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0134A NO. 134-A ORDINANCE AUTHORIZING ISSUANCE OF $350, 000. 06 "CITY OF SOUTHLAKE, TEXAS, WATERWORKS SYSTEM REVENUE BONDS, SERIES 1965'', DATED AUGUST 1, 1965. THE STATE OF TEXAS CITY OF SOUTHLAKE COUNTY OF TARRANT ON THIS, the 28th day of October, 1965, the City Council of the City of Southlake, Texas, convened in special session at the regular meeting place thereof in the City Hall there being present and in attendance the following members, to-wit: PAUL SCHELL MAYOR EARL WILLIAMS ) J. D. Cate ) ALDERMEN J. J. CARLILE ) W. H. CRUMBAKER ) J. L. CLOW ) And the following absent: W uH C"rijrnbn er ' constituting a quorum; and among other proceedings had by said City Council were the following: Mayor Schell introduced a proposed ordinance. The ordinance was read in full. Alderman Earl Williams made a motion that any rule requiring ordinance to be read at more than one meeting be suspended. The motion was seconded by Alderman J. L. Clow and carried by the following vote: AYES: Aldermen Williams, Cate, Carlile, baker and Clow NOES: None. Alderman Earl Williams made a motion that the ordi- nance be passed finally. The motion was seconded by Alderman J. L. Clow and carried by the following vote: AYES: Alderman Williams, Cate, Carlile, C-xu T~ and Clow. NOES: None The Mayor announced that the ordinance had been finally passed. The ORDINANCE is as follows: "AN ORDINANCE BY the City Council of the City of Southlake, Texas, authorizing the issuance of $350, 000. 00 'CITY Off' SOUTHLA.KE, TEXAS, WATERWORKS SYSTEM REVENUE BONDS, SERIES 1965, dated August 1, 1965, being $350, 000. 00 for the purpose of City Waterworks System in and for said City, as authorized by the General Laws of the State of Texas, particularly Article 1111 et seq. , Revised Civil Statutes of Texas, 1925, as amended; prescribing the form of the Bonds and the form of the interest coupons; pledging the revenues of the City's Waterworks System, after deduction of reasonable operation and maintenance expenses as said expenses are defined by statute to the payment of the principal of and interest on said Bonds; enacting provisions incident and relating to the subject and purpose of this ordinance; and declaring an emergency. " WHEREAS, pursuant to a resolution and order duly passed and approved by the City Council of the City of Southlake, Texas, on the 4th day of May, 1965, said City Council found among other things that it was to the best interest of said City that it purchase and construct a City's Waterworks System for the use and benefit of the citizens of said City, all in accordance with the recommendations, plans and estimates which had heretofore been presented to and considered by the City Council and the same resolution and order among other things called an election for the issuance of $350, 000. 00 Revenue Bonds for the purpose of purchasing and constructing a City's Waterworks System; and WHEREAS, at an election held in the City of Southlake, on the 22nd day of May, 1965, more than a majority of the duly qualified resident electors of said City who owned taxable property in said City and who had duly rendered the same for taxation voting at said election, voted in favor of the issuance of the Revenue Bonds of said City in the amounts and for the purposes hereinabove stated; and, WHEREAS, upon consideration of the returns of said election, the City Council found that said election had been conducted in the manner prescribed by law, and was in all respects legally held, after due and proper notice as required by law; that due returns of said election had been made by the proper officers; that said election resulted favorably to the issuance of said Bonds; that a majority of the resident qualified electors voting at said election voted in favor of the issuance of said Bonds; and that the City Council is in all things authorized to issue said bonds and to do any and all things necessary and/or convenient in con- nection therewith; and WHEREAS, it has been determined that $350, 000. 00 of such voted Bonds should be issued and sold at this time being for waterworks purposes; therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SOUTHLAKE, TEXAS: SECTION 1: Authorization - Principal Amount- Designation. That in order to borrow the said sum of THREE HUNDRED AND FIFTY THOUSAND DOLLARS ($350, 000. 00), for the purpose of purchasing and constructing improvements to the City's Waterworks System the City Council of the City of Southlake, Texas, by virtue of the authority expressly conferred by the resident qualified property taxpaying electors who owned taxable property in said City and who had duly rendered the same for taxation, voting at the aforesaid election, and pursuant to the General Laws of the State of Texas, par- ticularly Article 1111 et seq. , Revised Civil Statutes of 1925, as amended, has determined that there shall be issued and there is hereby ordered to be issued a series of coupon Bonds, to be designated " CITY OF SOUTHLAKE, TEXAS, WATERWORKS SYSTEM REVENUE BONDS, SERIES 1965, aggregat- ing the sum of THREE HUNDRED AND FIFTY THOUSAND DOLLARS ($350, 000. 00) payable as to both principal and interest solely from and secured by a first lien on and pledge of the revenues of the City's Water- works System, after deduction of reasonable operation and maintenance expenses, as said expenses are defined by statute. SECTION 2: Date - Numbers - Maturity - Option . Said bonds shall be dated August 1, 1965, shall be numbered consecutively from One (1) through 'Three Hundred Fifty (350) shall be in denomination of ONE THOUSAND DOLLARS ($1, 000) each, aggregating Three Hundred and Fifty `Thousand Dollars ($350, 000. 00) and shall become due and payable serially on August 1 in each of the years in accordance with the following schedule: MATURITY A1\/iOUNT 1967 $ 2,000 1968 2,000 1969 2, 000 1970 5, 000 1971 5,000 1972 5, 000 1973 5, 000 1974 5,000 1975 7, 000 1976 7,000 1977 8,000 1978 8,000 1979 9, 000 1980 9,000 1981 9,000 1982 9,000 1983 9,000 1984 9,000 1985 9,000 1986 9, 000 1987 10,000 1988 10,000 1989 10, 000 1990 10, 000 1991 10,000 1992 10, 000 1993 10,000 1994 10, 000 1995 10,000 1996 11, 000 1997 11,0-0-0 1998 11, u00 1999 12,000 2000 12,000 2001. 12, 000 2002 14,000 2003 14,000 2004 15,000 2005 15,000 PROVIDED, HOWEVER, the City reserves the -right to redeem all of said Bonds in whole or in part on August 1, 1968, or on any interest payment date thereafter, at the price of par and accrued interest to the dated fixed for redemption; and PROVIDED, FURTHER, that at least thirty (30) days prior to any interest payment date upon which any of said bonds are to be redeemed, notice of redemption, signed by the City Secretary (specifying the serial :numbers and amount of the bonds to be redeemed), shall have been filed with the FIRST NATIONAL BANK, Grapevine, Texas, (the paying agent named in each of said bonds) and with the registered holder of the bonds if tine bonds are so registered; and should any bond or bonds not be presented for redemption pursuant to such notice, the san_ie shall cease to bear interest from and after the date so fixed for redemption. SECTION 3: Interest. That all of said bonds shall bear interest from date to maturity at the rate of THREE AND THREE FOURTHS PER CE1\,TU1Mi (3-3/4%) per annum, such interest to be evidenced by proper coupons attached to each of said bonds; and said interest shall be payable on August 1, 1966, and annually thereafter on August 1 in each year. SECTION 4: dace of Payment. That the principal and interest on said bonds shall be payable as to principal to the registered holder of the bonds and as to interest to the bearer of the interest coupons in lawful money of the United States of America, without exchange or collection charges, at the FIRST NATIONAL BANK, Grapevine, Texas, subject to the following conditions, to wit: If and for so long as payment of the principal of and interest on said bonds is to be made to the United States of America, actinU through the Farmers Home Administration, United States Department of Agriculture (hereinafter called the 'Government') the place initially a:nd from time to time designated by the Government shall be the place of pay- ment for aid bonds and said bonds and the interest thereon in such event will be payable upon presentation and surrender of the proper bond or the proper interest coupon to the Government for payment at such place as it shall initially and from time to time designate as the registered owners of said bonds. SECTION 5: Execution of Bonds and Coupons. The seal of said City may be irnpressed on each of said Bonds or in the alternative a facsimile of such seal may be printed on the said Bonds. The Bonds Mr'.'o~'rfu7~=~ rCc ~a and interest coupons appurtenant thereto may be executed by the iwjpip&d facsimile signature of the Mayor and City Secretary of the City, and execution in such manner shall have the same effect as if such Bonds and coupons had been signed by the Mayor and City Secretary in person by their manual signatures. Inasmuch as such bonds are required to be registered by the Comptroller of Public Accounts for the State of Texas, only his signature (or that of a deputy designated in writing to act for the Comptroller) shall be required to be manually subscribed to such Bonds in connection with his registration certificate to appear thereon, as hereinafter provided; all in accordance with the provisions of the "Texas Uniform Facsimile Signature of Public Official Act", enacted by the 57th Legislature of Texas at its Regular Session in 1961. SECTION 6: Form of Bonds. That the form of said Bonds shall be substantially as follows: No. UNITED STATES OF AMERICA $ STATE OF TEXAS COUNTY OF TARRANT CITY OF SOUTHLAKE, TEXAS, WATERWORKS SYSTEM REVENUE BOND, SERIES 1965 The CITY OF SOUTHLAKE, a municipal corporation of the State of Texas, acknowledges itself indebted to and FOR VALUE RE- CEIVED hereby promises to pay to the United States of America, acting through the Farmers Home Administration, United States Department of Agriculture (hereinafter called the "Government"), or to its registered assigns the sum of in lawful money of the United States of America, on the FIRST DAY OF AUGUST with interest thereon from the date hereof to maturity at the rate of THREE AND THREE FOURTHS PER CENTUM (3-3/4%) per annum, payable on August 1, 1966, and annually thereafter on August 1 in each year, and interest falling due on or prior to maturity hereof is payable only upon presentation and surrender of the interest coupons hereto attached as they severally become due. The PRINCIPAL of this Bond shall be payable to the registered owner thereof upon presentment at maturity at the FIRST NATIONAL BANK, Grapevine, Texas, the place of payment for this bond. The interest due hereon shall be payable to bearer upon presentment of the proper coupon at said place of payment. This bond and the interest hereon shall be payable in lawful money of the United States of America, without exchange or collection charges, in accordance with the foregoing provisions hereof, except that, if and for so long as the principal of this bond is payable to the Government, the place designated by the Government shall be the place of payment for this bond, and presentment of this bond shall be made at such place as the Government shall initially and from time to time designate as the Registered Owner of this bond. The CITY OF SOUTHLA.KE, Texas, is hereby held and firmly bound to apply the pledged appropriated revenues of its Waterworks System to the prompt payment of principal and interest of this bond at maturity and to pay said principal and interest as they mature. This BOND is one of a series of bonds of like tenor and effect ex- cept as to number, right of prior redemption and maturity, aggregating in amount THREE HUNDRED FIFTY THOUSAND DOLLARS ($350, 000. 00), numbered consecutively fron ONE (1) through THREE HUNDRED FIFTY (350) in denomination of One Thousand Dollars ($1, 000), issued for the purpose of c purchasing, improving _ d e `E-' Pg a Waterworks System in and for said City, in accordance with the Constitution and laws of the State of Texas, particularly Articles 1111-1118, both inclusive, Revised Civil Statutes of 1925, as amended, and by authority of a vote of the resident qualified property taxpaying electors of said City who,h~&d ;:f d fer~cm, voting at an election held for that purpose within sa-i& City on the 22nd day of May, 1965, and pursuant to an ordinance passed by the City Council of the City of Southlake, and duly recorded in the Minutes of said City Council. THIS BOND and the series of which it is a part constitute special obligation of the City of Southlake, Texas, payable as to both principal and interest from and equally secured by a first lien on and pledge of the City's Waterworks System, after deduction of reasonable expenses of operation and maintenance thereof. THE HOLDER hereof shall never have the right to demand pay- ment of this obligation out of any funds raised or to be raised by taxation. THE CITY, however, expressly reserves the right to issue additional Bond Obligations in all things on a parity with the Bonds of this series, and payable solely from and equally secured by a first lien on and pledge of the net revenues of the City's Waterworks System; PROVIDED, HOWEVER, that any and all such additional Bonds may be issued only in accordance with and subject to the covenants, conditions, limitation and restrictions relating thereto which are set out and contained in the ordinance authorizing this series, and to which said ordinance reference is hereby made for more complete and full particulars. EACH HOLDER of this Bond, payable to bearer, or of the interest coupons hereto attached, is conclusively presumed to forego and renounce his equities in favor of subsequent holders for value without notice and to agree that, being payable to bearer, this Bond and each of the interest coupons at- tached, may be negotiated by delivery however possession may have been acquired, and that any subsequent holders who may receive this Bond or any of the interest coupons attached, for value without notice, has thereby acquired absolute title free from all equities and claims of ownership of any prior holder. The City of Southlake, its officers and the paying agent shall not be affected by any notice to the contrary. IT IS HEREBY CERTIFIED AND RECITED, That the issuance of this Bond, and the series of which it is a part, is duly authorized by law; that all acts, conditions and things required to exist and to be done precedent to and in the issuance of this Bond to render the same lawful and valid, have been properly done, have happened and have been performed in regular and due time, form and manner, as required by the Constitution and laws of the State of Texas; and the ordinance hereinabove mentioned, and that this series of revenue Bonds does not exceed any constitutional or statutory limitations; and that provisions has been made for the payment of the principal of and interest on this Bond and the series of which it is a part by irrevocable pledging of the Net Revenues of the City's combined Waterworks System. IN TESTIMONY WHEREOF, The City Council of the City of South- lake, Texas, in accordance with the provisions of the "Texas Uniform Facsimile Signature of Public Official Act", enacted by the 57th Legislature of Texas at its Regular Session in 1961, has caused the seal of said City to be impressed or a facsimile thereof to be printedhereon, and this bond and its appurtenant coupons to be executed with the imprinted facsimile signature of the Mayor and City Secretary of said City, as of the 1st day of August, 1965. Mayor, City of Southlake, Texas COUNTERSIGNED: City ,Secretary, City of Southlake, Texas SECTION 7 Coupon Form. The form of said interest coupons shall be substantially as follows: 1140. ON THE DAY OF $ upon surrender hereof, unless the Bond to which this coupon pertains, has been properly called for redemption in accordance with its terms, the City of Southlake, a municipal corporation of the State of Texas, hereby promises to pay to bearer out of fu.rid ; specified in the Bond to which this coupon is attached (without right to demand payment out of any funds- raised or to be raised by taxation, ) and in any coin or currency which, on the date of payment, is legal tender for the payment of debts due the United States of America, without exchange or collection changes to the owner or holder, A the FIRST NATIONAL BANK, Grapevine, Texas, the sum of DOLLARS ) said sum being month's interest due that day on '''CITY OF SOUTHLAKE, TEXAS, WATERWORKS SYSTElL REVENUE BONDS, SERIES 1965, dated August 1, 1965, Bond No. City Secretary iViayor SECTION 8 : Form of Comptroller's Certificate. Substantially the following shall be printed on the back of each Bond: OFFICE OF COMPTROLLER X REGISTER NO. STATE OF TEXAS I HEREBY CERTIFY that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Bond has been examined by him as required by law, and that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding special obligation of the City of Southlake, '1 exas, payable from the revenues pledged to its payment by and in the ordinance authorizing same and said Bond has this day been registered by me. WITNESS N1Y HAND AND SEAL OF OFFICE, at Austin, Texas, Comptroller of Public Accounts of the State of Texas SECTION 9 Definition. For all purposes of this ordinance and in particular for clarity with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of revenues therefor, the following definitions are provided: (a) The term "System" shall mean all properties, real, personal, mixed or otherwise, now owned or hereafter acquired by the City of Southlake, Texas, through purchase, construction, or otherwise and used in connection with the City's Waterworks System, and in any wise pertaining thereto whether situated within or without the limits of said City; (b) The term "Net Revenuest' shall mean the gross revenues of the System less the expense of operation and maintenance, including all salaries, labor, materials, repairs and extension necessary to render efficient service, provided, however, that only such repairs and exten- sions, as in the judgment of the City Council, reasonably and fairly exercised, are necessary to keep the System in operation and render adequate service to the City and the inhabitantsthereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the Bonds authorized by this Ordinance and the Ad- ditional Bonds permitted to be issued under Section 20 hereof, shall be deducted in determining "Net Revenues"; (c) The Term 'Bonds" shall mean the $350, 000. 00 authorized by this ordinance; (d) The Term "Additional Bonds" means the Additional Parity Bonds which the City reserves the right to issue under Section 20 hereof. SECTION 10: Pledge . All of the Net Revenues of the City's System with the exception of those in excess of the amounts required to establish and maintain the funds as hereinafter provided are hereby irrevocably pledged for the payment of the Bonds, and of the Additional Bonds if issued uoder the conditions and in the manner specified in this Ordinance, and interest thereon, and it is hereby ordained that the Bonds and the Additional if so issued, and the interest thereon, shall constitute a first lien upon said Net Revenues. SECTION 11: Rates and Charges: The City Covenants and agrees with the holders of the Bonds and of the Additional Bonds if and when issued: (a) That it will at all times charge and collect for services rendered by the System rates sufficient to pay all operating, main- tenance, depreciation, replacement and betterment expense, and other costs deductible in determined "Net Revenues" as herein defined and to pay the interest on and principal of the Bonds and to establish and main- tain the Funds as hereinafter provided; (b) If the Additional Bonds are issued, or if the System should become legally liable for any other indebtedness, the City will fix and maintain rates and collect charges for the services of the System sufficient to discharge such indebtedness. SECTION 12: Fund Designation. All revenues derived from the operation of the System shall be kept separate from other funds of the City. To that end, the following special Funds are hereby created; (a) "Water Revenue Fund", hereinafter called "system Fund". This Fund shall be kept in the City's Depository Bank, which bank shall be a member of the Federal Deposit Insurance Corporation; (b) "Water Revenue Bond and Interest Sinking Fund" herein- after called ''Interest and Sinking Fund". This Fund shall be deposited with the FIRST NATIONAL BANK, Grapevine, Texas, as Trustee of the pledged revenues; (c) "Water Repair and Replacement Fund", hereinafter called "Repair and Replacement Fund". This Fund shall be deposited with the FIRST NATIONAL BAND, Grapevine, Texas, as Trustee. SECTION 13; System Fund. All revenues of every nature re- ceived through the operation of the System or as a result of its ownership of the System shall be deposited from day to day into the System Fund and the current expenses of the System shall be payable from month to month as a first charge against said System Fund as the same shall become due and payable. The City hereby covenants and agrees that the current expenses of the operation of the System in any year shall not exceed the reasonable and necessary amounts therefor, and that current expenses shall include all reasonable and necessary costs of operation, maintenance, repairs ~1AJ~ and extensions necessary to render efficient service and insurance of the System, but shall exclude depreciation and payments into the Interest and Sinking Fund and the Repair and Replacement- Fund; provided that only such repairs and extensions as, in the judgment of the City Council are necessary to keep the System in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the Bonds, shall be a lien prior to any existing lien. All revenues of the System not actually required to pay expenses and costs incurred or permitted by this Section shall be deposited in the other funds created by this ordinance each of which shall have priority thereto in the order to which they are created in the following sections. SECTION 14: Interest and Sinking Fund. On or before the 10th day of the month following the delivery of the Bonds and on or before the 10th day of each month thereafter until the first interest payment date following the time the waterworks system is complet ed and placed in operation, the City Treasurer shall calculate the amount which shall be required, together with accrued interest, if any, to pay the next principal or interest payment to become due with respect to the Bonds herein authorized and shall deposit such amount in approximately equal monthly installments in the Interest and Sinking Fund, beginning on or before the 10th day of the month following the interest payment date following the completion of the Waterworks System to be constructed with a portion of the proceeds of the Bonds, and on or before the 10th day of each month thereafter, the City shall deposit into the Interest and Sinking Fund an amount of money not less than one-tenth of the principal and interest due the next payment date and such deposits shall continue until such time as $13, 125 in excess of all amounts required to fully meet and discharge the principal and interest requirements falling due before the beginning of the next succeeding fiscal year with respect to the Bonds, and thereafter, the City shall deposit such sums as are necessary to meet the then current year's debt service requirement and maintain the reserve of $13, 125. All accrued interest received from the sale of the Bonds together with the sum of $13, 125 (representing interest during the period of construction) out of the proceeds from the sale of Bonds shall be deposited in the Interest and Sinking Fund. SECTION 15: Repair and Replacement Fund: On or before the 10th day of the month following the date the Waterworks System is completed and placed in operation and on or before the 10th day of each month thereafter, the City shall deposit into the Repair and Replacement Fund the sum of $50 per month until the fuhds and/or investments therein shall amount to $1, 000. Funds in said Water System Repair and Re- placement Fund are to be used for the payment of any extraordinary repairs or replacements to the Waterworks System for which funds are not otherwise available, or for economically justifiable extensions to the System. However, in the event that the funds in the Interest and Sinking Fund are reduced below the amount required to meet the current debt service plus the reserve of $ 1, 000• 00 funds on deposit in the Repair and Replacement Fund may be transferred to the Interest and Sinking Fund to the extent re- quired to eliminate the deficiency in that fund. When any funds are paid out of said Repair and Replacement Fund, payments into the Account shall be resumed and continued until such time as the account has been restored to the level of $ 1, 000. 00 The deposits into this Fund shall be subordinate to those required to be made into the Interest and Sinking Fund. SECTION 16: Investment of Funds. The City, at its option may invest the Reserve Portion of the Interest and Sinking Fund and the Repair and Replacement Fund in direct obligations of, or obligations the prin- cipal and interest on which are guaranteed by the United States Government, and if at any time uninvested funds are insufficient to accomplish the purposes for which said respective bonds are herein establisled the custodian bank shall sell on the open market such amount of the securities as may be required to meet such deficiency giving notice thereof to the City of Southlake. All money resulting from the maturity of principal and interest of the securities in which the aforesaid Funds are invested may be reinvested or accumulated in the respective fund and considered a part thereof, and used for and only for the purposes hereinabove specified with respect thereto. SECTION 17: Deficiencies in Funds: If in any month the City shall, for any reason, fail to pay into the Interest and Sinking Fund, the Repair and Replacement Fund, the full amount above stipulated, amounts equivalent to such deficiencies shall be set apart and paid into said Funds from the first available and unallocated revenues of the following month or months and each payment shall be in addition to the amounts hereinabove provided to be otherwise paid into said Funds during such month or months. SECTION IS: Excess Revenues. Any revenues in excess of those required to establish and maintain the Funds as above required may be used for the purpose of paying the costs of extensions and improvements which will either enhance the revenue-producing capacity of the Water System or provide a higher degree of service; or for acquiring the outstanding bonds for cancellation, or for redeeming the outstanding bonds in inverse numerical and maturity order, at not to exceed the call price or for any other lawful purpose. SECTION 19: Security of Funds: All funds created by this Ordinance shall be secured in the manner and to the fullest extent permitted by the Laws of Texas for the security of Public Funds, and such funds shall be used only for the purposes permitted by this Ordinance. SECTION 20: Issuance of Additional Parity Bonds. In addition to the right to issue Bonds of inferior lien as authorized by the Laws of this State, the City reserves the right hereafter to issue Additional Bonds. The Additional Bonds when issued shall be secured by and payable from a first lien on and pledge of the net revenues of the System in the same manner and to the same extent as are the Bonds authorized by this ordinance, and the Bonds and the Additional Bonds shall be in all respects of equal dignity. The Additional Bonds may be issued in one or more installments, provided, however, that none shall be issued unless and tmtil the following conditions have been met: (a) The City is not then in default as to any covenants, condition or obligation prescribed by this Ordinance; (b) That the Laws of the State of Texas in force as such time provide permission for the issuance of such bonds; (c) Each of the funds created by this Ordinance contains the amount of money then required to be on deposit therein; (d) The City has secured a certificate from an Engineer registered by the State Board of Registration for Professional Engineers of the State of Texas, showing that the projected net income and revenues of the System as estimated by him throughout the maturities of all such Bonds will each year be at least one and one-half times the average annual requirement for the payment of principal and interest on the then outstanding Bonds and on the Additional Bonds; (e) The Additional Bonds are made to Mature August 1 of each of the years in which they are scheduled to mature. aG red.-i~- this ~ r~en~es-.after--..d.eclucti-ng SECTION 21: Maintenance and operation - Insurance. The City shall maintain the System in Good condition and operate the same in an efficient manner and at reasonable cost. So long as a_ny of the Bonds are outstanding, the City agrees to maintain insurance for the benefit of the holder or holders of the Bonds, on the System of a kind and in an amount which usually would be carried by private companies engaged in a similar type of business. Nothing in this ordinance shall be construed as requiring the City to expend any funds which are derived from sources other than the operation of the System but nothing herein shall be construed as preventing the City from doing so. SECTION 22: Records, - Accounts - Accounting Reports. The City of Southlake hereby covenants and agrees that so long as any of the Bonds herein authorized or any interest thereon remain outstanding and unpaid, it will keep and maintain a proper and complete system of records and ac- counts pertaining to the operation of its System separate and apart frorn all other records and Accounts in which complete and correct entries shall be made of all transactions relating to said System, as Provided by Article 1113, Revised Civil Statutes of Texas, 1925, as amended, and that the holder or holders of any of the Bonds or any duly authorized agent or agents of such holders, shall have the right at all reasonable times to inspect all such records, accounts and data relating thereto, and to inspect the System and all properties com- prising same. The City further agrees that within sixty (60) days following the close of each fiscal year, it will cause an audit of such books and accounts to be made by an independent fi: _-i of Certified Public Accountants or Licensed Pub' lic Accountant, showing the receipts and disbursements for account of the System for the fiscal year. Each such audit, in addition to whatever other matter may be thought proper by the accountant, shall particularly include the following: (a) A detailed statement of the income and expenditures of the System for such fiscal year; (b) A balance sheet as of the end of such fiscal year; (c) The Accountant's comments regarding the manner in which the City has carried outthe requirements of this Ordinance and his recommendations for any changes or improvements in the operation, record and accounts of the System; (d) A list of the insurance policies in force at the end of the fiscal year on the 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 Interest and Sinking Fund throughout the fiscal year, a list of the securities, if any, in which the Reserve portion and the Repair and Replacement Fund have been invested, and a statement of the manner in which money in the System Fund has been secured in such fiscal year; (f) The number of properties connected with the System and the total income from System for the year. Expenses incurred in making the audits above referred to are to be regarded as maintenance and operating expenses and paid as such. Copies of the aforesaid annual audit shall be immediately furnished to the Executive Director of the (Municipal Advisory Council of Texas, at his office in Austin, Texas, and to any holder of any Revenue Bond or Bonds authorized by this Ordinance who shall request the same. At the Close of the first six months' period of each fiscal year, the City Secretary is hereby directed to furnish a copy of an operating and income statement in reasonable detail covering such period, to any bondholder upon his request therefor, received not more than thirty (30) days after the close of said six months' Period. Any bond holder shall have the right to discuss with the Accountants making the annual audit the contents thereof and to ask for such additional information as he may reasonable require. SECTION 23: Remedies in Event of Default. In addition to all the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City (a) defaults in payments to be made to the Interest and Sinking Fund and the Repair and Replacement Fund as required by this Ordinance, or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this Ordinance, the following remedies shall be available: (1) The holder or holders of any of the bonds shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling any requiring the City Council and other officers of the City to observe and perform any covenant, condition or obligation prescribed in the Bond Ordinance. (2) 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 acgiescense therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. The specific remedies herein provided shall be cumulative of all other existing remedies and the specification of such remedies shall not be deemed to be exclusive. SECTION 24. Special Covenants. The City hereby further covenants as follows: (a) That it has the lawful power to pledge the revenues supporting this issue of Bonds and has lawfully exercised said power under the constitution and laws of the State of Texas, including said power ,existing under Articlellll to 1118, both inclusive, Revised Civil Statutes of the State of Texas, 1925, with amendments thereto; that the Bonds issued hereuoder, and the Additional Bonds, when issued, shall be ratably secured under said pledge of income, in such manner that one Bond shall have no preference over any other Bond of said issue; (b) The City Covenants and represents that other than for the payment of the Bonds herein authorized, the rents, revenues and income of the System have not in any manner been pledged to the payment of any debt or obligation of the City or of the System; (c) That so long as any of said Bonds remain outstanding, the City will not sell or encumber the System or any substantial part thereof, and that with the exception of the Additional Bonds expressly permitted by this Ordinance to be issued, it will not encomber the revenues thereof unless such encumbrance is made junior and subordinate to all of the provisions of this Ordinance; (d) That no free service of the System shall be allowed, and should the City or any of its agents or instrumentalities make use of the services and facilities of the System payment of the reasonable value thereof shall be made by the City out of funds from sources other than the revenues and in- come of the System; (e) To the extent that it legally may, the City further covenants and agrees that, so long as any of the Bonds or Additional Bonds or any interest thereon are outstanding, no franchise shall be granted for the installation or operation of any competing Waterworks System other than that owned by the City, and the operation of any such system by anyone other than this City is hereby prohibited. Section 25: Bonds are Special Obligations. The Bonds are special obligations of the City payable from the pledged revenues, and the holder there- of shall never have the right to demand payment thereof out of funds raised or to be raised by taxation. SECTION 26: Mayor to Have Charge of Records and Bonds. That the Mayor of the City of Southlake shall be, and he is hereby authorized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas, and shall take and have charge and control of the Bonds herein authorized pending their approval by the Attorney General and their registration bo the Comptroller of Public Accounts. SECTI ON 27: Sale and Delivery of Bonds: Upon the sale of the Bonds herein authorized, delivery of the Bonds shall be made to the purchaser as soon as may be after the adoption of this Ordinance upon any payment therefor in accordance with the terms of sale. SECTION 28: Emergency. The fact that it is to the best interest of the City to provide funds for the construction of improvements and extensions to its Waterworks System and constitute and create an emergency and an urgent public :necessity, requiring that any duly providing for ordinance to be read and voted upon at more than one meeting of the City Council be suspended, and requiring that this ordinance be passed and take effect as an emergency measure, and such rules and provisions are accordingly suspended, and this ordinance is passed as an emergency measure, and shall take and have effect and be in full force from and after its passage. PASSED AND APPROVED, this the 28th day of October, 1955. 61, ILA- Mayor, City of Southlake, Texas ATTEST: ?7 f City Secretary, City of Southlake, Texas (City Seal)