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1987-017ORDINANCE NO 87-017 ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1987, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, the Caty of Denton, Texas, heretofore has duly assued, and there are presently outstandang, the following revenue bonds Caty of Denton Utalaty System Revenue Bonds, Seraes 1984, dated March 1, 1984, scheduled to mature on December 1 in each of the years 1995 through 2004, beang fully regis- tered bonds payable to the registered owners thereof, In denomanataons an multiples of $5,000, aggregating $500,000 ~n principal amounts (and belng all of the outstanding bonds of sa~d Ser~es scheduled to mature on and after December 1, 1995), and C~ty of Denton Ut~laty System Revenue Bonds, Ser~es 1984-A, dated October 1, 1984, scheduled to mature on December 1 of each of the years 1995 through 2009, beang fully regastered bonds payable to the regastered owners thereof, an denominations ~n multaples of $5,000, aggre- gating $13,500,000 an principal amount (and beang all of the outstandlng bonds of sa~d Ser~es scheduled to mature on and after December 1, 1995), (collectively, the "Outstanding Bonds", an the aggregate pranc~pal amount of $14,000,000), and WHEREAS, the Caty Council of the C~ty of Denton deems at necessary and advisable to refund the Outstanding Bonds, and to authorize, assue, and delayer the bonds herelnafter described, and WHEREAS, the bonds hereinafter authorlzed are to be · ssued, sold, and delivered pursuant to Vernon's Ann Tex Clv St Article 717k, the City's Home Rule Charter and other applicable laws THEREFORE, ORDAINS THAT THE COUNCIL OF THE CITY OF DENTON HEREBY Sectaon 1 bonds of the Caty of Denton, authorized to be ~ssued and AMOUNT AND PURPOSE OF THE BONDS The bond or Texas (the "Issuer") are hereby delivered in the aggregate principal amount of $17,485,000, FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $14,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS Section 2 DESIGNATION OF THE BONDS Each bond issued pursuant to this Ordinance shall be designated "CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 1987", and initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments of principal (the "Initial Bond"), but the Initial Bond may be assigned and transferred and/or con- verted into and exchanged for a lake 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 hereinafter provided The term "Bonds" as used in this Ordi- nance 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 TIES, INITIAL INITIAL BOND INITIAL DATE, DENOMINATION, NUMBER, MATURI- REGISTERED OWNER, AND CHARACTERISTICS OF THE (a) The Initial Bond is hereby authorized to be Issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated JANUARY 1, 1987, in the denomination and aggregate principal amount of $17,485,000, numbered R-l, payable in annual installments of principal to the initial registered owner thereof, to-wit SMITH BARNEY, HARRIS UPHAM & CO INCORPORATED, or to the registered assignee or assignees of said Bond or any portion or portions thereof (in each case, the "registered owner"), with the annual installments of principal of the Initial Bond to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL BOND set forth in this Ordinance (b) The Initial Bond (1) may and shall be prepaid or redeemed prior to the respective scheduled due dates of in- stallments of principal thereof, (11) may be assigned and transferred, (lil) 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 respectlve scheduled due dates, or to the respec- tive dates of prepayment or redemption, of the ~nstallments of principal of the Initial Bond, and sa~d interest shall be payable, all in the manner provided and at the rates and on the dates stated ~n the FORM OF INITIAL BOND set forth ~n th~s 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 FORM OF INITIAL BOND NO R-1 $17,485,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BOND SERIES 1987 THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to SMITH BARNEY, HARRIS UPHAM & CO INCORPORATED, or to the registered assignee or assignees of this Bond or any port~on or port~ons hereof (an each case, the "registered owner") the aggregate prlnclpal amount of $17,485,000 (SEVENTEEN MILLION FOUR HUNDRED EIGHTY FIVE THOUSAND DOLLARS) an annual installments of principal due and payable on DECEMBER 1 in each of the years, and an the respective principal amounts, as set forth ~n the following schedule PRINCIPAL PRINCIPAL YEAR AMOUNT YEAR AMOUNT 1991 $ 255,000 ]999 $1,175,000 1992 270,000 2000 1,155,000 1993 280,000 ,'001 1,135,000 1994 295,000 2002 1,115,000 1995 1,245,000 **** 1996 1,230,000 2007 5,070,000 1997 1,210,000 **** 1998 1,195,000 ;009 1,855,000 and to pay Interest, from the date of th~s Bond hereinafter stated, on the balance of each such installment of principal, respectavely, from tame to tame remaanang unpaad, at the rates as follows 5 00% per annum on the above anstallment due an 1991 5 25% per annum on the above anstallment due in 1992 5 50% per annum on the above ans~allment due an 1993 5 75% per annum on the above ans~allment due an 1994 6 00% per annum on the above ans%allment due an 1995 6 20% per annum on the above ans~allment due an 1996 6 40% per annum on the above ans~allment due an 1997 6 60% per annum on the above ans~allment due an 1998 6 70% per annum on the above ans~allment due an 1999 6 80% per annum on the above anstallment due an 2000 6 90% per annum on the above anstallment due an 2001 7 00% per annum on the above installment due an 2002 7 00% per annum on the above anstallment due an 2007 7 00% per annum on the above anstallment due in 2009 wath sald anterest beang payable on JUNE 1, 1987, and sema- annually on each DECEMBER 1 and JUNE 1 thereafter whale th~s Bond or any port~on hereof as outstandang and unpaad Saad anterest shall be calculated on the bas~s of a 360-day year composed of twelve 30-day months THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON thas Bond are payable an lawful money of the Unated States of Ameraca, w~thout exchange or collection charges The anstall- ments of prancapal and the anterest on th~s Bond are payable to the regastered owner hereof through the servaces of TEXAS AMERICAN BANK/FORT WORTH, N A , FORT WORTH, TEXAS, whach as the "Payang Agent/Regastrar" for thas Bond Payment of all pranca- pal of and anterest on thas Bond shall be made by the Paying Agent/Regastrar to the regastered owner hereof on each prancl- pal and/or anterest payment date by check or draft, dated as of such date, drawn by the Payang Agent/Regastrar on, and payable solely from, funds of the Issuer required by the ordanance authorizing the assuance of thas Bond (the "Bond Ordanance") to be on deposat w~th the Payang Agent/Regastrar for such purpose as hereanafter provaded, and such check or draft shall be sent by the Payang Agent/Regastrar by Un~ted States maal, farst- class postage prepaad, on each such prancapal and/or anterest payment date, to the regastered owner hereof, at the address of the regastered owner, as at appeared on the 15th day of the month next precedang each such date (the "Record Date") on the Regastratlon Books kept by the Pay3ng Agent/Regastrar, as hereanafter descrabed The Issuer covenants wath the regas- tered owner of thas Bond that on o~ before each prlncapal and/or anterest payment date for thas Bond at wall make avaal- able to the Paying Agent/Regastrar, from the "Interest and Sankang Fund" maanta~ned pursuant to the Bond Ordanance, the amounts required to provide for the payment, in immediately available funds, of all principal of and ~nterest on th~s Bond, when due IF THE DATE for the payment of the principal of or ~nter- est on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking lnstltut~ons ~n the Clty where the Paying Agent/Registrar ~s located are authorized by law or executlve order to close, then the date for such payment shall be the next succeeding day which Ks not such a Saturday, Sunday, legal holiday, or day on which banklng lnstltut~ons are authorized to close, and payment on :uch date shall have the same force and effect as ~f made on the original date payment was due THIS BOND has been authorized Ln accordance with the Constitution and laws of the State of Texas FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $14,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS ON DECEMBER 1, 1996, or on any ~nterest payment date thereafter, the unpaid installments cf prlnclpal of th~s Bond may be prepaid or redeemed prior to ~he~r scheduled due dates, at the option of the Issuer, w~th ~unds derived from any available source, as a whole, or ~n part, and, ~f in part, the particular port~on of this Bond to be prepaid or redeemed shall be selected and designated by the Issuer (provided that a port~on of th~s Bond may be redeemed only ~n an integral multiple of $5,000), at the prepayment or redemptlon price of the par or principal amount thereof, plus accrued ~nterest to the date fixed for prepayment or redemption ON DECEMBER 1, 2003, and on DECEMBER 1 of each of the years hereinafter specified, the ~nstallments of principal of this Bond which are due and payable on DECEMBER 1, 2007, and on DECEMBER 1, 2009, are subject to mandatory prepayment and redemption prior to their scheduled due dates, and shall be prepaid and redeemed by the Issuer, an part, prlor to their scheduled due dates, with money from the Interest and S~nk~ng Fund, at a prepayment or redemption price equal to the prlnc~- pal amount thereof and accrued ~nterest to the date of prepay- ment or redemption, on the dates and ~n the principal amounts, respectively, as shown in the following schedule 5 December if Dates 2007 Installment Principal Amounts December ir 2009 Installment Principal Date Amount December 1, 2003 $1,095,000 December 1, 2004 $1,070,000 December 1, 2005 $ 990,000 December 1, 2006 $ 965,000 December 1, 2008 $935,000 AT LEAST 30 days prior to the date f~xed for any such prepayment or redemption a written not~ce of such prepayment or redemptlon shall be ma~led by the Paying Agent/Registrar to the registered owner hereof By the date flxed for any such prepayment or redemption due prov~slon shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepayment or redemption price for thls Bond or the port~on hereof which ~s to be so prepaid or redeemed, plus accrued ~nterest thereon to the date f~xed for prepayment or redemption If such written notlce of prepayment or redemptlon Ks g~ven, and If due provision for such payment ls made, all as provided above, th~s Bond, or the port~on thereof which ~s to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to ~ts scheduled due date, and shall not bear ~nterest after the date flxed for ~ts prepayment or redemption, and shall not be regarded as being outstanding except for the r~ght of the registered owner to receive the prepayment or redemption price plus accrued ~nter- est to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment The Paying Agent/Registrar shall record ~n the Registration Books all such prepayments or redemptlons of principal of th~s Bond or any port~on hereof THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed port~on hereof ~n any ~ntegral multiple of $5,000, may be assigned by the ~n~t~al registered owner hereof and shall be transferred only ~n the Registration Books of the Issuer kept by the Paying Agent/Registrar acting ~n the capacity of registrar for the Bonds, upon the terms and conditions set forth ~n the Bond Ordinance Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying Agent/- Registrar for cancellation, together w~th proper ~nstruments of assignment, ~n form and wlth guarantee of s~gnatures satisfac- tory to the Paying Agent/Registrar, ev~denclng assagnment by the anatial registered owner of th~s Bond, or any portion or portions hereof an any ~ntegral multiple of $5,000, to the assagnee or assignees an whose name or names th~s Bond or any such portaon or portions hereof ~s or are to be transferred and registered Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any such portion or portions hereof by the initial registered owner hereof A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conver- sion and exchange of this Bond or any portion hereof The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, Including payment and discharge of 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- gate principal amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement here- lnafter stated that each substitute bond issued in exchange for any portion of this Bond shall have a single stated principal maturity date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance If this Bond or any portion hereof is assigned and transferred or converted each bond issued in exchange for any portion hereof shall have a single stated principal maturity date correspond- lng to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear Interest at the rate applicable to and borne by such installment of principal or portion thereof Such bonds, respectively, shall be sub]ect to redemption prior to maturity on the same dates and for the same prices as the corresponding Installment of principal of this Bond or portion hereof for which they are being exchanged No such bond shall be payable in installments, but shall have only one stated principal maturity date AS PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds ~ssued and delivered ~n exchange for this Bond or any portlon hereof may be assigned and transferred, and converted, subsequently, as provided ~n the Bond Ordinance The Issuer shall pay the Paying Agent/Reglstrar's standard or customary fees and charges for transferring, converting, and exchanging th~s Bond or any port~on thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be pa~d w~th respect thereto The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (~) during the per~od commencing wlth the close of bus~ness on any Record Date and ending wlth the opening of bus~ness on the next following principal or lnterest payment date, or, (~) w~th respect to any Bond or port~on thereof called for prepayment or redemption prior to maturity, w~th~n 45 days prior to ~ts prepayment or redemptlon date IN THE EVENT any Paying Agent/Registrar for thls Bond ~s changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that ~t promptly w~ll appoint a competent and legally qualified sub- statute therefor, and promptly w~ll cause wrltten notlce thereof to be malled to the registered owner of thls Bond IT IS HEREBY certlf~ed, reclted, and covenanted that th~s Bond has been duly and validly authorlzed, lssued, sold, and dellvered, that all acts, conditions, and th~ngs required or proper to be performed, ex~st, and be done precedent to or ~n the authorization, ~ssuance, and delivery of th~s Bond have been performed, existed, and been done ~n accordance w~th law, that th~s Bond ~s a special obl~gatlon of the Issuer, secured by and payable, together with other bonds, from a f~rst lien on and pledge of the "Pledged Revenues", which ~nclude ~nlt~ally the "Net Revenues of the System" as such terms are deflned ~n the Bond Ordinance, w~th the System conslst~ng of the C~ty's entire combined waterworks, sewer, and electric l~ght and power system THE ISSUER has reserved the r~ght, subject to the restric- tion stated ~n the Bond Ordinance, to ~ssue Additional Bonds payable from and secured by a f~rst l~en on and pledge of the "Pledged Revenues" on a parity w~th th~s Bond THE REGISTERED OWNER hereof shall never have the r~ght to demand payment of th~s Bond or the lnterest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than speclf~ed ~n the Bond Ordinance BY BECOMING the registered owner of th~s Bond, the regis- tered owner thereby acknowledges all of the terms and 8 prov~saons of the Bond Ordanance, agrees to be bound by such terms and provlsaons, acknowledges that the Bond Ordanance as duly recorded and available for anspectaon an the offlclal manutes and records of the governang body of the Issuer, and agrees that the terms and provasaons of thas Bond and the Bond Ordanance constatute a contract between the reglstered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused thas Bond to be sagned wlth the manual sagnature of the Mayor of the Issuer and countersigned w~th the manual s~gnature of the Caty Secretary of the Issuer, has caused the offacaal seal of the Issuer to be duly impressed on th~s Bond, and has caused thas Bond to be dated JANUARY 1, 1987 C~ty Secretary, Clty of Denton, Texas Mayor, Caty of Denton, Texas (CITY SEAL) FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certify that thls Bond has been examaned, certa- faed as to valld~ty, and approved by the Attorney General of the State of Texas, and that th~s Bond has been regastered by the Comptroller of Publlc Accounts of the State of Texas W~tness my s~gnature and seal thas Comptroller of Publac Accounts of the State of Texas (COMPTROLLER'S SEAL) Sectaon 6 ADDITIONAL CHARACTERISTICS OF THE BONDS Re~strataon and Transfer (a) The Issuer shall keep or cause to be kept at the principal corporate trust offace of TEXAS AMERICAN BANK/FORT WORTH, N A , FORT WORTH, TEXAS (the "Paylng Agent/Registrar") books or records of the regastrat~on and transfer of the Bonds (the "Regastrataon Books"), and the Issuer hereby appoints the Paylng Agent/Regastrar as ~ts 9 registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe, and the Paying Agent/Registrar shall make such transfers and registrations as herein provided The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided, but at 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 not~ce 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- tratlon Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity Registration of each Bond may be transferred in the Registra- tion Books only upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satis- factory to the Paying Agent/Registrar, evidencing (1) the assignment of the Bond, or any portion thereof in any ~ntegral multiple of $5,000, to the assignee or assignees thereof, and (Il) 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 in any denomination or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated principal maturity date), shall be in the form prescribed ~n 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 surrendered to the Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any port~on 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 10 of principal or portion thereof for which the substitute Bond lS 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 only a portion of the Initial Bond is assigned and trans- ferred, there shall be delivered to and registered in the name of the initial registered owner substitute Bonds in exchange for the unassigned balance of the Initial Bond in the same manner as if the Initial registered owner were the assignee thereof If any Bond or portion thereof other than the Initial Bond is assigned and transferred or converted each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is exchanged A 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 Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and transferred, all in conversion of and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section 6(d), below, for the conversion and exchange of Bonds by any registered owner of a Bond The Issuer shall pay the Paying Agent/ Reglstrar's standard or customary fees and charges for making such transfer and delivery of a substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto The Paying Agent/Registrar shall not be required to make transfers of registration of any Bond or any portion thereof (1) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (il) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date (b) Ownership of Bonds The entity in whose name any Bond shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such Bond shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary, and payment of, 11 or on account of, the prlnclpal of, premium, if any, and lnterest on any such Bond shall be made only to such reglstered owner All such payments shall be valid and effectual to satlsfy and d~scharge the llabll~ty upon such Bond to the extent of the sum or sums so pa~d (c) Payment of Bonds and Interest The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the prlnclpal of and ~nterest on the Bonds, and to act as ~ts agent to convert and exchange or replace Bonds, all as provided ~n th~s Ordinance The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paylng Agent/Registrar w~th respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provlded ~n thls Ordlnance (d) Conversion and Exchange or Replacement, Authenti- cation Each Bond ~ssued and delivered pursuant to th~s Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount thereof, may, upon surrender of such Bond at the principal corporate trust off~ce of the Paylng Agent/Registrar, together w~th a written request therefor duly executed by the registered owner or the asslgnee or assignees thereof, or ~ts or their duly authorized attorneys or represen- tatives, w~th guarantee of s~gnatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be con- verted ~nto and exchanged for fully registered bonds, wlthout lnterest coupons, ~n the form prescribed ~n the FORM OF SUBSTI- TUTE BOND set forth ~n th~s Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substltute Bond shall have a s~ngle stated maturity date), as requested ~n writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unredeemed principal balance or principal amount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be If the Inltlal Bond ~s assigned and transferred or converted each substltute Bond ~ssued in exchange for any port~on of the Initial Bond shall have a s~ngle stated principal maturity date, and shall not be payable ~n ~nstallments, and each such Bond shall have a principal maturlty date corresponding to the due date of the ~nstallment of principal or port~on thereof for which the substitute Bond ~s being exchanged, and each such Bond shall bear interest at the s~ngle rate applicable to and borne by such lnstallment of principal or portion thereof for which ~t · s being exchanged If a port~on of any Bond (other than the Initial Bond) shall be redeemed prlor to lts scheduled maturity as provided here~n, a substitute Bond or Bonds having the same 12 maturity date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation If any Bond or portion thereof (other than the Initial Bond) is assigned and transferred or converted, each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged Each substitute Bond shall bear a letter and/or number to 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 authenti- cated after such first scheduled Record Date shall bear inter- est from the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but on or before the next following interest payment date, in which case 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 is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in full THE INITIAL BOND issued and delivered pursuant to this Ordinance is not required to be, and shall not be, 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 and exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas 13 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 dellvery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with llthographed or steel engraved borders of customary weight and strength Pursuant to Vernon's Ann Tex Clv St Art 717k-6, and particularly Section 6 thereof, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paylng Agent/Reglstrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enforceable an the same manner and wlth 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 Comptroller of Public Accounts The Issuer shall pay the Paylng Agent/Reglstrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condlt~on precedent to the exercise of such privilege of conversion and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange or replacement of Bonds or any portion thereof (1) during the period commencing w~th the close of business on any Record Date and ending with the openlng of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date (e) In General Ail Bonds issued ~n conversion and exchange or replacement of any other Bond or portion thereof, (1) shall be issued in fully registered form, w~thout ~nterest 14 coupons, with the principal of and lnterest on such Bonds to be payable only to the registered owners thereof, (aa) may and shall be redeemed praor to their scheduled maturataes, (laa) may be transferred and assigned, (av) may be converted and ex- changed for other Bonds, (v) shall have the characterastacs, (va) shall be s~gned and sealed, and (v~a) the pranc~pal of and anterest on the Bonds shall be payable, all as provaded, and an the manner required or lndacated, in the FORM OF SUBSTITUTE BOND set forth an thls Ordanance (f) Payment of Fees and Char~es The Issuer hereby covenants wath the registered owners of the Bonds that at wall (a) pay the standard or customary fees and charges of the Payang Agent/Registrar for ~ts services w~th respect to the payment of the prancapal of and anterest on the Bonds, when due, and (aa) pay the fees and charges of the Paying Agent/- Registrar for servaces w~th respect to the transfer of reg~s- trataon of Bonds, and w~th respect to the conversaon and exchange of Bonds solely to the extent above provaded an thas Ordinance (g) Substitute Paying Agent/Reglstrar The Issuer covenants w~th the registered owners of the Bonds that at all tames wh~le the Bonds are outstandang the Issuer wall provade a competent and legally qual~faed bank, trust company, fananclal anstatut~on, or other agency to act as and perform the services of Paying Agent/Regastrar for the Bonds under thas Ordanance, and that the Paying Agent/Registrar w~ll be one entaty The Issuer reserves the right to, and may, at ~ts optlon, change the Payang Agent/Registrar upon not less than 120 days wratten not~ce to the Payang Agent/Registrar, to be effective not later than 60 days prior to the next principal or anterest payment date after such notace In the event that the entity at any tame actang as Paying Agent/Registrar (or ars successor by merger, acquisition, or other method) should reslgn or other- wase cease to act as such, the Issuer covenants that promptly at wall appoant a competent and legally qualafaed bank, trust company, fananc~al ~nst~tutaon, or other agency to act as Paying Agent/Registrar under this Ordinance Upon any change in the Paying Agent/Regastrar, the prevaous Payang Agent/Regis- trar promptly shall transfer and delaver the Reglstrataon Books (or a copy thereof), along w~th all other pertinent books and records relating to the Bonds, to the new Paying Agent/Regls- trar designated and appointed by the Issuer Upon any change in the Paying Agent/Registrar, the Issuer promptly w~ll cause a written notlce thereof to be sent by the new Payang Agent/Regi- strar to each registered owner of the Bonds, by Unated States mail, f~rst-class postage prepaad, which notace also shall gave the address of the new Paying Agent/Registrar By accepting the pos~taon and performing as such, each Payang 15 Agent/Registrar shall be deemed to have agreed to the prova- slons of this Ordanance, and a certified copy of thas OrdInance shall be delivered to each Paying Agent/Regastrar 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, ancludlng the form of Paying Agent/Reg~strar'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, substantlally as follows, w~th such appropriate variations, omissions, or ansert~ons as are permitted or required by th~s Ordinance FORM OF SUBSTITUTE BOND NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BOND SERIES 1987 INTEREST RATE MATURITY DATE CUSIP NO % ON THE MATURITY DATE specified above the CITY OF DENTON, an Denton County, Texas (the "Issuer"), being a a political subdivision of the State of Texas, hereby promises to pay to or to the registered assagnee hereof (either beang hereinafter called the "registered owner") the principal amount of and to pay interest thereon from JANUARY 1, 1987, to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above, with interest being payable on JUNE 1, 1987, and semiannually on each DECEMBER 1 and JUNE 1 thereafter, except that if the date of authentication of thls Bond is later than MAY 15, 1987, 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 followang Interest payment date, an which case such principal amount shall bear anterest from such next following interest payment date Said ~nterest shall be calculated on the basis of a 360-day year composed of twelve 30-day months 16 THE PRINCIPAL OF AND INTEREST ON thas Bond are payable an lawful money of the United States of Ameraca, wathout exchange or collection charges The prancapal of thas Bond shall be paad to the registered owner hereof upon presentataon and surrender of thls Bond at maturity or upon the date faxed for · ts redemption praor to maturity, at the pranc~pal corporate trust off~ce of TEXAS AMERICAN BANK/FORT WORTH, N A , FORT WORTH, TEXAS, which ~s the "Payang Agent/Regastrar" for th~s Bond The payment of ~nterest on thas Bond shall be made by the Payang Agent/Registrar to the regastered owner hereof on each ~nterest payment date by check or draft, dated as of such anterest payment date, drawn by the Paylng Agent/Regastrar on, and payable solely from, funds of the Issuer requared by the ordinance authorizing the ~ssuance of the Bonds (the "Bond Ordinance") to be on deposit wath the Paylng Agent/Registrar for such purpose as hereinafter provaded, and such check or draft shall be sent by the Paying Agent/Regastrar by Unated States mall, farst-class postage prepaid, on each such anterest payment date, to the registered owner hereof, at the address of the registered owner, as at appeared on the 15th day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Payang Agent/Reglstrar, as hereinafter descrlbed Any accrued lnterest due upon the redemption of th~s Bond praor to maturaty as provaded here~n shall be pa~d to the registered owner at the prancapal corpor- ate trust off~ce of the Paying Agent/Regastrar upon presen- tation and surrender of th~s Bond for redemptaon and payment at the pranc~pal corporate trust offace of the Paylng Agent/Regas- trar The Issuer covenants with the regastered owner of thas Bond that on or before each pr~ncapal payment date, anterest payment date, and accrued ~nterest payment date for thas Bond · t will make available to the Payang Agent/Regastrar, from the "Interest and S~nk~ng Fund" created by the Bond Ordanance, the amounts required to provide for the payment, an ~mmedaately available funds, of all principal of and anterest on the Bonds, when due IF THE DATE for the payment of the pranc~pal of or inter- est on thxs Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking anst~tutaons an the C~ty where the Payang Agent/Registrar as located are authorazed by law or executive order to close, then the date for such payment shall be the next succeeding day whach ~s 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 af made on the oraganal date payment was due THIS BOND ~s one of an ~ssue of Bonds anataally dated JANUARY 1, 1987, authorized an accordance wath the Constatutaon 17 and laws of the State of Texas an the principal amount of $17,485,000, FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $14,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS ON DECEMBER 1, 1996, or on any interest payment date thereafter, the Bonds of this Serles may be redeemed prior to their scheduled maturities, at the option of the Issuer, wlth funds derived from any avallable and lawful source, as a whole, or in part, and, if ~n part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a port,on of a Bond may be redeemed only an an ~ntegral multiple of $5,000), at the redemption prlce of the par or pr~nclpal amount thereof, plus accrued ~nterest to the date flxed for redemption ON DECEMBER 1, 2003, and on DECEMBER 1 of each of the years hereinafter specified, the outstanding Bonds of th~s Ser~es scheduled to mature on DECEMBER 1, 2007, and on DECEMBER 1, 2009, are subject to mandatory redemptlon prior to thelr scheduled maturities, and shall be redeemed by the Issuer, an part, prior to their scheduled maturities, w~th money from the Interest and S~nk~ng Fund, w~th the particular Bonds or port~on thereof to be redeemed to be selected by the Issuer at random, by lot or other customary method (provided that a portion of a Bond may be redeemed only in an ~ntegral multiple of $5,000), at a redemption price equal to the par or principal amount thereof and accrued ~nterest to the date of redemption, on the dates, and in the prlnc~pal amounts, respectively, as shown an the following schedule December 1r 2007 Maturity December lr 2009 Maturlt~ Principal Principal Dates Amounts Date Amount December 1, 2003 $1,095,000 December 1, 2004 $1,070,000 December 1, 2005 $ 990,000 December 1, 2006 $ 965,000 December 1, 2008 $935,000 The prlnclpal amount of the Bonds required to be redeemed on any redemption date pursuant to the foregoing operation of the mandatory sinking fund shall be reduced, at the option of the Issuer, by the principal amount of any Bonds out of the matur- ity scheduled for redemption ~n part on such redemption date which, at least 45 days prior to the mandatory sinking fund redemption date, (1) shall have been acquired by the Issuer and delivered to the Paying Agent/Registrar for cancellation, or (2) shall have been acquired and cancelled by the Paying 18 Agent/Regastrar, at the darectaon of the Issuer, w~th funds from the Interest and Sinkang Fund, in e~ther case at a price not exceedang the par or pr~ncapal amount of such Bonds plus accrued anterest to the date of acqu~sat~on thereof AT LEAST 30 days praor to the date f~xed for any redemp- tion of Bonds or portaons thereof praor to maturity a wratten notace of such redemption shall be publashed once ~n a flnan- caal publlcataon, journal, or reporter of general carculataon among securatles dealers an The Caty of New York, New York (ancludang, but not lamated to, The Bond Buyer and The Wall Street Journal), or in the State of Texas (~ncludang, but not l~mated to, The Texas Bond Reporter) Such not~ce also shall be sent by the Payang Agent/Registrar by Unated States mall, farst-class postage prepaad, not less than 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemptaon date, provaded, however, that the failure to send, maal, or receave such notice, or any defect thersan or an the sendang or maallng thereof, shall not affect the valldlty or effectiveness of the proceedings for the redemption of any Bond, and at is hereby specaflcally provaded that the publacatlon of such notice as requared above shall be the only notace actually required an connectaon wath or as a prerequaslte to the redemption of any Bonds or portaons there- of By the date faxed for any such redemptaon due provision shall be made wath the Paying Agent/Registrar for the payment of the requared redemptaon price for the Bonds or portaons thereof whach are to be so redeemed, plus accrued interest thereon to the date faxed for redemption If such written notice of redemptaon as publashed and if due provas~on for such payment as made, all as provided above, the Bonds or portions thereof whach are to be so redeemed thereby automatically shall be treated as redeemed prior to thear scheduled maturat~es, and they shall not bear interest after the date fixed for redemp- tion, and they shall not be regarded as beang outstandang except for the raght of the registered owner to receive the redemptaon prace plus accrued interest from the Paying Agent/ Regastrar out of the funds provaded for such payment If a portion of any Bond shall be redeemed a substitute Bond or Bonds havang the same maturaty date, bearing anterest at the same rate, an any denomanataon or denomanataons in any ~ntegral multaple of $5,000, at the written request of the regastered owner, and in aggregate pr~ncapal amount equal to the unre- deemed port~on thereof, wall be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided an the Bond Ordanance THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTE- GRAL MULTIPLE OF $5,000 may be assagned and shall be 19 transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of regis- trar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner or its duly authorized attorney or representative, to evidence the assignment hereof A new Bond or Bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all an the form and manner as provided in the next paragraph hereof for the conver- sion and exchange of other Bonds The Issuer shall pay the Paying Agent/Reglstrar's standard or customary fees and charges for making such transfer, 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 (1) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (il) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date The registered owner of thls Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary ALL BONDS OF THIS SERIES are lssuable solely as fully registered bonds, without lnterest coupons, in the denomination of any integral multiple of $5,000 As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or as- signees hereof, be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without ~nterest coupons, payable to the approprlate registered owner, assignee, or assignees, as the case may be, having the same 20 maturity date, and bearing lnterest at the same rate, an any denom~natlon or denominations in any ~ntegral multlple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon sur- render of th~s Bond to the Paying Agent/Registrar for cancella- tlon, all ~n accordance w~th the form and procedures set forth ~n the Bond Ordinance The Issuer shall pay the Paying Agent/- Registrar's standard or customary fees and charges for trans- ferring, converting, and exchanging any Bond or any port~on thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be pald w~th respect thereto as a condltlon precedent to the exercise of such privilege of converslon and exchange The Paying Agent/Registrar shall not be required to make any such conversion and exchange (~) during the per~od commencing wlth the close of business on any Record Date and ending wlth the opening of bus~ness on the next following principal or ~nterest payment date, or, (~) w~th respect to any Bond or portion thereof called for redemption prlor to maturity, w~th~n 45 days prior to its redemption date IN THE EVENT any Paying Agent/Registrar for the Bonds ls changed by the Issuer, reslgns, or otherwise ceases to act as such, the Issuer has covenanted ~n the Bond Ordinance that ~t promptly w~ll appoint a competent and legally qualified substi- tute therefor, and promptly w~ll cause written not~ce thereof to be ma~led to the registered owners of the Bonds IT IS HEREBY certified, recited, and covenanted that thls Bond has been duly and validly authorized, ~ssued, sold,and de- llvered, that all acts, conditlons, and thlngs required or proper to be performed, ex~st, and be done precedent to or ~n the authorization, ~ssuance, and delivery of th~s Bond have been performed, existed, and been done in accordance w~th law, that th~s Bond Ks a special obligation of the Issuer, secured by and payable, together w~th other bonds, from a flrst l~en on and pledge of the "Pledged Revenues", whlch include ~n~t~ally the "Net Revenues of the System", as such terms are defined in the Bond Ordinance, w~th the System consisting of the C~ty's entire combined waterworks, sewer, and electric light and power system THE ISSUER has reserved the r~ght, subject to the restric- tion stated ~n the Bond Ordinance, to ~ssue Additional Bonds payable from and secured by a f~rst l~en on and pledge of the "Pledged Revenues" on a parity with th~s Bond and ser~es of which bt ~s a part THE REGISTERED OWNER hereof shall never have the r~ght to demand payment of this Bond or the ~nterest hereon out of any 21 funds raised or to be raised by taxation or from any source whatsoever other than specified an the Bond Ordlnance BY BECOMING the registered owner of thls Bond, the regas- tered owner thereby acknowledges all of the terms and provl- s~ons of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance as duly recorded and avallable for ~nspect~on ~n the off~caal manutes and records of the governing body of the Issuer, and agrees that the terms and provisions of th~s Bond and the Bond Ordl- nance constitute a contract between each registered owner hereof and the Issuer IN WITNESS WHEREOF, the Issuer has caused th~s Bond to be s~gned w~th the facslm~le s~gnature of the Mayor of the Issuer and countersigned w~th the facsimlle s~gnature of the C~ty Secretary of the Issuer, and has caused the official seal of the Issuer to be duly ~mpressed, or placed in facsimile, on th~s Bond (facsimile s~nature) C~ty Secretary, C~ty of Denton, Texas (facslm~le s~nature) Mayor, Clty of Denton, Texas (CITY SEAL) FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It ~s hereby certified that th~s Bond has been assued under the provisions of the Bond Ordlnance descrabed ~n th~s Bond, and that th~s Bond has been ~ssued ~n conversion of and exchange for or replacement of a bond, bonds, or a port~on of a bond or bonds of an ~ssue which orlg~nally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas TEXAS AMERICAN BANK/FORT WORTH, N A , FORT WORTH, TEXAS Paylng Agent/Registrar Dated By Authorized Representative 22 FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undersagned regastered owner of thas Bond, or duly authorazed representative or attorney thereof, hereby assagns thas Bond to ! ! (Assagnee's Social Securaty or Taxpayer Identafacataon Number (prant or typewrate Assagnee's name and address, ancludang zap code) and hereby arrevocably constztutes and appoants attorney to transfer the regastrataon of thas Bond on the Paying Agent/Regastrar's Regastrataon Books wath full power of substmtutaon an the premases Dated Sagnature Guaranteed NOTICE The sagnature must be guaranteed by a member of the New York Stock Exchange or a commercaal bank or trust company Regastered Owner NOTICE The sagnature above must correspond wmth the name of the Regmstered Owner ap- pearmng on the face of thms Bond Sectaon 8 DEFINITIONS As used an thas Ordanance the followang terms shall have the meanangs set forth below, unless the text hereof specafacally andacates otherwase (a) The terms "Caty" and "Issuer" shall mean the Caty of Denton, an Denton County, Texas (b) The term "City Councal" or "Councal" shall mean the governang body of the Caty (c) The term "Bonds" shall mean collectavely the Inztaal Bond as defaned and descrabed an Sectaon 1 of thas Ordznance and all substatute bonds exchanged therefor, and all other substatute bonds and replacement bonds, assued pursuant to and as provaded an thas Ordinance 23 (d) The term "Parity Bonds" shall mean collectively (~) the outstanding City of Denton Utll~ty System Refunding Revenue Bonds, Ser~es 1983, authorized by ordlnance passed on March 10, 1983 (the "Serles 1983 Bonds"), (~) the unrefunded City of Denton Utility System Revenue Bonds, Serles 1984, whlch mature on December 1 ~n each of the years 1987 through 1994, author- lzed by ordinance passed on February 21, 1984 (the "Ser~es 1984 Bonds"), (~) the unrefunded Clty of Denton Ut~llty System Revenue Bonds, Serles 1984-A, which mature on December 1 ~n each of the years 1987 through 1994, authorized by ordinance passed on September 25, 1984 (the Serles 1984-A Bonds), and (~v) the Bonds (e) The term "Addlt~onal Bonds" shall mean the add~tlonal parity revenue bonds which the City reserves the rlght to lssue ~n the future, in accordance with Section 25 of th~s Ordinance (f) The term "System" shall mean (1) the Clty's entire exlsting waterworks and sewer system and the City's entire ex~st~ng electric l~ght and power system, together w~th all future extensions, ~mprovements, enlargements, and additions thereto, and all replacements thereof, and (2) any other related facilities, all or any part of the revenues or income from which do, ~n the future, at the option of the C~ty, and ~n accordance w~th law, become "Pledged Revenues" as hereinafter defined, provided that, notwlthstandlng 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 facll~t~es of any k~nd which are declared not to be a part of the System, and which are acquired or constructed by the City w~th the proceeds from the ~ssuance of "Special Facilities Bonds", which are hereby defined as being special revenue obligations of the City which are not payable from or secured by any Pledged Revenues, but whlch are secured by and payable from l~ens on and pledges of any other revenues, sources, or payments, ~nclud~ng, but not l~m~ted to, special contract revenues or payments received from any other legal entity ~n connection w~th such facilities, and such revenues, sources, or payments shall not be considered as or constitute Gross Rev- enues of the System, unless and to the extent otherwise pro- v~ded ~n the ordinance or ordinances authorizing the ~ssuance of such "Special Facilities Bonds" (g) The terms "Gross Revenues of the System" and "Gross Revenues" shall mean all revenues and ~ncome of every nature derived or received by the City from the operation and owner- sh~p of the System, ~nclud~ng the lnterest ~ncome from the ~nvestment or deposit of money in any Fund created by th~s Ordinance 24 (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, materials, repairs, and extensions necessary to render effi- cient service, provided, however, that only such repairs and extensions, as ~n 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 adequate service to said City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the Bonds or Additional Bonds, shall be deducted in determining "Net Revenues" Payments required to be made by the City for water supply or water facilities, sewer services or sewer facilities, fuel supply, and for the purchase of electric power, which payments under law constitute operation and maintenance expenses of any part of the System, shall constitute and be regarded as ex- penses of operation and maintenance of the System under this Ordinance Depreciation and amortization shall not constitute or be regarded as expenses of operation and maintenance of the System (i) The term "Pledged Revenues" shall mean (1) the Net Revenues, plus (2) any additional revenues, income, or other resources which are expected to be available to the City on a regular periodic basis, including, without limitation, any grants, donations, or income received or to be received from the United States Government, or any other public or private source, whether pursuant -to an agreement or otherwise, which in the future may, at the option of the City, be pledged to the payment of the Parity Bonds or Additional Bonds (]) 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 united States Treasury obl~gatlons such as its State and Local Government Series, and which may be in book-entry form Section 9 PLEDGE (a) The Bonds are "Additional Bonds" as permitted by Sections 24 and 25 of the ordinance passed on 25 March 10, 1983, authorKz~ng the Ser~es 1983 Bonds, and ~t is hereby determKned, declared, and resolved that all of the Parity Bonds (~ncludKng the Bonds) are secured and payable equally and ratably on a parKty, and that SectKons 8 through28, of th~s Ordinance are supplemental to and cumulatKve of Sec- t~ons 7 through 27 of the aforesald ordlnance passed on March 10, 1983, w~th SectKons 8 through 28 of this Ordlnance belng applicable to all of the ParKty Bonds (b) The Parity Bonds and any AddKtlonal Bonds, and the ~nterest thereon, including any lnterest coupons appertaining thereto, are and shall be secured by and payable from a fKrst 1Ken on and pledge of the Pledged Revenues, and the Pledged Revenues are further pledged to the establlshment and mainte- nance of the Funds created by thls OrdKnance, and any Funds created by any ordKnance authorlzKng the ~ssuance of any Add~tKonal Bonds The ParKty Bonds and any AddKtKonal Bonds are not and w~ll not be secured by or payable from a mortgage or deed of trust on any real, personal, or mKxed properties constKtutKng the System SectKon 10 SYSTEM FUND There heretofore has been and Ks hereby created and there shall be established and maKnta~ned on the books of the City, and accounted for separate and apart from all other funds of the C~ty, a specKal fund to be entKtled the "C~ty of Denton Utility System Fund" (the "System Fund") Ail Gross Revenues shall be credited to the System Fund ~mmedK- ately upon receipt, unless otherwlse provKded ~n thKs Ordl- nance Ail current expenses of operatKon and maKntenance of the System shall be pa~d from such Gross Revenues credited to the System Fund as a f~rst charge against same Before makKng any deposits hereinafter requKred to be made from the System Fund, the CKty shall retaKn ~n the System Fund at all t~mes an amount at least equal to one-s~xth of the amount budgeted for the then current f~scal year for the current operatlon and maKntenance expenses of the System SectKon 11 INTEREST AND SINKING FUND For the sole purpose of paying the pr~ncKpal of and ~nterest on all Parity Bonds and Additional Bonds, there heretofore has been and ~s hereby created and there shall be established and malntalned on the books of the CKty, and accounted for separate and apart from all other funds of the CKty, a separate fund to be en- titled the "C~ty of Denton Ut~lKty System Revenue Bonds Inter- est and Sinking Fund" (the "Interest and SlnkKng Fund") Section 12 RESERVE FUND There heretofore has been and Ks hereby created and there shall be established and maKnta~ned ~n~t~ally at Texas AmerKcan Bank/Fort Worth, N A , Fort Worth, Texas, and thereafter, at the optKon of the CKty, establlshed 26 and maintained at any tame at any national bank having a capital and surplus ~n excess of $25,000,000, a separate fund to be entitled the "C~ty of Denton Utility System Bonds and Additional Bonds Reserve Fund" (the "Reserve Fund") The Reserve Fund shall be used to pay the principal of and lnterest on any Parity Bonds or Additional Bonds when and to the extent the amounts ~n the Interest and S~nklng Fund available for such payment are lnsuff~c~ent for such purpose, and may be used for the purpose of f~nally retiring the last of any Parity Bonds or Additional Bonds Section 13 EXTENSION AND IMPROVEMENT FUND There heretofore has been and ~s hereby created and there shall be established and maintained on the books of the Clty, and accounted for separate and apart from all other funds of the Clty, a separate fund to be entitled the "Clty of Denton utility System Extension and Improvement Fund" (the "Extension and Improvement Fund") The Extension and Improvement Fund shall be used for the purpose of paylng the costs of ~mprove- 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 avallable, or for paying unexpected or extraordinary expenses of operation and maintenance of the System for which System funds are not otherwise available, or for any other lawful purpose Section 14 EMERGENCY FUND There ~s hereby created and there shall be established and ma~ntalned on the books of the C~ty, and accounted for separate and apart from all other funds of the C~ty, a separate fund to be entitled the "C~ty of Denton utlllty 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 ~n the Extension and Improvement Fund are available There was deposited ~n the Emergency Fund s~multaneously with the delivery of the Serles 1983 Bonds to the ~nltlal purchasers thereof from lawfully available funds of the C~ty the amount of $250,000 All ~nvestment interest ~ncome from the Emergency Fund shall be transferred to the System Fund as received Section 15 DEPOSITS OF PLEDGED REVENUES Pledged Revenues shall be credited to or deposited in the Interest and Sinking Fund, the Reserve Fund, the Extension and Improvement Fund, and other funds when and as required by th~s Ordinance and any ordinance authorizing the issuance of Additional Bonds 27 Sectaon 16 INVESTMENTS Money in any Fund establashed pursuant to th~s Ordinance or any ordanance authorlzang the assuance of Addat~onal Bonds, may, at the option of the C~ty, be placed an t~me deposits or certlfacates of deposat secured by oblagat~ons of the type herelnafter described, or be vested ~n Government Oblagat~ons (as defaned in Sectaon 8 hereof) or oblagataons guaranteed or ansured by the Unated States of America, which, an the opan~on of the Attorney General of the Unlted States, are backed by ats full faath and credit or represent ars general oblagataons, or invested obligations of anstrumental~t~es of the Unated States of Ameraca, ~nclud~ng, but not llmated to, evidences of lndebted~ ness ~ssued, ansured, or guaranteed by such governmental agencies as the Federal Land Banks, Federal Intermedaate Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Govern- ment National Mortgage Association, Unated States Postal Service, Farmers Home Admanastratlon, Federal Home Loan Mort- gage Assoc~atlon, Small Busaness Adman~stratlon, Federal Housing Assoc~ataon, or Participation Cert~facates in the Federal Assets F~nancang Trust, provaded that all such deposats and anvestments shall be made an such manner as wall, in the op~n~on of the C~ty, permit the money required to be expended from any Fund to be avaalable at the proper tame or tames as expected to be needed Such anvestments (except Un~ted States Treasury Obligations--State and Local Government Seraes ~nvest- ments held ~n book entry form, which shall at all tlmes be valued at cost) shall be valued an terms of current market value as of the last day of each fascal year Unless otherwise set forth herein, all anterest and ancome deraved from such deposits and investments ~mmed~ately shall be credlted to, and any losses deb~ted to, the Fund from which the deposit or investment was made, and surpluses an any Fund shall or may be dasposed of as hereinafter provaded Such ~nvestments shall be sold promptly when necessary to prevent any default an con- nect~on with the Paraty Bonds or Addat~onal Bonds consastent wath the ordinances, respectlvely, author~zang their assuance Section 17 FUNDS SECURED That money an all created by th~s Ordinance, to the extent not anvested, secured in the manner prescribed by law Funds shall be Section 18 PRIORITY OF DEPOSITS AND PAYMENTS FROM SYSTEM FUND That the C~ty shall make the deposits and payments from Pledged Revenues ~n the System Fund when and as required by th~s Ordinance and any ordinance author~zang any Additional Bonds, and such deposits shall be made an the followang manner and w~th the following arrevocable praorataes, respectively Farst, to the Interest and Sank~ng Fund, when and an the amounts requlred by th~s Ordanance and 28 any ordinance authorizing any Additional Bonds, Second, to the Reserve Fund, when and in the amounts required by this Ordinance and any ordinance authorizing any Additional Bonds, and Third, to the Extension and Improvement Fund, when and as required by Section 21 of this Ordinance Section 19 INTEREST AND SINKING FUND REQUIREMENTS The City shall cause to be deposited to the credit of the Interest and Sinking Fund the accrued interest and any premium received from the sale of the Initial Bond, and on or before the 25th day of each month, the City shall cause to be deposited to the 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 redemption on such mandatory redemption date The Paying Agent shall cancel any Parity Bonds so purchased Section 20 RESERVE FUND REQUIREMENTS There is now on hand in the Reserve Fund an amount of money and Government Obligations which is in excess of $3,000,000 and which is in an amount at least equal to the average annual principal and interest requirements of all Parity Bonds and Additional Bonds to be outstanding immediately after the issuance and delivery of the Initial Bond (the "Required Reserve Amount"), 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 After the delivery of any future Additional Bonds the City shall cause the Reserve Fund to be increased, if and to the extent necessary, so that such Fund will contain an amount of money and investments equal to the Required Reserve Amount Any increase in the Required Reserve Amount may be funded from Pledged Revenues, or from proceeds from the sale of any Additional Bonds, or any other available source or combination of sources All or any part of the Required Reserve Amount not funded initially and 29 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 dellvery, by deposits of Pledged Revenues ~n approximately equal monthly ~nstallments on or before the 25th day of each month Pr~nclpal amounts of the Parity Bonds and any Additional Bonds whlch must be redeemed pursuant to any applicable mandatory redemption requirements shall be deemed to be maturing amounts of principal for the purpose of calculatlng principal and interest requirements on such bonds When and so long as the amount in the Reserve Fund ~s not less than the Required Reserve Amount no deposits shall be made to the credit of the Reserve Fund, but when and 1f the Reserve Fund at any time contains less than the Requlred Reserve Amount, then the C~ty shall transfer from Pledged Revenues in the System Fund, and deposit to the credit of the Reserve Fund, monthly on or before the 25th day of each month, a sum equal to 1/60th of the Required Reserve Amount, until the Reserve Fund ~s restored to the Requlred Reserve Amount The City specifically covenants that when and so long as the Reserve Fund contains the Required Reserve Amount, the City shall cause all amounts in excess of the Required Reserve Amount to be deposited to the credit of the Interest and Sinking Fund Section 21 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS Durlng each year, subject and subordinate to making the re- quired deposits to the credit of the Interest and S~nk~ng Fund and the Reserve Fund, the City shall be requlred to deposit to the credit of the Extension and Improvement Fund, from Pledged Revenues in the System Fund, an amount equal to 8% of the "Adjusted Gross Revenues of the System", whlch term ~s hereby defined to mean the followlng 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 dlrectly attribut- able to (i) all fuel costs related to the production of electric energy by the C~ty and/or (1~) the pur- chase of electric energy by the C~ty Additional excess Pledged Revenues may, at the option of the Clty Council, be deposited to the credit of the Improvement Fund as permitted by Section 22 (b) hereof, but no such addi- tional deposit 1s required Ail ~nvestment interest ~ncome from the Extension and Improvement Fund shall be retained ~n and remain a part of such Fund Sectlon 22 DEFICIENCIES, EXCESS PLEDGED REVENUES (a) If on any occasion there shall not be sufficient Pledged 30 Revenues to make the requlred deposits into the Interest and Slnklng Fund or the Reserve Fund, such def~clency shall be made 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 requlred by thls Ordinance or any ordlnance authorizing the ~ssuance of Additional Bonds, any surplus Pledged Revenues may be used by the C~ty for any lawful purpose Section 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS On or before June 1, 1987, and semiannually on or before each December 1 and June 1 thereafter wh~le any of the Parity Bonds or Additional Bonds are outstanding and unpaid the City shall make available to the Paying Agents therefor, out of the Interest and S~nking Fund, or ~f necessary, out of the Reserve Fund, money sufficient to pay, on each of such dates, the principal of and ~nterest on the Parity Bonds and Add~tlonal Bonds as the same matures and comes due, or to redeem the Parity Bonds or Additional Bonds prior to maturlty, elther upon mandatory redemption or at the option of the C~ty At the direction of the C~ty the Paying Agents shall elther deliver pald Parity Bonds and Addltlonal Bonds, and any lnterest coupons apperta~nlng thereto, to the Clty or destroy all pald Parity Bonds and Additional Bonds, and any coupons appertaining thereto, and furnish the Clty w~th an appropriate certificate of cancellation or destruction Section 24 FINAL DEPOSITS (a) Any Parity Bond or Additional Bond shall be deemed to be pa~d, retired, and no longer outstanding within the meaning of thls Ordlnance when payment of the principal of, redemption premium, ~f any, on such Parity Bond or Additional Bond, plus ~nterest thereon to the due date thereof (whether such due date be by reason of maturity, upon redemption, or otherwise) e~ther (~) shall have been made or caused to be made ~n accordance w~th the terms thereof (~nclud~ng the glv~ng of any required notice of redemp- tion or provision for the proper g~v~ng of such not~ce having been made), or (~) shall have been provided by Irrevocably deposlting with or making available to a Paying Agent therefor, · n trust and Irrevocably set aside exclusively for such pay- ment, (1) money sufficient to make such payment or (2) Govern- ment Obligations which mature as to principal and ~nterest ~n such amounts and at such times as w~ll lnsure the ava~labll~ty, without re~nvestment, of suff~clent money to make such payment, and all necessary and proper fees, compensatlon, and expenses of such Paying Agent pertaining to the Parity Bonds and Addi- tional Bonds w~th respect to which such deposit is made shall have been pa~d or the payment thereof provided for to the 31 sat~sfactaon of such paying agent At such tame as a Bond or Addlt~onal Bond shall be deemed to be pa~d hereunder, as aforesaid, it shall no longer be secured by or entitled to the benefits of th~s Ordinance or allen on and pledge of the Pledged Revenues, and shall be entitled to payment solely from such money or Government Oblagataons (b) Any moneys so deposited wlth a paying agent may at the d~rect~on of the C~ty also be ~nvested an Government Obligations, maturang ~n the amounts and tames as hereinbefore set forth, and all lncome from all Government Obllgatlons in the hands of the paying agent pursuant to thls Section which ~s not required for the payment of the Parity Bonds and Additional Bonds, the redemption premlum, ~f any, and lnterest thereon, w~th respect to which such money has been so deposited, shall be turned over to the City or deposited as d~rected by the Caty Section 25 ADDITIONAL BONDS (a) The C~ty shall have the right and power at any t~me and from tame to t~me, and in one or more ser~es or ~ssues, to authorize, lssue, and deliver additional parity revenue bonds (hereln called "Addltlonal Bonds"), in accordance w~th law, in any amounts, for any lawful purpose, ~ncludlng the refunding of any Parity Bonds or Addi- tional Bonds, or other obligations Such Additional Bonds, if and when authorized, issued, and delivered ~n accordance w~th th~s Ordinance, shall be payable from and secured by an irrev- ocable f~rst l~en on and pledge of the Pledged Revenues, equally and ratably on a parity ~n all respects w~th the Parity Bonds and any other outstanding Additional Bonds (b) The principal of all Additional Bonds must be scheduled to be pa~d or mature on December 1 of the years ~n whach such principal ~s scheduled to be pald or mature Section 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS Additional Bonds shall be ~ssued only ~n accordance w~th thas Ordinance, and no ~nstallment, Ser~es, or ~ssue of Additional Bonds shall be ~ssued or delivered unless (a) The Mayor of the C~ty and the City Secretary s~gn a written certificate to the effect that the C~ty ~s not ~n default as to any covenant, condition, or obligation ~n connec- tion w~th all then outstanding Parlty Bonds and Additional Bonds, and the ordinances authoraz~ng same, and that the Interest and $lnk~ng Fund and the Reserve Fund each contains the amount then required to be thereln (b) An ~ndependent certlfled public accountant, or ln- dependent f~rm of cert~fled public accountants, acting by and 32 through a certified public accountant, s~gns a written certlf~- cate to the effect that, in his or lts op~nlon, durlng e~ther the next preceding fiscal year, or any twelve consecutive calendar month period out of the 18-month period immediately precedlng the month ~n whlch the ordlnance authorizing the issuance of the then proposed Additional Bonds is passed, the Pledged Revenues were at least (~) 1 25 t~mes an amount equal to the average annual principal and interest requirements, and (~) 1 10 t~mes an amount equal to the prlnc~pal and ~nterest requirements durlng the f~scal year during whlch such require- ments are scheduled to be the greatest, of all Parity Bonds and Additional Bonds whlch are scheduled to be outstandlng after the dellvery of the then proposed Add~tlonal Bonds It is specifically provided, however, that ~n calculating the amount of Pledged Revenues for the purposes of th~s subsection (b), ~f there has been any increase In the rates or charges for ser- vices of the System which ~s then ~n effect, but whlch was not in effect during all or any part of the entire per~od for which the Pledged Revenues are belng calculated (hereinafter referred to as the "entire period") then the certified public account- ant, or ~n l~eu of the certified public accountant a firm of consulting englneers, shall determine and certify the amount of Pledged Revenues as being the total of (~) the actual Pledged Revenues for the entire per~od, plus (l~) a sum equal to the aggregate amount by which the actual b~ll~ngs to customers of the System during the entire perlod would have been lncreased if such increased rates or charges had been ~n effect durlng the entire per~od (c) Provision shall be made ~n the ordinance authorizing their ~ssuance for ~ncreas~ng the Reserve Fund to the Required Reserve Amount as required by Section 20 hereof (e) All calculations of average annual principal and ~nterest requirements of any bonds made in connection w~th the ~ssuance of any then proposed Addlt~onal Bonds shall be made as of the date of such Additional Bonds, and also in maklng calculations for such purpose, and for any other purpose under th~s Ordinance, principal amounts of any bonds which must be redeemed prlor to maturity pursuant to any applicable mandatory redemption requirements shall be deemed to be maturing amounts of principal of such bonds Section 27 GENERAL COVENANTS The C~ty further cove- nants and agrees that in accordance w~th and to the extent required or permitted by law (a) Performance It w~ll faithfully perform at all t~mes any and all covenants, undertakings, stipulations, and provi- sions contained ~n th~s Ordinance, and each ordlnance 33 authorizing the issuance of Additional Bonds, and in each and every Parity Bond and Additional Bond, that at will promptly pay or cause to be paid the prlncapal 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 Caty, its officials, and em- ployees, to carry out, respect, or enforce the covenants and obligations of this Ordinance, or any ordinance authorizing the assuance of Additional Bonds, by all legal and equitable means, ancludlng specifically, but without limitation, the use and faling of mandamus proceedings, in any court of competent jurisdiction, against the City, its officials, and employees (b) City's Legal Authority The City is a duly created and existing home rule city of the State of Texas, and is duly authorized under the laws of the State of Texas to create and issue the P=rlty Bonds and Additional Bonds, that all action on its part for the creation and issuance of the said obligations has been or will be duly and effectively taken, and that said obligations in the hands of the holders and owners thereof are and will be valid and enforceable special obligations of the City in accordance with their terms (c) Title The City has or wall obtain lawful title to the lands, buildings, structures, and facilities constituting the System, that it warrants that it will defend the title to all the 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 claims and demands of all persons whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the Parity Bonds and Additional Bonds in the manner prescribed herein, and has lawfully exercised such rights (d) Liens The City will from time to time and before the same become delinquent pay and discharge all taxes, assess- ments, and governmental charges, if any, which shall be law- fully imposed upon it, or the System, that it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpald might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein, and that it will not create or suffer to be created any mechanic's, laborer's, materialman's, or other lien or charge which might or could be prior to the liens hereof, or do or 34 either when it has prQvlde substitutes of the City Council necessary suffer any matter or thing whereby the liens hereof m~ght or could be impaired, provided, however, that no such tax, assess- ment, 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 pa~d so long as the validity of the same shall be contested ~n good faith by the City (e) Operation of Systemf No Free Service While the Parity Bonds or any Additional Bonds are outstanding and unpaid the City shall continuously and efficiently operate the System, and shall maintain the System in good condltlon, repair, and working order, all at reasonable cost No free service of the System shall be allowed, and should the City or any of ~ts agencies, instrumentalities, lessors, or concessionaires make use of the services and facilities of the System, payment monthly of the standard retail price of the services provided shall be made by the City or any of its agencies, instrumen- talities, lessors, or concessionaires out of funds from sources other than the revenues of the System, unless made from surplus Pledged Revenues as permitted by Section 22(b) hereof (f) Further Encumbrance While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the City shall not additionally encumber the Pledged Revenues in any manner, except as permitted in this Ordinance in connection with Additional Bonds, unless said encumbrance is made ]unlor and subordinate in all respects to the liens, pledges, covenants, and agreements of this Ordinance and any ordinance authorizing the issuance of Additional Bonds, but the right of the City to issue revenue bonds payable from a subordinate lien on surplus Pledged Revenues is specifically recognized and retained, as permitted under Section 22(b) hereof) (g) Sale or Disposal of Property While the Parity Bonds or any Additional Bonds are outstanding and unpaid, the City shall not sell, convey, mortgage, encumber, lease, or in any manner transfer title to, or dedicate to other use, or other- w~se dispose of, the System, or any significant or substantial part thereof, provided that whenever the City deems it neces- sary to dispose of any property, machinery, fixtures, or equipment, or dedlcate such property to other use, it may do so made arrangements to replace the same or therefor, or it is determined by resolution that no such replacement or substitute is (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 ~nsurance 35 company or companies, against risks, accidents, or casualties against which and to the extent lnsurance ~s usually carried by corporations operatang l~ke propertaes, ~ncludang, to the extent reasonably obtainable, fare and extended coverage ~nsurance, ~nsurance against damage by floods, and use and occupancy ~nsurance Public l~aballty and property damage lnsurance also shall be carried unless the C~ty Attorney gaves a written op~n~on to the effect that the C~ty ~s not l~able for claims which would be protected by such ~nsurance All ~nsur- ance premiums shall be pa~d as an expense of operataon of the System At any t~me wh~le any contractor engaged an construc- tion work shall be fully responslble therefor, the C~ty shall not be required to carry ~nsurance on the work beang con- structed · f the contractor ~s requlred to carry approprlate ~nsurance Ail such pollc~es shall be open to the ~nspect~on of the Bondholders and their representatives at all reasonable t~mes Upon the happening of any loss or damage covered by ~nsurance from one or more of sa~d causes, the C~ty shall make due proof of loss and shall do all th~ngs necessary or desir- able to cause the ~nsur~ng companies to make payment ~n full d~rectly to the C~ty The proceeds of ~nsurance covering such property, together w~th any other funds necessary and available for such purpose, shall be used forthwith by the C~ty for repairing the property damaged or replacing the property destroyed, provided, however, that ~f sald lnsurance proceeds and other funds are ~nsuff~c~ent for such purpose, then sald ~nsurance proceeds pertaln~ng to the System shall be deposlted · n a special and separate trust fund, at an official depository of the C~ty, to be designated the Insurance Account The Insurance Account shall be held until such tame as other funds become available which, together w~th the Insurance Account, w~ll be sufficient to make the repairs or replacements or~gln- ally required (2) The annual audit hereinafter required may contaln a section commenting on whether or not the C~ty has complied wlth the requirements of this Section with respect to the mainte- nance of ~nsurance, and shall state whether or not all ~nsur- ance premiums upon the insurance policies to which reference ~s made have been pa~d (~) Annual Budget and Rate Covenant The C~ty shall prepare, prior to the beg~nnang of each f~scal year, an annual budget, ~n accordance w~th law, reflecting an estimate of cash receipts and d~sbursements for the ensuing f~scal year ~n sufficient detall to indicate the probable Gross Revenues and Pledged Revenues for such f~scal year The C~ty shall f~x, establish, maintain, and collect, such rates, charges, and fees for the use and availability of the System at all t~mes as are necessary (1) to produce Gross Revenues sufflclent, together 36 with any other Pledged Revenues, to pay all current operation and maintenance expenses of the System, and (2) to produce an amount of Pledged Revenues during each f~scal year at least equal to the greater of 1 25 tames the average annual principal and interest requirements of all then outstanding Paraty Bonds and Add~taonal Bonds or 1 25 t~mes the succeedang fiscal year's pr~ncapal and anterest requlrements of all then outstandang Parity Bonds and Additional Bonds (]) Records The C~ty shall keep proper books of record and account in which full, true, proper, and correct entr~es wlll be made of all dealings, activities, and transactions relating to the System, the Pledged Revenues, and the Funds created pursuant to th~s Ordinance, and all books, documents, and vouchers relating thereto shall at all reasonable tlmes be made available for ~nspectaon upon request of any Bondholder or c~t~zen of the C~ty To the extent consistent wath the provi- sions of thas Ordinance, the City shall keep ~ts books and records in a manner conformang to standard accountang practaces as usually would be followed by private corporations ownang and operating a sam~lar System, wath appropriate recogn~taon being g~ven to essentaal dafferences between municipal and corporate accountang practices (k) Audats After the close of each f~scal year whale any of the Paraty Bonds or any Add~taonal Bonds are outstand- ang, an audat w~ll be made of the books and accounts relatang to the System and the Pledged Revenues by an ~ndependent certifaed publac accountant or an independent f~rm of certaf~ed public accountants As soon as practicable after the close of each such year, and when saad audat has been completed and made available to the C~ty, a copy of such audit for the preceding year shall be ma~led to the Munac~pal Advisory Councal of Texas, to each payang agent for any bonds payable from Pledged Revenues, and to any Bondholders who shall so request an wrat~ng The annual audat reports shall be open to the anspec- taon of the Bondholders and thelr agents and representatives at all reasonable tames (1) Governmental A~encles It w~ll comply w~th all of the terms and conditions of any and all franchises, permits, and authorizations applicable to or necessary w~th respect to the System, and which have been obtained from any governmental agency, and the C~ty has or will obtain and keep ~n full force and effect all franchises, permats, authorizatlon, and other requirements applicable to or necessary with respect to the acquisition, construction, equipment, operataon, and mainte- nance of the System 37 (m) No Competition It wall 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 be in competition with the System, and to the extent that it legally may, the City wall prohibit any such competing facilities (n) No Arbitrage The City covenants to and with the purchasers of the Parity Bonds and any Additional Bonds that no use wall be made of the proceeds of any of such bonds at any tame throughout the term of any of such bonds which, if such use had been reasonably expected on the date of delivery of any of such bonds to and payment therefor by the purchasers, would have caused any of such bonds to be arbitrage bonds within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended, or the Internal Revenue Code of 1986, or any regulatIons or rulings pertaining thereto, and by this covenant the City Ks obligated to comply with the requirements of the aforesaid Codes and all applicable and pertinent Department of the Treasury regulations relating to arbitrage bonds The City further covenants that the proceeds of all such bonds will not otherwise be used d~rectly or indirectly so as to cause all or any part of such bonds to be or become arbitrage bonds within the meaning of the aforesaid Codes, or any regulations pertain- lng 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 Ordinance which may be deemed necessary or desirable by the City, provided, however, that nothing here~n contained shall permit or be construed to permit the amendment of the terms and conditions an this Ordinance or in the Parity Bonds or Addi- tional Bonds so as to (1) Make any change an 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 of or interest on the outstanding Parity Bonds or Addi- tional Bonds, or impose any conditions with respect to such payment, 38 (5) Affect the rights of the holders or owners of less than all of the Parity Bonds and Additional Bonds then outstanding, (6) Change the minimum percentage of the prin- cipal amount of Parity Bonds and Additional Bonds neces- sary for consent to such amendment (b) If at any time the City shall desire to amend the Ordinance under this Section, the City shall cause notice of the proposed amendment to be published in a financial publica- tion of general circulation in The City of New York, New York, once during each calendar week for at least two successive calendar weeks Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agents for inspection by all holders or owners of Parity Bonds and Addi- tional Bonds Such publication is not required, however, if notice in writing is given to each holder or owner of Parity Bonds and Additional Bonds (c) Whenever at any time not less than thirty days, and within one year, from the date of the first publication of said notice or other service of written notice the City shall receive an instrument or instruments executed by the holders or owners of at least 51% in aggregate principal amount of all Parity Bonds and Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agents, the City Council may pass the amendatory ordinance in substantially the same form (d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be amended in accordance with such amendatory ordi- nance, and the respective rights, 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 slx 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 39 time after slx months from the date of the f~rst publication of such notice by the holder or owner who gave such consent, or by a successor in t~tle, by filing notice thereof w~th 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 an 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 s~tuated showing that at the date therein mentioned such person had on deposit with such trust company, bank, banker, or other depository, the Parity Bonds and Additional Bonds described in such certificate The City may conclusively assume that such ownership continues until written notice to the contrary is served upon the City The ownership of all registered Parity Bonds and Additional Bonds shall be determined from the registration books kept by the registrar therefor Section 29 DAMAGED, MUTILATED, LOST, STOLEN, OR DE- STROYED BONDS (a) Replacement Bonds In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, 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) Application for Replacement Bonds Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying 40 Agent/Registrar for cancellation the Bond so damaged or muti- lated (c) No Default Occurred Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then con- tlnulng in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided ~n this Section (d) Charge for Issuing 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) Issuer for Issulng Replacement Bonds In accordance with Section 6 of Vernon's Ann Tex C~v 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 an conversion and exchange for other Bonds Section 30 CUSTODY, APPROVAL, AND REGISTRATION OF INITIAL BOND, BOND COUNSEL'S OPINION, AND CUSIP NUMBERS The Mayor of the Issuer is hereby authorized to have control of the Initial Bond issued hereunder and all necessary records and proceedings pertaining to the Initial Bond pending its delivery and its investigation, examination, and approval by the Attor- ney General of the State of Texas, and ~ts registration by the Comptroller of Public Accounts of the State of Texas Upon reglstrat~on of the Initial Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the Initial Bond, and the seal of said 41 Comptroller shall be ampressed, or placed in facslmale, on the Inatlal Bond The approvang legal opanaon of the Issuer's Bond Counsel and the asslgned CUSIP numbers may, at the optaon of the Issuer, be prlnted on the Initial Bond or on any Bonds ~ssued and delivered in conversion of and exchange or replace- ment of any Bond, but nelther shall have any legal effect, and shall be solely for the convenaence and ~nformat~on of the reglstered owners of the Bonds Sectaon 31 COVENANTS REGARDING TAX-EXEMPT STATUS OF BONDS The Issuer hereby covenants to take such actaon or refrain from such action necessary to ensure the status of the Bonds as oblagat~ons described an sectaon 103 of the Internal Revenue Code of 1986 or any predecessor thereof In partacular, but not by way of l~matataon, the Issuer covenants as follows (a) None of the proceeds of the Bonds (~ncludlng anvestment earnangs thereon) wlll be used, dlrectly or indirectly, ~n the trade or bus~ness of a person, other than the Issuer For purposes of the foregolng, any use of such proceeds ~n any manner contrary to the guadel~nes set forth ~n Revenue Procedures 82-14 and 82-15, 1982-1 C B 459, 460, or any amendments, rev~saons or supplements thereto, shall constitute the use of such proceeds in the trade or bus~ness of such person, (b) None of the proceeds of the Bonds (anclud~ng ~nvestment earnings thereon) wall be used, darectly or · ndarectly, to f~nance loans to any persons, (c) Not by way of l~matatlon, the Issuer w~ll take such action or w~ll refraan from any action whach would adversely affect the exemption from federal lncome taxa- tion of the anterest paad on the Bonds, lncludang wlthout limitation any action that would permat any of the Bonds to be treated as "pravate actlvlty bonds" wlthan the meanang of section 141 of the Code or as "federally guaranteed" wathin the meaning of section 149(b) of the Code, and wall take, or requlre to be taken, such acts as may be reasonably wath~n its abal~ty and as may from t~me to t~me be required under applicable law or regulation to continue to cause interest on the Bonds to be excludable from gross ~ncome of the holder, ~nclud~ng the preparatlon and f~lang of any statements or ~nformataon reports requared to be faled by the Issuer an order to maintain the tax-exempt status of the anterest on the Bonds, and (d) The Issuer has not taken, has no present anten- t~on of takang any action and knows of no actlon taken or 42 ~ntended whach would cause anterest on the Bonds to be includable an the gross ancome of any bondholders for federal ~ncome tax purposes Sectaon 32 COVENANTS REGARDING ARBITRAGE (a) A Rebate Fund ~s hereby establashed by the Issuer Such Fund shall be for the benefat of the Un~ted States of America The Rebate Fund as establashed for the purpose of complaance wath sectaon 148 of the Internal Revenue Code of 1986 (the Code") (b) At the close of each "Bond Year," the Issuer shall compute the amount of "Excess Earnlngs," af any, for the peraod begann~ng on the date of delavery of the Inataal Bond and ending at the close of such "Bond Year" and transfer to the Rebate Fund an amount equal to the dafference, af any, between the amount then in the Rebate Fund and the Excess Earnangs so computed The term "Bond Year" means wath respect to the Bonds each one-year per~od ending on the annaversary of the date of delivery of the Inatial Bond If, at the close of any Bond Year, the amount ~n the Rebate Fund exceeds the amount that would be required to be pa~d to the Un~ted States of Ameraca under paragraph (d) below af the Bonds had been paad an full, such excess may be transferred from the Rebate Fund and paad to the Issuer (c) In general, "Excess Earnlngs" for any per~od of tame means the sum of (a) the excess of -- (A) the aggregate amount earned durang such peraod of t~me on all "Nonpurpose Oblagat~ons" (including gains on the dasposat~on of such Obla~ gations) an which "Gross Proceeds" of the issue are invested (other than amounts attrabutable to an excess described an thas subparagraph (c) (a)), over (B) the amount that would have been earned during such per~od of tame af the "Y~eld" on such Nonpurpose Obligations (other than amounts attrab- utable to an excess descrabed ~n thas subparagraph (c) (a)) had been equal to the yaeld on the assue, plus (ii) any income during such peraod of tame attrab- utable to the excess descrabed an subparagraph (c) (~) above "Excess Earnangs" wall not anclude amounts, af any, whach need not be taken anto account under the speclal rules of sectaon 43 148(f) (4) (A) and (B) of the Code relating to bona fide debt service funds and the slx-month temporary investment period The terms "Nonpurpose Obligations," "Gross Proceeds" and "Yield" shall have the meanings prescribed by section 148 of the Code and shall be applied in the manner prescribed in such section (d) The Issuer shall pay to the United States of America at least once every five-years an amount that ensures that at least 90 percent of the Excess Earnings from the date of delivery of the Bonds to the close of the period for which the payment is being made will have been paid The Issuer shall pay to the United States of America not later than 60 days after the Bonds have been paid in full 100 percent of the amount then required to be paid under section 148(f) of the Code as a result of Excess Earnings (e) The Issuer shall keep such records as will enable the Issuer to fulfill its responsibilities under this section and section 148(f) of the Code and shall retain such records for at least slx years following the final payment of principal and interest on the Bonds (f) The Issuer will not use any portion of the proceeds of the Bonds directly or indirectly to acquire "higher yielding investments," or to replace funds which were used directly or indirectly to acquire "higher yielding investments" The term higher yielding investments means any investment property (as defined in section 148(b) (2) of the Code) which produces a yield over the term of the issue which is materially higher than the yield on the issuer (as defined above) The foregoing limitation on higher yielding Investments shall not apply to -- (1) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less until such proceeds are needed for the purpose for which the bonds are issued, or (2) amounts Invested in a bona fide debt service fund if the gross earnings on such fund are less than $100,000 in any bond year (g) The Issuer covenants to restrict the use of Initial Bond proceeds in such manner and to such extent, as may be necessary, so that the Bonds will not constitute arbitrage bonds under section 148 of the Code Any authorized represen- tative of the Issuer having responsibility with respect to the issuance of the Bonds is authorized and directed, alone or in con]unction with any other official, employee or consultant of the Issuer to give an appropriate certificate on behalf of the 44 Issuer, for Inclusion in the transcript of proceedings for the Bonds, setting forth the facts, estimates and circumstances and reasonable expectations pertaining to section 148 of the Code and, to the extent applicable, section 149(d) of the Code (h) The requirements of this Section are subject to, and shall be Interpreted in accordance with section 148 of the Code Section 33 SALE OF INITIAL BOND The Initial Bond is hereby sold and shall be delivered to Smith Barney, Harris Upham & Co Incorporated, as representative of the under- writers, in accordance with the Bond Purchase Contract dated the date of this meeting and presented to the City Council of the City at this meeting The Mayor of the Issuer is author- lzed and directed to execute, on behalf of the Issuer, said Bond Purchase Contract in the form and substance submitted at this meeting Section 34 OFFICIAL STATEMENT An Official Statement dated as of the date of this meeting has been prepared in connection with the sale of the Initial Bond and the Bonds, in the form and substance submitted at this meeting Said Offi- cial Statement and any supplement or addenda thereto have been and are hereby approved, and thelr use in the offer and sale of the Bonds is hereby approved It is further officially found, determined, and declared that the statements and representa- tions contained in said Offlclal Statement are true and correct in all material respects, to the best knowledge and belief of the Issuer The dlstrlbutlon and use of the Preliminary Official Statement dated January 22, 1987, prior to the date hereof is hereby ratified and approved Section 35 REFUNDING OF OUTSTANDING BONDS That concur- rently with the delivery of the Initial Bond the Issuer shall deposlt an amount from the proceeds from the sale of the Initial Bond, with Texas American Bank/Fort Worth, N A , Fort Worth, Texas, as Escrow Agent, sufficient, together w~th other available amounts, to refund all of the Outstanding Bonds in accordance with Section 7A of Vernon's Ann Tex Clv St Article 717k, as amended By resolution of the Issuer of even date herewlth the Issuer has authorized the execution of an appropriate Escrow Agreement to accomplish such purpose It is hereby found and determined that the refunding of the Outstand- ing Bonds is advisable and necessary in order to restructure the debt service requirements and procedures of the Issuer, and that the debt service requirements on the Bonds will be less than those on the Outstanding Bonds, resulting in a reduction in the amount of prlnclpal and interest which otherwise would be payable both on an actual and a present value basis 45 Section 36 FURTHER PROCEDURES The Mayor and C~ty Secretary of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby expressly authorazed, empowered, and dlrected from tame to tame and at any tame to do and perform all such acts and thlngs and to execute, acknowledge, and dellver an the name and on behalf of the Issuer all such Instruments and agreements, whether or not here~n mentaoned, as may be necessary or desar- able an order to carry out the terms and provasaons of thls Bond Ordanance, the Bonds, the sale and delavery of the Inat~al Bonds and the other Bonds, the Offacaal Statement, and the Escrow Agreement In case any offacer whose signature shall appear on any Bond shall cease to be such offacer before the delavery of such Bond, such sagnature shall nevertheless be valad and suffacaent for all purposes the same as ~f such offacer had remained ~n offace untll such delavery" 46 CERTIFICATE FOR ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1987, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON We, the undersigned offacers of saad Caty, hereby certify as follows 1 The Caty Councal of sa~d C~ty convened an SPECIAL MEETING ON THE 27TH DAY OF JANUARY, 1987, at the Munacapal Bulldang (C~ty Hall), and the roll was called of the duly constatuted officers and members of said Caty Councal, to-wat Jennafer K Walters, City Secretary Mark Chew Jane Hopkins Jam Riddlesperger Ray Stephens, Mayor Llnnle McAdams Jam Alexander Joe Alford and all of ~ad persons were present, except absentees thus constitutang a quorum Whereupon, among the followang was transacted at sa~d Meeting the followang other busaness, a wratten ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1987, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO was duly antroduced for the consaderataon of saad Caty Councal and duly read It was then duly moved and seconded that sa~d Ordinance be passed; and, after due discussion, saad motaon, carrying with ~t the passage of saad Ordinance, prevaaled and carried by the followang vote AYES Ail members of saad Caty Councal shown present above voted "Aye" NOES None 2 That a true, full, and correct copy of the aforesaid Ordinance passed at the Meeting descrabed an the above and foregoing paragraph as attached to and follows thas Certafa- cate, that saad Ordinance has been duly recorded in saad City Council's minutes of saad Meeting, that the above and foregoang paragraph is a true, full, and correct excerpt from said City Council's m~nutes of said Meeting pertalnlng to the passage of sa~d Ordinance, that the persons named ~n the above and fore- going paragraph are the duly chosen, quallfled, and acting offlcers and members of sa~d Clty Council as indicated there~n, and that each of the officers and members of said C~ty Council was duly and sufficiently not~fled off~clally and personally, · n advance, of the time, place, and purpose of the aforesaid Meeting, and that said Ordinance would be ~ntroduced and considered for passage at sa~d Meeting, and that said Meetlng was open to the public, and public not~ce of the t~me, place, and purpose of sa~d meeting was g~ven, all as required by Vernon's Ann Tex C~v St Article 6252-17 3 That the Mayor of said City has approved, and hereby approves, the aforesaid Ordinance, that the Mayor and the Clty Secretary of sa~d C~ty have duly s~gned sa~d Ordinance, and that the Mayor and the C~ty Secretary of sa~d C~ty hereby declare that their s~gn~ng of th~s Certificate shall constitute the s~gn~ng of the attached and following copy of sa~d Ordi- nance for all purposes SIGNED AND SEALED the 27th day of January, 1987 ~ Ci~ Secretary (SEAL) We, the undersigned, being respectively the C~ty Attorney and the Bond Attorneys of the Clty of Denton, Texas, hereby certify that we prepared and approved as to legality the attached and following Ordinance pr~or to ~ts passage as City At tor~ey Bond Attorneys