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HomeMy WebLinkAboutORD 91-07 - Utility System Refund BondTHE STATE OF COUNTYOF • CITY OF !• i We, the undersigned officers of said City, hereby certify as follows: 1. The City Council of said City convened in REGULAR MEETING ON THE 26TH DAY OF MARCH, 1991, at the City Hall, and the roll was called of the duly constituted officers and members of said City Council, to -wit: W. H. Connor, Mayon-----' Mike McMaster, Mayor Pro Tem Winfred Bonner Barbara Pearce Joe Saegert Bob Schrawger Fred Tonn Lorenzo Valdez, Jr. Elizabeth Gray, City Secretary and all of said persons were present, except the following absentees: thus constituting a quorum. at said Meeting: a written Whereupon, among other business, the following was transacted !i�!+ a fill • i' • i' • ! ! •' ! i ING TO THE SUBJECT was duly introduced for the consideration of said City Council and read in full. It was then duly moved and seconded that said Ordinance be passed; and, after due discussion, said motion carrying with it the passage of said Ordinance, prevailed and carried by the following vote: AYES: All members of said City Council shown present above voted "Aye". NOES: None. 2. That a true, full and correct copy of the aforesaid Ordinance passed at the Meeting described in the above and foregoing paragraph is attached to and follows this Certificate; that said Ordinance has been duly recorded in said City Council's minutes of said Meeting; that the above and foregoing paragraph is a true, full and correct excerpt from said City Council's minutes of said Meeting pertaining to the passage of said Ordinance; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of said City Council as indicated therein; that each of the officers and members of said City Council was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the aforesaid Meeting, and that said Ordinance would be introduced and considered for passage at said Meeting, and each of said officers and members consented, in advance, to the holding of said Meeting for such purpose, and that said Meeting was open to the public and public notice of the time, place and purpose of said meeting was given, all as required by Vernon's Ann. Civ. St. Article 6252-17. 3. That the Mayor of said City has approved and hereby approves the aforesaid Ordinance; that the Mayor and the City Secretary of said City have duly signed said Ordinance; and that the Mayor and the City Secretary of said City hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Ordinance for all purposes. SIGNED AND SEALED the 26th day of March, 1991. Secretary ORDINANCE AUTHORIZING * REVENUE OTHERPROVISIONS FOR THE SECURITY TUEREOF, AND ORDAINING t TUE WK01 a U01 z 3I WHEREAS, the City of Georgetown, Texas (the "Issuer) has duly issued and there is now outstanding, pursuant to Vernon's Ann. Tex. Civ. St. Articles 1111 through 1118, and Article 717k, as amended, the following series or issue of bonds which are secured solely by a first lien on and pledge of the Net Revenues of the Issuer's Waterworks and Sewer System: Utility System Revenue Bonds, Series 1974, dated October 15, 1974, maturities April 15, 1991 through April 15, 1995, now outstanding in the principal amount of $305,000 (the "Series 1974 Bonds"); and Utility System Revenue Bonds, Series 1984, dated July 15, 1984, maturities August 15, 1991 through August 15, 2003, now outstanding in the principal amount of $1,795,000 (the "Series 1984 Bonds"); and Utility System Revenue Bonds, Series 1985, dated July 15, 1985, maturities August 15, 1991 through August 15, 2005, now outstanding in the principal amount of $8,275,000 (the "Series 1985 Bonds"); and Utility System Revenue Bonds, Series 1991, dated January 1, 1991, maturities August 15, 1993 through August 15, 2006, now outstanding in the principal amount of $2,300,000 (the "Series 1991 Bonds"); and WHEREAS, the Issuer now desires to refund maturities 1995 through 2003 of the Series 1984 Bonds in the principal amount of $1,340,000 and maturities 1996 through 2005 of the Series 1985 Bonds in the principal amount of $6,775,000 for a total aggregate amount of $8,115,000 (the "Refunded Bonds"); and WHEREAS, the City Council of the Issuer deems it advisable to refund the Refunded Bonds in order to achieve an interest cost savings of approximately $619,336.50; and 11 WHEREAS, Article 717k, V.A.T.C.S. authorizes the Issuer to issue refunding bonds and to deposit the proceeds from the sale thereof together with any other available funds or resources, directly with a place of payment (paying agent) for the Refunded Bonds, 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 Bonds; and WHEREAS, Article 717k further authorizes the Issuer to enter into an escrow agreement with the paying agent for the Refunded Bonds with respect to the safekeeping, investment, reinvestment, administration and disposition of any such deposit, upon such terms and conditions as the Issuer and such paying agent may agree, provided that such deposits may be invested and reinvested 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 Bonds; and WHEREAS, First City, Texas - Austin, N.A., Austin, Texas, is the paying agent for the Refunded Bonds, and the Escrow Agreement hereinafter authorized, constitutes an agreement of the kind authorized and permitted by said Article 717k; and WHEREAS, all the Refunded Bonds mature or are subject to redemption prior to maturity within 20 years of the date of the bonds hereinafter authorized. THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF GEORGETOWN. Section 1. AMOUNT AND PURPOSE OF THE BONDS. The findings contained in the preambles hereto are incorporated herein by reference and are made a part hereof for all purposes. The bond or bonds of the City of Georgetown (the "Issuer") are hereby authorized to be issued and delivered in the aggregate principal amount of $9,150,000 for the purpose of providing funds to refund a portion of the Issuer's Series 1984 Bonds, being maturities 1995 through 2003, and to refund a portion of the Issuer's Series 1985 Bonds, being maturities 1996 through 2005. Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Ordinance shall be designated: "CITY OF GEORGETOWN, TEXAS UTILITY SYSTEM REVENUE REFUNDING BOND, SERIES 1991," and initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments of principal (the "Initial Bond"), but the Initial Bond may be assigned and transferred and/or converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, having serial maturities, and in the denomi- nation or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided. The term "Bonds" as used in this Ordinance shall mean and include collectively the Initial Bond and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term 'Bond" shall mean any of the Bonds. Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURITIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND. (a) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated March 15, 1991, in the denomination and aggregate principal amount of $9,150,000, numbered R4, payable in annual installments of principal to the initial registered owner thereof, to -wit: Merrill Lynch Capital Markets, or to the registered assignee or assignees of said Bond or any portion or portions thereof (in each case, the "registered owner"), with the annual installments of principal of the Initial Bond to be payable on the dates, respectively, and in the principal amounts, respectively, stated in the FORM OF INITIAL BOND set forth in this Ordinance. (b) The Initial Bond (i) may be prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest on the Initial Bond shall be payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL BOND set forth in this Ordinance. Section 4. INTEREST. The unpaid principal balance of the Initial Bond shall bear interest from the date of the Initial Bond, and will be calculated on the basis of a 360 -day year of twelve 30 -day months to the respective scheduled due dates, or to the respective dates of prepayment or redemption, of the installments of principal of the Initial Bond, and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL BOND set forth in this Ordinance. Section 5. FORM OF INITIAL BOND. The form of the Initial Bond, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Bond, shall be substantially as follows. NO. R-1 UNITED STATES OF AMERICA STATE OF TEXAS COUNTYOF • CITY OF ! ` •' SERIES •• $9,150,000 The CITY OF GEORGETOWN (the "Issuer"), in Williamson County, being a political subdivision of the State of Texas, hereby promises to pay to 3 or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the "registered owner") the aggregate principal amount of 121 I "NoMM03121)' i• • in annual installments of principal due and payable on August 15 in each of the years, and in the respective principal amounts, as set forth in the following schedule. ... AMOUNT 1991 $1359000 1998 $790,000 1992 959000 1999 8307000 1993 100,000 2000 8851JI000 1994 105,000 2001 9459000 1995 2459000 2002 9753000 1996 715,000 2003 960,000 1997 7559000 2004 815111,000 2005 80011,000 and to pay interest, from the date of this Bond hereinafter stated, on the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the following rates per annum: maturity 1991, 4.50% maturity 1992, 5.10% maturity 1993,5.30% maturity 1994, 5.50% maturity 1995, 5.75% maturity 1996, 6.00% maturity 1997, 6.00% maturity 1998, 6.10% maturity 1999, 6.20% maturity 2000, 6.30% maturity 2001, 6.40% maturity 2002, 6.50% maturity 2003, 6.60% maturity 2004, 6.70% maturity 2005, 6.75% with said interest being payable on August 15, 1991, and semiannually on each February 15 and August 15 thereafter while this Bond or any portion hereof is outstanding and unpaid. THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The installments of principal and the interest on this Bond are payable to the registered owner hereof through the services of First City, Texas - Austin, N.A., Austin, Texas, which is the "Paying Agent/Registrar" for this Bond. Payment of all principal of and interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner 0 hereof on each principal and/or interest payment date by check, wire or draft, dated as of such date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as 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 principal and/or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared on the last business day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described, or by such other method acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of the registered owner. The Issuer covenants with the registered owner of this Bond that, on or before each principal and/or interest payment date for this Bond, it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on this Bond, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS BOND has been authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $9,150,000, for the purpose of providing funds to refund a portion of the Issuer's Series 1984 Bonds, being maturities 1995 through 2003, and to refund a portion of the Issuer's Series 1985 Bonds, being maturities 1996 through 2005. ON AUGUST 15, 2001, or any date thereafter, the unpaid installments of principal of this Bond may be prepaid or redeemed prior to their scheduled due dates, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, and, if in part, the Issuer shall select and designate the maturity or maturities and the amount that is to be redeemed, and if less than a whole maturity is to be redeemed, the Issuer shall direct the Paying Agent/Registrar to call by lot (provided that a portion of this Bond may be redeemed only in an integral multiple of $5,000), at a price equal to the principal amount to be so prepaid or redeemed, plus accrued interest to the date fixed for prepayment or redemption. AT LEAST 30 days prior to the date fixed for any such prepayment or redemption, a written notice of such prepayment or redemption shall be mailed by the Paying Agent/Registrar to the registered owner hereof. By the date fixed for any such prepayment GJ or redemption, due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required prepayment or redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption. If such written notice of prepayment or redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued interest to the date fixed for prepayment or redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such prepayments or redemptions of principal of this Bond or any portion hereof. THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar for cancellation, together with proper instruments of assign- ment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment by the initial registered owner of this Bond, or any portion or portions hereof in any integral multiple of $5,000, to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. Any instrument or instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any such portion or portions hereof by the initial registered owner hereof. A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this Bond or any portion hereof. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. AS PROVIDED above and in the Bond Ordinance, this Bond, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Bond which is not being assigned 101 and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute bond issued in exchange for any portion of this Bond shall have a single stated principal maturity date), upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. If this Bond or any portion hereof is assigned and transferred or converted, each bond issued in exchange for any portion hereof shall have a single stated principal maturity date corresponding to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof. Such bonds, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding installment of principal of this Bond or portion hereof for which they are being exchanged. No such bond shall be payable in installments, but shall have only one stated principal maturity date. AS PROVIDED IN THE BOND ORDINANCE, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond Ordinance. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption date. IN THE EVENT any Paying Agent/Registrar for this Bond is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner of this Bond. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law, that this Bond is a special obligation; and that the principal of and interest on this Bond, together with other outstanding revenue bonds of said Issuer, are payable from, and secured by a first lien on and pledge of the Net Revenues of the Issuer's Utility System, being the combined Waterworks, Sewer and Electric Light System, including all additions, extensions and improvements thereto which may hereafter be made. 7 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 or to be 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 Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between the registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual signature of the Mayor of the Issuer, countersigned with the manual signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed on this Bond dated March 15, 1991. City Secretary (CITY SEAL) Mayor 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 E Section 5. ADDITIONAL CHARACTERISTICS OF THE BONDS. (a) Registration and Transfer. The Issuer shall keep or cause to be kept at the principal corporate trust office of First City, Texas - Austin, N.A., Austin, Texas, (the 'Paying Agent/Registrar") books or records of the registration and transfer of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfers and registrations as herein provided. The Paying Agent/ Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each Bond may be transferred in the Registration Books only upon presentation and surrender of such Bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, (i) evidencing the assignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (ii) the right of such assignee or assignees to have the Bond or any such portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of any Bond or any portion thereof, a new substitute Bond or Bonds shall be issued in conversion and exchange therefor in the manner herein provided. The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial regis- tered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof. All Bonds issued and delivered in conversion of and exchange for the Initial Bond shall be in any denomination or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, and shall have the characteristics, and may be assigned, transferred, and converted as hereinafter provided. If the Initial Bond or any portion thereof is assigned and transferred or converted, the Initial Bond must be surrendered to the Paying Agent/Registrar for cancellation, and each Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If only a portion of the Initial Bond is assigned and transferred, there shall be delivered to and registered in the name of the initial registered owner substitute Bonds in exchange for the unassigned balance of the Initial Bond 0 in the same manner as if the initial registered owner were the assignee thereof. If any Bond or portion thereof other than the Initial Bond is assigned and transferred or converted, each Bond issued in exchange shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is exchanged. A form of assignment shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof. Upon surrender of any Bonds or any portion or portions thereof for transfer of registration, an authorized representative of the Paying Agent/Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described, payable to such assignee or assignees (which then will be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and transferred, all in conversion of and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section b(d), below, for the conversion and exchange of Bonds by any registered owner of a Bond. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer and delivery of a substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of any Bond or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its prepayment or redemption date. (b) Ownership of Bonds. The entity in whose name any Bond shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such Bond shall be overdue, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any such Bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (c) Payment of Bonds and Interest. The Issuer hereby appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to convert and exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special m 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 (5) business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Bondholder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. (d) Conversion and Exchange or Replacement: Authentication. Each Bond issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed princi- pal balance or principal amount thereof, may, upon surrender of such Bond at the principal corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unredeemed principal balance or principal amount of any Bond or Bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be. If the Initial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If a portion of any Bond (other than the Initial Bond) shall be redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If any Bond or portion thereof (other than the Initial Bond) is assigned and transferred or converted, each Bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. The Paying Agent/Registrar shall convert and exchange or replace Bonds as provided herein, and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be converted and exchanged or replaced. It is specifically provided that any Bond authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each substitute 11 Bond so authenticated after such first scheduled Record Date shall bear interest from the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest from such next following interest payment date; provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in full. THE INITIAL BOND issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds issued under this Ordinance there shall be printed a certificate, in the form substantially as follows. •1111111111111 iiiiiiiijll 1111111 11111111•111111111111111111111111111 11. • • t It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described on the face of this Bond; and that this Bond has been issued in conver- sion of and exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. M Authorized Representative An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composi- tion printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Article 717k-6, V.A.T.C.S., as amended, and particularly Section 6 thereof, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which originally was issued pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, 12 converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to make any such conversion and exchange or replacement of Bonds or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its prepayment or redemption date. (e) In General. All Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORINT OF SUBSTITUTE BOND set forth in this Ordinance. (f) Payment of Fees and Charges. The Issuer hereby covenants with the registered owners of the Bonds that it will (i) pay the standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay the fees and charges of the Paying Agent/Registrar for services with respect to the transfer of registration of Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided in this Ordinance. (g) Substitute Paving_ Agent/Registrar. The Issuer covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. Section 7. FORM OF SUBSTITUTE BONDS. The form of all Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, including the form of Paying Agent/Registrar's Certificate to be printed on each of such Bonds, and the Form of Assignment to be printed on each of the Bonds, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance. M • • -•-figiallit 1110,0010le• UNITED STATES OF • COUNTYSTATE OF TEXAS OF ` • CITY OF •• tTEXAS REFUNDINGUTILITY SYSTEM REVENUE SEVIES 9 • D • VVIE91-021 March 15, 1991 ON THE MATURITY DATE specified above, the CITE' OF GEORGETOWN (the "Issuer"), in Williamson County, being a political subdivision of the State of Texas, hereby promises to pay to or to the registered assignee hereof (either being hereinafter called the "registered owner") the principal amount of and to pay interest thereon March 15, 1991, to the Maturity Date, or the date of redemption prior to maturity, at the Interest Rate per annum, specified above, with interest being payable on August 15, 1991 and semiannually on each February 15 and August 15 there- after; except that if the date of authentication of this Bond is later than July 31, 1991, such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date (hereinafter M defined) but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date. 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 principal corporate trust office of First City, Texas - Austin, N.A., Austin, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Regis- trar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Bonds (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check 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 the address of the registered owner, as it appeared on the last business day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described, or by such other method acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of the registered owner. Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner at the principal corporate trust office of the Paying Agent/Registrar upon presentation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the registered owner of this Bond that, on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond, it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Bond Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, a Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS BOND is one of an issue of Bonds initially dated Larch 15, 1991, authorized in accordance with the Constitution and laws of the State of Texas, in the original principal amount of $9,150,000 for the purpose of providing funds to refund a portion of the Issuer's Series 1984 Bonds, being maturities 1995 through 2003, and to refund a portion of the Issuer's Series 1985 Bonds, being maturities 1996 through 2045. 15 ON AUGUST 15, 2001, or any date thereafter, the Bonds of this Series may be redeemed prior to their scheduled maturities, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the maturity or maturities of Bonds and the amounts thereof, to be redeemed shall be selected and designated by the Issuer, and the Issuer shall direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof within such maturities and in such principal amounts, for redemption (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at the redemption price of the principal amount thereof, plus accrued interest to the date fixed for prepayment or redemption. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity, a written notice of such redemption shall be published once in a financial publication, journal, or reporter of general circulation among securities dealers in The City of New York, New York (including, but not limited to, The Bond Buyer and The Wall Street Journal), or in the State of Texas (including, but not limited to, The Texas Bond Reporter). Such notice also shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, not less than 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond to be redeemed at its address as it appeared on the 45th day prior to such redemption date; provided, however, that the failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond, and it is hereby specifically provided that the publication of such notice as required above shall be the only notice actually required in connection with or as a prerequisite to the redemption of any Bonds or portions thereof. By the date fixed for any such redemption, due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such written notice of redemption is published and if due provision for such payment is made, all as provided above, the Bonds or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance. THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTEGRAL MULTIPLE OF $5,000 may be assigned and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent/Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Ordinance. Among other In requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond shall be executed by the registered owner or its duly authorized attorney or representative,to evidence the assignment hereof. A new Bond or Bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying Agent/Registrar in conversion of and exchange for this Bond, all in the form and manner as provided in the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such transfer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent/Registrar shall not be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent/Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent/Registrar shall not be affected by any notice to the contrary. ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Bond Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Ordinance. The Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, conver- sion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent/Registrar shall not be required to make any such conversion and exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest 17 payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its prepayment or redemption date. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law, that this Bond is a special obligation; and that the principal of and interest on this Bond, together with other outstanding revenue bonds of said Issuer, are payable from, and secured by a first lien on and pledge of, the Net Revenues of the Issuer'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 or to be 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 Issuer, and agrees that the terms and provisions of this Bond and the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the facsimile signature of the Mayor of the Issuer and countersigned with the facsimile signature of the City Secretary of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. City Secretary (CITY SEAL) 10 Mayor • •,IIIIIII,. • .I I• (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 on the face of this Bond; and that this Bond has been issued in conversion of and exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated: FIRST CITY, TEXAS - AUSTIN, N.A. Austin, Texas By Authorized Representative MA *$ ►f111 FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to (Assignee's Social Security or Taxpayer Identification Number) and hereby irrevocably constitutes and appoints (print or type Assignee's name and address, including zip code) attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises. Dated Signature Guaranteed: NOTICE: This signature must be guaranteed by a member of the New York Stock Exchange or a commercial bank or trust company. Registered Owner NOTICE: This signature must correspond with the name of the Registered Owner appearing on the face of this Bond in every particular without alteration or enlargement or any change whatsoever. U] Section 8. DEFINITIONS. As used in this Ordinance, the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise. (a) The 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 Refunding Bonds, Series 1991, authorized by this Ordinance. (d) The term "Outstanding Bonds" shall mean the Issuer's Utility System Revenue Bonds, Series 1974; Utility System Revenue Bonds, Series 1984, Utility System Revenue Bonds, Series 1985, and Utility System Revenue Bonds, Series 1991. (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. (h) The term "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 term "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 the costs of certain repairs or replacements to said System, and for the payment of principal of and interest on the bonds outstanding against the Utility System, as hereinafter more specifically stated. Section 9. 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 Issuer, together with all improvements, extensions and additions thereto which may be made while any Parity Bonds or Additional Q] Bonds remain outstanding against the System. Such System shall be operated on the basis of a fiscal year commencing on September 1 of each year and ending on August 31 of the following year. Section 10. 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 11. MAINTENANCE OF RATES. The Issuer 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 Issuer shall fix and maintain rates and collect charges for the facilities and services afforded by the System to the Issuer, and to all other customers, which will provide 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, other than 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. RA Section 12. UTILITY SYSTEM REVENUE REFUNDING 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 Issuer. Such Revenue Fund shall be maintained in the Issuer'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 Issuer, are necessary to keep the System in operation and render adequate service to the Issuer 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 Issuer 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 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 Issuer currently has on deposit in the Reserve Fund $ , and has covenanted in the most recently adopted ordinance authorizing the issuance of its Utility System Revenue Bonds, Series 1991, to maintain a required reserve of $ The Reserve Fund shall be increased to $ by monthly deposits of $ beginning the 10th day of each month hereafter as required by the ordinance 0 authorizing the issuance of the Utility System Revenue Bonds, Series 1991, until the amount in the Reserve Fund is equal to $ . The Issuer 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 and one month 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 $ monthly shall be resumed and continued until such time as such Fund contains the amount of money then required to be on deposit therein. The Issuer'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 Issuer. 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 Issuer 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 and one month from the date of the Additional Bonds. (d) Contingency Fund. Based on an annual review of the Issuer'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 Issuer'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 23 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 Issuer are insufficient for such purposes. The Issuer 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 Issuer'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 Issuer's official depository is hereby authorized to invest the money in the Contingency Fund in direct obligations of or obligations unconditionally guaranteed by the Untied 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 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 Issuer 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 Issuer to pay in accordance with the provisions thereof any junior lien bonds hereafter legally issued by it. Section 13. SECURITY FOR FUNDS. All moneys which are to be paid into the depository under the provisions of the ordinances authorizing the Parity Bonds shall be M 3 secured in accordance with the law of the State of Texas applicable thereto, and the Issuer 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. Section 14. ADDITIONAL BONDS. In addition to the right to issue bonds of inferior lien as authorized by the laws of this State, the Issuer 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 Issuer 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; (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 15. MAINTENANCE AND OPERATION. The Issuer hereby covenants and agrees to maintain the facilities of the Utility System in good condition and operate the FW same in an efficient manner and at a reasonable cost. So long as any Parity Bonds are outstanding, the Issuer 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 16. RECORDS AND ACCOUNTS. The Issuer 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 Issuer 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 Issuer has carried 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; (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 NZ 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 Issuer further agrees to promptly furnish a copy of each such audit to First Southwest Company, Dallas, Texas, or its successor, if any, and to any holder of any of the Bonds who shall request same in writing, and that the holder of any of the Bonds shall have the right to discuss with the certified public accountant making the audit the contents of the audit and to ask for such additional information as he may reasonably request. Section 17. SALE, LEASE OR OTHER ENCUMBRANCE OF UTILITY SYSTEM. The Issuer 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 Issuer of property which in its judgment has become inexpedient to use in connection with the Utility System when other property of equal value has been substituted therefor). 11 Section 18. NO COMPETING SYSTEM. So far as it legally may, the Issuer 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 Issuer, until all Bonds issued hereunder shall have been retired. Section 19. REMEDIES IN EVENT OF DEFAULT. In addition to all the rights and remedies provided by the laws of the State of Texas, the Issuer covenants and agrees particularly that in the event the Issuer (a) defaults in the payment of principal of or interest on any Bonds when due, (b) fails to make the payments required by Section 12 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 Issuer 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. M 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 20. SPECIAL COVENANTS AND CONDITIONS. (a) The Issuer will punctually keep, observe and perform each and every term, covenant and condition on its part to 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 Issuer 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 Issuer 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 Issuer 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 Issuer in accordance with their terms; (c) The Bonds authorized hereunder shall be special obligations of the Issuer 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 Issuer nor of said System. Section 21. ORDINANCE TO CONSTITUTE CONTRACT. The provisions of this Ordinance shall constitute a contract between the Issuer 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 22. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the W registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. (e) Authority for Issuing Replacement Bonds. In accordance with Article 717k-6, V.A.T.C.S., as amended, and particularly, 'this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of this Ordinance for Bonds issued in conversion and exchange for other Bonds. Section 23. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION; CUSIP NUMBERS; AND CONTINGENT INSURANCE PROVISION, IF OBTAINED. The Mayor of the Issuer is hereby authorized to have control of the Initial Bond issued hereunder and all necessary records and proceedings per- taining to the Initial Bond pending its delivery and its investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate on the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on the W Initial Bond. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Initial Bond or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. In addition, if bond insurance is obtained, the Bonds may bear an appropriate legend as provided by the Insurer. Section 24. COVENANTS REGARDING TAX EXEMPTION. The Issuer covenants to refrain from taking any action which would adversely affect, and to take any required action to ensure, the treatment of the Bonds as obligations described in Section 143 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows. (a) to take any action to assure that no more than 10 percent of the proceeds of the Bonds (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in Section 141(b)(6) of the Code or, if more than 10 percent of the proceeds are so used, that amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance, or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent 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 subsection (a) hereof exceeds 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of Section 141(b)(3) of the Code, to the governmental use; (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds 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 -- kill (1) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, a to • for a period of 1 days or • s. --l. 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 1.10343(b)(12) of the Treasury regulations, and amountsdeposited in any reasonablyl reserve or i . - • to the amountsextent such • • not i 10 percent of proceeds of -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); (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; and (i) to maintain such records as will enable the Issuer to fulfill its responsibilities under this Section and Section 148 of the Code and to retain such records for at least six years following the final payment of principal and interest on the Bonds. In order to facilitate compliance with the above covenants (g), (h), and (i), a "rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the bondholders. The rebate Fund is established for the additional purpose of compliance with Section 148 of the Code. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify, or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally -recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under Section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally -recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under Section 103 of the Code. 31 Section 25. SALE OF INITIAL BOND. The Initial Bond is hereby sold and shall be delivered to Merrill Lynch Capital Markets for cash for the price of $8,977,641.80 thereof and accrued interest thereon to date of delivery. It is hereby officially found, determined, and declared that the Initial Bond has been sold pursuant to the terms and provisions of a Purchase Contract in substantially the form attached hereto as Exhibit A, which the Mayor of the Issuer is hereby authorized and directed to execute and deliver and which the City Secretary of the Issuer is hereby authorized and directed to attest. It is hereby officially found, determined, and declared that the terms of this sale are the most advantageous reasonably obtainable. The Initial Bond shall be registered in the name of Merrill Lynch Capital Markets. Section 26. APPROVAL OF OFFICIAL STATEMENT. The Issuer 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 Underwriter in final form, 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. APPROVAL OF ESCROW AGREEMENT AND TRANSFER OF FUNDS. The Mayor of the Issuer is hereby authorized and directed to execute and deliver and the City Secretary of the Issuer is hereby authorized and directed to attest an Escrow Agreement in substantially the form attached hereto as Exhibit B. In Addition, the Mayor is authorized to execute such subscription for the purchase of U. S. Treasury Securities, State and Local Government Series, and to authorize the transfer of such funds of the City, as may be necessary for the Escrow Fund. Section 28. NOTICE OF REDEMPTION. There is attached to this Ordinance, as Exhibit C, and made a part hereof for all purposes, a notice of prior redemption for the Refunded Bonds to be redeemed prior to stated maturity, and such Refunded Bonds described in said notice of prior redemption are hereby called for redemption and shall be redeemed prior to maturity on the date, place, and at the price as set forth therein. Section 29. NOTICE TO PAYING AGENT. The Refunded Bonds described in Exhibit C attached hereto are so called for redemption, and First City, Texas - Austin, N.A. is hereby directed to make appropriate arrangements so that such Refunded Bonds may be redeemed at said bank on the redemption date. A copy of such Notice of Redemption shall be delivered to the Paying Agent bank so mentioned and to the Texas Bond Reporter for publication. Section 30. REASONS FOR REFUNDING. That the Issuer deems it advisable to issue the refunding bonds in order to achieve an interest cost savings and the interest savings shall be approximately $619,336.50. 32 ' i11VAa) City Attomey Purchase Contract The Purchase Contract has been omitted at this point as it appears in executed form elsewhere in this transcript. r W The Escrow Agreement has been omitted at this point as it appears in executed form elsewhere in this transcript. 35 EXHIBIT C NOTICE IS HEREBY GIVEN that the City of Georgetown, Texas has called for redemption the outstanding Bonds of the City described as follows: City of Georgetown, Texas Utility System Revenue Bonds, Series 1984, dated July 15, 1984, maturing August 15, 1995 through August 15, 2003, in the aggregate principal amount of $1,340,000 to call date of the Bonds so called for redemption at First City, Texas - Austin, N.A., Austin, Texas. Call date: August 15, 1994. On August 15, 1994, interest on the Bonds shall cease to accrue and be payable. City of Georgetown, Texas Utility System Revenue Bonds, Series 1985, dated July 15, 1985, maturing August 15, 1996 through August 15, 2005, in the aggregate principal amount of $6,775,000 to call date of the Bonds so called for redemption at First City, Texas - Austin, N.A., Austin, Texas. Call date: August 15, 1995. On August 15, 1995, interest on the Bonds shall cease to accrue and be payable. Notice is further given that the Bonds should be surrendered by insured mail or by hand delivery on their respective call dates at First City, Texas - Austin, N.A., Austin, Texas as indicated below: First City, Texas - Austin, N.A. First City, Texas - Austin N.A. 816 Congress P. O. Box 2127 Austin, Texas 78768 Austin, Texas 78701 In compliance with the Interest and Dividend Tax Compliance Act of 1983, payers making payments of principal due on debt securities may be obligated to withhold 20% tax from remittance to individuals who failed to provide such payer with a valid taxpayer identification number. To avoid the imposition of this withholding tax, such bondholders should submit a certified taxpayer identification number when surrendering the bonds for redemption. W. H. Connor, Mayor City of Georgetown, Texas W $9,150,000 GEORGETOWN,CITY OF UTILITY SYSTEM REVENUE REFUNDING i The Honorable City Council City of Georgetown 609 Main Georgetown, TX 78627®0409 Gentlemen The undersigned, Merrill Lynch Pierce Fenner & Smith, Inc. 9 Legg Mason Wood Walker, Inc . , and Edward D. Jones & Co. ( collectively, the "Underwriters") acting herein through Merrill Lynch Pierce Fenner & Smith, Inc. as the representative of the Underwriters (the "Representative") offer to enter into this Purchase Contract with the City of Georgetown, Texas (the "Issuer") . This offer is made subject to the Issuer's acceptance of this Purchase Contract on or before 9:00 p.m., Central Time on March 26, 1991. 1. PURCHASE AND SALE OF THE BONDS. Upon the terms and conditions and upon the basis of the representations set forth herein, the Underwriters hereby agree to purchase from the Issuer, and the Issuer here- by agrees to sell and deliver to the Underwriters an aggregate of $9,150,000 principal amount of "City of Georgetown, Texas, Utility System Revenue Refunding Bonds, Series 1991 (the "Bonds"). The Bonds shall be dated March 15, 1991 and shall have the maturities and bear interest from their date at the rate or rates per annum as shown on the cover page of the Official Statement (hereinafter defined), such interest being payable on August 15, 1991, and semiannually thereafter on February 15 and August 15 in each year. The purchase price for the Bonds shall be $8,977,641.80, plus interest accrued on the Bonds from their date to the date of the payment for and delivery of the Bonds (the "Closing") or $60,748.01 assuming the Closing occurs on April 23, 1991. Exhibit A hereto is the Official Statement, including the cover page and Appendices thereto, of the Issuer, dated this date, with respect to the Bonds. The Official Statement, including the cover page and Appendices thereto, as further amended only in the manner hereinafter provided, is hereinafter called the "Official Statement." 2. ORDINANCE. The Bonds shall be as described in and shall be issued and secured under the provisions of the Ordinance adopted by the City Council of the Issuer (the "Council") on this date (the "Ordinance"). The Bonds shall be subject to redemption and shall be payable as provided in the Ordinance. 3. PUBLIC OFFERING. It shall be a condition of the obligation of the Issuer to sell and deliver the Bonds to the Underwriters, and of the obligation of the Underwriters to purchase and accept delivery of the Bonds, that the entire principal amount of the Bonds authorized by the Ordinance shall be sold and delivered by the Issuer and accepted and paid for by the Underwriters at the Closing. The Underwriters agree to make a bona fide public offering of all of the Bonds, at not in excess of the initial public offering prices, as set forth on the cover page of the Official Statement, plus interest accrued thereon from the date of the Bonds, if any. 4. SECURITY D OSIT ® Delivered to the Issuer herewith is a corporate check of the Representative payable to the order of the Issuer in the amount of 1% of the principal amount of the Bonds to be purchased. The Issuer agrees to hold such check uncashed until the Closing to ensure the performance by the Underwriters of their obligation to purchase, accept delivery of, and pay for the Bonds at the Closing. Concurrently with the payment by the Underwriters of the purchase price of the Bonds, the Issuer shall return such check to the Representative as provided in Paragraph 7 hereof. Should the Issuer fail to deliver the Bonds at the Closing, or should the Issuer be unable to satisfy the conditions of the obligations of the Underwriters to purchase, accept delivery of, and pay for the Bonds, as set forth in this Purchase Contract (unless waived by the Representative), or should such obligations of the Underwriters be terminated for any reason permitted by this Purchase Contract, such check shall immediately be returned to the Representative. In the event the Underwriters fail (other than for a reason permitted hereunder) to purchase, accept delivery of, and pay for the Bonds at the Closing as herein provided, such check shall be retained by the Issuer as and for full liquidated damages for such failure of the Underwriters and for any defaults hereunder on the part of the Underwriters. The Representative hereby agrees not to stop or cause payment on said check to be stopped unless the Issuer has breached any of the terms of this Purchase Contract. 5. DELIVERY OF OFFICIAL STATEMENT. The Issuer shall deliver to the Representative at the time of or prior to the Issuer's acceptance of this Purchase Contract (a) three copies of the official statement of the Issuer dated the date hereof, relating to the Bonds, attached hereto as Exhibit A (said official statement together with all attachments thereto and such amendments and supplements thereto which shall be approved by the Underwriters, is hereafter referred to as the "Official Statement") and (b) three copies of the Ordinance. The Issuer will provide to the Representative such additional copies of the Ordinance as the Representative may reasonably request. The Issuer within seven days of the date hereof (exclusive of Saturdays, Sundays, and legal holidays) , provide up to 100 printed copies of the Official Statement in the form as the Representative may reasonably request in order to enable the Underwriters to comply with their obligations set forth in Section 240.15c2-12 of Chapter 11 of Title 17 of the Code of Federal Regulations ("Rule 15c2®121'). In the event that the number of additional copies of the Official Statement supplied to the Representative pursuant to the immediately preceding sentence shall prove to be insufficient to enable the Underwriters to comply with their obligation under paragraph (b) of Rule 15c2-12, the Issuer agrees to make available from time to time, such additional printed or photostatic copies of the Official Statement as may be reasonably required to enable the Underwriters to continue to comply with their obligation under Rule 15c2-12. The Issuer has previously delivered to the Representative the Preliminary Official Statement of the Issuer dated February 27, 1991, relating to the Bonds (such Preliminary Official Statement, including all attachments thereto, being herein called the "Preliminary Official Statement") . REPRESENTATIONS, *n the date hereof, the Issuer represents, warrants, and agrees as follows. (a) The Issuer is a political subdivision of the State of Texas and a home rule municipal corporation, and has full legal right, power, and authority to enter into this Purchase Contract and the Escrow Agreement between the Issuer and the Escrow Agent named in the Official Statement (the "Escrow Agreement"), to adopt the Ordinance, to sell the Bonds, and to issue and deliver the Bonds to the Underwriters as provided herein and to carry out and consummate all other transactions contemplated by the Ordinance, the Escrow Agreement, and this Purchase Contract. (b) By official action of the Issuer prior to or concurrently with the acceptance hereof, the Issuer has duly adopted the Ordinance, has duly authorized and approved the execution and delivery of, and the performance by the Issuer of the obligations contained in the Bonds, the Escrow Agreement, and this Purchase Contract and has duly authorized and approved the performance by the Issuer of its obligations contained in the Ordinance, the Escrow Agreement, and in this Purchase Contract; (c) The Issuer is not in breach of or default under any applicable law or administrative regulation of the State of Texas or the United States or any applicable judgment or decree or any loan agreement, note, resolution, agreement, or other instrument (except as may be disclosed in the Official Statement) to which the Issuer is a party or is otherwise subject, which would have a material and adverse effect upon the business or financial condition of the Issuer; and the execution and delivery of the Escrow Agreement, and this Purchase Contract by the Issuer and the execution and delivery of the Bonds and the adoption of the Ordinance by the Issuer and compliance with the provisions of each thereof will not violate or constitute a breach of or default under any existing law, administrative regulation, judgment, decree, or any agreement or other instrument to which the Issuer is a party or is otherwise subject; (d) All approvals, consents, and orders of any governmental authority or agency having jurisdiction of any matter which would constitute a condition precedent to the performance by the Issuer of its obligations to sell and deliver the Bonds hereunder will have been obtained prior to the Closing; (e) At the time of the Issuer's acceptance hereof and at the time of the Closing, the Official Statement does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; 91 (f) Between the date of this Purchase Contract and Closing, the Issuer will not, without the prior written consent of the Representative, issue any additional bonds, notes, or other obligations for borrowed money, and the Issuer will not incur any material liabilities, direct or contingent, nor will there be any adverse change of a material nature in the financial position of the Issuer. (g) Except as described in the Official Statement, no litigation is pending or, to the knowledge of the Issuer, threatened in any court affecting the corporate existence of the Issuer, the title of its officers to their respective offices, or seeking to restrain or enjoin the issuance or delivery of the Bonds, the collection of revenues pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the issuance, execution, delivery, payment, security or validity of the Bonds, or in any way contesting or affecting the validity or enforceability of the Ordinance, the Escrow Agreement, or this Purchase Contract, or contesting the powers of the Issuer, or any authority for the Bonds, the Ordinance, the Escrow Agreement, or this Purchase Contract or contesting in any way the completeness, accuracy or fairness of the Preliminary Official Statement or the Official Statement; (h) The Issuer will cooperate with the Underwriters in arranging for the qualification of the Bonds for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Representative designates, and will use their best efforts to continue such qualifications in effect so long as required for distribution of the Bonds; provided, however, that the Issuer will not be required to execute a general consent to service of process or to qualify to do business in connection with any such qualification in any jurisdiction; (i) The descriptions contained in the Official Statement of the Bonds, the Escrow Agreement, and the Ordinance accurately reflect the provisions of such instruments, and the Bonds, when validly executed, authenticated, and delivered in accordance with the Ordinance and sold to the Underwriters as provided herein, will be validly issued and outstanding obligations of the Issuer entitled to the benefits of, and subject to the limitations contained in, the Ordinance; (j) If at any time after the date of this Purchase Contract but before the first to occur of (i) the date upon which the Representative notifies the Issuer that the period of the initial public offering of the Bonds has expired or (ii) the date that is 180 days after the date hereof, any event shall occur which might or would cause the Official Statement to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statement therein, in the light of the circumstances under which they were made, not misleading, the Issuer shall notify the Representative, and if, in the opinion of the Representative such events requires the preparation and publication of a supplement or amendment to the Official Statement, the Issuer will at its expense supplement or amend the Official Statement in the form and in a manner approved by 11 the Representative and furnish to the Underwriters a reasonable number of copies requested by the Underwriters in order to enable the Underwriters to comply with Rule 15c2®12; provided, however, that the cost of any such supplement or amendment required after 90 days from the date hereof shall be borne by the Underwriter requiring an Official Statement for delivery; (k) Between the date of this Purchase Contract and the date of the Closing the Issuer shall disclose to, discuss with, and provide any information reasonably requested by the Representative in connection with any breach, default, or failure to comply, of whatever nature and of which the Issuer, has knowledge regarding any law, loan agreement, indenture, bond, note, resolution, agreement, or other instrument to which the Issuer is a party or to which the Issuer, or any of the property or assets of the Issuer is otherwise subject; and (1) The Issuer upon request has delivered to the Representative and the Representative acknowledges receipt of true, correct, complete, and legible copies of all information, applications, reports, or other documents of any nature whatsoever submitted to any rating agency for the purpose of obtaining a rating for the Bonds or to any insurance company, or other entity of any nature whatsoever for the purpose of obtaining a higher investment grade credit rating for the Bonds or the Refunded Bonds, or both, and, in each instance, true, correct, complete, and legible copies of all correspondence or other communications relating, directly or indirectly, thereto. 7. CLOSING. At 10.00 A.M., Central Time, on April 23, 1991 (the "Closing") , the Issuer will deliver the Initial Bond (as defined in the Ordinance) to the Underwriters and will have available for immediate exchange the Bonds in definitive form, duly executed and authenticated, together with the other documents hereinafter mentioned, and the Underwriters will accept such delivery and pay the purchase price of the Bonds as set forth in Paragraph 1 hereof in immediately available funds. Concurrently with such payment by the Underwriters, the Issuer shall return to the Representative the check referred to in Paragraph 4 hereof. Delivery and payment as aforesaid shall be made at the offices of Texas, or such other place, as shall have been mutually agreed upon by the Issuer and the Representative. The Bonds shall be printed or lithographed; shall be prepared and delivered as fully registered bonds in the denomination of $5,000 or any multiple thereof; shall be regis- tered in the names as shall be requested by the Representative at least five days prior to the Closing; and, if the Representative shall so request, shall be made available to the Underwriters at least one business day before the Closing for purpose of inspection in New York, New York. 8. CONDITIONS. The Underwriters have entered into this Purchase Con® tract in reliance upon the representations and warranties of the Issuer con- tained herein and to be contained in the documents and instruments to be de= livered at the Closing, and upon the performance by the Issuer of its obliga- tions hereunder, both as of the date hereof and as of the date of Closing. Accordingly, the Underwriters' obligations under this Purchase Contract to 61 purchase and pay for the Bonds shall be subject to the performance by the Issuer of its obligations to be performed hereunder and under such documents 9.nd instruments at or prior to the , and shall also be subject to the I • • +conditions- (a) The representations and warranties of the Issuer contained herein shall be true, complete, and correct in all material respects on the date hereof and on and as of the date of Closing, as if made on the date of Closing; (b) At the time of the Closing, the Ordinance and the Escrow Agreement shall be • and effect, and the Ordinance and the Escrow• not have been •-• or •• -r and the Official Statement shall not have been amended, modified, or supplemented, except as may been -• to by Representative (c) At the time of the Closing, all official action of the Issuer related to the Ordinance shall be in full force and effect and shall not have been amended, modified, or supplemented,* (d) The Issuer shall not have failed to pay principal or interest when due on any of its outstanding obligations for borrowed money, (e) The Issuer will purchase the government securities, if any, other than the State and Local Government Series obligations necessary to provide the funds needed to refund the "Refunded Bonds" as contemplated by the Escrow Agreement; (f) At or prior to the Closing, the Representative shall have received each of the following documents (1) The Official Statement executed on behalf of the Issuer by its Mayor and City Secretary; (2) The Ordinance certified by the City Secretary under its seal as having been duly adopted by the Issuer and as being in effect, with such changes or amendments as may have been agreed to by the Representative; (3) An unqualified opinion, dated the date of Closing, of Messrs. McCall, Parkhurst & Horton, Bond Counsel to the Issuer, in substantially the form and substance of Appendix _ to the Official Statement; (4) An unqualified opinion or certificate, dated on or prior to the date of Closing, of the Attorney General of Texas, approving Bonds a .• by (5) The supplemental opinion, dated the date of Closing, of McCall, Parkhurst & Horton, Bond Counsel to the Issuer, addressed to the Issuer and the Underwriters, to the effect that (A) the Purchase Contract has been duly authorized, executed, and 0 delivered by the Issuer and (assuming due authorization by the Underwriters) constitutes a binding and enforceable agreement of the Issuer in accordance with its terms; (B) in its capacity as Bond Counsel, such firm has reviewed the information in the Official Statement under the captions, "Plan of Financing" and "Other Relevant Information - Tax Exemption, - Tax Accounting Treatment of Discount Bonds, and - Legal Investments and Eligibility to Secure Public Funds in Texas", and such firm is of the opinion that such descriptions present a fair and accurate summary of the provisions of the laws and instruments therein described; and (C) the Bonds are exempt from registration pur- suant to the Securities Act of 1933, as amended, and the Ordinance is exempt from qualification as an indenture pursuant to the Trust Indenture Act of 1939, as amended. (6) The opinion of McGinnis, Lochridge & Kilgore, as Underwriters' Counsel, dated the date of the Closing addressed to the Underwriters to the effect that the Bonds are exempted securities as described in Section 3(a) (2) of the Securities Act of 1933, as amended, and Section 304(a)(4) of the Trust Indenture Act of 1939, as amended, to the extent provided in such Acts, and it is not necessary in connection with the sale of the Bonds to the public to register the Bonds under the Securities Act of 1933 as amended, or to qualify the Ordinance under the Trust Indenture Act of 1939, as amended. The opinion of such counsel shall also state that, based upon their participation in the preparation of the Official Statement, such counsel has no reason to believe that the Official Statement (except for the financial statements and other financial and statistical data contained therein, as to which no view need be expressed), as of the date of the Official Statement, contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (7) A certificate, dated the date of Closing, signed by the Mayor and Marianne Landers Banks, Esq., City Attorney, to the effect that (i) the representations and warranties of the Issuer contained herein are true and correct in all material respects on and as of the date of Closing as if made on the date of Closing; (h) except to the extent disclosed in the Official Statement, no litigation is pending or, to the knowledge of such persons, threatened in any court to restrain or enjoin the issuance or delivery of the Bonds, or the levy or collection of the taxes or other revenues pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity of the Bonds, the Ordinance, the Escrow Agreement, or this Purchase Contract, or contesting the powers of the Issuer or contesting the authorization of the Bonds or the Ordinance, or contesting in any way the accuracy, completeness, or fairness of the Preliminary Official Statement or the Official Statement (but in lieu of or in conjunction with such 0 certificate the Representative may, in its sole discretion, accept certificates or opinions of such City Attorney that, in her opinion, the issues raised in any such pending or threatened litigation are without substance or that the contentions of all plaintiffs therein are without merit); and (iii) to the best of their knowledge, no event affecting the Issuer has occurred since the date of the Official Statement which should be disclosed in the Official State- ment for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any respect (8) A certificate, dated the date of Closing, of the Director of Utilities and the Director of Finance of the Issuer to the effect that there has not been any material and adverse change in the affairs or financial condition of the Issuer since September 30, 1990, the latest date as to which audited financial information is available; (9) A certificate, dated the date of the Closing, of an appropriate official of the Issuer to the effect that, on the basis of the facts, estimates, and circumstances in effect on the date of delivery of the Bonds, it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of section 147 of the Internal Revenue Code of 1986, as amended; (10) A certificate, dated the date of the Closing signed by a duly authorized officer of First Southwest Company to the effect that such firm, acting as Financial Advisor to the Issuer, collected, assembled, and compiled the information contained in Appendix A to the Official Statement from sources deemed to be reliable, but, however, that, such firm made no independent investigation as to the accuracy of such information; (11) A copy of a special report prepared by the independent Certified Public Accountants named in the Official Statement, addressed to the Issuer, Bond Counsel, and the Underwriters verifying the arithmetical computations of the adequacy of the maturing principal and interest on the escrowed securities and uninvested cash on hand under the Escrow Agreement to pay, when due, the principal of and interest on the Refunded Bonds and the computation of the yield with respect to such securities and the Bonds; (12) A policy of municipal bond insurance from Municipal Bond Investors Assurance Corporation acceptable to the Representative; (13) Such additional legal opinions, certificates, instruments, and other documents as Bond Counsel, the Underwriters or Underwriters' Counsel may reasonably request to evidence the truth, accuracy, and completeness, as of the date hereof and as of the date of Closing, of the Issuer's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance and satisfaction by the Issuer at or prior to the date of Closing of all agreements then to be performed and all conditions then to be satisfied by the Issuer; and (14) Evidence of the ratings on the Bonds shall be delivered in a form acceptable to the Representative. All of the opinions, letters, certificates, instruments, and other documents mentioned above or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions hereof if, but only if, they are satisfactory to the Representative. If the Issuer shall be unable to satisfy the conditions to the obligations of the Underwriters to purchase, to accept delivery of, and to pay for the Bonds as set forth in this Purchase Contract, or if the obligations of the Underwriters to purchase, to accept delivery of, and to pay for the Bonds shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriters nor the Issuer shall be under further obligation hereunder, except that: (i) the check referred to in Paragraph 4 hereof shall be immediately returned to the Representative by the Issuer and (ii) the respective obligations of the Issuer and the Underwriters set forth in Paragraphs 10 and 12 hereof shall continue in full force and effect. 9. TERMINATION. The Underwriters may terminate its obligation to purchase at any time before the Closing if any of the following should occur: (a) (i) Legislation shall have been enacted by the Congress of the United States, or recommended to the Congress for passage by the President of the United States or favorably reported for passage to either Douse of the Congress by any Committee of such house, or (ii) a decision shall have been rendered by a court established under Article III of the Constitution of the United States or by the United States Tax Court, or (iii) an order, ruling, or regulation shall have been issued or proposed by or on behalf of the Treasury Department of the United States or the Internal Revenue Service or any other agency of the United States, or (iv) a release or official statement shall have been issued by the President of the United States or by the Treasury Department of the United States or by the Internal Revenue Service, the effect of which, in any such case described in clause (1), (ii) , (iii) , or (iv) , would be to impose, directly or indirectly, federal income taxation upon interest received on obligations of the general character of the Bonds or upon income of the general character to be derived by the Issuer in such a manner as in the judgment of the Representative would materially impair the marketability or materially reduce the market price of obligations of the general character of the Bonds. (b) Any action shall have been taken by the Securities and Exchange Commission or by a court which would require registration of Pi any security under the Securities Act of 1933, as amended, or qualification of any indenture under the Trust Indenture Act of 1939, as amended, in connection with the public offering of the Bonds, or any action shall have been taken by any court or by any governmental authority suspending the use of the Preliminary Official Statement or the Official Statement or any amendment or supplement thereto, or any proceeding for that purpose shall have been initiated or threatened in any such court or by any such authority. (c) (i) The Constitution of the State of Texas shall be amended or an amendment shall be proposed, or (ii) legislation shall be enacted, or (iii) a decision shall have been rendered as to matters of Texas law, or (iv) any order, ruling, or regulation shall have been issued or proposed by or on behalf of the State of Texas by an official, agency, or department thereof, affecting the tax status of the Issuer, its property or income, its bonds (including the Bonds) or the interest thereon, which in the judgment of the Representative would materially affect the market price of the Bonds. (d) (i) A general suspension of trading in securities shall have occurred on the New York Stock Exchange, or (ii) the United States shall have become engaged in hostilities which have resulted in the declaration, on or after the date of this Purchase Contract, of a national emergency or war, the effect of which, in either case described in clause (i) and (ii) , is, in the judgment of the Representative, so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Bonds on the terms and in the manner contemplated in this Purchase Contract and the Official Statement. (e) An event described in Paragraph 6(j) hereof occurs which, in the opinion of the Representative, requires a supplement or amendment to the Official Statement. (f) A general banking moratorium shall have been declared by authorities of the United States, the State of New York, or the State of Texas. (g) A lowering of the ratings initially assigned to the Bonds by either i i •y's Investors Service or t •:. • c.: iiiCorporation ticcur prior to Closing. 10. EXPENSES. (a) The Underwriters shall be under no obligation to pay, and the Issuer shall pay, any expenses incident to the performance of the Issuer's obligations hereunder, including but not limited to: (i) the cost of the preparation, printing, and distribution of the Preliminary Official Statement and the Official Statement, (ii) the cost of the preparation and printing of the Bonds; (iii) the fees and expenses of Bond Counsel to the Issuers (iv) the fees and disbursements of the Issuer's accountants, advisors, and of any other experts or consultants retained by the Issuers (v) premiums for bond insurances and (vi) fees for bond ratings and any travel or other expenses incurred incident thereto. W (b) The Underwriters shall pay: (i) all advertising expenses in connection with the offering of the Bonds; (ii) the cost of the preparation and printing of all the underwriting documents, including this Purchase Contract; and (iii) all other expenses incurred by them in connection with their offering and distribution of the Bonds. 11. NOTICES. Any notice or other communication to be given to the Issuer under this Purchase Contract may be given by delivering the same in writing at the address for the Issuer set forth above, and any notice or other communication to be given to the Underwriters under this Purchase Contract may begiven by delivering the same in writing to Merrill Lynch Pierce Fenner & Smith, Inc., 212 San Jacinto Street, Suite 1100, Dallas, Texas 75201, Attention* Jack E. Addams . 12. PARTIES IN INTEREST. This Purchase Contract is made solely for the benefit of the Issuer and the Underwriters (including the successors or assigns of the Underwriters) and no other person shall acquire or have any right hereunder or by virtue hereof. The Issuer's representations, warranties, and agreements contained in this Purchase Contract shall remain operative and in full force and effect, regardless of (i) any investigations made by or on behalf of the Underwriters and (ii) delivery of any payment for the Bonds hereunder, and the Issuer's representations and warranties contained in Paragraph 6 of this Purchase Contract shall remain operative and in full force and effect, regardless of any termination of this Purchase Contract. 13. EFFECTIVE DATE. This Purchase Contract shall become effective upon the execution of the acceptance hereof by the Mayor and shall be valid and enforceable as of the time of such acceptance. Very truly yours, ACCEPTED. This )`°`day of `, 1991 Aprve4 alb 11 a,Ph.„ . Application No.: 91-02-1510 Sale Date: March 26, 1991 Program Type: Negotiated DP RE: $9,150,000 City of Georgetown, Texas (Williamson County), Utility System Revenue Refunding Bonds, Series 1991 (the "Obligations") This commitment to issue a financial guaranty insurance policy (the "Commitment") dated April 2, 1991, constitutes an agreement between CITY OF GEORGETOWN, TEXAS (the "Applicant"), and MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION (the "Insurer"), a stock insurance company incorporated under the laws of the State of New York. Based on an approved application dated March 8, 1991, the Insurer agrees, upon satisfaction of the conditions herein, to issue on the earlier of (i) 120 days of said approval date or (ii) on the date of delivery of and payment for the Obligations, a financial guaranty insurance policy (the "Bond Insurance Policy"), for the Obligations, insuring the payment of principal of and interest on the Obligations when due. The issuance of the Bond Insurance Policy shall be subject to the following terms and conditions: 1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date of delivery of and payment for the Obligations, the following payments: a. a nonrefundable premium in the amount of $43,000 [.290% (premium rate) of $14,744,130 (total debt service) premium rounded to the nearest thousand]. The premium set out in this paragraph shall be the total premium required to be paid on the Bond Insurance Policy issued pursuant to this Commitment, and b. Standard & Poor's Corporation rating agency fees in an amount to be billed directly by Standard & Poor's Corporation, based on the final par and other factors as determined by Standard & Poor's Corporation, and c. Moody's Investors Service rating agency fees in an amount to be billed directly by Moody's Investors Service, based on the final par and other factors as determined by Moody's Investors Service. 2. The Obligations shall have received the unqualified opinion of bond counsel with respect to the tax-exempt status of interest on the Obligations. 3, There shall have been no material adverse change in the Obligations or the Resolution, Bond Ordinance, Trust Indenture or other official document authorizing the issuance of the Obligations or in the final official statement or other similar document, including the financial statements included therein. 4. There submitted to shall have been no material the Insurer as a part of adverse change in the application any information or subsequently submitted to be a part of the application to the Insurer. _2- 5. No event shall have occurred which would allow any underwriter or any other purchaser of the Obligations not to be required to purchase the Obligations at closing. 6. All documents executed in connection with the issuance of the Obligations shall contain a provision which requires copies of any amendments to such documents consented to by the Insurer to be sent to Standard & Poor's. 7, A Statement of Insurance satisfactory to the Insurer shall be printed on the obligations, 8. Prior to the delivery of and payment for the Obligations, none of the information or documents submitted as a part of the application to the Insurer shall be determined to contain any untrue or misleading statement of a material fact or fail to state a material fact required to be stated therein or necessary in order to make the statements contained therein not misleading. 9. No material adverse change affecting any security for the Obligations shall have occurred prior to the delivery of and payment for the Obligations, 10. This Commitment may be signed in counterpart by the parties hereto. 11. Receipt by the Insurer of the final debt service schedule on the issue within three business days from the sale date. 12. Receipt, satisfactory review and subsequent oral approval by the Insurer of draft copies of the CPA's verification, escrow securities purchase contracts or SLG subscription forms and escrow agreement at least ten business days prior to closing. Final and signed copies of all the above documents to be sent via overnight mail from closing. 13. Receipt by the Insurer at least five business days prior to closing of a draft opinion from Bond Counsel (or Special Tax Counsel) to the effect that the refunding obligations are being issued in compliance with state law and that the interest on the refunding obligations is tax-exempt. 14. Receipt by the Insurer at least five business days prior to closing of a draft opinion from Bond Counsel stating that the refunded obligations have been legally defeased. (This condition is only applicable in those situations where the refunding issue is legally defeasing the refunded issue.) Final executed copies of #13 and #14 to be sent via overnight mail. 15. If the escrow agreement allows for the substitution of securities in the escrow account, then it should be provided in the escrow agreement that no such substitution may occur unless there has first been delivered to the escrow agent/trustee, (1) a CPA verification that the escrow investments, as substituted, are sufficient to pay debt service, as it becomes due, on the .refunded obligations and (2) an opinion of nationally recognized bond counsel to the effect that the substitution is permitted under the documents and the substitution has no adverse effect on the tax-exempt nature of the refunding obligations. 16. Escrow investments must be limited to U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series -- "SLGS"), direct obligations of the Treasury which have been stripped by the Treasury itself, "CATS" and "TIGRS" and obligations issued by the following agencies which are backed by the full faith and credit of the U.S.: 1. U.S. Export -Import Bank: Direct obligations or fully guaranteed certificates of beneficial ownership 2. 3. Farmers Home Administration: Certificates of beneficial ownership Federal Financing Bank 4. 5. 6. Federal Housing Administration Debentures General Services Administration: Participation certificates U.S. Maritime Administration: Guaranteed Title XI financing 7. 8. New Communities Debentures.: U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds: U.S. government guaranteed public housing notes and bonds 9. U.S. Department of Housing and Urban Development: Project Notes; Local Authority Bonds 10. Prerefunded municipal bonds must be rated "Aaa" by Moody's or "AAA" by S&P. If the issue is only rated by S&P (i.e., there is no Moody's rating), then the prerefunded bonds must have been prerefunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA -rated prerefunded municipals that satisfy this condition. Dated this 2nd day of April, 1991. MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION By ld�A Assistant Secretary CITY OF GEORGETOWN, TEXAS By Tit e: