98-039 ORD AUTHORIZE TEXAS WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 1998

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of insurance, and shall state whether or not all insurance premiums upon the insurance policies to which reference is made have been paid. (i) Annual Budget and Rate Covenant. The Issuer shall prepare, prior to the beginning of each fiscal year, an annual budget, in accordance with law reflecting an estimate of cash receipts and disbursements for the ensuing fiscal year in sufficient detail to indicate the probable Gross Revenues and Net Revenues for such fiscal year. (j) Records. The Issuer shall keep proper books of record and account in which full, true, proper, and correct entries will be made of all dealings, activities, and transactions relating to the System, the Net Revenues, and the Funds created pursuant to this Ordinance, and all books, documents, and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any Bondholder or citizen of the Issuer. To the extent consistent with the provisions of this Ordinance, the Issuer shall keep its books and records in a manner conforming to standard accounting practices as usually would be followed by private corporations owning and operating a similar system, with appropriate recognition being given to essential differences between municipal and corparate accounting practices. (k) Audits. After the close of each fiscal year while any of the Bonds, the Outstanding Bonds, and any Revenue Bonds are outstanding, an audit will be made of the books and accounts relating to the System and the Net Revenues by an independent certified public accountant or an independent firm of certified public accountants. As soon as practicable after the close of each such year, and when said audit has been completed and made available to the Issuer, a copy of such audit for the preceding year shall be mailed to the Municipal Advisory Council of Texas, to each paying agent for any bonds payable from Net Revenues, to any Bondholders who shall so request in writing, and to Southwest Securities Incorporated. The annual audit reports shall be open to the inspection of the Bondholders and their agents and representatives at all reasonable times. (1) Governmental A eg ncies. It will comply with all of the terms and conditions of any and all franchises, permits, and authorizations applicable to or necessary with respect to the System, and which have been obtained from any governmental agency; and the Issuer has or will obtain and keep in full force and effect all franchises, permits, authorization, and other requirements applicable to or necessary with respect to the acquisition, construction, equipment, operation, and maintenance of the System. (m) No Competition. It will not operate, or grant any franchise r, to the extent it legally may, permit the acquisition, construction, or operation of, any facilities which would be in competition with the System, and to the extent that it legally may, the Issuer will prohibit any such competing facilities. (n) District or River Authoritv Contract. Nothing herein shall be construed to prevent the Issuer from making contracts with a district or river authority operating pursuant to Article 16, Section 59 of the Texas Constitution, as authorized by Chapter 30, Texas Water Code, or Article 31