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HomeMy WebLinkAbout2000-153ORDINANCE NO 2000-� ORDINANCEAUTHORIZINGTHE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 2000, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO, AND PROVIDING AN EFFECTIVE DATE 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 Bonds, Series 1992, dated March 1, 1992, City of Denton Utility System Revenue Bonds, Series 1993, dated March 1, 1993, City of Denton Utility System Revenue Refimdmg Bonds, Series 1993-A, dated June 1, 1993, City of Denton Utility System Revenue Refunding Bonds, Taxable Series 1993-B, dated June 1, 1993, City of Denton Utility System Revenue Bonds, Series 1996, dated May 1, 1996, City of Denton Utility System Revenue Refunding Bonds, Series 1996-A, dated May 1, 1996, City of Denton Utility System Revenue Bonds, Series 1998, dated March 15, 1998, City of Denton Utility System Revenue Refunding Bonds, Series 1998A, dated July 15, 1998, and City of Denton Utility System Revenue Refunding Bonds, Series 1998B, dated August 1, 1998, WHEREAS, the City Council of the City of Denton deems it necessary and advisable to authorize, issue, and deliver the additional Utility System Revenue Bonds hereinafter described, and WHEREAS, the Series 2000 Bonds hereinafter authorized and described are to be issued, sold and delivered pursuant to Chapter 1502, Texas Government Code, the City's Home Rule Charter, and other applicable laws, NOW, THEREFORE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS Section 1 AMOUNT AND PURPOSE OF THE BONDS (a) The bond or bonds of the City of Denton, Texas (the "Issuer") are hereby authorized to be issued and delivered inthe aggregate principal amount of $51,085,900, for the purpose of providing for 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, and shall be designated "City ofDenton Utility System Revenue Bonds, Series 2000A" (the "Series 2000A Bonds") (b) The bond or bonds of the City of Denton, Texas (the "Issuer") are hereby authorized to be issued and delivered in the aggregate principal amount of $3,795,000, for the purpose of providing for 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, and shall be designated "City of Denton Utility System Revenue Bonds, Taxable Series 200013" (the "Taxable Series 2000B Bonds") Section 2 DESCRIPTION OF THE BONDS (a) With respect to the Series 2000A Bonds, initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments of principal (the "Initial Series 2000A Bond"), but the Initial Series 2000A Bond may be assigned and transsfbrred and/or converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, having serial matunties, and in the denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided The term "Sens 2000A Bonds" as used in this Ordinance shall mean and include collectively the Initial Series 2000A Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the tern "Series 2000A Bond" shall mean any of the Series 2000A Bonds (b) With respect to the Taxable Series 2000B Bonds, initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments of principal (the "Initial Taxable Series 2000B Bond"), but the Initial Taxable Series 2000B 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 matunties, and in the denomination or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided The term "Taxable Series 2000B Bonds" as used in this Ordinance shall mean and include collectively the Initial Taxable Series 2000B Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the tern "Taxable Series 2000B Bond" shall mean any of the Taxable Series 2000B Bonds (c) the tern "Initial Bonds" as used in this Ordinance shall mean and include collectively the Initial Series 2000A Bond and the Initial Taxable Series 2000B Bond, the tern "Bonds" as used in this Ordinance shall mean and include collectively the Initial Bonds 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, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BONDS (a) (1) The Initial Series 2000A Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated APRIL 15, 2000, in the denomination and aggregate principal amount of $51,085,000, numbered R-1, payable in annual installments of principal to the initial registered owner thereof, to -wit DAIN RAUSCHER INCORPORATED 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 Initial Series 2000A Bond to be payable on the date4, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL SERIES 2000A BOND set forth in this Ordinance (u) The Initial Taxable Series 2000B Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated APRIL 15, 2000, in the denomination and aggregate principal amount of $3,795,000, numbered R-1, payable in annual installments of principal to the untial registered owner thereof, to -wit DAIN RAUSCHER INCORPORATED 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 Initial Taxable Series 2000B Bond to be payable on the dates, respectively, and mthe principal amounts, respectively, stated m the FORM OF INITIAL TAXABLE SERIES 2000B BOND set forth in this Ordinance (b) The Initial Bonds (i) may and shall be prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, (u) may be assigned and transferred, (in) 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 Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORMS OF INITIAL BONDS set forth in this Ordinance Section 4 INTEREST The unpaid principal balance ofthe Initial Bonds shall bear interest from the date of each Initial Bond to the respective scheduled due dates, or to the respective dates of prepayment or redemption, of the installments of principal of the Initial Bonds, and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORMS OF INITIAL BONDS set forth in this Ordmance Section 5 FORMS OF INITIAL. BONDS The form of the Initial Bonds, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Bonds, shall be substantially as follows FORM OF INITIAL SERIES 2000A BOND NO R-1 $51,085,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 2000A THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to DAIN RAUSCHER INCORPORATED or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the "registered owner") the aggregate principal amount of $51,085,000 (FIFTY ONE MILLION EIGHTY FIVE THOUSAND DOLLARS) in annual installments of principal due and payable on December 1 in each of the years, and in the respective principal amounts, as set forth in the following schedule, and to pay interest, from the date of this Bond hereinafter stated, on the balance of each such installment of principal, respectively, from time to tune remaining unpaid, at the rates as follows PRINCIPAL INTEREST PRINCIPAL INTEREST YEAR AMOUNT RATE(%) YEAR AMOUNT RATE(%) 2000 $1,270,000 4 875 2010 $ 2,500,000 5200 2001 1,565,000 4 750 2011 2,630,000 5 250 2002 1,640,000 4 750 2012 2,780,000 5 300 2003 1,720,000 5 000 2013 2,935,000 5 400 2004 1,810,000 5 000 2014 3,095,000 5 500 2005 1,905,000 5 000 2006 2,005,000 5 050 •+++• +•++rrrrr r+++r 2007 2,110,000 5 100 2017 10,470,000 6 000 2008 2,225,000 5 600 2018 3,915,000 5 600 2009 2,365,000 6 000 2019 4,145,000 5 625 Interest shall first be due and payable on December 1, 2000, and semiannually on each June 1 and December 1 thereafter while this Bond or any portion hereof is outstanding and unpaid Said interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges The installments of principal and the interest on this Bond are payable to the registered owner hereofthrough the services ofBANK ONE, TEXAS, N A, FORT WORTH, TEXAS, which is the "Paying Agent/Registrar" for this Bond Payment of all principal of and interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and/or interest payment date by check, dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authonzmg,the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the Paying Agent/Registrar by United States mad, first-class postage prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared on the 15th day ofthe month next preceding each such {Date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described The Issuer covenants with the registered owner of this Bond that on or before each principal and/or interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" maintained pursuant to the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on this Bond, when due IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds forthe payment of such interest have been received from the Issuer Notie of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such notice IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturdav, Sunday, a legal holiday, or a day on which banking mstituuons in the City where the Paying Agent/Registrar 4 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 in the principal amount of $51,085,000, for the purpose of providing for 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 ON DECEMBER 1, 2010, or on any date whatsoever 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 available source, as a whole, or in part, and, if in part, the particular portion of thus Bond to be prepaid or redeemed 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 THE OUTSTANDING BONDS of this Series scheduled to mature on DECEMBER 1, 2017 are subject to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, with the particular Bonds or portions thereof to be redeemed to be selected by the Paying Agent/Registrar at random, by lot or other customary method (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at a redemption price equal to the par or principal amount thereof and accrued interest to the date of redemption, on the dates, and in the principal amounts, respectively, as shown in the following schedule Mandatory Principal Redemption Dates Amounts December 1, 2015 3,285,000 December 1, 2016 3,485,000 December 1, 2017 (maturity) 3,700,000 The principal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal amount of any Bonds out of the maturity scheduled for December 1, 2017 which, at least 45 days prior to the aforesaid appropriate redemption date (1) shall have been acquired by the Issuer 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/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the Mandatory Sinking Fund redemption ATiEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed bythe Paying AgenvRegistrarto the registered owner hereof By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying Agefit/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, tins Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment The Paying Agent/Registrar shall 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 ofthe Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance Among other requirements for such transfer, 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 satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner of this Bond, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to 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 (winch 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 tins Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agernt/Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of tins Bond or anylportion hereof The registered owner of tins Bond 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 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 aggregate principal amount offully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of tins Bond winch is not being assigned and transferred by the initial registered owner, in any denomination or denommations in any integral multiple of $5,000 (subject to the requirement hereinafter 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 tins Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and p ures 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 corresponding to the due date of the installment of principal of tins Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and bome by such installment of principal or portion thereof Such bonds, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding installment of principal of tins 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 FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for tins Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond Ordinance The Issuer shalli pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, snd exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto The Paying AgenvRegistrar 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, (u) with respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or 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 Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written nonce thereof to be mailed to the registered owner of this Bond 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 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 nght, subject to the restrictions 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 panty with this Bond THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to amend the Bond Ordinance with the approval of the holders or owners of fifty-one percent in principal amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged Revenues THE REGISTERED OWNER hereof shall never have the right to demand payment of this Bond or the interest hereon out of any fiords 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 registered owner thereby acknowledges all of the terns and provisions of the Bond Ordniarice, 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 ofthe governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused dus Bond to be signed with the manual or facsnmle signature of the Mayor of the Issuer and countersigned and attested with the manual signature or facsimile 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 April 15, 2000 ATTEST By Jennifer Walters City Secretary, City of Denton, Texas (CITY SEAL) CITY OF DENTON, TEXAS Lz Jack Miller Mayor, City of Denton, Texas (BOND INSURANCE LEGEND, IF ANY) • i_&6- ff_ • M • t COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certify that this Bond has been examined, certified 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 Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) FORM OF INITIAL TAXABLE SERIES 2000B BOND NO R-1 $3,795,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND TAXABLE SERIES 2000B THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to DAIN RAUSCHER INCORPORATED or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the "registered owner") the aggregate principal amount of $3,795,000 (THREE MILLION SEVEN HUNDRED NINETY FIVE DOLLARS) in annual installments of principal due and payable on December 1 in each of the years, and in the respective principal amounts, as set forth in the following schedule, and to pay interest, from the date of this Bond hereinafter stated, on the balance of each such installment of principal, respectively, from tune to time remaining unpaid, at the rates as follows PRINCIPAL INTEREST PRINCIPAL INTEREST YEAR AMOUNT RATE(+/o) YEAR AMOUNT RATE(%) t�000 $120,000 6 900 2007 $240,000 7 450 2001 155,000 7 125 2008 260,000 7 500 2002 165,000 7200 2009 280,000 7 550 2003 180,000 7200 2010 300,000 7 625 2004 195,000 7 300 ***** rssr+rs+r ++s++ 2005 210,000 7 400 2014 1,465,000 7 800 2006 225,000 7 450 Interest shall first be due and payable on December 1, 2000, and semiannually on each June 1 and December 1 thereafter while this Bond or any portion hereof is outstanding and unpaid Said interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges The installments of principal and the interest on this Bond are payable to the registered owner hereofthrough the services ofBANK ONE, TEXAS, N A, FORT WORTH, TEXAS, which is the "Paying Agent/Registrar" for this Bond Payment of all principal of and interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and/or interest payment date by check, dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance oftlus Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the Paying AgenURegistrar by United States mail, first-class postage prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address ofthe registered owner, as it appeared on the 15th day ofthe month next preceding 0 each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described The Issuer covenants with the registered owner of tlus Bond that on or before each principal and/or interest payment date for tlus Bond it will make available to the Paying Agent/Registrar, from the "Interest and Smkmg Fund" maintained pursuant to the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on tlus Bond, when due IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a, new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Ragistrar, of and when funds forthe payment of such interest have been received from the Issuer Notice ofthe Special Record Date and ofthe scheduled payment date ofthe past due interest ("Special Payment Date", which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such notice IF THE DATE for the payment of the principal of or interest on this 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 has been authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $3,795,000, for the purpose of providing for 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 ON DECEMBER 1, 2010, or on any date whatsoever 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 available source, as a whole, or in part, and, if in part, the particular portion of this Bond to be prepaid or redeemed 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 THE OUTSTANDING BONDS of this Series scheduled to mature on DECEMBER 1, 2014 are subject to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, with the particular Bonds or portions thereof to be redeemed to be selected by the Paying Agent/Registrar at random, by lot or other customary method (provided that a portion of a Bond May be redeemed only in an integral multiple of $5,000), at a redemption price equal to the par or principal amount thereof and accrued interest to the date of redemption, on the dates, and in the principal amounts, respectively, as shown in the following schedule W=7.7171•- i IL:L=, Mandatory Principal Redemption Dates Amounts December 1,2011 $325,000 December 1, 2012 350,000 December 1, 2013 380,000 December 1, 2014 (maturity) 410,000 10 The principal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal amount of any Bonds out of the maturity scheduled for December 1, 2014 which, at least 45 days prior to the aforesaid appropriate redemption date (1) shall have been acquired by the Issuer 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/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the Mandatory Smkmg Fund 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 marled by the Paying Agent/Registrar to the registered owner hereof By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying 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 treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment The Paying Agent/Registrar shall 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 ofthe Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying Aient/Registrar for cancellation, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner of this Bond, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or assignees in whose name or names tins Bond or any such portion or portions hereof is or are to be transferred and registered Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to 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 and transferred by the unnal registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for tins Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of tins Bond or any portion hereof The registered owner of this Bond 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 tins 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 aggregate principal amount offully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion ofthis Bond which is not being assigned and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each 11 substitute boµd issued in exchange for any portion of this Bond shall have a single stated principal maturity date), upon surrender of tits Bond to the Paying Agem/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 m exchange for any portion hereof shall have a single stated principal maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof Such bonds, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the 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 FORM 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 Ordnance 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 requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to matte any such assignment, conversion, or exchange (i) during the period commerical; 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, (u) with respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or 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 Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner of this Bond 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 ofthis 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, toBether with other bonds, from a first lien on and pledge of the "Pledged Revenues", which include mitially 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 restrictions stated in the Bond Ordnance, to issue Additional Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues" on a panty with this Bond THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordnance, to amend the Bond Ordinance with the approval ofthe holders or owners of fifty-one percent in principal amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged Revenues THE REGISTERED OWNER hereof shall never have the right to demand payment of tins Bond or the interest hereon out ofany funds raised or to be raised by taxation or from any source whatsoever other than specified in the Bond Ordnance 12 BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions 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 ofthb governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance 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 or facsimile signature of the Mayor of the Issuer and countersigned and attested with the manual signature or facsumle 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 April 15, 2000 ATTEST By Jennifer Walters City Secretary, City of Denton, Texas (CITY SEAL) CITY OF DENTON, TEXAS 10 Jack Miller Mayor, City of Denton, Texas (BOND INSURANCE LEGEND, IF ANY) COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certifythatthis Bond has been examined, certified 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 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 Remstration and Transfer (a) The Issuer shall keep or cause to be kept at the Fort Worth, Texas, corporate trust office of BANK ONE, TEXAS, N jA (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 transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe, and the Paying Agent/Registrar shall make 13 such transfers and registrations as herein provided The Paying Agent/Registrar shall obtain and record in the Registmuon Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided, but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given The Issuer shall have the right to inspect the Registration Books during regular business hours ofthe Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep thje Registration Books confidential and, unless otherwise required by law, shall not pemut their inspection byd any other entity Registration of each Bond may be transferred in the Registration Books only upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing (i) the assignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (u) 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 of the same Series shall be issued in conversion and exchange therefor in the manner herein provided The Imual Bonds, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the minal registered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof All Bonds issued and delivered in conversion of and exchange for the Initial Bond shall be in any denomination or denommations of any integral multiple of $5,000 (subject to the requirement hereinafter statedthat each substitute Bond shall have a single statedprincipal maturity date), shall be in the form prescribed for such Series in the FORMS OF SUBSTITUTE BONDS set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provided If'ithe Initial Bond or any portion thereof is assigned and transferred or converted the Initial Bond must be surrendered to the Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any portion ofthe Initial Bond shall have a single stated principal maturity date, and shall not be payable in install- ments, and each such Bond shall have a principal maturity date corresponding to the due date ofthe installment of principal or portion thereof for wluch the substitute Bond is being exchanged, each such Bond shall bear interest at the single rate applicable to and bome by such installment of principal or portion thereof for which it is being exchanged and each such Bond shall be of the same Series If only a portion of the Initial Bond is assigned and, transferred, there shall be delivered to and registered in the name of the initial registered owner substitute Bonds of the same Series in exchange for the unassigned balance of the Inrual Bond in the same manner as iflthe initial registered owner were the assignee thereof If any Bond or portion thereof other than the Imual Bond is assigned and transferred or converted each Bond issued in exchange therefor shall be of the same Series, 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 Bonds., 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, Ian 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 ofthe same Series, having the characte�stics herein described, payable to such assignee or assignees (wluch then will be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner in case only a portion of a Bond is be 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, ifor 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 Bond or Bonds, 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 �egistrauon of any Bond or any portion thereof (►) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or 14 interest payment date, or, (u) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date (b) Ownersbw of Bonds The entity in whose name any Bond shall be registered in the Registration Books at any tune shall be deemed and treated as the absolute owner thereof for all purposes of tins 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, and payment o4 or on account of, the principal of, premium, if any, and 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) Payment of Bonds and Interest The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to convert and exchange or replace Bonds, all as provided in this Ordinance The Paying Agent/Registrar shall keep proper records of all payments trade by the Issuer and the Paying Agent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer Notice of the Special Record Date and ofthe scheduled payment date of the past due interest ("Special Payment Date", which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such notice (d) Conversion and Exchange or Reolacement Authentication Each Bond issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount thereof, may, upon surrender of such Bond at the principal corporate trust office ofthe Paying Agent/Registrar, ,Vgether with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds of the same Series, without interest coupons, in the form prescribed for such Series in the FORMS OF SUBSTITUTE BONDS set forth in this Ordinance, in the denomination of $5,000, or any mtegral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond 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 unredeemed 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 be of the same Series, shall have a single stated principal maturity date, and shall not be payable in installments, 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 and each such Bond shall be of the same Series 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 be of the same Series having the same maturity date, hearing interest at the same rate, in the denommaton or denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed portionthereof, 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 be of the same Series, have the same principal 15 maturity date and bear interest at the same rate as the Bond for which it is being exchanged Each substitute Bond shall 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 herem, 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 ofthis Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be 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 Irntutl Bond shall bear interest from the date ofthe hutial Bond, but each substitute Bond so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest from such next following interest payment date, provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in full THE INITIAL BONDS issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substttute 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 inthis 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 General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas A, Dated BANK ONE, TEXAS, N A Paying Agem/Registrar 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 executed 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, execution, and delivery of the substitute Bonds in the manner prescribed herem Pursuant to 'Chapter 1201, Texas Government Code, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/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, approved by the Attorney General, and registered by the Comptrollet ofPublic Accounts The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchangmg any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange or replacement of Bonds or any portion thereof (i) during the period commencing with the close of business on 16 any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (it) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date (e) In General All Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, (t) 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, (it) may and shall be redeemed prior to their scheduled maturities, (in) may be transferred and assigned, (iv) may be converted and exchanged for other Bonds of the same Series, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vu) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORMS OF SUBSTITUTE BONDS set forth in this Ordinance (f) Payment of Fees and Charges The Issuer hereby covenants with the registered owners of the Bonds that it will (t) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Bonds, when due, and (it) pay the fees and charges ofthe Paying Agent/Registrar for services with respeetto the transfer of registration of Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided in this Ordinance (g) Substitute Paving Aaent/Reaistrar The Issuer covenants with the registered owners of the Bonds that at all tines while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such notice In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that it will promptly appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar shall promptly transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer Upon any change m the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar Section 7 FORMS 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 appropriate variations, omissions, or insertions as are permitted or required by this Ordinance 17 FORM OF SUBSTITUTE SERIES 2000A BOND NO _ UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 2000A INTEREST MATURITY ORIGINAL DATE RATE DATE OF ISSUE CUSIP N 2000 ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby prormses 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 April 15, 2000, to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above, with interest being first due and payable on December 1, 2000, and sermannually on each June 1 and December 1 thereafter, except that if the date of authentication ofttus Bond is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date (hereinafter defined) but on or before the next following interest ,,payment date, in which case such principal amount shall bear interest from such next following interest payment date Said 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 thus Bond shall be paid to the registered owner hereof upon presentation and surrender of tlus Bond at maturity or upon the date fixed for its redemption prior to maturity, at the Fort Worth, Texas, corporate trust office of BANK ONE, TEXAS, N A, which is the "Paying Agent/Registrar" for this 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, dated as of such interest payment date, drawn by the Paying Agent/Registmr on, and payable solely from, funds of the Issuer requi�d by the ordinance authorizing the issuance ofthe Bonds (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the Paying Agem/Registrar by United States marl, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the 15th day ofthe month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described However, the payment of such interest may be made by any other method acceptable to the Paying Agent/Registrar and requested by, and at the risk and expense of, the registered owner hereof Any accrued interest due upon the redemption of thus Bond prior to maturity as provided herem shall be paid to the registered owner at the principal corporate trust office of the Paying Agent/Regiptrar upon presentation and surrender of dus Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar The Issuer covenants with the registered owner of this 1g C Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond It will make available to the Paying Agent/Registrar, from the "Interest and Smkmg Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer Notice ofthe Special Record Date and ofthe scheduled payment date ofthe past due interest ("Special Payment Date", which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such notice IF THE DATE for the payment of the principal of or interest on this 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 wluch 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 a series of Bonds initially dated April 15, 2000, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $51,085,000, for the purpose of providing for 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 ON DECEMBER 1, 2010, or on any date whatsoever thereafter, the Bonds of tlus Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption THE OUTSTANDING BONDS of this Series scheduled to mature on DECEMBER 1, 2017 are subject to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, with the particular Bonds or portions thereof to be redeemed to be selected by the Paying Agent/Registrar at random, by lot or other customary method (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at a redemption price equal to the par or principal amount thereof and accrued interest to the date of redemption, on the dates, and in the principal amounts, respectively, as shown in the following schedule Mandatory Principal Redemption Dates Amounts December 1, 2015 3,285,000 December 1, 2016 3,485,000 December 1, 2017 (maturity) 3,700,000 19 The principal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal amount of any Bonds out of the maturity scheduled for December 1, 2017 which, at least 45 days prior to the aforesaid appropriate redemption date (1) shall have been acquired by the Issuer 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/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the Mandatory Sinking Fund redemption AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemption date and to major securities depositories, national bond rating agencies and bond information services, provided, however, that the failure of the registered owner to receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond By the date fixed for any such redemption due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof that are to be so redeemed If such written notice of redemption is sent and if due provision for such payment is made, all as provided above, the Bonds or portions thereof that are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price from the Paying 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 rate, in any denommation or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting mthe capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance Among other requirements for such assignment 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 satisfactory 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 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 representative, 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 the previous registered owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all in the form and manner as provided in the next 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 transfer, 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 trarisfers of regis- tration of this Bond or any portion hereof (i) during the period commencing with the close of business on any Record Data and ending with the opening of business on the next following principal or interest payment date, or, (it) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date The registered owner of this Bond shall be deemed and treated by the Issuer and 20 the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability uponthts 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, thus Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable tothe appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of tins Bond to the Paying Agent/Registrar for cancellation, 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 transferring, converting, and exchangmg any Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange (i) during the period commencing with the close ofbusmess on any Record Date iand ending with the opening of business on the next following principal or interest payment date, or, (it) 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 for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and will promptly cause written nonce 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 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 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 venally 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 restrictions 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 panty with this Bond and series of which it is a part THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to amend the Bond Ordinance with the approval ofthe holders or owners of fifty-one percent in principal amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged Revenues THE REGISTERED OWNER hereof shall never have the right to demand payment of thus Bond or 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 21 BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions 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 ofthe Issuer, and agrees that the terms and provisions of tlus Bond and the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsurule signature of the Mayor of the Issuer and countersigned and attested with the manual or facsumle signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly unpressed, or placed in facsimile, on this Bond ATTEST By Jennifer Walters City Secretary, City of Denton, Texas (CITY SEAL) CITY OF DENTON, TEXAS By Jack Miller Mayor, City of Denton, Texas FORM OF PAYING: AGENT/RECdSTRAR'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 inithns Bond, and that this Bondhas 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 General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas BANK ONE, TEXAS, N A Paying Agent/Registrar Dated By Authorized Representative (BOND INSURANCE LEGEND, IF ANY) 22 D ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to (Assignee's Social (print or typewrite Assignee's name and Security or Taxpayer address, including zip code) Identification Number) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises Dated Signature Guaranteed NOTICE Signature(s) must be guaranteed by Registered Owner an eligible guarantor institution participating in NOTICE This signature must correspond with a securities transfer association recognized the name ofthe Registered Owner appearing on signature guarantee program the face of this Certificate in every particular without alteration or enlargement or any change whatsoever FORM OF SUBSTITUTE TAXABLE SERIES 2000B BOND NO _ UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND TAXABLE SERIES 2000B INTEREST MATURITY ORIGINAL DATE RATE DATE OF ISSUE CUSIP N 2000 ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas (the ,Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to 23 , or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon from April 15, 2000, to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per arum specified above, with interest being first due and payable on December 1, 2000, and semiannually on each June 1 and December 1 thereafter, except that if the date of authentication oftlus Bond is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date (hereinafter defined) but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date Said 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 or upon the date fixed for its redemption prior to maturity, at the Fort Worth, Texas, corporate trust office of BANK ONE, TEXAS, N A , which is the "Paying Agent/Registrar" for this Bond The payment of interest on this Bond shall be made by the Paying AgenvRegistrar to the registered owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Bonds (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the I Sth day ofthe month next preceding each such date (the "Record Date") on the Registration Books kept -,ky the Paying Agent/Registrar, as hereinafter described However, the payment of such interest may be made �r by any other method acceptable to the Paying Agent/Registrar and requested by, and at the risk and expense of, the registered owner hereof 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 corporate trust office of the Paying Agent/Registrar upon presentation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar The Issuer covenants with the registered owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer Notice ofthe Special Record Date and ofthe scheduled payment date ofthe past due interest ("Special Payment Date", which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such notice 24 IF THE DATE for the payment of the principal of or interest 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 winch 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 a series of Bonds initially dated April 15, 2000, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $3,795,000, for the purpose of providing for improvements and extensions of the City of Denton Utility System, winch consists of the City's Combined Waterworks, Sower, and Electric Light and Power System ON DECEMBER 1, 2010, or on any date whatsoever thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at the redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for redemption THE OUTSTANDING BONDS of this Series scheduled to mature on DECEMBER 1, 2014 are subject to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled maturities, with the particular Bonds or portions thereof to be redeemed to be selected by the Paying Agent/Registrar at random, by lot or other customary method (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at a redemption price equal to the par or principal amount thereof and accrued interest to the date of redemption, on the dates, and in the principal amounts, respectively, as shown in the following schedule =1.- 1 _L. Mandatory Principal Redemption Dates Amounts December 1, 2011 $325,000 December 1, 2012 350,000 December 1, 2013 380,000 December 1, 2014 (maturity) 410,000 The principal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the principal amount of any Bonds out of the maturity scheduled for December 1, 2014 which, at least 45 days prior to the aforesaid appropriate redemption date (1) shall have been acquired by the Issuer 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/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the Mandatory Sinking Fund redemption AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying AgenURegistrar by United States mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemption date 25 and to major securities depositories, national bond rating agencies and bond information services, provided, however, that the failure of the registered owner to receive such nonce, or any defect therein or in the sending or mailmg thereof, shall not affect the vandity or effectiveness of the proceedings for the redemption of any Bond By the date fixed for any such redemption due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof that are to be so redeemed If such written notice of redemption is sent and if due provision for such payment is made, all as provided above, the Bonds or portions thereof that are to be so redeemed thereby automatically shall be treated as redeemed pnorto their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price from the Paying 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 rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity ofregisnar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying AgenURegistrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying 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 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 representative, 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 _X, Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all in the form and manner as provided in the next 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 transfer, 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 regis- tration of thus 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, (it) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date The registered owner of this Bond 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 request of the registered owner or the assignee or assignees hereof, be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for 26 cancellation, 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 transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying 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, (it) 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 for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and will promptly cause written notice thereof to be mailed to the registered owners of the Bonds 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 tins 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 restrictions stated in the Bond Ordinance, to issue Additional Bonds payable from and secured by a first lien on and pledge ofthe "Pledged Revenues" on a panty with this Bond and series of which it is a part THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to amend the Bind Ordinance with the approval of the holders or owners of fifty-one percent in principal amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged Revenues THE REGISTERED OWNER hereof shall never have the right to demand payment of this Bond or 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 registered owner thereby acknowledges all of the terms and provisions 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 Ordmarice constitute a contract between each registered owner hereof and the Issuer 27 IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsumle signature of the Mayor of the Issuer and countersigned and attested with the manual or facsumle signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsmule, ion this Bond ATTEST M Jennifer Walters City Secretary, City of Denton, Texas (CITY SEAL) CITY OF DENTON, TEXAS Jack Miller Mayor, City of Denton, Texas FORM OF PAYING AGENTWGISTRAR'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 General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas BANK ONE, TEXAS, N A Paying Agent/Registrar ' Ft Dated By Authorized Representative (BOND INSURANCE LEGEND, IF ANY) 28 n FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of tins Bond, or duly authorized representative or attorney thereof, hereby assigns tins Bond to (Assignee's Social Security or Taxpayer Identification Number) (print or typewrite Assignee's name and address, including zip code) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises Dated Signature Guaranteed NOTICE Signature(s) must be guaranteed by an eligible guarantor institution participating in a securities transfer association recognized signature guarantee program Registered Owner NOTICE Tlus signature must correspond with the name of the Registered Owner appearing on the face of this Certificate in every particular without alteration or enlargement or any change whatsoever Section 8 DEFINITIONS As used in this Ordinance the following terms shall have the meanings set forth below, unless the text hereof specifically indicates 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 Bonds as defined and described in Section 2 of tlus Ordinance and all substitute bonds exchanged therefor, and all other substitute bonds and replacement bonds, issued pursuant to and as provided in this Ordinance (d) The tern "Panty Bonds" shall mean collectively (i) the outstanding City of Denton Utility System Revenue Bonds, Series 1992, authorized by ordinance passed on March 3, 1992 (the "Series 1992 Bonds"), (n) the outstanding City ofDenton Utility System Revenue Bonds, Series 1993, authorized by ordinance passed on March 1,6, 1993 (the "Series 1993 Bonds"), (in) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 1993-A, authorized by ordinance passed on June 8, 1993 (the "Series 1993-A Bonds"), (nv) the outstanding City ofDenton Utility System Revenue Refunding Bonds, Taxable Series 1993-B, authorized by ordinance passed on June 8, 1993 (the "Series 1993-B Bonds"), (v) the outstanding City of 29 Denton Utility System Revenue Bonds, Series 1996, authorized by an ordinance passed on May 7, 1996 (the "Series 1996 Bonds"), (vi) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 1996-A, authorized by an ordinance passed on May 7,1996 (the "Series 1996-A Bonds"), (vii) the outstanding City of Denton Utility System Revenue Bonds, Series 1998, authorized by an ordinance passed on March 24, 1998 (the "Series 1998 Bonds"), (vim) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 1998A, authorized by an ordinance passed on July 21, 1998 (the "Series 1998A Bonds"), (ix) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 1998B, authorized by an ordinance passed on August 4, 1998 (the "Series 1998B Bonds") and (x) the Bonds (e) The term "Additional Bonds" shall mean the additional panty revenue bonds which the City reserves the right to issue in the future, in accordance with Section 25 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 defined, provided that, notwithstanding the foregoing, and to the extent now or hereafter authorized or pernutted 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 ofthe 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 lumted 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 Revenues of the System, unless and to the extent otherwise provided 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 ownership 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 ofthe 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, in- cluding all salaries, labor, materials, repairs, and extensions necessary to render efficient 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 resolutions, 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 ofthe 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 p) the Net Revenues, plus 30 (2) any additional revenues, income, or other resources which are expected to be available to the City on a regular periodic bans, 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 Panty Bonds or Additional Bonds 0) The tern "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 ofthe United States of America, including obligations the principal of and interest on which are unconditionally 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 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 City of Denton Revenue Refunding Bonds, Series 1983 (the "Series 1983 Bonds"), and it is hereby determined, declared, and resolved that all ofthe Panty Bonds (including the Bonds) are secured and payable equally and ratably on a panty, and that Sections 8 through 28, of this Ordinance are supplemental to and cumulative of Sections 7 through 25 of the aforesaid ordinance passed on March 10, 1983, with Sections 8 through 28 of this Ordinance being applicable to all of the Panty Bonds (b) The Panty Bonds and any Additional Bonds, and the interest thereon, including any 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 Panty 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 10 SYSTEM FUND There heretofore has been and 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 hereinafter required to be made from the System Fund, the City shall retain in the System Fund at all tunes 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 11 INTEREST AND SINKING FUND For the sole purpose of paying the principal of and interest on all Panty Bonds and Additional Bonds, there heretofore has been and 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 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 establishediand maintained at Bank One, Texas, N A , and hereafter, 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 31 "Reserve Fund") The Reserve Fund shall be used to pay the principal of and interest on any Panty 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 Panty Bonds or Additional Bonds Section 13 EXTENSION AND IMPROVEMENT FUND There heretofore has been and 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 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 ofthe 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") 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 was deposited in the Emergency Fund simultaneously with the delivery of the Series 1983 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 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 , unds when and as required by this Ordmance and any ordmance 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, 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 8 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 ofthe United States of America, including, but not limited to, evidences of indebtedness issued, insured, or guaranteed by such governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, United States Postal Service, Farmers Home Admuustration, Federal Home Loan Mortgage 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 tunes be valued at cost) shall be valued in term of current market value as ofthe 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 32 prevent any default in connection with the Panty Bonds or Additional Bonds consistent with the ordinances, respectively, authorizing 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 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 Smkmg Fund, when and in the amounts required by this Ordinance and any ordinance authorizing any Additional Bonds, then Second, to the Reserve Fund, when and in the amounts required by this Ordinance and any ordinance authorizing any Additional Bonds, then Third, to the Extension and Improvement Fund, when and as required by Section 21 of this Ordinance Section 19 INTEREST AND SINKING FUND REQUIREMENTS The City shall cause to be deposited to the credit of the Interest and Sinking Fund the accrued interest and any prenuum received 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 credit of the Interest and Smkmg Fund, in approximately equal monthly payments, amounts sufficient, together with any other funds on hand therem, to pay all of the interest or principal and interest coming due, including the principal amount of any Panty Bonds required to be redeemed prior to maturity pursuant to any mandatory redemption requirements, on the Panty Bonds and any Additional Bonds on the next succeeding interest payment date Any moneys so deposited in the Interest and Smkmg 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, Panty Bonds which would be subject to being chosen for mandatory redemption on such mandatory redemption date The Paying Agent shall cancel any Panty Bonds so purchased Section 20 RESERVE FUND REQUIREMENTS There is now on hand in the Reserve Fund an amount of money and Government Obligations which is in excess of $3,000,000 and which is at least equal to the average annual principal and interest requirements ofthe outstanding Series 1992 Bonds, the Series 1993 Bonds, the Series 1993-A Bonds, the Taxable Series 1993-B Bonds, the Series 1996 Bonds, the Series 1996-A Bonds, the Series 1998 Bonds, the Series 1998A Bonds and the Series 1998B Bonds (the current "Required Reserve Amount") Following the issuance and delivery of the Initial Bonds 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 the outstanding Panty 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 Panty Bonds and Additional Bonds exceeds $3,000,000 Immediately after the issuance and delivery of the Initial Bond there shall be deposited to the credit of the Reserve Fund, from the proceeds ofthe sale of the Initial Bond, money sufficient to cause the Reserve Fund to contain an aggregate amount ofmoney and investments equal tothe Required Reserve Amount for all then outstanding Panty 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 33 Required Reserve Amount Any increase in the Required Reserve Amount may be funded from Pledged Revenues, or from proceeds from the sale of any Additional 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, by deposits of Pledged Revenues in approximately equal monthly installments on or before the 25th day of each month Principal amounts ofthe Panty Bonds and any Addmon- al 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 1160th 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 amounts in excess of the Required Reserve Amount to be deposited to the credit of the Interest and Sinking Fund Section 21 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS 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", winch term is hereby defined to mean the following the Gross Revenues of the System for such yew 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 attributable to (i) all fuel costs related to the production of electric energy by the City and/or (u) the purchase of electric energy by the City r3r 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 additional deposit its 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 up as soon as possible from the next available Pledged Revenues (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, 2000, and semiannually on or before each June 1 and December 1 thereafter while any of the Panty Bonds or Additional Bonds are outstanding and unpaid the City shall make available to the Paying Agents therefor, out ofthe Interest and Sinking Fund, or if necessary, out ofthe Reserve Fund, money sufficient to pay, on each of such dates, the principal of and interest on the Panty Bonds and Additional Bonds as the same matures and comes due, or to redeem the Panty 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 Panty Bonds and Additional Bonds, and any interest coupons appertaining thereto, to the City or 34 destroy all paid Panty 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 Panty 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 Panty 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 (n) 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) Govern- ment Obligations which mature as to principal and interest in such amounts and at such tunes 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 Panty Bonds and 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 Govern- ment 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 tunes as herembefore 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 Panty 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 25 ADDITIONAL BONDS (a) The City shall have the right and power at any time and from tune to time, and in one or more series or issues, to authorize, issue, and deliver additional panty revenue bonds (herein called "Additional Bonds"), in accordance with law, in any amounts, for any lawful purpose, including the refunding of any Panty Bonds or Additional 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 irrevocable first lien on and pledge of the Pledged Revenues, equally and ratably on a panty in all respects with the Panty Bonds and any other outstanding Additional Bonds (b) 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 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS Additional Bonds shall be issued only in accordance with this Ordinance, and no installment, Series, or issue of Additional 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 connection with all then outstanding Panty 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 independent firm of certified public accountants, acting by and through a certified public accountant, signs a written certificate to the effect that, in his or its K 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) 125 tunes an amount equal to the average annual principal and interest requirements, and (u) 1 10 tunes an amount equal to the principal and interest requirements during the fiscal year during which such requirements are scheduled to be the greatest, of all Panty 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 ofthis subsection (b), if there has been any increase in the rates or charges for services 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 accountant, or in lieu ofthe certified public accountant a firm of consulting engineers, shall determine and certify the amount of Pledged Revenues as being the total of (i) the actual Pledged Revenues for the entire period, plus (u) 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 mthe ordinance authorizing their issuance for increasing the Reserve Fund to the Required Reserve Amount as required by Section 20 hereof (d) 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 tlus 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 27 GENERAL COVENANTS The City further covenants and agrees that in accordance �#nth 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 provisions contained in this Ordinance, and each ordinance authorizing the issuance of Additional Bonds, and in each and every Panty Bond and Additional Bond, that it will promptly pay or cause to be paid the principal of and interest on every Panty Bond and Additional Bond, on the dates and in the places and manner prescribed in such ordinances and Panty 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 Panty 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 authonzing the issuance of Additional 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) Citv's Legal Authonty 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 Panty 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 36 (c) Tide 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 Panty Bonds and Additional Bonds, against the clauns and demands of all persons whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the Panty Bonds and Additional Bonds in the manner prescribed herein, and has lawfully exercised such rights (d) L=a The City will from time to time and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully unposed 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 hen of which would be prior to or mterfere with the liens hereof, so that the priority of the hens granted hereunder shall be fully preserved in the manner provided herem, and that it will not create or suffer to be created any mechamc's, laborer's, matenalman'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, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, matenalmads, or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good firth by the City (e) Operation of System. No Free Service While the Panty 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 ofthe 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, instrumentalities, 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 22(b) hereof (f) Further Encumbrance While the Panty 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 is made juror 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 perntted under Section 22(b) hereof) (g) Sale or Disposal of Property Wlule the Panty 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) Insu (1) The City shall cause to be insured such parts of the System as would usually be insured by corporations operating like properties, with a responsible insurance company or companies, against risks, accidents, or casualties against which and to the extent insurance is usually carved 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 earned unless the City Attorney gives a written opinion to the effect that the City is not 37 liable for claims which would be protected by such insurance All insurance premiums shall be paid as an expense of operation of the System At any time while any contractor engaged in construction work shall be fully responsible therefor, the City shall not be required to carry insurance on the work being constructed ifthe contractor ns irequired to carry appropriate insurance All such policies shall be open to the inspection of the Bondholders and their representatives at all reasonable tunes Upon the happening of any loss or damage covered by insurance from one or more of said causes, the City shall make due proof of loss and shall do all things necessary or desirable 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 originally 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 maintenance of insurance, and shall state whether or not all insurance premiums upon the insurance policies to which reference is made have been paid (i) 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 tunes 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 125 tunes the average annual principal and interest requirements of all then outstanding Panty Bonds and Additional rids or 125 tunes the succeeding fiscal year's principal and interest requirements of all then outstanding Panty Bonds and Additional Bonds 0) 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 i at all reasonable tunes be made available for inspection upon request of any Bondholder or citizen of the City To the extent consistent with the provisions 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) IAudttq After the close of each fiscal year while any of the Panty 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 marled 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 inspecuon of the Bondholders and their agents and representatives at all reasonable tunes 38 (1) Governmental Agencies It will comply with all of the terms and conditions of any and all franchuses, permits, and authonzations applicable to or necessary with respect to the System, and which have been obtamed 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 maintenance 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 The City covenants to and with the purchasers of the Panty Bonds and any Additional Bonds that no use will be made ofthe 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 meamrig of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), or any regulations or rulings pertaining thereto, and by this covenant the City is obligated to comply with the requirements of the aforesaid Code 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 aforesaid Code, or any regulations pertainng thereto Section 28 AMENDMENT OF ORDINANCE (a) The holders or owners of Panty Bonds and Additional Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Panty 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 herem contained shall permit or be construed to pewit the amendment of the terms and conditions in this Ordinance or in the Panty Bonds or Additional Bonds so as to (1) Make any change in the maturity of the outstanding Panty Bonds or Additional Bonds, (2) Reduce the rate of interest home by any of the outstanding Panty Bonds or Additional Bonds, (3) Reduce the amount of the principal payable on the outstanding Panty Bonds or Additional Bonds, (4) Modify the terns of payment of principal of or interest on the outstanding Panty Bonds or Additional Bonds, or impose any conditions with respect to such payment, (5) Affect the rights of the holders or owners of less than all of the Panty Bonds and Additional Bonds then outstanding, (6) Change the nummum percentage of the principal amount of Panty 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 successive calendar weeks Such notice shall Ibriefly 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 Panty Bonds and Addi- 39 tional Bonds 1 Such publication is not requited, however, if notice in writing is given to each holder or owner of Panty Bonds and Additional Bonds (c) Whenever at any time not less than tinny 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 Sl% in aggregate principal amount of ail Panty Bonds and Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and winch 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 ordinance, and the respective rights, duties, and obligations under this Ordinance of the City, and all the holders or owners of then out- standing Parity Bonds and Additional Bonds and all future Panty 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 Panty Bond or Additional Bond pursuant to the provisions ofthis Section shall be irrevocable for a period of one year 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 Panty Bond or Additional Bond during such period Such consent may be revoked at any time after one year from the date of the first publication of such notice by the holder or owner 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 or owners of Sl% in aggregate principal amount of the then outstanding Panty Bonds and Additional Bonds as in this Section defined have, prior to the attempted revocation, consented to, and approved the amendment A.y (f) For the purpose of this Section, the fact of the holding of Panty Bonds or Additional Bonds which are in bearer, coupon form, by any bondholder and the amount and numbers of such bearer Panty 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 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 Panty 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 ownership of all registered Panty Bonds and Additional Bonds shall be determined from the registration books kept by the registrar therefor Section 29 DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS (a) Bolacement Bonds In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Age>ItURegmstrar shall cause to be printed, 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 mariner hereinafter provided (b) I Apmlication for Replacement 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 destruction of a Bond, the registered owner applying for a replacement bond shall furnsh 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 40 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 mutilated (c) Djo Default Occurred Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred winch is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is fiirmshed as above provided in this Section (d) �bM for Issu a 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 ofthe 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 i this Ordinance (e) Tuihonty for Issumglacement Bonds In accordance with Chapter 1201, Texas Government Code, 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/Registrar, 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 Secuon30 COVENANTS REGARDING TAX -EXEMPTION The Issuer covenants to refrain from any action which would adversely affect, and to take such action to ensure, the treatment of the Series 2000A 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 Series 200,0A Bonds (less amounts deposited to a reserve fund, if any) are used for any "private business use',', as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds are so used, that amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms oftlus Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Series 2000A Bonds, in contravention of section 141(b)(2) of the 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 Series 2000A Bonds (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private bus)ness use" which is "related" and not "disproportionate", within the meaning of section 141(b)(3) of the Code, to the governmental use, 41 (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 Series 2000A Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code, (d) to refrain from taking any action which would otherwise result in the Series 2000A Bonds being treated as "private activity bonds" withm the meaning of section 141(b) of the Code, (e) to refram from taking any action that would result in the Series 2000A Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code, (f) to rd= from using any portion of the proceeds ofthe Series 2000A Bonds, duectly 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 Series 2000A Bonds, other than investment property acquired with — (1) proceeds of the Series 2000A Bonds invested for a reasonable temporary period of 3 years or less until such proceeds are needed for the purpose for which the Series 2000A Bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning of section 1 148-1(b) of the Treasury Regulations, and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated principal amount (or, in the case of a discount, the issue price) of the Series 2000A Bonds, (g) to otherwise restrict the use of the proceeds of the Series 2000A Bonds or amounts treated as proceeds of the Series 2000A Bonds, as may be necessary, so that the Series 2000A Bonds do not otherwise contravene the requirements of section 148 ofthe Code (relating to arbitrage), Section 149(g) of the Code (relating to hedge bonds), and, to the extent applicable, section 149(d) of the Code (relating to advance refundmgs), and (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 Series 2000A 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 Series 2000A Bonds have been paid in full, 100ipercent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code For purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (ifany) and proceeds ofthe refunded bonds expended prior to the date of issuance ofthe Series 2000A Bonds It is the understanding of the Issuer that the covenants contained herem are intended to assure compliance with the Code and any regulations or rulings promulgated by the U S Department ofthe Treasury pursuant thereto In the event that regulations or rulings are hereafter promulgated which modify, or expand provisions ofthe Code, as applicable to the Series 2000A Bonds, the Issuer will not be required to comply with any covenant contained herem to the extent that such failure to comply, in the opinion of nationally -recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Series 42 2000A Bonds under section 103 of the Code In the event that regulations or rulings are hereafter promulgated which uupose additional requirements which are applicable to the Series 2000A Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary and reasonably possible, in the opinion of nationally -recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Series 2000A Bonds under section 103 of the Code In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the purpose for the issuance of the Series 2000A Bonds The Issuer covenants to comply with the covenants contained in this section after defeasance of the Series 2000A Bonds In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including without limitation, the owners of the Certificates The Rebate Fund is established for the additional purpose of compliance with Section 148 of the Code Section 31 ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section I of this Ordinance (the "Project") on its books and records in accordance with the requirements of the Internal Revenue Code The Issuer recognizes that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 18 months of the later of the date that (1) the expenditure its made, or (2) the Project is completed, but in no event later than three years after the date on which the original expenditure its paid The foregoing notwithstanding, the Issuer recognizes that in order for proceeds to be expended under the Internal Revenue Code, the sale proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifth anniversary ofthe delivery ofthe Series 2000A Bonds, or (2) the date the Series 2000A Bonds are retired The Issuer agrees to obtain the advice of nationally -recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Series 2000A Bonds For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest Section 32 DISPOSITION OF PROJECT The Issuer covenants that the property constituting the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of nationally -recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Series 2000A Bonds Section 33 INTEREST EARNINGS ON BOND PROCEEDS Interest earnings derived from the investment of proceeds from the sale of the Initial Bonds, other than proceeds deposited in the Interest and Sulking Fund and the Reserve Fund, shall be used along with other available proceeds for improving the System, provided that after completion of the improvements if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund his further provided, however, that any interest earnings on bond proceeds which are required to be rebated to the United States of America pursuant to the Covenants Regarding Tax-Exmnption herem so as to prevent the Series 2000A Bonds from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Ordinance Section 34 CUSTODY, APPROVAL, AND REGISTRATION OF BONDS, BOND COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE, AND INSURANCE The Mayor of the Issuer is hereby authorized to have control of the Initial Bonds issued hereunder and all necessary records and proceedings 43 pertaining to the Initial Bonds pending their delivery and the investigation, examination, and approval by the Anomey General ofthe State of Texas, and the registration by the Comptroller of Public Accounts ofthe State of Texas on registration of the Initial Bonds said Comptroller of Public Accounts (or a deputy designated in writing tol act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the Initial Bonds, and the seal of said Comptroller shall be unpressed, or placed in facsumle, on the Initial Bonds The approving legal opinion ofthe Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Initial Bonds or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convemenceand information of the registered owners of the Bonds The preamble to tlus Ordinance is hereby adopted and made apart hereof for all purposes If insurance is obtained on any ofthe Bonds, the Initial Bonds and all other Bonds shall bear an appropriate legend concerning insurance as provided by the insurer Section 35 SALE OF INITIAL BONDS The Initial Bonds are hereby sold and shall be delivered to Dam Rauscher Incorporated, as representative of the underwriters, in accordance with the Bond Purchase Agreement dated the date of this Ordinance and presented to the City Council at tlus meeting The Mayor is hereby authorized and directed to execute, on behalf ofthe Issuer, such Bond Purchase Agreement in the form and substance submitted at this meeting Section 36 OFFICIAL STATEMENT An Official Statement dated as of the date of this meeting has been prepared in connection with the sale of the Initial Bonds and the Bonds, in the form and substance submitted at this meeting Said Official Statement and any supplement or addenda thereto have been and are hereby approved, and their use in the offer and sale of the Bonds is hereby approved It is further officially found, determined, and declared that the statements and representations contained in said Official Statement are true and correct in all material respects, to the best knowledge and belief of the Issuer The distribution and use of the Preliminary Official Statement dated April 11, 2000, prior to the date hereof is hereby ratified and approved Section 37 DTC REGISTRATION The Bonds initially shall be issued and delivered in such manner that no physical distribution of the Bonds will be made to the public, and The Depository Trust Company ("DTC"), New York, New York, initially will act as depository for the Bonds DTC has represented that it is a limited purpose trust company incorporated under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and A "clearing agency" registered under Section 17A ofthe federal Securities Exchange Act of 1934, as amended{ and the Issuer accepts, but in no way verifies, such representations The Initial Bond authorized by this Ordinance shall be delivered to and registered in the name of the Purchaser However, it is a condition of delivery and sale that the Purchaser, immediately after such delivery, shall cause the Paying Agent/Registrar, as provided for in this Ordinance, to cancel said Initial Bond and deliver in exchange therefor a substitute Bond for each maturity of such Initial Bond, with each such substitute Bond to be registered in the name of CEDE & CO , the nommee of DTC, and it shall be the duty of the Paying Agent/Registrar to take such action It is expected that DTC will hold the Bonds on behalf of the Purchaser and/or the DTC Participants, as defined and described in the Official Statement referred to and approved in Section 36 hereof (the "DTC Participants") So long as each Bond is registered in the name of CEDE & CO , the Paying Agent/Registrar shall treat and deal with DTC in all respects the same as if it were the actual and beneficial owner thereof It is expected that DTC will maintain a book entry system which will identify beneficial ownership of the Bonds by DTC Partici- pants in integral amounts of $5,000, with transfers of ownership being effected on the records of DTC and the DTC Participants pursuant to rules and regulations established by them, and that the substitute Bonds initially deposited with DTC shall be immobilized and not be further exchanged for substitute Bonds except as heremaf- ter provided The Issuer is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, will not be responsible or liable for maintaining, 44 supervising, or reviewing the records of DTC or the DTC Participants, or protecting any interests or rights of the beneficial owners of the Bonds It shall be the duty of the Purchaser and the DTC Participants to make all arrangements with DTC to establish this book -entry system, the beneficial ownership of the Bonds, and the method of paying the fees and charges of DTC The Issuer does not represent, nor does it in any way covenant that the initial book -entry system established with DTC will be maintained in the future The Issuer reserves the right and option at any tune in the future, in its sole discretion, to terminate the DTC (CEDE & CO ) book - entry only registration requirement described above, and to permit the Bonds to be registered in the name of any owner Ifthe Issuer exercises its right and option to terminate such requirement, it shall give written nouce of such termination to the Paying Agent/Registrar and to DTC, andthereafter the Paying Agent/Registrar shall, upon presentation and proper request, register any Bond in any name as provided for in this Ordinance Notwithstan0mg the initial establishment ofthe foregoing book -entry system with DTC, if for any reason any of the originally delivered substitute Bonds is duly Sled with the Paying Agent/Registrar with proper request for transfer and substitution, as provided for in this Ordinance, substitute Bonds will be duly delivered as provided in tits Ordinance, and there will be no assurance or representation that any book -entry system will be maintained for such Bonds Section 38 COMPLIANCE WITH RULE 15c2-12 (a) Annual Reports. (i) The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after 2000, financial information and operating data with respect to the Issuer of the general type included in the final Official Statement authorized by Section 36 of this Ordinance, being the information described in Exlvbit A hereto, winch Exhibit is attached to and incorporated in this Ordinance as if written word for word herem Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit A hereto, or such other accounting principles as the Issuer may be required to employ from tune to time pursuant to state law or regulation, and (2) audited, if the Issuer commissions an audit of such statements and the audit is completed within the period during winch they must be provided If the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited financial statements by the required time and will provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements become available (u) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by winch the Issuer otherwise would be required to provide financial information and operating data pursuant to this Section The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC (b) Material Event Notices The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws Principal and interest payment delinquencies, 2 Non-payment related defaults, Unscheduled draws on debt service reserves reflecting financial difficulties, 4 Unscheduled draws on credit enhancements reflecting financial difficulties, 45 5 Substitution of credit or liquidity providers, or their failure to perform, 6 Adverse tax opuuons or events affecting the tax-exempt status of the Bonds, 7 Modifications to tights of holders of the Bonds, 8 Bond calls, 9 Defeasances, 10 Release, substitution, or sale of property securing repayment of the Bonds, and I 1 Rating changes The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide &metal information or operating data in accordance with subsection (a) of this Section by the time required by such subsection (c) Limitations. Disclaimers. and Amendments. (i) The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning ofthe Rule, except that the Issuer in any event will give the notice required by Subsection (b) hereof of any Bond calls and defeasance that cause the Issuer to no longer be such an 'obligated person" (it) The provisions of this Section are for the sole benefit of the registered owners and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claun hereunder to any other person The Issuer undertakes to provide only the Ainancial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein The Issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date (in) UNDER NO CIRCUMSTANCES SHALL THE ISSUER, ITS OFFICERS, AGENTS AND EMPLOYEES, BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE (iv) No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance Nothing in this Section is intended or shall act to disclaim, waive, or otherwise lmut the duties of the Issuer under federal and state securities laws (v) The provisions ofthis Section may be amended by the Issuer from time to tune to adapt to changed circumstances that anse from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Issuer, but only if (1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the registered owners of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that is unaffiliated with the Issuer (such as nationally recognized bond counsel) determined that such amendment will not materially impair the interest of the registered owners and beneficial owners of the Bonds If the Issuer so amends the provisions oftlus Section, it shall include with any amended financial information or operating data next provided in accordance with subsection (a) oftlus Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided The Issuer may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction entersludgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds below (d) 12gfiratigpg, As used in this Section, the following terms have the meanings ascribed to such terms WSW' means the Municipal Securities Rulemakmg Board "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities mformation repository within the meaning of the Rule from time to time "Rule" means SEC Rule 15c2-12, as amended from time to time "SEC" means the United States Securities and Exchange Commission "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to tune Section 39 FURTHER PROCEDURES The Mayor of the Issuer, the City Secretary of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the Issuer all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terns and provisions of this Bond Ordinance, the Bonds, the sale of the Bonds, and the Official Statement, and the Assistant City Manager/Finance of the City shall cause the expenses of issuance of the Bonds to be paid from the proceeds of sale of the Initial Bonds or from other lawfully available funds of the Issuer In case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery Section 40 OPEN MEETINGS The City Council has found and determined that the meeting at which this Ordmance is considered is open to the public and that notice thereof was given in accordance with the provisions of the Texas Open Meetings, Law, Tex Gov't Code, Chapter 551, as amended 47 Section 41 EFFECTIVE DATE This Ordmance shall become effective unmedhately upon its passage and approval "I" 48 PASSED AND APPROVED this the 25th day of Apnl, 2000 ATTEST 70 WIRMIA 10 - /I m—mar APPROVED AS TO LEGAL FORM Herbeertt L Prouty, City Attorney By V�� Jack nil r, Mayor 49 EXHIBIT A DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 38 of dus Ordinance Annual Financial Statements and Operating Data The financial information and operating data with respect to the Issuer to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the tables of the Official Statement referred to) below Tables numbered 1 through 14, inclusive, under the captions "The Utility System", 'Debt Service Requirements" and "Financial Information' in the Official Statement Appendix B in the Official Statement Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in the paragraph above