2007-020
ORDINANCE NO. 2(}O'i- ()2.0
ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF
DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 2007, AND
APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELA TING
THERETO; AND PROVIDING AN EFFECTIVE DATE
THE STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON
WHEREAS, the City of Denton, Texas (the "Issuer"), heretofore has duly issued the following
revenue bonds:
City of Denton Utility System Revenue Refunding Bonds, Taxable Series 1993-B, dated June I,
1993;
City of Denton Utility System Revenue Bonds, Series 1996, dated May], ]996;
City of Denton Utility System Revenue Refunding Bonds, Series 1996-A, dated May 1, ]996;
City of Denton Utility System Revenue Bonds, Series ]998, dated March 15, ]998;
City of Denton Utility System Revenue Refunding Bonds, Series 1998A, dated July IS, ]998;
City of Denton Utility System Revenue Refunding Bonds, Series 1998B, dated August ],1998;
City of Denton Utility System Revenue Bonds, Series 2000A, dated April IS, 2000;
City of Denton Utility System Revenue Bonds, Taxable Series 2000B, dated April 15, 2000;
City of Denton Utility System Revenue Refunding and Improvement Bonds, Series 200 I, dated
April ]5,2001;
City of Denton Utility System Revenue Bonds, Series 2002A, dated April 1,2002;
City of Denton Utility System Revenue Bonds, Taxable Series 2002B, dated April 1,2002;
City of Denton Utility System Revenue Refunding and Improvement Bonds, Series 2003, dated
April 1, 2003;
City of Denton Utility System Revenue Refunding Bonds, Series 2004, dated September 1, 2004;
City of Denton Utility System Revenue Refunding Bonds, Series 2005, dated May] 5,2005;
City of Denton Utility System Revenue Bonds, Series 2006, dated July 15,2006; and
WHEREAS, the Issuer now desires to refund all or part of the bonds described in Schedule
I attached hereto, collectively, the "Available Refunded Bonds", and those Available Refunded
Bonds designated by the Pricing Officer in the Pricing Certificate, each as defined below, to be
refunded are herein referred to as the "Refunded Bonds";
WHEREAS, Chapter 1207, Texas Government Code, authorizes the Issuer to issue refunding
bonds and to deposit the proceeds from the sale thereof, together with any other available funds or
resources, directly with a paying agent for the Refunded Bonds or a trust company or commercial
bank that does not act as a depository for the Issuer and is named in these proceedings, and such
deposit, ifmade before the payment dates of the Refunded Bonds, shall constitute the making offirm
banking and financial arrangements for the discharge and final payment of the Refunded Bonds;
WHEREAS, Chapter 1207, Texas Government Code, further authorizes the Issuer to enter
into an escrow agreement with such paying agent for the Refunded Bonds or trust company or
commercial bank with respect to the safekeeping, investment, reinvestment, administration and
disposition of any such deposit, upon such terms and conditions as the Issuer and such paying agent
or trust company or commercial bank may agree;
WHEREAS, the Escrow Agreement hereinafter authorized between the Issuer and The Bank
of New York Trust Company, N.A., Dallas, Texas, constitutes an agreement of the kind authorized
and permitted by said Chapter 1207, Texas Government Code, and The Bank of New York Trust
Company, N.A., Dallas, Texas, is so named as the Escrow Agent in accordance with Section
1207.061, Texas Government Code;
WHEREAS, this City Council hereby finds and determines that it is a public purpose and
in the best interests of the Issuer to refund the Refunded Bonds in order to achieve a present value
debt service savings of not less than 3.50%, with such savings, among other information and terms
to be included in a pricing certificate (the "Pricing Certificate") to be executed by the City Manager
or the Assistant City Manager, acting as the designated pricing officer of the Issuer (the "Pricing
Officer"), all in accordance with the provisions of Section 1207.007, Texas Government Code;
WHEREAS, all the Refunded Bonds mature or are subject to redemption prior to maturity
within 20 years of the date of the bonds hereinafter authorized;
WHEREAS, the Series 2007 Bonds hereinafter authorized and described are to be issued, sold and
delivered pursuant to Chapters 1207, Texas Government Code, the City's Home Rule Charter, and other
applicable laws, NOW, THEREFORE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
Section I. RECITALS, AMOUNT AND PURPOSE 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 bond or 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 purpose of (a) refunding the
Refunded Bonds in order to lower the overall debt service requirements of the City's Combined Waterworks,
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Sewer and Electric Light and Power System (the "System") and (b) paying costs of issuance associated with
the sale of such bonds.
Section 2. DESCRIPTION OF THE BONDS. (a) Each bond issued pursuantto this Ordinance shall
be designated: "CITY OF DENTON UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES
2007." With respect to the Series 2007 Bonds, initially there shall be issued, sold, and delivered hereunder
a single fully registered bond, without interest coupons, payable in installments of principal (the "Initial Series
2007 Bond"), but the Initial Series 2007 Bond may be assigned and transferred and/or converted into and
exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, having
serial maturities, and in the denomination or denominations of$5,000 or any integral multiple of$5,000, all
in the manner hereinafter provided. The term "Series 2007 Bonds" as used in this Ordinance shall mean and
include collectively the Initial Series 2007 Bond and all substitute bonds exchanged therefor, as well as all
other substitute bonds and replacement bonds issued pursuant hereto, and the term "Series 2007 Bond" shall
mean any of the Series 2007 Bonds.
(b) The term "Initial Bond" as used in this Ordinance shall mean and include collectively the
Initial Series 2007 Bond, the term "Bonds" as used in this Ordinance shall mean and include collectively the
Initial Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement
bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds.
Section 3. DELEGATION TO PRICING OFFICER. (a) As authorized by Section 1207.007, Texas
Government Code, as amended, the City Manager or Assistant City Manager (the "Pricing Officer") is hereby
authorized to act on behalf of the Issuer in selling and delivering the Bonds, determining which of the
A vailable Refunded Bonds shall be refunded and carrying out the other procedures specified in this
Ordinance, including, determining 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 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 ofthe Bonds and the
refunding of the Refunded Bonds, including without limitation establishing the redemption date for and
effecting the redemption of the Refunded Bonds and obtaining municipal bond insurance for all or any
portion ofthe Bonds 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 $47,500,000;
(ii) the price to be paid for the Bonds shall not be less than 97% ofthe aggregate original principal
amount thereof plus accrued interest thereon from its date to its delivery;
(iii) none ofthe Bonds shall bear interest at a rate greater than 6.00% per annum and the net effective
interest rate on the Bonds shall not exceed 6.00%;
(iv) the refunding must produce present value debt service savings of at least 3.50%, net of any
Issuer contribution; and '
(v) the delegation made hereby shall expire if not exercised by the Pricing Officer on or prior to
April 23, 2007.
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(b) 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 purposes for which the Bonds are authorized 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 4. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL
REGISTERED OWNER, INTEREST AND CHARACTERISTICS OF THE INITIAL BOND.
(a) The Initial Series 2007 Bond is hereby authorized to be issued, sold, and delivered hereunder
as a single fully registered Bond, without interest coupons, dated the date set forth in the Pricing Certificate,
in the denomination and aggregate principal amount set forth in the Pricing Certificate, numbered R-l,
payable in annual installments of principal to the initial registered owner thereof or to the registered assignee
or assignees of said Bond or any portion or portions thereof (in each case, the "registered owner"), with the
annual installments of principal ofthe Initial Series 2007 Bond to be payable on the dates, respectively, and
in the principal amounts, respectively, stated in the FORM OF INITIAL SERIES 2007 BOND set forth in
this Ordinance.
(b) The Initial Series 2007 Bond (i) may and shall be prepaid or redeemed prior to the respective
scheduled due dates of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be
converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and
sealed, and the principal of and interest on the Initial Series 2007 Bond shall be payable, all as provided, and
in the manner required or indicated, in the FORM OF INITIAL SERIES 2007 BOND set forth in this
Ordinance.
(c) The unpaid principal balance ofthe Initial Series 2007 Bond shall bear interest from the date
of each Initial Series 2007 Bond to the respective scheduled due dates, or to the respective dates of
prepayment or redemption, of the installments of principal ofthe Initial Series 2007 Bond, and said interest
shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL
SERIES 2007 BOND set forth in this Ordinance.
Section 5. FORM OF INITIAL SERIES 2007 BOND. The form of the Initial Series 2007 Bond,
including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to
be endorsed on the Initial Series 2007 Bond, shall be substantially as follows, with such appropriate
variations, omissions or insertions as are permitted or required by this Ordinance, and with the
Bonds to be completed with information set forth in the Pricing Certificate:
FORM OF INITIAL SERIES 2007 BOND
NO.R-I
$
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE
REFUNDING BOND
SERIES 2007
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THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of
the State of Texas, hereby promises to pay to
or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the
"registered owner") the aggregate principal amount of
$
(
)
in annual installments of principal due and payable on in each of the years, and in the
respective principal amounts, as set forth in the following schedule, and to pay interest, from the date ofthis
Bond hereinafter stated, on the balance of each such installment of principal, respectively, from time to time
remaining unpaid, at the rates as follows:
YEAR
PRINCIPAL
AMOUNT
INTEREST
RA TE(%)
YEAR
PRINCIPAL
AMOUNT
INTEREST
RA TE(%)
(Information from Pricing Certificate to be inserted)
Interest shall first be due and payable on , 20-, and semiannually on each
and thereafter while this Bond or any portion hereof is outstanding and unpaid.
Said interest shall be calculated on the basis ofa 360-day year composed of twelve 3D-day months.
THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in
lawful money of the United States of America, without exchange or collection charges. The installments of
principal and the interest on this Bond are payable to the registered owner hereof through the services ofthe
Dallas, Texas corporate trust office of THE BANK OF NEW YORK TRUST COMPANY, NATIONAL
ASSOCIATION, which is the "Paying Agent/Registrar" for this Bond. Payment of all principal of and
interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each
principal andlor interest payment date by check, dated as of such date, drawn by the Paying AgentlRegistrar
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 AgentlRegistrar for such purpose as
hereinafter provided; and such check shall be sent by the Paying AgentlRegistrar by United States mail,
first-class postage prepaid, on each such principal andlor interest payment date, to the registered owner
hereof, at the address of the registered owner, as it appeared on the day of the month next
preceding each such date (the "Record Date") on the Registration Books kept by the Paying AgentlRegistrar,
as hereinafter described. The Issuer covenants with the registered owner ofthis Bond that on or before each
principal and/or interest payment date for this Bond it will make available to the Paying AgentlRegistrar, from
the "Interest and Sinking Fund" maintained pursuant to the Bond Ordinance, the amounts required to provide
for the payment, in immediately available funds, of all principal of and interest on this Bond, when due.
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 AgentlRegistrar, 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 ofthe past due interest ("Special
Payment Date", which shall be fifteen (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 Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the
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close of business on the 15th business day next preceding the date of mailing of such notice.
IF THE DATE for the 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 Paying Agent/Registrar
is located are authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are.
authorized to close; and payment on such date shall have the same force and effect as if made on the original
date payment was due.
THIS BOND has been authorized in accordance with the Constitution and laws ofthe State of Texas
in the principal amount of$ for the purpose of (a) refunding certain of the City's outstanding
revenue bonds (the "Refunded Bonds") in order to lower the overall debt service requirements ofthe City's
Combined Waterworks, Sewer and Electric Light and Power System (the "System") and (b) paying costs of
issuance associated with the sale of this Bond.
ON ,20_, or on any date whatsoever thereafter, the unpaid installments of principal
of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with
funds derived from any available source, as a whole, or in part, and, if in part, the particular portion of this
Bond to be prepaid or redeemed shall be selected and designated by the Issuer (provided that a portion of this
Bond may be redeemed only in an integral multiple of$5,000), at the prepayment or redemption price of the
par or principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption.
THE BONDS of this Series scheduled to mature on , 20 and
20_ are subject to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the
Issuer, in part, prior to their scheduled maturities, with money from the Interest and Sinking Fund, with the
particular Bonds or portion thereof to be redeemed to be selected by the Paying Agent/Registrar, by lot or
other customary method (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 par or principal amount thereof and accrued interest to the date
of redemption, on the dates, and in the principal amounts, respectively, as show in the following schedule:
,20
Maturity
Mandatory
Redemotion Dates
Principal
Amounts
,20_
,20_ (maturity) $
$
.20
Maturity
Mandatory
Redemotion Dates
Principal
Amounts
,20_
, 20_ (maturity) $
$
The principal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant
to the foregoing shall be reduced, at the option of the Issuer by the principal amount of any Bonds out of the
maturity scheduled for , 20_ and , 20_ which, at least 45 days prior to the
aforesaid appropriate redemption date (I) shall have been acquired by the Issuer at a price not exceeding the
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principal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the
Paying Agent/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional
redemption provisions hereof and not previously credited to the mandatory sinking fund redemption. During
any period in which ownership of the Bonds is determined by a book entry at a securities depository for the
Bonds, iffewer than all ofthe Bonds ofthe same maturity and bearing such interest rate are to be redeemed,
the Bonds, or portions thereof, to be redeemed shall be selected in accordance with the arrangements between
the Issuer and the securities depository.
AT LEAST 30 days prior to the date fixed for any such prepayment or redemption a written notice
of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner
hereof. By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer
with the Paying Agent/Registrar for the payment of the required prepayment or redemption price for this
Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date
fixed for prepayment or redemption. If such written notice of prepayment or redemption is given, and if due
provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be
so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled
due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be
regarded as being outstanding except for the right of the registered owner to receive the prepayment or
redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying
Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the
Registration Books all such prepayments or redemptions of principal of this Bond or any portion hereof.
THIS BOND, to the extent ofthe unpaid or unredeemed principal balance hereof, or any unpaid and
unredeemed portion hereofin any integral multiple of$5,000, may be assigned by the initial registered owner
hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying
Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in
the Bond Ordinance. Among other requirements for such transfer, this Bond must be presented and
surrendered to the Paying Agent/Registrar for cancellation, together with proper instruments of assignment,
in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment
by the initial registered owner of this Bond, or any portion or portions hereof in any integral multiple of
$5,000, to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof
is or are to be transferred and registered. Any instrument or instruments of assignment satisfactory to the
Paying Agent/Registrar may be used to evidence the assignment of this Bond or any such portion or portions
hereof by the initial registered owner hereof. A new bond or bonds payable to such assignee or assignees
(which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial
registered owner as to any portion of this Bond which is not being assigned and transferred by the initial
registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this
Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph
hereofforthe conversion and exchange of this Bond or any portion hereof. The registered owner of this Bond
shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for
all purposes, including payment and discharge ofliability upon this Bond to the extent of such payment, and
the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary.
AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or
unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal
amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly
designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion
ofthis Bond which is not being assigned and transferred by the initial registered owner, in any denomination
or denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each
substitute bond issued in exchange for any portion of this Bond shall have a single stated principal maturity
7
date), upon surrender of this Bond to the Paying AgentlRegistrar for cancellation, all in accordance with the
form and procedures set forth in the Bond Ordinance. If this Bond or any portion hereof is assigned and
transferred or converted each bond issued in exchange for any portion hereof shall have a single stated
principal maturity date corresponding to the due date of the installment of principal ofthis Bond or portion
hereoffor which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and
borne by such installment of principal or portion thereof. Such bonds, respectively, shall be subject to
redemption prior to maturity on the same dates and for the same prices as the corresponding installment of
principal of this Bond or portion hereof for which they are being exchanged. No such bond shall be payable
in installments, but shall have only one stated principal maturity date. AS PROVIDED IN THE BOND
ORDINANCE, THIS BOND IN ITS PRESENT FORM MAYBE ASSIGNED AND TRANSFERRED OR
CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange
forthis Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided
in the Bond Ordinance. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and
charges for transferring, converting, and exchanging this Bond or any portion thereof, but the one requesting
such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with
respect thereto. The Paying AgentlRegistrar shall not be required to make any such assignment, conversion,
or exchange (I) during the period commencing with the close of business on any Record Date and ending with
the opening of business on the next following principal or interest payment date, or, (ii) with respect to any
Bond or portion thereof called for prepayment or redemption prior to maturity, within 45 days prior to its
prepayment or redemption date.
IN THE EVENT any Paying AgentlRegistrar for this Bond 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 promptly will cause written notice thereof to be
mailed to the registered owner of this Bond.
IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly
authorized, issued, sold, and delivered; that all acts, conditions, and things required or proper to be performed,
exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been
performed, existed, and been done in accordance with law; that this Bond is a special obligation of the Issuer,
secured by and payable, together with other bonds, from a first lien on and pledge of the "Pledged Revenues",
which include, but are not limited to, the "Net Revenues of the System" as such terms are defined in the Bond
Ordinance, with the System consisting of the City's entire combined waterworks, sewer, and electric light and
power system.
THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Ordinance, to issue
Additional Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues" on a
parity with this Bond.
THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to
amend the Bond Ordinance with the approval of the holders or owners of fifty-one percent in principal
amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the
Pledged Revenues.
THE REGISTERED OWNER hereof shall never have the right to demand payment ofthis Bond or
the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other
than specified in the Bond Ordinance.
BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all
of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions,
8
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 the 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 and attested with the manual signature or facsimile
ofthe City Secretary of the Issuer, has caused the official seal ofthe Issuer to be duly impressed on this Bond,
and has caused this Bond to be dated , 2007.
ATTEST:
CITY OF DENTON, TEXAS
By:
Jennifer Walters
City Secretary, City of Denton, Texas
By:
Perry R. McNeill
Mayor, City of Denton, Texas
(CITY SEAL)
(BOND INSURANCE LEGEND, IF ANY)
FORM OF REGISTRATION CERTIFICA TE 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)
Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. Registration and Transfer. (a)
The Issuer shall keep or cause to be kept at the Dallas, Texas, corporate trust office of THE BANK OF NEW
YORK TRUST COMPANY, NA TIONAL ASSOCIATION (the "Paying Agent/Registrar") books or records
of the registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the
Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such
transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may
prescribe; and the Paying Agent/Registrar shall make such transfers and registrations as herein provided. The
Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner
of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall
be the duty of each registered owner to notifY the Paying Agent/Registrar in writing ofthe 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
9
AgentJRegistrar, but otherwise the Paying AgentJRegistrar shall keep the Registration Books confidential and,
unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each
Bond may be transferred in the Registration Books only upon presentation and surrender of such Bond to the
Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments
of assignment, in form and with guarantee of signatures satisfactory to the Paying AgentJRegistrar,
evidencing (i) the assignment of the Bond, or any portion thereof in any integral multiple of$5,000, to the
assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any such
portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of
any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued in conversion and exchange
therefor in the manner herein provided. The Initial Bond, to the extent ofthe unpaid or unredeemed principal
balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one
or more assignees designated in writing by the initial registered owner thereof. All Bonds issued and
delivered in conversion of and exchange for the Initial Bond shall be in any denomination or denominations
of any integral multiple of$5,000 (subject to the requirement hereinafter stated that each substitute Bond shall
have a single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE
SERIES 2007 BOND set forth in this Ordinance, and shall have the characteristics, and may be assigned,
transferred, and converted as hereinafter provided. Ifthe Initial Bond or any portion thereof is assigned and
transferred or converted the Initial Bond must be surrendered to the Paying Agent/Registrar for cancellation,
and each Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal
maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity
date corresponding to the due date of the installment of principal or portion thereof for which the substitute
Bond is being exchanged; each such Bond shall bear interest at the single rate applicable to and borne by such
installment of principal or portion thereof for which it is being exchanged. If only a portion of the Initial
Bond is assigned and transferred, there shall be delivered to and registered in the name of the initial registered
owner substitute Bonds in exchange for the unassigned balance ofthe Initial Bond in the same manner as if
the initial registered owner were the assignee thereof. If any Bond or portion thereof other than the Initial
Bond is assigned and transferred or converted each Bond issued in exchange therefor shall have the same
principal maturity date and bear interest at the same rate as the Bond for which it is exchanged. A form of
assignment shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall be executed
by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof.
Upon surrender of any Bonds or any portion or portions thereof for transfer of registration, an authorized
representative of the Paying Agent/Registrar shall make such transfer in the Registration Books, and shall
deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described, payable
to such assignee or assignees (which then will be the registered owner or owners of such new Bond or
Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and transferred,
all in conversion of and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the
same form and manner, and with the same effect, as provided in Section 6( d), below, for the conversion and
exchange of Bonds by any registered owner of a Bond. The Issuer shall pay the Paying Agent/Registrar's
standard or customary fees and charges for making such transfer and delivery of a substitute Bond or Bonds,
but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid
with respect thereto. The Paying AgentJRegistrar shall not be required to make transfers of registration of
any Bond or any portion thereof(i) during the period commencing with the close of business on any Record
Date and ending with the opening of 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.
(b) Ownershio of Bonds. The entity in whose name any Bond shall be registered in the
Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of
this Ordinance, whether or not such Bond shall be overdue, and the Issuer and the Paying AgentJRegistrar
shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of,
10
premium, if any, and interest on any such Bond shall be made only to such registered owner. All such
payments shall be valid and effectual to satisfY and discharge the liability upon such Bond to the extent of
the sum or sums so paid.
(c) Pavment 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, and to act
as its agent to convert and exchange or replace Bonds, all as provided in this Ordinance. The Paying
Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar
with respect to 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, anew 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 ofthe scheduled payment date of the
past due interest ("Special Payment Date", which shall be fifteen (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 Holder of a Bond appearing on the registration books of the Paying
Agent/Registrar at the close of business on the 15th business day next preceding the date of mailing of such
notice.
(d) Conversion and Exchange or Reolacement: Authentication. Each Bond issued and delivered
pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount
thereof, may, upon surrender of such Bond at the principal corporate trust office of the Paying
Agent/Registrar, together with a written request therefor duly executed by the registered owner or the
assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of
signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such
assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without
interest coupons, in the form prescribed in the FORM OF SUBSTITUTE SERIES 2007 BOND set forth in
this Ordinance, in the denomination of$5,000, or any integral multiple of$5,000 (subject to the requirement
hereinafter stated that each substitute Bond shall have a single stated maturity date), as requested in writing
by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid
or unredeemed principal balance or principal amount of any Bond or Bonds so surrendered, and payable to
the appropriate registered owner, assignee, or assignees, as the case may be. Ifthe Initial Bond is assigned
and transferred or converted each substitute Bond issued in exchange for any portion ofthe Initial Bond shall
have a single stated principal maturity date, and shall not be payable in installments; each such Bond shall
have a principal maturity date corresponding to the due date of the installment of principal or portion thereof
for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate
applicable to and borne by such installment of principal or portion thereoffor which it is being exchanged.
If a portion of any Bond (other than the Initial Bond) shall be redeemed prior to its scheduled maturity as
provided herein, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate,
in the denomination or denominations of any integral multiple of $5,000 at the request of the registered
owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the
registered owner upon surrender thereof for cancellation. If any Bond or portion thereof( other than the Initial
Bond) is assigned and transferred or converted, each Bond issued in exchange therefor shall have the same
principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged. Each
substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. The Paying
Agent/Registrar shall convert and exchange or replace Bonds as provided herein, and each fully registered
bond delivered in conversion of and exchange for or replacement of any Bond or portion thereof as permitted
or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this
Ordinance, and may again be converted and exchanged or replaced. It is specifically provided that any Bond
authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first
II
scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each
substitute Bond so authenticated after such first scheduled Record Date shall bear interest from the interest
payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond
is authenticated after any Record Date but on or before the next following interest payment date, in which
case it shall bear interest from such next following interest payment date; provided, however, that if at the
time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but
has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in
full. The Initial Bond issued and delivered pursuant to this Ordinance is not required to be, and shall not be,
authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and
exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed a
certificate, in the form substantially as follows:
"PAYING AGENTfREGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance
described in this Bond; and that this Bond has been issued in conversion of and exchange for or replacement
of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney
General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas.
THE BANK OF NEW YORK TRUST COMPANY,
NA TIONAL ASSOCIATION, Paying Agent/Registrar
Dated
By
Authorized Representative"
An authorized representative ofthe Paying AgentlRegistrar shall, before the delivery of any such Bond, date
and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless
such Certificate is so executed. The Paying AgentlRegistrar promptly shall cancel all Bonds surrendered for
conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed
or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing
conversion and exchange or replacement of any Bond or portion thereof, and the Paying AgentlRegistrar shall
provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein.
Pursuant to Chapter 1201, Texas Government Code, the duty of conversion and exchange or replacement of
Bonds as aforesaid is hereby imposed upon the Paying AgentlRegistrar, and, upon the execution of the above
Paying AgentfRegistrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be
valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which
originally was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the
Comptroller of Public Accounts. The Issuer shall pay the Paying AgentlRegistrar's standard or customary
fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one
requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required
to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and
exchange. The Paying AgentlRegistrar shall not be required to make any such conversion and exchange or
replacement of Bonds or any portion thereof(i) during the period commencing with the close of business on
any Record Date and ending with the opening of business on the next following principal or interest payment
date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45
days prior to its redemption date.
(e) In General. All Bonds issued in conversion and exchange or replacement of any other Bond
or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of
12
and interest on such Bonds to be payable only to the registered owners thereof, (ii) may and shall be redeemed
prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and
exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the
principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or
indicated, in the FORM OF SUBSTITUTE SERIES 2007 BOND set forth in this Ordinance.
(f) Pavment of Fees and Charges. The Issuer hereby covenants with the registered owners of
the Bonds that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for
its services with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay
the fees and charges ofthe Paying Agent/Registrar for services with respect to the transfer of registration of
Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided in this
Ordinance.
(g) Substitute Paving 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 agency 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 it will promptly 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 shall
promptly 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 ofthe new Paying Agent/Registrar. By
accepting the position and performing as such, each Paying Agent/Registrar shall be 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.
Section 7. FORM OF SUBSTITUTE SERIES 2007 BOND. The form of all Series 2007 Bonds
issued in conversion and exchange or replacement of any other Series 2007 Bond or portion thereof, including
the form of Paying Agent/Registrar's Certificate to be printed on each of such Series 2007 Bonds, and the
Form of Assignment to be printed on each of the Series 2007 Bonds, shall be, respectively, substantially as
follows, with such appropriate variations, omissions, or insertions as are permitted or required by this
Ordinance, and with the Bonds to be completed with information set forth in the Pricing Certificate.
FORM OF SUBSTITUTE SERIES 2007 BOND
NO.
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE
REFUNDING BOND
SERIES 2007
PRINCIPAL AMOUNT
$
13
INTEREST
RATE
MATURITY
DATE
ORIGINAL DATE
OF ISSUE
CUSIP NO.
%
,20_
ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas
(the "Issuer"), being a political subdivision of the State of Texas, hereby promises to pay to
, or to the registered assignee
hereof (either being hereinafter called the "registered owner") the principal amount of
and to pay interest thereon from , 20_, to the maturity date specified above, or the date of
redemption prior to maturity, at the interest rate per annum specified above; with interest being first due and
payable on , 20_, and semiannually on each and thereafter, except
that ifthe date of authentication of this Bond 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 (hereinafter defined) 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. Said interest shall be calculated on the basis of a 360-day year composed
oftwelve 30-day months.
THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United
States of America, without exchange or collection charges. The principal of this Bond shall be paid to the
registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for
its redemption prior to maturity, at the Dallas, Texas, corporate trust office of THE BANK OF NEW YORK
TRUST COMPANY, NATIONAL ASSOCIATION, 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, 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 the Bonds (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such
purpose as hereinafter provided; and such check 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 the
address of the registered owner, as it appeared at the close of business on the day of the month next
preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar,
as hereinafter described. However, the payment of such interest may be made by any other method
acceptable to the Paying Agent/Registrar and requested by, and at the risk and expense of, the registered
owner hereof. Any accrued interest due upon the redemption of this Bond prior to maturity as provided
herein shall be paid to the registered owner at the principal corporate trust office of the Paying
Agent/Registrar upon presentation and surrender ofthis Bond for redemption and payment at the principal
corporate trust office ofthe Paying Agent/Registrar. The Issuer covenants with the registered owner of this
Bond that on or before each principal payment date, interest payment date, and accrued 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.
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
14
Issuer. Notice of the Special Record Date and ofthe scheduled payment date of the past due interest ("Special
Payment Date", which shall be fifteen (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 Holder of a Bond appearing on the registration books of the Paying Agent/Registrar at the
close of business on the 15th business day next preceding the date of mailing of such notice.
IF THE DATE for the 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 Paying Agent/Registrar
is located are authorized by law or executive order to close, then the date for such payment shall be the next
succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as if made on the original
date payment was due.
THIS BOND is one of a series of Bonds initially dated , 20_, authorized in
accordance with the Constitution and laws ofthe State of Texas in the principal amount of$
for the purpose of (a) refunding certain of the City's outstanding revenue bonds (the "Refunded Bonds") in
order to lower the overall debt service requirements of the City's Combined Waterworks, Sewer and Electric
Light and Power System (the "System") and (b) paying costs of issuance associated with the sale of the
Bonds.
ON , 20_, or on any date whatsoever thereafter, the Bonds ofthis 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 the redemption price of the par or principal amount thereof, plus
accrued interest to the date fixed for redemption.
THE BONDS of this Series scheduled to mature on , 20_ and
20_ are subject to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the
Issuer, in part, prior to their scheduled maturities, with money from the Interest and Sinking Fund, with the
particular Bonds or portion thereof to be redeemed to be selected by the Paying Agent/Registrar, by lot or
other customary method (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 par or principal amount thereof and accrued interest to the date
of redemption, on the dates, and in the principal amounts, respectively, as show in the following schedule:
.20
Maturitv
Mandatory
Redemotion Dates
Principal
Amounts
,20_
,20_ (maturity) $
$
.20
Maturity
Mandatory
Redemotion Dates
Principal
Amounts
,20
,20_ (maturity) $
$
15
The principal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant
to the foregoing shall be reduced, at the option ofthe Issuer by the principal amount of any Bonds out ofthe
maturity scheduled for , 20_ and , 20_ which, at least 45 days prior to
the aforesaid appropriate redemption date (I) shall have been acquired by the Issuer at a price not exceeding
the principal amount of such Bonds plus accrued interest to the date of purchase thereof, and delivered to the
Paying Agent/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional
redemption provisions hereof and not previously credited to the mandatory sinking fund redemption. During
any period in which ownership of the Bonds is determined by a book entry at a securities depository for the
Bonds, iffewer than all of the Bonds ofthe same maturity and bearing such interest rate are to be redeemed,
the Bonds, or portions thereof, to be redeemed shall be selected in accordance with the arrangements between
the Issuer and the securities depository.
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 and to major securities depositories, national bond rating agencies and bond information
services; 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 thereofthat 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 ofthe 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 thereofforcancellation,
at the expense of the Issuer, all as provided in the Bond Ordinance.
THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MOL TlPLEOF
$5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the
Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set
forth in the 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 assigmnent,
in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assigmnent
of this Bond or any portion or portions hereof in any integral multiple of$5,000 to the assignee or assignees
in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and
registered. The form of Assigmnent printed or endorsed on this Bond shall be executed by the registered
owner or its duly authorized attorney or representative, to evidence the assignment hereof. A new Bond or
Bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such
new Bond or Bonds), or to the previous registered owner in the case of the assignment and transfer of only
a portion of this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for
this Bond, all in the form and manner as provided in the next paragraph hereof for the conversion and
exchange of other Bonds. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and
charges for making such transfer, but the one requesting such transfer shall pay any taxes or other
governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be
16
required to make transfers of registration of this Bond or any portion hereof(i) during the period commencing
with the close of business on any Record Date and ending with the opening of business on the next following
principal or interest payment date, or, (il) with respect to any Bond or any portion thereof called for
redemption prior to maturity, within 45 days prior to its redemption date. The registered owner of this Bond
shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for
all purposes, including payment and discharge ofliability upon this Bond to the extent of such payment, and
the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary.
ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest
coupons, in the denomination of any integral multiple of$5,000. As provided in the Bond Ordinance, this
Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or
assignees hereof, be 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 maturity date, and bearing interest at the same rate, in any 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. The Issuer shall
pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and
exchanging any Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange
shall pay any taxes or goverrunental charges required to be paid with respect thereto as a condition precedent
to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be
required to make any such conversion and exchange (i) during the period commencing with the close of
business on any Record Date and ending with the opening of business on the next following principal or
interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to
maturity, within 45 days prior to its redemption date.
IN THE EVENT any Paying Agent/Registrar 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 will promptly 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, sold, and delivered; that all acts, conditions, and things required or proper to be performed,
exist, and be done precedent to or in the authorization, issuance, and delive!)' of this Bond have been
performed, existed, and been done in accordance with law; that this Bond is a special obligation of the Issuer,
secured by and payable, together with other bonds, from a first lien on and pledge of the "Pledged Revenues",
which include, but are not limited to, the "Net Revenues ofthe System", as such terms are defined in the Bond
Ordinance, with the System consisting ofthe City's entire combined waterworks, sewer, and electric light and
power system.
THE ISSUER has reserved the right, subjectto the restrictions stated in the Bond Ordinance, to issue
Additional Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues" on a
parity with this Bond and series of which it is a part.
THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to
amend the Bond Ordinance with the approval of the holders or owners of fifty-one percent in principal
amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the
Pledged Revenues.
17
\
THE REGISTERED OWNER hereof shall never have the right to demand payment ofthis Bond or
the interest hereon out of any funds raised or to be raised by takation or from any source whatsoever other
than specified in the Bond Ordinance. I
BY BECOMING the registered owner ofthis Bond, the registered owner thereby acknowledges all
of the terms and provisions of the Bond Ordinance, agrees tb be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and av~ilable for inspection in the official minutes
and records of the governing body of the Issuer, and agrees th~t the terms and provisions of this Bond and
the Bond Ordinance constitute a contract between each registefed owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Blnd to be signed with the manual or facsimile
signature of the Mayor of the Issuer and countersigned and attdsted with the manual or facsimile signature
of the City Secretary of the Issuer, and has caused the officiall seal of the Issuer to be duly impressed, or
placed in facsimile, on this Bond. I
ATTEST: CITY OF DENTON, TEXAS
By:
Jennifer Walters
City Secretary, City of Denton, Texas
(CITY SEAL)
By:
PeiTy R. McNeill
Mhor, City of Denton, Texas
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICA TION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHEN1hcA TION CERTIFICATE
It is hereby certified that this Bond has been issued ubder the provisions of the Bond Ordinance
described in this Bond; and that this Bond has been issued in cortversion of and exchange for or replacement
of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney
General ofthe State of Texas and registered by the Comptrolldr of Public Accounts of the State of Texas.
JPMORGAN CHASEI BANK, NATIONAL ASSOCIA TION
Paying AgentlRegistrJr
Dated
By
Authorized jepresentative
(BOND INSURANCE LEGEND, IF ANY)
18
FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized
representative or attorney thereof, hereby assigns this Bond to
/ /
(Assignee's Social
Security or Taxpayer
Identification Number)
(print or typewrite Assignee's name and
address, including zip code)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration ofthis Bond on the Paying Agent/Registrar's Registration Books with full
power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by
an eligible guarantor institution participating in
a securities transfer association recognized
signature guarantee program.
Registered Owner
NOTICE: This signature must correspond with
the name of the Registered Owner appearing on
the face of this Bond in every particular without
alteration or enlargement or any change whatsoever.
Section 8. DEFINITIONS. As used in this Ordinance the following terms shall have the meanings
set forth below, unless the text hereof specifically indicates otherwise:
(a) The terms "City" and "Issuer" shall mean the City of Denton, in Denton County, Texas.
(b) The term "City Council" or "Council" shall mean the governing body of the City.
(c) The term "Bonds" shall mean collectively the Initial Bond as defined and described in Section
2 of this Ordinance and all substitute bonds exchanged therefor, and all other substitute bonds and
replacement bonds, issued pursuant to and as provided in this Ordinance.
(d) The term "Parity Bonds" shall mean collectively (i) the outstanding City of Denton Utility
System Revenue Refunding Bonds, Taxable Series I 993-B, authorized by ordinance passed on June 8, 1993
(the "Series I 993-B Bonds"), (ii) the outstanding City of Denton Utility System Revenue Bonds, Series 1996,
authorized by an ordinance passed on May 7, 1996 (the "Series 1996 Bonds"), (ili) the outstanding City of
Denton Utility System Revenue Refunding Bonds, Series I 996-A, authorized by an ordinance passed on May
7, 1996 (the "Series 1996-A Bonds"), (iv) the outstanding City of Denton Utility System Revenue Bonds,
Series 1998, authorized by an ordinance passed on March 24, 1998 (the "Series 1998 Bonds"), (v) the
outstanding City of Denton Utility System Revenue Refunding Bonds, Series 1998A, authorized by an
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ordinance passed on July 21, 1998 (the "Series 1998A Bonds"), (vi) the outstanding City of Denton Utility
System Revenue Refunding Bonds, Series 1998B, authorized by an ordinance passed on August 4, 1998 (the
"Series 1998B Bonds"), (vii) the outstanding City of Denton Utility System Revenue Bonds, Series 2000A,
authorized by an ordinance passed on April 25, 2000 (the "Series 2000A Bonds"), (viii) the outstanding City
of Denton Utility System Revenue Bonds, Taxable Series 2000B, authorized by an ordinance passed onApril
25,2000 (the "Taxable Series 2000B Bonds"), (ix) the outstanding City of Denton Utility System Revenue
Refunding and Improvement Bonds, Series 2001, authorized by an ordinance passed on April I?, 2001 (the
"Series 200 I Bonds"), (x) the outstanding City of Denton Utility System Revenue Bonds, Series 2002A,
authorized by an ordinance passed on April 9, 2002 (the "Series 2002A Bonds"), (xi) the outstanding City
of Denton Utility System Revenue Bonds, Taxable Series 2002B, authorized by an ordinance passed on
April 9, 2002 (the "Taxable Series 2002B Bonds") (xii) the outstanding City of Denton Utility System
Revenue Refunding and Improvement Bonds, Series 2003, authorized by an ordinance passed on April I,
2003 (the "Series 2003 Bonds"), (xiii) the outstanding City of Denton Utility System Revenue Refunding
Bonds, Series 2004, authorized by an ordinance passed on September ?, 2004 (the "Series 2004 Bonds"),
(xiv) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series 2005, authorized by
an ordinance passed on May 24, 2005 (the "Series 2005 Bonds"), (xv) the outstanding City of Denton Utility
System Revenue Bonds, Series 2006, authorized by an ordinance passed on July 18,2006 (the "Series 2006
Bonds") and (xvi) the Bonds.
(e) The term "Additional Bonds" shall mean the additional parity revenue bonds which the City
reserves the right to issue in the future, in accordance with Section 26 of this Ordinance.
(1) The term "System" shall mean (I) the City's entire existing waterworks and sewer system and
the City's entire existing electric light and power system, together with all future extensions, improvements,
enlargements, and additions thereto, and all replacements thereof, and (2) any other related facilities, all or
any part ofthe revenues or income from which do, in the future, at the option ofthe City, and in accordance
with law, become "Pledged Revenues" as hereinafter defined; provided that, notwithstanding the foregoing,
and to the extent now or hereafter authorized or permitted by law, the term System shall not mean any water,
sewer, electric, or other facilities of any kind which are declared not to be a part of the System, and which
are acquired or constructed by the City with the proceeds from the issuance of "Special Facilities Bonds",
which are hereby defined as being special revenue obligations of the City which are not payable from or
secured by any Pledged Revenues, but 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".
(g) The terms "Gross Revenues of the System" and "Gross Revenues" shall mean all revenues
and income of every nature derived or received by the City from the operation and ownership of the System,
including the interest income from the investment or deposit of money in any Fund created by this Ordinance.
(h) The terms "Net Revenues ofthe System", and "Net Revenues" shall mean all Gross Revenues
after deducting therefrom an amount equal to the current expenses of operation and maintenance of the
System, including all salaries, labor, materials, repairs, and extensions necessary to render efficient service,
provided, however, that only such repairs and extensions, as in the judgment ofthe City Council, reasonably
and fairly exercised by the adoption of appropriate resolutions, are necessary to keep the System in operation
and render adequate service to said City and the inhabitants thereof, or such as might be necessary to meet
some physical accident or condition which would otherwise impair the Bonds or Additional Bonds, shall be
deducted in determining "Net Revenues". Payments required to be made by the City for water supply or
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water facilities, sewer services or sewer facilities, fuel supply, and for the purchase of electric power, which
payments under law constitute operation and maintenance expenses of any part ofthe System, shall constitute
and be regarded as expenses of operation and maintenance of the System under this Ordinance. Depreciation
and amortization shall not constitute or be regarded as expenses of operation and maintenance of the System.
(i) The term "Pledged Revenues" shall mean
(I) the Net Revenues, plus
(2) the net revenues of the Drainage System, which shall be calculated on the same basis as
the Net Revenues of the System, plus
(3) any additional revenues, income, or other resources relating to the System which are
expected to be available to the City on a regular periodic basis, including, without limitation, any grants,
donations, or income received or to be received from the United States Government, or any other public or
private source, whether pursuant to an agreement or otherwise, which in the future may, at the option of the
City, be pledged to the payment of the Parity Bonds or Additional Bonds.
(j) The term "year" or "fiscal year" shall mean the fiscal year used by the City in connection with
the operation of the System.
(k) The term "Government Obligations" shall mean (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 ofthe District 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.
(I)
thereto.
"Drainage System" means the City's entire existing drainage system and all facilities related
(m) "Rate Stabilization Fund" means the City's separate Rate Stabilization Fund established for
the purpose of stabilizing rates for ratepayers.
Section 9. PLEDGE. (a) The Bonds are "Additional Bonds" as permitted by Sections 24 and 25 of
the ordinance passed on March 10, 1983, authorizing the City of Denton Revenue Refunding Bonds, Series
1983 (the "Series 1983 Bonds"); and it is hereby determined, declared, and resolved that all of the Parity
Bonds (including the Bonds) are secured and payable equally and ratably on a parity, and that Sections 8
through 28, of this Ordinance are supplemental to and cumulative of Sections 7 through 27 of the aforesaid
ordinance passed on March 10, 1983, with Sections 8 through 29 of this Ordinance being applicable to all
of the Parity Bonds.
(b) The Parity Bonds and any Additional Bonds, and the interest thereon, including any interest
coupons appertaining thereto, are and shall be secured by and payable from a first lien on and pledge of the
Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of
the Funds created by this Ordinance, and any Funds created by any ordinance authorizing the issuance of any
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Additional Bonds. The Parity Bonds and any Additional Bonds are not and will not be secured by or payable
from a mortgage or deed of trust on any real, personal, or mixed properties constituting the System.
Section 10. SYSTEM FUND. There heretofore has been and is hereby created and there shall be
established and maintained on the books ofthe City, and accounted for separate and apart from all other funds
of the City, a special fund to be entitled the "City of Denton Utility System Fund" (the "System Fund"). All
Gross Revenues shall be credited to the System Fund immediately upon receipt, unless otherwise provided
in this Ordinance. All current expenses of operation and maintenance of the System shall be paid from such
Gross Revenues credited to the System Fund as a first charge against same. Before making any deposits
hereinafter required to be made from the System Fund, the City shall retain in the System Fund at all times
an amount at least equal to one-sixth of the amount budgeted for the then current fiscal year for the current
operation and maintenance expenses of the System.
Section 11. INTEREST AND SINKING FUND. For the sole purpose of paying the principal of and
interest on all Parity Bonds and Additional Bonds, there heretofore has been and is hereby created and there
shall be established and maintained on the books ofthe City, and accounted for separate and apart from all
other funds of the City, a separate fund to be entitled the "City of Denton Utility System Revenue Bonds
Interest and Sinking Fund" (the "Interest and Sinking Fund").
Section 12. RESERVE FUND. There heretofore has been, and is hereby, created, and there shall
be established and maintained at JPMorgan Chase Bank, National Association, and hereafter, at the option
of the City, established and maintained at any time at any national bank having a capital and surplus in excess
of$25,000,000, a separate fund to be entitled the "City of Denton Utility System Bonds and Additional Bonds
Reserve Fund" (the "Reserve Fund"). The Reserve Fund shall be used to pay the principal of and interest on
any Parity Bonds or Additional Bonds when and to the extent the amounts in the Interest and Sinking Fund
available for such payment are insufficient for such purpose, and may be used for the purpose of finally
retiring the last of any Parity Bonds or Additional Bonds.
Section 13. EXTENSION AND IMPROVEMENT FUND. There heretofore has been and is hereby
created and there shall be established and maintained on the books of the City, and accounted for separate
and apart from all other funds of the City, a separate fund to be entitled the "City of Denton Utility System
Extension and Improvement Fund" (the "Extension and Improvement Fund"). The Extension and
Improvement Fund shall be used for the purpose of paying the costs of improvements, enlargements,
extensions, additions, replacements, or other capital expenditures related to the System, or for paying the costs
of unexpected or extraordinary repairs or replacements of the System for which System funds are not
available, or for paying unexpected or extraordinary expenses of operation and maintenance of the System
for which System funds are not otherwise available, or for any other lawful purpose.
Section 14. EMERGENCY FUND. There is hereby created and there shall be established and
maintained on the books ofthe City, and accounted for separate and apart from all other funds of the City,
a separate fund to be entitled the "City of Denton Utility System Emergency Fund" (the "Emergency Fund").
The Emergency Fund shall be used for the purpose of paying unexpected or extraordinary expenses of repair,
replacement, operation, and maintenance of the System for which neither System funds nor the moneys in
the Extension and Improvement Fund are available. There was deposited in the Emergency Fund
simultaneously with the delivery of the Series] 983 Bonds to the initial purchasers thereoffrom lawfully
available funds of the City the amount of $250,000. All investment interest income from the Emergency
Fund shall be transferred to the System Fund as received.
Section ]5. DEPOSITS OF PLEDGED REVENUES. Pledged Revenues shall be credited to or
deposited in the Interest and Sinking Fund, the Reserve Fund, the Extension and Improvement Fund, and
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other funds when and as required by this Ordinance and any ordinance authorizing the issuance of Additional
Bonds.
Section 16. INVESTMENTS. To the extent permitted by law, money in any Fund established
pursuant to this Ordinance or any ordinance authorizing the issuance of Additional Bonds, may, at the option
of the City, be placed in time deposits or certificates of deposit secured by obligations of the type hereinafter
described, or be invested in Government Obligations (as defined in Section 8 hereof) or obligations
guaranteed or insured by the United States of America, which, in the opinion of the Attorney General of the
United States, are backed by its full faith and credit or represent its general obligations, or invested in
obligations of instrumentalities of the United States of America, including, but not limited to, evidences of
indebtedness issued, insured, or guaranteed by such governmental agencies as the Federal Land Banks,
Federal Intermediate Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Government National
Mortgage Association, United States Postal Service, Farmers Home Administration, Federal Home Loan
Mortgage Association, Small Business Administration, Federal Housing Association, or Participation
Certificates in the Federal Assets Financing Trust; provided that all such deposits and investments shall be
made in such manner as will, in the opinion ofthe City, permit the money required to be expended from any
Fund to be available at the proper time or times as expected to be needed. Such investments (except United
States Treasury ObIigations--State and Local Government Series investments held in book entry form, which
shall at all times be valued at cost) shall be valued in terms of current market value as ofthe last day of each
fiscal year. Unless otherwise set forth herein, all interest and income derived from such deposits and
investments immediately shall be credited to, and any losses debited to, the Fund from which the deposit or
investment was made, and surpluses in any Fund shall or may be disposed of as hereinafter provided. Such
investments shall be sold promptly when necessary to prevent any default in connection with the Parity Bonds
or Additional Bonds consistent with the ordinances, respectively, authorizing their issuance.
Section 17. FUNDS SECURED. That money in all Funds created by this Ordinance, to the extent
not invested, shall be secured in the manner prescribed by law.
Section 18. PRIORITY OF DEPOSITS AND PA YMENTS FROM SYSTEM FUND. That the City
shall make the deposits and payments from Pledged Revenues in the System Fund when and as required by
this Ordinance and any ordinance authorizing any Additional Bonds, and such deposits shall be made in the
following manner and with the following irrevocable priorities, respectively:
First,
to the Interest and Sinking Fund, when and in the amounts required by this
Ordinance and any ordinance authorizing any Additional Bonds; then
Second,
to the Reserve Fund, when and in the amounts required by this Ordinance and any
ordinance authorizing any Additional Bonds; then
Third,
to the Extension and Improvement Fund, when and as required by Section 21 of this
Ordinance.
Section 19. INTEREST AND SINKING FUND REQUIREMENTS. The City shall cause to be
deposited to the credit of the Interest and Sinking Fund the accrued interest received from the sale of the
Initial Bond, and on or before the 25th day of each month, the City shall cause to be deposited to the credit
of the Interest and Sinking Fund, in approximately equal monthly payments, amounts sufficient, together
with any other funds on hand therein, to pay all of the interest or principal and interest coming due, including
the principal amount of any Parity Bonds required to be redeemed prior to maturity pursuant to any
mandatory redemption requirements, on the Parity Bonds and any Additional Bonds on the next succeeding
interest payment date. Any moneys so deposited in the Interest and Sinking Fund with respect to a mandatory
23
redemption requirement, together with other lawfully available funds of the City, may be used by the City,
to purchase, in advance of a mandatory redemption date and at a price not exceeding the principal amount
thereof plus accrued interest thereon to the date of purchase, Parity Bonds which would be subject to being
chosen for mandatory redemption on such mandatory redemption date. The Paying Agent shall cancel any
Parity Bonds so purchased.
Section 20. RESERVE FUND REQUIREMENTS. There is now on hand in the Reserve Fund an
amount of money and Government Obligations which is in excess of$3,000,000 and which is at least equal
to the average annual principal and interest requirements of the outstanding Taxable Series 1993-B Bonds,
the Series 1996 Bonds, the Series 1996-A Bonds, the Series 1998 Bonds, the Series 1998A Bonds, the Series
1998B Bonds, the Series 2000A Bonds, the Series 2000B Bonds, the Series 2001 Bonds, the Series 2002A
Bonds, the Taxable Series 2002B Bonds, the Series 2003 Bonds, the Series 2004 Bonds, the Series 2005
Bonds, and the Series 2006 Bonds (the current "Required Reserve Amount"). Following the issuance and
delivery of the Initial Bonds the Required Reserve Amount shall become and be an amount of money and
investments equal to the average annual principal and interest requirements of all the outstanding Parity
Bonds and Additional Bonds; provided further, however, that the Required Reserve Amount shall never be
less than $3,000,000 if the maximum annual principal and interest requirements on all outstanding Parity
Bonds and Additional Bonds exceeds $3,000,000. Immediately after the issuance and delivery of the Initial
Bond there shall be deposited to the credit of the Reserve Fund, from the proceeds of the sale of the Initial
Bond, money sufficient to cause the Reserve Fund to contain an aggregate amount of money and investments
equal to the Required Reserve Amount for all then outstanding Parity Bonds. After the delivery of any future
Additional Bonds the City shall cause the Reserve Fund to be increased, if and to the extent necessary, so that
such Fund will contain an amount of money and investments equal to the Required Reserve Amount. Any
increase in the Required Reserve Amount may be funded from Pledged Revenues, or from proceeds from the
sale of any Additional Bonds, or any other available source or combination of sources. All or any part of the
Required Reserve Amount not funded initially and immediately after the delivery of any installment or issue
of Additional Bonds shall be funded, within not more than five years from the date of such delivery, by
deposits of Pledged Revenues in approximately equal monthly installments on or before the 25th day of each
month. Principal amounts of the Parity Bonds and any Additional Bonds which must be redeemed pursuant
to any applicable mandatory redemption requirements shall be deemed to be maturing amounts of principal
for the purpose of calculating principal and interest requirements on such bonds. When and so long as the
amount in the Reserve Fund is not less than the Required Reserve Amount no deposits shall be made to the
credit of the Reserve Fund; but when and if the Reserve Fund at any time contains less than the Required
Reserve Amount, then the City shall transfer from Pledged Revenues in the System Fund, and deposit to the
credit of the Reserve Fund, monthly on or before the 25th day of each month, a sum equal to I/60th of the
Required Reserve Amount, until the Reserve Fund is restored to the Required Reserve Amount. The City
specifically covenants that when and so long as the Reserve Fund contains the Required Reserve Amount,
the City shall cause all amounts in excess of the Required Reserve Amount to be deposited to the credit of
the Interest and Sinking Fund.
Section 21. EXTENSION AND IMPROVEMENT FUND REQUIREMENTS. During each year,
subject and subordinate to making the required deposits to the credit of the Interest and Sinking Fund and the
Reserve Fund, the City shall be required to deposit to the credit of the Extension and Improvement Fund,
from Pledged Revenues in the System Fund, an amount equal to 8% of the "Adjusted Gross Revenues ofthe
System", which term is hereby defined to mean the following:
the Gross Revenues of the System for such year after deducting from such Gross Revenues
an amount equal to the current expenses of operation and maintenance ofthe System for such
year which are directly attributable to (i) all fuel costs related to the production of electric
energy by the City and/or (ii) the purchase of electric energy by the City.
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Additional excess Pledged Revenues may, at the option of the City Council, be deposited to the credit of the
Extension and Improvement Fund as permitted by Section 23 (b) hereof, but no such additional deposit is
required. All investment interest income from the Extension and Improvement Fund shall be retained in and
remain a part of such Fund.
Section 22. RATE ST ABILIZA nON FUND. (a) [n each fiscal year, the City hereby agrees to
transfer the Transfer Amount (as defined below) from the Rate Stabilization Fund into the System Fund for
the purpose of paying the current expenses of operation and maintenance of the System and pledges such
Transfer Amount to the payment of the Bonds, all Parity Bonds and any Additional Bonds.
(b) The Transfer Amount shall be an amount of moneys and investments contained in the Rate
Stabilization Fund equal to the amount for each fiscal year of the City that will, when added to the otherwise
expected Pledged Revenues for that fiscal year, produce an amount of Pledged Revenues during such fiscal
year at least equal to the greater of 1.25 times the average annual principal and interest requirements of all
then outstanding Bonds, Parity Bonds and Additional Bonds or 1.25 times the succeeding fiscal year's
principal and interest requirements of all then outstanding Bonds, Parity Bonds and Additional Bonds.
(c) The Transfer Amount will be calculated and reflected in the annual budget for each fiscal
year and will, on the first day of such fiscal year, be transferred from the Rate Stabilization Fund into the
System Fund.
Section 23. DEFICIENCIES; EXCESS PLEDGED REVENUES. (a) If on any occasion there shall
not be sufficient Pledged Revenues to make the required deposits into the Interest and Sinking Fund or the
Reserve Fund, such deficiency shall be made up as soon as possible from the next available Pledged
Revenues.
(b) Subject to making the required deposits to the credit of the various Funds when and as
required by this Ordinance or any ordinance authorizing the issuance of Additional Bonds, any surplus
Pledged Revenues may be used by the City for any lawful purpose.
Section 24. PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS. On or before each
June 1 and December I, while any of the Parity Bonds or Additional Bonds are outstanding and unpaid the
City shall make available to the Paying Agents therefor, out ofthe Interest and Sinking Fund, or if necessary,
out of the Reserve Fund, money sufficient to pay, on each of such dates, the principal of and interest on the
Parity Bonds and Additional Bonds as the same matures and comes due, or to redeem the Parity Bonds or
Additional Bonds prior to maturity, either upon mandatory redemption or at the option of the City. At the
direction of the City the Paying Agents shall either deliver paid Parity Bonds and Additional Bonds, and any
interest coupons appertaining thereto, to the City or destroy all paid Parity Bonds and Additional Bonds, and
any coupons appertaining thereto, and furnish the City with an appropriate certificate of cancellation or
destruction.
Section 25. FINAL DEPOSITS. (a) Any Parity Bond or Additional Bond shall be deemed to be
paid, retired, and no longer outstanding within the meaning of this Ordinance when payment of the principal
of, redemption premium, ifany, on such Parity Bond or Additional Bond, plus interest thereon to the due date
thereof(whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have
been made or caused to be made in accordance with the terms thereof (including the giving of any required
notice of redemption or provision for the proper giving of such notice having been made), or (il) shall have
been provided by irrevocably depositing with or making available to a Paying Agent therefor, in trust and
irrevocably set aside exclusively for such payment, (I) money sufficient to make such payment or (2)
Government Obligations which mature as to principal and interest in such amounts and at such times as will
25
insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary
and proper fees, compensation, and expenses of such Paying Agent pertaining to the Parity Bonds and
Additional Bonds with respect to which such deposit is made shall have been paid or the payment thereof
provided for to the satisfaction of such paying agent. At such time as a Bond or Additional Bond shall be
deemed to be paid hereunder, as aforesaid, it shall no longer be secured by or entitled to the benefits of this
Ordinance or a lien on and pledge ofthe Pledged Revenues, and shall be entitled to payment solely from such
money or Government Obligations.
(b) Any moneys so deposited with a paying agent may at the direction of the City also be
invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all
income from all Government Obligations in the hands of the paying agent pursuant to this Section which is
not required for the payment ofthe Parity Bonds and Additional Bonds, the redemption premium, if any, and
interest thereon, with respect to which such money has been so deposited, shall be turned over to the City or
deposited as directed by the City.
Section 26. ADDITIONAL BONDS. (a) The City shall have the right and power at any time and
from time to time, and in one or more series or issues, to authorize, issue, and deliver additional parity
revenue bonds (herein called "Additional Bonds"), in accordance with law, in any amounts, for any lawful
purpose, including the refunding of any Parity Bonds or Additional Bonds, or other obligations. Such
Additional Bonds, if and when authorized, issued, and delivered in accordance with this Ordinance, shall be
payable from and secured by an irrevocable first lien on and pledge of the Pledged Revenues, equally and
ratably on a parity in all respects with the Parity Bonds and any other outstanding Additional Bonds.
(b) The principal of all Additional Bonds must be scheduled to be paid or mature on December
I of the years in which such principal is scheduled to be paid or mature.
Section 27. FURTHER REQUIREMENTS FOR ADDITIONAL BONDS. Additional Bonds shall
be issued only in accordance with this Ordinance, and no installment, Series, or issue of Additional Bonds
shall be issued or delivered unless:
(a) The Mayor of the City and the City Secretary sign a written certificate to the effect that the
City is not in default as to any covenant, condition, or obligation in connection with all then outstanding
Parity Bonds and Additional Bonds, and the ordinances authorizing same, and that the Interest and Sinking
Fund and the Reserve Fund each contains the amount then required to be therein.
(b) An independent certified public accountant, or independent firm of certified public
accountants, acting by and through a certified public accountant, signs a written certificate to the effect that,
in his or its opinion, during either the next preceding fiscal year, or any twelve consecutive calendar month
period out of the l8-month period immediately preceding the month in which the ordinance authorizing the
issuance of the then proposed Additional Bonds is passed, the Pledged Revenues were at least (i) 1.25 times
an amount equal to the average annual principal and interest requirements, and (il) 1.10 times an amount
equal to the principal and interest requirements during the fiscal year during which such requirements are
scheduled to be the greatest, of all Parity Bonds and Additional Bonds which are scheduled to be outstanding
after the delivery of the then proposed Additional Bonds. It is specifically provided, however, that in
calculating the amount of Pledged Revenues for the purposes of this subsection (b), if there has been any
increase in the rates or charges for services of the System which is then in effect, but which was not in effect
during all or any part of the entire period for which the Pledged Revenues are being calculated (hereinafter
referred to as the "entire period") then the certified public accountant, or in lieu of the certified public
accountant a firm of consulting engineers, shall determine and certifY the amount of Pledged Revenues as
being the total of (i) the actual Pledged Revenues for the entire period, plus (il) a sum equal to the aggregate
26
amount by which the actual billings to customers of the System during the entire period would have been
increased if such increased rates or charges had been in effect during the entire period.
(c) Provision shall be made in the ordinance authorizing their issuance for increasing the Reserve
Fund to the Required Reserve Amount as required by Section 20 hereof.
(d) All calculations of average annual principal and interest requirements of any bonds made in
connection with the issuance of any then proposed Additional Bonds shall be made as of the date of such
Additional Bonds; and also in making calculations for such purpose, and for any other purpose under this
Ordinance, principal amounts of any bonds which must be redeemed prior to maturity pursuant to any
applicable mandatory redemption requirements shall be deemed to be maturing amounts of principal of such
bonds.
Section 28. GENERAL COVENANTS. The City further covenants and agrees that in accordance
with and to the extent required or permitted by law:
(a) Performance. It will faithfully perform at all times any and all covenants, undertakings,
stipulations, and provisions contained in this Ordinance, and each ordinance authorizing the issuance of
Additional Bonds, and in each and every Parity Bond and Additional Bond; that it will promptly payor cause
to be paid the principal of and interest on every Parity Bond and Additional Bond, on the dates and in the
places and manner prescribed in such ordinances and Parity Bonds or Additional Bonds; and that it will, at
the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited
into the Interest and Sinking Fund and the Reserve Fund; and any holder of the Parity Bonds or Additional
Bonds may require the City, its officials, and employees, to carry out, respect, or enforce the covenants and
obligations ofthis Ordinance, or any ordinance authorizing the issuance of Additional Bonds, by all legal and
equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings,
in any court of competent jurisdiction, against the City, its officials, and employees.
(b) City's Legal Authoritv. The City is a duly created and existing home rule city of the State
of Texas, and is duly authorized under the laws ofthe State of Texas to create and issue the Parity Bonds and
Additional Bonds; that all action on its part for the creation and issuance ofthe said obligations has been or
will be duly and effectively taken, and that said obligations in the hands of the holders and owners thereof
are and will be valid and enforceable special obligations of the City in accordance with their terms.
(c) Title. The City has or will obtain lawful title to the lands, buildings, structures, and facilities
constituting the System, that it warrants that it will defend the title to all the aforesaid lands, buildings,
structures, and facilities, and every part thereof, for the benefit ofthe holders and owners of the Parity Bonds
and Additional Bonds, against the claims and demands of all persons whomsoever, that it is lawfully qualified
to pledge the Pledged Revenues to the payment of the Parity Bonds and Additional Bonds in the manner
prescribed herein, and has lawfully exercised such rights.
(d) Liens. The City will from time to time and before the same become delinquent pay and
discharge all taxes, assessments, and goverrunental charges, ifany, which shall be lawfully imposed upon it,
or the System, that it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if
unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with
the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner
provided herein, and that it will not create or suffer to be created any mechanic's, laborer's, materialman's,
or other lien or charge which might or could be prior to the liens hereof, or do or suffer any matter or thing
whereby the liens hereof might or could be impaired; provided, however, that no such tax, assessment, or
charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, materialman's,
27
or other lien or charge, shall be required to be paid so long as the validity ofthe same shall be contested in
good faith by the City.
(e) Operation ofSvstem: No Free Service. While the Parity Bonds or any Additional Bonds are
outstanding and unpaid the City shall continuously and efficiently operate the System, and shall maintain the
System in good condition, repair, and working order, all at reasonable cost. No free service of the System
shall be allowed, and should the City or any of its agencies, instrumentalities, lessors, or concessionaires
make use of the services and facilities of the System, payment monthly of the standard retail price of the
services provided shall be made by the City or any of its agencies, instrumentalities, lessors, or
concessionaires out of funds from sources other than the revenues of the System, unless made from surplus
Pledged Revenues as permitted by Section 23(b) hereof.
(t) Further Encumbrance. While the Parity Bonds or any Additional Bonds are outstanding and
unpaid, the City shall not additionally encumber the Pledged Revenues in any manner, except as permitted
in this Ordinance in connection with Additional Bonds, unless said encumbrance is made junior and
subordinate in all respects to the liens, pledges, covenants, and agreements of this Ordinance and any
ordinance authorizing the issuance of Additional Bonds; but the right of the City to issue revenue bonds
payable from a subordinate lien on surplus Pledged Revenues is specifically recognized and retained, as
permitted under Section 23(b) hereof.
(g) Sale. Lease or Disposal ofPropertv. No part of the System shall be sold, leased, mortgaged,
demolished, removed or otherwise disposed of, except as follows:
(I) To the extent permitted by law, the City may sell, lease, mortgage, demolish, remove
or otherwise dispose of at any time and from time to time any property or facilities constituting part
ofthe System only if(A) the City Council shall determine, as evidenced by a resolution to that effect,
such property or facilities are not useful in the operation of the System, or (B) the proceeds of such
sale are $250,000 or less, or the City Council shall determine, as evidenced by a resolution to that
effect, the fair market value of the property or facilities exchanged is $250,000 or less, or (C) if such
proceeds or fair market value exceed $250,000 the City Council shall determine, as evidenced by a
resolution to that effect, that the sale or exchange of such property or facilities will not impair the
ability of the City to comply during the current or any future fiscal year with the covenant of the City
set forth in Section 28(i) ofthis Ordinance. The proceeds of any such sale or exchange not used to
acquire other property necessary or desirable for the sale or efficient operation of the System shall
forthwith, at the option of the City, (i) to be used to redeem or purchase Parity Bonds or Additional
Bonds, (ii) otherwise be used to provide for the payment of Parity Bonds or Additional Bonds or (iii)
be used for any other lawful purpose.
(2) To the extent permitted by law, the City may lease or make contracts or grant
licenses for the operation of, or make arrangements for the use of, or grant easements or other rights
with respect to, any part ofthe System, provided that any such lease, contract, license, arrangement,
easement or right (A) does not impede the operation of the System by the City and (B) does not in
any manner impair or adversely affect the rights or security of the owners of the Parity Bonds or
Additional Bonds under this Ordinance; and provided, further, that if the depreciated cost of the
property to be covered by any such lease, contract, license, arrangement, easement or other right is
in excess of $500,000, the City Council shall determine, as evidenced by a resolution to that effect,
that the action of the City with respect thereto does not result in a breach of the conditions under this
clause (2). Any payments received by the City under or in connection with any such lease, contract,
license, arrangement, easement or right in respect of the System or any part thereof shall constitute
Gross Revenues.
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(h) Insurance. (I) The City shall cause to be insured such parts of the System as would usually
be insured by corporations operating like properties, with a responsible insurance company or companies,
against risks, accidents, or casualties against which and to the extent insurance is usually carried by
corporations operating like properties, including, to the extent reasonably obtainable, fire and extended
coverage insurance, insurance against damage by floods, and use and occupancy insurance. Public liability
and property damage insurance also shall be carried unless the City Attorney gives a written opinion to the
effect that the City is not liable for claims which would be protected by such insurance. All insurance
premiums shall be paid as an expense of operation of the System. At any time while any contractor engaged
in construction work shall be fully responsible therefor, the City shall not be required to carry insurance on
the work being constructed ifthe contractor is required to carry appropriate insurance. All such policies shall
be open to the inspection of the Bondholders and their representatives at all reasonable times. Upon the
happening of any loss or damage covered by insurance from one or more of said causes, the City shall make
due proof of loss and shall do all things necessary or desirable to cause the insuring companies to make
payment in full directly to the City. The proceeds of insurance covering such property, together with any
other funds necessary and available for such purpose, shall be used forthwith by the City for repairing the
property damaged or replacing the property destroyed; provided, however, that if said insurance proceeds and
other funds are insufficient for such purpose, then said insurance proceeds pertaining to the System shall be
deposited in a special and separate trust fund, at an official depository of the City, to be designated the
Insurance Account. The Insurance Account shall be held until such time as other funds become available
which, together with the Insurance Account, will be sufficient to make the repairs or replacements originally
required.
(2) The annual audit hereinafter required may contain a section commenting on whether or not the
City has complied with the requirements of this Section with respect to the maintenance of insurance, and
shall state whether or not all insurance premiums upon the insurance policies to which reference is made have
been paid.
(i) Annual Budget and Rate Covenant. The City shall prepare, prior to the beginning of each
fiscal year, an annual budget, in accordance with law, reflecting an estimate of cash receipts and
disbursements for the ensuing fiscal year in sufficient detail to indicate the probable Gross Revenues and
Pledged Revenues for such fiscal year. The City shall fix, establish, maintain, and collect, such rates, charges,
and fees for the use and availability ofthe System at all times as are necessary (I) to produce Gross Revenues
sufficient, together with any other Pledged Revenues, to pay all current operation and maintenance expenses
of the System, and (2) to produce an amount of Pledged Revenues during each fiscal year at least equal to
the greater of 1.25 times the average annual principal and interest requirements of all then outstanding Parity
Bonds and Additional Bonds or 1.25 times the succeeding fiscal year's principal and interest requirements
of all then outstanding Parity Bonds and Additional Bonds.
(j) Records. The City shall keep proper books of record and account in which full, true, proper,
and correct entries will be made of all dealings, activities, and transactions relating to the System, the Pledged
Revenues, and the Funds created pursuant to this Ordinance, and all books, documents, and vouchers relating
thereto shall at all reasonable times be made available for inspection upon request of any Bondholder,
provided, that all books, documents, and vouchers relating to the City's electric system shall be made
available for inspection only to the extent required by law, including, without limitation, the provisions of
Section 552.133 of the Texas Government Code. To the extent consistent with the provisions of this
Ordinance, the City shall keep its books and records in a manner conforming to standard accounting practices
as usually would be followed by private corporations owning and operating a similar System, with
appropriate recognition being given to essential differences between municipal and corporate accounting
practices.
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. (k) Audits. After the close of each fiscal year while any ofthe Parity Bonds or any Additional
Bonds are outstanding, an audit will be made of the books and accounts relating to the System and the
Pledged Revenues by an independent certified public accountant or an independent firm of certified public
accountants. As soon as practicable after the close of each such year, and when said audit has been completed
and made available to the City, a copy of such audit for the preceding year shall be mailed to the Municipal
Advisory Council of Texas, to each paying agent for any bonds payable from Pledged Revenues, and to any
Bondholders who shall so request in writing. The annual audit reports shall be open to the inspection of the
Bondholders and their agents and representatives at all reasonable times.
(I) Governmental Agencies. It will comply with all of the terms and conditions of any and all
franchises, permits, and authorizations applicable to or necessary with respect to the System, and which have
been obtained from any governmental agency; and the City has or will obtain and keep in full force and effect
all franchises, permits, authorization, and other requirements applicable to or necessary with respect to the
acquisition, construction, equipment, operation, and maintenance of the System.
(m) No Comoetition. It will not operate, or grant any franchise or, to the extent it legally may,
permit the acquisition, construction, or operation of, any facilities which would be in competition with the
System, and to the extent that it legally may, the City will prohibit any such competing facilities.
(n) No Arbitrage. The City covenants to and with the purchasers of the Parity Bonds and any
Additional Bonds that no use will be made of the proceeds of any of such bonds at any time throughout the
term of any of such bonds which, if such use had been reasonably expected on the date of delivery of any of
such bonds to and payment therefor by the purchasers, would have caused any of such bonds to be arbitrage
bonds within the meaning of Section 148 of the Internal Revenue Code ofl986, as amended (the "Code"), or
any regulations or rulings pertaining thereto; and by this covenant the City is obligated to comply with the
requirements ofthe aforesaid Code and all applicable and pertinent Department of the Treasury regulations
relating to arbitrage bonds. The City further covenants that the proceeds of all such bonds will not otherwise
be used directly or indirectly so as to cause all or any part of such bonds to be or become arbitrage bonds
within the meaning of the aforesaid Code, or any regulations pertaining thereto.
Section 29. AMENDMENT OF ORDINANCE. (a) The holders or owners of Parity Bonds and
Additional Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding
Parity Bonds and Additional Bonds shall have the right from time to time to approve any amendment to this
Ordinance which may be deemed necessary or desirable by the City, provided, however, that nothing herein
contained shall permit or be construed to permit the amendment ofthe terms and conditions in this Ordinance
or in the Parity Bonds or Additional Bonds so as to;
(I) Make any change in the maturity of the outstanding Parity Bonds or Additional Bonds;
(2) Reduce the rate ofinterest borne by any of the outstanding Parity Bonds or Additional Bonds;
(3) Reduce the amount of the principal payable on the outstanding Parity Bonds or Additional
Bonds;
(4) ModifY the terms of payment of principal of or interest on the outstanding Parity Bonds or
Additional Bonds, or impose any conditions with respect to such payment;
(5) Affect the rights of the holders or owners ofless than all ofthe Parity Bonds and Additional
Bonds then outstanding;
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(6) Change the minimum percentage of the principal amount of Parity Bonds and Additional
Bonds necessary for consent to such amendment.
(b) Ifat any time the City shall desire to amend the Ordinance under this Section, the City shall
cause notice of the proposed amendment to be published in a financial publication of general circulation in
The City of New York, New York, once during each calendar week for at least two successive calendar
weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy
thereofis on file at the principal office of the Paying Agents for inspection by all holders or owners of Parity
Bonds and Additional Bonds. Such publication is not required, however, if notice in writing is given to each
holder or owner of Parity Bonds and Additional Bonds.
(c) Whenever at any time not less than thirty days, and within one year, from the date of the first
publication of said notice or other service of written notice the City shall receive an instrument or instruments
executed by the holders or owners of at least 51% in aggregate principal amount of all Parity Bonds and
Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment
described in said notice and which specifically consent to and approve such amendment in substantially the
form of the copy thereof on file with the Paying Agents, the City Council may pass the amendatory ordinance
in substantially the same form.
(d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section,
this Ordinance shall be deemed to be amended in accordance with such amendatory ordinance, and the
respective rights, duties, and obligations under this Ordinance of the City, and all the holders or owners of
then outstanding Parity Bonds and Additional Bonds and all future Parity Bonds and Additional Bonds shall
thereafter be determined, exercised, and enforced hereunder, subject in all respects to such amendments.
(e) Any consent given by the holder or owner of a Parity Bond or Additional Bond pursuant to
the provisions ofthis Section shall be irrevocable for a period of one year from the date of the first publication
of the notice provided for in this Section, and shall be conclusive and binding upon all future holders or
owners of the same Parity Bond or Additional Bond during such period. Such consent may be revoked at any
time after one year from the date of the first publication of such notice by the holder or owner who gave such
consent, or by a successor in title, by filing notice thereof with the paying agents and the City, but such
revocation shall not be effective if the holders or owners of 51% in aggregate principal amount of the then
outstanding Pariry Bonds and Additional Bonds as in this Section defined have, prior to the attempted
revocation, consented to, and approved the amendment.
(I) For the purpose of this Section, the fact of the holding of Parity Bonds or Additional Bonds
which are in bearer, coupon form, by any bondholder and the amount and numbers of such bearer Parity
Bonds or Additional Bonds and the date of their holding same, may be proved by the affidavit ofthe person
claiming to be such holder or owner, or by a certificate executed by any trust company, bank, banker, or any
other depository wherever situated showing that at the date therein mentioned such person had on deposit
with such trust company, bank, banker, or other depository, the Parity Bonds and Additional Bonds described
in such certificate. The City may conclusively assume that such ownership continues until written notice to
the contrary is served upon the City. The ownership of all registered Parity Bonds and Additional Bonds shall
be determined from the registration books kept by the registrar therefor.
Section 30. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a)
Reolacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the
Paying AgentJRegistrar 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.
3]
(b) Application for Replacement Bonds. Application for replacement of damaged, mutilated,
lost, stolen, or destroyed Bonds shall be made by the registered owner thereofto the Paying Agent/Registrar.
In every case ofloss, 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 ofthe 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 ofthis Section, in the event
any such Bond shall have matured, and no default has occurred which 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
ofthe 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 ofthis Section
by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the
Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by
anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and
all other Bonds duly issued under this Ordinance.
(e) Authoritv for Issuing Reolacement Bonds. In accordance with Chapter 1201, Texas
Government Code, this Section of this Ordinance shall constitute authority for the issuance of any such
replacement bond without necessity of further action by the governing body of the Issuer or any other body
or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying
Agent/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 6( d) ofthis Ordinance for Bonds issued in conversion and
exchange for other Bonds.
Section 3 I. COVENANTS REGARDING TAX-EXEMPTION. The Issuer covenants to refrain from
any action which would adversely affect, and to take such action to ensure, the treatment of the Bonds as
obligations described in section 103 ofthe Code, the interest on which is not includable in the "gross income"
of the holder for purposes offederal income taxation. In furtherance thereof, the Issuer covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of the
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 ofthe proceeds are so used, that
amounts, whether or not received by the Issuer, with respect to such private business use, do not,
under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or
provide for the payment of more than 10 percent ofthe debt service on the Bonds, in contravention
of section 141 (b )(2) of the Code;
(b) to take any action to assure that in the event that the "private business use" described
in subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds (less amounts deposited into
a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use"
which is "related" and not "disproportionate", within the meaning of section 141(b)(3) of the Code,
to the governmental use;
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(c) to take any action to assure that no amount which is greater than the lesser of
$5,000,000, or 5 percent of the proceeds ofthe 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 ] 4 ] (c) of the Code;
(d) to refrain from taking any action which would otherwise result in the Bonds being
treated as "private activity bonds" within the meaning of section 14](b) of the Code;
(e) 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;
(1) to refrain from using any portion ofthe proceeds ofthe Bonds, directly or indirectly,
to acquire orto replace funds which were used, directly or indirectly, to acquire investment property
(as defined in section] 48(b )(2) of the Code) which produces a materially higher yield over the term
of the Bonds, other than investment property acquired with --
(]) proceeds of the Bonds invested for a reasonable temporary period
of 30 days or less in the case of an advance refunding bond and 90 days of less in
the case of a current refunding bond,
(2) amounts invested in a bona fide debt service fund, within the meaning of
section I.] 48-] (b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement fund
to the extent such amounts do not exceed ] 0 percent of the stated principal amount (or, in
the case of a discount, the issue price) of the Bonds;
(g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as
proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the
requirements of section 148 of the Code (relating to arbitrage), Section ] 49(g) of the Code (relating
to hedge bonds), and, to the extent applicable, section l49(d) of the Code (re]ating to advance
refundings); and
(h) to pay to the United States of America at least once during each five-year period
(beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the
"Excess Earnings", within the meaning of section 148(1) of the Code and to pay to the United States
of America, not later that 60 days after the Bonds have been paid in full, 100 percent of the amount
then required to be paid as a result of Excess Earnings under section ]48(1) of the Code.
For purposes of the foregoing (a) and (b), 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 bonds 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. ]n the event that regulations or rulings are hereafter promulgated which modifY, or expand provisions
of the Code, as applicable to the Bonds, the Issuer will 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. ]n the event that regulations or rulings are hereafter promulgated which impose additional
requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements
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to the extent necessary and reasonably possible, in the opinion of nationally-recognized bond counsel, to
preserve the exemption from federal income taxation ofinterest on the Bonds under section 103 ofthe Code.
In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor to execute any documents,
certificates or reports required by the Code and to make such elections, on behalf of the Issuer, which may
be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. The Issuer
covenants to comply with the covenants contained in this section after defeasance of the Bonds.
In order to facilitate compliance with the above covenant (h), 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 owners of the Bonds. The Rebate Fund is
established for the additional purpose of compliance with Section 148 of the Code.
Section 32. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the
projects financed or refinanced with proceeds of the Refunded Bonds 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 of in the ordinary course shall not be treated as a transaction resulting in the
receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with
this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability
for federal income tax purposes from gross income of the interest.
Section 33. INTEREST EARNINGS ON BOND PROCEEDS. Interest earnings derived from the
investment of proceeds from the sale of the Initial Bonds, other than proceeds deposited in the Interest and
Sinking Fund and the Reserve Fund, shall be used along with other available proceeds for improving the
System; provided that after completion of the improvements if any of such interest earnings remain on hand,
such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however,
that any interest earnings on bond proceeds which are required to be rebated to the United States of America
pursuant to the Covenants Regarding Tax-Exemption herein so as to prevent the Bonds from being arbitrage
bonds shall be so rebated and not considered as interest earnings for the purposes of this Ordinance.
Section 34. CUSTODY, APPROVAL, AND REGISTRA TION OF BONDS; BOND COUNSEL'S
OPINION, CUSIP NUMBERS, PREAMBLE, AND INSURANCE. The Mayor of the Issuer is hereby
authorized to have control of the Initial Bonds issued hereunder and all necessary records and proceedings
pertaining to the Initial Bond pending their delivery and the investigation, examination, and approval by the
Attorney General of the State of Texas, and the registration by the Comptroller of Public Accounts of the
State of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy
designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration
Certificate on the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile,
on the Initial Bonds. 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 Initial Bond or on any Bonds issued and delivered
in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall
be solely for the convenience and information of the registered owners of the Bonds. The preamble to this
Ordinance is hereby adopted and made a part hereoffor all purposes. If insurance is obtained on any ofthe
Bonds, the Initial Bond and all other Bonds shall bear an appropriate legend concerning insurance as provided
by the insurer.
Section 35. SALE OF INITIAL BOND; BOND INSURANCE. (a) The Bonds shall be sold and
delivered subject to the provisions of Section I and Section 2 and pursuant to the terms and provisions of a
bond purchase agreement (the "Purchase Agreement"), the terms and provisions of which are to be
34
determined by the Pricing Officer in accordance with Section 3, and in which the purchaser or purchasers (the
"Underwriters") of the Bonds shall be designated. The Pricing Officer is hereby authorized to execute and
deliver the Purchase Agreement for an on behalf of the Issuer. The Bonds shall initially be registered in the
name of the Underwriters as set forth in the Pricing Certificate.
(b) The Pricing Officer is authorized, in connection with effecting the sale ofthe Bonds, to obtain
from a municipal bond insurance company so designated in the Purchase Agreement (the "Insurer") a
municipal bond insurance policy (the "Insurance Policy") in support ofthe 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 ofthe Insurer relating to the issuance ofthe
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.
Section 36. OFFICIAL STATEMENT. The Mayor and the City Secretary are authorized and
directed to execute and deliver for and on behalf of the Issuer copies of a Preliminary Official Statement and
Official Statement, prepared in connection with the offering of the Bonds by the Underwriters, in final form
as may be required by the Underwriters, 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
Underwriters.
Section 37. REFUNDING OF REFUNDED BONDS. (a) Subject to execution and delivery of the
Purchase Agreement with the Underwriters, the Issuer hereby directs that the Refunded Bonds be called for
redemption on the dates and at such prices as set forth in the Pricing Certificate. The Pricing Officer is hereby
authorized and directed to issue or cause to be issued Notice of Redemption of the Refunded Bonds in
substantially the form set forth in Exhibit B attached hereto, completed with information from the Pricing
Certificate, to the paying agents for the Refunded Bonds.
(b) In addition, the paying agents for the Refunded Bonds are hereby directed to provide the
appropriate notices of redemption and defeasance as specified by the orders or ordinances authorizing the
issuance of Refunded Bonds and are hereby directed to make appropriate arrangements so that the Refunded
Bonds may be redeemed on their redemption dates. The Refunded Bonds shall be presented for redemption
at the paying agent therefor, and shall not bear interest after the date fixed for redemption.
(c) If the redemption of the Refunded Bonds results in the partial refunding of any maturity of
the Refunded Bonds, the Pricing Officer shall direct the paying agent/registrar for the Refunded Bonds to
designate at random and by lot which of the Refunded Bonds will be payable from and secured solely from
Pledged Revenues pursuant to the ordinance of the Issuer authorizing the issuance of such Refunded Bonds
(the "Refunded Bond Ordinance"). For purposes of such determination and designation, all Refunded Bonds
registered in denominations greater than $5,000 shall be considered to be registered in separate $5,000
denominations. The paying agent/registrar shall notifY by first-class mail all registered owners of all affected
bonds of such maturities that: (i) a portion of such bonds have been refunded and are secured until final
maturity solely with cash and investments maintained by the Escrow Agent in the Escrow Fund, (ii) the
principal amount of all affected bonds of such maturities registered in the name of such registered owner that
have been refunded and are payable solely from cash and investments in the Escrow Fund and the remaining
principal amount of all affected bonds of such maturities registered in the name of such registered owner, if
any, have not been refunded and are payable and secured solely from ad valorem taxes of the Issuer described
in the Refunded Obligation Ordinance, (iii) the registered owner is required to submit his or her Refunded
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Bonds to the paying agent/registrar, for the purposes of re-registering such registered owner's bonds and
assigning new CUSIP numbers in order to distinguish the source of payment for the principal and interest on
such bonds, and (iv) payment of principal of and interest on such bonds may, in some circumstances, be
delayed until such bonds have been re-registered and new CUSIP numbers have been assigned as required
by (iii) above.
(d) The source of funds for payment ofthe principal of and interest on the Refunded Bonds on
their respective maturity or redemption dates shall be from the funds deposited with the Escrow Agent
pursuant to the Escrow Agreement approved in Section 38 of this Ordinance.
Section 38. APPROVAL OF ESCROW AGREEMENT AND TRANSFER OF FUNDS. The Pricing
Officer or the Mayor and City Secretary are further authorized to enter into and execute on behalf of the
Issuer with the escrow agent named herein, an escrow agreement, in the form and substance as shall be
approved by the Pricing Officer, which escrow agreement will provide for the payment in full of the
Refunded Obligations. In addition, the Mayor or the Pricing Officer is authorized to purchase such securities,
to execute such subscriptions for the purchase of the Escrowed Securities (as defined in the Escrow
Agreement), and to authorize such contributions for the escrow fund as provided in the Escrow Agreement.
Section 39. DTC REGISTRATION. The Bonds initially shall be issued and delivered in such
manner that no physical distribution of the Bonds will be made to the public, and The Depository Trust
Company ("DTC"), New York, New York, initially will act as depository for the Bonds. DTC has
represented that it is a limited purpose trust company incorporated under the laws ofthe State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered under Section 17 A of the federal Securities
Exchange Act of 1934, as amended, and the Issuer accepts, but in no way verifies, such representations. The
Initial Bond authorized by this Ordinance shall be delivered to and registered in the name of the Underwriters.
However, it is a condition of delivery and sale that the Underwriters, immediately after such delivery, shall
cause the Paying Agent/Registrar, as provided for in this Ordinance, to cancel said Initial Bond and deliver
in exchange therefor a substitute Bond for each maturity of such Initial Bond, with each such substitute Bond
to be registered in the name of CEDE & CO., the nominee of DTC, and it shall be the duty of the Paying
Agent/Registrar to take such action. It is expected that DTC will hold the Bonds on behalf of the
Underwriters and/or the DTC Participants, as defined and described in the Official Statement referred to and
approved in Section 36 hereof (the "DTC Participants"). So long as each Bond is registered in the name of
CEDE & CO., the Paying Agent/Registrar shall treat and deal with DTC in all respects the same as ifit were
the actual and beneficial owner thereof. It is expected that DTC will maintain a book entry system which will
identif'y beneficial ownership ofthe Bonds by DTC Participants in integral amounts of$5,000, with transfers
of ownership being effected on the records ofDTC and the DTC Participants pursuant to rules and regulations
established by them, and that the substitute Bonds initially deposited with DTC shall be immobilized and not
be further exchanged for substitute Bonds except as hereinafter provided. The Issuer isnot responsible or
liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its
services, will not be responsible or liable for maintaining, supervising, or reviewing the records ofDTC or
the DTC Participants, or protecting any interests or rights of the beneficial owners of the Bonds. It shall be
the duty of the Underwriters and the DTC Participants to make all arrangements with DTC to establish this
book-entry system, the beneficial ownership of the Bonds, and the method of paying the fees and charges of
DTC. The Issuer does not represent, nor does it in any way covenant that the initial book-entry system
established with DTC will be maintained in the future. The Issuer reserves the right and option at any time
in the future, in its sole discretion, to terminate the DTC (CEDE & CO.) book-entry only registration
requirement described above, and to permit the Bonds to be registered in the name of any owner. If the Issuer
exercises its right and option to terminate such requirement, it shall give written notice of such termination
to the Paying Agent/Registrar and to DTC, and thereafter the Paying Agent/Registrar shall, upon presentation
36
and proper request, register any Bond in any name as provided for in this Ordinance. Notwithstanding the
initial establishment of the foregoing book-entry system with DTC, if for any reason any of the originally
delivered substitute Bonds is duly filed with the Paying Agent/Registrar with proper request for transfer and
substitution, as provided for in this Ordinance, substitute Bonds will be duly delivered as provided in this
Ordinance, and there will be no assurance or representation that any book-entry system will be maintained
for such Bonds.
Section 40. COMPLIANCE W]TH RULE 15c2- ]2. (a) Annual Reoorts. (i) The Issuer shall
provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending
in or after 2006, financial information and operating data with respect to the Issuer of the general type
included in the final Official Statement authorized by Section 36 of this Ordinance, being the information
described in Exhibit A hereto, which Exhibit is attached to and incorporated in this Ordinance as if written
word for word herein. Any financial statements so to be provided shall be (I) 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 complete within such period, then the Issuer shall
provide unaudited financial statements by the required time and will provide audited financial statements for
the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements
become available.
(ii) If the Issuer changes its fiscal year, it will notifY each NRMSIR and any SID 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 full in one or more
documents or may be included by specific reference to any document (including an official statement or other
offering document, ifit is available from the MSRB) that theretofore has been provided to each NRMSIR and
any SID or filed with the SEC.
(b) Material Event Notices. The Issuer shall notify any SID and either each NRMSIR or the
MSRB, in a timely manner, of any ofthe following events with respect to the Bonds, if such event is material
within the meaning of the federal securities laws;
I. 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 ofho]ders of the Bonds;
8. Bond calls;
9. Defeasances;
37
10. Release, substitution, or sale of property securing repayment of the Bonds; and
II. Rating changes.
The Issuer shall notity any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure
by the Issuer to provide financial information or operating data in accordance with subsection (a) of this
Section by the time required by such subsection.
( c) 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 the notice required by Subsection (b) hereof of any Bond calls and defeasance that cause the
Issuer to no longer be such an "obligated person".
(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, ITS OFFICERS, AGENTS AND
EMPLOYEES, 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
WITHOUTFAUL TONITS PART, OF ANY COVENANT SPECIFIED INTHIS 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.
(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(l) the provisions of this Section, as so
amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering ofthe 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. 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 (a) of this Section an explanation, in narrative
38
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. 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.
(d) Definitions. As used in this Section, the following terms have the meanings ascribed to such
terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each person whom the SEC or its staff has determined to be a nationally
recognized municipal securities information repository within the meaning of the Rule from time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized department, officer, or
agency thereof as, and determined by the SEC or its staff to be, a state information depository within the
meaning of the Ru]e from time to time.
Section 4]. PROTECTION OF PLEDGE. Chapter ]208, Government Code, applies to the issuance
of the Bonds and the pledge of the revenues granted by the Issuer under Section 9 of this Ordinance, and is
therefore valid, effective, and perfected. ] fTexas law is amended at any time while the Bonds are outstanding
and unpaid such that the pledge ofthe revenues granted by the Issuer under Section 9 of this Ordinance is to
be subject to the filing requirements of Chapter 9, Texas Business & Commerce Code, then in order to
preserve to the registered owners ofthe Bonds the perfection ofthe 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, Texas Business & Commerce Code and enable a filing to perfect the
security interest in said pledge to occur.
Section 42. FURTHER PROCEDURES. The Mayor of the Issuer, the City Secretary of the Issuer,
the Pricing Officer, and all other officers, employees, and agents ofthe 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 all such instruments, whether or not herein mentioned, as may be necessary
or desirable in order to carry out the terms and provisions of this Bond Ordinance, the Bonds, the sale of the
Bonds, and the Official Statement; and the Assistant City Manager/Finance of the City shall cause the
expenses of issuance of the Bonds to be paid from the proceeds of sale of the Initial Bonds or from other
lawfully available funds of the Issuer. 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 43. OPEN MEETINGS. The City Council has found and determined that the meeting at
which this Ordinance is considered is open to the public and that notice thereof was given in accordance with
the provisions of the Texas Open Meetings, Law, Tex. Gov't. Code, Chapter 551, as amended.
39
,
Section 44. REPEALER. All indentures, ordinances or resolutions, or parts thereof, that are in
conflict or inconsistent with any provision ofthis Ordinance are hereby repealed to the extent of such conflict
and the provisions of this Ordinance shall be and remain controlling as to the matters contained herein.
Section 45. EFFECTIVE DATE. This Ordinance shall become effective immediately upon its
passage and approval.
40
PASSED AND APPROVED this the 23rd day of Janu&~'fU
ATTEST:
APPROVED AS TO LEGAL FORM:
By:
SCHEDULE I
Utility System Revenue Refunding Bonds, Series 1998A
Original
Dated Date
7/15/1998
Original
Maturity
12/1 /2023(1)
12/1/2029(2)
Interest
Rate
5.125%
5.125%
Princi pal
Amount
Outstanding
$1,965,000
14,180,000
(I) The 2023 maturity is a term bond with scheduled annual mandatory sinking fund redemptions on December 1 of each year
commencing December I, 2019.
(2) The 2029 maturity is a term bond with scheduled annual mandatory sinking fund redemptions on December I of each year
commencing December 1,2024.
Utility System Revenue Refunding and Improvement Bonds, Series 2001
Original
Dated Date
4/15/2001
Original
Maturity
12/1/2011
12/1/2012
12/1/2013
12/1/2014
12/1 /20 15
12/1/2016
12/1/2017
12/1/2018
12/1/2019
12/1/2020
Interest
Rate
5.000%
5.000%
5.000%
5.000%
5.000%
5.000%
5.125%
5.125%
5.125%
5.400%
Principal
Amount
Outstanding
$4, I 00,000
2,755,000
2,895,000
3,040,000
3,200,000
3,365,000
3,335,000
3,515,000
3,700,000
3,895,000
.
,
EXHIBIT A
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 40 of this Ordinance:
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the Issuer to be provided annually in
accordance with such Section are as specified (and included in the Appendix or under the tables of the
Official Statement referred to) below:
Tables numbered I through 10, inclusive, under the captions "The Electric System", "The Water
System", "The Wastewater System", "Debt Information" and "Financial Information" in the Official
Statement.
Appendix C in the Official Statement.
Accountiag Principles
The accounting principles referred to in such Section are the accounting principles described in the
notes to the financial statements referred to in the paragraph above.
!
,
EXHIBIT B
NOTICE OF PRIOR REDEMPTION
THE CITY OF DENTON, TEXAS
NOTICE IS HEREBY GIVEN that the City of Denton, Texas has called for redemption the outstanding Bonds
of the City described as follows:
CITY OF DENTON (TEXAS) UTILITY SYSTEM REVENUE REFUNDING BONDS,
SERIES 1998A, dated July IS, 1998, scheduled to mature on through
in the principal amount of$ (and being all of the outstanding bonds
of said series scheduled to mature on and after ).
Call date: : redeemable at a redemption price of par plus accrued interest
at the principal corporate offices of The Bank of New York Trust Company, National Association,
only upon presentation by the registered owner.
CITY OF DENTON (TEXAS) UTILITY SYSTEM REVENUE REFUNDING AND
IMPROVEMENT BONDS, SERIES 200lA, dated April 15, 2001, scheduled to mature
on through , aggregating $ (and being all of the
outstanding bonds of said series scheduled to mature on and after ).
Call date: : redeemable at a redemption price of par plus accrued interest
at the principal corporate offices of The Bank of New York Trust Company, National Association
only upon presentation by the registered owner.
Ifmoneys sufficient for the payment of such redemption price are held by or on behalf of the respective paying
agent, the described Bonds shall become due and payable on the redemption date specified, and the interestthereon shall
cease to accrue from and after the redemption date.
Under the provisions of the Jobs and Growth Tax Relief Reconciliation Act of2003 (the "Act"), paying agents
making payments of interest or principal on municipal securities may be obligated to withhold a 28% tax from remittance
to individuals who have failed to furnish the paying agent with a valid taxpayer identification number. Owners of the
Bonds who wish to avoid the imposition of the tax should submit certified taxpayer identification numbers when
presenting the Bonds for payment.
NOTICE IS FURTHER GIVEN that all Bonds described above should be submitted to the following address:
The Bank or New York Trust Company, National Association
(successor to JPMorgan Chase Bank, N.A.)
200 I Bryan Street, 10th Floor
Dallas, Texas 75201
Attn:
Dated:
,2007
By: The Bank or New York Trust Company, National Association