1998-225 ORDINANCE NO 980~
ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF
DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1998B, 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 UUhty System Revenue Bonds, Series 1988, dated August 1, 1988,
C~ty of Denton Utd~ty System Revenue Bonds, Series 1989, dated October 1, 1989,
C~ty of Denton Utility System Revenue Bonds, Series 1992, dated March 1, 1992,
C~ty of Denton Uuhty System Revenue Bonds, Series 1993, dated March I, 1993,
City of Denton Utdity System Revenue Refundtng Bonds, Series 1993-A, dated June 1, 1993,
C~ty of Denton Utility System Revenue Refunding Bonds, Taxable Series 1993 -B, dated June 1, 1993,
C,ty of Denton Utility System Revenue Bonds, Series 1996, dated May 1, 1996,
C~ty of Denton Utility System Revenue Refunding Bonds, Series 1996A, dated May 1, 1996,
City of Denton Utdtty System Revenue Bonds, Series 1998, dated March 15, 1998,
C~ty of Denton UUhty System Revenue Refunchng Bonds, Series 1998A, dated July 15, 1998, and
C~ty of Denton Utthty System Revenue Refunding Bonds, Series t998B, dated August 1, 1998,
WHEREAS, tho City Courted of the City of Denton deems ~t necessary and adwsable to refund the
following revenue bonds
C~ty of Denton Utd~ty System Revenue Bonds, Series 1989, dated October 1, 1989 scheduled
to mature on December 1 ~n each of the years 2006 through 2009, aggregatmg $4,400,000 m
pnnc~pal amount, and
C~ty of Denton Utility System Revenue Bonds, Series 1992, dated March 1, 1992 scheduled
to mature on December 1 in each of the years 2006 through 2014, aggregating $2,740,000 ~n
principal amount
(collectively, the "Refunded Bonds") m the aggregate prmcapal amount of $7,140,000), and
WHEREAS, the City Council of the City of Denton deems it necessary and advisable to authorize,
issue, and deliver the additional Utility System Revenue Bonds hereinafter described to refund the Refunded
Bonds, and
WHEREAS, the Series 1998B Bonds hereinafter authorized and described are to be issued, sold, and
delivered pursuant to Vernon's Ann Tex Clv St Art 717k, the City's Home Rule Charter, and other
applicable laws, NOW, THEREFORE
THE COUNCIl, OF THE CITY OF DENTON HEREBY ORDA1NS
Section 1 AMOUNT AND PURPOSE OF THE BONDS The bond or bonds of the Issuer are
hereby anthonzed to be issued and dehvemd in the aggregate prmctpal amount of $7,640,000 FOR THE
PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $7,140,000 IN AGGREGATE
PRINCIPAL AMOUNT OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, AND SHALL
BE DESIGNATED "CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES
1998B" (THE "SERIES 1998B BONDS'*)
Section 2 DESCRIPTION OF THE BONDS (a) With respect to the Series 1998B Bonds, nntlally
there shall be issued, sold, and delivered hereunder a single fully registered bond, ~xathout interest coupons,
payable m installments of pnncipal (the "Imtml Sones 1998B Bond"), but the Imtial Series 1998B Bond may
be assigned and transferred and/or converted rote and exchanged for a hke aggregate principal amount of fully
registered bonds, w~thout interest coupons, having serial matunt~es, and m the denommatton or denominations
of $5,000 or any integral multiple of $5,000, all m the manner hereinafter pro~ded The term "Sones 1998B
Bonds" as used m Ihs Ordinance shall mean and include collectively the Imt~al Series 1998B Bond and all
substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds ~ssued
pursuant hereto, and the term "Sones 1998B Bond" shall mean any of the Series 1998B Bonds
(b) the term "Initial Bond" as used m tlus Ordinance shall mean and include collectively the Imnal
Series 1998B Bond, the term "Bonds" as used m Ihs Ordinance shall mean and include collectively the Initial
Bond and all substttute 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
Sectton 3 INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL
REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BONDS (a) The Imtml Sones
1998B Bond ~s hereby anthonzed to be issued, sold, and dehvemd hereunder as a single fully registered Bond,
w~thout interest coupons, dated AUGUST 1, 1998, m the denomination and aggregate pnnc~pal amount of
$7,640,000, numbered R-l, payable m annual installments of prmmpal to the initial registered owner thereof,
to-mt
SALOMON SMITH BARNEY INC
or to the registered assignee or assignees of said Series 1998B Bond or any portion or portions thereof (m each
case, the "registered owner"), w~th the annual installments of pnnmpal of the Imtial Series 1998B Bond to be
payable on the dates, respectively, and m the prmetpal amounts, respectively, stated in the FORM OF INITIAL
SERIES 1998B BOND set forth m Ihs Ordinance
(b) The Inmal Bond (0 may and shall be prepaid or redeemed prior to the scheduled duo dates of
Installments of pnne~pal 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 principal of and
~nterest on the Inmal Bond shall be payable, all as provided, and in the manner required or indicated, m the
FORM OF INITIAL SERIES 1998B BOND set forth m this Ordinance
Section 4 INTEREST The unpatd pnnclpal balance of the Imttal Bond shall bear tnterest from the
date of the Inmal Bond to the respecttve scheduled due dates, or to the dates of prepayment or redemptton, of
the installments of principal of the Imttal Bond, and said tnterest shall be payable, all m the manner prowded
and at the rates and on the dates stated tn the FORM OF INITIAL SERIES 1998B BOND set forth m thts
Ordinance
Sectton 5 FORM OF INITIAL SERIES 1998B BOND The form of the Initial Bond, including the
form of Regtstratton Cemficate of the Comptroller of Public Accounts of the State of Texas to be endorsed
on the Imtlal Bond, shall be substantially as follows
FORM OF INITIAL SERIES 1998B BOND
NO R-1 $7,640,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE
REFUNDING BOND
SERIES 1998B
THE CITY OF DENTON, m Denton County, Texas (the "Issuer"), being a political subdtwsion of
the State of Texas, hereby promises to pay to
SALOMON SMITH BAKNEY 1NC
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
$7,640,000
(SEVEN MILLION SIX HUNDRED FORTY THOUSAND DOLLARS)
m annual installments of principal due and payable on December 1 tn each of the years, and m the respecttve
prmctpal amounts, as set forth tn the following schedule
PRINCIPAL PRINCIPAL
YEAR AMOUNT YEAR AMOUNT
1998 $ 110,000 2006 $1,390,000
**** ******** 2007 1,390,000
2000 55,000 2008 1,390,000
2001 60,000 2009 1,380,000
2002 60,000 2010 290,000
2003 65,000 2011 305,000
2004 70,000 2012 315,000
PRINCIPAL PRINCIPAL
yEAR AMOUNT YEAR AMOUNT
2005 70,000 20!3 335,000
2006 1,390,000 2014 355,000
and to pay interest, from the date of tins Bond hereinafter stated, on the balance of each such installment of
principal, respectively, from tune to time remammg unpaid, at the rates as follows
4 000% per annum on the above installment due in 1999
4 000% per annum on the above installment due in 2000
4 000% per annum on the above installment due in 2001
4 150% per annum on the above installment due in 2002
4 200% per annum on the above mstallment due in 2003
4 250% per annum on the above installment due in 2004
4 350% per annum on the above mstallment due in 2005
4 400% per annum on the above installment due in 2006
4 500% per annum on the above installment due in 2007
4 500% per annum on the above installment due in 2008
4 600% per annum on the above installment due in 2009
4 700% per annum on the above installment due in 2010
4 800% per annum on the above installment due in 2011
4 900% per annum on the above installment due m 2012
5 000% per annum on the above installment due in 2013
5 000% per annum on the above installment due in 2014
with smd interest being payable on December 1, 1998 and semiannually on each June 1 and December 1
thereafter winle tins Bond or any pomon hereof is outstanding and unpaid Said interest shall be calculated
on the basis of a 360-day year composed of twelve 30-day months
THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON flus Bond are payable m
lawful money of the Umted States of America, without exchange or collection charges The installments of
principal and the interest on flus Bond are payable to the registered owner hereof through the services of
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, DALLAS, TEXAS, winch is the "Paying
Agent/Registrar" for tins Bond Payment of all principal of and mterest on fins Bond shall be made by the
Paying Agent/Registrar to the registered owner hereof on each principal and/or mtemst payment date by check,
dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer
required by the ordinance authorizing the ~ssuance of tins Bond (the "Bond Ordinance") to be on deposit with
the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the
Paying Agent/Registrar by United States mall, first-class postage prepaid, on each such pnncipal and/or
~ntemst payment date, to the registered owner hereof, at the address of the registered owner, as it appeared on
the 15th day of the month next preceding each such date (the "Record Date") on the Registration Books kept
by the Pa~nng Agent/Registrar, as heromafter descnbed The Issuer covenants with the registered owner oftins
Bond that on or before each prmmpal and/or interest payment date for tins Bond ~t will make available to the
Paymg Agent/Registrar, from the "Interest and Stoking Fund" maintained pursuant to the Bond Ordinance, the
amounts reqmred to prov,de for the payment, m mediately available funds, of all pnnmpal of and interest
on tins Bond, when due
4
IF THE DATE for the payment of the pnnc~pal of or ~nterest on this Bond shall be a Saturday,
Sunday, a legal hohday, or a day on which hankmg mst~tut~ons m the C~ty where the Paying Agent/Registrar
~s located, are authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day which ~s not such a Saturday, Sunday, legal hohday, or day on which hank~ng ~nstatut~ons are
authorized to close, and payment on such date shall have the same force and effect as ff made on the original
date payment was due
THIS BOND has been anthonzed m accordance w~th the Const~tuUon and laws of the State of Texas
m the prmcapal amount of $7,640,000 FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO
REFUND $7,140,000 IN AGGREGATE PRINCIPAL AMOUNT OF CITY OF DENTON UTILITY
SYSTEM REVENUE BONDS
ON DECEMBER l, 2008, or on any date whatsoever thereafter, the unpaid installments of principal
of tins Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, wth
funds derived from any available source, as a whole, or m part, and, ff ~n part, the particular portion of tins
Bond to be prepaad or redeemed shall be selected and designated by the Issuer (prowded that a port,on of tins
Bond may be redeemed only m an antegral multaple of $5,000), at the prepayment or redemption price of the
par or prmcapal amount thereof, plus accrued interest to the date fixed for prepayment or redemption
AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written not,ce
of such prepayment or redemptaon shall be marled by the Paying Agent/Registrar to the registered owner hereof
By the date fixed for any such prepayment or redemption due provlsmn shall be made by the Issuer wath the
Paying Agent,'Regastrar for the payment of the reqmred prepayment or redemption price for flus Bond or the
portion hereof winch is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for
prepayment or redemption ff such written notate of prepayment or redemption ~s g~ven, and if due prows~on
for such payment is made, all as provided above, tins Bond, or the portion thereof winch 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 mtereet after the date fixed for its prepayment or redemption, and shall not be regarded as being
outstanding except for the right of the regastered owner to receive the prepayment or redempuon price plus
accrued interest to the date fixed for prepayment or redemption from the Paying AgentfReg~strar out of the
funds prowdsd for such payment The Paying Agent/Registrar shall record m the Reg~sU'atmn Books all such
prepayments or red~mptaons of pnnc~pal of flus Bond or any port~on hereof
THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and
unredeemed portaon herenfm any integral muinple of $5,000, may be assigned by the ~ntial registered owner
hereof and shall be transferred only m the Registration Books of the Issuer kept by the Paying Agent/Registrar
acting m the eapaeaty of registrar for the Bonds, upon the terms and conditions set forth m the Bond Ordinance
Among other reqmremeats for such transfer, flus Bond must be presented and surrendered to the Paying
Agent~Reg~strar for cancellatmn, together vath proper instruments of assignment, m form and wath guarantee
of signatures sat~sfuetory to the Paying Agent/Registrar, evidencing assignment by the m~tlal registered owner
of flus Bond, or any portmn or portions hareof m any mtegrul multiple of $5,000, to the assignee or assignees
m whose name or names this Bond or any such pomon or portions hereof is or are to be transferred and
reg~stered, Any m.~mmaent or mstrumeats of assignment satisfactory to the Paying Agent/Registrar may be
used to ewdence the assagmuent of flus Bond or any such portmn or port~ons hereof by the ~mtlal registered
owner hereof A new bond or bonds payable to such assignee or assignees (which then vail be the new
registeredlowner or owners of such new Bond or Bonds) or to the m~t~al registered owner as to any port~on of
this Bond winch as not being assigned and transferred by the ant~al registered owner, shall be delivered by the
Paying Asent/Regastrar an conversion of and exchange for flus Bond or any portion or portmns hereof, but
solely m the form and manner as provided m the next paragraph hereof for the conversmn and exchange of tins
Bond or any portion hereof The registered owner of flus Bond shall be deemed and treated by the Issuer and
the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of
liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not
be affected by any notice to the contrary
AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or
unredeemed principal balance hereof, may be convened into and exchanged for a like aggregate prmc~pal
amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated
m writing,by the antml registered owner hereof, or to the mmal registered owner as to any pomon of flus Bond
which is not being assigned and transferred by the mitml regtstered owner, m any denomination or
denominations m any integral multiple of $5,000 (subject to the reqmrement hereinafter stated that each
substitute bond issued m exchange for any portton of flus Bond shall have a smgle stated principal maturity
date), upon surrender of flus Bond to the Paying Agent/Registrar for cancellation, all m accordance wath the
form and procedures set forth m the Bond Ordinance If this Bond or any portion hereof is assigned and
transferred or converted each bond issued m exchange for any pomon hereof shall have a single stated principal
maturity date corresponding to the due date of the mstallment of prmc~pal of flus Bond or portion hereof for
which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such
installment of principal or portion thereof Such bonds, respectively, shall be subject to redemption prior to
maturity on the same dates and for the same prices as the corresponding mstatlment of principal of flus Bond
or portion hereof for wlueh they are being exchanged No such bond shall be payable m mstallments, but shall
have only one stated principal maturity date AS PROVIDED IN THE BOND ORDINANCE, THIS BOND
IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY,
and to one or more assignees, but the bonds issued and delivered ~n exchange for flus Bond or any pomon
hereof may be assigned and transferred, and converted, subsequently, as prowded m the Bond Ordinance The
Issuer shall pay the Paymg Agent/Reg~strar's standard or customary fees and charges for transfemng,
converting, and exchanging flus Bond or any portion thereof, but the one requestmg such transfer, conversion,
and exchange shall pay any taxes or governmental charges required to be paid wath respect thereto The Paying
AgentfReglstrar shall not be reqmred to make any such assignment, conversion, or exchange 0) dunng the
period eommencmg wath the close of business on any Record Date and ending wath the openmg of business on
the next following principal or interest payment date, or, (u) vath respect to any Bond or port~on thereof called
for prepayment or redempUon prior to maturity, waflun 45 days prior to ~ts prepayment or redemption date
IN THE EVENT any Paying Agent/Registrar for flus Bond is changed by the Issuer, resigns, or
otherwase ceases to act as such, the Issuer has covenanted m the Bond Ordinance that It promptly wall appoint
a competent and legally qualified substitute therefor, and promptly wall cause written not~ee thereof to be
mailed to the registered owner of flus Bond
IT IS HEREBY cerUfied, recited, and covenanted that flus Bond has been duly and validly authorized,
issued, sold, and delivered, that all acts, condutlons, and things required or proper to be performed, eyast, and
be done precedent to or m the anthonzatlon, issuance, and delivery of flus Bond have been performed, existed,
and been done m accordance w~th law, that this Bond is a special obligation of the Issuer, secured by and
payable, together wah other bonds, from a first ben on and pledge of the "Pledged Revenues", which include
lmtially the "Net Revenues of the System" as such terms are defined ~n 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 right, subject to the restrictions stated in the Bond Ordinance, to ~ssue
Adcht~onal Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues" on a panty
wath flus Bond
6
THE ISSUER also has reserved the right, subject to the restrictions stated m the Bond Ordinance, to
amend the Bond Ordinance vath the approval of the holders or owners of'fill:y-one percent in principal 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 this Bond or
the ~nterest hereon out of*my funds raised or to be raised by taxation or from any source whatsoever other than
specified in the Bond Ordinance
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of
the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and proxaslons,
acknowledges that the Bond Ordinance ~s duly recorded and avadable for inspection in the official minutes and
records of the governing body of the Issuer, and agrees that the terms *md prowsmns oft.has Bond *md the Bond
Ordinance constitute a contract between the registered owner hereof*md the Issuer
IN WITNESS WHEREOF, the Issuer has caused tbas Bond to be signed unth the manual or facsmule
signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the City
Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed, or placed in faosumle,
on this Bond, and has caused flus Bond to be dated August 1, 1998
C~ty Secretary, City of Denton, Texas Mayor, City of Denton, Texas
(CITY SEAL)
(BOND INSURANCE LEGEND, IF ANY)
FORM OF REOISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS
COMPTROLLER'S REOISTRATION CERTIFICATE REGISTER NO
I hereby comfy that flus Bond has been examined, certffied as to vahthty, and approved by the Attorney
General of the State of Texas, and that flus Bond has been registered by the Comptroller of Public Accounts
of the State of Texas
W~mess my signature and seal ttus
Comptroller of Public Accounts
of the State of Texas
(COMPTROLLER'S SEAL)
7
Section6 ADDITIONAL CHARACTERISTICS OF THE BONDS Registration and Transfer (a)
The Issuer shall keep or cause to be kept at the principal corporate trust office of CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, DALLAS, TEXAS (the "Paying Agent/Registrar") hooks or records of the
registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Pay, ng
Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and
registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe, and
the Paying Agent/Registrar shall make such transfers and registrattons as here~n provided The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each
Bond to winch payments w~th respect to the Bonds shall be marled, as herein provided, but it shall be the duty
of each registered owner to notify the Paying Agent/Registrar in writing of the address to which paymems shall
be mailed, and such interest payments shall not be mailed unless such notice has been given The Issuer shall
have the right to respect the Registration Books dunng regular business hours of the Paying Agent~Registrar,
but othervase the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise
required by law, shall not perrmt their mspeetion by any other enUty Registration of each Bond may be
transferred m the Registration Books only upon presentation and surrender of such Bond to the Paying
Agent/Registrar for transfer of registration and caneellaUon, together vath proper wntten ~nstruments of
assignment, m form and vath guarantee of signatures satisfactory to the Paying Agent/Registrar, exndencmg
0) the assignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assignee or
assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any such port~on thereof
registered m 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 m the
manner hereto provided The Imtlal Bond, totheextentoftheunpaidorunredeemedprmcipalbalancethereof,
may be assigned and transferred by the mltaal registered owner thereof once only, and to one or more assignees
designated m writing by the ~mt~al registered owner thereof All Bonds issued and dehvered m conversion of
and exchange for the Imtml Bond shall be m any denomination or denommaUons of any integral multaple of
$5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated
pnnclpal maturity date), shall be m the form prescribed in the FORM OF SUBSTITUTE SERIES 1998B
BOND set forth m tins Ordinance, and shall have the characteristics, and may be assigned, transferred, and
converted as hereinafter provided If the Imtial Bond or any portion thereof is assigned and transferred or
converted the Imtlal Bond must be surrendered to the Paying Agent/Registrar for cancellation, and each Bond
xssued m exchange for any portion of the Initial Bond shall have a single stated pnncipal maturity date, and
shall not be payable m installments, and each such Bond shall have a principal maturity date corresponding
to the due date of the installment of principal or portion therenf for wbach the substitute Bond ~s being ex-
changed, and each such Bond shall bear interest at the single rate applicable to and borne by such installment
of pnncipal or portion thereof fur wbach it Is being exchanged If only a port~on ofthe Imt~al Bond is assigned
and transferred, there shall be delivered to and registered m the name of the untaal registered owner substitute
Bonds m exchange for the unassigned balance of the Imtial Bond m the same manner as if the initial 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 m exchange therefor shall have the same pnncipal maturity date and
bear interest at the same rate as the Bond for winch it is exchanged A form of assignment shall be printed or
endorsed on each Bond, excepting the Imtial Bond, winch shall be executed by the registered owner or its duly
authorized attorney or representative to evidence an assignment thereof Upon surrender ofany 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 Reglstratmn Books, and shall deliver a new fully registered
substitute ~Bond or Bonds, having the charactensUcs herein described, payable to such assignee or assignees
(winch rhea will be the registered owner or owners of such new Bond or Bonds), or to the previous registered
owner in ease only a portion ora Bond is being assigned and transferred, all m conversion of and exchange for
said assigned Bond or Bonds or any poraon or portions thereof, m the same form and manner, and w~th the
same effect, as prowded m Section 6(d), below, for the conversion and exchange of Bonds by any registered
owner ora Bond The Issuer shall pay the Paying Agent/Reglstrar's standard or customary fees and charges
for malang such transfer and delivery ora substitute Bond or Bonds, but the one requesting such transfer shall
pay any taxes or other governmental charges required to be paid with respect thereto The Paying
Agent/Registrar shall not be required to make transfers of registration et'any Bond or any portion thereof 0)
dunag tho period commencing w~th the close et'business on any Record Date and ending w~th the opening of
business On the next fullowmg pnncipal or interest payment date, or, (il) wnh respect to any Bond or any
portion thereof called for redemption prior to maturity, w~thm 45 days prior to its redemption date
(b) 0wnershm of Bonds The entity m whose name any Bond shall be registered m the Registration
Books at any Ume shall be deemed and treated as the absolute owner thereof for all purposes of flus Orchnanee,
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', premium, if any, and interest
on any such Bond shall be made only to such registered owner All such payments shall be valid and effectual
to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid
(c) Pavmeat of Bonds and Interest The Issuer hereby further appoints the Paying Agent/Registrar
to act as the paying agent for paying the pnncipal of and interest on the Bonds, and to act as its agent to
convert and exchange or replace Bonds, all as provided m flus Ordinance The Paying Agent/Registrar shall
keep proper records of all payments made by the Issuer and the Paying Agent/Registrar w~th respect to the
Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as proxaded m flus
Ordinance
(d) Cgnverslon and Exchan~,e or Renlaeement. Authentication Each Bond issued and delivered
pursuant to flus Ordmanee, to the extent of the unpaid or unredeemed principal balance or pnneipal amount
thereof, may, upon surrender of such Bond at the principal corporate trust office of the Paymg Agent/Registrar,
together with a written request therefor duly executed by the registered owner or the assignee or assignees
thereof, or its or their duly authorized attorneys or representatives, v~th guarantee of signatures satisfactory
to the Paying AgenffRegistrar, may, at the option of the registered owner or such assignee or assignees, as
appropriate, be converted rote and exchanged for fully registered bonds, without interest coupons, m the form
prescribed m the FORM OF SUBSTITUTE SERIES 1998B BOND set forth m flus Ordinance, in the
denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that
each substitute Bond shall have a single stated maturity date), as requested m writing by such registered owner
or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unredeemed principal
balance or principal amount of any Bond or Bonds so surrendered, and payable to the apprnpnate registered
owner, assignee, or assignees, as the case may be If the Initial Bond is assigned and transferred or converted
each substitute Bond issued m exchange for any portmn of the Imtial Bond shall have a smgle stated pnnclpal
maturity date, and shall not be payable in installments, and each such Bond shall have a pnnclpal maturity date
corresponding to the due date of the installment of principal or portion thereof for wluch the substitute Bond
is being enchanged, and each such Bond shall bear mterest at the single rate appheable to and borne by such
installment ofprmclpal or portion thereof fur which it Is being exchanged If a portion of any Bond (other than
the Imtial Bond) shall be redeemed prior to its scheduled maturity as proxaded herem, a substitute Bond or
Bonds having the same maturity date, bearing interest at the same rate, m the denonunation or denommaUons
of any mtqgral multiple of $5,000 at the request of the registered owner, and in aggregate principal amount
equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for
cancellation If any Bond or portion thereof (other than the Imtial Bond) is assigned and transferred or
converted, leach Bond issued m exchange therefor shall have tho same pnnclpal maturity date and bear mterest
at the same rate as the Bond for wtuch it is being exchanged Each substitute Bond shall bear a letter and/or
number to distmgmsh it from each other Bond The Paying Agent/Registrar shall convert and exchange or
replace Bonds as provided herem, and each fully registered bond delivered in conversion of and exchange for
9
or replacement of any Bond or portton thereof as pertained or required by any proviston of flus Ordinance shall
constitute one of the Bonds for all purposes of flus Ordinance, and may again be converted and exchanged or
replaced It ts specifically prowded that any Bond authenticated tn conversion of and exchange for or
replacement of another Bond on or prior to the first scheduled Record Date for the Inmal Bond shall bear
interest from the date of the Imt~al Bond, but each substitute Bond so anthent~cated 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 authentacated, unless such Bond ~s authenticated after any Record Date but on or before the next
followmg~mterest payment date, m winch case tt shall bear interest from such next follovang ~nterest payment
date, prowded, however, that ~fat the ttme ofdehvery of any substitute Bond the mterest on the Bond for winch
~t is being exchanged ts due but has not been pa~d, then such Bond shall bear tnterest from the date to winch
such interest has been pard m full THE INITIAL SERIES 1998B BOND ~ssued and dehvered pursuant to
this Ordinance ~s not reqmred to be, and shall not be, authenttcated by the Paying Agent/Registrar, but on each
substttute Bond tssued mconverston of and exchange for or replacement of any Bond or Bonds ~ssued under
tins Ordinance there shall be printed a certtficate, m the form substantially as follows
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It ts hereby certified that tins Bond has been ,ssued under the prov~stons of the Bond Ordinance
described m flus Bond, and that flus Bond has been tssued m conversion of and exchange for or replacement
ora bond, bonds, or a portton ora bond or bonds of an ~ssue winch originally was approved by the Attorney
General of the State of Texas and regtstered by the Comptroller of Pubhc Accounts of the State of Texas
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, DALLAS, TEXAS
Paymg Agen'dReg~strar
Dated By.
Authorized Representative*'
An anthonzed representative of the Paying Agent/Regtstrar shall, before the dehvery of any such Bond, date
and manually stgn tho above Cemficate, and no such Bond shall be deemed to be ~ssued or outstanding unless
such Certificate ts so executed The Paymg Agent/Registrar promptly shall cancel all Bonds surrendered for
conversion and exchange or replacement No addxttonal ordmances, orders, or resoluttons need be passed or
adopted by the governing body of the Issuer or any other body or person so as to accomphsh the foregoing
conversion and exchange or replacement of any Bond or port,on thereof, and the Paymg Agent/Registrar shall
provide for the prmtmg, executton, and dehvery of the subst~tnte Bonds m the manner prescribed hereto, and
sa~d Bonds shall be of type compos~tton printed on paper wtth hthographed or steel engraved borders of
customary wetght and strength Pursuantto Vernon's Ann Tex Crv St Art 717k-6, and pamcularly Seeuon
6 thereof, the duty of conversion and exchange or replacement of Bonds as aforesaid ts hereby nnposed upon
the Paying Agent/Registrar, and, upon the exeentmn of the above Paying Agent/Reg~strar's Authentteatmn
Certificate, the converted and exchanged or replaced Bond shall be vahd, mcontestable, and enforceable m the
same manner and w~th the same effect as the Imttal Bond winch originally was ~ssued pursuant to flus
Ordinance, approved by the Attorney General, and registered by the Comptroller of Pubhc Accounts The
Issuer shall pay the Paying Agent/Reg~strar's standard or customary fees and charges for transfernng,
converting, and exchanging any Bond or any portton thereof, but the one requesting any such transfer,
conversion, and exchange shall pay any taxes or governmental charges reqmred to be pa~d vath respect thereto
as a con&tmn precedent to the exerctse of such pnwlege of conversion and exchange The Paymg
l0
Agent/Registrar shall not be required to make any such converston and exchange or replacement of Bonds or
any portion thereof(0 during the period commencing vath the close of business on any Record Date and ending
with the opening of business on the next following prmcipal or interest payment date, or, (Ii) vath respect to
any Bond or portion thereof called for redemption prior to maturity, w~thm 45 days prior to its redemption date
(e) In General All Bonds issued m conversion and exchange or replacement of any other Bond or
portion thereof, 0) shall be issued m fully registered form, vathout interest coupons, wxth the principal 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, (m) may be transferred and assigned, 0v) may be converted and exchanged for
other Bonds, (v) shall have the charaetenstaes, (xa) shall be signed and sealed, and (vl~) the pnnc~pal of and
interest on the Bonds shall be payable, all as provided, and in the manner required or md~cated, in the FORM
OF SUBSTITUTE SERIES 1998B BOND set forth m this Ordinance
(f) P~vment of Fees and Charaes The Issuer hereby covenants w~th the registered owners of the
Bonds that it will 0) pay the standard or customary fees and charges of the Paying Agent/Registrar for its
servtces w~th respect to the payment of the principal of and interest on the Bonds, when due, and (u) pay the
fees and charges of the Paymg Agent/Registrar for serwces vath respect to the transfer ofreg~stration of Bonds,
and vath respect to the conversion and exchange of Bonds solely to the extent above prowded m th~s Ordinance
(g) SUbstitute ?avm~, A~ent/Re~,~strar The Issuer covenants wth the registered owners of the Bonds
that at all tunes whale the Bonds are outstanding the Issuer will provide a competent and legally quahfied bank,
trust company, financial mst~tution, or other agency to act as and perform the services of Paying
AgenVReg~strar for the Bonds under flus Ordinance, and that the Paying Agent/Registrar vail be one entity
The Issuer reserves the right to, and may, at xts option, change the Paying Agent/Registrar upon not less than
120 days written nottee to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next
principal or interest payment date after sanh notice In the event that the entity at any time acting as Paymg
Agent/Registrar (or ars successor by merger, acqu~sltion, or other method) should resign or othervnse cease to
act as such, the Issuer covenants that promptly it will appoint a competent and legally quahfied bank, trust
company, financial matitutmn, or other agency to act as Paying Agent/Registrar under flus Ordinance Upon
any change m the Paymg Agent/Registrar, the prev~oas Paying Agent/Registrar promptly shall transfer and
dehver tho Reg~stratmn Books (or a copy thereof), along wath all other pertinent books and records relating to
the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer Upon any change m the
Paymg Agent/Registrar, the Issuer promptly vnll cause a written notice thereof to be sent by the new Paymg
Agent/Registrar to each registered owner of the Bonds, by Umted States marl, first-class postage prepaid,
which not~ee also shall g~ve the address of the new Paying Agent/Registrar By acceptmg the pos~t~on and
performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the prov~s~ons of flus
Ordmanca, and a certified copy of flus Ordinance shall be delivered to each Paying Agent/Registrar
Seetmn 7 FORM OF SUBSTITUTE BONDS The form of all Bonds ~ssued m conversmn and
exchange er replacement of any other Bond or poraon thereof, including the form of Paying AgenVRegistrar's
Certificate to be pnnted on oanh of such Bonds, and the Form of Assignment to be prmted on caeh of the
Bonds, shall be, respectively, substantially as follows, vnth such appropriate variations, om~ssions, or msemons
as are pemutted or required by flus Ordinance
Il
FORM OF SUBSTITUTE SERIES 1998B BOND
NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT
STATE OF TEXAS $
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE
REFUNDING BOND
SERIES 1998B
INTEREST MATURITY ORIGINAL DATE
RATE~ DATE OF ISSUE CUSIP NO
% AUGUST 1, 1998
ON THE MATURITY DATE specified above the CITY OF DENTON, m Denton County, Texas
(the "Issuer"), being a political subdlwsion of the State of Texas, hereby promises to pay to
, or to the registered assignee
hereof (e~ther being hereinafter called the "registered owner") the pnncapal amount of
and to pay interest thereon from August 1, 1998, to the maturity date specified above, or the date of redemption
prior to maturity, at the interest rate per annum specified above, vath interest being payable on December l,
1998, and senuannually on each June I and December 1 thereafter, except that if the date of anthentlcatlon of
this Bond Is later than the first Record Date (hereinafter defined), such pnnclpal amount shall bear mterest
from the interest payment date next preceding the date of anthentlcatlon, unless such date of authentication is
after any Record Date (hereinafter defined) but on or before the next following mterest payment date, m which
case such pnnc~pal amount shall bear interest from such next following interest payment date Said interest
shall be calculated on the bas~s ora 360-day year composed of twelve 30-day months
THE PRINCIPAL OF AND INTEREST ON tbas Bond are payable m lawful money of the Umted
States of America, vathout exchange or collection charges The pnnclpal of tbas Bond shall be pa~d to the
registered owner hereof upon presentation and surrender ofttus Bond at maturity or upon the date fixed for its
redemption prmr to maturity, at the pnnclpal corporate trust office of CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, DALLAS, TEXAS, wtuch ls the "Paymg Agent/Reglstrar" fortbas Bond The
payment of interest on this Bond shall be made by the Paymg Agent/Registrar to the registered owner hereof
on each interest payment date by check, dated as of such interest payment date, drawn by the Paying
Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authonzmg the
issuance of the Bonds (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such
purpose as hereinafter provided, and such check shall be sent by the Paymg Agent/Registrar by Umted States
mall, first~class postage prepaid, on each such mterest 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
precedmg each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar,
as hereinafter described However, the payment of such mterest may be made by any other method acceptable
to the Paying Agent/Registrar and requested by, and at the risk and expense of, the registered owner hereof
Any accrued interest due upon the redemptmn of tins Bond prior to maturity as prowded herein shall be paid
to the registered owner at the pnnc~pal corporate trust office of the Paying Agent/Registrar upon presentation
and surrender ofth~s Bond for redemptmn and payment at the pnnc~pal corporate trust office of the Paymg
Agent/Registrar The Issuer covenants with the registered owner of th~s Bond that on or before each pnnclpal
12
payment date, interest payment date, and accrued interest payment date for this Bond it will make available
to the Paying Agent/Registrar, from the "Interest and Slnkuag Fund" created by the Bond Ordinance, the
amounts required to provide for the payment, in immediately available funds, of all prmcipal of and interest
on the Bonds, when due
IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday,
Sunday, a legal holiday, or a day on which banking restitutions in the City where the Paying Agent/Registrar
is located are authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day wluch is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are
authorized to close, and payment on such date shall have the same force and effect as if made on the ongmal
date payment was due
THIS BOND is one of an issue of Bonds lmtaally dated August l, 1998, authorized in accordance w~th
the Constitution and laws of the State of Texas in the pnncipal amount of $7,640,000 FOR THE PURPOSE
OF OBTAINING FUNDS REQUIRED TO REFUND $7,140,000 IN AGGREGATE PRINCIPAL
AMOUNT OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, AND SHALL BE
DESIGNATED
ON DECEMBER l, 2008, or on any date whatsoever thereafter, the Bonds of ttus Series may be
redeemed prior to their scheduled matuntaes, at the option of the Issuer, with funds derived from any avmlable
and lawful source, as a whole, or m part, and, if m part, the pameular Bonds, or porUons thereof, to be
redeemed shall be selected and designated by the Issuer (prowded that a portion of a Bond may be redeemed
only in an integral multaple of $5,000), at the redemption price of the par or pnncipal amount thereof, plus
accrued interest to the date fixed for redemptaon
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to
maturity a written notice of such redemptaon shall be published once in a financial publication, journal, or
reporter of general clrculatmn among seountles dealers in The City of New York, New York (including, but
not lamted to, The Bond Buyer and The Wall Street Journal), or m the State of Texas (including, but not
lmuted 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 prior to the date fixed for any such redemption,
to the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such
redemption date, prowded, however, that the fmlure to send, mall, or receive such notice, or any defect thereto
or in the sending or marling thereof, shall not affect the vahchty or effectiveness of the proceedings for the
redemption of any Bond, and it is hereby specifically prowded that the publication of such notice as required
above shall be the only horace actually required ua connectaon vath or as a prerequisite to the redempUon of any
Bonds or porUons thereof By the date fixed for any such redemptaon due prov~sion shall be made w~th the
Paying Agent/Registrar for the payment o£the required redemption price for the Bonds or portions thereof
wluch are to be so redeemed, plus accrued uaterest thereon to the date fixed for redemption If such written
notice of redemptaon is published and if due provision for such payment is made, all as provided above, the
Bonds or portions thereof wluch are to be so redeemed thereby automatically shall be treated as redeemed prior
to their scheduled maturities, and they shall not bear uaterest after the date fixed for redemption, and they shall
not be regarded as beuag outstanding except for the right of the registered owner to receive the redemption price
plus accrued uaterest from the Paying Agent/Registrar out ofthe funds provided for such paymant Ifapomon
of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, beanng interest at
the same rate, ua any denomination or denomuaataons ua any uategral multiple of $5,000, at the wntten request
of the registered owner, and ua aggregate principal amount equal to the unredeemed portion thereof, will be
issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as
provided ua the Bond Ordinance
13
THIS BOND OR ANY PORTION OR PORTIONS HEREOF 1N ANY INTEGRAL MULTIPLE
OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the
Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth
in the Bond Ordinance Among other requirements for such assignment and transfer, this Bond must be
presented and surrendered to the Paying Agent/Registrar, together vath proper instruments of assignment, in
form and vath guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of
this Bond or any portion or portions hereof m any integral multiple of $5,000 to the assignee or assignees m
whose name or names this Bond or any such portion or portions hereof ,s or are to be transferred and
registered The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner
or its duly authorized attorney or reprosentutive, to ewdence the assignment hereof A new Bond or Bonds
payable to such assignee or assignees (winch then vail be the new registered owner or owners of such new Bond
or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of
this Bond, may be delivered by the Paying AgenffRegistrar ua conversion of and exchange for tins Bond, all
in the form and manner as provided m the next paragraph hereof for the conversion and exchange of other
Bonds The Issuer shall pay the Paying Agent/Reglstrar's standard or customary fees and charges for makuag
such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required
to be paid vath respect thereto The Paying Agent/Registrar shall not be requared to make transfers of regis-
tration of tins Bond or any portion hereof 0) daring the period commencing vath the close of business on any
Record Date and ending vath the opening ofbusuaess on the next following pnncipal or interest payment date,
or, (ii) vath respect to any Bond or any portaon therenf called for redemption prior to matunty, vathm 45 days
prior to its redemption date The registered owner of tins Bond shall be deemed and treated by the Issuer and
the Paying Agnnt/Raglstrar as the absolute owner herenf for all purposes, including payment and d~scharge of
liability upon tins Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not
be affected by any notice to the contrary
ALL BONDS OF THIS SERIES are lssuable solely as fully registered bonds, vathout interest
coupons, in the denommataon of any integral multiple of $5,000 As provided ua the Bond Ordinance, this
Bond, or any unredeemed portaon hereof, may, at the request of the registered owner or the assignee or as-
signees hereof, be converted rote and exchanged for a like aggregate principal amount of fully registered bonds,
vathout interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may
be, having the same maturity date, and bearing interest at the same rate, ua any denomination or denominations
ua any integral multaple of $5,000 as requested m writing by the appropriate registered owner, assignee, or
assignees, as the case may be, upon surrender of tins Bond to the Paying AgentdReglstrar for cancellation, all
ua accordance w~th the form and procedures set forth m the Bond Ordinance The Issuer shall pay the Paying
Agent/Reglstrar'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 paad vath respect thereto as a condition precedent to the exercise of such
pnwlege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such
conversion and exchange (0 during the period commencing wth the close of business on any Record Date and
ending wrth the opening of business on the next following principal or interest payment date, or, (ii) vath
respect to any Bond or portion thereof called for redemption prior to maturity, vathm 45 days prior to its
redemption date
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or
othervase ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly vail appoint
a competent and legally qualified substitute therefor, and promptly vail cause written notice thereof to be
mailed to the registered owners of the Bonds
14
IT IS HEREBY certified, melted, and covenanted that this Bond has been duly and validly authorized,
issued, sold, and delivered, that all acts, conditions, and tlungs required or proper to be performed, eyast, and
be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, eyasted,
and been done m accordance w~th law, that this Bond is a special obhgat~on of the Issuer, secured by and
payable, together wxth other bonds, from a first lien on and pledge of the "Pledged Revenues", which include
initially the "Net Revenues of the System", as such terms are defined m the Bond Ordinance, wnh the System
consisting of the City's entire combined waterworks, sewer, and electric light and power system
THE ISSUER has reserved the right, subject to the restncuons stated In the Bond Ordinance, to ~ssue
Additional Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues' on a panty
w~th this Bond and sones of which it is a part
THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to
amend the Bond Ordinance wth the approval of the holders or owners of fii~-one percent m pnncipal amount
of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged
Revenues
THE REGISTERED OWNER hereof shall never have the right to demand payment of this Bond or
the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than
specified m the Bond Ordinance
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of
the terms and prowslons of the Bond Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and available for mspecnon m the official minutes and
records of the governing body of the Issuer, and agrees that the terms and prowslons 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 this Bond to be signed vath the manual or facsamle
signature of the Mayor of the Issuer and countersigned vath the manual or facsmule signature of the City
Secretary of the Issuer, and has caused the official seal of the Issuer to be duly wapressed, or placed m
facstnule, on this Bond
City Secretary, City of Denton, Texas Mayor, City of Denton, Texas
(CITY SEAL)
15
FORM OF PAYING AGENT/REGISTRAR'S AUT~NTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It ts hereby certified that this Bond has been issued under the prows~ons of the Bond Ordinance
described m thts Bond, and that this Bond has been issued m conversion of and exchange for or replacement
of a bond, bonds, or a portmn ora bond or bonds of an ~ssue 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)
FORM OF ASSIGNMENT
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of tbas Bond, or duly authorized
representative or attorney thereof, hereby assigns tbas Bond to
/ /
(Ass~gnee's Social (print or typewnte Asslgnee's name and
Seeunty or Taxpayer address, including z~p code)
Ident~fieatmn Number)
and hereby ~rrevocably constitutes and appoints
attorney to transfer the rog~stratmn oftt~s Bond on the Paying Agent/Reg~strar's Registration Books w~th ~ll
power of substatat~on m the prermses
Dated
Signature Guaranteed
NOTICE S~gnatare(s) must be guaranteed by an Registered Owner
ehg~ble guarantor restitution participating m a NOTICE This signature must eorrespondvnththe
secunt~estransferassoc~at~on reeogmzeds~gnature name of the Registered owner appeanng on the
guarantee~ face of tYas Bond m every pamcular wnhout
alteration or enlargement or any change
whatsoever
16
Section 8 DEFINITIONS As used m this Ordinance the following terms shall have the meanings
set forth below, unless the text hereof spectfically indicates otherwise
(a) The terms "Ctty" and "Issuer" shall mean the City of Denton, m Denton County, Texas
(b) The term "City Council" or "Council" shall mean the governing body of the C~ty
(e) The term "Bonds" shall mean collectively the Inmal Bond as defined and described m Section
2 of this Ordinance and all substitute bonds exchanged therefor, and all other substitute bonds and replacement
bonds, issued pursuant to and as prowded m this Ordinance
(d) The term "Panty Bonds" shall mean collectively (2) the outstandmg Caty of Denton Ut~hty System
Revenue Bonds, Series 1988, authorized by ordinance passed on August 2, 1988 (the "Series 1988 Bonds"),
(u) the outstanding City of Denton Utthty System Revenue Bonds, Senes 1989, authorized by ordinance passed
on October 24, 1989 (the "Series 1989 Bonds*'), (iii) the outstandmg City of Denton Utility System Revenue
Bonds, Series 1992, authorized by ordinance passed on March 3, 1992 (the "Senes 1992 Bonds"), 0v) the
outstanding Caty of Denton Utthty System Revenue Bonds, Series 1993, authorized by ordinance passed on
March 16, 1993 (the "Series 1993 Bonds"), (v) the outstanding Caty of Denton Utibty System Revenue
Refunding Bonds, Series 1993 -A, authorized by ordinance passed on June 8, 1993 (the "Series 1993-A Bond"),
(va) the outstanding City of Denton Utility System Revenue Refunding Bonds, Taxable Series 1993-B,
authorized by ordinance passed on June 8, 1993 (the "Series 1993-B Bonds"), (wi) the outstanding City of
Denton Utility System Revenue Bonds, Series 1996, authorized by ordinance passed on May 7, 1996 (the
"Senes 1996 Bonds"), (vm) the C~ty of Denton Utility System Revenue Refunding Bonds, Series 1996A,
authorized, by ordinance passed on May 7, 1996 (the "Series 1996A Bonds"), (ix) the City of Denton Utthty
System Revenue Bonds, Series 1998, authorized by ordinance passed on March 24, 1998 (the "Series 1998
Bonds"), (x) the City of Denton Utahty System Revenue Refundmg Bonds, Series 1998A, authorized by
ordinance passed on July 21, 1998 (the "Series 1998A Bonds") and (ya) the Bonds
(e) The term "Additional Bonds" shall mean the additaonal panty revenue bonds which the C~ty
reserves tho right to issue m the future, m accordance v, uth Seetaon 25 of this Ordinance
(f) The term "System" shall mean (l) the Caty's entire eyastmg waterworks and sewer system and the
Caty's entire eyastmg electric light and power system, together v,~th all future extensaons, ~mprovements,
enlargements, and additauns thereto, and all replacements thereof, and (2) any other related facdities, all or any
part of the revenues or menme from which do, ~n the future, at the optmn of the City, and m accordance ruth
law, become "Pledged Revenues" as hereinafter defined, provided that, notwxthstandmg the foregoing, and to
the extent now or herea~er authorized or peruntted by law, the term System shall not mean any water, sewer,
electric, or other fanflat~es of any land which are declared not to be a part of the System, and which are acquired
or constructed by the City wath the proceeds from the assuance of "Spemal Facthties Bonds", which are hereby
defined as being special revenue obhgataens of the C~ty which are not payable from or secured by any Pledged
Revenues, but which are secured by and payable from hens on and pledges of any other revenues, sources, or
payments, including, but not lmuted to, special contract revenues or payments received from any other legal
entity m conneeUon w~th such faeflmes, and such revenues, sources, or payments shall not be considered as
or constatute Gross Revenues of the System, unless and to the extent otherx, ase prowded m the ordinance or
ordinances authonzmg the ~ssuance of such "Special Facthties Bonds"
(g) The terms "Gross Revenues of the System" and "Gross Revenues" shall mean all revenues and
raceme of every nature derived or receaved by the Caty from the operation and ownership of the System,
meludmg the interest menme from the investment or deposit of money m any Fund created by fins Ordinance
17
(h) The terms "Net Revenues of the System", and "Net Revenues" shall mean all Gross Revenues after
deducting therefrom an amount equal to the current expenses of operation and maintenance of the System,
eluding all salaries, labor, materials, repairs, and extensions necessary to render efficient service, provided,
however, that only such repairs and extensions, as m the judgment of the C~ty Council, reasonably and fairly
exercised by the adoption of appropriate resolutions, are necessary to keep the System in operation and render
adequate service to sa~d City and the inhabitants thereof, or such as m~ght be necessary to meet some physical
accident or condition which would otherx~ase ~mpa~r the Bonds or Additional Bonds, shall be deducted m
determining "Net Revenues" Payments required to be made by the City for water supply or water facflmes,
sewer services or sewer facilities, fuel supply, and for the purchase of electric power, which payments under
law constitute operation and maintenance expenses of any part of the System, shall constitute and be regarded
as expenses of operation and mamtenance ofthe System under th~s Ordinance Deprec~ation and amomzation
shall not eonstatute or be regarded as expenses of operation and maintenance of the System
(0 The term "Pledged Revenues" shall mean
(1) the Net Revenues, plus
(2) any addatmnal revenues, raceme, or other resources which are expected to be available
to the City on a regular periodic bas~s, including, vathout lmutaUon, any grants, donations, or income
received or to be received from the United States Government, or any other public or private source,
whether pursuant to an agreement or otherwise, which In the future may, at the option of the Cl~y, 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 City m connection wath the
operation of the System
(k) The term "Government Obligations" shall mean direct obhgat~ons of the Umted States of America,
including obhgat~ons the pnnclpal of and interest on wbach are unconchtionalty guaranteed by the Umted States
of America, wlueh may be Umted States Treasury obligations such as ns State and Local Government Series,
and wlueh may be m book-entry form
Section 9 PLEDGE (a) The Bonds are "Additional Bonds" as permuted by Sections 24 and 25 of
the ordinance passed on March 10, 1983, authorizing the City of Dentun Refunding Bonds, Series 1983 (~he
"Series 1983 Bonds"), and it is hereby determined, declared, and resolved that all of the Panty Bonds (including
the Bonds) are secured and payable equally and ratably on a panty, and that Sections 8 through 28 of tlus
Ordinance are supplemental to and cumulattve of Sections 7 through 27 of the aforesmd ordinance passed on
March 10, 1983, wath Seetmns 8 through 28 of this Ordinance being applicable to all of the Panty Bonds
(b) The Panty Bonds and any Additional Bonds, and the interest thereon, meluchng any interest
coupons appertaining thereto, are and shall be secured by and payable from a first lien on and pledge of the
Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the
Funds created by this Ordinance, and any Funds created by any ordinance anthonzmg the issuance of any
Additional Bonds The Panty Bonds and any Add~tional Bonds are not and will not be secured by or payable
from a mortgage or deed of trust on any real, personal, or nuxed properties constituting the System
Section l0 SYSTEM FUND There heretofore has been and is hereby created and there shall be
established and maintained on the books of the City, and accounted for separate and apart from all other funds
of the City, a special fund to be entitled the "City of Denton Utility System Fund" (the "System Fund") All
Gross Revenues shall be credited to the System Fund immediately upon receipt, unless otherwise provided in
18
tins Ordinance All current expenses of operation and maintenance of the System shall be prod from such
Gross Revenues cmdmted to the System Fund as a first charge against same Before mal~ng any deposits
hereinafter mqmred to be made from the System Fund, the Cmty shall retamn m the System Fund at all tanes an
amount at least equal to one-sixth of the amount budgeted for the then current fiscal year for the current
operanon and maintenance expenses of the System
Sectmon 11 INTEREST AND SINKING FUND For the sole purpose of paying the pnnmpal of and
mnterest on all Panty Bonds and Addmonal Bonds, there heretofore has been and ts hereby created and there
shall be estabhshed and maintained on the books of the Cmty, and accounted for separate and apart from all
other funds of the City, a separate fund to be entitled the "Cmty of Denton Utdmty System Revenue Bonds Inter-
est and Stoking Fund" (the "Interest and Stoking Fund")
Section 12 RESERVE FUND There heretofore has been, and ts hereby, created, and there shall be
estabhshed and maintained at Chase Bank of Texas, Natmonal Assocmat~on, and hereat~er, at the option of the
City, estabhshed and mamtamned at any time at any natmonal bank having a capmtal and surplus m excess of
$25,000,000, a separate fund to be entitled the "Cmty of Denton Utd~ty System Bonds and Adchtlonal Bonds
Reserve Fund" (the "Reserve Fund") The Reserve Fund shall be used to pay the pnnmpal of and tnterest on
any Panty Bonds or Addmonal Bonds when and to the extent the amounts m the Interest and Stoking Fund
avmlable for such payment are msufficment for such purpose, and may be used for the purpose of finally retmrmg
the last of any Panty Bonds or Adrhtmonal Bonds
S~ctionl3 EXTENSION AND IMPROVEMENT FUND There heretofore has been and ~s hereby
created and there shall be established and maintained on the books of the Cmty, and accounted for separate and
apart from all other funds of the C~ty, a separate fund to be entmtled the "C~ty of Denton Utdmty System
Extension and Improvement Fund" (the "Extensmon and Improvement Fund") The Extensmon and Improvement
Fund shall, be used for the purpose of paying the costs of ~mprovements, enlargements, extensions, adchtions,
replacements, or other capital expenditures related to the System, or for paying the costs of unexpected or
extraordinary repairs or replacaments of the System for wInch System funds are not avadable, or for paying
unexpected or extraordinary expenses of operation and maintenance of the System for wInch System funds are
not otherwise available, or for any other lawful purpose
SecUon 14 EMERGENCY FUND There ~s hereby created and there shall be estabhshed and
maintained on the books of the C~ty, and accounted for separate and apart from all other funds of the C~ty, a
separate fund to be entitled the "City of Denton Utd~ty System Emergency Fund" (the "Emergency Fund")
The Emergency Fund shall be used for the purpose of paying unexpected or extraordinary expenses of repmr,
replacemetlt, operation, and maintenance of the System for wtuch netther System funds nor the moneys m the
Extensmn and Improvement Fund are available There was deposmted m the Emergency Fund stmultaneously
w~th the dohvery of the Series 1983 Bonds to the anUal purchasers thereof from lawfully avmlable funds of
the Ctty the amount of $250,000 AIl investment interest raceme from the Emergency Fund shall be transferred
to the System Fund as recemved
Section 15 DEPOSITS OF PLEDGED REVENUES Pledged Revenues shall be credited to or
deposaed m the Interest and Stoking Fund, the Reserve Fund, the Extension and Improvement Fund, and other
funds when and as reqmrcd by tlus Ordinance and any ordinance anthonzmg the issuance of Adchuonal Bonds
Section 16 INVESTMENTS Money m any Fund estabhshed pursuant to tins Ordinance or any
ordinance authorizing the issuance of Addmonal Bonds, may, at the optmon of the Cmty, be placed m Ume
deposits or certfficates of deposit secured by obhgatmons of the type hereinafter described, or be invested m
Government ObhgaUons (as defined m Section 8 hereof) or obhgaUons guaranteed or insured by the Umted
19
States of Amenca, which, in the opanon of the Attorney General of the United States, are backed by its full
faith and credit or represent its general obligations, or invested in obligations ofmstrumentahties of the United
States of America, including, but not hunted to, evidences of indebtedness issued, insured, or guaranteed by
such governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks, Banks for
Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, United States Postal
Serwce, Farmers Home Adrrumstration, Federal Home Loan Mortgage Association, Small Business
Administration, Federal Hoasmg Association, or ParUcipation Certificates in the Federal Assets Financing
Trust, provided that all such deposits and investments shall be made in such manner as wdl, m the opimon of
the City, pernut the money required to be expended from any Fund to be available at the proper time or tunes
as expected to be needed Such investments (except Umted States Treasury Obligations--State and Local
Government Series investments held in book entry form, winch shall at all times be valued at cost) shall be
valued m terms of current market value as ofthe last day of each fiscal year Unless othervwse set forth hereto,
all ~nterest and raceme danved from such deposits and investments lmmedintely shall be credited to, and any
losses debited to, the Fund from which tho deposit or investment was made, and surpluses m any Fund shall
or may be disposed of as heremaiter provided Such mvestments shall be sold promptly when necessary to
prevent any default m connection w~th the Panty Bonds or Additional Bonds consistent vath the ordinances,
respectively, anthonzmg their issuance
Section 17 FUNDS SECURED That money m all Funds created by flus Ordinance, to the extent
not ~nvested, shall be secured m the manner prescribed by law
Section 18 PRIORITY OF DEPOSITS AND PAYMENTS FROM SYSTEM FUND That the City
shall make the deposits and payments from Pledged Revenues m the System Fund when and as required by flus
Ordinance and any ordinance authorizing any Additional Bonds, and such deposits shall be made m the
following manner and vath the following irrevocable pnonnes, respectively
First, to the Interest and Stoking Fund, when and in the amounts required by this
Ordinance and any ordinance authorizing any Additional Bonds,
Second, to the Reserve Fund, when and m the amounts required by flus Ordinance and any
ordinance anthonzmg any Additional Bonds, and
Tlurd, to the Extensmn and Improvement Fund, when and as required by Sectaon 21 of
this Ordinance
Section 19 INTEREST AND SINKING FUND REQUIREMENTS The City shall cause to be
deposited to the credit of the Interest and Stoking Fund the accrued interest and any premium received from
the sale of~the hnt~al Bond, and on or before the 25th day of each month, the City shall cause to be deposited
to the credit of the Interest and Stoking Fund, m approramately equal monthly payments, amounts sufficient,
together vath any other funds on hand therein, to pay all of the interest or principal and interest coming due,
mcludmg the principal amount of any Panty Bonds required to be redeemed prior to maturity pursuant to any
mandatory redemption requirements, on the Panty Bonds and any Additional Bonds on the next succeeding
interest payment date Any moneys so deposited m the Interest and Smkmg Fund vath respect to a mandatory
redemption requirement, together w~th other lawfully available funds of the City, may be used by the City, to
purchase, m advance cfa mandatory redemption date and at a price not exceeding the pnncipal amount thereof
plus accrued interest thereon to the date of purchase, Panty Bonds which would be subject to being chosen for
mandatory redemption on such mandatory redemption date The Paying Agent shall cancel any Panty Bonds
so purchased
2O
Section 20 RESERVE FUND REQUIREMENTS There ts now on hand m the Reserve Fund an
amount of money and Government Obhgat,ons which is m excess of $3,000,000 and wluch is at least equal
to the average annual pnncipal and interest requirements of the outstanchng Series 1988 Bonds, the Series 1989
Bonds, the Sones 1992 Bonds, the Series 1993 Bonds, the Series 1993-A Bonds, the Taxable Sones 1993-B
Bonds, the Sones 1996 Bonds, the Series 1996A Bonds, tho Series 1998 Bonds and the Sones 1998A Bonds
(the current "Required Reserve Amount") Following the issuance and delivery of the Imtial Bonds the
Required ~Reserve Amount shall become and bo an amount of money and ,nvestments equal to the average
annual principal and interest requirements of all tho outstanding Parity Bonds and Additional Bonds, proxaded
further, however, that the Required Reserve Amount shall never be less than $3,000,000 if tho mardmum
annual principal and interest requirements on all outstanding Panty Bonds and Adthtional Bonds exceeds
$3,000,000 Immochatoly after tho issuance and delivery of the Initial Bonds there shall be deposited to the
credit of tho Reserve Fund, from the proceeds of the sale of the Initial Sones 1998B Bond, money sufficient
to cause the Reserve Fund to contain an aggregate amount of money and ,nvestmonts equal to the Required
Reserve Amount for all then outstanding Panty Bonds After the dehvery of any future Additional Bonds the
City shall cause the Reserve Fund to bo increased, if and to tho extent necessary, so that such Fund wall contain
an amount of money and investments equal to the Required Reserve Amount Any increase in the Required
Reserve Amount may be funded fi.om Pledged Revenues, or fi.om proceeds from the sale of any Adchtaonal
Bonds, or any other available source or combination of sources All or any part of the Required Reserve
Amount not funded unt~ally and nnmothately after the delivery of any installment or issue of Ad&tional Bonds
shall be t'[tnded, w~thm not more than five years from the date of such delivery, by deposits of Pledged
Revenues m approxmmtely equal monthly installments on or before the 25th day of each month Pnnclpal
amounts of the Panty Bonds and any Additional Bonds which must be redeemed pursuant to any applicable
mandatory redemption reqmreraents shall be deemed to be maturing amounts of principal for the purpose of
calculating principal and interest reqmrements on such bonds When and so long as the amount m the Reserve
Fund is not loss than the Required Reserve Amount no deposits shall be made to the cretht of the Reserve Fund,
but when and if the Reserve Fund at any tame contains less than tho Required Reserve Amount, then the City
shall transfer from Pledged Revenues m the System Fund, and deposit to the credit of tho Reserve Fund,
monthly on or before the 25th day of each month, a sam equal to 1/60th of the Required Reserve Amount, until
the Reserve Fund is restored to the Required Reserve Amount The City specifically covenants that when and
so long as'the Reserve Fund contains the Reqmred Reserve Amount, tho City shall cause all amounts m excess
of the Required Reserve Amount to be deposited to the credit of the Interest and Stoking Fund
Section 21 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS During each year,
subject and subordinate to making the required deposits to the credit of tho Interest and Stoking Fund and the
Reserve Fund, tho City shall be rextmred to deposit to the crecht 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", Winch 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
yoar winch are threetly attributable to (l) all fuel costs related to the production of electric
energy by the City and/or (n) the purchase of electnc energy by the City
Ad&t~onal excess Pledged Revenues may, at the option of the City Council, be deposited to the credit of the
Improvement Fund as permitted by So.ion 22 (b) hereof, but no such additional deposit is required All
investment interest raceme from the Extension and Improvement Fund shall be retamed m and remain a part
of such Fund
21
Section 22 DEFICIENCIES, EXCESS PLEDGED REVENUES (a) If on any occasion there shall
not be sufficient Pledged Revenues to make the required deposits into the Interest and Sinking Fund or the
Reserve Fund, such deficiency shall be made up as soon as possible from the next available Pledged Revenues
(b) SubJect to making the required deposits to the credit of the var, ous Funds when and as required
by this Ordmance or any ordinance authorizing the ~ssuance of Additional Bonds, any surplus Pledged
Revenues, may be used by the City for any lawful purpose
Section 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS On or before
December l, 1998, and semiannually on or before each June 1 and December 1 thereafter whale any of the
Panty Bonds or Additional Bonds are outstanding and unpaid the C~ty shall make available to the Paying
Agents therefor, out of the Interest and Stoking Fund, or ffneeessary, out of the Reserve Fund, money sufficient
to pay, on each of such dates, the principal of and interest on the Panty Bonds and Additional Bonds as the
same matures and comes due, or to redeem the Panty Bonds or Additional Bonds prior to maturity, either upon
mandatory redemption or at the option of the C~ty At the direction of the City the Paying Agents shall either
deliver pald Panty Bonds and Additional Bonds, and any interest coupons appertaining thereto, to the City or
destroy all pard Panty Bonds and Additional Bonds, and any coupons appertaining thereto, and furnish the C~ty
wath an alapropnate certificate of cancellation or destruction
Seetton 24 FINAL DEPOSITS (a) Any Panty Bond or Additional Bond shall be deemed to be paid,
retired, and no longer outstanding w~thm the meaning of tbas Ordinance when payment of the pnnclpal of,
redemption premium, if any, on such Panty Bond or AddiUonal Bond, plus interest thereon to the due date
thereof (whether such due date be by reason ofmatunty, upon redemption, or othervnse) either (0 shall have
been made or caused tu be made m accordance w~th the terms thereof (including the giving of any required
not,ce of redemption or prows,on for the proper giving of such notice having been made), or (il) shall have been
prowded by irrevocably depositing w:th or making available to a Paying Agent therefor, m trust and
irrevocably set aside exclusively for such payment, (l) money sufficient to make such payment or (2)
Government Obhgatlons wbach mature as to principal and interest m such amounts and at such ttmes as will
insure the avaflabdlty, w~thout remvestment, of sufficient money to make such payment, and all necessary and
proper fees, compensataon, and expenses of such Paying Agent pertaining to the Parity Bonds and Additional
Bonds w~th respect to wbach such deposit is made shall have been paid or the payment thereof provided for to
the satisfaction of such paying agent At such time as a Bond or Additional Bond shall be deemed to be paid
hereunder, as aforesaad, :t shall no longer be secured by or entitled to the benefits of tlus Ordinance or a lien
on and pledge of the Pledged Revenues, and shall be entatled to payment solely from such money or Govern-
ment Obhgat:ons
(la) Any moneys so deposited w~th a paying agent may at the direction of the C~ty also be invested m
Government Obligations, maturing m the amounts and t~mes as hereinbefore set forth, and all income from all
Government Obhgatxons m the hands of the paying agent pursuant to thas Section which is not reqmred for the
payment of the Panty Bonds and Addit~onal Bonds, the redemption premium, ffany, and interest thereon, v~th
respect to which such money has been so deposited, shall be turned over to the City or deposited as directed
by the City
Section 25 ADDITIONAL BONDS (a) The City shall have the right and power at any tune and
from tLme to tune, and m one or more senes or issues, to authorize, issue, and deliver additional panty revenue
bonds (hereto called "Additmnal Bonds"), ~n accordance w~th law, in any amounts, for any lawful purpose,
mcludmg the refunding ofany Panty Bonds or Additional Bonds, or other obhgattons Such Additional Bonds,
if and when authorized, issued, and delivered m accordance with this Ordinance, shall be payable from and
22
secured by an ~rrevocable first hen on and pledge of the Pledged Revenues, equally and ratably on a panty in
all respects w~th the Parity Bonds and any other outstanding Additional Bonds
(b) The principal of all Additional Bonds must be scheduled to be pa~d or mature on December 1 of
the years m which such pnnc~pal ~s scheduled to be pa~d or mature
Section 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS Additional Bonds shall
be ~ssued 0nly m accordance vath tbas Ordinance, and no ~nstallment, Series, or ~ssue of Additional Bonds shall
be tssued or delivered unless
(a) The Mayor of the C~ty and the C~ty Secretary s~gn a written certificate to the effect that the City
~s not m default as to any covenant, condition, or obligation m connection w~th all then outstanding Panty
Bonds and Addit~ounl Bonds, and the orchnanees anthonz~ng same, and that the Interest and Slnlnag Fund and
the Reserve Fund each contains the amount then required to be there~n
(b) An independent cemfied pubhe accountant, or independent firm of certified public accountants,
acting by and through a certafied pubhc accountant, signs a written cert~fieate to the effect that, m bas or ~ts
op~mon, during either the next preceding fiscal year, or any twelve consecutive calendar month period out of
the 18-munth period unmed~ately preceding the month in which the orchnance authorizing the ~ssuanee of the
then proposed Adchtmnal Bonds is passed, the Pledged Revenues were at least (0 125 tunes an amount equal
to the average annual pnncipal and interest requirements, and (n) 1 10 tunes an amount equal to the pnnc~pal
and interest requirements during the fiscal year during which such reqmrements are scheduled to be the
greatest, of all Panty Bonds and Additional Bonds wbaeh are scheduled to be outstanding after the delivery of
the then proposed Addmonal Bonds It is specifically prowded, however, that m caleulatmg the amount of
Pledged Revenues for the purposes oftbas subsectaon (b), if there has been any increase m the rates or charges
for services of the System wbach is then m effect, but wbach was not m effect dunng all or any part of the entire
period for wbach the Pledged Revenues are being calculated (heremai~er referred to as the "ent,re period") then
the certlfi~)d public accountant, or m lieu of the certified public accountant a firm of consulting engineers, shall
determine and certafy the amount of Pledged Revenues as being the total of(l) the antual Pledged Revenues for
the entire l~enod, plus (n) a sum equal to the aggregate amount by which the actual bflhngs to customers of the
System dunng the entare period would have been increased if such increased rates or charges had been m effect
during the entare period
(o) Provasmn shall be made m the ordinance authorizing their ~ssuance for mcreasmg the Reserve Fund
to the Required Reserve Amount as required by Section 20 hereof
(d) All calculations of average annual pnnclpal and interest reqmrements of any bonds made m
conneetlon w~th the issuance of any then proposed Addit~onal Bonds shall be made as of the date of such
Addltmnal Bonds, and also m making ealeulatmns for such purpose, and for any other purpose under th~s
Ordinance, pnn¢lpal amounts of any bonds wbach must be redeemed prior to maturity pursuant to any
apphcable mandatory redemption requirements shall be deemed to be maturing amounts of pnnclpal of such
bonds
Section 27 (~ENERAL COVENANTS The C~ty further covenants and agrees that m accordance
w~th and to the extent required or pemutted by law
(a) performance It will fmthfully perform at all t~mes any and all covenants, undertakings,
supulat~ons, and provisions contained m tbas Or&hartco, and each ordinance authorizing the ~ssuanee of
Additional Bonds, and ~n each and every Panty Bond and Additional Bond, that it w~ll promptly pay or cause
23
to be pa,d~the principal of and interest on every Parity Bond and Additional Bond, on the dates and in the places
and manner prescribed m such ordinances and Parity Bonds or Additional Bonds, and that it will, at the times
and in tho manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the
Interest a0d Sinking Fund and the Reserve Fund, and any holder of the Parity Bonds or Additional Bonds may
require the City, its officials, and employees, to carry out, respect, or enforce the covenants and obligations of
this Ordinance, or any ordinance anthonzmg the issuance of Additional Bonds, by all legal and equitable
means, including specifically, but without limitation, the use and filing ofmandamas proceedings, in any court
of competent.lunsdlctlon, against the City, its officials, and employees
(b) Ow's Le,,al Authority The City is a duly created and existing home rule city of the State of
Texas, and is duly authorized under the laws of the State of Texas to create and issue the Panty Bonds and
Additional Bonds, that all action on its part for the creation and issuance of the said obligations has been or
will be duly and effectively taken, and that said obligations in the hands of the holders and owners thereof are
and will be valid and enforceable special obligations of the City in accordance with their terms
(c) Title The City has or will obtmn lawful title to the lands, buildings, structures, and facilities
constituting the System, that it warrants that it will defend the title to all the aforesaid lands, braidings,
structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Panty Bonds
and Additional Bonds, against the clanns and demands of all persons whomsoever, that it is lawfully qualified
to pledge Ithe Pledged Revenues to the payment of the Panty Bonds and Add~taonal Bonds in the manner
prescribed harem, and has lawfully exercised such nghts
(d) Liens The City vail from tnne to tune and before the same become delmquent pay and chscharge
all taxes, assessments, and governmental charges, if any, which shall be lawfully nnpoeed upon it, or the
System, that it will pay all lawful clauns for rents, royalties, labor, materials, and supplies wtuch ffnnpa~d
nught by law become a lien or charge thereon, the lien of wbach would be prior to or interfere with the liens
hereof, so that the priority of the liens granted hereunder shall be fully preserved m the manner provided harem,
and that it vall not create or suffer to be created any mechamc's, laborer's, materialman's, or other lien or
charge which rmght or could be prior to the liens hereof, or do or suffer any matter or tlung whereby the liens
hereofunght or could be unpaired, provided, however, that no such tax, assessment, or charge, and that no such
claims wbach nnght bo used as the basis cfa mechamc's, laborer's, materialman's, or other lien or charge, shall
be reqmr~ to be paid so long as the vahchty of the same shall be contested in good faith by the City
(~) Onerat~on of System. No Free Serwce WMe the Panty Bonds or any Adchtaonal Bonds are
outstanding and unpaid the City shall continuously and efficiently operate the System, and shall maintain the
System mlgood condltaOn, repair, and working order, all at reasonable cost No free service ortho System shall
be allowed, and should the City or any of ItS agencies, mstrumentahues, lessors, or concessiona~res make use
of the services and fantht~es of the System, payment monthly of the standard retail price of the services
provided shall be made by the City or any nfits agencies, mstrumentalmes, lessors, or concessionaires out of
funds from sources other than the revenues of the System, unless made from surplus Pledged Revenues as
permitted iby Section 22('0) hereof
(0 Forth~r Encumbrance Whale the Panty Bonds or any Adchtional Bonds are outstanding and
unpaid, tlm City shall not add~tionally encumber the Pledged Revenues m any manner, except as permitt~d in
this Ordinance m connection with Additional Bonds, unless said encumbrance is made junior and subordinate
in all respects to the liens, pledges, covenants, and agreements nfttus Ordinance and any ordinance anthonzing
the lssuanee of Adthtional Bonds, but the right nfthe City to issue revenue bonds payable from a suborchnate
lien on surplus Pledged Revenues is specifically recogluzed and retained, as pernuttexi under Section 22Co)
hereof
24
(g) Sale or DlsI~gsal of Pronenv While the Parity Bonds or any Additional Bonds are outstanding
and unpaid, the C,ty shall not sell, convey, mortgage, encumber, lease, or m any manner transfer title to, or
dedicate to other use, or otherwise dispose of, the System, or any significant or substantial pan thereof,
prowded, that whenever the City deems ~t necessary to dispose of any property, machinery, fixtures, or
eqmpme~t, or dedicate such property to other use, ,t may do so either when It has made arrangements to replace
the same lot provide substitutes therefor, or it is determined by resolution of the City Counc,l that no such
replacement or substitute is necessary
(h) Insur~lce (l) The C~ty shall cause to be insured such pans of the System as would usually be
insured by corporations operating like properties, vath a responsible insurance company or compames, against
risks, aec~ldents, or casualties against which and to the extent insurance is usually carried by corporations
operating like properties, including, to the extent reasonably obtainable, fire and extended coverage insurance,
insurance against damage by floods, and use and occupancy insurance Public liability and property damage
insurance also shall be earned unless the C~ty Attorney gives a written opanon to the effect that the City ~s not
liable for claims which would be protected by such insurance All insurance premiums shall be paid as an
expense of operation of the System At any tune while any contractor engaged m construction work shall be
fully responsible therefor, the C~ty shall not be required to carry insurance on the work being constnicted if the
contractor ,s required to carry appropriate insurance All such poheles shall be open to the mspection of the
Bondholders and their representatives at all reasonable times Upon the happening of any loss or damage
covered by insurance from one or more of said causes, the City shall make due proof of loss and shall do all
things necessary or desirable to cause the msunng compames to make payment m full directly to the C~ty The
proceeds 0fmsuranco covering such property, together w~th any other funds necessary and available for such
purpose, shall be used forthvath by the C~ty for repalnng the property damaged or replacing the property
destroyed, prowded, however, that ffsaid insurance proceeds and other funds are msuffic,ent for such purpose,
then said insurance proceeds pertaining to the System shall be deposited m a special and separate trust fund,
at an official depository ortho Cmty, to be designated the Insurance Account The Insurance Account shall be
held until such tune as other funds become available which, together v~th the Insurance Account, wll be
sufficient,to make the repairs or replacements originally required
(2) The annual audit hereinafter required may contain a section commentmg on whether or not the C~ty
has comphed with the reqmrements of this Section with respect to the mamtenance of insurance, and shall state
whether or not all insurance premiums upon the insurance policies to which reference is made have been paid
(i) Annual Budget and Rate Covenant The C~ty shall prepare, prior to the beginning of each fiscal
year, an annual budget, m accordance w~th law, reflecting an estunate of cash receipts and disbursements for
the ensunlg fiscal year m sufliclent detail to indicate the probable Gross Revenues and Pledged Revenues for
such fiscal year The C~ty shall fix, estabhsh, maintain, and collect, such rates, charges, and fees for the use
and ava, l~bfl~ty of the System at all times as are necessary (1) to produce Gross Revenues sui~e,ent, together
wth any ether Pledged Revenues, to pay all current operation and mamtenance expenses of the System, and
(2) to produce an amount of Pledged Revenues during each fiscal year at least equalto the greater of 1 25 t~mes
the average annual pnnc~pal and interest reqmrements of all then outstanding Panty Bonds and Additional
Bonds or 1 25 tunes the succeeding fiscal year's pnnclpal and ,nterest requirements of all then outstanding
Panty Bonds and Additional Bonds
(1~ Records The C~ty shall keep proper books of record and account m which full, true, proper, and
correct entries vail be made of all dealings, activities, and transactions relating to the System, the Pledged
Revenues~ and the Funds created pursuant to this Ordinance, and all books, documents, and vouchers relating
thereto shall at all reasonable times be made available for mspection upon request of any Bondholder or c,tizen
of the City To the extent consistent vath the provisions of this Ordinance, the C,ty shall keep its books and
2~
records in a manner conforming to standard accounting practices as usually would be followed by private
corporations owmng and operating a slmdar System, with appropriate recognition being given to essential
d~fferences between mumclpal and corporate accounting practices
(k) Audits A~er the close of each fiscal year while any of the Panty Bonds or any Addmonal Bonds
are outstanding, an audtt will be made of the books and accounts relating to the System and the Pledged
Revenues by an independent certafied public accountant or an ~ndependent firm of certified pubhc accountants
As soon as practicable after the close of each such year, and when sa~d audit has been completed and made
avadable to the Caty, a copy of such audat for the preceding year shall be mailed to the Mumc~pal Adwsory
Council of Texas, to each paying agent for any bonds payable from Pledged Revenues, and to any Bondholders
who shall so request m writing The annual aod~t reports shall be open to the anspect~on of the Bondholders
and thetr agents and representatives at all reasonable tunes
(l) Govemmental A,,encles It will comply vath all of the terms and condmons of any and all
francinses, penmts, and authonzataons applicable to or necessary wah respect to the System, and wbach have
been obtained from any governmental agency, and the City has or vall obtain and keep m full force and effect
all franeinses, permats, authorization, and other requirements applicable to or necessary w~th respect to the
acqmsat~on, eonstruetaon, eqmpment, operation, and maintenance of the System
(m) NoComnetmon It vnll ant operate, orgrantanyfrancbaseor, to the extent ~t legally may, permlt
the acqms~tlon, construetaon, or operation of, any faodmes wbach would be m competmon vaththe System, and
to the extent that ~t legally may, the Caty vnll probabat any such competing facfl~taes
(n) NO Arbatra~ze The CaW covenants to and w~th the purchasers of the Panty Bonds and any
Addat~onal Bonds that no use will be made of the proceeds of any of such bonds at any tune throughout the term
of any of such bonds wi'ach, ff such use had been reasonably expected on the date of dehvery of any of such
bonds to and payment therefor by the purchasers, would have caused any of such bonds to be arbitrage bonds
wahm the meaning of Sentmn 148 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
regulations or ruhags pertaining thereto, and by thts covenant the Caty is obhgated to comply vath the
reqmrements of the aforesmd Code and all applicable and pertinent Department of the Treasury ragulat~ons
relating to arbitrage bonds The Caty further covenants that the proceeds of all such bonds vail not othervase
be used d~reetly or mdarectly so as to cause all or any part of such bonds to be or become arbitrage bonds
vathm the meaning of the aforesaad Code, or any regulations pertaining thereto
Seetmn 28 AMENDMENT OF ORDINANCE (a) The holders or owners of Panty Bonds and
Add~taonal Bonds aggragatmg m principal amount 51% of the aggregate principal amount of then outstanding
Panty Bonds and Addmonal Bonds shall have the right from tune to tune to approve any amendment to flus
Ordinance winch may be deemed necessary or desarable by the Caty, prowded, however, that notinng hereto
contained shall penmt or be construed to pernut the amendment of the terms and condmons an tins Ordinance
or ~n the Panty Bonds or Addmonal Bonds so as to
(l) Make any change m the maturity of the outstanding Panty Bonds or Adcht~onal Bonds,
(2) Reduce the rate of interest borne by any of the outstanding Panty Bonds or Addmonal Bonds,
(3) Reduce the amount of the prmcapal payable on the outstanding Panty Bonds or Additional
Bonds,
26
(4) Modify the terms of payment of principal of or interest on the outstanding Parity Bonds or
Additional Bonds, or impose any conditions with respect to such payment,
(5) Affect the rights of the holders or owners of less than all of the Parity Bonds and Addmonal
Bonds then outstanding,
(6) Change the rmnunum percentage of the principal amount of Parity Bonds and Additional
Bonds necessary for consent to such amendment
(b) If at any tune the City shall desire to amend the Ordinance under this Section, the City shall cause
notice of the proposed amendment to be pubhshed m a financial publication of general cunulatien in The City
of New York, New York, once during each calendar week for at least two successive calendar weeks Such
notice shall bnefiy set forth the nature of the proposed amendment and shall state that a copy therenfls on file
at the principal office of the Paying Agents for inspection by all holders or owners of Panty Bonds and Addi-
tional Bonds Such pubhcataon is not reqmred, however, if notme in writing is given to each holder or owner
of Panty Bonds and Additional Bonds
(c) Whenever at any tune not less than thirty days, and w~thm one year, from the date of the first
publication of said notice or other serrate of written notice the City shall receive an instrument or instruments
executed by the holders or owners of at least 51% m aggregate principal amount of all Panty Bonds and
Additional Bonds then outstanding, wbach instrument or instruments shall refer to the proposed amendment
described m smd notice and which specifically consent to and approve such amendment m substantially the
form of th* copy thereof on file vnth the Paying Agents, the City Council may pass the amendatory ordinance
m substantially the same form
(d) Upon the passage of any amendatory ordinance pursuant to the provisions of ttus Section, this
Ordinance shall be deemed to be amended m accordance with such amendatory ordinance, and the respective
rights, duties, and obligations under ttus Ordinance of the City, and all the holders or owners of then out-
standing Panty Bonds and Additional Bonds and all future Panty Bonds and Addmonal Bonds shall thereafter
be determined, exemised, and enforced hereunder, subject in all respects to such amendments
(e) Any consent given by the holder or owner of a Panty Bond or Additional Bond pursuant to the
provisions ofttus Section shall be irrevocable for a period of slx months from the date of the first pubheatlon
of the notice provided for mttus Section, and shall be conclusive and binding upon all future holders or owners
of the same Panty Bond or Additional Bond during such period Such consent may be revoked at any tn'ne
after slx months from the date of the first pubhcation of such notice by the holder or owner who gave such
consent, or by a successor in title, by filing notice thereofw~th the paying agents and the City, but such revoca-
tion shall not be effective if the holders or owners of 51% in aggregate pnnclpal amount of the then outstanding
Panty Bonds and Adchtlonal Bonds as mttus Section defined have, prior to the attempted revocation, consented
to, and approved the amendment
(f) For the purpose of this Section, the fact of the holding of Panty Bonds or Additional Bonds which
are in bearer, coupon form, by any bondholder and the amount and numbers of such bearer Panty Bonds or
Additional, Bonds and the date of their holding same, may be proved by the affidawt of the person clamung to
be such holder or owner, or by a certificate executed by any trust company, bank, banker, or any other
depomory wherever situated showing that at the date therein mentioned such person had on depom w~th such
trust company, bank, banker, or other deposito~y, the Parity Bonds and Additional Bonds described in such
certfficate The City may conclusively assume that such ownerstup continues until written notice to the
27
contrary ~s served upon the City The ownership of'all registered Panty Bonds and Additional Bonds shall be
determined from the registration hooks kept by the registrar therefor
Section 29 DAMAOED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS (a)
Replacc~m~:nt Bgnda In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the
Paying Agent/Registrar shall cause to be pnnted, executed, and delivered, a new bond of the same principal
amount, raatunty, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, m replacement
for such Bond m the manner herema~er provaded
(b) Aunhcation for Renlaeement Bonds Application for replacement of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar In
every case of loss, thor;, or dest~uctmn of'a Bond, the registered owner applying for a replacement bond shall
furnish to the Issuer and to the Paying Agent/Registrar such security or mdemmty as may be required by them
tu save each ofthem harmless from any loss or damage w~th respect thercto Also, m every case ofloss, theft,
or destruction of a Bond, the registered owner shall furmsh to the Issuer and to the Paying Agent/Registrar
evidence to their satisfaction ortho loss, theft, or destruction of such Bond, as the case may be In every case
of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for
cancellation the Bond so damaged or mutilated
(c) No Default Occurred Notw~thstsndmg the foregoing prowsions of this Section, m the event any
such Bond shall have matured, and no default has occurred winch is then continuing in the payment of the
pnncipal of, redemption prennum, if any, or interest on the Bond, the Issuer may authorize the payment of the
same (wathout surrender thereof except m the case of a damaged or mutilated Bond) instead of issuing a
replacement Bond, provided security or mdenmity is furmshed as above prowded in tins Section
(d) Charge for Issuma Renlacement Bonds Prior tothe issuance of any replacement bond, the Paying
Agent/Registrar shall charge the registered owner of such Bond wath all legal, printing, and other expenses m
connection therevath Every replacement bond issued pursuant tu the provisions of this Section by vartue 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 of fi~as Ordinance equally and proportionately youth any and all other Bonds duly
issued under tins Ordinance
(e) A~th0nW fo;' ~umg Replacement Bonds In accordance with Section 6 of Vernon's Ann Tex
Clv St Art 717k-6, tins Section of this Ordinance shall constitute authority for the issuance of any such
replacement bond w~thout necessity of further action by the governing body of the Issuer or any other body or
person, mid the duty of the replacement of such bonds is hereby anthonzed and tmposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds m the form and
manner mid w~th the effect, as provtded m Section 6(d) of tins Ordinance for Bonds issued m conversion and
exchange for other Bonds
Section30 COVENANTSREGARDINGTAX-EXEMPTION TheIssuercovenantstorefratufrom
any action winch would adversely affect, and to take such action to ensure, the treatment of the Bonds as
obligations described m section 103 of the Code, the interest on which is not includable in the "gross raceme"
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 l0 percent of the proceeds of the
Bonds (less amounts deposited to a reserve fund, ffany) are used for any "private business use", as
28
defined in section 141 (b)(6) of the Code or, if more than 10 percent o£ the proceeds are so used, that
amounts, whether or not received by the Issuer, with respect to such private business use, do not, under
the terms of this Ordinance or any underlying arrangement, directly or mdirectly, secure or provide for
the payment of more than 10 percent of the debt service on the Bonds, in contravention of section
141 (b)(2) of the Code,
(b) to take any action to assure that in the event that the "private business use"
described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds (less amounts
deposited rote a reserve fund, if any) then the amount in excess of 5 percent is used for a "private
business use" which is "related" and not "disproportionate", w~thm the meaning of section 141('o)(3)
of the Code, to the governmental use,
(c) to take any action to assure that no amount which is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if
any) ~s directly or indirectly used to finance loans to persons, other than state or local governmental
umts, ~n contravention of section 141 (c) of the Code,
(d) to reft'am from talang any action wtuch would otherwise result m the Bonds being
treated as "pnvate act~vny bonds" vathm the meaning of secnon 141 (b) of the Code,
(e) to refrain from taking any action that would result m the Bonds being "federally
guaranteed" vattnn the meaning of section 149(b) of the Code,
(f) to refrain from using any portion of the proceeds of the Bonds, chrectly or
indirectly, to acqmre or to replace funds which were used, d~rectly or indirectly, to acquire investment
property (as defined m section 148(b)(2) of the Code) wluch produces a matenally higher y~eld over
the term of the Bonds, other than ~nvestment property acqmred vath --
(1) proceeds of the Bonds invested for a reasonable temporary penod 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 serwce fund, vathm the meamng
of secUon 1 148-1(b) of the Treasury Regulations, and
(3) amounts deposited m any reasonably requu~l reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the stated pnnc~pal amount (or,
m the case cfa chscount, the ~ssue pnce) of the Cemficates,
(g) to other~nse restrict the use of the proceeds of the Bonds or amounts treated as
proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the
requirements of section 148 of the Code (relating to arbitrage), Section 149(g) of the Code (relating
to hedge bonds), and, to the extent apphcable, section 149(d) of the Code (relatmg to advance
re/undmgs), and
(h) to pay to the Umted States of America at least once dunng each five-year period
(besmmng on the date of dehvery of the Bonds) an amount that is at least equal to 90 percent of the
"Excess Earnings', wtlun the meaning of sectnon 148(f) of the Code and to pay to the Umted States
of America, not later that 60 days afl;or tho Bonds have been paid ~n full, 100 percent of the amount
then roqmred to be paid as a result of Excess Earnings under section 148(f~ of the Code
29
For purposes of the foregoing (a) and (b), the Issuer understands that the term '*proceeds" includes
"d~sposmon proceeds" as defined m the Treasury Regulations and, in the case of refunding bonds, transferred
proceeds (~f any) and proceeds of the refunded bonds expended prior to the date of ~ssuance of the Bonds It
~s the understanding of the Issuer that the covenants contained hereto are intended to assure comphanee w~th
the Code and any regulations or ruhngs promulgated by the U S Department of the Treasury pursuant thereto
In the event that regulations or ruhngs are hereai~er promulgated which modify, or expand prows~ons of the
Code, as apphcable to the Bonds, the Issuer will not be required to comply w~th any covenant contained hereto
to the extent that such fuflure to comply, m the opinion of nat~onally-recogmzed bond counsel, vail not
adversely affect the exemption from federal raceme taxation of interest on the Bonds under section 103 of the
Code In the event that regulations or rulings are hereafter promulgated which nupose addit~onal requirements
which are apphcable to the Bonds, the Issuer agrees to comply wnh the adtht~onal reqmrements to the extent
necessary, ~n the opinion ofnationally-reeogmzed bond counsel, to preserve the exemption from federal raceme
taxation of interest on the Bonds under section 103 of the Code
In order to facilitate compliance wath the above covenant (h), a "Rebate Fund'* ~s hereby estabhshed
by the Issuer for the sole benefit of the Umted States of America, and such fund shall not be subject to the
claim of any other person, including w~thout hnutatlon, the owners of the Cemficates The Rebate Fund ~s
estabhshed for the additional purpose ofeomphance v~th Section 148 of the Code
Section 31 CUSTODY, APPROVAL, AND REGISTRATION OF BONDS, BOND COUNSEL'S
OPINION, CUSIP NUMBERS, PREAMBLE, AND INSURANCE The Mayor of the Issuer ~s hereby
authorized to have control of the Imt~al Bond issued hereunder and all necessary records and proeeed~ngs
pertaining to the Imtaal Bond pending its delivery and ~ts ~nvestagat~on, exarmnat~on, and approval by the Attor-
ney General of the S~ate of Texas, and its registrat~on by the Comptroller of Pubhc Accounts of the State of
Texas Upon reg~stratmn of the Initial Bond smd Comptroller of Pubhc Accounts (or a deputy designated m
writing to act for smd Comptroller) shall manually sagn the Comptroller's Registration Certificate on such
Imt~al Bond, and the seal of sa~d Comptroller shall be nnpressed, or placed ~n facsumle, on such Imtial Bond
The approving legal opLmon of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option
of the Issuer, be printed on the Imt~al Bond or on any Bonds ~ssued and dehvered m conversmn of and exchange
or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convemenee and
~nformat~on ofthe registered owners ofthe Bonds The preamble to flus Ordinance ~s hereby adopted and made
a part hereof for all purposes If insurance is obtained on any ofthe Bonds, the respective Imt~al Bond and all
other Bonds shall bear an appropriate legend concerumg ~nsurance as prowded by the insurer
Section 32 SALE OF INITIAL BONDS, BOND INSURANCE The Imt~al Bonds are hereby sold
and shall be delivered to SALOMON SMITH BARNEY INC, m accordance w~th the Bond Purchase
Agreement dated the date of flus rneetmg and presented to the C~ty Courted of the City at flus meeting The
Mayor of,the Issuer is authorized and d~rected to execute, on behalf of the Issuer, smd Bond Purchase
Agreement m the form and substance subnutted at flus meeting The Bonds shall be insured by Financial
Security Assurance (the "Insurer") and shall, to the extent not m confl~ct w~th flus Ordinance, be sub. leer to the
insurance comrmtment from the Insurer to the Issuer
Section 33 OFFICIAL STATEMENT An Official Statement dated as of the date of flus meeting
has been prepared m connection wth the sale of the Imt~al Bonds and the Bonds, m the form and substance
submitted at flus meeting Sa~d Official Statement and any supplement or addenda thereto have been and are
hereby approved, and their use m the offer and sale of the Bonds ~s hereby approved It ~s further officially
found, determined, and declared that the statements and representations contained m sa~d Official Statement
are true and correct m all material respects, to the best knowledge and behef of the Issuer The d~stnbut~on
3O
and use of the Prehmtnary Official Statement dated July 21, 1998, prior to the date hereof is hereby ratified
and approved
Section 34 REFUNDING OF REFUNDED BONDS That concurrently w~th the dehvery of the
lmtial Bonds the Issuer shall depostt an amount from the proceeds from the sale of the Imttal Bonds vath The
Bank of New York, as Escrow Agent, sufficient, together uath other avadable amounts, to refund all of the
Refunded Bonds tn accordance vath Sectton 7A of Vemon's Ann Tex Clv St Arttcle 717k, as amended The
Issuer hereby anthonzes the executton of the Escrow Agreement dated as of August 1, 1998 between the
Escrow Agent and the Issuer The Mayor ofthe Issuer ts authorized and directed to execute, on behalf ofthe
Issuer, said Escrow Agreement tn the form and substance presented to this meeting It ts hereby found and
determtned that the refundtng of the Refunded Bonds ts advtsable and necessary m order to restructure the debt
service requirements and procedures of the Issuer, and that the debt servtce requirements on the Bonds will be
less than those on the Refunded Bonds, resulting tn a reductton tn the amount of principal and mterest whmh
otherwise would be payable both on an actual and a present value basis bemg an actual gross debt service
sarongs of approxanat¢ly $796,445, and a present value debt serwce savtngs of apprommately $527,168
Sectton 35 REDEMPTION OF REFUNDED BONDS There ts attached hereto and made a part
hereof for all purposes a notme of redemptton for the Refunded Bonds, wluch bonds are hereby called for
redemptton, and shall be redeemed, prior to thetr scheduled matunttes, on the date, at the place, and at the
price, set forth thereto, the Issuer shall cause the appropriate notmes of such redemptton to be g~ven tn
accordance vath the requtrements of the respecttve proceedings authorizing the tssuance of such bonds, and
due prows~on shall be made by the Issuer in accordance vath law for the payment of the redemptton price of
satd bonds by the place of payment (paying agent) for such bonds
Section36 DTCREGISTRATION TheBondsmmallyshallbetssuedanddehveredmsuchmanner
that no physical d~stnbutmn of the Bonds will be made to the public, and The Deposttory Trust Company
("DTC"), New York, New York, lmtmlly will act as depository for the Bonds DTC has represented that tt ts
a hnuted purpose trust company incorporated under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" w~thm the meaning of the New York Umfonn Commerctal
Code, and a "clearing agency" regtstered under Section 17A of the federal Secunttes Exchange Act of 1934,
as amended, and the Issuer accepts, but m no way verifies, such representattons The Imttal Bond authorized
by ttus Ordinance shall be dehvered to and registered m the name ofthe Purchaser However, it is a comhtton
of dehvery and sale that the Purchaser, unrnethately after such dehvery, shall cause the Paying Agent/Regtstrar,
as provtded for m tbas Ordinance, to cancel satd Imttal Bond and dehver m exchange therefor a submtute Bond
for each maturity of such Imttal Bond, vath each such substttute Bond to be registered in the name of CEDE
& CO, th~ nominee of DTC, and ~t shall be the duty of the Paying Agent/Registrar to take such action It ~s
expected that DTC vail hold the Bonds on behalf of the Purchaser and/or the DTC Participants, as defined and
described in the Official Statement referred to and approved m Sectton 33 hereof (the "DTC Pamc~pants")
So long as each Bond ~s registered ~n the name of CEDE & CO, the Paying AgentJRegtstrar shall treat and
deal vath DTC m all respects the same as ff~t were the actual and beneficial owner thereof It is expected that
DTC vail maintain a book entry system wluoh wall ~dent~fy beneficial ownership of the Bonds by DTC Pamc,-
pants tn mtogral amounts of $5,000, vath transfers ofownerslup being effected on the records of DTC and the
DTC Partm~pants pursuant to rules and regulattons estabhshed by them, and that the substitute Bonds mtttally
depostted w~th DTC shall be tmmob~hzed and not be further exchanged for substttute Bonds except as hereinaf-
ter prowdod The Issuer Is not responsible or hable for any functions of DTC, vail not be responsible for
paying any fees or charges vath r~speot to ~ts servmes, vall not be responsible or hable for maintaining,
superv~smlh or rexaewmg the records of DTC or the DTC Parttmpants, or protecting any interests or rights of
the beneficaal owners of the Bonds It shall be the duty of the Purchaser and the DTC Part~eipants to make all
arrangements vath DTC to estabhsh tlus book-entry system, the benefictal ownerstup of the Bonds, and the
31
method ofpaylng the fees and charges of DTC The Issuer does not represent, nor does tt in any way covenant
that the mmal book-entry system established vath DTC will be mainta~ned m the future The Issuer reserves
the right and option at any tune m the future, ~n ns sole dtscretton, to terminate the DTC (CEDE & CO ) book-
entry only reg~straUon requirement described above, and to permit the Bonds to be registered ~n the name of
any owner Ifthe Issuer exercises its r~ght and opt,on to terminate such requirement, n shall give written notice
of such termination to the Paying Agent/Regmrar and to DTC, and thereafter the Paying Agent/Registrar shall,
upon presentation and proper request, register any Bond m any name as prowded for in this Ordinance
Notwithstanding the lmt~al estabhshment of the foregoing book-entry system vath DTC, fffor any reason any
of the originally dehvered substitute Bonds ~s duly filed vath the Paying Agent/Registrar vath proper request
for trans~r and substitution, as provided for m this Ordinance, substitute Bonds vail be duly delivered as
provided in tins Ordinance, and there vail be no assurance or representauon that any book-entry system wdl
be maintained for such Bonds
Sectmn 37 COMPLIANCE WITH RULE 15c2-12 (a) Annual Reports (0 The Issuer shall
prowde annually to each NRMSIR and any SID, vathan slx months after the end of each fiscal year enchng m
or after 1998, financial mformaUon and operating data with respect to the Issuer of the general type included
m the final Official Statement authonzed by Section 33 of this Ordinance, being the mformatlon described in
Exhibit A hereto, winch Exinbit is attached to and incorporated m this Ordinance as if written word for word
hereto Any financial statements so to be prowded shall be (1) prepared In accordance vath the accounting
principles described m Exinblt A hereto, or such other accounting principles as the Issuer may be required to
employ from Ume to tune pursuant to state law or regulation, and (2) auchted, if the Issuer comnussions an
audit of such statements and the ancht is completed vathm the period during winch they must be prowded If
the aucht of such financial statements is not complete vatlun such period, then the Issuer shall prowde unaudited
financial statements by the required tame and vail prowde auchted financial statements for the applicable fiscal
year to each NRMSIR and any SID, when and if the audit report on such statements become available
(n) If the Issuer changes its fiscal year, n vail notify each NRMSIR and any SID of the change (and
of the date of the new fiscal year end) prior to the next date by which the Issuer otherv, ase would be required
to provide financial mformatton and operating data pursuant to tins SecUon The financial reformation and
operating data to be provided pursuant to tins Section may be set forth m full m one or more documents or may
be mcinded by specific reference to any document (meindmg an official statement or other offering document,
if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed
with the SEC
(b) Material Event Notices The Issuer shall notify any SID and etther each NRMSIR or the MSRB,
m a mnely manner, of any of the follovang events vath respect to the Bonds, ff such event ~s material vatinn
the meaning of the federal securities laws
1 Pnnc~pal and interest payment dehnquencles,
2 Non-payment related defaults,
3 Unscheduled draws on debt sennce reserves reflecting financial dlffieulues,
4 Unscheduled draws on credit enhancements reflecung financial difficulties,
5 Substitution of credit or liquidity providers, or thetr failure to perform,
6 Adverse tax opunoas or events affecUng the tax-exempt status of the Bonds,
32
7 Modifications to rights of holders of the Bonds,
8 Bond calls,
9 Defeasances,
l0 Release, substitution, or sale of property securing repayment of the Bonds, and
11 Rating changes
The Issuer shall notify any SID and e~ther each NRMSIR or the MSRB, ~n a ttmely manner, of any failure by
the Issuer to prowde financial information or operating data m accordance w~'~h subsection (a) of flus Section
by the tune required by such subsection
(¢) Lumtat~ons, Dlsclauners, and Amendments (0 The Issuer shall be obhgated to observe and
perform the covenants specified m 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~thm the meaning of the Rule, except that the Issuer m any event
will give the notice reqmred by Subsection (b) hereof of any Bond calls and defeasance that cause the Issuer
to no longer be such an ')obligated person"
(u) The prowslons of flus Section are for the sole benefit of the registered owners and beneficial
owners of the Bonds, and nothing m flus Section, express or amphed, shall give any benefit or any legal or
equitable right, remedy, or clmm hereunder to any other person The Issuer undertakes to prowde only the
financial mfonnat~on, operating data, financial statements, and notices wbach ~t has expressly agreed to prowde
pursuant to flus Section and does not hereby undertake to provade any other mformatmn that may be relevant
or material to a complete presentation of the Issuer's financial results, condftton, or prospects or hereby
undertake to update any reformation prowded m accordance uath flus Section or otherx'ase, except as expressly
provlded hereto The Issuer does not make any representation or warranty concernmg such reformation or its
usefulness to a dec,sion to mvest m or sell Bonds at any future date
0!0 UNDER NO CIRCUMSTANCES SHALL THE ISSUER, ITS OFFICERS OR EMPLOYEES
BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY
OTHER PERSON, 1N CONTRACT OR TORT, FOR DAMAGES RESLILTING IN WHOLE OR IN PART
FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS
PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY
OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH
BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE
0v) No default by the Issuer m observing or perfonmng its obhgat~ons under flus Section shall
comprise a breach of or default under the Ordinance for purposes of any other prowslon of this Ordinance
Nothing ln~ flus Section ~s intended or shall act to disclaim, watve, or otherwise hnut the duties o£the Issuer
under fed~)ral and state securities laws
(v) The provaslons of tins Section may be amended by the Issuer from tune to tune to adapt to changed
c~rcumstanc~s that arise from a change m legal requirements, a change ~n law, or a change m the ~dentlty,
nature, status, or type of operations of the Issuer, but only if (1) the prows~ons of tbas Section, as so amended,
would have penmtted an tmderwnter to purchase or sell Bonds m the primary offering of the Bonds m
comphanee w~th the Rule, taFang rotc account any amendments or ~nterpretatlons of the Rule smee such
offenng as well as such changed circumstances and (2) either (a) the registered oumers of a majority m
33
aggregate pnncipal amount (or any greater amount required by any other provision of this Ordinance that
authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated w~th the Issuer (such as natmnally recognized bond counsel) determined that such amendment will
not materially lmpmr the interest ofthe registered owners and beneficial owners ofthe Bonds Ifthe Issuer so
amends the provisions of this Section, it shall include with any amended financial information or operating data
next provided m accordance with subsection (a) of this Section an explanation, m narrative form, of the reason
for the amendment and of the unpact of any change m the type of financial information or operating data so
provided The Issuer may also amend or repeal the provisions of this continuing disclosure agreement if the
SEC amends or repeals the apphcable provision of the Rule or a court of final j urisdiction enters judgment that
such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would
not prevent an underwriter from lawfully purchasing or selling Bonds m the primary offenng of the Bonds
(d) Defimtions As used m this Seetaon, the following terms have the meanings ascribed to such terms
below
"MSRB" means the Mumclpal Secuntms Rulemakmg Board
"NPdVlSIR" means each person whom the SEC or its staffhas determined to be a nationally recognized
mumcipal secuntles information repository wthm the meaning of the Rule from time to tune
"Rule" means SEC Rule 15c2-12, as amended from tune to tune
"SEC" means the Umted States Securities and Exchange Commission
"SID" means any person designated by the State of Texas or an authorized department, officer, or
agency thereof as, and determined by the SEC or its staff to be, a state information depository v~thm thc
meamng of the Rule from tune to tune
Section 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 authorized, empowered, and directed from tune to time and at any tune to do and perform all such
acts and things and to execute, acknowledge, and deliver m the name and under the corporate seal and on behalf
of the Issuer all such instruments, whether or not herem mentioned, as may be necessary or desirable m order
to carry out the terms and proxaslons of this Bond Ordinance, the Bonds, the sale of the Bonds, the Escrow
Agreement and the Not~ce of Sale and Official Statement, and thc Director of Finance of the City shall cause
the expenses of~ssuance of the Bonds to be paid from the proceeds of sale of the Imtial Bond or from other
lawfully available funds ofthe Issuer In case any officer whose signature shall appenr on any Bond shall cease
to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient
for all purposes the same as if such officer had remained ,n office untal such delivery
Section 39 OPEN MEETINGS The City Council has found and detemuned that the meeting at
which this Ordinance is considered is open to the public and that notice thereof was given in accordance vath
the provasmns of the Texas Open Meetings, Law, Tex Gov't Code, Chapter 551, as amended
Section40 EFFECTIVE DATE ThisOrdinanceshallbecomeeffectiveimmediatelyuponitspassage
and approval
34
PASSED AND APPROVED this the 4th day of August, 1998
ATTEST
t~/enni~'er ~alt~rs, ~ty S~creta~y
APPROVED AS TO LEGAL FORM
Herbert L Prouty, Ctty Attorney
?
35
EXHIBIT A
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following mformatton ts referred to ~n Section 37 of this Ordtnance
Annual Ftnanctal Statements and Operating Data
The financtal tnfonnatton and operating data w~th respect to the Issuer to be provtded annually tn
accordance w~th such Seetton are as spectfied (and mcluded m the Appendix or under the tables of the Offietal
Statement referred to) below
Tables numbered I through 14, mclus~ve, under the capttons "The Utility System", "Debt Serwce
Reqmrements" and "Fmane:al Informataon" tn the Official Statement
Appendix B tn the Offictal Statement
Accounting Prmeaples
The accounting principles referred to m such Section are the accounting principles described tn the
notes to the fmanetal statements referred to m the paragraph above
NOTICE OF PRIOR REDEMPTION
CITY OF DENTON (TEXAS)
UTILITY SYSTEM REVENUE BONDS, SERIES 1989
CITY OF DENTON (TEXAS)
UTILITY SYSTEM REVENUE BONDS, SERIES 1992
NOTICE IS HEREBY GIVEN that the City of Denton, Texas has called for redemption the
outstanding Bonds of the City described as follows
CITY OF DENTON (TEXAS) UTILITY SYSTEM REVENUE BONDS, SERIES
1989, dated October l, 1989, schednled to mature on December l, 2006 fltrough December
l, 2009, agsregatmg $4,400,000 (and being all of the outstanding bonds of smd sones
scheduled to mature on and after December 1, 2006 to and including December I, 2009)
Call date December l~ 1999, redeemable at a redemption price of par plus accrued
interest at the pnnc~pal corporate Offices of The Bank of New York, New York, New York,
only upon presentation by the re~stered owner
CITY OF DENTON (TEXAS) UTILITY SYSTEM REVENUE BONDS, SERIES
1992, dated March l, 1992, scheduled to mature on December 1, 2006 through December l,
2014, aggregating $2,740,000 (and being all of the outstanding bonds of smd sones scheduled
to mature on and after December l, 2006)
Call date December 1, 2004, redeemable at a redemption price of par plus accrued interest
at the pnnclpal corporate offices of The Bank of Now York, New York, only upon presentation by the
registered owner
If moneys sufficient for the payment of such redcraptmn price arc held by or on behalf of the respective paying
agent, theldcscnbed Bonds shall become due and payable on the redemption date speafied, and the interest
thereon shall cease to accrue from and ai~r the redempt,on date
In compliance w~th sectmn 3406 of the Internal Revenue Code of 1986, payers making certain
payments due on debt securities may be obhgated to deduct and w~thhold 31 percent of such payment from the
renuttanco to any payee who has faded to provide such payor w~th a vahd taxpayer ~dcnt~fication number To
avoid the imposmon of the vathholdmg of tax, such payees should submit a taxpayer ~dentaficatmn number
when surr~dsnng the bonds for redemption
NOTICE IS FURTHER GIVEN that all Bonds should be submitted to thc following address
The Bank of New York Trust Company of Florida, N A
10161 Centurion Parkway
Jacksonwlle, FL 32256
THE BANK OF NEW YORK TRUST
COMPANY OF FLORIDA, NA