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HomeMy WebLinkAboutORD 97-15 - Utility System Revenue Bondsr;•t r! i � r r,. r� r , •r. 1 ,� t r ..,.r 1 ;11111111 111� FROM III • STATE OF COUNTY OF 1 r CITY OF r r WHEREAS, the following Utility System Revenue Bonds of the City of Georgetown are presently outstanding: Utility System Revenue Bonds, Series 1991, dated January 1, 1991, maturing August 15, 1997 through August 15, 2006 now outstanding in the principal amount of $1,950,000 (the "Series 1991 Bonds"); Utility System Revenue Refunding Bonds, Series 1991 dated March 15, 1991, maturing August 15, 1997 through August 15, 2005 now outstanding in the principal amount of $7,755,000 (the "Series 1991 Refunding Bonds"); Utility System Revenue Bonds, Series 1995 dated June 1, 1995, maturing August 15, 1997 through August 15, 2015 now outstanding in the principal amount of $5,115,000 (the "Series 1995 Bonds"); and Utility System Revenue Bonds, Series 1995-A dated June 1, 1995, maturities August 15, 1997 through August 15, 2015 now outstanding in the principal amount of $6,800,000 ("Series 1995-A Bonds"); and WHEREAS, the City now desires to refund the Series 1991 Bonds maturing in the years 2004 and 2005 in the aggregate principal amount of $1,615,000 and the Series 1991 Refunding Bonds maturing in the years 2004 through 2006 in the aggregate principal amount of $875,000 (collectively, the "Refunded Obligations"); and WHEREAS, the City Council of the City deems it advisable to refund the Refunded Obligations in order to achieve a present value savings of approximately $120,537.60 and an overall savings of $104,986.70; and WHEREAS, Article 717k, Texas Annotated Revised Civil Statutes, as amended ("Article 717k") authorizes the City to issue refunding bonds and to deposit the proceeds from the sale thereof GEORGTFJNJREF97: ORDIN.DR2 3110197 together with any other available funds or resources, directly with a place of payment (paying agent) for the Refunded Obligations, and such deposit, if made before such payment dates, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Obligations; and WHEREAS, Article 717k further authorizes the City to enter into an escrow agreement with a paying agent for the Refunded Obligations with respect to the safekeeping, investment, reinvestment, administration and disposition of any such deposit, upon such terms and conditions as the City and such paying agent may agree, provided that such deposits may be invested and reinvested in direct obligations of the United States of America including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which shall mature and bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment or prepayment of the Refunded Obligations; and WHEREAS, the Escrow Agreement hereinafter authorized, constitutes an agreement of the kind authorized and permitted by said Article 717k; and WHEREAS, all the Refunded Obligations mature or are subject to redemption prior to maturity within 20 years of the date of the bonds hereinafter authorized; and WHEREAS, the City deems it appropriate to call for redemption the following Refunded Obligations: i Series 1991 Utility System Revenue Bonds maturing on August 15 in each of the years 2004 and 2005 Series 1991 Utility System Revenue Refunding Bonds maturing on August 15 in each of the years 2004 and 2006 August 15, 2001 August 15, 2001 Mi 101 WHEREAS, the City is authorized to issue additional utility system revenue bonds upon compliance with certain conditions as set forth in the ordinances authorizing the above-mentioned outstanding bonds; and WHEREAS, the City is in compliance with such additional bond provisions; and WHEREAS, the City Council deems it to be in the best interest of the City to also issue new money utility system revenue bonds in conjunction with the refunding bonds for the purpose of GEORGT"/REF97: ORDIN.DU 3/10/97 2 paying, in whole or in part, contractual obligations incurred or to be incurred for electric, water and wastewater improvements to the system including (i) acquiring an automated meter reading system and (ii) paying the costs associated with the issuance of the bonds; and WHEREAS, on February 11, 1997 the City Council has adopted a resolution authorizing and directing the city secretary to give notice of intention to issue revenue bonds; and WHEREAS, the notice has been duly published in the Williamson County Sun, which is a newspaper within the definition of Section 2051.044, Government Code, as amended, of general circulation in the City, in its issues of February 16, 1997 and February 23, 1997; and WHEREAS, the City has not received a petition from the qualified electors of the City protesting the issuance of such revenue bonds; and WHEREAS, the City hereby finds that the issuance of the Bonds implements Finance Policy 4 of the Century Plan; and WHEREAS, the meeting was open to the public and public notice of the time, place and purpose of said meeting was given pursuant to Chapter 551, Government Code. THEREFORE, BE ORDAINED ,p i EL OF THEi' GEORGETOWN, PLAN . (a) Recitals, Amount and Purpose of the Bonds. The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in this Section. The "City of Georgetown, Texas Utility System Revenue and Refunding Bonds, Series 1997" (the "Bonds") are hereby authorized to be issued and delivered in the aggregate principal amount not to exceed $6,825,000 for the purposes set forth in the preambles of this Ordinance. (b) Century Plan. The City hereby finds that the issuance of the Bonds implements Finance Policy 4 of the Century Plan - Policy Plan Element, which states; "The City shall develop a strategy to provide sufficient financial resources, for both short term and long term needs", and Economic Development Policy which states "The City will encourage diversified growth and promote business opportunities to create jobs, broaden the tax base, and minimize the impact of economic fluctuation"; and further finds that the enactment of this Ordinance is not inconsistent or in conflict with any other Century Plan Policies, as required by Section 2.03 of the Administrative Chapter of the Policy Plan. Section 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS, AND MATURITIES OF BONDS. Each Bond issued pursuant to this Ordinance shall be designated: "CITY OF GEORGETOWN, TEXAS UTILITY SYSTEM REVENUE AND REFUNDING BOND, SERIES 1997", and initially there shall be issued, sold, and delivered hereunder fully registered bonds, without interest coupons, dated March 1, 1997, in the respective denominations and principal GEORGIWN/REF97: ORDIN.DR2 3/10197 3 amounts hereinafter stated, numbered consecutively from R-1 upward (except the initial Bonds delivered to the Attorney General of the State of Texas which shall be numbered T-1 upward), payable to the respective initial Registered Owners thereof (as designated in Section 21 hereof), or to the registered assignee or assignees of said bonds or any portion or portions thereof (in each case, the "Registered Owner"), and said bonds shall mature and be payable serially on August 15 in each of the years and in the principal amounts, respectively, as set forth in the following schedules: YEAR AMOUNT YEAR AMOUNT 1997 $295,000 2003 $ 280,000 1998 160,000 2004 115351000 1999 170,000 2005 1,610,000 2000 175,000 2006 1,230,000 2001 1851000 2007 980,000 2002 205,000 The term 'Bonds" as used in this Ordinance shall mean and include collectively the bonds initially issued and delivered pursuant to this Ordinance and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "BOND" shall mean any of the Bonds. Section 3. INTEREST. The Bonds scheduled to mature during the years, respectively, set forth below shall bear interest calculated on the basis of a 360 -day year composed of twelve 30 -day months from the date of delivery of the initial Bonds to specified in the FORM OF BOND set forth in this Ordinance to their respective dates of maturity or earlier redemption at the following rates per YEAR RATE • RATE 1997 3.75% 2003 4.70% 1998 4.00 2004 4.80 1999 4.10 2005 4.90 2000 4.30 2006 5.00 2001 4.45 2007 5.10 2002 4.60 Interest shall be payable in the manner provided and on the dates stated in the FORM OF BOND set forth in this Ordinance. GEORGTWN/REF97: ORDIN.DR2 3110/97 2 Section 4. CHARACTERISTICS OF THE BONDS. Registration, Transfer, Conversion and Exchange, Authentication. (a) The City shall keep or cause to be kept at The Bank of New York, New York, (the "Paying Agent/Registrar") books or records for the registration of the transfer, conversion and exchange of the Bonds (the "Registration Books"), and the City hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers, conversions and exchanges under such reasonable regulations as the City and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such registrations, transfers, conversions and exchanges as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the Registered Owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each Registered Owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. The Paying Agent/Registrar shall make a copy of the Registration Books available in the State of Texas. The City shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. The City shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, conversion, exchange and delivery of a substitute Bond or Bonds. Registration of assignments, transfers, conversions and exchanges of Bonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in this Ordinance. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. Except as provided in Section 4(c) of this Ordinance, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign said Bond, and no such Bond shall be deemed to be issued or outstanding unless such Bond is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for conversion and exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the City or any other body or person so as to accomplish the foregoing conversion and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be printed or typed on paper of customary weight and strength. Pursuant to Article 717k-6, Vernon's Annotated Texas Civil Statutes, as amended, and particularly Section 6 thereof, the duty of conversion and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Bond, the converted and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Ordinance, approved by the Attorney General and registered by the Comptroller of Public Accounts. (b) Payment of Bonds and Interest. The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds at its designated payment and transfer office in Houston, Texas, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the City and the Paying GEORGIWN/REF97: ORDIN.DR2 3/10/97 5 Agent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the past due interest shall be sent at least five (5) business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of each Registered Owner appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. (c) In General. The Bonds (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the Registered Owners thereof, (ii) may be converted and exchanged for other Bonds, (iii) may be transferred and assigned, (iv) shall have the characteristics, (v) shall be signed, sealed, executed and authenticated, (vi) the principal of and interest on the Bonds shall be payable, and (vii) shall be administered and the Paying Agent/Registrar and the City shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF BOND set forth in this Ordinance. The Bonds initially issued and delivered pursuant to this Ordinance are not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION Bond, in the form set forth in the FORM OF BOND. (d) Substitute Paying Agent/Registrar. The City covenants with the Registered Owners of the Bonds that at all times while the Bonds are outstanding the City will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The City reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 30 days written notice to the Paying Agent/Registrar, to be effective at such time which will not disrupt or delay payment on the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the City covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. No resignation or removal of the Paying Agent/Registrar shall take effect until a successor paying agent/registrar has been appointed and has accepted its duties as paying agent/registrar. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the City. Upon any change in the Paying Agent/Registrar, the City promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each Registered Owner of the Bonds and to the Bond Insurer, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and GEORGTWN/REF97: ORDIN.DR2 3/10/97 6 performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. (e) Book-Entry-Only stem. The Bonds issued in exchange for the Bonds initially issued as provided in Section 4(h) shall be issued in the farm of a separate single fully registered Bond for each of the maturities thereof registered in the name of Cede & Co., as nominee of The Depositary Trust Company of New York ("DTC") and except as provided in subsection (f) hereof, all of the Outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC participants (the "DTC Participant") or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a Registered Owner, as shown on the Registration Books, of any notice with respect to the Bonds, or (iii) the payment to any DTC Participant or any person, other than a Registered Owner, as shown on the Registration Books of any amount with respect to principal of or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary, but to the extent permitted by law, the City and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Band is registered in the Registration Books as the absolute owner of such Bond for the purpose of payment of principal of and interest, with respect to such Bond, for the purposes of registering transfers with respect to such Bond, and for all other purposes of registering transfers with respect to such Bonds, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Bands only to or upon the order of the respective Registered Owners, as shown in the Registration Books as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than a Registered Owner, as shown in the Registration Books, shall receive a Bond evidencing the obligation of the City to make payments of principal, and interest pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks being mailed to the Registered Owner at the close of business on the Record Date the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC. (f) Successor Securities Depository; Transfer Outside Book -Entry -Only System. In the event that the City determines to discontinue the book -entry system through DTC or a successor or DTC determines to discontinue providing its services with respect to the Bands, the City shall either (i) GEORGTWN/REF97: ORDIN.DR2 3/10/97 7 appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Registration Books in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names the Registered Owner transferring or exchanging Bonds shall designate, in accordance with the provisions of this Ordinance. (g) Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Letter of Representations of the City to DTC attached hereto as Exhibit B. (h) Initial Bonds(s). The Bonds herein authorized shall be initially issued as fully registered Bonds, being one Bond for each maturity in the denomination of the applicable principal amount and the initial Bond(s) shall be registered in the names of the purchaser or the designees thereof as set forth in Section 21 hereof. The initial Bond(s) shall be the Bonds submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts of the State of Texas and delivered to the purchaser as set forth in Section 21. Immediately after the delivery of the initial Bond(s), the Paying Agent/Registrar shall cancel the initial Bond(s) delivered hereunder and exchange therefor Bonds in the form of a separate single fully registered Bond for each of the maturities thereof registered in the name of Cede & Co., as nominee of DTC and except as provided in Section 4(f), all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. Section 5. FORM OF BONUS. The form of the Bonds, including the form of Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Bonds initially issued and delivered pursuant to this Ordinance, shall be, respectively, substantially as f& lows, with such appropriate variations, omissions or insertions as are permitted or required by this Ordinance. GEORG VN/REF97: OP DIN.DR2 3/10797 8 I"$ 194airej C1 1 UNITEDSTATESOF STATE OF COUNTY OF 1' i Wo 1 11 Mi 1 REGISTERED OWNER: SERIES 1997 DATE OF BONDS March 1, 1997 CUSIP NO. ON THE MATURITY DATE specified above, the CITY OF GEORGETOWN, in Williamson County, Texas (the "City"), being a political subdivision of the State of Texas, hereby promises to pay to the registered owner set forth above, or registered assigns (hereinafter called the "Registered Owner") the principal amount set forth above, and to pay interest thereon from the Date of the Bonds set forth above, on August 15, 1997 and semiannually on each February 15 and August 15 thereafter to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above; except that if this Bond is required to be authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next fol- lowing interest payment date; provided, however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being exchanged or converted from is due but has not been paid, then this Bond shall bear interest from the date to which such interest has been paid in full. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the Registered Owner hereof upon presentation and surrender of this Bond at maturity, or upon the date fixed for its redemption prior to maturity, at The Bank of New York, New York, which is the "Paying Agent/Registrar" for this Bond at their office in Houston, Texas (the "Designated GEORGIWN/REF97: ORDIN.DR2 3110/97 9 Payment/Transfer Office"). The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the Registered Owner hereof on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the City required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the Registered Owner hereof, at its address as it appeared on the last business day of the month preceding each such date (the "Record Date") on the registration books kept by the Paying Agent/Registrar (the "Registration Books"). In addition, interest may be paid by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Registered Owner. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of each owner of a Bond appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. Notwithstanding the foregoing, during any period in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, payments made to the securities depository, or its nominee, shall be made in accordance with arrangements between the City and the securities depository. ANY ACCRUED INTEREST due at maturity or upon the redemption of this Bond prior to maturity as provided herein shall be paid to the Registered Owner upon presentation and surrender of this Bond for redemption and payment at the Designated Payment/Transfer Office of the Paying Agent/Registrar. The City covenants with the Registered Owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday or a day on which banking institutions in the city where the principal corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS BOND is one of a Series of Bonds dated March 15, 1997, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $6,950,000, for the purpose of paying in whole or in part contractual obligations incurred or to be incurred for electric, GEORGTWN/REF97: ORDIN.DR2 3/10/97 10 water and wastewater improvements to the system including (i) acquiring an automated meter reading system, (ii) advance refunding a portion of the City's outstanding utility system revenue bonds and (iii) paying the costs associated with the issuance of the bonds. THIS BOND is not subject to redemption prior to maturity. ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance, this Bond may, at the request of the Registered Owner or the assignee or assignees hereof, be assigned, transferred, converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate Registered Owner, assignee or assignees, as the case may be, having the same denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate Registered Owner, assignee or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancella- tion, all in accordance with the form and procedures set forth in the Bond Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar at its Designated Payment Transfer Office, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be registered. The form of Assignment printed or endorsed on this Bond may be executed by the Registered Owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the Registered Owner. The Paying Agent/Registrar's reasonable standard or customary fees and charges for assigning, transferring, converting and exchanging any Bond or portion thereof will be paid by the City. In any circumstance, any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer, conversion or exchange, as a condition precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to make any such transfer, conversion, or exchange during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the City, resigns, or otherwise ceases to act as such, the City has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and cause written notice thereof to be mailed to the Registered Owners of the Bonds. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly authorized, issued and delivered; that all acts, conditions and things required or proper to be performed, exist and be done precedent to or in the authorization, issuance and delivery of this Bond have been performed, existed and been done in accordance with law; and that this Bond is a special obligation and this Bond, together with other obligations of the City, is secured by and payable from GEORGI'WN/REF97: ORDIN.DR2 3/10/97 11 a first lien on and pledge of the Net Revenues of the City's Utility System, being the combined Waterworks, Sewer and Electric Light System, including all additions, extensions and improvements thereto which may hereafter be made. THE ISSUER has reserved the right, subject to the restrictions stated in the Bond Ordinance, to issue additional parity revenue bonds which also may be made payable from and secured by a lien on and pledge of, the Net Revenues of the Issuer's Utility System in the same manner and to the same extent as this series of Bonds. THE OWNER HEREOF shall never have the right to demand payment of this obligation out of any funds raised by taxation. BY BECOMING the Registered Owner of this Bond, the Registered Owner thereby acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the City, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each Registered Owner hereof and the City. IN WITNESS WHEREOF, the City has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the City and countersigned with the manual or facsimile signature of the City Secretary of said City, and has caused the official seal of the City to be duly impressed, or placed in facsimile, on this Bond. City Secretary (SEAL) GEORGIWN/REF97: ORDIN.DR2 3/14!97 12 Mayor MHz '.� a a. 0 1117111,ir rally Vii.aley f '' a (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in exchange for, a bond, bonds, or a portion of a bond or bonds of a Series which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated The Bank of New York, New York Paying Agent/Registrar Authorized Representative Financial Security Assurance Inc. ("Financial Security"), New York, New York, has delivered its municipal bond insurance policy with respect to the scheduled payments due of principal of and interest on this Bond to The Bank of New York, New York, or its successor, as paying agent for the certificates (the "Paying Agent"). Said Policy is on file and available for inspection at the principal office of the Paying Agent and a copy thereof may be obtained from Financial Security or the Paying Agent. GEORGIWN/REF97: ORDIN.DR2 3/10/97 13 FORM OF ASSIGNMENT: For value received, the undersigned hereby sells, assigns and transfers unto Please insert Social Security or Taxpayer Identification Number of Transferee (Please print or typewrite name and address, including zip code, of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney, to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. GEORGTWN/REF97: ORDIN.DR2 3/10197 14 NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, with. out alteration or enlargement or any change whatsoever. I hereby certify that this Bond has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 6. DEFMTIONS. As used in this Ordinance, the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise: (a) The term "City" or "Issuer" shall mean the City of Georgetown, in Williamson County, Texas. (b) The term "City Council" shall mean the governing body of the City of Georgetown. (c) The term "Bonds" shall mean the City of Georgetown, Texas Utility System Revenue and Refunding Bonds, Series 1997, authorized by this Ordinance. (d) The term "Outstanding Bonds" shall mean the Issuer's, Utility System Revenue Bonds, Series 1985, Utility System Revenue Refunding Bonds, Series 1991, Utility System Revenue Bonds, Series 1991, Utility System Revenue Bonds, Series 1995 and Utility System Revenue Bonds, Series 1995-A. (e) The term "Parity Bonds" shall mean, collectively, the Bonds and the Outstanding Bonds. (f) The term "Additional Bonds" shall mean the additional parity revenue bonds permitted to be issued under the provisions of the ordinances authorizing the Parity Bonds. (g) The terms "Utility System" and "System" shall mean the System created and established for and on behalf of the Issuer under the provisions of the ordinances authorizing the Outstanding Bonds. GEORG'RVN/REF97: ORDIN.DR2 3110197 15 (h) The terms "Net Revenues" and "Pledged Revenues" shall mean the revenues derived from the operation of the Utility System as such revenues are defined and pledged in Section 10 of the ordinance authorizing the Issuer's Utility System Revenue Bonds, Series 1974. (i) The terms "Utility System Revenue Fund," "Utility System Revenue Bonds Interest and Sinking Fund" or "Interest and Sinking Fund," "Utility System Revenue Bonds Reserve Fund" or "Reserve Fund" and "Utility System Contingency Fund" or "Contingency Fund" shall mean the special funds which the City Council has heretofore created and ordered to be established and maintained for the payment of expenses of operating and maintaining the Utility System, and for the payment of principal of and interest on the Parity Bonds and Additional Bonds outstanding against the Utility System, as hereinafter more specifically stated. Section 7. UTILITY SYSTEM. The Utility System, as created and established by the City Council, is comprised of the entire Waterworks System, Sewer System, and Electric Light System, now owned and operated by the City, together with all improvements, extensions and additions thereto which may be made while any Parity Bonds or Additional Bonds remain outstanding against the System. Such System shall be operated on the basis of a fiscal year commencing on October 1 of each year and ending on September 30 of the following year. Section 8. PLEDGE OF REVENUES. (a) The Bonds herein authorized and the Outstanding Bonds shall be equally and ratably secured by and payable from an irrevocable first lien on and pledge of the income and revenues derived and to be derived from the operation of the System, after deducting therefrom the amounts necessary to pay all operating, maintenance, replacement and betterment charges of the System, as required by Article 1113 of the Revised Civil Statutes of Texas, 1925, as amended, and by other applicable statutes of the State of Texas, and the following sections of this Ordinance are cumulative of, and supplemental to, the pertinent provisions of the ordinances authorizing the Outstanding Bonds. (b) The Bonds are being issued as additional parity revenue bonds, defined as Additional Bonds in the ordinance that authorized the City of Georgetown, Texas Utility System Revenue Bonds, Series 1974, and as defined as Additional Bonds in the ordinances that authorized the issuance, sale and delivery of the Outstanding Bonds, Section 9. MAINTENANCE OF RATES. The City hereby covenants and agrees that it will at all times, while any of the Parity Bonds or any Additional Bonds or any interest thereon, are outstanding and unpaid, charge and collect for services rendered by the System rates sufficient to pay all maintenance, depreciation, replacement, betterment, and interest charges, and to provide an Interest and Sinking Fund sufficient to pay the interest and principal of such Bonds as such interest and principal mature, and any outstanding indebtedness of the System, as is required by applicable statutes of Texas. For the benefit of the original purchasers and all subsequent holders of the Parity Bonds, Additional Bonds, or any part thereof, and in addition to all other provisions and covenants in the laws of the State of Texas, and in this Ordinance, it is expressly covenanted that the City shall fix and maintain rates and collect charges for the facilities and services afforded by the System to the City, and to all other customers, which will provide GEORGTWN/REF97: ORDINDU 3/10/97 16 revenues sufficient at all times: (a) to pay all operating, maintenance and replacement charges of the Utility System, as is required by Article 1113 of the Civil Statutes, as amended, and by other applicable statutes of the State of Texas; (b) to establish and maintain the Interest and Sinking Fund and the Reserve Fund for the Parity Bonds and for any Additional Bonds; (c) to pay, in addition, all outstanding indebtedness against the Utility System, in addition to the Parity Bonds or any Additional Bonds, as and when the same becomes due; and (d) to provide for the payments into the Contingency Fund as required under the provisions of the ordinances authorizing the issuance of the Parity Bonds, Section 10. UTILITY SYSTEM REVENUE FUND - FLOW OF FUNDS. There shall be deposited into the Revenue Fund (already established), as collected, all revenues derived from the operation of the Utility System, which fund shall be maintained separate and apart from all other funds of the City. Such Revenue Fund shall be maintained in the City's official depository, so long as any Parity Bonds or any Additional Bonds remain outstanding, and shall be administered as follows: (a) Operation and Maintenance Expenses. The money in the Revenue Fund shall be used first for the payment of the reasonable and proper expenses of operating and maintaining the Utility System, including salaries, labor, materials, interest, repairs and extensions necessary to render efficient service. The words "repairs" and "extensions" as used in this paragraph shall be construed to refer only to such repairs and extensions, as in the judgment of the governing body of the City, are necessary to keep the System in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to remedy some physical accident or condition which would otherwise impair the security of the Parity Bonds or any Additional Bonds. (b) Bond Fund. The amounts to be paid into the Interest and Sinking Fund (already established and hereinafter called the "Bond Fund"), during each year in which any of the Parity Bonds or any Additional Bonds are outstanding, shall be an amount equal to 100% of the amount required to meet the interest and principal payments falling due on or before the next maturity date of the Parity Bonds or any Additional Bonds then outstanding. On or before the 10th day of each month, after payments have been made as required by subsection (a) of this Section, the City shall withdraw from the Revenue Fund and deposit into the Bond Fund an amount not less than the total of 1/12th of the next maturing installment of principal of the Parity Bonds then outstanding, and of any Additional Bonds then outstanding, and 1/6th of the next semiannual installment of interest on the Parity Bonds then outstanding, and any Additional Bonds then outstanding. The moneys in the Bond Fund shall be used solely for the purposes of paying the interest and principal of the Parity Bonds and Additional Bonds until all such bonds have been retired. In the event the income and revenue of the Utility System are insufficient in any month GEORGfWN/REF97: ORDIN.DR23/10/97 17 to permit the required deposits into the Bond Fund in full accord with the provisions hereof, then the amount of any deficiency shall be added to the amount otherwise required to be deposited in the Bond Fund in the next month, until all deficiencies are rectified. Concurrently with the delivery of the Bonds to the purchasers thereof, all sums of money received from the purchasers as accrued interest paid on the Bonds shall be placed into the Bond Fund. (c) Reserve Fund. The City currently has on deposit in the Reserve Fund $2,123,847, and has covenanted to maintain a required reserve of $2,103,856. The City covenants and agrees that in the event Additional Bonds are issued as hereinafter provided, the ordinance authorizing such Additional Bonds shall provide for the payment into the Reserve Fund of such additional sums as shall be necessary to permit an accumulation in the Reserve Fund, within five years from the date of the Additional Bonds, as an additional reserve, of an amount of money at least equal to one year's average annual principal and interest requirements on such Additional Bonds then outstanding. The Reserve Fund shall be used to pay principal of or interest on the Parity Bonds and such Additional Bonds falling due at any time for the payment of which there is not money available in the Bond Fund. No payments need be made into the Reserve Fund after there shall have been accumulated and shall exist in said Fund the amount of money herein stipulated; but, if at any time it becomes necessary to use temporarily any part of such Reserve Fund for the payment of principal or interest of the Parity Bonds, or it is otherwise depleted, payments into the Reserve Fund in the amount of $30,055.09 monthly shall be implemented and continued until such time as such Fund contains the amount of money then required to be on deposit therein. The City's official depository is hereby authorized to invest the money in the Reserve Fund in direct obligations of, or obligations unconditionally guaranteed by the United States Government, having maturities not in excess of five years from the date of the making of such investments, as the City Council may direct. Said obligations shall be deposited in escrow with said depository under an escrow agreement, and if at any time uninvested funds shall be insufficient to permit payment of principal and interest of the Parity Bonds or any Additional Bonds then outstanding, said depository shall sell on the open market such amount of the securities as is required to pay said parity Bonds or Additional Bonds and the interest thereon when due, and shall give due notice thereof to the City. All money resulting from the maturity of principal and interest of the securities in which the Reserve Fund is invested may be reinvested and accumulated in said Reserve Fund and considered a part thereof and used for and only for the purposes hereinabove provided with respect to said Fund. When the Outstanding Bonds have been paid off, cancelled and retired, the Reserve Fund for the Bonds may be commingled with reserve funds established for series of bonds hereafter issued which are similarly secured and payable from the same source without impairment of the obligation of contract. The City further covenants that when Additional Bonds are issued, the aggregate amount to be accumulated and maintained in the Reserve Fund shall be not less than the average annual principal and interest requirements of all bonds similarly secured, and any additional amount required to be accumulated in the Reserve Fund shall be accumulated therein in not less than five years from the date of the Additional Bonds, GEORGTWN/REF97: ORDIN.DU 3/10/97 18 (d) Contingency Fund. Based on an annual review of the City's experience as to the cost of repairs and replacement to the Utility System necessitated by the occurring of emergencies, and the recommendation of the City's consulting engineer, the City Council has determined that the Contingency Fund heretofore created and ordered to be established and maintained in the amount of $15,000 is sufficient for the time being. The Contingency Fund shall be used to pay (1) the cost of any repairs or replacements to the Utility System necessitated by the occurring of an emergency and (2) interest on and/or principal of the Parity Bonds or any Additional Bonds, when other funds of the City are insufficient for such purposes. The City covenants and agrees that in the event Additional Bonds are issued, the ordinance authorizing such Additional Bonds shall provide for such appropriate additional or larger amounts to be accumulated in the Contingency Fund as deemed advisable by the City Council, based on an annual review of the City's experience as to the cost of repairs and replacements to the Utility System necessitated by the occurring of emergencies and the recommendation of a consulting engineer. No payments need be made into the Contingency Fund after there shall have been accumulated in said Fund the amount of money then required to be on deposit therein, except that whenever any money is paid out of said Fund, monthly payments into the Fund shall be resumed and continued so that the Fund may be, restored to the required sum. The City's official depository is hereby authorized to invest the money in the Contingency Fund in direct obligations of or obligations unconditionally guaranteed by the United States Government, having maturities not in excess of five years from the date of the making of such investment, as the City Council may direct. Any obligations in which money is so invested shall be kept in escrow in said depository and shall be promptly sold and the proceeds of sale applied to the making of payments required to be made from the Contingency Fund, whenever such payments are required to be made under the foregoing provisions of this Ordinance. (e) Surplus Funds. All monies remaining in the Revenue Fund after the requirements of the foregoing subsections of this Section have been met (including any increased payments into the aforesaid Bond Fund, Reserve Fund and Contingency Fund as may be necessary by reason of the issuance of Additional Bonds in the future under the provisions of the ordinances authorizing the Parity Bonds), and after all deficiencies shall have been made up, repaying any amounts due hereunder, and all replacements made, shall be either used or accumulated for the making of improvements, extensions and additions to the Utility System, or may, in the discretion of the City be used for any other proper purpose now or hereafter permitted by law, including the use thereof in retiring in advance of maturity any Additional Bonds then outstanding, in accordance with provisions made for their prior redemption or may be used to purchase the Parity Bonds and Additional Bonds on the open market at not exceeding the market value thereof. All Bonds so paid, redeemed or purchased shall be cancelled and shall not be reissued. Nothing herein shall be construed, however, as impairing the right of the City to pay in accordance with the provisions thereof any junior lien bonds hereafter legally issued by it. GEORa MN/REM: ORDIN.DRZ 3/10/97 19 Section 11. SECURITY FOR FUNDS AND INVESTMENT OF FUNDS. All monies which are to be paid into the depository under the provisions of the ordinances authorizing the Parity Bonds shall be secured in accordance with the law of the State of Texas applicable thereto, and the City covenants especially that such money shall be continuously secured by a valid pledge of direct obligations of, or obligations unconditionally guaranteed by, the United States of America., having a par value, or market value when less than par, exclusive of accrued interest, at all times at least equal to the total amount of money on deposit in the several funds of the depository. Unless otherwise stated in this Ordinance, all monies held in any fund pursuant to this Ordinance shall be invested in (i) direct obligations of or obligations unconditionally guaranteed by the United States Government; (ii) a State administered local government investment pool or (iii) other permitted investments as approved by the Insurer, as hereinafter defined. Section 12. ADDITIONAL BONDS. In addition to the right to issue bonds of inferior lien as authorized by the laws of this State, the City reserves the right to issue Additional Bonds from time to time payable from the net income and revenues of the Utility System; and, when issued in compliance with law and the terms and conditions hereinafter appearing, such Additional Bonds shall be equally secured by a first lien on and pledge of the Pledged Revenues; and the Additional Bonds, when issued, shall be payable from the Interest and Sinking Fund and shall be in all respects of equal dignity and on a parity with the Parity Bonds, provided, that in each instance, since the City of Georgetown, Texas Utility System Revenue Bonds, Series 1966 and City of Georgetown, Texas Utility System Revenue Bonds, Series 1977 have been duly paid off and retired, the City may issue Additional Bonds on a parity in all respects with the Bonds and Parity Bonds (without impairing the obligation of contract with the holder of the Bonds or obligations hereafter issued on a parity therewith) if the following terms and conditions have been met: (1) the applicable laws of the State of Texas in force at such time provide permission for the issuance of such Bonds; (2) each of the funds, being the Bond Fund, Reserve Fund and Contingency Fund contains the amount of money then required to be on deposit therein; (3) the Net Revenues of the Utility System for either the fiscal year or twelve month period next preceding the date of the ordinance authorizing the issuance of the Additional Bonds are certified by a certified public accountant to have been at least equal to one and one-half times the average annual principal and interest requirement on all Parity Bonds to be outstanding after the issuance of the Additional Bonds; (4) the aggregate amount to be accumulated and maintained in the Reserve Fund shall be not less than the average annual principal and interest requirements of all bonds similarly secured, and any additional amount required to be accumulated in the Reserve Fund shall be accumulated therein in not less than five years and one month from the date of the Additional Bonds; and GEORGTWNIREF97: ORDIN.DRZ 3/10/97 20 (5) the ordinance authorizing the issuance of Additional Bonds shall provide for an identical flow of funds as prescribed by ordinances authorizing the Parity Bonds. Section 13. MAINTENANCE AND OPERATION. The City hereby covenants and agrees to maintain the facilities of the Utility System in good condition and operate the same in an efficient manner and at a reasonable cost. So long as any Parity. Bonds are outstanding, the City covenants and agrees to maintain insurance for the benefit of the holder or holders of such Bonds of the kinds and in the amounts which usually are carried by private companies operating similar properties, and that during such time all policies of insurance shall be maintained in force and kept current as to premium payments. All money received from losses under such insurance policies, other than public liability policies, are hereby pledged as security for such Bonds until and unless the proceeds are paid out in making good the loss or damage in respect of which such proceeds are received, either by replacing the property destroyed or repairing the property damaged, and adequate provision for making good such loss or damage made within ninety days after the date of loss. The payment of premiums for all insurance policies required under the provisions hereof shall be considered as a maintenance and operation expense. Section 14. RECORDS AND ACCOUNTS. The City hereby covenants and agrees that so long as any Parity Bonds, or any interest thereon, remain outstanding and unpaid, it will keep and maintain a proper and complete system of records and accounts pertaining to the operation of the Utility System, separate and apart from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to said System as provided in Article 1113, Revised Civil Statutes of Texas, 1925, as amended, and that the holder or holders of any of the Parity Bonds, or any duly authorized agent or agents of such holders shall have the right at all reasonable times to inspect the System and all properties comprising same. The City further agrees that within sixty days following the close of each fiscal year, it will cause an audit of such books and accounts to be made by an independent firm of certified public accountants, showing the receipt and disbursements for account of the Utility System for the fiscal year, and each such audit, in addition to whatever other matters may be thought proper by the certified public accountant, shall particularly include the following: (a) a detailed statement of the income and expenditures of the Utility System for such fiscal year; (b) a balance sheet as of the end of such fiscal year; (c) the certified public accountant's comments regarding the manner in which the City has carries out the requirements of this Ordinance and his recommendations for any changes or improvements in the operation, records and accounts of the Utility System; (d) a list of the insurance policies in force at the end of the fiscal year on the Utility System properties, setting out as to each policy the amount thereof, the risk covered, the name of the insurer, and the policy's expiration date; GEORGTWN7REF97: ORDIN.DR2 3110797 21 (e) a list of the securities which have been on deposit as security for the money in the Bond Fund, the Reserve Fund and the Contingency Fund throughout the fiscal year; a list of the securities, if any, in which the Reserve Fund and the Contingency Fund have been invested, and a statement of the manner in which money in the Utility System Revenue Fund has been secured in such fiscal year; (f) the number of metered and unmetered customers connected with the various departments of the Utility System, showing totals as of the end of the year. Expenses incurred in making the audits above required are to be paid as a maintenance and operation expense. The City hereby covenants, finds and obligates itself not to sell, lease, or in any manner dispose of the Utility System, or any part thereof, including any and all extensions and additions that may be made thereto, until all Bonds shall have been paid in full as to both principal and interest (provided that this covenant shall not be construed to prevent the disposal by the City of property which in its judgement has become inexpedient to use in connection with the Utility System when other property of equal value has been substituted therefor). Section 16. NO COMPETING SYSTEM. So far as it legally may, the City covenants and agrees, for the protection and security of the Bonds and the holders thereof, from time to time, that it will not grant a franchise for the operation of any competing waterworks, sewer and/or electric light system in the City, until all Bonds issued hereunder shall have been retired. Section 17, REMEDIES IN EVENT OF DEFAULT. In addition to all the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City (a) defaults in the payment of principal of or interest on any Bonds when due, (b) fails to make the payments required by Section 10 of this Ordinance to be made into the Bond Fund, Reserve Fund and Contingency Fund for the Parity Bonds or any Additional Bonds, or (c) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this Ordinance, the holder or holders of any of the Bonds issued hereunder shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the City Council and other officers of the City to observe and perform any covenant, obligation or condition prescribed in this Ordinance. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. The specific remedies herein provided shall be cumulative of all other existing remedies and the specification of such remedies shall not be deemed to be exclusive. Section 18. SPECIAL COVENANTS AND CONDITIONS. (a) The City will punctually keep, observe and perform each and every term, covenant and condition on its part to GEORG VIN/REF97: ORDIN.DR23/10197 22 be kept, observed and performed, contained in this Ordinance, and will punctually perform all duties with reference to the Utility System required by the Constitution and laws of the State of Texas, including particularly the making and collecting of such reasonable and sufficient rates and charges for services supplied by the Utility System to the City and to all other customers, adjusting such rates and charges, from time to time, in such manner as will be fully sufficient to meet all the requirements of the ordinances authorizing the Parity Bonds, and the proper segregation and application of the revenues of such System; (b) The City is duly authorized under the laws of the State of Texas to issue the Bonds and to pledge the revenues pledged hereunder, and all necessary action on the part of the City and its City Council for the issuance of the Bonds have been duly and effectively taken, and that the Bonds in the hands of the holders thereof are and will be valid and enforceable obligations of the City in accordance with their terms; (c) The Bonds authorized hereunder shall be special obligations of the City and the holder thereof shall never have the right to demand payment out of funds raised or to be raised by taxation; (d) Other than for the payment of the Bonds and the Outstanding Bonds, the rents, revenues and income of the Utility System have not been pledged in any manner to the payment of any debt or obligation of the City nor of said System. Section 19. ORDINANCE TO CONSTITUTE CONTRACT. The provisions of this Ordinance shall constitute a contract between the City and the holder or holders of the Bonds, from time to time, and after the issuance of any of the Bonds, no change, variation or alteration of any kind of the provisions of this Ordinance may be made, unless as herein otherwise provided, until all of the Bonds shall have been paid as to both principal and interest. Section 20. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE BONDS. The City covenants to refrain from any action which would adversely affect, or to take such action as to ensure, the treatment of the Bonds as obligations described in Section 103 of the Internal Revenue Code of 1986, as amended (the "Code") the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the City covenants as follows: (a) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in Section 141(b)(6) of the Code or, if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the City, with respect to such private business use, do not, under the terms of this Ordinance, or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of Section 141(b)(2) of the Code; (b) to take any action to assure that in the event that the "private business use" described in GEORGG WN/REF97. ORDIRM 3110/97 23 subsection (a) hereof exceeds five percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of five percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of Section 141(b)(3) of the Code, to the governmental use; (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or five percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of Section 141(c) of the Code; (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of Section 141(b) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of Section 149(b) of the Code; (f) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in Section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with -- (1) proceeds of the Bonds invested for a reasonable temporary period of three years or less or, in the case of a refunding bond, for a period of 30 days or less until such proceeds are needed for the purpose for which the bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning of Section 1.148-1(b) of the Treasury Regulations, and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of Section 148 of the Code (relating to arbitrage) and, to the extent applicable, Section 149(d) of the Code (relating to advance refundings); and (h) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of Section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under Section 148(f) of the Code. In order to facilitate compliance with the above covenant (h), a "Rebate Fund" is hereby established by the City for the sole benefit of the United States of America, and such Rebate Fund GEORGMMUF97: ORDIN.DR2 3114/97 24 shall not be subject to the claim of any other person, including without limitation the registered owners of the Bonds. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. For purposes of the foregoing (a) and (b), the City understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the City that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally -recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under Section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the City agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally -recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under Section 103 of the Code. In furtherance of the foregoing, the Mayor, the City Manager, and the Director of Finance of the City may execute any certificates or other reports required by the Code and make such elections, on behalf of the City, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. The City covenants to comply with the covenants contained in this section after defeasance of the Bonds. Section 21. SALE OF BONDS. The Bonds are hereby sold and shall be delivered to Southwest Securities, Inc. at the price and in accordance with the terms and provisions of a Bond Purchase Agreement in substantially the form attached hereto as Exhibit A, which the Mayor of the City is hereby authorized and directed to execute and deliver and the City Secretary is further authorized and directed to attest such agreement. It is hereby officially found, determined, and declared that the terms of this sale are the most advantageous reasonably obtainable. The Initial Bonds shall be registered in the name of Southwest Securities, Inc. Section 22. DEFEASANCE OF BONDS. (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section 22, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption), or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment, (2) Government Obligations which mature as to principal and interest in such amounts and at such times as will ensure the availability, without reinvestment, of sufficient money to provide for such payment and when proper arrangements have been made by the City with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall GEORGTWN/REF97: ORDIN.DR2 3110/97 25 have become due and payable or (3) any combination of (1) and (2). At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged or Net Revenues pledged, as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the City also be invested in Government Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for (i) the payment of the Bonds and interest thereon with respect to which such money has been so deposited or (ii) the payment of any other amounts due hereunder shall be turned over to the City, or deposited as directed in writing by the City. (c) The term "Government Obligations" as used in this Section, shall mean direct non -callable obligations of the United States of America, including, obligations the principal of and interest on which are fully and unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, which may be in book -entry form. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the City shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 23. CONSTRUCTION FUND. Immediately after the delivery of the Bonds, the City shall cause a Construction Fund to be established with the City's depository bank. The costs of issuance of the Bonds, being legal, fiscal and engineering fees, may be paid from the Construction Fund. The cost of the construction of the System improvements will be paid from this Construction Fund as approved by the City. Section 24. INTEREST EARNINGS ON BOND PROCEEDS. Interest earnings derived from the investment of proceeds from the sale of the Bonds shall be used along with other Bond proceeds for the purpose for which the Bonds are issued set forth in Section 1 hereof, provided that after completion of such purpose, if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided, however, that any interest earnings on Bond proceeds which are required to be rebated to the United States of America pursuant to Section 20 hereof in order to prevent the Bonds from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section. Section 25. APPROVAL OF ESCROW AGREEMENT AND TRANSFER OF FUNDS. The Mayor of the City is hereby authorized and directed to execute and deliver and the City Secretary of the City is hereby authorized and directed to attest an Escrow Agreement in substantially the form attached hereto as Exhibit "B". In addition, the Mayor, City Manager and Director of Finance are each hereby authorized to execute such subscriptions or other documentation for the purchase of GEORMVN/REF97: ORDIN.DM 3/10/97 26 United States Treasury Securities, and to authorize the transfer of such funds of the City, as may be necessary for the Escrow Fund. Section 26. APPROVAL OF PAYING AGENT/REGISTRAR AGREEMENT, LETTER OF REPRESENTATIONS AND OFFICIAL STATEMENT. Attached hereto as Exhibit "C" is a substantially final form of Paying Agent/Registrar Agreement with an attached Letter of Representations. Each the Mayor, the City Manager and the Director of Finance are hereby authorized to amend, complete or modify such agreement and the Letter of Representations as necessary and are further authorized to execute such agreement and the City Secretary is hereby authorized to attest such agreement. The City hereby approves the form and content of the Official Statement relating to the Bonds and any addenda, supplement or amendment thereto, and approves the distribution of such Official Statement in the reoffering of the Bonds by the Underwriters, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. Section 27. NOTICE TO PAYING AGENT. The Refunded Obligations described in Exhibit "D" attached hereto are so called for redemption, and the respective paying agents for the Refunded Obligations are hereby directed to make appropriate arrangements so that such Refunded Bonds may be redeemed on the respective redemption dates. A copy of such notice of redemption shall be delivered to the respective paying agents so mentioned in the notices. Section 28. CONTINUING DISCLOSURE UNDERTAKING. (a) Annual Reports. The City shall provide annually to each NRMSIR and any SID, within six months after the end of the next fiscal year, financial information and operating data with respect to the City of the general type included in the final Official Statement authorized by Section 26 of this Ordinance, being the information described in Exhibit "E" hereto. Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit "E" hereto, or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation, and (2) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the City shall provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements become available. If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. GEORGTWN/REF97: ORDIN.DR2 3/10/97 27 (b) Material Event Notices. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: .M A. Principal and interest payment delinquencies; Be Non-payment related defaults; C. Unscheduled draws on debt service reserves reflecting financial difficulties; D. Unscheduled draws on credit enhancements reflecting financial difficulties, E. Substitution of credit or liquidity providers, or their failure to perform; F. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; G. Modifications to rights of holders of the Bonds; H. Bond calls; I. Defeasances; J. Release, substitution, or sale of property securing repayment of the Bonds; K. Rating changes. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with Section 28(a) of this Ordinance by the time required by such Section. (c) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the City remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the City in any event will give notice of any deposit made in accordance with Section 22 that causes the Bonds no longer to be outstanding. The provisions of this Section are for the sole benefit of the holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided GEORGIWN/REF97: ORDIN.DU 3/10197 28 in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MAND"US OR SPECIFIC PERFORMANCE. No default by the City in observing or performing its obligations under this Section shall comprise a breach of or default under the Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if (1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the outstanding Bonds consents to such amendment or (b) a person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interest of the holders and beneficial owners of the Bonds. If the City so amends the provisions of this Section, it shall include with any amended financial information or operating data next provided in accordance with Section 28(a) an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. (d) Definitions. As used in this Section, the following terms have the meanings ascribed to such terms below: GEORGIVNIREF97: ORDINAR2 3/10197 29 WSW' means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Rule" means SEC Rule 150-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. Section 29. INSURANCE PROVISIONS. (a) Third Consent Party Beneficiary. Financial Security Assurance (the "Bond Insurer") is a third party beneficiary to this Ordinance. (b) Amendment with Consent of Bond Insurer. No amendment or supplement to this Ordinance may become effective except upon obtaining the prior written consent of the Bond Insurer. (c) Exercise of Rights. The rights granted to the Bond Insurer under this Ordinance to request, consent to or direct any action are rights granted to the Bond Insurer in consideration of its issuance of the Bond Insurance Policy. Any exercise by the Bond Insurer of such rights is merely an exercise of the Bond Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit or on behalf of the Certificateholders nor does such action evidence any position of the Bond Insurer, positive or negative, as to whether Certificateholder consent is required in addition to consent of the Bond Insurer. (d) Defeasance of Certificates. In the event the City defeases any of the Certificates pursuant to Section 8 of this Ordinance, the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the Bond Insurer ("Accountant") verifying the sufficiency of the escrow established to pay the Certificates in full on the maturity or redemption date ("Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the Bond Insurer), and (iii) an opinion of nationally recognized bond counsel to the effect that the Certificates are no longer "Outstanding" under this Ordinance; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the City, the Paying Agent/Registrar and the Bond Insurer. In the event a forward purchase agreement will be employed in the refunding, such agreement shall be subject to the approval of the Bond Insurer and shall be accompanied by such opinions of counsel as may be required by the Bond Insurer. The Bond Insurer shall be provided with final drafts of the above referenced documentation not less than five business days prior to the funding of the escrow. (e) Claims Upon the Bond Insurance Policy and Payments by and to the Bond Insurer. If, on the business day prior to the related scheduled interest payment date or principal payment date or GEORGTWN/REF97: ORDIN.DR2 3/10/97 30 the date to which Certificate maturity has been accelerated ("Payment Date") there is not on deposit with the Paying Agent/Registrar, after making all transfers and deposits required under this Ordinance, moneys sufficient to pay the principal of and interest on the Certificates due on such Payment Date, the Paying Agent/Registrar shall make a claim under the Bond Insurance Policy and give notice to the Bond Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency and the allocation of such deficiency between the amount required to pay interest on the Certificates and the amount required to pay principal of the Certificates, confirmed in writing to the Bond Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such Business Day by filling in the form of Notice of Claim and Certificate delivered with the Bond Insurance Policy. In the event the claim to be made is for a mandatory sinking fund redemption installment, upon receipt of the moneys due, the Paying Agent/Registrar shall authenticate and deliver to affected Certificateholders who surrender their Certificates a new Certificate or Certificates in an aggregate principal amount equal to the unredeemed portion of the Certificate surrendered. The Paying Agent/Registrar shall designate any portion of payment of principal on Certificates paid by the Bond Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Certificates registered to the then current Certificateholder, whether DTC or its nominee or otherwise, and shall issue a replacement Certificate to equal to the amount of principal paid (without regard to authorized denominations); provided that the Paying Agent/Registrar's failure to so designate any payment or issue any replacement Certificate shall have no effect on the amount of principal or interest payable by the City on any Certificate or the subrogation rights of the Bond Insurer. The Paying Agent/Registrar shall keep a complete and accurate record of all funds deposited by the Bond Insurer into the Policy Payments Account and the allocation of such funds to payment of interest on and principal paid in respect of any Certificate. The Bond Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Paying Agent/Registrar. Upon payment of a claim under the Bond Insurance Policy the Paying Agent/Registrar shall establish a separate special purpose trust account for the benefit of Certificateholders referred to herein as the "Policy Payments Account" and over which the Paying Agent/Registrar shall have exclusive control and sole right of withdrawal. The Paying Agent/Registrar shall receive any amount paid under the Bond Insurance Policy in trust on behalf of Certificateholders and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Paying Agent/Registrar to Certificateholders in the same manner as principal and interest payments are to be made with respect to the Certificates under the sections hereof regarding payment of Certificates. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Funds held in the Policy Payments Account shall not be invested by the Paying Agent/Registrar and may not be applied to satisfy any costs, expenses or liabilities of the Paying Agent/Registrar. GEORGIWN/REF97: ORDIN.DM 3/10/97 31 Any funds remaining in the Policy Payments Account following a Certificate payment date shall promptly be remitted to the Bond Insurer. (f) Subrogation. The Bond Insurer shall, to the extent it makes any payment of principal or interest on the Certificates, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Bond Insurance Policy. (g) Reimbursement of Costs. To the extent authorized by Texas law, the City shall agree to pay or reimburse the Bond Insurer any and all charges, fees, costs and expenses which the Bond Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in respect of this Ordinance, (ii) the pursuit of any remedies under this Ordinance or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, this Ordinance whether or not executed or completed, (iv) the violation by the City of any law, rule or regulation, or any judgment, order or decree applicable to it or (v) any litigation or other dispute in connection with this Ordinance or the transactions contemplated thereby, other than amounts resulting from the failure of the Bond Insurer to honor its obligations under the Bond Insurance Policy. Notwithstanding the foregoing, the City shall not reimburse the Bond Insurer for any charges, fees, costs or expenses resulting from the negligence of the Bond Insurer. The Bond Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this Ordinance. (h) Payments to Bond Insurer. Payments required to be made to the Bond Insurer shall be payable solely from the revenues pledged under this Ordinance and shall be paid (i) prior to an event of default, to the extent not paid from the Interest and Sinking Fund and (ii) after an event of default, with respect to amounts other than principal and interest on the Certificates, on the same priority as payments for expenses in enforcing this Ordinance. The obligations to the Bond Insurer shall survive discharge or termination of this Ordinance. (i) Payment by Bond Insurer. The Bond Insurer shall be entitled to pay principal or interest on the Certificates that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are defined in the Bond Insurance Policy) and any amounts due on the Certificates as a result of acceleration of the maturity thereof in accordance with this Ordinance, whether or not the bond Insurer has received a Notice (as defined in the Bond Insurance Policy) of Nonpayment or a claim upon the Bond Insurance Policy. 0) Notices. The notice address of the Bond Insurer is: Financial Security Assurance Inc., 350 Park Avenue, New York, New York 10022-6022, Attention: Managing Director -- Surveillance --Re: Policy No. Telephone: (212) 826-0100; Telecopier: (212) 339-3529. In each case in which notice or other communication refers to an Event of Default then a copy of such notice or other communication shall also be sent to the attention of General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." (k) Provision of Information. The Bond Insurer shall be provided with the following information: GEORG MN/REF97: ORDIN.DR2 3/10/97 32 (i) Annual audited financial statements within 120 days after the end of the City's fiscal year and the City's annual budget within 30 days after the approval thereof, (ii) Notice of any default within five business days after knowledge thereof, Prior notice of the advance refunding or redemption of any of the Certificates, including the principal amount, maturities and CUSIP numbers thereof, (iv) Notice of the resignation or removal of the Paying Agent/Registrar and the appointment of, and acceptance of duties by, any successor thereto; (v) the commencement of any proceeding by or against the City commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (vi) the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Certificates; (vii) A full original transcript of all proceedings relating to the execution of any amendment or supplement to this Ordinance; and (viii) All reports, notices and correspondence to be delivered under the terms of this Ordinance. Section 30. SEVERABILITY. The provisions of this Ordinance are severable; and in case any one or more of the provisions of this Ordinance or the application thereof to any person or circumstance should be held to be invalid, unconstitutional, or ineffective as to any person or circumstance, the remainder of this Ordinance nevertheless shall be valid, and the application of any such invalid provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby. [the remainder of this page intentionally left blank] GEORGTWN/REF97: ORDIN.DR2 3/10/97 33 Section 31. EFFECTIVE DATE. This Ordinance shall become effective upon the final passage of this Ordinance, and no petition was received from the qualified electors of the City protesting the issuance of such Bonds. PASSED AND APPROVED on First Reading on the 25th day of February, 1997. PASSED AND APPROVED on Second Reading on the 11th day of March, 1997. THE CITY OF GEORGETOWN: By: Leo Wood, Mayor City of Georgetown, Texas ATTEST: Sandra Lee City Secretary APPROVED AS TO FORM: Marianne Landers Banks City Attorney GEORG7WN/REF97: ORDIN.DR2 3/10/97 34 GEORGTWN/REF97: ORDIN.DR2 3/10/97 A-1 GEORGTWNaEF97: ORDIN.DR2 3/10/97 B-1 �� 1 ., •: • • ., • GEORGTWN/REF97: ORDIN.DR2 3/10/97 C-1 • 1 GEORGTWN/REF97: ORDIN.DR2 3/10/97 D-1 104*4 agoI: ''JI The i' . 1 1 i• i The following information is referred to in Section 28 of this Ordinance. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the headings of the Official Statement referred to) below: (1) Appendix B - Excerpts from Annual Financial Report; (2) Table 1 - Water Usage; (3) Table 2 - Ten Largest Water Customers; (4) Table 3 - Monthly Water Rates; (5) Table 4 - Daily Flow (Wastewater Treatment); (6) Table 5 - Monthly Wastewater Rates; (7) Table 6 - Top Wastewater Customers; (8) Table 7 - Monthly Electric Rates; (9) Table 8 - Debt Service Requirements; (10) Table 9 - Ten Largest Electrical Customers; (11) Table 10 - Utility System Condensed Statement of Operations; (12) Table 11 - Coverage and Fund Balances; and (13) Table 12 - City's Equity in System. Accounting Primciples The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in paragraph 1 above. GE0RGCWN/REF97: ORDIN.DR2 3110/97 E-1