2002-107ORDINANCE NO, 2002-107
ORDINANCE ALrII-IORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF
DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 2002, AND APPROVING
AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO;
AND PROVIDING AN EFFECTIVE DATE
THE STATE OF TEXAS :
COUNTY OF DENTON :
CITY OF DENTON :
WHEREAS, the City of Denton, Texas, hcreiofore has duly issued the following revenue bonds:
City of Denton Utility System Revenue Bonds, Series 1992, dated March 1, 1992;
City of Denton Utility System Revenue Bonds, Series 1993, dated March 1, 1993;
City of Denton Utility System Revenue Refunding Bonds, Series 1993-A, dated June 1, 1993;
City of Denton Utility System Revenue Refunding Bonds, Taxable Series 1993 -B, dated June 1, 1993;
City of Denton Utility System Revenue Bonds, Series 1996, dated May 1, 1996;
City of Denton Utility System Revenue Refunding Bonds, Series 1996-A, dated May 1, 1996;
City of Denton Utility System Revenue Bonds, Series 1998, dated March 15, 1998;
City of Denton Utility System Revenue Refunding Bonds, Series 1998A, dated July 15, 1998;
City of Denton Utility System Revenue Refunding Bonds, Series 1998B, dated August 1, 1998;
City of Denton Utility System Revenue Bonds, Series 2000A, dated April 15, 2000;
City of Denton Utility System Revenue Bonds, Taxable Series 2000B, dated April 15, 2000; and
City of Denton Utility System Revenue Refunding and Improvement Bonds, Series 2001, dated April
15, 2001;
WHEREAS, the City Council of the City of Denton deems it necessary and advisable to authorize,
issue, and deliver the additional Utility System Revenue Bonds hereinafter described; and
WHEREAS, the Series 2002 Bonds hereinafter authorized and described are to be issued, sold and
delivered pursuant to Chapter 1502, 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 1. AMOUNT AND PURPOSE OF THE BONDS. (a) The bond or bonds of the City of
Denton, Texas (the "Issuer") are hereby authorized to be issued and delivered in the aggregate principal mount
of $56,710,000, for the purpose of providing for improvements and extensions of the City of Denton Utility
System, which consists of the City's Combined Waterworks, Sewer, and Electric Light and Power System, and
shall be designated "City of Denton Utility System Revenue Bonds, Series 2002A" (the "Series 2002A Bonds").
(b) The bond or bonds of the City of Denton, Texas (the "Issuer") are hereby authorized to be issued
and dehvered in the aggregate principal amount ors 13,985,000, for the purpose of providing for improvements
and extensions of the City of Denton Utility System, which consists of the City's Combined Waterworks,
Sewer, and Electric Light and Power System, and shall be designated "City of Denton Utility System Revenue
Bonds, Taxable Series 2002B" (the "Taxable Series 2002B Bonds").
Section 2. DESCRIPTION OF THE BONDS. (a) With respect to the Series 2002A 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 2002A Bond"), but the Initial Series 2002A 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 2002A
Bonds" as used in this Ordinance shall mean and include collectively the Imtial Series 2002A Bond and all
substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued
pursuant hereto, and the term "Series 2002A Bond" shall mean any of the Series 2002A Bonds.
(b) With respect to the Taxable Series 2002B 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 Taxable Series 2002B Bond"), but the Initial Taxable Series 2002B 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 hereinst~er provided. The term "Taxable Series 2000B Bonds"
as used in this Ordinance shall mean and include collectively the Initial Taxable Series 2002B Bond and all
substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued
pursuant hereto, and the term "Taxable Series 2002B Bond" shall mean any of the Taxable Series 2002B
Bonds.
(c) thc term "Initial Bonds" as used in this Ordinance shall mean and include collectively the Initial
Series 2002A Bond and the Initial Taxable Series 2002B Bond, the term "Bonds" as used in this Ordinance
shall mean and include collectively the Initial Bonds 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. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL
REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BONDS.
(a) (i) The Initial Series 2002A Bond is hereby authorized to be issued, sold, and delivered hereunder
as a single fully registered Bond, without interest coupons, dated APRIL 1, 2002, in the denomination and
aggregate principal amount of $56,710,000, numbered R-I, payable in annual installments of principal to the
initial registered owner thereof, to-wit:
MORGAN STANLEY
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or to the registered assignee or assignees of said Bond or any portion or portions thereof(in each case, the
"registered owner"), with the annual installments of principal of the Initial Series 2002A Bond to be payable
on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL
SERIES 2002A BOND set forth in this Ordinance.
(ii) The haitial Taxable Series 2002B Bond is hereby authorized to be issued, sold, and delivered
hereunder as a single fully .registered Bond, without interest coupons, dated APRIL l, 2002, in the
denomination and aggregate principal amount orS 13,985,000, numbered R-l, payable in annual installments
of principal to the initial registered owner thereof, to-wit:
MORGAN KEEGAN & COMPANY, INC.
or to the registered assignee or assignees of said Bond or any portion or portions thereof (in each ease, the
"registered owner"), with the annual installments of principal of the Imtial Taxable Series 2002B Bond to be
payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL
TAXABLE SERIES 2002B BOND set forth in this Ordinance.
Co) The Initial Bonds (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 Bonds shall be payable, all as provided, and in the manner required or
indicated, in the FORMS OF I]NfflAL BONDS set forth in this Ordinance.
Section 4. INTEREST. The unpaid principal balance of the Initial Bonds shall bear interest from the
date of each Initial Bond to the respective scheduled due dates, or to the respective dates of prepayment 0r
redemption, of the in~allraeots of principal of the Initial Bonds, and said interest shall be payable, all in the
manner provided and at the rates and on the dates stated in the FORMS OF INITIAL BONDS set forth in this
Ordinance.
Section 5. FORMS OF ]]NfI'IAL BONDS. The form of the Initial Bonds, including the form of
Registration Certificate of the Comptroller of Public Aeeounts of the State of Texas to be endorsed on the
Initial Bonds, shall be substantially as follows:
FORM OF IN1TIAL SERIES 2002A BOND
NO. R-1 $56,710,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE BOND
SERIES 2002A
THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), be'rog a political subdivision of
the State of Texas, hereby promises to pay to
MORGAN STANLEY
or to the registered assignee or assignees of this Bond or any portion or potions hereof (in each case, the
"registered owner") the aggregate principal amount of
$56,710,000
(FIFTY SIX MILLION SEVEN HUNDRED TEN THOUSAND DOLLARS)
in annual installments of principal due and payable on December 1 in each of the years, and in the respective
principal mounts, as set forth in the following schedule, and to pay interest, from the date of this Bond
hereinat~er stated, on the balance of each such installment of principal, respectively, from time to time
remaining unpaid, at the rates as follows:
PRINCIPAL INTEREST PRINCIPAL INTEREST
YEAR AMOUNT RATE(%} YEAR AMOUNT RATE(O/o)
2002 $1,735,000 4.25 2012 $2,730,000 5.25
2003 1,820,000 4.25 2013 2,870,000 5.25
2004 1,900,000 4.25 2014 3,035,000 5.25
2005 1,990,000 4.25 2015 3,210,000 5.25
2006 2,085,000 4.25 2016 3,385,000 5.25
2007 2,180,000 4.25 2017 3,580,000 5.00
2008 2,280,000 4.25 2018 3,780,000 5.00
2009 2,385,000 5.00 2019 3,995,000 5.00
2010 2,495,000 4.25 2020 4,210,000 5.00
2011 2,610,000 4.375 2021 4,435,000 5.00
Interest shall first be due and payable on June 1, 2002, and semiannually on each June 1 and December
1 thereafter while this Bond or any portion hereof is outstanding and unpaid. Said interest shall be calculated
on the basis of a 360-day year composed of twelve 30-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 of BANK
ONE, NATIONAL ASSOCIATION, AUSTIN, TEXAS, which is the "Paying Agent/Registrar" for this Bond.
Paymem 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 and/or interest payment date by check, dated as of such date, drawn
by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance
anthori~ng the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar
for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United
States mail, first-class postage prepaid, en each such principal and/or interest payment date, to the registered
owner hereof, at the address ofthe registered owner, as it appeared on the 15th 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. The Issuer covenants with the regis~red owner of this Bond that on or before each
principal and/or interest payment date for this Bond it will make available to the Paying Agent/Registrar, 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
therea~er, a new record date for such interest payment (a "Special Record Date") will be established by the
Paying Agent/Registrar, ffand when funds for the payment of such interest have been received from the Issuer.
Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment
Date", which shall be fi_O. een (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 hohday, or day on which banking institutions are
authorized to close; and payment on such date shall have the same force and effect as ffmade on the original
date payment was due.
THIS BO ND has been authorized in accordance with the Constitution and laws of the State of Texas
in the principal amount of $56,710,000, for the purpose of providing for improvements and extensions of the
City of Denton Utility System, which consists of the City's Combined Waterworks, Sewer, and Electric Light
and Power System.
ON DECEMBER 1, 2012, 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.
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 bythe Paying Agent/Registrur to the registered owner hereof.
By the date fixed for any such pmpaymeat or redemption due provision shall be made by the Issuer with the
Paying Agent/Registrar for the payment of the iequired prepayment or rcdomption 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, ffsuch written notice of prepayment or redemption is given, and if duc 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
acemed 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 re, cord in the Registration Books all such
prepayments or redemptions of principal of this Bond or any portion hereof.
THIS BOND, to thc extent of the unpaid or unredeemed principal balance hereof, or any unpaid and
unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the imfial registered owner
hereof and shall be transferrcd only m the Registration Books of the Issuer kept by the Paying Agent/Registrar
acting in the capacity of registrar for the Bonds, upon the tern and conditions sot forth in the Bond Orclinance.
Among other requirements for such transfer, this Bond must bc presented and surrendered to the Paying
Agent/Registrar for cancellation, together with proper instruments of assignmcnt, in form and with guarantee
of si~natures satisfactory to thc Paying Agent/Registrar, evidencing assignment by thc initial registered owner
of this Bond, or any portion or portions herenfin 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 thc Paying Agent/Registrar may be
used to evidence the assignment of this Bond or any such portion or portions hereof by the imtial registered
owner hereof. A new bond or bonds payable to such assignee or assignees (which then will be thc new
registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of
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this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the
Paying AgentIRegistrar in conversion of and exchange for this Bond or any portion or portions hereof, but
solely in the form and manner as provided in the next paragraph hereof for the 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 of
liability upon this Bond to the extent of such payment, and the Issuer and the Paying AgeotfRegistrar shall not
be affected by any notice to the contrary.
AS PROVIDED above and in the Bond Ordinance, this Bond, to thc extent of the unpaid or
unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal
mount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated
in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Bond
which is not being assigned and transferred by the imtial 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
date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the
form and procedures set forth in the Bond Ordinance. If this Bond or any portion hereof is assigned and
transferred or converted each bond issued in oxchange for any portion hereof shall have a single stated principal
maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for
which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such
installment of principal or portion thereof. Such bonds, respectively, shall be 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 MAY BE AS SIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY,
and to one or more assignees, but the bonds issued and delivered in exchange for this 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 AgenffReglstrar's standard or customary fees and charges for transferring,
converting, and exchanLzing this Bond or any portion thereof, but the one requesting such transfer, conversion,
and exchange shall pay any taxes or governmental charges reqtmed to be paid with respect thereto. The Paying
Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the
period conunencmg 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 pr~ayment or redemption date.
1N THE EVENT any Paying Agent/Registrar 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 dehvety 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
initially the '2qct 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 hght and power system.
6
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 of this 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,
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 tern 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 thc Mayor of thc Issuer and countersigned and attested with thc manual si?aturc or facsimile of
thc City Secretary of thc Issuer, has caused the official seal of the Issuer to be duly impressed on this Bond,
and has caused this Bond to bo dated April 1, 2002.
KI-IEST:
CITY OF DENTON, TEXAS
By: By:
Jennifer Waiters
City Secrc~hary, City of Denton, Texas
(CITY SEAL)
Euline Brock
Mayor, City of Denton, Texas
(BOND INSURANCE LEGEND, IF ANY)
FORM OF REGISTRATION CERTIFICATE OF THE
COMPTROLLER OF PUBLIC ACCOUNTS:
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this Bond has been examined, certified as to validity, and approved by thc Attorney
General of thc State of Texas, and that this Bond has been registered by thc Comptroller of Public Accounts
of thc State of Texas.
Witness my signature and seal this
(COMPTROLLER'S SEAL)
Comptroller of Public Accounts
of the State of Texas
FORM OF INITIAL TAXABLE SERIES 2002B BOND
NO. R-1 $13,985,000
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE BOND
TAXABLE SERIES 2002B
THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of
the State of Texas, hereby promises to pay to
MORGAN KEEGAN & COMPANY, INC.
or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, thc
"registered owner") the aggregate principal amount of
$13,985,000
(THIRTEEN MILLION NINE HUNDRED EIGHTY FIVE THOUSAND DOLLARS)
in annual installments of principal due and payable on December i in each of the years, and in the respective
principal amounts, as set forth in the following schedule, and to pay interest, fi.om the date of this Bond
hereina~er stated, on the balance of each such installment of principal, respectively, fi.om time to time
remaining unpaid, at the rates as follows:
PRINCIPAL INTEREST PRINCIPAL INTEREST
YEAR AMOUNT RATE(%) YEAR AMOUNT RATE(%)
2002 $ 360,000 5.00 2012 $ 660,000 6.50
2003 380,000 5.00 2013 705,000 6.50
2004 405,000 . 5.00 2014 ******* ****
2005 430,000 5.00 2015 ******* ****
2006 455,000 5.45 2016 ******* ****
2007 ****** **** 2017 3,370,000 6.50
2008 1,000,000 6.25 2018 ****** ****
2009 545,000 6.50 2019 ****** ****
2010 580,000 6.50 2020 ****** ****
2011 620,000 6.50 2021 4,475,000 6.75
Interest shall first be due and payable on June 1, 2002, and semiannually on each June I and
December I thereafter while this Bond or uny portion hereofis outstanding andunpaid. Said interest shall be
calculated on the basis ora 360-day year composed of twelve 30-day months.
THE INSTALLIVIENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable m
lawful money of the umted States of America, without exchange or collection charges. The instalhnents of
principal and the interest on this Bond are payable to the registered owner hereof through the services of BANK
ONE, NATIONAL AS S OCIATION, AUSTIN, TEXAS, 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 AgenffRegistrar to the
registered owner hereof on each principal and/or interest payment date by check, dated as of such date, drawn
by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance
authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar
for such purpose as hereina~r provided; and such check shall be sent bythe Paying Agent/Registrar by United
States mail, first-class postage prepaid, on each such principal and/or interest payment date, to the registered
owner hereof, at the address of the registered owner, as it appeared on the 15th day of the month next preceding
each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as
hereinafrer described. The Issuer covenants with the registered owner of this Bond that on or before each
principal and/or interest payment date for this Bond it will make available to the Paying Agent/Registrar, from
the "Interest and Sinking Fund" maintained pursuant to the Bond Ordinance, the mounts 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 Agent/Regish'ar, ff and when funds for the payment of such interest have been received from the Issuer.
Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment
Date", which shall be fifteen (15) days after the Special Record Date) shall bo 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 thc principal of or interest on this Bond shall be a Saturday,
Sunday, a legal hohday, 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.
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THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas
in the principal amount of $13,985,000, for the purpose of providing for improvements and extensions of the
City of Denton Utility System, which consists of the City's Combined Waterworks, Sewer, and Electric Light
and Power System.
ON DECEMBER 1, 2012, 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 soume, 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 aeomed interest to the date fixed for prepayment or redemption.
THE OUTSTANDING BONDS of this Series scheduled to mature on DECEMBER 1, 2008,
DECEMBER 1, 2017 and DECEMBER 1,2021 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 the particular
Bonds or port/om thereof to be redeemed to be selected bythe Paying Agent/Registrar at random, 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 shown in the following schedule:
December 1, 2008 Maturity
Mandatory Principal
Redemption Dates Amounts
December 1, 2007 $485,000
December 1, 2008 (m/turity) 515,000
December 1, 2017 Maturity
Mandatory Principal
Redemotion Dates Amounts
December 1, 2014 $760,000
December 1, 2015 810,000
December 1, 2016 870,000
December l, 2017 (maturity) 930,000
December 1, 2021 Matoritv
Mandatory Principal
Redemption Dates Amounts
December i, 2018
December 1, 2019
December 1, 2020
December I, 2021
(maturity)
$1,000,000
1,075,000
1,155,000
1,245,000
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 any such
maturity which, at least 45 days prior to the aforesaid appropriate redemption date ( 1 ) shall have been acqmred
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by the Issuer at a price not exceeding the principal mount 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 hercof and not previously credited to the Mandatory
Sinking Fund Redemption.
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 AgentlRegistrar 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. Ifsanh 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 fi.om 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 of the unpaid or unredeemed principal balance hereof, or any unpaid and
unredeemed portion hereof in 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, evidencmg 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 instnunent 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) orto the initial registered owner as to any portion of
this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the
Paying Agent/Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but
solely in the form and manner as provided in the next paragraph hereof for the 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 of
liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not
be affected by any notice to the contrmy.
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 imtial registered owner as to any portion of this Bond
which is not being assigned and transferred by the initial registered owner, in any denomination or
denominations in any integral multiple of $5,000 (subject to the requirement hereinaRer stated that each
substitute bond issued in exchange for any portion of this Bond shall have a single stated principal matunty
date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the
form and procedures set forth in the Bond Ordinance. If this Bond or any po~don hereof is assigned and
11
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 of this Bond or portion hereof for
which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and bome 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 MAY BE AS SIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY,
and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion
hereofmay be assigned andtransferred, 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
Agent/Registrar 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 Agent/Registrar 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 aeoordance 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
initially 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 watenvorks, sewer, and electric light and power system.
THE ISSUER has reserved the right, subject to the restrictions stated'm 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 fffiy-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 of this 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 aH of
the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and
records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond
Ordinance constitute a contract between the registered owner hereof and the Issuer.
12
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 of
the City Secretary of thc Issuer, has caused the official seal of the Issuer to be duly impressed on this Bond,
and has caused this Bond to be dated April 1, 2002.
KIYEST:
CITY OF DENTON, TEXAS
By: By:
Jennifer Walters
City Secretary, City of Denton, Texas
(CITY SEAL)
Euline Brock
Mayor, City of Denton, Texas
(BOND INSURANCE LEGEND, 1F ANY)
FORM OF REGISTRATION CERTiFiCATE OF THE
COMPTROI,LER 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 s~gnamre and seal this
(COMPTROLLER'S SEAL)
Comptroller of Public Accounts
of the State of Texas
Section 6: ADDmONAL CHARACTERISTICS OF THE BONDS. _~_gistration and Transfer. (a)
The Issuer shall keep or cause to be kept at the Austin, Texas, corporate trust office of BANK ONE,
NATIONAL ASSOCIATION (the "Paying Agent/Registrar") books or records of the registration and transfer
of the Bonds (the "R~gistration 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 shah obtain and
record in the Registration Books the address of the registered owner of each Bond to which payments with
respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered owner to
notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest
payments shall not be mailed unless such notice has been given. The Issuer shall have the right to inspect the
Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying
Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not
13
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 mstmments of assignment, in form and with
guarantee of signatures satisfactory to the Paymg Agent/Registrar, evidencing (i) the assignment of the Bond,
or any potion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (ii) the fight
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 of the same Series shall be issued in conversion and exchange therefor in the manner hereto
provided. The Initial Bonds, to the extent of the unpaid or unredeemed principal balance thereof, my be
assigned and transferred by the initial registered owner thereof once only, and to one or more assignees
designated m writing by the initial registered owner thereof. AH 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
prmcipal maturity date), shall be in the form prescribed for such Series m the FORMS OF SUBSTITUTE
BONDS set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and
converted as hereinaRer provided. If the Initial Bond or any portion thereof is assigned and transferred or
converted the Initial Bond must be surrendered to tho Paying Agent/Registrar for cancellation, and each Bond
issued in exchange for any potion 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 prmcipal or portion thereof for which the substitute Bond is being ex-
changed; each such Bond shall bear interest at the single rate applicable to and borne by such installment of
principal or potion thereof for which it is being exchanged and each such Bond shall be of the same Series.
l/only a potion 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 of the same Series in exchange for the unassigned balance
of the Initial Bond in the same manner as if the initial registered owner were the assignee thereof. If any Bond
or potion thereof other than the Initial Bond is assigned and transferred or converted each Bond issued in
exchange therefor shall bo of the same Series, have thc same principal maturity date and bear interest at the
same rate as thc Bond for which it is exchanged. A form of assignment shall be printed or endorsed on each
Bond, excepting the Initial Bonds, which shall be executed by the registered owner or its duly authorized
attorney or representative to evideoee an assignment thereof. Upon surrendsr of any Bonds or any potion or
potions 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
of the same Series, 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 previons 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 potion or potions 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 AgentJRegistrar's standard or customary fees and charges for
making such transfer and delivery ora 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 AgenffRcgistrar
shall not be required to make transfers of registration of any Bond or any potion 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.
fo) Ownership of Bonds. The entity in whose name any Bond shall be registered in the Registration
Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance,
whether or not such Bond shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected
by any notic~ to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest
14
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) Payment ofBondsandlnterest. The lssuer 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, ail as provided in this Ordinance. The Paying AgenffRegistrar shall
keep proper records of ail payments made by the Issuer and the Paying Agent/Registrar with respect to the
Bonds, and of ail 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 ( 3 0 )
days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by
the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the
Issuer. Notice of the Speciai Record Date and of the scheduled payment date of the past due interest ("Special
Payment Date", which shall be fifteen (15) days after the Speciai Record Date) shall be sent at least five (5)
business days prior to the Speciai 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 tho 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 Replacement; Authentication. Each Bond issued and dehvered
pursuant to this Ordinance, tO the extent Of the unpaid or unredeemed principai baiance or principai mount
thereof, may, upon surrender of such Bond at the principai 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 of the same Series, without interest
coupons, in the form prescribed for such Series in the FORMS OF SUBSTITUTE BONDS set forth in this
Ordinance, in the denomination of $5,000, or hny integral multiple of $5,000 (subject to the requirement
hereinatter 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 principai amount equai to the unpaid
or unredeemed principal balance or prmcipai amount of any Bond or Bonds so surrendered, and payable to the
appropriate registered owner, assignee, or assignees, as the case may be. If the fuitiai Bond is assigned and
transferred or converted each substitute Bond issued in exchange for any portion of the Initiai Bond be of the
same Scrics, shall have a single stated principai maturity date, and shall not be payable in installments; each
· such Bond shall have a prmcipai maturity date corresponding to the due date ofthe installment of pfincipai or
portion thereof for which the substitute Bond is bcing exchanged; and each such Bond shall bear interest at the
single rate applicable to and borne by such installment of principai or port/on thcrcof for which it is being
exchanged and each such Bond shall bc of the same Series. Ifa portion of any Bond (other than thc Imtial
Bond) shall bc rcdecmed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds be of
thc same Series having the same maturity date, bearing interest at the samc rate, in thc denomination or
denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate
principai amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender
thereof for cancellation, ff any Bond or portion thereof ( other than the Initiai Bond) is assigned and transferred
or converted, each Bond issued in exchange therefor shall be of the same Series, 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 dehvered in
conversion of and exchange for or replacement of any Bond or portion thereof as permitted or required by any
provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again
be converted and exchanged or replaced. It is specifically provided that any Bond authenticated in conversion
of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date for the
15
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 BONDS issued and delivered
pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar,
but on each substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds
issued under this Ordinance there shall be printed a certificate, in the form substantially as follows:
"PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance
described in this Bond; and that this Bond has been issued in conversion of and exchange for or replacement
of a bond, bonds, or a portion ora 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.
BANK ONE, NATIONAL ASSOCIATION
Paying Agent/Registrar
Dated By
Authorized Representative"
An authorized representative of the Paying AgenffRegistrar 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. Thc Paying Agent/Registrar promptly shall cancel aH Bonds surrendered for
conversion and exchange or replaccment. No additional ordinances, orders, or resolutions need bc passed or
adopted by thc governing body of thc Issuer or any other body or person so as to accomplish thc foregoing
conversion and exchange or replacement of any Bond or portion thereof, and thc Paying Agent/Registrar shall
provide for thc printing, execution, and delivery of thc substitute Bonds in thc 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 thc Paying Agent/Registrar, and, upon thc execution of thc above
Paying Agent/R~gistrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be
valid, incontestable, and enforceable in thc same manner and with thc same effect as thc Initial Bond which
originally was issued pursuant to this Ordinance, approved by thc Attorney General, and registered by the
Comptroller of Pubhc Accounts. Thc Issuer shall paythc 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 any such transfer, conversion, and exchange shall pay any taxes or governmental charges reqfftred
to be paid with respect thcreto as a condition precedent to thc exercise of such privilege of conversion and
exchange. The Paying AgentJRegistrar shall not bc required to make any such conversion and exchange or
replacement of Bonds or any portion thcrcof (i) during thc period commencing with thc close of busincss on
any Record Date and ending with thc opening of business on the next following principal or interest paymem
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 and
interest on such Bonds to be payable only to the registered owners thereof, (ii) may and shall be redeemed prior
16
to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for
other Bonds of thc same Series, (v) shall have the characteristics, (vi) shall be signed and scaled, and (vii) thc
principal of and interest on the Bonds shall be payable, all as provided, and m the manner required or indicated,
in the FORMS OF SUBSTITUTE BONDS set forth in this Ordinance.
(f) Payment 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 of the 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 fight to, and may, at its option, change the Paying Agent/Registrar upon not less than
120 days written notice to the Paying Agant/Registrar, to be effective not later than 60 days prior to the next
principal or interest payment date aider 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
dehver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to
the Bonds, to the new Payiag Agent/Registrar designated and appointed by the Issuer. Upon any change in the
Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying
Agent/Registrar to each registered owner of the Bonds, by United States mail, first-class postage prepaid,
which notice also shall give the address of the new Paying Agnnt/Ragistrar. 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 dehvered to each Paying Agent/Registrar.
Section 7. FORMS OF SUBSTITUTE BONDS. The form of all Bonds issued in conversion and
exchange or replacement of any other Bond or portion thereof, including the fdrm of Paying Agent/Registrar's
Certificate to be printed on each of such Bonds, and the Form of Assignment to be printed on each of the
Bonds, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions
as are permitted or required by this Ordinance.
FORM OF SUBSTH'LrI'E SERIES 2002A BOND
NO. UNH'gD STATES OF AMERICA PRINCIPAL AMOUNT
STATE OF TEXAS $
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE BOND
· SERIES 2002A
INTEREST MATURITY ORIGINAL DATE
RATE DATE OF ISSUE CUSIP NO.
% APRIL 1, 2002
17
ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas
(the "Issuer"), b(mg 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 April 1, 2002, 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
June 1, 2002, and semiannually on each June 1 and December 1 thereafter, except that if the date of authenti-
cation of this Bond is later than the first Record Date (hereina~er 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, m which case such principal amount shall bear interest from such next following interest
payment date. Said interest shall be calculated on the basis ora 360-day year composed of twelve 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 Austin, Texas, corporate trust office of BANK ONE, 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 hereina~er provided; and
such check shall be sent by the Paying Agent/Registrar by United States mail, tim-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 15th 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 AgenffRegistrar 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 of this Bond for
redemption and payment at the prindpal corporate trust office ofthe Paying Agent/Registrar. The Issuer cove-
nants 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 Stoking Fund" created by the Bond Ordinance, the amounts required to provide for the pay-
ment, 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 estabhshed by the
Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer.
Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment
Date", which shall be fifteen 05) days after the Special Record Date) shall be sent at least five (5) business
days prior to the Special Record Date by United States ma/l, first class postage prepaid, to the address of each
Holder of a Bond appearing on the registration books of the Paying Agent/RegisWar at the dose of business
on the 15th business day next preceding the date of mailing of such notice.
18
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 datrxl April 1, 2002, authorized in accordance with
the Constitution and laws of the State of Texas in the principal amount of $56,710,000, for the purpose of
providing for improvements and extensions of the City of Denton Utility System, which consists of the City's
Combined Waterworks, Sewer, and Electric Light and Power System.
ON DECEMBER 1, 2012, or on any date whatsoever thereafter, the Bonds of this Series may be
redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived fi.om 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.
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 Agem/Ragistrar by Umted 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 addsess 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 r, ailing thereof, shall not affect the validity or effectiveness of the proeeeclings 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 ff due provision for such payment is made, all as provided
above, the Bonds or portions thereof that are to be so redeemed thereby automatically shall be treated as
redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption,
and they shall not be regarded as being outstanding except for the right of the registered owner to receive the
redemption price fi.om the Paying Agent/Registrar out of the funds provided for such payment. If a portion
of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at
the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request
of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be
issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as
provided in the Bond Ordinance.
THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE
OF $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 assignment, in
form and with guarantee of siLznaturas satisfactory to the Paying Agent/Registrar, evidencing assignment of
this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in
whose name or names this Bond or any such portion or portions hereof is or are to be transferred and
registered. The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner
or its duly authorized attorney or representative, to evidence the assignment hereof. A new Bond or Bonds
19
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, my 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 required to make transfers of regis-
tration of this Bond or any portion hereof(i) during the period commencing with the close of bnsiness 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. The registered owner of this Bond shall be deemed and treated by the Issuer and
the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of
liabihty 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 re~stered
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 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 Agent/Registrar shall not be required
to make any such conversion and exchange (i) during the period commencing with the close ofbnsiness on any
Record Date and ending with the opening of bnsiness 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 eanse 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 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
initially 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 start in the Bond Ordinance, to issue
Additional Bonds payable from and secured by a first hen on and pledge of the "Pledged Revenues" on a parity
with this Bond and series of which it is a part.
2O
THE ISSUER also has reserved the fight, subject to the restrictions stated in the Bond Ordinance, to
amend the Bond Ordinance with the approval of the holders or owners offifry-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 of this 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 ownefthereby acknowledges all of
the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions,
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and
records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond
Ordinance constitute a contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile
signature of the Mayor of the Issuer and countersigned and attested with the manual or facsimile signature of
the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed
in facsimile, on this Bond.
ATTEST:
CITY OF DENTON, TEXAS
By: By:
Jennifer Walters
City Secretary, City of Denton, Texas
(CITY SEAL)
Euline Brock
Mayor, City of Denton, Texas
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE
PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIIqCATE
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.
BANK ONE, NATIONAL ASSOCIATION
Paying Agant/Registrar
Dated By
Authorized Repmsantafive
(BOND INSURANCE LEGEND, IF ANY)
21
FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized
repre~e_ntative or attorney thereof, hereby assigns this Bond to
/ /
(Assignee's Social (print or typewrite Assignee's name and
Security or Taxpayer address, including zip code)
Identification Number)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration of this 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 Certificate in every particular
without alteration or enlargement or any change
whatsoever.
FORM OF SUBSI'ITLITE TAXABLE SERIES 2002B BOND
NO.
UNITED STATES OF AMERICA PRINCIPAL AMOUNT
STATE OF TEXAS $
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE BOND
TAXABLE SERIES 2002B
INTEREST MATURITY ORIGINAL DATE
RATE DATE OF ISSUE CUSIP NO.
% APRIL1,2002
ON THE MATURrrY 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
22
, or to the registered assignee
hereof (either being hereinafter called the "registered owner") the principal mount of
and to pay interest thereon from April 1, 2002, 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
June 1, 2002, and semiannually on each June 1 and December 1 thereafter, except that if the date of anthenti-
cation 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 ai~r 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 ora 360-day year composed of twelve 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 Austin, Texas, corporate trust office of BANK ONE, 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 hasincss on the 15th day of the month next preceding each such date (the "Record
Date") on the Registration Books kept by the Paying AgenttrRegistrar, as hereinaRer described. However, the
payment of such interest may be made by any other m~thod acceptable to the Paying Agent/Registrar and
requested by, and at the risk and expense of, the registered owner hereof. Any aeomed 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 of this Bond for
redemption and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer cove-
nants 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 pay-
ment, in mediately 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
there, after, a new record date for such interest payment (a "Special Record Date") will be established by the
Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer.
Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment-
Date", which shah 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
23
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 April 1, 2002, authorized in accordance with
the Constitution and laws of the State of Texas in the principal mount of $13,985,000, for the purpose of
providing for improvements and extensions of the City of Denton Utility System, which consists of the City's
Combined Waterworks, Sewer, and Electric Light and Power System.
ON DECEMBER 1, 2012, or on any date whatsoever thereafter, the Bonds of this Series may be
redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available
and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be
redeemed shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed
only in an integral multiple of $5,000), at the redemption price of the par or principal amount thereof, plus
accrued interest to the date fixed for redemption.
THE OUTSTANDING BONDS of this Series scheduled to mature on DECEMBER 1, 2008,
DECEMBER 1, 2017 and DECEMBER 1,2021 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 the particular
Bonds or portions therenf to be redeemed to be selected by the Paying Agent/Registrar at random, 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 shown in the following schedule:
December 1.2008 Mataritv
Mandatory Principal
Redemption Dates Amounts
December 1, 2007 $485,000
December 1, 2008 (maturity) 515,000
December 1, 2017 MaturiW
Mandatory Principal
Redemntion Dates Amounts
December 1, 2014 $760,000
December 1, 2015 810,000
December 1, 2016 870,000
December 1, 2017 (maturity) 930,000
24
December 1, 2021 Maturity
Mandatory Principal
Redemption Dates Amounts
December I, 2018
December 1, 2019
December 1, 2020
December 1, 2021
(maturity)
$1,000,000
1,075,000
1,155,000
1,245,000
Thc 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 mount of any Bonds out of any such
maturity which, at least 45 days prior to thc aforesaid appropriate redemption date ( 1 ) 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.
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 AgentfRegistrar 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 thereof that are to be so redeemed thereby automatically shall be treated as
redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption,
and they shall not be regarded as being outstanding except for the right of the registered owner te 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, inn any denomination or denominations in any integral multiple of $5,000, at the written request
of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be
issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as
provided in the Bond OrdinanCe.
THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY IN'rlSGRAL MULTIPLE
OF $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 forah
in the Bond OrdinanCe. Among other requirements for such assignment and transfer, this Bond must be
presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in
form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of
this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in
whose name or names this Bond or any such portion or portions hereof is or are to be transferred and
registered. The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner
or its duly authorized attorney or representative, to evidence the assignment hereof. A new Bond or Bonds
payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond
or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of
25
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 required to make transfers of regis-
tration 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, (ii) with respect to any Bond or any portion therenf 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 of
liability upon this Bond to the extent of such payment, and the Issuer and the Paying AgentJRegistrar shall not
be atTeeted 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 mount 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/~gistrar'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 governmental charges required to be paid with respect thereto as a condition precedent
to the exercise of such privilegn 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 bnsiness 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 Ordinane~ thRt 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 tn 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 obhgation of the Issuer, secured by and
payable, together with other bonds, from a first hen on and pledge of the "Pledged Revenues", which include
initially 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 and series of which it is a part.
26
THE ISSUER also has reserved the fight, subject to the restrictions stated m 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 of this 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,
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and
records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond
Ordinance constitute a contract between each registered owner hereof and the Issuer.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile
signature of the Mayor of the Issuer and countersigned and attested with the manual or facsimile signature of
the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed
in facsimile, on this Bond.
ATTEST:
CITY OF DENTON, TEXAS
By:. By:
Jennifer Walters
City Secretary, City of Denton, Texas
Euline Brock
Mayor, City of Denton, Texas
(CITY SEAL)
FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION cERTIFICATE
PAYING AGENT/R.EGISTRAR'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.
BANK ONE, NATIONAL ASSOCIATION
Paying Agent/Registrar
Dated By.
Authorized Representative
(BOND INSURANCE LEGEND, IF ANY)
27
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 Assignec's name and
address, including zip code)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration of this 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
si~nature guarantee program.
Registered Owner
NOTICE: This si~nature must correspond with
the name of the Registered Owner appearing on
the face of this Certificate in every particular
without alteration or enlargement or any change
whatsoever.
Section 8. DEFINH'IONS. As used in this Ordinance the following terms shall have the meanings
set forth below, unless the text hereof specifically indicates othensise:
(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 Bonds as defined and described in Section 2
oft}ds Ordinance and all substitute bonds exchanged therefor, and aH 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 Bonds, Series 1992, authorized by ordinance passed on March 3, 1992 (the "Series 1992 Bonds"),
(ii) the outstanding City of Denton Utility System Revenue Bonds, Series 1993, authorized by ordinance passed
on March 16, 1993 (the "Series 1993 Bonds"), (iii) the outstanding City of Denton Utility System Revenue
Refunding Bonds, Series 1993-A, authorized by ordinance passed on Juno 8, 1993 (the "Series 1993-A
Bonds"), (iv) the outstanding City of Denton Utility System Revenue Refunding Bonds, Taxable Series 1993-B,
authorized by ordinance passed on June 8, 1993 (the "Series 1993-B Bonds"), (v) the outstanding City of
28
Denton Utility System Revenue Bonds, Series 1996, authorized by an ordinance passed on May 7, 1996 (the
"Series 1996 Bonds"), (vi) the outstanding City of Denton Utility System Revenue Refunding Bonds, Series
1996-A, authorized by an ordinance passed on May 7, 1996 (the "Series 1996-A Bonds"), (vii) the outstanding
City of Denton Utility System Revenue Bonds, Series 1998, authorized by an ordinance passed on March 24,
1998 (the "Series 1998 Bonds"), (viii) the outstanding City of Denton Utility System Revenue Refunding
Bonds, Series 1998A, authorized by an ordinance passed on Suly 21, 1998 (the "Series 1998A Bonds"), (ix)
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"), (x) the outstanding City of Denton Utility
System Revenue Bonds, Series 2000A, authorized by an ordinance passed on April 25, 2000 (the "Series
2000A Bonds"), (xi) the outstanding City of Denton Utility System Revenue Bonds, Taxable Series 2000B,
authorized by an ordinance passed on April 25, 2000 (the "Taxable Series 2000B Bonds"), (xii) the outstanding
City of Denton Utility System Revenue Refunding and Improvement Bonds, Series 2001, authorized by an
ordinance passed on April 17, 2001 (the "Series 2001 Bonds"), and (xiii) the Bonds.
(e) Thc 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 25 of this Ordinance.
(f) Thc term "System" shall mean (1) the City's enme existing waterworks and sewer system and the
City's entire existing clectric light and power system, together with all futura extensions, improvements,
enlargements, and additions thereto, and all replacements thereof, and (2) any other related facilities, all'or any
part of the revenues or income from which do, in the future, at the option of thc 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 arc not payable fi'om or secured by any Pledged
Revenues, but which arc 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 thc System, unless and to thc extent otherwise provided in the ordinance or
ordinances authorizing tho 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 mcome from the investment or deposit of money in any Fund created by this Ordinance.
(h) The terms "Net Revenues of the System", and ''Net Revenues" shall mean all Gross Revenues after
deducting therefrom an mount equal to the current expenses of operation and maintenance of the System, in-
chiding all salaries, labor, materials, repairs, and extensions necessary to render efficient service, provided,
however, that only such repairs and extensions, as in the judgment of the City Council, reasonably and fairly
exercised 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 water facilities,
sewer services or sewer facilities, fuel supply, and for the purchase of electric power, which payments under
law constitute operation and maintenance expenses of any part of the System, shall constitute and be regarded
as 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.
29
(i) The term "Pledged Revenues" shall mean
(1) the Net Revenues, plus
(2) any additional revenues, raceme, or other resources which are expected to be available
to the City on a regular periodic basis, including, without limitation, any grants, donations, or raceme
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 connechon with the
operation of the System.
(k) The term "Government Obhgations" shall mean direct obligations ofthe United States of America,
including obligations the principal of and interest on which are unconditionally guaranteed by the IJmted States
of America, which may be United States Treasury obligations such as its State and Local Government Series,
and which may be in book-entry form.
Section 9. PLEDGE. (a) The Bonds are "Additional Bonds" as permitted by Sections 24 and 25 of
the ordinance passed on 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
(mchiding 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 25 of the aforesaid ordinance
passed on March 10, 1983, with Sections 8 through 28 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 thc issuance of any
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 constimtiag the System.
Section i0. SYSTEM 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 special fund to be entifled 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 again~ same. Before making any deposits
hereinaf~r required to be made from the System Fund, the City shall retain in the System Fund at all times an
mount 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. INI'EREST 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 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 Revenue Bonds Inter-
est and Sinking Fund" (the "Interest and Sinking Fund").
30
Section 12. RESERVE FUND. There heretofore has been, and is hereby, created, and there shall be
established and maintained at Bank One, 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 f-really 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 r~alntenunce 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 of the City, and a~eounted 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 1983 Bonds to the initial purchasers thereof from lawfully available funds of
the City the amount of $250,000. Allinvestment interest income from the Emergency Fund shall be transferred
to the System Fund as received.
Section 15. DEPOSITS OF PLEDGED REVENUES. Pledged Revenues shall be credited to or
deposited in the Interest and Sinking Fund, the Reserve Fund, the Extension and Improvement Fund, and other
funds when and as required by this Ordinance and any ordinance authorizing the issuance of Additional Bonds.
Section 16. INVESTMENTS. Money in any Fund estabhshed pursuant to this Ordinance or uny
ordinance authorizing the issuance of Additional Bonds, may, at the option of the City, be placed in time
deposits or certificatee 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 of
the 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 Obligations--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 ofcaeh fiscal year. Unless otherwise set forth herein,
31
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 Fnnds created by this Ordinance, to the extent
not invested, shall be secured in the manner prescribed by law.
Section 18. PRIORITY OF DEPOSITS AND PAYMENTS 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 mounts required by this Ordinance
and any ordinance authorizing any Additional Bonds; then
to the Reserve Fund, when and in the mounts required by this Ordinance and any
ordinance authorizmg 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 and any premium received from
the sale of the Initial Bond, and on or before the 25th day of each month, the City shall cause to be deposited
to the credit of the Interest and Sinking Fund, in approyamately equal monthly payments, amounts sufficient,
together with any other funds on hand therein, to pay all of the interest or principal and interest coming due,
including the principal amount of any Parity Bonds required to be redeemed prior to maturity pursuant to any
mandatory redemption requirements, on the Parity Bonds and any Additional Bonds on the next succeeding
interest payment date. Any moneys so deposited in the Interest and Sinking Fund with respect to a mandatory
redemption requirement, together with other lawfully available funds of the City, may be used by the City, to
purchase, in advance ora 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 pumhased.
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 Series 1992 Bonds, the Series 1993
Bonds, the Series 1993-A Bonds, the Taxable Series 1993-B Bonds, the Series 1996 Bonds, the Series 1996-A
Bonds, the Series 1998 Bonds, the Series 1998A Bonds and the Series 1998B 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 anmlal 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 Imtial 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
32
amount of money and investments equal to the Required Re~erve Amount for ail 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 saie 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 nnmediately
after the delivery of any installment or issue of Additional Bonds shall be fimded, 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. Principai amounts of the Parity Bonds and any Addition-
ai 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 eaiculating principai 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 contain~ 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 equai to 1/60th of the Required Reserve Amount, until the Reserve Fund is restored to the
Required Reserve Amount. The City speeifinally 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 of the
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 equai to the current expenses of operation and maintenance of the 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.
Additionai excess Pledged Revenues may, at the option of the City Council, be deposited to the credit of the
Improvement Fund as permitted by Section 22 fo) 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. 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 fi.om 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 23. PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS. On or before
June 1, 2002, and semJanmmlly on or before each June 1 and December 1 thereafter while any of the Parity
Bonds or Additional Bonds are outstanding and unpaid the City shall make available to the Paying Agents
therefor, out of the Interest and 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
33
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 24. 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, if any, on such Parity Bond or Additional Bond, plus interest thereon to the due date
thereof (whether such due date be by mason 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 (ii) 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, (1) money sufficient to make such payment or (2) Govern-
ment Obligations which mature as to principal and interest in such mounts and at such times as will 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 of the Pledged Revenues, and shall be entitled to payment solely from such money or Govern-
ment 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 of the 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 25. ADDITIONAL BONDS. (a) The City shah have the fight 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 acenrdanee 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 raspeets with the Parity Bonds and any other outstanding Additional Bonds.
(h) The principal of ail Additional Bonds must be scheduled to be paid or mature on December 1 of
thc years in which such principal is scheduled to be paid or mature.
Section 26. 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.
34
(b) An independent certified public accountant, or independent firm of certified public accountants,
actmg by and through a certified public accountant, signs a whtten certificate to the effect that, in his or its
opinion, dunng either the next preceding fiscal year, or any twelve consecutive calendar month period out of
the 18-month period tmmediately 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 (ii) 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 (hereinat'~er 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 (ii) a sam equal to the aggregate 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 reqairements'shall be deemed to be maturing amounts of principal of such
bonds.
Section 27. 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 pay or 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 bolder 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 of
this Ordinance, or any orrlinance authorizing the issuance of Additional Bonds, by all legal and equitable
means, including specifically, but without limitation, the use and filing ofmundarnus proceedings, in any court
of competent jurisdiction, against the City, its officials, and employees.
Co) City's Le~,al Authority. The City is a duly created and existing home rule city of the State of
Texas, and is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds and
Additional Bonds; that all action on its part for the creation and issuance of the said obligations has been or
will be duly and effectively taken, and that said obligations in the hands of the holders and owners thereof are
and will be valid and enforceable special obligations of the City in accordance with their terms.
35
'~ cs, and fac' ' ·
~.~ n~ la~,,, ~e Paten. us o~all ne.' ~ uolders n.~ oresa~d 1~
all ,- ,w ~ns ~ -~eu Such h - ~ BOn~ '"SOever, ~ . .~'~e Paa~
o ~es, ~s~' ~heCiw,,~,,~ ~ts. us and Ad~.' atitisla~p. 'YBonds
aYstem ~ . ess~ents, ~.ff ~u ~o~ ti~. UOnal Bo-~ 'Y qUali~.~
~h, ~' u~t it ~11 - ~,u gOVem~ --,,~ to ~e ~.~ ~ .us ~ the
~ ~,, oy law ~- ray all la,-.~ V""eatal char~ -'~ oefore ,~ m~er
uer~f u~CO~e _ ,. ~ul clai~ ~ $es, if._ -,e s~e ~
a.. ~" so ~at ~e ~ · 7 ~en or ch~- -~.,s tot rents ~Y, W~ch .~ .. ~eCome delin
. ~. W~ch __. -~te or - ~ ~r~t~L "Orwhi~. ' '"~tenal. ""posed. -~arge
nereof m. . "~t o. ~ · ~U~r to ~ u~re~de. .~ ..--.u WOuld ~ 0, ~d su--,' upon it
clai~ 'm~t°rcou~''°Uldbep~ . oe Created._ '~'~lbe~11.. oephorto~ ~v~es W~ch ;~'
~ whi~ , ,u oe ~._ , ~r ~o ~e " ~Y mech~ , , ~ Prese~e~ · or ate~er . UUnpaia
be r~u~~' ~t be u.~vmred; prO~de~ :,e~ hereoi ~. '~c s, labore~, ~ mae m~.-- ~re ma ae
.... u to be - -- *~u~ ~e h.. ~u, aOWever --' ~' uo Or s"~ -, s, ~te~, ~Crpro~de~'
P~aSOlon~ ~SlSofa~ . ~,~tao~.. . ~ter~ym~. "~ ~nere~
· '~ ~ ~ ._,.. ',,~c~, , ouc~ t~ --~tter Or,~' , Or O~er ,.
ou,o.- (e) ~m" ' '~u~e of ac -~ s, aborer,s, ~ a~sessmeac or'~g Whereby ,,'~ or
.Sy~m ~~~ t_ ~ S · oe cOntest~ ~ D o[ O~erlien Z~tn° Such
or ~e se~ ~u should ae ~' ~d wor}i--°usry ~ e~: me ea~ Bon~ ~ "'~
pro~do~ · ~sces ~d fi~;v.. City or ~v ~e~~ Order, ~1 ~. ~en~y Operat. .~'~ or ~v a~.
"-~ oy 8e~;~ ~'~ man ~ _ ~ or,ts ~_ . "Tnthly o~,- ' '~SOrs, or-~ * ~rae S~,,~
--on Z2(b) he-~ ~ reVenUes ov,~C~es, ~,~ - me s~d -onCessio~m~-'cms~
, ~or. ' ~ System. ,~.~"~n~iaes, l~ss~ re~ pace or*~s ~ use
~ss ~ aom ~r~,or Concessi~.~
"W~us Pledged '~es out oF
.~eissu~c~_~efie~, ~t~ m~d~onat~ "~ rl~n ~Y Ad~'~On.~ ~
~*n on s,,Z O~ad~.~o~ ~ses, COve~.~ oon~, ~,~ ?ev~u,s ~ ..--~ oon~ ~
her~ ~ "P~Us PI~ -- oon~; b .... ~a, ~da~ o ~d enc,,~ ~Y ~er ~ out~:
~,~Uesis . ~ot'~. Ut~s~ ~' ~de ' · ~ ~pe~;- .
· Specl~c~l,, ~ ~ tOissu~ ~r~ce~.~ ~J~or ~do-~''rated ~
. ~,u r~ ._ ~ Payable ~n~ e au~odza~
-' ~e~se ~, No p. ~,uer Sec~on 22~e
~ or, e~cent .~ ~i of ~e
~' ~ tOllows: sh~l be sold, l~ed, moagaged'
' ~e SMe Or ~ ~ch S~e Or ~-- ~ve~t ofa~ ~7'~
'mC,ent Operah~ffx~ge not u~ ~'~
~u Ot'~ o ovu to
36 ~ o Yste~ Sh~l
forthwith, at the option of the City, (i) to be used to redeem or purchase Parity Bonds or Additional
Bonds, (ii) otherWse 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 of the 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.
(h) Insurance. (1) 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 earned by corporations
operating like properties, including, to the extent reasonably obtainable, fire and ex~ended 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 ofthe System. At anytime 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 if the
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 fimds 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 hereina~er 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 of the System at all times as are necessary (1) 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
37
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.
(k) Audits. After the close of each fiscal year while any of the 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 at, er 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.
(1) 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 necessmy 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 sanh 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 nfsuch 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 nfthe Internal Revenue Code of 1986, as amended (the "Code"), or any
regulations or rulings pertaining thereto; and by this covenant the City is obligated to comply with the
requirements of the 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 28. AMENDMENT OF ORDINANCE. (a) The holders or owners of Parity Bonds and
Additional Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding
Parity Bonds and Additional Bonds shall have the right from time to time to approve any amendment to this
Ordinance which may be deemed necessary or desirable by the City, provided, however, that nothing herein
38
contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance
or in the Parity Bonds or Additional Bonds so as to:
(1) Make any change in the maturity of the outstanding Parity Bonds or Additional Bonds;
(2) Reduce the rate of interest borne by any of the outstanding Parity Bonds or Additional Bonds;
(3)
Reduce the amount of the principal payable on the outstanding Parity Bonds or Additional
Bonds;
(4)
Modify the terms of payment of principal of or interest on the outstanding Parity Bonds or
Additional Bonds, or impose any conditions with respect to such payment;
(5)
Affect the rights of the holders or owners of less than all of the Parity Bonds and Additional
Bonds then outstanding;
(6)
Change the minimum percentage of the principal amount of Parity Bonds and Additional
Bonds necessary for consent to such amendment.
(b) fiat 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 thereof is on file
at the principal office of the Paying Agents for inspection by all holders or owners of Parity Bonds and Addi-
tional Bonds. Such publication is not required, however, if notice in writing is given to each holder or owner
of Parity Bonds and Additional Bonds.
(c) Whenever at any time not less than thirty days, and within one year, from the date of the first
publication of said notice or other service of written notice the City shall receive an instrument or instruments
executed by the holders or owners of at least 51% in aggregate principal amount of all Parity Bonds and
Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment
described in said notice and which specifically consent to and approve such amendment in substantially the
form of the copy thereof on file with the Paying Agents, the City Council may pass the amendatury 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
fights, duties, and obligations under this Ordinance of the City, and all the holders or owners of then out-
standing Parity Bonds and Additional Bonds and all future Parity Bonds and Additional Bonds shall thereafter
be determined, exercised, and enforced hereunder, subject in all respects to such amendments.
(e) Any consent given by the holder or owner of a Parity Bond or Additional Bond pursuant to the
provisions of this Section shall be irrevocable for a period of 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 tire, by filing notice thereof with the paying agents and the City, but such revoca-
tion shall not be effective if the holders or owners of 51% in aggregate principal amount of the then outstanding
39
Parity Bonds and Additional Bonds as in this Section defined have, prior to the attempted revocation, consented
to, and approved the amendment.
(f) For the purpose of this Section, the fact of the holding of Parity Bonds or Additional Bonds which
am in bearer, coupon form, by any bondholder and the amount and numbers of such bearer Parity Bonds or
Additional Bonds and the date of their holding same, may be proved by the affidavit of the person claiming to
be such holder or owner, or by a certificate executed by any trust company, bank, banker, or uny 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. Thc City may conclusively assume that such ownership confmues until written notice to the
contrary is served upon the City. The ownership of all registered Parity Bonds and Additional Bonds shall be
determined fi.om the registration books kept by the registrar therefor.
Section 29. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a)
Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the
Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal
amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement
for such Bond in the manner hereinat~er provided.
(b) Apphcation for Replacement Bonds. Application for replacement of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In
every case of loss, their, 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 fi.om any loss or damage with respect thereto. Also, in every case of loss, the~,
or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar
evidence to their satisfaction of the loss, theft, 6r destruction of such Bond, as the case may be. In every case
of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for
cancellation the Bond so damaged or mutilated.
(c) No Default Occurred. Notwithstanding the foregoing provisions of this 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 unY, or interest on the Bond, the Issuer may authorize the payment of the
same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a
replacement Bond, provided security or indemnity is famished as above provided in this Section.
(d) Charge for Issuing Renlacement Bonds. Prior to the issuance of any replacement bond, the Paying
Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in
connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of
the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether
or not the lost, stolen, or destroyed Bond shall be found at anytime, 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) Authority for Issuin~ Renlacement 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 fumher 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
40
effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion and exchange for other
Bonds.
Section 30. 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 Series 2002A
Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross
income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as
follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of the Series
2002A Bonds (less mounts deposited to a reserve fund, if any) are used for any "private business
use", as defined in section 141CO)(6) of the Code or, if more than 10 pement of the proceeds are so
used, that mounts, whether or not received by the Issuer, with respect to such private business use,
do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure
or provide for the payment of more than 10 percent of the debt service on the Series 2002A Bonds, in
contravention of section 141 Co)(2) of the Code;
Co) to take any action to assure that m the event that the "private business use" described
in subsection (a) hereof exceeds 5 percent of the proceeds of the Series 2002A 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;
(c) to take any action to assure that no mount which is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Series 2002A Bonds (less amounts deposited into a
reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local
governmental units, in contravention of section 141 (c) of the Code;
(d) to refrain from taking any action which would otherwise result in the Series 2002A
Bonds being treated as "private activity bonds" within the meaning of section 141Co) of the Code;
(e) to refrain from taking any action that would result in the Series 2002A Bonds being
"federally guaranteed" within the meaning of section 149Co) of the Code;
(f) to refrain from using any portion of the proceeds of the Series 2002A Bonds, directly
or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire
investment property (as defined in section 148CO)(2) of the Code) which produces a materially higher
yield over the term of the Series 2002A Bonds, other than investment property acquired with --
(1) proceeds of the Series 2002A Bonds invested for a reasonable temporary
period of 3 years or less until such proceeds are needed for the purpose for which the Series
2002A Bonds are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning of
section 1.148-1(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 10 percent of the stated principal amount (or, in the
case of a discount, the issue price) of the Series 2002A Bonds;
41
(g) to otherwise restrict the use of the proceeds of the Series 2002A Bonds or amounts
treated as proceeds of the Series 2002A Bonds, as may be necessary, so that the Series 2002A Bonds
do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage), Section
149(g) of the Code (relating to hedge bonds), and, to the extent applicable, section 149(d) of the Code
(relating 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 Series 2002A Bonds) an amount that is at least equal to 90
pement of the "Excess Earnings", within the meamng of section 148(0 of the Code and to pay to the
United States of America, not later that 60 days after the Series 2002A Bonds have been paid in full,
100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(0
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 Series 2002A
Bonds. It is the understanding of the Issuer that the covenants contained herein are intended to assure
compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury
pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify, or expand
provisions of the Code, as applicable to the Series 2002A 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 fi.om federal income taxation of interest on the Series
2002A Bonds under section 103 of the Code. In the event that regulations or rulings are herea~er promulgated
which impose additional requirements which are applicable to the Series 2002A Bonds, the Issuer agrees to
comply with the additional requirements to the extent necessary and reasonably possible, in the opinion of
nationally-recognized bond counsel, to preserve the exemption fi.om federal income taxation of interest on the
Series 2002A Bonds under section 103 of the 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 behaheofthe Issuer, which may be permitted by the Code as are consistent with the
purpose for the issuance of the Series 2002A Bonds. The Issuer covenants to comply with the covenants
contained in this section after defeasance of the Series 2002A Bonds.
In order to facilitate compliance with the above covenant (la), 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 Certificates. The Rebate Fund is
established for the additional purpose of compliance with Section 148 of the Code.
Section 31. ALLOCATION OF, AND LIMITATION ON, EXPENDITURES FOR THE PROJECT.
The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for
the purposes described in Section I of this Ordinance (the "Project") on its books and records in accordance
with the requirements of the Internal Revenue Code. The Issuer recogmzes that in order for the proceeds to
be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 18
months of the later of the date that ( 1 ) the expenditure is made, or (2) the Project is completed; but in no event
later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding,
the Issuer recognizes that in order for proceeds to be expended under the Internal Revenue Code, the sale
proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifdi
anniversary of the delivery of the Series 2002A Bonds, or (2) the date the Series 2002A Bonds are retired. The
Issuer agrees to obtain the advice of nationally-recognized bond counsel if such expenditure falls to comply
with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Series
42
2002A Bonds. 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 32. DISPOSITION OF PROJECT. The Issuer covenants that the property constituting the
Project will not be sold or otherwise disposed m 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 stares of the Series 2002A Bonds.
Section 33. INTEREST EARNINGS ON BOND PROCEEDS. Interest earnings derived from the
investment of proceeds fi'om 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 remare 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 Series 2002A 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 REGISTRATION 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 pmceeclmgs
pertaining to the Initial Bonds 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 ofthe Initial Bonds said Comptroller of Public Accounts (or a deputy designated
in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the
Initial Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on thc Initial Bonds.
The approving legal opimon of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option
of the Issuer, be printed on the Initial Bonds 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 hereof for all purposes. Ifinsuranen is obtained on any of the Bonds, the Initial Bonds
and all other Bonds shall bear an appropriate legend concerning insurance as provided by the insurer.
Section 35. SALE OF INITIAL BONDS. (a) Thc Initial Series 2002A Bonds are hereby sold and
shall be delivered to Morgan Stanley, for cash for the par value thereof and accrued interest thereon to date of
delivery plus a premium of $359,920.67 (accrued interest and premium, if any, to be deposited into the Interest
and Sinking Fund). It is hereby officially found, determined, and declared that the Initial Bonds have been sold
at public sale to the bidder offering the lowest interest cost, afrer receiving sealed bids pursuant to an Official
Notice of Sale and Bidding Instructions and Offieinl Statement dated April 9, 2002, prepared and distributed
in eonneotion with the sale of the Initial Bonds. Said Official Notice of Sale and Bidding Instructions and
Official Statement, and any addenda, supplement, or amendment thereto have been and are hereby approved
by the governing body of the Issuer, and their use in the offer and sale of the Bonds is hereby approved. It is
further officially found, determined, and declared that the statements and representations contained in said
Official Notice of Sale and Official Statement are true and correct in all material respects, to the best
knowledge and belief of the governing body of the Issuer.
(b) The Initial Taxable Series 2002B Bonds are hereby sold and shall be delivered to Morgan Keegan
& Company, Inc., for cash for 99.682% of the par value thereof and accrued interest thereon to date of
43
delivery, plus a cash premium of $-0- (accrued,interest and premium, if any, to be deposited into the Interest
and Sinking Fund). It is hereby officially found, determmed, and declared that the Initial Bonds have been sold
at public sale to the bidder offering the lowest interest cost, after receiving sealed bids pursuant to an Official
Notice of Sale and Bidding Instructions and Official Statement dated April 9, 2002, prepared and distributed
in connection with the sale of the Initial Bonds. Said Official Notice of Sale and Bidding Instructions and
Official Statement, and any addenda, supplement, or amendment thereto have been and are hereby approved
by the governing body of the Issuer, and their use in the offer and sale of the Bonds is hereby approved. It is
further officially found, determined, and declared that the statements and representations contained in said
Official Notice of Sale and Official Statement are true and correct in all material respects, to the best
knowledge and belief of the governing body of the Issuer.
Section 36. OFFICIAL STATEMENT. An Official Statement dated as of the date of this meeting
has been prepared in connection with the sale of the Initial Bonds and the Bonds, in the form and substance
submitted at this meeting. Said Official Statement and any supplement or addenda thereto have been and are
hereby approved, and their use in the offer and sale of the Bonds is hereby approved. It is further officially
found, detemUned, and declared that the statements and representations contained in said Official Statement
am true and correct in all material respects, to the best knowledge and belief of the Issuer. The distribution
and use of the Preliminary Official Statement dated March 28, 2002, prior to the date herenfis hereby ratified
and approved.
Section 37. DTC REGISTRATION. The Bonds imtially shall be issued and delivered in such manner
that no physical distribution of the Bonds will be made to the public, and Thc 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 of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the Now York Uniform Commercial
Code, and a "clearing agency" registered under Section 17A 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 Ordinanea shall be delivered to and registered in the name of the Purchaser. However, it is a condition
of delivery and sale that the Purchaser, 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 Purchaser and/ortho 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 if it were the actual and beneficial owner thereof. It is expected that
DTC will maintain a book entry system which will identify beneficial ownership of the Bonds by DTC Partici-
pants in integral amounts of $5,000, with transfers of ownership being effected on the records of DTC 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 hereinaf-
ter provided. The Issuer is not 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 of DTC or the DTC Participants, Or protecting any interests or fights of
the beneficial owners of the Bonds. It shall be the duty of the Purchaser 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
44
any owner. If the Issuer exercises its fight 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 and proper request, register any Bond in any name as provided for in this Ordinance.
Notwithstanding the imtial 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 38. COMPLIANCE W1TH RULE 15o2-12. (a) Annual Reports. (i) The Issuer shall
provide annually to each NRMS1R and any S1D, within six months at, er the end of each fiscal year ending in
or after 2000, 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 (1) prepared in accordance with the accounting
principles described in Exhibit A hereto, or such other acc0untmg 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) ffthe 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,
if it 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 of the 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;
Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting finan.cial diflS, culties;
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 fights of holders of the Bonds;
8. Bond calls;
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9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds; and
11. Rating changes.
The Issuer shall notify 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 spec'flied m 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 thc sole benefit of the registered owners and beneficial
owners of the Bonds, and nothing m 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 m 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
WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY
RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT
OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE.
(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 m 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 m legal requirements, a change in law, or a change in the identity,
nature, status, or type of operations of the Issuer, but only if (I) the provisions of this Section, as so amended,
would have pelmitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in
compliance with the Rule, taking into account any amendments or interpretations of the Rule since such
offering as well as such changed circumstances and (2) either (a) the registered owners of a majority in
aggregate principal amount (or any greater amount required by any other provision of this Ordinance that
authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated with the Issuer (such as nationally recognized bond counsel) detenulned that such amendment will
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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 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 judgrnent 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.
'%IRMSIR" means each person whom the SEC or its staffhas 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 Rule from time to time.
Section 39. PROTECTION OF PLEDGE. Chapter 1208, 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. If Texas law is amended at any time while the Bonds are outstanding
and unpaid such that the pledge of the revenues granted by the Issuer under Section 9 of this Ordinance is to
be subject to the filing requirements of Chapter 9, Texas Business 8: Commerce Code, then in order to preserve
to the registered owners of the Bonds the perfection of the security interest in said pledge, the Issuer agrees to
take such measures as it determines are reasonable and necessmy under Texas law to comply with the
applicable provisions of Chapter 9, Texas Business ge Commerce Code and enable a filing to perfect the
security interest in said pledge to occur.
Section 40. FURTHER PROCEDURES. The Mayor of the Issuer, the City Secretary of the Issuer,
and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby
expressly 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 bo paid from the proceeds of sale of the Initial Bonds or from other lawfully available funds of the
Issuer. Incase 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
ff such officer had remained in office until such delivery.
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Section 41. 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.
Section 42. EFFECTIVE DATE. Tlxis Ordinance shall become effective unmediately upon its passage
and approval.
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PASSED AND APPROVED this the 9th day of April, 2002.
Euline Brock, Mayor
ATTEST:
APPROVED AS TO LEGAL FORM:
Herbert L. Prout~/~ ~_
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EXHIBIT A
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 38 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 1 through 1 l, inclusive, under the captions "The Electric System", "The Water
System", "The Wastewater System", "Debt Requirements" and "Financial Information" in the Official
Statement.
Appendix B in the Official Statement.
Accounting Principles
The accounting principles referred to m such Section are the accounting principles described in the
notes to the financial statements referred to in the paragraph above.