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1988-127ORDINANCE NO 88-0 ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 1988, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RE 109-THKEKT9 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, and City of Denton Utility System Revenue Refunding Bonds, Series 1987, dated January 1, 1987, and WHEREAS, the City Council of the City of Denton deems Bonds hereinafter d scr bed,e it necessary and additional Utility dSystem e Revenue authorize, and WHEREAS, the bonds hereinafter authorized are to be issued, sold, and delivered pursuant to Vernon's Ann Tex Civ 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 1 AMOUNT AND PURPOSE OF THE BONDS The bond or bonds of the City of Denton, Texas (the "Issuer") are hereby authorized amount of $3,500,000 FOR THE PURPOSE OF OBTAINING MONEY n pal 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 Section 2 DESIGNATION OF THE BONDS Each bond issued pursuant to this Ordinance shall be designated "CITY OF DENTON UTILITY SYSTEM REVENUE BOND, SERIES 198811, and initially there shall be issued, sold, and delivered hereunder leifully registered bond, without interest coupons, payable installments 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 AUGUST 1, 1988, in the denomination and aggregate principal amount of $3,500,000, numbered R-1, payable in annual installments of principal to the initial registered owner RAUSCHERPIERCE eREFSNES, INC , 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 and Initial t amounts l,a respectively, stated P ntthel FORM OF in the principal INITIAL BOND set forth in this Ordinance (b) The Initial Bond (1) 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, (iii) 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 manner 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 principals of the p InitialoBond,e and osaidfinthe terestt shall be of he manne and IN T AL BOND set forth in d this he the rates daateslestated in tthe FORMrOFprovided 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 FORT4 OF INITIAL_B( NN $3,500,000 NO R-1 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 1988 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 RAUSCHER PIERCE REFSNES, INC , ( n assignees thi"s Bond or teredny or to the reg rti portions assignee or portion or p owner") the aggregate principal amount of $3,500,000 (THREE MILLION FIVE HUNDRED THOUSAND DOLLARS) respective ayable oncDECEMBER in annual installments of principal 1 in each of the years, amounts, as set forth in the following schedule PRINCIPAL PRINCIPAL YEAR AMOUNT YEAR AMOUNT 1989 $175,000 1999 $175,000 000 175 1990 175,000 2000 2001 , 175,000 1991 175,000 000 175 2002 175,000 1992 , 000 175 2003 175,000 1993 , 000 175 2004 175,000 1994 1995 , 175,000 2005 175,000 000 175 1996 175,000 2006 2007 , 175,000 1997 175,000 000 175 2008 175,000 1998 , and to pay interest, from the date of this Bond hereinafter tallment c stated, on the balance of each time to time such remaining ins rates npai at he respectivel y , from y, as follows 3 9 75% per annum on the above installment due in 1989 9 75% per annum on the above installment due in 1990 9 75% per annum on the above installment due in 1991 9 75% per annum on the above installment due in 1992 9 75% per annum on the above installment due in 1993 9 75% per annum on the above installment due in 1994 9 75% per annum on the above installment due in 1995 8 125% per annum on the above installment due in 1996 6 90% per annum on the above installment due in 1997 7 00% per annum on the above installment due in 1998 7 00% per annum on the above installment due in 1999 7 00% per annum on the above installment due in 2000 7 00% per annum on the above installment due in 2001 7 00% per annum on the above installment due in 2002 7 00% per annum on the above installment due in 2003 7 00% per annum on the above installment due in 2004 7 00% per annum on the above installment due in 2005 7 00% per annum on the above installment due in 2006 6 75% per annum on the above installment due in 2007 6 75% per annum on the above installment due in 2008 with said interest being payable on DECEMBER 1, 1988, and semi- annually on each JUNE 1 and DECEMBER 1 thereafter while this Bond or any interest shall be calculated on he outstanding of and a unpaid 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 he services of TEXASthe AMERICAN BANK/FORT WORTH, N A , FORT WORTH, princi- pal Agent/Registrar" for this Bond Payment of all p pal 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 the Pa ntcheck draft, on, and payable such date, drawn by Paying g Age/Registrar solely from, funds of the Issuer required by the ordinance to authorizing the issuance of this Bond (the "Bo for d h purpose be on deposit with the Paying Agent/Registrar as hereinafter provided, and such check or draft shall f rst sent by the Paying Agent/Registrar by United States mail, class postage prepaid, on each such principal and/or interest , at payment date, to the registered owner rthe 15th day dof ethe of the registered owner, as it appeared on month next preceding each such date (the "Record Date") o as he Registration Books kept by the Paying gent/Reg _ regis or covenants before each principal tered owner of thisd Bond The Issuer and/or interest payment date for this Bond it will make 4 available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" amounts required to maintained provider for the payment, i ~ndimmediately 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- the a City awherelthe~ est a on this Bond shall be a day on which banking institutions aSunday, or 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 CONSISTS CITY'S COMBINED DENTON UTILITY SYSTEM, WHICH WATERWORKS, SEWER,, AND ELECTRIC LIGHT AND POWER SYSTEM ON DECEMBER 1, 1998, or on any interest payment date 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 or if in r deemed shall source, available a a whole, to be prepaid and, be selected and designated by the Issuer (provided that a portion of this Bond may be redeemed only in an integral multiple of $5,000), at the prepayment or redemption price of the par or principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice of such prepayment or such the redemption shall be mailed by the Pdateg fixed Agent/Rany egistrar registered owner hereof By the prepayment or redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepayment or redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption If such written notice of prepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated prepaid or redeemed to its scheduled u its date, and shall not bear interest after the date fixed for 5 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 nprovided record for payment The Paying Agent/Registrar shall in the Registration Books all such prepayments or redemptions of principal of this Bond or any portion hereof THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books 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 for such transfer, Bond Ordinance Among other requirements 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 assignmenn or the initial registered owner of this Bond, or any p to the portions hereof in any integral multiple of $5,000, assignee or assignees in whose name or names this Bond or any such portion or portions hereof or are to is transferr and registered Any instrument or istrar may be used to satisfactory to the Paying Agent/Reg evidence the assignment of this Bond or any such portion or portions hereof by the initial registered owner hereof A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of this n assigned and owner, shall be delivered by transferred Payinge Agent/Registrar in conversion of but exchange thehis Boand or any portion or portions hereof, solely in The d_ manner as provided in the next paragraph onion hereof conve sion and exchange of this Bond or any p registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar and absolute discharge hereof for all purposes, including payment liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary AS PROVIDED above and in the Bond ordinance, this Bond, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggre- bonds, assig without gate principal amount to the registered duly interest coupons, payable 6 n hereof designated in writing by the initial registered this or to the initial registered owner as to any porti registered owner, in any denomination transferred sdenom nations inlanyl integral multiple of $5,000 (subject to the requirement here- inafter 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- ing to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being ins rate exchanged, nshall installment of principal orportionc and borne by such hereof Such maturity on the same dates l and for the same epricesoaspther to corresponding installment of principal of this Bond or portion hereof for which they are being exchanged No such bond shall be payable in installments, but shall have only one stated principal maturity date AS PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond 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 taxes ouch transfer, conversion, and exchange shall pay any governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or m portion thereof called for thin 45 days prepayment or itsn prepaymnt for n prior r to to maturity, within redemption date IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance al fiedhat it promptly will appoint a competent nd cause legally ,ten notice stitute therefor, and promptly will thereof to be mailed to the registered owner of this Bond 7 IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, sold, and delivered, that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, x s and been done in accordance with this Bond isaspecial obligation of the Isuersecured 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 electric light and power entire combined waterworks, sewer, and 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 THE REGISTERED OWNER hereof shall never have the right to demand payment of this Bond or the interest hereon out of any y source funds raised e raised ytaxation d Ordinance whatsoever other than specified in 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 City Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed on this Bond, and has caused this Bond to be dated AUGUST 1, 1988 City Secretary, city of Denton, Texas Mayor, City of Denton, Texas (CITY SEAL) 8 ORS. OF REGISTRATION CERTIFICATE OF THE ^F PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certify that trovd Bond has been b Attorney 1Generalcerti- fied as to validity, and app by the the State of Texas Comptroller of ,Public h Account of the n State ofeTexasred by 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 Reaistra+ion and Transfer (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of TEXAS AMERICAN BANK/FORT WORTH, 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 regulations rasa the Issuer egandr Paying Agent/Registrar nay e 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 registered t payments with respect to the Bonds shall be mailed, ashereinh 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 tc 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 (1) the assignment of the Bond, or any portion thereof in any integral 9 multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any such 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 All Bonds issued and de- livered in conversion of and exchange for the Initial Bond shall be any ub to t to denominations of any requirement hereinafter integral multiple o j stated that at each 00 each substitute Bond shall have a single stated principal maturity date), shall be in the form prescribed in the FORM 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 and eto the Pain g Agent/Registrar for cancellation, exchange for any portion of the Initial Bond shall have a le siningle stated installment , and principal maturity suc Bodate, and nd shall shave ao principal maturity date corresponding to the due date of the installment is being iexchanged, and each such Bond which shall ebear sinterest oat the single rate applicable to and borne by such installment of asis being signed and trans- principal o portion of he In tial Bond is it If only a portion 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 form 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/ Registrar's standard or customary fees and charges for making such transfer and delivery of a substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes 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 (i) during the period commencing with the close of business on any Record Date and ending with the opening of burin ors on the next following principal or interesPo Y thereof called for with respect to any Bond or any portion redemption prior to maturity, within 45 days prior to its redemption date (b) ~•-•~~rahin 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, a if any, of, or on account of, the principal of, premium, interest on any such Bond shall be made only to such registered owner All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid (c) P4vment o Bonds and Interest The Issuer hereby further appoints the Paying Agent/Registrar to act as the to act paying itshagentntop convert and exchange or the Bondsg agent 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 Ordinance and of 1 Bonds',7e as provided in exchanges of the Bonds, and replacements of all (d) 11 1- A, - cation Each Bond issued and delivered pursuant to this ordinance, to the extent of the unpaid or uurede med inciof 1 balance or principal amount thereof, may, p such Bond at the principal corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed b or t its registered or their duly authorized assignee attoreys sornees thereof, 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 rof $5,000 or any integral equirement hereinafter stated multiple each5substituteeBondo the 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 maturity the same date, denomination ordembearing inationsnofrany integral a 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 Bond uwhich it is being ex hanged at Eathe same rate ch s bstitute a Bondeshall date and bear interest for bear a letter and/or number to distinguish it from each other Bond The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided 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 first scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each substitute Bond so such he date inter- est from the interest payment date next preceding on 12 which such substitute Bond was so authenticated, unless such inuwhich ocasefite Bond authenticated interest payment date, Date the next following ng shall bear interest from such next following interest payment date, provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it Bondssbeing exchanged is due but has not been paid, bear interest from the date to which such interest has been nopur t be nt be,~danddelivered paoid in full this Ordinance E is INITIAL BOND not required to issued authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed a certificate, in the form substantially as follows "PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in this Bond, and that this Bond has been issued in conversion of ands exchange for or replacement of a bond, bonds, or a portion b the bond or bonds of an issue which originally was approved by Attorney omptrollernofaPublic Accounts of the State ofgTexased by the C TEXAS AMERICAN BANK/FORT WORTH, 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 particularly Section 6 thereof, the Civ. St Art 717k-6, and p 13 duty of conv exchane or of Bonds as aforesaid is ehereby si posed upon the Paying replacementAgent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which originally was issued pursuant to this Ordinance, ap- proved by the Attorney General, and registered by the Comptrol- ler rol- ler of Public Accounts The Issuer shall pay t Paying Agent/Registrar's standard or customary fees and Bond aore any for transferring, converting, and exchanging any portion thereof, but the one requesting taxes such governmental conversion, and exchange shall pay any 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 an he period replacement commenci g with or any portion thereof (i) during 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 port r 5i days thereof called for redemption prior to maturity, within prior to its redemption date (e) rn 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, (ii) may and shall be redeemed prior to their scheduled mamaturities, andlex- may be transferred and assigned, (iv) Y be 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) o ent of ~ and Charges 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 prinhe due, and (ii) pay Pfeesfanddchargessof othe hPay ng 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) Subst t»te paying nrt4ntiueaiatrar The Issuer covenants with the registered owners of the Bonds that at all 14 times while the Bonds are bank tthe issuer will rust company, financial competent and legally qualified 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 wilb one entity The Issuer reserves the right to, and may, at its option, the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later such prior notice the In ethe principal pat many than after days time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or other- wise cease to act as such, the Issuer covenants that bankrotrust it will appoint a competent and legally qualified company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance Upon previous Paying Agentchange- in the Paying Agent/Registrar, the 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 will causea written notice thereof to be sent by the new Paying Agent/Regi- strar to each registered owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall e the address of the new Paying Agent/Registrar By accepting the position aperforming to have a agreed such, to a the Paying this trar shall be deemed is this ordinance shall be delivered to each Paying certified gent/Registar 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 or insertions as are such ted appropriate or i required by this Ordinance permit rOR?R OF SUBSTITUTE BOND NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON UTILITY TEM REVENUE BOND SERIES 1988 15 MATi1RTTY DATE CUSIP NO INTEREST RATE ON THE MATURITY DATE specified above the CT OF Eca ON, in Denton County, Texas (the "Issuer"), being a 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 AUGUST 1, 1988, to the maturi- ty 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, 1988, and semiannually on each JUNE 1 and DECEMBER 1 thereafter, except that if the date of authentication of this Bond is later than NOVEMBER 15, 1988, 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 (herein- after defined) but on or before the next following interest payment date, in which case such p ntecipa amount d all beaid interest from such next following irest payment interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or the upon the date its redemption prior to maturity, principal corporate FORT trust office of TEXAS AMERICAN BANK/FORT RQ R stray"Afor this WORTH, TEXAS, which is the "Paying Ag / g 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 or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and nayable solely from, the funds issuance t of the Issuer required y Bonds (the "B nde ordi ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided, and such check or draft shall be sent by the Paying Agent/Registrar by United prepaid, the c address interest States mail, first-class hereof, e at each payment date, to the registered of the registered owner, as it appeared on the 15th day of the "Record Date) month next g nt/Registr'ar,o as he by such the a Paying e Agent/Registrar" Registration Books kept each 16 hereinafter described Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner at the principal 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 date for interest Bond that o before trest principal payment payment date, and accrued in Bond it will make available to the Paying Agent/Registrar, from the "Interest d to Sking Fund" for t the by the provide created payment, in immediately the amounts require 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 AUGUST 1, 1988, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of 5EXTENSIONS OF ETHERCITY OF DE TON OBTAINING SYSTEM, WHICH TS AND CONSISTS OF THE CITY'S COMBINED WATERWORKS, SEWER, AND ELECTRIC LIGHT AND POWER SYSTEM ON DECEMBER 1, 1998, or on any interest payment date thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with s nin part, and, if in part, the particular Bonds, source, or as a portio whole, or thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed only on price of an principal multiple amount $ thereof, plus the daccrue i the par o nterest 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 amongp securities , dealers in The City of New York, 17 (including, but not limited to, The Bond Buyer and The Wall Street Journal), or in the State of Texas (including, but not limited to, The Texas Bond Reporter) Such notice also shall be sent by the Paying Agent/Registrar by United States mail, first-class postage s any esuch redemption, to the registered owner t not less than 30 days prior to date fixed f 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 redemption oflanytBond, effectiveness it is hereby specifi ally provided that the publication of such notice as required above shall be the only notice actually required in connection with or as a prerequisite dto the ate fixed for redemption any osuchyredBonds or emptionpduelprovision of By BY for the payment shall be made with the Paying Agent/Registrar 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 payment isrmade t ail as pr via d above, thdue e p ndssornportionsh 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, i 00,at the denomination written denominations request of the integed l multiple of $5 owner, owner, and in aggregate principal amount equal to the unre- deemed portion thereof, will be issued to the registered owner cancellation, he expense of upon the ~,r all d as provided f in the Bond Ordinance the Issuer 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 requirements n i for such forth assignment andd Ordinance Among other 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 18 or names this Bond or any such portion or portions hereof is or are to be transferred and registered The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner or its duly authorized attorney or 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 porti on of this Bond, may be delivered ttransferoof only aregistered and this h Bond, all in the Agent/Registrarand manner as proved d incthegnextr paragraph hereof for the conversion and exchange of other Bonds The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such 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 principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof to called its redemption date prior Theoregistered owner nof5 hiss Bond prior maturity, shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of $5,000 As provided in the Bond ordinance, this Bond, or any unredeemed portion hereof, may, at the reest of the signees~hereof, be converted dinto eandrexthe changed gfor ar like aggregate principal ablettofthelappropriatee egi tered Towner, interest coupons, , p payY assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any multiple of denomination or denominations in any integral registered $5,000 as requested in writing by the appropriate owner, assignee, or assignees, as the case may be, upon sur- render of this Bond to the Paying Agent/Registrar 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 fortrans- ferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and 19 exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (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 fceases or the Bonds as changed by the Issuer, resigns, such, the Issuer has covenanted in the Bond Ordinance that it 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 e Bond has been duly and livered, that all acts,~a conditions, and authorized, things issued, required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law, that this Bond is a special obligation of the Issuer, secured by and payable, together with other bonds, from a first lien on and pledge of the "Pledged Revenues", which include initially the "Net Revenues of the System", as such terms are defined in the Bond Ordinance, with the System consisting of the City's entire combined waterworks, sewer, and electric light and power system THE ISSUER has reserved the right, subject to the restric- tion stated in the Bond Ordinance, to issue Additional Bonds and pledge series ofe payable from secured on a parity with this Bond and "Pledged Revenues" which it is a part Bondhereof THE Gent of thisOWNER the interest hereon out of any demand pay m 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 agrees of this the Issuer, and records and t governing body of Bond and the Bond that the terms and provisions 20 Ordinance constitute a contract between each registered owner hereof and the issuer IN WITNESS WHEREOF, the issuer has caused this Bond to be of the the signed countersigned withltheifacsimile of signature the r of the Cityer secretary Issuer to be duly impressed, or placed in facsimile, l the on this Bond (facsi " i„natiiral City secretary, City of Denton, Texas (farsimiip sianature) mayor, City of Denton, Texas (CITY SEAL) ORS OF PAIING 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 registered by the Attorney ller General of a Public Accounts of the State of Texas comptroller TEXAS AMERICAN BANK/FORT WORTH, N A , FORT WORTH, TEXAS Paying Agent/Registrar Dated By Authorized Representative ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to / / (Ass gnee's Soc al (print or typewrite Assignees name and security or Taxpayer address, including zip code) Identification Number 21 and hereby irrevocably constitutes and appoints attorney zv -a.- - Paying Agent/Registrar's Reg substitution in the premises 0 on tion Books with full power of Dated• Signature Guaranteed NOTICE The signature must be guaranteed by a member of the New York Stock Exchange or a commercial bank or trust company Registered Owner NOTICE The signature above must correspond with the name of the Registered owner ap- pearing on the face of this Bond Section 8 DEFINITIONS As used in this ordinance the meanings set h below, unless following terms shall have hs otherwise the text hereof specifically indicate (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 and is alldothere Bond alas def ined. and l substitute bonds described xchang d therefor of and 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 or)inathe ncots passed ding City f, 1983 (the "Series 1983 Bonds"), 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 out- September 25, 1984 (the Series 1984-A Bonds), (iv) the standing City of Denton Utility System Revenue Refunding Bonds, ds on January 27, 1987 Series 1987, authorized by ordinance passed (the "Series 1987 Bonds"), and (v) the 22 (e) The term "Additional Bonds" shall mean the additional e inrthe future, innaccordance hwith tSection 25 ofethis hordinance (f) The term "System" shall mean (1) the City's entire existing waterworks and sewer system and the City's entire existing electric light and power system, together with all future extensions, improvements, enlargements, and additions thereto, and all replacements thereof, and (2) any other related facilities, all or any part of the revenues or incomin from which do, in the future, at the option of the City, and accordance with 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 wwithSystem, and proc eds ifromrthecissuancerof "Special Facilitiesy constructed b the 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 with 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- vided in the ordinance or ordinances authorizing the issuance of such "Special Facilities Bonds" (g) The terms "Gross Revenues of the System" and "Gross Revenues" shall mean all revenues and income of every nature derived or received by the City from the operation and owner- shi of the Stem, any Fund created from this or d posit of including the 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 salaries, labor, that necessary only such render repairs effi- materials, ia providand ed, extensions cient service, 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 in operation and render to meet some inhabitants thereof, or such as adequate migt service be necessary City and the suc accident or be would dducted otheriise impair the condition , shall which determining "Nets Revenues" Bonds 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 pcnan and shall maintenance constitute of or be regarded as expenses of operatio 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 City on a regular periodic basis, including, 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 ti tthepfuture may, at the option of the City, be pledged Parity Bonds or Additional Bonds (j) The term "year" or "fiscal year" shall mean the fiscal year used by the City in connection with the operation of the System (k) The term "Government Obligations" shall mean direct obligations of the United States of America, including obliga- tions the principal of and interest on which are uncondition- ally guaranteed by the United States of America, which may be Series, and which may be such as United Government States in book-entry nty form and Local obligations 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- tions 7 through 27 of h aforesaid ordinance 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 are and shall be lien i.ene on and pledge of thesPledged bRevenues, and them Pledgedt 24 Revenues are further pledged to the establishment and mainte- nancethe createdf by any nordinance dauthorizing dthen issuance, and of any s Additional Bonds The Parity Bonds and any Additional Bonds are not and will not be secured by or payable from mortgage or deed of trust on any real, personal, or mixed properties constituting the System Section by created and there shall b is hereby 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") ordi All Gross Revenues shall otherwisetprovia d in this O di- nance upon receipt, unless 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, t shall retain 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 principal oSINKIUND f and For the sole Section 11 INTEREST all Parity purpose of paying the Bonds and Additional Bonds, there heretofore has been and is her theebooks of created the City, shall be d fors separ to a ndaained part on 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 is hereby created a initially at Texas American Bank/Fort Worths Ne A , Fort Worth ,l 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 Bonds and entitled the "City of sDenton Utility OSystemp d to be 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 he be apart from all entitled the "City of Denton , a accounted sparate separate fund to and City 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 is hereby created and there shall be established and maintained on the books of the City, and accounted for separate and apart from all other funds of the City, a separate fund to be entitled the "City of Denton Utility System Emergency Fund" (the "Emergency Fund") The Emergency Fund shall be used for the purpose of paying 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 available Fund are Emergency simultaneously with the delivery of the Series 1983Bonds Ftod the initial purchasers thereof from lawfully available funds of the City the amount of $250,000 All investment interest income from the Emergency Fund shall be transferred to the System Fund as received Section 15 DEPOSITS OF PLEDGED REVENUES Pledged Revenues shall be credited to or deposited in the Interest and Sinking Fund, the Reserve Fund, the Extension and Improvement Fund, and other funds when and as required by this ordinance and any ordinance authorizing the issuance of Additional Bonds Section 16 INVESTMENTS Money in any Fund established pursuant to this ordinance or any ordinance authorizing the issuance of Additional Bonds, may, at the option of the City, be placed in time deposits or certificates of deposit secured by obligations of the type hereinafter described, or be in- vested in Government obligations (as defined in Section 8 hereof) or obligations guaranteed or insured by the United States of America, which, in the opinion of the Attorney obbacked by its ligations, or full faith invested in and l of the represent e its States, general are credit or to, the United States of obligations of , instrumentalities indebted- evidences of America, including, ness issued, insured, or guaranteed by such governmental agencies as the Federal Land Banks, Federal Intermediate Credit 26 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 Fi y provided such manner as all wisuch ll, an thes and investments shall be made i opinion of the City, permit the money required to be expended from any Fund to be available at the proper time or times as expected to be needed Such investments (except United States Treasury Obligations--State and Local Government Series 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- nection with the Parity Bonds or Bonds consistent issuance with the ordinances, respectively, authorizing their 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. T Revenues City the nts in System e Fund the dwhenianda as r equeired by from Pledged Rev this ordinance and any ordinance authorizing any Additional Bonds, nu owing deposits irrevocable prioriies, r spectively manner and with the following in First, the the interest Sinking by k this Fund, 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, t n when as required bynSection 21eof this Fund, and Ordinance section 19 INTEREST AND SINKING FUND REQUIREMENTS The city shall cause to be deposited to the credit of the rInterest eceived and Sinking Fund the accrued interest and any premium 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 interest 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 principal amount thereof plus accrued interest thereon to the date of purchase, Parity Bonds which would be subject to being chosen for mandatory nt shall i cancel any Parity Bonds som redemption date The Paying Agent Section 20 RESERVE FUND REQUIREMENTS There is now on hand in the Reserve Fund an amount of money and Government avin excess of erage annual $3,000,000 aandw interestich is Obl the is qual to which llleasigations requirements of the Series 1983 Bonds, the Series 1984 Bonds, the Series 1984-A Bonds, and the Series 1987 Bonds (the "Required Reserve Amount"), except and provided that following the issuance and delivery of the Initial Bond (Series 1988) 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 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 ll deposited thet sales ofcredit the Initial Reserve Fund, from the proceeds Bond, money sufficient to cause the Reserve Fund to contain an aggregate amount of money and investments equal to the average requirement of all then annual principal and in the sthen Requireds Reserve Am unt)t standing Parity Bonds After the delivery of any future Additional Bonds the City shall cause the Reserve Fund to be increased, if and to the extent necessary, so that such Fund will contain an amount of money and investments equal to the Required Reserve Amount Any increase in the Required Reserve Amount may be funded from Pledged Revenues, or from proceeds from the sale of any Addi- tional Bonds, or any other available source or combination of sources All or any part of the Required Reserve Amount not funded initially and immediately after the delivery of any installment or issue of Additional Bonds shall be funded, within not more than five years from the date of such delivery, 28 by deposits of Pledged Revenues in approximately equal monthly installments on or before the 25th day of each month Princi- pal amounts of the Parity Bonds and any aAdditional el mandatory Bonds which must be redeemed pursuant to any applicable 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, Reserve Fund at any time contains less than but when and if the the Required Reserve Amount, then the City shall transfer from Pledged Revenues in the System Fund, and deposit to the credit of the Reserve F I monthly of the Required dayAmountof each month, a sum equal to 1/0 h 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 s of the red AmoC~ity becaudepositedse all the credit of the Int re tRandrve 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 i Fund, an amount equal "Adjusted Gross Revenues of the System", which t term isf 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 prodductn of electric energy by the City and/or (ii) 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 All investment interest income from the Extension and Improvement Fund shall be retained in and remain a part of such Fund Section 22 DEFICIENCIES, EXCESS PLEDGED REVENUES (a) If on any occasion there shall not be sufficient Pledged Revenues to make the required deposits into the Interest and Sinking Fund or the Reserve Fund, such deficiency shall be made 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 issuance of Additional Bonds, any surplus Pledged Revenues may be used by the City for any lawful purpose Section 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS On or before December 1, 1988, and semiannually on or before each June 1 and December 1 thereafter while any of the Parity the Bonds or Additional Bonds are outstanding and unpaid oout of ity shall make available to the Paying Agents out of the Reserve Interest and Sinking Fund, or if necessary, of such dates, the Fund, money sufficient to pay, o principal of and interest on the Parity Bonds and Additional Bonds as the same matures and comes due, or to redeem the A the upon opprior to tion of the rCity, ei t Parity Bon redemption ot or aatBonds mandatory shall either deliver direction of the City the Paying Agents 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 this Ordinance when payment of the principal of, redemption premium, if any, on Bond or Bond, p inter thehduerdate thereofA(wh ether such duel date beeby reasonnofo maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms the proper giving of required notice having giving of any redemp- thereof or provision for the tion been made), or (ii) shall have been provided by irrevocably depositing with or making available to a Paying Agent therefor, in trust and irrevocably set aside exclusively for such 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 insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of such Paying Agent pertaining to the Parity Bonds and Addi- tional Bonds with respect to which thereof provided for ate shall have been paid or the payment satisfaction of such paying agent At such time as a Bond or Additional Bond shall be deemed to be paid hereunder, as 30 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, which such bet turn de overo to the City moredepositednaso directede by the 1 City Section 25 ADDITIONAL BONDS (a) The City shall have the right and power at any time and from time to time, and in I and one or series or additionale parity revenue issues, (herein called issue "Additdionaler 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, respects the Parity equally land n any ratably other outstanding Additinal Bonds B (b) The principal of all Additional Bonds must be sched- ears in which uled d or mature on December 1 of the such principal is scheduled to be paid or mature Section 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS with this Additional Ordinance, and d no sinstallment,16Series, iorissueof accordance 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 h Reserve Fund each contains Interest and Sinking to be therein rgquired (b) An independent certified public accountant, or in- dependent firm of certified public accountants, acting by and or n its signs opinion, ~r during certifi- through to the effect that, public in his accountant, cate either 31 the next preceding fiscal year, or any twelve consecutive month calendar period out of t l precedingthe month in which the ordinance e authorizing athey issuance of the then proposed Additional tBondsansapassed, the Pledged Revenues were at least (1) to the average annual principal and interest requirements, and (ii) 1 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 equal to the Revenues for the entire period, plus (ii) a sum aggregate amount by which the actual billings to customers of in effect increased system d rats n or re period would charges had been have been if such increase during the entire period (c) Provision shall be made in the ordinance authorizing to the Required issuance their for increasing Section Reserve Fund 20 hereof Reserve Amount as required b (e) All calculations of average annual principal and interest requirements of any bonds made in connection with the issuance of any then proposed Additional Bonds shall be made as of the date of such Additional Bonds, and also in making calculations for such purpose, and for any other purpose under this ordinance, principal amounts of any bonds which e t be mandatory redeemed prior to maturity pursuant to any app 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) Performance 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 it will 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 Addi- tional Bonds may require the City, its officials, and em- ployees, to carry out, respect, or enforce the covenants and the issuanceoof Additional Bonds, byrallylegal nandeequitable imeans, including specifically, but without limitation, the use and of competent filing of mandamus proceedings, in any officials, and employees jurisdiction, against the City, its (b) CitvIs Leaa~ Authority The City is a duly created and existing home is 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) Is The City has or will obtain lawful title to constituting the lands, buildings, structures, and facilities the System, that it warrants that it will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Parity Bonds and Additional Bonds, against the Pledged, Revenues that tot claims and qudemands of all alified to pledge persons lawfully qu the prescribed herein, and has s lawand fully Additional exercis d n such rights manner (d) Liens The City will from time to time and abefore ssess- the same become delinquent pay and discharge which shall taxes, law- ments, and governmental charges, if any, 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, hereunder shall be fully preserved iin the t manner liens providedd herein, and that it will not create or suffer to be created any the liens other hereof,l or doaore mechanic's, orb could A be prior materialman's, which might or suffer ymatter or thin , provided,1B however, that no hereof such itax, could be impaired 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 r ti on of System No Free Service While the (e) 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 its agencies, instrumentalities, lessors, or concessionaires nake use of the services and facilities of the System, p yms monthly of the standard retail price of the services provided shall be made by the City or any of its agencies, instrumen- talities, lessors, or concessionaires out of funds from sources other hthan the from surplus Pledged Revenues as permitted by Section 22(b) hereof (f) EUrth9X Fncumrrance 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 junior ntd subordinate in all respects to the liens, pledges, 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 Pled ed Revenues is specifically recognized and retained, as permitted under Section 22(b) hereof) (9) ~a~e or Disoosai 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 significant or,substanti- wise dispose of, the System, Y 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 substitutes therefor, or it is determined by resolution of the City Council that no such replacement or substitute is necessary (h) Insurance (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 com any or companies, against risks, accidents, or casualties aga nst 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 gives a written opinion to the effect that the City is not liable for claims which would be protected by such insurance All 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 fcarrryinsurance responsible n therefor, the work h being yconall not be structed required if the contractor is required to carry appropriate insurance All such policies shall be open to the inspection the Bonholders and their the happening of representatives s loss t or e damage l covered a yle times Up insurance from one or more of said causes, the City shall make des due proof of loss and shall do all things necessary in f r able to cause the insuring companies to make payment 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 a special and be designated fund, at an ofcial of Insurance Acco ntepoTheory of the City, Insurance Account shall be held until such time as other funds become available which, together with the Insurance Account, will be sufficient to make the repairs or replacements origin- ally required (2) The annual audit hereinafter required may contain a section commenting on whether or not the City has complied with the requirements of this Section with respect to the 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) A "L Sachet 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 35 amount of Pledged Revenues during each fiscal year at least equal to the greater of 1 25 times the average annual principal and interest requirements of all then outstanding Parity Bonds Additional and h principal and interest requirements ofs all then outstanding/s Parity Bonds and Additional Bonds (j) 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 given to essential differences between municipal and corporate accounting practices (k) Audits After the close of each fiscal year while any outstand- ing, o an t audit Parity Additional Bonds are 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 Revenues aeach nd toy any Bagent for ondholders who nshally sot reqfrom uest tinged 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) Qc•Mrnmentai Acencies It will comply with 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 operation, with spenect d to t e- acquisition, construction, equipment, nance of the System (m) ~jQ Comoeti on It will not operate, or grant any franchise or, to the extent it legally may, permit the acquisi- tion, construction, or operation of, any facilities which would 36 be comae,thenCitwith the system, y will prohibit and to any such h competingtfacili- legal ally may, Y ties (n) Arbitrage 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 would of such bonds to and payment therefor by the purchasers, 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 The City aforesaid Codarelatingetonarbitrage bonds Department the Treasury regulations further covenants that the proceeds of all such bonds will not otherwise e directly used 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 principal amount 51% of the aggregate principal amount of then outstanding Parity Bonds and Additional Bonds shall have the right from time to time to approve any amendment to this the Ordinance which may be deemed necessary or desirable contained yshall City, provided, however, Addind the amendment Parity Bo ds orterms permit conditions b in this Ordinance permit in the tional Bonds so as to (1) Make any change in the maturity of the out- standing Parity 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 respect Addi- of or inthe terest on t with Bonds or tional Bonds, or impose any cond 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 eepublished The s City i of a New financial York, New publica- tion of general circulation in 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 518 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, duties, 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, subject 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 six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders or owners of the same Parity Bond or Additional Bond during such period Such consent may be revoked at any time after s months such noticeby theholdermor h owner e whof the o gave first 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 bof all g from the registration books kptabyBthes ownership determined shall registrar therefor Section 29 DAMAGED, MUTILATED, LOST, STOLEN, OR DE- STROYED BONDS (a) ReDl ement 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 in the manner hereinafter provided (b) Ann1~c *i^^ fer ReD~acement 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, ih1eft, a destruction of a Bond, the registered owner applying for 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) N Def is is s Occurred Notwithstanding the foregoing provisions of th Section, in the event any such Bond shall have matured, and no default has occurred which is than con- tinuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the paym except ccaseent o the same insteadf of is uing to he mutilated surrender of a damaged or (without replacement Bond, provided security or indemnity is furnished as above provided in this Section (d) or Tssu;na Replacement Bonds Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation 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) Tasuer for Tssuina Re~acement Bonds In accordance 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/Regis- trar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion and exchange for other Bonds Section 30 COVENANTS REGARDING TAX-EXEMPTION The Issuer covenants to take any action or refrain from any action which would adversely affect the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation In furtherance thereof, the Issuer covenants as follows (a) to take any action to assure that no more than 10 percent of the proceeds of the Bondse(less amounts deposited to a reserve fund, if any) a used for any "private business use", as defined in section of the proceeds6) of percent are the Code or, if more than 10 so used, that amounts, whether or not received by the Issuer, with respect to such private business use, do not, 40 under the terms of this Resolution or any ornprovidngfor arrangement, directly or indirectly, secure the payment of more than to percent of the debt service the on the Bonds, in contravention of section 141(b) (2) 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 $5,ooo,ooo, or 5 percent of the proceeds of the Bonds (less amounts depos- ited into a reserve fund, if any) is directly or indirect- ly used gto finance loans overnmental units to persons, econtraveother ntion t or of section local g 141(c) of the Code, (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code, would (e) to refrain from taking any action nteeat with in result in the Bonds being "federally Coda the meaning of section 149(b) of the (f) to refrain from using any portion of the pro- ceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with (1) proceeds of pthe eriod of 3$ yearssordless r until reasonable temporary 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 Treasury Regulatof section ions, ns, and 1 103-13(b)(12) of 41 (3) amounts deposited in any reasonably re- quired reserve or replacement fund to of thee extent such amounts do not exceed 10 percent 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 five-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 result of Excess Earnings under section rati red 14to be 8(f) of id as a the Code and (i) to maintain such records as will enable the Issuer to fulfill its responsibilities under this section the retain such records princi- and section 148 of the Code and to at least six years following final payment pal and interest on the Bonds pal It is the understanding of the Issuer that the covenants contained and any regulations eore rulings spromulgated nby theh the Code 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 n contained herein to the extent that comply modification or covenant expansion, in the opinion of nationally-recognized bond coun- sel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code In the event that regulations or rulings are hereaf- ter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional national ly-rrecognized bond counsel, lto preserve the exemp- tion of from federal income taxation of interest on the Bonds under section 103 of the Code Section 31 DESIGNATION AS QUALIFIED TAX-EXEMPT BONDS The Issuer hereby designates the Bonds as "qualified tax-exempt 42 bonds" 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 isued, the Issuer (including any subordinate entities) has not desig- nated nor will designate bonds, which when aggregated with the Bonds will result in more than $10,000,000 of "qualified tax-exempt bonds" 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 isued, by the Issuer (or any subordinate entities) will not exceed e such $10,000,000, and, (c) that the Issuer will as kmore parti ularly refrain from such action as necessary, set forth in Section 30, hereof, in order thath hetBon s will not be considered "private activity bonds" mean of section 141 of the Code Section 32 CUSTODY, APPROVAL, AND REGISTRATION I E F TBOND he S BOND COUNSEL'S OPINION, CUSIP NUMBERS, AND Mayor of the Issuer is hereby authorized to have control of the Initial Bond issued hereunder and all necessary its delivery proceedings pertaining to the Initial Bond pending by the Attor- ney its investigation, examination, and approval General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas Upon registration of Initial Bond d in lwr ting rtolactoforusaid Accounts ( a deputy designated the Comptroller's Registration Comptroller) ) shall manually g said Comptrol Certificate on the Initial Bond, and the seal on he Init 1 or placed in facslmi e of Bond be impressed, Issuer' Coun Bond The approving legal opinion of ate the optionoof the sel and the assigned CUSIP numbers may, Issuer, be printed on the Initial Bond or on any Bonds issued and delivered in conversion of and exchange effect, or replacement shallof any Bond, but neither shall have any leg solely for the convenience and informatiof of the registered owners of the Bonds If the purchaser exercises its option to obtain insurance on Inthe Bons, structions a and permitted in the Notice of Sale and Bidding official Statement hereinafter des rib ehl g end lc n Bern ng insurance and all other Bonds shall as provided bye the insurer appropriate Section 33 SALE OF INITIAL BOND The Initial Bond is hereby sold and shall be delivered to RAUSCHER PIERCE REFSNES, INC AND ASSOCIATES, for cash for the par value thae Pre iandof accrued interest thereon to date of delivery, dplus etermined, and It is hereby officially found, public sale to declared that the initial Bond has been sold a after receiving the bidder offering the lowest interest cost, 43 sealed bids pursuant to an official Notice of Sale and1Bidding Instructions and Official Statement dated July 19, 88, prepared and distributed in connection with the sale of the Initial Bond Said Official Notice of Sale and Bidding In- structions and official Statement, and any addenda plement, or amendment thereto have been and are hereby approved by the Issuer, and they use in the offer and sale of the Bonds is hereby approved It is further officially found, determined, and declared that the statements and representations contained in said official 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 FURTHER PROCEDURES The Mayor of the Issuer, the City Secretary Secretary of the Issuer, and all other and each of officers, employees, and agents of the Issuer, them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowl- edge, and deliver in the name and under the corporate seal and on behalf of the Issuer be such desir bleti.n orderoto herein mentioned, as may 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 In case paid shall cause expenses of sale of issuance the Initi1 Bod Bonds from the proceeds any officer whose signature shall appear on any Bond shall cease to be such 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 remained in office until such delivery 44 CERTIFICATE FOR ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY of CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 1988, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES ING TH 0 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 2ND DAY anOF AUGUST, d the roll was called at the Municipal Building (City Hall), of the duly constituted officers and members of said City Council, to-wit Jennifer K Walters, City Secretary Ray Stephens, Mayor Linnie McAdams Hugh Ayer Jim Alexander Jane Hopkins Bob Gorton Randall Boyd and all of said persons were present, except the following absentees Boyd, thus constituting a quorum Whereupon, among other business, the following was transacted at said Meeting a written ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY AND PROCEDURES APPROVING NANDIAUTHORIZING INSTRUMENTSDANDS RELATING THERETO introduced for was duly the and duly read it was then duly moved and second d t hat usa d 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 All members of said City Council shown present above voted "Aye", except Jane Hopkins NOES None ABSTENTIONS Jane Hopkins 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 said paragraph is a true, full, and correct excerpt tfrom he passage to Council's minutes of said Meeting pertaining said ordinance, that the persons named in the above and fore- going paragraph are the duly chosen, qualified, and acting officers and members of said City Council as indicated therein, and that each of the officers and was duly and sufficiently notified officially 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 time, place, and purpose of said meeting was given, all as required by Vernon's Ann Tex Civ St Article 6252-17 ,City 3 That the Mayor of said City has approved, and hereby that approves, ofe saaforesaid id City have ordinance, signed said O Secretary that the Mayor and the City Secretary of said City hereby said constitute declare that their signing of this Certificate shall ordi- the signing of the attached and following copy nance for all purposes SIGNED AND SEALED the 2nd y ecretary day of ugust, 1988 utriil-~ may pr (SEAL) We, the undersigned, being respectively the City Attorney Attorneys of the City of and the Bond Texas, legality the certify that we prepared and approved Denton, tto ~ hereby attached and following ordinance prior to its passage as aforesaid 1 City Atto y Bond Attorneys GENERAL CERTIFICATE THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON We, the undersigned, hereby officially certify that we are the Mayor and City Secretary, respectively, of the City of Denton, Texas (the "Issuer"), and we further certify as follows 1 That this certificate is executed for and on behalf of said Issuer with reference to the issuance of the proposed City of Denton Utility System Revenue Bonds, Series 1988, dated August 1, 1988, authorized by an ordinance passed by the City council of said Issuer on August 2, 1988, initially issued and delivered as a single fully registered bond payable in install- ments to the registered owner, but convertible into fully registered bonds in any multiple of $5,000 (the "Bonds") 2 That said Issuer is a duly incorporated Home Rule City, having more than 5000 inhabitants, operating and existing under the Constitution and laws of the State of Texas and the duly adopted Home Rule Charter of said City, which Charter has not been changed or amended since the passage of the ordinance authorizing the issuance of the City of Den9tosn General Obliga- tion Bonds, Series 1988, dated January 1, 3 That no litigation of any nature has ever been filed pertaining to, affecting, or contesting (a) the which authorized said 1 in eIssuer's rtificate(the proposed "SeBonds ries described 1988 Bond paragraph 1 of this ordinance") , (b) the issuance, execution, delivery, payment, security, or validity of said proposed Bonds, (c) the authority of the governing body and the officers of said Issuer to issue, execute, and deliver said Bonds, (d) the title of the present ld f said Issuer members and officers of the City Council corporate their respective offices, or (e) the existence or the Charter of said Issuer 4 That none of the Pledged Revenues, as defined in the Series 1988 Bond Ordinance, have been pledged or encumbered to the payment of any debt or obligation whatsoever, except in connection with the aforesaid proposed Bonds, and the outstand- ing bonds of the following issues City of Denton Utility System Revenue Refunding Bonds, nds, Series 1983 (the Series 1983 Bonds"), Ordinance passed on March 10, 1983 (the 111983 Bond Ordi- nance"), (city of the "Series o 1984 iBonds"), authorized by ordinance passed on February 21, 1984 (the 111984 Bond Ordinance"), City of Denton Utility System Revenue Bonds, Series 1984-A (the Series 111984-A Bonds"), authorized by Ordinance passed on September 25, 1984 (the 111984-A Bond Ordi- nance"), and City of Denton Utility System Revenue Refunding Bonds, Series 1987 (the "Series 1987 Bonds"), authorized by Ordinance passed on January 27, 1987 (the 111987 Bond Ordinance") 5 That the City is not in default as to any covenant, condition, or obligation in connection with the above described outstanding Bonds and the Bond Ordinances, respectively, authorizing same, and that the Interest and Sinking Fund and the Reserve Fund created and maintained by said Bond Ordinances for the benefit of the above described outstanding Bonds and all Additional Bonds issued pursuant to said Bond Ordinances each contains the amount now required to be therein thtthe 6 That the statements and information set forth in Official Statement dated July 19, 1988, pertaining aforesaid proposed Bonds and the Issuer, and particularly the utility coverage system et forth therein are true and corrects and and the Water, Sewer, and Electric Rates set forth therein are currently in effect and were authorized by ordinances duly passed by the City Council 7 That no petition has been filed protesting the issu- ance of the Bonds or seeking a referendum vote on the question as to the issuance of the Bond/,s~~ SIGNED AND SEALED this'"" day of 1988 C Se' a ary, City of Denton Mayo, City of Denton ( TY SEAL)