Loading...
1996-107 ORDINANCE NO 96-/t~7 ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 1996 AND CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1996A, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO, AND PROVIDING AN EFFECTIVE DATE THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, the City of Denton, Texas, heretofore has duly issued the following revenue bonds City of Denton Ut~hty System Revenue Refundmg Bonds, Senes 1987, dated January 1, 1987, City of Denton Utility System Revenue Bonds, Series 1988, dated August 1, 1988, City of Denton Utility System Revenue Bonds, Series 1989, dated October 1, 1989, City of Denton Utdity System Revenue Bonds, Series 1992, dated March 1, 1992, City of Denton Utility System Revenue Bonds, Series 1993, dated March 1, 1993, City of Denton Ut~hty System Revenue Refunding Bonds, Series 1993-A, dated June 1, 1993, and City of Denton Ut~hty System Revenue Refundmg Bonds, Taxable Series 1993-B, dated June 1, 1993, WHEREAS, the City Council of the City of Denton deems it necessary and adwsable to authorize, issue, end dehver the additional Utility System Revenue Bonds hereinafter described, and WHEREAS, the Series 1996 Bonds herematter authorized and described are to be issued, sold and delivered pursuant to Vemon's Ann Tex Clv Arts 2368a and 1111 through 1118, the City's Home Rule Charter, and other apphcable laws, and WHEREAS, the Series 1996A Bonds hereinafter authorized and described are to be issued, sold, and dehvered pursuant to Vemon'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 ORDAINS Se, etlon 1 AMOUNT AND PURPOSE OF THE BONDS (a) The bond or bonds of the City of Denton, Texas (the "Issuer") are hereby authorized to be Issued and delivered In the aggregate pnnc~pal amount of $2,750,000, for the purpose ofprowthng for improvements and extensions of the City of Denton Utility System, winch consists of the City's Combined Waterworks, Sewer, and Electric Light and Power System, and shall be designated "City of Denton Utlhty System Revenue Bonds, Series 1996" (the "Series 1996 Bonds") (b) The bond or bonds of the Issuer are hereby anthonzed to be issued and delivered in the aggregate pnne~pal amount of $36,510,000, for the purpose ofprowdlng for refunding and prepaying ceamn obhgatlons of the Issuer pursuant to a "Contract between the United States of America and the City of Denton, Texas, for water storage spaces m Aubrey and Levasvllle Lakes, Texas", funding a reserve fund and paying a portion of the cost of issuing sa~d bonds, and shall be designated "C~ty of Denton Utdlty System Revenue Refunding Bonds, Series 1996A" (the "Series 1996A Bonds") Section 2 DESCRIPTION OF THE BONDS (a) With respect to the Series 1996 Bond, initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable m installments of principal (the "Imtlal Series 1996 Bond"), but the Imt~al Series 1996 Bond may be assigned and transferred and/or converted into and exchanged for a like aggregate principal amount of fully registered bonds, vothout interest coupons, having serial maturities, and m the denomination or denominations of $5,000 or any integral multiple of $5,000, all m the manner hereinafter proxaded The term "Series 1996 Bonds" as used m this Ordinance shall mean and include collectively the Imtlal Series 1996 Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Series 1996 Bond" shall mean any of the Series 1996 Bonds Co) With respect to the Series 1996A Bond, initially there shall be issued, sold, and delivered hereunder a single fully registered bond, w~thout interest coupons, payable in installments of pnnclpal (the "Imt~al Series 1996A Bond"), but the Imtlal Series 1996A Bond may be assigned and transferred and/or converted rotc and exchanged for a hke aggregate pnncipal amount of fully registered bonds, without interest coupons, having serial maturities, and m the denomination or denominat~ons of $5,000 or any integral multiple of $5,000, all in the manner heremat~er provided The term "Series 1996A Bonds" as used mttus Ordtnance shall mean and include collectively the Initial Ser~es 1996A Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacernent bonds Issued pursuant hereto, and the term "Series 1996A Bond" shall mean any of the Series 1996A Bonds (e) the term "Imtial Bonds" as used m this Ordinance shall mean and include collectively the Imtlal Series 1996 Bond and the Series 1996A Bond, the term "Bonds" as used m this Ordinance shall mean and include collectively the Imtlal Bonds and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds Section 3 INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BONDS (a) (0 The Imtlal Series 1996 Bond is hereby authorized to be issued, sold, and dehvered hereunder as a single fully registered Bond, vathout interest coupons, dated MAY 1, 1996, in the denommatmn and aggregate pnnc~pal amount of $2,750,000, numbered R-I, payable in annual tnstallments ofpnnelpal to the tint,al registered owner thereof, to-w~t FIRST SOUTHWEST COMPANY or to the registered assignee or a~lgn~s of smd Series 1996 Bond or any portton or portions thereof (m each case, the "registered owner"), vath the annual installments of pnnclpal of the Imtlal Series 1996 Bond to be payable on the dates, respectively, and m the pnnclpal amounts, respecttvely, stated tn the FORM OF INITIAL SERIES 1996 BOND set forth in this Ordinance (u) The Imt~al Senas 1996A Bond ~s hereby authorized to be Issued, sold, and dehvered hereunder as a single fully registered Bond, w~thout mterest coupons, dated MAY 1, 1996, tn the denomtnat~on and aggregate pnne~pal amount of $36,510,000, numbered R-I, payable tn annual tnstallments ofpnne~pal to the initial registered owner thereof, to-wit FIRST SOUTHWEST COMPANY or to the registered assignee or asstgnees of said Series 1996A Bond or any portion or porttons thereof(m each case, the "registered owner"), with the annual tnstallments of pnncipal of the Imtlal Series 1996A Bond to be payable on the dates, respectively, and ~n the pnneipal amounts, respectively, stated tn the FORM OF INITIAL SERIES 1996A BOND set forth tn this Ordinance (b) The Imttal Bonds (i) may and shall be prepaid or redeemed prior to the respeettve scheduled due dates of installments ofpnneipal thereof, (u) may be assigned and transferred, (m) may be converted and exchanged for other Bonds, 0v) shall have the characteristics, and (v) shall be signed and sealed, and the pnnctpal of and tnterest on the Initial Bonds shall be payable, all as prowded, and m the manner required or indicated, m the FORMS OF INITIAL BONDS set forth m this Ordinance Section 4 INTEREST The unpaid pnnc~pal balance of the Inmal Bonds shall bear interest from the date of each Imtml Bond to the raspeet~ve scheduled due dates, or to the respective dates of prepayment or redemption, of the installments of pnnctpal of the Imtml Bonds, and smd tntarest shall be payable, all tn the manner prowded and at the rates and on the dates stated m the FORMS OF INITIAL BONDS set forth m th~s Ordinance Section 5 FORM OF INITIAL BONDS The forms of the Imt~al Bonds, including the form of Reg~straUon Certificate of the Comptroller of Pubhc Accounts of the State of Texas to be endorsed on the Imtlal Bond, shall be substantmlly as follows FORM OF INITIAL SERIES 1996 BOND NO R-1 $2,750,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 1996 THE CITY OF DENTON, m Denton County, Texas (the "Issuer"), betng a pohtlcal subd~v~smn of the State of Texas, hereby pronuses to pay to FIRST SOUTHWEST COMPANY or to the registered assignee or assignees of this Bond or any portion or portions hereof (,n each case, the "reg, stered owner") the aggregate principal amount of $2,750,000 (TWO MILLION SEVEN HLrNDRED FIFTY THOUSAND DOLLARS) ,n annual ~nstallments of principal due and payable on December 1 ,n each of the years, and m the respective pnn¢lpal amounts, as set forth m the following schedule PRINCIPAL PRINCIPAL YEAR AMOUNT YEAR AMOUNT 1997 $ 75,000 2007 $135,000 1998 80,000 2008 140,000 1999 85,000 2009 150,000 2000 90,000 2010 160,000 2001 95,000 2011 170,000 2002 100,000 2012 180,000 2003 105,000 2013 190,000 2004 115,000 2014 200,000 2005 120,000 2015 210,000 2006 125,000 2016 225,000 4 and to pay interest, from the date of tins Bond hereinafter stated, on the balance of each such installment ofpnncipal, respectively, from tune to time rema~mng unpaid, at the rates as follows 7 40% per annum on the above installment due in 1997 7 40% per annum on the above installment due in 1998 7 40% per annum on the above installment due in 1999 7 40% per annum on the above installment due in 2000 7 40% per annum on the above installment due in 2001 7 40% per annum on the above installment due in 2002 7 40% per annum on the above installment due in 2003 7 40% per annum on the above installment due in 2004 6 00% per annum on the above installment due in 2005 5 40% per annum on the above installment due in 2006 5 40% per annum on the above installment due in 2007 5 50% per annum on the above installment due in 2008 5 60% per annum on the above installment due in 2009 5 70% per annum on the above installment due in 2010 5 75% per annum on the above installment due in 2011 5 75% per annum on the above installment due in 2012 5 75% per annum on the above installment due ~n 2013 5 75% per annum on the above installment due in 2014 5 75% per annum on the above installment due m 2015 5 75% per annum on the above installment due in 2016 with said interest being payable on December 1, 1996, and sen~annually on each June 1 and December 1 thereafter whde tins Bond or any posen hereof ~s outstanding and unpaid Sa~d interest shall be calculated on the bas~s cfa 360-day year composed of twelve 30-day months THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON tins Bond are payable m lawful money of the Umted States of America, w~thout exchange or collection charges The installments of principal and the Lnterest on tins Bond are payable to the registered owner hereof through the serwces of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, DALLAS, TEXAS, winch ~s the "Paying A~ent/Reg~strar" for tins Bond Payment of all pnnc~pal of and interest on this Bond shall be made by the Pa3qng Agent/Registrar to the registered owner hereof on each principal and/or interest payment date by check, dated as of such date, drawn by the Pa3qng Agent/Registrar on, and payable solely from, funds of the Issuer reqmred by the ordinance authonzing the issuance of tins Bond (the "Bond Ordinance") to be on deposit with the Payqng Agent/Registrar for such purpose as herema.f[er prov~dad, and such check shall be sent by the Paying AgentfReg~strar by Umted States mad, first-class postage prepmd, on each such pnncipal and/or interest payment date, to the reg~sterad 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 Registrat~on Books kept by the Paying Agent/Registrar, as heremaRer described The Issuer covenants vath the registered owner of tins Bond that on or before each pnnc~pal and/or interest payment date for tins Bond it unll make available to the Pasqng Agent/Registrar, from the "Interest and Slnkang Fund" ma~ntmned pursuant to the Bond Ordinance, the amounts required to pro,nde for the payment, in immediately avmlable funds, of all pnncipal of and interest on tins Bond, when due 11; THE DATE for the payment of the principal of or interest on tbs Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking restitutions are authorized to close, and payment on such date shall have the same force and effect as if made on the original date payment was due THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas m the pnnapal amount of $2,750,000, for the purpose of prowdmg for improvements and extensions of the City of Denton Ut~hty System, which consists of the City's Combined Waterworks, Sewer, and Electric Light and Power System ON DECEMBER l, 2005, or on any date whatsoever thereafter, the unpaid installments of pnncipal of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds denved from any available source, as a whole, or in part, and, if in part, the particular portion of this Bond to be prepaid or redeemed shall be selected and designated by the Issuer (provided that a portion of tbs Bond may be redeemed only in an integral multiple of $5,000), at the prepayment or redemption price of the par or pnncipal amount thereof, plus accrued interest to the date fixed for prepayment or redemption AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Pa~nng Agent/Registrar to the registered owner hereof By the date fixed for any such prepayment or redemption due pro,nsion shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepay- ment or redemption price for th~s Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption If such written notice of prepayment or redemption is given, end ~fdue pro,aslon for such payment is made, all as pro,nded above, this Bond, or the pomon thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds prowded for such payment The Paying Agent/Registrar shall record in the Registration Books all such prepayments or redemptions of pnnclpal of this Bond or any portion hereof THIS BOND, to the extent of the unpaid or unredeemed pnncipal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance Among other requirements for such transfer, th~s Bond must be presented and surrendered to the Paying Agent/Registrar for cancellation, together w~th proper instruments of assignment, in form and w~th guarantee of signatures satisfactory to the Paying Agent/Registrar, evxdencing assignment by the imtlal registered owner of this Bond, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered Any instrument or instruments of assignment satisfactory to the Pa3qng Agent/RegIstrar 6 may be used to evtdence the assignment of tins Bond or any such portion or pomons hereof by the lmtlal registered owner hereof A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the imtial re~stered owner as to any portion of this Bond winch is not being assigned and transferred by the imtial re~stered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for tins Bond or any portion or portions hereof, but solely in the form and manner as prowded in the next paragraph hereof for the conversion and exchange of this Bond or any portion hereof The re~stered owner of tins Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of habd~ty upon tins Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary AS PROVIDED above and m the Bond Ordinance, this Bond, to the extent of the unpmd or unredeemed pnncipal balance hereof, may be converted into and exchanged for a hke aggregate principal amount of fully registered bonds, w~thout interest coupons, payable to the assignee or assignees duly designated m writing by the imtial registered owner hereof, or to the lmual registered owner as to any pomon of tins Bond winch is not being assigned and transferred by the initial registered owner, in any denonunatlon or denormnations in any integral multiple of $5,000 (subject to the reqmrement hereinafter stated that each substitute bond issued in exchange for any portion of this Bond shall have a single stated pnncipal maturity date), upon surrender of tins Bond to the Paying AgentYReg~strar for cancellation, all in accordance w~th the form and procedures set forth ~n the Bond Ordinance If tins Bond or any pomon hereof~s assigned and transferred or converted each bond ~ssued in exchange for any portion hereof shall have a single stated pnnclpal maturity date corresponding to the due date of the installment of pnnclpal of tins Bond or portion hereof for winch the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of pnnclpal 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 lnstalhnent of principal of tins Bond or portion hereof for which they are being exchanged No such bond shall be payable in installments, but shall have only one stated pnncipal maturity date AS PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for tins Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as prowded in the Bond Ordinance The Issuer shall pay the Paying A~entYRe~strar's standard or customary fees and charges for transferring, converting, and exchanging tins Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be prod w~th respect thereto The Paying Agent/Registrar shall not be reqmred to make any such assignment, conversion, or exchange (0 during the period commencing wtth the close of business on any Record Date and enchng w~th the opening of business on the next following pnncipal or interest payment date, or, (n) w~th respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, w~tinn 45 days prior to its prepayment or redemption date IN THE EVENT any Paying Asent/Re~strar for tins Bond is changed by the Issuer, resigns, or othervose ceases to act as such, the Issuer has covenanted ~n the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be totaled to the registered owner of tins Bond IT IS HEREBY certified, recited, and covenanted that tlus Bond has been duly and vahdly authonzed, ~ssued, sold, and dehvered, that all acts, condmons, and tlungs reqmred or proper to be performed, erdst, and be done precedent to or m the anthonzatmn, ~ssuance, and delivery of tins Bond have been performed, existed, and been done tn accordance v~th law, that flus Bond is a special obhgat~on of the Issuer, secured by and payable, together w~th other bonds, from a first hen on and pledge of the "Pledged Revenues", wluch include lmtially the "Net Revenues of the System" as such terms are defined m the Bond Ordmance, v~th the System cons~stmg of the City's entire combined waterworks, sewer, and electric hght and power system THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Ordinance, to xssue Addmonal Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues" on a panty w~th flus Bond THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to amend the Bond Ordinance wnh the approval of the holders or owners of fifty-one percent in prmc~pal amount of all outstandmg bonds wtuch 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 nused by taxation or from any source whatsoever other than specified m the Bond Ordinance BY BECOMING the registered owner of flus Bond, the registered owner thereby acknowledges all of the terms and prowslons of the Bond Ordinance, agrees to be bound by such terms and provts~ons, acknowledges that the Bond Ordinance is duly recorded and available for inspection tn the officmal mutes and records of the govermng body of the Issuer, and agrees that the terms and provmons of th~s Bond and the Bond Ordinance constmtute a contract between the registered owner hereof and the Issuer 1N WITNESS WHEREOF, the Issuer has caused flus Bond to be signed w~th the manual sxgnature of the Mayor of the Issuer and countersigned with the manual signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed on flus Bond, and has caused tl~s Bond to be dated May 1, 1996 C~ty Secretary, C~ty of Denton, Texas Mayor, C~ty of Denton, Texas (CITY SEAL) (BOND INSURANCE LEGEND, IF ANY) 8 FORM OF REGISTRATION CERTIFICATE OF THE (30MPTROT JT.ER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby cerUfy that tl~s Bond has been examaned, certified as to vahdlty, and approved by the Attorney General of the State of Texas, and that th~s Bond has been registered by the Comptroller of Pubhc Accounts oftha State of Texas Witness my s~gnature and seal this Comptroller of Pubhc Accounts of the State of Texas (COMPTROLLER'S SEAL) FORM OF INITIAL SERIES 1996A BOND NO R-1 $36,510,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BOND SERIES 1996A THE CITY OF DENTON, m Denton County, Texas (the "Issuer"), being a polmcal subdiv~s~on of the State of Texas, hereby promises to pay to FIRST SOUTHWEST COMPANY or to the registered assignee or assignees oftbas Bond or any pomon or portions hereof (m each case, the "registered owner") the aggregate pnncipal amount of $36,510,000 (THIRTY SIX MILLION FIVE HUNDRED TEN THOUSAND DOLLARS) m annual installments of pnnc~pal due and payable on December I ~n each of the years, and m the respective pnneipal amounts, as set forth m the following schedule PRINCIPAL PRINCIPAL YEAR AMOUNT YEAR AMOUNT 1996 $1,115,000 2011 $ 1,140,000 1997 1,260,000 2012 1,210,000 1998 490,000 2013 1,280,000 1999 $25,000 2014 1,360,000 2000 565,000 2015 1,445,000 2001 610,000 2016 1,$35,000 2002 655,000 **** 2003 700,000 2024 16,230,000 2004 755,000 2005 810,000 2006 865,000 2007 910,000 2008 960,000 2009 1,015,000 2010 1,075,000 and to pay interest, from the date of ttus Bond hereinafter stated, on the balance of each such installment of pnnc~pal, respectively, from t~me to t~me remalmng unpmd, at the rates as follows 7 80% >er annum on the above installment due m1996 7 80% ~er annum on the above installment due m 1997 7 80% Der annum on the above mstallment due m 1998 7 80% >er annum on the above installment due m 1999 7 80% >er annum on the above installment due m 2000 7 80% >er annum on the above ~nstallment due m 2001 7 80% >er annum on the above installment due m 2002 7 80% >er annum on the above installment due in 2003 7 80% ~er annum on the above installment due m 2004 5 30% ~er annum on the above ~nstallment due m 2005 5 40% ~er annum on the above ~nstallment due m 2006 5 40% ~er annum on the above installment due in 2007 5 50% ~er annum on the above installment due ~n 2008 5 60% ~er annum on the above installment due m 2009 5 70% ~er annum on the above installment due ~n 2010 5 80% 3er annum on the above mstallmem due m 2011 5 85% ,er annum on the above installment due ~n 2012 5 90% ~er annum on the above mstallment due m 2013 5 95% per annum on the above installment due m 2014 6 00% ~er annum on the above installment due m 2015 6 00% per annum on the above installment due ~n 2016 6 00% per annum on the above installment due ~n 2024 10 with smd interest being payable on December 1, 1996, and sermannually on each June 1 and December 1 thereafter while this Bond or any portton hereof is outstandtng and unpmd Smd interest shall be calculated on the basis ora 360-day year composed of twelve 30=day months THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the Umted States of Amencig without exchange or collection charges The installments of principal and the Interest on this Bond are payable to the registered owner hereof through the ser,aces of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, DALLAS, TEXAS, which IS the "Paying Agent/Registrar" for this Bond Payment of all pnnclpal of and interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each principal and/or Interest payment date by check, dated as of such date, drawn by the Palang AgenffReg~strar on, and payable solely fi.om, funds of the Issuer required by the ordinance anthonzlng the issuance of this Bond (the "Bond Ordinance~) to be on deposit w~th the Paying Agent/Relpstrar for such purpose as herein~er prowded, and such check shall be sent by the Paying AgenffR. eglstrar by Umted States mad, first-class postage prepmd, on each such principal and/or interest payment date, to the registered owner herenf, 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 Paying AgentfRelpstrar, as hereinafter descnbed The Issuer covenants vath the registered owner of this Bond that on or before each pnncipal and/or interest payment date for this Bond it vail make avmlable to the Paying AgentfReglstrar, fi.om the "Interest and Sinking Fund" mmntmned pursuant to the Bond Ordinance, the amounts required to provide for the payment, In immediately available funds, of all pnncipal of and interest on tins Bond, when due IF THE DATE for the payment of the pnncipal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the City where the Paying Agent/Registrar Is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day winch is not such a Saturday, Sunday, legal holiday, or day on which banlong Institutions are authorized to close, and payment on such date shall have the same force and effect as if mede on the original date payment was due THIS BOND has been authorized In accordance vath the Constitution and laws of the State of Texas in the pnnclpal amount of $36,510,000, for the purpose of pro,ading for refunding and prepaying certain obhgatlons of the Issuer pursuant to a "Contract between the United States of America and the City of Denton, Texas, for water storage spaces m Aubrey and Levasvllle Lakes, Texas", funding a reserve fund and paying a portion of the cost of Issuing the Bonds ON DECEMBER 1, 2006, or on any date whatsoever thereafter, the unpaid installments of pnncipal of tins Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, w~th funds denved fi.om any available source, as a whole, or in part, and, ifm part, the particular portion of this Bond to be prepaid or redeemed shall be selected and designated by the Issuer (provided that a portion of this Bond may be redeemed only in an integral multiple of $5,000), at the prepayment or redempuon price of the par or pnnclpal amount thereof, plus accrued interest to the date fixed for prepayment or redemption 11 THE OUTSTANDING BONDS ofth~s Senes scheduled to mature on DECEMBER 1, 2024 are subject to mandatory redemption pnor to their scheduled maturities, and shall be redeemed by the Issuer, m part, prior to their scheduled matuntles, vath the particular Bonds or pomons thereof to be redeemed to be selected by the Pa!nng Agent/Registrar at random, by lot or other customary method (prowded that a portion ora Bond may be redeemed only in an integral multiple of $$,000), at a redemption pnce equal to the par or pnnclpal amount thereof and accrued interest to the date of redemption, on the dates, and In the pnnclpal amounts, respectively, as shown in the follovang schedule D~l:~mber 1. 2024 Maturity Mllndatorv Redemption Dates Pnncloal Amounts December 1, 2017 $1,625,000 December 1, 2018 1,730,000 December 1, 2019 1,835,000 December 1, 2020 1,950,000 December 1, 2021 2,070,000 December 1, 2022 2,200,000 December 1, 2023 2,335,000 December 1, 2024 2,485,000 (payment at maturity) The pnncIpal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the pnncipal amount of any Bonds out of the maturity scheduled for December 1, 2024 which, at least 45 days prior to the aforesaid appropriate redemption date (1) shall have been acquired by the Issuer at a price not exceeding the pnnclpal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to the Mandatory Sinking Fund redemption AT LEAST 30 days pnor to the date fixed for any such prepayment or redemption a written notice of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner hereof By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepay- ment or redemption pnce for th~s Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption If such written notice of prepayment or redemption is g~verh and it'due provision for such payment is made, all as provided above, flus Bond, or the portion thereofwluch is to be so prepmd or redeemed, thereby automatically shall be treated as prepmd or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment The Palong Agent/Registrar shall record in the Registration Books all such prepayments or redemptions of pnncipal of this Bond or any portion hereof 12 THIS BOND, to the extent of the unpmd or unredeemed pnnclpal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the nntlal registered owner hereof and shall be transferred only ~n the Registration Books of the Issuer kept by the Paying Agent/Registrar acting In the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance Among other requirements for such transfer, t[us Bond must be presented and surrendered to the Paying Agent/Registrar for cancellation, together w~th proper Instruments of assignment, in form and vnth guarantee of signatures satlsfactoD' to the Paying Agent/Registrar, exndenclng assignment by the ~mtlal registered owner of t[us Bond, or any port,on or portions hereof in any integral multiple of $5,000, to the assignee or assignees m whose name or names t[us Bond or any such portion or port~ons hereof is or are to be transferred and registered Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to exndence the assignment oft[us Bond or any such port,on or portions hereof by the mlUal registered owner hereof A new bond or bonds payable to such assignee or assignees (w[uch then w~ll be the new registered owner or owners of such new Bond or Bonds) or to the ~mual registered owner as to any port,on oft[us Bond w[uch is not being assigned and transferred by the ~nltlal registered owner, shall be dehvered by the Paying Agent/Registrar in conversion of and exchange for t[us Bond or any portion or port~ons hereof, but solely in the form and manner as proxaded In the next paragraph hereof for the conversion and exchange oft[us Bond or any pomon hereof The registered owner oft[us Bond shall be deemed and treated by the Issuer and the Pajong Agent/Registrar as the absolute owner hereof for all purposes, xncludmg payment and discharge of hab~hty upon t[us Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any not,ce to the contrary AS PROVIDED above and m the Bond Ordinance, t[us Bond, to the extent of the unpmd or unredeemed principal balance hereof, may be converted into and exchanged for a hke aggregate principal amount of fully registered bonds, w~thout interest coupons, payable to the assignee or assignees duly designated m writing by the imtlal registered owner hereof, or to the ~mtml registered owner as to any portion of t[us Bond w[uch ~s not being assigned and transferred by the ~mt~al registered owner, In any denormnat~on or denonunat~ons m any integral multiple of $5,000 (subJect to the requirement hereinafter stated that each substitute bond issued m exchange for any portion of t[us Bond shall have a single stated pnnclpal maturity date), upon surrender of t[us Bond to the Paying AgentJReglstrar for cancellation, all in accordance w~th the form and procedures set forth in the Bond Ordinance fit[us Bond or any portion hereof is assigned and transferred or converted each bond issued in exchange for any portion hereof shall have a single stated pnnclpal maturity date corresponding to the due date of the installment of pnnclpal of t[us Bond or portion hereof for w[uch the substitute bond Is being exchanged, and shall bear ~nterest at the rate applicable to and borne by such installment of pnnc~pal or port~on thereof Such bonds, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding installment ofpnnclpal oft[us Bond or portion hereof for w[uch they are being exchanged No such bond shall be payable m ~nstallments, but shall have only one stated pnnclpal 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 dehvered In exchange for t[us Bond or any port~on hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond Ordinance The Issuer shall pay the Paying Agent/Reg~strar's standard or customary fees and charges for transfernng, convemng, and exchanging t[us Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges reqmred to be prod w~th respect thereto The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange 0) during the period commencing w~th the close of business on any Record Date and ending w~th the opening of business on the next fullowmg pnnclpal or interest payment date, or, (u) w~th respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, w~tinn 45 days prior to its prepayment or redemption date IN THE EVENT any Paying Agent/Registrar for tins Bond is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted m the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be maded to the registered owner of flus Bond IT IS HEREBY certified, recited, and covenanted that tins Bond has been duly and validly authonzed, issued, sold, and dehvered, that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of tins Bond have been performed, existed, and been done m accordance w~th law, that tins Bond is a special obhgaUon of the Issuer, secured by and payable, together w~th other bonds, from a first lien on and pledge of the "Pledged Revenues", winch include imt~ally the "Net Revenues of the System" as such terms are defined in the Bond Ordinance, voth the System consisting of the City's entire combined waterworks, sewer, and electric light and power system THE ISSUER has reserved the nght, subject to the restrictions stated in the Bond Ordinance, to issue Additional Bonds payable from and secured by a first hen on and pledge of the "Pledged Revenues" on a panty w~th tins Bond THE ISSUER also has reserved the nght, subject to the restncuons stated in the Bond Ordinance, to amend the Bond Ordinance w~th the approval of the holders or owners of fifry-one percent in 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 nght to demand payment of tins Bond or the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specified in the Bond Ordinance BY BECOMING the registered owner of flus Bond, the registered owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and proxqsions, acknowledges that the Bond Ordinance is duly recorded and avadable for inspection m the official minutes and records of the govermng body of the Issuer, and agrees that the terms and prowslons of tins Bond and the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer 14 IN WITNESS WHEREOF, the Issuer has caused flus Bond to be signed w~th the manual signature of the Mayor of the Issuer and countersigned wath the manual signature of the City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed on thts Bond, and has caused tlus Bond to be dated May 1, 1996 City Secretary, City of Denton, Texas Mayor, City of Denton, Texas (CITY SEAL) (BOND INSURANCE LEGEND, IF ANY) FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certify that this Bond has been exarmned, certified as to validity, and approved by the Attorney General of the State of Texas, and that tbas Bond has been registered by the Comptroller of Public Accounts of the State of Texas Witness my signature and seal tbas Comptroller of Pubhc Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 6 ADDITIONAL CHARACTERISTICS OF THE BONDS Registration and Transfer (a) The Issuer shall keep or cause to be kept at the pnnclpal corporate trust office of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, DALLAS, TEXAS (the "Paying Agem/Registrar") books or records of the registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe, and the Paying Agent/Registrar shall make such transfers and registrations as herein provided The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to whtch payments vath respect to the Bonds shall be mailed, as herein provided, but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in wntuig of the address to wbach payments shall be mailed, and such interest payments shall not be totaled unless such notice has been g~ven The Issuer shall have the right to respect the Reg~strataon Books dunng regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agem/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any 15 other enttty Regtstrat~on of each Bond may be transferred na the Registration Books only upon presentatmn and surrender of such Bond to the Paynag Agant/Reg~strar for transfer of reg, strat~on and cancellauon, together with proper wntten instruments of assignment, ~n form and with guarantee of s~gnatures satisfactory to the Paying AgentffReg~strar, ev~dencnag (l) the assagnment of the Bond, or any porUon thereofm any integral multiple of $5,000, to the assignee or ass,gnees thereof, and (n) the right of such assignee or assignees to have the Bond or any such pomon thereof registered na the name of such asmgnee or assignees Upon the assignment and transfer of any Bond or any port~on thereof, a new substitute Bond or Bonds shall be ~ssued m convemon and exchange therefor na the manner hereto provaded The Irut~al Bond, to the extent of the unpmd or unredeemed pnnmpal balance thereof, may be assagned and transferred by the mat~al registered owner thereof once only, and to one or more asslgueos designated m writing by the ,mtml registered owner thereof All Bonds issued and dehvered m conversmn of and exchange for the Imt,al Bond shall be m any denonnnat~on or denommanons of any integral multiple of $5,000 (subject to the reqmrement heremat~er stated that each substitute Bond shall have a snaffle stated pnnc~pal matunty date), shall be m the form prescnbed m the FORM OF SUBSTITUTE BOND set forth m tins Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provaded If the Imtml Bond or any pomon thereof~s assigned and transferred or converted the Imtlal Bond must be surrendered to the Paying Agent/Registrar for cancellatmn, and each Bond assued na exchange for any pon, on of the Imt~al Bond shall have a single stated prmc,pal maturity date, and shall not be payable m installments, and each such Bond shall have a prmmpal maturity date corresponding to the due date of the nastallment of principal or pomon thereof for winch the substitute Bond is being exchanged, and each such Bond shall bear naterest at the snaffle rate apphcable to and borne by such nastallmem of prmmpal or portton thereof for wbach ~t m benag exchanged If only a portion of the Inmal Bond ~s ass~gued and transferred, there shall be delivered to and registered ,n the name of the ~rnt~al registered owner subst,tute Bonds m exchange for the unassigned balance of the Initial Bond m the same manner as ffthe ~mUal registered owner were the assignee thereof If any Bond or portmn thereof other than the Imt~al Bond ~s assigned and transferred or converted each Bond ,ssued m exchange therefor shall have the same principal maturity date and bear naterest at the same rate as the Bond for winch it ~s exchanged A form ofass~gument shall be pnnted or endorsed on each Bond, excepting the Imtlal Bond, winch shall be executed by the registered owner or ~ts duly authorized attorney or representative to ewdence an asslgnmant thereof Upon surrender of any Bonds or any pomon or portions thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall make such transfer m the ReglstraUon Books, and shall dehver a new fully registered substitute Bond or Bonds, havang the characteristics hereto described, payable to such asstgnee or assignees (winch then roll be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner na case only a pomon cfa Bond ~s being assigned and transferred, all m conversmn of and exchange for smd assigned Bond or Bonds or any portmn or pomons thereof, m the same form and manner, and with the same effect, as prowded m Section 6(d), below, for the conversion and exchange of Bonds by any registered owner cfa Bond The Issuer shall pay the Paynag Agent/Registrars standard or customary fees and charges for malong such trans- fer and debvery of a subst,tute Bond or Bonds, but the one requesting such transfer shall pay any taxes or other governmental charges reqmred to be prod with respect thereto The Paying Agent/Reg,strar shall not be reqmred to make transfers of registration of any Bond or any pomon thereof(,) dunng the penod commencing with the close of business on any Record Date and ending w~th the opemng of business on the next following principal or interest payment date, or, (n) with 16 respect to any Bond or any portion thereof called for redemption prior to maturity, w~tban 45 days prior to its redemption date (b) Ownership of Bonds The entity in whose name any Bond shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of tbs Ordinance, whether or not such Bond shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary, and payment of, or on account of, the pnncipal of, prenuum, if any, and interest on any such Bond shall be made only to such registered owner All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so pa~d (c) Payment of Bonds and Interest The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the pnnclpal of and interest on the Bonds, and to act as its agent to convert and exchange or replace Bonds, all as prowded in this 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 prowded in th~s Ordinance (d) Conversion and E~ehan?e or Replacement. Authentication Each Bond issued and dehvered pursuant to tIas Ordinance, to the extent of the unpaid or unredeemed pnnclpal balance or pnnclpal amount thereof, may, upon surrender of such Bond at the pnnclpal corporate trust office of the Paying Agent/Registrar, together vath a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representataves, w~th guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE BOND set forth m tlus Ordinance, in the denonunatlon of $5,000, or any integral multiple of $5,000 (subject to the reqmrement hereinafter stated that each substitute Bond shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, m an aggregate pnnclpal amount equal to the unpaid or unredeemed pnncipal balance or principal amount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be If the Imtial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion of the Imtial Bond shall have a single stated pnncipal 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 pnncipal or portion thereof for winch the substitute Bond is being exchanged, and each such Bond shall bear interest at the single rate applicable to and borne by such installment of pnncipal or portion thereof for wtuch it is being exchanged Ifa portion of any Bond (other than the Imtlal Bond) shall be redeemed prior to its scheduled maturity as prowded herein, a substitute Bond or Bonds having the same maturity date, beanng interest at the same rate, in the denonunatlon or denomanations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate pnnclpal amount equal to the unredeemed portion thereof, vail be issued to the registered owner upon surrender thereof for cancellaUon If any Bond or portion thereof (other than the Inmal Bond) Is assigned and transferred or converted, each Bond issued in exchange therefor shall have the same pnncipal maturity date and bear interest at the same rate as the Bond for wbach xt is being exchanged Each substitute Bond shall bear a letter and/or number to d~stmguish it from each other Bond The Paying Agent/Registrar shall 17 convert and exchange or replace Bonds as prowded herein, and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond or portion thereof as perrmtted or reqmred by any proxas~on ofttus Ordinance shall constitute one of the Bonds for all purposes oftlus Ordinance, and may again be converted and exchanged or replaced It is specifically provided that any Bond authenticated in convemon of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date for the Imtlal Bond shall bear interest from the date of the Imtlal Bond, but each substitute Bond so authenticated at~er such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on wluch such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but on or before the next following interest payment date, in whmh case it shall bear interest from such next following interest payment date, provided, however, that ff at the time of delivery of any substitute Bond the interest on the Bond for whmh it is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to wtuch such interest has been pad in full THE INITIAL BOND Issued and dehvered pursuant to tlms Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/l~g~strar, but on each sub~tute Bond issued m conversion of and exchange for or replacement of any Bond or Bonds issued under tlus Ordinance there shall be pnnted a certificate, in the form substantially as follows "PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that tbas Bond has been issued under the provisions of the Bond Ordinance described m tbs Bond, and that tins Bond has been issued in conversion of and exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Pubhc Accounts of the State of Texas TEXAS COMMERCE BANK NATIONAL ASSOCIATION, DALLAS, TEXAS Paling Agent/Registrar Dated By Authorized Representative" An authorized representative of the Pa3nng Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement No additional ordinances, orders, or resolutions need be passed or adopted by the govermng body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the Paying AgenffKeg~strar shall promde for the printing, execution, and delivery of the substitute Bonds in the manner prescribed hereto, and said Bonds shall be of type composltaon pnnted on paper w~th hthographed or steel engraved borders of customary weight and strength Pursuant to Vernon's Ann Tex Civ St Art 717k-6, and particularly Section 6 thereof, the duty of convemon and exchange or replacement of Bonds as aforesaid ~s hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying AgentYReg~strar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, 18 incontestable, and enforceable m the same manner and w~th the same effect as the Imtlal Bond wluch originally was issued pursuant to tlus Ordinance, approved by the Attorney General, and re~ustered by the Comptrnller of Pubhc Accounts The Issuer shall pay the Paying Agent/Reglstrar's standard or customary fees and charges for transfemng, convertmg, and exchanging any Bond or any portton thereof, but the one requesting any such transfer, convemon, and exchange shall pay any taxes or governmental charges requtred to be pa~d w~th respect thereto as a condmon precedent to the exerctse of such pnwlege of convemon and exchange The Paying Agent/Regtstrar shall not be required to make any such convemon and exchange or replacement of Bonds or any portion thereof (0 dunng the period commencing vath the dose of business on any Record Date and ending wtth the opening of business on the next following prmapal or interest payment date, or, (n) w~th respect to any Bond or portton thereof called for redemption prior to maturity, vathln 45 days prior to its redemption date (e) In General All Bonds tssued m conversion and exchange or replacement of any other Bond or portion thereof, 0) shall be tssued m fully regtstered form, w~thout interest coupons, with the pnnctpal of and interest on such Bonds to be payable only to the registered owners thereof, 00 may and shall be redeemed prior to thetr scheduled matunues, (iii) may be transferred and asstgned, 0v) may be converted and exchanged for other Bonds, (v) shall have the charactenstics, (w) shall be signed and sealed, and (va) the pnne~pal of and interest on the Bonds shall be payable, all as prowded, and tn the manner required or indicated, in the FORM OF SUBSTITUTE BOND set forth in tbas Ordmance (f) Payment 0fFees and Chard, es The Issuer hereby covenants wnh 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 serwces w~th respect to the payment of the pnnapal of and interest on the Bonds, when due, and (n) pay the fees and charges of the Payang Agent/Registrar for services with respect to the transfer of regtstratlon of Bonds, and wtth respect to the convemon and exchange of Bonds solely to the extent above provided in flus Ordinance (g) S~b~tute Pa~ng AgentJRegtstrar The Issuer covenants wnh the registered owners of the Bonds that at all times whale the Bonds are outstanding the Issuer will provide a competent and legally quahfied bank, trust company, financial mstltutlon, or other agency to act as and perform the services of Paying Agent/Registrar for the Bonds under th~s Ordinance, and that the Paying Agent/Re~strar will be one entity The Issuer reserves the right to, and may, at its option, change the Paying Agent~eg~strar upon not less than 120 days wntten notice to the Paying Agent/Regtstrar, to be effecttve not later than 60 days prior to the next prmapal or interest payment date after such notice In the event that the entity at any time aetmg as Paying Agent/Regtstrar (or its successor by merger, acqutsmon, or other method) should restgn or other~nse cease to act as such, the Issuer covenants that promptly tt will appomt a competent and legally qualtfied bank, trust company, financial mstttutton, or other agency to act as Paying Agent/Registrar under tbas Ordinance Upon any change tn the Paying Agent/Registrar, the previous Payang Agent/Regtstrar promptly shall transfer and dehver the Regtstratlon Books (or a copy thereof), along w~th all other pertinent books and records relating to the Bonds, to the new Pa3nng Agent/Registrar designated and appointed by the Issuer Upon any change m the Paying AgentfRegtstrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by Umted States marl, first-class postage prepaid, which notice also shall give the address of the new 19 Paying Agent/Registrar By accepting the posit~on and performing as such, each Paying AgenffReg~s- trar shall be deemed to have agreed to the prowsions oftlus Ordinance, and a certified copy ofttus Ordinance shall be delivered to each Paying Agent/Registrar Section 7 FORM OF SUBSTITUTE BONDS The form of all Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, including the form of Paying AgenffReg~strafs Certificate to be pnnted on each of such Bonds, and the Form of Assignment to be pnnted on each of the Bonds, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by flus Ordinance FORM OF SUBSTITUTE SERIES 1996 BOND NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 1996 INTEREST MATURITY ORIGINAL DATE RATE DATE OF ISSUE CUSIP NO % MAY 1, 1996 ON THE MATURITY DATE specrfied above the CITY OF DENTON, In Denton County, Texas (the "Issuer"), being a pohtlcal subdlwsion of the State of Texas, hereby promises to pay to , or to the registered assignee hereof(either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon from May 1, 1996, to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above, with interest being payable on December 1, 1996, and semiannually on each June 1 and December 1 thereafter, except that ffthe date of anthentication ofth~s Bond is later than the first Record Date (hereinafter defined), such pnncipal amount shall bear interest from the interest payment date next preceding the date of authenucatton, unless such date of authentication is after any Record Date (hereinafter defined) but on or before the next following interest payment date, in which case such pnnopal amount shall bear interest from such next following interest payment date Smd interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months THE PRINCIPAL OF AND INTEREST ON ttus Bond are payable in lawful money of the Umted States of America, without exchange or collection charges The pnnclpal of tins Bond shall be prod to the registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the pnnclpal corporate trust office of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, DALLAS, TEXAS, whmh is the 20 "Paying Agent/R~gistrar" for tlus Bond The payment of interest on tlus Bond shall be made by the Paying Agent/Registrar to the re~stered owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paling Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Bonds (the "Bond Ordinance") to be on deposit w~th the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the Paying Agent/Re~strar by Umted States mlul, first-class postage prep0ad, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business on the 15th day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as heremat~er described However, the payment of such interest may be made by any other method acceptable to the Paying Agent/Registrar and requested by, and at the risk and expense of, the registered owner hereof Any accrued interest due upon the redemption oftlus Bond prior to maturity as provided herein shall be prod to the registered owner at the pnnclpal corporate trust office of the Paying Agent/Registrar upon presentation and surrender of tlus Bond for redemp- tion and payment at the pnncipal corporate trust office of the Paling Agent/Registrar The Issuer covenants with the registered owner of this Bond that on or before each pnnclpal payment date, interest payment date, and accrued interest payment date for this Bond it w~ll make available to the Paying Agent/Registrar, from the "Interest and Slnlong Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all pnnclpal of and interest on the Bonds, when due IF THE DATE for the payment of the pnneipal of or interest on flus Bond shall be a Saturday, Sunday, a legal holiday, or a day on which bankdng institutions in the City where the Pa3nng A4~ent/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 wluch banking mstatutions are authorized to close, and payment on such date shall have the same force and effect as if made on the otnginal date payment was due THIS BOND is one of an issue of Bonds initially dated May 1, 1996, authorized in accordance w~th the Constitution and laws of the State of Texas in the pnnclpal amount of $2,750,000, for the purpose of providing for improvements and extensions of the City of Denton Utility System, wtuch consists of the City's Combined Waterworks, Sewer, and Eleetnc Light and Power System ON DECEMBER 1, 2006, or on any date whatsoever thereafter, the Bonds of this Series may be redeemed prior to their scheduled matuntles, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion ora Bond may be redeemed only in an integral multiple of $5,000), at the redemption price of the par or pnncipal amount thereof, plus accrued interest to the date fixed for redemption AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be pubhshed once in a financial publication, journal, or reporter of general circulation among secunues dealers in The City of New York, New York (including, but not hrmted to, The Bond Buyer and The Wall Street Journal), or in the State of Texas (including, but not limited to, The Texas Bond Reporter) Such notice also shall be sent by 21 the Paymg Agent/Registrar by Umted States marl, first-class postage prepoad, not less than 30 days prior to the date fixed for any such redemptton, to the registered owner of each Bond to be redeemed at as address as tt appeared on the 45th day prior to such redemptton date, pro,haled, however, that the fatlure to send, mml, or receive such nottce, or any defect therem or tn the sending or mmlmg thereof, shall not affect the valtdtty or effecttveness of the proceedtngs for the redemptton of any Bond, and tt Is hereby specifically provided that the pubhcatton of such nottce as required above shall be the only noUce actually required m connecuon vath or as a prereqmsxte to the redemption of any Bonds or porttons thereof By the date fixed for any such redemptxon due prowsmn shall be made w~th the Paying Agent/Registrar for the payment of the requtred redemptton price for the Bonds or porttons thereof winch are to be so redeemed, plus accrued mterast thereon to the date fixed for redemption If such written nouce of redemptmn ts pubhshed and ff due prows~on for such payment ts made, all as proxaded above, the Bonds or portions thereof winch are to be so redeemed thereby automattcally shall be treated as redeemed prior to thetr scheduled matunues, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to recetve the redemptton price plus accrued interest from the Paying Agent/Registrar out of the funds prowded for such payment Ifa pomon of any Bond shall be redeemed a substttute Bond or Bonds hawng the same maturity date, bearing tnterest at the same rate, m any denomination or denonunattons m any integral multtple of $5,000, at the written request of the registered owner, and m aggregate prmcxpal amount equal to the unredeemed portton thereof, v~ll be tssued to the registered owner upon the surrender thereof for cancellatton, at the expense of the Issuer, all as provaded tn the Bond Ordinance THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be asstgned and shall be transferred only In the Registration Books of the Issuer kept by the Paying AgentJRegtstrar actmg ~n the capacity of registrar for the Bonds, upon the terms and condttions set forth m the Bond Ordinance Among other reqmrements for such asstgnment and transfer, tins Bond must be presented and surrendered to the Paling Agent/Regtstrar, together vath proper instruments of asstgnment, m form and w~th guarantee of signatures sattsfactoD' to the Paying Agent/Registrar, ewdencmg asstgnment of tins Bond or any portton or porttons hereof m any tntegral multiple of $5,000 to the asstgnee or asstgnees m whose name or names tins Bond or any such ponton or porttons hereof ts or are to be transferred and registered The form of Asstgnmant pnnted or endorsed on tins Bond shall be executed by the regtstered owner or tts duly authorized attorney or representattve, to exadence the asstgnment hereof A new Bond or Bonds payable to such asstgnee or asstgnees (which then vall be the new regtstered owner or owners of such new Bond or Bonds), or to the previous registered owner in the case of the asstgnment and transfer of only a porUon oftl~s Bond, may be dehvered by the Paying Agent/Regtstrar tn conversion of and exchange for tl~s Bond, all m the form and manner as prowded ~n the next paragraph hereof for the conversion and exchange of other Bonds The Issuer shall pay the Paying Agent/Regtstrar's standard or customary fees and charges for making such transfer, but the one requesttng such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto The Paying Agent/Regtstrar shall not be reqmred to make transfers of registration of tins Bond or any portton hereof0) dunng the period commenctng w~th the close of business on any Record Date and ending w~th the opemng ofbustness on the next following pnnctpal or ~nterest payment date, or, (u) w~th respect to any Bond or any portion thereof called for redemptton prior to maturity, w~tinn 45 days pnor to tts redemptton date The registered owner of tins Bond shall be deemed and treated by the Issuer and the Paying Agent/Regtstrar as the absolute owner hereof for all purposes, tncludlng 22 payment and discharge of hahihty upon this Bond to the extent of such payment, and the Issuer and the Paying AgentgReg~strar shall not be affected by any notice to the contrary Ali. BONDS OF THIS SERIES are lssuable solely as fully registered bonds, w~thout interest coupons, m the denonunation of any integral multiple of $5,000 As provided m the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be converted into and exchanged for a hke aggregate pnncipal 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, m any denomination or denominations m any integral multiple of $5,000 as requested m writing by the appropnate registered owner, assignee, or assignees, as the case may be, upon sur- render of this Bond to the Paying Agent/Registrar for cancellation, all m accordance w~th the form and procedures set forth in the Bond Ordinance The Issuer shall pay the Paying Agent/Reglstrar's standard or customary fees and charges for transfernng, 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 pad w~th respect thereto as a condition precedent to the exercise of such pnvdege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange 0) dunng the period commencing with the close of business on any Record Date and ending vath the opemng of business on the next following principal or interest payment date, or, (n) voth respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date 1N THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or otherwtse ceases to act as such, the Issuer has covenanted in the Bond Ordinance that It promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause wmten notice thereof to be totaled to the registered owners of the Bonds IT IS HEREBY certified, recited, and covenanted that tlus Bond has been duly and validly authorized, issued, sold, and delivered, that all acts, conditions, and things required or proper to be performed, erast, and be done precedent to or m the anthonzauon, issuance, and dehvevy of this Bond have been performed, exJsted, and been done in accordance voth law, that this Bond is a special obhgataon of the Issuer, secured by and payable, together with other bonds, from a first hen on and pledge of the "Pledged Revenues", winch include imtially the "Net Revenues of the System", as such terms are defined in the Bond Ordinance, v~th 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 m the Bond Ordinance, to issue Additional Bonds payable from and secured by a first hen on and pledge of the "Pledged Revenues" on a panty w~th this Bond and series ofwtuch 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 w~th the approval of the holders or owners of fifty-one percent in pnncipal amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged Revenues 23 THE REGISTERED OWNER hereof shall never have the right to demand payment ofttus Bond or the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specified in the Bond Ordinance BY BECOMING the registered owner of tbas Bond, the registered owner thereby acknowledges all of the terms and prowslons of the Bond Ordinance, agrees to be bound by such terms and prov~sions, acknowledges that the Bond Ordinance is duly recorded and available for inspection m the official mutes and records of the gnvermng body of the Issuer, and agrees that the terms and provisions of tlus Bond and the Bond Ordmance constitute a contract between each registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused tbas Bond to be signed w~th the manual or facsimile signature of the Mayor of the Issuer and countersigned w~th the manual or facslrmle signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsirmle, on tbas Bond City Secretary, City of Denton, Texas Mayor, City of Denton, Texas (CITY SEAL) FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that tbas Bond has been issued under the provisions of the Bond Ordinance described m fins Bond, and that tbas Bond has been issued in conversion of and exchange for or replacement ora bond, bonds, or a poruon ora bond or bonds of an issue winch ongmally was approved by the Attorney General ol~the State of Texas and registered by the Comptroller of Pubhc Accounts of the State of Texas TEXAS COMMERCE BANK NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Dated By Authorized Representative (BOND INSURANCE LEGEND, IF ANY) 24 FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner oft[us Bond, or duly authorized representative or attorney thereof, hereby assigns t[us Bond to / / (Asslgnee's Social (pnnt or typewrite Assignee's name and Security or Taxpayer address, including zip code) Identification Number) and hereby irrevocably constitutes and appoints attomey to transfer the reg~strataon oftNs Bond on the Paying Agent/Reglstrar's Registration Books vath full power of substitution in the prenuses Dated Signature Guaranteed NOTICE Signature(s) must be Registered Owner guaranteed by an eligible guarantor NOTICE T[Us signature must correspond institution participating Iff a w~th the name of the Registered Owner secunUes transfer assomatlon appeanng on the face of t[us Certificate in recogmzed signature guarantee every particular wathout alteration or program enlargement or any change whatsoever 25 FORM OF SUBSTITUTE SERIES 1996A BOND NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BOND SERIES 1996A INTEREST MATURITY ORIGINAL DATE RATE DATE OF ISSUE CUSIP NO % MAY 1, 1996 ON THE MATURITY DATE specified above the CITY OF DENTON, m Denton County, Texas (the "Issuer"), being a poht~cal subdivision of the State of Texas, hereby prormses to pay to , or to the registered assignee hereof (e~ther being heremaiter called the "registered owner") the pnnc~pal amount of and to pay interest thereon from May 1, 1996, to the maturity date specified above, or the date of redemptton prior to maturity, at the interest rate per annum specffied above, w~th interest being payable on December 1, 1996, and sermannually on each June 1 and December 1 thereafter, except that rfthe date of authenttcataon oftlus Bond ~s later than the first Record Date (hereinafter defined), such pnnc~pal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentmatxon ~s after any Record Date (heretnai~er defined) but on or before the next following interest payment date, xn wl~ch case such pnnc~pal amount shall bear tnterest from such next following interest payment date Smd ~nterest shall be calculated on the bas~s of a 360-day year composed of twelve 30-day months THE PRINCIPAL OF AND INTEREST ON thts Bond are payable ~n lawful money of the Umted States of America, vathout exchange or collection charges The pnnc~pal of tins Bond shall be prod to the registered owner hereof upon presentation and surrender ofth~s Bond at maturity or upon the date fixed for its redempuon prior to maturity, at the pnncxpal corporate trust office of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, DALLAS, TEXAS, wl~ch ~s the "Paying AgentYReg~strar" for thru Bond The payment of interest on flus Bond shall be made by the Paying Agent/Registrar to the rel0stered owner hereof on each ~nterest 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 reqmred by the ordinance authorizing the muance of the Bonds (the "Bond Ordxnance") to be on deposit xanth the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the Paying A_gent/Reg~strar by Umted States mad, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as ~t appeared at the close of business on the 15th day of the month next preceding each such date (the "Record Date") on the Regmtrat~on Books kept by the Paying Agent/Registrar, as hereinafter described However, the payment of such interest may be made by 26 any other method acceptable to the Paying AgentJRegtstrar and requested by, and at the risk and expense of~ the reElstered owner hereof Any accrued tnterest due upon the redemption of tins Bond prior to maturity as proxaded herem shall be prod to the re~stered owner at the prmctpal corporate trust office of the Paying AgentJReg~strar upon presentation and surrender of tins Bond for redemp- tton and payment at the prtnctpal corporate trust office of the Paytng AgentfRegtstrar The Issuer covenants ,vath the ragtstered owner of tins Bond that on or before each pnnctpal payment date, interest payment date, and accrued interest payment date for tins Bond tt vail make avmlable to the Paying AgentJRegtstrar, from the "Interest and Stnlong Fund" created by the Bond Ordinance, the amounts reqmred to provtde for the payment, tn tmmedtately avatlable funds, of all pnnc~pal of and tnterest on the Bonds, when due IF THE DATE for the payment of the pnnctpal of or interest on ttus Bond shall be a Saturday, Sunday, a legal hohday, or a day on winch hankmg mstttut~ons tn the C~ty where the Paytng Agent/Re~strar ts located are authortzed by law or executtve order to close, then the date for such payment shall be the next succeeding day winch ts not such a Saturday, Sunday, legal hohday, or day on winch banking mstttuttons are anthonzed to close, and payment on such date shall have the same force and effect as tf made on the on~unal date payment was due THIS BOND ts one of an tssue of Bonds tmttally dated May 1, 1996, authorized tn accordance vath the Constttutton and laws of the State of Texas tn the pnnctpal amount of $36,510,000, for the purpose of prov~dtn8 for refunding and prepaying certain obhgat~ons of the Issuer pursuant to a "Contract between the Umted States of America and the Ctty of Denton, Texas, for water storage spaces m Aubrey and Levasvtlle Lakes, Texas", funding a reserve fund and paying a portton of the cost of tssumg the Bonds ON DECEMBER 1, 2006, or on any date whatsoever therea~er, the Bonds of tins Series may be redeemed prior to their scheduled matunttes, at the optton of the Issuer, vath funds derived from any available and lawful source, as a whole, or tn part, and, ~f tn part, the parttcular Bonds, or porttons thereof, to be redeemed shall be selected and designated by the Issuer (proxaded that a port~on ora Bond may be redeemed only tn an tntegral multiple of $5,000), at the redemptton price of the par or pnnctpal amount thereof, plus accrued interest to the date fixed for redemptton THE OUTSTANDING BONDS of tins Senes scheduled to mature on DECEMBER 1, 2024 are subject to mandatory redemption prtor to their scheduled maturities, and shall be redeemed by the Issuer, in part, prior to their scheduled matunttes, vath the parttcular Bonds or portions thereof to be redeemed to be selected by the Paying Agent/Registrar at random, by lot or other customary method (provtded that a portion of a Bond may be redeemed only tn an tntegral multtple of $5,000), at a redemption price equal to the par or pnnctpal amount thereof and accrued tnterest to the date of redemptton, on the dates, and tn the pnnctpal amounts, respecttvely, as shown tn the followmg schedule 27 December 1. 2024 Maturity Mandatory_ Redemption Dates Pnncmal Amounts December 1, 2017 $1,625,000 December 1, 2018 1,730,000 December 1, 2019 1,835,000 December 1, 2020 1,950,000 December 1, 2021 2,070,000 December 1, 2022 2,200,000 December 1, 2023 2,335,000 December 1, 2024 2,485,000 (payment at maturity) The pnncipal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of the Issuer by the pnncipal amount of any Bonds out of the maturity scheduled for December 1, 2024 wtuch, at least 45 days prior to the aforesaid appropriate redemption date (1) shall have been acquired by the Issuer at a price not exceeding the pnncipal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional redemption provisions hereof and not prewously credited to the Mandatory Slnlong Fund redemption AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be published once In a financial publication, journal, or reporter of general circulation among securities dealers m The City of New York, New York (including, but not hnuted to, The Bond Buyer and The Wall Street Journal), or in the State of Texas (including, but not limited to, The Texas Bond Reporter) Such notice also shall be sent by the Payang Agent/Registrar by United States marl, 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, provided, however, that the failure to send, mml, or receive such notice, or any defect therein or m the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond, and It is hereby specifically provaded that the publication of such notice as required above shall be the only notice actually required m connection with or as a prerequisite to the redemption of any Bonds or portions thereof By the date fixed for any such redemption due provision shall be made w~th the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption If such wnttan nouce of redemption Is pubhshed and If due provision for such paymant is made, all as provided above, the Bonds or portions thereof whtch are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest from the Paying Agent/Registrar out of the funds prowded for such payment If a portion of any Bond shall be redeemed a substitute Bond or Bonds hawng the same maturity date, beanng interest at the same rate, m any denormnatton or denominations m any integral multiple of $5,000, at the written request of the registered owner, and in aggregate pnncipal amount equal to the unredeemed portion thereof, 28 w~l be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as prowded in the Bond Ordinance THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions se~ forth in the Bond Ordinance Among other requirements for such assignment and transfer, flus Bond must be presented and surrendered to the Paying Agent/Registrar, together w~th proper instruments of assignment, m form and w~th guarantee of signatures satisfactory to the Paying Agent/Registrar, ewdencxng assignment oftlus Bond or any port,on or portions hereof in any integral multiple of $5,000 to the assignee or assignees m whose name or names tbas Bond or any such port~on or portions hereof is or are to be transferred and registered The form of Assignment pnnted or endorsed on tlus Bond shall be executed by the registered owner or its duly anthonzed attorney or representative, to evidence the assignment hereof A new Bond or Bonds payable to such assignee or assignees (winch then ~ be the new registered owner or owners of such new Bond or Bonds), or to the prewous registered owner in the case of the assignment and transfer of only a po~on of this Bond, may be dehvered by the Paying Agent/Registrar in conversion of and exchange for flus Bond, all in the form and manner as prowded 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 malang such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid w~th respect thereto The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or any portion hereof(0 during the period commencing with the close of buslness on any Record Date and ending with the opemng of business on the next follovong principal or interest payment date, or, (il) with respect to any Bond or any portion thereof called for redemption prior to maturity, wltlun 45 days prior to its redemption date The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and &scharge of hablhty upon tlus Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary ALL BONDS OF TI-HS SERIES are lssuable solely as fully registered bonds, w~thout interest coupons, m the denonnnatlon of any integral multiple of $5,000 As provided in the Bond Ordinance, flus Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be converted into and exchanged for a like aggregate pnnclpal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and beanng interest at the same rate, m any denommauon or denominations m any integral multiple of $5,000 as requested m writing by the appropnate registered owner, assignee, or assignees, as the case may be, upon sur- render ofttus Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance The Issuer shall pay the Paying Agent/Reg~strar's standard or customary fees and charges for transfernn~ 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 pa~d w~th respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be reqtured to make any such conversion and exchange (1) dunng the period commencing w~th the close of business on any Record Date and en/hng vath the opemng of business on the next following 29 principal or interest payment date, or, (n) vath respect to any Bond or portion thereof called for redemption prior to maturity, w~tinn 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 m the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly wdl cause written notice thereoftu be totaled to the registered owners of the Bonds IT IS HEREBY certified, recited, and covenanted that tins Bond has been duly and validly authonzed, ~ssued, sold, and dehvered, that all acts, conditions, and tinngs required or proper to be performed, wast, and be done precedent to or m the authorization, issuance, and dehvery of tins Bond have been performed, existed, and been done in accordance wath law, that tins Bond Is a special obhgatton of the Issuer, secured by and payable, together vath other bonds, from a first lien on and pledge of the "Pledged Revenues", winch include lmtially the "Net Revenues of the System", as such terms are defined in the Bond Ordinance, vath the System consisting of the City's entire combined waterworks, sewer, and electric light and power system THE ISSUER has reserved the right, sub. leer to the restrictions stated in the Bond Ordinance, to issue Additional Bonds payable fi.om and secured by a first hen on and pledge of the "Pledged Revenues" on a panty vath tins Bond and series of winch it is a part THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to amend the Bond Ordinance vath the approval of the holders or owners of fifty-one percent in pnnclpal amount of all outstanding bonds winch are secured by and payable from a first lien on and pledge of the Pledged Revenues THE REGISTERED OWNER hereof shall never have the nght to demand payment of tins Bond or the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specified in the Bond Ordinance BY BECOMING the registered owner of tins Bond, the registered owner thereby acknowledges all of the terms and prowslons of the Bond Ordinance, agrees to be bound by such terms and prov~sions, acknowledges that the Bond Ordinance is duly recorded and available for inspection m the official mutes and records of the govermng body of the Issuer, and agrees that the terms and provasions of tins 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 facsimile s~gnature of the Mayor of the Issuer and countersigned vath the manual or facslnule signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed m facsimale, on tins Bond City Secretary, City of Denton, Texas Mayor, City of Denton, Texas (CITY SEAL) 3O FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that tbas Bond has been issued under the prowslons of the Bond Ordinance described m this Bond, and that ttus Bond has been issued in conversion of and exchange for or replacement of a bond, bonds, or a por'aon ora bond or bonds of an issue wluch 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 TEXAS COMMERCE BANK NATIONAL ASSOCIATION, DALLAS, TEXAS Paying Agent/Registrar Dated By Authonzed Representative (BOND INSURANCE LEGEND, IF ANY) 31 FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner oftl~s Bond, or duly authorized representative or attorney thereof, hereby assigns fins Bond to / / (Assignee's Social (pnnt or typewrite Assignee's name and Security or Taxpayer address, Including zip code) Identification Number) and hereby iITevocably constitutes and appoints attomey to transfer the reg~straUon of this Bond on the Paymg Agent/Registrar's Registration Books w~th full power of substitution in the prenuses Dated Signature Guaranteed NOTICE Signature(s) must be Registered Owner guaranteed by an eligible guarantor NOTICE This signature must correspond institution partlclpatmg in a with the name of the Registered Owner securities transfer association appeanng on the face of tbas Certificate in recogmzed signature guarantee every pamcular vathout alteration or program enlargement or any change whatsoever Section 8 DEFINITIONS As used in flus Ordinance the following terms shall have the meamngs set forth below, unless the text hereof specifically indicates otherwise (a) The terms "City" and "Issuer" shall mean the City of Denton, in Denton County, Texas (b) The term "City Council" or "Council" shall mean the govermng body of the City (c) The term "Bonds" shall mean collectively the Imtlal Bonds as defined and described in Section 2 of tins Orchnance and all substitute bonds exchanged therefor, and all other substitute bonds and replacement bonds, issued pursuant to and as proxaded ~n tbas Ordinance (d) The term "Panty Bonds" shall mean collecavely 0) the outstanding City of Denton Utility System Revenue Refundmg Bonds, Series 1987, authorized by ordinance passed on January 27, 1987 (the "Series 1987 Bonds"), (n) the outstandmg City of Denton Utility System Revenue Bonds, Series 32 1988, authorized by ordinance passed on August 2, 1988 (the "Series 1988 Bonds"), (iii) the outstanding City of Denton Utility System Revenue Bonds, Series 1989, authorized by ordinance passed on' Ootober 24, 1989 (the "Series 1989 Bonds"), (iv) the outstanding City of Denton Utility System Revenue Bonds, Senes 1992, authorized by ordinance passed on March 3, 1992 (the "Series 1992 Bonds"), (v) the outstanding City of Denton Utdity System Revenue Bonds, Series 1993, authonzed by ordinance passed on March 16, 1993 (the 'Senes 1993 Bonds"), (vt) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 1993-A, anthonzed by ordinance passed on June 8, 1993 (the "Series 1993-A Bond"), (vii) the outstanding City of Denton Utility System Revenue Refunding Bonds, Taxable Series 1993-B, authonzed by ordinance passed on June 8, 1993 (the "Series 1993-B Bonds"), and (yin) the Bonds (e) The term "Additional Bonds" shall mean the additional panty revenue bonds which the City reserves the right to issue m the future, in accordance wth Section 25 of this Ordinance (f) The term "System" shall mean (1) the City's entire existing waterworks and sewer system and the City's entire ex~sttng electnc light and power system, together w~th all future extensions, maprovements, enlargements, and additions thereto, and all replacements thereof, and (2) any other related facilities, all or any part of the revenues or income from which do, In the future, at the option of the City, and m accordance w~th law, become "Pledged Revenues" as hereinafter defined, prowded that, notwithstanding the foregoing, and to the extent now or hereafter authorized or penmtted by law, the term System shall not mean any water, sewer, electnc, or other faclhties of any land which are declared not to be a part of the System, and which are acquired or constructed by the City w~th the proceeds from the issuance of "Special Facditles Bonds", which are hereby defined as being special revenue obligations of the City which are not payable from or secured by any Pledged Revenues, but which are secured by and payable from liens on and pledges of any other revenu, es, sources, or payments, including, but not hrmted to, special contract revenues or payments received from any other legal entity tn connection w~th such facflmes, and such revenues, sources, or payments shall not be considered as or constitute Gross Revenues of the System, unless and to the extent other- wise provided in the ordinance or ordinances authonmng the issuance of such "Special Facilities Bonds" (g) The terms "Gross Revenues of the System" and "Gross Revenues" shall mean all revenues and income of every nature derived or received by the C~ty from the operation and ownership of the System, including the interest income from the investment or deposit of money in any Fund created by this Ordinance (h) The terms "Net Revenues of the System", and "Net Revenues" shall mean all Gross Revenues alter deducting therefrom an amount equal to the current expenses of operation and mainte- nance of the System, including all salanes, labor, materials, repairs, and extnns~ons necessary to render efficient service, provided, however, that only such repairs and extensions, as in the judgment of the C~ty Council, reasonably and fairly exercised by the adoption of appropriate resolutions, are necessary~to keep the System m operation and render adequate servtce to said City and the mhahitants thereof, or such as nught be necessary to meet some physical accident or condition which would other~nse mapair the Bonds or Additional Bonds, shall be deducted m deternumng "Net Revenues" Payments reqtnred to be made by the City for water supply or water facilities, sewer servaces or sewer facilities, fuel supply, and for the purchase of electric power, which payments under law constitute operation and maintenance expenses of any part of the System, shall constitute and be regarded as expenses of operation and maintenance of the System under this Ordinance Depreciation and amortization shall not constitute or be regarded as expenses of operation and maintenance of the System 0) The term "Pledged Revenues" shall mean (1) the Net Revenues, plus (2) any additional revenues, income, or other resources which are expected to be available to the City on a regular periodic basis, including, without limitation, any grants, donaUons, or income received or to be received from the Umted States Government, or any other pubhc or private source, whether pursuant to an agreement or othemase, which m the future may, at the option of the City, be pledged to the payment of the Panty Bonds or Additional Bonds (j) The term "year" or "fiscal year" shall mean the fiscal year used by the City in connection v~th the operation of the System (k) The term "Government Obligations" shall mean direct obligations of the Umted States of America, including obligations the prmcipal of and interest on which are unconditionally guaranteed by the Umted States of Amanca, which may be Umted States Treasury obligations such as its State and Local Government Series, and which may be in book-entry form (1) The term "Contract" means that "Contract between the Umted States of America and the City of Denton, Texas, for Water Storage Spaces in Aubrey and Lewaswlle Lakes, Texas", dated August 15, 1980 (m) The term "Refunded Obligations" means those obligations owed by the Issuer to the Umted States of America pursuant to the Contract and to be refunded and prepaid with a portion of the proceeds of the Bonds Section 9 PLEDGE (a) The Bonds are "Additional Bonds" as permatted by Sections 24 and 25 of the ordinance passed on March 10, 1983, authomang the City of Denton Refunding Bonds, Series 1983 (the "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 this Ordinance are supplemental to and cumulative of Sections 7 through 27 of the aforesmd ordinance passed on March 10, 1983, w~th Sections 8 through 28 of this Ordinance being applicable to all of the Panty Bonds (b) The Panty Bonds and any Additional Bonds, and the interest thereon, including any interest coupons appertaining thereto, are and shall be secured by and payable from a first lien on and pledge of the Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Funds created by this Ordinance, and any Funds created by any ordinance authorizing the issuance of any Additional Bonds The Panty Bonds and any Addmonal Bonds are 34 not and w~l not be secured by or payable from a mortgage or deed of trust on any real, personal, or rmxed properties constituting the System Section 10 SYSTEM FUND There heretofore has been and ~s hereby created and there shall be estabhshad and mamtmned on the books of the City, and accounted for separate and apart from all other funds of the C~ty, a specml fund to be entitled the "C~ty of Denton Utlhty System Fund" (the "System Fund") All Gross Revenues shall be credited to the System Fund ~mme&ately upon receipt, unless otherwise prowded m this Ordinance All current expenses of operation and maintenance of the System shall be prod from such Gross Revenues credited to the System Fund as a first charge agmnst same Before ma, long any deposits haremai~er reqmred to be made from the System Fund, the C~ty shall retmn m the System Fund at all t~mes an amount at least equal to one- sixth of the amount budgeted for the then current fiscal year for the current operation and mmntenance expenses of the System Section 11 INTEREST AND SINKING FUND For the sole purpose of paying the prmcxpal of and xnterest on all Panty Bonds and Add~uonal Bonds, there heretofore has been and ~s hereby created and there shall be estabhshed and m~untmned 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 Utthty System Revenue Bonds Interest and S~nlong Fund" (the "Interest and Smlong Fund") Section 12 RESERVE FUND There heretofore has been, and ~s hereby, created, and there shall be estabhshed and mamtmned at Texas Commerce Bank National Assocmt~on, and hereafter, at the option of the City, estabhshed and mmntmned at any t~me at any national bank hawng a capital and surplus m excess of $25,000,000, a separate fund to be entitled the "C~ty of Denton Ut~hty System Bonds and Addmonal Bonds Reserve Fund" (the "Reserve Fund") The Reserve Fund shall be used to pay the principal of and interest on any Panty Bonds or Additional Bonds when and to the extent the amounts ~n the Interest and S~nlong Fund available for such payment are insufficient for such purpose, and may be used for the purpose of finally ret~nng the last of any Panty Bonds or Additional Bonds SecUon 13 EXTENSION A_ND IMPROVEMENT FUND There heretofore has been and ~s hereby created and there shall be estabhshed and mmntmned on the books of the C~ty, and accounted for separate and apart from all other funds of the City, a separate fund to be enUtled the "City ofDanton Ut~hty System Extension and Improvement Fund" (the "Extension and Improvement Fund") The Extension and Improvement Fund shall be used for the purpose of paying the costs of ~mprovements, enlargements, extensions, additions, replacements, or other capital expenditures related to the System, or for paying the costs of unexpected or extraordinary repmrs or replacements of the System for which System funds are not avmlable, or for paying unexpected or extraordinary expenses of operataon and maintenance of the System for which System funds are not othe~se ava~l- able, or for any other lawful purpose Section 14 EMERGENCY FUND There ~s hereby created and there shall be estabhshed and mamtmned on the books of the Ctty, and accounted for separate and apart from all other funds of the C~ty, a separate fund to be entitled the "City of Denton Ut~hty System Emergency Fund" (the "Emergency Fund") The Emergency Fund shall be used for the purpose of paying unexpected or extraordinary expenses of repmr, replacement, operatmn, and mmntenance of the System for which 35 nexther System funds nor the moneys m the Extens:on and Improvement Fund are available There was deposited m the Emergency Fund simultaneously w~th the delivery of the Series 1983 Bonds to the lmt~al purchasers thereof from lawfully avmlable funds of the City the amount of $250,000 All investment interest income from the Emergency Fund shall be transferred to the System Fund as received Section 15 DEPOSITS OF PLEDGED REVENUES Pledged Revenues shall be credited to or deposited m the Interest and Staling Fund, the Reserve Fund, the Extension and Improvement Fund, and other funds when and as required by th~s Ordinance and any ordinance anthonzmg the issuance of Addmonal Bonds Section 16 INVESTMENTS Money m any Fund established pursuant to th~s Ordinance or any ordinance anthonzmg the issuance of Additional Bonds, may, at the option of the City, be placed m time deposits or certificates of deposit secured by obligations of the type heremai~er described, or be invested m Government Obhgations (as defined m Section 8 hereof) or obligations guaranteed or msured by the Umted States of America, which, in the opunon of the Attorney General of the Umted States, are backed by its full fiuth and credit or represent its general obligations, or mvested m obhgations ofmstrumentaht~es of the Umted States of America, including, but not limited to, ex~dences of indebtedness issued, insured, or guaranteed by such governmental agencies as the Federal Land Banks, Federal Intermedmte Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Govermnent National Mortgage Association, Umted States Postal Service, Farmers Home Adnumstratlon, Federal Home Loan Mortgage Association, Small Business Administration, Federal Housing Association, or Partlcipat~on CertaScates m the Federal Assets Fmancmg Trust, prowded that all such deposits and investments shall be made m such manner as will, m the opinion of the C~ty, pemut the money reqmred to be expended from any Fund to be available at the proper time or times as expected to be needed Such investments (except Umted States Treasury Obligations--State and Local Government Series investments held m hook entry form, wluch shall at all times be valued at cost) shall be valued in terms of current market value as of the last day of each fiscal year Unless otherwise set forth herein, all mterest and mcome derived from such deposits and investments immediately shall be credited to, and any losses debited to, the Fund from wbach the deposit or investment was made, and surpluses m any Fund shall or may be disposed of as heremaf~er provided Such investments shall be sold promptly when necessary to prevent any default in connection w~th the Panty Bonds or Add~tional Bonds consistent w~th the ordinances, respectively, authonzmg their issuance Section 17 FUNDS SECURED That money m all Funds created by flus Ordinance, to the extent not invested, 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 in the System Fund when and as required by this Ordinance and any ordinance authorizing any AddlUonal Bonds, and such deposits shall be made in the following manner and w~th the following irrevocable priorities, respectively First, to the Interest and Smk~ng Fund, when and m the amounts required by th~s Ordinance and any ordinance authorizing any AddiUonal Bonds, 36 Second, to the Reserve Fund, when and m the amounts required by this Ordinance and any ordinance authonzing any Additional Bonds, and Third, to the Extension and Improvement Fund, when and as required by Section 21 of this Ordinance Se~aon 19 INTEREST AND SINKING FUND REQUIREMENTS The City shall cause to be deposited to the credit of the Interest and Stoking Fund the accrued interest and any prermum received fi.om the sale of the Imtual Bond, and on or before the 25th day of each month, the City shall cause to be deposited to the cre&t of the Interest and Slnktng Fund, in approyamately equal monthly payments, amounts su~c~ent, together w~th any other funds on hand therein, to pay all of the interest or pnn¢lpal end interest cormng due, mcludlng the pnnc~pal amount of any Panty Bonds required to be redeemed prior to maturity pursuant to any mandatory redemption requirements, on the Panty Bonds and any Addmonal Bonds on the next succeeding interest payment date Any moneys so deposited in the Interest and Sinking Fund w~th respect to a mandatory redemption requirement, together with other lawfully avmlable funds of the City, may be used by the City, to purchase, in advance of a mandatory redemption date and at a price not exceeding the pnncipal amount thereof plus accrued interest thereon to the date of purchase, Panty Bonds which would be subject to being chosen for mandatory redemption on such mandatory redemption date The Paying Agent shall cancel any Panty Bonds so purchased Section 20 RESERVE FUND REQUIREMENTS There is now on hand in the Reserve Fund an amount of money and Government Obligations which is in excess of $3,000,000 and which is at least equal to the average annual pnncipal and interest reqmrements of the outstanding Series 1987 Bonds, the Series 1988 Bonds, the Series 1989 Bonds, the Series 1992 Bonds, the Series 1993 Bonds, the Series 1993-A Bonds and the Taxable Series 1993-B Bonds (the current "Required Reserve Amount") Follovong the issuance and delivery of the Imtlal Bonds the Reqmred Reserve Amount shall become and be an amount of money and investments equal to the average annual principal and interest requirements of all the outstanding Panty Bonds and Additional Bonds, provaded further, however, that the Required Reserve Amount shall never be less than $3,000,000 if the mayamum annual pnncipal and interest reqmrements on all outstanding Panty Bonds and Add~tional Bonds exceeds $3,000,000 Immediately al~er the ~ssuance and delivery of the Imt~al Bonds there shall be deposited to the credit of the Reserve Fund, from the proceeds of the sale of the Inmal Series 1996A Bond, money sufficient to cause the Reserve Fund to contmn an aggregate amount of money and investments equal to the Required Reserve Amount for all then outstanding Panty Bonds After the dehvery of any future Addmonal Bonds the City shall cause the Reserve Fund to be increased, ~f and to the extent necessary, so that such Fund will contmn an amount of money and ~nvestments equal to the Required Reserve Amount Any ~ncrease xn the Required Reserve Amount may be funded from Pledged Revenues, or fi.om proceeds from the sale of any Addi- tional Bonds, or any other avmlable source or combmauon of sources All or any part of the Reqmred Reserve Amount not funded lmtmlly and immediately after the dehvery of any installment or ~ssue of Addmonal Bonds shall be funded, w~thin not more than five years from the date of such dehvery, by deposits of Pledged Revenues in epproyamately equal monthly ~nstallments on or before the 25th day of each month Principal amounts of the Panty Bonds and any Additional Bonds which must be redeemed pursuant to any applicable mandatory redemption requirements shall be deemed to be maturing amounts of pnnc~pal for the purpose of calculating pnnopal and interest reqmrements 37 on such bonds When and so long as the amount an the Reserve Fund is not less than the Required Reserve Amount no deposits shall be made to the credit of the Reserve Fund, but when and ffthe Reserve Fund at any tune contains less than the Reqmred Reserve Amount, then the City shall transfer fi.om Pledged Revenues m the System Fund, and deposit to the credit of the Reserve Fund, monthly on or before the 25th day of each month, a sum equal to 1/60th of the Required Reserve Amount, until the Reserve Fund is restored to the Required Reserve Amount The City specifically covenants that when and so long as the Reserve Fund contains the Required Reserve Amount, the City shall cause all amounts m excess of the Required Reserve Amount to be deposited to the credit of the Interest and Sinking Fund Section 21 EXTENSION AND IIVIPROVEMENT FUND REQUIREMENTS Dunng each year, subject and subordinate to making the requtred deposits to the credit of the Interest and Stoking Fund and the Reserve Fund, the City shall be reqmred to deposit to the credit of the Extension and Improvement Fund, from Pledged Revenues m the System Fund, an amount equal to 8% of the "Adjusted Gross Revenues of the System", which term ns hereby defined to mean the following the Gross Revenues of the System for such year at~er deducting from such Gross Revenues an amount equal to the current expenses of operation and mtuntenance of the System for such year which are directly attributable to (0 all fuel costs related to the produmon of electric energy by the C~ty and/or (u) the purchase of electric energy by the City Additional excess Pledged Revenues may, at the option of the City Council, be deposited to the credit of the Improvement Fund as peruntted by Section 22 (b) hereof, but no such additional deposit is requtred All mvastment interest income fi.om the Extension and Improvement Fund shall be retained in and remain a part of such Fund Sectmn 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 Slnlang Fund or the Reserve Fund, such deficiency shall be made up as soon as possible fi.om the next available Pledged Revenues (b) SubJect to makang the required deposits to the credit of the vanous Funds when and as required by tins Ordinance or any ordinance authorizing the issuance of Addmonal Bonds, any surplus Pledged Revenues may be used by the City for any lawful purpose Semon 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS On or before December l, 1996, and sermannually on or before each June 1 and December 1 thereafter whale any of the Panty Bonds or Addmonal Bonds are outstanding and unpaid the City shall make available to the Paying Agents therefor, out of the Interest and Smkang Fund, or if necessary, out of the Reserve Fund, money sufficient to pay, on each of such dates, the pnnclpal of and interest on the Panty Bonds and Additional Bonds as the same matures and comes due, or to redeem the Panty Bonds or Adchl~onal Bonds prior to maturity, either upon mandatory redemption or at the option of the Cmty At the direction of the City the Paying Agents shall either deliver pa~d Panty Bonds and Additional Bonds, and any interest coupons appertaining thereto, to the City or destroy all prod Panty Bonds and Addlt~onal Bonds, and any coupons appertmmng thereto, and furmsh the C~ty wath an appropriate certificate of cancellation or destruction Seetton 24 FINAL DEPOSITS (a) Any Panty Bond or Add~tmnal Bond shall be deemed to be p~ud, retired, and no longer outstanding wlthtn the meamng of tlus Ordinance when payment of the pnnc~pal of, redemption prermum, fi.any, on such Panty Bond or Addit~onal Bond, plus ~nterest thereon to the due date thereof (whether such due date be by reason of maturity, upon redemption, or otherwise) e~ther 0) shall have been made or caused to be made m accordance with the terms thereof0ncludmg the g~vmg of any reqmred not, ce of redemption or provision for the proper g~wng of such not,ce having been made), or (n) shall have been prowded by ~rrevocably depositing wath or malang av~ulable to a Paying Agent therefor, m trust and ~rrevocably set aside exclusively for such payment, (1) money sufficient to make such payment or (2) Government Obhgatmns wtuch mature as to pnn¢lpal and mterest m such amounts and at such t~mes as wall insure the av~nlabfl~ty, wathout relnvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of such Paying Agent perta~mng to the Panty Bonds and Additional Bonds w~th respect to wbach such deposit ~s made shall have been p~ud or the payment thereof prowded for to the sattsfaet~on of such paying agent At such t~me as a Bond or Additional Bond shall be deemed to be pa~d hereunder, as aforesaid, ~t shall no longer be secured by or entitled to the benefits of tlus Ordinance or a hen on and pledge of the Pledged Revenues, and shall be entitled to payment solely from such money or Government Obhgat~ons (b) Any moneys so deposited wath a paying agent may at the d~rection of the C~ty also be invested m Government Obhgatmns, matunng m the amounts and t~mes as hereinbefore set forth, and all raceme from all Government ObhgaUons m the hands of the paying agent pursuant to th~s Secuon which ~s not reqmred for the payment of the Panty Bonds and Additional Bonds, the redemption prermum, ffany, and mterest thereon, vath respect to which such money has been so deposited, shall be turned over to the C~ty or deposited as d~rected by the C~ty Section 25 ADDITIONAL BONDS (a) The C~ty shall have the right and power at any t~me and from t~me to t~me, and m one or more series or ~ssues, to authorize, ~ssue, and dehver additional panty revenue bonds (here~n called "Addit~onal Bonds"), m accordance wath law, m any amounts, for any lawful purpose, including the refunding of any Panty Bonds or Additional Bonds, or other obhgat~ons Such Additional Bonds, fi. and when authorized, ~ssued, and dehvered ~n accordance vath tbas Ordinance, shall be payable from and secured by an ~rrevoeable first hen on and pledge of the Pledged Revenues, equally and ratably on a panty ~n all respects wath the Panty 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 wbach such pnnc~pal ~s scheduled to be pa~d or mature Section 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS Additional Bonds shall be ~ssued only m accordance wath tbas Ordinance, and no installment, Senes, or ~ssue of Additional Bonds shall be ~ssued or dehvered unless (a) The Mayor of the C~ty and the C~ty Secretary s~gn a written certificate to the effect that the City is not m default as to any covenant, condition, or obhgat~on m connection with all then 39 outstanding Panty Bonds and Additional Bonds, and the ordinances authorizing same, and that the Interest and Stoking Fund and the Reserve Fund each contains the mount then required to be therein (b) An independent certified public accountant, or independent firm of certified public accountants, acting by and through a certified public accountant, signs a wmten certificate to the effect that, m h~s or its opu~on, during e~ther the next preceding fiscal year, or any twelve consecutive calendar month period out of the 18-munth period immediately preceding the month in winch the ordinance authorizing the issuance of the then proposed Additional Bonds is passed, the Pledged Revenues were at least 0) 1 25 times an amount equal to the average annual pnncipal and interest requirements, and (ii) 1 10 times an amount equal to the pnncipal and interest requirements dunng the fiscal year dunng wluch such requirements are scheduled to be the greatest, of all Panty Bonds and Addmonal Bonds wtuch are scheduled to be outstanding after the delivery of the then proposed Additional Bonds It is specifically proxaded, however, that in calculating the amount of Pledged Revenues for the purposes oftlus subsection Co), ktthere has been any increase in the rates or charges for services of the System wluch is then in effect, but wluch was not in effect dunng all or any part of the entire penod for wtuch the Pledged Revenues are being calculated (hereinafter referred to as the "enUre period") then the certified public accountant, or in lieu of the certified public accountant a firm of consulting engineers, shall deternune and certify the amount of Pledged Revenues as being the total of (0 the actual Pledged Revenues for the entire period, plus (ii) a sum equal to the aggregate amount by wtuch the actual billings to customers of the System dunng the entire period would have been increased if such increased rates or charges had been in effect dunng the entire period (c) Provision shall be made in the ordinance authorizing their issuance for increasing the Reserve Fund to the Required Reserve Amount as required by Section 20 hereof (d) All calculations of average annual pnncipal and interest requirements of any bonds made m connection vath the issuance of any then proposed Additional Bonds shall be made as of the date of such Addmonal Bonds, and also in malung calculations for such purpose, and for any other purpose under this Ordinance, pnncipal amounts of any bonds wluch must be redeemed prior to maturity pursuant to any applicable mandatory redemption requirements shall be deemed to be matunng amounts of pnncipal of such bonds Section 27 GENERAL COVENANTS The City further covenants and agrees that in accordance with and to the extent required or pemutted by law (a) Performance It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained ua tbas Ordinance, and each ordinance authorizing the issuance of Addltiunal Bonds, and in each and every Panty Bond and Additional Bond, that it will promptly pay or cause to be paid the pnncipal of and interest on every Panty Bond and Additional Bond, on the dates and ua the places and manner presenbed in such ordinances and Panty Bonds or Additional Bonds, and that it will, at the times and in the manner prescnbed, deposit or cause to be deposited the amounts required to be deposited into the Interest and Sinking Fund and the Reserve Fund, and any holder of the Panty Bonds or Adch'aonal Bonds may reqmre the City, its officials, and employees, to carry out, respect, or enforce the covenants and obligations oftlus Ordinance, or any ordinance authonzmg the issuance of Addmonal Bonds, by all legal and equitable means, including specifically, 40 but without hnntatton, the use and fihng of mandamus proceedings, in any court of competent jurisdiction, agmnst the C~ty, its ofticlalS, and employees (b) ~ The City ts a duly created and ex~stmg home rule c~ty of the State of Texas, and is duly anthonzed under the laws of the State of Texas to create and ~ssue the Panty Bonds and Additional Bonds, that all action on ~ts part for the creation and ~ssuance of the said obhgauons has been or wdl be duly and effectively taken, and that smd obligations m the hands of the holders and owners thereof are and vail be valid and enfomeable special obligations of the City ~n accordance vath their terms (c) Title The City has or vail obtmn lawful t~tle to the lands, buildings, structures, and fac~htles constituting the System, that it warrants that it will defend the t~tle to all the aforesaid lands, buddings, structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Panty Bonds and Additional Bonds, against the clmms and demands of all persons whomso- ever, that ~t Is lawfully quahfied to pledge the Pledged Revenues to the payment of the Panty Bonds and Additional Bonds m the manner prescribed here~n, and has lawfully exercised such rights (d) L~ens The City will from time to time and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, whmh shall be lawfully imposed upon it, or the System, that it wdl pay all lawful claims for rents, royalties, labor, materials, and supphes which if unpaid rmght by law become a lien or charge thereon, the lien of whmh would be prior to or interfere vath the liens hereof, so that the priority of the hens granted hereunder shall be fully preserved m the manner proxaded herein, and that it vail not create or suffer to be created any mechamc's, laborer's, materialman's, or other hen or charge which aught or could be prior to the hens hereof, or do or suffer any matter or thing whereby the liens hereof nnght or could be Impmred, provided, however, that no such tax, assessment, or charge, and that no such clmms wbach aught be used as the basis of a mechamc's, laborer's, materialman's, or other lien or charge, shall be required to be prod so long as the validity of the same shall be contested in good froth by the C~ty (e) Operation of System. No Free Semce While the Panty Bonds or any Add~tional Bonds are outstanding and unpaid the City shall continuously and efficiently operate the System, and shall maintain the System m good cond~tion, repair, and working order, all at reasonable cost No free serwce of the System shall be allowed, and should the C~ty or any of its agencies, instrumentalities, lessors, or concess~onmres make use of the serwces and facdlt~es of the System, payment monthly of the standard retml price of the services proxaded shall be made by the C~ty or any oflts agencies, ~nstmmentahtles, lessors, or concessionaires out of funds from sources other than the revenues of the System, unless made from surplus Pledged Revenues as penmtted by Section 22(b) hereof (f) Further Encumbrance While the Panty Bonds or any Additional Bonds are outstanding and unpaid, the City shall not additionally encumber the Pledged Revenues in any manner, except as perrmtted tn th~s Ordinance m connection wath Additional Bonds, unless smd encumbrance is made junior and subordinate in all respects to the hens, pledges, covenants, and agreements of this Ordinance and any ordinance authorizing the ~ssuance of Additional Bonds, bm the right of the City to issue revenue bonds payable from a subordinate lien on surplus Pledged Revenues is specifically recogmzed and retmned, as perrmtted under Section 22(b) hereof) 41 (g) Sale or D~sposal of Property_ Wlule the Panty Bonds or any Addmonal Bonds are outstanding and unpaid, the City shall not sell, convey, mortgage, encumber, lease, or ~n any manner transfer t~tle to, or dedicate to other use, or other~ase d~spose of, the System, or any s~gmficant or substantial part thereof, proxaded that whenever the C~ty deems ~t necessary to d~spose of any property, maclunery, fixtures, or equtpment, or dedicate such property to other use, ~t may do so e~ther when ~t has made arrangements to replace the same or proxade substitutes therefor, or ~t ~s determined by resolution of the Ctty Council that no such replacement or substitute ~s necessary (h) Insurance (1) The City shall cause to be insured such parts of the System as would usually be ~nsured by corporations operating hke properties, unth a responsible ~nsurance company or compames, against risks, accidents, or casualties agmnst wbach and to the extent insurance is usually carried by corporations operating hke properties, ~ncludmg, to the extent reasonably obtainable, fire and extended coverage insurance, insurance agmnst damage by floods, and use and occupancy insurance Pubhc hab~hty and property damage msurance also shall be carried unless the C~ty Attorney g~ves a written op~mon to the effect that the C~ty ~s not hable for clmms wbaeh would be protected by such ~nsurance All insurance prenuums shall be pa~d as an expense of operation of the System At any tune whale any contractor engaged m construction work shall be fully responsible therefor, the C~ty shall not be reqmred to carry ~nsurance on the work being constructed ff the contractor ~s requulxl to carry appropriate insurance All such pohc~es shall be open to the inspection of the Bondholders and their representatives at all reasonable t~mes Upon the happemng of any loss or damage covered by insurance from one or more of sa~d causes, the C~ty shall make due proof of loss and shall do all tlungs necessary or destrable to cause the msunng compames to make payment m full directly to the C~ty The proceeds of insurance covenng such property, together with any other funds necessary and av/ulable for such purpose, shall be used forthwith by the C~ty for repamng the property damaged or replacing the property destroyed, prowded, however, that ~f sa~d ~nsurance proceeds and other funds are insufficient for such purpose, then sa~d insurance proceeds pert/umng to the System shall be deposited m a special and separate trust fund, at an official depository of the C~ty, to be designated the Insurance Account The Insurance Account shall be held until such t~me as other funds become avatlable wluch, together uath the Insurance Account, w~ll be sufficient to make the repairs or replacements originally reqmred (2) The annual audit hereinafter reqmred may contmn a section commenting on whether or not the C~ty has comphed with the requirements oftbas Section w~th respect to the maintenance of insurance, and shall state whether or not all insurance prermums upon the insurance pohc~es to which reference ~s made have been prod (0 Annual Budget and Rate Covenant The C~ty shall prepare, prior to the beginning of each fiscal year, an annual budget, ~n accordance wnth law, reflecting an estimate of cash receipts and d~sbursements for the ensuing fiscal year ~n sufficient detad to md~cate the probable Gross Revenues and Pledged Revenues for such fiscal year The C~ty shall fix, estabhsh, mmntmn, and collect, such rates, charges, and fees for the use and avadab~hty of the System at all tnnes as are necessary (1) to produce Gross Revenues sufficient, together w~th any other Pledged Revenues, to pay all current operation and maintenance expenses of the System, and (2) to produce an amount of Pledged Revenues during each fiscal year at least equal to the greater of 1 25 t~mes the average annual pnnc~pal and interest requtrements of all then outstanding Panty Bonds and Additional Bonds or 1 25 42 times the, succeeding fiscal year's pnncipal and interest requirements of all then outstanding Panty Bonds and Additional Bonds (3) Records The City shall keep proper books of record and account in which full, true, proper, and correct entries will be made of all dealings, activities, and transactions relating to the System, the Pledged Revenues, and the Funds created pursuant to this Ordinance, and all books, documents, and vouchers relating thereto shall at all reasonable tunes be made available for inspection upon request of any Bondholder or citizen of the City To the extent consistent with the provisions of this Ordinance, the City shall keep its books and records in a manner conforrmng to standard accounting practices as usually would be followed by private corporations owning and operating a sim. dar System, with appropriate recognition being given to essential differences between mumcipal and corporate accounting practices (k) Audits Aider the close ofeech fiscal year wh~e any of the Panty Bonds or any Additional Bonds are outstanding, an audit wdl be made of the books and accounts relating to the System and the Pledged Revenues by an independent certified public accountant or an independent firm of certified pubhc accountants As soon as practicable aider the close of each such year, and when said audit has been completed and made available to the City, a copy of such audit for the preceding year shall be mailed to the Municipal Advisory Council of Texas, to each paying agent for any bonds payable bom Pledged Revenues, and to any Bondholders who shall so request in wnUng The annual audit reports shall be open to the inspection of the Bondholders and their agents and representatives at all reasonable times (1) Govemmen~ It will comply with all of the terms and conditions of any and all franchises, pernuts, and anthonzations applicable to or necessary with respect to the System, and which have been obtained from any governmental agency, and the City has or will obtain and keep m full force and effect all franchises, pernuts, authorization, and other requirements apphcable to or necessary with respect to the acquisition, construction, equipment, operation, and maintenance of the System (m) No Competition It will not operate, or grant any franchise or, to the extent it legally may, permit the acquisition, construction, or operation of, any facilities which would be in competition with the System, and to the extent that it legally may, the City will prohibit any such competing facilities (n) No Arhitra~e The City covenants to and with the purchasers of the Panty Bonds and any Additional Bonds that no use will be made of the proceeds of any of such bonds at any time throughout the term of any of such bonds which, if 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 within the meamng of Section 148 of the Internal Revenue Code of 1986, as amended (the '*Code**), or any regulations or rulings pertaimng thereto, and by this covenant the City is obligated to comply with the requirements of the aforesaid Code and all apphcable and pertinent Department of the Treasury regulations relating to arbitrage bonds The City further covenants that the proceeds of all such bonds will not otherwise be used directly or indirectly so as to cause all or any part of such bonds to be or become arbitrage bonds within the meamng of the aforesaid Code, or any regulations pertaimng thereto Seeuon 28 AMENDMENT OF ORDINANCE (a) The holders or owners of Panty Bonds and AddtUonal Bonds aggregating tn pnnctpal amount 51% of the aggregate principal amount of then outstanchng Panty Bonds and Additional Bonds shall have the right from time to time to approve any amendment to tins Ordinance winch may be deemed necessary or desirable by the City, proxaded, however, that nothing hereto contained shall penmt or be construed to perrmt the amendment of the terms and conditions m tins Ordinance or m the Panty Bonds or Additional Bonds so as to (1) Make any change m the maturity of the outstanding Panty Bonds or Adchnonal Bonds, (2) Reduce the rate of interest borne by any of the outstanding Panty Bonds or Additional Bonds, (3) Reduce the amount of the pnncipal payable on the outstanding Panty Bonds or Additional Bonds, (4) Modify the terms of payment of pnncipal of or interest on the outstanding Panty Bonds or Adcht~onal Bonds, or impose any conditions wath respect to such payment, (5) Affect the rights of the holders or owners of less than all of the Panty Bonds and Additional Bonds then outstanding, (6) Change the rmmmum percentage of the principal amount of Panty Bonds and Additional Bonds necessary for consent to such amendment (b) If at any time the C~ty shall desire to amend the Ordinance under this Section, the C~ty shall cause notice of the proposed amendment to be pubhshed an a financial pubhcat~on of general circulation m The City of New York, New York, once dunng each calendar week for at least two successive calendar weeks Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the pnnclpal office of the Paying Agents for inspection by all holders or owners of Panty Bonds and Addalonal Bonds Such publication Is not required, however, ffnotlce m wntmg is g~van to each holder or owner of Panty Bonds and Additional Bonds (c) Whenever at any me not less than tinny days, and w~thm one year, from the date of the first pubheatlon of smd notice or other service of written notice the City shall receive an instrument or instruments executed by the holders or owners of at least 51% m aggregate prmcipal amount of all Panty Bonds and Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described m smd noUce and which specifically consent to and approve such amendment m substantially the form of the copy thereof on file with 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 prowsions of tins Section, tl~s Ordinance shall be deemed to be amended m accordance wath such amendatory ordinance, and the respectJve rights, duties, and obligations under tins Ordinance of the City, and all the holders or owners of then outstanding Panty Bonds and Addaional Bonds and all future Panty Bonds and Addmonal Bonds shall thereafter be determaned, exercised, and enforced hereunder, subject m all respects to such amendments 44 (e) Any consent ~ven by the holder or owner of a Panty Bond or Additional Bond pursuant to the prowslons ofth~s Section shall be irrevocable for a period of slx months from the date of the first pubhcatlon of the notice provided for in th~s Section, and shall be conclusive and binding upon all future holders or owners of the same Panty Bond or Additional Bond dunng such period Such consent may be revoked at any time after six months from the date of the first publication of such notice by the holder or owner who gave such consent, or by a successor in title, by filing notice thereofvath the paying agents and the City, but such revocation shall not be effective if the holders or owners of 51% m aggregate pnnclpal amount of the then outstanding Panty Bonds and Additional Bonds as m flus Seet~on defined have, pnor to the attempted revocation, consented to, and approved the amendment (f) For the purpose of th~s 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 al~dawt of the person clmrmng to be such holder or owner, or by a certificate executed by any trust company, bank, banker, or any other depository wherever situated showing that at the date therein mentioned such person had on deposit w~th such trust company, bank, banker, or other depository, the Parity Bonds and Additional Bonds described in such certificate The City may conclusively assume that such ownerslup continues until written notice to the contrary is served upon the City The ownership of all registered Panty Bonds and Ad&tlonal Bonds shall be detenmned from the registration books kept by the registrar therefor Section 29 DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS (a) Replacement Bonds In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying A~entJReg~strar shall cause to be pnnted, executed, and delivered, a new bond of the same pnnclpal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner herelnai~er provided (b) A_nphcat~on for Replacement Bonds Apphcatlon for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Pa3qng Agent~Reg~strar In every case of loss, theft, or destruction ora Bond, the registered owner applying for a replacement bond shall furmsh to the Issuer and to the Paying Agent/Registrar such security or lndemmty as may be required by them to save each of them harmless fi-om any loss or damage w~th respect thereto Also, m every case of loss, theft, or destrucuon ora Bond, the registered owner shall furmsh to the Issuer and to the Paying AgentJRe~strar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be In every case of damage or mutilation ora Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated (¢) No Default Occurred Notwithstanding the foregoing prowslons oftlus Section, In the event any such Bond shall have matured, and no default has occurred which is then continuing In the payment of the pnnclpal of, redemption premium, If any, or interest on the Bond, the Issuer may authorize the payment of the same (w~thout surrender thereof except in the case of a damaged or mutilated Bond) instead of ISSUing a replacement Bond, provided security or lndemmty Is furnished as above provided in th~s Section (d) Chttrge for Issumg Renlacement Bonds Pnor to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, pnntmg, and other expenses in connection therewith Every replacement bond issued pursuant to the provisions of this Section by xartue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any tnne, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordmance equally and proportionately with any and all other Bonds duly issued under flus Ordinance (e) Authority for Issuing Renlacement Bonds In accordance w~th Section 6 of Vernon's Ann Tex Clv St Art 717k-6, this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the govermng body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authentmate and deliver such Bonds in the form and manner and with the effect, as proxaded in Section 6(d) of this Ordinance for Bonds issued m conversion and exchange for other Bonds Section 30 COVENANTS REGARDING TAX-EXEMPTION The Issuer covenants to refrain from any aetton which would adversely affect, and to take such action to ensure, the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable m the "gross income" ofthe holder for purposes of federal income taxation In furtherance thereof, the Issuer covenants as follows (a) to take any actmn 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 "pnvate business use", as defined m section 141(b)(6) of the Code or, if more than l0 percent of the proceeds are so used, that amounts, whether or not received by the Issuer, w~th respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, chrectly or indirectly, secure or provide for the payment of more than l0 percent of the debt semce 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 "pnvate business use" described in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds (less amounts depomed nato 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", within the meaning of section 141(b)(3) of the Code, to the governmental use, (c) to take any actmn 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, ffany) is dtrectly or indirectly used to finance loans to persons, other than state or local governmental umts, in contravention of section 141 (c) of the Code, (d) to refrmn from talang any action which would othervnse result in the Bonds being treated as "private actlxaty bonds" within the meamng of section 141(b) of the Code, (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code, 46 (f) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds wluch were used, directly or indirectly, to acquire investment property (as defined m section 148Co)(2) of the Code) which produces a materially lugher y~eld over the term of the Bonds, other than investment property acquired vath -- (1) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less untd such proceeds are needed for the purpose for wluch the Bonds are ISSUed, (2) amounts invested m a bona fide debt serwce fund, w~tlun the meamng of section 1 148-1(b) of the Treasury Regulations, and (3) amounts deposited m any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated pnncipal amount (or, m the case of a discount, the issue price) of the Certificates, (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not other~v~se contravene the reqmrements of section 148 of the Code (relating to arbitrage), Section 149(g) of the Code (relating to hedge bonds), and, to the extent applicable, section 149(d) of the Code (relating to advance refundings), and (h) to pay to the Umted States of America at least once dunng each five-year period (beginning on the date ofdehvery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings", vothm the meaning of sectaon 148(0 of the Code and to pay to the Umted States of America, not later that 60 days after the Bonds have been prod in full, 100 percent of the amount then required to be pa~d as a result of Excess Earnings under section 148(0 of the Code For purposes of the foregoing (a) and (b), the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, m the case of refunding bonds, transferred proceeds 0f any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance w~th the Code and any regulations or rulings promulgated by the U S Department of the Treasury pursuant thereto In the event that regulations or rulings are hereafter promulgated wluch modify, or expand prowsions of the Code, as applicable to the Bonds, the Issuer wall not be required to comply w~th any covenant contmned herein to the extent that such fmlure to comply, m the oplmon of natlonally-recogmzed bond counsel, will not adversely affect the examptton fi'om federal income taxation of interest on the Bonds under section 103 of the Code In the event that regulations or rulings are herea~er promulgated wluch impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply w~th the additional requirements to the extent necessary, in the opinion of nat~onally-recogmzed bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code 47 In order to fac~htate compliance w~th the above covenant (h), a "Rebate Fund" Is hereby estabhshed by the Issuer for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including vathout hmltat~on, the owners of the Certtticates The Rebate Fund Is estabhsbed for the additional purpose of comphance with Section 148 of the Code Section 31 INTEREST EARNINGS ON BOND PROCEEDS Interest earnings derived l~om the investment of proceeds from the sale of the Initial Bond, other than proceeds deposited in the Interest and Suflong Fund and the Reserve Fund, shall be used along w~th other available proceeds for unprovmg the System, provided that af~er completion of the improvements if any of such interest earnings renmn on hand, such interest earmngs shall be deposited in the Interest and Smlang Fund It ~s further prowded, however, that any interest earnings on bond proceeds which are required to be rebated to the Umted States of America pursuant to the Covenants Regarding Tax-Exemption herein so as to prevent the Bonds from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes oftlus Ordinance Section 32 CUSTODY, APPROVAL, AND REGISTRATION OF BONDS, BOND COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE, AND INSURANCE The Mayor of the Issuer is hereby authorized to have control of each Imtial Bond issued hereunder and all necessa~ records and proceedings pertalmng to each Initial Bond pending its dehvery and its investigation, exanunation, and approval by the Attorney General of the State of Texas, and ~ts registration by the Comptroller of Public Accounts of the State of Texas Upon registration of each Initial Bond said Comptroller of Pubhc Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on such Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Initial Bond The approving legal opimon of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be pnnted on each Initial Bond or on any Bonds issued and delivered m conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds The preamble to ttus Ordinance is hereby adopted and made a part hereof for all purposes If insurance is obtained on any of the Bonds, the respective Initial Bond and all other Bonds shall bear an appropriate legend concerning insurance as provided by the insurer Section 33 SALE OF INITIAL BONDS (a) The ImUal Ser~es 1996 Bond is hereby sold and shall be delivered to First Southwest Company, for cash for the par value thereof and accrued interest thereon to date of delivery, plus a prermum of $. -0- It is hereby officially found, deter- mined, and declared that the Initial Series 1996 Bond has been sold at public sale to the bidder offenng the lowest interest cost, after receiwng sealed bids pursuant to an Officml Notice of Sale and Bidding Instructions and Official Statement dated April 23, 1996, prepared and distributed in connection w~th the sale of the Imtial Series 1996 Bond Sa~d Official Notice of Sale and Bidding In- structions and Official Statement, and any addenda, supplement, or amendment thereto have been and are hereby approved by the Issuer, and their use in the offer and sale of the Series 1996 Bonds ~s hereby approved It is further officially found, determined, and declared that the statements and representations contained in said Official Notice of Sale and Official Statement are true and correct in all mater~al respects Co) The Imual Senes 1996A Bond is hereby sold and shall be delivered to First Southwest Company, for cash for 99 50% of the par value thereof and accrued interest thereon to date of delivery It is hereby officially found, determined, and declared that the Initial Series 1996A Bond has been sold at pubhc sale to the bidder offenng the lowest interest cost, after receiving sealed bids pursuant to an Official Notace of Sale and Bidding Instructions and Official Statement dated April 23, 1996, prepared and distributed in connection wath the sale of the Initial Series 1996A Bond Smd Official Notice of Sale and Bidding Instructions and Official Statement, and any addenda, supplement, or amendment thereto have been and ere hereby approved by the Issuer, and their use in the offer and sale of the Series 1996A Bonds is hereby approved It is further officially found, deternnned, and declared that the statements and representatmns contmned in said Official Notice of Sale and Official Statement are true and correct in all material respects Sec'flon 34 DTC REGISTRATION The Bonds ivatlally shall be issued and delivered in such manner that no physical distribution of the Bonds wall be made to the public, and The Depository Trust Company ("DTC"), New York, New York, lmtlally will act as depository for the Bonds DTC has represented that it is a hmlted purpose trust company incorporated under the laws of the State of New York, a member of the Federal Reserve System, a "cleanng corporation" w~thm the meaning of the New York Umfurm Commercial Code, and a "cleanng agency" registered under Section 17A of the federal Securities Exchange Act of 1934, as amended, and the Issuer accepts, but in no way verifies, such representations The Imt~al Bond authorized by this Ordinance shall be delivered to and registered in the name of the Purchaser However, it is a condmon of delivery and sale that the Purchaser, immediately after such dehvery, shall cause the Paying Agent/Registrar, as provided for m flus Ordinance, to cancel said Initial Bond and deliver in exchange therefor a substitute Bond for each maturity of such Imtlal Bond, w~th each such substitute Bond to be registered in the name of CEDE & CO, the nominee of DTC, and it shall be the duty of the Paying Agent/Registrar to take such action It is expected that DTC will hold the Bonds on behalf of the Purchaser and/or the DTC Participants, as defined and described in the Official Statement referred to and approved in Section 33 hereof(the "DTC Participants") So long as each Bond is registered in the name of CEDE & CO, the Paying Agent/Registrar shall treat and deal with DTC in all respects the same as if it were the actual and beneficial owner thereof It ~s expected that DTC will maintain a book entry system wluch will ~dentlfy beneficial ownership of the Bonds by DTC Participants in integral amounts of $5,000, w~th transfers of ownerstup being effected on the records of DTC and the DTC Participants pursuant to rules and regulations estabhshed by them, and that the substitute Bonds lnmally deposited w~th DTC shall be lmmobdlzed and not be further exchanged for substitute Bonds except as hereinafter provided The Issuer is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, will not be responsible or liable for ma~ntmmng, supevasmg, or rewewang the records of DTC or the DTC Part~cipants, or protecting any interests or rights of the beneficial owners of the Bonds It shall be the duty of the Purchaser and the DTC Participants to make all arrangements w~th DTC to establish this book-entry system, the beneficial ownership of the Bonds, and the method of paying the fees and charges of DTC The Issuer does not represent, nor does it in any way covenant that the initial book-entry system established vath DTC will be maintained in the future The Issuer reserves the right and option at any time m the future, m its sole discretion, to terminate the DTC (CEDE & CO ) book-entry only regis- tration requirement described above, and to permit the Bonds to be registered in the name of any owner If the Issuer exercises its right and option to terminate such reqmrement, it shall give written 49 notice of such terrmnatlon to the Paying Agent/Registrar and to DTC, and thereafter the Paying Agent/Regdstrar shall, upon presentation and proper request, register any Bond in any name as prowded for m tlus Ordinance Notwithstanding the mttial estabhshment of the foregoing book-antry system vath DTC, fffor any reason any of the originally delivered substitute Bonds ~s duly filed w~th the Paying Agent/Registrar w~th proper request for transfer and substitution, as prowded for in tlus Ordinance, substitute Bonds wdl be duly delivered as provided In th~s Ordinance, and there roll be no assurance or representation that any book-entry system will be mmntmned for such Bonds Section 35 COMPLIANCE WITH RULE 15c2-12 (a) Annual Reports 0) The Issuer shall pro,nde annually to each NRMSIR and any SID, w~thm six months after the end of each fiscal year ending m or after 1996, financial reformation and operating data with respect to the Issuer of the general type mcluded m the final Officud Statement authonzed by Secuon 33 ofth~s Ordinance, being the reformation described m Exhibit A hereto, wl~ch Exhibit ~s attached to and incorporated m th~s Ordinance as ffwntten word for word herean Any financial statemems so to be provided shall be (1) prepared m accordance vath the accounting pnneiples described m Exhabit A hereto, or such other accounting pnnclples as the Issuer may be required to employ from Ume to time pursuant to state law or regulataon, and (2) audited, if the Issuer commiss~ons an audit of such statements and the audit Is completed w~tban the period dunn$ wluch they must be provided If the audit of such financial statements Is not complete w~thm such period, then the Issuer shall provide unaudited financial statements by the required time and will provide audited financial statements for the apphcable fiscal year to each NRMSIR and any SID, when and ~f the audit report on such statements become available (n) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by whmh the Issuer otherwise would be reqmred to pro,nde financial information and operating data pursuant to this Section The financial information and operating data to be prowded pursuant to th~s Sectmn may be set forth m full m one or more documents or may be included by specific reference to any document (including an official statement or other offenng document, if n is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed wnh the SEC (b) Material Event Not,ecs. The Issuer shall notify any SID and either each NRMSIR or the MSRB, m a timely manner, of any of the following events with respect to the Bonds, if such event is material w~thm the meanln8 of the federal securities laws 1 Principal and interest payment dehnquencles, 2 Non-payment related defaults, 3 Unscheduled draws on debt serv, ce reserves reflecting financial dlfficulues, 4 Unscheduled draws on credit enhancemems reflecting financial &fficultles, 5 SubsUtution of credit or hqmd~ty prowders, or their fadure to perform, 6 Adverse tax opimons or events affecting the tax-exempt status of the Bonds, 5O 7 Modifications to rights of holders of the Bonds, 8 Bond calls, 9 Defeasances, 10 Release, substitution, or sale of property securing repayment of the Bonds, and 11 Rating changes The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any ffulure by the Issuer to provide fmancial information or operating data in accordance w~th subsection (a) of this Section by the time required by such subsection (C) l.~m~tatlom, Dlsclatmers. and Amendments, (1) The Issuer shall be obligated 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~thin the meamng of the Rule, except that the Issuer in any event w~ll give the notice required by Subsection (b) hereof of any Bond calls and defeasance that cause the Issuer to no longer be such an "obligated person" (ii) The prowslons of this Section are for the sole benefit of the registered owners and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person The Issuer undertakes to provide only the financial reformation, operating data, financial statements, and notices wbach ~t has expressly agreed to provide pursuant to this Section and does not hereby undertake to prowde any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or other~ase, except as expressly provided herein The Issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date (iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE (iv) No default by the Issuer in obsermng or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any other prowsion of this Ordinance Nothing m fins Section is intended or shall act to disclaim, wmve, or otherwise hnut the duties of the Issuer under federal and state securities laws 51 (v) The prowstons of tins Sectton may be mended by the Issuer from Ume to t~me to adapt to changed cumnnstances that arise from a change m lesal requirements, a change ~n law, or a change m the tdenttty, nature, status, or type of operattons of the Issuer, but only ff (1) the prov~stons of thts Section, as so amended, would have pernutted an underwriter to purchase or sell Bonds tn the primary offenng of the Bonds tn comphance vath the Rule, takdng into account any amendments or mterpretattons of the Rule stnce such offenng as well as such changed c~rcumstances and (2) etther (a) the registered owners of a majority m aggregate prmcupal amount (or any greater amount reqmred by any other prov~ston of th~s Ordinance that authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that ts unaffihated vath the Issuer (such as nauonally recosmzed bond counsel) detenmned that such amendment wdl not materially lmpmr the interest of the regtstered owners and benefictal owners of the Bonds If the Issuer so amends the proxaslons oftlus Sectton, tt shall Include vath any amended financml ~nformat~on or operattng data next provaded m accordance vath subsection (a) ofthts Sectton an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial reformation or operating data so prowded The Issuer may also amend or repeal the provisions of this continuing d~sclosure agreement ffthe SEC amends or repeals the apphcable provision of the Rule or a court of final juns&ctton enters judgment that such provts~ons of the Rule are invalid, but only ff and to the extent that the proxastons of tins sentence would not prevent an underwriter from lawfully purchasing or selhng Bonds tn the primary offenng of the Bonds (d) D~fimttons. As used tn tins Section, the follovang terms have the meanings ascribed to such terms below "MSRB" means the Mumc~pal Securities Rulemakmg Board "NRMSIR" means each person whom the SEC or ~ts staff has determined to be a nationally recogmzed mumcupal securities mformat~on repository w~thm the meaning of the Rule from time to time "Rule" means SEC Rule 15c2-12, as amended from time to time "SEC" means the United States Securities and Exchange Commission "SID" means any person destgnated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or ~ts staff to be, a state tnformatton deposttory vatinn the meen~ng of the Rule from time to t~me Section 36 REFUNDING OF REFUNDED OBLIGATIONS Concurrently vath the delivery of the Imtlal Series 1996A Bonds, the Issuer shall transfer to the United States of America $34,839,670 17 from the proceeds of the sale of the Series 1996A Bonds to refund and prepay the Refunded Obhgauons It ts hereby found and deternuned that the refunding of the Refunded ObhgaUons vail result m a reduction m the amount of pnnctpal and interest which would otherwse be payable by the Issuer both on an actual and a present value bas~s, vath an actual gross debt sermce savings of approydmately $42,188,180 and a present value debt sermce sawngs of approydmately $7,256,115 52 Section 37 FURTHER PROCEDURES The Mayor of the Issuer, the City Secretary of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby expressly anthonzed, empowered, and directed from time to time and at any tune to do and perform all such acts and things and to execute, acknowledge, and deliver In the name and under the corporate seal and on behalf of the Issuer all such instruments, whether or not hereto mentioned, as may be necensaty or desirable in order to carry out the terms and prows~ons oftlus Bond Ordi- nance, the Bonds, the sale of the Bonds, and the Notice of Sale and Official Statement, and the Du~ctor of F'mance of the City shall came the expenses of Issuance of the Bonds to be prod from the proceeds of sale of the Imual Bond or from other lawfully avmlable funds of the Issuer In case any officer whose sllpmmre shall appear on any Bond shall cease to be such officer before the dehvery of such Bond, such s~gnature shall nevertheless be valid and sufficient for all purposes the same as ff such officer had remmned m office untd such dehvery Section 38 OPEN MEETINGS The City Councd has found and deternuned that the mentm$ at whtch tlus Ordinance m conndered is open to the public and that notice thereof was ~ven m accordance vath the prows~ons of the Texas Open Meetings, Law, T ex Gov't Code, Chapter 551, as amended Section 39 EFFECTIVE DATE Th~s Ordinance shall become effective ~mmed~ately upon Its passase and approval PASSED AND APPROVED tlus the '~ day of..~ 1996 ATTEST BoQ C leberry, Mayor / lemufer Walters, City S~retery APPROVED AS TO LEGAL FORM He.eft L Prouty, City Attorney ? 53 EXHIBIT A DESCRII~TION OF ANNUAL FINANCIAL INFORMATION The following :nformatlon is referred to m Section 35 of tins Ordinance Annual Flnancml Statements and Operating Data The financml mformaUon and operattng data w~th respect to the Issuer to be provided annually m accordance w~th such Section are as specified (and included m the Appendix or under the tables of the Official Statement referred to) below Tables numbered 1 through 14, inclusive, under the captions "The Ut~hty System", "Debt Service Requirements" and "F~nanclal Information" in the Official Statement Appendix B in the Official Statement Accounting Principles The accounting pnnclples referred to in such Section are the accounting pnnc~ples described m the notes to the financial statements referred to in the paragraph above CERTIFICATE FOR ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTETM REVENUE BONDS, SERIES 1996 AND CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1996A, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO, AND PROVIDING AN EFFECTIVE DATE THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON We, the undersigned officers of smd C~ty, hereby certify as follows 1 The City Council of said Cmty convened m REGULAR MEETING ON THE 7TH DAY OF MAY, 1996, at the Mumcipal Building (C~ty Hall), and the roll was called of the duly constituted officers and members of smd C~ty Council, to-w~t Jenmfer K Walters, Bob Castleberry, Mayor C~ty Secretary Euhne Brock Dawd Biles, Mayor Pro Tem JeffKrueger Jerry Cott Carl G Young, Sr Jack Miller and all of said persons were present, except the following absentees None, thus constituting a quorum Whereupon, among other business, the following was transacted at said Meeting a written ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTETM REVENUE BONDS, SERIES 1996 AND CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1996A, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO, AND PROVIDING AN EFFECTIVE DATE was duly introduced for the consideration of smd Ctty Council and duly read It was then duly moved and seeondexl that smd Ordinance be passed, and, after due discussion, sa~d motion, carrying w~th It the passage of said Ordinance, prevailed and camed by the following vote AYES 6 NOES 1 AB STENTIONS 0 2 That a true, full, and correct copy of the aforesaid Ordinance passed at the Meeting described in the above and foregoing paragraph is attached to and follows tlus Certificate, that smd Ordinance has been duly recorded m smd City Council's minutes of said Meeting, that the above and foregoing paragraph is a true, full, and correct excerpt fi.om smd City Council's n~nutes of said Meeting pertaining to the passage of said Ordinance, that the persons named in the above and fore- going paragraph are the duly chosen, qualified, and acting officers and members of said City Councd as indicated thereto, and that each of the officers and members of said City Council was duly and sufficiently notdied officially and personally, in advance, of the time, place, and purpose of the aforesmd Meeting, and that smd Ordinance would be introduced and considered for passage at smd Meeting, and that said Meeting was open to the public, and public notice of the time, place, and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code 3 That the Mayor of said City has approved, and hereby approves, the aforesmd Ordinance, that the Mayor and the City Secretary of smd City have duly signed said Ordinance, and that the Mayor and the City Secretary of smd City hereby declare that their slgmng oftlus Certificate shall constitute the signing of the attached and follovang copy of said Ordinance for all purposes SIGNED AND SEALED the 7th day of May, 1996 (..~ ' ~l~-y~-Secretary ~/ Mayor (SEAL) We, the undersigned, being respectively the City Attorney and the Bond Attorneys of the City of Denton, Texas, hereby certify that we prepared and approved as to legality the attached and following Ordinance prior to its passage as aforesmd City Attorne~_~ l~ond Attorneys LAW OFFICES MCCALL PARKHURST ~ HORTON LLP 3100 ONF AMERICAN CENTER ?17 NORTH HARWOOD 1225 ONE RIVERWALK PLACE AUSTIN TEXAS 787013248 N}NTH FLOOR SAN ANTONIO TEXAS 78205 3503 May 7, 1996 Honorable Mayor and Council of the City of Denton Denton, Texas Ladies and Gentlemen Re City of Denton Utility System Revenue Bonds, Series 1996, $2,750,000 In compliance with Section 9 02 and Section 9 04 of the City Charter of the City of Denton, you are advised that the bids for the captsoned issue of bonds received by thc City pursuant to its Official Statement and Notice of Sale and Bidding Instructions dated April 23, 1996, have been tabulated and that we find, based on calculations performed by First Southwest Company, as financial advisor, that thc bid of a syndicate managed or headed by the following with the bonds to bear interest at the rates therein specified, with such bidder to pay par and accrued interest to date of delivery for said bonds, plus a premium of $ 0 , is the lowest and best bid received, and we recommend that it be accepted We further cerlafy that we have examined the ordinance presently placed before the Mayor and Council for the purpose of authorizing the issuance of said bonds, and, in our opinion, the said proposed bond ordinance is legal, and the bonds to be issued thereunder will be special obligations of the City payable from, and secured by a first hen on and pledge of, the "Pledged Revenues", which include lmtlally the "Net Revenues of the System" as such terms are defined in the Bond Ordinance, with the System consisting of the City's entire combined waterworks, sewer, and electric light and power system Respectfully, McCall, Parkhurst & Horton L L P L E (Ted) Brizzolara, II1 LAW OFFICES MC_CALL, PARKHURST ~ HORTON L L P 31©0 ONE AMERICAN CENTER 717 NORTH HARWOOD 1225 ONE RIVERWALK PLACE AUSTIN TEXAS 787013~41B NINTH FLOOR SAN ANTONIO TEXAS 782053503 May 7, 1996 Honorable Mayor and Council of the City of Denton Denton, Texas Ladies and Gentlemen Re City of Denton Utility System Revenue Refunding Bonds, Series 1996A, $36,510,000 In compliance with Section 9 02 and Section 9 04 of the City Charter of the City of Denton, you are advised that the bids for the captioned issue of bonds received by the City pursuant to its Officml Statement and Notice of Sale and Bidding Instructions dated April 23, 1996, have been tabulated and that we find, based on calculataons performed by First Southwest Company, as financial advisor, that the bid of a syndicate managed or headed by the following vath the bonds to bear interest at the rates therein specified, with such bidder to pay cl q, %0 % of par and accrued interest to date of delivery for satd bonds, plus a premunn of $ O · is the lowest and best bid received, and we recommend that it be accepted We further certify that we have examined the ordinance presently placed before the Mayor and Couned for the purpose of authorizing the issuance of said bonds, and, in our opinion, the said proposed bond ordinance is legal, and the bonds to be issued thereunder will be special obligations of the C~ty payable from, and secured by a first lien on and pledge of, the "Pledged Revenues", which include initially the "Net Revenues of the System" as such terms are defined in the Bond Ordinance, with the System cons~sting of the C~ty's entire combined waterworks, sewer, and electric light and power system Respectfully, McCall, Parkhurst & Horton L L P L E (Ted) Brizzolara, III