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<br /> Section 24. COr'1PETITION, That so far as it legally may, the City covenants and agrees,
<br /> for the orotection and security of the outstanding Bonds, Certificates and Additional
<br /> Bonds and the holders thereof from time to time, that it will not grant a franchise for
<br /> the operation of any competing water and/or sewer system in the City of San Marcos, until
<br /> all Outstanding Bonds, Certificates and Additional Bonds shall have been retired.
<br /> Section 25. FURTHER COVENANTS, The City further covenants and agrees by and through this
<br /> Ordinance as follows:
<br /> (a) That it has the lawful power to pledge the revenues supporting this issue of
<br /> Certificates and has lawfully exercised said power under the Constitution and laws of the
<br /> State of Texas, including power existing under Articles 1111, et seq., and 2368a.l, V. LC.S.,
<br /> as amended.
<br /> (b) That other than for the payment of the Certificates hereby issued and the Out-
<br /> standing Bonds, the rents, revenues and income of the combined waterworks and sewer system
<br /> of said City have not been pledged in any manner to the payment of any debt or obligation
<br /> of the City, nor of said System.
<br /> (c) It will duly and punctually keep, observe and perform each and every undertaking,
<br /> covenant and condition on its part to be kept, observed and performed, contained in this
<br /> Ordinance and in the ordinances authorizing the Outstanding Bonds and any Additional Bonds,
<br /> and that it will prior to the maturity of each installment of interest and prior to the
<br /> maturity of each Outstanding Bond Certificate, Additional Bond issued thereunder, make
<br /> available at the principal office of the Paying Agent/Registrar, but only from the Water
<br /> and Sewer System Junior Lien Bond Fund, sufficient funds to promptly pay such principal and
<br /> i nteres t.
<br /> (d) If and when the City from time to time shall issue Additional Bonds, the ordinance
<br /> authorizing same shall provide: (i) for payments of principal thereof on January 1 of the
<br /> appropriate year or years and for payments of interest thereon on January 1 and July 1,
<br /> (ii) for an identical FLOW OF FUNDS as prescribed by this Ordinance, (iii) that all revenues
<br /> deposited in the special funds and accounts as created and established by this Ordinance
<br /> shall be comingled, and (iiii) for appropriate additional or larger payments to be made into
<br /> said special funds and accounts so that the security of the Outstanding Bonds, Certificates
<br /> and any Additional Bonds will not be impaired.
<br /> (e) It will from time to time promptly pay and discharge all taxes, assessments,
<br /> and other governmental charges, the lien of which would be prior to the lien hereof, law-
<br /> fully imposed upon the System or any part thereof or upon the income and proceeds thereof,
<br /> so that the lien of the Outstanding Bonds, Certificates or Additional Bonds, when issued,
<br /> shall at all times be wholly preserved at the cost of the City and without expense to the
<br /> holders thereof; provided, however, that nothing in this Section contained shall require
<br /> the City to payor discharge any such tax, assessment or governmental charge so long as
<br /> the validity thereof be by it in good faith contested.
<br /> Section 26. CONSTRUCTION ACCOUNT. The City shall establish in a deposjtory bank a separate
<br /> account or accounts (herein collectively called the "Construction Account") into which shall
<br /> be deposited the proceeds fromthe sale of the Certificates (except accrued interest thereon)
<br /> and the additional funds, if any, required to assure the payment of all project costs.
<br /> Moneys in the Construction Account shall be expended only for the purposes for which the
<br /> Certificates have been issued, until such purposes have been accomplished.
<br /> Money in the Construction Account shall be secured by the depository bank in the manner
<br /> prescribed by statutes relating to the securing of public funds. Where the moneys on deposit
<br /> in the Construction Account exceed the estimated disbursements on account of the Project
<br /> for the next 90 days, the City may direct the Depository Bank to invest said excess funds
<br /> in direct obligations of, or obligations the principal of and interest on which are guaran-
<br /> teed by, the United States Government, which shall mature not later than the date on which
<br /> such moneys are required for project costs. The earnings from any such investments shall
<br /> be deposited in the Construction Account by the City.
<br /> All moneys remaining in the Construction Account after all costs of the project have
<br /> been paid shall be promptly used to the extent possible for the redemption of Certificates,
<br /> and any residue shall be deposited in the account established for the payment of the princi-
<br /> pal and interest of the Certificates.
<br /> Section 27. SURETY. The City covenants that each of its officials or employees having
<br /> custody of funds of the System during acquisition, construction, development, and operation
<br /> of the System, shall be bonded at all times in an amount at least equal to the total funds
<br /> in his custody at anyone time.
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