1992-037 ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY
OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, SERIES
1992, AND APPROVING AND AUTHORIZING INSTRUMENTS AND
pROCEDURES RELATING THERETO
THE STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON
WHEREAS, the City of Denton, Texas, heretofore has duly
issued the following revenue bonds
City of Denton Utility System Revenue Refunding Bonds,
Series 1983, dated March 1, 1983,
City of Denton Utility System Revenue Bonds, Series 1984,
dated March 1, 1984,
City of Denton Utility System Revenue Bonds, Series
1984-A, dated October 1, 1984,
City of Denton Utility System Revenue Refunding Bonds,
Series 1987, dated January 1, 1987, and
city of Denton Utility System Revenue Bonds, Series 1988,
dated August 1, 1988, and
city of Denton Utility System Revenue Bonds, Series 1989,
dated October 1, 1989
WHEREAS, the city Council of the City of Denton deems
it necessary and advisable to authorize, issue, and deliver the
additional Utility System Revenue Bonds hereinafter described,
and
WHEREAS, the bonds hereinafter authorized are to be
issued, sold, and delivered pursuant to Vernon's Ann Tex Clv
St Articles 2368a and 1111 through 1118, the City's Home Rule
Charter, and other applicable laws
THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY
ORDAINS THAT
Section i AMOUNT AND PURPOSE OF THE BONDS The bond or
bonds of the city of Denton, Texas (the "Issuer") are hereby
authorized to be issued and delivered in the aggregate princi-
pal amount of $4,500,000 FOR THE PURPOSE OF OBTAINING MONEY FOR
IMPROVEMENTS AND EXTENSIONS OF THE CITY OF DENTON UTILITY
SYSTEM, WHICH CONSISTS OF THE CITY'S COMBINED WATERWORKS,
SEWER, AND ELECTRIC LIGHT AND POWER SYSTEM
1
Section 2 DESIGNATION OF THE BONDS Each bond issued
pursuant to this Ordinance shall be designated "CITY OF DENTON
UTILITY SYSTEM REVENUE BOND, SERIES 1992", and initially there
shall be issued, sold, and delivered hereunder a single fully
registered bond, without interest coupons, payable in install-
ments of principal (the "Initial Bond"), but the Initial Bond
may be assigned and transferred and/or converted into and
exchanged for a like aggregate principal amount of fully
registered bonds, without interest coupons, having serial
maturities, and in the denomination or denominations of $5,000
or any integral multiple of $5,000, all in the manner herein-
after provided The term "Bonds" as used in this Ordinance
shall mean and include collectively the Initial Bond and all
substitute bonds exchanged therefor, as well as all other
substitute bonds and replacement bonds issued pursuant hereto,
and the term "Bond" shall mean any of the Bonds
Section 3 INITIAL DATE, DENOMINATION, NUMBER, MATURI-
TIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE
INITIAL BOND
(a) The Initial Bond is hereby authorized to be issued,
sold, and delivered hereunder as a single fully registered
Bond, without interest coupons, dated MARCH 1, 1992, in the
denomination and aggregate principal amount of $4,500,000,
numbered R-l, payable in annual installments of principal to
the initial registered owner thereof, to-wit
FIRST SOUTHWEST COMPANY,
or to the registered assignee or assignees of said Bond or any
portion or portions thereof (in each case, the "registered
owner"), with the annual installments of principal of the
Initial Bond to be payable on the dates, respectively, and in
the principal amounts, respectively, stated in the FORM OF
INITIAL BOND set forth in this Ordinance
(b) The Initial Bond (i) may and shall be prepaid or
redeemed prior to the respective scheduled due dates of In-
stallments of principal thereof, (ii) may be assigned and
transferred, (11i) may be converted and exchanged for other
Bonds, (iv) shall have the characteristics, and (v) shall be
signed and sealed, and the principal of and interest on the
Initial Bond shall be payable, all as provided, and in the
manmer required or indicated, in the FORM OF INITIAL BOND set
forth in this Ordinance
Section 4 INTEREST The unpaid principal balance of the
Initial Bond shall bear interest from the date of the Initial
Bond to the respective scheduled due dates, or to the respec-
tive dates of prepayment or redemption, of the Installments of
principal of the Initial Bond, and said interest shall be
payable, all in the manner provided and at the rates and on the
dates stated in the FORM OF INITIAL BOND set forth in this
Ordinance
Section 5 FORM OF INITIAL BOND The form of the Initial
Bond, including the form of Registration Certificate of the
Comptroller of Public Accounts of the State of Texas to be
endorsed on the Initial Bond, shall be substantially as fol-
lows
~O~M OF INITIAL BOND
NO R-1 $4,500,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE BOND
SERIES 1992
THE CITY OF DENTON, in Denton County, Texas (the "Issu-
er''), being a political subdivision of the State of Texas,
hereby promises to pay to
FIRST SOUTHWEST COMPANY,
or to the registered assignee or assignees of this Bond or any
portion or portions hereof (in each case, the "reglstered
owner") the aggregate principal amount of
$4,500,000
(FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS)
· n annual installments of principal due and payable on DECEMBER
1 in each of the years, and in the respective prlnclpal
amounts, as set forth in the following schedule
PRINCIPAL PRINCIPAL
~EAR _A~Q_%SN_T__ YEAR ~
1995 $115,000 2005 $215 000
1996 120,000 2006 230 000
1997 130 000 2007 245,000
1998 140 000 2008 265 000
1999 145 000 2009 280,000
2000 155 000 2010 300 000
2001 165 000 2011 320 000
2002 180,000 2012 340 000
2003 190 000 2013 365 000
2004 205 000 2014 395 000
and to pay ~nterest, from the date of this Bond hereinafter
stated, on the balance of each such ~nstallment of prlnc~pal,
respectively, from time to time remaining unpaid, at the rates
as follows
8 75% per annum on the above installment due in 1995
8 75% per annum on the above installment due in 1996
8 75% per annum on the above Installment due in 1997
8 75% per annum on the above installment due in 1998
8 75% per annum on the above installment due in 1999
6 95% per annum on the above installment due in 2000
5 80% per annum on the above installment due in 2001
6 00% per annum on the above installment due in 2002
6 20% per annum on the above installment due in 2003
6 30% per annum on the above installment due in 2004
6 50% per annum on the above installment due in 2005
6 50% per annum on the above installment due in 2006
6 50% per annum on the above installment due in 2007
6 50% per annum on the above installment due in 2008
6 50% per annum on the above installment due in 2009
6 50% per annum on the above installment due in 2010
6 50% per annum on the above installment due in 2011
6 50% per annum on the above installment due in 2012
6 50% per annum on the above installment due in 2013
6 50% per annum on the above installment due in 2014
with said interest being payable on DECEMBER 1, 1992, and semi-
annually on each JUNE i and DECEMBER i thereafter while this
Bond or any portion hereof is outstanding and unpaid Said
interest shall be calculated on the basis of a 360-day year
composed of twelve 30-day months
THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this
Bond are payable in lawful money of the United States of
America, without exchange or collection charges The install-
ments of principal and the interest on this Bond are payable to
the registered owner hereof through the services of NATIONSBANK
OF TEXAS, N A , FORT WORTH, TEXAS, which is the "Paying
Agent/Registrar" for this Bond Payment of all principal of
and interest on this Bond shall be made by the Paying
Agent/Registrar to the registered owner hereof on each princi-
pal and/or interest payment date by check, dated as of such
date, drawn by the Paying Agent/Registrar on, and payable
solely from, funds of the Issuer required by the ordinance
authorizing the issuance of this Bond (the "Bond Ordinance") to
be on deposit with the Paying Agent/Registrar for such purpose
as hereinafter provided, and such check shall be sent by the
Paying Agent/Registrar by United States mail, first-class
postage prepaid, on each such principal and/or interest payment
date, to the registered owner hereof, at the address of the
registered owner, as it appeared on the 15th day of the month
next preceding each such date (the "Record Date") on the
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Registration Books kept by the Paying Agent/Registrar, as
hereinafter described The Issuer covenants with the regis-
tered owner of this Bond that on or before each principal
and/or interest payment date for this Bond it will make avail-
able to the Paying Agent/Registrar, from the "Interest and
Sinking Fund" maintained pursuant to the Bond Ordinance, the
amounts required to provide for the payment, in immediately
available funds, of all principal of and interest on this Bond,
when due
IF THE DATE for the payment of the principal of or inter-
est on this Bond shall be a Saturday, Sunday, a legal holiday,
or a day on which banking institutions in the city where the
Paying Agent/Registrar is located are authorized by law or
executive order to close, then the date for such payment shall
be the next succeeding day which is not such a Saturday,
Sunday, legal holiday, or day on which banking institutions are
authorized to close, and payment on such date shall have the
same force and effect as if made on the original date payment
was due
THIS BOND has been authorized in accordance with the
Constitution and laws of the State of Texas FOR THE PURPOSE OF
OBTAINING MONEY FOR IMPROVEMENTS AND EXTENSIONS OF THE CITY OF
DENTON UTILITY SYSTEM, WHICH CONSISTS OF THE CITY'S COMBINED
WATERWORKS, SEWER, AND ELECTRIC LIGHT AND POWER SYSTEM
ON DECEMBER 1, 2004, or on any date whatsoever thereafter,
the unpaid installments of principal of this Bond may be
prepaid or redeemed prior to their scheduled due dates, at the
option of the Issuer, with funds derived from any available
source, as a whole, or in part, and, if in part, the particular
portion of this Bond to be prepaid or redeemed shall be select-
ed and designated by the Issuer (provided that a portion of
this Bond may be redeemed only in an integral multiple of
$5,000), at the prepayment or redemption price of the par or
principal amount thereof, plus accrued interest to the date
f~xed 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 Paying Agent/Registrar to the
registered owner hereof By the date fixed for any such
prepayment or redemption due provision shall be made by the
Issuer with the Paying Agent/Registrar for the payment of the
required prepayment or redemption price for this Bond or the
portion hereof which is to be so prepaid or redeemed, plus
accrued interest thereon to the date fixed for prepayment or
redemption If such written notice of prepayment or redemption
is given, and if due provision for such payment is made, all as
5
provlded above, this Bond, or the portion thereof which is to
be so prepaid or redeemed, thereby automatically shall be
treated as prepaid or redeemed prior to its scheduled due date,
and shall not bear interest after the date fixed for 1ts
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 inter-
est to the date fixed for prepayment or redemption from the
Paying Agent/Registrar out of the funds provided for such
payment The Paying Agent/Registrar shall record in the
Registration Books all such prepayments or redemptions of
principal of this Bond or any portion hereof
THIS BOND, to the extent of the unpaid or unredeemed
prln¢ipal balance hereof, or any unpaid and unredeemed port~on
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, this
Bond must be presented and surrendered to the Paying Agent/-
Registrar for cancellation, together with proper instruments of
assignment, in form and with guarantee of signatures satisfac-
tory to the Paying Agent/Registrar, evidencing assignment by
the initial registered owner of this Bond, or any portion or
portions hereof in any integral multiple of $5,000, to the
assignee or assignees in whose name or names this Bond or any
such portion or portions hereof is or are to be transferred and
registered Any instrument or instruments of assignment
satisfactory to the Paying Agent/Registrar may be used to
evldence the assignment of this Bond or any such portion or
portions hereof by the initial registered owner hereof A new
bond or bonds payable to such assignee or assignees (which then
will be the new registered owner or owners of such new Bond or
Bonds) or to the initial registered owner as to any portion of
this Bond which is not being assigned and transferred by the
initial registered owner, shall be delivered by the Paying
Agent/Registrar in conversion of and exchange for this Bond or
any portion or portions hereof, but solely in the form and
manner as provided in the next paragraph hereof for the conver-
sion and exchange of this Bond or any portion hereof The
registered owner of this Bond shall be deemed and treated by
the Issuer and the Paying Agent/Registrar as the absolute owner
hereof for all purposes, including payment and discharge of
liab~ility upon this Bond to the extent of such payment, and the
Issuer and the Paying Agent/Registrar shall not be affected by
any notice to the contrary
6
AS PROVIDED above and in the Bond Ordinance, this Bond, to
the extent of the unpaid or unredeemed principal balance
hereof, may be converted into and exchanged for a like aggre-
gate principal amount of fully registered bonds, without
interest coupons, payable to the assignee or assignees duly
designated in writing by the initial registered owner hereof,
or to the initial registered owner as to any port~on of this
Bond which is not being assigned and transferred by the initial
registered owner, in any denomination or denominations in any
integral multiple of $5,000 (subject to the requirement here-
lnafter stated that each substitute bond issued in exchange for
any portion of this Bond shall have a single stated principal
maturity date), upon surrender of this Bond to the Paying
Agent/Registrar for cancellation, all in accordance with the
form and procedures set forth in the Bond Ordinance If this
Bond or any portion hereof is assigned and transferred or
converted each bond issued in exchange for any portion hereof
shall have a single stated principal maturity date correspond-
lng to the due date of the installment of principal of this
Bond or portion hereof for which the substitute bond is being
exchanged, and shall bear interest at the rate applicable to
and borne by such installment of principal or portion thereof
Such bonds, respectively, shall be sub3ect to redemption prior
to maturity on the same dates and for the same prices as the
corresponding installment of principal of this Bond or portion
hereof for which they are being exchanged No such bond shall
be payable in installments, but shall have only one stated
principal maturity date AS PROVIDED IN THE BOND ORDINANCE,
THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED
OR CONVERTED ONCE ONLY, and to one or more assignees, but the
bonds issued and delivered in exchange for this Bond or any
portion hereof may be assigned and transferred, and converted,
subseq~/ently, as provided in the Bond Ordinance The Issuer
shall pay the Paying Agent/Registrar's standard or customary
fees and charges for transferring, converting, and exchanging
this Bond or any portion thereof, but the one requesting such
transfer, conversion, and exchange shall pay any taxes or
governmental charges required to be pa~d with respect thereto
The Paying Agent/Registrar shall not be required to make any
such assignment, conversion, or exchange (1) during the period
commencing with the close of business on any Record Date and
ending with the opening of business on the next following
principal or intereet payment date, or, (ii) with respect to
any Bond or portion thereof called for prepayment or redemption
prior to maturity, within 45 days prior to its prepayment or
redemption date
IN THE EVENT any Paying Agent/Registrar for this Bond is
changed by the Issuer, resigns, or otherwise ceases to act as
7
such, the Issuer has covenanted in the Bond Ordinance that it
promptly will appoint a competent and legally qualified
substitute therefor, and promptly will cause written notice
thereof to be mailed to the registered owner of this Bond
IT IS HEREBY certified, recited, and covenanted that th~s
Bond has been duly and validly authorized, issued, sold, and
delivered, that all acts, conditions, and things required or
proper to be performed, exist, and be done precedent to or ~n
the authorization, issuance, and delivery of this Bond have
been performed, existed, and been done in accordance with law,
that this Bond is a special obligation of the Issuer, secured
by and payable, together with other bonds, from a first lien on
and pledge of the "Pledged Revenues", which include Initially
the "Net Revenues of the System" as such terms are defined in
the Bond Ordinance, with the System consisting of the City's
entire combined waterworks, sewer, and electric light and power
system
THE ISSUER has reserved the right, subject to the restric-
tion stated in the Bond Ordinance, to issue Addlt~onal Bonds
payable from and secured by a first lien on and pledge of the
"Pledged Revenues" on a parity with this Bond
THE REGISTERED OWNER hereof shall never have the r~ght to
demand payment of this Bond or the interest hereon out of any
funds raised or to be raised by taxation or from any source
whatsoever other than specified in the Bond Ordinance
BY BECOMING the registered owner of this Bond, the regis-
tered owner thereby acknowledges all of the terms and provi-
sions of the Bond Ordinance, agrees to be bound by such terms
and provisions, acknowledges that the Bond Ordinance is duly
recorded and available for inspection in the official minutes
and records of the governing body of the Issuer, and agrees
that the terms and provisions of this Bond and the Bond Ordi-
nance constitute a contract between the registered owner hereof
and the Issuer
IN WITNESS WHEREOF, the Issuer has caused this Bond to be
signed with the manual signature of the Mayor of the Issuer and
countersigned with the manual signature of the C~ty Secretary
of the Issuer, has caused the official seal of the Issuer to be
duly impressed on this Bond, and has caused this Bond to be
dated MARCH 1, 1992
city Secretary, Mayor,
City of Denton, Texas City of Denton, Texas
(CITY SEAL)
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS
COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO
I hereby certify that this Bond has been examined, certi-
fied as to validity, and approved by the Attorney General of
the State of Texas, and that this Bond has been registered by
the Comptroller of Public Accounts of the State of Texas
Witness my signature and seal this
Comptroller of Public Accounts
of the State of Texas
(COMPTROLLER'S SEAL)
Section 6 ADDITIONAL CHARACTERISTICS OF THE BONDS
Reg%stration and Transfer (a) The Issuer shall keep or cause
to be kept at the principal corporate trust office of
NATIONSBANK OF TEXAS, N A , FORT WORTH, TEXAS (the "Paying
Agent/Registrar") books or records of the registration and
transfer of the Bonds (the "Registration Books"), and the
Issuer hereby appoints the Paying Agent/Registrar as its
registrar and transfer agent to keep such books or records and
make such transfers and registrations under such reasonable
regulations as the Issuer and Paying Agent/Registrar may
prescribe, and the Paying Agent/Registrar shall make such
transfers and registrations as herein provided The Paying
Agent/Registrar shall obtain and record in the Registration
Books the address of the registered owner of each Bond to which
payments with respect to the Bonds shall be mailed, as herein
provided, but it shall be the duty of each registered owner to
notify the Paying Agent/Registrar in writing of the address to
which payments shall be mailed, and such interest payments
shall not be mailed unless such notice has been given The
Issuer shall have the right to inspect the Registration Books
during regular business hours of the Paying Agent/Registrar,
but otherwise the Paying Agent/Registrar shall keep the Regis-
tration Books confidential and, unless otherwise required by
law, shall not permit their Inspection by any other entity
Registration of each Bond may be transferred in the Registra-
tion Books only upon presentation and surrender of such Bond to
the Paying Agent/Registrar for transfer of registration and
cancellation, together with proper written instruments of
assignment, in form and with guarantee of signatures satis-
factory to the Paying Agent/Registrar, evidencing (i) the
assignment of the Bond, or any portion thereof in any integral
multiple of $5,000, to the assignee or assignees thereof, and
(11) the right of such assignee or assignees to have the Bond
or any such portion thereof registered in the name of such
assignee or assignees Upon the assignment and transfer of any
Bond or any portion thereof, a new substitute Bond or Bonds
shall be issued in conversion and exchange therefor in the
manner herein provided The Initial Bond, to the extent of the
unpaid or unredeemed principal balance thereof, may be assigned
and transferred by the initial registered owner thereof once
only, and to one or more assignees designated in writing by the
initial registered owner thereof Ail Bonds issued and de-
livered in conversion of and exchange for the Initial Bond
shall be in any denomination or denominations of any integral
multlple of $5,000 (subject to the requirement hereinafter
stated that each substitute Bond shall have a single stated
principal maturity date), shall be in the form prescribed in
the FOP24 OF SUBSTITUTE BOND set forth in this Ordinance, and
shall have the characteristics, and may be assigned, trans-
ferred, and converted as hereinafter provided If the Initial
Bond or any portion thereof is assigned and transferred or
converted the Initial Bond must be surrendered to the Paying
Agent/Registrar for cancellation, and each Bond Issued in
exchange for any portion of the Initial Bond shall have a
single stated principal maturity date, and shall not be payable
in installments, and each such Bond shall have a principal
maturity date corresponding to the due date of the installment
of principal or portion thereof for which the substitute Bond
is being exchanged, and each such Bond shall bear interest at
the single rate applicable to and borne by such installment of
principal or portion thereof for which it ~s being exchanged
If only a portion of the Initial Bond is assigned and trans-
ferred, there shall be delivered to and registered in the name
of the initial registered owner substitute Bonds in exchange
for the unassigned balance of the Initial Bond in the same
manner as if the Initial registered owner were the assignee
thereof If any Bond or portion thereof other than the Initial
Bond is assigned and transferred or converted each Bond issued
in exchange therefor shall have the same principal maturity
date and bear interest at the same rate as the Bond for which
it is exchanged A for~ of assignment shall be printed or
endorsed on each Bond, excepting the Initial Bond, which shall
be executed by the registered owner or its duly authorized
attorney or representative to evidence an assignment thereof
Upon surrender of any Bonds or any portion or portions thereof
for transfer of registration, an authorized representative of
the Paying Agent/Registrar shall make such transfer in the
Registration Books, and shall deliver a new fully registered
substitute Bond or Bonds, having the characteristics herein
described, payable to such assignee or assignees (which then
will be the registered owner or owners of such new Bond or
10
Bonds), or to the previous registered owner in case only a
portion of a Bond is being assigned and transferred, all in
conversion of and exchange for said assigned Bond or Bonds or
any portion or portions thereof, in the same form and manner,
and with the same effect, as provided in Section 6(d), below,
for the conversion and exchange of Bonds by any registered
owner of a Bond The Issuer shall pay the Paying Agent/
Reglstrar's standard or customary fees and charges for making
such transfer and delivery of a substitute Bond or Bonds, but
the one requesting such transfer shall pay any taxes or other
governmental charges required to be paid with respect thereto
The Paying Agent/Registrar shall not be required to make
transfers of registration of any Bond or any portion thereof
(1) during the period commencing with the close of business on
any Record Date and ending with the opening of business on the
next following principal or interest payment date, or, (il)
with respect to any Bond or any portion thereof called for
redemption prior to maturity, within 45 days prior to Its
redemption date
(b) 0wnershlD 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 this Ordinance, whether or not such Bond shall
be overdue, and the Issuer and the Paying Agent/Registrar shall
not be affected by any notice to the contrary, and payment of,
or on account of, the principal of, premium, if any, and
interest on any such Bond shall be made only to such registered
owner Ail such payments shall be valid and effectual to
satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid
(c) p~yment of Bonds and Interest The Issuer hereby
further appoints the Paying Agent/Registrar to act as the
paying agent for paying the principal of and interest on the
Bonds, and to act as its agent to convert and exchange or
replace Bonds, all as provided in this Ordinance The Paying
Agent/Registrar shall keep proper records of all payments made
by the Issuer and the Paying Agent/Registrar with respect to
the Bonds, and of all conversions and exchanges of Bonds, and
all replacements of Bonds, as provided in this Ordinance
(d) CQnverslon and Exchanae or Replacement. Authenti-
cation Each Bond issued and delivered pursuant to this
Ordinance, to the extent of the unpaid or unredeemed principal
balance or principal amount thereof, may, upon surrender of
such Bond at the principal corporate trust office of the Paying
Agent/Registrar, together with a written request therefor duly
executed by the registered owner or the assignee or assignees
thereof, or its or their duly authorized attorneys or
11
representatives, with guarantee of signatures satisfactory to
the Paying Agent/Registrar, may, at the option of the regis-
tered 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 in this Ordinance, in the denomina-
tion of $5,000, or any integral multiple of $5,000 (subject to
the requirement hereinafter stated that each substitute Bond
shall have a single stated maturity date), as requested in
writing by such registered owner or such assignee or assignees,
in an aggregate principal amount equal to the unpaid or unre-
deemed principal balance or principal amount of any Bond or
Bonds so surrendered, and payable to the appropriate registered
owner, assignee, or assignees, as the case may be If the
Initial Bond is assigned and transferred or converted each
substitute Bond issued in exchange for any portion of the
Initial Bond shall have a single stated principal maturity
date, and shall not be payable in installments, and each such
Bond shall have a principal maturity date corresponding to the
due date of the installment of principal or portion thereof for
which the substitute Bond is being exchanged, and each such
Bond shall bear interest at the single rate applicable to and
borne by such installment of principal or portion thereof for
which it is being exchanged If a portion of any Bond (other
than the Initial Bond) shall be redeemed prior to Its scheduled
maturity as provided herein, a substitute Bond or Bonds having
the same maturity date, bearing interest at the same rate, in
the denomination or denominations of any integral multiple of
$5,000 at the request of the registered owner, and in aggregate
principal amount equal to the unredeemed portion thereof, will
be issued to the registered owner upon surrender thereof for
cancellation If any Bond or portion thereof (other than the
Initial Bond) is assigned and transferred or converted, each
Bond issued in exchange therefor shall have the same principal
maturity date and bear interest at the same rate as the Bond
for which it is being exchanged Each substitute Bond shall
bear a letter and/or number to distlnguish it from each other
Bond. The Paying Agent/Registrar shall convert and exchange or
replace Bonds as provided herein, and each fully registered
bond delivered in conversion of and exchange for or replacement
of any Bond or portion thereof as permitted or required by any
provision of this Ordinance shall constitute one of the Bonds
for all purposes of this ordinance, and may again be converted
and exchanged or replaced It is specifically provided that
any Bond authenticated in conversion of and exchange for or
replacement of another Bond on or prior to the f~rst scheduled
Record Date for the Initial Bond shall bear interest from the
date of the Initial Bond, but each substitute Bond so authenti-
cated after such first scheduled Record Date shall bear Inter-
est from the interest payment date next preceding the date on
12
which such substitute Bond was so authenticated, unless such
Bond is authenticated after any Record Date but on or before
the next following interest payment date, in which case it
shall bear interest from such next following Interest payment
date, provlded, however, that if at the tlme of dellvery of any
substitute Bond the interest on the Bond for which It is being
exchanged ls due but has not been paid, then such Bond shall
bear interest from the date to which such lnterest has been
paid in full THE INITIAL BOND issued and delivered pursuant
to th~s Ordinance is not required to be, and shall not be,
authenticated by the Paying Agent/Reglstrar, but on each
substitute Bond issued in conversion of and exchange for or
replacement of any Bond or Bonds ~ssued under this Ordinance
there shall be printed a certiflcate, ~n the form substantially
as follows
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been lssued
under the provisions of the Bond Ordinance described ~n this
Bond; and that this Bond has been issued ~n conversion of and
exchange for or replacement of a bond, bonds, or a portion of a
bond or bonds of an issue which orlg~nally was approved by the
Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas
NATIONSBANK OF TEXAS, N A ,
FORT WORTH, TEXAS
Paying Agent/Registrar
Dated By
Authorized Representative"
An authorized representative of the Paying Agent/Registrar
shall, before the delivery of any such Bond, date and manually
sign the above Certificate, and no such Bond shall be deemed to
be issued or outstanding unless such Certificate is so ex-
ecuted The Paying Agent/Registrar promptly shall cancel all
Bonds surrendered for conversion and exchange or replacement
No additional ordinances, orders, or resolutions need be passed
or adopted by the governing body of the Issuer or any other
body or person so as to accomplish the foregoing conversion and
exchange or replacement of any Bond or portion thereof, and the
Paying Agent/Registrar shall provide for the printing, execu-
tion, and delivery of the substitute Bonds in the manner
prescribed herein, and said Bonds shall be of type composition
printed on paper with lithographed or steel engraved borders of
customary weight and strength Pursuant to Vernon's Ann Tex
Clv St Art 717k-6, and particularly Section 6 thereof, the
13
duty of conversion and exchange or replacement of Bonds as
aforesaid is hereby Imposed upon the Paying Agent/Registrar,
and, upon the execution of the above Paying Agent/Reglstrar's
Authentication Certificate, the converted and exchanged or
replaced Bond shall be valid, incontestable, and enforceable in
the same manner and with the same effect as the Initial Bond
which originally was issued pursuant to this Ordinance, ap-
proved by the Attorney General, and registered by the Comptrol-
ler of Public Accounts The Issuer shall pay the Paying
Agent/Registrar's standard or customary fees and charges for
transferring, converting, and exchanging any Bond or any
portion thereof, but the one requesting any such transfer,
conversion, and exchange shall pay any taxes or governmental
charges required to be paid with respect thereto as a condition
precedent to the exercise of such privilege of conversion and
exchange The Paying Agent/Registrar shall not be required to
make any such conversion and exchange or replacement of Bonds
or any portion thereof (i) during the period commencing with
the close of business on any Record Date and ending with the
opening of business on the next following principal or interest
payment date, or, (ii) with respect to any Bond or portion
thereof called for redemption prior to maturity, within 45 days
prior to its redemption date
(e) In General All Bonds issued in conversion and
exchange or replacement of any other Bond or portion thereof,
(1) shall be issued in fully registered form, without Interest
coupons, with the principal of and interest on such Bonds to be
payable only to the registered owners thereof, (11) may and
shall be redeemed prior to their scheduled maturities, (111)
may be transferred and assigned, (iv) may be converted and ex-
changed for other Bonds, (v) shall have the characteristics,
(vi) shall be signed and sealed, and (vii) the principal of and
interest on the Bonds shall be payable, all as provided, and in
the manner required or indicated, in the FORM OF SUBSTITUTE
BOND set forth in this Ordinance
(f) p~yment of Fees and Charaes The Issuer hereby
covenants with the registered owners of the Bonds that it will
(i) pay the standard or customary fees and charges of the
Paying Agent/Registrar for its services with respect to the
payment of the principal of and interest on the Bonds, when
due, and (ii) pay the fees and charges of the Paying Agent/-
Registrar for services with respect to the transfer of regis-
tration of Bonds, and with respect to the conversion and
exchange of Bonds solely to the extent above provided in this
Ordinance
(g) Substitute Pavlna A~ent/Re~istrar The Issuer
covenants with the registered owners of the Bonds that at all
14
times while the Bonds are outstanding the Issuer will provide a
competent and legally qualified bank, trust company, financial
Institution, or other agency to act as and perform the services
of Paying Agent/Registrar for the Bonds under this Ordinance,
and that the Paying Agent/Registrar will be one entity The
Issuer reserves the right to, and may, at its option, change
the Paying Agent/Registrar upon not less than 120 days written
notice to the Paying Agent/Registrar, to be effective not later
than 60 days prior to the next principal or interest payment
date after such notice In the event that the entity at any
time acting as Paying Agent/Registrar (or ~ts successor by
merger, acquisition, or other method) should resign or other-
wise cease to act as such, the Issuer covenants that promptly
it will appoint a competent and legally qualified bank, trust
company, financial institution, or other agency to act as
Paying Agent/Registrar under this Ordinance Upon any change
in the Paying Agent/Registrar, the previous Paying Agent/Regis-
trar promptly shall transfer and deliver the Registration Books
(or a copy thereof), along with all other pertinent books and
records relating to the Bonds, to the new Paying Agent/Regis-
trar designated and appointed by the Issuer Upon any change
in the Paying Agent/Registrar, the Issuer promptly w~ll cause a
written notice thereof to be sent by the new Paying Agent/Regi-
strar to each registered owner of the Bonds, by United States
mall, first-class postage prepaid, which notice also shall give
the address of the new Paying Agent/Registrar By accepting
the position and performing as such, each Paying Agent/Regis-
trar shall be deemed to have agreed to the provlslons of th~s
Ordinance, and a certified copy of this 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
Agent/Registrar's Certificate to be printed on each of such
Bonds, and the Form of Assignment to be printed on each of the
Bonds, shall be, respectively, substantially as follows, with
such appropriate variations, omissions, or insertions as are
permitted or required by this Ordinance
FORM OF SUBSTITUTE BOND
NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT
STATE OF TEXAS $
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE BOND
SERIES 1992
ORIGINAL DATE
I~LTABA~--~ HA~Z~LTX_~A~ OF ISSUE CUSIP NO
% MARCH 1, 1992
15
ON THE MATURITY DATE specified above the CITY OF DENTON,
in Denton County, Texas (the "Issuer"), being a political
subdivision of the State of Texas, hereby promises to pay to
or to the registered assignee hereof (either being hereinafter
called the "registered owner") the principal amount of
and to pay interest thereon from MARCH 1, 1992, 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, 1992, and semiannually on
each JUNE i and DECEMBER i thereafter, except that if the date
of authentication of this Bond is later than the first Record
Date (hereinafter defined), such principal amount shall bear
interest from the interest payment date next preceding the date
of authentication, unless such date of authentication is after
any Record Date (hereinafter defined) but on or before the next
following interest payment date, in which case such principal
amount shall bear interest from such next following interest
payment date Said interest shall be calculated on the basis
of a 360-day year composed of twelve 30-day months
THE PRINCIPAL OF AND INTEREST ON this Bond are payable ~n
lawful money of the United States of America, without exchange
or collection charges The principal of this Bond shall be
paid to the registered owner hereof upon presentation and
surrender of this Bond at maturity or upon the date fixed for
its redemption prior to maturity, at the principal corporate
trust office of NATIONSBANK OF TEXAS, N A , FORT WORTH, TEXAS,
which is the "Paying Agent/Registrar" for this Bond The
payment of interest on this Bond shall be made by the Paying
Agent/Registrar to the registered owner hereof on each interest
payment date by check, dated as of such interest payment date,
drawn by the Paying Agent/Registrar on, and payable solely
from, funds of the Issuer required by the ordinance authorizing
the issuance of the Bonds (the "Bond Ordinance") to be on
deposit with the Paying Agent/Registrar for such purpose as
hereinafter provided, and such check shall be sent by the
Paying Agent/Registrar by United States mall, first-class
postage prepaid, on each such interest payment date, to the
registered owner hereof, at the address of the registered
owner, as it appeared at the close of business on the 15th day
of the month next preceding each such date (the "Record Date")
on ~he Registration Books kept by the Paying Agent/Registrar,
as hereinafter described Any accrued interest due upon the
redemption of thls Bond prior to maturity as provided hereln
16
shall be paid to the registered owner at the principal corpor-
ate trust office of the Paying Agent/Registrar upon presen-
tation and surrender of this Bond for redemption and payment at
the principal corporate trust office of the Paying Agent/Regis-
trar The Issuer covenants with the registered owner of this
Bond that on or before each principal payment date, interest
payment date, and accrued interest payment date for this Bond
It will make available to the Paying Agent/Registrar, from the
"Interest and Sinking Fund" created by the Bond Ordinance, the
amounts required to provide for the payment, in immediately
available funds, of all principal of and interest on the Bonds,
when due
IF THE DATE for the payment of the principal of or Inter-
est on this Bond shall be a Saturday, Sunday, a legal holiday,
or a day on which banking institutions in the City where the
Paying Agent/Registrar is located are authorized by law or
executive order to close, then the date for such payment shall
be the next succeeding day which is not such a Saturday,
Sunday, legal holiday, or day on which banking institutions are
authorized to close, and payment on such date shall have the
same force and effect as if made on the original date payment
was due
THIS BOND is one of an issue of Bonds initially dated
MARCH 1, 1992, authorized in accordance with the Constitution
and laws of the State of Texas in the principal amount of
$4,500,000, FOR THE PURPOSE OF OBTAINING MONEY FOR IMPROVEMENTS
AND EXTENSIONS OF THE CITY OF DENTON UTILITY SYSTEM, WHICH
CONSISTS OF THE CITY'S COMBINED WATERWORKS, SEWER, AND ELECTRIC
LIGHT AND POWER SYSTEM
ON DECEMBER 1, 2004, or on any date whatsoever thereafter,
the Bonds of this series may be redeemed prior to their sched-
uled maturities, at the option of the Issuer, with funds
derived from any available and lawful source, as a whole, or in
part, and, if in part, the particular Bonds, or portions
thereof, to be redeemed shall be selected and designated by the
Issuer (provided that a portion of a Bond may be redeemed only
in an integral multiple of $5,000), at the redemption price of
the par or principal amount thereof, plus accrued interest to
the date fixed for redemption
AT LEAST 30 days prior to the date fixed for any redemp-
tion of Bonds or portions thereof prior to maturity a written
notice of such redemption shall be published once in a finan-
cial publication, Journal, or reporter of general circulation
among securities dealers in The City of New York, New York
(including, but not limited to, The Bond Buyer and The Wall
Street Journal), or in the State of Texas (including, but not
17
limited to, The Texas Bond Reporter) Such notice also shall
be sent by the Paying Agent/Registrar by United States mall,
first-class postage prepaid, not less than 30 days prior to the
date fixed for any such redemption, to the registered owner of
each Bond to be redeemed at its address as it appeared on the
45th day prior to such redemption date, provided, however, that
the failure to send, mail, or receive such notice, or any
defect therein or in the sending or mailing thereof, shall not
affect the valldlty or effectiveness of the proceedings for the
redemption of any Bond, and it is hereby specifically provided
that the publioatlon of such notice as required above shall be
the only notice actually required in connection with or as a
prerequisite to the redemption of any Bonds or portions there-
of By the date fixed for any such redemption due provision
shall be made with the Paying Agent/Registrar for the payment
of the required redemption price for the Bonds or portions
thereof which are to be so redeemed, plus accrued interest
thereon to the date fixed for redemption If such written
notice of redemption is published and if due provision for such
payment is made, all as provided above, the Bonds or portions
thereof which 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 redemp-
tion, 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 provided for such payment If a
portion of any Bond shall be redeemed a substitute Bond or
Bonds having the same maturity date, bearing interest at the
same rate, in any denomination or denominations in any integral
multiple of $5,000, at the written request of the registered
owner, and in aggregate principal amount equal to the unre-
deemed portion thereof, will be issued to the registered owner
upon the surrender thereof for cancellation, at the expense of
the Issuer, all as provided in the Bond Ordinance
THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTE-
GRAL MULTIPLE OF $5,000 may be assigned and shall be trans-
ferred only in the Registration Books of the Issuer kept by the
Paying Agent/Registrar acting in the capacity of registrar for
the Bonds, upon the terms and conditions set forth in the Bond
Ordinance Among other requirements for such assignment and
transfer, this Bond must be presented and surrendered to the
Paying Agent/Registrar, together with proper instruments of
assignment, in form and with guarantee of signatures satisfac-
tory to the Paying Agent/Registrar, evidencing assignment of
this Bond or any portion or portions hereof in any integral
multiple of $5,000 to the assignee or assignees in whose name
or names this Bond or any such portion or portions hereof is or
are to be transferred and registered The form of Assignment
18
printed or endorsed on this Bond shall be executed by the
registered owner or its duly authorized attorney or representa-
tive, to evidence the assignment hereof A new Bond or Bonds
payable to such assignee or assignees (which then will be the
new registered owner or owners of such new Bond or Bonds), or
to the previous registered owner in the case of the assignment
and transfer of only a portion of this Bond, may be delivered
by the Paying Agent/Registrar in conversion of and exchange for
this Bond, all in the form and manner as provided in the next
paragraph hereof for the conversion and exchange of other
Bonds The Issuer shall pay the Paying Agent/Registrar's
standard or customary fees and charges for maklng such trans-
fer, but the one requesting such transfer shall pay any taxes
or other governmental charges required to be paid with respect
thereto The Paying Agent/Registrar shall not be required to
make transfers of registration of this Bond or any portion
hereof (i) during the period commencing with the close of
business on any Record Date and ending with the opening of
business on the next following prlncipal or interest payment
date, or, (ii) with respect to any Bond or any portion thereof
called for redemption prior to maturity, within 45 days prior
to its redemption date The registered owner of thls Bond
shall be deemed and treated by the Issuer and the Paying
Agent/Registrar as the absolute owner hereof for all purposes,
including payment and discharge of liability upon this Bond to
the extent of such payment, and the Issuer and the Paying
Agent/Registrar shall not be affected by any not~ce to the
contrary
ALL BONDS OF THIS SERIES are ~ssuable solely as fully
registered bonds, wlthout interest coupons, in the denomination
of any integral multiple of $5,000 As provided in the Bond
Ordinance, this Bond, or any unredeemed portion hereof, may, at
the request of the registered owner or the assignee or as-
signees hereof, be converted into and exchanged for a like
aggregate principal amount of fully registered bonds, without
interest coupons, payable to the appropriate registered owner,
assignee, or assignees, as the case may be, having the same
maturity date, and bearing interest at the same rate, in any
denomination or denominations in any integral multiple of
$5,000 as requested in writing by the appropriate registered
owner, assignee, or assignees, as the case may be, upon sur-
render of this Bond to the Paying Agent/Reglstrar for cancella-
tion, all in accordance with the form and procedures set forth
in the Bond Ordinance The Issuer shall pay the Paying Agent/-
Registrar's standard or customary fees and charges for trans-
ferring, converting, and exchanging any Bond or any port,on
thereof, but the one requesting such transfer, conversion, and
exchange shall pay any taxes or governmental charges required
to be paid with respect thereto as a condition precedent to the
19
exercise of such privilege of conversion and exchange The
Paying Agent/Registrar shall not be required to make any such
conversion and exchange (1) during the period commencing with
the close of business on any Record Date and ending with the
opening of business on the next following principal or interest
payment date, or, (Ii) with respect to any Bond or portion
thereof called for redemption prior to maturity, within 45 days
prior to its redemption date
IN THE EVENT any Paying Agent/Registrar for the Bonds is
changed by the Issuer, resigns, or otherwise ceases to act as
such, the Issuer has covenanted in the Bond Ordinance that 1t
promptly will appoint a competent and legally qualified substi-
tute therefor, and promptly will cause written notice thereof
to be mailed to the registered owners of the Bonds
IT IS HEREBY certified, recited, and covenanted that this
Bond has been duly and validly authorized, issued, sold,and de-
livered, that all acts, conditions, and things required or
proper to be performed, exist, and be done precedent to or in
the authorization, issuance, and delivery of this Bond have
been performed, existed, and been done ~n accordance with law,
that this Bond is a special obligation of the Issuer, secured
by and payable, together with other bonds, from a first lien on
and pledge of the "Pledged Revenues", which include initially
the "Net Revenues of the System", as such terms are defined in
the Bond Ordinance, with the System consisting of the City's
entire combined waterworks, sewer, and electric light and power
system
THE ISSUER has reserved the right, subject to the restric-
tion stated in the Bond Ordinance, to issue Additional Bonds
payable from and secured by a first lien on and pledge of the
"Pledged Revenues" on a parity with this Bond and series of
which it is a part
THE REGISTERED OWNER hereof shall never have the right to
demand payment of this Bond or the interest hereon out of any
funds raised or to be raised by taxation or from any source
whatsoever other than specified in the Bond Ordinance
BY BECOMING the registered owner of this Bond, the regis-
tered owner thereby acknowledges all of the terms and provi-
sions of the Bond Ordinance, agrees to be bound by such terms
and provisions, acknowledges that the Bond Ordinance ~s duly
recorded and available for inspectlon in the official minutes
and records of the governing body of the Issuer, and agrees
that the terms and provisions of th~s Bond and the Bond Ordi-
nance constitute a contract between each registered owner
hereof and the Issuer
20
IN WITNESS WHEREOF, the Issuer has caused this Bond to be
signed with the facsimile signature of the Mayor of the Issuer
and countersigned with the facsimile signature of the City
Secretary of the Issuer, and has caused the official seal of
the Issuer to be duly impressed, or placed in facsimile, on
this Bond
(facsimile sianature~ (facsimile slanature)
City Secretary, Mayor,
City of Denton, Texas City of Denton, Texas
(CITY SEAL)
FO~AM 0F PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued
under the provisions of the Bond Ordinance described in this
Bond, and that this Bond has been issued in conversion of and
exchange for or replacement of a bond, bonds, or a portion of a
bond or bonds of an issue which originally was approved by the
Attorney General of the State of Texas and registered by the
Comptroller of Public Accounts of the State of Texas
NATIONSBANK OF TEXAS, N A ,
FORT WORTH, TEXAS
Paying Agent/Registrar
Dated By
Authorized Representative
FORM OF ASSIGNMENT
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of
this Bond, or duly authorized representative or attorney
thereof, hereby assigns this Bond to
/ !
(Assignee's social (print or typewrite Asslgnee's name and
Security Or Taxpayer address, including zip code)
Identification Number
and hereby irrevocably constitutes and appoints
21
attorney to transfer the registration of this Bond on the
Paying Agent/Reglstrar's Registration Books with full power of
substitution in the premises
Dated
S~gnature Guaranteed
NOTICE The signature must be Registered Owner
guaranteed by a member of the NOTICE The signature above
New York Stock Exchange or a must correspond wlth the name
commercial bank or trust of the Registered Owner ap-
pearing on the face of this
company Bond
Section 8 DEFINITIONS As used in this Ordinance the
following ter~s shall have the meanings set forth below, unless
the text hereof specifically indicates otherwise
(a) The terms "City" and "Issuer" shall mean the City of
Denton, in Denton County, Texas
(b) The term "City Council" or "Council" shall mean the
governing body of the city
(c) The term "Bonds" shall mean collectively the Initial
Bond as defined and described in Section 2 of this Ordinance
and all substitute bonds exchanged therefor, and all other
substitute bonds and replacement bonds, issued pursuant to and
as provided in this ordinance
(d) The term "Parity Bonds" shall mean collectively (1)
the outstanding city of Denton Utility System Refunding Revenue
Bonds, Series 1983, authorized by ordinance passed on March 10,
1983 (the "Series 1983 Bonds"), (li) the outstanding City of
Denton Utility System Revenue Bonds, Series 1984, authorized by
ordinance passed on February 21, 1984 (the "Series 1984
Bonds"), (iii) the outstanding City of Denton Utility System
Revenue Bonds, Series 1984-A, authorized by ordinance passed on
September 25, 1984 (the Series 1984-A Bonds), (iv) the out-
standing City of Denton Utility System Revenue Refunding Bonds,
Series 1987, authorized by ordinance passed on January 27, 1987
(the "Series 1987 Bonds"), (v) the outstanding City of Denton
Utility System Revenue Bonds, Series 1988, authorized by
ordinance passed on August 2, 1988 (the "Series 1988 Bonds"),
(vi) the outstanding city of Denton Utility System Revenue
Bonds, Series 1989, authorized by ordinance passed on October
24, 1989 (the "Series 1989 Bonds"), and (vii) the Bonds
22
(e) The term "Additional Bonds" shall mean the additional
parity revenue bonds which the City reserves the rlght to lssue
an the future, in accordance with Section 25 of this Ordlnance
(f) The term "System" shall mean (1) the C~ty's entlre
ex~sting waterworks and sewer system and the C~ty's entire
exlsting electric l~ght and power system, together wlth all
future extensions, improvements, enlargements, and additions
thereto, and all replacements thereof, and (2) any other
related facilities, all or any part of the revenues or income
from which do, in the future, at the option of the city, and ~n
accordance w~th law, become "Pledged Revenues" as hereinafter
defined, provided that, notwithstanding the foregoing, and to
the extent now or hereafter authorized or permitted by law, the
term System shall not mean any water, sewer, electric, or other
facilities of any kind which are declared not to be a part of
the System, and which are acquired or constructed by the C~ty
with the proceeds from the issuance of "Special Facilities
Bonds", which are hereby defined as being special revenue
obligations of the city which are not payable from or secured
by any Pledged Revenues, but which are secured by and payable
from liens on and pledges of any other revenues, sources, or
payments, including, but not limited to, special contract
revenues or payments received from any other legal entity in
connection w~th such facilities, and such revenues, sources, or
payments shall not be considered as or constitute Gross Rev-
enues of the System, unless and to the extent otherwise pro-
vlded in the ordinance or ordinances authorizing the issuance
of such "Special Facilities Bonds"
(g) The terms "Gross Revenues of the System" and "Gross
Revenues" shall mean all revenues and lncome of every nature
derived or received by the City from the operation and owner-
sh~p of the System, including the interest lncome from the
investment or deposit of money in any Fund created by this
Ordinance
(h) The terms "Net Revenues of the system", and "Net
Revenues" shall mean all Gross Revenues after deducting there-
from an amount equal to the current expenses of operation and
maintenance of the System, including all salarles, labor,
materials, repairs, and extensions necessary to render effi-
cient service, provided, however, that only such repairs and
extensions, as in the Judgment of the City Council, reasonably
and fairly exercised by the adoption of appropriate resolu-
tions, are necessary to keep the System ~n operation and render
adequate service to said City and the lnhabitants thereof, or
such as might be necessary to meet some physical accident or
condition which would otherwise impair the Bonds or Additional
Bonds, shall be deducted in determinlng "Net Revenues"
23
Payments required to be made by the City for water supply or
water facilities, sewer services or sewer facilities, fuel
supply, and for the purchase of electric power, which payments
under law constitute operation and maintenance expenses of any
part of the System, shall constitute and be regarded as ex-
penses of operation and maintenance of the System under this
Ordinance Depreciation and amortization shall not constitute
or be regarded as expenses of operation and maintenance of the
System
(i) The term "Pledged Revenues" shall mean
(1) the Net Revenues, plus
(2) any additional revenues, income, or other
resources which are expected to be available to the
City on a regular periodic basis, including, without
limitation, any grants, donations, or income received
or to be received from the United States Government, or
any other public or private source, whether pursuant
to an agreement or otherwise, which in the future may, at
the option of the City, be pledged to the payment of the
Parity Bonds or Additional Bonds
(j) The term "year" or "fiscal year" shall mean the
fiscal year used by the City in connection wlth the operation
of the System
(k) The term "Government Obligations" shall mean direct
obligations of the United States of America, including obliga-
tions the principal of and interest on which are uncondition-
ally guaranteed by the Unlted States of America, which may be
United States Treasury obligations such as its State and Local
Government Series, and which may be in book-entry form
Section 9 PLEDGE (a) The Bonds are "Additional Bonds"
as permitted by Sections 24 and 25 of the ordinance passed on
March 10, 1983, authorizing the Series 1983 Bonds, and it is
hereby determined, declared, and resolved that all of the
Parity Bonds (including the Bonds) are secured and payable
equally and ratably on a parity, and that Sections 8 through28,
of this ordinance are supplemental to and cumulative of Sec-
tlons 7 through 27 of the aforesaid ordinance passed on March
10, 1983, with Sections 8 through 28 of this Ordinance being
applicable to all of the Parity Bonds
(b) The Parity 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 flrst
lien on and pledge of the Pledged Revenues, and the Pledged
24
Revenues are further pledged to the establishment and mainte-
nance of the Funds created by this Ordinance, and any Funds
created by any ordinance authorizing the Issuance of any
Additional Bonds The Parity Bonds and any Additional Bonds
are not and will not be secured by or payable from a mortgage
or deed of trust on any real, personal, or mixed properties
constituting the System
Section 10 SYSTEM FUND There heretofore has been and
ls hereby created and there shall be established and maintained
on the books of the city, and accounted for separate and apart
from all other funds of the city, a special fund to be entitled
the "City of Denton Utility System Fund" (the "System Fund")
All Gross Revenues shall be credited to the System Fund immedi-
ately upon receipt, unless otherwise provided in this Ordi-
nance All current expenses of operation and maintenance of
the System shall be paid from such Gross Revenues credited to
the System Fund as a first charge against same Before making
any deposits hereinafter required to be made from the System
Fund, the city shall retain in the System Fund at all times an
amount at least equal to one-sixth of the amount budgeted for
the then current fiscal year for the current operation and
maintenance expenses of the System
Section 11 INTEREST AND SINKING FUND For the sole
purpose of paying the principal of and interest on all Parity
Bonds and Additional Bonds, there heretofore has been and is
hereby created and there shall be established and maintained on
the books of the City, and accounted for separate and apart
from all other funds of the city, a separate fund to be en-
titled the "City of Denton Utility System Revenue Bonds Inter-
est and Sinking Fund" (the "Interest and Sinking Fund")
Section 12 RESERVE FUND There heretofore has been, and
· s hereby, created, and there shall be established and main-
tained initially at NationsBank of Texas, N A , Fort Worth,
Texas, and thereafter, at the option of the city, established
and maintained at any time at any national bank having a
capital and surplus in excess of $25,000,000, a separate fund
to be entitled the "City of Denton Utility System Bonds and
Additional Bonds Reserve Fund" (the "Reserve Fund") The
Reserve Fund shall be used to pay the principal of and interest
on any Parity Bonds or Additional Bonds when and to the extent
the amounts in the Interest and Sinking Fund available for such
payment are insufficient for such purpose, and may be used for
the purpose of finally retiring the last of any Parity Bonds or
Additional Bonds
Section 13 EXTENSION AND IMPROVEMENT FUND There
heretofore has been and is hereby created and there shall be
25
established and maintained on the books of the City, and
accounted for separate and apart from all other funds of the
City, a separate fund to be entitled the "City of Denton
Utility System Extension and Improvement Fund" (the "Extension
and Improvement Fund") The Extension and Improvement Fund
shall be used for the purpose of paying the costs of improve-
ments, enlargements, extensions, additions, replacements, or
other capital expenditures related to the System, or for paying
the costs of unexpected or extraordinary repairs or replace-
ments of the System for which System funds are not available,
or for paying unexpected or extraordinary expenses of operation
and maintenance of the System for which System funds are not
otherwise available, or for any other lawful purpose
Section 14 EMERGENCY FUND There ~s hereby created and
there shall be established and maintained 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 entitled the "City of Denton
Utility System Emergency Fund" (the "Emergency Fund") The
Emergency Fund shall be used for the purpose of paying unex-
pected or extraordinary expenses of repair, replacement,
operation, and maintenance of the System for which neither
system funds nor the moneys in the Extension and Improvement
Fund are available There was deposited in the Emergency Fund
simultaneously with the delivery of the Series 1983 Bonds to
the initial purchasers thereof from lawfully available funds of
the city the amount of $250,000 Ail investment interest
~ncome 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 ~n the Interest and
Sinking Fund, the Reserve Fund, the Extension and Improvement
Fund, and other funds when and as required by this Ordinance
and any ordinance authorizing the Issuance of Additional Bonds
Section 16 INVESTMENTS Money ~n any Fund established
pursuant to this Ordinance or any ordinance authorizing the
· ssuance of Additional Bonds, may, at the option of the city,
be placed in time deposits or certificates of deposit secured
by obligations of the type hereinafter described, or be in-
vested in Government Obligations (as defined ~n Section 8
hereof) or obligations guaranteed or insured by the United
StatUs of America, which, in the opinion of the Attorney
General of the United States, are backed by its full faith and
credit or represent its general obligations, or invested in
obligations of instrumentalities of the United States of
America, including, but not limited to, evidences of indebted-
ness issued, insured, or guaranteed by such governmental
agencies as the Federal Land Banks, Federal Intermediate Credit
Banks, Banks for Cooperatives, Federal Home Loan Banks, Govern-
ment National Mortgage Association, United States Postal
Service, Farmers Home Administration, Federal Home Loan Mort-
gage Association, Small Business Administration, Federal
Housing Association, or Participation Certificates in the
Federal Assets Financing Trust, provided that all such deposits
and investments shall be made in such manner as will, in the
opinion of the City, permit the money required to be expended
from any Fund to be available at the proper t~me or times as
expected to be needed Such investments (except United States
Treasury Obligations--State and Local Government Series invest-
ments held in book entry form, which shall at all times be
valued at cost) shall be valued in terms of current market
value as of the last day of each fiscal year Unless otherwise
set forth herein, all interest and income derived from such
deposits and investments immediately shall be credited to, and
any losses debited to, the Fund from which the deposit or
investment was made, and surpluses in any Fund shall or may be
disposed of as hereinafter provided Such investments shall be
sold promptly when necessary to prevent any default in con-
nectlon with the Parity Bonds or Additional Bonds consistent
with the ordinances, respectively, authorizing their issuance
Section 17 FUNDS SECURED That money in all Funds
created by this Ordinance, to the extent not Invested, shall be
secured in the manner prescribed by law
Section 18 PRIORITY OF DEPOSITS AND PAYMENTS FROM SYSTEM
FUND That the city shall make the deposits and payments from
Pledged Revenues in the System Fund when and as required by
this Ordinance and any ordinance authorizing any Additional
Bonds, and such deposits shall be made in the following manner
and with the following irrevocable priorities, respectively
First, to the Interest and Sinking Fund, when and in
the amounts required by this Ordinance and
any ordinance authorizing any Additional Bonds,
Second, to the Reserve Fund, when and in the amounts
required by this Ordinance and any ordinance
authorizing any Additional Bonds, and
Third, to the Extension and Improvement Fund, when
and as required by Section 21 of this Ordinance
Section 19 INTEREST AND SINKING FUND REQUIREMENTS The
City shall cause to be deposited to the credit of the Interest
and Sinking Fund the accrued interest and any premium received
from the sale of the Initial Bond, and on or before the 25th
day of each month, the City shall cause to be deposited to the
27
credit of the Interest and Sinking Fund, in approximately equal
monthly payments, amounts sufficient, together with any other
funds on hand therein, to pay all of the interest or principal
and interest coming due, including the principal amount of any
Parity Bonds required to be redeemed prior to maturity pursuant
to any mandatory redemption requirements, on the Parity Bonds
and any Additional Bonds on the next succeeding lnterest
payment date Any moneys so deposited in the Interest and
Sinking Fund with respect to a mandatory redemption require-
ment, together with other lawfully available funds of the City,
may be used by the City, to purchase, in advance of a mandatory
redemption date and at a price not exceeding the prlnclpal
amount thereof plus accrued interest thereon to the date of
purchase, Parity Bonds which would be subject to being chosen
for mandatory redemption on such mandatory redemption date
The Paying Agent shall cancel any Parity 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 pr~nclpal and interest
requirements of the Series 1983 Bonds, the Series 1984 Bonds,
the Series 1984-A Bonds, the Serles 1987 Bonds, the Series 1988
Bonds, and the Series 1989 Bonds (the current "Required Reserve
Amount"), except and provided that following the issuance and
delivery of the Initial Bond (Series 1992) the Required Reserve
Amount shall become and be an amount of money and investments
equal to the average annual principal and interest requirements
of all the outstanding Parity Bonds and Additional Bonds,
provided further, however, that the Required Reserve Amount
shall never be less than $3,000,000 if the maximum annual
principal and interest requirements on all outstanding Parity
Bonds and Additional Bonds exceeds $3,000,000 Immediately
after the issuance and delivery of the Initial Bond there shall
be deposited to the credit of the Reserve Fund, from the
proceeds of the sale of the Initial Bond, money sufficient to
cause the Reserve Fund to contain an aggregate amount of money
and investments equal to the average annual principal and
interest requirements of all then outstanding Parity Bonds (the
then Required Reserve Amount) After the delivery of any
future Additional Bonds the City shall cause the Reserve Fund
to be increased, if and to the extent necessary, so that such
Fund,will contain an amount of money and investments equal to
the Required Reserve Amount Any increase in the Required
Reserve Amount may be funded from Pledged Revenues, or from
proceeds from the sale of any Additional Bonds, or any other
available source or combination of sources Ail or any part of
the Required Reserve Amount not funded Initially and immediate-
ly after the delivery of any installment or issue of Additional
Bonds shall be funded, within not more than five years from the
28
date of such delivery, by deposits of Pledged Revenues in
approximately equal monthly installments on or before the 25th
day of each month Principal amounts of the Parity Bonds and
any Additional Bonds which must be redeemed pursuant to any
applicable mandatory redemption requirements shall be deemed to
be maturing amounts of principal for the purpose of calculating
principal and interest requirements on such bonds When and so
long as the amount in the Reserve Fund is not less than the
Required Reserve Amount no deposits shall be made to the credit
of the Reserve Fund, but when and if the Reserve Fund at any
time contains less than the Required Reserve Amount, then the
City shall transfer from Pledged Revenues in the System Fund,
and deposit to the credit of the Reserve Fund, monthly on or
before the 25th day of each month, a sum equal to 1/60th of the
Required Reserve Amount, until the Reserve Fund is restored to
the Required Reserve Amount The City specifically covenants
that when and so long as the Reserve Fund contains the Required
Reserve Amount, the city shall cause all amounts in excess of
the Required Reserve Amount to be deposited to the credit of
the Interest and Sinking Fund
Section 21 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS
During each year, subject and subordinate to making the re-
quired deposits to the credit of the Interest and Sinking Fund
and the Reserve Fund, the city shall be required to deposit to
the credit of the Extension and Improvement Fund, from Pledged
Revenues in the System Fund, an amount equal to 8% of the
"Adjusted Gross Revenues of the System", which term is hereby
defined to mean the following
the Gross Revenues of the System for such year after
deducting from such Gross Revenues an amount equal to
the current expenses of operation and maintenance of
the System for such year which are directly attribut-
able to (i) all fuel costs related to the production
of electric energy by the City and/or (11) the pur-
chase of electric energy by the city
Additional excess Pledged Revenues may, at the option of the
city Council, be deposited to the credit of the Improvement
Fund as permitted by Section 22 (b) hereof, but no such addi-
tional deposit is required Ail investment interest income
from the Extension and Improvement Fund shall be retained in
and remain a part of such Fund
Section 22 DEFICIENCIES, EXCESS PLEDGED REVENUES (a)
If on any occasion there shall not be sufficient Pledged
Revenues to make the required deposits into the Interest and
Sinking Fund or the Reserve Fund, such deficiency shall be made
29
up as soon as possible from the next available Pledged Rev-
enues
(b) Subject to making the required deposits to the credit
of the various Funds when and as required by this Ordinance or
any ordinance authorizing the lssuance of Additional Bonds, any
surplus Pledged Revenues may be used by the City for any lawful
purpose
Section 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS
On or before June 1, 1992, and semiannually on or before each
December 1 and June 1 thereafter while any of the Parity Bonds
or Additional Bonds are outstanding and unpaid the City shall
make available to the Paying Agents therefor, out of the
Interest and Sinking Fund, or if necessary, out of the Reserve
Fund, money sufficient to pay, on each of such dates, the
principal of and interest on the Parity Bonds and Add~tlonal
Bonds as the same matures and comes due, or to redeem the
Parity Bonds or Addlt~onal Bonds prior to maturity, either upon
mandatory redemption or at the option of the City At the
direction of the city the Paying Agents shall either deliver
paid Parity Bonds and Additional Bonds, and any interest
coupons appertaining thereto, to the city or destroy all paid
Parity Bonds and Additional Bonds, and any coupons appertaining
thereto, and furnish the city with an appropriate certificate
of cancellation or destruction
Section 24 FINAL DEPOSITS (a) Any Parity Bond or
Additional Bond shall be deemed to be paid, retired, and no
longer outstanding within the meaning of th~s Ordinance when
payment of the principal of, redemption premium, if any, on
such Parity Bond or Additional Bond, plus interest thereon to
the due date thereof (whether such due date be by reason of
maturity, upon redemption, or otherwise) either (i) shall have
been made or caused to be made in accordance with the terms
thereof (including the giving of any required notice of redemp-
tion or provision for the proper giving of such notice having
been made), or (ii) shall have been provided by Irrevocably
depositing with or making available to a Paying Agent therefor,
· n trust and irrevocably set aside exclusively for such pay-
ment, (1) money sufficient to make such payment or (2) Govern-
ment Obligations which mature as to principal and interest in
such amounts and at such times as will ~nsure the availability,
without reinvestment, of sufficient money to make such payment,
and all necessary and proper fees, compensation, and expenses
of such Paying Agent pertaining to the Parity Bonds and Addi-
tional Bonds with respect to which such deposit is made shall
have been paid or the payment thereof provided for to the
satisfaction of such paying agent At such t~me as a Bond or
Additional Bond shall be deemed to be paid hereunder, as
3O
aforesaid, it shall no longer be secured by or entitled to the
benefits of this Ordinance or a lien on and pledge of the
Pledged Revenues, and shall be entitled to payment solely from
such money or Government Obligations
(b) Any moneys so deposited with a paying agent may at
the direction of the City also be invested In Government
Obligations, maturing in the amounts and times as hereinbefore
set forth, and all income from all Government Obligations in
the hands of the paying agent pursuant to this Section which is
not required for the payment of the Parity Bonds and Additional
Bonds, the redemption premium, if any, and interest thereon,
with respect to which such money has been so deposited, shall
be turned over to the City or deposited as directed by the
City
Section 25 ADDITIONAL BONDS (a) The City shall have
the right and power at any time and from time to time, and in
one or more series or issues, to authorize, Issue, and deliver
additional parity revenue bonds (herein called "Additional
Bonds"), in accordance with law, in any amounts, for any lawful
purpose, including the refunding of any Parity Bonds or Addi-
tional Bonds, or other obligations Such AdditIonal Bonds, if
and when authorized, issued, and delivered in accordance with
this Ordinance, shall be payable from and secured by an irrev-
ocable first lien on and pledge of the Pledged Revenues,
equally and ratably on a parity in all respects with the Parity
Bonds and any other outstanding Additional Bonds
(b) The principal of all Additional Bonds must be sched-
uled to be paid or mature on December 1 of the years in which
such principal is scheduled to be paid or mature
Section 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS
Additional Bonds shall be issued only in accordance with this
Ordinance, and no ~nstallment, Series, or issue of Additional
Bonds shall be issued or delivered unless
(a) The Mayor of the City and the City Secretary sign a
written certificate to the effect that the City is not in
default as to any covenant, condition, or obligation in connec-
tion with all then outstanding Parity Bonds and Additional
Bonds, and the ordinances authorizing same, and that the
Interest and Sinking Fund and the Reserve Fund each contains
the amount then required to be therein
(b) An independent certified public accountant, or ~n-
dependent fir~ of certified public accountants, acting by and
through a certified public accountant, signs a written certifi-
cate to the effect that, in his or Its opinion, during either
31
the next preceding fiscal year, or any twelve consecutive
calendar month period out of the 18-month period immediately
preceding the month in which the ordinance authorizing the
issuance of the then proposed Additional Bonds is passed, the
Pledged Revenues were at least (1) 1 25 times an amount equal
to the average annual principal and interest requirements, and
(11) i 10 times an amount equal to the principal and Interest
requirements during the fiscal year during which such require-
ments are scheduled to be the greatest, of all Parity Bonds and
Additional Bonds which are scheduled to be outstanding after
the delivery of the then proposed Additional Bonds It is
specifically provided, however, that in calculating the amount
of Pledged Revenues for the purposes of this subsection (b), if
there has been any increase in the rates or charges for ser-
vices of the System which is then in effect, but which was not
in effect during all or any part of the entire period for which
the Pledged Revenues are being calculated (hereinafter referred
to as the "entire period") then the certified public account-
ant, or in lieu of the certified public accountant a firm of
consulting engineers, shall determine and certify the amount of
Pledged Revenues as being the total of (1) the actual Pledged
Revenues for tho entire period, plus (11) a sum equal to the
aggregate amount by which the actual billings to customers of
the System during the entire period would have been increased
if such increased rates or charges had been in effect during
the entire period
(c) Provision shall be made in the ordinance authorizing
their issuance for increasing the Reserve Fund to the Required
Reserve Amount as required by Section 20 hereof
(d) Ail calculations of average annual principal and
interest requirements of any bonds made in connection with the
issuance of any then proposed Additional Bonds shall be made as
of the date of such Additional Bonds, and also in making
calculations for such purpose, and for any other purpose under
this Ordinance, principal amounts of any bonds which must be
redeemed prior to maturity pursuant to any applicable mandatory
redemption requirements shall be deemed to be maturing amounts
of principal of such bonds
Section 27 GENERAL COVENANTS The City further cove-
nants and agrees that in accordance with and to the extent
required or permitted by law
(a) ~ It will faithfully perform at all times
any and all covenants, undertakings, stipulations, and provi-
sions contained in this Ordinance, and each ordinance authoriz-
ing the issuance of Additional Bonds, and in each and every
Parity Bond and Additional Bond, that ~t w~ll promptly pay or
32
cause to be paid the principal of and interest on every Parity
Bond and Additional Bond, on the dates and in the places and
manner prescribed in such ordinances and Parity Bonds or
Additional Bonds, and that it will, at the times and in the
manner prescribed, deposit or cause to be deposited the amounts
required to be deposited into the Interest and Sinking Fund and
the Reserve Fund, and any holder of the Parity Bonds or Add1-
tlonal Bonds may require the City, its officials, and em-
ployees, to carry out, respect, or enforce the covenants and
obligations of this Ordinance, or any ordinance authorizing the
issuance of Additional Bonds, by all legal and equitable means,
including specifically, but without limitation, the use and
filing of mandamus proceedings, in any court of competent
]urlsdiction, against the City, 1ts offlclals, and employees
(b) City's Leaal Authority The City ~s a duly created
and existing home rule city of the State of Texas, and is duly
authorized under the laws of the State of Texas to create and
issue the Parity Bonds and Additional Bonds, that all action on
its part for the creation and issuance of the said obligations
has been or will be duly and effectively taken, and that said
obligations in the hands of the holders and owners thereof are
and will be valid and enforceable special obligations of the
City in accordance with their terms
(c) Title The City has or will obtain lawful title to
the lands, buildings, structures, and facilities constituting
the System, that it warrants that it will defend the title to
all the aforesald lands, buildings, structures, and facilities,
and every part thereof, for the benefit of the holders and
owners of the Parity Bonds and Additional Bonds, against the
claims and demands of all persons whomsoever, that it IS
lawfully qualified to pledge the Pledged Revenues to the
payment of the Parity Bonds and Additional Bonds in the manner
prescribed herein, and has lawfully exercised such rlghts
(d) Liens The City will from time to time and before
the same become delinquent pay and discharge all taxes, assess-
ments, and governmental charges, if any, which shall be law-
fully imposed upon it, or the System, that it will pay all
lawful claims for rents, royalties, labor, materials, and
supplies which if unpaid might by law become a lien or charge
thereon, the lien of which would be prior to or interfere with
the liens hereof, so that the priority of the liens granted
hereunder shall be fully preserved in the manner provided
herein, and that it will not create or suffer to be created any
mechanic's, laborer's, materialman's, or other lien or charge
which might or could be prior to the liens hereof, or do or
suffer any matter or thing whereby the liens hereof might or
could be impaired, provided, however, that no such tax,
33
assessment, or charge, and that no such claims which might be
used as the basis of a mechanic's, laborer's, materialman's, or
other lien or charge, shall be required to be paid so long as
the validity of the same shall be contested in good faith by
the city
(e) 0p~ratlon of System, No Free Service While the
Parity Bonds or any Additional Bonds are outstanding and unpaid
the City shall continuously and efficiently operate the System,
and shall maintain the System in good condition, repair, and
working order, all at reasonable cost No free service of the
System shall be allowed, and should the City or any of 1ts
agencies, instrumentalities, lessors, or concessionaires make
use of the services and facilities of the System, payment
monthly of the standard retail price of the services provided
shall be made by the city or any of 1ts agencies, instrumen-
talities, lessors, or concessionaires out of funds from sources
other than the revenues of the System, unless made from surplus
Pledged Revenues as permitted by Section 22(b) hereof
(f) Further Encumbrance While the Parity Bonds or any
Additional Bonds are outstanding and unpaid, the City shall not
additionally encumber the Pledged Revenues in any manner,
except as permitted in this Ordinance in connection with
Additional Bonds, unless said encumbrance is made ]unior and
subordinate in all respects to the liens, pledges, covenants,
and agreements of this Ordinance and any ordinance authorizing
the issuance of Additional Bonds, but the right of the City to
issue revenue bonds payable from a subordinate lien on surplus
Pledged Revenues is specifically recognized and retained, as
permitted under Section 22(b) hereof)
(g) ~ale or DisPosal of Property While the Parity Bonds
or any Additional Bonds are outstanding and unpaid, the City
shall not sell, convey, mortgage, encumber, lease, or in any
manner transfer title to, or dedicate to other use, or other-
wise dispose of, the System, or any significant or substantial
part thereof, provided that whenever the City deems it neces-
sary to dispose of any property, machinery, fixtures, or
equipment, or dedicate such property to other use, it may do so
either when it has made arrangements to replace the same or
provide s~bstitutes therefor, or it is determined by resolution
of the City Council that no such replacement or substitute ~s
necessary
(h) ~ (1) The City shall cause to be insured
such parts of the System as would usually be insured by corpor-
ations operating like properties, with a responsible insurance
company or companies, against risks, accidents, or casualties
against which and to the extent insurance is usually carried by
34
corporations operating like properties, including, to the
extent reasonably obtainable, fire and extended coverage
insurance, insurance against damage by floods, and use and
occupancy insurance Public liability and property damage
insurance also shall be carried unless the City Attorney glves
a written opinion to the effect that the city is not liable for
claims which would be protected by such insurance Ail insur-
ance premiums shall be paid as an expense of operation of the
System At any time while any contractor engaged in construc-
tion work shall be fully responsible therefor, the City shall
not be required to carry insurance on the work being con-
structed if the contractor is required to carry appropriate
insurance Ail such policies shall be open to the lnspect~on
of the Bondholders and their representatives at all reasonable
times Upon the happening of any loss or damage covered by
insurance from one or more of said causes, the City shall make
due proof of loss and shall do all things necessary or desir-
able to cause the insuring companies to make payment in full
directly to the city The proceeds of insurance covering such
property, together with any other funds necessary and available
for such purpose, shall be used forthwith by the City for
repairing the property damaged or replacing the property
destroyed, provided, however, that if said insurance proceeds
and other funds are insufficient for such purpose, then said
insurance proceeds pertaining to the System shall be deposited
in a special and separate trust fund, at an official depository
of the City, to be designated the Insurance Account The
Insurance Account shall be held until such t~me as other funds
become available which, together with the Insurance Account,
w~ll be sufficient to make the repairs or replacements origin-
ally required
(2) The annual audit hereinafter required may contain a
section commenting on whether or not the C~ty has complied with
the requirements of this Section with respect to the mainte-
nance of insurance, and shall state whether or not all insur-
ance premiums upon the insurance policies to which reference is
made have been paid
(i) ~nnual Budaet and Rate Covenant The City shall
prepare, prior to the beginning of each fiscal year, an annual
budget, in accordance with law, reflecting an estimate of cash
receipts and disbursements for the ensuing fiscal year in
sufficient detail to indicate the probable Gross Revenues and
Pledged Revenues for such fiscal year The city shall fix,
establish, maintain, and collect, such rates, charges, and fees
for the use and availability of the System at all times as are
necessary (1) to produce Gross Revenues sufficient, together
with any other Pledged Revenues, to pay all current operation
and maintenance expenses of the System, and (2) to produce an
amount of Pledged Revenues during each fiscal year at least
equal to the greater of i 25 times the average annual principal
and interest requirements of all then outstanding Parity Bonds
and Additional Bonds or I 25 times the succeeding fiscal year's
principal and interest requirements of all then outstanding
Parity Bonds and Additional Bonds
(]) Records The city shall keep proper books of record
and account in which full, true, proper, and correct entries
will be made of all dealings, activities, and transactions
relating to the System, the Pledged Revenues, and the Funds
created pursuant to this Ordinance, and all books, documents,
and vouchers relating thereto shall at all reasonable times be
made available for inspection upon request of any Bondholder or
citizen of the City To the extent consistent with the provi-
sions of this Ordinance, the City shall keep its books and
records in a manner conforming to standard accounting practices
as usually would be followed by private corporations owning and
operating a similar System, with appropriate recognition being
g~ven to essential differences between municipal and corporate
accounting practices
(k) Audits After the close of each fiscal year while
any of the Parity Bonds or any Additional Bonds are outstand-
ing, an audit will be made of the books and accounts relating
to the System and the Pledged Revenues by an independent
certified public accountant or an independent firm of certified
public accountants As soon as practicable after the close of
each such year, and when said audit has been completed and made
available to the City, a copy of such audit for the preceding
year shall be mailed to the Municipal Advisory Council of
Texas, to each paying agent for any bonds payable from Pledged
Revenues, and to any Bondholders who shall so request in
writing The annual audit reports shall be open to the inspec-
tion of the Bondholders and their agents and representatives at
all reasonable times
(1) Governmental A~encles It will comply w~th all of
the terms and conditions of any and all franchises, permits,
and authorizations applicable to or necessary with respect to
the System, and which have been obtained from any governmental
agency, and the city has or will obtain and keep In full force
and effect all franchises, permits, authorization, and other
requirements applicable to or necessary with respect to the
acquisition, construction, equipment, operation, and mainte-
nance of the System
(m) nO Competition It will not operate, or grant any
franchise or, to the extent it legally may, permit the acquisi-
tion, constr%/ctlon, or operation of, any facilities which would
36
be in competition with the System, and to the extent that it
legally may, the City will prohibit any such competing facili-
ties
(n) No Arbitraae The City covenants to and with the
purchasers of the Parity Bonds and any Additional Bonds that no
use will be made of the proceeds of any of such bonds at any
time throughout the term of any of such bonds which, if such
use had been reasonably expected on the date of delivery of any
of such bonds to and payment therefor by the purchasers, would
have caused any of such bonds to be arbitrage bonds within the
meaning of Section 103(c) of the Internal Revenue Code of 1954,
as amended, or the Internal Revenue Code of 1986, or any
regulations or rulings pertaining thereto, and by this covenant
the City is obligated to comply with the requirements of the
aforesaid Codes and all applicable and pertinent Department of
the Treasury regulations relating to arbitrage bonds The City
further covenants that the proceeds of all such bonds will not
otherwise be used directly or indirectly so as to cause all or
any part of such bonds to be or become arbitrage bonds within
the meaning of the aforesaid Codes, or any regulations pertain-
ing thereto
Section 28 AMENDMENT OF ORDINANCE (a) The holders or
owners of Parity Bonds and Additional Bonds aggregating in
prlncipal amount 51% of the aggregate principal amount of then
outstanding Parity Bonds and Additional Bonds shall have the
r~ght from time to time to approve any amendment to th~s
Ordinance which may be deemed necessary or desirable by the
City, provided, however, that nothing here~n contained shall
permit or be construed to permit the amendment of the terms and
conditions in this Ordinance or in the Parity Bonds or Addi-
tlonal Bonds so as to
(1) Make any change in the maturity of the out-
standing Parlty Bonds or Additional Bonds,
(2) Reduce the rate of interest borne by any of
the outstanding Parity Bonds or Additional Bonds,
(3) Reduce the amount of the principal payable
on the outstanding Parity Bonds or Additional Bonds,
(4) Modify the terms of payment of principal
of or interest on the outstanding Parity Bonds or Addi-
tional Bonds, or impose any conditions with respect to
such payment,
(5) Affect the rights of the holders or owners of
less than all of the Parity Bonds and Additional Bonds
37
then outstanding,
(6) Change the minimum percentage of the prin-
cipal amount of Parity Bonds and Additional Bonds neces-
sary for consent to such amendment
(b) If at any time the city shall desire to amend the
Ordinance under this Section, the City shall cause notice of
the proposed amendment to be published in a financial publica-
tion of general circulation in The City of New York, New York,
once during each calendar week for at least two successive
calendar weeks Such notice shall briefly set forth the nature
of the proposed amendment and shall state that a copy thereof
is on file at the principal office of the Paying Agents for
inspection by all holders or owners of Parity Bonds and Addi-
tional Bonds Such publication is not required, however, if
notice in writing is given to each holder or owner of Parity
Bonds and Additional Bonds
(c) Whenever at any time not less than thirty days, and
within one year, from the date of the first publication of said
notice or other service of written notice the city shall
receive an instrument or instruments executed by the holders or
owners of at least 51% in aggregate principal amount of all
Parity Bonds and Additional Bonds then outstanding, which
instrument or instruments shall refer to the proposed amendment
described in said notice and which specifically consent to and
approve such amendment in substantially the form of the copy
thereof on file with the Paying Agents, the city Council may
pass the amendatory ordinance in substantially the same form
(d) Upon the passage of any amendatory ordinance pursuant
to the provisions of this Section, this Ordinance shall be
deemed to be amended in accordance with such amendatory ordi-
nance, and the respective rights, dutles, and obligations under
this Ordinance of the City, and all the holders or owners of
then outstanding Parity Bonds and Additional Bonds and all
future Parity Bonds and Additional Bonds shall thereafter be
determined, exercised, and enforced hereunder, sub]ect in all
respects to such amendments
(e) Any consent given by the holder or owner of a Parity
Bond or Additional Bond pursuant to the provisions of this
Section shall be irrevocable for a period of slx months from
the date of the first publication of the notice provided for ~n
this Section, and shall be conclusive and binding upon all
future holders or owners of the same Parity Bond or Additional
Bond during such period Such consent may be revoked at any
time after six months from the date of the first publication of
such notice by the holder or owner who gave such consent, or by
38
a successor in title, by filing notice thereof with the paying
agents and the City, but such revocation shall not be effective
if the holders or owners of 51% in aggregate principal amount
of the then outstanding Parity Bonds and Additional Bonds as in
this Section defined have, prior to the attempted revocation,
consented to, and approved the amendment
(f) For the purpose of this Section, the fact of the
holding of Parity Bonds or Additional Bonds which are in
bearer, coupon form, by any bondholder and the amount and
numbers of such bearer Parity Bonds or Additional Bonds and the
date of their holding same, may be proved by the affidavit of
the person claiming to be such holder or owner, or by a certi-
ficate executed by any trust company, bank, banker, or any
other depository wherever situated showing that at the date
therein mentioned such person had on deposit with such trust
company, bank, banker, or other depository, the Parity Bonds
and Additional Bonds described in such certificate The City
may conclusively assume that such ownership continues until
written notice to the contrary is served upon the City The
ownership of all registered Parity Bonds and Additional Bonds
shall be determined from the registration books kept by the
registrar therefor
Section 29 DAMAGED, MUTILATED, LOST, STOLEN, OR DE-
STROYED BONDS (a) Replacement Bonds In the event any
outstanding Bond is damaged, mutilated, lost, stolen, or
destroyed, the Paying Agent/Registrar shall cause to be print-
ed, executed, and delivered, a new bond of the same principal
amount, maturity, and interest rate, as the damaged, mutilated,
lost, stolen, or destroyed Bond, in replacement for such Bond
· n the manner hereinafter provided
(b) ADDlication for Replacement Bonds Application for
replacement of damaged, mutilated, lost, stolen, or destroyed
Bonds shall be made by the registered owner thereof to the
Paying Agent/Registrar In every case of loss, theft, or
destruction of a Bond, the registered owner applying for a
replacement bond shall furnish to the Issuer and to the Paying
Agent/Registrar such security or indemnity as may be required
by them to save each of them harmless from any loss or damage
with respect thereto Also, in every case of loss, theft, or
destruction of a Bond, the registered owner shall furnish to
the Issuer and to the Paying Agent/Registrar evidence to their
satisfaction of the loss, theft, or destruction of such Bond,
as the case may be In every case of damage or mutilation of a
Bond, the registered owner shall surrender to the Paying
Agent/Registrar for cancellation the Bond so damaged or muti-
lated
39
(c) NO Default Occurre~ Notwithstanding the foregoing
provisions of this Section, in the event any such Bond shall
have matured, and no default has occurred which is then con-
tlnuing in the payment of the principal of, redemption premium,
If any, or ~nterest on the Bond, the Issuer may authorize the
payment of the same (without surrender thereof except in the
case of a damaged or mutllated Bond) instead of issuing a
replacement Bond, provided security or ~ndemnlty is furnished
as above provided in th~s Section
(d) Charae for Issuina Replacement Bonds Prior to the
issuance of any replacement bond, the Paying Agent/Registrar
shall charge the registered owner of such Bond with all legal,
printing, and other expenses ~n connection therewith Every
replacement bond issued pursuant to the provisions of this
Section by virtue of the fact that any Bond is lost, stolen, or
destroyed shall constitute a contractual obligation of the
Issuer whether or not the lost, stolen, or destroyed Bond shall
be found at any time, or be enforceable by anyone, and shall be
entitled to all the benefits of this Ordinance equally and
proportionately with any and all other Bonds duly issued under
this Ordinance
(e) Authority for Issuing Replacement Bonds In accor-
dance with Section 6 of Vernon's Ann Tex Civ 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 governing body of the Issuer
or any other body or person, and the duty of the replacement of
such bonds is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authen-
ticate and deliver such Bonds in the form and manner and with
the effect, as provided in Section 6(d) of this Ordinance for
Bonds issued in conversion and exchange for other Bonds
Section 30 COVENANTS REGARDING TAX-EXEMPTION The
Issuer covenants to refrain from any action which would ad-
versely affect, and to take such action to ensure, the treat-
ment of the Bonds as obligations described in section 103 of
the Code, the interest on which is not includable ~n the "gross
income" of the holder for purposes of federal income taxation
In furtherance thereof, the Issuer covenants as follows
(a) to take any action to assure that no more than
10 percent of the proceeds of the Bonds (less amounts
deposited to a reserve fund, if any) are used for any
"private bus,ness use", as defined in section 141(b)(6) of
the Code or, if more than 10 percent of the proceeds are
40
so used, that amounts, whether or not received by the
Issuer, with respect to such private business use, do not,
under the terms of this Ordinance or any underlying
arrangement, directly or indirectly, secure or provide for
the payment of more than 10 percent of the debt service on
the Bonds, in contravention of sectlon 141(b) (2) of the
Code,
(b) to take any action to assure that in the event
that the "private business use" described in subsection
(a) hereof exceeds 5 percent of the proceeds of the Bonds
(less amounts deposited into 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 "disproportion-
ate", within the meaning of section 141(b) (3) of the Code,
to the governmental use,
(c) to take any action to assure that no amount
which is greater than the lesser of $5,000,000, or 5
percent of the proceeds of the Bonds (less amounts depos-
ited into a reserve fund, if any) is directly or indirect-
ly used to finance loans to persons, other than state or
local governmental units, in contravention of section
141(c) of the Code,
(d) to refrain from taking any action which would
otherwise result in the Bonds being treated as "private
activity bonds" within the meaning 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,
(f) to refrain from using any portion of the pro-
ceeds of the Bonds, directly or indirectly, to acquire or
to replace funds which were used, d~rectly or ~nd~rectly,
to acquire investment property (as defined in section
148(b) (2) of the Code) which produces a materIally higher
yield over the term of the Bonds, other than Investment
property acquired with --
(1) proceeds of the Bonds invested for a
reasonable temporary period of 3 years or less until
such proceeds are needed for the purpose for which
the Bonds are issued,
(2) amounts invested in a bona fide debt
service fund, within the meaning of section
i 103-13(b) (12) of the Treasury Regulations, and
41
(3) amounts deposited in any reasonably re-
quired reserve or replacement fund to the extent such
amounts do not exceed 10 percent of the proceeds of
the Bonds,
(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 otherwise
contravene the requirements of section 148 of the Code
(relating to arbitrage) and, to the extent applicable,
section 149(d) of the Code (relating to advance
refundings),
(h) to pay to the United States of America at least
once during each flve-year period (beginning on the date
of delivery of the Bonds) an amount that is at least equal
to 90 percent of the "Excess Earnings", within the meaning
of section 148(f) of the Code and to pay to the United
States of America, not later that 60 days after the Bonds
have been paid in full, 100 percent of the amount then
required to be paid as a result of Excess Earnings under
section 148(f) of the Code, and
(i) to maintain such records as will enable the
Issuer to fulfill its responsibilities under this section
and section 148 of the Code and to retain such records for
at least six years following the final payment of princi-
pal and interest on the Bonds
It is the understanding of the Issuer that the covenants
contained herein are intended to assure compliance with the
Code and any regulations or rulings promulgated by the U S
Department of the Treasury pursuant thereto In the event that
regulations or rulings are hereafter promulgated which modify,
or expand provisions of the Code, as applicable to the Bonds,
the Issuer will not be required to comply with any covenant
contained herein to the extent that such failure to comply, in
the opinion of nationally-recognized bond counsel, will not
adversely affect the exemption from federal ~ncome taxation of
interest on the Bonds under sectlon 103 of the Code In the
event that regulations or rulings are hereafter promulgated
which impose additional requirements which are applicable to
the Bonds, the Issuer agrees to comply with the additional
requirements to the extent necessary, ~n the opinion of nation-
ally-recognized bond counsel, to preserve the exemption from
federal income taxation of interest on the Bonds under section
103 of the Code
Section 31 INTEREST EARNINGS ON BOND PROCEEDS Interest
earnings derived from the investment of proceeds from the sale
42
of the Initial Bond, other than proceeds deposited in the
Interest and Sinking Fund and the Reserve Fund, shall be used
along with other available proceeds for ~mprov~ng the System,
provided that after completion of the ~mprovements if any of
such interest earnings remain on hand, such interest earnings
shall be deposited in the Interest and Sinking Fund It
further provided, however, that any interest earnings on bond
proceeds which are required to be rebated to the United States
of America pursuant to the Covenants Regarding Tax-Exemption
here~n so as to prevent the Bonds from being arbitrage bonds
shall be so rebated and not considered as interest earnings for
the purposes of this Ordinance
Sectlon 32 CUSTODY, APPROVAL, AND REGISTRATION OF BONDS,
BOND COUNSELtS OPINION, CUSIP NUMBERS, PREAMBLE, AND INSURANCE
The Mayor of the Issuer is hereby authorized to have control of
the Initial Bond issued hereunder and all necessary records and
proceedings pertaining to the Initial Bond pending lts delivery
and its investigation, examination, and approval by the Attor-
ney General of the State of Texas, and ~ts registration by the
Comptroller of Public Accounts of the State of Texas Upon
regietratlon of the Initial Bond said Comptroller of Public
Accounts (or a deputy designated in writing to act for said
Comptroller) shall manually sign the Comptroller's Reg~stratlon
Certificate on the Initial Bond, and the seal of said Comptrol-
ler shall be impressed, or placed in facsimile, on the Initial
Bond The approving legal opinion of the Issuer's Bond Counsel
and the assigned CUSIP numbers may, at the option of the
Issuer, be printed on the Initial Bond or on any Bonds ~ssued
and delivered in conversion of and exchange or replacement of
any Bond, but neither shall have any legal effect, and shall be
solely for the convenience and lnformation of the registered
owners of the Bonds The preamble to this Ordinance is hereby
adopted and made a part hereof for all purposes If ~nsurance
is obtained on any of the Bonds, the Initial Bond and all other
Bonds shall bear an appropriate legend concerning insurance as
provided by the insurer
Section 33 SALE OF INITIAL BOND The Initial Bond
hereby sold and shall be delivered to First Southwest Company
and Associates, for cash for the par value thereof and accrued
· ntereet thereon to date of delivery, plus a premlum of $66 90
It is hereby officially found, determined, and declared that
the Initial Bond has been sold at public sale to the bidder
offering the lowest interest cost, after receiving sealed bids
pursuant to an Official Notice of Sale and Bidding Instructions
and official Statement dated February 18, 1992, prepared and
distributed in connection with the sale of the Inltial Bond
Sa~d Official Notice of Sale and B~ddlng Instructions and
Official Statement, and any addenda, supplement, or amendment
43
thereto have been and are hereby approved by the Issuer, and
their use in the offer and sale of the Bonds is hereby ap-
proved 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 material respects, to the best knowledge and
belief of the city Council
Section 34 DESIGNATION AS QUALIFIED TAX-EXEMPT
OBLIGATIONS The Issuer hereby designates the Bonds as
"qualified tax-exempt obligations" as defined In Section
265(b)(3) of the Internal Revenue Code of 1986 (the "Code")
In furtherance of such designation, the Issuer represents,
covenants, and warrants the following (a) that during the
calendar year in which the Bonds are issued, the Issuer
(including any subordinate entitles) has not designated nor
will designate any such obligations, which when aggregated with
the Bonds will result in more than $10,000,000 of "qualified
tax-exempt obligations" being issued, (b) that the Issuer
reasonably anticipates that the amount of tax-exempt
obligations issued during the calendar year in which the Bonds
are issued, by the Issuer (or any subordinate entitles) will
not exceed $10,000,000, and, (c) that the Issuer will take such
action or refrain from such action as necessary, and as more
particularly set forth in Section 12, hereof, in order that the
Bonds will not be considered "private activity bonds" within
the meaning of section 141 of the Code
Section 35 DTC REGISTRATION The Bonds initially shall
be issued and delivered in such manner that no physical distri-
bution of the Bonds will be made to the public, and the Deposi-
tory Trust Company ("DTC"), New York, New York, initially will
act as depository for the Bonds DTC has represented that it
is a limited purpose trust company incorporated under the laws
of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" regis-
tered 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 Initial Bond authorized by
this Ordinance shall be delivered to and registered in the
name of the Purchaser However, it is a condition of delivery
and sale that the Purchaser, immediately after such delivery,
shall cause the Paying Agent/Registrar, as provided for In this
Ordinance, to cancel said Initial Bond and deliver in exchange
therefor a substitute Bond for each maturity of such Initial
Bond, with each such substitute Bond to be registered in the
name of CEDE & CO , the 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 Purchas-
er and/or the DTC Participants, as defined and described in the
44
Official Statement referred to and approved in Section 14
hereof (the "DTC Participants") So long as each Bond is
registered in the name of CEDE & CO , the Paying Agent/Regis-
trar shall treat and deal with DTC in all respects the same as
if it were the actual and beneficial owner thereof It is
expected that DTC will maintain a book entry system which will
identify beneficial ownership of the Bonds by DTC Participants
in integral amounts of $5,000, with transfers of ownership
being effected on the records of DTC and the DTC Partlclpants
pursuant to rules and regulations established by them, and that
the substitute Bonds initially deposited with DTC shall be
· mmobllized 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 maintaining, supervising, or
revlewlng the records of DTC or the DTC Participants, or
protecting any interests or rights of the beneficial owners of
the Bonds It shall be the duty of the Purchaser and the DTC
Participants to make all arrangements with DTC to establish
this book-entry system, the beneficial ownership of the Bonds,
and the method of paying the fees and charges of DTC The
Issuer does not represent, nor does it in any way covenant that
the initial book-entry system established with DTC will be
maintained in the future The Issuer reserves the right and
option at any time in the future, in its sole discretion, to
terminate the DTC (CEDE & CO ) book-entry only registration
requirement described above, and to permit the Bonds to be
registered in the name of any owner If the Issuer exercises
1ts right and option to terminate such requirement, it shall
give written notice of such termination to the Paying Agent/
Registrar and to DTC, and thereafter the Paying Agent/Registrar
shall, upon presentation and proper request, register any Bond
in any name as provided for in this Ordinance Notwithstand-
Ing the initial establishment of the foregoing book-entry
system with DTC, if for any reason any of the originally
delivered substitute Bonds is duly filed with the Paying
Agent/Registrar with proper request for transfer and substitu-
tion, as provided for in this Ordinance, substitute Bonds will
be duly delivered as provided in this Ordinance, and there
will be no assurance or representation that any book-entry
system will be maintained for such Bonds
Section 36 FURTHER PROCEDURES The Mayor of the Issuer,
the city Secretary Secretary of the Issuer, and all other
officers, employees, and agents of the Issuer, and each of
them, shall be and they are hereby expressly authorized,
empowered, and directed from time to t~me and at any time to do
and perform all such acts and things and to execute, acknowl-
edge, and deliver in the name and under the corporate seal and
45
on behalf of the Issuer all such instruments, whether or not
herein mentioned, as may be necessary or desirable in order to
carry out the terms and provisions of this Bond Ordinance, the
Bonds, the sale of the Bonds, and the Notice of Sale and
Official Statement, and the Director of Finance of the city
shall cause the expenses of issuance of the Bonds to be paid
from the proceeds of sale of the Initial Bond In case any
officer whose signature shall appear on any Bond shall cease to
be smch officer before the delivery of such Bond, such signa-
ture shall nevertheless be valid and sufficient for all purpos-
es the same as if such officer had remalned in office until
such delivery
46
CERTIFICATE FOR
ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF
CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 1992,
AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES
RELATING TH~ET0
THE STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON
We, the undersigned officers of said City, hereby certify
as follows
1 The City Council of said City convened in
REGULAR MEETING ON THE 3RD DAY OF MARCH, 1992,
at the Municipal Building (City Hall), and the roll was called
of the duly constituted officers and members of said City
Council, to-wit
Jennifer K Walters, City Secretary Bob Castleberry, Mayor
Mark Chew John Trent
Jane Hopkins Jim Alexander
Harold Perry Margaret Smith
and all of said persons were present, except the following
absentees Jane Hopkins ,
thus constituting a q~orum 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 SYSTEM REVENUE BONDS, SERIES 1992,
AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES
RELATING THERETO
was duly introduced for the consideration of said City Council
and duly read It was then duly moved and seconded that said
ordinance be passed, and, after due discussion, said motion,
carrying with it the passage of said Ordinance, prevailed and
carried by the following vote
AYES ~
NOES 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 this Certifi-
cate, that said Ordinance has been duly recorded In said City
Council's minutes of said Meeting, that the above and foregoing
paragraph is a true, full, and correct excerpt from said City
Council's minutes of said Meeting pertaining to the passage of
said ordinance, that the persons named in the above and fore-
going paragraph are the duly chosen, qualified, and acting
offloers and members of said city Council as Indicated therein,
and that each of the officers and members of said City Council
was duly and sufficiently notified offlclally and personally,
in advance, of the time, place, and purpose of the aforesaid
Meeting, and that said Ordinance would be introduced and
considered for passage at said Meeting, and that said Meeting
was open to the public, and public notice of the tlme, place,
and purpose of said meeting was given, all as required by
Vernon's Ann Tex civ St Article 6252-17
3 That the Mayor of said City has approved, and hereby
approves, the aforesaid Ordinance, that the Mayor and the City
Secretary of said C~ty have duly signed said Ordinance, and
that the Mayor and the City Secretary of said Clty hereby
declare that their signing of this Certificate shall constitute
the signing of the attached and following copy of said Ordi-
nance for all purposes
/~/~SIGNED AND SEALED as of the 3rd d~ o~ March, 1992 .
We, the undersigned, being respectively the C~ty Attorney
and the Bond Attorneys of the city of Denton, Texas, hereby
certify that we prepared and approved as to legality the
attached and following Ordinance prior to its passage as
aforesaid
City Attor~e~
Bond ~ttornsys
PAYING AGENT/REGISTRAR
AGREEMENT entered into as of March 24, 1992 (this "Agreement")
by and between City of Denton (the "Issuer"), and NatlonsBank of
Texas, N A , duly organized and existing under the laws of the
United States of America (the "Bank") at its office located in Fort
Worth, Texas
RECITALS OF THE ISSUER
The Issuer has duly authorized and provided for the issuance
of Utility System Revenue Bonds, Series 1992 (the "Securities") in
an aggregate principal amount of $4,500,000 to be ~ssued as
registered securities without coupons,
All things necessary to make the Securities the valid
obligations of the Issuer, in accordance with their terms, will be
taken upon the issuance and delivery thereof,
The Issuer is desirous that the Bank acts as the Paying Agent
of the Issuer in paying the principal, premium (if any) and
interest on the Securities, in accordance with the terms thereof,
and that the Bank act as Registrar for the Securities,
The Issuer has duly authorized the execution and delivery of
this Agreement, and all things necessary to make this Agreement the
valid agreement of the Issuer, in accordance with its terms, have
been done
ARTICLE ONE
APPOINTMENT OF BANK AS
PAYING AGENT/REGISTRAR
Section 1 01 Appointment
The Issuer hereby appoints the Bank to act as Paying Agent
with respect to the Securities, in paying to the holders of the
Securltles the pr~nclpal, premium (if any) and interest on all or
any of the Securities
The Issuer hereby appoints the Bank as Registrar with respect
to the Securities
Section 1 02 ~
As compensation for the Bank's services as Paying
Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees
and amounts set forth in the Annex A hereto for the f~rst year of
this Agreement and thereafter the fees and amounts set forth in the
Bank's current fee schedule then in effect for services as Paying
Agent/Registrar for municipalities, which shall be supplied to the
Issuer on or before 90 days prior to the close of the fiscal year
of the Issuer, and shall be effective upon the first day of the
following fiscal year
In addition, the Issuer agrees to reimburse the Bank upon 1ts
request for all reasonable expenses, disbursements and advances
incurred or made by the Bank in accordance with any of the
provisions hereof (including the reasonable compensation and the
expenses and disbursements of its agents and counsel)
ARTICLE TWO
DEFINITIONS
Section 2 01 ~
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires
"Acceleration Date" on any security means the date on and
after which the principal or any or all 1nstallments of Interest,
or both, are due and payable on any Security which as become
accelerated pursuant to the terms of the Security
"Bank Office" means the principal corporate trust office of
the Bank as Indicated on Page 10 The Bank will notify the Issuer
in writing of any change in location of the Bank off~ce
"Bond Resolution" means the resolution, order or ordinance of
the governing body of the Issuer pursuant to which the Securities
are issued certified by the Security or any other officer of the
Issuer and delivered to the Bank
"Fiscal Year" means the period ending September 30 of each
year
"Holder" and "Security Holder" each means a Person in whose
name a Security is registered in the Security Register
"Issuer Request" and "Issue Order" means a written request or
order signed in the name of the Issuer by the Chief F1nanclal
Officer of the Issuer, and delivered to the Bank
"Legal Holiday" means a day on which the Bank is required or
authorized to be closed
"Person" means any individual, corporation, partnership, ]olnt
venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision
of a government
"Predecessor Securities" of any particular Security means
every previous Security evidencing all or a portion of the same
obligation as that evidenced by such particular Security (and, for
the purpose of this definition, any Security registered and
delivered under Section 5 06 in lieu of a mutilated, lost,
destroyed or stolen Security shall be deemed to evidence the same
obligation as the mutilated, lost, destroyed or stolen Security)
"Redemption Date" when used with respect to any Bond to be
redeemed means the date fixed for such redemption pursuant to the
terms of the Bond Resolution
"Responsible Officer" when used with respect to the bank means
the Chairman or Vice Chairman of the Board of Directors, the
Chairman or Vice Chairman of the Secretary, any Assistant
Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any
Assistant Cashier, any Trust Officer or Assistant Trust Officer, or
any other officer of the Bank customarily performing functions
similar to those performed by any of the above-designated officers
and means, with respect to a particular corporate trust matter, any
other officer to whom such matter is referred because of his
knowledge of and famillarlty with the particular subject
"Security Register" means a register maintained by the Bank on
behalf of the Issuer providing for the registration and transfer of
Securities
"Stated Maturity" means the date specified ~n the Bond
Resolution as the fixed date on which the principal of the Security
is due and payable
Section 2 02 Other Definitions
The terms "Bank," "Issuer" and "Security" have the meanings
assigned to them in the opening paragraph of this Agreement or ~n
the Recitals of the Issuer
The term "Paying Agent/Registrar" refers to the Bank when It
is performing the functions associated with such terms in this
Agreement
ARTICLE THREE
PAYING AGENT
Section 3 01 Duties of Pavlna Aae~t
As Paying Agent, the Bank shall, provided adequate collected
funds have been provided to it for such purpose by or on behalf of
the Issuer, pay on behalf of the Issuer the principal of the
Security at its Stated Maturity, Redemptlon Date, or Acceleration
Date, to the Holder upon surrender of the Security to the Bank at
the Bank Office
As Paying Agent, the Bank shall, provided adequate collected
funds have been provided to it for such purpose by or on behalf of
the Issuer, pay on behalf of the Issuer the interest on the
Security when due, by computing the amount of interest to be pa~d
each Holder, preparing the checks and mailing the checks on the
payment date, to the Holders of the Securities (or their
Predecessor Securities) on the Record Date, addressed to their
address appearing on the Security Register
3
Section 3 02 ~
The Issuer hereby instructs the Bank to pay the principal of
and interest on the Securities at the dates specified in the order
authorizing issuance or bond resolution
ARTICLE FOUR
REGISTRAR
Section 4 01 Transfer and Excha~qe
The Bank agrees to keep and maintain for and on behalf of the
Issuer at the Bank Office books and records (herein sometimes
referred to as the "Security Register") for recording the names and
addresses of the Holders of the Securities, the transfer, exchange,
and replacement of the Securities and the payment of the principal
of and interest on the Securities to the Holders and containing
such other information as may be reasonably required by the Issuer
and subject to such reasonable regulations as the Issuer and the
Bank may prescribe The Bank is hereby appointed "Registrar" for
the purpose of registering Securities and transfers of Securities
as herein provided The Bank agrees to maintain the Security
Register while it is Registrar Ail transfers, exchanges, and
replacements of Securities shall be noted ~n the Security Register
Every Security surrendered for transfer or exchange shall be
duly endorsed or be accompanied by a written Instrument of
transfer, the signature on which has been guaranteed by an officer
of a federal or state bank or a member of the National Association
of Securities Dealers, such written instrument to be in a form
satisfactory to the Bank, duly executed by the Holder thereof or
his attorney duly authorized in writing
Registrar may request any supporting documentation if he feels
necessary to effect a re-registration, transfer or exchange of the
Securities
Section 4 02
The Issuer shall provide an adequate Inventory of Securities
certificates to facilitate transfers The Bank covenants that
will maintain Securities certificates in safekeeping and will use
reasonable care in maintaining such Securities in safekeeping,
which shall be not less than the care it maintains for debt
securities of other governments or corporations for which it serves
as registrar, or which it maintains for its own Securities
Section 4 03 Form of Security Realster
The Bank as Registrar will maintain the records of the
Security Register in accordance with the Bank's general practices
and procedures in effect from time to time The Bank shall not be
obligated to maintain such Register in any form other than those
which the Bank has currently available and currently utilizes at
the time
The Securities Register may be maintained in written form or
in any other form capable of being converted into written form
within a reasonable time
Section 4 04 List of Security Holders
The Bank will provide the Issuer at any time requested by the
Issuer, upon payment of the required fee, a copy of the information
contained in the Security Register The Issuer may also inspect
the information in the Security Register at any time the Bank is
customarily open for business, provided that reasonable time is
allowed the Bank to provide an up-to-date listing or to convert the
information into written form
Except as otherwise required by law, the Bank will not release
or disclose the content of the Security Register to any person
other than to, or at the written request of, an authorized officer
or employee of the Issuer, except upon receipt of a subpoena or
court order Upon receipt of a subpoena or court order, the Bank
w111 notify the Issuer so that the Issuer may contest the subpoena
or court order
Section 4 05 Return of Cancelled Cert~floate~
The Bank will, at such reasonable Intervals as it determines,
surrender to the Issuer, Securities certificates 1n l~eu of which
or in exchange for which other Securities have been Issued, or
which have been paid
Section 4 06 Mutilated. Destroyed. Lost or Stolen Securlt%es
The Issuer hereby instructs the Bank to deliver and issue
Securities in exchange for or in lieu of mutilated, destroyed, lost
or stolen Securities as long as the same does not result in an
overissuance
The Bank will issue and deliver a new Security in exchange for
a mutilated Security surrendered to it The Bank will issue a new
Security in lieu of a Security for which it received written
representation from the Holder that the Certificate representing
such Security is destroyed, lost or stolen, without the surrender
or production of the original Certificate The Bank will pay on
behalf of the Issuer the principal and premium, if any, of a
Security for which it receives written representation such Security
is destroyed, lost or stolen following the Stated Maturity or
Redemption of the Security, without the surrender or production of
the original Certificate
The Bank will not issue a replacement Security or pay such
replacement Security unless there is delivered to the Bank such
security or indemnity as it may require (which may be by the Bank's
blanket bond) to save both the Bank and the Issuer harmless
5
On satisfaction of the Bank and the Issuer, the Certificate
number on the Security registered wlll be cancelled with a notation
that it has been mutilated, destroyed, lost or stolen and a new
Security will be issued of the same series and of l~ke tenor and
principal amount bearing a number (according to the Security
Register) not contemporaneously outstanding
The Bank may charge the Holder the Bank's fees and expenses in
connection with issuing a new Security ~n lieu of or exchange for
a mutilated, destroyed, lost or stolen Security
The Issuer hereby accepts the Bank's current blanket bond for
lost, stolen or destroyed Certificates and any future substitute
blanket bond for lost, stolen or destroyed Certificates that the
Bank may arrange, and agrees that the coverage under any such
blanket bond is acceptable to it and meets the Issuer's
requirements as to security or indemnity The Bank need not notify
the Issuer of any changes in the security or other company givlng
such bond or the terms of any such bond The bla~Lket bond then
utilized for the purpose of lost, stolen or destroyed Certificates
by the Bank is available for Inspection by the Issuer on request
Section 4 O? Transaction Information to Issuer
The Bank will, within a reasonable time after receipt of
written request from the Issuer, furnish the Issuer Information as
to the Securities it has paid pursuant to 3 01, Securities it has
delivered upon the transfer or exchange of any Securities pursuant
to Section 4 01 and Securities it has delivered in exchange for or
in lieu of mutilated, destroyed, lost or stolen Securities pursuant
to Section 4 06
ARTICLE FIVE
THE BANK
Sectlon 5 01 ~
The Bank undertakes to perform the duties set forth herein and
agrees to use reasonable care in the performance thereof
Section 5 02 Reliance on Documents. etc
(a) The Bank may conclusively rely, as to the truth of the
statements and correctness of the opinions expressed therein,
on certificates or opinions furnished to the Bank
(b) The Bank shall not be liable for any error of 3udgment
made in good faith by a Responsible Officer, unless it shall
be proven that the Bank was negligent in ascertaining the
pertinent facts
6
(c) No provisions of this Agreement shall require the Bank to
expend or risk 1ts own funds or otherwise incur any financial
liability for performance of any of 1ts duties hereunder, or
in the exercise of any of Its rights or powers, if it shall
have reasonable grounds for believing that repayment of such
funds or adequate indemnity satisfactory to ~t against such
risks or liability is not assured to it
(d) The Bank may rely and shall be protected ~n acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, note, security, or other
paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties
Without limiting the generality of the foregoing statement,
the Bank need not examine the ownership of any Securities, but
is protected in acting upon receipt of Securities containing
an endorsement or instruction of transfer or power of transfer
which appears on its face to be signed by the Holder or an
attorney-in-fact of the Holder The Bank shall not be bound
to make any investigation into the facts or matters stated in
a resolution, certificate, statement, Instrument, opinion,
report, notice, request, direction, consent, order, bond,
note, security or other paper or document supplied by Issuer
(e) The Bank may consult with counsel, and the written advice
of such counsel or any opinion of counsel shall be full and
complete authorization and protection with respect to any
action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon
(f) The Bank may exercise any of the powers hereunder and
perform any duties hereunder either directly or by or through
agents or attorneys and the Bank
Section 5 03 Recitals of Issuer
The recitals contained herein and in the Securities shall be
taken as the statements of the Issuer, and the Bank assumes no
responsibility for their correctness
The Bank shall in no event be liable to the Issuer, any Holder
or Holders of any Security or any other Person for any amount due
on any Security from its own funds
Section 5 04 May Hold Securities
The Bank, in its individual or any other capacity, may become
the owner of pledgee of Securities and may otherwise deal with the
Issuer with the same rights it would have if ~t were not the Paying
Agent/Registrar, or any other agent
Section 5 05 Moneys Held by Bank
Money held by the Bank hereunder need not be segregated from
any other funds provided appropriate accounts are maintained
The Bank shall be under no liability for Interest on any money
received by it hereunder
The Bank shall deposit any moneys received from the Issuer
Into a trust account to be held in a fiduciary capacity for the
payment of the Securities, with such moneys in the account that
exceed the deposit insurance available to the Issuer by the Federal
Deposit Insurance Corporation, to be fully collaterallzed with
securities or obligations that are eligible under the laws of the
State of Texas to secure and be pledged as collateral for trust
accounts until the principal and interest on such securities have
been presented for payment and paid to the owner thereof Payments
made from such trust account shall be made by check drawn on such
trust account unless the owner of such Securities shall, at its own
expense and risk, request such other medium of payment
Subject to the Unclaimed Property Law of the State of Texas,
any money deposited with the Bank for the payment of the principal,
premium (if any), or interest on any Security and remaining
unclaimed for three years after the final maturity of the Security
has become due and payable will be paid by the Bank to the Issuer
if the Issuer so elects, and the Holder of such Security shall
hereafter look only to the Issuer for payment thereof, and all
liability of the Bank with respect to such moneys shall thereupon
cease If the Issuer does not elect, the Bank is directed to
report and dispose of the funds in compliance with Title 6 of the
Texas Property Code, as amended
A~y money deposited with the Bank for the payment of the
principal, premium (if any) or interest on any Security and
remaining unclaimed for four years after final maturity of the
Security has become due and payable will be paid by the Bank to the
Issuer, and the Holder of such Security shall thereafter look only
to the Issuer for payment thereof, and all liability of the Bank
with respect to such moneys shall thereupon cease, provided that
the bank shall comply with Title 6, Tax Property Code, where
applicable
Section 5 06 Indemnification
The Issuer agrees to indemnify the Bank for and hold it
harmless against, any loss, liability or expense Incurred without
negligence or bad faith on its part, arising out of or In
connection with its acceptance or administration of its duties
hereunder, including the cost and expenses (including its counsel
fees) or defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties under this Agreement, provided that such indemnification
shall be to the extent permitted by law
8
Section 5 07 ~
The Issuer and the Bank agree that the Bank may seek
adjudication of any adverse claim, demands or controversy over 1ts
persons as well as funds on deposit, in either the District Court
of Tarrant County, Texas, or the United States Federal District
Court for the Northern District of Texas, waive personal service of
any process, and agree that service of process by certified or
registered mall, return receipt requested, to the address set forth
· n Section 6 03 of this Agreement shall constitute adequate
service The Issuer and the Bank further agree that the Bank has
the right to file a Bill of Interpleader in any court of competent
jurisdiction to determine the rights of any Person claiming any
interest herein
ARTICLE SIX
MISCELLANEOUS PROVISIONS
Section 6 01 Amendment
This Agreement may be amended only by an agreement in writing
signed by both of the parties hereof
Section 6 02 Ass~unment
This Agreement may not be assigned by either party without the
prior written consent of the other
Section 6 03 Notices
Any request, demand, authorization, direction, notice,
consent, waiver or other document provided or permitted hereby to
be given or furnished to the Issuer or the Bank shall be mailed or
delivered to the Issuer or the Bank, respectively, at the addresses
shown on Page 11
Section 6 04 Effect of Headings
The Article and Section headings herein are for convenience
only and shall not effect the construction hereof
Section 6 05 Successors and Assiqn~
All covenants and agreements herein by the Issuer shall bind
· ts successors and assigns, whether so expressed or not
Section 6 06 Separability
In case any provision herein shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby
Section 6 07 Benefits of AGreement
Nothing herein, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, any
benefit or any legal or equitable right, remedy or clalm hereunder
Section 6 08 ~
This Agreement and the Bond Resolution constItute the entire
agreement between the parties hereto relative to the Bank acting as
Paying Agent/Registrar and if any conflict exists between this
Agreement and the Bond Resolution, the Bond Resolution shall
govern
Section 6 09 ~
This Agreement may be executed in any number of counterparts,
each which shall be deemed an original and all of which constitute
one and the same Agreement
Section 6 10 ~
This Agreement will terminate on the date of final payment by
the Bank issuing its checks for the final payment of principal and
interest of the Securities
This Agreement may be earlier terminated upon 60 days written
notice by either party
The provisions of Section i 02 and Article Five shall survive
and remain in full force and effect following the termination of
this Agreement
Section 6 11 ~
This Agreement shall be construed in accordance with and
governed by the laws of the State of Texas
10
IN WITNESS WHEREOF, the Dartles hereto have executed this
Agreement as of the day and year first above written
~ ExTeic~leVe D1 rector of Finance
Address,
215 E McKlnney
Mailing Address
Denton, lx 76201
City, State, Zip
Attn Executive Director of F~nance
ATTEST ~ .................. ' ......J
Paying Agent/Registrar
NationsBank of Texas, N A
Title Vice President
(SEAL)
Address 500 West 7th St , 11th Fi
~ ~ Fort Worth, Texas 76113
Attn Corp Trust Dept
Titl
ll
NafionsBank
City of Denton, Texas
utlllty Syst~ Revenue Bonds, Series 1992
$4,500,000
Annual Fee (Book-Entry-Only) $200 00
Includes the followmng servmces
- i~au~strat~on Fee
- A~ceptance Fee
- Annual Renewal Fee
- Fee for Payment of PrLnc~pal
- Fee for Payment of Interest
- Fee for ReducLng Bonds
- Correspondence
- Other Paying Agent/Reglsrar Special Services
Member FDIC