2001-179NOTE Amended by Ordinance No 2001-203
ORDINANCE NO 2001-LIV
AN ORDINANCE AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF CITY OF
SERIES 200 APP ROVING ANDA~OR FINGDINSTRUMENTS 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 (the "City" or the "Issuer"), heretofore 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, Sexes 1993-A, dated June 1, 1993,
City of Denton Utility System Revenue Refunding Bonds, Taxable Sexes 1993-B, dated June 1, 1993,
City of Denton Utility System Revenue Bonds, Sexes 1996, dated May 1, 1996,
City of Denton Utility System Revenue Refunding Bonds, Series 1996A, dated May 1, 1996,
City of Denton Utility System Revenue Bonds, Sexes 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, and
City of Denton Utility System Revenue Bonds, Taxable Series 2000B, dated April 15, 2000,
WHEREAS, the City Council of the City deems it necessary and advisable to refund the following
revenue bonds
City of Denton Utility System Revenue Bonds, Series 1993, dated March 1, 1993 scheduled
to mature on December 1 in each of the years 2004 through 2011, aggregating $2,640,000 in
principal amount, d to City of Denton Utility System Revenue Bonds, Series 19962dated M , 1996 $1 hedule0 in
mature on December 1 in each of the years 2007 through
principal amount,
City of Denton Utility Revenue Rfung Bonds, Series -A, May 1, 1996
scheduled to mature onyDember 1 in each of the years 20071through 20111, aggregating
$5,100,000 in principal amount, and
(collectively, the "Refunded Bonds") in the aggregate principal amount of $9,500,000), and
WHEREAS, the City Council of the City deems it necessary and advisable to provide 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 (the "System"), and
WHEREAS, the City Council of the City deems it necessary and advisable to authorize, issue, and
deliver the additional Utility System Revenue Bonds heremafter described to refund the Refunded Bonds and
to provide for improvements and extensions to the System, and
WHEREAS, the Series 2001 Bonds hereinafter authorized and described are to be issued, sold, and
delivered pursuant to Chapters 1207 and 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 The bond or bonds of the Issuer are
hereby authorized to be issued and delivered in the aggregate principal amount of $59,545,000 FOR THE
PURPOSE OF OBTAINING FUNDS REQUIRED TO REFUND $9,500,000 IN AGGREGATE
PRINCIPAL AMOUNT OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS AND TO
PROVIDE FOR IMPROVEMENTS AND EXTENSIONS OF THE SYSTEM, AND SHALL BE
NUE REFUNDING AND
BONDS, ESN2001I' (THUTILITY E "SERIES 2 OE BONDS")
IMPROVEMENT "CITY
Section 2 DESCRIPTION OF THE BONDS (a) With respect to the Seines 2001 Bonds, initially
principal (the "Initial nSeries 20011 Bond"), but the Initial Seri su2001 Bond may be
there sa be issued, payable in installments sold,
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 2001
Bonds" as used in this Ordinance shall mean and include collectively the Initial Series 2001 Bond and all
200 replacement bonds issued
substitute bonds exchanged therefor, as well as all other substitute bonds and
pursuant hereto, and the term Series 2001 Bond" shall mean any the
(b) The term "Initial Bond" as used in this Ordinance shall mean and include collectively the Initial collectively Series 2001 Bond, the term "Bonds" gehe aor,as cell as all other substituteibondss and r plament boinds
Bond and d all substitute bonds exchanged
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) The Initial Series
2001Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond,
ount of
$59 thereof,
without intert coupons, dated April 15, ,545000, numbed R- 1, payable in annual installments of principal to the initial registered owner
to-wit
2
DAIN RAUSCHER INCORPORATED
or to the registered assignee with the an annual installments o Bpi pall of the Initial Series 2001 Bond to be or any portion r case, the "registered owner")), ,
payable on the dates, respectively, and inthe principal amounts, respectively, stated in the FORM OF INITIAL
SERIES 2001 BOND set forth in this Ordinance
(b) The Initial Bond (i) may and shall be prepaid or redeemed prior to the scheduled due dates of
installments of principal thereof, (u) may be assigned and transferred, (in) 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 est on the Initial Bond FO rRM OF INITIAL SERIES 200e1 Bpayable, OND setl forth in plus Ordinance manner required or indicated, in the
Section 4 INTEREST The unpaid principal balance of the Initial Bond shall bear interest from the
date of the Initial Bond to the respective scheduled due dates, or to the dates of prepayment or redemption, of
the dates stattedlin Bond, and the FORM OF interest be payable, 20011BOND seett forth in provided this
the install
in the m and at the rates and on principal
Ordinance
Section 5 FORM OF INITIAL SERIES 2001 BOND The form of the Initial Bond, including the
form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed
on the Initial Bond, shall be substantially as follows
FORM OF INITIAL SERIES 2001 BOND
$59,545,000
NO R-1
UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE
REFUNDING AND IMPROVEMENT BOND
SERIES 2001
THE CITY OF DENTON, in Denton County, Texas (the "Issuer"), being a political subdivision of
the State of Texas, hereby promises to pay to
DAIN RAUSCHER INCORPORATED
or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the
"registered owner") the aggregate principal amount of
$59,545,000
(FIFTY NINE MILLION FIVE HUNDRED FORTY 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, from the date of this Bond
hereinafter 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
INT'ERES T
YEAR
AMOUNT
RATE
YEAR
AM T
-RATE-"
4 000
2011
$4,100,000
5 000
2001
$1,200,000
5 000
2012
2,755,000
5 000
2002
1,615,000
5 000
2013
2,895,000
5 000
2003
1,695,000
5 000
2014
3,040,000
5 000
2004
2,110,000
5 000
2015
3,200,000
5 000
2005
2,200,000
4 250
2016
3,365,000
5 000
2006
2,280,000
5 000
2017
3,335,000
5 125
2007
3,420,000
5 000
2018
3,515,000
5 125
2008
3,570,000
5 000
2019
3,700,000
5 125
2009
3,740,000
5 000
2020
3,895,000
5 400
2010
3,915,000
Interest shall be due and payable on December 1, 2001 and semiannually on each June 1 and December 1
g nunpaid Said interest shall be calculated
thereafter while this Bond or any portion hereof is outstandmg
on the basis of a 360-day year composed of twelve 30-day
TILE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in
lawful money of the United States of Ameria, without exchange or collection charges The installments of
pal
pnncipalandthemterestonthisBondarepayabletothe enlegstrar forthisBond Paymenr BANK
ONE, NA, DALLAS, TEXAS, which is the "Paying Ag
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/Reglstrar the
issuance on, and payable solely from, funds ofthe Issuer required e ordi stray f tj such purpose a hereinafteBon
(the "Bond Ordinance) to be on deposit with the Paying Ageeg bUnited States mail, first-class postage
vided, and such check shall be sent by the Paying Agent/Registr Y
prepaid, on each such principal and/or interest payment date, to the registered owner hereof, at the address of
he einafth such da e (the
the registered owner, as rt appeared on the 15th day of the month stet preceding
TheRecor Issuer
Date") on the Registration Books kept by the Paying Agent/Reg
covenants with the registered owner of this Bond that on or be o e princthipael Id/or i crest paym t date
for this Bond it will make available to the Paying Ag g
maintained pursuant to the Bond Ordinance, the amounts required to provide for the payment, m immediately
available funds, of all pnncipal of and interest on thus Bond, when due
IF THE DATE for the payment of in pttuYoPn 1 n of or interest on this Bond shall be a Saturday, Sunday,
the City where the Pay g Agent/Re8 tray is to ated
a legal holiday, or a day on ueh banking
are authorized law or exeeccutive order to close, thn the date for such payment shl be the next
day on which banking iinst tut ons are authored
day whic which h i s not t such a Saturday, Sunday, legal ho Y, > orr
to close, and payment on such date shall have the same force and effect as if made on the ongmal date payment
was due
THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas
in the principal amount of $59,545,000 FOR THE PURPOSE OF OBTAINING FUNDS REQUIRED TO
FUND $9,500,000 IN AGGREGATE PRINCIPAL AMOUNT OF CITY OF DENTON UTILITY
SYS EMREVENUEBONDSANDTOPROVIDEFORIMPRO MENTSANDEXTENS ONSOFTHE
A
SYSTEM
ON JUNE 1, 2011, 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 Bond
this of the pa or
may be prepaid or redeemed shall be selected and designated by the Issuer (provided that a horii pn of
be redeemed only in an integral multiple of $5,000), prepayment
principal amount thereof, plus accred interest to the date fixed for prepayment or redemption
notice
AT LEAST 30 days prior to the date fixed for any such pepaym or tredemption a he registered o tter hereof
of such prepayment or redemption shall be mailed by the Paying Agent/Registrar
By the date fixed for any such prepayment or redemption due provision shall be made by the Issuer with the or th Paying Agent/Registrar for the payment of the required prepayment o interest price
boor this Bond
fixed for
portion hereof winch is to be so prepaid or redeemed, plus accrued
prepayment or redemption If such written notice of prepayment or redemption is given, and if due provision
for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so prepaid
or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and
shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being
outstanding except for the right of the registered owner to receive the prepayment or redemption
out of the
accred interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar
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 prop instruments of assignment, by the initial and with guarantee
owner registered
of signatures satisfactory to the Paying Agent/Registrar,
of this Bond, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or assignees
in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and
registered Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be
used to evidence the assignment of this Bond or any such portion or portions hereof by the initial registered
owner hereof A new bond or bonds payable to such assignee or assignees (which then will be hen new
registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion this Pay Bond
this initial Bond registered or any portion orlportons hereof, but
Agent/Registrar ar in conversion of and exchange for the
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
of
the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment discharg
liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not
be affected by any notice to the contrary
AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or
unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal
amount of fully registered bonds, without interest coupons, payable to the assignee or assignees ulofthisBated
portion
in writing by the initial registered owner hereof, or to the initial registered owner as to any
which is not being assigned and transferred by the initial registered owner, in any denomination or tha denominations in any integral multiple of $5,000 (subject to the
of this Bond shall have aesingle stab depnnc Pal maturity
substitute bond issued in exchange for any portion
date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the
form and procedures set forth in the Bond Ordinance if this Bond or any portion hereof is assigned and
transferred or converted each bond issued in exchange for any portion hereof shall have a single stated principal
maturity date 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 home by such prior installment of principal or portion thereof Such bonds, respectively, shall be subject principal redemption
this Bond
maturity on the same dates and for the same pries as the corresponding installment or portion hereof for which they are being exchanged No such bond shall be payable in installments, but shall
have only one stated principal maturity date AS PROVIDED IN THE BOND ORDINANCE, THIS BOND
IN ITS PRESENT FORM MAYBE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY,
and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or portion
hereof maybe assigned and transferred, and aconverted, dard or customary fees and ha gesdfoor t ransferr ge
Issuer shall pay the Paying g Ag Agent/Reg
converting, and exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion, ect thereto
The
Paying and exchange shall pay any taxes or governmental charge required o be paid with res exchange (i) during the
Agent/Registrar shall not be required to make any such aassignment, conversion, or
of business on
period commencing with the close of business on any Record Date and ending with the opening
thereof
any Bond or
respect
date, or
the next interest
calle or prepaoymentlorpedemption prior to maturity within 45)days prior to its prepaymen torrredempt on dated
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 Ordinance
written notctl thewill reof to nt
a competent and legally qualified substitute therefor, and promptly will cause
mailed to the registered owner of this Bond
IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized,
issued, sold, and delivered, that all acts, conditions, and things required or proper to be performed, exist, and
be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed,
and been done in accordance with law, that this Bond is a special obligation of the Issuer, secured by and
payable, together with other bonds, from a first lien on and pledge of the "Pledged Revenues", which include
initia ues of the System" as such terms are defined in
Bond ens st g of the City' entire combined waterworks, sewer, and elec nc light and power system with the System
THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Ordinance, to issue
Additional Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues" on a parity
with this Bond
THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to in principal amount
apercent nd pledge of the Pledged
amend the Bond Ordinance with the approval of the holders owner first fifty-one
of all outstanding bonds which are secured by and payable from a Revenues
THE REGISTERED OWNER hereof shall never have the right to demand p wmtso f this Bond or
other than
the interest hereon out of any funds raised or to be raised by taxation or from any source
specified in the Bond Ordinance own BY BECOMING the registered owner of this Bo d, the breg ei bound bye the eb ac and lprovrs all of
the terms and provisions of the Bond Ordinance, ags to such rms
acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and
6
Orodinan a coonstitute ac ontract between the reg stereddowner hereof and the Issuerof the Bond and the Bond
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual or facsimile
signature of the Mayor of the Issuer and countersigned with the manual or facsinle signature of the City
Secretary of the Issuer, has caused the official seal of the Issuer to be duly impressed, or placed in facsimile,
on this Bond, and has caused this Bond to be dated Apnl 15, 2001
Mayor, City of Denton, Texas
C Secre ,City of Denton, Texas
(CITY SEAL)
(BOND INSURANCE LEGEND, IF ANY)
FORM F RE IS 'RATION CERTIFICATE OF THE
rnraPTROLLER OF PUBLIC ACCOUNTS
COMPTROLLER'S REGISTRATION CERTIFICATE REGISTERNO
I hereby certify that tins Bond has been examined, certified as to validity, and approved by the Attorney
General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts
of the State of Texas
Witness my signature and seal this
Comptroller of Public Accounts
of the State of Texas
(COMPTROLLER'S SEAL)
Section 6 ADDITIONAL CHARACTERISTICS OF THE BONDS &9l tration and Transfer (a)
The Issuer shall keep or cause to be kept at the principal corporate trust office of BANK ONE, NA, DALLAS,
TEXAS (the "Paying Agent/Regstrar") books or records of the registratio stand a ans reg f the Bot ansfer
"Registration Books"), and the Issuer hereby appoints the Paying Agent/Reg
agent to keep such books or records and make such transfers and registration ennder u ar shall make
regulations as the Issuer and Paying AgentlRegistrar may prescribe, and the Paying g g
such transfers and registrations as herem provided The Paying Agent/Registrar shall obtain and record in the
Registration Books the address of the registered owner of each Bond to which payments with respect to the
Bonds shall be mailed, as herein provided, but it shall be the duty of each registered owner to notify the Paying
Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall
not be mailed unless such nonce has been given A ent/Regist ar, but otherwiis tthe P ying AganUReg strar
Books dunng regular business hours of the Paying 8
shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their
inspection by any other entity Registration of each Bond may be transferred in the Registration Books only
upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registration and
cancellation, together with proper written instruments of assignment, of an with guarantee f s portion the reef the Bond, or any satisfactory to the Paying Agent/Registrar, evidencing (i) t assignment in any integral multiple of $5,000, to the assignee or assignees thereof, and (u) the right of such assignee or
assignees to have the Bond or any such portion thereof registered in the name of such assignee or assignees
Upon the assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall
be issued in conversion and exchange therefor in the manner herein provided
by the initial registered
of the unpaid or unredeemed principal balance thereof, may assigned an
owner thereof once only, and to one or more assignees designated in writing by the initial registered owner
thereof All Bonds issued and delivered in conversion of and exchange for the Initial Bond shall be in any
denomination or denominations of any integral multiple of $5,000 (subject to requirement the in the form pre onbedadd
that each substitute Bond shall have a single stated principal maturity date), shall
the FORM OF SUBSTITUTE SERIES 2001 BOND set forth in this Ordinance, and shall have the
characteristics, and may be assigned, transferred, and converted as hereinafter provided If the Initial Bond
the
or any portion thereof is assigned and transferred or converted the Initial Bond must be u rendered Bond
Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any portion shall have a single stated principal maturity date, ano Yale due date payable the installment installments, pand each nnc pal such Bond or poron
shall have a principal maturity date corresponding
thereof for which the substitute Bond is being exchanged, and each such Bond shall bear interest at the single
rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged
If only a portion of the Initial Bond is assigned and transferred, there shall be delivered to and registered in the
name of the initial registered owner substitute Bonds in exchange for the unassigned b Bond or the
thereof
in the same manner as if the initial registered owner were the assignee thereof If any portion
other than the Initial Bond is assigned and transferred or converted each Bond issued in exchange therefor shall
have the same principal maturity date and bear interest at the same rate as the Bond for which it is exchanged Bond A form of assignment shall be printed or endorsed on each Bond, excepting the Initial rev done which shall be
executed by the registered owner or its duly authorized attorney representative thereof
au Books,
thorized representative of the Pa mg Agent/Registrar shall make ssuthereof for ch transfer in the Registration
and shall deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described,
payable to such assignee or assignees (which then will be the registered owner or owners of such new Bond
or Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and
transferred, all in conversion of and exchange for said assigned Bond or Bonds or any portion
for the in Se thereof, in the same form and manner, and with the
own r t, a Brov d The Issuer ctio sh(d) below the the, Paying
conversion and exchange of Bonds by any registered Agent/Registrar's standard or customary fees and charges for making such transfer and delivery of a substitute
Bond or Bonds, but the one requesting such transfer shall pa sang shall not ber gover red nta~erges r erir of
to be registration paid with respect thereto The Paying Agent/Registrar
the commencing with the close of business on
_
of any Bond or any portion thereof (i) during period
ddaate, or, (u) with aspect to any Bond or any portion thereof called for redemption priory to maturity, within 45
days prior to its redemption date
(b) MLO-f 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, affec whether or not such Bond shall be overdue, and tri on accounof, the print Palo pAgent/Registrar
mium, if shall
any Land inter] st
by any notice to the contrary, and paym payment ofo
on any sh Bond wner such shall val to sat sfy and di charge the 1 ab 1 ty upon such Bond toothe extenlt of th sum or sums so pa dd and effectual
(c) Payment of BondQ and Interest The Issuer hereby further appoints the Paying AgenURegistrar agent to act as the paying agent for paying the principal of and interest on the Bonds, and to act as Itstrar shall
convert and exchange or replace Bonds, all as provided in this Ordinance The paying Agent/Registrar gwrth respect to the
keep proper records of all payments made by the Issuer and the Paying AB
Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this
Ordinance
(d) Conversion and Exchange or Replacement. Authentication Each Bond issued and delivered
pursuant to this Or e, to the extent of the unpaid or unredeemed principal balance or principal amount Paying thereof, may, upon surrender of such Bond at the principal corporate registered o cerooththe a si Age o/ assignees
together with a written request therefor duly executed by Bst of signatures satisfactory
thereof, or its or their duly authorized attorneys or representatives, with guarantee
to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as
appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form
the
prescribed in the FORM OF SUBSTITUTE SERIES 2001 BO to the set forth n this Ordinance, in that requient hereinafter stated
denomination of , or any integral multiple
of $5,000 as requested in writing by such registered owner
each substitute Band ond shall have a angle stated maturity a mount equal to the unpaid or unredeemed principal
or such assignee or assignees, in an aggregate principal ate registered
balance or principal amount of any Bond or Bonds so surrendered, and payable to the appropriate B
owner, assignee, or assignees, as the case may be If the Imual Bond is assigned and transferred or converted
each substitute Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal
maturity date, and shall not be payable in installments, and each such Bond shall have a principal maturity date
corresponding to the due date of the mstalhnent of principal or portion thereof for which the substitute Bond
is being exchanged, and each such Bond shall bear interest at the single rate applicable to and borne by such
installment of principal or portion thereof for which it is being exchanged If a portion of any Bond (other than
the Initial Bond) shall be redeemed prior to its scheduled maturity as provided herem, a substitute Bond or
Bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations
amount
nattio
of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal
equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for
cancellation If any Bond or portion thereof (other than the Initial Bond) is assigned and transferred or
converted, each Bond issued in exchange therefor shall have the Each substitute Bond shall bear a bane inane r
at the same rate as the Bond for which it is being exchanged E
number to distinguish it from each other Bond The Paying Agent/Registrar shall convert and exchange or
replace Bonds as provided herem, and each fully registered bond delivered in conversion of this and
dinannge for
or replacement of any Bond or portion thereof as permitted or required by any provision
constitute one of the Bonds for all purposes of this Ordinance, and may again be converted and exchanged or
replaced It is specifically provided that any Bond authenticated in conversion of and exchange for or
replacement of another Bond on or prior to the first scheduled Record Date for the Initial Bond shall bear
interest from the date of the Initial Bond, but each substitute Bond so authenticated after such first scheduled
Record Date shall bear interest from the interest payment date next preceding the date on which such substitute afterany Record Date
before the next
in Bond is
interest payment
Bond was urte authenticated,
case it shall bear interest from such next fobut
payment e,da unless
following of any Bond the interest on the Bond for which
date, provided, however, that if at the time of delivery Y substitute
it is being exchanged is due but has not been paid, then such Bond shall bar interest from the date to which
such interest has been paid in full THE INITIAL SERIES 2001 BOND issued and delivered pursuant to this
Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each
substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds issued under
this Ordinance there shall be printed a certificate, in the form substantially as follows
"PAYING AGENIyREGISTRAR'S AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance
described in of a bond, bonds, or a portion of a bond or bonds ofian iss a in conversion of which orginallyiwas 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, NA, DALLAS, TEXAS
Paying Agent/Registrar
Dated
By
Authorized Representative"
An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date
and manually sign the above Certificate, and no such Bond shall promptly hall cancel all oBonds r outst riding u derednless
such Certificate is so executed The Paying Age ch r
conversion and exchange or replacement No additional ordinances, orders, or resolutions need be passed or
adopted by the governing body of the Issuer or any other body or person so as to accomplish the shall
conversion and exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar
provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and
cu tmary weight and strength Pursuant to Chapter 1201, Texas Government Code, the duty of conversion Bonds shall be of type composition printed on paper with and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and,
upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and
exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the
same effect as the Initial Bond which originally was issued pursuant to this Ordinance, approved by the
Attorney General, and registered by the Comptroller of Public Accounts The Issuer shall pay the Paying
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 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 or replacement of Bonds or ' the f (it the period commencing owing
with the close of business on any Record Date and ending opening business the
principal or interest payment date, or, (u) 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
to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for
other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and
interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM
OF SUBSTITUTE SERIES 2001 BOND set forth in this Ordinance
10
(f) Payment of Fees and Charges The Issuer hereby covenants with the registered owners of the
Bonds that it will (1) 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 (n) 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) r n +P u~ ne Aaent/Reg~strar 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,
institution, di
trust company, financial Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity
12e Issuer reserves
days written not ce to the Paying gent/Regs option, to be effective not later than 60 daysppnor to the next aying principal or interest payment date after such notice Ir other method) should resign or acting es Pase to
Agent/Registrar (or its successor by merger, acquisition, otherwis
act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust
company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance Upon
any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and
deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to
the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer Upon any change in the
Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying
Agent/Registrar to each registered owner of the Bonds, by United States mail, first-class postage prepaid,
which notice also shall give the address of the new Paying Agent/Registrar By accepting the position and
performin as sh, each Ordinance a and a certified copaying y of this Ordinance shall lbe delivered to each Paying Agent/Regist ars of this
Section 7 FORM OF SUBSTITUTE BONDS The form of all Bonds issued in conversion and
exchange or replacement of any other Bond or portion thereof, including the form 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 SUBSTITUTE SERIES 2001 BOND
NO UNITED STATES OF AMERICA
STATE OF TEXAS
COUNTY OF DENTON
CITY OF DENTON UTILITY SYSTEM REVENUE
REFUNDING AND IMPROVEMENT BOND
SERIES 2001
INTEREST
RATE
MATURITY
DATE
DATE OF ISSUE
APRIL 15, 2001
PRINCIPAL AMOUNT
CU SIP NO
ON THE MATURITY DATE specified above the CITY OF DENTON, in Denton County, Texas
(the "Issuer"), being a political subdivision of the State of Texas, hereby throeg stereo ass to
gnee
, or to
hereof (either being hereinafter called the "registered owner") the principal amount of
11
and to thern from ril 15, 200 1, to the maturity date specified above, or the date of redemption
prior toamaturity interest, them eestArate per annum specified above, with interest being payable on December 1
2001, and semiannually on each June 1 and December 1 thereafter, except that if the date of authentication of
this Bond is later than the first Record Date (hereinafter defined), such principal amount shall bear merest
from the merest payment date next preceding the date of authentication, unless such date o ate authentication
in which
after any Record Date (hereinafter defined) but on or before the next following payment
date Said interest
amount shall of a interest from such next
year composed of twelve 30-day
case such be calcula ed cipal
shall b
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
mTEXAS ade by
this Bond DALLAS,
redemption prior to maturity, at the principal corporate trust office Bmte K ONE, NA,
of shall be
which is the "Paying Agent/Registrar" for this Bond The payment
the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check, dated as of
such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the
Issuer required by the ordinance authorizing the issuance of the Bonds (the "Bond Ordinance") to be on deposit
with the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent by the
Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date,
to the registered owner hereof, at the address of the registered owner, as it appeared at the close of business
on the 15th day of the month next preceding each such date (the „Record Date") on the Registration Books kept such
st may by the Paying Agent/Registrar, as hereinafter described However, e payment b o and at ntere risk and expense
by any other method acceptable to the Paying Agent/Reg and te4ties by,
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
Issuer covenants redemption and payment at the principal
Agent/Registrar upon presentation Age t/Re strar thTh Bond for
with the
corporate registered owner of this
corporate trust office of the Paying g Bi
Bond that on or before each principal payment date, interest payment date, and accrued interest payment date
for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created
by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of
all principal of and interest on the Bonds, when due
in interest on n this
IF THE DATE for the payment of the principalo of
the Bond Paying shall beent/R g stray
Sunday, a legal holiday, or a day on which banking
is located are authorized by law or executive order to close, then the date for such payment shall tbe the a t ins
itut succeeding day which is not such a Saturday, Sunday, legal holy, or
and effect which
as bif m de on the original
such date hall have the same force day
authorized to close, and payment on sc
date payment was due
THIS BOND is one of an issue of Bonds unually dated April 15, 2001, authorized in accordance with
the Constitution and laws of the State of Texas in the principal amount of $59,545,000 FOR THE PURPOSE
OF OBTAINING FUNDS REQUIRED TO REFUND $9,500,000 IN AGGREGATE PRINCIPAL
AMOUNT OF CITY OF IMPROVEMENTS AND EXTENSIONS F THE SYSTEM, AND SHALL D BE DESIGNATE DDE FOR
12
ON JUNE 1, 2011, 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
a portion of a Bond may be redeeme only in an integral
be selected and desited by the Issuer
or principal amount thereof, plus accrued interest to the
multiple of $5 000),at the redemption price of to par that
date fixed for redemption
AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to mail maturity a written notice of such redemption shall be sent by to Paying Age fro eany such nit pS one to the
first-class postage prepaid, not less than 30 days prior h
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 ofthe registered owner to receive such notice, or any defect therein
or in the sending or ailing 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
which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption 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 which are to be so redeemed thereby automatically shall be 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 plus
accrued interest 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
t regist red owner, and aggregate principal rn amount equal to the unredeemed portion thereof, vnll 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 signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of
this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in
whose name or names this Bond or any such portion or portions hereof is or are to be transferred and
registered The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner
or its duly authorized attorney or representative, to evidence the assignment hereof A new Bond or Bonds
payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond
or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of
this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all
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,
45 days
or, (u) th respect to any Bond or any portion
shall be deemed and treated by the Is Issuer an
ts redemption dates The registered owner thereof of ths called
prior to d
13
the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of
liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not
be affected by any notice to the contrary
ALL BONDS OF THIS SERIES are 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 as-
signees hereof, be converted into and exchanged for a lice aggregate principal amount of fully registered bonds,
without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may
be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations
in any integral multiple of $5,000 as requested in writing by the appropriate registered
for owner, as igni ee, all
assignees, as the case may be, upon surrender of this Bond to the Paying g 6stray
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 az shall not be requued the exercise of such
such
privilege of conversion and exchange The Paying Agent/Reg to make any
conversion and exchange (i) during the period commencing with the close of business on any Record Date and
ending with the Bnd opening business on the next following principal or interest payment date, or,
called for redemption prior to maturity, within 45 days prior ) to its
portion
respect to any y
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 promptly will 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 tlungs 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 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 hen on pnd pledge of the "Pledged Revenues" on a panty
with this Bond and series of winch it is a part
THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Ordinance, to
amend the Bond Ordinance with the approval of the holders or owners of fifty-one percent in principal amount
of all outstanding bonds winch are secured by and payable from a first hen 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
14
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 facsmule
signature of the Mayor of the Issuer and countersigned 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
4acs e, onhis Bo
r City of Denton, Texas Mayor, City of Denton, Texas
(CITY SEAL)
FORM OF PAYING AGENT
PAYING AGENT/REGSTRARSRARUTHENTICATIONTCER IF CATE ATE
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
Can issue which omptroller of Publics Accounts of the State of Texas Attorney
of a bond, bonds, or a portion of a bond or bonds General of the State of Texas and registered by the of
BANK ONE, NA, DALLAS, TEXAS
Paying Agent/Registrar
Dated
By.
Authorized Representative
(BOND INSURANCE LEGEND, IF ANY)
15
FORM OF ASSIGNMENT
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized
representative or attorney thereof, hereby assigns tlus Bond to
(Assignee's Social
Security or Taxpayer
Identification Number)
(print or typewrite Assignee's name and
address, including zip code)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registranon 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
Registered Owner
NOTICE This signature must correspond with the
name of the Registered owner appearing on the
face of this Bond in every particular without
alteration or enlargement or any change
whatsoever
Section 8 DEFINITIONS As used in this Ordinance the following terms shall have the meanings
set forth below, unless the text hereof specifically indicates otherwise
(a) The terms "City" and "Issuer" shall mean the City of Denton, in Denton County, Texas
(b) The term "City Council" or "Council" shall mean the governing body of the City
(c) The term "Bonds" shall mean collectively the Initial Bond as defined and described in Section 2
of this Ordinance and all substitute bonds exchanged therefor, and all other substitute bonds and replacement
bonds, issued pursuant to and as provided in this Ordinance
(d) The term "Parity Bonds" shall mean collectively (i) the outstanding City of Denton Utility System
Revenue Bonds, Series 1992, authorized by ordinance passed on March 3, 1992 (the "Series 1992 Bonds"),
(u) the outstanding City 9f Denton Utility System Revenue the oB standing City of , authorized Ut lily System ordinance paRevenssed
on March 16, 1993 (the "Series 1993 Bonds"), (
Refunding Bonds, Series 1993-A, authorized by ordinance passed on June 8, 1993 (the "Series 1993-A Bond"),
(iv) the outstanding City of Denton Utility System Revenue Refunding Bonds, Taxable Series 199
authorized by ordinance passed on June 8, 1993 (the "Series 1993-B Bonds"), O outstanding the City of
Denton Utility System Revenue Bonds, Series 1996, authorized by ordinance passed on May 7, 1996 (the
16
"Series 1996 Bonds"), (vi) the City of Denton Utility System Revenue Refunding Bonds, DSeries enton Utility
authorized by ordinance passed on May 7, 1996 (the "Series 1996A Bonds"), (vii) the City
System Revenue Bonds, Series 1998, authorized by ordinance passed on March 24, 1998 (the "Series 1998
Bonds"), (viii) the City of Denton Utility System Revenue Refunding Bonds, Series 1998A, authorized by
ordinance passed on July 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 "Series 2000B Bonds"), and (xii) the Bonds
(e) The term "Additional Bonds" shall mean the additional parity revenue bonds which the City
reserves the right to issue in the future, in accordance with Section 25 of this Ordinance
(f) The term "System" shall mean (1) the City's entire existing waterworks and sewer system and the
City's entire existing electric light and power system, together with all future extensions, improvements,
enlargements, and additions thereto, and all replacements thereof, and (2) any other related facilities, all or any
the foregoing, accordance with
part of the revenues or income from which do, in the future, at the
to
that, notwithstanding the City, and in
law, become Pledged Revenues as hereinafter defined, provided 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 ofthe City which are not payable from or secured by any Pledged
Revenues, but which are secured by and payable from liens on and pledges of any other revenues, sources, or
payments, including, but not limited to, special contract revenues or payments received from any other legal
entity in connection with such facilities, and such revenues, sources, or payments shall not be considered as
or constitute Gross Revenues of the System, unless and to the extent otherwise provided in the ordinance or
ordinances authorizing the issuance of such "Special Facilities Bonds"
(g) The terns Gross Revenues of the System" and "Gross Revenues" shall mean all revenues and
income of every nature derived or received by the City from the operation and ownership of the System,
including the interest income from the investment or deposit of money in any Fund created by this Ordinance
(h) The terms Net Revenues of the System", and "Net Revenues" shall mean all Gross Revenues after
deducting therefrom an amount equal to the current expenses of operation and maintenance of the System, in-
cluding 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
(i) The term "Pledged Revenues" shall mean
(1) the Net Revenues, plus
17
(2) any additional revenues, income, or other resources which are expected to be available
to the City on a regular periodic basis, including, without limitation, any grants, donations, or income
received or to be received from the United States Government, or any other public or private source,
whether pursuant to an agreement or otherwise, which in the future may, at the option of the City, be
pledged to the payment of the Panty Bonds or Additional Bonds
0) The tern "year" or "fiscal year" shall mean the fiscal year used by the City in connection with the
operation of the System
(k) The tern "Government Obligations" shall mean direct obligations of the United States of America,
including obligations the pnncipal of and interest on which are unconditionally guaranteed by the United 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 Refunding Bonds, Series 1983 (the
"Series 1983 Bonds"), and it is hereby determined, declared, and resolved that all ofthe Panty Bonds (including
the Bonds) are secured and payable equally and ratably on a panty, and that Sections 8 through 28 of this are
and cumulative of Sections 7 through 27 of the oresaid ordinance passed March 10, 1983 supplemental
th Sections 8 through 28 of this Ordinance being appl ableto all of the Panty Bondson
(b) The Parity Bonds and any Additional Bonds, and the interest
from a first lien on and pledge interest
the
coupons appertaining thereto, are and shall be secured by and payable
Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the
Funds created by this Ordinance, and any Funds created by any ordinance authorizing the issuance of any
any
The Panty
Add itiona
al Bonds are not and from a of gagesor deed of trust on anyr al, personalAddition, or mixed properties con tituting the System payable
Section 10 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 entitled the "City of Denton Utility System Fund" (the "System Fund") All
Gross Revenues shall be credited to the System Fund immediately upon receipt, unless otherwise provided in
this Ordinance All current expenses of operation and maintenance of the System shall be paid from such
Gross Revenues credited to the System Fund as a first charge against same Before making any deposits
hereinafter required to be made from the System Fund, the City shall retain in the System Fund at all times an
amount at least equal to one-sixth of the amount budgeted for the then current fiscal year for the current
operation and maintenance expenses of the System
Section l l INTEREST AND SINKING FUND For the sole purpose of paying the principal of and
interest on all Panty 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
City of Denton Utility System Revenue Bonds
other funds of the City, a separate fund to be entitled the
Interest and Sinking Fund" (the "Interest and Sinking Fund")
Section 12 RESERVE FUND There heretofore has been, and is hereby, created, and there shall be
established and maintained at any national or state 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 a Bonds
(the "Reserve Fund") The Reserve Fund shall be used to pay the principal of and rote available for such
or Additional Bonds when and to the extent the amounts in the Interest and Sinking Fund
18
payment are msufficient for such purpose, and may be used for the purpose of finally retiring the last of any
Panty 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 unprovements, enlargements, extensions, additions,
replacements, or other capital expenditures related to the System, or for paying the costs of unexpected or
extraordinary repairs or replacements of the System for which System funds are not available, or for paying
unexpected or extraordinary expenses of operation and maintenance of the System for which System funds are
not otherwise available, or for any other lawful purpose
Section 14 EMERGENCY FUND There is hereby created and there shall be established and
maintained on the books 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 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 All investment 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 established pursuant to this Ordinance or any
ordinance authorizing the issuance of Additional Bonds, may, at the option of the City, be placed in time
deposits or certificates of deposit secured by obligations of the type hereinafter described, or be invested in
Government Obligations (as defined in Section 8 hereof) or obligations guaranteed or insured by the United
States of America, which, in the opinion of the Attorney General of the United States, are backed by its full
faith and credit or represent its general obligations, or invested in obligations of instrumentalities of the United
States of America, including, but not limited to, evidences of indebtedness issued, insured, or guaranteed by
such governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks, Banks for
Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, United States Postal
Service, Farmers Home Administration, Federal Home Loan Mortgage Association, Small Business
Administration, Federal Housing Association, or Participation Certificates in the Federal Assets Financing
Trust, provided that all such deposits and investments shall be made in such manner as will, in the opinion 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 of the last day of each fiscal year Unless otherwise set forth herem,
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 Panty Bonds or Additional Bonds consistent with the ordinances,
respectively, authorizing their issuance
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Section 17 FUNDS SECURED That money in all Funds created by this Ordinance, to the extent
not invested, shall be secured in the manner prescribed by law
Section 18 PRIORITY OF DEPOSITS AND PAYMENTS FROM SYSTEM FUND Thatthe City
shall make the deposits and payments from Pledged Revenues in the System Fund when and as required by thus
Ordinance and any ordinance authorizing any Additional Bonds, and such deposits shall be made in the
following manner and with the following irrevocable priorities, respectively
First, to the interest and Sinking Fund, when and in the amounts required by this
Ordinance and any ordinance authorizing any Additional Bonds,
Second, to the Reserve Fund, when and in the amounts required by this Ordinance and any
ordinance authorizing any Additional Bonds, and
Third, to the Extension and Improvement Fund, when and as required by Section 21 of
this Ordinance
Section 19 INTEREST AND SINKING FUND REQUIREMENTS The City shall cause to be
deposited to the credit of the Interest and Smkmg Fund the accrued interest and any premium received from
the sale of the Initial Bond, and on or before the 25th day of each month, the City shall cause to be deposited
to the credit of the Interest and Sinking Fund, in approximately equal monthly payments, amounts sufficient,
together with any other funds on hand therem, 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 Panty Bonds and any Additional Bonds on the next succeeding
interest payment date Any moneys so deposited to 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 of a mandatory redemption date and at a price not exceeding the principal amount thereof
plus accrued interest thereon to the date of purchase, Parity Bonds which would be subject to being chosen for
mandatory redemption on such mandatory redemption date The Paying Agent shall cancel any Panty Bonds
so purchased
Section 20 RESERVE FUND REQUIREMENTS There is now on hand in the Reserve Fund an
amount of money and Government Obligations which is in excess of $3,000,000 and which is at least equal
to the average annual principal and interest requirements of the outstanding Series 1992 Bonds, the Series 1993
Bonds, the Series 1993-A Bonds, the Taxable Series 1993-B Bonds, the Senes 1996 Bonds, the Series 1996A
Bonds, the Series 1998 Bonds, the Series 1998A Bonds, the Series 2000A Bonds and the Series 2000B Bonds
(the current "Required Reserve Amount") Following the issuance and delivery of the Initial Bonds the
Required Reserve Amount shall become and be an amount of money and investments equal to the average
annual principal and interest requirements of all the outstanding Panty Bonds and Additional Bonds, provided
further, however, that the Required Reserve Amount shall never be less than $3,000,000 if the maximum
annual principal and interest requirements on all outstanding Parity Bonds and Additional Bonds exceeds
$3,000,000 Immediately after the issuance and delivery of the Initial Bonds there shall be deposited to the
credit of the Reserve Fund, from the proceeds of the sale of the Initial Series 2001 Bond, money sufficient to
cause the Reserve Fund to contain an aggregate amount of money and investments equal to the Required
Reserve Amount for all then outstanding Panty Bonds After the delivery of any future Additional Bonds the
City shall cause the Reserve Fund to be increased, if and to the extent necessary, so that such Fund will contain
an amount of money and investments equal to the Required Reserve Amount Any increase in the Required
Reserve Amount may be funded from Pledged Revenues, or from proceeds from the sale of any Additional
Bonds, or any other available source or combination of sources All or any part of the Required Reserve
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Amount not funded initially and immediately after the delivery of any installment or issue of Additional Bonds
shall be funded, within not more than five years from the date of such delivery, by deposits of Pledged
Revenues in approximately equal monthly installments on or before the 25th day of each month Principal
amounts of the Panty Bonds and any Additional Bonds which must be redeemed pursuant to any applicable
mandatory redemption requirements shall be deemed to be maturing amounts of principal for the purpose of
calculating principal and interest requirements on such bonds When and so long as the amount in the Reserve
Fund is not less than the Required Reserve Amount no deposits shall be made to the credit of the Reserve Fund,
but when and if the Reserve Fund at any time contains less than the Required Reserve Amount, then the City
shall transfer from Pledged Revenues in the System Fund, and deposit to the credit of the Reserve Fund,
monthly on or before the 25th day of each month, a sum equal to 1/60th of the Required Reserve Amount, until
the Reserve Fund is restored to the Required Reserve Amount The City specifically covenants that when and
so long as the Reserve Fund contains the Required Reserve Amount, the City shall cause all amounts in excess
of the Required Reserve Amount to be deposited to the credit of the Interest and Sinking Fund
Section 21 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS During each year,
subject and subordinate to making the required deposits to the credit of the Interest and Sinking Fund and the
Reserve Fund, the City shall be required to deposit to the credit of the Extension and Improvement Fund, from
Pledged Revenues in the System Fund, an amount equal to 8% of the "Adjusted Gross Revenues 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 equal 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 (u) the purchase of electric energy by the City
Additional 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 (b) hereof, but no such additional deposit is required All
investment interest income from the Extension and Improvement Fund shall be retained in and remain a part
of such Fund
Section 22 DEFICIENCIES, EXCESS PLEDGED REVENUES (a) If on any occasion there shall
not be sufficient Pledged Revenues to make the required deposits into the Interest and Sinking Fund or the
Reserve Fund, such deficiency shall be made up as soon as possible from the next available Pledged Revenues
(b) Subject to making the required deposits to the credit of the various Funds when and as required
by this Ordinance or any ordinance authorizing the issuance of Additional Bonds, any surplus Pledged
Revenues may be used by the City for any lawful purpose
Section 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS On or before
December 1, 2001, and semiannually 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 ofthe Interest and Sinking Fund, or if necessary, out ofthe Reserve Fund, money sufficient
to pay, on each of such dates, the principal of and interest on the Panty Bonds and Additional Bonds as the
same matures and comes due, or to redeem the Panty 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 Panty Bonds and Additional Bonds, andany coupons appertaining thereto, and furnish the City
with an appropriate certificate of cancellation or destruction
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Section 24 FINAL DEPOSITS (a) Any Panty 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 prermum, if any, on such Panty Bond or Additional Bond, plus interest thereon to the due date
thereof (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have
been made or caused to be made in accordance with the terms thereof (including the giving of any required
notice of redemption or provision for the proper giving of such notice having been made), or (n) 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)
Government Obligations which mature as to principal and interest in such amounts 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 Panty 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 herembefore 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 shall have the right and power at any time and
from tune to time, and in one or more series or issues, to authorize, issue, and deliver additional panty revenue
bonds (herem called "Additional Bonds"), in accordance with law, in any amounts, for any lawful purpose,
including the refunding of any Parity Bonds or Additional Bonds, or other obligations Such Additional Bonds,
if and when authorized, issued, and delivered in accordance with this Ordinance, shall be payable from and
secured by an irrevocable first lien on and pledge of the Pledged Revenues, equally and ratably on a panty in
all respects with the Parity Bonds and any other outstanding Additional Bonds
(b) The principal of all Additional Bonds must be scheduled to be paid or mature on December 1 of
the 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 tlus 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 Panty
Bonds and Additional Bonds, and the ordinances authorizing same, and that the Interest and Sinking Fund and
the Reserve Fund each contains the amount then required to be therein
(b) An independent certified public accountant, or independent firm of certified public accountants,
acting by and through a certified public accountant, signs a written certificate to the effect that, in his or its
opinion, during either the next preceding fiscal year, or any twelve consecutive calendar month period out of
the 18-month period mimediately preceding the month in which the ordinance authorizing the issuance of the
then proposed Additional Bonds is passed, the Pledged Revenues were at least (1) 125 times an amount equal
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to the average annual principal and interest requirements, and (u) 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 Panty Bonds and Additional Bonds which are scheduled to be outstanding after the delivery of
the then proposed Additional Bonds It is specifically provided, however, that in calculating the amount of
Pledged Revenues for the purposes of this subsection (b), if there has been any increase in the rates or charges
for services of the System which is then in effect, but which was not in effect during all or any part of the entire
period for which the Pledged Revenues are being calculated (hereinafter referred to as the "entire period") then
the certified public accountant, or in lieu of the certified public accountant a firm of consulting engineers, shall
determine and certify the amount of Pledged Revenues as being the total of (i) the actual Pledged Revenues for
the entire period, plus (m) a sum 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 requirements 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 Panty Bond and Additional Bond, that it will promptly pay or cause
to be paid the principal of and interest on every Panty Bond and Additional Bond, on the dates and in the places
and manner prescribed in such ordinances and Panty Bonds or Additional Bonds, and that it will, at the times
and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the
Interest and Sinking Fund and the Reserve Fund, and any holder of the Panty Bonds or Additional Bonds may
require the City, its officials, and employees, to carry out, respect, or enforce the covenants and obligations of
this Ordmance, or any ordinance authorizing the issuance of Additional Bonds, by all legal and equitable
means, including specifically, but without limitation, the use and filing of mandamus proceedings, in any court
of competent jurisdiction, against the City, its officials, and employees
(b) City's Legal Authonty 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 Panty Bonds and
Additional Bonds, that all action on its part for the creation and issuance of the said obligations has been or
will be duly and effectively taken, and that said obligations in the hands of the holders and owners thereof are
and will be valid and enforceable special obligations of the City in accordance with their terms
(c) Title The City has or will obtain lawful title to the lands, buildings, structures, and facilities
constituting the System, that it warrants that it will defend the title to all the aforesaid lands, buildings,
structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Panty Bonds
and Additional Bonds, against the claims and demands of all persons whomsoever, that it is lawfully qualified
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to pledge the Pledged Revenues to the payment of the Panty Bonds and Additional Bonds in the manner
prescribed herem, and has lawfully exercised such rights
(d) Liens The City will from time to time and before the same become delinquent pay and discharge
all taxes, assessments, and governmental charges, if any, which shall be lawfully unposed upon it, or the
System, that it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpaid
nught by law become a hen or charge thereon, the hen of which would be prior to or interfere with the liens
hereof, so that the priority ofthe liens granted hereunder shall be fully preserved in the manner provided herem,
and that it will not create or suffer to be created any mechanic's, laborer's, matenalman's, or other hen or
charge which might or could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens
hereof might or could be unpaired, provided, however, that no such tax, assessment, or charge, and that no such
claims which might be used as the basis of a mechanic's, laborer's, matenalman's, or other lien or charge, shall
be required to be paid so long as the validity of the same shall be contested in good faith by the City
(e) Operation of System, No Free Service While the Parity Bonds or any Additional Bonds are
outstanding and unpaid the City shall continuously and efficiently operate the System, and shall maintain the
System in good condition, repair, and working order, all at reasonable cost No free service of the System shall
be allowed, and should the City or any of its agencies, instrumentalities, lessors, or concessionaires make use
of the services and facilities of the System, payment monthly of the standard retail price of the services
provided shall be made by the City or any of its agencies, instrumentalities, lessors, or concessionaires out of
funds from sources other than the revenues of the System, unless made from surplus Pledged Revenues as
pernutted by Section 22(b) hereof
(f) Further Encumbrance While the Panty Bonds or any Additional Bonds are outstanding and
unpaid, the City shall not additionally encumber the Pledged Revenues in any manner, except as permitted in
this Ordinance in connection with Additional Bonds, unless said encumbrance is made jumor and subordinate
in all respects to the liens, pledges, covenants, and agreements oftlus Ordinance and any ordinance authorizing
the issuance of Additional Bonds, but the right of the City to issue revenue bonds payable from a subordinate
lien on surplus Pledged Revenues is specifically recognized and retained, as permitted under Section 22(b)
hereof
(g) Sale or Disposal of Property Wlule the Panty Bonds or any Additional Bonds are outstanding
and unpaid, the City shall not sell, convey, mortgage, encumber, lease, or in any manner transfer title to, or
dedicate to other use, or otherwise dispose of, the System, or any significant or substantial part thereof,
provided that whenever the City deems it necessary to dispose of any property, machinery, fixtures, or
equipment, or dedicate such property to other use, it may do so either when it has made arrangements to replace
the same or provide substitutes therefor, or it is determined by resolution of the City Council that no such
replacement or substitute is necessary
(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 carried by corporations
operating like properties, including, to the extent reasonably obtainable, fire and extended coverage insurance,
insurance against damage by floods, and use and occupancy insurance Public liability and property damage
insurance also shall be earned unless the City Attorney gives a written opinion to the effect that the City is not
liable for claims which would be protected by such insurance All insurance premiums shall be paid as an
expense of operation of the System At any time while any contractor engaged in construction work shall be
fully responsible therefor, the City shall not be required to carry insurance on the work being constructed ifthe
contractor is required to carry appropriate insurance All such policies shall be open to the inspection of the
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Bondholders and their representatives at all reasonable tunes 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 chrectly to the City The
proceeds of insurance covering such property, together with any other funds necessary and available for such
purpose, shall be used forthwith by the City for repairing the property damaged or replacing the property
destroyed, provided, however, that if said insurance proceeds and other funds are insufficient for such purpose,
then said insurance proceeds pertaining to the System shall be deposited in a special and separate trust fund,
at an official depository of the City, to be designated the Insurance Account The Insurance Account shall be
held until such time as other funds become available which, together with the Insurance Account, will be
sufficient to make the repairs or replacements originally required
(2) The annual audit hereinafter required may contain a section commenting on whether or not the City
has complied with the requirements of this Section with respect to the maintenance of insurance, and shall state
whether or not all insurance prenuums 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 tunes 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
the average annual principal and interest requirements of all then outstanding Panty 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
0) 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 tunes be made available for inspection upon request of any Bondholder or citizen
of the City 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 sinular 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 Panty Bonds or any Additional Bonds
are outstanding, an audit will be made of the books and accounts relating to the System and the Pledged
Revenues by an independent certified public accountant or an independent firm of certified public accountants
As soon as practicable after the close of each such year, and when said audit has been completed and made
available to the City, a copy of such audit for the preceding year shall be mailed to the Municipal Advisory
Council of Texas, to each paying agent for any bonds payable from Pledged Revenues, and to any Bondholders
who shall so request in writing The annual audit reports shall be open to the inspection of the Bondholders
and their agents and representatives at all reasonable times
(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 wluch have
been obtained from any governmental agency, and the City has or will obtain and keep in full force and effect
all franchises, permits, authorization, and other requirements applicable to or necessary with respect to the
acquisition, construction, equipment, operation, and maintenance of the System
25
(m) No Co itton 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 prolubit any such competing facilities
(n) No Arbitrage The City covenants to and with the purchasers of the Parity Bonds and any
Additional Bonds that no use will be made of the proceeds of any of such bonds at any time throughout the term
of any of such bonds which, if such use had been reasonably expected on the date of delivery of any of such
bonds to and payment therefor by the purchasers, would have caused any of such bonds to be arbitrage bonds
within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
regulations or rulmgs pertaining thereto, and by thus 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 Panty 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 tune to time to approve any amendment to this
Ordinance which may be deemed necessary or desirable by the City, provided, however, that nothing herein
contained shall permit or be construed to permit the amendment of the terns and conditions in this Ordinance
or in the Panty 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 Panty Bonds or
Additional Bonds, or unpose any conditions with respect to such payment,
(5) Affect the rights of the holders or owners of less than all of the Panty 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) If at any time the City shall desire to amend the Ordinance under this Section, the City shall cause
notice of the proposed amendment to be published in a financial 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 Panty Bonds and Addi-
tional Bonds Such publication is not required, however, of notice in writing is given to each holder or owner
of Panty 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 Panty Bonds and
26
Additional Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment
described in said notice and which specifically consent to and approve such amendment in substantially the
form of the copy thereof on file with the Paying Agents, the City Council may pass the amendatory ordinance
in substantially the same form
(d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this
Ordinance shall be deemed to be amended in accordance with such amendatory ordinance, and the respective
rights, duties, and obligations under this Ordinance of the City, and all the holders or owners of then out-
standing Parity Bonds and Additional Bonds and all future Panty 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 Panty Bond or Additional Bond pursuant to the
provisions of this Section shall be irrevocable for a period of six months from the date of the first publication
of the notice provided for in this Section, and shall be conclusive and binding upon all future holders or owners
of the same Panty Bond or Additional Bond during such period Such consent may be revoked at any time
after six months from the date of the first publication of such notice by the holder or owner who gave such
consent, or by a successor in title, by filing notice thereof with the paying agents and the City, but such revoca-
tion shall not be effective if the holders or owners of 51% in aggregate principal amount of the then outstanding
Panty 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 Panty Bonds or Additional Bonds which
are in bearer, coupon form, by any bondholder and the amount and numbers of such bearer Panty 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 any other
depository wherever situated showing that at the date therein mentioned such person had on deposit with such
trust company, bank, banker, or other depository, the Panty Bonds and Additional Bonds described in such
certificate The City may conclusively assume that such ownership continues until written notice to the
contrary is served upon the City The ownership of all registered Panty Bonds and Additional Bonds shall be
determined from 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 hereinafter provided
(b) Application for Replacement Bonds Application for replacement of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar In
every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall
funush to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them
to save each of them harmless from any loss or damage with respect thereto Also, in every case of loss, theft,
or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar
evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be In every case
of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for
cancellation the Bond so damaged or mutilated
(c) No Default Occurred Notwithstanding the foregoing provisions of this Section, in the event any
such Bond shall have matured, and no default has occurred which is then continuing in the payment of the
27
principal of, redemption prenuum, if any, or interest on the Bond, the Issuer may authorize the payment of the
same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a
replacement Bond, provided security or indemnity is furnished as above provided in this Section
(d) Charge for Issuing Replacement Bonds Prior to the issuance of any replacement bond, the Paying
Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in
connection therewith Every replacement bond issued pursuant to the provisions of dus Section by virtue of
the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether
or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be
entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly
issued under this Ordinance
(e) Authority for Issuing Replacement Bonds In accordance with Section 6 of Chapter 1201, Texas
Government Code, this Section of this Ordinance shall constitute authority for the issuance of any such
replacement bond without necessity of further action by the governing body of the Issuer or any other body or
person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and
manner and with the effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion and
exchange for other Bonds
Section 30 COVENANTS REGARDING TAX-EXEMPTION OF INTEREST ON THE BONDS
(a) Covenants The Issuer covenants to take any action necessary to assure, or refrain from any action which
would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Internal
Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income"
of the holder for purposes of federal income taxation In furtherance thereof, the Issuer covenants as follows
(1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or
the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any
"private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the
proceeds or the projects financed therewith are so used, such amounts, whether or not received by the
Issuer, with respect to such private business use, do not, under the terms of this Order or any
underlying arrangement, directly or mdirecdy, secure or provide for the payment of more than 10
percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code,
(2) to take any action to assure that in the event that the "private business use" described in
subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed therewith
(less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for
a "private business use" which is "related" and not "disproportionate," within the meaning of section
141(b)(3) of the Code, to the governmental use,
(3) to take any action to assure that no amount which is greater than the lesser of $5,000,000,
or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly
or indirectly used to finance loans to persons, other than state or local governmental units, in
contravention of section 141(c) of the Code,
(4) to refrain from taking any action which would otherwise result in the Bonds being treated
as "private activity bonds" within the meaning of section 141(b) of the Code,
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(5) to refrain from taking any action that would result in the Bonds being "federally
guaranteed" within the meaning of section 149(b) of the Code,
(6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to
acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as
defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the
Bonds, other than investment property acquired with
(A) proceeds of the Bonds invested for a reasonable temporary period of 3 years
or less or, in the case of a refunding bond, for a period of 30 days or less until such proceeds
are needed for the purpose for which the bonds are issued,
(B) amounts invested in a bona fide debt service fund, within the meaning of
section 1 148-1(b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or replacement fund to
the extent such amounts do not exceed 10 percent of the proceeds of the Bonds,
(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds
of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of
section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code
(relating to advance refundings), and
(8) to pay to the United States of America at least once during each five-year period
(beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the
"Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States
of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount
then required to be paid as a result of Excess Earnings under section 148(f) of the Code
(b) Rebate Fund In order to facilitate compliance with the above covenant (a) (8), a "Rebate Fund"
is hereby established by the Issuer for the sole benefit of the United States of America, and such fund shall not
be subject to the claim of any other person, including without limitation the bondholders The Rebate Fund
is established for the additional purpose of compliance with section 148 of the Code
(c) Proceeds The Issuer understands that the tern "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 pnor to the date of issuance of the Bonds It is the understanding of
the Issuer that the covenants contained herein are intended to assure compliance with the Code and any
regulations or rulings promulgated by the U S Department of the Treasury pursuant thereto In the event that
regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable
to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that
such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the
exemption from federal income taxation of interest on the Bonds under section 103 of the Code In the event
that regulations or rulings are hereafter promulgated which impose additional requirements which are
applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary,
in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation
of interest on the Bonds under section 103 of the Code In furtherance of such intention, the Issuer hereby
authorizes and directs the Mayor to execute any documents, certificates or reports required by the Code and
29
to make such elections, on behalf of the Issuer, which may be permitted by the Code as are consistent with the
purpose for the issuance of the Bonds
(d) Allocation Of and Limitation On Expenditures for the Protect The Issuer covenants to account
for the expenditure of sale proceeds and investment earnings to be used for the purposes described in Section
1 of this Order (the "Protect") on its books and records in accordance with the requirements of the Code The
Issuer recognizes that in order for the proceeds to be considered used for the reimbursement of 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 Protect is completed, but in no event later than three years after the date on which the
original expenditure is paid The foregoing notwithstanding, the Issuer recognizes that in order for proceeds
to be expended under the Code, the sale proceeds or investment earnings must be expended no more than 60
days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds are
retired The Issuer agrees to obtain the advice of nationally-recognized bond counsel if such expenditure fails
to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status
of the 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
(e) Disposition of Project The Issuer covenants that the property constituting the Protect will not be
sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation,
unless the Issuer obtains an opinion of nationally-recognized bond counsel that such sale or other disposition
will not adversely affect the tax-exempt status of the Bonds For purposes of the foregoing, the portion of the
property comprising personal property and disposed in the ordinary course shall not be treated as a transaction
resulting in the receipt of cash or other compensation For purposes hereof, the Issuer shall not be obligated
to comply with this covenant if it obtains 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 31 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 Bond issued hereunder and all necessary records and proceedings
pertaining to the Initial Bond pending its delivery and its investigation, examination, and approval by the Attor-
ney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of
Texas Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designated in
writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on such
Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Initial Bond
The approving legal opuvon of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option
of the Issuer, be printed on the Initial Bond or on any Bonds issued and delivered in conversion of and exchange
or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and
information of the registered owners of the Bonds The preamble to this Ordinance is hereby adopted and made
a part hereof for all purposes If insurance is obtained on any of the Bonds, the respective Initial Bond and all
other Bonds shall bear an appropriate legend concerning insurance as provided by the insurer
Section 32 SALE OF INITIAL BONDS, BOND INSURANCE The Initial Bonds are hereby sold
and shall be delivered to DAIN RAUSCHER INCORPORATED, in accordance with the Bond Purchase
Agreement dated the date of this meeting and presented to the City Council of the City at this meeting The
Mayor of the Issuer is authorized and directed to execute, on behalf of the Issuer, said Bond Purchase
Agreement in the form and substance submitted at tlus meeting The Bonds shall be insured by Ambac
Assurance Corporation (the "Insurer") and shall, to the extent not in conflict with tlus Ordinance, be subject
to the insurance commitment from the Insurer to the Issuer
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Section 33 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, determined, and declared that the statements and representations contained in said Official Statement
are 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 April 10, 2001, prior to the date hereof is hereby ratified
and approved
Section 34 REFUNDING OF REFUNDED BONDS That concurrently with the delivery of the
Initial Bonds the Issuer shall deposit an amount from the proceeds from the sale of the Initial Bonds with The
Chase Manhattan Bank, as Escrow Agent, sufficient, together with other available amounts, to refund all of
the Refunded Bonds in accordance with Chapter 1207, Texas Government Code, as amended The Issuer
hereby authorizes the execution ofthe Escrow Agreement dated as of April 15, 2001 between the Escrow Agent
and the Issuer The Mayor of the Issuer is authorized and directed to execute, on behalf of the Issuer, said
Escrow Agreement in the form and substance presented to this meeting It is hereby found and determined that
the refunding of the Refunded Bonds is advisable and necessary in order to restructure the debt service
requirements and procedures ofthe Issuer, and that the debt service requirements on the Bonds will be less than
those on the Refunded Bonds, resulting in a reduction in the amount of principal and interest which otherwise
would be payable both on an actual and a present value basis being an actual gross debt service savings of
approximately $569,379 46, and a present value debt service savings of approximately $305,553 21
Section 35 REDEMPTION OF REFUNDED BONDS There is attached hereto as Exhibit A and
made a part hereof for all purposes a notice of redemption for the Refunded Bonds, which Refunded Bonds are
hereby called for redemption, and shall be redeemed, prior to their scheduled maturities, on the date, at the
place, and at the price, set forth therem, the Issuer shall cause the appropriate notices of such redemption to
be given in accordance with the requirements of the respective proceedings authorizing the issuance of such
Refunded Bonds, and due provision shall be made by the Issuer in accordance with law for the payment of the
redemption price of said bonds by the place of payment (paying agent) for such Refunded Bonds
Section 36 DTC REGISTRATION The Bonds initially shall be issued and delivered in such manner
that no physical distribution of the Bonds will be made to the public, and The Depository Trust Company
("DTC'), New York, New York, initially will act as depository for the Bonds DTC has represented that it is
a limited purpose trust company incorporated under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered under Section 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 Ordinance 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 nommee 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/or the DTC Participants, as defined and
described in the Official Statement referred to and approved in Section 33 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
31
deposited with DTC shall be immobilized and not be further exchanged for substitute Bonds except as heremaf-
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 rights of
the beneficial owners ofthe 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 mitial book-entry system established with DTC will be maintained in the future The Issuer reserves
the right and option at any time in the future, in its sole discretion, to terminate the DTC (CEDE & CO ) book-
entry only registration requirement described above, and to permit the Bonds to be registered in the name of
any owner Ifthe Issuer exercises its right and option to terminate such requirement, it shall give written notice
of such termination to the Paying Agent/Registrar and to DTC, and thereafter the Paying Agent/Registrar shall,
upon presentation and proper request, register any Bond in any name as provided for in this Ordinance
Notwithstanding the initial establishment of the foregoing book-entry system with DTC, if for any reason any
of the originally delivered substitute Bonds is duly filed with the Paying Agent/Registrar with proper request
for transfer and substitution, as provided for in this Ordinance, substitute Bonds will be duly delivered as
provided in this Ordinance, and there will be no assurance or representation that any book-entry system will
be maintained for such Bonds
Section 37 COMPLIANCE WITH RULE 15c2-12 (a) Annual Reports (i) The Issuer shall
provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in
or after 1998, financial information and operating data with respect to the Issuer of the general type included
in the final Official Statement authorized by Section 33 of this Ordinance, being the information described in
Exhibit B hereto, which Exhibit is attached to and incorporated in this Ordinance as if written word for word
herem Any financial statements so to be provided shall be (1) prepared in accordance with the accounting
principles described in Exhibit B hereto, or such other accounting principles as the Issuer may be required to
employ from time to time pursuant to state law or regulation, and (2) audited, if the Issuer commissions an
audit of such statements and the audit is completed within the period during which they must be provided If
the audit of such financial statements is not complete within such period, then the Issuer shall provide unaudited
financial statements by the required time and will provide audited financial statements for the applicable fiscal
year to each NRMSIR and any SID, when and if the audit report on such statements become available
(u) If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and
of the date of the new fiscal year end) prior to the next date by which the Issuer otherwise would be required
to provide financial information and operating data pursuant to this Section The financial information and
operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may
be included by specific reference to any document (including an official statement or other offering document,
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
Principal and interest payment delinquencies,
Non-payment related defaults,
Unscheduled draws on debt service reserves reflecting financial difficulties,
32
4 Unscheduled draws on credit enhancements reflecting financial difficulties,
5 Substitution of credit or liquidity providers, or their failure to perform,
6 Adverse tax opinions or events affecting the tax-exempt status of the Bonds,
7 Modifications to rights of holders of the Bonds,
S Bond calls,
9 Defeasances,
10 Release, substitution, or sale of property securing repayment of the Bonds, and
I 1 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 specified in this Section for so long as, but only for so long as, the Issuer remains an
"obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in any event
will give the notice required by Subsection (b) hereof of any Bond calls and defeaance that cause the Issuer
to no longer be such an "obligated person"
(u) The provisions of dus Section are for the sole benefit of the registered owners and beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or
equitable right, remedy, or claim hereunder to any other person The Issuer undertakes to provide only the
financial information, operating data, financial statements, and notices which it has expressly agreed to provide
pursuant to tlus 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 herem The Issuer does not make any representation or warranty concerning such information or its
usefulness to a decision to invest in or sell Bonds at any future date
(in) UNDER NO CIRCUMSTANCES SHALL THE ISSUER, ITS OFFICERS OR EMPLOYEES
BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY
OTHER PERSON, IN CONTRACT ORTORT, FORDAMAGES 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 tlus Ordinance
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer
under federal and state securities laws
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(v) The provisions of this Section may be amended by the Issuer from time to time to adapt to changed
circumstances that anse from a change in legal requirements, a change in law, or a change in the identity,
nature, status, or type of operations of the Issuer, but only if (1) the provisions of tlus Section, as so amended,
would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in
compliance with the Rule, taking into account any amendments or interpretations of the Rule since such
offering as well as such changed circumstances and (2) either (a) the registered owners of a majority in
aggregate principal amount (or any greater amount required by any other provision of tlus Ordinance that
authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated with the Issuer (such as nationally recognized bond counsel) determined that such amendment will
not materially impair the interest of the registered owners and beneficial owners of the Bonds If the Issuer so
amends the provisions of this Section, it shall include with any amended financial information or operating data
next provided in accordance with subsection (a) of this Section an explanation, in narrative form, of the reason
for the amendment and of the impact of any change in the type of financial information or operating data so
provided The Issuer may also amend or repeal the provisions of this continuing disclosure agreement if the
SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that
such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would
not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds
below
(d) Definitions As used in this Section, the following terms have the meanings ascribed to such terms
"MSRB" means the Municipal Securities Rulemakmg Board
"NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized
municipal securities information repository within the meaning of the Rule from tune 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 38 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 herem 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, the Escrow
Agreement and the Official Statement, and the City shall cause the expenses of issuance of the Bonds to be paid
from the proceeds of sale of the Initial Bond or from other lawfully available funds of the Issuer In case any
officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such
Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had
remained in office until such delivery
Section 39 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 nonce thereof was given in accordance with
the provisions of the Texas Open Meetings, Law, Tex Gov't Code, Chapter 551, as amended
34
Section 40 EFFECTIVE DATE Tlus Ordinance shall become effective munechately upon its passage
and approval
35
PASSED AND APPROVED tlus the 17th day of Apnl, 2001
&A4te, A~-
Eulme Brock, Mayor
ATTEST
J f4Wrs, City Secretary
APPROVED AS TO LEGAL FORM
Herbert L Prouty, City Attorney
By
36
EXHIBIT B
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 37 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 14, inclusive, under the captions "The Utility System", "Debt Service
Requirements" and "Financial Information" in the Official Statement
Appendix B in the Official Statement
Accounting Principles
The accounting principles referred to in such Section are the accounting principles described in the
notes to the financial statements referred to in the paragraph above
NOTICE OF PRIOR REDEMPTION
CITY OF DENTON (TEXAS)
UTILITY SYSTEM REVENUE BONDS, SERIES 1993
NOTICE IS HEREBY GIVEN that the City of Denton, Texas has called for redemption the
outstanding Bonds of the City described as follows
CITY OF DENTON (TEXAS) UTILITY SYSTEM REVENUE BONDS, SERIES
1993, dated March 1, 1993, scheduled to mature on December 1, 2004 through December 1,
2011, aggregating $2,640,000 (and being all ofthe outstanding bonds of said series scheduled
to mature on and after December 1, 2004 to and including December 1, 2011)
Call date December 1, 2002, redeemable at a redemption price of par plus accrued
interest at the principal corporate offices of The Bank of New York, Jacksonville, Florida,
only upon presentation by the registered owner
If moneys sufficient for the payment of such redemption price are held by or on behalf of the respective paying
agent, the described Bonds shall become due and payable on the redemption date specified, and the interest
thereon shall cease to accrue from and after the redemption date
In compliance with section 3406 of the Internal Revenue Code of 1986, payors making certain
payments due on debt securities may be obligated to deduct and withhold 31 percent of such payment from the
remittance to any payee who has failed to provide such payor with a valid taxpayer identification number To
avoid the imposition of the withholding of tax, such payees should submit a taxpayer identification number
when surrendering the bonds for redemption
NOTICE IS FURTHER GIVEN that all Bonds should be submitted to the following address
The Bank of New York Trust Company of Florida, N A
10161 Centurion Parkway
Jacksonville, FL 32256
THE BANK OF NEW YORK TRUST COMPANY OF FLORIDA, NA
NOTICE OF PRIOR REDEMPTION
CITY OF DENTON (TEXAS)
UTILITY SYSTEM REVENUE BONDS, SERIES 1996
CITY OF DENTON (TEXAS)
UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1996-A
NOTICE IS HEREBY GIVEN that the City of Denton, Texas has called for redemption the
outstanding Bonds of the City described as follows
CITY OF DENTON (TEXAS) UTILITY SYSTEM REVENUE BONDS, SERIES
1996, dated May 1, 1996, scheduled to mature on December 1, 2007 through December 1,
2016, aggregating $1,760,000 (and being all of the outstanding bonds of said series scheduled
to mature on and after December 1, 2007 to and including December 1, 2016)
Call date December 1, 2006, redeemable at a redemption price of par plus accrued interest
at the principal corporate offices of The Chase Manhattan Bank, Houston, Texas, only upon
presentation by the registered owner
CITY OF DENTON (TEXAS) UTILITY SYSTEM REVENUE REFUNDING
BONDS, SERIES 1996-A, dated May 1, 1996, scheduled to mature on December 1, 2007
through December 1, 2011, aggregating $5,100,000 (and being all of the outstanding bonds
of said series scheduled to mature on and after December 1, 2007 to and including December
1, 2011)
Call date December 1, 2006, redeemable at a redemption price of par plus accrued interest
at the principal corporate offices of The Chase Manhattan Bank, Houston, Texas, only upon
presentation by the registered owner
If moneys sufficient for the payment of such redemption price are held by or on behalf of the respective paying
agent, the described Bonds shall become due and payable on the redemption date specified, and the interest
thereon shall cease to accrue from and after the redemption date
In compliance with section 3406 of the Internal Revenue Code of 1986, payors making certain
payments due on debt securities may be obligated to deduct and withhold 31 percent of such payment from the
remittance to any payee who has failed to provide such payor with a valid taxpayer identification number To
avoid the imposition of the withholding of tax, such payees should submit a taxpayer identification number
when surrendering the bonds for redemption
NOTICE IS FURTHER GIVEN that all Bonds should be submitted to the following address
The Chase Manhattan Bank, Houston, Texas
600 Travis Street
Suite 1150
Houston, Texas 77002
THE CHASE MANHATTAN BANK
ORDINANCE NO 269--A4-19
AN ORDINANCE AMENDING AN ORDINANCE
AUTHORIZING THE ISSUANCE OF CITY OF DENTON, TEXAS
UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1983
AND OTHER ORDINANCES RELATING TO THE CITY'S
UTILITY SYSTEM REVENUE BONDS, PROVIDING AN EFFECTIVE DATE
STATE OF TEXAS
CITY OF DENTON
WHEREAS, the City of Denton, Texas (the "City") has previously adopted an Ordinance Authorizing
the Issuance of City of Denton, Texas Utility System Revenue Refunding Bonds, Series 1983 (the "1983
Ordinance) pursuant to which the City has issued its Utility System Revenue Bonds, Series 1992, Series 1993,
Series 1993-A, Taxable Series 1993-B, Senes 1996, Series 1996-A, Series 1998, Series 1998A, Series 1998B,
Series 2000A, Taxable Series 2000B and Series 2001 (the "Bonds"), and
WHEREAS, in connection with the issuance of each senes of Bonds the City has adopted an ordinance
authorizing the issuance of each series of Bonds (the "Other Ordinances"), and
WHEREAS, the 1983 Ordinance and the Other Ordinances (collectively, the "Revenue Bond
Ordinance") provide that the provisions thereof may be amended with the approval of the owners of 51% or
more in aggregate principal amount of the Bonds then outstanding, and
WHEREAS, the City finds it necessary and desirable to amend the Revenue Bond Ordinance, and
WHEREAS, the necessary notice in writing of such amendment has been given to the owners of the
Bonds, and
WHEREAS, the aggregate principal amount of the Bonds now outstanding is $212,700,000 and the
City has received the consent of $113,035,000 in aggregate principal amount of the Bonds now outstanding,
representing 53 14% of the aggregate principal amount of the Bonds now outstanding,
NOW THEREFOR, BE IT ORDAINED BY THE CITY COUNCIL OF DENTON, TEXAS, THAT
SECTION I Section 26(g) of the 1983 Ordinance headed "Sale or Disposal of Property" and
the corresponding section of each of the Other Bond Ordinances are hereby amended and
restated to read as follows
(g) Sale Lease or Disposal of Property No part of the System
shall be sold, leased, mortgaged, demolished, removed or otherwise disposed
of, except as follows
(1) To the extent penmtted by law, the City may sell,
lease, mortgage, demolish, remove or otherwise dispose of at any
time and from time to time any property or facilities constituting
part of the System only if (A) the City Council shall determine, as
evidenced by a resolution to that effect, such property or facilities
are not useful in the operation of the System, or (B) the proceeds of
such sale are $250,000 or less, or the City Council shall determine,
as evidenced by a resolution to that effect, the fair market value of
the property or facilities exchanged is $250,000 or less, or (C) if
such proceeds or fair market value exceeds $250,000 the City
Council shall determine, as evidenced by a resolution to that effect,
that the sale or exchange of such property or facilities will not
impair the ability of the City to comply during the current or any
future fiscal year with the covenant of the City set forth in Section
27(1) of this Ordinance The proceeds of any such sale or exchange
not used to acquire other property necessary or desirable for the sale
or efficient operation of the System shall forthwith, at the option of
the City, (i) be used to redeem or purchase Panty Bonds or
Adrtional Bonds, (u) otherwise be used to provide for the payment
of Panty 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 Panty 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
SECTION 2 Section 260) of the 1983 Ordinance headed "Records" and the corresponding
section of the Other Bond Ordinances are hereby amended and restated as follows
0) 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 tunes 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 552 131 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 sumlar System, with appropriate
recognition being given to essential differences between municipal and
corporate accounting practices
SECTION 3 Section 26(m) of the 1983 Ordinance headed "No Competition" and the
corresponding section of the Other Bond Ordinances are hereby deleted in their entirety
SECTION 4 This Ordinance shall become effective immediately upon its passage and approval
PASSED AND APPROVED this the 15th day of May, 2001
C- &CtL
Eulme Brock, Mayor
ATTEST
V7T
e fifer 11"ters, City Secretary
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY. CITY ATTORNEY
By ~Uj