENTON WATER AND SEWER SYSTEM REVENUE BONDS AND ELECTRIC SYSTEM REVENUE BONDS Section 2 BONDS DESIGNATED That said bonds shall be designated as the "CITY OF DENTON, TEXAS UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1983" (the "Bonds") Section 3 DATE AND MATURITIES That the Bonds shall be dated March 1, 1983, shall be in the denomination of $5,000 each, shall be numbered consecutively from one upward, and shall mature serially on December 1 of each of the years, and in the amounts, respectively, unless redeemed prior to maturity as required or permitted in the FORM OF BOND set forth in Section 6 of this Ordinance, as set forth in the following schedule YEARS AMOUNTS YEARS AMOUNTS 1983 $2,060,000 1989 $1,805,000 1984 1,735,000 1990 1,775,000 1985 1,595,000 1991 1,125,000 1986 1,570,000 1992 1,140,000 1987 1,665,000 1993 1,100,000 1988 1,800,000 2001 5,850,000 2007 2,060,000 Section 4 INTEREST That the Bonds scheduled to mature during the years, respectively, set forth as follows shall bear interest from the date thereof to maturity or redemption at the following rates per annum 2 YEARS RATES YEARS RATES 1983 4.75% 1989 7 258 1984 5 258 1990 7 758 1985 5 758 1991 8.00% 1986 6 258 1992 8 258 1987 6 50% 1993 8 50% 1988 6.75% 2001 9 50% 2007 9.625% Said interest shall be evidenced by interest coupons which shall appertain to the Bonds, and which shall be payable in the manner provided and on the dates stated in the FORM OF BOND set forth in Section 6 of this Ordinance Section 5 GENERAL CHARACTERISTICS That the Bonds and interest coupons shall be issued, shall be payable, shall and may be redeemed prior to their scheduled maturities, shall have the characteristics, and shall be signed and executed (and the Bonds shall be sealed), all as provided, and in the manner indicated, in the FORM OF BOND set forth in Section 6 of this Ordinance. Section 6. FORMS. That the form of the Bonds, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be printed and en- dorsed on each of the Bonds, and the form of the aforesaid interest coupons which shall appertain and be attached initial- ly to each of the Bonds, shall be, respectively, substantially as follows: NO FORM OF BOND UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON, TEXAS UTILITY SYSTEM REVENUE REFUNDING BOND SERIES 1983 ON DECEMBER 1 , THE CITY OF DENTON, in Denton County, Texas, hereby promfses to pay to bearer hereof the principal amount of FIVE THOUSAND DOLLARS and to pay interest thereon from the date of this Bond, at the rate of 8 per annum, evidenced by interest coupons payable December- j I983, and semiannually on each June 1 and December 1 thereafter while this Bond is outstanding. THE PRINCIPAL of this Bond and the interest coupons ap- pertaining hereto shall be payable to bearer, in lawful money of the United States of America, without exchange or collection charges to the bearer, upon presentation and surrender of this Bond or proper interest coupon, at the following, which shall constitute and be defined as the "Paying Agent" for this Series of Bonds Texas American Bank/Fort Worth, N A , Fort Worth, Texas THIS BOND is one of a Series dated as of March 1, 1983, authorized and issued in the principal amount of $25,280,000, FOR THE PURPOSE OF REFUNDING ALL OF THE OUTSTANDING CITY OF DENTON WATER AND SEWER SYSTEM AND ELECTRIC SYSTEM REVENUE BONDS ON DECEMBER 1, 1993, 3 or on any interest payment date thereafter, the outstanding Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of said City, with funds derived from any source, in whole, or in part (and if in part, the City shall select the maturity or maturities to be redeemed and within a maturity the particular Bonds to be redeemed shall be chosen at random, by lot, or other customary method by the City) at the Redemption Price equal to the principal amount of the Bonds to be so redeemed, plus accrued interest to the date of redemption THE BONDS maturing in the year 2001 are subject to mandatory redemption prior to maturity with funds from the "Interest and Sinking Fund" established in the Ordinance authorizing the Series of Bonds of which this is one, and shall be redeemed in part prior to maturity with funds from the "Interest and Sinking Fund", for the principal amount thereof and accrued interest thereon to the date of redemption, and without premium, on the dates and in the amounts set forth below, with such Bonds being subject to mandatory redemption on December 1, 1994, and annually thereafter on each December 1 through December 1, 2000 Redemption Date Principal Amount December 1, 1994 $ 1,065,000 December 1, 1995 1,080,000 December 1, 1996 1,005,000 December 1, 1997 840,000 December 1, 1998 840,000 December 1, 1999 550,000 December 1, 2000 250,000 and the Bonds maturing in the year 2007 are subject to mandatory redemption prior to maturity with funds from the "Interest and Sinking Fund", and shall be redeemed in part prior to maturity with funds from the "Interest and Sinking Fund", for the principal amount thereof and accrued interest thereon to the date of redemption, and without premium, on the dates and in the amounts set forth below, with such Bonds being subject to mandatory redemption on December 1, 2002, and annually thereafter on each December 1 through December 1, 2006 Redemption Date Principal Amount December 1, 2002 $ 250,000 December 1, 2003 260,000 December 1, 2004 270,000 December 1, 2005 325,000 December 1, 2006 335,000 The particular Bonds to be redeemed on each such date shall be chosen at random, by lot, or other customary method, by the City provided, however, that the principal amount of the Bonds required to be redeemed pursuant to the operation of such mandatory redemption provisions shall be reduced at the option of the City, by the principal amount of any Bonds which, at least 45 days prior to the mandatory redemption date, (1) shall have been acquired by the City at a price not exceeding the principal amount of such Bonds plus accrued interest to the date of purchase thereof and delivered to the Paying Agent for cancellation, or (2) have been redeemed pursuant to the optional redemption provisions set forth above and not theretofore credited against a mandatory redemption requirement AT LEAST thirty redemption a written lashed at least onc, days prior to the `date fixed for any prior notice of such redemption shall be pub- s in a financial publication of general 4 circulation in The City of New York, New York and in a newspaper of general circulation in the City of Denton, Texas By the date fixed for any such redemption due provision shall be made with the Paying Agent for the payment of the principal amount of the Bonds which are to be so redeemed and accrued interest thereon to the date fixed for redemption If such written notice of redemption is published and if due provision for such payment is made, all as provided above, the Bonds which are to be so redeemed thereby automatically shall be redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the bearer to receive the redemption price from the Paying Agent out of the funds provided for such payment IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, and de- livered pursuant to the applicable laws of the State of Texas, including particularly Vernon's Ann Tex Civ St Article 717k, as amended, that all acts, conditions, and things re- quired or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond and the Series of which it is a part have been performed, existed, and been done in accordance with law, that this Bond and the Series of which it is a part constitute special obliga- tions of said City, secured by and payable from a first lien on and pledge of the "Pledged Revenues", as defined in the ordinance authorizing the Bonds (the "Bond Ordinance"), which Pledged Revenues include initially the "Net Revenues" of the "System", as such terms are defined in the Bond Ordinance, with the "System" initially consisting of the City's entire existing waterworks and sanitary sewer system and the City's entire existing electric light and power system THE CITY has reserved the right, subject to the restric- tions stated in the Bond Ordinance, and without obtaining the consent of the holder of this Bond, to issue "Additional Bonds" also to be secured by and payable from a first lien on and pledge of the Pledged Revenues in the same manner and to the same extent as this Bond and the Series of which it is a part THE CITY has reserved the right, subject to the restric- tions stated in the Bond Ordinance, to amend the Bond Ordinance with the approval of the holders of 51% of the outstanding principal amount of all Bonds and Additional Bonds BY ACCEPTING THIS BOND the holder hereof acknowledges the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, and acknowledges that the Bond Ordinance is duly recorded in the official minutes and records of the City THE HOLDER HEREOF shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation, or from any source whatsoever other than the Pledged Revenues and other sources described in the Bond Ordinance IN WITNESS WHEREOF, this Bond and the interest coupons appertaining hereto have been signed with the facsimile signa- ture of the Mayor of said City and countersigned with the facsimile signature of the City Secretary of said City, and the official seal of said City has been duly impressed, or placed in facsimile, on this Bond City Secretary, City of Denton Mayor, City of Denton FORM OF REGISTRATION CERTIFICATE COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO 5 I hereby certify that this Bond has been examined, certi- fied as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas NO Witness my signature and seal this Comptroller of Public Accounts of the State of Texas FORM OF INTEREST COUPON ON 1, , THE CITY OF DENTON, in Denton County, Texas, promises to pay to bearer the amount shown on this interest coupon, in lawful money of the United States of America, without exchange or collection charges to the bearer, unless due provision has been made for the redemption prior to maturity of the Bond to which this interest coupon appertains, upon presentation and surren- der of this interest coupon, at the Texas American Bank/Fort Worth, N A , Fort Worth, Texas said amount being interest due that day on the Bond, bearing the number hereinafter designated, of that issue of CITY OF DENTON, TEXAS UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1983, dated March 1, 1983 The holder hereof shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation, or from any source whatso- ever other than the Pledged Revenues and other sources de- scribed in the Bond to which this coupon appertains Bond No City Secretary Mayor Section 7 DEFINITIONS That as used in this Ordinance the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise (a) The term "City" 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 "Outstanding Bonds" shall mean collectively the presently outstanding Water and Sewer System Revenue Bonds and Electric System Revenue Bonds of the City described in the preamble to this Ordinance (d) The terra "Bonds" shall mean the City of Denton Utility System Revenue Refunding Bonds, Series 1983, authorized by this Ordinance (e) The term "Additional Bonds" shall mean the additional parity revenue bonds which the City reserves the right to issue in the future, in accordance with Section 24 of this Ordinance (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 income from which do, in the future, at the option of the City, and in accordance with law, become "Pledged Revenues" as hereinafter 2 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 System, and which are acquired or constructed by the City with the proceeds from the issuance of "Special Facilities 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- ship of the System, including the interest income from the investment or deposit of money in any Fund created by this Ordinance (h) The terms "Net Revenues of the System", and "Net Revenues" shall mean all Gross Revenues after deducting therefrom an amount equal to the current expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs, and extensions necessary to render effi- cient service, provided, however, that only such repairs and 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 adequate service to said City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the Bonds or Additional Bonds, shall be deducted in determining "Net Revenues" 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 expenses of operation and maintenance of the System under this Ordinance Depreciation and amortization shall not constitute or be regarded as expenses of operation and maintenance 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 the City on a regular periodic basis, including, without 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 in the future may, at the option of the City, be pledged to the payment of the 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 States Treasury obligations such as its State and Local Government Series, and which may be in book -entry form 7 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 System, and which are acquired or constructed by the City with the proceeds from the issuance of "Special Facilities 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- ship of the System, including the interest income from the investment or deposit of money in any Fund created by this Ordinance (h) The terms "Net Revenues of the System", and "Net Revenues" shall mean all Gross Revenues after deducting therefrom an amount equal to the current expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs, and extensions necessary to render effi- cient service, provided, however, that only such repairs and 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 adequate service to said City and the inhabitants thereof, or such' as might be necessary to meet some physical accident or condition which would otherwise impair the Bonds or Additional Bonds, shall be deducted in determining "Net Revenues" 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 expenses of operation and maintenance of the System under this Ordinance Depreciation and amortization shall not constitute or be regarded as expenses of operation and maintenance 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 the City on a regular periodic basis, including, without 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 in the future may, at the option of the City, be pledged to the payment of the 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 States Treasury obligations such as its State and Local Government Series, and which may be in book -entry form 7 Section 8 PLEDGE That the Bonds and any Additional Bondsl, and the interest thereon, including interest coupons appertaining thereto, are and shall be secured by and payable from a first lien on and pledge of the Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Funds created by this Ordinance, and any Funds created by any ordinance authorizing the issuance of any Additional Bonds The Bonds and any Additional Bonds are not and will not be secured by or payable from a mortgage or deed of trust on any real, personal, or mixed properties constituting the System Section 9 SYSTEM FUND That 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 special fund to be entitled the "City of Denton Utility System Fund" (the "System Fund") All Gross Revenues shall be credited to the System Fund immediately upon receipt, unless otherwise provided in this Ordinance 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 herein- after required to be made from the System Fund, the City shall retain in the System Fund at all times an amount at least equal to one -sixth of the amount budgeted for the then current fiscal year for the current operation and maintenance expenses of the System Section 10 INTEREST AND SINKING FUND That for the sole purpose of paying the principal of and interest on all Bonds and Additional Bonds, 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 Revenue Bonds Interest and Sinking Fund" (the "Interest and Sinking Fund") Section 11 RESERVE FUND That there is hereby created and there shall be established and maintained initially at Tex&$ American Bank/Fort Worth, N A , Fort Worth, 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 excess of $25,000,000, a separate fund to be entitled the "City of Denton Utility System Bonds and Additional Bonds Reserve Fund" (the "Reserve Fund") The Reserve Fund shall be used to pay the principal of and interest on any 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 Bonds or Additional Bonds Section 12 EXTENSION AND IMPROVEMENT FUND That 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 en- titled the "City of Denton 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 improvements, enlargements, extensions, additions, replacements, or other capital expenditures related to the System, or for paying the costs of unexpected or extraordinary repairs or replacements 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 ( i, Section 13 EMERGENCY FUND That 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") 9 The 'Emergency Fund shall be used for the purpose of paying unexpected 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 Fund are available There shall be deposited in the Emergency Fund simultaneously with the delivery of the Bonds to 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 14 DEPOSITS OF PLEDGED REVENUES That 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 15 INVESTMENTS That money in any Fund estab- lished pursuant to this Ordinance or any ordinance authorizing the issuance of Additional Bonds, may, at the option of the City, be placed in time deposits or certificates of deposit secured by obligations of the type hereinafter described, or be invested in Government Obligations (as defined in Section 7 hereof) or obligations guaranteed or insured by the United States of America, which, in the opinion of the Attorney General of the United States, are backed by its full faith and credit or represent its general obligations, or invested in obligations of instrumentalities of the United States of America, including, but not Limited to, evidences of indebted- ness issued, insured, or guaranteed by such governmental agencies as the Federal Land Banks, Federal Intermediate Credit 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 Federal Assets Financing Trust, provided that all such deposits and investments shall be made in such manner as will, in 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 investments 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 connection with the Bonds or Additional Bonds consistent with the ordinances, respectively, authorizing their issuance Section 16 BUMS 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 17 PRIORITY OF DEPOSITS AND PAYMENTS FROM SYSTEM FUND That the City shall make the deposits and payments from Pledged Revenues in the System Fund when and as required by this Ordinance and any ordinance authorizing any Additional Bonds, and such deposits shall be made in the following manner and with the following irrevocable priorities, respectively First, to the Interest and Sinking Fund, when and in the amounts required by this Ordinance 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 9 Third, to the Extension and Improvement Fund, when and as required by Section 20 of this Ordinance Section 18 INTEREST AND SINKING FUND REQUIREMENTS The City shall cause to be deposited to the credit of the Interest and Sinking Fund any accrued interest received from the sale of the Bonds, and on or before April 25, 1983 and on or before the 25th day of each month thereafter the City shall cause to be deposited to the 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 Bonds required to be redeemed prior to maturity pursuant to any mandatory redemption requirements, on the 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 requirement, 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, Bonds which would be subject to being chosen for mandatory redemption on such mandatory redemption date The Paying Agent shall cancel any Bonds so purchased Section 19 RESERVE FUNI after the delivery of the Bonc deposited in the Reserve Fund, available for such purpose, and and delivery of the Bonds, an Obligations equal to $3,000,00( the Reserve Fund an amount of the lesser of $3,000,000 or th interest requirements of the Amount") Following the issua Required Reserve Amount shall : principal and interest requiredi Bonds then outstanding, providec Amount shall not be less than $: principal and interest required( Bonds outstanding exceeds $3,0 any Additional Bonds the City be increased, if and to the exti will contain an amount of mone Required Reserve Amount Any i Amount may be funded from Pled from the sale of anv Additional REQUIREMENTS That promptly s the City shall cause to be from funds on hand and lawfully from the proceeds from the sale amount of money and Government The City shall maintain in money and investments equal to s maximum annual principal and Bonds (the "Required Reserve ace of Additional Bonds, the )e equal to the average annual nts of all Bonds and Additional however, the Required Reserve ,000,000, if the maximum annual nts on all Bonds and Additional )0,000 After the delivery of shall cause the Reserve Fund to int necessary, so that such fund y and investments equal to the icrease in the Required Reserve ged Revenues, or from proceeds Bonds, or anv 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, by deposits of Pledged Revenues in approximately equal monthly installments on or before the 25th day of each month Principal amounts of the Bonds and any Additional Bonds which must be redeemed pursuant to any applicable mandatory redemption 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, but when and if the Reserve 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, monthly on or before the 25th day of each month, a sum equal to 1/60th of the Required Reserve Amount, 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 City shall cause all interest and income derived from the deposit or investment of the Reserve Fund to be deposited to the credit of the Interest and Sinking Fund 10 Section 20 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS That during each year, subject and subordinate to making the required 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, an amount equal to 8% of the "Adjusted Gross Revenues of the System", which term is 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 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 21 (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 21 DEFICIENCIES, EXCESS PLEDGED REVENUES (a) That 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 up as soon as possible from the next available Pledged Rev- enues (b) That, 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 Addi- tional Bonds, any surplus Pledged Revenues may be used by the City ,for any lawful purpose Section 22 PAYMENT OF BONDS AND ADDITIONAL BONDS On or before December 1, 1983, and semiannually on or before each June 1 and December 1 thereafter while any of the Bonds or Additional Bonds are outstanding and unpaid the City shall make available to the Paying Agents therefor, out of the Interest and Sinking Fund, or if necessary, out of the Reserve Fund, money sufficient to pay, on each of such dates, the principal of and interest on the Bonds and Additional Bonds as the same matures and comes due, or to redeem the Bonds or Additional Bonds prior to maturity, either upon mandatory redemption or at the option of the City At the direction of the City the Paying Agents shall either deliver paid Bonds and Additional Bonds, and the coupons appertaining thereto, to the City or destroy all paid Bonds and Additional Bonds, and the coupons appertaining thereto, and furnish the City with an appropriate certificate of cancellation or destruction Section 23 FINAL DEPOSITS (a) That any 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 such Bond or Additional Bond, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption or provision for the proper giving of such notice 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 payment, (1) money sufficient to make such payment or (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of such Paying Agent pertaining to the Bonds and 11 Additional Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of such paying agent At such time as a Bond or Additional Bond shall be deemed to be paid hereunder, as 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) That 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 Bonds and Additional Bonds, the redemption premium, if any, and interest thereon, with respect to which such money has been so deposited, shall be turned over to the City or deposited as directed by the City Section 24 ADDITIONAL BONDS (a) That the City shall have the right and power at any time and from time to time, and in one or more series or issues, to authorize, issue, and deliver additional parity revenue bonds (herein called "Addi- tional Bonds"), in accordance with law, in any amounts, for any lawful purpose, including the refunding of any 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 and ratably on a parity in all respects with the Bonds and any other outstanding Additional Bonds (b) That the principal of all Additional Bonds must be scheduled to be paid or mature on December 1 of the years in which such principal is scheduled to be paid or mature Section 25 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS That Additional Bonds shall be issued only in accordance with this Ordinance, and no installment, Series, or issue of Addi- tional 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 Bonds and Additional Bonds, and the ordinances authorizing same, and that the Interest and Sinking Fund and the Reserve Fund each contains the amount then required to be therein (b) An independent certified public accountant, or in- dependent firm of certified public accountants, acting by and through a certified public accountant, signs a written certifi- cate to the effect that, in his or its opinion, during either the next preceding fiscal year, or any twelve consecutive calendar month period out of the 18-month period immediately preceding the month in which the ordinance authorizing the issuance of the then proposed Additional Bonds is passed, the Pledged Revenues were at least (1) 1 25 times an amount equal to the average annual principal and interest requirements, and (ii) 1 10 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 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 12 Pledged Revenues as being the total of (i) the actual Pledged Revenues for the entire period, plus (ii) a sum equal to the aggregate amount by which the actual billings to customers of the System during the entire period would have been increased if such increased rates or charges had been in effect during the entire period (c) Provision shall be made in the ordinance authorizing their issuance for increasing the Reserve Fund to the Required Reserve Amount as required by Section 19 hereof (e) That 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 t�e 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 be redeemed prior to maturity pursuant to any applicable mandatory redemption requirements shall be deemed to be maturing amounts of principal of such bonds Section 26 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 Bond and Additional Bond, that it will promptly pay or cause to be paid the principal of and interest on every Bond and Addi- tional Bond, on the dates and in the places and manner pre- scribed in such ordinances and 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 Bonds or Additional Bonds may require the City, its officials, and employees, to carry out, respect, or enforce the covenants and obligations of this Ordinance, or any ordinance authorizeing the issuance of Addi- tional Bonds, by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings, in any court of competent jurisdiction, against the City, its officials, and employees (b) City's Legal Authority 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 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) Title The City has or will obtain lawful title to the lands, buildings, structures, and facilities constituting 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 Bonds and Additional Bonds, against the claims and demands of all persons whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the Bonds and Additional Bonds in the manner prescribed herein, and has lawfully exercised such rights (d) Liens The City will from time to time and before the same become delinquent pay and discharge all taxes, assess- ments, and governmental charges, if any, which shall be law- 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 13 the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein, and that it will not create or suffer to be created any mechanic's, laborer's, materialman's, or other lien or charge which might or could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired, provided, however, that no such tax, assess- ment, 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) Operation of System, No Free Service While the 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 make 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 the revenues of the System, unless made from surplus Pledged Revenues as permitted by Section 21(b) hereof (£) Further Encumbrance While the Bonds or any Addi- tional 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 is made junior and subordinate in all respects to the liens, pledges, covenants, 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 Pledged Revenues is specifically recognized and retained, as permitted under Section 21(b) hereof) (g) Sale or Disposal of Property While the 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 to other use, or otherwise dispose of, the System, or any significant or substantial part thereof; provided that whenever the City deems it necessary 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 company or companies, against risks, accidents, or casualties against which and to the extent insurance is usually carried by 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 work shall be fully responsib14 therefor, the City shall not be required to carry insurance on the work being con- structed if the contractor is required to carry appropriate insurance All such policies shall be open to the inspection of the Bondholders and their representatives at all reasonable times Upon the happening of any loss or damage covered by insurance from one or more of said causes, the City shall make 14 due proof of loss and shall do all things necessary or desir- able to cause the insuring companies to make payment in full 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 separate trust fund, at an official depository of the City, to be designated the Insurance Account The 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 M Annual Budget 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, maintain, and 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 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 Bonds and Additional Bonds or 1 25 times the succeeding fiscal year's principal and interest requirements of all then outstanding 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 any of the Bonds or any Additional Bonds are outstanding, an audit will be made of the books 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 Texas, to each paying agent for any bonds payable from Pledged Revenues, and to any Bondholders who shall so request in 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) Governmental Agencies It will comply with all of the terms and conditions of any and all franchises, permits, 15 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 with respect to the acquisition, construction, equipment, operation, and mainte- nance of the System (m) No Competition It will not operate, or grant any franchise or, to the extent it legally may, permit the acquisition, construction, or operation of, any\ facilities which would be in competition with the System, and to the extent that it legally may, the City will prohibit any such competing facilities (n) No Arbitrage That the City covenants to and with the purchasers of the 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 delivery of any of such bonds to and payment therefor by the purchasers, would 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 any regulations or rulings pertaining thereto, and by this covenant the City is obligated to comply with the requirements of the aforesaid Section 103(c) and all applicable and pertinent Department of the Treasury regulations relating to arbitrage bonds The City further covenants that the proceeds of all such bonds will not otherwise be used directly or indirectly so as to cause all or any part of such bonds to be or become arbitrage bonds within the meaning of the afore- said Section 103(c), or any regulations pertaining thereto Section 27 AMENDMENT OF ORDINANCE (a) The holders of Bonds and Additional Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Bonds and Additional Bonds shall have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City, provided, however, that nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance or in the Bonds or Additional Bonds so as to 1) Make any change in the maturity of the out- standing Bonds or Additional Bonds, 2) Reduce the rate of interest borne by any of the outstanding Bonds or Additional Bonds, 3) Reduce the amount of the principal payable on the outstanding Bonds or Additional Bonds, 4) Modify the terms of payment of principal of or interest on the outstanding Bonds or Additional Bonds, or impose any conditions with respect to such payment, (5) Affect the rights of the holders of less than all of the Bonds and Additional Bonds then out- standing, (6) Change the minimum percentage of the prin- cipal amount of Bonds and Additional Bonds necessary 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 proposed amendment to be published in a financial publication of general circulation in The City of New York, New York, once during each calendar week for at least two succe- ssive 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 16 for inspection by all holders of Bonds and Additional Bonds Such publication is not required, however, if notice in writing is given to each holder of 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 of at least 51% in aggregate principal amount of all Bonds and Additional Bonds then outstanding, which instrument or instru- ments 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 amenda- tory 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- nance, and the respective rights, duties, and obligations under this Ordinance of the City, and all the holders of then out- standing Bonds and Additional Bonds and all future Bonds and Additional Bonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such amendments (a) Any consent given by the holder of a Bond or Addi- tional 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 of the same Bond or Additional Bond during such period Such consent may be revoked at any time after six months from the date of the first publication of such notice by the holder who gave such consent, or by a successor in title, by filing notice thereof with the paying agents and the City, but such revoca- tion,shall not be effective if the holders of 51% in aggregate principal amount of the then outstanding 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 Bonds or Additional Bonds by any bondholder and the amount and numbers of such 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 by a certificate 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 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 Section 28 APPROVAL AND REGISTRATION OF BONDS That the Mayor of the City is hereby authorized to have control of the Bonds and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation, examination, and approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts of the State of Texas Upon registration of the Bonds, said Comptroller of Public Accounts (or a deputy desig- nated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate printed and endorsed on the Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on each of the Bonds Section 29 SALE OF BONDS That the Bonds are hereby sold and shall be delivered to an underwriting syndicate managed by Goldman, Sachs & Co , Dillon, Read & Co Inc , and Kidder, Peabody & Co , Incorporated, on the terms and conditions set forth in the Bond Purchase Contract, dated the date of this meeting, in form and substance presented to the City Council at this meeting Said Bond Purchase Contract is Fyl hereby approved, and the Mayor of the City is hereby authorized and directed, for and on behalf of the City, to sign, execute, and deliver said Bond Purchase Contract Section 30 APPROVAL OF OFFERING MEMORANDUM That an Offering Memorandum relating to the Bonds, dated the date of this meeting, in form and substance presented to the City Council at this meeting, is hereby approved, its distribution is hereby authorized to prospective investors, including all ultimate purchasers, and other interested parties in connection with the sale and resale of the Bonds, with such changes therein as shall be approved by the Mayor of the City, and the Mayor and City Secretary are hereby authorized to execute it in substantially such form It is further officially found, determined, and declared that the statements and representations contained in said Offering Memorandum are true and correct in all material respects to the best knowledge and belief of the City Council Section 31. PROCEEDS OF SALE That promptly after the delivery of the Bonds all of the proceeds from the sale and delivery of the Bonds shall be deposited with Texas American Bank/Fort Worth, N.A., Fort Worth, Texas, (the "Escrow Agent"), which is a place of payment (paying agent) for the Electric System Revenue Bonds and is the agent for InterFirst Bank Dallas, N.A., Dallas, Texas ("InterFirst") a place of payment (paying agent) for the Water and Sewer System Revenue Bonds, pursuant to the terms of the below -mentioned Escrow Agreement, and such proceeds shall be used for the purpose of refunding, discharging, and retiring all of the Outstanding Bonds, for the deposit of accrued interest to the credit of the Interest and Sinking Fund, for the deposit of the amount of $2,100,000 to the credit of the Reserve Fund, and for paying all costs and expenses of issuing the Bonds and discharging and retiring the Outstanding Bonds. By a resolution of the City Council of even date herewith the City Council has authorized the execution of a "Utility System Special Escrow Agreement" among the City, the Escrow Agent, and InterFirst (the "Escrow Agreement"), which provides for the disposition of said Bond proceeds as afore- said. Simultaneously with the delivery of the Bonds to the initial purchasers, the Mayor shall direct that $900,000 currently held in the City's Water and Sewer System Revenue Bond Reserve Fund shall be transferred to the Reserve Fund and invested pursuant to the recommendations of First Southwest Company. The balance in said Water and Sewer System Revenue Bond Reserve Fund and the amounts in each of the interest and sinking funds for the Outstanding Bonds shall be deposited with the Escrow Agent pursuant to the terms of the Escrow Agreement Section 32. REASONS FOR REFUNDING That it is specific- ally found and determined by the City that the underlying ordinances authorizing the Outstanding Bonds contain restric- tive covenants which prevent the adequate and economical financing of projects which are expected to be required for various parts of the System in the near future, and require the maintenance of unnecessarily high utility rates Such restric- tive covenants also require unnecessary, cumbersome, and onerous procedures with respect to operation and maintenance of various parts of the System and the issuance of bonds there- under The refunding will permit the combination, for financ- ing purposes, of the presently separated (1) City waterworks and sewer system and (2) City electric light and power system, giving an improved cash flow between the systems and enabling the City to finance needed projects which otherwise could not be undertaken Therefore, for the reasons stated in this Section, the City and the City Council have found it to be necessary and essential in the best interest of the City that such refunding be accomplished, and the Outstanding Bonds be refunded, discharged, and retired thereby Section 33 FURTHER PROCEDURES That the Mayor, City Secretary, and all other officers, employees, and agents of the City, and each of them, shall be and they are hereby expressly 18 authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of the City all such instruments, whether or not herein mentioned, as may be necessary or desir- able in order to carry out the terms and provisions of this Ordinance and the Bonds, and the Bond Purchase Contract and Offering Memorandum pertaining thereto In case any officer whose facsimile signature shall appear on any Bond or interest coupon appertaining thereto shall cease to be such officer before the delivery of the Bonds, such facsimile signature shall nevertheless be valid and sufficient for all purposes the same as if he or she had remained in office until such de- livery. Section 34 SEVERABILITY. That the provisions of this Ordinance are severable, and in case any one or more of the provisions of this Ordinance or the application thereof to any person or circumstance should be held to be invalid, unconsti- tuttonal, or ineffective as to any person or circumstance, the remainder of this Ordinance nevertheless shall be valid, and the application of any such invalid provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby. 19 CERTIFICATE FOR ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF DENTON, TEXAS UTILITY SYSTEM SYSTEM REVENUE REFUNDING BONDS SERIES 1983 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 SPECIAL MEETING ON THE LOTH DAY OF MARCH, 1983, at the Municipal Building (City Hall), and the roll was called of the duly constituted officers and members of said City Council, to -wit Charlotte Allen, City Secretary Richard O Stewart, Mayor Mark Chew Jack Barton Charles Hopkins Dr A Ray Stephens Jim Riddlesperger Joe Alford and all of said persons were present, except the following absentees 4z ft 14 Qi thus constitutiftg a quorum. Whereupon, among of er usiness, the following was transacted at said Meeting a written ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF DENTON, TEXAS UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1983 was duly introduced for the consideration of said City Council and duly read It was then duly moved and seconded that said Ordinance be passed; and, after due discussion, said motion, carrying with it the passage of said Ordinance, prevailed and carried by the following vote AYES All members of said City Council shown present above voted "Aye" NOES None. 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 excerpt from said City Council's minutes of said Meeting pertaining to the passage of said Ordinance; that the persons named in the above and 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 members of said City Council was duly and sufficiently notified officially and personally, in advance, of the time, place, and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and considered for passage at said Meeting, and that said Meeting was open to the public, and public notice of the time, place, and purpose of said meeting was given, all as required by Vernon's Ann. Tex. Civ. St. Article 6252-17 3. That the Mayor of said City has approved, and hereby approves, the aforesaid Ordinance, that the Mayor and the City Secretary of said City have duly signed said Ordinance, and that the Mayor and the City Secretary of said City hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Ordi- nance for all purposes. 4. That the Ordinance has not been modified, amended or repealed and is in full force and effect on and as of the date hereof_ 14 We, the undersigned, being respectively the City Attorney and the Bond Attorneys of the City of Denton, Texas, hereby certify that we prepared and approved as to legality the attached and following Ordinance prior to its passage as aforesaid /v City orney �— B6td Attorney4 9 u 0 I l } 4 r i 'I t t I c r t e