1998-084 ORDINANCE NO 98-_(~
ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF
DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 1998, 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 C~ty of Denton, Texas, heretofore has duly ~ssued the following revenue
bonds
C~ty of Denton Utthty System Revenue Refunding Bonds, Series 1987, dated January l, 1987,
C~ty ofDanton Utd~ty System Revenue Bonds, Series 1988, dated August l, 1988,
C~ty of Denton Utility System Revenue Bonds, Series 1989, dated October l, 1989,
C~ty of Denton Utility System Revenue Bonds, Series 1992, dated March l, 1992,
C~ty of Denton Utility System Revenue Bonds, Series 1993, dated March l, 1993,
City of Denton Ut~hty System Revenue Refunding Bonds, Senes 1993 -A, dated June 1, 1993,
C~ty of Denton Ut~hty System Revenue Refunding Bonds, Taxable Series 1993-B, dated June
1, 1993,
C~ty of Denton Utility System Revenue Bonds, Senes 1996, dated May l, 1996, and
C~ty of Denton Ut~hty System Revenue Refunding Bonds, Series 1996-A, dated May l, 1996,
WHEREAS, the C~ty Council of the City of Denton deems ~t necessary and advisable to
authorize, issue, and dehver the edd~tmnal Utility System Revenue Bonds hereinafter described, and
WHEREAS, the Series t998 Bonds herematter authorized and desenbed are to be ~ssued, sold
and dehvered pursuant to Vernon's Ann Tex C~v Arts 2368a and 1111 through 1118, the C~ty's
Home Rule Charter, and other apphcable laws, NOW, THEREFORE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
Section 1 AMOUNT AND PURPOSE OF THE BONDS The bond or bonds of the City
of Denton, Texas (the "Issuer") are hereby anthonzed to be issued and delivered m the aggregate
pnnmpal amount of $7,175,000, for the purpose of prowdmg for improvements and extensions of the
City of Denton Utility System, winch 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, Series 1998" (the "Series 1998 Bonds")
Section 2 DESCRIPTION OF THE BONDS (a) With respect to the Series 1998 Bonds,
initially there shall be issued, sold, and delivered hereunder a single fully registered bond, vathout
interest coupons, payable m installments of pnnclpal (the "Imtlal Bond"), but the Imtlal Bond may
be assigned and transferred and/or converted into and exchanged for a like aggregate pnnclpal
amount of fully registered bonds, vathout interest coupons, having serial maturities, and in the
denomination or denominations of $5,000 or any mtegral mulnple of $5,000, all in the manner herem-
a~er provided The term "Bonds" as used in tins Ordinance shall mean and include collectively the
Initial Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and
replacement bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds
Section 3 INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL
REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND
(a) The Imtlal Bond is hereby authorized to be issued, sold, and delivered hereunder as a
single fully registered Bond, vathout interest coupons, dated MARCH 15, 1998, in the denonunatlon
and aggregate prmeipal amount of $7,175,000, numbered R-l, payable in annual installments of
pnneipal to the lmtlal registered owner thereof, to-vat
DEAN WITTER REYNOLDS
or to the registered assignee or assignees of smd Bond or any portion or portions thereof (in each
case, the "registered owner"), with the annual installments of pnnclpal of the Initial Bond to be
payable on the dates, respectavely, and m the principal amounts, respectively, stated in the FORM OF
INITIAL BOND set forth in tins Ordinance
(b) The Imtial Bond (0 may and shall be prepmd or redeemed prior to the respective
scheduled due dates of installments of pnncipal thereof, (n) may be assigned and transferred, (ill) may
be converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be
signed and sealed, and the pnnclpal of and interest on the Imtial Bond shall be payable, all as
provided, and m the manner required or md,eated, m the FORM OF INITIAL BOND set forth in tins
Ordinance
Section 4 INTEREST The unpmd pnnclpal balance of the Initial Bond shall bear interest
fi.om the date of the Imtial Bond to the respective scheduled due dates, or to the respective dates of
prepayment or redemption, of the installments of prmcipal of the Imtial Bond, and smd interest shall
be payable, all in the manner prowded and at the rates and on the dates stated in the FORM OF
INITIAL BOND set forth in tins Ordinance
Section 5 FORM OF INITIAL BOND The form of the ImUal Bond, including the form of
Reg~stration Cemticate of the Comptroller of Pubhc Accounts of the State of Texas to be endorsed
on the Imtial Bond, shall be substantially as follows
FORM OF INITIAL BOND
NO R-1 $7,175,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE BOND
SERIES 1998
THE CITY OF DENTON, m Denton County, Texas (the "Issuer"), being a pohtical
subdivision of the State of Texas, hereby prormses to pay to
DEAN WITTER REYNOLDS
or to the registered assignee or assignees of this Bond or any portion or portions hereof (m each case,
the "registered owner") the aggregate principal amount of
$7,175,000
(SEVEN MILLION ONE HUNDRED SEVENTY FIVE THOUSAND DOLLARS)
in annual installments of pnncipal due and payable on December 1 in each of the years, and in the
respective pnnclpal amounts, as set forth in the following schedule
PRINCIPAL INTEREST PRINCIPAL INTEREST
1998 $360,000 6 30% 2008 $360,000 4 50
1999 360,000 6 30 2009 360,000 4 60
2000 360,000 6 30 2010 360,000 4 70
2001 360,000 6 30 2011 360,000 4 80
2002 360,000 6 30 2012 360,000 5 O0
2003 360,000 5 75 2013 355,000 5 O0
2004 360,000 4 30 2014 355,000 5 O0
2005 360,000 4 35 2015 355,000 5 O0
2006 360,000 4 40 2016 355,000 5 O0
2007 360,000 4 50 2017 355,000 5 O0
and to pay interest, from the date of this Bond hereinafter stated, on the balance of each such
installment ofpnncipal, respectively, from time to time remmmng unpaid, at the rates as follows
6 30% per annum on the above installment due in 1998
6 30% per annum on the above ~nstallment due in 1999
6 30% >er annum on the above installment due in 2000
6 30% >er annum on the above installment due in 2001
6 30% >er annum on the above installment due in 2002
5 75% .er annum on the above installment due in 2003
4 30% >er annum on the above installment due in 2004
4 35% >er annum on the above installment due in 2005
4 40% >er annum on the above installment due m 2006
4 50% >er annum on the above installment due m 2007
4 50% >er annum on the above installment due in 2008
4 60% >er annum on the above installment due in 2009
4 70% >er annum on the above installment due in 2010
4 80% >er annum on the above installment due in 2011
5 00% >er annum on the above installment due in 2012
5 00% .er annum on the above installment due m 2013
$ 00% >er annum on the above installment due ~n 2014
5 00% >er annum on the above installment due ~n 2015
5 00% >er annum on the above installment due m 2016
5 00% >er annum on the above installment due in 2017
with said interest being first due and payable on D~cember 1, 1998, and sermannually on each June
1 and December I thereafter while this Bond or any portion hereof is outstanding and unpaid Said
interest shall be calculated on the basis ora 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 Umted States of America, without exchange or collection charges
The mstallmeats of principal and the interest on this Bond are payable to the registered owner hereof
through the services of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS,
TEXAS, which is the "Paying Agent/Ill, sitar" for this Bond Payment of all pnnc~pal of and ~nterest
on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each
pnncipal and/or interest payment date by check, dated as of such date, drawn by the Paying
Agent/Res~strar on, and payable solely fi.om, funds of the Issuer required by the ordinance anthonznig
the issuanoe of this Bond (the "Bond Ordinance") to be on deposit with the Paying AgentYReglstrar
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 principal and/or interest payment date,
to the rel~$tered owner hereof, at the address of the registered owner, as ~t appeared on the 15th day
of the month next preceding each such date (the "Record Date") on the Registration Books kept by
the Paymg,A~ent/Kel~strar, as hereinafter described The Issuer covenants with the registered owner
of this Bond that on or before each pnncipal and/or interest payment date for this Bond it wdl make
available to the Paying Agent/lt.e~strar, 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 pnncipal of and lmerest on this Bond, when due
IF THE DATE for the payment of the pnncipal of or niterest on this Bond shall be a Saturday,
Sunday, a legal holiday, or a day on which banking restitutions m the City where the Paying
Asent/Rei~strar is located are anthonzed 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
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on which banking mstltuUons are authorized to close, and payment on such date shall have the same
force and effect as fi`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 rathe pnnclpal amount of $7,175,000, for the purpose of prowdlng for improvements and
extensions of the City of Denton Ut~ty System, which consists of the City's Combined Waterworks,
Sewer, and Electric Light and Power System
ON DECEMBER 1, 2008, 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 fins Bond to be prepaid or redeemed shall be selected and designated by the
Issuer (prowded that a portion of fins Bond may be redeemed only in an integral multiple of $5,000),
at the prepayment or redemption price of the par or pnnclpal amount thereof, plus accrued interest
to the date fixed for prepayment or redemption
AT LEAST 30 days pnor to the date fixed for any such prepayment or redemption a written
notice of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the
registered owner hereof By the date fixed for any such prepayment or redemption due prowslon
shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepay-
ment or redemption pnce for fins 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 wntten notice
of prepayment or redemption is giver~ and fi`due prowsion for such payment is made, all as prowded
above, fins 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 pnce 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 pnnclpal 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
lmtlal registered owner hereof and shall be transferred only in the Registration Books of the Issuer
kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms
and 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, m form and with guarantee of signatures satisfactory to the
Paying Agent/Registrar, evidencing assignment by the lmtial registered owner of fins Bond, or any
portion or portions hereofm 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 asslgnment 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
mmal 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 lmtlal
registered owner as to any portion of this Bond which is not being assigned and transferred by the
initial registered owner, shall be dehvered by the Paying Agent/Registrar m conversion of and
exchange for flus Bond or any port,on or port~ons hereof, but solely m the form and manner as
provmded m the next paragraph hereof for the conversion and exchange oftlus Bond or any portton
hereof The registered owner oftlus Bond shall be deemed and treated by the Issuer and the Paying
Agent/Reliostrar as the absolute owner hareof for all purposes, including payment and discharge of
hab~hty upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Regmstrar
shall not be affected by any nottce to the contrary
AS PROVIDED above and m the Bond Ordinance, thts Bond, to the extent of the unpaid or
unredeemed pnnc~pal balance hereof, may be converted into and exchanged for a hke aggregate
principal amount of fully registered bonds, wathout interest coupons, payable to the assignee or
assignees duly destgnated m wntm8 by the ~mttal registered owner hereof, or to the lmt~al registered
owner as to any portmn of tbas Bond wluch is not being assigned and transferred by the ~mt~al
registered owner, m any denonunat~on or denonunatmns m any integral multtple of $5,000 (subject
to the requtremeot hereinafter stated that each substitute bond issued m exchange for any portion of
th~s Bond shall have a single stated pnnc~pal maturity date), upon surrender of flus Bond to the
Paymg Agent/Registrar for cancellatmn, all m accordance wath the form and procedures set forth m
the Bond Ordinance Iftlus Bond or any port,on hereofls assigned and transferred or converted each
bond ~ssued m exchange for any portmn hereof shall have a single stated principal maturity date
corresponding to the due date of the mstallmeot of pnnclpal of flus Bond or portmon hereof for wluch
the substitute bond ~s being exchanged, and shall bear interest at the rate applicable to and borne by
such installment of pnnc~pal or portmn thereof Such bonds, respectively, shall be subject to
redemptmn prior to maturity on the same dates and for the same prices as the correspondmg
mstallmant ofpnnc~pal oftlus Bond or port,on hereof for which they are being exchanged No such
bond shall be payable m installments, but shall have only one stated prmc~pal 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 ~ssued and dehvered m exchange for fins Bond or any port~on hereof may
be assigned and transferred, and converted, subsequently, as prowded m the Bond Ordinance The
Issuer shall pay the Paying Agent/Reg~strar's standard or customary fees and charges for transfemng,
convening, and exchanging tl~s 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 wath
respect thereto The Paying Agent/Registrar shall not be reqmred to make any such assmgnment,
conversion, or exchange 0) dunng the period commencing wath the close of business on any Record
Date and ending wath the opening of business on the next following pnnc~pal or interest payment date,
or, (u) wath respect to any Bond or portion thereof called for prepayment or redemption prior to
maturity, wthm 45 days prior to ~ts prepayment or redempuon date
IN THE EVENT any Paying Agent/Registrar for flus Bond ~s changed by the Issuer, resigns,
or otherwase ceases to act as such, the Issuer has covenanted m the Bond Ordmance that at promptly
will appoint a competent and legally qualified substitute therefor, and promptly wall cause wntten
notice thereof to be rmuled to the registered owner ofttus Bond
IT IS HEREBY cemfled, recited, and covenanted that fins Bond has been duly and vabdly
authorized, ~ssued, sold, and dehvered, that all acts, conditions, and tlungs reqmred or proper to be
performed, erast, and be done precedent to or m the authorization, ~ssuance, and dehvery ofttus
Bond have been performed, crested, and been done m accordance w~th law, that flus Bond ts a specml
obhgatton of the Issuer, secured by and payable, together w~th other bonds, from a first hen on and
pledge of the "Pledged Revenues", whtch mclude tint,ally the "Net Revenues of the System" as such
terms are defined tn the Bond Ordinance, wtth the System conststmg of the Ctty's enUre combmed
waterworks, sewer, end electric hght and power system
THE ISSUER has reserved the nght, subject to the resmctlons stated tn the Bond Ordinance,
to ~ssue Addmonal Bonds payable from and secured by a first hen on and pledge of the "Pledged
Revenues" on a panty wtth tl~s Bond
THE ISSUER also has reserved the right, subject to the restrictions stated tn the Bond
Ordinance, to amend the Bond Ordntance w~th the approval of the holders or owners of fit~y-one
pement m prmctpal amount of all outstanding bonds whmh 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 ttus
Bond or the mterest hereon out of any funds raised or to be raised by taxatton or from any source
whatsoever other than spectfied m the Bond Ordinance
BY BECOIVlING the registered owner of tins Bond, the registered owner thereby
acknowledges all of the terms and prowslons of the Bond Ordmance, agrees to be bound by such
terms and proxastons, acknowledges that the Bond Ordinance ts duly recorded and avmlable for
inspection m the officml minutes and records of the govermng body of the Issuer, and agrees that the
terms and prowstons of tlus Bond and the Bond Ordinance consntute a contract between the
registered owner hereof and the Issuer
IN WITNESS WHEREOF, the Issuer has caused flus Bond to be stgned w~th the manual
signature of the Mayor of the Issuer and countersigned and attested with the manual signature of the
Ctty Secretary of the Issuer, has caused the official seal of the Issuer to be duly tmpressed on th~s
Bond, and has caused th~s Bond to be dated March 15, 1998
ATTEST CITY OF DENTON, TEXAS
By By
Jenmfer Walters Jack Mffier
City Secretary, Ctty of Denton, Texas Mayor, Ctty of Denton, Texas
(CITY SEAL)
(BOND INSURANCE LEGEND, IF ANY)
7
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS
COMI~TROLLER'S REGISTRATION CERTIFICATE REGISTER NO
I hereby certify that this Bond has been examined, certified as to vahd~ty, and approved by
the Attorney General of the State of Texas, and that tins Bond has been registered by the Comptroller
of Public Accounts of the State of Texas
Witness my signature and seal this
Comptroller of Pubhc Accounts
of the State of Texas
(COMPTROLLER'S SEAL)
Section 6 ADDITIONAL CHARACTERISTICS OF THE BONDS Re~straUon and
Transfer (a) The Issuer shall keep or cause to be kept at the pnncipal corporate trust office of
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS (the "Paying
Agent/Regmrar") books or records of the registration and transfer of the Bonds (the "Registration
Books"), and the Issuer hereby appomts 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 Agant/Registrar may prescribe, and the Paying Agent/Registrar
shall make such transfers and registrations as herein provided The Paying Agent/Registrar shall
obtain and record in the Registration Books the address of the registered owner of each Bond to
which payments vath respect to the Bonds shall be mmled, as hereto prowded, but it shall be the duty
of each registered owner to notify the Paying Agent/Regmrar in writing of the address to which
payments shall be marie, d, and such interest payments shall not be marled unless such notice has been
given The Issuer shall have the right to respect the RegistraUon Books dunng regular business hours
of the Paymg Agent/Registrar, but otherwuse the Paying Agent/Registrar shall keep the Registration
Books confidential and, unless othervase required by law, shall not perrmt their mspecUon by any
other entity Registration of each Bond may be transferred in the RegistraUon Books only upon
presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registraUon
and eancellauon, together with proper written instruments of asslgument, in form and w~th guarantee
of s~guatures saUsfactony to the Paym8 Agent/Regmrar, evidencing 0) the asslgument of the Bond,
or any porUon thereofm any integral multiple of $5,000, to the assignee or assignees thereof, and (ii)
the nght 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 pomon
thereof, a new substitute Bond or Bonds shall be issued in conversion and exchange therefor in the
manner herein provided The ImUal Bond, to the extent of the unpaad or unredeemed pnncipal
balance thereof, may be assigned and transferred by the maUal registered owner thereof once only, and
to one or more assignees designated in writing by the lmUal registered owner thereof All Bonds
issued and dehvered m convemon of and exchange for the Imual Bond shall be in any denonunauon
or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that
each substitute Bond shall have a single stated pnnclpal maturity date), shall be in the form prescribed
m the FORM OF SUBSTITUTE BOND set forth m tins Ordinance, and shall have the characteristics,
and may be assigned, transferred, and converted as hereinafter proxaded If the Imtial Bond or any
portion thereof is assigned and transferred or converted the Imt~al Bond must be surrendered to the
Paying Agent/Re.sitar for cancellation, and each Bond ~ssued in exchange for any portion of the
Imt~al Bond shall have a stogie stated pnncipal maturity date, and shall not be payable m :nstallments,
and each such Bond shah have a pnncipal maturity date corresponding to the due date of the
installment ofpnncipal or pomon thereof for winch the substitute Bond ~s being exchanged, and each
such Bond sludl bear interest at the stogie rate apphcable to and borne by such installment of pnncipal
or portion thereof for wluch it is being exchanged If only a portion of the Imtlal Bond is assigned
and transferred, there shall be delivered to and registered in the name of the imtlal registered owner
substitute Bonds m exchange for the unassigned balance of the Imtial Bond m the same manner as
if the lmtial registered owner were the assignee thereof If any Bond or portion thereof other than
the Imtlal Bond is assigned and transferred or converted each Bond issued in exchange therefor shall
have the same pnncipal maturity date and bear interest at the same rate as the Bond for wtuch it is
exchanged A form of assignment shall be pnnted or endorsed on each Bond, exceptang the Imtlal
Bond, wluch shall be executed by the registered owner or its duly authorized attorney or
representative to ewdenee an assignment thereof Upon surrender of any Bonds or any portion or
portions thereof for transfer of registration, an authorized representative of the Paying
Agent/Registrar shall make such transfer m the Registration Books, and shall deliver a new fully
registered substitute Bond or Bonds, hawng the characteristics herein described, payable to such
assignee or assignees (wtuch then vnll 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 being assxgned and
transferred, all in conversion of and exchange for smd assigned Bond or Bonds or any portion or
poruons thereof, m the same form and manner, and wnh the same effect, as provided in Section 6(d),
below, for the conversion and exchange of Bonds by any registered owner of a Bond The Issuer
shall pay the Paying Agent/l~g~strar's standard or customary fees and charges for malong such trans-
fer 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 pa~d w~th respect thereto The Paying
Agent/Registrar shall not be required to make transfers of registration of any Bond or any portion
thereof(0 dunng the period commencing wnh the close of business on any Record Date and ending
with the opemng of business on the next following pnneipal or interest payment date, or, (ii) w~th
respect to any Bond or any portion thereof called for redemptxon prior to maturity, w~thm 45 days
prior to its redemption date
(b) Ownership of Bonds The entity in whose name any Bond shall be registered in the
Registration Books at any time shall be deemed and treated as the absolute owner thereof for all
purposes oftlus 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 of, or on account
of, the principal of, prenuum, 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 satis~ and discharge the hablhty
upon such Bond to the extent of the sum or sums so pa~d
(c) Payment of Bonds and Interest The Issuer hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the pnnclpal of and interest on the Bonds, and
9
to act as its agent to convert and exchange or replace Bonds, all as prowded in tl~s Ordinance The
Paying Agent/Rag~strar shall keep proper records of all payments made by the Issuer and the Paying
Agent/Registrar ~th respect to the Bonds, and of all conversmns and exchanges of Bonds, and all
replacements of Bonds, as prowded in tbas Ordinance
(d) Conversion and Exchange or Replacement. Authentication Each Bond issued and
dahvered pursuant to tbs Ordinance, to the extent of the unpaid or unredeemed pnnclpal balance or
pnnclpal amount thereof, may, upon surrender of such Bond at the pnnclpal corporate trust office
of the Paying Agent/Registrar, together w~th a written request therefor duly executed by the
rag~stered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or
representatives, w~th guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the
option of the registered owner or such assignee or assignees, as appropnate, be converted into and
exchanged for fully reslstered bonds, without interest coupons, in the form prescribed in the FORM
OF SUBSTITUTE BOND set forth m tbs Ordinance, in the danonunatlon of $5,000, or any integral
multiple of $5,000 (subJeCt to the reqturement 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, m an aggregate pnnclpal amount equal to the unpaid or unredeemed pnnclpal balance or
principal amount of any Bond or Bonds so surrendered, and payable to the appropriate registered
owner, ass~gnen, or assignees, as the case may be If the Imual Bond is assigned and transferred or
converted each substitute Bond issued In exchange for any pomon of the Imtlal Bond shall have a
single stated pnnclpal maturity date, and shall not be payable m installments, and each such Bond shall
have a pnnelpal maturity date corresponding to the due date of the installment of pnncxpal or portion
thereof for wluch the substitute Bond is being exchanged, and each such Bond shall bear interest at
the single rate applicable to and borne by such installment ofpnnclpal or pomon thereof for which
it is being exchanged Ifa portion of any Bond (other than the Imual Bond) shall be redeemed prior
to its scheduled maturity as proxaded hereto, a substitute Bond or Bonds hawng the same maturity
date, beanng interest at the same rate, in the denormnatlon or denominations of any integral multiple
of $5,000 at the request of the registered owner, and m aggregate pnnclpal amount equal to the
unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for
cancellation Ifany Bond or pomon thereof (other than the Imtlal Bond) ~s assigned and transferred
or converted, each Bond issued in exchange therefor shall have the same pnnclpal 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 d~stmgnlsh it from each other Bond The Paying Agent/Regxstrar shall
convert and exchange or replace Bonds as provided herein, and each fully registered bond delivered
m conversion of and exchange for or replacement of any Bond or port,on thereof as penmtted or
required by any provision oftbas Ordinance shall constitute one of the Bonds for all purposes oftlus
Ordinance, and may agmn 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 Imtlal Bond shall bear interest from the date of the
Imt~ 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 winch such substitute Bond
was so authenticated, unless such Bond ~s authenticated afrer any Record Date but on or before the
next following interest payment date, m wtuch case it shall bear interest from such next following
interest payment date, proxaded, however, that if at the time of delivery of any substitute Bond the
interest on the Bond for wluch it is being exchanged ~s due but has not been prod, then such Bond
shall bear interest from the date to wtuch such ~nterast has been prod in full THE INITIAL BOND
l0
issued and dehvered pursuant to tins Ordinance is not required to be, and shall not be, authenticated
by the Paying A~ent/Res~strar, but on each sub~tute Bond issued in conversion of and exchange for
or replacement of any Bond or Bonds issued under tins Ordinance there shall be pnnted a cerUficate,
in the form substantially as follows
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It Is hereby certified that tins Bond has been issued under the prowsions of the Bond
Ordinance described m tins Bond, and that tbas Bond has been issued m conversion of and exchange
for or replacement ora 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 Pubhc
Accounts of the State of Texas
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, DALLAS, TEXAS
Paying Agent/Registrar
Dated By.
Authorized Representative"
An authorized representative of the Pa3qng Agent/Registrar shall, before the dehvery of any such
Bond, date and manually s~gn the above Certtficate, and no such Bond shall be deemed to be issued
or outstanthng unless such Certificate is so executed The Paling AgentfRegistrar 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 prowde for the pnntlng, execotion, and
delivery of the substitute Bonds m the manner prescribed herein, and smd Bonds shall be of type
composition pnnted on paper w~th hthographed or steel engraved borders of customary weight and
strength Pursuant to Vernon's Ann Tex Clv St Art 717k-6, and particularly Section 6 thereof,
the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon
the Paying AgentfRegtstrar, and, upon the execution of the above Paling AgentfRegistrar's
Authentication Certtficate, the converted and exchanged or replaced Bond shall be valid,
incontestable, and enforceable m the same manner and with the same effect as the Imtlal Bond winch
originally was issued pursuant to tins Ordinance, approved by the Attorney General, and registered
by the Comptroller of Pubhc Accounts The Issuer shall pay the Paling Agent/Registrar's standard
or customary fees and charges for transfernng, converting, and exchanging any Bond or any portion
thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or
governmental charges reqmred to be prod w~th respect thereto as a condition precedent to the
exercise of such prlwlege of conversion and exchange The Paling Agent/Registrar shall not be
reqmred to make any such conversion and exchange or replacement of Bonds or any port~on thereof
(i) dunng the period commencing wath the close of business on any Record Date and ending with the
opening of business on the next following pnncipal or ~nterest payment date, or, 00 with respect to
any Bond or portton thereof called for redemption prior to maturity, wttlun 45 days prior to Its
redemption date
1!
(e) In General All Bonds xssued m conversion and exchange or replacement of any other
Bond or portion thereof, (0 shall be issued m fully reggstered form, w~thout ~nterest coupons, wtth
the pnnclpal of and interest on such Bonds to be payable only to the registered owners thereof, (u)
may and shall be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned,
0v) may bo converted and exchanged for other Bonds, (v) shall have the charactenstms, (va) shall be
signed and sealed, and (va) the prmopal of and mterest on the Bonds shall be payable, all as provaded,
and in the manner required or indicated, m the FORM OF SUBSTITUTE BOND set forth m this
Ordinance
(f) Payment of Fees and Chames The Issuer hereby covenants w~th the registered owners
of the Bonds that it w~ll (0 pay the standard or customary fees and charges of the Paying
Agent/Regtstrar for its services w~th respect to the payment of the pnnclpal of and interest on the
Bonds, when due, and (n) pay the fees and charges of the Paying Agent/Re~strar for services w~th
respect to the transfer ofregistrat~on of Bonds, and w~th respect to the conversion and exchange of
Bonds solely to the extent above provaded m this Ordinance
(g) Substttute Pa~ng Agent/Registrar The Issuer covenants with the registered owners of
the Bonds that at all times while the Bonds are outstanding the Issuer will provade a competent and
legally qualtlled bank, trust company, financial institution, or other agency to act as and perform the
serwces of Paying Agent/Registrar for the Bonds under flus Ordinance, and that the Paying
Agent/Registrar w~ll 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 pnnclpal or interest payment date after such
not~ce In the event that the entity at any time acting as Paying AgenffReglstrar (or its successor by
merger, acquisition, or other method) should resign or otherv~se cease to act as such, the Issuer
covenants that it will promptly appoint a competent and legally quahfied bank, trust company,
financial mstltutmn, 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 dehver the Registration Books (or a copy thereof), along w~th all other pertinent hooks
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
nouce thereof to be sent by the new Paym8 AgentJReglstrar to each registered owner of the Bonds,
by Umted States mall, first-class postage prepaid, which notice also shall g~ve the address of the new
Paying Agent/Registrar By acceptmg the position and performing as such, each Paying Agent/Regis-
trar shall be deemed to have agreed to the provas~ons oftlus Ordinance, and a certified copy of this
Ordinance shall be delivered to each Paying Agent/Registrar
Section 7 FORM OF SUBSTITUTE BOND The form of all Bonds issued in conversion
and exchange or replacement of any other Bond or portion thereof, lnchiding the form of Paying
Agent/Reglstrar's Certificate to be pnnted on each of such Bonds, and the Form of Assignment to be
pnnted on each oftbe Bonds, shall be, respectively, substantially as follows, with such appropnate
variations, ormssions, or insertions as are pernutted or reqmred by this Ordinance
12
FORM OF SUBSTITUTE BOND
NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT
STATE OF TEXAS $
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE BOND
SERIES 1998
INTEREST MATURITY ORIGINAL DATE
RATE DATE OF ISSUE CUSIP NO
% MARCH 15, 1998
ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County,
Texas (the "Issuer"), being a pohtlcal subdivision of the State of Texas, hereby prormses to pay to
, or to the rag~stered
assignee hereof (either being hereinafter called the "registered owner") the pnncipal amount of
and to pay interest thereon from March 15, 1998, to the maturity date specified above, or the date
of redemption prior to maturity, at the interest rate per annum specified above, w~th interest being
first due and payable on December l, 1998, and sermannually on each June 1 and December 1
thereafter, except that if the date of authenUcauon of tins Bond is later than the first Record Date
(hereinafter defined), such pnnclpal 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
pnncipal amount shall bear interest from such next following interest payment date Smd interest shall
be calculated on the basis of a 360-day year composed of twelve 30-day months
THE PRINCIPAL OF AND INTEREST ON fins Bond are payable in lawful money of the
Umted States of America, w~thout exchangn or collection charges The pnncipal of tlus Bond shall
be pa~d to the registered owner hereof upon presentauon and surrender of this Bond at maturity or
upon the date fixed for its redemption prior to maturity, at the pnnclpal corporate trust office of
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS, which is the
"Paying Agem/Rag~strar" for ttus Bond The payment oflnterest on fins Bond shall be made by the
Paym8 Agent/Rag~strar to the ragmered owner hereof on each interest payment date by check, dated
as of such interest payment date, drawn by the Paying Agent/Ragmrar 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 w~th the Pajong Agent/Registrar for such purpose as hereinafter
prowded, and such check shall be sent by the Paying AgentTRef0strar by Umted States moal, first-class
postage prep~ud, 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 of the 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
13
any other method acceptable to the Paling Agent/Registrar and requested by, and at the risk and
expense of; the registered owner hereof Any accrued interest due upon the redemption of th~s Bond
prior to maturity as proxaded herein shall be prod to the registered owner at the pnnclpal corporate
trust office of the Paying Agent/Registrar upon presentation and surrender of tins Bond for redemp-
tion and payment at the pnncipal corporate trust office oftbe PaHn8 Agent/Registrar The Issuer
covenants wath the registered owner of thas Bond that on or before each pnnclpal payment date,
interest payment date, and accrued interest payment date for tins Bond it wall make avmlable to the
Paling Agent/Registrar, from the "Interest and Slnlang Fund" created by the Bond Ordinance, the
amounts required to provide for the payment, m immediately available funds, of all pnncipal of and
interest on the Bonds, when due
lf THE DATE for the payment of the pnncipal of or interest on tbs Bond shall be a Saturday,
Sunday, a legal holiday, or a day on winch banlang institutions in the City where the Paling
Agent/Refilstrar Is located are authorized by law or executive order to close, then the date for such
payment shall be the next succeeding day whch is not such a Saturday, Sunday, legal holiday, or day
on wluch hanlang mstttut~ons are authorized to close, and payment on such date shall have the same
force and effect as if made on the ongtnal date payment was due
THIS BOND Is one of an issue of Bonds lmtially dated March 15, 1998, authorized in
accordance wath the Constitution and laws of the State of Texas in the pnncipal amount of
$7,175,000, for the purpose of prov~ding for improvements and extensions of the City of Denton
Utility System, winch consists of the City's Combined Waterworks, Sewer, and Electric Light and
Power System
ON DECElV~ER 1, 2008, or on any date whatsoever thereafter, the Bonds of this Series may
be redeemed pnor to their scheduled matunties, 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
porUon ora Bond may be redeemed only in an integral multiple of $5,000), at the redemption price
of the par or pnncipal amount thereof, plus accrued interest to the date fixed for redemption
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof
pnor to matunty a written notace of such redemption shall be pubhshed once in a financial publication,
journal, or reporter of general circulation among securities dealers m The City of New York, New
York (including, but not lumted to, The Bond Buyer and The Wall Street Journal), or m the State of
Texas (including, but not hnnted to, The Texas Bond Reporter) Such notice also shall be sent by
the Paying,Agent/Registrar by Umted States mall, first-class postage prepaid, not less than 30 days
pnor to the date fixed for any such redemptton, to the registered owner of each Bond to be redeemed
at ~ts address as it appeared on the 45th day pnor to such redemption date, proxaded, however, that
the failure to send, mml, or receive such notice, or any defect therein or in the sending or reading
thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any
Bond, and It is hereby spect/ically provided that the pubhcatlon o£ such notice as required above shall
be the only notace actually required in connection wath or as a prerequisite to the redemption of any
Bonds or portions thereof By the date fixed for any such redemption due prows~on shall be made
wath the Paying Agent/Registrar for the payment oftbe required redemption pnce for the Bonds or
portions thereofwbach are to be so redeemed, plus accrued interest thereon to the date fixed for
14
redemption If such written not~ce of redemptton is pubhshed and ~f due prowsion for such payment
is made, all as provided above, the Bonds or portions thereofwluch are to be so redeemed thereby
automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear
interest a_Rer the date fixed for redemption, and they shall not be regarded as being outstanding except
for the right of the registered owner to receive the redemption price plus accrued interest from the
Paying Agont/Registrar out of the funds proxqded for such payment ifa portion of any Bond shall
be redeemed a sub~tute Bond or Bonds haxqng the same maturity date, beanng interest at the same
rate, tn any denommatton or denormnations Lq any integral multiple of $5,000, at the written request
of the registered owner, and m aggregate pnnclpal 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 m the Registration Books of
the Issuer kept by the Paying Agent/Registrar acting m the capacity of registrar for the Bonds, upon
the terms and conditions set forth Lq the Bond Ordinance Among other requirements for such
assignment,and transfer, tlus Bond must be presented and surrendered to the Paying Agent/Registrar,
together voth proper instruments of assignment, m form and w~th guarantee of signatures satisfactory
to the Paying Agent/Registrar, ev~dencing assignment ofth~s Bond or any port~on or portions hereof
Lq any Lqtegral multiple of $5,000 to the assignee or assignees in whose name or names ttus Bond or
any such portion or portions hereof is or are to be transferred and registered The form of
Assignment pnnted or endorsed on tlus Bond shall be executed by the registered owner or its duly
authorized attorney or representative, to evtdence the assignment hereof A new Bond or Bonds
payable to such asstgnee or assignees (wluch then wdl be the new registered owner or owners of such
new Bond or Bonds), or to the previous registered owner ~n the case of the assignment and transfer
of only a portion of this Bond, may be delivered by the PayLqg Agent/Registrar m conversion of and
exchange for th~s Bond, all Lq the form and manner as prowded in the next paragraph bereof for the
conversion and exchange of other Bonds The Issuer shall pay the Paying Agent/Registrar's standard
or customary fees and charges for malong such transfer, but the one requesting such transfer shall pay
any taxes or other governmental charges required to be prod w~th respect thereto The Paying
Agent/Registrar shall not be required to make transfers of registration of tlus Bond or any portion
hereof(0 dunng the period commencing wtth the close of business on any Record Date and ending
with the opeLqng of busLqess on the next following pnnclpal or interest payment date, or, (ii) w~th
respect to any Bond or any port~on thereof called for redemption prior to maturity, wltlun 45 days
prior to its redemption date 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, lncludLqg
payment and &seharge of habihty upon tlus 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 lssuable solely as fully registered bonds, vnthout interest
coupons, In the denormnatlon of any Integral multiple of $5,000 As provided in the Bond
OrdLqance, th~s 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 pnnclpal
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 beanng interest
at the same rate, Lq any denomination or denonunat~ons m any integral multiple of $5,000 as requested
m writing by the appropnete registered owner, assignee, or assignees, as the case may be, upon sur-
render 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 Payang AgentfReg~strar'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 prod wath respect thereto as a condition precedent to the
exercise of such pnwlege of conversion and exchange The Paying AgentfReg~strar shall not be
reqtm'ed to make any such conversion and exchange (1) dunng the period commencing with the close
of business on any Record Date and ending voth the opemng of business on the next followang
principal or interest payment date, or, (n) wath respect to any Bond or portion thereof called for
redemption prior to maturity, w~tinn 45 days prior to its redemption date
1N 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 tinngs required or proper to be
performed, exist, and be done precedent to or m the authorization, issuance, and deliveny of tins Bond
have been performed, ex~sted, and been done In accordance with law, that tins Bond is a special
obhgat~on of the Issuer, secured by and payable, together with other bonds, from a first lien on and
pledge of the "Pledged Revenues", winch include lmt~ally the "Net Revenues of the System", as such
terms are defined in the Bond Ordinance, wath the System consisting of the City's entire combined
waterworks, sewer, and electric light and power system
THE ISSUER has reserved the r~ght, 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 w~th tins Bond and series of winch 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 wath the approval of the holders or owners of fii'~y-one
percent In principal amount of all outstanding bonds winch are secured by and payable from a first
hen 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 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 tins Bond, the registered owner thereby
acknowledges all of the terms and prowslons of the Bond Ordinance, agrees to be bound by such
terms and prowslons, acknowledges that the Bond Ordinance is duly recorded and available for
inspection in the official nunutes and records of the govermng body of the Issuer, and agrees that the
terms and provisions of this Bond and the Bond Ordinance constitute a contract between each
registered owner hereof and the Issuer
IN WITNESS WHEREOF, the Issuer has caused flus Bond to be signed vath the manual or
facs~mde slsnature of the Mayor of the Issuer and countersigned and attested w~th the manual or
facslrmle stgnature of the City Secretary of the Issuer, and has caused the official seal of the Issuer
to be duly impressed, or placed m facs~rmle, on flus Bond
ATTEST CITY OF DENTON, TEXAS
By By
Jenmfer Walters Jack lVhller
City Secretary, City of Denton, Texas Mayor, City of Denton, Texas
(CITY SEAL)
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It ~s hereby certified that th~s Bond has been issued under the prowsions of the Bond
Ordinance descnbed m tins Bond, and that fins Bond has been issued m conversion of and exchange
for or repl0~ment 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 Pubhc
Accounts of the State of Texas
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, DALLAS, TEXAS
Paying Agent/Registrar
Dated By.
Authorized Representative
(BOND INSURANCE LEGEND, IF ANY)
17
FORM OF ASSIGNMENT
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner ofttus Bond, or duly authorized
representative or attorney thereof, hereby assigns th~s Bond to
/ /
(Asslgnee's Soaal (pnnt or typewrite Asslgnee's name and
Security or Taxpayer address, including zip code)
Identification Number)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration oftbas Bond on the Paying Agent/Reg~strar's Registration Books
with full power of subst~tution ~n the prermses
Dated
Signature Guaranteed
NOTICE Signature(s) must be Registered Owner
guaranteed by an eligible guarantor NOTICE Ttus signature must correspond
institution participating in a with the name of the Registered Owner
securities transfer association appeanng on the face of tins Certificate in
recognized signature guarantee every particular w~thout alteration or
program enlargement or any change whatsoever
Section 8 DEFINITIONS As used in flus Ordinance the following terms shall have the
meamngs 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 govermng body of the City
(c) The term "Bonds" shall mean collectively the Imtial Bond as defined and described in
Sectton 2 ofttns Ordinance and all substitute bonds exchanged therefor, and all other substitute bonds
and replacement bonds, issued pursuant to and as provided in tins Ordinance
(d) The term "Panty Bonds" shall mean collectively (0 the outstanding City of Denton Utdity
System Revenue Refunding Bonds, Series 1987, anthonzed by ordinance passed on January 27, 1987
(the "Sanes 1987 Bonds"), (n) the outstanding C~ty of Denton Utility System Revenue Bonds, Series
1988, anthonzed by ordinance passed on August 2, 1988 (the "Series 1988 Bonds"), (m) the
18
outstanding City of Denton Utility System Revenue Bonds, Series 1989, authorized by ordinance
passed on October 24, 1989 (the "Series 1989 Bonds"), 0v) the outstanding City of Denton Utthty
System Revenue Bonds, Series 1992, authorized by ordinance passed on March 3, 1992 (the "Series
1992 Bonds"), (v) the outstanding City of Denton Utility System Revenue Bonds, Series 1993,
authorized by ordinance passed on March 16, 1993 (the "Series 1993 Bonds"), (xa) the outstanchng
City of Denton Utility System Revenue Refunding Bonds, Series 1993-A, authorized by ordinance
passed on June 8, 1993 (the "Sanes 1993-A Bond"), (w0 the outstanding City of Denton Utility
System Revenue Refunding Bonds, Taxable Series 1993-B, authorized by ordinance passed on June
8, 1993 (the "Sanes 1993-B Bonds"), (wn) the outstanding City of Denton Utility System Revenue
Bonds, Series 1996, authorized by an ordinance passed on May 7, 1996, 0x) the outstanding City of
Denton Utthty System Revenue Refunding Bonds, Series 1996~A, authorized by an ordinance passed
on May 7, 1996 and (x) the Bonds
(e) The term "Addmonal Bonds" shall mean the additional panty revenue bonds wluch the
City reserves the right to Issue in the future, m accordance w~th Section 25 of this Ordinance
(f) The term "Systenl" shall mean (1) the City's entire eyastlng waterworks and sewer system
and the City's entire emstmg electric light and power system, together with all future extensions,
Improvements, enlargements, and additions thereto, and all replacements thereof, and (2) any other
related facthties, all or any part of the revenues or income from w}uch do, m the future, at the option
of the City, and m accordance w~th law, become "Pledged Revenues" as hereinafter defined, provided
that, notwithstanding the foregoing, and to the extent now or hereafter authorized or pemutted by
law, the term System shall not mean any water, sewer, electric, or other facilities of any kind wluch
are declared not to be a part of the System, and wluch are acquired or constructed by the City with
the proceeds from the issuance of "Special Facilities Bonds", wluch are hereby defined as being
special revenue obligations of the City wluch are not payable from or secured by any Pledged
Revenues, but wiuch are secured by and payable from liens on and pledges of any other revenues,
sources, or payments, including, but not hrmted to, special contract revenues or payments received
~om any other legal ennty m connecaon vath such faclhues, and such revenues, sources, or payments
shall not be considered as or constitute Gross Revenues of the System, unless and to the extent other-
wise provided m the ordinance or ordinances authorizing the issuance of such "Special Facllmes
Bonds"
(g) The terms "Gross Revenues of the System" and "Gross Revenues" shall mean all revenues
and raceme 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 m any Fund created
by ttus Ordinance
(h) The terms "Net Revenues of the System", and "Net Revenues" shall mean all Gross
Revenues at~er deducting therefi'om an amount equal to the current expenses of operation and mainte-
nance of the System, including all salanes, labor, materials, repairs, and extensions necessary to
render efficient serwce, proxnded, however, that only such repairs and extensions, as in the judgment
of the City Council, reasonably and fmrly exercised by the adoption of appropriate resolutions, are
necessary to keep the System m operation and render adequate service to smd City and the inhabitants
thereof, or such as nught be necessary to meet some physical accident or condition which would
othervnse tmpmr the Bonds or Additional Bonds, shall be deducted in deterrmnlng "Net Revenues"
19
Payments reqtured to be made by the City for water supply or water fac~htles, sewer senaces or sewer
faclht~es, fuel supply, and for the purchase of electric power, wluch payments under law constitute
operation and mmntenance expenses of any part of the System, shall constitute and be regarded as
expenses of operation and mmntenance of the System under th~s Ordinance Depreciation and
amortization shall not constitute or be regarded as expenses of operation and mmntenance of the
System
(0 The term "Pledsed Revenues" shall mean
(l) the Net Revenues, plus
(2) any additional revenues, income, or other resources wluch are expected to be
avadable to the C~ty on a regular periodic basis, including, vathout hmnatlon, any grants,
donations, or income received or to be received from the Umted States Government, or any
other pubhc or private source, whether pursuant to an agreement or othervase, wtuch in the
future may, at the option of the City, be pledged to the payment of the Panty Bonds or
Additional Bonds
(I) The term "year" or "fiscal year" shall mean the fiscal year used by the C~ty m connection
v~th the operation of the System
(k) The term "Government Obhgat~ons" shall mean direct obhgat~ons of the Umted States
of America, including obhgat~ons the principal of and interest on wl~ch are unconditionally
guaranteed by the Umted States of America, which may be Umted States Treasury obhgatlons such
as ~ts State and Local Government Series, and which may be m book-entry form
Section 9 PLEDGE (a) The Bonds are "Additional Bonds" as pernutted by Sections 24
and 25 of the ordinance passed on March 10, 1983, anthonzmg the C~ty of Denton Revenue
Refunding Bonds, Series 1983 (the "Series 1983 Bonds"), and it ~s hereby detenmned, declared, and
resolved that all of the Panty Bonds (mcludmg the Bonds) are secured and payable equally and
ratably on a panty, and that Sectmns 8 through 28, of this Ordinance are supplemental to and
cumulative of Sections 7 through 27 of the aforesaid ordinance passed on March 10, 1983, w~th
Sections 8 through 28 oftbas 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~he Pledged Revenues, and the Pledged Revenues are further pledged to the estabhshraent
and maintenance of the Funds created by th~s Ordinance, and any Funds created by any ordinance
authorizing the ~ssuance 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
n~xed properties const~tutmg the System
Section l0 SYSTEM FUND There heretofore has been and as hereby created and there
shall be estabhshed and mmntmned on the books of the Cmty, and accounted for separate and apart
from all other funds of the City, a special fund to be entitled the "City of Denton Utlhty System Fund"
(the "System Fund") All Gross Revenues shall be credited to the System Fund immediately upon
90
receipt, unless othervase proxaded 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 makJng any deposits hereinafter required to be made from the
System Fund, the City shall retain in the System Fund at all times an amount at least equal to one-
sixth of the amount budgeted for the then current fiscal year for the current operation and
maintenance expenses of the System
Section 11 INTEREST AND SINKING FUND For the sole purpose of paying the
pnnclpal of and interest on all Panty Bonds and Additional Bonds, there heretofore has been and is
hereby created and there shall be estabhshed and maintained on the books of the City, and accounted
for separate and apart from all other funds of the City, a separate fund to be entitled the "City of
Denton Utility System Revenue Bonds Interest and Sinking Fund" (the "Interest and Sinking Fund")
Section 12 RESERVE FLrND There heretofore has been, and Is hereby, created, and there
shall be established and maintained at Chase Bank of Texas, National Association, and hereafter, at
the option of the City, established and maintained at any time at any national bank hawng a capital
and surplus in excess of $25,000,000, a separate fund to be entitled the "City of Denton Utility
System Bonds and Adchtlonal Bonds Reserve Fund" (the "Reserve Fund") The Reserve Fund shall
be used to pay the pnnc~pal of and interest on any Panty Bonds or Additional Bonds when and to the
extent the amounts in the Interest and Stoking Fmld available for such payment are insufficient for
such purpose, and may be used for the purpose of finally retinng 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 of the System for which System funds are not otherwise avail-
able, 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
extraordmmy 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 w~th the delivery of the Series 1983 Bonds to
the mmal 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
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Section 15 DEPOSITS OF PLEDGED REVENUES Pledged Revenues shall be credited
to or deposited m the Interest and Smkang Fund, the Reserve Fund, the Extension and Improvement
Fund, and other funds when and as required by tbas Ordinance and any ordinance authorizing the
issuance of Additional Bonds
Section 16 INVESTMENTS Money m any Fund established pursuant to flus Ordinance
or any ordinance authonzang the ~ssuance of Additional Bonds, may, at the option of the C~ty, be
placed m time deposits or certificates of deposit secured by obligations of the type hereinafter
desenbed, or be invested m Government Obhgatmns (as defined m Section 8 hereof) or obligations
guaranteed or insured by the Umted States of America, which, m the op~mon of the Attorney General
of the Umted States, are backed by its full faith and credit or represent its general obligations, or
invested m obhgat~ons of mstrumentaht~es of the Umted States of America, including, but not hnuted
to, evidences of indebtedness issued, insured, or guaranteed by such governmental agencies as the
Federal Land Banks, Federal Intermediate Credit Banks, Banks for Cooperataves, Federal Home Loan
Banks, Government National Mortgage Association, Umted States Postal Service, Farmers Home
Adnumstration, Federal Home Loan Mortgage Association, Small Business Adnumstration, Federal
Housing Assoemtmn, or PamcipaUon Cemficates m the Federal Assets Financing Trust, provided that
all such deposits and investments shall be made an such manner as wall, m the oplmon of the City,
perunt the money required to be expended from any Fund to be avmlable at the proper time or times
as expected to be needed Such investments (excepl Umted States Treasury Obhgatlons--State and
Local Government Series investments held m book entry form, which shall at all times be valued at
cost) shall be valued m terms of current market value as of the last day of each fiscal year Unless
otherwise set forth herein, all interest and income derived from such deposits and investments
immediately shall be credited to, and any losses debited to, the Fund from which the deposit or
investment was made, and surpluses m any Fund shall or may be disposed of as hereinafter provided
Such investments shall be sold promptly when necessary to prevent any default in connection wath
the Panty Bonds or AdchUonal Bonds consistent wath the ordinances, respectively, authorizing their
issuance
Section 17 FUNDS SECURED That money In all Funds created by flus Ordinance, to the
extent not invested, shall be secured In the manner prescribed by law
Section 18 PRIORITY OF DEPOSITS AND PAYM~WFS FROM SYSTEM FUND That
the City shall make the deposits and payments from Pledged Revenues in the System Fund when and
as reqmred by flus Orchnance and any ordinance authonzmg any Additional Bonds, and such deposits
shall be made in the followang manner and wath the following irrevocable priorities, respectively
First, to the Interest and Smlong Fund, when and ~n the amounts reqmred by flus
Ordinance and any ordinance authorizing any Additional Bonds,
Second, to the Reserve Fund, when and m the amounts required by th~s Ordinance and
any ordinance authorizing any Additional Bonds, and
Third, to the E~ension and Improvement Fund, when and as required by Section 21
of tbas Ordinance
22
Sectton 19 INTEREST AND SINKING FUND REQUIREMENTS The City shall cause
to be deposited to the credit of the Interest and Stoking Fund the accrued interest and any prermum
received fi'om the sale of the Imual Bond, and on or before the 25th day of each month, the City shall
cause to be deposited to the creaht of the Interest and Smkntg Fund, m approyamately equal monthly
payments, amounts sufficient, together w~th any other funds on hand therein, to pay all of the interest
or pnncipal and interest cormng due, including the pnncipal amount of any Panty Bonds required to
be redeented prior to maturity pursuant to any mandatory redemption reqmrements, on the Panty
Bonds and any Additional Bonds on the next succeeding interest payment date Any moneys so
deposited m the Interest and Smlang Fund with respect to a mandatory redemption requirement,
together vath other lawfully avadable 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 pnncipal amount thereof
plus accrued merest thereon to the date of purchase, Panty Bonds wbach 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 ~s now on hand m the Reserve
Fund an amount of money and Government Obligations whtch is m excess of $3,000,000 and wtuch
~s at least equal to the average annual pnnclpal and interest requirements of the outstanding Series
1987 Bonds, the Series 1988 Bonds, the Series 1989 Bonds, the Series 1992 Bonds, the Series 1993
Bonds, the Series 1993-A Bonds, the Taxable Series 1993-B Bonds, the Series 1996 Bonds and the
Series 1996-ABonds (the current "Requn'ed Reserve Amount") Follovang the issuance and delivery
of the Imt~al Bonds the Reqmred Reserve Amount shall become and be an amount of money and
investments equal to the average annual pnnclpal and interest requirements of all the outstanding
Panty Bonds and Additional Bonds, proxaded further, however, that the Required Reserve Amount
shall never be less than $3,000,000 if the maxamum annual pnnclpal and ~nterest reqmrements on all
outstanding Panty Bonds and Addmonal Bonds exceeds $3,000,000 Immediately after the issuance
and dehvery of the Imtlal Bond there shall be deposited to the credit of the Reserve Fund, from the
proceeds of the sale of the Imtial Bond, money sufficient to cause the Reserve Fund to cont~un au
aggregate amount of money and investments equal to the Required Reserve Amount for all then out-
standing Parity Bonds After the delivery of any future Additional Bonds the City shall cause the
Reserve Fund to be increased, ~f and to the extent necessary, so that such Fund will contmn an
amount of money and investments equal to the Required Reserve Amount Any increase m the
Required Reserve Amount may be funded from Pledged Revenues, or from proceeds from the sale
of any Addmonal Bonds, or any other avadable source or combination of sources All or any part
of the Required Reserve Amount not funded imtially and immediately aher the delivery of any
Installment or Issue of Addmonal Bonds shall be funded, w~thm not more than five years fi'om the date
of such debvery, by deposits of Pledged Revenues m approramataly equal monthly installments on
or before the 25th day of each month Pnnc~pal amounts of the Panty Bonds and any Additional
Bonds wtuch must be redeemed pursuant to any apphcable mandatory redemption requirements shall
be deemed to be matunng amounts of pnnclpal for the purpose of calculating pnncipal and interest
requtrements on such bonds When and so long as the amount m the Reserve Fund Is not less than
the Reqmred Reserve Amount no deposits shall be made to the credit of the Reserve Fund, but when
and ffthe Reserve Fund at any t~me cont~uns less than the Required Reserve Amount, then the City
shall transfer from Pledged Revenues m the System Fund, and deposit to the credit of the Reserve
Fund, monthly on or before the 25th day of each month, a sum equal to 1/60th of the Required
Reserve Amount, until the Reserve Fund ~s restored to the Reqmred Reserve Amount The City
23
specifically covenants that when and so long as the Reserve Fund contains the Required Reserve
Amount, the City shall muse all amounts m excess of the Required Reserve Amount to be deposited
to the credit of the Interest and Slnkang Fund
Section 21 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS Dunng each
year, subJeCt and subordinate to making the reqmred deposits to the cretin of the Interest and Smhng
Fund and the Reserve Fund, the City shall be required to deposit to the credit of the Extension and
Improvement Fund, from Pledged Revenues m the System Fund, an amount equal to 8% of the
"AdJusted Gross Revenues of the System", which term is hereby defined to mean the following
the Gross Revenues of the System for such year after deducting from such Gross
Revenues an amount equal to the current expenses of operation and maintenance of
the System for such year which are directly attributable to 0) all fuel costs related to
the produCtion ofeleetnc energy by the City end/or (n) the purchase of electric energy
by the City
Additional excess Pledged Revenues may, at the option of the City Council, be deposited to the credit
of the Improvement Fund as permitted by Section 22 (b) hereof, but no such additional deposit Is
required All investment interest income from the Extension and Improvement Fund shall be retained
in and remain a part of such Fund
Section 22 DEFICIENCIES, EXCESS PLEDGED REVENUES (a) If on any occasion
there shall not be sufficient Pledged Revenues to make the required deposits into the Interest and
Stoking Fund or the Reserve Fund, such deficiency shall be made up as soon as possible fi.om 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 Ordmance or any ordinance authonzmg the issuance of Additional Bonds, any surplus
Pledged Revenues may be used by the C~ty for any lawful purpose
SecUon 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS On or before
June 1, 1998, and semiannually on or before each June 1 and December 1 thereafter while any of the
Parity Bonds or Additional Bonds are outstanding and unpaid the City shall make available to the
Paying Agents therefor, out of the Interest and Smlang Fund, or if necessary, out of the Reserve
Fund, money sufficient to pay, on each of such dates, the principal of and interest on the Panty Bonds
and Addit~onal 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 dehver paid Panty Bonds and Additional
Bonds, and any interest coupons appertaining thereto, to the City or destroy all paid Panty Bonds and
Additional Bonds, and any coupons appertaimng thereto, and furmsh the City with an appropriate
certificate of cancellation or destruction
Secuon 24 FINAL DEPOSITS (a) Any Panty Bond or Additional Bond shall be deemed
to be paid, retired, and no longer outstanding within the meamng of this Ordinance when payment
of the pnnclpal of, redemption premium, fi`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,
24
or otherwise) etther 0) shall have been made or caused to be made tn accordance v~th the terms
thereof (including the ~vmg of any reqmred nottce of redemption or prowslon for the proper 81wng
of such not,ce having been made), or 0t) shall have been proxaded by trrevocably depos~tmg w~th or
malang avmlable to a Paying Agent therefor, m trust and trrevocably set astde exclusively for such
payment, (1) money suffictent to make such payment or (2) Government Obhgatlons wlach mature
as to pnnclpal and interest m such amounts and at such ttmes as will insure the avaflabfltty, without
remvestment, of suttlctent money to make such payment, and all necessary and proper fees,
compensation, and expenses of such Paying Asent pertmmng to the Panty Bonds and Addtttonal
Bonds with respect to wlach such deposit ts made shall have been pa~d or the payment thereof
prowded for to the sattsfactton of such paying agent At such time as a Bond or Additional Bond
shall be deemed to be pa~d hereunder, as aforesaid, tt shall no longer be secured by or entttled to the
benefits of tlas Ordinance or a hen on and pledge of the Pledged Revenues, and shall be entitled to
payment solely from such money or Government Obligations
(b) Any moneys so depostted wath a paying agent may at the dtrectlon of the City also be
invested m Government Obhgattons, matunng m the amounts and ttmes as hereinbefore set forth, and
all income from all Government Obhgauons m the hands of the paying agent pursuant to tlas Sectton
which ts not reqmred for the payment of the Panty Bonds and Addtttonal Bonds, the redemption
prenuum, if eny, and interest thereon, w~th respect to wlach such money has been so depostted, shall
be turned over to the Ctty or deposned as directed, by the City
Sectton 25 ADDITIONAL BONDS (a) The City shall have the right and power at any
ttme and from time to ttme, and m one or more senes or issues, to authorize, tssue, and dehver
addmonal panty revenue bonds (herein called "Addlttonal Bonds"), m accordance wath law, tn any
amounts, for any lawful purpose, including the refunding of any Panty Bonds or Addtt~onal Bonds,
or other obhgattons Such Addtttonal Bonds, if and when authorized, tssued, and delivered tn
accordance v~th flus Ordinance, shall be payable from and secured by an irrevocable first hen on and
pledge of the Pledged Revenues, equally and ratably on a panty m all respects with the Panty Bonds
and any other outstanding Addttional Bonds
(b) The principal of all Addtttonal Bonds must be scheduled to be pa~d or mature on
December 1 of the years tn wluch such pnnclpal is scheduled to be pard or mature
Section 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS Addtuonal
Bonds shall be tssued only tn accordance w~th flus Ordinance, and no installment, Senes, or issue of
Additional Bonds shall be issued or dehvered unless
(a) The Mayor of the City and the Ctty Secretary sign a written cemficate to the effect that
the Ctty is not tn default as to any covenant, condttlon, or obligation tn connecuon vath all then
outstandm8 Panty Bonds and Addttlonal Bonds, and the ordinances authorizing same, and that the
Interest and Smlong Fund and the Reserve Fund each contains the amount then requtred to be thereto
(b) An independent certtfied pubhc accountant, or mdepandent firm of cemfied pubhc
accountants, acting by and through a certtfled public accountant, stgns a written certificate to the
effect that, m las or ~ts opanon, during elthar the next precedm8 fiscal year, or any twelve consecutive
calendar month period out of the 18-month period tmmedlately preceding the month tn whtch the
25
ordinance authorizing the issuance of the then proposed Additional Bonds IS passed, the Pledged
Revenues were at least (0 125 t~mes an amount equal to the average annual pnnclpal and interest
reqmrements, and (n) 1 10 times an amount equal to the pnnc~pal and interest reqmrements dunng
the fiscal year during winch such requirements are scheduled to be the greatest, of all Panty Bonds
and Add~tmnal Bonds winch are scheduled to be outstanding after the dehvery of the then proposed
Additional Bonds It is specifically provtded, however, that m calculating the amount of Pledged
Revenues for the purposes of tins subsectton (b), ffthere has been any increase m the rates or charges
for services of the System winch Is then m effect, but winch was not m effect dunng all or any part
of the entire period for winch the Pledged Revenues are being calculated (hereinafter referred to as
the "enttre period") then the cemfied pubhc accountant, or in heu of the certified public accountant
a firm of consulting engineers, shall deterrmne and certl~ the amount of Pledged Revenues as being
the total of (0 the actual Pledged Revenues for the entire period, plus (n) a sum equal to the
aggregate amount by winch the actual bdhngs to customers of the System dunng the entire period
would have been increased if such increased rates or charges had been m effect dunng the enure
period
(c) Prowslon shall be made m the 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 pnncipal and interest reqmrements of any bonds
made in connection w~th the issuance of any then proposed Additional Bonds shall be made as of the
date of such Additional Bonds, and also m makmg calculations for such purpose, and for any other
purpose under tins Ordinance, pnnclpal amounts of any bonds winch must be redeemed prior to
matumy pursuant to any applicable mandatory redemption requirements shall be deemed to be
matunng amounts of principal of such bonds
Section 27 GENERAL COVENANTS The City further covenants and agrees that in
accordance w~th and to the extent required or perrmtted by law
(a) Performance It wdl faithfully perform at all times any and all covenants, undertakungs,
supulat~ons, and prowsions contained m this Ordinance, and each ordinance authorizing the issuance
of Addmonal Bonds, and m each and every Panty Bond and Additional Bond, that it will promptly
pay or cause to be prod the pnncipal of and interest on every Panty Bond and Addmonal Bond, on
the dates and m the places and manner prescribed in such ordinances and Panty Bonds or Addmonal
Bonds, and that it will, at the times and m the manner prescribed, deposit or cause to be deposited
the amounts reqmred to be deposited into the Interest and Smkmg Fund and the Reserve Fund, and
any holder of the Panty Bonds or Addit~onal Bonds may reqmre the City, ~ts officials, and employees,
to carry out, respect, or enforce the covenants and obligations of tins Ordinance, or any ordinance
anthormn8 the issuance of Addmonal Bonds, by all legal and eqmtable means, including specifically,
but without hrmtation, the use and filing of mandamus proceedings, m any court of competent
lunsd~ctlon, against the City, ~ts officials, and employees
(b) Cl _ty's Legal Authority The City is a duly created and emstmg home rule c~ty 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 ~ssuance of the smd
obhgat~ons has been or wdl be duly and effectively taken, and that sa~d obhgations m the hands of the
26
holders and owners thereof are and will be valid and enforceable special obligations of the City in
accordance with their terms
(c) Title The City has or will obtmn lawful title to the lands, buildings, structures, and
fac~ties con~tutmg the System, that it warrants that it will defend the title to all the aforesaid lands,
buildings, structures, and facihties, and every part thereof, for the benefit of the holders and owners
of the Parity Bonds and Additional Bonds, agmnst the claims and demands of all persons whomso-
ever, 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) Liens 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 imposed
upon it, or the System, that it will pay all lawful claims for rents, royalties, labor, materials, and
supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be
prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be
fully preserved In the manner provided herein, and that it will not create or suffer to be created any
mecharac's, laborer*s, matenalman's, or other hen or charge which might or could be pr~or 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 ora mecharnc's, laborer's, materialman's, or other lien or charge, shall be required
to be paid so long as the validity of the same shall be contested in good faith by the City
(e), Operation of System. No Free Serwce 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 worlong order, all at reasonable cost No free
serwce of the System shall be allowed, and should the City or any of its agencies, instrumentalities,
lessors, or concessionaires make use of the services and facilities of the System, payment monthly of
the standard retail price of the services provided shall be made by the City or any of its agencies,
mstrumantallties, lessors, or concessionmres out of funds from sources other than the revenues of the
System, un]ess made from surplus Pledged Revenues as pernutted 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
junior and subordinate in all respects to the liens, pledges, covenants, and agreements of this
Ordinance and any ordinance authorizing the issuance of Additional Bonds, but the right of the City
to issue revenue bonds payable from a subordinate lien on surplus Pledged Revenues is specifically
recogmzed and retained, as permitted under Section 22(b) hereof)
(g) Sale or Disposal of Property While 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 other~wse 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
27
(h) Insurance (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 compames, agmnst risks, accidents, or casualties agmnst wtuch and to the extent insurance is
usually carned by corporations operatmg hke properties, including, to the extent reasonably
obtmnable, fire and extended coverage ~nsurance, ~nsurance agmnst damage by floods, and use and
occupancy insurance Public habdlty and property damage insurance also shall be carned unless the
Cmty Attorney ~ves a wnttan op~mon to the effect that the C~ty is not liable for claims wluch would
be protected by such insurance AIl insurance pren~ums shall be pasd as an expense of operation of
the System At any tune wlale any contractor engaged m construction work shall be fully responsible
therefor, the City shall not be required to carry insurance on the work being constructed if the
contractor is required to carry appropriate insurance All such policies shall be open to the inspection
ofthe Bondholders and their representanves at all reasonable times Upon the happemng of any loss
or damage covered by insurance fi.om one or more of smd causes, the City shall make due proof of
loss and shall do all tlungs necessary or desirable to cause the insunng compames to make payment
m full &re~ly to the City The proceeds of insurance covenng such property, together w~th any other
funds necessary and avmlable for such purpose, shall be used forthvath by the C~ty for repmnng the
property damaged or replacing the property destroyed, prowded, however, that If smd insurance
proceeds and other funds are insufficient for such purpose, then smd insurance proceeds pertmmng
to the System shall be deposited m 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 tune
as other funds become avmlable wluch, together with the Insurance Account, will be sufficient to
make the repairs or replacements originally requxred
(2) The annual audit hereinaf~er reqmred may contain a section commenting on whether or
not the City has comphed vath the requirements ofttus Section w~th respect to the mmntenance of
insurance, and shall state whether or not all insurance prenuums upon the insurance policies to wtuch
reference Is made have been prod
(0 Annual Bud_~et and Rate Covenant The City shall prepare, pnor to the beginmng of each
fiscal year, an annual budget, m accordance vath law, reflecting an estimate of cash receipts and
chsbursemeots for the ensuing fiscal year m sufficient detail to indicate the probable Gross Revenues
and Pledged Revenues for such fiscal year The City shall fix, establish, mmntsan, and collect, such
rates, charges, and fees for the use and avmlabdity of the System at all times as are necessary (1) to
produce Gross Revenues sufficient, together with any other Pledged Revenues, to pay all current
operation and mmntenance expenses of the System, and (2) to produce an amount of Pledged
Revenues dunng each fiscal year at least equal to the greater of 1 25 times the average annual
pnncipal and interest requtrements of all then outstanding Panty Bonds and Additional Bonds or 1 25
times the succeeding fiscal year's pnncipal and interest requirements of all then outstanding Panty
Bonds and Add~tional Bonds
(I) Records The C~ty shall keep proper books of record and account m wluch full, true,
proper, and correct entries w~ll be made of all dealings, activities, and transactions relating to the
System, the Pledged Revenues, and the Funds created pursuant to tlus Ordinance, and all books,
documents, and vouchers relating thereto shall at all reasonable tunes be made available for inspection
upon request ofany Bondholder or citizen of the City To the extent consistent vath the prov~smns
of this Ordinance, the City shall keep its books and records m a manner confomung to standard
28
accounting practices as usually would be followed by private corporations owmng and operating a
sumlar System, wath appropriate recogumon being g~ven to essential differences between mumc~pal
and corporate aeeounUng practices
(k) Auchts After the close of each fiscal year while any of the Panty Bonds or any Additional
Bonds are outstanding, an aucht 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
eemfied pubhc accountants As soon as praetmable after the close of each such year, and when smd
aucht has been completed and made avadable to the City, a copy of such audit for the preceding year
shall be totaled to the Mumcipal Advisory Council of Texas, to each paying agent for any bonds
payable fi.om Pledged Revenues, and to any Bondholders who shall so request m writing The annual
audit reports shall be open to the inspection of the Bondholders and their agents and representatives
at all reasonable t~mes
(1) Governmental Agencies It will comply wath all of the terms and cond~tions of any and
all francinses, pernuts, and authonzetmns applicable to or necessary wath respect to the System, and
winch have been obtained from any governmental agency, and the City has or wall obtain and keep
m full force and effect all francinses, perrmts, anthonzatlon, and other requirements applicable to or
necessat3, wath respect to the aeqmsluon, constmcuon, equipment, operation, and mmntenance of the
System
(m) No Competition It will not operate, or grant any fi.aneinse or, to the extent it legally
may, permit the acquisition, construction, or operation of, any fatalities winch would be m
competition wath the System, and to the extent that ~t legally may, the C~ty will proinblt any such
competing facilities
(n) No Arbitrage The City covenants to and wath the purchasers of the Panty Bonds and
any Additional Bonds that no use will be made of the proceeds of any of such bonds at any ume
throughout the term of any of such bonds winch, 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 watl~n the meamng of Section 148 of the Internal Revenue
Code of 1986, as mended (the "Code"), or any regulations or rulings pertalmng thereto, and by tins
covenant the City is obligated to comply wath the requirements of the aforesmd Code and all
apphcable and pertinent Department of the Treasury regulations relating to arbitrage bonds The City
further covenants that the proceeds of all such bonds wall not otherwase be used directly or indirectly
so as to cause all or any part of such bonds to be or become arbitrage bonds watinn the meamng of
the aforas~ud Code, or any regulations perta~mng thereto
Semen 28 AMENDMENT OF ORDINANCE (a) The holders or owners of Panty Bonds
and Adchuonal Bonds aggregating m pnncipal mount 51% of the aggregate pnncipal amount of then
outstanding Panty Bonds and Additional Bonds shall have the right fi.om time to time to approve any
amendment to tbas Ordinance windh may be deemed necessary or desirable by the City, proxaded,
however, that nothing hereto contsaned shall perrmt or be construed to permat the amendment of the
terms and conditions in tins Ordinance or in the Panty Bonds or Additional Bonds so as to
(I) Make any change m the maturity of the outstanding Panty Bonds or Adchtlonal Bonds,
29
(2) Reduce the rate of interest bome by any of the outstanding Panty Bonds or Additional
Bonds,
(3) Reduce the mount of the prmclpal payable on the outstanding Panty Bonds or
Additional Bonds,
(4) Modify the terms of payment of prmclpal of or interest on the outstanding Panty
Bonds or Additional Bonds, or impose any conditions vath 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 unmmum percentage of the pnncipal 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 tins Section, the City
shall cause hOrace of the proposed amendment to be published in a financial publication of general
circulation in The City of New York, New York, once durmg each calendar week for at least two
successive calendar weeks Such notice shall briefly set forth the nature of the proposed amendment
and shall state that a copy thereof is on file at the pnncipal office of the Paying Agents for inspection
by all holders or owners of Panty Bonds and Additional Bonds Such publication is not required,
however, ffnot~ce m wntmg is g~ven to each holder or owner of Panty Bonds and Additional Bonds
(c) Whenever at any tune not less than tinrty days, and watinn one year, from the date of the
first pubhcatlon of said notice or other service of written notice the City shall receive an instrument
or instruments executed by the holders or owners of at least 51% in aggregate pnncipal amount of all
Panty Bonds and Additional Bonds then outstanding, winch instrument or instruments shall refer to
the proposed amendment described m smd notace and winch specifically consent to and approve such
amendment m substantially the form of the copy thereof on file w~th 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 prowslons of tins Section,
tbs Ordinance shall be deemed to be amended in accordance with such amendatory ordinance, and
the respective rights, duties, and obligations under tins Ordinance of the City, and all the holders or
owners of then outstanding Panty Bonds and Additional Bonds and all future Panty Bonds and
Additional Bonds shall thereat~er be detemuned, exercised, and enforced hereunder, subject in all
respects to such amendments
(e) Any consent g~ven by the holder or owner of a Panty Bond or Addmonal Bond pursuant
to the provisions of tbas Section shall be irrevocable for a period of six months from the date of the
first pubhcation of the notice provided for in tins Section, and shall be conclusive and binding upon
all future holders or owners of the same Panty Bond or Addmonal Bond dunng such period Such
consent may be revoked at any time after six months from the date of the first publication of such
notice by the holder or owner who gave such consent, or by a successor in title, by filing notice
thereofw~th the paling agents and the City, but such revocation shall not be effective if the holders
or owners of 51% m aggregate punopal amount of the then outstanding Panty Bonds and Additional
3O
Bonds as m fins SecUon defined have, prior to the attempted revocation, consented to, and approved
the amendment
(f) For the purpose ofthss Sectton, the fact of the holding of Panty Bonds or Additional
Bonds wtuch are m bearer, coupon form, by any bondholder and the amoum and numbers of such
bearer Panty Bonds or Addmonal Bonds and the date of their holding same, may be proved by the
affldaxat of the person clmrmng to be such holder or owner, or by a cemficate executed by any trust
company, bank, banker, or any other dopomory wherever s~tuated showing that at the date thereto
mentioned such person had on deposit vath such trust company, bank, banker, or other deposxtory,
the Parity Bonds and Additional Bonds described m such certificate The City may conclusively
assume that such ownersbap continues until written notxce to the contrary is served upon the City
The ownership of all registered Panty Bonds and Addit~onal Bonds shall be detemuned from the
reglstrataon books kept by the registrar therefor
Section 29 DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS
(a) R~lacement Bonds In the event any outstanding Bond is damaged, mutilated, lost, stolen, or
destroyed, the Paying Agent/Reslstrar shall cause to be pnnted, executed, and delivered, a new bond
of the same pnncipal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or
destroyed Bond, m replacement for such Bond m the manner heremai~er proxaded
(b) Apphcatlon for Replacement Bonds Apphcatlon 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 ora Bond, the registered owner applHng
for a replacement bond shall furmsh to the Issuer and to the Paying AgenffReglstrar such security or
mdemmty as may be required by them to save each of them harmless from any loss or damage with
respect thereto Also, m every case of loss, thefi, or destructxon of a Bond, the registered owner shall
furmsh to the Issuer and to the Paying Agant/Reg~strar ewdence to their satisfaction of the loss, the~,
or destruction of such Bond, as the case may be In every case of damage or mutdatlon of a Bond,
the registered owner shall surrender to the Paying AgentJReglstrar for cancellation the Bond so
damaged or mutilated
(c) No Default Occurred Notwithstanding the foregoing provisions oftl~s Section, m the
event any such Bond shall have matured, and no default has occurred wluch ~s then continuing m the
payment of the pnnclpal of, redemption prermum, 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
muulated Bond) instead of issuing a replacement Bond, provided security or mdemmty ~s furmshed
as above proxaded mttus Section
(d) Charge for Issuing Replacement Bonds Prior to the ~ssuance of any replacement bond,
the Paying Agent/ReSlstrar shall charge the registered owner of such Bond with all legal, pnntmg,
and other expenses m connection therevath Every replacement bond ~ssued pursuant to the
provisions of th~s Section by xartue of the fact that any Bond is lost, stolen, or destroyed shall
constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond
shall be found at any trine, or be enforceable by anyone, and shall be entitled to all the benefits oftlus
Ordinance equally and proporuonately w~th any and all other Bonds duly ~ssued under ttus Ordmance
31
(e) Authority for Issuing Replacement Bonds In accordance w~th Sectxon 6 of Vemon's
Ann Tex Clv St Art 717k-6, tlus Section of this Ordinance shall constitute authority for the
issuance of any such replacement bond w~thout necessity of further actton by the govermng body of
the Issuer or any other body or person, and the duty of the replacemem of such bonds is hereby
authorized and imposed upon the Paying AgenffRegtstrar, and the Paying AgenffReglstrar shall
authentmate and deliver such Bonds in the form and manner and w~th the effect, as proxaded m
Sectmn 6(d) of tins Ordinance for Bonds issued m conversion and exchange for other Bonds
Section 30 COVENANTS REGARDING TAX-EXEMPTION The Issuer covenants to
refnun from any actton wluch would adversely affect, and to take such actmn to ensure, the treatment
of the Bonds as obhgations described in section 103 of the Code, the interest on wtuch is not
includable m the "gross income" of the holder for purposes of federal income taxation In furtherance
thereof, the Issuer covenants as follows
(a) to take any action to assure that no more than 10 percent of the proceeds of
the Bonds (less mounts deposited to a reserve fund, ffany) are used for any "private business
use", as defined m secuon 141(b)(6) of the Code or, if more than 10 percent of the proceeds
are so used, that amounts, whether or not rec~ved by the Issuer, wath respect to such private
business use, do not, under the terms of flus Ordinance or any underlying arrangement,
dtrectly or mdtrectly, secure or pm,nde for the payment of more than 10 percent of the debt
serwce on the Bonds, m 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 m subsectmn (a) hereof exceeds 5 percent of the proceeds of the Bonds (less
amounts deposited into a reserve fund, ~f any) then the amount in excess of 5 percent is used
for a "private business use" wl~ch is "related" and not "d:sproportlonate", w~thtn the meamng
of section 141(b)(3) of the Code, to the govemmantal use,
(c) to take any acUon to assure that no amount which ~s greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Bonds (less amounts depomed into a reserve
fund, tf any) is &rectly or mdtrecfly used to finance loans to persons, other than state or local
governmental umts, m contravention of section 141 (c) of the Code,
(d) to refrmn from takdng any action wluch would otherv~se result m the Bonds
being treated as "private activaty bonds" watl~n the meamn8 of section 141(b) of the Code,
(e) to refrmn from taking any actmn that would result in the Bonds being
"federally guaranteed" w~tlun the meamng of section 149(b) of the Code,
(f) to refrain from using any pomon of the proceeds of the Bonds, directly or
mdtrectly, to acquire or to replace funds wl~ch were used, &rectly or indirectly, to acquire
investment property (as defined msectton 148Co)(2) of the Code) wluch produces a materially
lugher yield over the term of the Bonds, other than investment property acquired w~th --
32
(1) proceeds of the Bonds invested for a reasonable temporary period of
3 years or less until such proceeds are needed for the purpose for which the Bonds are
Issued,
(2) amounts invested m a bona fide debt serwc~ fund, witban the meamng
of section 1 148-1(b) of the Treasury Regulations, and
(3) amounts deposited m any reasonably required reserve or replacement
fund to the extent such amounts do not exceed l0 percent of the stated pnnclpal
amount (or, m the case cfa discount, the issue price) of the Bonds,
(g) to otherwise resmct the use of the proceeds of the Bonds or amounts treated
as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwase
contravene the requtrements of section 148 of the 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 refundings), and
(h) to pay to the Umted States of America at least once dunng each five-year
period (beffmnmg on the date ofdehvery of the Bonds) an amount that is at least equal to 90
percent of the "Excess Earnings", within the meaning of sechon 148(0 of the Code and to pay
to the Umted States of America, not later that 60 days after the Bonds have been paid in full,
100 percent of the amount then required to be paid as a result of Excess Earmngs under
section 148(0 of the Code
The Issuer understands that the term "proceeds" includes "disposition proceeds" as defined
in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and
proceeds of the refunded bonds expended prior to the date of issuance of the Bonds It is the
understanding of the Issuer that the covenants contained herein are intended to assure compliance
with the Code and any regulations or rulings promulgated by the U S Department of the Treasury
pursuant thereto In the event that regulations or rulings are hereafter promulgated which modify,
or expand provtslons of the Code, as applicable to the Bonds, the Issuer will not be required to
comply with any covenant contained herein to the extent that such failure to comply, in the opimon
of natlonally-recogmzed bond counsel, will not adversely affect the exemption from federal income
taxation of interest on the Bonds under section 103 of the Code In the event that regulations or
rulings are hereafter promulgated which impose additional requirements winch are applicable to the
Bonds, the Issuer agrees to comply with the add~tional requirements to the extent necessary and
reasonably,possible, m the opinion ofnatlonally-recogmzed bond counsel, to preserve the exemption
fi'om federal income taxation of interest on the Bonds under section 103 of the Code In furtherance
of such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents,
certtficates or repons required by the Code and to make such elections, on behalf of the Issuer, which
may be pemlltted by the Code as are consistent with the purpose for the Issuance of the Bonds The
Issuer covenants to comply with the covenants contained in tins section after defeasance of the
Bonds
33
In order to facilitate compliance w~th the above covenant (h), a "Rebate Fund" IS hereby
estabhshed by the Issuer for the sole benefit of the Umted States of America, and such fund shall not
be subject to the clmm of any other person, including w~thout hrmtatlon, the owners of the
Cemflcates The Rebate Fund is estabhshed for the addluonal purpose of comphance w~th Section
148 of the Code
Section 31 ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE
PROIECT The Issuer covenants to account for the expenditure of sale proceeds and investment
earmngs to be used for the purposes described m Section 1 oftlus Ordinance (the "Project") on its
books and records by allocating proceeds to expenditures w~tlun 1 $ months of the later of the date
that (1) the expenditure is made, or (2) the Project is completed The foregoing notw~thstandlng, the
Issuer shall not expend sale proceeds or investment earmngs thereon more than 60 days aider the
eather of(l) the fifth anmversary of the delivery of the Bonds, or (2) the date the Bonds are retired,
unless the Issuer obtains an opinion ofnat~onally-recogmzed bond counsel that such expenditure
not adversely affect the tax-exempt status of the Bonds For purposes hereof, the Issuer shall not be
obligated to comply w~th flus covenant if it obtmns an oplrnon that such fadure to comply v~ll not
adversely affect the excludability for federal income tax purposes from gross income of the interest
Section 32 DISPOSITION OF PRO~ECT The Issuer covenants that the property
constituting the Project will not be sold or other~nse disposed in a transaction resulting in the receipt
by the Issuer of cash or other compensation, unless the Issuer obtmns an opnnon of nationally-
recogruzed bond counsel that such sale or other disposition w~ll not adversely affect the tax-exempt
status of the Bonds
Section 33 INTEREST EARNINGS ON BOND PROCEEDS Interest earmngs derived
fi.om the investment of proceeds from the sale of the Imtial Bond, other than proceeds deposited in
the Interest and Stoking Fund and the Reserve Fund, shall be used along vath other avmlable proceeds
for m~proving the System, prowded that aider completion of the improvements if any of such interest
earnings remmn on hand, such interest eanungs shall be deposited In the Interest and Slnlang Fund
It Is further provided, however, that any interest earmngs on bond proceeds whch are required to be
rebated to the Umted States of America pursuant to the Covenants Regarding Tax-Exemption herein
so as to prevent the Bonds from being arbitrage bonds shall be so rebated and not considered as
interest earmngs for the purposes oftbas 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 each IvaUal Bond Issued hereunder and all necessary
records and proceedings pertmmng to each Irntial Bond pending its delivery and Its investigation,
exammataon, and approval by the Attorney General of the State of Texas, and its registration by the
Comptroller of Public Accounts of the State of Texas Upon registration of each IraUal Bond smd
Comptroller of Pubhc Accounts (or a deputy designated in writing to act for smd Comptroller) shall
manually sign the Comptroller's Reg~straUon Certificate on such Imtlal Bond, and the seal of smd
Comptroller shall be impressed, or placed in facslnule, on such Imtlal Bond The approwng legal
opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the
Issuer, be pnnted on each Imtlal Bond 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
34
the convemence and information of the re~stered owners of the Bonds The preamble to tins
Ordinance is hereby adopted and made a part hereof for all purposes If insurance Is obtmned on any
of the Bonds, the respective Imtml Bond and all other Bonds shall bear an eppropnate legend
conceromg msurance as prosnded by the insurer
Section 35 SALE OF INITIAL BONDS The Imtlal Bond is hereby sold and shall be
dehvered to DEAN WITTER REYNOLDS, for cash for the par value thereof and accrued interest
thereon to date ofdehvery, plus a premium of $-0~ It is hereby officially found, detenmned, and
declared that the Imtlal Bond has been sold at pubhc sale to the bidder offenng the lowest interest
cost, after recelwng sealed bids pursuant to an Official Notw, e of Sale and Bidding Instructions and
Official Statement dated March 10, 1998, prepared and distributed in connection vnth the sale of the
Imtlal Bond Smd Officml Notice of Sale and Bidding Instructions and Official Statement, and any
addenda, supplement, or amendment thereto have been and are hereby approved by the Issuer, and
their use in the offer and sale of the Bonds ~s hereby approved It is further officially found,
determined, and declared that the statements and representations contmned in smd Official Not,ce of
Sale and Official Statement are true and correct m all material respects
Section 36 DTC REGISTRATION The Bonds miUally shah be issued and delivered m such
manner that no physical distnbut~on oftbe Bonds w~ll be made to the pubhc, and The Depository
Trust Company ("DTC"), New York, New York, mmally w~ll act as depository for the Bonds DTC
has represented that it is a hnnted purpose trust company incorporated under the laws of the State
of New York, a member of the Federal Reserve System, a "cleanng corporation" witinn the meamng
of the New York Uniform Commercial Code, and a "cleanng agency" registered under SeoUon 17A
of the federal Seountias Exchange Act of 1934, as amended, and the Issuer accepts, but in no way
venfles, such representations The Imt~al Bond authorized by tins Ordinance shall be dehvered to and
registered m the name oftbe Purchaser However, it is a condmon of dehvery and sale that the
Purchaser, immediately after such delivery, shall cause the Pa3nn8 Agent/Registrar, as proxaded for
m flus Ordinance, to cancel s0ad Imtial Bond and dehver in exchange therefor a substitute Bond for
each matunty of such Imtml Bond, w~th each such subsutute Bond to be regnstered in the name of
CEDE & CO, the nonnnee of DTC, and it shall be the duty oftbe Paying Agent/Registrar to take
such acuon It is expected that DTC will hold the Bonds on behalf of the Purchaser and/or the DTC
Participants, as defined and described m the Official Statement referred to and approved in Sectaon
33 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 vnth DTC in all respects the same as if it were the
actual and beneficial owner thereof It is expected that DTC vail mmntmn a book entry system winch
veil identify beneficial ownersinp of the Bonds by DTC Part~cipants in integral amounts of $5,000,
w~th transfers of ownerslup being effected on the records of DTC and the DTC Pamcipants pursuant
to rules and regulations established by them, and that the substitute Bonds lmually deposited w~th
DTC shall be immobilized and not be further exchanged for substitute Bonds except as hereinafter
proxaded The Issuer is not responsible or liable for any functions ofDTC, vnll not be responsible
for paying any fees or charges unth respect to its senncas, wdl not be responsible or liable for
maintaining, super~smg, or revtewwg the records Of DTC or the DTC Participants, or protecting any
interests or nghts of the beneficml ownen of the Bonds It shall be the duty of the Purchaser and the
DTC Participants to make all arrangements vnth DTC to estabhsh flus book-entry system, the
beneficial ownersbap of the Bonds, and the method of pa3nng the fees and charges of DTC The
Issuer does not represent, nor does it in any way covenant that the nnt~al book-entry system
estabhshed with DTC will be maintained m the future The Issuer reserves the right and option at any
me m the future, m its sole chscreuon, to terrmnate the DTC (CEDE & CO ) book-entry only reg~s-
tration requirement described above, and to perrmt the Bonds to be registered in the name of any
owner If the Issuer exercises its nght and option to terrmnate such requirement, it shall give written
notice of such terrmnation to the Paying Agent/Registrar and to DTC, and thereafter the Paying
Agent/Registrar shall, upon presentation and proper request, register any Bond in any name as
proxaded for mttus Ordinance Notwithstanding the trntlal estabhshment of the foregoing book-entry
system with DTC, if for any reason any of the ongmally delivered substitute Bonds is duly filed with
the Paying Agent/Regcstrar with proper request for transfer and substitution, as provided for in this
Ordinance, substitute Bonds will be duly delivered as provided in flus Ordinance, and there will be
no assurance or representation that any book-entry system will be maintained for such Bonds
Sechon37 COMPLIANCE WITH RULE15c2-12 (a) AnnualReports (0 Thelssuer
shall proxade annually to each NRMSIR and any SID, withan six months after the end of each fiscal
year ending m or after 1996, financial mformat~on and operating data with respect to the Issuer of the
general type included m the final Official Statement authorized by Section 35 oftlus Ordinance, being
the mfom~at~on described in Exlubit A hereto, wbach Exhibit Is attached to and incorporated in th~s
Ordinance as if written word for word hereto Any financial statements so to be proxaded shall be (I)
prepared in accordance with the accounting principles dascnbed m Extnbit A hereto, or such other
accounUng pnnc~ples as the Issuer may be reqmred to employ from time to time pursuant to state law
or regulation, and (2) audited, if the Issuer comrmssions an audit of such statements and the audit is
completed witban the period dunng wbach they must be provided If the audit of such financial
statements is not complete vatban such period, then the Issuer shall prowde unaudited financial
statements by the requ~d tune 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 nex~ date by wtuch the Issuer
otherwise would be required to proxade financial information and operating data pursuant to ttus
Section The financial information and operating data to be proxaded pursuant to th~s 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 offenng document, if a is available from the
MSRB) that theretofore has been prowded to each NRMSIR and any SID or filed with the SEC
Co) Material Event Notices The Issuer shall notify any SID and either each NRMSIR or the
MSRB, m a timely manner, of any of the following events with respect to the Bonds, if such event
is material w~tl~n the meamng of the federal secunUes laws
t Principal and interest payment delinquencies,
2 Non-payment related defaults,
3 Unscheduled draws on debt service reserves reflecting financial difficulties,
4 Unscheduled draws on credit enhancements reflecting financial difficulties,
36
5 Substitution of credit or hqmdlty prowders, or their failure to perform,
6 Adverse tax opuuons or events affecting the tax-exempt status of the Bonds,
7 Modlficanons to rights of holders of the Bonds,
8 Bond calls,
9 Defeasances,
10 Release, subst~tuuon, or sale of property seconng repayment of the Bonds, and
11 Rating changes
The Issuer shall not~fy any SID and e~ther each NRMSIR or the MSRB, m a timely manner, of any
fatlure by the Issuer to provide financial information or operanng data ~n accordance with subsection
(a) oftlus Section by the time required by such subsection
(c) Lmutanons. Dlsclmmers. and Amendments (0 The Issuer shall be obligated to observe
and perform the covenants specltied ~n this Section for so long as, but only for so long as, the Issuer
remains an "obhgated person" w~th respect to the Bonds w~tlun the meamng of the Rule, except that
the Issuer m any event w~ll g~ve the not,ce required by Subsection (b) hereof of any Bond calls and
defeasance that cause the Issuer to no longer be such an "obligated person"
(10 The prows~ons of tbas Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in tlus Section, express or implied, shall give any benefit
or any legal or eqmtable right, remedy, or clmm hereunder to any other person The Issuer
undertakes to provide only the financml mformanon, operating data, financial statements, and notices
wluch it has expressly agreed to provide pursuant to tbas 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 fi~ancial results, condmon, or prospects or hereby undertake to update any reformation
provided In accordance w~th tlus Section or otherwise, except as expressly prowded herein The
Issuer does not make any representation or warranty concermng such mformaUon or ~ts usefulness
to a dec,sion to mvest m or sell Bonds at any future date
(m) UNDER NO CIRCUMSTANCES SHALL THE ISSUER 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 SHA!.I. BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE
(iv) No default by the Issuer in obsepnnff or perfornung its obligations under this Section
shall comprise a breach of or default under the Ordinance for purposes of any other prov~slon of this
Ordinance Nothing mthis Section is intended or shall act to dlsclmm, waive, or othervnse lmut the
duties of the Issuer under federal and state secunues laws
(v) The prosas~ons of this Sectaon may be amended by the Issuer from time to time to adapt
to changed c~rcumstanees that anse from a change m legal requirements, a change m law, or a change
m the identaty, nature, status, or type of operations of the Issuer, but only if(l) the prowslons of this
Section, as so amended, would have perrmtted an underxvnter to purchase or sell Bonds in the
primary offenng of the Bonds in compliance w~th the Rule, taking into account any amendments or
interpretations of the Rule since such offenng as well as such changed circumstances and (2) either
(a) the registered owners of a majonty m aggregate principal amount (or any greater amount required
by any other prov~sion of this Ordinance that authorizes such an amendment) of the outstanding
Bonds consent to such amendment or (b) a person that is unaffiliated w~th the Issuer (such as
nationally recognized bond counsel) detenmned that such amendment w~ll not materially impair the
interest of the rag~stered owners and beneficial owners of the Bonds If the Issuer so amends the
prowslonsIofthis Section, it shall mchide w~th any amended financial information or operating data
next prowded m accordance vnth subsection (a) of this Section an explanation, m 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 prowded The Issuer may also a.mend or repeal the prowsions of this continuing
chsclosure agreement ~fthe SEC amends or repeals the apphcable provaslon of the Rule or a court of
final jur~sdiction enters judgment that such provasions 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 offenng of the Bonds
(d) Definitions. As used in this Section, the following terms have the meamngs ascribed to
such terms below
"MSRB" means the Mumcipal Securities Rulemalong Board
"NR_MSIR" means each person whom the SEC or its staff has determined to be a
nataonally recognized municipal secunl~es reformation repository within the meamng of the Rule from
time to time
"Rule" means SEC Rule 15c2-12, as amended from time to t~me
"SEC" means the Umted States Secunues and Exchange Comrmssion
"SID" means any person designated by the State of Texas or an authorized
department, officer, or agency thereof as, and detenmned by the SEC or its staff to be, a state
information depository vnthin the meamng of the Rule from time to time
SecUon 38 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 authonzed, empowered, and directed from time to ume and at any ume to do
and perform all such acts and things and to execute, acknowledge, and deliver in the name and under
38
the corporate seal and on behalf of the Issuer all such instruments, whether or not hereto mentioned,
as may be necessary or desirable m order to carry out the terms and prowslons of tlus Bond Or&-
nance, the Bonds, the sale of the Bonds, and the Notice of Sale and Official Statement, and the
Assistant City Manager/Fmanco of the City shall cause the expenses of~ssuance of the Bonds to be
paid from the proceeds of sale of the Imtlal Bond or from other lawfully available funds of the Issuer
In case any officer whose s~gnamre shall appear on any Bond shall cease to be such officer before the
dehvery of such Bond, such slsnature shall nevertheless be valid and sufficient for all purposes the
same as ~f such officer had remained in office until such dehvery
Section 39 OPEN MEETINGS The City Council has found and detenmned that the
meeting at winch tins Ordinance is considered is open to the pubhc and that notice thereof was given
m accordance w~th the provisions of the Texas Open Meetings, Law, Tex Gov't Code, Chapter 551,
as amended
SecUon 40 EFFECTIVE DATE Tins Ordinance shall become effective mramed~ately upon
~ts passage and approval
PASSED AND APPROVED tins the 24th day of March, 1998
ATTEST
APPROVED AS TO LEGAL FORM
Herbert L Prouty, City Attorney d
39
EXHIBIT A
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 37 ofttus Ordinance
Annual Fmancml Statements and Operating Data
The financial reformation and operating data vnth respect to the Issuer to be prowded 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
Serwce Requirements" and "Financial Information" in the Official Statement
Appendix B in the Official Statement
Accounting Principles
The acc. ountmg pnnclples referred to in such Section are the accounting pnnclples described
in the notes to the financial statements referred to in the paragraph above
LaW OffiCES
M~.CALL PARKHURST & HORTON L L P
600 CONGRESS AVENUE "717 NORTH HARWOOD 700 N ST MARYS STREET
1250 ONE AMERICAN CENTER NINTH FLOOR 1225 ONE RIVERWALK PLACE
AUSTIN TEXAS 787013248 DALLAS TEXAS 752016587 SAN ANTONIO TEXAS 78205 3503
March 24, 1998
Honorable Mayor and Council of
the City of Denton
Denton, Texas
City of Denton Utility System Revenue
Bonds. Series 1998. $7.175,000
Ladles and Gentlemen
In comphanen with Section 9 02 and Section 9 04 of the City Charter of the City of Denton, you are
advised that the bids for the captioned issue received by the City pursuant to its Official Statement and Notice
of Sale and Bidding Instructions dated March 24, 1998, have been tabulated, and that we find, based on
calculations performed by F~rst Southwest Company, as financial advisor, that the bid of a syndicate managed
or headed by the following
DEAN WITTER REYNOLDS
vnth the bonds to bear interest at the rates themn specified, vath such bidder to pay par and accrued interest to
date of dehve~y for said bonds, plus a prenuum of $-0-, is the lowest and best bid received, and we recommend
that it be aecept~l
We further cerafy that we have examined the ordinance presently placed before the Mayor and Council
for the purpose of autbonzmg the issuance of said bonds, and, m our opunon, the said proposed bond ordinance
is legal, and the bonds to be issued thereunder will be special obligations of the City payable fi.om, and secured
by a fa'st hen on and pledge of, the "Pledged Revenues", wluch include initially the "Net Revenues of the System"
as such terms are defined in the Bond Ordinance, w~th the System consisting of the C~ty's ant~re combined
waterworks, sewer, and elecmc light and power system
Respectfully,
LAW OFFICES
M(;CALL, PARKHURST & HORTON LLP
March 24, 1998
Honorable Mayor and Council of
the City of I~nton
Denton, Texas
City of Denton Utility System Revenue
Bonds Series 1998, $7,175,000
Ladles and Gentlemen
In compliance with Section 9 02 and Section 9 04 of the City Charter of the City of Denton, you are
edVlSed that the bids for the captioned issue received by the City pursuant to its Official Statement and Notice
of Sale and Bidding Instructions dated March 24, 1998, have been tabulated, and that we find, based on
calenlatlons performed by First Southwest Company, as financial advisor, that the bid of a syndicate managed
or headed by the following
DEAN WITTER REYNOLDS
vath the bonds to bear mterest at the rates therein specified, with such bidder to pay par and accrued interest to
date of delivery for said bonds, plus a premium of $-0-, is the lowest and best bid received, and we recommend
that it be accepted
We further certify that we have examined the ordinance presently placed before the Mayor and Conncll
for the purpose of authorizing the issuance of said bonds, and, in our opmion, the said proposed bond ordinance
is legal, and the bonds to be issued thereunder will be special obligations of the City payable from, and secured
by a f~t Ilea on and pledge of, the "Pledged Revenues", which mclude initially the '~Net Revenues of the System"
as such terms are defined m the Bond Ordinance, with the System consisting of the C~ty's entire combined
waterworks, sewer, and electric hght and power system
Respectfully,