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