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2000-153
2ooo-/ ORI)INANCE AUTHORIZING ~ ISSUANCE, SALE, AND DELIVERY OF CITY OF DENTON UTILITY SYSTEM REVENUE BONDS, SERIES 2000, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO, AND PROVIDING AN EFFECTIVE DATE THE STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON WHEREAS, tho C~t~ of Denton, Texas, heretofore has duly issued the following revenue bonds C~ty of Denton Utility System Revenue Bonds, Series 1992, dated March 1, 1992, C~ty of Denton Uuhty Systom Rovenue Bonds, Senes 1993, dated March 1, 1993, C~ty of Denton U~lty System Revenue Kefundmg Bonds, Senes 1993-A, dated June 1, 1993, Cxty of Denton UuI~ Syst~n P,~vcnue Refunchng Bonds, Taxable Senes 1993-B, dated June 1, 1993, C~ty of Denton Uuhty System Revenue Bonds, Series 1996, dated May 1, 1996, C~ty of Denton Utility System Revenue Refunding Bonds, Series 1996-A, dated May 1, 1996, C~ty of Denton Utility System Revenue Bonds, Sencs 1998, dated March 15, 1998, C~ty of Denton Utthty System Revenue Refunding Bonds, Series 1998A, dated July 1~, 1998, and City of Denton UUhty System Revenue P,~Smdmg Bonds, Senes 1995B, dated August 1, 1998, WHEREAS, the City Council oftbo City of Denton deems n necessary and advisable to authonze, xssue, and d~hvcr the adchuonal Uuhty System Revenue Bonds hereinafter descnbod, and WHEREAS, the Series 2000 Bonds hereinafter authorized and descnbed are to be ~ssued, sold and dehvered pursuant to Chapter 1~02, Texas Government Code, the C~ty's Home Rule Charter, and other apphcable laws, NOW, THEREFOKE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS Secuon 1 AMOUNT AND PURPOSE OF THE BONDS (a) The bond or bonds of the City of Denton, Tex~ (the "Issuer") are boreby authonzed to bo issued and dshvered m the aggregate pnnclpal amount of $~ 1,085,000, for the purpose of prov~chng for u~provements and ~ons of the C~ty of Denton UUht~ System, which consists of the C~ty's Combined Waterworks, Sewer, and Electnc L~ght aad Power System, and shall be dss~gnated 'C~ty of Denton UUhty Sy~m Revenue Bonds, Senes 2000A' (the 'Series 2000A Bonds") Co) Thc bond or bonds of the City of Denton, Texas (the "Issuer") are hereby authorized to bo issued and delivered ut the as~re~ate pnn¢lpal amount of $3,795,000, for the purpose ofprowdmg for unprovements and extensions of the City of Denton Utthty System. which consists of thc City's Combined Waterworks, Sewer, and Electric Light and Power System, and shall be designated "City of Denton Utility System Revenue Bonds, Taxable Sones 2000B" (the 'Waxable Sones 2000B Bonds") Sec~on 2 DBSCRIPTION OF THE BONDS (a) W~th respect to the Sones 2000A Bonds, antially there shall be Issued, sold, and dobv~red hereunder a smile fully registered bond, without mtercst coupons, payable m installments of principal (the "ImUal Sones 2000A Bond"), but thc ImUal Sones 2000A Bond may be nssl~ned and transferr~ and/or converted rote and ~'xchanged for a like a~,regate principal amoun~t of fully registered bonds, vathout interest coupons, having serial matunUcs, and m the denomination or dsnommatlons of $5,000 or any mtolp-al mulUplo of $$,000, all m the manner horemat%r provtded Tho term "Sones 2000A Bonds" as used m tins Ordinance shall mean and m¢luds collectively thc ImUal Sones 2000A Bond and all substtmte bonds exchanged therefor, as well as all other subsumte bonds and replacement bonds issued pursuant h~reto, and the term "Sones 2000A Bond" shall mean any of the Sones 2000A Bonds (b) With respect to the Taxable Sones 2000B Bonds, untially there shall be issued, sold, and dehvored hereunder a sm~lc fully registered bond, without mterest coupons, payable ut mstellments of pnnclpal (thc "huUal Taxable Sones 2000B Bond"), but the lnmal Taxable Sones 2000B Bond may be assigned and transferred and/or converted rote and exchanged for a bke a~regate pnnclpal amount of folly registered bonds, without interest coupons, having senal maturities, and m the denommauon or denounnauons of $5,000 or any integral multlplo of $5,000, all m the mauner hereinafter provided Tho term "Taxable Sones 2000B Bonds" as used m this Ordinance shall mean and include collectively the Imtial Taxable Sones 2000B Bond and all subsutute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds ~ssued pursuant hereto, and the term "Taxable Sones 2000B Bond" shall mean any of the Taxable Sones 2000B Bonds (c) the term "Imual Bonds" as used m flus Ordinance shall mean and include colle~tively the lmtml Sones 2000A Bond and the Imual Taxable Sones 2000B Bond, thc term "Bonds" as used m flus Ordinance shall mean and mcluds colleottvely thc Imtial Bonds and all subsUtute bonds exchanged therefor, as well as all other subsUtute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds SecUon 3 INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BONDS (a) (~) The Imual Sones 2000A Bond is hereby authonzed to be issued, sold, and dehvored hereunder ns a smile fully re~stered Bond, without interest coupons, dated APRIL 15, 2000, m the denommaUon and a~regate principal amount of $51,085,000, numbered R-l, payable m annual mst.ailments of principal to the untial registered owner thereof, to-wit DAIN RAUSCI-~R INCORPORATED or to the roistered assignee or assll~noes of smd Bond or any portxon or portions thereof (m each case, tho "registered Owner"), with the annual installments of pnncipal of the lmual Sones 2000A Bond to be payable on the dates, respectively, and m tho principal amounts, respectively, stated m the FORM OF INITIAL SERIES 2000A BOND sot forth ua flus Ordinance 2 (ii) The ImUal Taxable Senes 2000B Bond ~s hereby authorized to be ~ssued, sold, and delwered hereunder as a stngle fully regtstered Bond, w~thout interest coupons, dated APRIL 15, 2000, m thc denomination and aggregate prmctpal amount of S3,795,000, numbered R-l, payable m annual installments of principal to the uutml registered owner thereof, to-vat DAIN RAUSCHER INCORPORATED or to the real.red assignee or assignees of smd Bond or uny pomon or porUons thereof (m each case, the "registered owner"), vath the annual m~ll~oents of principal of the lmUal Taxable Series 2000B Bond to be payable on the dates, respectively, and m the pnnclpal amounts, respec~vely, stated m the FORM OF INITIAL TAXABLE SERIES 2000B BOND set forth m t~us Ordmunce (b) The Imt~al Bonds (0 may and shall be prepmd or redeemed pr~or to the respeetlve scheduled due dates of installments of principal thereof, (Il) may be assigned und transferred, (m) may be converted and exchanged for other Bonds, (~v) shall have the charactensUcs, and (v) shall be signed and sealed, und the principal of ~md interest on the ImUal Bonds shall be payable, all as prowded, and m the rammer reclmred or md~eated, m the FORMS OF INITIAL BONDS set forth m th~s Ordmunce Seet~on4 INTEREST The unpmd prmc~pal balance ofthe lmUal Bonds shall bear mterest from the date of each Imual Bond to the respective scheduled due dates, or to the respective dates of prepay~nent or redempUon, of the installments of pnne~pal of the ImUal Bonds, and smd interest shall be payable, all m the manner prowded und at the rates and on the dates stated tn the FORMS OF INITIAL BONDS set forth m th~s Ordmunce Section 5 FORMS OF INITIAL BONDS The form of the Imtml Bonds, including the form of Reg~straUon Certificate of the Comptroller of Pubhc Accounts of the State of Texas to be endorsed on the Imual Bonds, shall be substanually as follows FORM OF INITIAL SERIES 2000A BOND NO R-I $51,085,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 2000A THE CITY OF DENTON, m Denton County, Texas (the "Issuer"), being a polmeal sub&v~s~on of the State of Texas, hereby prormses to pay to DAIN RAUSCHER INCORPORATED or to the registered assignee or assignees of tlus Bond or uny pomon or pomons hereof (m each case, the "registered owner") tho aggregate principal amount of S51,085,000 (FIFTY ONE MILLION EIGHTY FIVE THOUSAND DOLLARS) m annual installments of principal due and payable on December 1 m each of the years, und m the respective principal amounts, as set forth m the following schedule, und to pay interest, from the date of ttus Bond hcrcmaftcr stated, on the balance of cach such installment of pnnclpal, respccUvcly, from ttmc to ttmc remaining unpaid, at thc rates as follows PRINCIPAL IN'f/~REST PRINCIPAL INTEREST 2000 $1,2'/0,000 4 875 2010 $ 2,500,000 5 200 2001 1,565,000 4 750 2011 2,630,000 5 250 2002 1,640,000 4 750 2012 2,780,000 5 300 2003 1,720,000 5 000 2013 2,935,000 5 400 2004 1,810,000 5 000 2014 3,095,000 5 500 2005 1,905,000 5 000 ***** ********* ***** 2006 2,005,000 5 050 ***** ********* ***** 2007 2,110,000 5 100 2017 10,470,000 6 000 2008 2,225,000 5 600 2018 3,915,000 5 600 2009 2,365,000 6 000 2019 4,145,000 5 625 Interest shall first be due and payable on December 1, 2000, and semiannually on each June 1 and Docemher 1 thereafter wlule tlus Bond or any porUon hereof Is outstanding and unpmd Smd interest shall be calculated on the basis of a 360-day y~ar composed of twelve 30-day months THE INSTALLIvIENTS OF PRINCIPAL OF AND THE INTEREST ON flus Bond are payable m lawful money of the Umted States of Amonc~ without exchange or collection charges The installments of principal and the interest on tins Bond are payable to the reg~stenxt owner hereof through the serwces of BANK ONE, TEXAS, N A, FORT WORTH, TEXAS, winch is the "Paying Agent/Registrar' for flus Bond Payment of all principal of and interest on fins Bond shall be made by the Paying Agent/Registrar to the registered ovmor hereof on each pnnclpal and/or interest payment date by chock, dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance anthonzmg,the issuance oftlus Bond (the '*Bond Ordinance") to be on deposit w~th the Paying Agent/Registrar for such purpose as hereinafter prov~dad, and such check shall be sent by the Paym4g Agent/Registrar by Umted States mall, first-class postage prepaid, on each such prmcxpal and/or interest payment date, to thc registered owner hereof, at the address of the registered owner, as it appeared on the 15th day of the month next preceding each such date (the "Record Date") on the Reg~strauon Books kept by the Paying Agent/Registrar, as hereinafter described The Issuer covenants with tho registered owner of flus Bond that on or before each principal and/or interest payment date for tlus Bond it will make avmlable to the Paying Agent/Registrar, from the "Interest and Stoking Fund" maintained pursuant to the Bond Ordinance, the amounts required to provide for the payment, m munexhately available funds, of all pnnclpal of and interest on tins Bond, when due IN TH~ EVENT of a nonpayment of interest on a scheduled payment date, and for tlurty (30) days thereafter, a now record date for such interest payment (a "Special Record Date") will be estabhshed by the Paying AgentA~,~glstras, if and when funds for the payment of such interest have been received from the Issuer Not,ce' of the Special Record Date and of the scheduled payn~nt date of the past due interest ("Specml Payment Date", winch shall be fifteen (15) days after the Special Record Date) shall be seat at least five (5) business days prior to the Special Record Date by Umted States mml, first class postage prepaid, to the address of each Holder of a Bond appearing on tho reg~straUon books of the Paying Agent/Registrar at the close of business on the 15th business day nex~ precefl~n~ the date of reading of such not,ce IF THE DATE for tim payment of the pnnclpal of or interest on flus Bond shall be a Saturday, Sunday, a legal holiday, or a day on wtuch banking mst~tuuoas m tho C~ty where the Paying Agent/Registrar 4 is local~l ar~ authonzcd by law or execuUve order to close, then thc date for such payment shall be the next suceeedn~ d~y which is not such a Saturday, Sunday, le~al holdiay, or day on winch banlung mstitu~ons are authorized tO close, and payment on such date shall have the same foree and effect as if made on the ongmal date payment was due THIS BOND has been authonzed m accordance vath thc Consulouon and laws of thc S~ate of Texas ha thc pnnclpal amount of $$1,085,000, for the purpose of prov~dm~ for unprovcments and extensions of the C~ty of DenWn UUhty System, which consists of the City's Combmcd Waterworks, Sewer, and Electnc Light and Power System ON DECEMBER 1.2010, or on any dale whatsoever thereafter, the unpaid msmllmants of pnncipal of fins Bond,may be prepaid or redeemed pnor lo their scheduled due dates, at the opuon of the Issuer, w~th funds denved from any available souree, as a whole, or m pan, and, if in pan, thc pamcnlar poraon of fins Bond W bc prepaid or redeemed shall be selected and desi/nated by thc Issuer (provided that a pomon of this Bond may be redcemed only m an integral mul~ple of $5,000), at the prcpaymcnt or redempUon pncc of the par or pnncipal amount thereof, plus accrued interest lo the date fixed for prepayment or redemption ~ OUTSTANDING BONDS of this Series scheduled lo mature on DECEMBER 1, 2017 arc subject to mandatory redemption pnor to their scheduled malonues, and sh~l! be redeemed by the Issuer, m pan, pnor tO their scheduled maturities, w~th the panlcular Bonds or pomons thereof lo be redecmed to be selecl~l by the Payml~ A~ant/Re~strar at random, by lot or other customary method (provided lhat a pomon of a Bond may be redeemed only m an integral mulUple of $5,000), at a redempUon pnee equal to thc par or pnnapal amount thereof and accrued interest lo the date of redempuon, on thc dates, and m the pnnc~pal amounts, respectively, as shown m the follovan~ schedule December 1.2017 MalonW Mandatol'y Principal ~ Amounts December 1, 2015 3,21~5,000 Dceemhar 1, 2016 3,485,000 December 1, 2017 (maturity) 3,?00,000 Thc pnncipal amount of the Bonds required lo be redeemed on the Mandatory Redemption Dates pursuant to thc foregou~ shall be reduced, at the opUon of the Issuer by thc principal amount of any Bonds out of the malonty scheduled for December 1, 201 ? which, at leas~ 45 days pnor to thc aforesaid appropnate redemption date ( 1 ) shall have b~en acquired by the Issuer at a pnce not exceeding thc pnnapal amount of such Bonds plus accrued tautest W the date of purchase thereof, and dchvcrcd to ',he Payml~ Agent/P.e~strar for cancellauon, or (2) as shall have been redeemed pursuant to file optional redemption provisions hereof and not pr~ousty credited to the MandaWry Smlanl~ Fund redcmpUon AT[LEAST 30 days prior to the date fixed for any such prepayment or redemption a wntten not~ee of such prepayment or redemp~on shall be mailed by the Paym~ Albany/Re.sitar w the re~stered owner hereof By the date fixed for any such prepayment or redemlmon duc provision shall be made by the Issuer vath thc PaymE A~en~/Re~strar for the payment of the requu~l prcpaymant or redempUon pnee for flus Bond or the pomon hereof which ~s to be so prepmd or redeemed, plus accrued interest tha~on lo the date fixed for prepayment or redemption If such wntten nonce of prepaymcnl or redemption is tlvan, and ffdue proviswn for such payment ~s made, all as provided above, flus Bond, or the pomon thereof which is to bc so prepaid or redeemed,,thereby auWmatically shall be trea~l as prepaid or redeemed pnor to its scheduled duc date, and shall not bear interest after the date fixed for Its prepayment or redempUon, and shall not be regarded as berne outstanding except for thc n~ht of the registered owner to receive the prepayment or redcrnpUon pnee plus accrued interest to LI~ date fixed for prepaynmnt or redcmpUon from the Paying A~ant/Reglstrar out of the funds provided for such payment The Paym~ Agent/R~strar shall record m the Re~strauon Books all such prepaymentsl or r~demptions of pnn~lpal of gus Bond or any pomon hereof THIS BOND, to the extent ofihe unpaid or unredeemed pnncipal balance hereof, or any unpaid and unredeemed pomon herenfm any integral mulUple of $~,000, may be assigned by the anual re~stered owner hereof and shall be tra~ferred only m the Ro~lstrauon Books of the Issuer ~ by the Paym~ A~en~.e~lstrar a~tmg m the capacity ofre~strar for the Bonds, upon the terms and conchuons set forth m the Bond Ordmanee Amon~ other requirements for such transfer, this Bond must be presented and surrendered to the Paying Agent/l~strar for cancellaUon, together voth proper mstmm~ots of a~sl~nmont, in form and w~th ~uarantee of signatures, satisfactory to the Paying Agent/~lstrar, ewdencmg assignment by the unUal registered owner of this Bond, or any portion or porUons hereof m any mtel~al mulUplc of $5,000, to thc assignee or assignees m whose name or names tlus Bond or any such poman or poruons hereof is or are to be transferred and registered Any instrument or instruments of asslsnmont satisfactory to the Paying Agenl/Re~strar may be used to ewdenco the assignment of gus Bond or any such poruon or pomons hereof by the anUal registered owner hereof A new bond or bonds payable to such assignee or assl~ees (which then will be the new re~stered owner or owners of such n~w Bond or Bonds) or to the mmal registered owner as to any portion of this Bond which Is not being assigned and transferred by the uuual registered owner, shall be delivered by the Paying Agent/Registrar m conversion of and exchange for this Bond or any portion or pomons hereof, but solely m the form and manner as prowded In the next parasraph hereof for the conversion and exchange of gus Bond or any[portion bereof The registered owner ofgus Bond shall be deemed and treated by the Issuer and the Paym~ A~ent/l~$ustrar as the absolute owner hereof for all purposes, including payment and d~scharge of habglty upon gus 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 m the Bond Ordinance, this Bond, to the extoot of thc unpmd or unredeemed [principal balance hereof, may be converted rote and exchanged for a like a~,,regate pnnclpal amount of fully re~stered bonds, vothout interest coupons, payable to the asslsnee or ass~snees duly dss~gnated m writing by tho u'utial roistered ownsr hereof, or to thc uutial rcsustered owner as to any pomon of gus Bond which is not bernS assigned and transferred by thc miual relpstered owner, m any denommauon or dcnommauons ut any integral multiple of $5,000 (sub. lent to the reqmrement heremat~er stated that each sub~tute bond issued m exchange for any portion of tins Bond shall have a single stated pnnc~pal maturity date), upon surrender of gus Bond to thc Paying A$cnt/R~glstrar for caneellaUon, all m accordance vath the form and procedures set forth in the Bond Ordinance If gus Bond or any pomon herenf is assll~ned and transferred c~r converted each bond issued m exchange for any port, on hereof shall have a smile stated principal matunty date correspondm~ to the due date of tho mst~l!ment of principal of gus Bond or pomon hereof for which the substitute bond is being exchanged, and shall boar interest at the rate applicable to and borne by such installment 0f pnnclpal or port,on thereof Such bonds, reepecUvely, shall be subject to redempuon prior to matunty on the same dates and for thc same pnc~s as the corresponding installment of pnnaipal of gus Bond or portion hereof for which they are being excha~ed No such bond shall be payable ut installments, but shall have only o~e stated pnncipal matunty date AS PROVIDED 1N THE BOND ORDINANCE, THIS BOND IN ITS PRE~ENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assl~nens, but thc bonds issued and dehvered m exchange for gus Bond or any pomon herenf may be assigned and transferred, and converted, subsequently, as prowded m tbe Bond Ordinance Thc Issuer shalll pay the Paym~ Agent/Resustrar's standard or customary fees and charges for transferring, converting, and excha~u~ gus Bond or any poruon thereof, but the one rcqnestmg such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be prod w~h respect thereto The Paying Agent/Rcgtstrar shall not be required to make any such assignment, conversion, or exchange (0 dunng the period commonemg w~th the close of business on any Record Date and ending voth the ope~ng of business on the next following principal or interest payment date, or, (u) w~th respect to any Bond or porUon thereof called for prepayment or redmnptsun prior to matonty, v~thm 45 days prior to its prepayment or redcmpuon date IN THE EVENT any Paying Agent/Regtstrar for tlus Bond ts changed by the Issuer, resigns, or other~ase ceases to act as such, the Issuer has covenanted m the Bond Ordinance that it promptly wll appoint a competent and legally qualified subsUtute therefor, and promptly wdl cause written noUce thereof to be mmlcd to the rcgtstered owner of tins Bond IT IS HEREBY cemfi~d, recited, and covenanted that tlus Bond has been duly and validly authorized, issued, sold, and delivered, that all acts, cond~oas, and thngs required or proper to be performed, ernst, and be done precedent to or m the anthonzat~un, tssuance, and delivery ofthts Bond have been performed, existed, and been done m accordance vath law, that this Bond ts a spce~al obh~at~on of the Issuer, secured by and payable, together with other bonds, from a first hen on and pledge of the "Pledged Revenues", wluch include nuUally thc "Net Revenues of thc System" as such terms arc defined m thc Bond Ordinance, w~th thc System consisUng of the City's anUrc combined watenvorks, sewer, and electric light and power system THE ISSUBR has reserved the right, subject to thc resmcuons stated m thc Bond Ordinance, to lSSUC Addtuonal Bonds payable from and secured by a first lien on and pledge of the "Pledgcd Revenues" on a panty w~th tlus Bond THE ISSUER also has reserved the right, subject to the resmcUons stated m the Bond Ordmanee, to amend the Bond Ordinance wtth the approval of the holders or owners of fiiby-one percent m prmclpal amount of all outstanding bonds which are secured by and payable from a first lien on and pledge of the Pledged Revenues THE REGISTERED OWNER hereof shall never have the right to dcmand payment of ',lus Bond or thc interest hereon out of any funds rinsed or to be rinsed by taxauon or from any source whatsoever other than spcclficd m thc Bond Ordinance BY BECOMING the regtstered owner ofttns Bond, thc re&ustered owncr thereby acknowledges all of the terms and prowmons of the Bond Ordinance, agrees to be bound by such terms and provtstons, acknowledges that thc Bond Ordmanee is duly recorded and avmlablc for mspecUon m thc official minutes and records of the govermng body of the Issuer, and agrees that thc terms and prowmons of tins Bond and the Bond Ordmanee constitute a contract between the registered owncr hereof and the Issucr 7 IN WITNESS WHEREOF, the Issuer has caused tins Bond to bc signed vnth the manual or facsnmle slsrmturc of the Mayor of the Issuer and countersigned and attested wtth the manual slsnatorc or facsmulc of the Clt~ Secretary of the Issuer, has caused the o~cmi seal of thc Issuer to be duly tmpressed on this Bond, and has caused flus Bond to be dated April 15, 2000 ATt'~:ST CITY OF DENTON, TEXAS By By Jennifer Walters Jack Mdler C~ty Secretary, Ctty of DenWn, Texas Mayor, Ctty of Denton, Texas (CITY SEAL) (BOND INSURANCE LEGEND, IF ANY) FQRM OF REGISTRATION CERTIFICATE OF THE CQMPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certify flint flus Bond has been examined, cemficd as to validity, and approved by the Attorney General of the State of Texas, and that flus 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 thc State of Texas (COMPTROLLER'S SEAL) FORM OF INITIAL TAXABLE SERIES 2000B BOND NO R-1 $3,795,000 UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND TAXABLE SERIES 2000B THE CITY OF DENTON, ua Denton County, Texas (the "Issuer"), being a pohueal subd~wsmn of the State of Texas, hereby prormses to pay W DAIN RAUSCHER INCORPORATED or to the registered asmgrge or ass~gnecs of this Bond or any po~tmn or port~ons hereof (m each case, the "registered owner") the aggregate pnnc~pal amount of $3,795,000 (THREE MILLION SEVEN HUNDRED NINETY FIVE DOLLARS) m annual installments of pnnc~pal due and payable on December 1 m each of the years, and m the resp¢cUve principal amounts, as set forth m the follovang schedule, and to pay interest, from tho date of tlns Bond hereinafter stated, on the balance of each such installment of principal, respecUvely, from Umo to tame remaining unpaid, at the rates as follows PRINCIPAL INTEREST PRINCIPAL INTEREST YEAR AMOUNT RATE(%) YEAR AMOUNT RATEr%) ~000 $120,000 6 900 2007 $240,000 7 450 2001 155,000 7 125 2008 260,000 7 500 2002 165,000 7 200 2009 280,000 7 550 2003 180,000 7 200 2010 300,000 7 625 2004 195,000 7 300 ***** ********* ***** 2005 210,000 7 400 2014 1,465,000 7 800 2006 225,000 7 450 Interest shall first be due and payable on December 1, 2000, and semiannually on each June 1 and December 1 thereafter whale flus Bond or any porUon hereof as outstanding and unpaid Said interest shall be calculated on the bas~s ora 360-day year composed of twelve 30-day months THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON flus Bond are payable m lawful money of the Umtexi States of America, w~thout exchange or collection charges The installments of pnnc~pal and the mterest on flus Bond are payable to the regustered owner hereof through the semecs of BANK ONE, TEXAS, N A, FORT WORTH, TEXAS, wluch Is the "Paymg Agent/Regustrar" for this Bond Payment of all pnnclpal of and n~rest on flus Bond shall be made by the Paying Agent/Regssttar to the registered owner hereof on each pnnc~pal and/or interest payment date by check, dated as of such date, drawn by the Paying Agent/Regustrar on, and payable solely fi.om, funds of the Issuer reqmred by the ordinance authonzlng the ~ssuanec of flus Bond (the "Bond Ordinance") to be on deposn w~th the Paying Agent/Registrar for such purpose as hereinafter prowded, and such check shall be sent by the Paying Agent~,eg~strar by Umted States mall, first-class postage prepaid, on each such pnnc~pal and/or interest payment date, to the resustered owner hereof, at the address of the regastered owner, as It appeared on the 15th day of the month next precerhng 9 each such date (th~ "Record Date") on the RegistraUon Books kept by the Paying Agen~Rcgistrar, as hereinafter deecnbed The Issuer covenants with the registered owner of this Bond that on or before each pnnc~pal and/or interest payment date for this Bond It wdl make available to the Paymg Agent/Registrur, from the "Interest and Stoking Fund" maintained pursuant to the Bond Ort~lnlanCO, the alnounts required 1:o prowde for the paynlent, In unmexhately avmlable funds, of all pnnclpal of and interest on this Bond, when due IN TH~ EVENT of a nonpayment of interest on a scheduled payment date, and for tlurty (30) days thereafter, a,new record date for such interest payment (a "Specud Record Date") will be established by the Paying Agent/Registrar, If and when funds for the payment of such interest have been received from the Issuer Notice of tho Special Record Date and of the scheduled payment date of tho past due interest ("Spcead Payment Date", which shall be fifteen (15) days after thc Specud Record Date) shall be sent at least five (5) business days pnor to tho Specud Record Date by Umted States mini, first class postage p~paid, to the address of each Holder of a Bond appeanng on tho registration books of tho Paying Agent/Registrar at the close of business on the 15th business day nrxt preceding thc date of madras of such noUce IF ~ DATE for the payment of the pnnclpal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking mstltuuons m the City where the Paying Agent/Registrar is located arc authonzed by law or exceutavo order to close, then the date for such payment shall bo thc nr~'t succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking mst~tuUoas arc authonzed to close, and payment on such date shall have the same force and effect as if made on the ongmal date payment was duo THIS BOND has been authonzed m accordance with the Constitution and laws of tho State of Texas m the principal mount of $3,795,000, for the purpose of provnlmg for unprovements and extensions of the City of Denton Utility System, which consists of the City's Combmed Waterworks, Sewer, and Electric Light and Power System ON DECEMBER 1, 2010, or on any date whatsoever therca_O~r, the unpmd installments of principal of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the optaon of thc Issuer, with funds denved from any available source, as a whole, or m part, and, ~f m part, the pamcular pomon of ~ Bond to be prepatd or redeemed shall bo selected and dcelgnated by tho Issuer (provided that a pomun of this Bond may be redeemed only m an mtegrul multiple of $5,000), at the prepayment or redompUon pnce of thc par or principal amount thereof, plus accrued interest to thc date fixed for prepayment or rcdempt~un THE OUTSTANDING BONDS of this Sones scheduled to mature on DECEMBER 1, 2014 are subject to mandatory redemption pnor to their scheduled matunues, and shall be redeemed by the Issuer, La part, prior to their scheduled maturities, with the parttcular Bonds or portions thcrenf to be redeemed to be selected by ~o Paying Agent/Registrar at random, by lot or other customary method (provaded that a pomon of a Bond may be redeemed only m an integral mnlliple of $5,000), at a redemption price equal to the par or pnnclpal amount thereof and accrued interest to tho date of redempuun, on thc dates, and m thc principal amounts, respectively, as shown m tho following schedule December 1.2014 Maturity Mandatory Principal ~ Amounts December I, 2011 $325,000 December 1, 2012 350,000 December 1, 2013 380,000 December 1, 2014 (matunty) 410,000 10 The pnncipal mount of the Bonds required W be redeemed on thc Mandatory RedempUon Da~cs pursuant the foregoing shall be reduced, at the option of the Issuer by the pnnclpal amount of any Bonds out of the matunty scheduled for December l, 2014 wluch, at lcas~ 45 days pnor to the aforesmd appropnate redemption date (1) shall have been acqmred by the Issuer at a price not exceeding the principal amount of such Bonds plus accrued unerest to the date of purchase thereof, and dshvered to the Paym~ A~ent/Rcgls~rar for cancellation, or (2) as shall have been redeemed purs~_t_~nt to thc optional redemption provisions hereof and not previously crc&ted W the Mandatory Smkmg Fund redempuon AT LEAST 30 days pnor to the date fixed for any such prepayment or redemption a wntten not~cc of such prepayment or redemptton shall be maded by the Paying AgenffReg~i~r to thc rel~stered owner hereof By the date fixed for any such prepayrmmt or redcmlmon duc prowslon shall bc made by thc Issuer with the Paying A~ent/Reg~strar for the payment of the required prepayment or rcdampUon pnce for tins Bond or rite porUon herenf wluch is to be so prepaid or redeemed, plus accrued interest thereon to thc date fixed for prepayment or redemption If such wnt?~'a notice of prepayment or redcmpUon ~s g~ven, and if due provision for such payment Is made, all as provided above, flus Bond. or the pomon thereof wluch is to be so prepaid or redeemed, thereby automaUcally shall be trea~:l as prepmd or redeemed pnor to ~ts scheduled due date, and shall not bear interest al/er the date fixed for Its prepayment or redcmpUon, and shall not be re~arded as berne outstanding except for the right of the re~stered owner to receive thc prepayment or redemption pnce plus accrued interest to the date fixed for prepayment or redemption from thc Paying Agem/Re~strar out of the funds providsd for such payment Thc Paym~ A~eat/P~s~rar shall record m the Re~stration Books all such prepayments or redampt~ons of pnnclpul of flus Bond or any portion hereof THIS BOND, to the extent of thc unpmd or unredeemed principal balance hereof, or any unpmd and unredeemed pomon hereof m any mtegrul mulUple of $5,000, may be assigned by the untml registered owner hereof and shall be transferred only m the ReglstraUon Books of the Issuer kept by the Paying Agent/R~strar acun~ m the capacity of registrar for the Bonds, upon rite terms and conchuoas set forth m the Bond Ordinance Among other requirements for such transfer, flus Bond must be presented and surrendered to the Paying A~e~nt/Rcglstrar for cancellation, together ~th proper instruments of assignment, m form and with guarantee of signatures satisfactory to the Paym~ Agen~/Re~strar, evidencing assl~runent by the unUal registered owner of flus Bond, or any pomon or pomoas hereof m any integral multiple of $5,000, to thc assl/nec or m wbosc name or names flus Bond or any such pomon or portions hereof is or are to be transferred and registered Any instrument or instruments of assignment sausfactory to the Paying Agent/Rc~strar may be used to cwdmce thc assl/nment of flus Bond or any such pomon or pomons hereof by thc ~mual registered owner hereof A new bond or bonds payable to such asslsnee or assignees (which then will be the new registered owner or owners of such now Bond or Bonds) or to thc uuual re.stored owner as to any pomon of flus Bond wluch is not berne assigned and transferred by the unUal registered owner, shall be delivered bythe Paying Agen~/Re~strar m conversion of and exchange for flus Bond or any pomon or pomons hereof, but solely m the form and manner as provided m tho next paragraph hereof for the conversion and exchun~e of flus Bond or any pomon hereof The re~stered owner of flus Bond shall be deemed and treated by th~ Issuer and the Paying A~ent/P~strar as the absolute owner hereof for all purposes, including payment and d~scharge of liability upon flus Bond to thc cxten~ of such payment, and the Issuer and thc Paying Agent~Reglstrar shall not be affected by any notice to the contrary AS PROVIDED above and m the Bond Ordinance. tbs Bond, to thc ext~t of the unpmd or unredeemed prmclpal balance hereof, may be converted rotc and exchanged for a hke aggregate pnnc~pal amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated m writing by the uutml re~u~ored owner hereof, or to the anual registered owner as to any portion of flus Bond wluch ~s not being assr/ned and trans~rred by the uuual registered owner, m any dcnommaUon or denormnauons m any mtesral multiple of $5,000 (subject to rite requlren~nt heremaf~r stated that each ll substitute bond issued m ex~.h~n~¢ for any pomon of flus Bond shall have a susie stated pnncipal matunty date), upon surrender of this Bond to the Payms Aseut/R~gistrar for cancellattnn, all in accordance with thc form and procedures set forth tn the Bond Ordinance If this Bond or any pomon hereof is assqp~l and transferred or converted each bond issued m 6xch~n~e for any pomon hereof shall have a single stated pnncipal matonty date correspondms w the due date of the mstallmcot of principal of flus Bond or portton hereof for which the substmite bond is bem~ exchanged, and shall bear interest at thc rate applicable to and bomc by such tnstsl!meat of pnncipal or portton thereof Such bonds, rcspeetively, shall be anbject to rcdcmpUon pnor to maturity on the same dates and for the same pnces as the corresponding installment of principal of flus Bond or pomon hereof for which th~ are hems exchanged No such bond shall be payable m mst~l!mcnts, but shall have only one stated pnncipal matonty date AS PROVIDED IN TH~ BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or moro asml~nees, but the bonds issued ~nrl delivered ut exchange for flus Bond or any pomon hereof may bo asm~ned and transferred, and converr~d, subsequantly~ as provtded m the Bond Ordinance Thc Issuer shall pay thc Paym~ A~cnt/Rc~strar's standard or customary fees and char~cs for transfernng, converting, and exchansm~ flus Bond or any pomon thereof, but thc one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges reqmred to be prod with respect thereto Thc Paym~ Agent/Reg~/~ shall not be reqmred to nmke any such assignmeut, conversion, or exchange 0) durm~ the penod conunencm~ with the close of business on any Record Date and ending w~th the ope, m2 of business on the next following pnncipal or mterest paymeat date, or, (n) with respcet to any Bond or pomon thereof called for prepaym~ut or redemption prior to matonty, withn 45 days prior to lte prepayment or redempuon date IN THE EVENT any Paying A~ont/Re~ for flus Bond is changed by ~he Issuer, resigns, or othervasc ceases to act as such. the Issuer has covenanted tn thc Bond O.tm~nce that it promptly will appoint a competent and legally qush6ed substitute therefor, and promptly will cause wntten notice thereof to be mailed to the registered owner of flus Bond IT IS HEREBY cemfled, recited, and covenanted that this Bond has been duly and valtdly authorized, issued, sold, and dchvered, that all acts, concht~ons, and things required or proper to be performed, exist, and be done precedent to or ut the authorization, issuance, and delivery of flus Bond have been performed, existed, and been done in accordance with law, that flus Bond is a special obhgai~on of thc Issuer, secured by and payable, together with other bonds, from a first lien on and pledge of thc "Pledged Revenues", which include initially thc '~Net Revenues of the System" as such terms arc defined in thc Bond Ordinance, with the System consistmS oi~thc City's enttre combined warm'works, sewer, and eleetnc h~ht and power system ~ ISSUER has reserved the n~ht, sub.~ect to the rcsmcuons stated tn the Bond Or~,n~,~ce, to ~ssue Additional Bonds payable from and sceured by a first han on and pledge of thc "Pledged Revenues*' on a panty with flus Bond TH~ ISSUER also has reserved the n~ht, subject to the restnctions stated tn thc Bond Ordinance, to amend the Bond Ordinance with the approval of thc holders or owners of fifty-one percent in principal amount of all outstandmg bonds which are secured by and payable from a first hca on and pledge of thc Pledged Revenues ~ RBGISTERED OWNER hereof shall never have thc right to demand payment of flus Bond or thc interest hereon out of any funds ratsed or to be raised by texaUon or from any source whatsoever other th~n spccxfied m the Bond Ordinance 12 BY BECOMING the registered owner of tbs Bond, the registered owner thereby acknowledges all of the terms arid provisions of the Bond Ordinance, agr~s to be bound by such terms and prov~siens, acknowledges that the Bond Ordinance is duly recorded and available for inspection tn the official minutes and records of the gnvemmg body oftbe Issuer, and agrees that the terms and provtmoas oftlus Bond and the Bond Ordinance constttuto a contract between tho registered owner bereof and thc Issuer IN WITNESS WI-I~REOF, the Issuer has caused flus Bond to be signed w~th the manual or facstrmlc signatur~ of tho Mayor of tho Issuer and countersigned and attested vath the manual signature or facsmule of the City S~cretary oftbe Issuer, has caused thc officml seal of the Issuer to be duly trapressed on flus Bond, and has caused flus Bond to be dated April 15, 2000 A'I-I'I~ST CITY OF DENTON, TEXAS By By Jenmfer Walters Jack Miller City Sect~ary, Ctty of Denton, Texas Mayor, Ctty of Denton, Texas (CrrV SF~L) (BOND INSURANCE LEGEND, IF ANY) FORM OF REGISTRATION CERTIFICATE OF THE ~Q~IPTROLLER OF PUBLIC ACCOUNTS COMPTROLLER'S REGISTRATION CERTIFICATE REGISTER NO I hereby certify that this Bond has been examined, cemfied as to Validity, ~ approved by the ARomey General of the State of Texas, and that flus Bond has been registered by the Comptroller of Public Accounts of the State of Texas Wlmess my signature and seal flus Comptroller of Pubhc Accounts of the State of Texas (COMPTROLLER'S SEAL) SecUen 6 ADDITIONAL CHARACTERISTICS OF THE BONDS ~ (a) The Issuer shall ke~p or cause to be k~t at the Fort Worth, Toy, as, corporate trus~ office of BANK ONE, TEXAS, N~A (the "Paying Agent/Registrar") books or records of the reg~strauon and tramfer of the Bonds (the "Registrat~on Books"), and the Issuer hereby appoints the Paymg Agent/Registrar as ~ts registrar and transfer a~ent ~o keep such books or records and make such transfers and re~rauons under such reasonable regnlaUons as the Issuer and Paying Agent/Re~strar may prescribe, and the Paying Agent/Re~,ustrar shall make 13 such transfers and registrations as horem provided The Paying Agent/Registrar shall obtain and record m thc Rcgistrauon Books tho address of thc registered owner of each Bond to which payments w~th respect to thc Bonds shall be rnmled, as hereto provided, but It shall bc tho duty of each registered owner to not~fy thc Paying AgenffRel~lstrar m writing of tho address to which payments shall bc mmled, and such interest payments shall not bc totaled unless such notice has been givan The Issuer shall have tho right to respect the Registration Books dunngI regular hosmess hours of the Paying Agent/Registrar, but otherwise thc Paying Agent/Registrar shall keep th~ P~gistration Books confidanual and, unless othervase reqmred by law, shall not pornut their inspection b); any other eni~ty Registration of each Bond may be transferred m tho Registration Books only upon presentatton and surrender of such Bond to tho Paying Agent/Registrar for transfer of registrauon and cancellation, together with proper written mstnanents of assignment, m form and with guarantee of s~gnamres sansfactory th tho Paying Agant/Rogistrar, ~videncmg (~) thc assignment of tho Bond, or any portion thereof m any integral mulUplo of $~,000, to the assignee or assignees thereof, and (u) the right of such assignee or assignees to have the Bond or any such portton thereof registered m the name of such assignee or assignees Upon the assignment and transfer of any Bond or any porUon thereof, a now subsUtote Bond or Bonds of the same Sones shall bo issued m conversion and exchange therefor ua tho manner hereto provided The Imual Bonds, to the oxteat of the unpaid or unred~med principal balance thereof, may be assigned and transferred by the anUal,roglstered owner thereof once only, and to one or more assignees desiderated m wntmg by the tmtud registered owner thereof All Bonds ~ssued and delivered m conversion of and exchange for the ImUal Bond shall bo m any denomination or denommalions of any integral multiple of $$,000 (subject to the requirement horomai~r stated that each sublmtute Bond shall have a single stated principal matunty date), shall be ha the form prescnbed for such Sones in tho FORMS OF SUBSTITUTI~ BONDS set forth m tins Ordinance, and shall have tho charactensucs, and may bo assigned, transferred, and convened as hcremai~er provided Iflthe ImUal Bond or any pomon thereof is assigned and transferred or converted the ImUal Bond must bo surr0ndered to the Paying Agen~A~,~gistrar for cancellaUon, and each Bond issued ut exchange for any pon~on of th0 Imt~al Bond shall have a single stated principal matunty date, and shall not bo payable m install- ments, and each such Bond shall have a pnnc~pal maturity date corresponding to the due date of tho installment of pnnelpal or portion thereof for which tho substitute Bond is being exchanged, each such Bond shall bear interest at the single rate appheablo to and borne by such installment of pnnclpal or pomon thereof for which it is bomg exchanged and each such Bond shall bo of thc santo Sones If only a portion of thc Imtial Bond Is assigned and transferred, thoro shall bo dehvered to and registered m tho name of the unual registered owner subsutute BOnds of tho same Sones m exchange for the unassigned balance of tho huUal Bond m the same manner as ~fitho mitml registered owner were tho assignee thereof If any Bond or porUon thereof other than the lmtial Bond ~s assigned and transferred or converted each Bond ~ssued m exchange therefor shall be of the same Senes,~have the same principal matunty date and bear interest at the same rate as thc Bond for which it is exchanged A form of assignment shall bo printed or endorsed on each Bond, excepting tho Imual Bonds, which shall be executed by tho registered owner or Its duly authorized attorney or representative to cwdence an assignment thereof Upon surrender of any Bonds or any pomon or pomons thereof for transfer of reglsUat~on, lan authonzed ropresentattve of the Paying Agent/Registrar shall make such transfer m thc ReglstraUon Books, and shall dehver a now fully registered substitute Bond or Bonds of the same Sones, having the charactm~cs hereto described, payable to such assignee or ass~gnces (which then will be the registered owner or owners of such now Bond or Bonds), or to tho previous registered owner m case only a pomon of a Bond is being assigned and transferred, all tn oonverslun of and exchange for smd assigned Bond or Bonds or any pomon ~r pomoas thereof, ut the san~ form and manner, and with tho same effect, as provided m Section 6(d), below, lfor tho conversion and exchange of Bands by any registered owner of a Bond The Issuer shall pay tho Paying Agnnt/Rogistrar's standard or customary foes and charges for malong such transfer and delivery of a substitute Bond or Bonds, but tho one requesting such transfer shall pay any taxes or other governmental charges required to bo prod with respect thereto Tho Paying Agent/Registrar shall not bo reqmred to make transfers of ~ogistrailun of any Bond or any portion thereof (~) dunng the penod commencing with tho close of business On any Record Date and ending with tho opemng of business on thc next following principal or 14 interest payment date, or, (u) w~th respect to any Bond or any pomon thereof called for redempUon prior to maturity, w~thm 45 days pnor to its redemption date (b) 0wnershu) of Bonds The entity m whose name any Bond shall ho regtstered m the RegistraUon Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such Bond shall be overdue, and the Issuer and the Pa!an-~ Agent/R~strar shall not be affceted by any notice to the contrary, and payment oi~ or on account of, the principal of, premium, if any, and interest on any such Bond shall be made only to such registered owner All such payments shall be valid and effectual to satisf}' and chschargn the habihty upon such Bond to thc extent of the sum or sums so paid (c) Payment of Bonds and Interest Thc Issuer hereby further appoints the Paying Agent/Registrar to act as the paym~ a~ent for paying the principal of and interest on thc Bonds, and to act as its agent to convert and exchange or replace Bonds, all as provided tn this Ordinance The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paym~ A4~ent/Rcgtstrar vath respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as pwvided tn flus Ordinance However, m tho event ora nonpayment of interest on a scheduled payment date, and for flurty (30) days thorcaP~r, a now r~ord date for such interest payment (a "Spcetal Record Date") will be estubhshcd by thc Paym~ Agent/l~gtstrar, if and when funds for the payment of such interest have been received from thc Issuer Notieo ortho Specml Reoord Date and ofthe scheduled payment date ofthe past duc interest ("Spcelal Payment Date'*, whch shall be fdtcen (15) days after the Specml Record Date) shall be sent at least/Jvc (5) business days prior to the Specml Record Date by Umted S~ates mml, first class postage prepaid, to the address of each Holder of a Bond appeanng on tho re~straUon books of thc Paying Agent/Re~strar at thc close of business on thc 15th busmess day next preceding the date of Ipmhng of such notice (d) Conversion and ExahAnae or Renlacement. Authentication Each Bond issued and delivered pursuant to flus Ordinance, to the extent of thc unpaid or unredeemed principal ba]~nce or pnncipal amount thereof, may, upon surrender of such Bond at the principal corporate trust office of the Paying Agent/Registrar, .illt~ether voth a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to thc Paym~ A~ent/Rog~sUar, may, at the option of tho registered owner or such assignee or assignees, as approprmte, be converted rote and exchanlp~d for fully re~stered bonds of the same Series, vathout interest coupons, tn thc form prescnbed for such Series tn the FORMS OF SUBSTITUTE BONDS set forth m flus Ordinance, in the denomination of $5,000, or any mtelFal multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a smile stated matunty date), as requested tn writing by such registered owner or such assignee or assignees, tn an aF~'egate pnnclpal amount equal to the unpaid or unredeemed pnnclpal b~_l-qce or pnncipal amount of any Bond or Bonds so sur~ndered, and payable to the appropnate registered owner, assignee, or assll~nces, as the case may be If the Imual Bond is assigned and transferred or converux[ ~ach substitute Bond issued tn exchange for any porUon of thc Imual Bond be of the same Senes, shall have a sml~le stated principal maturity date, and shall not be payable tn installments, each such Bond shall have a pnncipal maturity date corresponding to the due date of the installment of principal or portion thereof for wluch the substitute Bond ts being exchanged, and each such Bond shall bear interest at the single rate applicable to and borne by such installment of pnnclpal or pomon thereof for which it is bemg exchanged and each such Bond shall be of the same Series If a portion of any Bond (other than tho Imtial Bond) shall be redeemed pnor to its scheduled matunty as provided hereto, a substitute Bond or Bonds bc of thc same Sones having the same maturity date, bearing interest at thc same rate, m thc denomination or denommaUoas of any integral mulUple of $5,000 at the request of thc registered owner, and in aggregate principal amount equal to the unredeemed pomonthereof, will be LSSUed to thc registered owner upon surrender thereof for cancellaUon If any Bond or pamon thereof (other than thc lmtial Bond) Is assigned and trsnsfcrred or converted, each Bond issued tn exchange therefor shall bo of the same Series, have the same prmclpal 15 maturity date and bear mterast at the same rate as tho Bond for which it ns being exchanged Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond The Paying Agent/Registrar shall converll and exchange or replace Bonds as provided hereto, and each fully registered bond delivered m conversion of and excbsnge for or replacement of any Bond or pomon thereof as pemutted or required by any prowslon of flus Ordinance shall consUtute on~ of the Bonds for all purposes of flus Ordinance, and may again be converted and exchanged or replaced It is spechfieally provided that any Bond authenticated m conversion of and exchange for or r~lacement of another Bond on or pnor to the first scheduled Record Date for the lmtlal Bond shall bear interest from the date of the Imual Bond, but each substitute Bond so authenucated after such first scheduled Record Date shall bear interest from th~ interest payment date next preceding the date on which such substitute Bond was so authenueated, unless such Bond is auth~nucated after any Record Date but on or bgfore the next following interest payment date, m which case it shall bear mterest from such next following m~rest payment date, prowd~ however, that if at the tune of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but has not b~,n paid, then such Bond shall bear interest from the date to which such interest has bcen prod m full TI-IE IN1TIAL BONDS ~ssued and dchvered pursuant to flus Ordinance is not reqmred to be, and shall not be, authenticated by thc Paying Agent/Registrar, but on each subslitute Bond Issued m conversion of and exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall bo printed a certificate, m th~ form substanUally as follows "PAY1NI~ At3ENT/RECHSTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the pmxaslons of the Bond Ordinance described re,this Bond, and that this Bond has been issued m conversion of and exchange for or replacement cfa bond, bonds, or a pomon cfa bond or bonds of an issue which onlpnally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas BANK ONE, TEXAS, N A Paying AgentffRoglstrar Dated By Authonzed Representative" An authorized represontauve of thc Paying Agent/Regssh~t shall, before the delivery of any such Bond, date and manually sign the above Cemfieate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement No additional ordmaneas, orders, or rcsoluUons need be passed or adopted by tho gnvemmg body of the Issuer or any other body or person so as to accomphsh the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the Paying Agent/R~g~strar shall provide for ~the printing, ex~oution, and delivery of the substitute Bonds m the manner prescnbed hereto Pursuant tolChapter 1201, Texas Ctovcmment Code, the duty of conv~rslon and exchange or replacement of Bonds as aforesmd ~s hereby unposed upon thc Paying Agent/Registrar, and, upon the execution of the above Paymg Ag~nt/Reglstrar's Authentication Cemfieate, the converted and exchanged or replaced Bond shall be valid, mcontcetable, and eoforceablc m the same roanner and with the sam~ effect as th~ lmual Bond which originally Was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptrollei of Pubhc Accounts The Issuer shall pay tho Paying Agent/RegJstrar's standard or eastomary fces and charges for transferring, convcrlang, and exchanging any Bond or any pomon thcrenf, but thc one rcquestmg 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 pnvalege of conversion and exchange The Paying Agant/Rog~itm' shall not be required to make any such conversion and exchange or replacement of Bonds or any pomon thereof (0 dunng the period commencing with the close of business on 16 any Record I)ate and ending with the opening of business on the next following principal or interest payment date, or, (n) wlth r~spect to any Bond or portion thereof called for redemption pnor to maturity, vothm 45 days prior to its rod~npUon date (e) In C. mneral All Bonds issued m conversion and exchange or replacement of any other Bond or pomon thereof, (1) shall be ~ssued m fully rag~stered forra, w~thout interest coupons, w~th the principal of and interest on such Bonds to be payable only to th~ rag~stered owners thereof, (u) may and shall be redeemed pnor to their scheduled maturities, (111) may be transferred and assigned, (iv) may be converted and exchanged for other Bonds of the same Series, (v) shall have the charactensUes, (v0 shall be signed and sealed, and (w0 the pnncipal of and interest on tho Bonds shall be payable, all as provided, and m the manner required or mchcanxi, m the FORMS OF SUBSTITUTE BONDS set forth m flus Ora~n~nce (f) p~vment of Fees and Charues The Issuer hereby covenants wtth the registered owners of the Bonds that it will (0 pay the standard or customary fees and charges of the Paying Agent/Registrar for its services vath respect to the payment of the pnncipal of and interest on thc Bonds, when due, and (n) pay the fees and cha~ges oftha Paying Agent/Registrar for serwces with respect to the transfer ofreglstrauon of Bonds, and with respect to the converswn and exchange of Bonds solely to the extent above provtded m this Ordinance (g) SubsUtute Pavm~ Aoent/Re~,lstrar The Issuer covenants with the registered owners ofthe Bonds that at all tunes wlule the Bonds are outstanchng the Issuer will prowde a competent and legally qualified bank, trust company, financial msUtuuon, or other agency to act as and perform thc services of Paying AgentdRcg~strar for the Bonds under flus Ordmanee, and that the Paying Agent/Registrar will be one enttty The Issuer reserves the right to, and may, at its opUon, change the Paying Agent/Registrar upon not less than 120 days written notice to th~ Paying Agent/Registrar, to be effecttve not later than 60 days prior to the next pnnclpal or interest payment date after such ncticc In the event that thc enUty at any Umc acting as Paying Agent/Registrar (or Its successor by merger, acqmsltaon, or other method) should resign or otherwise cease to act as such, tho Issuer covenants that ~t will promptly appoint a competent and legally qualified bank, trust company, financial msUtutaon, or other agency w act as Paying Agent/Registrar under tins Ordinance Upon any change m thc Paying Agent/Registrar, tim prewous Paying Agent/Registrar shall promptly transfer and dchver the RegistraUon Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to thc now Paying Agent/Registrar dsslgnated and appointed by the Issuer Upon any change m the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by thc new Paying Agent/R~gistrar to each registered owner of the Bonds, by Umted Slates mml,/irst-class postage prcpmd, wluch notl~ also shall give the address of tho new Paying Agent/Registrar By accepting thc posltaon and perfomung as such, each Paying Agent/Rag~strar shall be deenmt to have agreed to the prows~ons of flus Ordinance, and a certified copy of flus Ordinance shall bc delivered to each Paymlg Agent/Registrar Secttan ? FORMS OF SUBSTITUTE BONDS Thc form of all Bonds Issued m conversion and exchange or replacement of any other Bond or portion thereof, mcluchng the form of Paying Agent/Rcg~strar's Certificate to be printed on each of such Bonds, and the Form of Assignment to bc pnnted on each of the Bonds, shall be, resp~'~av¢ly, substantmlly as follows, with such appropriate vanauoas, ~oassicus, or msemons as are permitted or required by flus Ordlmmce l? FORM OF SUBSTITUTE SERIES 2000A BOND NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUNTY OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND SERIES 2000A INTEREST MATURITY ORIGINAL DATE RATE DATE OF ISSUE CUSIP NO % ,2000 ON THE MATURITY DATE specked above the CITY OF DENTON, m Denton County, Texas (thc "Issuer"), being a pollUcal sub&wston of the State of Texas, hereby prormses to pay to , or to the registered assignee hereof (e~ther being hereinafter called the "registered owner") the prmclpal amount of and to pay interest thereon from Apn115, 2000, to the maturity date specified above, or the date of redempuon pnor to maturity, at tho interest rate per annum specified above, w~th interest bmug first due and payable on December l, 2000, and senuannually on each June 1 and December 1 thereafter, except that ffthe date of authent~caUon of flus Bond Is later than the first Record Date (heremat~r defined), such pnnc~pal amount shall bear interest from the interest payment date next preceding the date of authenucaUon, unless such date of authenucat~0n ~s afar any Record Date (heremaft. er defined) but on or before the next following interest ~ayment date, m wluch case such pnncipal amount shall bear interest from such next following interest payment date Smd interest shall be calculated on the bas~s of a 360-day year composed of twelve 30-day months THE PRINCIPAL OF AND INTEREST ON tins Bond are payable m lawful money of the Umted States of America, vothont exchange or collection charges The pnnc~pal of tlus Bond shall be pa~d to the regtstered owner hereof upon presentaUon and surrender of tbs Bond at maturity or upon the date fixed for tts redemption prior to matanty, at tho Fort Worth, Texas, corporate trust office of BANK ONE, TEXAS, N A, wluch ns the "Paying Agent/Registrar" for tlus Bond The payment of interest on tbs Bond shall be made by the Paying Ageot/Registrar to flu~ registered owner hereof on each interest payment date by check, dated as of such mteres~ payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer reqm~ed by the ordinance anthorlzmg the ~ssuance of the Bonds (the "Bond Ordinance") to be on depomt w~th the Paying Agent/Registrar for such purpose as hereinafter provided, and such check shall be sent bythe Paying Agent/Registrar by Umted States mml, first-class postage prepmd, on each such interest payment date, to the registered owner hereof, at the address of tho registered owner, as ~t appeared at the close of business on the 15th day of the month nex~ preceding each such date (the "Record Date") on the Reg~straUon Books kept by thc Paying Agent/R~ustrar, as heremai~er described However, thc payment of such interest may he made by any other rf~hed acceptable to the Paying Agcnt/Re~ustrar and requested by, and at the nsk and expense of, the registered owner hereof Any accrued interest due upon the redempUon of flus Bond prior to matanty as provided hereto shall be prod to the re~stered owner at the pnnc~pal corporate trust oflSce of the Paying Agent/Registrar upon preseotaUon and surrender of flus Bond for redempUon and payment at the principal corporate trust office of the Paying Ageat/Reg~sWar The Issuer covenants w~th the registered owner of flus 15 Bond that on or before each principal payment date, mteres~ payment date, and accrued mterest payment date for thius Bond it vail make avadable to the Paym~ Agent/Registrar, from the "Interest and Smlang Fund" created by the Bond Ordinance, the arflounts reqmred to prowde for the payment, m mune&ately avmlable funds, of all pnnc~pal 0land interest on the Bonds, when due IN TH~ EVENT of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a now record date for such interest payment (a "Special Record Date") vail be estabhshed by the Paying Agen~/P.e&,lstrar, If and when funds for the payment of such interest have been received from the Issuer NoUce oftbe Spe~ud Raoord Date and of the scheduled payment date of the past due interest ("Special Payment Date", whch shall be fifteen (15) days ai~r the Spocml Record Date) shall be sent at least five (5) business days prior to the Spceud P.~h~ord Date by United States fatal, first class postage prepmd, to the address of each Holder of a Bond appearm~ on the re~strauon books of the Paying Agent/Registrar at the close of busmess on the 15th business day nex~ preceding the date of mmhag of such noUce IF TH~ DATE for the payment of the pnnelpal of or interest on flus Bond shall be a Saturday, Sunday, a legal hohday, or a day on whch hanlang msUtuUons in the C~ty where the Paying A§en~Reg~strar ~s located are anthonzed by law or exeouUve order to close, then the date for such payment shall be the next suceeedmg day wluch is not such a Saturday, Sunday, legal hohday, or day on wtuch banlong lnst~tutions are authorized to close, and payment on such date shall have the same force and effect as xf made on the original date payment was due THIS BOND Is one of a series of Bonds uut~ally dated April 15, 2000, authorized m accordance vath the Const~toUon and laws of the State of Texas m the principal amount of $51,085,000, for the purpose of provlchng for unprovaments and extensions of the City of Denton UUhty System, which consists of the C~ty's Combined Waterworks, Sewer, and Electnc L~iht and Power System ON DECEMBER l, 2010, or on any date whatsoever thereafter, the Bonds of flus Series may be redeemed pnor to their scheduled mamnUes, at the option of the Issuer, vath funds derived from any avmlable and lawful source, as a whole, or m part, and, ~f m part, the parucular Bonds, or portions therenf, to be redeemed shall be selected and deslgna~l by the Issuer (prowded that a porUon of a Bond may be redcen~l only m an integral multiple of $5,000), at the redemption pnce of the par or pnnc~pal amount thereof, plus accrued interest to the date fixed for redampUon ~ OUTSTANDING BONDS of flus Series scheduled to mature on DECEMBER l, 2017 are subject to mandatory redempuon prior to their scheduled maturities, and shall be redeemed by the Issuer, m part, prior to tbe~r scheduled matunues, w~th the pamcular Bonds or portions thereof to be redeemed to be selected by the Paym~ Agent/P.e~strar at random, by lot or other customary method (prowded that a poraon of a Bond may be redeemed only m an mte&~'al multaple of $5,000), at a redampt~on price equal to th~ par or pnnclpal amount thereof and acemed interest to the date of redempUon, on the dates, and m the pnnc~pal amounts, respecUvely, as shown m the following schedule Dg~ember I. 2017 MatunW Mandatory Pnnc~pal ~ Amounts December 1, 2015 3,285,000 December 1, 2016 3,485,000 Decembar 1, 2017 (maturity) 3,700,000 19 The principal amount of the Bonds required to be redeemed on the Mandatory Redempuon Dates pursuant to ',he foregoing shall bc reducexi, at thc option of the Issuer by the pnncipal amount of any Bonds out of the maturity scheduled for December l, 2017 which, at least 45 days prior to thc aforesaid appropriate redemption date (1) shall have been acquired by the Issuer at a price not exccedm~ the principal amount of such Bonds plus accrued mter~st to thc date of purchase thereof, and delivered to the Paym~ Agenl~Rcgistrar for cancellaUon, or (2) as shall have been redeemed pursuant to the opuonal redemption proviswns hereof and not prewously credited to thc Mandatory Sndung Fund redemption AT LEAST 30 days prior to thc date fixed for any redemption of Bonds or pomons thereof pnor to maturity a wntml notice of such rcdempUon shall be sent by the Paying Agent/RcgisWar by Umted S~ates mall, first-class postage prepaid, at least 30 days prior to thc date fixed for any such redemption, to the registered owner of each Bond to be redeemed at l~s address as it appeared on the 45th day pnor to such redemption date and to major securities depositories, national bond rating agencies and bond reformation semces, prodded, however, that the failure of the registered owner to receive such notice, or any defect thereto or m the sending or minims thereof, shall not affect th~ vahchty or effectiveness of the proceedings for the redemption of any Bond By tho date fixed for any such redemplion duc provision shall be mada with the Paying AgenffRegistrar for thc payment of the required redemption price for the Bonds or pomons thereof that arc to be so redeemed Ii' such wntten notice of rcdempiion ~s sent and If duc prowsion for such payment ~s made, all as provided above, the Bonds or pomons thereof that are to be so redeemed thereby automatically shall be treated as redeemed pnor to thor scheduled matonties, and they shall not bear mtercst after the date fixed for redemption, and they shall not be rcgiu'ded as bem~ outstanding except for thc right of the registered owner to receive the redemption price from thc Paying Agent/Registrar out of the funds prowded for such payment If a porUon of any Bond shall be redeemed, a subsUtute Bond or Bonds having the same maturity date, beanng interest at the same rate, m any denomination or denommauoas m any integral mulUplc of $5,000, atthe written request of the registered owner, and m aggregate pnnclpal amount equal to the unredccmed portion thereof, will bc issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as pr, evaded m 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 m the Reglstrauon Books of the Issuer kept by the Paying A~ent/Reglstrar actm~ m the capaclt~ of registrar for the Bonds, upon the terms and condmoas set forth m the Bond Ordinance Among other r~qmrements for such assignment and transfer, flus Bond must be presented and surrendered to the Paying A~ent/l~gistrar, together with proper instruments of assignment, m form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, cwdencmg assignment of tbs Bond or any pomon or poruons hereof m any integral multiple of $5,000 to the assignee or assignees un whose nam0 or names flus Bond or any such pomon or pomons hereof is or are to be transferred and registered Tho form ofAssl/nment pnnted or endorsed on tlus Bond shull be exccuted bY thc registered owner or Its duly anthonzed attorney or representative, to cwdencc the assignment hereof A new Bond or Bonds payable to such assignee or assignees (wluchthen will be the ncw registered owner or owners of such now Bond or Bonds), or to the prowons registered owner m the case of the assignment and transfer of only a porUon of th~s Bond, may be delivered by fl~ Paying AgenffReglstrar m converswn of and exchange for flus Bond, all m the form and manner as prowled m tho nox~ paragraph hereof for the conversion and exchange of other Bonds Tho Issuer shall pay the Paym~ A~ent/ReglsWar's standard or customary fees and char~s for mahng such transfer, but the one requesUn~ such transfer shall pay any taxes or other governmental charges rcqmred to be paid With respect thereto The Paym~ A~ent/R~glstrar shall not be rcqmred to makc transfers of regis- traUon of this Bond or any pomon hereof (i) during the period commencing with the close of business on any Record Date and enchng with thc opening of business on thc next following pnnclpal or interest payment date, or, (u) wlth respect to any Bond or any portion thereof called for rcdcmption prior to maturity, withm 45 days prior to its redemption date The registered owner of flus Bond shall bc dcemed and treated by thc Issuer and 2O the Paying AScot/Registrar as thc absolute owner hereof for all purposcs, including payment and (hschargc of hablhty upan, flns Bond to the cxtcot of such payment, and thc Issuer and thc Paying Ascot/Registrar shall not bc affected by any nouce to the contrary ALL BONDS OF THIS SERIES are lssuable solely as fully registered bonds, without interest coupons, in thc denonuna~on of any mte$~'al multiple of $5,000 As provided in thc Bond Ordinance, tlus Bond, or any unredeemed pomon hereof, may, at the request of the registered owner or the assl/ncc or assignees hereof, be converted mW and exchanged for a like aggregate pnnclpal amount of fully rcmstered bonds, without mterest coupons, payable to the appropriate rel~stered owner, assllp~cc, or assignees, as thc case may be, having the same maturity date, and bearing interest at thc same rate, m any dcoonunation or denominations In any mte/~'al multiple of $5,000 ns requested m writing by thc appropriate registered owner, assignee, or assignees, as thc case may be, upon surrender of tlus Bond to the Paying Agent/Registrar for cancellaUon, all m accordance with thc form and procedures sci forth m the Bond Ordmancc Thc Issuer shall pay thc Paym~ Agcot/Reglstrar's standard or customary fccs and chargcs for transfcmng, converting, and exchanging any Bond or any pomon thereof, but the one rcquestmg such transfer, conversion, and exchange shall pay any taxes or Sovemmcntal charg©s requu~l to be prod with respcct thereto as a con&tion precedcot to the exercise of such privilege of conversion and exchange Thc paya~ Agent/Registrar shall not be reqmred to make any such conversion and oxcha~c (1) during thc pcnnd commcocmg with the close of business on any Record Date,and cod~ with thc opcom~ of business on the next following pnnclpal or interest payment date, or, (n) with respect to any Bond or pomon thereof called for redcraption pnor to maturity, within 45 days pnor to its redemption date IN THE EVENT any Paying Ascot/Registrar for thc Bonds is changed by thc Issuer, resigns, or othcrwisc ceases to act as such, thc Issuer has covenanted in thc Bond Ordinance that it promptly will appoint a compctcot and lesally qualified substitute therefor, and will promptly cansc written notice thereof to bc nmled to the re~stered owners of the Bonds IT IS HEREBY cemfied, recited, and covcoanted that flus Bond has bcco duly and validly authorized, issued, sold, and dchvered, that all acts, condmons, and dungs reqmred or proper to be performed, cyast, and bc done prceedcot to or tn the anthonzation, issuance, and dchvcry of flus Bond have beco performed, eyasted, and been done tn accordance with law, that flus Bond is a special obligation of thc Issuer, secured by and payable, together with other bonds, from a first hoe on and pledge of thc *'Pledged Revcoucs', wtuch include antially thc "Net Rcvcoues of thc System", as such terms arc defined m thc Bond Ordinance, with thc Systcra consisung of the City's entire combined waterworks, sewer, and clccmc light and power system THB ISSUER b~ rcserved thc n~ht, subject to thc rcstncuons stated m thc Bond Ordinance, to ~ssuc Ad(htioonl Bonds payable from and secured by a first hoe on and pledgc of thc '*Pledged Revcoues" on a panty with flus Bond and scnas of which it Is a part THE ISSUER also has reserved thc n~ht, subject to thc restnctions stated m the Bond Ordinance, to amcnd thc Bond Ordinance with the approval of the holders or owners of fifty-one perccot tn principal amount of all outstanding bonds wluch are secured by and payable from a first hoe on and pledge of thc Pledsed Revenues THE REGISTER.ED OV~ER hereof shall never have thc right to demand payment of flus Bond or thc interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specified m thc Bond Ordinance 21 BY BECOMING thc res~stered owner of this Bond, the registered owner thereby acknowledges all of thc terms aad prowstons of the Bond Ordinance, a~rees to be bound by such terms and prows~ons, acknowledges that the Bond Ordinance is duly recorded and avmlablc for mspecuon m the official minutes and records of th& govenm~ body of the Issuer, and a~rees that the terms and prowstons of this Bond and the Bond Ordinance constitute a contract between each ro~us~red owner hereof and thc Issuer IN W1TNESS WHEREOF, the Issuer has caused this Bond to be m~ned vath the manual or facsmule sz~nature of the Mayor of the Issuer and coun~rsl~ and attested w~th the manual or facsmulc m~nature of the City Sccrota~ of the Issuer, and has caused the official seal of the Issuer to be duly uupressed, or placed m facsmule,*on this Bond A'Fr~ST CITY OF DENTON, TEXAS By By Jenmfcr Walters Jack Mtller C~y Secretary, City of Deuton, Texas Mayor, City of Denton, Texas (CrY SEAL) FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/R.EGISTRAR'S AUTI-IE2qTICATION CERTIFICATE It ns hereby certified that tlus Bond has been issued under the prows~ons of the Bond Ordinance ~cscnbed m~this Bond, and that tlus Bond Jaas been ~ssued m conversion of and exchange for or replacement of a bond, bonds, or a pomon of a bond or bonds of an issue which originally was approved by the Attorney General of the Sta~o of Texas and re~stered by the Comptroller of Pubhc Accounts of the State of Texas BANK ONE, TEXAS, N A Paying AgenJ/Reg~strar Dated By. Authonzed RepresentaUve (BOND INSURANCE LEGEND, IF ANY) 22 FORM O]~ ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the underslgued registered owner of tbs Bond, or duly authonzed representative or attorney thereof, hereby asslgus tins Bond to / , / (Assl~ncc's Socml (print or typewrite Assiguee's name and Secunty or Taxpayer address, including zap code) IdenUficauon Number) and hereby trrovocably consUtutes and appoints attorney to transfer tho re~strat~on ofths Bond on the Paying Agent/Reg~strar's Reglstratton Books wth full power of substitution m the premises Dated S~'~ture Guaranteed NOTICE g~guature(s) must be guaranteed by Registered Owner an ehglbl¢ guarantor mst~tutuon pamcxpatmg m NOTICE Tlus sxguature must correspond w~th a securmes transfer assocmUon rccogmz~l the name of the Rcgmtered Ownerappeanng on s~guature guarantee program thc face of this Cemficate m every parUcular w~thout alteratton or enlargement or any change whatsoever FORM OF SUBSTITUTE TAXABLE SERIES 2000B BOND NO UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ COUN'I~ OF DENTON CITY OF DENTON UTILITY SYSTEM REVENUE BOND TAXABLE SERIES 2000B INTEREST MATURITY ORIGINAL DATE PATE DATE OF ISSUE CUSIP NO % ,2000 ON THE MATURITY DATE specified above the CITY OF DENTON, tn Denton CounW, Texas (the "Issuer"), berne a pohncal sub&,asion of the State of Texas, hereby promises to pay to 23 , or to thc registered assignee hereof (ctthcr bern8 heremat~r called the "registered owner") the pnncipal amount of and to pay interest thereon from Apnl 15, 2000, to the maturity date specified above, or the date of redemption prior to matunty, at the interest rate per annum specified above, vath interest being first due and payable on December 1, 2000, and senuannually on each June 1 and December 1 thereafter, except that if the date of authentlcaUon oftlus Bond is later than the first Record Date (hereinafter defined), such pnnclpal amount shall bear interest from th~ interest payment date next preceding the date of authenticauon, unless such date of anthenUcaUon ~s after any Record Date (heremai[~r defined) but on or before thc next follown~ mterast payment date, m which case such principal amount shall bear interest from such next following mterast paymcn't date Smd interest shall be calculated on the basis cfa 360-day year composed of twelve 30-day months THE PRINCIPAL OF AND INTEREST ON this Bond are payable m lawful money of the United States of America, without exchange or collection charges The pnncrpal of flus Bond shall be paid to the registered owner hereof upon preseatalaon and surrender oftlus Bond at matunty or upon the date fixed for ~ts redempUon prior to matunty, at the Fen Worth, Texas, corporate trust office of BANK ONE, TEXAS, N A, wluch is the "Paying Agent/Registrar" for flus Bond The payment of mterast on tins Bond shall be made by the Paying Ageat/Re~strar to the registered owner hereof on each interest payment date by check, dated as of such mteresl payment dat~, drawn by the Paying Agent]Registrar on, and payable solely from, funds of the Issuer reqm~.,d by the ordinance authonzmg the ~ssuance of the Bonds (the "Bond Ordmanee") to be on deposit with the Paying Agent/Re~strar for such purpose as hereinafter prowded, and such check shall be sent by the Paying Agent/Registrar by Umted States mini, first-class postage prepaid, on each such interest payment date, to the reg~stsred owner hereof, at tho address of the registered owner, as ~t 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 ..j~, the Paying Agent/Registrar, as here~/~.or descnbed However, the payment of such interest may be made by any other method aeceptable to the Paying Ageat/Reg~strar and requested by, and at the nsk and expense of, the reg~sllered owner hereof Any accrued interest due upon the redompUon of flus Bond pnor to matunty as prowded hereto shall be paid to the registered owner at the principal corporate trust office of the Paying Agent/Registrar upon presentaUon and surrender of flus Bond for redemption and payment at the pnnclpal corporate trust office of the Paying Agent/Re~strar The Issuer covenants with the registered owner of flus Bond that on or before each principal payment date, mtersst payment date, and accrued interest payment date for flus Bond ~t vail make avmlable to the Paying Agent/Registrar, from the "Interest and Stoking Fund" created by the Bond Ordinance, the amounts reqmred to pwwde for the payment, m munexhately available funds, of all pnnc~pal of and interest on the Bonds, when due IN THE EVENT of a nonpayment of interest on a scheduled payment date, and for tlurty (30) days thereafter, a new record date for such interest payment (a "Specml Record Date") will be established by the Paying Agent/Relpstrar, ~f and when funds for the payment of such interest have been received from the Issuer NoUee of the Sl~oml Record Date and of tho scheduled payment date of the past due interest ("Specml Payment Date", wluch shall be titian (1:5) days aiter the Specml Record Date) shall be sent at least five (:5) business days pnor tO the Special Record Date by Umted States mini, first class postage prepaid, to the address of each Holder of a ,Bond appeanng on the reg~strat~an books of the Paying Agent/Regxstrar at the close of business on the l:sth busmeas day next precechng the date of mmlmg of such nouce 24 IF THE DATE for the payment of the pnn¢lpal of or interest on tbas Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking mstitotlons m the City where the Paying Agent/Registrar ,s located are authonzed by law or exeeuuve order to close, then the date for such payment shall be the nex~ succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking restitutions are authorized to dose, and payment on such date shall have the same force and effect as if made on the original date payment was due THIS BOND ~s one of a series of Bonds antmlly dated April 15, 2000, authorized m accordance w~th the ConstztoUon and laws of the State of Texas m the pnncipal amount of $3,795,000, for thc purpose of providing for unprovements and extensions of the City ofDentun Utxhty System, which consists of the City's Combined Waterworks, S~wer, and Electric Light and Power System ON DECEMBER 1, 2010, or on any date whatsoever thereafter, the Bonds of tbs Series may be redeemed prior to their scheduled maturities, at thc option of the Issuer, wath funds derived from any avadable and lawful sourco, as a whole, or m pan, and, if m pan, the pamcular Bonds, or pomons thereof, to be redeemed shall be selected and designated by the Issuer (provided that a pomon of a Bond may be redeemed only m an integral multiple of $5,000), at the rcdemptian pnco of the par or principal amount thereof, plus accrued interest to the date fixed for redemption THE OUTSTANDING BONDS of this Series scheduled to mature on DECEMBER 1, 2014 are sub. lea to mandatory redemption prior to their scheduled maturities, and shall be redeemed by the Issuer, m pan, prior tO their scheduled maturities, vath the panicular Bonds or pomons thereof to be redeemed to be selected by the Paying Agent/Registrar at random, by lot or other customary method (provided that a pomon of a Bond may be redeemed only in an integral multiple of $5,000), at a redemption pnee equal to the par or principal amount thereof and acemed interest to the date of redemption, on the dates, and tn the prmcipal amounts, respcctivdy, as shown tn thc following schedule December 1.2014 Matontv Mandatory Principal ~ Amounts December 1,2011 $325,000 December 1, 2012 350,000 December 1, 2013 380,000 December 1, 2014 (maturity) 410,000 The pnnc~pal amount of the Bonds required to be redeemed on the Mandatory Redemption Dates pursuant to the foregoing shall be reduced, at the option of thc Issuer by the principal amount of any Bonds out of the matonty scheduled for December l, 2014 which, at least 45 days prior to the aforesmd appropriate redemption date (1) shall have been aeqmred by thc Issuer at a price not exceeding the pnnc~pal amount of such Bonds plus acemcd interest to the date of purchase thereof, and dehvered to the Paying Agent/Registrar for cancellation, or (2) as shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credated to the Mandatory Smhng Fund redemption AT LEAST 30 days prior to the date fixed for any redemption of Bonds or pomons thereof pnor to matonty a written noUee of such redemption shall be sent by the Paying Agent/Registrar by Umted States marl, first-class postage prepmd, at least 30 days prior to the date fixed for any such redemption, to the relpstercd owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redempUon date 25 and to major sccunues d~poslton¢s, ilatlonal bond ratmS agencies and bond mformaUon scrvleeS, prowdcd, however, that the fmlure of thc reglstcred owner to rece4ve such noucc, or any dcfcct thereto or m thc sending or minims thereof, shall not affcc~ the vahdlty or effectiveness of thc procccdmgs for thc redemption of any Bond By tho date fixed for any such redcmpUon duc prowsion shall be made w~th the Paymg AgenttReglstrar for the paym~t of tho required redemption price for the Bonds or portions thereof that arc to bc so redeemed If such written not,ce of redempUon is sent and if due prowslon for such payment is made, all ns provided abovc, the Bonds or pomons thereof that are to be so redeemed thereby anWmatically shall be treated as redeemed pnor to their scheduled matunttes, and ~ shall not bear interest after thc date fixed for redcmptlon, and they shall not be regarded as being outetandmg except for the n~ht of thc registered owner to receive the redemption pn~ from the Paying Agant/Registrar out of the funds prowded for such payment If a portion of any Bond shall be redeemed, a subst~mt~ Bond or Bonds hawng the same maturity date, bearing mtercst at the same rat0, m any denormnaUon or denonunations m any mregral multiple of $5,000, at the written request of the registered owner, and m aggregate principal amount equal to the unredeemed ponton thereof, will be issued to the registered owner upon the surrandsr thereof for cancellation, at tbe expense of the Issuer, all as provided m 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 m the Registrauon Books of the Issuer kept by the Paying Agent/Registrar acUng m the capacity of registrar for the Bonds, upon thc terms and conditions set forth m the Bond Ordmanee Among other requirements for such assignment and transfer, tlus Bond must be presented and sur~ndered to the Paying A~ant/R~gistrar, together w~th proper instruments of assignment, m form and w~th gnarant~e of signatures sat~sfantory to tho Paying Agent/Registrar, ewdencmg assignment of flus Bond or any pomon or pomons herenf m any integral mulUple of $5,000 to the assignee or assignees m whose name or names flus Bond or any such pomon or pomons hereof is or are to be transferred and registered The form ofAssigiunent pnnted or endorsed on flus Bond shall be exeouted by the registered owner or its duly authorized attorney or representative, to ewdence the assignment hereof A n~w Bond or Bonds payable to such assignee or assil~nees (which then w~ll be the new registered owner or owners of such new Bond ~, Bonds), or to the prewons registered owner m the case of the assignment and transfer of only a port~on of this Bond, may be delivered by the Paying Agent/Registrar m conversion of and exchange for flus Bond, all m the form and manner as prowded m the next paragraph hereof for the conversion and exchange of other Bonds The Issuer shall pay the Paying Agent/Reglstrar's standard or customary fees and charges for mahng such transfer, but the on~ 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- tratlon of flus Bond or any portion hereof (l) dunnS the period commencing voth the close of business on any Record Date and ending voth the opening of bnsmess on the next following principal or interest payment date, or, (ii) vath respect to any Bond or any pomon thereof called for redempUon prior to maturity, w~tlun 45 days prior to its r~lemptlon date The registered owner of flus Bond shall be deemed and treated by the Issuer and the Paymg Agent/Registrar as the absolut~ owner hereof for all purposes, including payment and &scharge of habihty upon tins Bond to the extent of such payment, and the Issuer and thc Paymg Agent/R~g~strar shall not be affected by any notaen to tho contrary ALL BONDS OF THIS SERIES are lssuable solely as fully registered bonds, w~thont interest coupons, m the denommauon of any integral multiple of $$,000 As provided m the Bond Ordinance, flus Bond, or any unredeemed pomon bereof, may, at the request of the registered owner or the assignee or assignees hereof, be converted rote and oxchansed for a ld~ aggregate principal amount of fully registered bonds, wth0ut interest coupons, payable to tho appropriate registered owner, assignee, or assignees, as th~ case may be, hawng the same maturity date, and bearing interest at the same rate, in any danommauon or denonunauons m any integral multiple of $5,000 as requested m wnUng by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of flus Bond to the Paying Agent/Registrar for 26 cancellaUon, all m aeoordanee vath the fonn and proeedures set forth m the Bond Ordmanee The Issuer shall pay the Paying AgenffRos~strar's standard or customary fees and charges for transfernng, convcrtmg, and exc~ any Bond or any pomon thereof, but the one requcsUng such Uansfer, conversion, and exchange shall pay any taxes or governmental charges ~:lmred to be prod vath respect there'to as a conchUon preoedent to the exercise of such pnwlel~e of conversion and exchange The Paying Agent/Registrar shall not be reqmred to make any Such conversion and exchange (0 durm~ tho penod commencm~ vath the close of business on any Record Date and endu~ vath the opening of business on thc next following pnnclpal or mtereet payment date, or, (n) with respect to any Bond or pomon thereof called for red~mpUon prior to matunty, vathm 45 days pnor to its redemp~on date IN THE EVENT any Paym~ A~nt/R~lpstrar for the Bonds Is changed by the Issuer, reslins, or othervase ceases to act as such, the Issuer has covenanted m the Bond Ordmanee that it promptly vail appoint a competent and legally qualified subsUtute therefor, and vail promptly cause wntten notice thereof to bc mailed to the registered owners of the Bonds IT IS H~REBY certified, re~Ied, and covenanted that flus Bond has been duly and validly authoneed, issued, sold, and dehvered, that all acts, conchtions, and things required or proper to be performed, exist, and be done preoodent to or m the authorization, lssuaneo, and delivery of flus Bond have been performed, existed, and been done m accordance vath law, fi.at this Bond Is a special obligation of the Issuer, secured by and payable, together vath other bonds, from a first lien on and pledge of the "Pledged Revenues", which include miually the "Net Revenues of the System", as such terms are defined m the Bond Ordmanee, vath the System conslstm~ otthe City's entire combined waterworks, sewer, and electnc light and power system ~ ISSUER has reserved the right, sub. leet to the restrictions stated m the Bond Ordinance, to issue Addmonal Bonds payable from and secured by a first lien on and pledge of the "Pledged Revenues" on a panty vath this Bond and senes of which It is a part ~ ISSUER also has reserved the nght, subject to th~ restrictions stated m the Bond Ordmanee, to amend the B~)nd Ordinance vath the approval ofth~ holders or owners of fi/fy-one percent m principal amount of all outstanding bonds which are secured by and payable from a first hen on and pledge of the Pledged Revenues ~ REGISTERED OWNER hereof shall never have the nght to demand payment of flus Bond or the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specified m the Bond Ordmanee BY BECOMING the registered owner of flus Bond, th~ registered owner thereby acknowledges all of the terms and prowslons of the Bond Ordmanee, agr~s to be boand by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection m the official minutes and records of the governing body of the Issuer, and agrees that the terms and prowslons of flus Bond and the Bond Ordmanee consUtute a contract bct~veen each registered owner hareof and the Issuer 27 IN WITNESS WHEREOF, the Issuer has caused flus Bond to be signed w~th the manual or facsmulc signature of the Mayor of the Issuer and countersigned and attested vath the manual or facsmul¢ signature of the City Secretary of the Issuer, and has caused the official seal of thc Issuer to be duly unpressed, or placed m facsmule,~on flus Bond ATFEST CITY OF DENTON, TEXAS By By Jenmf~r Walters Jack Miller City Secretary, City of Demon, Texas Mayor, City of Denton, Texas (CITY SEAL) F~)RM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the prowslons of the Bond Ordinance described m flus Bond, and that flus Bond has bom issued tn conversion of and exchange for or replacement of a bond, bonds, or a pomon of a bond or bonds of an issue wluch ore.tonally was approved by the Attorney General of the State of Texas and registered bythe Comptroller of Pubhc Accounts of the State of Texas BANK ONE, TEXAS, N A Paying Agent/Registrar Dated By Authorized Representattve (BOND INSURANCE LEGEND, IF ANY) 28 FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the undcrstgnod registered owner of tlus Bond, or duly authorized representative or attorney thereof, hereby assigns tlus Bond to / / (Asmgnce's $octal (print or typowntc Asslgnec's name and Sceunty or Taxpayer address, including z~p code) IdcntificaUon Number) and hereby irrevocably constitutes and appoints attorney to transfer the registration oftlus Bond on the Paying Agont/Registrar's Reglstrauon Books with full power of substitution m thc prcrmses Dated Signature G-uarunteed NOTICE Signature(s) must be guaranteed by Registered Owner an chgible guarantor restitution participating m NOTICE Ttus signature must correspond with a securities transfer association recognized thcnameoftheRcglsteredOwncrappcanngon signature guarantee prograra the face of tlus Certificate m every particular without alteration or enlargement or any change whatsoever Sectaon 8 DEFINITIONS As used m this Ordinance the following terms shall have the meanings sct forth below, unless the text hereof specifically mchcates otherv~sc (a) The terms "City'* and "Issuer" shall mcan the City of Dcnton, m Dcnton County, Tcxas (b) Thc term '*City Council" or "Council" shall mcan thc govermng body of the City (c) Thc term "Bonds" shall mcan collectively the lmtial Bonds as defined and described m Section 2 of ttus Ordinance and all substttute bonds exchanged therefor, and all other subsutute bonds and replacement bonds, issued pursuant to and as provided m thts Ordinance (d) The term "Panty Bonds" shall mean collecUvely (0 the outstanding City of Denton Utility System Revenue Bonds, Series 1992, anthonzcd by ordmencc passed on March 3, 1992 (the "Series 1992 Bonds"), (ii) the om:stmutmg City of Denton Utility System Revenue Bonds, Series 1993, anthonzed by ordinance passed on March 1~, 1993 (the "Series 1993 Bonds"), (iii) the outstanding City of Denton Utility System Revenue Refunding Bonds, Senes 1993-A, authonzed by ordinance passed on June 8, 1993 (the "Series 1993-A Bonds "), (iv) the outstanding City of Demon Utility System Revenue Refunding Bonds, Taxable Series 1993-B, authorized by ordinance passed on June 8, 1993 (the "Series 1993-B Bonds"), (v) the outstanding City of 29 Denton UUhty System Revenue Bonds, Sones 1996, anthonzed by an ordinance passed on May 7, 1996 (the "Sones 1996 Bonds"), (vi) the outstanding City ofD~nton UUhiy System Revenue Refunding Bonds, Sones 1996-A, authorized by an ordinance passed on May 7, 1996 (the "Sones 1996-A Bonds"), (w0 the ou~/anchng City of Denton Utthty System Revenue Bonds, Sones 1998, authonzed by an ordinance passed on March 24, 1998 (the "Sones 1998 Bonds"), (viii) the outstandang City of Denton Uuhty System Revenue Refunding Bonds, Sones 1998A, authonzed by an ordinance passed on July 21, 1998 (the "Sones 1998A Bonds"), (~x) the outstandm_..S C~ty of Denton U~ty System Revenue Refunding Bonds, Sones 1998B, authonzed by an ordinance passed on Ausust 4, 1998 (the "Sones 1998B Bonds") and (x) the Bonds (e) Tho term "Addmonal Bonds" shall mean tho adcht~onal panW revenue bonds which the City reserves the nsht to issue m the future, m accordance with Section 25 of this Ordinance (f) Tho term "System" shall mcan (l) the City's entire eyastmg waterworks and scwcr system and the City's enUre emstmg electric light and power system, together v~th all future extensions, unprovoments, enlargements, and ad&Uons thereto, and all replacements thereof, and (2) any other related facilities, all or any part of the revenues or raceme from which do, m the future, at the opuon of the City, and m accordance wth law, become "Pledged Revenues" as hereinafter defined, provided that, notvathstandmg the foregoing, and to the extent now or boreaf~r authorized or peruntted by law, the term System shall not mean any water, sewer, olcetnc, or other facihttes of any kind which are declared not to be a part of the System, and which are acquired or constructed by the C~ty v~th the proceeds from the issuance of "Special Faclhues Bonds", wtuch are hereby defined as being specml revenue obhgaUons of tho City which are not payable from or secured by any Pled_ged Revenues, but wluch are secured by and payable from liens on and pledges of any other revenues, sources, or payments, including, but not lumted to, spceu~l contract revenues or payments received from any other legal enuty m connectaon wth such facihUes, and such revenues, sources, or payments shall not be considered as or constitute Gross Revenues of the System, unless and te the extent otborw~se provided m tho ordinance or ordinances authorizing tho ~ssuance of such "Specml Facthues Bonds" (~) Tho terms "Gross Revenues~ftbo System" and "Gross Revenues" shall mcan all revenues and raceme of every nature derived or received by the City from the opcrauon and ownership of tho System, including the mterest menmo from the mvesmtent or deposit of money m any Fund created by tlus Ordinance (h) Tho terms '~Net Revenues of'the System", and "Net Revenues" shall mcan all Gross Revenues after deducting therefrom an amount equal to the current expenses of operation and maintenance of tho System, m- cluchng all salaries, labor, materials, repmrs, and extensions necessary to render efficient scnace, provided, however, that only such repmrs and extensions, as m tbo.ludgmcnt of thc City Council, reasonably and fmrly exercised by the adopuon of' appropriate resolutions, are necessary to keep thc System m operation and render adequate scnace to said City and thc inhabitants thereof, or such as rmght bo ncecssary to meet some physical accident or con&t~on wluch would otherwise unpmr tho Bonds or Ackhuonal Bonds, shall be deducted m dcternumng "~NCt Revenues" Payments required to bo made by the City for water supply or water fucthucs, sewer senaces or sower faclhuos, fuel supply, and for tho purchase of electric power, which payments under law con~tute operation and maintenance expenses of any pa~ of'thc System, shall constitute and be regarded as expenses of operation and maintenance of~ho System onder tlus Ordinance Dcpreciatton and amorUzaUon shall not constitute or bo regarded as expenses of opera, Ion and maintenance of thc System (l) The term "Pledged Revenues" shall mcan 0) tho Net Revenues, plus 30 (2) any additional revenues, raceme, or other resources which are expected to be available to the City on a regular penodic basis, including, w~thout hrmlation, any grants, donations, or raceme received or to be received from the Umted Slates Government, or any other public or pnvate source, whether pursuant to an agreement or othervase, which m the future may, at the option of the City, be pledged to tho payment of thc Panty Bonds or Additional Bonds (j) Tim term "year" or "fiscal year" shall mean the fiscal year used by the City m connection w~th the operation of tim System (k) The term "Government Obhgations' shall mean direct obligations ofthe Umted Slates of Amenca, mchiding obligations thc principal of and interest on which are uncomhUonally guaranteed by the Umted States of America, which may be Umted States Treasury obhgauons such as its Slate and Local Government Series, and which may be m 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, authonzL~ the City of Denton Revenue Refunding Bonds, Senes 1983 (the "Sones 1983 Bonds"), and it is hereby dstermmed, declared, and resolved that all of the Panty Bonds (including the Bonds) are secured and payable equally and ratably on a panty, and that Secuons 8 through 28, of tins Ordinance are supplemental to and cumulative of Sections ? through 25 of the aforesaid ordinance passed on March 10, 1983, w~th Sections 8 through 28 of this Ordinance being applicable to all of the Panty Bonds Co) The Panty Bonds and any Additional Bonds, and the interest thereon, mchidmg any interest coupons appertaining thereto, are and shall be secured by and payable from a first llan on and pledge of the Pledged Revenues, and the Pledged Revenues are further pledged to the establishment and maintenance of the Funds created by this Ordinance, and any Funds created by any ordinance authorizing the issuance of any Adchuonal Bonds The Panty Bonds and any Additional Bonds are not and w~ll not be secured by or payable from a mortgage or deed oftrnst on any real, personal, or rmxed propemes constituting the System SeoUon 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 Danton Utility System Fund" (the "System Fond") All Gross Revenues shall be credited to the System Fund unm~hately upon receipt, unless otherwise prowded m this Ordinance Ail current expenses of operation and maintenance of the System shall be prod 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, th~ City shall retain m the System Fund at all tunes an amount at least equal to one-sixth of thc amount budgeted for the then current fiscal year for the current operation and mamtenanec expenses of the System Seouon 11 INTEREST AND SINKING FUND For the sole purpose of paying the principal of and interest on all Panty Bonds and A&huonal Bonds, them 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 enufled the "City of Denton Utility System Revenue Bonds Inter- est and Smk~ Fund" (the "Interest and Stolons Fund") Section 12 RESERVE FUND There heretofore has been, and is hereby, created, and there shall be eslabhshed~and maintained at Bank One, Texas, N A, and her~, at the option of the City, established and mamlamed at any tune at any naUonal bank having a capital and surplus m excess of $25,000,000, a separate fund to be enUtled th~ "City of Denton Ut~hty System Bonds and Addiuonal Bonds Reserve Fund" (the 31 "Reserve Fund") Tho Reserve Fund shall be used to pay the pnncxpal of and mtercst on any Panty Bonds or Additional Bonds when and to the extent the amounts m thc Interest and Stoking Fund available for such payment are insufficient for such purpose, and may be used for thc purpose of finally rctmng the last ofeny Panty Bunds or Additional Bonds Section 13 EXTENSION AND IMPROVEMENT FUND There heretofore has been and is hereby created and there shall be estabhsbed 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 UUhty System Extension and Improvement Fund' (the "Extension and Improvement Fund'*) The Extenswn and Improvement Fund shall bo used for thc purpose of paying the costs of unprovements, enlargements, extensions, adchuons, mplaeements, 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 arc not available, or for paying unexpected or extranrdinary expenses of operatton and maintenance of thc System for which System funds arc not otherwise avmlable, 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") Thc Emergency Fund shall be used for the purpose of paying unexpected or extraordinary expenses of repair, replaeemcnt, operatton, and mamtenanee of the System for which neither System funds nor the moneys m the Extension and hnprovement Fund am available There was deposxted m the Emergency Fund sunultaneously voth the delivery of the Sones 1983 Bonds to thc uutml purchasers therenf from lawfully available funds of the City the amount of $250,000 All investment interest raceme from the Emergency Fund shall be transferred to thc System Fund as received Section 15 DEPOSITS OF PLEDGED REValUES Pledged Revenues shall be ere&ted to or deposited m thc Interest and Smhng Fund, the Reserve Fund, the Extension and Improvement Fund, and other ~ -~/unds when and as required by this Ordmaoco and any ordmanee anthonzmg the issuance of Additional Bonds Section 16 INVESTMENTS Money m any Fund cstabhshed pursuant to tbs Ordmanee or any ordmanee authonzmg the issuance of Additional Bonds, may, at the option of thc City, be placed m time deposits or certificates of deposit secured by obligations of thc type beremafter described, or be invested m Government Obligations (as defined m Section 8 hereof) or obhgauons guaranteed or insured by thc Umted States of America, which, m thc opanon of the AtWmey General of the Umted States, arc backed by its full faith and credit or represent its general obligations, or invested m obligations of mstnunontahUee of the Umted States of America, including, but not lomted to, evidences of indebtedness issued, insured, or guaranteed by such governmental agencies as thc Federal Land Banks, Federal Intermediate Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, Umted States Postal Serviee, Farmers Home Admuustrauon, Federal Home Loan Monguge Assoc~attan, Small Bnsmcss Adnumstration, Federal Housing Association, or Parucipauon Cemficates m the Federal Assets Financing Trust, provided that all such deposits and mw~h~ents shall be made m such manner as vall, m the opinion of the City, penmt the money required to be expended from any Fund to be available at thc proper ttmc or tunes as expeeted to be needed Such mvestments (except Umted States Treasury Obhgauons--State and Local Government Series mvestments held m book entry form, which shall at all tunes be valued at cost) shall be valued m terms of carrent market value as ortho last day of cach fiscal year Unless other~nse set forth herem, all interest and mcomc derived from such deposits and investments munethately shall be credned to, and any losses debited to, the Fund from which tho deposit or mveetment was made, and surpluses m any Fund shall or may be chsposed of as beremafter provided Such mveetments shall be sold promptly when necessary to 32 prevent any default m connecUon w~th the Panty Bonds or Adchuonal Bonds consistent w~th the ordinances, rcspecUvely, authorizing their issuance Sec~on 17 FUNDS SECURED That money m all Funds created by this Orchnance, to the extent not mvested~ shall be secured in the manner prescribed by law Section 18 PRIORITY OF DEPOSITS AND PAYMENTS FROM SYSTEM FUND That the City shall make the deposes and payments fi.om Pledged Revenues m the System Fund when and as required by this Ordinance and any ordinance authorizing any AdchUonal Bonds, and such deposits shall be made m the following mmumr and ,anth the following irrevocable pnonues, respecuvely First, to the Interest and Smltm_.g Fund, when and tn the amounts required by this Ordinance and any ort~m~nce authorizing any AckhUonal Bonds, then Second, to the Reserve Fund, when and m the amounts required by t.has Ordinance and any ordinance anthonzmg any Adchuonal Bonds, then Third, to the Extension and Improvement Fund, when and as required by Section 21 of tlus Ordinance SecUon 19 INTEREST AND SINKING FUND REQUIREMENTS The C~y shall cause to be deposited to the credit of the Interest and Smlong Fund the accrued interest and any prenuum received fi.om the sale of the Imual Bond, and on or before the 25th day of ench month, the City shall cause to be deposited to the credat of the Interest and Stoking Fund, m approyamately equal monthly payments, amounts sufficient, together w~th any other funds on hand thereto, to pay all of the interest or pnncipal and interest coming due, including tho pnncipal amount of any Panty Bonds reqmred to be redeemed prior to maturity pursuant to any mandatory redempUon requirements, on the Panty Bonds and any Ad&Uonal Bonds on the next succeeding interest payment date Any moneys so deposited m the Interest and Stoking Fund vnth respect to a mandatory redemption ,requirement, together vath other lawfully available funds of the City, may be used by the City, to purchase, m advance ora mandatory redemption date and at a price not exceechng the principal amount thereof plus accrued interest thereon to *,he date of purchase, Panty Bonds which would be subject to hemg chosen for mandatory redemption on such mandatory redemptaon date The Paying Agent shall cancel any Panty Bonds so purchased Section 20 RESERVE FUND REQUIREMENTS There is now on hand un th~ Reserve Fund an amount of money and Government Obhgataons which is un excess of $3,000,000 and which is at least equal to the average annual principal and interest requirements of the outstanding Sones 1992 Bonds, the Sones 1993 Bonds, the Sones 1993-A Bonds, the Taxable Sones 1993-B Bonds, the Sones 1996 Bonds, the Sanes 1996-A Bonds, the Sones 1998 Bonds, the Sones 1998A Bonds and the Sones 1998B Bonds (the current "Required Reserve Amount") Following the issuance and delivery of the ImUal Bonds the Required Reserve Amount shall become and be an amount of money and investments equal to the average annual pnncipal and interest requirements of all the outstanding Panty Bonds and Ackh'aonal Bonds, provided further, however, that the Required Reserve Amount shall never bo less than $3,000,000 if the mayamum annual principal and mterest reqmrements on all outstanding Panty Bonds and Additional Bonds exceeds $3,000,000 Immedmtely after the issuance and delivery of the Imual Bond there shall be deposited to the cre~t of the Reserve Fund, from the proceeds of tho sale of the Imtaal Bond, money sufficient to cause the Reserve Fund to cuntsm an aggregate amount of money and mvesUnents equal to the Required Reserve Amount for all then outstanchag Panty Bonds After the delivery of any future Additional Bonds lhe City shall cause the Reserve Fund to be increased, if and to the extent necessary, so that such Fund w~ll contain an amount of money and investments equal to the Required Reserve Amount Any increase tn the Required Reserve Amount may bc funded from Pledged Revenues, or from proeneds from the sale of any AddtUonal Bonds, or any other avmlable source or combination of sources All or any part ofthe Reqmred Reserve Amount not funded anttally and mune&ately after the delivery of any installment or issue of Ad&uonal Bonds shall be funded, v~flun not more than five years from the date of such delivery, by deposits of Pledged Revenues m approyamately equal monthly installments on or before the 25th day of each month Pnnclpal amounts of the Panty Bonds and any Adchuon- al Bonds wluch must bo redeemed pursuant to any applicable mandatory redemption requirements shah be deemed to be matunn~ amounts ofpnncipal for the purpose of ealculatmg principal and interest requirements on such bonds When and so long as the amount ut the Reserve Fund Is not less than the Required Reserve Amount no deposits shall be made to the cre&t of the Reserve Fund, but when and if the Reserve Fund at any tune cOpt__n_m~ less than thc Required Reserve Amount, then the City shall transfer from Pledged Revenues tn thc System Fund, and deposit to the cre&t of thc Reserve Fund, monthly on or before the 2$th day of each month, a sum equal to 1/60th of thc Rcqmred Reserve Amount, until the Reserve Fund is restored to the Reqmred Reserve Amount The City epoctflcally covenants that when and so long as the Reserve Fund contains thc Required Reserve Amount, the Cxty shall cause all amounts in excess of thc Required Reserve Amount to be deposited to the credit of the Interest and Stoking Fund Section 21 EXTENSION AND IMPROVEMENT FUND REQUIREMENTS During each year, subject and subordinate to makm~ the reqmred deposits to thc cre&t of thc Interest and Smlong Fund and the Reserve Fund, the City shall be requ~cd W deposit to the creiht of the Extension and Impwvement Fund, from Pledged Revenues irt thc System Fund, an amount equal to 8% of thc "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 thc current expenses of operation and maintenance of the System for such year which arc (hrectly atmbutable to (0 all fuel costs related to thc production of electric encr/D' by the City and/or (n) the purchase of electric energy by the Cxty Addmonal ~xcess Pledged Revenues may, at the option of thc City Council, bc deposited to the ere/bt of the Improvement Fund as pcrrmtted by Sccttun 22 (b) hereof, but no such adchuonal deposit is required All investment interest mc, omc from the Exterenon and Improvement Fund shall be retained tn and remain a part of such Fund Section 22 DEFICIENCIES, EXCESS PLEDGED REVENUES (a) If on any occasion there shall not bc sufficient Pledged Revenues to make thc required deposits into thc Interest and Smlang Fund or the Reserve Fund, such deficiency shall be made up as soon as possible from thc next available Pledged Revenues (b) Subject to making the required deposits to thc crc(hi of the various Funds when and as required by flus Ordinance or any ordinance authorizing thc ~ssuance of Ad&ttonal Bonds, any surplus Pledged Revenues may be used by the Clt~ for any lawful purpose Section 23 PAYMENT OF PARITY BONDS AND ADDITIONAL BONDS On or before December 1, 2000, and senuanunally on or before each June 1 and December 1 thereafter wlulc any of thc Panty Bonds or AddtUoanl Bonds arc outstanclmg and unpn,d thc City shall make available to the Paying Agents therefor, out of the Interest and Smlon~ Fund, or if necessary, out oft=he Reserve Fund, money sufficient to pay, on each of such dates, tho principal of and interest on the Panty Bonds and Ackht~onal Bonds as thc same matures and comes duc, or to redeem the Panty Bonds or Adihtional Bonds prior to maturity, either upon mandawry redampUon or at the option of the City At thc chrectton of the City the Paym~ Agents shall either deliver paid Panty Bonds and Addmonal Bonds, and any interest coupons appertauung thereto, to the City or destroy all paid Panty Bonds and AdchUonal Bonds, and any coupons appertaining thereto, and furmsh the City with an appropnate comflcatc of cancellauon or destmcuon S¢Cuon24 FINAL DEPOSITS (a) Any Panty Bond or Add~uonal Bnnd shall bc decmcd to bo paid, retired, and no longer outstanding within the me~mng of tins Oramanee when payment of the pnncipal of, redempUon preonum, ~i'any, on such Panty Bond or Adshuonal Bond, plus interest thereon to thc due date thereof (wh~tbor such due date be by reason of mntunty, upon redempuon, or otbor~ase) either (0 shall have been mad~ or caused to bo made m accord~.~ with the terms thereof (including thc giving of any reqmred nouee ofredempUon or prowslon for the proper giving of such nouce having been made), or (ii) shall have been prowded by irrevocably dopomung w~th or ma~mg avmlable to a Paying Agent therefor, m trust and irrevocably set aside zxclnsively for such payment, (1) money suflSclent to make such payment or (2) Govern- ment Obligations winch mature as to pnncipal and interest m such amounts and at such tunes as will insure the avmlabllity, without remvestment, of sufficient money to make such payment, and all necessary and proper fees, compeneaUon, and expenses of such Paying Agent pertaining to the Panty Bonds and Ackhuunal Bonds with respect to winch such deposit is made shall have been prod or the payment thereof pwwded for to the sausfacUon of such paying agent At such tune as a Bond or Addmonal Bond shall be deemed to be prod hereunder, as aforesmd, it shall no longer be secured by or enutled to the benefits of flus Ordmanee or a lien on and pledge of the Pledged Revenues, and shall be mUffed to payment solely from such money or Govern- ment Obhgnuons (h) Any moneys so d~posited with a paying agent may at the &recuon of the City also be invested m Government Obhgnt~ons, maturing m the amounts and Umes as boremhafore set forth, and all income from all Governmen~ ObhgaUons m the hands of tho paying agent pursuant to tins Sextion winch is not required for the payment of the Panty Bonds and Adchuonal Bonds, the redempUon prenuum, if any, and interest thereon, with respect to winch such money has been so deposited, shall be turned over to the City or deposm~i as d~rected bythe City Sectaon 25 ADDITIONAL BONDS (a) Tho City shall have the right and power at any tune and from tlrae to tone, and m one or more series or issues, to authorize, issue, and deliver addit~onal panty revenue bonds (herein called "Add~uunal Bonds"), m accordance with law, m any amounts, for any lawful purpose, including tho refunding ofany Panty Bonds or AdchUonal Bonds, or other obhgnUons Such Adchtlonal Bonds, ~f and when, anthonzed, issued, and delivered m accordance with flus Ordmanee, ~hall be payable from and secured by an irrevocable first lien on and pledge of the Pledged Revenues, equally and ratably on a panty m all respects with the Panty Bonds and any other outstanding Ackituonal Bonds (h) The principal of all Ad&t~onal Bonds must be scheduled to be prod or mature on December 1 of the years m winch such principal is scheduled to be prod or mature Se~/t~on 26 FURTHER REQUIREMENTS FOR ADDITIONAL BONDS Add~uunal Bonds shall be issued only m accordanc~ with tins Ordmanee, and no installment, Series, or issue of Ad&uonal Bonds shall be ~ssued or delivered unless (a) The Mayor oftbo City and the City Secretary sign a written eerufica~ to the effect that the City is not m default as to any covenant, cun&Uon, or obhgnuon m connection w~th all then outstanding Panty Bonds and Addmonal Bonds, and the ordmanees authormng same, and that the Interest and Sndang Fund and the Reserve Fund each contains the amount then required to be therem (h) An md~endsnt cemfied public accountant, or independent firm of eerUfied public accountants, acung by and through a cemfied pubhc accountant, signs a written ceruficate to the effext that, m Ins or its 3~ opunon, during etther the next preceding fiscal year, or any twelve consecuUvc caleodar month pcnod out of thc 18-month period immediately preceding thc month m which thc orflmance authonzm8 thc lssunnce of thc then proposed Adihuonal Bonds is passed, the Pledged Revenues were at lcnst 0) 125 tunes an amount equal to the average annual principal and interest requirements, and (n) 1 10 tunes an amount equal to the pnnclpal and interest reqmrmneots dunng the fiscal year dunt~ which such requirements arc scheduled to he thc greatest, of all Panty Bonds and Additional Bonds which are scheduled W be outstanding after the delivery of thc then proposed Additional Bonds It ts specifically prowded, however, that m calcolatmg thc amount of Pledged Revenues for the purposes of tins subsection (b), if there has been any increase m the rates or charges for services of the Systmn which is then m effect, but which was not m effect dunng ali or any part of thc entre pcnod for which thc Pledged Reveouas are bmng calculated (hercmaf~r referred to as thc "entire pennd") dten thc certified public accountant, or m lieu of the certified public accountant a finn of consulting engineers, shall detemunc and certdy the amount of Pledged Revenues as being thc total of (0 the actual Pledged Revenues for thc entire period, plus (u) a sum equal to the aggregate amount by which thc actual billings to customers of thc System dunng the entire period would have been mcrcesed if such mcrensed ra'tcs or charges had bcea m effect dunng the entire pennd (c) Provision shall be mndem the ordinance authorizing their issuance for increasing the Reserve Fund to thc Required R~serve Amount as required by Section 20 hereof (d) All calculations of average annual pnncipal and mterest requirements of any bonds made m connectiun vath the issuance of uny then proposed Additional Bonds shall he mndc as of thc date of such Additional Bonds, and also m making calculations for such purpose, and for any other purpose under this Ordinance, pnnctpal amounts of any bunds which must he redeclned pnor to matunty pursuant to any appheablc mandatory redamption rcqmrcments shall be deemed to be matunng amounts of pnncipal of such bonds Section 27 GEN'~P~A~L COYk-"N~S The City fort. her covenants and agrees that m accordance ~)mth and to thc extent reqmred or pernutted by law (a) pt?rformance It vail faithfiflly perform at all times any and all covenants, undcrtahngs, stipulations, and prowsions contained m this Ordinance, and each ordinance authorizing thc issuance of Additional Bonds, and m each and every Panty Bond and Additional Bond, that it vail promptly pay or cause to bc paid the pnncipal of and interest on every Panty Bond and Additional Bond, on the dates and m the places and manner prcscnbed m such ordinances and Panty Bonds or Additional Bonds, and that it vail, at the tunes and m thc mariner prescnbed, deposit or cause to be deposited thc amounts rcqmred to be deposited into thc Interest and Smkmg Fund and thc Reserve Fund, and any holder of the Panty Bonds or Additional Bonds may rcqmre the City, its officials, and amployeos, to carry out, respect, or enforce the covenants and obligations of this Ordinance, or any ordinance anthonamg the issuance of Additional Bonds, by all legal and equitable means, mclt~dmg specifically, but without lumtation, the usc and filing ofmandsmus proceedmgs, m any court of eompctent.mnsihctton, against the City, Its officials, and employees (b) ~ The City is a duly created and existing home talc city of thc State of Texas, and is duly anthonzed under the laws of thc State of Texas to create and issue the Panty Bonds and Additional Bonds, that all actiun on its part for the creation and issuance of the said obligations has been or vail he duly and effectively taken, and that said obhgations m the hands of thc holders and owners thereof arc and vail be valid and enforceable special obligations of thc City m accordance vath their terms 36 (c) Title The City has or will obtain lawful title to thc lands, buildings, structarcs, and facdmcs consUtutm~ thc System, that it warrants that xt wdl defend thc title to all the aforesaid lands, buddings, structures, and facilities, and every part thereof, for the henefit of thc holders and owners of the Panty Bonds and Additional Bonds, a~amst the claims and demands of all persons whomsoever, that it is lawfully qualified to pledge the PieCed Revenues to the payment of the Panty Bonds and Addmonal Bonds tn thc manner prescnbed heram, and has lawfully exercised such nshts (d) Liens The City will from time to tune and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposed upon it, or thc System, that It will pay all lawful elauns for rents, royalties, labor, matenals, and supplies which if unpaid unght by law become a hen or cha~e thereon, the hen of which would be prior to or interfere with thc hens hereof, so tlmt the priority of thc hens granted hereunder shall bc folly preserved m the manner provided hereto, and that it wdl not create or suffer to be created any mechamc's, laborer's, matenalman's, or other hen or charge which nught or could be pnor to thc liens hereof, or do or suffer any matter or thm8 whereby thc hens hereof rmght or could he unpaired, provided, however, that no such tax, assessment, or charge, and that no such clanns which nu~ht be used as the basis cfa meehamc's, laborer's, matenalman's, or other llen or charge, shall be required to be paid so lon~ as tho validity of tho same shall be contested m good faith by the City (e) 0perauon of System. No Free Service While the Panty Bonds or any Mt,Uonal Bonds arc outstanrlm~ and unpaid thc City shall continuously and efficiently operate thc System, and shall maintain the System m ilood condition, repair, and working order, all at reasonable cost No free service ofthc System shall bc allowed, and should the City or any of its a~encies, mstrumentahtics, lessors, or concessionaires make use of the services and faclhUes of thc System, payment monthly of thc standard retml pnce of the scnaces provided shall he made by thc City or any of its a~enctes, mstmmentahtics, lessors, or cuncosslonmres out of funds from sources other than thc revenues of thc System, unless made from surplus Pledged Revenues as pcmutted by Section 220)) hereof (f) Ft~ltbcr Encumbrance While the Panty Bonds or any AddiUonal Bonds arc outstanding and unpaid, the City shall not additionally encumber the Pledged Revenues xn any manner, except ns pemutted in flus Ordinance in connection with Additional Bonds, unless smd encumbrance Is made.lumor and subordinate tn all respects to the liens, pledges, covenants, and agreements of flus Ordinance and any ordinance authonzmg the Issuance of Addiuonal Bonds, but the n~ht of the City to Issue revenue bonds payable from a subordinate hen on surplus Pledged Revenues is specifically recosnlzed and retained, as perrmtted under Section 22(b) herco0 (~) Sale or Dmnosal of Pronertv While the Panty Bonds or any Acklmonal Bonds arc outstanding and unpaid, the City shall not sell, convey, mortgage, encumber, lease, or m any manner transfer Utle to, or dc&cate to other use, or otherwise dispose of, lhe System, or any mSmficant or substantial pan thereof, prowded 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 prowde 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 bo insured such parts of the System ns would usually be insured by Corporatione operatm~ like properties, with a responsible insurance company or compames, a~amst risks, accidents, or casualties ag_~mst which and to the ex'tent insurance is usually carned by corporations operatm~ like propemos, including, to tho extent reasonably obtainable, fire and extended coverage insurance, insurance a~amst damase by floods, and use and occupancy insurance Public liability and property damage insurance also shall be earned unless the City Attorney ~lves a written opinion to the effect that thc City is not liable for clauns which would be protected by such insurance All insurance premiums shall be p~,d as an expense of operation of the System At any tun0 wtul¢ any contractor engaged m construction work shall be fully responsible therefor, the City shall not be required to carry insurance on the work being constructed if the contractor is ~roqulrod to car~' appropriate insurance AIl such pohcles shall be open to the inspection of the Bondholders and their representatives at all reasonable tunes Upon the happening of any loss or damage covered by msural~ from one or moro of said causes, the City shall make due proof of loss and shall do all thin~s necessary or dsslrable to cause the msunn~ compamcs to make payment m full directly to the CIty The proceeds of lllsurance covering such property, tegcther with any other funds necessary and available for such purpose, shall be used forthwith by the City for ~'~pmnng the property damaged or replacing the property destroyed, provided, however, thai; if said insurance proceeds and other funds are insufficient for such purpose, then smd ms~'an~ proceeds pert~mmg to th~ Syst~n sh_~ll be deposited m a special and s~parate trust fund, at an official depository of the City, to be designated tho Insurance Account The Insurance Account shall be held unul such tune as other funds become avmlable which, tol~ether with the Insurance Account, will be sufficient to make the ropmrs or replants on~nally required (2) Tho annual audit horems~r roqmrod may contain a secUon commenting un whether or not the CIty has compiled w~th the roqmroments of this Se~on 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 bcen prod (l) Annual Budget and Rate Covenant The City shall prepare, pnor to the bo~uuun~ of each fiscal year, an annual budget, m accordance with law, reflectm__~ an estm~ate of cash receipts and disbursements for the ensuing fiscal year m suffiolent dctml to indicate the probable Crross Revenues and Pledged Revenues for such fiscal year Tho City shall fix, estabhsh, ~,,~,m~ and collect, such rates, charges, and fees for the use and avmlablhty of tho System at all tunes as are necessary (1) to produce Gross Revenues sufficient, together with any other Pledged Revenues, to pay all currord operation and maintenance expenses of the System, and (2) to produce an amount of Pledged Revenues dunng each fiscal year at least equal to the greater of 1 22 tanes the averal~e annual pnnclpal and interest requirements of all then outstanding Panty Bonds and Addiuonal .~onds or 1 2:5 times the suc~eethng fscat year's pnncipal and interest requirements of all then outstanding Panty Bonds and Additional Bonds (I) Records The City shall keep proper books of record and account m which full, true, proper, and correct entries will be made of all dealings, activmes, and transacuons relating to the System, the Pledged Revenues, and the Funds created pursuant to this Ordinance, and all books, documents, and vouchers relating thereto shalll at all reasonable tunes be made avmlable for mspecuon upon request of any Bondholder or cmzen of the City To the extent consistent with the prowslons of this Ordmance, the City shall keep its books and records m a manner confomung to standard aecoantmg practices as usually would be followed by private corporations ownm~ and oporatm~ a smular System, with appropriate recol~mtlon being I~ven to essenual &ffcrences between mumclpal and corporate accounting pracuces (k) [Audits Aiter the close of each fscal year while any of the Panty Bonds or any Addiuonal Bonds are outsIandmg, an andit will be made of the books and accounts relating to the System and the Pledged Revenues by an independent cemfed pubho accountant or an independent finn of cemfied pubhc accountants As soon as practicable ~ the close of ench such year, and whm said autht has been completed and made avmlable to'tho City, a copy of such audit for the preceding year shall be mmlod to the Municipal Adwsory Council of Texas, to each paying a~ent for any bonds payable from Pledged Revenues, and to any Bondholders who shall so r~quest In writing The annual audit reports shall be open to the mspecUon of the Bondholders and their agents and roprosentaUvos at all reasonable tunes 38 (1) ~ It wdl comply with all of thc terms and conditions of any and all fran¢luses, p~nntts, and authorizations apphcable w or necessary with respect to rite System, and which have been obtained from any governmental a~ency, and the City has or will obtain and keep tn full force and c/Tea all franchiseS, pernuts, authorization, and other requirements apphcable to or necessary with respect to thc acqutsitien, constru~on, equipment, operation, and w~mtenance of thc System (m) ~ It will not operate, or ~rant any franchise or, to the extent It legally may, penmt the acqutsitl0n, consti~ction, or operation of, any factht~es wluch would be in enmpetition with the System, and to the extent that it legally may, the CIW will prohibit any such competing facdmes (n) ~ The City covenants to and with thc purchasers of the Panty Bonds and any Addiuenal Bonds that no use will be made of the pro~ of any of such bonds at any tune throushout thc term of any of suoh bonds which, If such use had been reasonably expceted on the date of delivery of any of such bonds to and, payment therefor by the purchasers, would have caused any of such bends to bc arhitra~c bonds witltm the meaning of .%etton 148 of the Internal Revenue Code of 1986, as amended (the "Code*'), or any regulations 0r rulings pertaanr~ thcrete, and by this covenant the City is obhgated to comply with the requirements of the aforesaid Code and all applicable and pertinent Department of the Treasury re$,ulations relatm~ to a~hitra~e bonds The City further covenants that the proceeds of all such bonds will not otherwise be used directly or mdireotly so as to cause all or any pan of such bonds to be or become arbitrage bonds within the meshing of the aforesmd Code, or any re~ula~ons pertamm~ thercW Section 28 AM.~ O1~ ORDINANCE (a) Thc holders or owners of Panty Bonds and Additional Bonds a/~re~atin~ tn pnncipal amount 51% of the a~rc~ate principal amount of then outstandm~ Panty Bonds and Additional Bonds shall have the night from time to tune to approve any amendment to this Ordinance Which may be deemed neeessary or desirable by the City, prowded, however, that nothing hereto contained shall pernut or bc construed to pemut the amendment of thc terms and conditions tn this Ordmanee or m the Panty Bonds or Additional Bonds so as to (l) Make any change in the matunty of thc ontstandmg Panty Bonds or Additional Bonds, (2) Reduce thc rate of interest borne by any of thc outstanctmg Panty Bonds or Adiituonal Bonds, (3) Reduce the amount of the principal payable on thc outstanding Panty Bonds or Additional Bonds, (4) Modify thc terms of payment of principal of or interest on thc outstanding Panty Bonds or Additional Bonds, or unpose any conditions with respect to such payment, ($) Affect the rights of the holders or owners of less than all of thc Panty Bonds and Additional Bonds then outstandu~, (6) Chan~e the minimum pereenta~e of the pnnclpal amount of Panty Bonds and Additional Bonds necessary for consent to such amendment (b) If at any tune thc City shall desire to amend the Ordinance under ths Section, the City shall cause notice of the proposed amendment to be published m a financial publication of general circulation tn The City o£Ncw York, New York, once dunn~ each calendar week for at least two successive calendar weeks Such notiee shalllbne/ly set forth thc nature of the proposed amendment and shall state that a copy thereof Is on file at the principal office of the Paym8 Asents for mspeetion by all holders or owners of Panty Bonds and Addi- uonal Bonds, Such pubhcation Is not roqmred, however, if noUce m writing is g~ven to each holder or owner of Panty Bonds and Additional Bonds (c) Whenever at any tune not less than thirty days, and w~flun one year, from the date of the first pubhcaUon of said not~ce or other semcc of wnttea not,cc thc City shnll r~colve an msmuneat or mstmmeats executed by tho holders or owners of at least 51% m a~r~gate principal amount of all Panty Bonds and Additional Bonds then outstanding, which mstrumeat or mstrumeats shall refer to the proposed amen&neat desenbed m Smd notice and which specifically consent to and approve such amendment m substanually the form of tho cbpy thereof on file wth the Paym_~ A~ea~, the City Council may pass the amendatory ordinance m substanUally the sam~ form (d) Upon the passage of any ameadawry ordinance pursuant to the pro,aslons of this Section, tins Ordinance shall be deemed to be amended m accordance vath such amendawry ordinance, and the respecuve n~,hts, duties, and obhl~ations undsr this Ordinance of the City, and all the holders or owners of then out- standing Parity Bonds and Addmonal Bonds and all future Panty Bonds and Addiuonal Bonds shall thereaiter be detennmex[, exercised, and enforced herennder, subject m all respects to such an~ndments (e) Any consent lpvea by the holder or owner of a Panty Bond or Ad&tional Bond pursuant to the provis~ons of this Seot~on shal! be u~evocable for a period of one year from the date of the first publication of the notice pwvidod for m this Secuon, and shall be conclusive and binding upon all future holders or owners of the same Panty Bond or Additional Bond durm~ such penod Such consent may be revoked at any ttme afar one year from the date of tho first publication of such notice by the holder or owner who ~ave such consent, or by a successor m Ufle, by film/noUcc thereof vath the paying ageats and the City, but such roveca- tlOn shall nell be effcctive If the holders or owners of 51% m a~reiate pnnclpal amount of the thea outstanding Panty Ben& and Addiuonal Bonds as m flus Secuon defined have, poor to the atmnpted rovocauon, consented to, and apprOved tho amendment ~, (f) For the purpose of flus Sec~aon, Iho fact of the holdms of Panty Bonds or Ad&uonal Bonds which are m bearer, coupon form, by any bondholder and tho amount and numbers of such bearer Panty Bonds or Additional Bonds and the date of their holdm~ same, may be proved by the affidavit of the person claumn5 to be such holder or owner, or by a cemiicate executed by any trust company, bank, banker, or any other dcposnory wherever situated shovang that at the date thereto meaUoned such person had on deposn v~th such trust company, bank, banker, or other d~pos~Wry, the Panty Bonds and Additional Bonds descnbed m such cemficate The City may conclusively assume that such ownership continues unUl wnt~n contrary ~s s~rved upon tho C~ty The ownership of all rol~stered Panty Bonds and Additional Bonds shall be determined from the roglstraUon books kept by the registrar therefor Sochon 29 DAMAOED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS (a) R~otacement Bonds In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying A~t/Re~s~rar shall cause to be pnnted, executed, and dehvered, a n~v bond of the same pnnclpal amount, matunty, and interest rate, as the damaged, muUlated, lost, sWlea, or destroyed Bond, m roplacemeat for such Bond m the manner hor~mai~r provided (b) [ Aoohcat~an for Renlacement Bonds Application for replacement of damaged, mutilated, lost, stolen, or d0stroyed Bonds shall be made by the re~stered owner thereof to the Paying Al~ent/Re~strar In every case 0f loss, the/t, or destmcUon ora Bond, the rol~st~rod owner applying for a replacement bond shall furmsh to the Issuer and to the Paym~ A~ent/Re~strar such secunty or mdemmty as may b~ required by thom to save each of them harmless from any loss or damage w~th respea thereto Also, m every case of loss, theft, or destruction of a Bond, the r~l~lstered owner shall furmsh to the Issuer and w the Paying Al~ent/Relpstrar 4O ev~dencc to tl$mr sausfacuon office loss, theft, or deam~on ofsu~ Bon~ ~ ~o c~e my b~ of ~o or mu~U~ of a Bond, ~o m~ o~r s~l sunder to ~e Pa~ A~E~ for c~ccllaUon ~e ~nd so ~ or muUla~ (c) ~ No~ ~ forcgo~ pro~s~o~ of~s Se~on, m ~e ov~ ~y su~ Bond s~l ~ mm~ ~d no ~t ~ ~u~ w&~ ~s ~ ~m~ m p~clp~ of, ~pU~ p~, ~f~, or m~ on ~ Bo~ ~e Issuer ~y au~o~ ~e parrot of~e s~c (~o~ su~r ~c~f ~t m ~ c~o of a ~ or muula~ Bond) ~ of ~ssu~ a r~la~t Bo~, pro~ s~ or ~W ~s ~s~ ~ abo~ pw~d~ m ~s Se~on (d) C~o ~r Issum ~la~t ~ Prior W ~e ~ssu~ of ~y r~lac~t bond, ~ Pa~ Ag~g~ s~l chsr~ ~ ~ o~er of su~ Bo~ ~ ~1 le~, p~g, ~d o~er e~os m ~m~on ~r~ Eve~ ~l~t bo~ ~ssu~ pursu~ ~ &e pro~s~om offs Se~on by ~e of · e ~ ~t ~y Bond ~ 1~, stol~, or d~y~ ~1 ~m~ a ~ntra~ obhgaUon of~ Issuer wheat or n~ ~e 1o~, ~lm, or ~a~oy~ Bond s~l be fo~ at ~y~, or be ~or~b~ by ~yo~, ~d ~1 be enU~ ~ ~1 ~ b~fi~ of ~s Or~ ~u~ly ~d propomo~ly ~ ~y ~d ~1 o~er Bo~ duly ~ssu~ ~or[~s O~ (e) b.~ho~wforlssum~l~tBo~ ~accor~ce~C~p~r 1201,T~w~ C~, ~s S~on of ~ O~g ~1 ~m~ au~onW for &e ~ss~co of my su~ r~la~t bo~ ~out ne~W of ~er a~on by ~e ~ovo~ b~y of ~ Issuer or ~y o~er b~y or pe~o~ ~d &e duW of &e r~eemmt of ~u~h bo~ ~s ~by au&o~ ~ ~pos~ upon ~e Pang Ag~, md ~ Pa~ A~en~ s~l a~ md dohvor such Bon& m ~e fo~ md ~er ~d w~ ~e effect, ~ pro~d~ m S~on 6(d) of ~ O~ for Bon& ~ssu~ m ~nve~on ~ ~c~o for ~er Bon& S~on30 CO~S~~T~-~ON ~elssuercov~~om ~y ~uon w~ch would ~vorsely ~, ~d ~ ~e su~ ~on to o~ure, ~ ~t of~ Series 2000A Bonds ~ obh~a~o~ ~cnb~ m s~on 103 of ~ C~, ~e ~ ~ w~ch ~s not mclu~ble m m~me" of~o hoist for pu~oses of ~ m~mo ~on ~ ~e~ce ~ereof, &e Issuor ~v~ ~ follows (a) ~ ~o ~y ~on~ ~sure ~t no more ~ 10 percent of~e pr~ of~e Series 2000A Bo~ (1~ ~o~ ~os~ to a reso~e ~, ~y) ~e us~ for ~y "private business use% ~ ~ m ~o~on 141~)(6) of&e C~e or, ~more ~ 10 percmt of~e pro~ ~ so us~, ~t ~o~, w~er or not rece~v~ by ~e Issuer, ~ respe~ to su~ pnw~ business use, do n~ ~r ~e ~ offs Or--ce or ~y ~rl~g ~t, &rely or ~r~y, s~cu~ or pro~ ~r ~e pa~t of mo~ ~ 10 pe~t of~e debt se~ce on ~e Sene~ 2000A Bo~, m con~vmUon of s~on 141 ~)(2) of ~ C~, ~) to ~ ~y ~ ~uro ~t m ~e ~mt ~t ~e 'Pnva~ bus-ss use" ~scnb~ m ~ub~ (a) ~r~f ox~ ~ p~cent of&e pr~ of~e Senos 2000A Bo~ (le~s ~o~ ~p~tod ~ a rese~ ~d, · my) ~ &o ~o~t m ~cess of ~ per~t of&o C~, m ~ ~ove~ u~o, 41 (c) to take any action to assure tha~ no amoun~ which ~s greater than the lesser of $~,000,000, or 5 percent o~thc proceeds of'the Senes 2000A Bonds (less amounts deposl~xi rote a reserve fund, d any) ~s (hrectly or mchrectly used to finance loans to persons, other than slate or local governmental umts, m contravention of sccaon 141 (c) of the Code, (d) to refrain from mlan~ any ac~aen winch would otherwise result m thc Scnes 2000A Bonds betas treatad as "private activity bonds" within thc meaning of section 141ca) of the Code, (e) to refrain from taking any actten that would result m the Series 2000A Bonds betas "federally suaranteed" wiflun the meaning of section 149ca) of the Code, (f) to refrain from usu~ any pomon ofthe proceeds ofthe Series 2000A Bonds, dlrcctly or indirectly, to acqmre or to replace funds winch were used, d~rectly or m,t,rectly, to acqmrc mve~hs~ent property (as defined m section 145Co)(2) of the Code) winch produces a materially in~har laeld over the term of the Series 2000A Bonds, other than investment property acquired with - (1) proceeds of the Sones 2000A Bonds invested for a reasonable temporary period of 3 years or less unttl such proceeds are needed for the purpose for winch the Senes 2000A Bonds are issued, (2) amounts mvcs~l In a bona fide debt service fund, within file meaning of section 1 145-1(b) of the Treasury Regulauoas, and (3) mounts deposited m any reasonably required reserve or replacement fund to the extent such amounts do not exceed l0 percent of the stated principal amount (or, m the case ora chscount, the issue price) of the Series 2000A Bonds, ~) to otherwise restrict the use of the proceeds of the Series 2000A Bonds or amounts treated as proceeds of the Senes 2000A Bonds, as may be necessary, so that the Senes 2000A Bonds do not otherwise contravene the requirements of section 145 of the Code (relating to arbltra~e), Sce~on 149(g) of the Code (relatn~ to hedse bonds), and, to the extent applicable, section 149(d) of the Code (relating to advance refimdmgs), and Ca) to pay to the Umted States of Amenca at least once dunng each five-year penod (begmnml~ on the date of dehvery of the Series 2000A Bonds) an amount that ns at least equal to 90 pcre~nt of the "Excess Earnml~s", within the meaning of section 145(f) of the Code and to pay to the Umted States of Amenea, not later that 60 days after thc Senes 2000A Bonds have been paid m full, 1001pereent of the amoun~ then required to bc paid as a result of Excess Eanungs under secuon 148(0 of the Code Forlpurposes of the foregoing (a) and Ca), thc Issuer understands that the term "proceeds" includes "d,sposltion proceeds" as defined m the Treasury Regulat~oas end, m the case of refundu~ bonds, transferred proceeds (~fany) and proceeds of the refunded bonds expended pnor to thc date of issuance ofthe Senes 2000A Bonds It Is the undemanding of the Issuer that the covenants contained hereto are mteaded to assure compliance with the Coda and any regulatwns or rulmss promulgated by the U S Departraent of thc Trensury pursuant thereto In the event that regulations or mhaSs are hcrea/ter promulgated winch modify, or expand prows~oas of the Code, as apphcable to the Series 2000A Bonds, the Issuer will not be reqmred to comply with any covenant conhamed hereto to the extent ~at such failure to comply, m the opunon of naUonally-recogmzed bond counsel, will not adversely affect the exemption from federal raceme taxation of interest on the Series 42 2000ABondsundersecilon 103 oftho Code In the ovent that rel~ulauonsorrulmgsarehereaftorpromulgated which unpo~e ada,tional reqmrements which are applicable to the Sones 2000A Bonds, the Issuer a~rces to comply with the additional reqmrements to the extent necessary and reasonably possible, m the opunon of natlonally-reco/puzed bond counsel, to preserve the exemption from federal raceme taxaUon of interest on thc Sones 2000A Bo,!_ds under section 103 of the Code In furtherance of such mtenUon, tho Issuer hereby anthonzes and directs the Mayor to execute any documents, cemiicates or reports reqmred by the Code and to make such elecuons, on behalf ortho Issuer, which may be penmtted by the Code as are consistent vath the purpose for tho issuance of the Sones 2000A Bonds The Issuer covenants to comply vath the covenants contained m this section alter defeasance of the Sones 2000A Bonds In order to fucthtate compliance w~th the above covenant (h), a "Rebate Fund" ~s hereby estabhshed by the Issuer for the solo benefit of the Umted States of America, and such fund shall not be subjoci to thc clann of any other person, mchiding vathout Imutauon, the owners of the Cemficates The Rebate Fund is established for tho additional purpose of comphancc vath Secuon 141i of the Code SecUun 31 ALLOCATION OF, AND LIMrrATION ON, EXPENDITURES FOR THE PROJECT The Issuer covenants to account for the expena,ture of sale proceeds and investment cammgs to bo used for the purposes described m Section I of flus Ordinance (the "Pro. loci") on ~ts books and records m accordance vath the requllmnents of tho Internal Revenue Code Tho Issuer reco~mzes ldmt m order for tho proceeds to be considered used for tho reunbursemcnt of costs, the proceeds must be allocated to expcoditures vathm 1 $ months of the later of the date that ( 1 ) tho expanditure Is made, or (2) the Project is completed, but m no event later than thrce years after the date on which the onf~mml cxpenditure Is prod Thc foregoing notvathstandmg, tho Issuer reco/mzes that m order for proceeds to be expended under thc Internal Revenue Code, thc sale proceeds or investment eamml~s must be expended no more than 60 days after the earlier of (1) the fi/th anniversary ortho dehvery oftho Sones 2000A Bonds, or (2) the date the Sones 2000A Bonds are rciired The Issuer agrees to obtain the advice of nationally-reco~uzed bond counsel if such expenditure fa~ls to comply with thc fu~oml~ to assure flu~t such expenditure will not adversely affect the tax-exempt status of the Sones 2000A Bonds For purposes hercof, the Issuer shall not be obhgated to comply vath this covenant ~f It obtains an opuuon ~dmt such failure to comply will not adversely affect tho cxchidab~hty for federal income tax purposes from gross raceme of the interest SeCtion 32 DISPOSITION OF PROJECT The Issuer covenants that the property con~tutmg the Proseci vail, not be sold or othervase disposed m a transaci~on resulting m the receipt by the Issuer of cash or other compensation, unless tho Issuer obtains an opnaon of nationally-recolpuzed bond counsel that such sale or other dis~osltion vail not adversely affect the tax-exempt status of the Sones 2000A Bonds SecUon 33 INTEREST EARNINOS ON BOND PROCEEDS Interest carnm~s derived from the investment of proceeds from the sale of the Initial Bonds, other than proceeds deposited tn the Interest and Stoking Fund and the Reserve Fund, shall be used along with othcr available proceeds for unprovm!~ the System, pr0wded that after complci~on of the unprovcmonts if any of such interest camm~s remain on hand, such interest eanun~s shall bo deposited m the Interest und Stoking Fund It is further prowded, however, that any mtereg camm~s on bond proceeds which are reqmred to be rebated to thc Umted States of Amonca pursuant tO tho Covenants Regardml~ Tax-Exemption hereto so as to prevent tho Sones 2000A Bonds from bom~ arhitra~e bonds shall bo so rebated and not considered as interest earnm~os for the purposes of this Ordinance SecUon 34 CUSTODY, APPROVAL, AND REGISTRATION OF BONDS, BOND COUNSEL'S OPINION, CUSIP NUMBERS, PREAMBLE, AND INSURANCE The Mayor of tho Issuer Is hereby autbonzed,to have conlrol of the Imtufl Bonds Issued hereunder and all necessary records and proceedings pertaining to the Imual Bonds pending their delivery and the mvesUgaUon, exammauon, and approval by the Atwmoy CJ~oral of the State of Texas, and tho registra~on by the Comptroller o£Pubhc Accounts ofthe State of Texas U~on rogistratton of tho ImUal Bonds smd Comptroller of Pub he Accounts (or a deputy designated m writing WI act for smd Comptroller) shall manually sign tho Comptroller's Registrauon Ccmficate on the lmUal Bonds, and tho seal of smd Comptroller shall bo unpressed, or placed m facsomlc, on the Imtml Bonds The approving lel~al opmion of thc Issuer's Bond Counsel and the assigned CUSIP numbers may, at the opUon of the Issuer, bo pnnted on the lmUal Bonds or on any Bonds issued and delivered m conversion of and exchange or replacement o£ any Bond, but ne~thor shall have any legal effect, and shall be solely for the convemenco,and mfommuon of the registered owuers of the Bonds The preamble to flus Ordinance is hereby adopted and made a part hereof for all purposes Ifmsurance is obtained on any ofthe Bonds, the ImUal Bonds and all other Bonds shall bear an appropriate legend concernm~ insurance as prowded by the insurer Section 35 SALE OF INITIAL BONDS Thc Initial Bonds arc hereby sold and shall be delivered to Dam Rauscher Incorporated, as representaUve of the underwriters, m accordance with thc Bond Purchase A~reement dated thc date of this Ordinance and presented to the City Council at flus meeting Thc Mayor is hereby authorized and &reeted to execute, on behalf of the Issuer, such Bond Purchase Aircemant m thc forra and substance submitted at this meetm~ Sectton 36 OFFICIAL STATEMENT An Official Statement dated as of the date of thts meeting has been prepared m connecuon with the sale of thc Imual Bonds and the Bonds, m the form and substance submitted at taus meetm4~ Smd Official Statement and any supplement or addenda thereto have been and are hereby approved, and their use m tho offer and sale of the Bonds is hereby approved It is further officially found, determined, and declared tha~ the statements and represantaUons contained m smd Offictal Statement arc true and correct m all material respects, to the best knowledge and bchef of the Issuer Thc &stnbuUon and usc of the Prelmunary Official Statement dated April 11, 2000, pnor to the date hereof is hereby muffed and approv~td -.~,, Section 37 DTC REOISTRATIOJq The Bonds untmlly shall be issued and delivered m such manner that no physical dtstribuUon of the Bonds will be made to the public, and Thc DeposiWry Trust Company (*'DTC"), New York, New York, miUally wdl act as depository for the Bonds DTC has represented that it is a lumted purpose trust company incorporated under the laws of thc State of New York, a member of the Federal Reserve System, a *'clearing corporatton" within the meanmg of thc New York Umform Commercial Code, and a "cleanng agency*' registered under Section I?A oftha federal Secunues Exchange Act of 1934, as amended~ and the Issuer accepts, but m no way verifies, such representations The lmUal Bond anthonzed by this Ordinance shall bo delivered to and registered m the name of the Purchaser However, it is a condmon of delivery and sale that the Purehaser, onme&ately after such delivery, shall cause thc Paying Agent/Registrar, as provided/'or m tbs Ordinance, to cancel said ImUal Bond and deliver m exchange therefor a substitute Bond for each maturity of such Imual Bond, with each such subsUtute Bond to be registered m the name of CEDE & CO, the,nominee of DTC, and it shall be the duty of thc Paym~ A~cnt/Rcgistrar W take such action It is expected that DTC wdl hold the Bonds on behalf of the Purchaser and/or the DTC Pamclpants, as defined and described m the Official Statement referred to and approved m SecUon 36 hereof (the "DTC Partic~pants") So long as ~h Bond is reSistered m the name of CEDE & CO, the Paying Agent/Registrar shall treat and deal with DTC m all respects tho same as if it were thc actual and bencfictal owner thereof It is expected that DTC will maintain a book entry system whch will Idenufy bencficml ownersinp of the Bonds by DTC Paine- pants m integral amounts of $5,000, with transfers ofownerslup being effected on the records of DTC and thc DTC Pamcipants pursuant to rules and reBulaUons established by them, and that thc substitute Bonds mmally deposited vath DTC shall be mimobd~zed and not be further exchanged for subsUtute Bonds except as boremaf- ter prowded The Issuer is not responstble or lmble for any funcuons of DTC, will not bo responsible for paying any fees or char~es with respect to its senaces, will not be responsible or liable for malllt_mnmg, supervising, or reviewm8 the records of DTC or the DTC Pamcipants, or protecting any interests or rights of thc beaefielal owners of the Bonds It shall be the duty of the Purchaser and thc DTC ParUclpants to make all arrangements vath DTC to estabhsh this book-entry system, the beneficml ownership of the Bonds, and the method ofpaymg the fees and charges of DTC The Issuer does not represent, nor dces it m any way covenant that the imual book-entry system cstabhshed vath DTC vail be maintained m thc future Thc Issuer reserves thc right and option at any time m the future, m its sole discretion, to temunate the DTC (CEDE & C O ) bcok- entry only reg~gration requirement described above, and to pemut the Bonds to be registered m thc name of any owner Ifthe Issner enerctses its nght and option to temunate such requirement, It shall give wntlen notice of such termination to tho Paying Agent/Registrar and to DTC, and thereafter the Paying Agent/Registrar shall, upon presentation and proper request, register any Bond m any name as provided for m this Ordinance Notwithstanding the lmtml estabhshrnent of the foregom~ book-entry system with DTC, tf for any reason any of the originally delivered substxtute Bonds is duly filed vath thc Paying Agent/Registrar with proper request for transfer and substitution, as provided for m this Ordinance, substitute Bonds will bc duly delivered as provided m tins Ordinance, and there will be no assurance or represcntaUon that any book-entry system will be maintained for such Bonds Section 38 COMPLIANCE WITH RULE 15c2-12 (a) Annual Reoorts. (0 The Issuer shall provide annually to each NRMSlR and any SID, within six months after the end of each fiscal year e~aml m or after 2000, financial mfonuntion and operating data vath respect to the Issuer o£the general type included m the final Official Statement authorized by Section 36 of this Ordinance, bemg the lnformauon descnbcd m Exhibit A hereto, which Exhibit is attached to and mcorpornted m this Ordinance as if written word for word hereto Any financial statements so to be provided shall be (1) prepared m accordance with thc accoimtmg pnnciples described m Exhibit A hereto, or such other accounting pnnciples as the Issuer may be required to employ from tun~ to tune pursuant to state law or regulaUon, and (2) audited, if thc Issuer comnussions an audit of such statements and thc audit is completed within thc pcnod dunng which they must bc provided If the audit of such finaocml statements is not complete within such period, then thc Issuer shall provide unaudited financial statements by the required time and vail provide audited financial statements for the applicable fiscal year to each,NRMSIR and any SID, whoa and if thc audit report on such statements become available (u) If the Issuer changes its fiscal year, it will noUfy each NRMSIR and any SID of the change (and of thc date of thc new fiscal year end) pnor to the next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this Section Thc financial mformaUon and operating data to be provided pursuant to this Section may be set forth m full m one or more documents or may bc included by specific reference to any document (mchidmg an official statement or other offenng document, if it is available from the MSRB) that theretofore has been provided to each NRMSlR and any SID or filed with the SEC (b) Matenal Event Notices The Issuer shall notify any SID and either each NRMS1R or the MSRB, m a timely manner, of any of the following events with respect to thc Bonds, if such event is matenal within thc meamng of the federal securities laws 1 Principal and interest payment delinquencies, 2 Non-payment related defaults, 3 Unscheduled draws on debt service reserves reflecting financial difficulties, 4 Unscheduled draws on credit enlumcements reflecting financml difficulties, 4~ $ SubsUtuUon of credit or hqul&ty prowders, or their failure to perform, 6 Adverse tax opunons or events affcctmg the tax-exempt status of the Bonds, ? Modfficauons to nghts of holders of the Bonds, 8 Bond calls, 9 Defeasanoes, 10 Release, subst~tuuun, or sale of property securing r~payment of the Bonds, and 11 Ratm~ changes The Issuer shall uotl~ any SID and e~tber each NRMSlR or the MSRB, m a umely manner, of any failure by thc Issuer to provide financial mformaUon or operating data m accor~nce with subseotlon (a) of flus SecUon by thc tune rcqmred by such subsection (c) ! L~m~ttons~ Dlsclnunersl and Amendm~ts. (0 The Issuer shall be obhf~ted to observe and perform the covenants specified m tins Sootion for so lon~ as, bu~ only for so long as, the Issuer remains an **obh~ated person'~ with respoot to the Bonds vflflun tho meanm5 of the Rule, except that the Issuer m any event w~ll g~ve tho not~oe re~lulred hy Subsecuon Co) bereof of any Bond calls and defeasance that cause the Issuer to no longer be such an *'obll~ated person" (n) The provisions of tlus SccUon are for the sole benefit of the registered owners and beneficial owners of the Bonds, and notlung m tlus Sccuon, express or unphed, shall give any benefit or any legal or equitable n~ht, remedy, or claun hereunder to any other person The Issuer undertakes to prowde only the ~.h~anc~al mformaUon, operatm~ data, financml staUnncnts, and noUoes wluch It has expressly af~recd to prowdc pursuant tottlns Scotion and does not hereby undertake to prowde any other reformation that may be relevant or material,to a complete prcsantation of the Issuel~s finan~al results, condmon, or prospects or hereby undertake to updaU~ any mformaUon prowde~l m uccordance w~th flus Sootion or othervflse, exert as expressly provided berean The Issuer does not make any repr~seatauon or warranty concermng such mforraaUon or its usefulness to a decision to revest m or sell Bonds a~ any future date (m) UNDER NO CIRCUMSTANCES SHALL TH~ ISSUER, ITS OFFICERS, AGENTS AND EMPLOYI~ES, BE LIABLE TO THE RF~ISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTH~R PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIOENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIOHT AND REMI~DY 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 d~anlt by the Issuer m observu~ or perforunng its ohh~auons under this SccUon shall comprise ~ br~ach of or dofanlt under the Ordmanoe for purposes of any other prowsion of flus Ordmanoe Notlnng m th~s SocUon Is intended or shall act to &sclmm, wmve, or othervflse lmut the duties of the Issuer under federal and state socunues laws 46 (¥) The pro~s~ons o~this Secuon may be amended bythc Issuer from tune to un~ to adap~ to chan~ed c~reamstaac~s that ans~ from a change m lel~al reqmrcments, a chan~e m law, or a chan~e m thc ~dentity, nature, statuS, or type of operations of the Issuer, but only fi' (1) the pro~s~ons of this Section, as so amended, would have pemutted an underwriter to purchase or sell Bonds m the primary offenn~ of thc Bonds m comphance with the Rule, tahng rotc account any amendments or mterpremlaons of the Rule since such offermg as well as such clinked circumstances _~na (2) either (a) the registered owners of a majority m aigregate pnnclpal amount (or any ~'eater amount required by any other prowslon of this Ordinance that authorizes such an amendment) of the ouLstandmg Bands consent to such amendment or (b) a person that Is unaffihated with the Issuer (such as nationally recol~-~:i bond counsel) dctenmned that such amendment vail not rnatenally unpmr the mterest o£the reg~s~red owners and bene/iclal owners o£the Bonds Ifthe Issuer so amends thc provmons of flus Secuon, it shall ~ncluds with any amended financial udormatlon or operaUng data next provtded m accordance with subsection (a) of tbs Section an explanation, m narrative form, of the reason for the amendment and of the unpact of any change m the l~./pe of fumnc~al ufi`ormation or operatm!~ data so prodded The Issuer may also amend or repeal the provmoas of flus conunumg disclosure aircement if the SEC amends or repeals the applicable provmon of the Rule or a court of final junsdictwn enters .~udgment that such provisions of the Rule arc mvahd, but only Ii'and W thc extent that the provmons of flus sentence would not prevent an underwriter from lawfully purchasu~ or sellh'~S Bonds tn the pruunry offcnng of the Bonds (d) ~ As used in flus Section, the following terms have the meanings ascribed to such terms below "MSRB" means the Mumc~pal Securities Rulemalang Board "NtLMSIR" means each person whom the SEC or ~s siaffhas dstermmed to be a nationally rccogmzed mamclpal securities reformation reposttory within thc meaning of the Rule from tune to tune "Rule" means SEC Rule 15c2-12, as amended from tune to tune "SEC" means the Umted States Secuni~es and Exchange Cormmssion '$1D" means any person dsslsnated by the State of Texas or an anthonzed depa~hi~ent, officer, or agency thereof as, and dc~ermmed by the SEC or l~s sh~ff to be, a state ~nformation dsposltory within the meamng of the Rule from tune to tune Section 3!) FURTI-I~R PROCEDURES The Mayor of'the Issuer, the City Sec~tary of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they arc hereby expressly authorized, empowered, and directed from ~une to tune and at any um¢ to do and perform all such acts and flungs and to execute, acknowledge, and dchver m the name and under the corporate seal and on behalf o£the Issuer all such mstmmenLs, whether or not hereto mentioned, as may be necessary or desirable m order to carry out,the terms and pro~s~ons of flus Bond Ordinance, the Bonds, the sale of thc Bonds, and the Official Statement, and the Assistant City Manager/Finance of the City shall cause the expenses of issuance of the Bonds to be paid from the proceeds of sale of the hutial Bonds or from other lawfully avadable funds of thc Issuer In case any officer whose signature shall appear on any Bond shall cease W be such officer before thc delivery of such Bond, such signature shall nevertheless be vahd and sufficlen~ for all purposes thc san~ as fi` such offi~' had remained m office until such dchvery $eOtlon 40 OPHN M]~]:.TING$ The City Council has found and dsternuned that the meeting at which th~ Ordinance Is cons~dsred is open to the pubhc and that notice thereof was l~ven in accordance with the provmoas of thc Texas Open Meetings, Law, Tex Gov~ Code, Chapter $51, as amended Section41 EFFECTIVE DATE TlusOrdmanceshallb¢como¢ffocUv¢~telyupon~tspassag¢ and approval PASSED AND APPROVED tins tho 25th day of Apnl, 2000 ATI"EST APPROVED AS TO LEGAL FORM Herbert L Prouty, C~ty Attorney 49 DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following mfornmUon ~s referred to m SecUon 38 of flus Ordmanc~ Annual F~nancial Statements and Operating Data Thc financtal reformation and operating data with respect to thc Issuer to bc provided annually in accordance vath such Section are as specified (and included m thc Appendix or under thc tables of the Official Statement rdm~ to) b~low Tables numbered 1 through 14, reclusive, un~r the captions "The Utihty System", "Debt Semce Rexlmrements" and "Financial Information" tn the Officml Statement App~nchx B m the Official Statement Accounting Pnnclples The accounting principles referred to m such Section are the accounting pnnclples described m the notes to the fmanaal statements referred to m the paragraph above