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20-2276Ordinance No. 20-2276 ORDINANCE ESTABLISHING THE CITY OF DENTON UTILITY SYSTEM EXTENDABLE COMMERCIAL PAPER FINANCING PROGRAM AND AUTHORIZING UTILITY SYSTEM REVENUE EXTENDABLE COMMERCIAL PAPER NOTES, SERIES A Adopted: January 12, 2021 ORDINANCE ORDINANCE ESTABLISHING THE CITY OF DENTON UTILITY SYSTEM EXTENDABLE COMMERCIAL PAPER FINANCING PROGRAM AND AUTHORIZING UTILITY SYSTEM REVENUE EXTENDABLE COMMERCIAL PAPER NOTES, SERIES A TABLE OF CONTENTS ARTICLE I DEFINITIONS AND CONSTRUCTION OF TERMS............................. Section 1.01. Definitions Section 1.02. Construction of Terms Section 1.03. Interpretation..................... ARTICLE II AUTHORIZATION OF EXTENDABLE COMMERCIAL PAPER NOTES . .10 Section 2.01 Section 2.02 Section 2.03 Section 2.04 Section 2.05 Section 2.06 Section 2.07 Section 2.08 Section 2.09 Section 2.10. Section 2.11. Section 2.12. Section 2.13 . Authorization ECP Notes Form of ECP Notes Execution and Authentication Issuing and Paying Agent ............... Book-Entry-Only System ........................... Negotiability, Registration, and Exchange . . . .. . . .. . . . . . . . . . . . Mandatory Exchange Upon Extended Maturity . . ECP Notes Mutilated, Lost, Destroyed, or Stolen .. Cancellation .................... Fiscal and Other Agents.... Dealer Agreements ..... . Credit Agreement. . 10 11 14 14 15 16 18 19 19 20 20 20 21 ARTICLE III ESTABLISHMENT OF ECP PROGRAM AND SECURiTY THEREFOR . Section 3.01. Establishment ofECP Program ................, Section 3.02. Security; Subordinate Lien; and Pledge ... Section 3.03. Covenant to Refinance.............., 21 21 . 22 ARTICLE IV ISSUANCE AND SALE OF ECP NOTES; CREATION OF FUNDS; PAYMENT Section 4.01. Issuance and Sale of ECP Notes Section 4.02. Conditions to Delivery Pursuant to Issuance Request ......... . Section 4.03. No Redemption Prior to Original Maturity Date ................ Section 4.04. Redemption following Original Maturity Date ..............., Section 4.05. Creation of Payment Fund .. . Section 4.06. Creation of Proceeds Fund; Proceeds of Sale ofECP Notes ............ Section 4.07. Deposits Into Payment Fund. 22 24 25 25 25 25 26 Section 4.08. Defeasance ofECP Notes ..... ARTICLE V COVENANTS OF THE ISSUER................. Section 5.01. Limitation on Issuance Section 5.02. Tax Exempt ECP Notes to Remain Tax Exempt ............. Section 5.03. Opinion of Bond Counsel ...., Section 5.04. Performance ............................................, Section 5.05. Legal Authority....................................... Section 5.06. Operation of System .............................. a An 4: A ax C A n7 nun al nao l:vbrb=n+ubjqnnrb vb rb nb 26 27 30 30 30 30 30 31 31 32 32 32 Section 5.08. Sale or Disposal of Property Section 5.09. Insurance 5.10. Rate Covenant Section 5.11. Governmental Agencies................... Section 5.12. Title................ Section 5.13. Liens............... Section 5.14. No Competition...., Section 5.15. Records ................ Section 5.16. Audits................... 33 33 33 ...... 33 ARTICLE VI AMENDMENTS .33 33 33 35 36 36 37 37 37 37 37 37 38 38 38 39 39 39 40 40 40 Section 6.01 Section 6.02 Section 6.03 Section 6.04 Section 6.05. Section 6.06. Section 6.07. Limitations Amendments Without Consent Amendments With Consent Notice of Proposed Amendments ........ . Receipt of Consents ......................... Effect of Amendments Additional Amendments . . . . . . . . . . . . . . . . . . . , ARTICLE VII MISCELLANEOUS ...... Section 7.01. Ordinance to Constitute a Contract; Equal Security..........., Section 7.02. Individuals Not Liable ., Section 7.03. Additional Actions; Recitals Section 7.04. Severability of Invalid Provisions ........... Section 7.05. Payment and Performance on Business Days .................., Section 7.06. Limitation of Benefits With Respect to the Ordinance ...... . Section 7.07. Approval of Attorney General ............... Section 7.08. Approval of Offering Memorandum.. Section 7.09. Notice to Rating Agencies .................. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES.... , Section 8.01. Events of Default Section 8.02. Remedies for Default ... EXHIBIT A – FORM OF ECP NOTES EXHIBIT B – FORM OF MASTER ECP NOTE EXHIBIT c – FORM OF EXTENSION REQUEST ...... ORDINANCE ESTABLISHING THE CITY OF DENTON UTILITY SYSTEM EXTENDABLE COMMERCIAL PAPER FINANCING PROGRAM AND AUTHORIZING UTILITY SYSTEM REVENUE EXTENDABLE COMMERCIXL PAPER NOTES, SERIES B WHEREAS, the City of Denton, Texas (the “City” or the “Issuer“) is a home-rule municipality, acting as such under the Constitution and laws of the State of Texas, has a population in excess of 50,000, and has outstanding long-term indebtedness that is rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long-term obligations; and WHEREAS, capitalized terms used herein shall have the meanings given to them in Section 1.01 hereof; and WHEREAS, the Outstanding Senior Lien Obligations are payable from Pledged Revenues; and WHEREAS, the Senior Lien Obligation Ordinance for the Outstanding Senior Lien Obligations permit the Issuer to encumber thc Pledged Revenues with additional Senior Lien Obligations or Subordinate Lien Obligations or other bonds or obligations payable from a subordinate lien on the Pledged Revenues; and WHEREAS, the Senior Lien Obligation Ordinance for the Outstanding Senior Lien Obligations permit the issuance of additional Senior Lien Obligations to refund such Subordinate Lien Obligations or other subordinate lien obligations; and WHEREAS, the Issuer wishes to provide in this Ordinance for the issuance, from time to time, of its ECP Notes, that shall be junior and subordinate to Outstanding Senior Lien Obligations, with such ECP Notes to be issued in an aggregate principal amount Outstanding at any one time not exceeding the Authorized Amount to provide an interim variable rate financing program for Projects; and WHEREAS, although the Issuer has the option to extend the maturity of an ECP Note, the Issuer intends, but is not obligated, to pay each ECP Note on its Original Maturity Date from the proceeds of newly issued ECP Notes, from the proceeds ofRefunding Bonds, or from other funds legally available to the Issuer for such purpose; and WHEREAS, the ECP Notes shall be special limited obligations of the Issuer issued in anticipation of receiving proceeds from Refunding Bonds that the Issuer may issue pursuant to a Refunding Ordinance to repay the ECP Notes; and WHEREAS, the ECP Notes authorized to be issued by this Ordinance shall be issued and Page 1 delivered pursuant to Chapter 1371, Texas Government Code, as amended, and other applicable laws; and WHEREAS, the City Council hereby finds that the purposes for which it may issue ECP Notes hereunder constitute “eligible projects“, as contemplated by Chapter 1371, Texas Government Code, as amended; and WHEREAS, the meeting was open to the public and public notice of the time, place and purpose of said meeting was given pursuant to Chapter 551, Texas Government Code; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDA INS: ARTICLE I DEFINITIONS AND CONSTRUCTION OF TERMS Section 1.01. Definitions. “Accountant“ means an independent certified public accountant or accountants or a firm of independent certified public accountants, in either case, with demonstrated expertise and competence in public accountancy. “Acts” means Chapter 1371 and Chapter 1502, Texas Government Code, as amended. “ Amended Ordinance” means any ordinance amending or amending and restating this Ordinance entered into as provided in Article VI of this Ordinance. “Authorized Amount” means $100,000,000. “Beneficial Owner” means the Person in whose name an ECP Note is recorded as beneficial owner of such ECP Note by the Depository, Participant, or Indirect Participant, as the case maybe. “Bond Counsel“ means McCall, Parkhurst & Horton L.L.P. or an attorney or law firm of attorneys of national recognition selected or engaged by the Issuer with knowledge and experience in the field of municipal finance. “Business Day” means any day (a) when banks are open for business in Dallas, Texas, and (b) when banks are not authorized to be closed in New York, New York. “Chapter 1371” means Chapter 1371, Texas Government Code, as amended. “City Authorized Representative” means one or more of the following officers or employees of the Issuer: the City Manager, the Assistant City Manager/Chief Financial Officer, the Director of Finance (or successors to any such positions), or such other officer or employee of the Issuer Page 2 authorized by the City Council to act as a City Authorized Representative, “City Council” means the City Council of the Issuer. “Code” means the Internal Revenue Code of 1986, as amended and the applicable United States Treasury Regulations proposed or in effect with respect thereto. “Costs of Issuance” means all reasonable costs incurred by the Issuer in connection with the issuance ofECP Notes, including, but not limited to: (a) counsel fees related to the issuance ofECP Notes; (b) financial advisor fees incurred in connection with the issuance ofECP Notes; (c) rating agency fees; (d) the initial fees and expenses of the Issuing and Paying Agent; (e) accountant fees related to the issuance of ECP Notes; (f) printing and publication costs; and (g) any other fee or cost incurred in connection with the issuance of ECP Notes that constitutes an “issuance cost” within the meaning of the Code. “CUSIP” has the meaning assigned to such term in Section 2.03(a). “Dealer” means such firm or firms that are acting as a dealer for the Issuer as appointed by the City Authorized Representative pursuant to Section 2.12 hereof and any successor thereto. “Dealer Agreement” means each dealer agreement executed and delivered by a City Authorized Representative and a Dealer pursuant to Section 2. 12 hereof, as each such agreement may be amended from time to time pursuant to the terms thereof. “Defeasance Securities” means (i) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the purchase thereof are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. “Depository” means the securities depository for the ECP Notes appointed as such pursuant to Section 2.06 hereof, and its successors and assigns. “DTC” means The Depository Trust Company, as the Depository, or any substitute securities depository appointed pursuant to this Ordinance, or any nominee of either. “ECP Note” means each “City of Denton Utility System Revenue Extendable Commercial Paper Note, Series A” issued pursuant to the provisions of this Ordinance with a final maturity, whether extended or not as described herein, on a Business Day not more than 270 days from the Issue Date, and which are authorized to be issued and reissued from time to time under this Page 3 Ordinance, having the terms and characteristics specified in Section 2.02 and in the form described in Exhibit A hereto. “EMMA” means the Electronic Municipal Market Access website of the Municipal Securities Rulemaking Board. “Event of Default” has the meaning assigned to such term in Section 8.01. “Extended Maturity Date” means, for each ECP Note, a Business Day (which shall be specified in the confIrmation sent to the Holder of the ECP Note) that is the Extended Maturity Days from its Issue Date. “Extended Maturity Days” means 270 days or any other lesser number of days specified in the confirmation sent to the Holder of the ECP Note. “Extended Rate” means, for each ECP Note, the rate of interest per annum established under Section 2.02(e) for each weekly period from and after the Original Maturity Date. “Fiscal Year” means the 12-month operational period of the Issuer commencing on October 1 of each year, or such other twelve month period as may in the future be designated as the Fiscal Year of the Issuer. “Fitch” means Fitch Investors Service or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities ratings services, such other nationally recognized securities rating agency as may be designated in writing by the City Council. “Gross Revenues” mean all revenues, income and receipts of every nature derived or received by the Issuer from the operation and ownership of the System, including the interest income from investment or deposit of money in any fund or account created by any Senior Lien Obligation Ordinance or this Ordinance or maintained by the Issuer in connection with the System. “Holder” means the Registered Owner or any Person who is in possession of any ECP Note issued to bearer or in blank. “Indirect Participant” means a broker-dealer, bank, or other financial institution for which the Depository holds ECP Notes as a securities depository through a Participant. “Issuance Request” means a request made by the Issuer, acting through a City Authorized Representative, to the Issuing and Paying Agent for the delivery of an ECP Note or ECP Notes. “Issue Date” means, for each ECP Note, the date on which the ECP Note is initially issued and delivered to the Beneficial Owner. “Issuer” means the City of Denton, Texas. Page 4 “Issuing and Paying Agent” means such entity or entities acting as such which are appointed by the City Authorized Representative pursuant to Section 2.05 hereof and have executed and delivered an Issuing and Paying Agent Agreement as approved and executed by a City Authorized Representative. When there is a co-Issuing and Paying Agent, either may perform the functions and duties of the Issuing and Paying Agent hereunder and under the Issuing and Paying Agent Agreement. “Issuing and Paying Agent Agreement“ means any issuing and paying agent agreement authorized to be entered into by Section 2.05 hereof, and any and all modifications, alterations, amendments and supplements thereto, or any other Issuing and Paying Agent Agreement entered into by the Issuer and the Issuing and Paying Agent with respect to the ECP Notes. “LIBOR Index“ means (i) for any date the London interbank offered rate for U.S. dollar deposits for a one-month period, as reported on the Reuters Screen LIBOROI Page (or any successor) as of 1 1 :00 a.m., London time, on the second Business Day preceding such date, or (ii) if such rate is not then reported by Reuters, the rate then reported by any successor to or substitute for such service designated by the City Council, acting through a City Authorized Representative, in writing that provides rate quotations comparable to those provided on such Reuters screen page, or (iii) if such rate is not published or otherwise becomes unavailable, such other publicly available rate as the Issuer (in consultation with the Dealers) shall determine to effect, to the extent practicable, an aggregate all-in interest rate comparable to the LIBOR-based rate in effect prior to its replacement; provided that if the Issuer determines that there is an industry-accepted successor rate to one-month LIBOR, then the Issuer shall select such rate. Such replacement index may be expressed as a percentage of (more or less than, or equal to, 100%) and/or a fixed spread to another index, so that when added to the E variable the resulting sum would be approximately equivalent to the Extended Rate determined based on the LIBOR Index prior to LIBOR becoming unavailable. “Master ECP Note” has the meaning assigned to such term in Section 2.06(b). “Maximum Interest Rate” means (i) with respect to any Tax Exempt ECP Notes, the lesser of: (A) ten percent (10%) per annum and (B) the Maximum Lawful Rate, and (ii) with respect to any Taxable ECP Notes, the lesser of: (A) twelve percent (12%) per annum and (B) the Maximum Lawful Rate. “Maximum Lawful Rate” means the maximum net effective interest rate permitted by law to be paid on obligations issued or incurred by the Issuer in the exercise of its borrowing powers (prescribed by Chapter 1204, Texas Government Code, as amended). “Maximum Original Maturity Days“ means the number of days specified in an Issuance Request but may be no greater than 90 days. “Moody’s” means Moody’s Investors Service, Inc. or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the Issuer. Page 5 “Net Revenues” mean all Gross Revenues remaining after deducting Operating Expenses. “Nominee” means the nominee of the Depository as determined from time to time in accordance with this Ordinance for any one or more the ECP Notes. “Operating Expenses” means the reasonable and necessary expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service (but only such repairs and extensions as, in the judgment of the Issuer, are necessary to keep the System in operation and render adequate service or such as might be necessary to meet some physical accident or conditions which would otherwise impair the Senior Lien Obligations or ECP Notes), and all payments under contracts for materials and services (including water supply contracts) provided to the Issuer that are required to enable the Issuer to render efficient service. The following shall never be considered as an Operating Expense: ( 1) depreciation, (2) franchise fees paid to the Issuer or transferred to the general fund or other fund of the Issuer, and (3) return on investment payments made to the Issuer or transferred to the general fund or other fund of the Issuer. “Ordinance” means this Ordinance establishing the City of Denton Utility System Extendable Commercial Paper Financing Program and Authorizing Utility System Revenue Extendable Commercial Paper Notes, Series A, adopted by the City Council on January 12, 2021, and as it may be amended or supplemented from time to time by an Amended Ordinance. “Original Maturity Date” means, for each ECP Note, a Business Day not less than 1 day and not greater than the Maximum Original Maturity Days from the Issue Date, and specified as such in the confirmation sent to the Holder of the ECP Note. “Original Rate” means, for each ECP Note, the rate of interest per annum borne by such ECP Note to the Original Maturity Date as specified in the applicable Issuance Request. “Outstanding”, when used with respect to ECP Notes, shall mean all ECP Notes which have been authenticated and delivered under this Ordinance, except: (a) ECP Notes cancelled or purchased by the Issuing and Paying Agent for cancellation or delivered to or acquired by the Issuing and Paying Agent for cancellation and, in all cases, with the intent to extinguish the debt represented thereby (including ECP Notes surrendered pursuant to Section 2.08 hereof); (b) ECP Notes in lieu of which other ECP Notes have been authenticated; (c) ECP Notes that have become due (at maturity or on redemption or otherwise) and for the payment of which sufficient moneys, including interest accrued to the due date, are held by the Issuing and Paying Agent; (d) ECP Notes which, under the terms of this Ordinance, are deemed to be no longer Outstanding; and (e) for purposes of any consent or other action to be taken by the holders of a specified percentage of ECP Notes under this Ordinance, ECP Notes held by or for the account of the Issuer or by any person controlling, controlled by or under common control with the Issuer. “Outstanding”, when used with reference to Senior Lien Obligations, shall mean all such bonds or other obligations theretofore delivered except: (i) any such obligations canceled by or on behalf of the Issuer at or before said date; (ii) any such obligations defeased pursuant to the Page 6 defeasance provisions of the Senior Lien Obligation Ordinance authorizing their issuance, or otherwise defeased as permitted by applicable law; and (iii) any such obligations in lieu of or in substitution for which another obligation shall have been delivered pursuant to the ordinance authorizing the issuance of such obligations. “Participant” means a broker-dealer, bank, or other financial institution for which the Depository holds ECP Notes as a securities depository. “Payment Fund“ means that fund created pursuant to Section 4.05 hereof “Permitted Investments” means any investment permitted by the Public Funds Investment Act, Chapter 2256, Texas Government Code, and the investment policy of the Issuer. “Person” means an individual, a corporation (including a limited liability company), a partnership (including a limited partnership), an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof “Pledged Revenues” means (a) the Net Revenues, plus (b) any additional revenues, income, receipts, or other resources, 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 hereafter are pledged by the Issuer to the payment of the Senior Lien Obligations and ECP Notes, and excluding those revenues excluded from Gross Revenues or excluded from Net Revenues. “Prevailing Rating” means, at the time of determination and with respect to a Rating Agency, the rating assigned to the ECP Notes by the Rating Agency or any comparable future designation by the Rating Agency. “Proceeds” means proceeds of the sale of the ECP Notes or any moneys, securities or other obligations that may be deemed to be proceeds of the ECP Notes within the meaning of the Code. “Proceeds Fund” means the fund by that name established pursuant to Section 4.06. “Program Expiration Date” means January 1, 205 1. “Project” means the acquisition, purchase, construction, improvement, enlargement, and/or equipping of any property, buildings, structures, activities, services, operations, or other facilities of the System which is listed or otherwise described in a Tax Certificate of the Issuer or other certificate of a City Authorized Representative, as being financed in whole or in part with the Page 7 Proceeds of the ECP Notes. “Project Costs” means all costs and expenses incurred in relation to a Project and permitted by law to be paid with the Proceeds of the ECP Notes, including without limitation, design, planning, engineering, and legal costs; acquisition costs of land, interests in land, right of way, and easements; construction costs; costs of machinery, equipment, and other capital assets incident and related to the operation, maintenance, and administration of the Project; and Costs of Issuance. “Rating Agency” means, any of the following: (i) Moody’s, (ii) Standard & Poor’s, (iii) Fitch or (iv) any other nationally recognized credit rating agency specified in an Amended Ordinance that maintains a rating on the ECP Notes at the request of the Issuer. “Rebate Fund” has the meaning assigned to such term in Section 5.02(b). “Refbnding Bonds” means refUnding Senior Lien Obligations of the Issuer authorized to be issued pursuant to a Refunding Ordinance to retire or defease ECP Notes. “Refunding Ordinance” means any ordinance adopted by the City Council hom time to time, authorizing the issuance of the Refunding Bonds. “Registered Owner” means the person or entity in whose name any ECP Note is registered in the Registration Books. “Registration Books” means the books or records relating to the registration, payment, and transfer or exchange of the ECP Notes maintained by the Issuing and Paying Agent pursuant to Section 2.06 hereof. “Registrar” means each person or entity, if any, designated by the Issuer herein or in an Amended Ordinance to keep a register of ECP Notes and of the transfer and exchange of the ECP Notes, and its successors and assigns, and any other person or entity which may at any time be substituted for it pursuant hereto. Initially, the Registrar shall be the Issuing and Paying Agent. “Senior Lien Obligations” means any Outstanding “City of Denton Utility System Revenue Bonds, Series 2017” of the Issuer, and any other obligations issued by the Issuer from time to time that are specified to be on parity with such Senior Lien Obligations pursuant to any ordinance authorizing Senior Lien Obligations. The Senior Lien Obligations, and the interest thereon, are payable from and secured by a first lien on and pledge of Pledged Revenues. “Senior Lien Obligation Ordinance” or “Senior Lien Obligation Ordinances” shall mean, individually or collectively, as appropriate, the Issuer’s Ordinance adopted June 21, 2016 authorizing the issuance of the “City of Denton Utility System Revenue Bonds, Series 2017”, as may be amended, and all other ordinances, as amended, authorizing the issuance of the Senior Lien Obligations. “SIFMA” means the Securities Industry and Financial Markets Association Page 8 “SIFMA Index“ means (i) the seven-day high grade market index of tax-exempt variable rate demand obligations, as most recently calculated by Bloomberg and published or made available by SIFMA or any Person acting in cooperation with or under the sponsorship of SIFMA or (ii) if such index is not published, such other publicly available rate as the Issuer (in consultation with the Dealers) shall deem most nearly equivalent thereto. Such index may be expressed as a percentage of (more or less than, or equal to, 100%) and/or a fixed spread to another index, and in no event shall the interest rate calculated on the basis of the SIFMA Index exceed the Maximum Interest Rate. “Special Project” means any water, wastewater, electric, drainage or other facilities of any kind or other public improvement declared by the Issuer not to be part of the System, for which the costs of acquisition, construction and installation are paid from proceeds of Special Project Bonds, but only to the extent that and for so long as all or any part of the revenues or proceeds of which are or will be pledged to secure the payment or repayment of such costs of acquisition, construction and installation under such financing transaction. “Special Project Bonds” means special revenue obligations of the Issuer which are not secured by the Pledged Revenues, but which are secured by and payable solely from liens on and pledges of any other revenues, sources, or payments, including, but not limited to, special contract revenues or payments received from the System, any other legal entity, or any combination thereof, in connection with a Special Project; and such revenues, sources or payments shall not be considered as or constitute Gross Revenues of the System, unless and to the extent otherwise provided in the ordinance or ordinances authorizing the issuance of such Special Project Bonds. “Standard & Poor’s” means S&P Global Ratings, a division of S&P Global Inc. or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the Issuer. “State” means the State of Texas. “Subordinate Lien Obligations” means any bonds, notes, contractual obligations or other debt issued by the Issuer that are payable from or reasonably expected to be payable in whole from, and equally and ratably secured by a lien on and pledge of the Pledged Revenues, such pledge being subordinate and inferior to the lien on and pledge of the Pledged Revenues that are or will be pledged to the payment of any Senior Lien Obligations issued by the Issuer. “System” means the Issuer's entire existing waterworks system, the Issuer's entire existing wastewater system, the Issuer's entire existing electric light and power system, and the Issuer's entire existing drainage system, together with all future extensions, improvements, enlargements, and additions thereto, and all replacements thereof; provided that, notwithstanding the foregoing, and to the extent now or hereafter authorized or permitted by law, the term System shall not include any Special Projects which are hereafter acquired or constructed by the Issuer with the proceeds of Special Project Bonds. “Tax Certificate“ means a certificate, as amended from time to time, executed and delivered Page 9 on behalf of the Issuer by a City Authorized Representative on the date upon which the ECP Notes are initially issued and delivered, or any functionally equivalent certificate subsequently executed and delivered on behalf of the Issuer by a City Authorized Representative with respect to the requirements of Section 148 (or any successor section) of the Code relating to the ECP Notes. “Taxable ECP Notes” means ECP Notes the interest on which is includable in the taxable income of the holder thereof “Tax Exempt ECP Notes” means ECP Notes the interest on which is excludable from the taxable income of the holder thereof. Section 1.02. Construction of Terms. If appropriate in the context of this Ordinance, words of the singular number shall be considered to include the plural, words of the plural number shall be considered to include the singular, and words of the masculine, feminine, or neuter gender shall be considered to include the other genders. Section 1.03. Interpretation. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Ordinance, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Ordinance as a whole and not to any particular Article, Section or subdivision hereof. If any date for the payment of principal of or interest on the ECP Notes is not a Business Day, payment may be made on the next succeeding day that is a Business Day and no interest will accrue for the intervening period. ARTICLE II AUTHORIZATION OF EXTENDABLE COMMERCIAL PAPER NOTES Section 2.01. Authorization.(a) Pursuant to authority conferred by and in accordance with the provisions of the Constitution and laws of the State of Texas, particularly the Acts, ECP Notes are hereby authorized to be issued in an aggregate principal amount not to exceed the Authorized Amount at any one time Outstanding for the purpose of financing Projects and paying Project Costs and to refinance, renew, or refund Outstanding ECP Notes, including interest thereon, all in accordance with and subject to the terms, conditions, and limitations contained herein; provided that the maximum aggregate principal amount of ECP Notes that may be issued under this Ordinance shall be reduced by the aggregate principal amount of all then Outstanding ECP Notes. For purposes of this Section 2.01, any portion of Outstanding ECP Notes to be paid from money on deposit with the Issuing and Paying Agent and from the available proceeds of Refunding Bonds or other obligations of the Issuer issued on the day of calculation shall not be considered Outstanding. The authority to issue ECP Notes from time to time under the provisions of this Ordinance shall exist until the Program Expiration Date, regardless of whether at any time prior to the Program Expiration Date there are any ECP Notes Outstanding. (b) As determined by a City Authorized Representative in accordance with Section 2.02 and in consultation with Bond Counsel in accordance with Section 4.02 hereof for each issuance ofECP Notes, such ECP Notes shall be issued either as (i) Tax Exempt ECP Notes, the interest on which is excludable from the gross income of the owners thereof for federal income tax purposes, pursuant to section 103 of the Code or (ii) Taxable ECP Notes, the interest on which is includable in the gross Page 10 income of the owners thereof for federal income tax purposes. (c) in connection with the refinancing or refunding of Outstanding ECP Notes through the issuance ofECP Notes, such ECP Notes shall qualify as “obligations,” as such term is defined in Chapter 1371 at the time any such refinancing or refunding occurs. The Outstanding ECP Notes to be refunded shall be selected by the City Council or as determined by a City Authorized Representative. Section 2.02. ECP Notes. (a) Maturity Dates ; Denominations . Under and pursuant to the authority granted hereby and subject to the limitations contained herein, ECP Notes to be designated “City of Denton Utility System Revenue Extendable Commercial Paper Note, Series A (Tax-Exempt)” and “City of Denton Utility System Revenue Extendable Commercial Paper Note, Series A (Taxable)” are hereby authorized to be issued, sold and delivered from time to time in such principal amounts as determined by a City Authorized Representative in denominations of $100,000 or in integral multiples of $1,000 in excess thereof, numbered in ascending consecutive numerical order in the order of their issuance or in such manner as the Issuing and Paying Agent may deem appropriate, and shall mature and become due and payable on such dates as a City Authorized Representative shall determine at the time of sale; provided that (a) the Original Maturity Date for each ECP Note shall be not less than 1 day nor greater than the Maximum Original Maturity Days from its Issue Date and (b) the Extended Maturity Date for each ECP Note shall be the number of Extended Maturity Days from its Issue Date. Outstanding ECP Notes may bear different Issue Dates, Original Maturity Dates, Extended Maturity Dates and interest rates. Tax Exempt ECP Notes and Taxable ECP Notes shall be sold at a price of par. (b) Dated Date; Interest Calculation; Sale Price. ECP Notes herein authorized (i) shall be dated as of their Issue Date and shall bear interest payable at maturity at a fixed annual rate (calculated on the basis of a year consisting of: 365/366 days and actual number of days elapsed with respect to Tax Exempt ECP Notes and 360 days and actual number of days elapsed with respect to Taxable ECP Notes ), which shall not in any event exceed the Maximum Interest Rate, (ii) shall mature on its Original Maturity Date, unless the Issuer exercises its option in accordance with this Ordinance to extend the maturity date, in which case the ECP Note shall mature on its Extended Maturity Date, and (iii) shall be sold by the Dealer pursuant to a Dealer Agreement. ECP Notes may be payable to bearer, may be issued in registered form, without coupons, or may be issued in book- entry-only form pursuant to Section 2.06 as determined by a City Authorized Representative. ECP Notes issued hereunder may contain terms and provisions for the redemption or prepayment thereof prior to maturity, subject to any applicable limitations contained herein (including Section 4.03), as provided herein or otherwise as shall be determined by a City Authorized Representative. (c) Payment . The Issuer’s obligation to pay the principal of and interest on each and every ECP Note when due is a limited obligation of the Issuer payable solely from Proceeds of the sale of ECP Notes, Pledged Revenues as described in Section 3.02 or Refunding Bonds issued to refinance ECP Notes and any funds held and available for such purpose. The Registered Owners shall never have the right to demand payment of the ECP Notes out of any funds raised or to be raised by the Page 1 1 levy of taxes by the Issuer, or from any source other than specified in this Ordinance. The Issuer will make all payments of principal and interest directly to the Issuing and Paying Agent in immediately available funds on or prior to 2:00 p.m., New York, New York time, on the date any payment is due on any ECP Note. The principal of and the interest on the ECP Notes shall be paid in federal funds or other immediately available funds in currency of the United States of America that is legal tender for the payment of public and private debts. The principal of and the interest on the ECP Notes shall be payable at the principal office of the Issuing and Paying Agent on or before the close of business on any Original Maturity Date or Extended Maturity Date, as the case may be, upon which such ECP Notes have become due and payable, provided that such ECP Notes are presented and surrendered on a timely basis. Upon presentation of such an ECP Note to the Issuing and Paying Agent no later than 1:15 p.m. (New York, New York time) on a Business Day, payment for such ECP Note shall be made by the Issuing and Paying Agent in immediately available funds on such Business Day. If an ECP Note is presented for payment after 1:15 p.m. (New York, New York time) on a Business Day, payment therefor may be made by the Issuing and Paying Agent on the next succeeding Business Day without the accrual of additional interest thereon. Notwithstanding the provisions of the previous paragraph, in the event the ECP Notes are issued as a master ECP Note or master ECP Notes in book entry form, they shall be payable at the Original Maturity Date or Extended Maturity Date, as the case may be, without physical presentation or surrender in accordance with the procedures of the Depository. With the consent of the Issuing and Paying Agent, the Issuer may modify the provisions contained in this Section 2.02(c) regarding payment dates and times if deemed appropriate to conform to DTC ’s rules and procedures or otherwise, and such modified provisions will be set forth in the Issuing and Paying Agent Agreement. (d) Interest Rate ; Interest Payment Dates . Each ECP Note shall bear no interest or shall bear interest at the Original Rate from its Issue Date to its Original Maturity Date and shall be payable on the Original Maturity Date. Principal shall be payable on the Original Maturity Date, unless the Issuer exercises its option to extend the Original Maturity Date to the Extended Maturity Date. The stated interest rate, Original Maturity Date, Extended Maturity Date and other terms of the ECP Notes, as long as not inconsistent with the terms of this Ordinance, shall be as set forth in the Issuance Request required by Section 4.01 hereof directing the issuance ofECP Notes. If the Issuer exercises its option in accordance with this Ordinance to extend the maturity date of an ECP Note, accrued interest at the Original Rate from the Issue Date to the Original Maturity Date shall be paid on the Original Maturity Date, and the ECP Note shall bear interest from its Original Maturity Date at the Extended Rate, and no additional interest shall accrue on the accrued but unpaid interest from the Issue Date to the Original Maturity Date. (e) Extended Rate . The Extended Rate shall be the rate of interest per annum determined by the following formula; provided that such Extended Rate shall not exceed the Maximum Interest Rate Page 12 The Extended Rate for Tax Exempt ECP Notes shall be the rate of interest per annum determined by the following formula; provided that such Extended Rate shall not exceed the Maximum Interest Rate: The greater of (SIFMA Index + F) or F The Extended Rate for Taxable ECP Notes shall be the rate of interest per annum determined by the following formula; provided that such Extended Rate shall not exceed the Maximum Interest Rate The greater of (LIBOR Index + F) or F The Extended Rate applicable to an ECP Note will be determined weekly by the Issuing and Paying Agent based on the Prevailing Ratings and other information available as of 1 1 :00 a.m., New York, New York time, on the Original Maturity Date of the ECP Note and each Thursday thereafter and will apply from that date through the following Wednesday or, if earlier, the applicable Extended Maturity Date. As used in the formula, the E and F variables shall be the fixed percentage rates, expressed in basis points and yields, respectively, determined based on the Prevailing Ratings of the Rating Agencies then rating the ECP Notes, as follows: Prevailing Rating Moody’s P- 1 Fitch F-1+ F-1 F-2 Lower than F-2 (or rating withdrawn for credit reasons) S&P A-1+ A- 1 A-2 Lower than A-2 (or rating withdrawn for credit reasons) E Variable 300 bps 400 bps 600 bps Maximum Interest Rate F Variable 7.o09/a 8.00% 9.00% Maximum Interest Rate P-2 Lower than P-2 (or rating withdrawn for credit reasons) If the individual Prevailing Ratings indicate different E or F variables as a result of split ratings assigned to the Issuer, the E or F variable shall be the arithmetic average of those indicated by the Prevailing Ratings. If another credit rating agency becomes a Rating Agency, the Issuing and Paying Agent shall, upon written direction of the City Authorized Representative, following consultation with the City Authorized Representative and each Dealer, determine how the agency’s rating categories shall be treated for the purpose of indicating an E or F variable. (f) Payment of Interest While Bearing Interest at Extended Rate. If the Issuer exercIses its option to extend the Original Maturity Date to the Extended Maturity Date, interest at the Extended Rate shall be payable on the Extended Maturity Date or upon prior redemption. Such interest will be calculated at the Extended Rate from and including the Original Maturity Date to but excluding the Extended Maturity Date or date of prior redemption. (g) Notice of Extension. The Issuer shall notify the Issuing and Paying Agent and each Dealer by 3:00 p.m., New York, New York time, on the day which is one Business Day prior to the Page 13 Original Maturity Date if it is exercising its option to extend the Original Maturity Date of an ECP Note to its Extended Maturity Date. Such notice shall be in substantially the form as attached hereto as Exhibit C. The Issuing and Paying Agent shall correspondingly notify (i) DTC by 11:30 a.m., New York, New York time on the Original Maturity Date and (ii) each Rating Agency then maintaining a rating on the ECP Notes and EMMA by the close ofbusiness in New York, New York on the Original Maturity Date, that the maturity is being extended. Even if the requisite notices are not given, if payment of the principal of and interest on an ECP Note does not occur on the Original Maturity Date, the maturity of the ECP Note shall be extended automatically to the Extended Maturity Date in accordance with Section 2.08 hereof. With the consent of the Issuing and Paying Agent, the Issuer may modify the notification provisions contained in this Section 2.02(g) if deemed appropriate to conform to DTC’s rules and procedures or otherwise, and such modified provisions will be set forth in the Issuing and Paying Agent Agreement. (h) No Default . In no event shall an extension of the Original Maturity Date constitute a default or a breach of any covenant under this Ordinance or the Issuing and Paying Agent Agreement. Section 2.03. Form of ECP Notes. (a) if not issued in book-entry-only form, the ECP Notes and the Certificate of Authentication to appear on each of the ECP Notes shall be substantially in the form set forth in Exhibit A hereto with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) (“CUSIP” numbers) and such legends and endorsements thereon as may, consistently herewith, be approved by a City Authorized Representative. (b) if the ECP Notes are issued in book-entry-only form pursuant to Section 2.06 hereof, they shall be issued in the form of a Master ECP Note for Tax Exempt ECP Notes and a Master ECP Note for Taxable ECP Notes in substantially the forms attached as Exhibit B hereto, or such other forms as are required by DTC, to which there shall be attached the respective form ofECP Note set forth in Exhibit A hereto and it is hereby declared that the provisions of Exhibit A hereto are incorporated into and shall be a part of the applicable Master ECP Note. It is further provided that this Ordinance, and the form of ECP Note set forth in Exhibit A hereto shall constitute the “underlying records” referred to in each Master ECP Note. In addition, whenever the beneficial ownership of the ECP Notes is determined by a book-entry at DTC, the Issuing and Paying Agent may, without further approval from the Issuer or a City Authorized Representative, place such letters, numbers, marks of identification, legends and endorsements on the ECP Notes and Master ECP Notes as are necessary to satisfy the requirements of DTC. Section 2.04. Execution and Authentication. (a) The ECP Notes shall be executed on behalf of the Issuer by the Mayor and City Secretary under its seal reproduced or impressed thereon. The signature of said officers on the ECP Page 14 Notes may be manual or facsimile. Notwithstanding the other provisions of this Section, each Master ECP Note shall be executed on behalf of the Issuer by the manual signature of the Mayor and City Secretary. ECP Notes bearing the manual or facsimile signatures of individuals who are or were the proper officers of the Issuer on the date of passage of this Ordinance shall be deemed to be duly executed on behalf of the Issuer, notwithstanding that such individuals or either of them shall cease to hold such offices at the time of the initial sale and delivery of the ECP Notes authorized to be issued hereunder and with respect to ECP Notes delivered in subsequent sales, exchanges, and transfers, all as authorized and provided in Chapter 1201, Texas Government Code, as amended (b) Other than pursuant to Section 2.03 (b) hereof, no ECP Note shall be entitled to any right or benefit under this Ordinance, or be valid or obligatory for any purpose, unless there appears on such ECP Note a certificate of authentication substantially in the form provided in Exhibit A hereto I executed by the Issuing and Paying Agent by manual signature, and such certificate upon any EC'P Note shall be conclusive evidence, and the only evidence, that such ECP Note has been duly certified or registered and delivered. (c) The Issuing and Paying Agent shall be the authenticating agent and Registrar for the ECP Notes Section 2.05. Issuing and Paying Agent. (a) Issuing and Paying Agent . The Issuer hereby appoints U.S. Bank National Association as the Issuing and Paying Agent, and Registrar, and agrees that, at or prior to the time of issuance of the initial ECP Notes, the City Authorized Representative will execute and deliver on behalf of the Issuer, the Issuing and Paying Agent Agreement in substantially the form presented to the City Council, with such changes, additions, or amendments thereto as the City Authorized Representative determines to be necessary and proper to carry out the purpose and intent of the City Council in authorizing this Ordinance. The Issuer will at all times, prior to the Program Expiration Date, maintain in effect an Issuing and Paying Agent Agreement, pursuant to which the Issuing and Paying Agent will agree to hold funds and fulfill the duties and obligations of the Issuing and Paying Agent, as provided for in this Ordinance. A City Authorized Representative is hereby authorized to enter into any supplemental agreements with the Issuing and Paying Agent or any additional agreements with any successor Issuing and Paying Agent as may be necessary and proper to carry out the purpose and intent of the Issuer. The Issuing and Paying Agent and the Issuer may treat the Registered Owner of each EC'P Note as the sole and exclusive owner thereof for the purposes of payment of the principal of or interest on such ECP Note, giving any notice permitted or required to be given to Holders hereunder, registering the transfer ofECP Notes, obtaining any consent or other action to be taken by Holders, and for all other purposes whatsoever, and neither the Issuing and Paying Agent nor the Issuer shall be affected by any notice to the contrary. (b) Resignation and Removal. The Issuing and Paying Agent may at any time resign and be discharged of the duties and obligations created by this Ordinance by giving at least 60 days’ written notice to the Dealer and the Issuer. The Issuing and Paying Agent may be removed, at any time by Page 15 an instrument signed by a City Authorized Representative and filed with the Issuing and Paying Agent and each Dealer. No such resignation or removal shall become effective, however, until a successor Issuing and Paying Agent has been selected and assumed the duties of the Issuing and Paying Agent hereunder. In the event of the resignation or removal of the Issuing and Paying Agent, the Issuing and Paying Agent shall pay over, assign and deliver any moneys held by it in such capacity to its successor. The Issuing and Paying Agent shall make any representations and warranties to the Issuer as may be reasonably requested by the Issuer in connection with any such assignment. Should a change in the Issuing and Paying Agent for the ECP Notes occur, the Issuer agrees to promptly cause a written notice thereof to be sent to each Dealer, Registered Owner, if any, of the ECP Notes then Outstanding by United States mail, first class, postage prepaid and to be provided to EMMA. Such notice shall give the address of the successor Issuing and Paying Agent. A successor Issuing and Paying Agent may be appointed without the consent of the Holders. (c) Books and Records . The Issuing and Paying Agent shall at all times keep or cause to be kept proper records in which accurate entries shall be made of all transactions made by it relating to the Proceeds of the ECP Notes and any funds and accounts established and maintained by the Issuing and Paying Agent pursuant to this Ordinance and any Amended Ordinance. Such records shall be available for inspection by the Issuer on each Business Day upon regular notice during reasonable business hours, and by any Registered Owner or its agent or representative duly authorized in writing at reasonable hours and under regular circumstances. The Issuing and Paying Agent shall provide to the City Authorized Representative upon request and each month a report or statement of the amounts deposited in each fund and account held by it, and the amount disbursed from such funds and accounts, the earnings thereon, the ending balance in each of such funds and accounts, the investments in each such fund and account, and the yield on each investment calculated in accordance with the directions of a City Authorized Representative. Such report or statement shall also include or be accompanied by such information regarding the issuance ofECP Notes during the subject month as the Issuer shall request. The Issuing and Paying Agent shall maintain such books, records and accounts as may be necessary to evidence the obligations of the Issuer resulting from the ECP Notes, the principal amounts owing thereunder, the maturity schedule therefor, the respective rates of interest thereon, and the principal and interest paid from time to time thereunder. Section 2.06. Book-Entry-Only System. (a) Unless a City Authorized Representative or its designee determines that the ECP Notes shall be issued in registered form other than in book entry form, the ECP Notes shall initially be issued in book entry form as further provided in this Section. A City Authorized Representative, acting for and on behalf of the Issuer, is hereby authorized to approve, execute, and deliver a Letter of Representations to DTC and to enter into such other agreements and execute such instruments as are necessary to implement such book-entry-only system, such approval to be conclusively Page 16 evidenced by the execution thereof by said City Authorized Representative. (b) Under the initial Book Entry System with DTC, (i) no physical ECP Note certificates will be delivered to DTC and (ii) the Issuer will execute and deliver to the Issuing and Paying Agent, as custodian for the Depository, a Master ECP Note relating to the Tax Exempt ECP Notes and to the Taxable ECP Notes (each a “Master ECP Note“) in substantially the form set forth in Exhibit B hereto, or such other forms as are required by the Depository. Except as provided herein, the ownership of the ECP Notes shall be registered in the name of the Nominee of the Depository. Ownership of beneficial interests in the ECP Notes shall be shown by book entry on the system maintained and operated by the Depository and Participants, and transfers of ownership of beneficial interests shall be made only by the Depository and the Participants by book entry, and the Issuer and the Issuing and Paying Agent shall have no responsibility therefor. The Depository will be required to maintain records of the positions of the Participants in the ECP Notes, and the Participants and persons acting through the Participants will be required to maintain records of the purchasers of beneficial interests in the ECP Notes. Except as provided in this Section, the ECP Notes shall not be transferable or exchangeable, except for transfer to another securities depository or to another nominee of a securities depository. (c) With respect to ECP Notes registered in the name of the Depository or its Nominee, neither the Issuer nor the Issuing and Paying Agent shall have any responsibility or obligation to any Participant or to any person on whose behalf a Participant holds an interest in the ECP Notes. Without limiting the immediately preceding sentence, neither the Issuer nor the Issuing and Paying Agent shall have any responsibility or obligation with respect to (i) the accuracy of the records of the Depository or any Participant with respect to any ownership interest in the ECP Notes, (ii) the delivery to any Participant or any other person, other than a registered owner of the ECP Notes, as shown on the Registration Books, of any notice with respect to the ECP Notes, including any notice of redemption, (iii) the payment to any Participant or any other person, other than a Registered Owner of the ECP Notes, as shown in the Registration Books, of any amount with respect to principal of and premium, if any, or interest on the ECP Notes or (iv) for any other purpose. (d) Whenever, during the term of the ECP Notes, the beneficial ownership thereof is determined by a book entry at the Depository, the requirements in this Ordinance of holding, registering, delivering, exchanging, or transferring the ECP Notes shall be deemed modified to require the appropriate person or entity to meet the requirements of the Depository as to holding, registering, delivering, exchanging, or transferring the book entry to produce the same effect. (e) The Depository may determine to discontinue providing its services with respect to the ECP Notes at any time by giving reasonable written notice to a City Authorized Representative and the Issuing and Paying Agent, and by discharging its responsibilities with respect thereto under applicable law. A City Authorized Representative, exercising the sole discretion of the Issuer and without the consent of any other person, may terminate, upon provision of notice to the Depository and the Issuing and Paying Agent, the services of the Depository with respect to the ECP Notes if the City Authorized Representative determines, on behalf of the Issuer, that the continuation of the system of book-entry-only transfers through the Depository (or a successor securities depository) is not in the best interests of the owners of the ECP Notes or is burdensome to the Issuer. Upon the Page 17 termination of the services of the Depository with respect to the ECP Notes, after which no substitute Depository willing to undertake the functions of the Depository hereunder can be found or which, in the opinion of the Issuer, is willing and able to undertake such functions upon reasonable and customary terms, the ECP Notes shall no longer be restricted to being registered in the registration books kept by the Registrar in the name of the Nominee of the Depository. In such event, the Issuer shall issue and the Issuing and Paying Agent shall transfer and exchange physical ECP Note certificates in the form set forth in Exhibit A hereto as requested by the Depository or Participants of like principal amount and maturity, in denominations of $100,000 and integral multiples of $1,000 in excess thereof, to the identified Holder in replacement of such Holder’s beneficial interests in an ECP Note. (f) Notwithstanding any provision hereof to the contrary, as long as the ECP Notes are registered in the name of the Nominee, all payments with respect to principal of and interest on the ECP Notes and all notices with respect to the ECP Notes shall be made and given, respectively, as provided in the Depository’s letter of representations for the ECP Notes or as otherwise instructed by the Depository. (g) The initial Depository with respect to the ECP Notes shall be DTC. The initial Nominee with respect to the ECP Notes shall be CEDE & CO., as nominee of DTC. Section 2.07. Negotiability, Registration, and Exchange. (a) The ECP Notes shall be, and shall have all of the qualities and incidents of a negotiable instrument under the laws of the State, and each successive Holder, in accepting any of the obligations, shall be conclusively deemed to have agreed that such obligations shall be and have all of the qualities and incidents of a negotiable instrument under the laws of the State. (b) Registration Books relating to the registration, payment, and transfer or exchange of the ECP Notes shall at all times be kept and maintained at the office of the Issuing and Paying Agent, and the Issuing and Paying Agent shall obtain, record, and maintain in the Registration Books the name, and to the extent provided by or on behalf of the Holder, the address of each Holder of the ECP Notes, except for any ECP Notes registered to bearer. A copy of the Registration Books shall be provided to and held by the Issuer or City Authorized Representative upon request. (c) Notwithstanding Section 2.06, any ECP Note may, in accordance with its terms and the terms hereof, be transferred or exchanged for ECP Notes of like tenor and character and of other authorized denominations upon the Registration Books by the Holder in person or by his duly authorized agent, upon surrender of such ECP Note to the Issuing and Paying Agent for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Issuing and Paying Agent. Upon surrender for transfer of any ECP Note at the designated office of the Issuing and Paying Agent, the Issuing and Paying Agent shall register and deliver, in the name of the designated transferee or transferees, one or more new ECP Notes executed on behalf of, and furnished by, the Issuer of like tenor and character and of authorized denominations and having the same maturity, bearing interest at the same rate and of a like aggregate principal amount as the ECP Note or ECP Notes surrendered Page 18 for transfer (d) ECP Notes may be exchanged for other ECP Notes of like tenor and character and of authorized denominations and having the same maturity, bearing the same rate of interest and of like aggregate principal amount as the ECP Notes surrendered for exchange, upon surrender of the ECP Notes to be exchanged at the designated office of the Issuing and Paying Agent. Whenever any ECP Notes are so surrendered for exchange, the Issuing and Paying Agent shall register and deliver new ECP Notes of like tenor and character as the ECP Notes exchanged, executed on behalf of and furnished by, the Issuer to the Holder requesting the exchange. (e) The Issuer and the Issuing and Paying Agent may charge the Holder a sum sufficient to reimburse them for any expenses incurred in making any exchange or transfer after the first such exchange or transfer. The Issuing and Paying Agent or the Issuer may also require payment from the Holder of a sum sufficient to cover any tax, fee, or other governmental charge that may be imposed in relation thereto. Such charges and expenses shall be paid before any such new ECP Note shall be delivered. (f) The Issuer and the Issuing and Paying Agent shall not be required to transfer or exchange any ECP Note selected, called, or being called for redemption in whole or in part. (g) New ECP Notes delivered upon any transfer or exchange shall be valid special obligations of the Issuer, evidencing the same debt as the ECP Notes surrendered, shall be secured by this Ordinance and shall be entitled to all of the security and benefits hereof to the same extent as the ECP Notes surrendered. (h) The Issuer reserves the right to change the above registration and transferability provisions of the ECP Notes at any time on or prior to the delivery thereof in order to comply with applicable laws and regulations of the United States in effect at the time of issuance thereof. In addition, to the extent that the provisions of this Section conflict with or are inconsistent with the provisions of the form of ECP Notes set forth in Exhibit A hereto, such other provisions shall control Section 2.08. Mandatory Exchange Upon Extended Maturity. Notwithstanding Section 2.06, by acceptance of an ECP Note, the Holder agrees that, should the principal of such Holder’s ECP Note not be paid on the Original Maturity Date, the Holder shall surrender such ECP Note to the Issuing and Paying Agent in exchange for a new ECP Note of like tenor and character as the ECP Note surrendered but having the Extended Maturity Date instead of the Original Maturity Date Section 2.09. ECP Notes Mutilated, Lost, Destroyed, or Stolen. If any ECP Note shall become mutilated, the Issuer, at the expense of the Holder of said ECP Note, shall execute and the Issuing and Paying Agent shall authenticate and deliver a new ECP Note of like tenor and number in exchange and substitution for the ECP Note so mutilated, but only upon surrender to the Issuing and Paying Agent of the ECP Note so mutilated. If any ECP Note shall be lost, destroyed, or stolen, evidence of such loss, destruction, or theft may be submitted to the Issuer and the Issuing and Paying Page 19 Agent. If such evidence is satisfactory to the Issuer and the Issuing and Paying Agent and indemnity satisfactory to them shall be given, the Issuer, at the expense of the Holder, shall execute and the Issuing and Paying Agent shall authenticate and deliver a new ECP Note of like tenor in lieu of and in substitution for the ECP Note so lost, destroyed, or stolen. In the event any such ECP Note shall have matured, the Issuing and Paying Agent instead of issuing a duplicate ECP Note may pay the same without surrender thereof after making such requirement as it deems fit for its protection, including a lost instrument bond. Neither the Issuer nor the Issuing and Paying Agent shall be required to treat both the original ECP Note and any duplicate ECP Note as being Outstanding for the purpose of determining the principal amount ofECP Notes which may be issued hereunder, but both the original and the duplicate ECP Note shall be treated as one and the same. The Issuer and the Issuing and Paying Agent may charge the Holder of such ECP Note with their reasonable fees and expenses for such service. Section 2.10. Cancellation. All ECP Notes which at maturity are surrendered to the Issuing and Paying Agent for the collection of the principal and interest thereof or are surrendered for transfer or exchange pursuant to the provisions hereof shall, upon payment or issuance of new ECP Notes, be cancelled by the Issuing and Paying Agent and forthwith transmitted to the Issuer, and thereafter the Issuer shall have custody of such cancelled ECP Notes. Section 2.11. Fiscal and Other Agents. In fhrtherance of the purposes of this Ordinance, the Issuer may from time to time appoint and provide for the payment of such additional fiscal, paying, or other agents or trustees as it may deem necessary or appropriate in connection with the ECP Notes. Section 2.12. Dealer Agreements. J.P. Morgan Securities LLC is hereby appointed and designated as a Dealer, and the City Authorized Representative is hereby authorized to enter into a Dealer Agreement with such firm in substantially the form presented to the City Council, with such changes, additions, or amendments thereto as the City Authorized Representative determines to be necessary and proper to carry out the purpose and intent of the City Council in authorizing this Ordinance. The City Authorized Representative is hereby authorized to appoint one or more additional firms to act as Dealer, and agrees that the Issuer will enter into a Dealer Agreement with each Dealer. The Issuer covenants that at all times while any ECP Notes shall be outstanding, it will maintain in effect one or more Dealer Agreements, pursuant to which the Dealer will agree to fulfill the duties and obligations of the Dealer as set forth in this Ordinance and its Dealer Agreement. The City Authorized Representative is further authorized and directed from time to time to review the performance of each Dealer and of the ECP Note program authorized hereby and to periodically solicit and review the qualifications of each Dealer and of any additional investment banking firms interested in serving as Dealer. Based upon such review, the number of Dealers selected, which Dealers are selected and the amount ofECP Notes which each Dealer is allocated to attempt to sell may be changed and additional or different Dealers may be selected and new Dealer Agreements entered into based upon a determination that such changes are expected to result in the lowest overall cost of the ECP Note program authorized hereby after taking into account not only the fees to be paid to the Dealers but the expectations as to the performance of each Dealer in providing broad distribution of the ECP Notes and creating competitive pricing without adversely affecting Page 20 investor liquidity. A City Authorized Representative is hereby authorized and directed to approve, execute, and deliver to the Dealers any instrument evidencing such changes, additions, or amendments to the Dealer Agreements as may be necessary and proper to carry out the purpose and intent of the Issuer in authorizing this Ordinance. A City Authorized Representative is hereby authorized to enter into any supplemental agreements with the Dealer or with any successor Dealer. Section 2.13. Credit Agreement. The Issuer reserves the right to enter into a credit agreement (as that term is defined by Chapter 1371 or other applicable State law) to provide liquidity for a part or all of the ECP Notes to be Outstanding under this Ordinance and any Amended Ordinance; provided that any credit agreement shall be entered into and reviewed by the appropriate State agencies or offices as required by State law. ARTICLE III ESTABLISHMENT OF ECP PROGRAM AND SECURITY THEREFOR Section 3.01. Establishment of ECP Program. This Ordinance is intended to establish a master plan for the authorization, issuance, sale, delivery, form, characteristics, provisions of payment and redemption, and security of the ECP Notes. Section 3.02. Security; Subordinate Lien; and Pledge. (a) The ECP Notes are special obligations of the Issuer, and the payment of the principal of and interest on the ECP Notes are and shall be secured by and payable only from a lien on and pledge of (i) the Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Payment Fund; provided that the pledge of Pledged Revenues securing the ECP Notes is expressly made subordinate and inferior to the lien on and pledge of Pledged Revenues securing Senior Lien Obligations, and the ECP Notes shall constitute Subordinate Lien Obligations, as provided in the Senior Lien Obligation Ordinances, (ii) the Proceeds from the sale of ECP Notes to refinance maturing ECP Notes (i.e., “roll”) and the proceeds of Refunding Bonds to be issued by the Issuer, and (iii) all amounts in the funds and accounts created or maintained pursuant to this Ordinance and the Issuing and Paying Agent Agreement (except the Rebate Fund), and such amounts constitute funds held for that purpose, subject only to the provisions of this Ordinance and the Issuing and Paying Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth herein and therein. The pledge herein made shall be irrevocable until all of the ECP Notes have been paid and retired. The granting of this pledge by the Issuer does not limit in any manner the rights of the Issuer to issue any additional debt or incur any other obligations. The ECP Notes are not secured by or payable from any funds raised or to be raised by the levy of taxes by the Issuer nor a mortgage or deed of trust on any properties, whether real, personal, or mixed, constituting the System or otherwise, nor from any source other than as specified in this Ordinance. (b) The Issuer shall not issue ECP Notes on a parity with the Senior Lien Obligations. Page 21 (c) The Issuer covenants to pay the principal of, premium, if any, and the interest on the ECP Notes when due, whether by reason of maturity or redemption. (d) Chapter 1208, Texas Government Code, applies to the issuance of the ECP Notes and the pledge of the proceeds of the sale of ECP Notes or Refunding Bonds and the Pledged Revenues granted by the Issuer under this section, and such pledge is therefore valid, effective, and perfected. If State law is amended at any time while the ECP Notes are outstanding such that the pledge granted by the Issuer under this section is to be subject to the filing requirements of Chapter 9, Texas Business & Commerce Code, then in order to preserve to the Registered Owners of the ECP Notes the perfection of the security interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under State law to comply with the applicable provisions of Chapter 9, Texas Business & Commerce Code and enable a filing to perfect the security interest in said pledge to occur. Section 3.03. Covenant to Refinance. (a) The Issuer covenants that it will undertake its best efforts to issue and deliver Refunding Bonds at the times and in the amounts necessary to refinance the ECP Notes that are maturing on the applicable Extended Maturity Date and apply the proceeds of such Refunding Bonds to retire such maturing ECP Notes. Notwithstanding the foregoing, the City Authorized Representative shall not deliver an Issuance Request for ECP Notes that could not be refinanced on or before the Program Expiration Date. (b) The Issuer intends to refinance the ECP Notes with Refunding Bonds issued under Chapter 1207, Texas Government Code, as amended, and, therefore (in accordance with Section 1371.057(c) of Chapter 1371), the Issuer will treat the ECP Notes as having the intended term and payment schedule of such Refunding Bonds, as determined by the City Authorized Representative. ARTICLE IV ISSUANCE AND SALE OF ECP NOTES; CREATION OF FUNDS; PAYMENT Section 4.01. Issuance and Sale of ECP Notes. (a) All ECP Notes shall be sold in the manner determined by the City Authorized Representative to be most economically advantageous to the Issuer. Prior to the issuance of the fIrst ECP Notes pursuant to this Ordinance, ECP Notes shall be executed on behalf of the Issuer and delivered to the Issuing and Paying Agent, which shall hold such ECP Notes tmauthenticated in safekeeping for the Issuer. (b) The terms of the ECP Notes shall be established and they shall be delivered by the Issuing and Paying Agent in accordance with telephonic, facsimile, computer, or written instructions of a City Authorized Representative and in the manner specified below and in the Issuing and Paying Agent Agreement. Any Issuance Request made by telephone pursuant to this Section may be Page 22 recorded by the Issuing and Paying Agent and shall be confirmed promptly in writing by a City Authorized Representative; provided, however, that any conflict between any recorded oral Issuance Request and the written confirmation thereof, shall not affect the validity of any recorded oral Issuance Request received by the Issuing and Paying Agent as provided herein. If the Issuing and Paying Agent does not record an oral Issuance Request, and a conflict exists between such oral Issuance Request and the written confirmation thereof, the terms of the written confirmation shall control. Any such instructions from a City Authorized Representative relating to the issuance of ECP Notes for the purpose of refinancing, renewing or refunding ECP Notes may be in the form of standing instructions to the effect that the Issuing and Paying Agent may rely on instructions it receives from a Dealer for the issuance and sale of such ECP Notes unless otherwise notified in writing by a City Authorized Representative. (c) Any Issuance Request shall specify (i) the aggregate principal amount ofECP Notes then to be issued, and, subject to Section 2.02(a), the respective denominations in which they are to be issued, (ii) the Original Rate with respect to each ECP Note, (iii) the Issue Date, the Original Maturity Date, and the Extended Maturity Date of each ECP Note, (iv) the formula or method of calculating interest and the basis upon which it is to be computed, (v) whether such ECP Notes are Tax Exempt ECP Notes or Taxable ECP Notes, (vi) the purchase price, and (vii) any other terms and conditions which are hereby authorized and permitted to be fixed by any City Authorized Representative at the time of sale of the ECP Notes. No later than 1 :00 p.m. (New York, New York time) on each Business Day on which the Issuer proposes to issue ECP Notes, the applicable Dealer shall report to the Issuer each transaction made with or arranged by it or shall notify the Issuer and the Issuing and Paying Agent of the difference, if any, between the amount of maturing ECP Notes and the amount ofECP Notes which the Dealer has arranged to sell or has agreed to purchase. The Issuer may deliver an Issuance Request for the issuance of ECP Notes on multiple roll-over dates in the future, but shall have the right to rescind such notice with respect to ECP Notes to be issued, no later than 1 1 :00 a.m. (New York, New York time) on any date ECP Notes are to be issued. (d) Upon receipt of such Issuance Request (which may be transmitted by mail, facsimile or other electronic communications method, or by telephone, promptly confirmed in writing by 1:30 p.m. New York, New York time), the Issuing and Paying Agent shall, by 1 :45 p.m. (New York, New York time) on such day, complete each ECP Note as to amount, Issue Date, Original Maturity Date, Extended Maturity Date and Original Rate specified in such Issuance Request, and deliver each such ECP Note to or upon the order of the applicable Dealer upon receipt of payment therefor; provided, however, that no such ECP Notes shall be delivered by the Issuing and Paying Agent if such delivery would cause the sum of the aggregate principal amount of ECP Notes Outstanding to exceed the Authorized Amount. If an Issuance Request is received after 1:30 p.m. (New York, New York time) on a given day, the Issuing and Paying Agent shall not be obligated to deliver the requested ECP Notes until the next succeeding Business Day. (e) At least one Business Day prior to any date on which the Issuer intends to issue ECP Notes, the Issuer shall provide notice of such intent to the Issuing and Paying Agent and the Dealer. In connection with each issuance and sale ofECP Notes for the purpose of refinancing, renewing or refLmding ECP Notes, a City Authorized Representative is hereby authorized to provide standing instructions to any Dealer of its preferred ranges for the interest rates and maturity dates for any such Page 23 sale ofECP Notes; provided that, no such ECP Note shall (i) bear interest at a rate that exceeds the Maximum Interest Rate, (ii) have a denomination of less than $ 100,000 or (iii) have a term in excess of 270 calendar days, whether extended or not; and provided further that, the interest rates shall be the minimum interest rates which, in the opinion of such Dealer under then-existing market conditions, would result in the sale of such ECP Notes at a price equal to the principal amount thereof Section 4.02. Conditions to Delivery Pursuant to Issuance Request. (a) No ECP Notes shall be delivered by the Issuing and Paying Agent if (i) it shall have received notice from a City Authorized Representative directing the Issuing and Paying Agent to cease authenticating and delivering ECP Notes until such time as such direction is withdrawn by similar notice, (ii) it shall have actual knowledge that an Event of Default shall have occurred and be continuing, and will not be cured by the issuance of the applicable ECP Notes, (iii) it shall have received notice from Bond Counsel that its opinion regarding the exclusion of interest on the ECP Notes of such issue (issued as Tax Exempt ECP Notes) from gross income for federal income tax purposes of the holders thereof is being withdrawn or (iv) the maturity date of such ECP Notes would extend beyond the Program Expiration Date. (b) in addition to the Issuance Request described above in Section 4.01, and as a further condition to the issuance of any ECP Notes, the City Authorized Representative shall certify to or instruct, for and on behalf of the Issuer, the Issuing and Paying Agent that, as of the date of delivery of such ECP Notes, (i) all action on the part of the Issuer necessary for the valid issuance of the ECP Notes then to be issued has been taken; (ii) all provisions of State and federal law necessary for the valid issuance of such ECP Notes have been complied with; (iii) such ECP Notes will be valid and enforceable special obligations of the Issuer according to their terms, subject to the exercise of judicial discretion in accordance with general principles of equity and bankruptcy, insolvency, reorganization, moratorium, sovereign or governmental immunity of political subdivisions and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent constitutionally applicable or general principles of equity which permit the exercise ofjudicial discretion; (iv) after the issuance of such ECP Notes and the application of the Proceeds thereof, the sum of the aggregate principal amount ofECP Notes Outstanding will not exceed the Authorized Amount; (v) unless the ECP Notes are to be issued as Taxable ECP Notes, to the Issuer’s knowledge there has been no change in the facts, estimates, circumstances and representations of the Issuer set forth or made (as the case may be) in the Tax Certificate (applicable to such ECP Notes); (vi) the Extended Maturity Date of such ECP Notes set forth in the Issuance Request does not extend beyond the Program Expiration Date; (vii) the Issuer, has not been notified by Bond Counsel that its opinion with respect to the validity of the ECP Notes and, unless the ECP Notes are to be issued as Taxable ECP Notes, the tax treatment of the interest thereon has been revised or withdrawn or, if any such revision or withdrawal has occurred, the revised opinion or a substitute opinion acceptable to the Dealer has been delivered; (viii) to the actual knowledge of the Issuer, no Event of Default has occurred and is then continuing; (ix) the Proceeds of the sale shall be deposited into the Payment Fund or into the Proceeds Fund pursuant to Sections 4.06 and 4.07 hereof in the amounts specified by the City Authorized Representative; and (x) all of the conditions precedent to the issuance of such ECP Notes set forth in this Section of this Ordinance have been satisfied. The delivery of any Issuance Page 24 Request to the Issuing and Paying Agent by a City Authorized Representative in the manner provided in this Section shall constitute the certification and representation of the Issuer as of the date of such Issuance Request as to the matters set forth in this paragraph. Section 4.03. No Redemption Prior to Original Maturity Date. The ECP Notes shall not be subject to redemption prior to their Original Maturity Date. Section 4.04. Redemption following Original Maturity Date. In the event the Issuer exercises its option to extend the maturity of an ECP Note to the Extended Maturity Date (or an ECP Note is automatically extended to the Extended Maturity Date), any ECP Note issued in exchange therefor may be redeemed on any date after its Original Maturity Date, at the option of the Issuer at a redemption price equal to par (100%), plus accrued and unpaid interest to the redemption date. To exercise its redemption option, the Issuer shall provide not less than 5 nor more than 25 calendar days’ notice to the Issuing and Paying Agent. The Issuing and Paying Agent will notify the Depository or the Registered Owner, if not issued in book entry form, of the ECP Notes to be redeemed within one Business Day of receipt of such notice. Section 4.05. Creation of Payment Fund. There is hereby created a fund at the Issuing and Paying Agent entitled the “City of Denton Utility System ECP Note Series A Interest and Sinking Fund” (the “Payment Fund”). Moneys in the Payment Fund and the accounts therein shall be held separate and apart from all other moneys, funds and accounts held by the Issuing and Paying Agent, and shall be applied to pay the principal of and interest on Outstanding ECP Notes in the amounts, at the times and in the manner set forth herein. The Payment Fund is hereby created as a separate fund and shall be held by the Issuing and Paying Agent. The Issuer may direct the Issuing and Paying Agent to establish and maintain a separate account or accounts in the Payment Fund with respect to any or all of the ECP Notes. The following accounts are hereby established within the Payment Fund for the deposit of the Proceeds of ECP Notes to refinance Outstanding ECP Notes in accordance with Section 4.07, and the Issuing and Paying Agent shall hold such accounts in accordance herewith and with the Issuing and Paying Agent Agreement: (1) the “Tax-Exempt ECP Note Series A Account“ and (2) the “Taxable ECP Note Series A Account”. Pending the expenditure of moneys in the Payment Fund for authorized purposes, moneys deposited therein may be invested at the direction of a City Authorized Representative in Permitted Investments. Any income received from investments in the Payment Fund shall be retained in the Payment Fund. Section 4.06. Creation of Proceeds Fund; Proceeds of Sale of ECP Notes. (a) The City of Denton Utility System ECP Note Series A Proceeds Fund (the “Proceeds Fund”) is hereby created as a separate fund and shall be held, maintained and accounted for by the Issuer at a depository bank selected by the Issuer. Page 25 (b) The Proceeds of the initial sale of any ECP Notes (that is, “new money” ECP Notes that are issued to pay Project Costs and are not issued to redeem or pay the principal of another ECP Note) shall be deposited into the Proceeds Fund and into the applicable account therein designated by the City Authorized Representative by which the Proceeds shall be used to pay Project Costs for which Projects the ECP Notes are issued. Proceeds so deposited shall be held separate and apart from all other funds and accounts and shall not be commingled with any other moneys. (c) The Proceeds of the sale ofECP Notes issued to redeem or pay the principal of another ECP Note shall be deposited directly into the applicable Payment Fund as directed in writing by a City Authorized Representative to refinance or retire the ECP Notes for which the refinancing ECP Notes were issued. Proceeds so deposited shall be held separate and apart from all other funds and accounts and shall not be commingled with any other moneys. Section 4.07. Deposits Into Payment Fund. (a) At or before 2:00 p.m., New York, New York time, on an interest payment date as provided in Section 2.02(d) or 2.02(f) hereof, on the Original Maturity Date or Extended Maturity Date of each ECP Note or on a redemption date for an ECP Note, the Issuer shall deposit or cause to be deposited into the applicable Payment Fund account, solely from Net Revenues or ECP Note Proceeds or proceeds from the sale of the Refunding Bonds, an amount sufficient, together with other available moneys including the moneys in the Payment Fund account, to pay principal of and interest due on all ECP Notes maturing or subject to redemption on such interest payment date, Original Maturity Date, Extended Maturity Date, or redemption date, as applicable. (b) Moneys in the Payment Fund shall be invested and reinvested by the Issuing and Paying Agent in Permitted Investments, as directed in writing by a City Authorized Representative. Section 4.08. Defeasance ofECP Notes. ECP Notes shall not be deemed to have been paid in fall unless payment of the principal of and interest on the ECP Notes either (a) shall have been made or caused to be made in accordance with the terms of the ECP Notes and this Ordinance, or (b) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Issuing and Paying Agent in accordance with an escrow agreement or other instrument for such payment (i) lawful money of the United States of America sufficient to make such payment or (ii) Defeasance Securities that mature as to principal and interest in such amounts and at such times as will insure the availability of sufficient money to provide for such payment. ARTICLE V COVENANTS OF THE ISSUER Section 5.01. Limitation on Issuance. Unless this Ordinance is amended and modified by the Issuer in accordance with the provisions of Article VI, the Issuer covenants that there will not be issued and Outstanding at any time more than the Authorized Amount ofECP Notes. The Issuer, however, does reserve the right to increase said amount by an amendment to this Ordinance duly adopted by the City Council. For purposes of this Section any portion of Outstanding ECP Notes to Page 26 be paid on the day of calculation from moneys on deposit in the Payment Fund or the Proceeds of ECP Notes or Refunding Bonds or any combination thereof shall not be considered Outstanding. Section 5.02. Tax Exempt ECP Notes to Remain Tax Exempt. (a) in order to maintain the exclusion from gross income of the interest on the ECP Notes issued as Tax Exempt ECP Notes for federal income tax purposes, the Issuer will make all calculations required by section 148 of the Code, including, but not limited to, the calculation of rebate, in a reasonable and prudent fashion and to segregate and set aside the lawfully available amounts that such calculations indicate may be required to be paid to the United States of America. The Issuer further covenants to do and perform all acts and things within its power and authority necessary to comply with each applicable requirement of section 103 and sections 141 through 150 of the Code. The Issuer agrees to periodically execute or cause to be executed a Tax Certificate as may be required by the Code, in the opinion of Bond Counsel, and the Form 8038-G, or any other forms designated by the Internal Revenue Service in substitution thereof. In fhrtherance of the foregoing, the Issuer will execute annually, or at any other time necessary in the opinion of Bond Counsel, a Tax Certificate and Form 8038-G necessary to assure the tax-exempt status of the Tax Exempt ECP Notes. (b) The Issuer covenants to refrain from any action which would adversely affect, or to take such action to assure, the treatment of the Tax Exempt ECP Notes as obligations described in section 103 of the Code, the interest on which is not includable in the “gross income” of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (i) to take any action to assure that no more than 10 percent of the Proceeds (but not to exceed $15,000,000) of the Tax Exempt ECP Notes (less amounts deposited to a reserve fund, if any) are used for any “private business use,” as defined in section 141 (b)(6) of the Code or, if more than 10 percent of the Proceeds are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Tax Exempt ECP Notes, in contravention of section 141 (b)(2) of the Code; (ii) to take any action to assure that in the event that the “private business use” described in subsection (i) hereof exceeds 5 percent of the Proceeds of Tax Exempt ECP Notes (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a “private business use“ which is “related” and not “disproportionate,” within the meaning of section 141 (b)(3) of the Code, to the governmental use; (iii) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the Proceeds of Tax Exempt ECP Notes (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141 (c) of the Code; Page 27 (iv) to take any action to assure that no more than 5 percent of the Proceeds of Tax Exempt ECP Notes are used to provide any output facility (other than a facility for furnishing water) with respect to which there is any “private business use” as more fully set forth in section 141 (b)(3) of the Code; (v) to refrain from taking any action which would otherwise result in the Tax Exempt ECP Notes being treated as “private activity bonds” within the meaning of section 141 (b) of the Code; (vi) to refrain from taking any action that would result in the Tax Exempt ECP Notes being “federally guaranteed” within the meaning of section 149(b) of the Code; (vii) to refrain from using any portion of the Proceeds of the Tax Exempt ECP Notes, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Tax Exempt ECP Notes, other than investment property acquired with - (A) Proceeds of the Tax Exempt ECP Notes invested for a reasonable temporary period until such Proceeds are needed for the purpose for which the Tax Exempt ECP Notes are issued; and (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1 (b) of the Treasury Regulations; and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated principal amount (or, in the case of a discount, the issue price) of the Tax Exempt ECP Notes; (viii) to otherwise restrict the use of the Proceeds of the Tax Exempt ECP Notes or amounts treated as Proceeds of the Tax Exempt ECP Notes as may be necessary, so that the Tax Exempt ECP Notes do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage), and section 149(g) of the Code (relating to hedge bonds); (ix) to refrain from using the proceeds to the Tax-Exempt ECP Notes to pay debt service on another issue of bonds more than 90 days after the date of issue of the Tax- Exempt ECP Notes in contravention of the requirements of section 149(d) of the Code (relating to advance refundings); and (x) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of Tax Exempt ECP Notes issued to pay Project Costs) an amount that is at least equal to 90 percent of the “Excess Earnings,” within the meaning of section 148(f) of the Code and to pay to the United States of America, not later Page 28 than 60 days after the Tax Exempt ECP Notes have been paid in full, 100 percent of the amount then required to be paid as a result of the Excess Earnings under section 148(f) of the Code In order to facilitate compliance with the above covenants (viii) and (ix), a “Rebate Fund“ is hereby established by the Issuer for the sole benefit of the United States of America, and such Rebate Fund shall not be subject to the claim of any other person, including, without limitation, the Registered Owners. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) The Issuer covenants to account for the expenditure of Tax Exempt ECP Note sale Proceeds and investment earnings to be used for Projects on its books and records in accordance with the requirements of the Code. The Issuer recognizes that in order for the Proceeds to be considered used for the reimbursement of Project Costs, the Proceeds must be allocated to expenditures within 18 months of the later of the date that (i) the expenditure is made, or (ii) the project being financed with the Proceeds of Tax Exempt ECP Notes is completed; but in no event later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding, the Issuer recognizes that in order for Proceeds to be expended under the Code, the sale Proceeds or investment earnings must be expended no more than 60 days after the earlier of (i) the fifth anniversary of the delivery of the Tax Exempt ECP Notes, or (ii) the date the Tax Exempt ECP Notes are retired, other than being retired with the proceeds of another tax-exempt obligation including tax-exempt bonds or another Tax Exempt ECP Note. The Issuer agrees to obtain the advice of Bond Counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Tax Exempt ECP Notes. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion of Bond Counsel that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (d) The Issuer covenants that the property constituting Projects financed with the Proceeds of the Tax Exempt ECP Notes will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation, unless the Issuer obtains an opinion of Bond Counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Tax Exempt ECP Notes. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion of Bond Counsel that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest (e) The Issuer shall not, expend, or permit to be expended, the Proceeds of the Tax Exempt ECP Notes in any manner inconsistent with its reasonable expectations as certified in the Tax Certificate to be executed from time to time with respect to the Tax Exempt ECP Notes; provided, however, that the Issuer may expend Proceeds of the Tax Exempt ECP Notes in any manner if the Issuer first obtains an unqualified opinion of Bond Counsel that such expenditure will not impair the exemption from federal income taxation of interest paid on the Tax Exempt ECP Notes. Page 29 Section 5.03. Opinion of Bond Counsel. The Issuer shall cause the legal opinion of Bond Counsel as to the validity of the ECP Notes and, with respect to Tax Exempt ECP Notes, as to the exclusion of interest on such Tax Exempt ECP Notes from gross income of the owners thereof for federal income tax purposes to be furnished to any Holder without cost. In addition, a copy of said opinion may be printed on or accompany each of the ECP Notes issued in physical format. In addition, in connection with the updating of the Offering Memorandum (as provided in accordance with Section 7.08 hereof) or as required by the Dealer Agreement, there may be provided an updated opinion of Bond Counsel for Tax Exempt ECP Notes and for Taxable ECP Notes as determined by Bond Counsel, at the cost of the Issuer or the Dealer as agreed to in the Dealer Agreement. Section 5.04. Performance. The Issuer will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions authorizing the issuance of the ECP Notes, and in each and every ECP Note; promptly pay or cause to be paid the principal of and interest on every ECP Note, on the dates and in the places and manner prescribed, and will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Payment Fund, and any Registered Owner of ECP Notes may require the Issuer, its City Council, and its officials and employees, to carry out, respect, or enforce the covenants and obligations of this Ordinance, by all legal and equitable means, including specifically, but without limitation, the use and filing ofmandamus proceedings, in any court of competent jurisdiction, against the Issuer, its City Council, and its officials and employees. Section 5.05. Legal Authority. The Issuer represents that it is a municipal corporation, a political subdivision of the State and a body politic and corporate, duly created, organized, and existing, under the Constitution and general laws of the State, and is duly authorized under the laws of the State to create and issue the ECP Notes; that all action on its part for the creation and issuance of the ECP Notes has been duly and effectively taken, and that the ECP Notes in the hands of the Registered Owners thereof are and will be valid and enforceable special obligations of the Issuer in accordance with their terms. Section 5.06. Operation of System. The Issuer will, while any ECP Notes are Outstanding, continuously and efficiently operate the System, and shall maintain the System in good condition, repair and working order, all at reasonable cost. No free service of the System shall be allowed, and should the Issuer or any of its 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 Issuer or any of its agencies, instrumentalities, lessors, or concessionaires out of funds from sources other than the revenues of the System, unless made from surplus Pledged Revenues. Section 5.07. Further Encumbrance. While the ECP Notes are Outstanding, the Issuer shall not, except with respect to the issuance of Senior Lien Obligations, additionally encumber the Pledged Revenues, unless said encumbrance is made on a parity with, or junior and subordinate in all respects to the liens, pledges, covenants and agreements hereof; but the right of the Issuer to issue obligations subordinate to the ECP Notes for any lawful purpose payable from a lien on the Pledged Revenues that is subordinate to the BCP Notes is specifically recognized and retained. This Page 30 Ordinance does not and is not intended to affect, limit, or prohibit the issuance of Bonds payable wholly or in part from ad valorem taxes. Section 5.08. Sale or Disposal of Property. While any ECP Notes are Outstanding, it will not sell, convey, mortgage, encumber, lease or in any manner transfer title to, or otherwise dispose of, the System, or any significant or substantial part thereof, except as follows: (a) To the extent permitted by law, the Issuer may sell, exchange or otherwise dispose of at any time and from time to time any property or facilities constituting part of the System only if (i) it shall determine such property or facilities are not useful in the operation of the System, (ii) the proceeds of such sale are 8500,000 or less, or it shall have received a certificate of a City Authorized Representative stating in the opinion of the signer, that the fair market value of the property or facilities exchanged is $500,000 or less, or (iii) if such proceeds or fair market value exceeds $500,000 it shall have received a certificate of a City Authorized Representative stating, in the opinion of the signer, that the sale or exchange of such property or facilities will not impair the ability of the Issuer to comply during the current or any fbture year with the provisions of Section 5.10 of this Ordinance. The proceeds of any such sale or exchange not used to acquire other property necessary or desirable for the safe or efficient operation of the System shall forthwith, at the option of the Issuer (i) be used to redeem or purchase Senior Lien Obligations, (ii) otherwise be used to provide for the payment of Senior Lien Obligations, or (iii) be used for any other lawful purpose; and (b) To the extent permitted by law, the Issuer may lease or make contracts or grant licenses for the operation of or make arrangements for the use of or grant easements or other rights with respect to, any part of the System, provided that any such lease, contract, license, arrangement, easement or right (i) does not impede the operation by the Issuer of the System and (ii) does not in any manner impair or adversely affect the rights or security of the owners of the ECP Notes under this Ordinance; and provided, further, that if the depreciated cost of the property to be covered by any such lease, contract, license, arrangement, easement or other right is in excess of $1,000,000, the Issuer shall have received a certificate of a City Authorized Representative that the action of the Issuer with respect thereto does not result in a breach of the conditions under this clause (b). Any payments received by the Issuer under or in connection with any such lease, contract, license, arrangement, easement or right in respect of the System or any part thereof shall constitute Gross Revenues. Section 5.09. Insurance. (a) The Issuer shall insure such parts of the System as would usually be insured by corporations operating like properties, with responsible insurance companies, or through self-insurance with adequate stop-loss reinsurance, against loss to the extent insurance is usually carried by corporations operating like properties, including, to the extent reasonably obtainable, insurance against the perils of fire, extended coverage and flooding and use and occupancy insurance. Public liability and property damage insurance shall also be carried unless the Issuer’s attorney gives a written opinion to the effect that the Issuer is not liable for claims which would be protected by such insurance. At any time while any contractor engaged in construction work shall be fully responsible therefor, the Issuer shall not be required to carry insurance on the Page 31 work being constructed if the contractor is required to carry appropriate insurance. All such policies shall be open to the inspection of the Holders and their agents and representatives at all reasonable times. Upon the happening of any loss or damage covered by insurance from one or more of said causes, the Issuer shall make due proof of loss and shall do all things necessary or desirable to cause the insuring companies to make payment in fbU directly to the Issuer. The proceeds of insurance covering such property, together with any other funds necessary and available for such purpose, shall be used forthwith by the Issuer for repairing the property damaged or replacing the property destroyed; provided, however, that if said insurance proceeds and other funds are insufficient for such purpose, then said insurance proceeds pertaining to the System shall be deposited in a special and separate trust fund, at a Depository, to be designated the Insurance Account. The Insurance Account shall be held until such time as other funds become available which, together with the Insurance Account, will be sufficient to make the repairs or replacements originally required, whichever of said events occurs first; provided that the Issuer may, in its discretion, use funds in the Insurance Account for the redemption or purchase of Senior Lien Obligations. (b) The foregoing provisions of clause (a) above notwithstanding, the Issuer shall have authority to enter into coinsurance or similar plans where risk of loss is shared in whole or in part by the Issuer. (c) The annual audit hereinafter required may contain a section commenting on whether or not the Issuer has complied with the requirements of this Section with respect to the maintenance of insurance, and listing all policies carried, and whether or not all insurance premiums upon the insurance policies to which reference is hereinbefore made have been paid. 5.10. Rate Covenant. The Issuer will fix, establish, maintain and collect such rates, charges and fees for the use and availability of the System at all times as are necessary to produce Gross Revenues, together with any other Pledged Revenues, sufficient (1) to pay all current Operating Expenses, and (2) to produce Pledged Revenues for each Fiscal Year at least equal to 1.00 times the Annual Debt Service Requirements (as defined and determined in accordance with the Senior Lien Obligation Ordinances) of all then Outstanding Senior Lien Obligations for that Fiscal Year, and (3) to make all payments and deposits required to be made into the Payment Fund for the ECP Notes and produce amounts required to pay all other obligations of the System reasonably anticipated to be paid from Pledged Revenues during the current Fiscal Year. Section 5.11. Governmental Agencies. The Issuer will comply with all of the terms and conditions of any and all franchises, permits and authorizations applicable to or necessary with respect to the System, and which have been obtained from any governmental agency; and the Issuer has or will obtain and keep in full force and effect all franchises, permits, authorization and other requirements applicable to or necessary with respect to the acquisition, construction, equipment, operation and maintenance of the System. Section 5.12. Title. The Issuer has or will obtain lawful title to the lands, buildings, structures and facilities constituting the System, that it warrants that it will defend the title to all the aforesaid lands, buildings, structures and facilities, and every part thereof, for the benefit of the holders and owners of the Senior Lien Obligations and ECP Notes, against the claims and demands Page 32 of all persons whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment of the Senior Lien Obligations and the ECP Notes in the manner prescribed herein, and has lawfully exercised such rights. Section 5.13. Liens. The Issuer will from time to time and before the same become delinquent pay and discharge all taxes, assessments and governmental charges, if any, which shall be lawfully imposed upon it, or the System; it will pay all lawful claims for rents, royalties, labor, materials and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein, and it will not create or suffer to be created any mechanic’s, laborer's, materialman’s or other lien or charge which might or could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired; provided, however, that no such tax, assessment or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, materialman's or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good faith by the Issuer Section 5.14. No Competition. So far as it legally may, the Issuer will not grant any franchise or permit for the acquisition, construction or operation of any competing facilities which might be used as a substitute for the System's facilities and, to the extent that it legally may, the Issuer will prohibit any such competing facilities. Section 5.15. Records. The Issuer will keep proper books of record and account in which full, true and correct entries will be made of all dealings, activities and transactions relating to the System, the Pledged Revenues, and the funds created pursuant to this Ordinance and Senior Lien Ordinances, and all books, documents and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of a Holder; provided, that all books, documents, and vouchers relating to the Issuer’s electric system shall be made available for inspection only to the extent required by law, including, without limitation, the provisions of Section 552.133 of the Texas Government Code. Section 5.16. Audits. After the close of each Fiscal Year while any ECP Note is Outstanding, it will cause an audit to be made of the books and accounts relating to the Issuer, including the System and the Pledged Revenues by an Accountant. Such annual audit reports shall be open to the inspection of the Holders and their agents and representatives at all reasonable times. ARTICLE VI AMENDMENTS Section 6.01. Limitations. This Ordinance shall not be modified or amended in any respect if any ECP Notes are Outstanding except as provided in, and in accordance with and subject to the provisions of, this Article. Section 6.02. Amendments Without Consent. Page 33 (a) This Ordinance and the rights and obligations of the Issuer and of the owners of the Outstanding ECP Notes may be modified or amended at any time without notice to or the consent of any owner of the ECP Notes, solely for any one or more of the following purposes: (i) To add to the covenants and agreements of the Issuer contained in this Ordinance, other covenants and agreements thereafter to be observed, or to surrender any right or power reserved to or conferred upon the Issuer in this Ordinance and which shall not, in the judgment of the Issuer, materially adversely affect the interests of the owners of the Outstanding ECP Notes; (ii) To cure any ambiguity or inconsistency, or to cure or correct any defective provisions contained in this Ordinance, upon receipt by the Issuer of an opinion of Bond Counsel, that the same is required for such purpose, and will more clearly express the intent of this Ordinance, provided that such supplement or amendment is not materially adverse to the Holders; (iii) To supplement the security for the Outstanding ECP Notes issued hereunder, provide for credit facilities, or make changes in the provisions thereof, or change the form of the Outstanding ECP Notes or make such other changes in the provisions hereof, including extending the Program Expiration Date, as the Issuer may deem necessary or desirable and which shall not, in the judgment of the Issuer, materially adversely affect the interests of the owners of the Outstanding ECP Notes; (iv) To make any changes or amendments requested by any Rating Agency then rating or requested to rate ECP Notes, as a condition to the issuance or maintenance of a rating, which changes or amendments do not, in the judgment of the Issuer, materially adversely affect the interests of the owners of the Outstanding ECP Notes; (v) To increase the Authorized Amount ofECP Notes which may be Outstanding; (vi) To accommodate the technical, operational and structural features ofECP Notes which are issued or are proposed to be issued, including, but not limited to, changes required to accommodate other forms of paper, or other forms of indebtedness which the Issuer from time to time deems appropriate to incur; (vii) To comply with the requirements of the Code as are necessary, in the opinion of Bond Counsel, to preserve the exclusion from gross income for federal income taxation of the interest on ECP Notes issued as Tax Exempt ECP Notes, as appropriate; or (viii) To change the Maximum Interest Rate, the Extended Rate variables E and F, the Maximum Original Maturity Days or the Extended Maturity Days, with respect to ECP Notes issued on or after the effective date of this Ordinance accompanied by appropriate Page 34 disclosure of the amendment or supplement, provided however, that the Maximum Original Maturity Days together with the Extended Maturity Days may not exceed 270 days and that any change to the Extended Rate variables E and F or the Maximum Interest Rate will be made so as to ensure that the ECP Notes will bear the lowest overall interest rate at which a par priced ECP Note may be sold, and provided further that any supplement or amendment described in this paragraph shall not be materially adverse to the Holders of Outstanding ECP Notes. (b) Before the Issuer shall, pursuant to this Section, execute any Amended Ordinance, other than an Amended Ordinance entered into pursuant to Section 6.02(a)(viii) hereof, there shall have been delivered to the Issuer an opinion of Bond Counsel to the effect that such Amended Ordinance is authorized or permitted by this Ordinance and applicable law, complies with their respective terms, will, upon the execution and delivery thereof, be valid and binding upon the Issuer in accordance with its terms, and will not cause interest on any of the ECP Notes which is then excluded from gross income of the recipient thereof for federal income tax purposes to be included in gross income for federal income tax purposes. Section 6.03. Amendments With Consent. (a) Except for any amendment pursuant to Section 6.02 and any amendment pursuant to subsection (b) below, subject to the terms and provisions contained in this Section and not otherwise, the Holders of not less than a majority in aggregate principal amount of the ECP Notes then Outstanding shall have the right from time to time, to consent to and approve the adoption by the Issuer of any Amended Ordinance deemed necessary or desirable by the Issuer for the purposes of modifying, altering, amending, supplementing or rescinding, in any particular, any of the terms or provisions contained in this Ordinance; provided, however, that, unless approved in writing by the holders of all the ECP Notes then Outstanding, or unless such change affects less than all Outstanding ECP Notes and subsection (b) below is applicable, nothing herein contained shall permit, or be construed as permitting, (i) an extension in the stated maturity (whether the Original Maturity Date or the Extended Maturity Date) of any Outstanding ECP Notes, or a change in the amounts of the principal of or interest on any Outstanding ECP Notes, or (ii) a reduction in the principal amount or redemption price of any Outstanding ECP Notes, or the rate of interest thereon; or (iii) except with respect to additional security which may be provided for a particular ECP Note, a preference or priority of any ECP Note or ECP Notes over any other ECP Note or ECP Notes with respect to the security granted therefor under this Ordinance, or (iv) a reduction in the aggregate principal amount of ECP Notes the consent of the Holders of which is required for any such Amended Ordinance. (b) if an Amended Ordinance contains provisions which affect the rights and interests of less than all Outstanding ECP Notes and Section 6.02 hereof is not applicable, then this subsection (b) rather than subsection (a) above shall control, and, subject to the terms and provisions contained in this Section and not otherwise, the holders of not less than a majority in aggregate principal amount of the Outstanding ECP Notes which are affected by such changes shall have the right from time to time to consent to any Amended Ordinance deemed necessary or desirable by the Issuer for the purposes of modifying, altering, amending, supplementing or rescinding, in any particular, any of Page 35 the terms or provisions contained in such Amended Ordinance and affecting only such ECP Notes; provided, however, that, unless approved in writing by the holders of all the affected ECP Notes then Outstanding, nothing herein contained shall permit, or be construed as permitting, (i) an extension in the stated maturity (whether the Original Maturity Date or the Extended Maturity Date) of any Outstanding ECP Notes, or a change in the amounts of the principal of or interest thereon, or (ii) a reduction in the principal amount or redemption price of any Outstanding ECP Notes or the rate of interest thereon, or (iii) except with respect to additional security which may be provided for the ECP Notes, a preference or priority of any ECP Note or ECP Notes over any other ECP Note or ECP Notes with respect to the security granted therefor under this Ordinance, or (iv) a reduction in the aggregate principal amount ofECP Notes, the consent of the Holders of which is required for any such Amended Ordinance. Nothing herein contained, however, shall be construed as making necessary the approval by Holders of the adoption of any Amended Ordinance as authorized in Section 6.02 hereof Section 6.04. Notice of Proposed Amendments. If at any time the Issuer shall desire to amend this Ordinance pursuant to Section 6.03, the Issuer shall cause notice of the proposed amendment to be given to all affected Registered Owners, each Dealer and EMMA. 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 Issuing and Paying Agent for inspection by all owners of ECP Notes issued hereunder. A copy of such Notice shall be provided in writing to each Rating Agency maintaining a rating on the ECP Notes. Section 6.05. Receipt of Consents. (a) Whenever at any time not less than thirty (30) days, and within one year, from the date of the notice of the proposed amendment is provided by the Issuer in accordance with Section 6.04 the Issuer shall receive an instrument or instruments executed by all of the Holders of at least a majority in Outstanding Principal Amount of the ECP Notes, as appropriate, 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 as aforesaid, the City Council may adopt the Amended Ordinance in substantially the same form. It shall not be required that the Holders approve the final form of such Amended Ordinance but it shall be sufficient if such Holders approve the substance thereof. (b) Any consent given by any Holder of ECP Notes pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the notice provided, and shall be conclusive and binding upon all future Holders of the same ECP Notes during such period. Such consent may be revoked at any time after six months from the date of the such notice by the Holder who gave such consent, or by a successor in title, by filing notice thereof with the issuing and Paying Agent and the Issuer, but such revocation shall not be effective if the Issuer has acted upon such proposed amendment prior to the attempted revocation of consent by such Holder or if the Holders of at least a majority in Outstanding principal amount ofECP Notes prior to the attempted revocation consented to and approved the amendment. (c) if Holders of not less than a majority in Outstanding principal amount of ECP Notes Page 36 required by this Section shall have consented to and approved the execution and delivery thereof as herein provided, no Holders shall have any right to object to the adoption of such Amended Ordinance, or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Issuer from adopting the same or from taking any action pursuant to the provisions thereof. Section 6.06. Effect of Amendments. Upon the adoption by the City Council of any ordinance to amend this Ordinance pursuant to the provisions of this Article VI, this Ordinance shall be deemed to be amended in accordance with the Amended Ordinance, and the respective rights, duties, and obligations of the Issuer and all the Holders of then Outstanding ECP Notes and all future ECP Notes shall thereafter be determined, exercised, and enforced under this Ordinance. Section 6.07. Additional Amendments. Subject to the provisions of Section 6.02 and 6.03 hereof, the Issuer may, from time to time and at any time, adopt an Amended Ordinance which amends the provisions of an earlier Amended Ordinance. ARTICLE VII MISCELLANEOUS Section 7.01. Ordinance to Constitute a Contract; Equal Security. In consideration of the acceptance of the ECP Notes by those who shall hold the same from time to time, this Ordinance shall be deemed to be and shall constitute a contract between the Issuer and the Holders of the ECP Notes and the pledge made in this Ordinance by the Issuer and the covenants and agreements set forth in this Ordinance to be performed by the Issuer shall be for the equal and proportionate benefit, security, and protection of all Holders of the ECP Notes, without preference, priority, or distinction as to security or otherwise of any of the ECP Notes over any of the others by reason of time of issuance, sale, or maturity thereof or otherwise for any cause whatsoever, except as expressly provided in or permitted by this Ordinance. Section 7.02. Individuals Not Liable. All covenants, stipulations, obligations, and agreements of the Issuer contained in this Ordinance shall be deemed to be covenants, stipulations, obligations, and agreements of the Issuer and the City Council to the full extent authorized or permitted by the Constitution and laws of the State of Texas. No covenant, stipulation, obligation, or agreement herein contained shall be deemed to be a covenant, stipulation, obligation, or agreement of any member of the City Council or agent or employee of the Issuer in his or her individual capacity and neither the members of the City Council nor any officer of the Issuer shall be liable personally on the ECP Notes or be subject to any personal liability or accountability by reason of the issuance thereof. Section 7.03. Additional Actions; Recitals. (a) The Mayor and Mayor Pro Tem, the City Authorized Representatives and the City Secretary, and all other officers, employees and agents of the Issuer are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all Page 37 documents which they may deem necessary or advisable in order to consummate the issuance, sale, and delivery of the ECP Notes and otherwise to effectuate the purposes of this Ordinance, the Dealer Agreement, and the Issuing and Paying Agent Agreement. In addition, the Mayor and Mayor Pro Tem, the City Secretary, the City Authorized Representatives, and Bond Counsel are hereby authorized to approve, subsequent to the date of adoption of this Ordinance, any amendments to the above named documents, and any technical amendments to this Ordinance as may be required by a Rating Agency as a condition to the granting or maintaining of a rating on the ECP Notes acceptable to a City Authorized Representative, or as may be required by the Office of the Attorney General of the State in connection with the approval of this Ordinance or to correct any ambiguity or mistake or properly or more completely document the transactions contemplated and approved by this Ordinance. In addition, the statements, findings, representations, and determinations set forth in the recitals to this Ordinance are hereby incorporated into and made a part of this Ordinance for all purposes (b) A City Authorized Representative shall promptly give written notice to each Rating Agency then rating the ECP Notes, as appropriate, of any changes or amendments to this Ordinance, or any other operative document used in connection with the issuance from time to time of the ECP Notes Section 7.04. Severability of Invalid Provisions. If any one or more of the covenants, agreements, or provisions herein contained shall be held contrary to any express provisions of law or contrary to the policy of express law, though not expressly prohibited, or against public policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements, or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements or provisions and shall in no way affect the validity of any of the other provisions hereof or of the ECP Notes issued hereunder. Section 7.05. Payment and Performance on Business Days. Whenever under the terms of this Ordinance or the ECP Notes, the performance date of any provision hereof or thereof, including the payment of principal of or interest on the ECP Notes, shall occur on a day other than a Business Day, then the performance thereof, including the payment of principal of and interest on the ECP Notes, need not be made on such day but may be performed or paid, as the case may be, on the next succeeding Business Day with the same force and effect as if made on the date of performance or payment is scheduled. Section 7.06. Limitation of Benefits With Respect to the Ordinance. With the exception of the rights or benefits herein expressly conferred, nothing expressed or contained herein or implied from the provisions of this Ordinance or the ECP Notes is intended or should be construed to confer upon or give to any person other than the Issuer, the Holders, the Issuing and Paying Agent, and the Dealer any legal or equitable right, remedy, or claim under or by reason of or in respect to this Ordinance or any covenant, condition, stipulation, promise, agreement, or provision herein contained. This Ordinance and all of the covenants, conditions, stipulations, promises, agreements, and provisions hereof are intended to be and shall be for and inure to the sole and exclusive benefit of the Issuer, the Holders, the Issuing and Paying Agent and the Dealer as herein and in the Issuing and Paying Agent Agreement and the Dealer Agreement provided. Page 38 Section 7.07. Approval of Attorney General. No ECP Notes herein authorized to be issued shall be sold or delivered by a City Authorized Representative until the Attorney General of the State shall have approved this Ordinance, and other agreements and proceedings as may be required in connection therewith, all as is required by the Acts. Section 7.08. Approval of Offering Memorandum. The form of Offering Memorandum to be used by the Dealer in the offering of the ECP Notes submitted to the City Council at the meeting at which this Ordinance is adopted is hereby approved, and a City Authorized Representative is authorized to approve any changes to said document the City Authorized Representative finds necessary or desirable. A City Authorized Representative is hereby authorized to approve the final form of Offering Memorandum, to be used by the Dealer in the offering of the ECP Notes, and the use thereof by the Dealer in connection therewith and to cooperate with the Dealer in periodically updating and approving the Offering Memorandum. Section 7.09. Notice to Rating Agencies. (a) The City Authorized Representative shall provide the Rating Agencies with written notice of the occurrence of the following events: (i) changes in any Dealer, (ii) the appointment of a successor Issuing and Paying Agent, (iii) amendments or supplements to the Ordinance or the Issuing and Paying Agent Agreement, (iv) the defeasance of all Outstanding ECP Notes and (v) the termination of the ECP Note program. (b) Any notice under paragraph (a) shall be sent to the Rating Agencies at the following addresses, as applicable: Standard & Poor’s:Attention: Muni Structured Finance 55 Water Street, 38th Floor New York, New York 10041 phone: 212-438-2000 fax: 212-438-2 157 email: pubfin structured@}sandp.com Moody’s:Attention: Public Finance Department – Rating Desk/CP Moody’s Investors Service, Inc. 99 Church Street New York, New York 10007 phone: 212-553-0300 fax: 212-964-5082 Fitch Ratings Fitch Ratings - U.S. Public Finance 33 Whitehall Street New York, New York 10004 phone: 212-908-0889 Page 39 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.01. Events of Default. Each of the following events shall constitute and is referred to in this Ordinance as an “Event of Default”: (a) a failure by the Issuer to pay the principal of any ECP Note for five Business Days after the date the same shall have become due and payable on an Extended Maturity Date; (b) a failure by the Issuer to pay any installment of interest on any ECP Note for five Business Days after the date such interest shall have become due and payable on an Original Maturity Date or an Extended Maturity Date or in accordance with Section 2.02(d) hereof; (c) a failure by the Issuer to apply the Proceeds of Refunding Bonds to the payment of maturing ECP Notes on the applicable Extended Maturity Date; (d) a failure by the Issuer to observe and perform any covenant, condition, agreement or provision (other than as specified in paragraphs (a), (b) and (c) of this Section) contained in the ECP Notes or in this Ordinance on the part of the Issuer to be observed or performed, which materially, adversely affects the rights of the Holders, including, but not limited to, their prospect or ability to be repaid in accordance with this Ordinance and which failure shall continue for a period of 30 days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Issuer by a Dealer, the Issuing and Paying Agent or any Holder; (e) bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, including, without limitation, proceedings under the United States Bankruptcy Code (as the same may from time to time be hereafter amended), or other proceedings for relief under any federal or State bankruptcy law or similar law for the relief of debtors are instituted by the Issuer; or (f) the occurrence of any other Event of Default as is provided in an Amended Ordinance. If any Event of Default has occurred, but is subsequently cured or waived, then such Event of Default shall no longer constitute an Event of Default hereunder. Section 8.02. Remedies for Default. (a) Upon the happening of any Event of Default, any Holder or an authorized representative thereof, including, but not limited to, a trustee or trustees therefore, may proceed against the Issuer or the City Council, as appropriate, for the purpose of protecting and enforcing the rights of the Holders under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Holders hereunder or any combination of such remedies. It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Holders of ECP Notes then Outstanding. Page 40 (b) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the ECP Notes or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the ECP Notes shall not be available as a remedy under this Ordinance. (c) By accepting the delivery of an ECP Note authorized under this Ordinance, a Holder agrees that the certifications required to effectuate any covenants or representations contained in this Ordinance do not and shall never constitute or give rise to a personal or pecuniary liability or charge against the officers or employees of the Issuer or the City Council. The motion to approve this Ordinance was made by?c~at PeltzzCand seconded by -'3cs&\>,x{rE5This Ordinance was passed and approved by the following vote tL–a : Aye \/ Jr \/ V/ 1/ \/ ,/ Nay Abstain Absent Mayor Gerard Hudspeth: Birdia Johnson, District 1 : Connie Baker, District 2: Jesse L. Davis, District 3 : John Ryan, District 4: Deb Armintor, At Large Place 5 : Paul Meltzer, At Large Place 6: [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] Page 41 PASSED, APPROVED AND EFFECTIVE this 12th day of January, 2021. c+k#$$fR ATTEST: ROSA RIOS, CITY SECRETARY A\ItII IIt II/ APPROVED AS TO LEGAL FORM: AARON LEAL, CITY ATTORNEY d..,Lt,,k=.,..M};:I.....'’.'-.==-„.BY: Digitally signed by Mack EXHIBIT A FORM OF ECP NOTES UNITED STATES OF AMERICA STATE OF TEXAS CITY OF DENTON UTILITY SYSTEM REVENUE EXTENDABLE COMMERCIAL PAPER NOTE SERIES A [(TAX-EXEMPT)] [(TAXABLE)] ECP NOTE NUMBER PRINCIPAL AMOUNTINTEREST RATE ISSUE DATE [ORIGINAL MATURITY DATE:] or [EXTENDED MATURITY DATE:] REGISTERED OWNER: PRINCIPAL AMOUNT: THE CITY OF DENTON, IN DENTON COUNTY, TEXAS (the “ Issuer”) being a political subdivision of the State of Texas, hereby promises to pay to the Registered Owner set forth above, or registered assigns, (i) the Principal Amount stated above, with accrued interest thereon at the Interest Rate stated above, on the Original Maturity Date stated above and (ii) if the Original Maturity Date shall have been extended to the Extended Maturity Date, as provided in the Ordinance, to pay: (a) accrued interest at the Interest Rate stated above on the Original Maturity Date, (b) from and after the Original Maturity Date accrued interest on the Principal Amount stated above at the Extended Rate (as described herein) and (c) the Principal Amount stated above on the Extended Maturity Date. The Principal Amount shall be payable at U.S BANK NATIONAL ASSOCIATION (the “Issuing and Paying Agent“). Both principal and interest on this ECP Note being payable in immediately available lawful money of the United States of America at the designated corporate office of the Issuing and Paying Agent, or its successor. THIS ECP NOTE IS ONE OF A SERIES OF NOTES with the option of the Issuer to extend the Original Maturity Date to the Extended Maturity Date. This ECP Note has been duly authorized and issued in accordance with the provisions of a master ordinance (the “ Ordinance“) adopted by the City Council of the Issuer for the purpose of financing Project Costs and to refinance, renew, and refund ECP Notes; all in accordance and in strict conformity with the provisions of the Constitution and laws of the State of Texas, including but not limited to, the Acts. The provisions of the Ordinance are incorporated herein by reference. Capitalized terms used herein and not otherwise defined shall have the meaning given in the Ordinance. A- 1 THIS ECP NOTE SHALL BEAR INTEREST at the Interest Rate from its Issue Date to its Original Maturity Date (calculated on the basis of a year consisting of: 365/366 days and actual number of days elapsed with respect to Tax Exempt ECP Notes and 360 days and actual number of days elapsed with respect to Taxable ECP Notes) and, unless the Issuer exercises its option to extend the Original Maturity Date to the Extended Maturity Date, shall be payable as to principal and interest on its Original Maturity Date. IF THE ISSUER EXERCISES ITS OPTION in accordance with the Ordinance to extend the Original Maturity Date of this ECP Note, accrued interest at the Interest Rate stated above shall be paid on the Original Maturity Date, the Principal Amount shall not be paid on its Original Maturity Date and the ECP Note shall bear interest from its Original Maturity Date at the Extended Rate (calculated on the basis of a year consisting of: 365/366 days and actual number of days elapsed with respect to Tax Exempt ECP Notes and 360 days and actual number of days elapsed with respect to Taxable ECP Notes), and no additional interest shall accrue on the accrued but unpaid interest from the Issue Date to the Original Maturity Date. If the Issuer extends the ECP Note to the Extended Maturity Date, then interest calculated at the Extended Rate from and including the Original Maturity Date to but excluding the Extended Maturity Date shall be payable on the Extended Maturity Date for such ECP Note or date of prior redemption. The Extended Rate shall be the rate of interest per annum determined by the following formula; provided that such Extended Rate shall not exceed the Maximum Interest Rate: The Extended Rate for Tax Exempt ECP Notes shall be the rate of interest per annum determined by the following formula; provided that such Extended Rate shall not exceed the Maximum Interest Rate: The greater of (SIFMA Index + F) or F The Extended Rate for Taxable ECP Notes shall be the rate of interest per annum determined by the following formula; provided that such Extended Rate shall not exceed the Maximum Interest Rate The greater of (LIBOR Index + F) or f THE EXTENDED RATE APPLICABLE TO AN ECP NOTE will be determined weekly by the Issuing and Paying Agent based on the Prevailing Ratings and other information available as of 11 :00 a.m., New York, New York time, on the Original Maturity Date of this ECP Note and each Thursday thereafter and will apply from that date through the following Wednesday or, if earlier, the applicable Extended Maturity Date. As used in the formula, the E and F variables shall be the fixed percentage rates, expressed in basis points and yields, respectively, determined based on the Prevailing Ratings of the Rating Agencies then rating the ECP Notes, as follows: A-2 Prevailing Rating Moody’s P- 1 Fitch F-1+ F- 1 F-2 S&P A- 1 + A- 1 A-2 Lower than A-2 (or rating withdrawn for credit reasons) E Variable 300 bps 400 bps 600 bps Maximum Interest Rate F Variable 7.00% 8.00% 9.009G Maximum Interest Rate P-2 Lower than P-2 (or rating withdrawn for credit reasons) Lower than F-2 (or rating withdrawn for credit reasons) If the individual Prevailing Ratings indicate different E or F variables as a result of split ratings assigned to the Issuer, the E or F variable shall be the arithmetic average of those indicated by the Prevailing Ratings. BY ACCEPTANCE OF THIS NOTE, in the event principal of this Note is not paid on the Original Maturity Date, the Registered Owner agrees to surrender this Note to the Issuing and Paying Agent in exchange for a new Note having the Extended Maturity Date. THE ECP NOTES SHALL NOT BE SUBJECT TO REDEMPTION prior to their Original Maturity Date. If the Issuer exercises its option to extend the maturity of an ECP Note to the Extended Maturity Date, this ECP Note may be redeemed on any date after its Original Maturity Date, at the option of the Issuer at a redemption price equal to par ( 100%), plus accrued and unpaid interest to the redemption date. To exercise its redemption option, the Issuer shall provide not less than 5 nor more than 25 calendar days’ notice to the Issuing and Paying Agent and each Dealer. The Issuing and Paying Agent will notify the Depository of the ECP Notes to be redeemed within one Business Day of receipt of such notice. THIS ECP NOTE IS A SPECIAL OBLIGATION OF THE ISSUER, and the payment of the principal of and interest on this ECP Notes is and shall be secured by and payable only from a lien on and pledge of (i) the Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Payment Fund; provided that the pledge of Pledged Revenues securing the ECP Notes is expressly made subordinate and inferior to the lien on and pledge of Pledged Revenues securing Senior Lien Obligations, and the ECP Notes shall constitute Subordinate Lien Obligations, as provided in the Senior Lien Obligation Ordinances, (ii) the Proceeds from the sale of ECP Notes to refinance maturing ECP Notes and the proceeds of Refunding Bonds to be issued by the Issuer, and (iii) all amounts in the funds and accounts created or maintained pursuant to this Ordinance and the Issuing and Paying Agent Agreement (except the Rebate Fund), and such amounts constitute funds held for that purpose, subject only to the provisions of the Ordinance and the Issuing and Paying Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth herein and therein. This ECP Notes is not secured by or payable from any funds raised or to be raised by the levy of taxes by the Issuer nor a mortgage or deed of trust on any properties, whether real, personal, or mixed, constituting the System or otherwise, nor from any source other than as specified in the Ordinance. THE ISSUER SHALL NOT ISSUE ECP NOTES on a parity with the Senior Lien A-3 Obligations. THE ISSUER COVENANTS to pay the principal of, premium, if any, and the interest on the ECP Notes when due, whether by reason of maturity or redemption. [THIS ECP NOTE is a Taxable ECP Note and is not an obligation described in section 103(a) of the Code.]1 REFERENCE IS HEREBY MADE TO THE ORDINANCE, copies of which may be obtained upon request to the Issuer, and by acceptance of this ECP Note, the Holder hereof hereby assents to all of the terms and provisions of the Ordinance, including, but not limited to, provisions relating to definitions of terms; the description of and the nature of the security for the ECP Notes and the pledge of Pledged Revenues; and the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holders of the ECP Notes. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by law and the Ordinance to exist, to have happened, and to have been performed precedent to and in the issuance of this ECP Note, do exist, have happened, and have been performed in regular and in due time, form, and manner as required by law and that the issuance of this ECP Note, together with all other Outstanding ECP Notes, is not in excess of the Authorized Amount permitted to be issued under the Ordinance. THIS ECP NOTE has all the qualities and incidents of a negotiable instrument under the laws of the State of Texas. THIS ECP NOTE may be registered to bearer or to any designated payee. Title to any ECP Note registered to bearer shall pass by delivery. If not registered to bearer, this ECP Note may be transferred only on the books of the Issuing and Paying Agent. Upon surrender hereof at the designated office of the Issuing and Paying Agent, this ECP Note may be exchanged for a like aggregate principal amount of fully registered (which registration may be to bearer) ECP Notes of authorized denominations of like interest rate and maturity, and in the same form as this ECP Note, but only in the manner, and subject to the limitations, and upon payment of the charges provided in the Ordinance and upon surrender and cancellation of this ECP Note. THIS ECP NOTE shall not be entitled to any benefit under the Ordinance or be valid or become obligatory for any purpose until this ECP Note shall have been authenticated by the execution by the Issuing and Paying Agent of the Certificate of Authentication hereon. IN WITNESS WHEREOF, the Issuer has authorized and caused this ECP Note to be executed and attested on its behalf by the manual or facsimile signatures of the Mayor of the Issuer (or in the Mayor’s absence, of the Mayor Pro-Tem) and countersigned with the manual or facsimile signature of the City Secretary of said Issuer and its official seal impressed or a facsimile thereof to 1 Error! Main Document Only.Include bracketed language only ifECP Notes are being issued as Taxable A-4 be printed hereon. City Secretary (SEAL) Mayor TE OF AUTHENTICATION This ECP Note is one of the ECP Notes delivered pursuant to the within mentioned Ordinance U.S. BANK NATIONAL ASSOCIATION, As Issuing and Paying Agent By: Authorized Signatory A-5 FORM OF ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto: Please insert Social Security or Taxpayer Identification Number of Transferee Please print or type name and address, including zip code of Transferee the within ECP Note and all rights thereunder, and hereby irrevocably constitutes and appoints: , attorney, to register the transfer of the within ECP Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a securities transfer association recognized SIgnature guarantee program. NOTICE: The signature above must correspond with the name of the registered owner as it appears upon the front of this ECP Note in every particular, without alteration or enlargement or any change whatsoever. A-6 EXHIBIT B FORM OF MASTER ECP NOTES The Depository Trust Company A subsidiary of The Depository Trust & Clearing Corporation MUNICIPAL COMMERCIAL PAPER [TEICP MASTER NOTE [(Tax Exempt)] [(Taxable)] [Date of Issuance] THE CITY OF DENTON, IN DENTON COUNTY, TEXAS (the “Issuer”), for value received, hereby promises to pay to Cede & Co., as nominee of The Depository Trust Company, or to registered assigns: (i) the principal amount, together with unpaid accrued interest thereon, if any, on the maturity date of each obligation identified on the records of the Issuer (the “Underlying Records”) as being evidenced by this Master Note, which Underlying Records are maintained by U.S. BANK NATIONAL ASSOCIATION (the “Issuing and Paying Agent”); (ii) interest on the principal amount of each such obligation that is payable in installments, if any, on the due date of each installment, as specified on the Underlying Records; and (iii) the principal amount of each such obligation that is payable in installments, if any, on the due date of each installment, as specified on the Underlying Records. Interest shall be calculated at the rate and according to the calculation convention specified on the Underlying Records. Payments shall be made solely from the sources stated on the Underlying Records by wire transfer to the registered owner from Paying Agent without the necessity of presentation and surrender of this Master Note. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS MASTER NOTE SET FORTH ON THE REVERSE HEREOF. This Master Note is a valid and binding obligation of the Issuer. Not Valid Unless Countersigned for Authentication by the Issuing and Paying Agent. B-1 U.S. BANK NATIONAL ASSOCIATION By: (Authorized Countersignature) CITY OF DENTON By: (Authorized Signature) B-2 The provisions of the City of Denton [Tax Exemptl [Taxable] Utility System Extendable Commercial Paper Note, Series A, a form of which is attached hereto, are incorporated herein and made a part hereof for all purposes. The aggregate principal amount of ECP Notes at any one time outstanding shall not exceed the amount authorized in Section 2.01 of the Ordinance establishing the City of Denton Utility System Extendable Commercial Paper Note Program, as amended, (the “Ordinance”) as such authorized amount may be limited by Section 5.01 of the Ordinance. At the request of the registered owner, the Issuer shall promptly issue and deliver one or more separate note certificates evidencing each obligation evidenced by this Master Note. As of the date any such note certificate or certificates are issued, the obligations which are evidenced thereby shall no longer be evidenced by this Master Note. FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (Name, Address, and Taxpayer Identification Number ofAssignee) the Master Note and all rights thereunder, hereby irrevocably constituting and appointing , attorney, to transfer said Master Note on the books of the Issuer with full power of substitution in the premises. Date: Signature(s) Guaranteed:(Signature) Notice: The signature on this assignment must correspond with the name as written upon the face of this Master Note, in every particular, without alteration or enlargement or any change whatsoever. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to Issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. B-3 EXHIBIT C FORM OF EXTENSION REQUEST Date [Name and Address of Issuing and Paying Agent] [Name and Address of Dealer] EXTENSION REQUEST Ladies and Gentlemen: This certificate is provided pursuant to the requirements of Section 2.02(g) of the Ordinance establishing the City of Denton Utility System Extendable Commercial Paper Financing Program and Authorizing Utility System Revenue Extendable Commercial Paper Notes, Series A adopted by the City Council of the City of Denton on January 12, 2021 (the “Ordinance”), with respect to the issuance of the City of Denton Utility System Revenue Extendable Commercial Paper Note, Series A [(Tax-Exempt) / (Taxable)], for the purpose of requesting the extension of an ECP Note, as provided herein. Capitalized terms used herein and not otherwise defined shall have the meaning given in the Ordinance. (a) The ECP Note is in the principal amount of $ rate of %, and has a stated Original Maturity Date of following CUSIP number(s): , bears interest at the stated , 20 . The ECP Note has the (b) Day. The Extended Maturity Date of the ECP Note is , 20 , which is a Business (c) The certifications made in the Issuance Request delivered in connection with the initial issuance of the ECP Note are confirmed. (d) The term of the ECP Note, as extended to the Extended Maturity Date, does not exceed 270 days. CITY OF DENTON By Authorized Representative C-1