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<br />Section 10.06 Competition. That so far as it legally may, the City covenants and agrees, for the
<br />protection and security of the Outstanding Bonds, Bonds, and Additional Bonds and the holders thereof
<br />from time to time, that it will not grant a franchise for the operation of any competing water and/or
<br />sewer system in the City, until all Outstanding Bonds, Bonds and Additional Bonds shall have been retired.
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<br />Section 10.07. Further Covenants. The City further covenants and agrees by and through this Ordinance
<br />as follows:
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<br />(a) That it has the lawful power to pledge the revenues supporting this issue of Bonds and has
<br />lawfully exercised said power under the Constitution and laws of the State of Texas, including power
<br />existing under Articles 1111, et seq., V.A.LC.5., as amended.
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<br />(b) That other than for the payment of the Bonds hereby issued and the Outstanding Bonds, the
<br />rents, revenues and income of the combined waterworks and sewer system of said City have not
<br />been pledged in any manner to the payment of any debt or obligation of the City, nor of said System.
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<br />(c) It will duly and punctually keep, observe and perform each and every undertaking, covenant
<br />and condition on its part to be kept, observed and performed, contained in this Ordinance and in the
<br />ordinances authorizing the Outstanding Bonds and any Additional Bonds, and that it will prior to the
<br />maturity of each installment of interest and prior to the maturity of each Outstanding Bond, Bond,
<br />and Additional Bond issued thereunder, make available at the principal office of the Paying
<br />Agent/Registrar, but only from the Water and Sewer System Junior Lien Bond Fund, sufficient funds
<br />to promptly pay such principal and interest.
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<br />(d) If and when the City from time to time shall issue Additional Bonds, the ordinance authorizing
<br />same shall provide: 0) for payments of principal thereof on January 1 of the appropriate year or
<br />years and for payments of interest thereon on January I and July 1; (ii) for an identical flow of funds
<br />as prescribed by this Ordinance; (iii) that all revenues deposited in the special funds and accounts as
<br />created and established by this Ordinance shall be comingled; and (iv) for appropriate additional or
<br />larger payments to be made into said special funds and accounts so that the security of the
<br />Outstanding Bonds, Bonds and any Additional Bonds will not be impaired.
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<br />(e) It will from time to tim~ promptly pay and discharge all taxes, assessments, and other
<br />governmental charges, the Hen of which would be prior to the lien hereof, lawfully imposed upon the
<br />System or any part therof or upon the income and proceeds thereof, so that the lien of the
<br />Outstanding Bonds, Bonds or Additional Bonds, when issued, shall at all times be wholly preserved at
<br />the cost of the City and without expense to the holders thereof; provided, however, that nothing in
<br />this Section contained shall require the City to payor discharge any such tax, assessment or
<br />governmental charge so long as the validity thereof be by it in good faith contested.
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<br />Section 10.09. Federal Tax Matters.
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<br />(a) The City hereby represents that the proceeds of the Bonds are needed at this time to provide
<br />funds in the amounts and for the respective purposes specified in Section J.Ol of this Ordinance;
<br />that based on current facts, estimates, and circumstances, it is reasonably expected that final
<br />disbursement of the proceeds of the Bonds will occur within three years after the Closing date, that
<br />it is not reasonably expected that the proceeds of the Bonds or money deposited in the Interest and
<br />Sinking Fund wil1 be used or invested in a manner that would cause the Bonds to be or become
<br />"arbitrage bonds," within the meaning of Section 148 of the Code; and that, except for the Interest
<br />and Sinking Fund and that portion of the Cosntruction Fund representing capitalized interest with
<br />respect to a portion of the Bonds, no other funds or accounts have been established or pledged to the
<br />payment of the Bonds.
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<br />(b) The City will not take any action or fail to take any action with respect to the investment of
<br />the proceeds of the Bonds or any other funds of the City, including amounts received from the
<br />investment of any of the foregoing, that based upon the facts, estimates, and circumstances known
<br />on the Closing Date, would result in constituting the Bonds "arbitrage bonds," within the meaning of
<br />Section I1J8 of the Code, and the City will not take any deliberate action motivated by arbitrage
<br />that would have such result.
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