2010-059
CERTIFICATE FOR ORDINANCE
THE STATE OF TEXAS:
COUNTY OF DENTON:
CITY OF DENTON:
We, the undersigned officers of said City, hereby certify as follows:
1. The City Council of said City convened in REGULAR MEETING ON THE 16th DAY OF
FEBRUARY, 2010, at the Municipal Building (City Hall), and the roll was called of the duly constituted
officers and members of said City Council, to-wit:
Mark Burroughs, MayorPete Kamp, Mayor Pro Tem
Dalton GregoryCharlye Heggins
Jim EngelbrechtChris Watts
Joe Mulroy
and all of said persons were present, except Jim Engelbrecht and Chris Watts, thus constituting a quorum.
Whereupon, among other business, the following was transacted at said Meeting: a written
AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED TO
THE ISSUANCE, SALE AND DELIVERY OF UP TO $65,000,000 IN PRINCIPAL
AMOUNT OF "CITY OF DENTON COMBINATION TAX AND REVENUE
REFUNDING BONDS, SERIES 2010"; ESTABLISHING PARAMETERS FOR THE
REDEMPTION OF CERTAIN OUTSTANDING OBLIGATIONS OF THE CITY;
AUTHORIZING THE ISSUANCE OF THE BONDS; LEVYING AN ANNUAL AD
VALOREM TAX AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF
SAID BONDS; APPROVING AND AUTHORIZING INSTRUMENTS AND
PROCEDURES RELATING TO SAID BONDS; AND ENACTING OTHER PROVISIONS
RELATING TO THE SUBJECT
was duly introduced for the consideration of said City Council and duly read. It was then duly moved and
seconded that said Ordinance be passed; and, after due discussion, said motion, carrying with it the passage
of said Ordinance, prevailed and carried by the following vote:
AYES: 5.
NOES: 0.
2. That a true, full, and correct copy of the aforesaid Ordinance passed at the Meeting described in
the above and foregoing paragraph is attached to and follows this Certificate; that said Ordinance has been
duly recorded in said City Council's minutes of said Meeting; that the above and foregoing paragraph is a
true, full, and correct excerpt from said City Council's minutes of said Meeting pertaining to the passage of
said Ordinance; that the persons named in the above and foregoing paragraph are the duly chosen, qualified,
and acting officers and members of said City Council as indicated therein; and that each of the officers and
members of said City Council was duly and sufficiently notified officially and personally, in advance, of the
time, place, and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and
considered for passage at said Meeting; and that said Meeting was open to the public, and public notice of
the time, place, and purpose of said meeting was given, all as required by Chapter 551, Texas Government
Code.
2010-059
ORDINANCE NO.
AN ORDINANCE CONSIDERING ALL MATTERS INCIDENT AND RELATED
TO THE ISSUANCE, SALE AND DELIVERY OF UP TO $65,000,000 IN
PRINCIPAL AMOUNT OF "CITY OF DENTON COMBINATION TAX AND
REVENUE REFUNDING BONDS, SERIES 2010"; ESTABLISHING
PARAMETERS FOR THE REDEMPTION OF CERTAIN OUTSTANDING
OBLIGATIONS OF THE CITY; AUTHORIZING THE ISSUANCE OF THE
BONDS; LEVYING AN ANNUAL AD VALOREM TAX AND PROVIDING FOR
THE SECURITY FOR AND PAYMENT OF SAID BONDS; APPROVING AND
AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING TO SAID
BONDS; AND ENACTING OTHER PROVISIONS RELATING TO THE
SUBJECT
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THE STATE OF TEXAS
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COUNTY OF DENTON
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CITY OF DENTON
WHEREAS, the City of Denton (the "Issuer") is a member city of the Texas Municipal Power
Agency ("TMPA"); and
WHEREAS, the Issuer, the Cities of Bryan, Garland and Greenville (together with the Issuer, the
"Member Cities") and TMPA have entered into identical Power Sales Contracts dated September 1, 1976,
as amended (the "Power Sales Agreement"), under which TMPA is obligated to sell electric energy to the
Member Cities, and each of the Member Cities is unconditionally obligated to pay to TMPA, without offset
or counterclaim and without regard to whether energy is delivered by TMPA to each Member City,
including the Issuer, or whether the Member Cities, including the Issuer, actually uses energy from TMPA's
generating facilities, the percentage of TMPA's Annual System Costs (as defined in the Power Sales
Agreement), including the payment of the Debt Service Requirements (as defined in the Power Sales
Agreement) which may from time to time exist, as set forth below:
City of Bryan: 21.7%
City of Denton: 21.3%
City of Garland: 47.0%
City of Greenville: 10.0%
Such payment percentages are hereinafter referred to as the "Contract Percentages"; and
WHEREAS, TMPA has outstanding certain "Debts" (within the meaning of the Power Sales
Agreement, and referred to herein as the "TMPA Debts"), the Contract Percentage of which the Issuer is
obligated to pay under the Power Sales Agreement (the Issuer's Contract Percentage of the TMPA Debts, as
being more fully described in Schedule I to this Ordinance, is herein referred to as the "Refunded
Obligations"), which represent a portion of the contractual obligations of the Member Cities incurred in
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accordance with the Power Sales Agreement; and
WHEREAS, TMPA and the Member Cities have entered into a "Settlement Agreement", under
which each Member City has agreed to individually provide its proportionate share of financing its
respective obligation to fund a portion of the TMPA Debts, as more fully described in Schedule I to this
Ordinance; and
WHEREAS, TMPA has advised the Issuer that it will fund the interest component of the Refunded
Obligations to be refunded by the Issuer, and that the Issuer will transfer to the paying agent or escrow agent
for the Refunded Obligations an amount equal to the aggregate principal amount of the Refunded
Obligations to be discharged; and
WHEREAS, Chapter 1207, Texas Government Code, as amended ("Chapter 1207"), authorizes the
Issuer to issue refunding bonds to refund any general or special obligation of the Issuer; and
WHEREAS, the bonds hereafter authorized are being issued and delivered pursuant to Chapter
1207; and
WHEREAS, the Issuer finds that the Refunded Obligations, which constitute a portion of the
payment obligations of the Issuer under the Power Sales Agreement, constitute a special obligation of the
Issuer that may be refunded with proceeds of bonds issued under Chapter 1207; and
WHEREAS, Chapter 1207 authorizes the Issuer to issue refunding bonds and to deposit the
proceeds from the sale thereof, and any other available funds or resources, directly with a place of payment
(paying agent) for the Refunded Obligations or other authorized depository, and such deposit, if made
before such payment dates, shall constitute the making of firm banking and financial arrangements for the
discharge and final payment of the Refunded Obligations; and
WHEREAS, this City Council has been provided with the resolutions adopted by the Board of
Directors of TMPA (the "TMPA Resolutions"), providing for the redemption and defeasance of the TMPA
Debt consisting of the TMPA Refunded Bonds (as defined in Schedule I) and the TMPA Refunded
Commercial Paper Notes (as defined in Schedule I) upon deposit of the necessary funds therefor, and also
been provided with an escrow agreement (the "Escrow Agreement") with respect to the TMPA Refunded
Bonds to be executed and delivered, in substantially the form and substance presented, by TMPA pursuant
to the TMPA Resolutions; and
WHEREAS, this City Council hereby finds and determines that it is in the Issuer's best interests to
issue the Bonds in order to prepay the Refunded Obligations incurred, due and owing by the Issuer under
the Power Sales Agreement, consistent with the terms of the Settlement Agreement, and that the refunding
of the contractual obligations of the Issuer incurred in connection with the TMPA Refunded Bonds and the
TMPA Refunded Commercial Paper Notes constitutes a public purpose, and will enable TMPA to fund
necessary improvements to its facilities in order to generate electricity for sale to the Member Cities,
including the Issuer, and to provide for greater efficiency resulting from the refinancing of the restructuring
of the Issuer's obligations under the Power Sales Agreement. The refunding of the TMPA Refunded
Commercial Paper Notes is effected to convert interim financing into long-term fixed rate financing, and
therefore it is impractical to make the determinations required by subsection (a) of Section 1207.008, Texas
Government Code; and
WHEREAS, it is officially found, determined, and declared that the meeting at which this
Ordinance has been adopted was open to the public and public notice of the time, place and subject matter
of the public business to be considered and acted upon at said meeting, including this Ordinance, was given,
all as required by the applicable provisions of Tex. Govt Code Ann. ch. 551; NOW, THEREFORE
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BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS:
Section 1. RECITALS, AMOUNT, PURPOSE AND DESIGNATION OF THE BONDS.
(a) The recitals set forth in the preamble hereof are incorporated herein and shall have the same
force and effect as if set forth in this Section.
(b) The bonds of the City of Denton, Texas (the "Issuer") are hereby authorized to be issued and
delivered in the aggregate principal amount hereinafter provided for the public purpose of providing funds
to refund the Refunded Obligations and to pay the costs incurred in connection with the issuance of the
Bonds. The term "Bonds" as used in this Ordinance shall mean and include collectively the bonds initially
issued and delivered pursuant to this Ordinance and all definitive or substitute bonds exchanged therefor, as
well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall
mean any of the Bonds, unless the context clearly indicates otherwise.
(c) Each bond issued pursuant to this Ordinance shall be designated: "CITY OF DENTON,
TEXAS, COMBINATION TAX AND REVENUE REFUNDING BOND, SERIES 2010," and initially
there shall be issued, sold, and delivered hereunder fully registered Bonds, without interest coupons,
payable to the respective registered owners thereof (with the initial bonds being made payable to the initial
purchaser as described in Section 11 hereof), or to the registered assignee or assignees of said bonds or any
portion or portions thereof (in each case, the "Registered Owner"). The Bonds shall be in the respective
denominations and principal amounts, shall be numbered, shall mature and be payable on the date or dates
in each of the years and in the principal amounts, and shall bear interest to their respective dates of maturity
or redemption prior to maturity at the rates per annum, as set forth in the Pricing Certificate.
Section 2. DELEGATION TO PRICING OFFICER.
(a) As authorized by Section 1207.007, Texas Government Code, as amended, the Pricing Officer
(hereinafter designated) is hereby authorized to act on behalf of the Issuer in selling and delivering the
Bonds and carrying out the other procedures specified in this Ordinance, including, determining the date of
the sale of the Bonds, the date of the Bonds, any additional or different designation or title by which the
Bonds shall be known, the price at which the Bonds will be sold, the years in which the Bonds will mature,
the principal amount to mature or be paid in installments in each of such years, the rate of interest to be
borne by each such maturity, the interest payment and record dates, the price and terms upon and at which
the Bonds shall be subject to redemption prior to maturity at the option of the Issuer, as well as any
mandatory sinking fund redemption provisions, and all other matters relating to the issuance, sale, and
delivery of the Bonds and the refunding of the Refunded Obligations, including without limitation
establishing the refunding date for and effecting the refunding of the Refunded Obligations and obtaining
municipal bond insurance for all or any portion of the Bonds, if any, and providing for the terms and
provisions thereof applicable to the Bonds, all of which shall be specified in the Pricing Certificate;
provided that:
(i) the aggregate original principal amount of the Bonds shall not exceed $65,000,000;
(ii) the price to be paid for the Bonds shall not be less than 97% of the aggregate original
principal amount thereof plus accrued interest, if any, thereon from its date to its delivery;
(iii) the net effective interest rate on the Bonds shall not exceed 15.00% per annum and
the true interest cost on the Bonds shall not exceed 5.000%;
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(iv) the maximum stated maturity of the Bonds shall not exceed December 31, 2025;
(v) the City Manager and Assistant City Manager are each hereby designated and
authorized to act as the Pricing Officer; and
(vi) the delegation made hereby shall expire if not exercised by the Pricing Officer on or
prior to August 16, 2010.
(b) The Bonds shall be sold by competitive sale.
(c) The Pricing Officer shall cause Bonds to be issued to refund all Refunded Obligations. In
establishing the aggregate principal amount of the Bonds, the Pricing Officer shall establish an amount not
exceeding the amount authorized in Subsection (a) hereof, which shall be sufficient in amount to provide
for the refunding of the Refunded Obligations and to pay costs of issuing the Bonds. The Bonds shall be
sold with and subject to such terms as set forth in the Pricing Certificate.
Section 3. CHARACTERISTICS OF THE BONDS.
(a) Registration. The Issuer shall keep or cause to be kept at the principal corporate trust office
of The Bank of New York Mellon Trust Company, N.A., Dallas, Texas, (the "Paying Agent/Registrar"),
books or records for the registration of the transfer, conversion and exchange of the Bonds (the
"Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and
transfer agent to keep such books or records and make such registrations of transfers, conversions and
exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and
the Paying Agent/Registrar shall make such registrations, transfers, conversions and exchanges as herein
provided within three days of presentation in due and proper form. The Paying Agent/Registrar shall
obtain and record in the Registration Books the address of the registered owner of each Bond to which
payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each
registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be
mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall
have the right to inspect the Registration Books during regular business hours of the Paying
Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential
and, unless otherwise required by law, shall not permit their inspection by any other entity. The Issuer
shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration,
transfer, conversion, exchange and delivery of a substitute Bond or Bonds. Registration of assignments,
transfers, conversions and exchanges of Bonds shall be made in the manner provided and with the effect
stated in the FORM OF BOND set forth in this Ordinance. Each substitute Bond shall bear a letter and/or
number to distinguish it from each other Bond.
(b) Transfer, Conversion and Exchange. Except as provided in Section 3(d) of this Ordinance,
an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date
and manually sign said Bond, and no such Bond shall be deemed to be issued or outstanding unless such
Bond is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds
surrendered for conversion and exchange. No additional ordinances, orders, or resolutions need be passed
or adopted by the governing body of the Issuer or any other body or person so as to accomplish the
foregoing conversion and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall
provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein.
Pursuant to Chapter 1201, Government Code, as amended, the duty of conversion and exchange of Bonds
as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Bond, the
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converted and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with
the same effect as the Bonds that initially were issued and delivered pursuant to this Ordinance, approved
by the Attorney General and registered by the Comptroller of Public Accounts.
(c) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all as
provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made
by the Issuer and the Paying Agent/Registrar with respect to the Bonds, and of all conversions and
exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event
of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record
date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar,
if and when funds for the payment of such interest have been received from the Issuer. Notice of the
Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after
the Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by
United States mail, first class postage prepaid, to the address of each registered owner appearing on the
Registration Books at the close of business on the last business day next preceding the date of mailing of
such notice.
(d) In General. The Bonds (i) shall be issued in fully registered form, without interest coupons,
with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii)
shall be in the denominations, (iii) may be converted and exchanged for other Bonds, (iv) may be
transferred and assigned, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and
authenticated, (vii) the principal of and interest on the Bonds shall be payable, (viii) may and shall be
redeemed prior to maturity, and (ix) shall be administered and the Paying Agent/Registrar and the Issuer
shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner
and to the effect as required or indicated, in the FORM OF BOND set forth in this Ordinance, as may be
modified in the Pricing Certificate. The Bond initially issued and delivered pursuant to this Ordinance is
not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute
Bond issued in conversion of and exchange for any Bond or Bonds issued under this Ordinance the Paying
Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION
CERTIFICATE, in the form set forth in the FORM OF BOND.
(e) Paying Agent/Registrar. The Issuer covenants with the registered owners of the Bonds that at
all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank,
trust company, financial institution, or other entity to act as and perform the services of Paying
Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity.
The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less
than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the
next principal or interest payment date after such notice. In the event that the entity at any time acting as
Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or
otherwise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally
qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under
this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar
promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent
books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by
the Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice
thereof to be sent by the new Paying Agent/Registrar to each Registered Owner of the Bonds, by United
States mail, first-class postage prepaid, which notice also shall give the address of the new Paying
Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be
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deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be
delivered to each Paying Agent/Registrar.
(f) Authentication. Except as provided below, no Bond shall be valid or obligatory for any
purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the
Certificate of Paying Agent/Registrar substantially in the form provided in this Ordinance, duly
authenticated by manual execution of the Paying Agent/Registrar. It shall not be required that the same
authorized representative of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on
all of the Bonds. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial
Bond delivered on the closing date shall have attached thereto the Comptroller's Registration Certificate
substantially in the form provided in this Ordinance, manually executed by the Comptroller of Public
Accounts of the State of Texas or by his duly authorized agent, which certificate shall be evidence that the
Initial Bond has been duly approved by the Attorney General of the State of Texas and that it is a valid and
binding obligation of the Issuer, and has been registered by the Comptroller.
(g) Definitive Bonds. The Bonds issued in exchange for the Bond initially issued to the initial
purchaser specified herein shall be initially issued in the form of a separate single fully registered Bond for
each of the maturities thereof. Upon initial issuance, the ownership of each such Bond shall be registered
in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"),
pursuant to the Book-Entry Only System hereinafter described and subject to the provisions set forth in
subsections (h), (i) and (j) of this Section, and except as provided in subsection (i) hereof, all of the
outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC.
(h) Book-Entry Only System. With respect to Bonds registered in the name of Cede & Co., as
nominee of DTC, the Issuer and the Paying Agent/Registrar shall have no responsibility or obligation to any
securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations
on whose behalf DTC was created ("DTC Participant") to hold securities to facilitate the clearance and
settlement of securities transactions among DTC Participants or to any person on behalf of whom such a
DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the
Issuer and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the
accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest
in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a Registered Owner of
Bonds, as shown on the Registration Books, of any notice with respect to the Bonds, or (iii) the payment to
any DTC Participant or any other person, other than a Registered Owner of Bonds, as shown in the
Registration Books of any amount with respect to principal of or interest on the Bonds. Notwithstanding
any other provision of this Ordinance to the contrary, the Issuer and the Paying Agent/Registrar shall be
entitled to treat and consider the person in whose name each Bond is registered in the Registration Books as
the absolute owner of such Bond for the purpose of payment of principal and interest with respect to such
Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes
whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Bonds only to or
upon the order of the Registered Owners, as shown in the Registration Books as provided in this Ordinance,
or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to
fully satisfy and discharge the Issuer's obligations with respect to payment of principal of and interest on the
Bonds to the extent of the sum or sums so paid. No person other than a Registered Owner, as shown in the
Registration Books, shall receive a Bond evidencing the obligation of the Issuer to make payments of
principal and interest pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of
written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co.,
and subject to the provisions in this Ordinance with respect to interest checks being mailed to the Registered
Owner at the close of business on the Record date, the words "Cede & Co." in this Ordinance shall refer to
such new nominee of DTC.
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The previous execution and delivery of the Blanket Letter of Representations with respect to
obligations of the Issuer is hereby ratified and confirmed; and the provisions thereof shall be fully
applicable to the Bonds.
(i) Successor Securities Depository; Transfers Outside Book-Entry Only System. In the event
that the Issuer determines that DTC is incapable of discharging its responsibilities described herein and in
the representations letter of the Issuer to DTC or that it is in the best interest of the beneficial owners of the
Bonds that they be able to obtain certificated Bonds, the Issuer shall (i) appoint a successor securities
depository, qualified to act as such under Section 17A of the Securities and Exchange Act of 1934, as
amended, notify DTC and DTC Participants of the appointment of such successor securities depository and
transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC
Participants of the availability through DTC of Bonds and transfer one or more separate certificated Bonds
to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no
longer be restricted to being registered in the Registration Books in the name of Cede & Co., as nominee of
DTC, but may be registered in the name of the successor securities depository, or its nominee, or in
whatever name or names Registered Owners transferring or exchanging Bonds shall designate, in
accordance with the provisions of this Ordinance.
(j) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the
contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments
with respect to principal of and interest on such Bond and all notices with respect to such Bond shall be
made and given, respectively, in the manner provided in the representations letter of the Issuer to DTC.
(k) Cancellation of Initial Bond. On the closing date, one initial Bond representing the entire
principal amount of the Bonds, payable in stated installments to the Initial Purchaser described in
Section 11 or its designee, executed by manual or facsimile signature of the Mayor and City Secretary of
the Issuer, approved by the Attorney General of Texas, and registered and manually signed by the
Comptroller of Public Accounts of the State of Texas, will be delivered to such purchaser or its designee.
Upon payment for the initial Bond, the Paying Agent/Registrar shall cancel the initial Bond and deliver to
the Purchaser or to the Depository Trust Company on behalf of such purchaser, as applicable, one registered
definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all of the Bonds
for such maturity. To the extent that the Paying Agent/Registrar is eligible to participate in DTC's FAST
System, pursuant to an agreement between the Paying Agent/Registrar and DTC, the Paying
Agent/Registrar shall hold the definitive Bonds in safekeeping for DTC.
Section 4. FORM OF BONDS. The form of the Bonds, including the form of Paying
Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration
Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Bonds initially
issued and delivered pursuant to this Ordinance, shall be, respectively, substantially as follows, with such
appropriate variations, omissions or insertions as set forth in the Pricing Certificate or are otherwise
permitted or required by this Ordinance, and with the Bonds to be completed with the terms and information
set forth in the Pricing Certificate.
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(a) [Form of Bond]
UNITED STATES OF AMERICAPRINCIPAL
NO. R-
STATE OF TEXASAMOUNT
CITY OF DENTON
$_________
COMBINATION TAX AND REVENUE REFUNDING BOND
SERIES 2010
Interest RateDated DateMaturity DateCUSIP No.
____________________________________________________
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
ON THE MATURITY DATE specified above, the City of Denton, in Denton County, Texas (the
"Issuer"), being a political subdivision and municipal corporation of the State of Texas, hereby promises to
pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered
Owner"), on the Maturity Date specified above, the Principal Amount specified above. The Issuer
promises to pay interest on the unpaid principal amount hereof (calculated on the basis of a 360-day year of
twelve 30-day months) from ___________, _____ at the Interest Rate per annum specified above. Interest
is payable on ______________, ____ and semiannually on each _____________ and _____________
thereafter to the Maturity Date specified above, or the date of redemption prior to maturity; except, if this
Bond is required to be authenticated and the date of its authentication is later than the first Record Date
(hereinafter defined), such principal amount shall bear interest from the interest payment date next
preceding the date of authentication, unless such date of authentication is after any Record Date but on or
before the next following interest payment date, in which case such principal amount shall bear interest
from such next following interest payment date; provided, however, that if on the date of authentication
hereof the interest on the Bond or Bonds, if any, for which this Bond is being exchanged is due but has not
been paid, then this Bond shall bear interest from the date to which such interest has been paid in full.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United
States of America, without exchange or collection charges. The principal of this Bond shall be paid to the
registered owner hereof upon presentation and surrender of this Bond at maturity, or upon the date fixed for
its redemption prior to maturity, at the principal corporate trust office of The Bank of New York Mellon
Trust Company, N.A., Dallas, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment
of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each
interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying
Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the
issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such
purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar by
United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner
hereof, at its address as it appeared on the ________________ day of the month preceding each such date
(the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter
described. In addition, interest may be paid by such other method, acceptable to the Paying
Agent/Registrar, requested by, and at the risk and expense of, the registered owner. In the event of a
non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such
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interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when
funds for the payment of such interest have been received from the Issuer. Notice of the Special Record
Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special
Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail,
first-class postage prepaid, to the address of each owner of a Bond appearing on the Registration Books at
the close of business on the last business day next preceding the date of mailing of such notice.
ANY ACCRUED INTEREST due at maturity or upon the redemption of this Bond prior to
maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this
Bond for payment or redemption at the principal corporate trust office of the Paying Agent/Registrar. The
Issuer covenants with the registered owner of this Bond that on or before each principal payment date and
interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest
and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in
immediately available funds, of all principal of and interest on the Bonds, when due.
IF THE DATE for any payment of the principal of or interest on this Bond shall be a Saturday,
Sunday, a legal holiday or a day on which banking institutions in the city where the principal corporate trust
office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the
date for such payment shall be the next succeeding day that is not such a Saturday, Sunday, legal holiday or
day on which banking institutions are authorized to close; and payment on such date shall have the same
force and effect as if made on the original date payment was due.
THIS BOND is one of a series of Bonds dated _________________, ______, authorized in
accordance with the Constitution and laws of the State of Texas in the principal amount of $____________
for the public purposes of refunding certain outstanding obligations of the Issuer, and to pay the costs
incurred in connection with the issuance of the Bonds.
ON _____________________, or on any date thereafter, the Bonds of this series may be redeemed
prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and
lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed
shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed only in
an integral multiple of $5,000), at a redemption price equal to the principal amount to be redeemed plus
accrued interest to the date fixed for redemption.
THE BONDS scheduled to mature on _____________ in the years ____ and ____ ( the "Term
Bonds") are subject to scheduled mandatory redemption by the Paying Agent/Registrar by lot, or by any
other customary method that results in a random selection, at a price equal to the principal amount thereof,
plus accrued interest to the redemption date, out of moneys available for such purpose in the interest and
sinking fund for the Bonds, on the dates and in the respective principal amounts, set forth in the following
schedule:
9
Term BondTerm Bond
Maturity: _________, ____Maturity: _________, ____
PrincipalPrincipal
AmountAmount
Mandatory Redemption DateMandatory Redemption Date
_________, ____$____________________, ____$___________
_________, _________________________, ________________
_________, _________________________, ________________
_________, ____(maturity)_____________________, ____ (maturity)____________
The principal amount of Term Bonds of a stated maturity required to be redeemed on any mandatory
redemption date pursuant to the operation of the mandatory sinking fund redemption provisions shall be
reduced, at the option of the Issuer, by the principal amount of any Term Bonds of the same maturity which,
at least 50 days prior to a mandatory redemption date (1) shall have been acquired by the Issuer at a price
not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase
thereof, and delivered to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and
canceled by the Paying Agent/Registrar at the request of the Issuer at a price not exceeding the principal
amount of such Term Bonds plus accrued interest to the date of purchase, or (3) shall have been redeemed
pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption
requirement.
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to
maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States
mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such redemption, to the
registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such
redemption date; provided, however, that the failure of the registered owner to receive such notice, or any
defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the
proceedings for the redemption of any Bond. By the date fixed for any such redemption due provision
shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the
Bonds or portions thereof that are to be so redeemed. If such written notice of redemption is sent and if due
provision for such payment is made, all as provided above, the Bonds or portions thereof that are to be so
redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they
shall not bear interest after the date fixed for redemption, and they shall not be regarded as being
outstanding except for the right of the registered owner to receive the redemption price from the Paying
Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed, a
substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any
denomination or denominations in any integral multiple of $5,000, at the written request of the registered
owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the
registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in
the Bond Ordinance.
IF AT THE TIME OF MAILING of notice of optional redemption of the Bonds there shall not have
either been deposited with the Paying Agent/Registrar or legally authorized escrow agent immediately
available funds sufficient to redeem all the Bonds called for redemption, such notice may state that it is
conditional, and is subject to the deposit of the redemption moneys with the Paying Agent/Registrar or
legally authorized escrow agent at or prior to the redemption date, and such notice shall be of no effect
unless such moneys are so deposited on or prior to the redemption date. If such redemption is not
effectuated, the Paying Agent/Registrar shall, within five days thereafter, give notice in the manner in
10
which the notice of redemption was given that such moneys were not so received and shall rescind the
redemption.
ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest
coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance, this
Bond may, at the request of the registered owner or the assignee or assignees hereof, be assigned,
transferred, converted into and exchanged for a like aggregate principal amount of fully registered Bonds,
without interest coupons, payable to the appropriate registered owner, assignee or assignees, as the case
may be, having the same denomination or denominations in any integral multiple of $5,000 as requested in
writing by the appropriate registered owner, assignee or assignees, as the case may be, upon surrender of
this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set
forth in the Bond Ordinance. Among other requirements for such assignment and transfer, this Bond must
be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of
assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing
assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee
or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be
registered. The form of Assignment printed or endorsed on this Bond may be executed by the registered
owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of
assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond
or any portion or portions hereof from time to time by the registered owner. The Paying Agent/Registrar's
reasonable standard or customary fees and charges for assigning, transferring, converting and exchanging
any Bond or portion thereof will be paid by the Issuer. In any circumstance, any taxes or governmental
charges required to be paid with respect thereto shall be paid by the one requesting such assignment,
transfer, conversion or exchange, as a condition precedent to the exercise of such privilege. The Paying
Agent/Registrar shall not be required to make any such transfer, conversion, or exchange (i) during the
period commencing with the close of business on any Record Date and ending with the opening of business
on the next following principal or interest payment date, or (ii) with respect to any Bond or any portion
thereof called for redemption prior to maturity, within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or
otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will
appoint a competent and legally qualified substitute therefor, and cause written notice thereof to be mailed
to the registered owners of the Bonds.
IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly
authorized, issued and delivered; that all acts, conditions and things required or proper to be performed,
exist and be done precedent to or in the authorization, issuance and delivery of this Bond have been
performed, existed and been done in accordance with law; that annual ad valorem taxes sufficient to
provide for the payment of the interest on and principal of this Bond, as such interest comes due and such
principal matures, have been levied and ordered to be levied against all taxable property in said Issuer, and
have been pledged for such payment, within the limit prescribed by law, and that this Bond is additionally
secured by and payable from a pledge of the net revenues of the Issuer's waterworks and sewer, electric
light and power, and drainage systems remaining after payment of all operation and maintenance expenses
thereof, and all debt service, reserve and other requirements in connection with all of the Issuer's revenue
obligations (now or hereafter outstanding) that are payable from all or part of said revenues, all as provided
in the Bond Ordinance.
THE ISSUER HAS RESERVED THE RIGHT to amend the Bond Ordinance as provided therein,
and under some (but not all) circumstances amendments thereto must be approved by the registered owners
of a majority in aggregate principal amount of the outstanding Bonds.
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BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all
of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes
and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and
the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or
facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of
the City Secretary of said Issuer, and has caused the official seal of the Issuer to be duly impressed, or
placed in facsimile, on this Bond.
(signature) (signature)
City Secretary Mayor
(SEAL)
(b) [Form of Paying Agent/Registrar's Authentication Certificate]
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
(To be executed if this Bond is not accompanied by an executed Registration
Certificate of the Comptroller of Public Accounts of the State of Texas)
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance
described in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in
exchange for, a Bond, Bonds, or a portion of a Bond or Bonds of a series that originally was approved by the
Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of
Texas.
Dated: _________________. The Bank of New York Mellon Trust Company, N.A.
Dallas, Texas
Paying Agent/Registrar
By:______________________________
Authorized Representative
(c) [Form of Assignment]
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 typewrite name and address, including zip code, of Transferee.)
______________________________________________________________________________
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the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
___________________________________________, attorney, to register the transfer of the within Bond
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 anNOTICE: The signature above must correspond
eligible guarantor institution participating in awith the name of the registered owner as it appears
securities transfer association recognized signatureupon the front of this Bond in every particular,
guarantee program.without alteration or enlargement or any change
whatsoever.
(d) [Form of Registration Certificate of the Comptroller of Public Accounts]
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. ___________
I hereby certify that this Bond has been examined, certified as to validity and approved by the
Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public
Accounts of the State of Texas.
Witness my signature and seal this _________________.
__________________________________________
Comptroller of Public Accounts of the State of Texas
(COMPTROLLER'S SEAL)
(e) [Initial Bond Insertions]
(i) The initial Bond shall be in the form set forth is paragraph (a) of this Section, except
that:
A. immediately under the name of the Bond, the headings "Interest Rate" and
"Maturity Date" shall both be completed with the words "As shown below" and
"CUSIP No. _____" shall be deleted.
B. the first paragraph shall be deleted and the following will be inserted:
"THE CITY OF DENTON, TEXAS, in Denton County, Texas (the "Issuer"), being a political subdivision
and municipal corporation of the State of Texas, hereby promises to pay to the Registered Owner specified
above, or registered assigns (hereinafter called the "Registered Owner"), on ___________________ in each
of the years, in the principal installments and bearing interest at the per annum rates set forth in the
following schedule:
YearsPrincipal AmountInterest Rates
13
(Information from Section 2 to be inserted)
The Issuer promises to pay interest on the unpaid principal amount hereof (calculated on the basis of a
360-day year of twelve 30-day months) from ____________, 20__ at the respective Interest Rate per
annum specified above. Interest is payable on _____________, ____, and semiannually on each
_______________ and _______________ thereafter to the date of payment of the principal installment
specified above, or the date of redemption prior to maturity; except, that if this Bond is required to be
authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such
Principal Amount shall bear interest from the interest payment date next preceding the date of
authentication, unless such date of authentication is after any Record Date but on or before the next
following interest payment date, in which case such principal amount shall bear interest from such next
following interest payment date; provided, however, that if on the date of authentication hereof the interest
on the Bond or Bonds, if any, for which this Bond is being exchanged is due but has not been paid, then this
Bond shall bear interest from the date to which such interest has been paid in full."
C. The Initial Bond shall be numbered "T-1."
Section 6. SECURITY AND SOURCE OF PAYMENT FOR THE BONDS.
(a) Definitions. For the purposes of this Ordinance, the following terms shall be defined as
follows:
"Gross Revenues" means, with respect to the System, all income, receipts, fees, payments and
revenues of every nature derived or received from the operation and ownership (excluding refundable meter
deposits, restricted gifts and grants) of the System, including earnings and income derived from the
investment or deposit of moneys in any special funds or accounts created and established by the Issuer for
the payment and security of obligations payable from and secured by a lien on and pledge of the Net
Revenues (other than investment earnings of ad valorem tax proceeds).
"Maintenance and Operating Expenses" means all current expenses of operating and maintaining
the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient
service; provided, however, that only such repairs and extensions, as in the judgment of the City Council,
reasonably and fairly exercised, are necessary to maintain the operations and render adequate service to the
Issuer and the inhabitants thereof, or such as might be necessary to meet some physical accident or
condition which would otherwise impair obligations payable from Net Revenues shall be deducted in
determining "Net Revenues." Depreciation shall never be considered as an expense of Maintenance and
Operation. Maintenance and Operating Expenses shall include payments under contracts for the purchase
of water supply or treatment of sewage or other materials, goods or services for the System to the extent
authorized by law and the provisions of such contract.
"Net Revenues" means the Gross Revenues of the System, with respect to any period, after
deducting the Maintenance and Operating Expenses during such period.
"Prior Lien Bonds" means, as and to the extent outstanding, the revenue bonds or other obligations
of the Issuer payable from and secured by a lien on and pledge of the Net Revenues superior to the lien on
and pledge of the Net Revenues securing the payment of the Bonds.
"System" means the Issuer's entire existing waterworks and sewer 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
14
law, the term "System" shall not mean any water, sewer, electric, drainage or other facilities of any kind
which are declared not to be a part of the System, and which are acquired or constructed by the Issuer with
the proceeds from the issuance of "Special Facilities Bonds", which are hereby defined as being special
revenue obligations of the Issuer which are not payable from or secured by any Net Revenues, but which are
secured by and payable from liens on and pledges of any other revenues, sources, or payments, including,
but not limited to, special contract revenues or payments received from any other legal entity in connection
with such facilities; and such revenues, sources, or payments shall not be considered as or constitute Gross
Revenues of the System, unless and to the extent otherwise provided in the ordinance or ordinances
authorizing the issuance of such "Special Facilities Bonds".
(b) Tax Levy. A special Interest and Sinking Fund (the "Interest and Sinking Fund") is hereby
created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established and
maintained by the Issuer at an official depository bank of the Issuer. The Interest and Sinking Fund shall
be kept separate and apart from all other funds and accounts of the Issuer, and shall be used only for paying
the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on account of
the Bonds shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year
while any of the Bonds or interest thereon are outstanding and unpaid, the governing body of the Issuer
shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and
produce the money required to pay the principal of its Bonds as such principal matures (but never less than
2% of the original principal amount of the Bonds as a sinking fund each year); and said tax shall be based on
the latest approved tax rolls of the Issuer, with full allowance being made for tax delinquencies and the cost
of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be
levied, against all taxable property in the Issuer for each year while any of the Bonds or interest thereon are
outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the
credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the
payment of the interest on and principal of the Bonds, as such interest comes due and such principal
matures, are hereby pledged for such payment, within the limit prescribed by law.
(c) Revenues. The Bonds are additionally secured by and shall be payable from surplus Net
Revenues of System, after payment of all Maintenance and Operation Expenses, and all debt service,
reserve, and other requirements in connection with all of the Issuer's revenue bonds or other obligations
(now or hereafter outstanding), which are payable from all or any part of the Net Revenues ("Surplus Net
Revenues"). The Issuer shall deposit such Surplus Net Revenues to the credit of the Interest and Sinking
Fund created pursuant to this Section, to the extent necessary to pay the principal and interest (if any) on the
Bonds. Notwithstanding the requirements of this Section, if Surplus Net Revenues or other lawfully
available funds are actually on deposit in the Interest and Sinking Fund in advance of the time when ad
valorem taxes are scheduled to be levied for any year, then the amount of taxes which otherwise would have
been required to be levied pursuant to Section 6 may be reduced to the extent and by the amount of the
revenues then on deposit in the Interest and Sinking Fund. However, if the Surplus Net Revenues are
budgeted for deposit into the Interest and Sinking Fund, the Issuer:
(i) shall transfer and deposit in the Interest and Sinking Fund each month an amount of
not less than 1/12th of the annual debt service on the Bonds to be paid from Surplus Net Revenues
until the amount on deposit in the Interest and Sinking Fund equals the amount required for annual
debt service on the Bonds;
(ii) shall establish, adopt and maintain an annual budget that provides for either the
monthly deposit of sufficient Surplus Net Revenues and/or tax revenues, the monthly deposit of
any other legally available funds on hand at the time of the adoption of the annual budget, or a
combination thereof, into the Interest and Sinking Fund for the repayment of the Bonds; and
15
(iii) shall at all times maintain and collect sufficient System rates and charges in
conjunction with any other legally available funds that, after payment of the costs of operating and
maintaining the System, produce revenues in an amount not less than the debt service requirements
of all outstanding System revenue bonds of the Issuer and other obligations of the Issuer which are
secured in whole or in part by a pledge of revenues of the System and for which the Issuer is
budgeting the repayment of such obligations from the revenues of the System, or the Issuer shall
provide documentation which evidences the levy of an ad valorem tax rate dedicated to the Interest
and Sinking Fund, in conjunction with any other legally available funds except System rates and
charges, sufficient for the repayment of System debt service requirements.
(d) Security Interest. Article 1208, Government Code, applies to the issuance of the Bonds and
the pledge of the taxes and Surplus Net Revenues granted by the Issuer under this Section, and is therefore
valid, effective, and perfected. Should Texas law be amended at any time while the Bonds are outstanding
and unpaid, the result of such amendment being that the pledge of the taxes and Surplus Net Revenues
granted by the Issuer under this Section, is to be subject to the filing requirements of Chapter 9, Business &
Commerce Code, in order to preserve to the registered owners of the Bonds of Obligation a security interest
in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under
Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce Code and enable a
filing of a security interest in said pledge to occur.
(e) Representations and Covenants.
(i) The Issuer is duly authorized under the laws of the State of Texas to issue the Bonds;
all action on its part for the creation and issuance of the Bonds has been duly and effectively taken;
and the Bonds in the hands of the Owners thereof are and will be valid and enforceable obligations
of the Issuer in accordance with their terms.
(ii) The Issuer will faithfully perform at all times any and all covenants, undertakings,
stipulations, and provisions contained in this Ordinance and in each Bond; the Issuer will promptly
pay or cause to be paid the principal of, interest on, and premium, if any, with respect to, each Bond
on the dates and at the places and manner prescribed in such Bond; and the Issuer will, at the times
and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of
money specified by this Ordinance.
(iii) While any of the Bonds are outstanding and unpaid, there shall be made available to
the Paying Agent/Registrar, out of the Interest and Sinking Fund, money sufficient to pay the
interest on and the principal of the Bonds, as applicable, as will accrue or mature on each applicable
Interest Payment Date.
(iv) While the Bonds are outstanding and unpaid, 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; provided that whenever the Issuer deems it necessary to
dispose of any other property, machinery, fixtures or equipment, it may sell or otherwise dispose of
such property, machinery, fixtures or equipment when it has made arrangements to replace the
same or provide substitutes therefor, unless it is determined that no such replacement or substitute
is necessary; and, provided further, that the Issuer retains the right to sell, convey, mortgage,
encumber, lease or otherwise dispose of any significant or substantial part of the System if (i) the
City Council makes a finding and determination to the effect that, following such action by the
Issuer, the System is expected to produce Gross Revenues in amounts sufficient in each Fiscal Year
16
while any of the Bonds are to be outstanding to comply with the obligations of the Issuer contained
in this Ordinance; (ii) the Issuer obtains a certificate or opinion of an accountant, an independent
engineer or a certified financial analyst to the effect that, or certificates or opinions of a
combination of the foregoing that together are to the effect that, following such action by the Issuer,
the System is expected to produce Gross Revenues in amounts sufficient in each fiscal year while
any of the Bonds are to be outstanding to comply with the obligations of the Issuer contained in this
Ordinance; and (iii) each Rating Agency then maintaining a rating on any Bonds or Prior Lien
Bonds delivers a letter to the Issuer confirming that it will not withdraw or lower the rating then in
effect after it has been informed by the Issuer of such sale, conveyance, mortgage, encumbrance,
lease or other disposition. Proceeds from any sale hereunder not used to replace or provide for
substitution of such property sold, shall be used for improvements to the System or to purchase or
redeem Bonds
Section 7. DEFEASANCE OF BONDS.
(a) Any Bond and the interest thereon shall be deemed to be paid, retired and no longer
outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in
subsection (d) of this Section, when payment of the principal of such Bond, plus interest thereon to the due
date (whether such due date be by reason of maturity or otherwise) either (i) shall have been made or caused
to be made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due
date by irrevocably depositing with or making available to the Paying Agent/Registrar in accordance with
an escrow agreement or other instrument (the "Future Escrow Agreement") for such payment (1) lawful
money of the United States of America sufficient to make such payment or (2) Government Securities that
mature as to principal and interest in such amounts and at such times as will insure the availability, without
reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been
made by the Issuer with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds
shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond
hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or
entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and
such principal and interest shall be payable solely from such money or Government Securities.
Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any
determination not to redeem Defeased Bonds that is made in conjunction with the payment arrangements
specified in subsection (a)(i) or (ii) of this Section shall not be irrevocable, provided that: (1) in the
proceedings providing for such payment arrangements, the Issuer expressly reserves the right to call the
Defeased Bonds for redemption; (2) gives notice of the reservation of that right to the owners of the
Defeased Bonds immediately following the making of the payment arrangements; and (3) directs that
notice of the reservation be included in any redemption notices that it authorizes.
(b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the
Issuer be invested in Government Securities, maturing in the amounts and times as hereinbefore set forth,
and all income from such Government Securities received by the Paying Agent/Registrar that is not
required for the payment of the Bonds and interest thereon, with respect to which such money has been so
deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. Any Future
Escrow Agreement pursuant to which the money and/or Government Securities are held for the payment of
Defeased Bonds may contain provisions permitting the investment or reinvestment of such moneys in
Government Securities or the substitution of other Government Securities upon the satisfaction of the
requirements specified in subsection (a)(i) or (ii) of this Section. All income from such Government
Securities received by the Paying Agent/Registrar which is not required for the payment of the Defeased
Bonds, with respect to which such money has been so deposited, shall be remitted to the Issuer or deposited
as directed in writing by the Issuer.
17
(c) The term "Government 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.
(d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar
shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not
been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as
required by this Ordinance.
(e) In the event that the Issuer elects to defease less than all of the principal amount of Bonds of a
maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount of Bonds by such
random method as it deems fair and appropriate.
Section 8. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS.
(a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen or
destroyed, the Paying Agent/Registrar shall cause to be printed, executed and delivered, a new Bond of the
same principal amount, maturity and interest rate, as the damaged, mutilated, lost, stolen or destroyed
Bond, in replacement for such Bond in the manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged, mutilated,
lost, stolen or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar.
In every case of loss, theft or destruction of a Bond, the registered owner applying for a replacement Bond
shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required
by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case
of loss, theft or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying
Agent/Registrar evidence to their satisfaction of the loss, theft or destruction of such Bond, as the case may
be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying
Agent/Registrar for cancellation the Bond so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this , in the event any
such Bond shall have matured, and no default has occurred that is then continuing in the payment of the
principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of
the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a
replacement Bond, provided security or indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement Bond, the
Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other
expenses in connection therewith. Every replacement Bond issued pursuant to the provisions of this
Section by virtue of the fact that any Bond is lost, stolen or destroyed shall constitute a contractual
obligation of the Issuer whether or not the lost, stolen or destroyed Bond shall be found at any time, or be
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enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately
with any and all other Bonds duly issued under this Ordinance.
(e) Authority for Issuing Replacement Bonds. In accordance with Sec. 1206.022, Government
Code, this Section 8 of this Ordinance shall constitute authority for the issuance of any such replacement
Bond without necessity of further action by the governing body of the Issuer or any other body or person,
and the duty of the replacement of such Bonds is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and
manner and with the effect, as provided in Section 3(a) of this Ordinance for Bonds issued in conversion
and exchange for other Bonds.
Section 9. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S
OPINION; CUSIP NUMBERS AND CONTINGENT INSURANCE PROVISION, IF OBTAINED;
ENGAGEMENT OF BOND COUNSEL.
(a) The Mayor of the Issuer is hereby authorized to have control of the Bonds initially issued and
delivered hereunder and all necessary records and proceedings pertaining to the Bonds pending their
delivery and their investigation, examination, and approval by the Attorney General of the State of Texas,
and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the
Bonds said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller)
shall manually sign the Comptroller's Registration Certificate attached to such Bonds, and the seal of said
Comptroller shall be impressed, or placed in facsimile, on such Bond. The approving legal opinion of the
Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the
Bonds issued and delivered under this Ordinance, but neither shall have any legal effect, and shall be solely
for the convenience and information of the registered owners of the Bonds. In addition, if bond insurance
is obtained, the Bonds may bear an appropriate legend as provided by the insurer.
(b) The obligation of the initial purchaser to accept delivery of the Bonds is subject to the initial
purchaser being furnished with the final, approving opinion of McCall, Parkhurst & Horton L.L.P., bond
counsel to the Issuer, which opinion shall be dated as of and delivered on the date of initial delivery of the
Bonds to the initial purchaser. The engagement of such firm as bond counsel to the Issuer in connection
with issuance, sale and delivery of the Bonds is hereby approved and confirmed. The execution and
delivery of an engagement letter between the Issuer and such firm, with respect to such services as bond
counsel, is hereby authorized in such form as may be approved by the Mayor, and the Mayor is hereby
authorized to execute such engagement letter.
Section 10. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE
BONDS.
(a) Covenants. The Issuer covenants to take any action necessary to assure, or refrain from any
action that would adversely affect, the treatment of the Bonds as obligations described in section 103 of the
Internal Revenue Code of 1986, as amended (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:
(1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds
(less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined
in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed
therewith 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,
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directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service
on the Bonds, in contravention of section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private business use" described
in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed
therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent
is used for a "private business use" that is "related" and not "disproportionate," within the meaning
of section 141(b)(3) of the Code, to the governmental use;
(3) to take any action to assure that no amount that is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Bonds (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;
(4) to refrain from taking any action that would otherwise result in the Bonds being
treated as "private activity bonds" within the meaning of section 141(b) of the Code;
(5) to refrain from taking any action that would result in the Bonds being "federally
guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly,
to acquire or to replace funds that were used, directly or indirectly, to acquire investment property
(as defined in section 148(b)(2) of the Code) that produces a materially higher yield over the term
of the Bonds, other than investment property acquired with
Þ
(A) proceeds of the Bonds invested for a reasonable temporary period of 3 years
or less or, in the case of an advance refunding bond, for a period of 30 days or less until
such proceeds are needed for the purpose for which the bonds are issued, and in the case of
a current refunding bond, for a period of 90 days or less,
(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 proceeds of the Bonds;
(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as
proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the
requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section
149(d) of the Code (relating to advance refundings); and
(8) to pay to the United States of America at least once during each five-year period
(beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the
"Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States
of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount
then required to be paid as a result of Excess Earnings under section 148(f) of the Code.
(b) Rebate Fund. In order to facilitate compliance with the above covenant (a)(8), a "Rebate
Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund
shall not be subject to the claim of any other person, including without limitation the Bondholders. The
Rebate Fund is established for the additional purpose of compliance with section 148 of the Code.
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(c) Use of Proceeds. For purposes of the foregoing covenants (a)(1) and (a)(2), the Issuer
understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury
Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the Refunded
Obligations expended prior to the date of issuance of the Bonds. It is the understanding of the Issuer that
the covenants contained herein are intended to assure compliance with the Code and any regulations or
rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations
or rulings are hereafter promulgated that modify or expand provisions of the Code, as applicable to the
Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such
failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the
exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the
event that regulations or rulings are hereafter promulgated that impose additional requirements applicable
to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the
opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of
interest on the Bonds under section 103 of the Code. In furtherance of such intention, the Issuer hereby
authorizes and directs the Mayor or Pricing Officer to execute any documents, certificates or reports
required by the Code and to make such elections, on behalf of the Issuer, that may be permitted by the Code
as are consistent with the purpose for the issuance of the Bonds.
(d) Disposition of Project. The Issuer covenants that the Project 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 nationally-recognized bond counsel that such sale or other disposition will not
adversely affect the tax-exempt status of the Bonds. 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 a legal opinion that such failure to comply will not
adversely affect the excludability for federal income tax proposes from gross income of the interest.
Section 11. SALE OF BONDS AND APPROVAL OF OFFICIAL STATEMENT; FURTHER
PROCEDURES.
(a) The Bonds shall be sold and delivered pursuant to competitive sale subject to the provisions of
Section 1 and Section 2. The Pricing Officer is hereby authorized to determine the winning bidder and
execute and accept the winning bid form in which the purchaser or purchasers (collectively, the "Initial
Purchaser") of the Bonds shall be designated. The Bonds shall initially be registered in the name of the
Initial Purchaser as set forth in the Pricing Certificate.
(b) The Pricing Officer is authorized, in connection with effecting the sale of the Bonds, to obtain
from a municipal bond insurance company so designated in the winning bid form (the "Insurer") a
municipal bond insurance policy (the "Insurance Policy") in support of the Bonds. To that end, should the
Pricing Officer exercise such authority and commit the Issuer to obtain a municipal bond insurance policy,
for so long as the Insurance Policy is in effect, the requirements of the Insurer relating to the issuance of the
Insurance Policy as set forth in the Pricing Certificate are incorporated by reference into this Ordinance and
made a part hereof for all purposes, notwithstanding any other provision of this Ordinance to the contrary.
The Pricing Officer shall have the authority to execute any documents to effect the issuance of the
Insurance Policy by the Insurer.
(c) The form of Notice of Sale and Preliminary Official Statement relating to the Bonds submitted
to the City Council at the meeting at which this Ordinance is adopted is hereby approved and the Pricing
Officers are authorized to approve any changes to said document and to authorize its distribution by the
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Initial Purchaser to prospective purchasers of the Bonds. The Mayor and the City Secretary are authorized
and directed to execute and deliver for and on behalf of the Issuer copies of the Preliminary Official
Statement and an Official Statement, prepared in connection with the offering of the Bonds by the Initial
Purchaser, in final form as may be required by the Initial Purchaser, and such final Official Statement in the
form and content as approved by the Pricing Officer or as manually executed by said officials shall be
deemed to be approved by the City Council of the Issuer and constitute the Official Statement authorized
for distribution and use by the Initial Purchaser.
(d) The Mayor and Mayor Pro Tem, the City Manager and the Assistant City Manager and all
other officers, employees and agents of the Issuer, and each of them, shall be and they are hereby expressly
authorized, empowered and directed from time to time and at any time to do and perform all such acts and
things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of
the Issuer a Paying Agent/Registrar Agreement with the Paying Agent/Registrar and all other instruments,
whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and
provisions of this Ordinance, the Bonds, the sale of the Bonds and the Official Statement. In case any
officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such
Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer
had remained in office until such delivery.
Section 12. COMPLIANCE WITH RULE 15c2-12.
(a) Definitions. As used in this Section, the following terms have the meanings ascribed to such
terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
(b) Annual Reports.
(i) The Issuer shall provide annually to the MSRB, in the electronic format prescribed by
the MSRB, within six months after the end of each fiscal year ending in or after 2010, financial
information and operating data with respect to the Issuer of the general type included in the final
Official Statement authorized by Section 11 of this Ordinance, being the information described in
the Pricing Certificate. Any financial statements so to be provided shall be (1) prepared in
accordance with the accounting principles described in Exhibit A hereto, or such other accounting
principles as the Issuer may be required to employ from time to time pursuant to state law or
regulation, and (2) audited, if the Issuer commissions an audit of such statements and the audit is
completed within the period during which they must be provided. If the audit of such financial
statements is not completed within such period, then the Issuer shall provide unaudited financial
statements within such period, and audited financial statements for the applicable fiscal year to the
MSRB, when and if the audit report on such statements become available.
(ii) If the Issuer changes its fiscal year, it will notify the MSRB of the change (and of the
date of the new fiscal year end) prior to the next date by which the Issuer otherwise would be
required to provide financial information and operating data pursuant to this Section. The
financial information and operating data to be provided pursuant to this Section may be set forth in
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full in one or more documents or may be included by specific reference to any document available
on the MSRB's internet website or filed with the SEC.
(c) Material Event Notices. The Issuer shall notify the MSRB, in the electronic format
prescribed by the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if
such event is material within the meaning of the federal securities laws:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The Issuer shall notify the MSRB, in a timely manner, of any failure by the Issuer to provide financial
information or operating data in accordance with subsection (b) of this Section by the time required by such
subsection.
(d) Limitations, Disclaimers, and Amendments.
(i) The Issuer shall be obligated to observe and perform the covenants specified in this
Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect
to the Bonds within the meaning of the Rule, except that the Issuer in any event will give notice of
any deposit made in accordance with this Ordinance or applicable law that causes the Bonds no
longer to be outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Issuer
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly
provided herein. The Issuer does not make any representation or warranty concerning such
information or its usefulness to a decision to invest in or sell Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN
PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT
FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY
RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON
ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR
MANDAMUS OR SPECIFIC PERFORMANCE.
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(iv) No default by the Issuer in observing or performing its obligations under this Section
shall comprise a breach of or default under the Ordinance for purposes of any other provision of
this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise
limit the duties of the Issuer under federal and state securities laws.
(v) The provisions of this Section may be amended by the Issuer from time to time to
adapt to changed circumstances that arise from a change in legal requirements, a change in law, or
a change in the identity, nature, status, or type of operations of the Issuer, but only if (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell
Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any
amendments or interpretations of the Rule since such offering as well as such changed
circumstances and (2) either (a) the registered owners of a majority in aggregate principal amount
(or any greater amount required by any other provision of this Ordinance that authorizes such an
amendment) of the outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated with the Issuer (such as nationally recognized bond counsel) determined that such
amendment will not materially impair the interest of the registered owners and beneficial owners of
the Bonds. The Issuer may also amend or repeal the provisions of this continuing disclosure
agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final
jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the
extent that the provisions of this sentence would not prevent an underwriter from lawfully
purchasing or selling Bonds in the primary offering of the Bonds. If the Issuer so amends the
provisions of this Section, it shall include with any amended financial information or operating data
next provided in accordance with subsection (b) of this Section an explanation, in narrative form, of
the reason for the amendment and of the impact of any change in the type of financial information
or operating data so provided.
Section 13. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend this
Ordinance subject to the following terms and conditions, to-wit:
(a) The Issuer may from time to time, without the consent of any holder, except as otherwise
required by paragraph (b) below, amend or supplement this Ordinance in order to (i) cure any ambiguity,
defect or omission in this Ordinance that does not materially adversely affect the interests of the holders, (ii)
grant additional rights or security for the benefit of the holders, (iii) add events of default as shall not be
inconsistent with the provisions of this Ordinance and that shall not materially adversely affect the interests
of the holders, (v) qualify this Ordinance under the Trust Indenture Act of 1939, as amended, or
corresponding provisions of federal laws from time to time in effect, or (iv) make such other provisions in
regard to matters or questions arising under this Ordinance as shall not be inconsistent with the provisions
of this Ordinance and that shall not in the opinion of nationally recognized bond counsel materially
adversely affect the interests of the holders.
(b) Except as provided in paragraph (a) above, the holders of a majority in principal amount of the
Bonds then outstanding that are the subject of a proposed amendment shall have the right from time to time
to approve any amendment hereto that may be deemed necessary or desirable by the Issuer; provided,
however, that without the consent of 100% of the holders in aggregate principal amount of the then
outstanding Bonds, nothing herein contained shall permit or be construed to permit amendment of the terms
and conditions of this Ordinance or in any of the Bonds so as to:
(1) Make any change in the maturity of any of the outstanding Bonds;
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(2) Reduce the rate of interest borne by any of the outstanding Bonds;
(3) Reduce the amount of the principal of, or redemption premium, if any, payable on any
outstanding Bonds;
(4) Modify the terms of payment of principal or of interest or redemption premium on
outstanding Bonds or any of them or impose any condition with respect to such payment;
or
(5) Change the minimum percentage of the principal amount of the Bonds necessary for
consent to such amendment.
(c) If at any time the Issuer shall desire to amend this Ordinance under this Section, the Issuer
shall send by U.S. mail to each registered owner of the affected Bonds a copy of the proposed amendment.
Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is
on file at the office of the Issuer for inspection by all holders of such Bonds.
(d) Whenever at any time within one year from the date of mailing of such notice the Issuer shall
receive an instrument or instruments executed by the holders of at least a majority in aggregate principal
amount of all of the Bonds then outstanding that are required for the amendment, which instrument or
instruments shall consent to and approve such amendment, the Issuer may adopt the amendment in
substantially the same form.
(e) Upon the adoption of any amendatory Ordinance pursuant to the provisions of this Section,
this Ordinance shall be deemed to be modified and amended in accordance with such amendatory
Ordinance, and the respective rights, duties, and obligations of the Issuer and all holders of such affected
Bonds shall thereafter be determined, exercised, and enforced, subject in all respects to such amendment.
(f) Any consent given by the holder of a Bond pursuant to the provisions of this Section shall be
irrevocable for a period of six months from the date of such consent, and shall be conclusive and binding
upon all future holders of the same Bond during such period. Such consent may be revoked at any time
after six months from the date of such consent by the holder who gave such consent, or by a successor in
title, by filing notice with the Issuer, but such revocation shall not be effective if the holders of a majority in
aggregate principal amount of the affected Bonds then outstanding, have, prior to the attempted revocation,
consented to and approved the amendment.
For the purposes of establishing ownership of the Bonds, the Issuer shall rely solely upon the
registration of the ownership of such Bonds on the registration books kept by the Paying Agent/Registrar.
Section 14. DEFAULT AND REMEDIES.
(a) Events of Default. Each of the following occurrences or events for the purpose of this
Ordinance is hereby declared to be an Event of Default:
(i) the failure to make payment of the principal of or interest on any of the Bonds when
the same becomes due and payable; or
(ii) default in the performance or observance of any other covenant, agreement or
obligation of the Issuer, the failure to perform which materially, adversely affects the rights of the
Registered Owners of the Bonds, including, but not limited to, their prospect or ability to be repaid
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in accordance with this Ordinance, and the continuation thereof for a period of 60 days after notice
of such default is given by any Registered Owner to the Issuer.
(b) Remedies for Default.
(i) Upon the happening of any Event of Default, then and in every case, any Registered
Owner or an authorized representative thereof, including, but not limited to, a trustee or trustees
therefor, may proceed against the Issuer for the purpose of protecting and enforcing the rights of the
Registered Owners 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 Registered Owners hereunder or
any combination of such remedies.
(ii) It is provided that all such proceedings shall be instituted and maintained for the equal
benefit of all Registered Owners of Bonds then outstanding.
(c) Remedies Not Exclusive.
(i) 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 Bonds 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 Bonds shall not be available as a remedy under this
Ordinance.
(ii) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver
of any other available remedy.
(iii) By accepting the delivery of a Bond authorized under this Ordinance, such
Registered Owner 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, employees or trustees of the Issuer or
the Board of Trustees.
Section 15. NOTICE OF PAYMENT OF AGREEMENT. The Pricing Officer is hereby
authorized and directed to provide any necessary notices to TMPA that the Issuer is providing funds to pay,
pursuant to the Power Sales Agreement and the Settlement Agreement, the amount necessary to pay the
Refunded Obligations in full and requesting TMPA to take such actions as are necessary to cause the
redemption of the TMPA Debt, including application of the amounts in the funds securing payment of the
TMPA Refunded Bonds and the TMPA Refunded Commercial Paper Notes to pay the redemption price of
said obligations. The Mayor, City Manager or Assistant City Manager is hereby authorized and directed to
execute and deliver such certificates or other instruments or agreements necessary to provide for the
redemption, payment and defeasance of the Refunded Obligations and the TMPA Debt.
Section 16. DISPOSITION OF FUNDS. On the delivery date of the Bonds, proceeds of the
Bonds in an amount which, together with other legally available funds, will be sufficient to pay in full the
Refunded Obligations, shall be paid to TMPA for deposit into the escrow fund established in the Escrow
Agreement for the TMPA Refunded Bonds and for deposit with the paying agent for the TMPA Refunded
Commercial Paper Notes. The remaining proceeds of the Bonds shall be used to pay costs of issuance,
with any remaining funds to be deposited into the Interest and Sinking Fund.
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Section 17. APPROPRIATION. To pay the debt service coming due on the Bonds, if any (as
determined by the Pricing Certificate) prior to receipt of the taxes levied to pay such debt service, there is
hereby appropriated from current funds on hand, which are hereby certified to be on hand and available for
such purpose, an amount sufficient to pay such debt service, and such amount shall be used for no other
purpose.
Section 18. SEVERABILITY. If any section, article, paragraph, sentence, clause, phrase or
word in this Ordinance, or application thereof to any persons or circumstances is held invalid or
unconstitutional by a court of competent jurisdiction, such holding shall not affect the validity of the
remaining portion of this Ordinance, despite such invalidity, which remaining portions shall remain in full
force and effect.
Section 19. EFFECTIVE DATE. In accordance with the provisions of V.T.C.A., Government
Code, Section 1201.028, this Ordinance shall be effective immediately upon its adoption by the City
Council.
[Execution Page Follows]
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SCHEDULE I
Schedule of Refunded Obligations
Contractual obligations of the City of Denton (the "Issuer") under the Power Sales Contract dated
September 1, 1976, as amended (the "Power Sales Agreement"), between the Issuer and the Texas
Municipal Power Agency ("TMPA"), relating to the payment of the Issuer's Contract Percentage of
$98,500,000 in principal amount of TMPA's outstanding "Texas Municipal Power Agency Commercial
Paper Notes, Series 2005" (the “TMPA Refunded Commercial Paper Notes”) with such Contract
Percentage being $20,980,500.
Contractual obligations of the Issuer under the Power Sales Agreement relating to the payment of the
Issuer's Contract Percentage of $195,655,000 in principal amount of TMPA's outstanding "Texas
Municipal Power Agency Subordinate Lien Revenue Refunding Bonds, Series 2003," "Texas Municipal
Power Agency Subordinate Lien Revenue Refunding Bonds, Series 2004" and "Texas Municipal Power
Agency Subordinate Lien Revenue Refunding Bonds, Series 2004-A" (collectively, the “TMPA Refunded
Bonds”) with such Contract Percentage being $41,674,515.