Ord 2017-023/authorizing the issuance and sale of City of San Marcos, Texas, Waterworks and Waste Water System Revenue Bonds, series 2017a in the amount of $4,760,000; providing for the security for and payment of said bonds; prescribing the form of said

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exceed the average annual principal and interest requirements of all Parity Revenue Obligations, the City, may transfer such excess amount to any fund or funds established for the payment of or security for the Parity Revenue Obligations (including any escrow established for the final payment of any such obligations pursuant to Tex. Gov't Code Ann., ch. 1207) or use such excess amount for any lawful purpose now or hereafter provided by law; provided, however, that except as otherwise may be permitted by applicable law, any portion of such amount constituting proceeds of bonds or other obligations of the City, or taxes, may be used only for purposes for which such proceeds or taxes could have been used lawfully at the time of the deposit thereof into the Reserve Fund. (d) In the event (a) the issuer of a surety policy becomes insolvent, or (b) the issuer of a surety policy defaults in its payment obligations thereunder, or (c) the claims paying ability of the issuer of the surety policy falls below "AAA" by S&P or "Aaa" by Moody's, the obligation to reimburse the issuer of the surety policy shall be subordinate to the cash replenishment of the Reserve Fund. In the event (a) the rating of the claims paying ability of the issuer of the surety policy falls below "AAA" by S&P or "Aaa" by Moody's, the City shall either (i) deposit into the Reserve Fund, in accordance with this section, an amount sufficient to cause the money or investments on deposit in the Reserve Fund to accumulate to the average annual principal and interest requirements on the Parity Revenue Obligations within thirty-six (36) months, or (ii) replace such instrument with a surety policy, within six (6) months of such occurrence. In the event (a) the rating of the claims -paying ability of the issuer of the Surety policy falls below "A" by S&P or Moody's, or (b) the issuer of the surety policy defaults in its payment obligations hereunder, or (c) the issuer of the surety policy becomes insolvent, the City shall either (i) deposit into the Reserve Fund, in accordance with this section, amounts sufficient to cause the money or investments on deposit in the Reserve Fund to accumulate to the average annual principal and interest requirements on the Parity Revenue Obligations, or (ii) replace such instrument with a surety policy, within six (6) months of such occurrence. Section 8.06. Escrow Fund. (a) Money on deposit in the Escrow Fund, including investment earnings thereof, shall be used for the purpose of refunding the Refunded Obligations in accordance with the Escrow Agreement. (b) Any amounts remaining in the Escrow Fund after the accomplishment of the purposes for which the Bonds are hereby issued, including investment earnings of the Escrow Fund, shall be deposited into the Interest and Sinking Fund. (c) Regions Bank is hereby designated as the Escrow Agent. The execution and delivery of the Escrow Agreement, specifying the duties and responsibilities of the City and the Escrow Agent, is hereby approved with such changes as may be approved by the Mayor of the City, and the Mayor and City Cleric of the City are hereby authorized to execute such agreement. SANMARCOS/W W W SRev2017A: Ordinance 28