2001B16-BONDFINAL
AN ORDINANCE AUTHORIZING THE ISSUANCE OF "CITY OF
SCHERTZ, TEXAS COMBINATION TAX AND LIMITED PLEDGE
REVENUE CERTIFICATES OF OBLIGATION, SERIES 2001"; PROVIDING
FOR THE PAYMENT OF SAID CERTIFICATES BY THE LEVY OF AN AD
VALOREM TAX UPON ALL TAXABLE PROPERTY WITHIN THE CITY
AND FURTHER SECURING SAID CERTIFICATES BY A LIEN ON AND
PLEDGE OF THE PLEDGED REVENUES OF THE SYSTEM; PROVIDING
THE TERMS AND CONDITIONS OF SAID CERTIFICATES AND
RESOLVING OTHER MATTERS INCIDENT AND RELATING TO THE
ISSUANCE, PAYMENT, SECURITY, SALE, AND DELIVERY OF SAID
CERTIFICATES, INCLUDING THE APPROVAL AND DISTRIBUTION OF
AN OFFICIAL STATEMENT PERTAINING THERETO; AUTHORIZING
THE EXECUTION OF A PAYING AGENT/REGISTRAR AGREEMENT;
COMPLYING WITH THE REQUIREMENTS OF THE DEPOSITORY
TRUST COMPANY'S LETTER OF REPRESENTATIONS; AND
PROVIDING AN EFFECTIVE DATE
WHEREAS, the City Council of the City of Schertz, Texas (the City) has caused notice to
be given of its intention to issue certificates of obligation in the maximum principal amoum of
$4,500,000 for the purpose of paying contractual obligations of the City to be incurred for making
permanem public improvements and for other public purposes, to-wit' (1) constructing street and
sidewalk improvements (including utilities repair, replacement, and relocation) and drainage incidental
thereto relating to Schertz Parkway, (2) constructing drainage improvements relating to Schertz
Parkway, (3) constructing signage and other improvements designating Schertz Parkway, (4) the
purchase of land and fights-of-way for authorized needs and purposes with respect to the street
improvements relating to Schertz Parkway, and (5) the payment of professional services related to
the construction and financing of the aforementioned projects. This notice has been duly published
in a newspaper hereby found and determined to be of general circulation in the City, once a week for
two (2) consecutive weeks, the date of the first publication of such notice being not less than fifteen
(15) days prior to the tentative date stated therein for the passage of the ordinance authorizing the
issuance of such certificates of obligation; and
WHEREAS, no petition protesting the issuance of the certificates of obligation described in
this notice, signed by at least 5% of the qualified electors of the City, has been presented to or filed
with the City Clerk prior to the date tentatively set in such notice for the passage of this ordinance;
and
WHEREAS, the City Council hereby finds and determines that certificates of obligation in the
principal amount of $4,500,000 described in such notice should be issued and sold at this time; now,
therefore,
#45059039vl
THAT'
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
SECTION 1. Authorization- Designation - Principal Amount - Purpose. The certificates of
obligation of the City shall be and are hereby authorized to be issued in the aggregate principal
amount of FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($4,500,000), to be designated and bear the title of"CITY OF SCHERTZ, TEXAS COMBINATION
TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF OBLIGATION, SERIES 2001"
(the Certificates), for the purpose of paying contractual obligations of the City to be incurred for
making permanem public improvements and for other public purposes, to-wit: (1) constructing street
and sidewalk improvements (including utilities repair, replacement, and relocation) and drainage
incidental thereto relating to Schertz Parkway, (2) constructing drainage improvements relating to
Schertz Parkway, (3) constructing signage and other improvements designating Schertz Parkway,
(4) the purchase of land and rights-of-way for authorized needs and purposes with respect to the
street improvements relating to Schertz Parkway, and (5)the payment of professional services related
to the construction and financing of the aforementioned projects, pursuant to the authority conferred
by and in conformity with the laws of the State of Texas, particularly Chapter 1502, as amended,
Texas Government Code, the Certificate of Obligation Act of 1971, as amended, Local Government
Code Section 271.041 through Section 271.063, and the City's Home Rule Charter.
SECTION 2. Fully Registered Obligations- Authorized Denominations-Stated Maturities
- Interest Rates - Date. The Certificates are issuable in fully registered form only; shall be dated
August 1,2001 (the Ceraficate Date) and shall be in denominations of $5,000 or any imegral multiple
thereof, and the Certificates shall become due and payable on February 1 in each of the years and in
principal amoum (the Stated Maturit~es) and bear interest on the unpaid principal amounts fi'om the
Certificate Date, or from the most recent Interest Payment Date (hereina~er defined) to which
interest has been paid or duly provided for, to the earlier of redemption or Stated Maturity, at the per
annum rates, while Outstanding, in accordance with the following schedule:
Year of Principal Interest
Stated Maturity Amount ($) Rate (%)
2002 125,000 6.00
2003 135,000 6.00
2004 140,000 6.00
2005 150,000 6.00
2006 160,000 6.00
2007 170,000 6.00
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Year of Principal Interest
Stated Maturity Amount ($) Rate (%)
2008 180,000 5.00
2009 190,000 4.10
2010 200,000 4.20
2011 210,000 4.25
2012 225,000 4.40
2013 235,000 4.50
2014 250,000 4.60
2015 260,000 4.70
2016 275,000 4.80
2017 290,000 4.90
2018 300,000 5.00
2019 320,000 5.00
2020 335,000 5.00
2021 3 50,000 5.00
SECTION 3. Payment of Certificates - Paying Agent~egistrar. The principal of, premium,
if any, and imerest on the Certificates, due and payable by reason of Stated Maturity, redemption, or
otherwise, shall be payable in any coin or currency of the United States of America which at the time
of payment is legal tender for the payment of public and private debts, and such payment of principal
of and interest on the Certificates shall be without exchange or collection charges to the Holder (as
hereinafter defined) of the Certificates.
The Certificates shall bear interest at the per annum rates shown above in Section 2, computed
on the basis of a 360-day year of twelve 30-day months, and interest thereon shall be payable
semiannually on February 1 and August 1 of each year (the Interest Payment Date) commencing
February 1, 2002, while the Certificates are Outstanding.
The selection and appointment of The Bank of New York, New York, New York to serve
as the initial Paying Agent/Registrar for the Certificates is hereby approved and confirmed, and the
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City agrees and covenants to cause to be kept and maintained at the corporate trust office of the
Paying Agent/Registrar books and records (the Security Register) for the registration, payment and
transfer of the Certificates, all as provided herein, in accordance with the terms and provisions of a
Paying Agent/Registrar Agreement, attached, in substamially final form, as Exhibit A hereto, and such
reasonable rules and regulations as the Paying Agem/Registrar and City may prescribe. The
Paying Agent/Registrar covenants to maintain a copy of the Security Register at its offices, or its
agent's offices, located in Houston, Texas. The City covenants to maintain and provide a Paying
Agent/Registrar at all times while the Certificates are Outstanding, and any successor Paying
Agent/Registrar shall be (i) a national or state banking institution or (ii) an association or a
corporation organized and doing business under the laws of the United States of America or of any
state, authorized under such laws to exercise trust powers. Such Paying Agem/Registrar shall be
subject to supervision or examination by federal or state authority and authorized by law to serve as
a Paying Agem/Registrar.
The City reserves the fight to appoim a successor Paying Agem/Registrar upon providing the
previous Paying Agent/Registrar with a certified copy of a resolution or ordinance terminating such
agency. Additionally, the City agrees to promptly cause a written notice of this substitution to be sent
to each Holder of the Certificates by United States mail, first-class postage prepaid, which notice shall
also give the address of the new Paying Agem/Registrar.
Both principal of, premium, if any, and interest on the Certificates, due and payable by reason
of Stated Maturity, redemption, or otherwise, shall be payable only to the registered owner of the
Certificates appearing on the Security Register (the Holder or Holders) maintained on behalf of the
City by the Paying Agent/Registrar as hereinafter provided (i) on the Record Date (hereina~er
defined) for purposes of payment of interest thereon, and (ii) on the date of surrender of the
Certificates for purposes of receiving payment of principal thereof upon redemption ofthe Certificates
or at the Certificates' Stated Maturity. The City and the Paying Agent/Registrar, and any agent of
either, shall treat the Holder as the owner of a Certificate for purposes of receiving payment and all
other purposes whatsoever, and neither the City nor the Paying Agem/Registrar, or any agent of
either, shall be affected by notice to the contrary.
Principal of and premium, if any, on the Certificates shall be payable only upon presentation
and surrender of the Certificates to the Paying Agent/Registrar at its corporate trust office. Interest
on the Certificates shall be paid to the Holder whose name appears in the Security Register at the
close of business on the fifteenth day of the month next preceding an Interest Payment Date for the
Certificates (the Record Date) and shall be paid (i) by check sent by United States mail, first-class
postage prepaid, by the Paying Agent/Registrar, to the address of the Holder appearing in the
Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested
in writing by the Holder at the Holder's risk and expense.
If the date for the payment of the principal of, premium, if any, or interest on the Certificates
shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where
the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date
for such payment shall be the next succeeding day which is not such a day. The payment on such date
#45059039vl -4-
shall have the same force and effect as if made on the original date any such payment on the
Certificates was due.
In the evem of a non-payment of interest on a scheduled payment date, and for thirty (30)
days thereafter, a new record date for such imerest payment (a Special Record Date) will be
established by the Paying Agent/Registrar, if and when funds for the payment of such interest have
been received from the City. Notice of the Special Record Date and of the scheduled paymem date
of the past due interest (the Special Payment Date - which shall be fifteen (15) days after the Special
Record Date) shall be sent at least five (5) business days prior to the Special Record Date by United
States mail, first-class postage prepaid, to the address of each Holder appearing on the Security
Register at the close of business on the last business day next preceding the date of mailing of such
notice.
SECTION 4. Redemption.
A. Optional Redemption. 'The Certificates having Stated Maturities on and after
February 1, 2012 shall be subject to redemption prior to Stated Maturity, at the option of the City,
on February 1, 2011, or on any date thereafter, as a whole or in part, in principal amoums of $5,000
or any integral multiple thereof (and if within a Stated Maturity selected at random and by lot by the
Paying Agent/Registrar), at the redemption price of par plus accrued interest to the date of
redemption.
B. Exercise of Redemption Option. At least forty-five (45) days prior to a date set for
the redemption of Certificates (unless a shorter notification period shall be satisfactory to the Paying
Agent/Registrar), the City shall notify the Paying Agent/Registrar of its decision to exercise the fight
to redeem Certificates, the principal amount of each Stated Maturity to be redeemed, and the date
set for the redemption thereof. The decision of the City to exercise the fight to redeem Certificates
shall be entered in the minutes of the governing body of the City.
C. Selection of Certificates for Redemption. If less than all Outstanding Certificates of
the same Stated Maturity are to be redeemed on a redemption date, the Paying Agem/Registrar shall
select at random and by lot the Certificates to be redeemed, provided that if less than the entire
principal amount of a Certificate is to be redeemed, the Paying Agent/Registrar shall treat such
Certificate then subject to redemption as representing the number of Certificates Outstanding which
is obtained by dividing the principal amount of such Certificate by $5,000.
D. Notice of Redemption. Not less than thirty (30) days prior to a redemption date for
the Certificates, a notice of redemption shall be sent by United States mail, first-class postage prepaid,
in the name of the City and at the City's expense, by the Paying Agent/Registrar to each Holder of
a Certificate to be redeemed, in whole or in part, at the address of the Holder appearing on the
Security Register at the close of business on the business day next preceding the date of mailing such
#45059039vl -5-
notice, and any notice of redemption so mailed shall be conclusively presumed to have been duly
given irrespective of whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the
Certificates, (ii) identify the Certificates to be redeemed and, in the case of a portion of the principal
amount to be redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price,
(iv) state that the Certificates, or the portion of the principal amoum thereof to be redeemed, shall
become due and payable on the redemption date specified, and the interest thereon, or on the portion
of the principal amount thereof to be redeemed, shall cease to accrue from and after the redemption
date, and (v) specify that payment of the redemption price for the Certificates, or the principal amount
thereof to be redeemed, shall be made at the corporate trust office of the Paying Agent/Registrar only
upon presentation and surrender thereof by the Holder. This notice may also be published once in
a financial publication, journal, or reporter of general circulation among securities dealers in the City
of New York, New York (including, but not limited to, The Bond Buyer and The Wall Street
Journal), or in the State of Texas (including, but not limited to, The Texas Bond Reporter).
Additionally, this notice may also be sent by the City to any registered securities depository and to
any national information service that disseminates redemption notices.
If a Certificate is subject by its terms to redemption and has been called for redemption and
notice of redemption thereof has been duly given or waived as herein provided, such Certificate (or
the principal amount thereof to be redeemed) so called for redemption shall become due and payable,
and if money sufficient for the payment of such Certificates (or of the principal amount thereof to be
redeemed) at the then applicable redemption price is held for the purpose of such paymem by the
Paying Agent/Registrar, then on the redemption date designated in such notice, interest on said
Certificates (or the principal amount thereof to be redeemed) called for redemption shall cease to
accrue and such Certificates shall not be deemed to be Outstanding in accordance with the provisions
of this Ordinance.
E. Transfer/Exchange of Certificates. Neither the City nor the Paying Agent/Registrar
shall be required (1) to transfer or exchange any Certificate during a period beginning forty-five (45)
days prior to the date fixed for redemption of the Certificates or (2) to transfer or exchange any
Certificate selected for redemption, provided, however, such limitation of transfer shall not be
applicable to an exchange by the Holder of the unredeemed balance of a Certificate which is subject
to redemption in part.
SECTION 5. Execution - Registration. The Certificates shall be executed on behalf of the
City by its Mayor under its seal reproduced or impressed thereon and attested by its City Secretary.
The signature of either of said officers on the Certificates may be manual or facsimile. Certificates
beating the manual or facsimile signatures of individuals who were, at the time of the Certificate Date,
the proper officers of the City shall bind the City, notwithstanding that such individuals or either of
them shall cease to hold such offices prior to the delivery of the Certificates to the Purchasers
#45059039vl -6-
(hereinafter defined), all as authorized and provided in Chapter 1201, as amended, Texas Government
Code.
No Certificate shall be entitled to any fight or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Certificate either a certificate of registration
substantially in the form provided in Section 8C, executed by the Comptroller of Public Accounts of
the State of Texas or his duly authorized agem by manual signature, or a certificate of registration
substantially in the form provided in Section SD, executed by the Paying Agent/Registrar by manual
signature, and either such certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly certified or registered and delivered.
SECTION 6. Registration- Transfer- Exchange of Certificates- Predecessor Certificates.
The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and
address of every owner of the Certificates, or if appropriate, the nominee thereof. Any Certificate
may, in accordance with its terms and the terms hereof, be transferred or exchanged for Certificates
of other authorized denominations upon the Security Register by the Holder, in person or by his duly
authorized agent, upon surrender of such Certificate to the Paying Agent/Registrar for cancellation,
accompanied by a written instrument of transfer or request for exchange duly executed by the Holder
or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar.
Upon surrender for transfer of any Certificate at the corporate trust office of the Paying
Agent/Registrar, the City shall execute and the Paying Agent/Registrar shall register and deliver, in
the name of the designated transferee or transferees, one or more new Certificates of authorized
denomination and having the same Stated Maturity and of a like interest rate and aggregate principal
amount as the Certificate or Certificates surrendered for transfer.
At the option of the Holder, Certificates may be exchanged for other Certificates of
authorized denominations and having the same Stated Maturity, beating the same rate of interest and
of like aggregate principal amount as the Certificates surrendered for exchange upon surrender of the
Certificates to be exchanged at the corporate trust office of the Paying Agent/Registrar. Whenever
any Certificates are so surrendered for exchange, the City shall execute, and the Paying
Agent/Registrar shall register and deliver, the Certificates to the Holder requesting the exchange.
All Certificates issued upon any transfer or exchange of Certificates shall be delivered at the
corporate trust office of the Paying Agent/Registrar, or be sent by registered mail to the Holder at
his request, risk, and expense, and upon the delivery thereof, the same shall be the valid and binding
obligations of the City, evidencing the same obligation to pay, and entitled to the same benefits under
this Ordinance, as the Certificates surrendered upon such transfer or exchange.
All transfers or exchanges of Certificates pursuant to this Section shall be made without
expense or service charge to the Holder, except as otherwise herein provided, and except that the
#45059039vl -7-
Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of
any tax or other governmental charges required to be paid with respect to such transfer or exchange.
Certificates canceled by reason of an exchange or transfer pursuant to the provisions hereof
are hereby defined to be Predecessor Certificates, evidencing all or a portion, as the case may be, of
the same debt evidenced by the new Certificate or Certificates registered and delivered in the
exchange or transfer therefor. Additionally, the term Predecessor Certificates shall include any
Certificate registered and delivered pursuant to Section 25 in lieu of a mutilated, lost, destroyed, or
stolen Certificate which shall be deemed to evidence the same obligation as the mutilated, lost,
destroyed, or stolen Certificate.
SECTION 7. Initial Certificate(s). The Certificates herein authorized shall be issued initially
either (i) as a single fully registered certificate in the total principal amount of $4,500,000 with
principal installments to become due and payable as provided in Section 2 and numbered T-l, or
(ii) as one (1) fully registered Certificate for each year of Stated Maturity in the applicable principal
amount and denomination and to be numbered consecutively from T-1 and upward (the Initial
Certificate(s)) and, in either case, the Initial Certificate(s) shall be registered in the name of the
Purchasers or the designee thereof. The Initial Certificate(s) shall be the Certificates submitted to the
Office of the Attorney General of the State of Texas for approval, certified and registered by the
Office of the Comptroller of Public Accounts of the State of Texas and delivered to the Purchasers.
Any time after the delivery of the Initial Certificate(s), the Paying Agent/Registrar shall cancel the
Initial Certificate(s) delivered hereunder and exchange therefor definitive Certificates of authorized
denominations, Stated Maturities, principal amoums and bearing applicable interest rates for transfer
and delivery to the Holders named at the addresses identified therefor; all pursuant to and in
accordance with such written instructions from the Purchasers, or the designee thereof, and such
other information and documentation as the Paying Agent/Registrar may reasonably require.
SECTION 8. Forms.
A. Forms Generally. The Certificates, the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas, the Certificate of Registration, and the form of Assignment
to be printed on each of the Certificates shall be substantially in the forms set forth in this Section
with such appropriate insertions, omissions, substitutions, and other variations as are permitted or
required by this Ordinance and may have such letters, numbers, or other marks of identification
(including insurance legends in the event the Certificates, or any Stated Maturities thereof, are insured
and identifying numbers and letters of the Committee on Uniform Securities Identification Procedures
of the American Bankers Association) and such legends and endorsements (including any
reproduction of an opinion of counsel) thereon as may, consistent herewith, be established by the City
or determined by the officers executing the Certificates as evidenced by their execution thereof. Any
portion of the text of any Certificate may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Certificate.
#45059039vl -8-
The definitive Certificates shall be primed, lithographed, or engraved, produced by any
combination of these methods, or produced in any other similar manner, all as determined by the
officers executing the Certificates as evidenced by their execution thereof, but the Initial Certificate(s)
submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise
reproduced.
[The remainder of this page intentionally left blank.]
#45059039vl -9-
B. Form of Definitive Certificate.
REGISTERED
NO.
REGISTERED AMOUNT
$
United States of America
State of Texas
Counties of Bexar, Comal, and Guadalupe
CITY OF SCHERTZ, TEXAS
COMBINATION TAX AND LIMITED PLEDGE REVENUE
CERTIFICATE OF OBLIGATION, SERIES 2001
Certificate Date'
August 1, 2001
Interest Rate:
Stated Maturity:
CUSIP No.
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Schertz, Texas (the City), a body corporate and municipal corporation in the
Counties ofBexar, Comal, and Guadalupe, State of Texas, for value received, acknowledges itself
indebted to and hereby promises to pay to the order of the Registered Owner specified above, or the
registered assigns thereof, on the Stated Maturity date specified above, the Principal Amount
specified above (or so much thereof as shall not have been paid upon prior redemption) and to pay
interest on the unpaid principal amount hereof from the Certificate Date, or from the most recent
interest payment date to which interest has been paid or duly provided for until such principal sum
has become due and payment thereof has been made or duly provided for, for, to the earlier of
redemption or Stated Maturity, at the per annum rate of interest specified above computed on the
basis of a 360-day year of twelve 30-day months; such interest being payable on February 1 and
August 1 of each year commencing February 1, 2002.
Principal of this Certificate shall be payable to the Registered Owner hereof (the Holder),
upon presentation and surrender, at the corporate trust office of the Paying Agent/Registrar executing
the registration certificate appearing hereon or a successor thereof. Interest shall be payable to the
Holder of this Certificate (or one or more Predecessor Certificates, as defined in the Ordinance
hereinafter referenced) whose name appears on the Security Register maintained by the Paying
Agent/Registrar at the close of business on the Record Date, which is the fifieemh day of the month
next preceding each interest payment date. All payments of principal of and interest on this Certificate
shall be in any coin or currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts. Interest shall be paid by the Paying
Agent/Registrar by check sent on the appropriate date of payment by United States mail, first-class
postage prepaid, to the Holder hereof at the address appearing in the Security Register or by such
#45059039vl - 1 0-
other method, acceptable to the Paying Agent/Registrar, requested by the Holder hereof at the
Holder's risk and expense.
This Certificate is one of the series specified in its title issued in the aggregate principal
amount of $4,500,000 (the Certificates) pursuant to an Ordinance adopted by the governing body
of the City (the Ordinance), for the purpose of paying contractual obligations of the City to be
incurred for making permanent public improvements and for other public purposes, to-wit'
(1) constructing street and sidewalk improvements (including utilities repair, replacement, and
relocation) and drainage incidental thereto relating to Schertz Parkway, (2) constructing drainage
improvements relating to Schertz Parkway, (3) constructing signage and other improvements
designating Schertz Parkway, (4) the purchase of land and fights-of-way for authorized needs and
purposes with respect to the street improvements relating to Schertz Parkway, and (5) the payment
of professional services related to the construction and financing of the aforementioned projects,
under and in strict conformity with the laws of the State of Texas, particularly Chapter 1502, as
amended, Texas Government Code, the Certificate of Obligation Act of 1971, as amended, Local
Government Code, Section 271.041 through 271.063, and the City's Home Rule Charter.
The Certificates stated to mature on and alter February 1, 2012 may be redeemed prior to
their Stated Maturities, at the option of the City, on February 1, 2011, or on any date thereafter, in
whole or in part, in principal amounts of $5,000 or any integral multiple thereof (and if within a
Stated Maturity selected at random and by lot by the Paying Agent/Registrar) at the redemption price
of par plus accrued interest to the date of redemption; provided, however, that at least thirty (30)
days prior written notice shall be sent to the Holder of the Certificates to be redeemed by United
States mail, first-class postage prepaid, and subject to the terms and provisions relating thereto
contained in the Ordinance. If this Certificate is subject to redemption prior to Stated Maturity and
is in a denomination in excess of $5,000, portions of the principal sum hereof in installments of
$5,000 or any integral multiple thereof may be redeemed, and, if less than all of the principal sum
hereof is to be redeemed, there shall be issued, without charge therefor, to the Holder hereof, upon
the surrender of this Certificate to the Paying Agent/Registrar at its corporate trust office, a new
Certificate or Certificates of like Stated Maturity and interest rate in any authorized denominations
provided in the Ordinance for the then unredeemed balance of the principal sum hereof.
If this Certificate (or any portion of the principal sum hereof) shall have been duly called for
redemption and notice of such redemption duly given, then upon such redemption date this Certificate
(or the portion of the principal sum hereof to be redeemed) shall become due and payable, and, if the
money for the payment of the redemption price and the interest accrued on the principal amount to
be redeemed to the date of redemption is held for the purpose of such paymem by the Paying
Agent/Re~strar, interest shall cease to accrue and be payable hereon from and after the redemption
date on the principal amount hereof to be redeemed. If this Certificate is called for redemption, in
whole or in part, the City or the Paying Agent/Registrar shall not be required to issue, transfer, or
exchange this Certificate within forty-five (45) days of the date fixed for redemption; provided,
#45059039vl "11-
however, such limitation of transfer shall not be applicable to an exchange by the Holder of the
unredeemed balance hereof in the event of its redemption in part.
The Certificates of this series are payable from the proceeds of an ad valorem tax levied upon
all taxable property within the City, within the limitations prescribed by law, and are further payable
from and secured by a lien on and pledge of the Pledged Revenues (identified and defined in the
Ordinance), being a limited amount of the Net Revenues derived from the operation of the City's
combined utility system (the System), such lien on and pledge of the limited amount of Net Revenues
being subordinate and inferior to the lien on and pledge of such Net Revenues securing payment of
the currently outstanding Prior Lien Obligations and Junior Lien Obligations and any Additional Prior
Lien Obligations, Additional Junior Lien Obligations, or Subordinate Lien Obligations herea~er issued
by the City. The City previously authorized the issuance of the Limited Pledge Obligations (idemified
and defined in the Ordinance) which are payable, in part, from and secured by a lien on and pledge
of a limited amount of the Net Revenues of the System in the manner provided in the ordinances
authorizing the issuance of the Limited Pledge Obligations. In the Ordinance, the City reserves and
retains the right to issue Additional Prior Lien Obligations, Additional Junior Lien Obligations,
Subordinate Lien Obligations, and Additional Limited Pledge Obligations (all as identified and defined
in the Ordinance), while the Certificates are Outstanding, without limitation as to principal amount
but subject to any terms, conditions or restrictions as may be applicable thereto under law or
otherwise.
Reference is hereby made to the Ordinance, copies of which are on file in the corporate trust
office of the Paying Agem/Registrar, and to all of the provisions of which the Holder by his
acceptance hereof hereby assents, for definitions of terms; the description of and the nature and extent
of the tax levied and the revenues pledged for the payment of the Certificates; the terms and
conditions under which the City may issue Additional Prior Lien Obligations, Additional Junior Lien
Obligations, Subordinate Lien Obligations, and Additional Limited Pledge Obligations; the terms and
conditions relating to the transfer or exchange of the Certificates; the conditions upon which the
Ordinance may be amended or supplemented with or without the consent of the Holder; the fights,
duties, and obligations of the City and the Paying Agem/Registrar; the terms and provisions upon
which this Certificate may be redeemed or discharged at or prior to the Stated Maturity thereof, and
deemed to be no longer Outstanding thereunder; and for the other terms and provisions specified in
the Ordinance. Capitalized terms used herein have the same meanings assigned in the Ordinance.
This Certificate, subject to certain limitations contained in the Ordinance, may be transferred
at the corporate trust office of the Paying Agent/Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by the
Holder hereof, or his duly authorized agent, and thereupon one or more new fully registered
Certificates of the same Stated Maturity, of authorized denominations, bearing the same rate of
interest, and of the same aggregate principal amount will be issued to the designated transferee or
transferees.
#45059039vl -12-
The City and the Paying Agent/Registrar, and any agent of either, shall treat the Holder hereof
whose name appears on the Security Register (i) on the Record Date as the owner hereof for
purposes of receiving payment of interest hereon, (ii) on the date of surrender of this Certificate as
the owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity or its
redemption, in whole or in part, and (iii) on any other date as the owner hereof for all other purposes,
and neither the City nor the Paying Agent/Registrar, or any such agent of either, shall be affected by
notice to the contrary. In the event of a non-payment of interest on a scheduled payment date, and
for thirty (30) days thereafter, a new record date for such interest payment (a Special Record Date)
will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest
have been received from the City. Notice of the Special Record Date and of the scheduled payment
date of the past due interest (the Special Payment Date - which shall be fifteen (15) days after the
Special Record Date) shall be sent at least five (5) business days prior to the Special Record Date by
United States mail, first-class postage prepaid, to the address of each Holder appearing on the
Security Register at the close of business on the last business day next preceding the date of mailing
of such notice.
It is hereby certified, covenanted, and represented that all acts, conditions, and things required
to be performed, exist, and be done precedent to the issuance of this Certificate in order to render the
same a legal, valid, and binding obligation of the City have been performed, exist, and have been
done, in regular and due time, form, and manner, as required by law, and that issuance of the
Certificates does not exceed any constitutional or statutory limitation. In case any provision in this
Certificate or any application thereof shall be deemed invalid, illegal, or unenforceable, the validity,
legality, and enforceability of the remaining provisions and applications shall not in any way be
affected or impaired thereby. The terms and provisions of this Certificate and the Ordinance shall be
construed in accordance with and shall be governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the City has caused this Certificate to be duly executed under its
official seal.
CITY OF SCHERTZ, TEXAS
ATTEST:
By
Mayor
City Secretary
(CITY SEAL)
#45059039vl - 1 3-
Co
*Form of Registration Certificate of Comptroller of Public Accounts to Appear on
Initial Certificate(s) Only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER
OF PUBLIC ACCOUNTS
THE STATE OF TEXAS
§ REGISTER NO.
I HEREBY CERTIFY that this Certificate has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and duly registered by the Comptroller of
Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
* Note to Primer: Not to appear on primed Certificates
Do
Form of Certificate of Paying Agent/Registrar to Appear on Definitive Certificates
Only.
CERTIFICATE OF PAYING AGENT/REGISTRAR
This Certificate has been duly issued under the provisions of the within-mentioned Ordinance;
the Certificate or Certificates of the above-entitled and designated series originally delivered having
been approved by the Attorney General of the State of Texas and registered by the Comptroller of
Public Accounts, as shown by the records of the Paying Agent/Registrar.
Registered this date:
THE BANK OF NEW YORK
as Paying Agent/Registrar
By.
Authorized Officer
#45059039vl - 14-
Eo
Form of Assignment.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Prim or
typewrite name, address, and zip code of transferee)'
(Social Security or other idemifying number)'
the within Certificate and all fights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Certificate on the
books kept for registration thereof, with full power of substitution in the premises.
DATED:
Signature guaranteed:
NOTICE' The signature on this assignment
must correspond with the name of the
registered owner as it appears on the face of
the within Certificate in every particular.
Fo
The Initial Certificate(s) shall be in the form set forth in paragraph B of this Section,
except that the form of a single fully registered Initial Certificate shall be modified as
follows:
(i) immediately under the name of the Certificate(s) the headings "Interest Rate and "Stated
Maturity shall both be completed "as shown below";
(ii) the first two paragraphs shall read as follows'
Registered Owner:
Principal Amount'
The City of Schertz, Texas (the City), a body corporate and municipal corporation in the
Coumies ofBexar, Comal, and Guadalupe, State of Texas, for value received, acknowledges itself
indebted to and hereby promises to pay to the order of the Registered Owner named above, or the
registered assigns thereof, the Principal Amount specified above stated to mature on the first day of
February in each of the years and in principal amounts and beating interest at per annum rates in
accordance with the following schedule'
#45059039vl - 15-
Year of Principal Interest
Stated Maturity Amoums ($) Rates (%)
(Information to be inserted
from schedule in Section 2 hereof)
(or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the
unpaid Principal Amounts hereof from the Certificate Date, or from the most recent interest payment
date to which interest has been paid or duly provided for, to the earlier of redemption or Stated
Maturity, at the per annum rates of interest specified above, computed on the basis of a 360-day year
of twelve 30-day months; such interest being payable on February 1 and August 1 of each year,
commencing February 1, 2002.
Principal of this Certificate shall be payable to the Registered Owner hereof (the Holder),
upon its presentation and surrender, at the corporate trust office of The Bank of New York, New
York, New York (the Paying Agent/Registrar). Interest shall be payable to the Holder of this
Certificate whose name appears on the Security Register maintained by the Paying Agent/Registrar
at the close of business on the Record Date, which is the fitteenth day of the month next preceding
each interest payment date. All payments of principal of and interest on this Certificate shall be in any
coin or currency of the United States of America which at the time of payment is legal tender for the
payment of public and private debts. Interest shall be paid by the Paying Agem/Registrar by check
sent on or prior to the appropriate date of payment by United States mail, first-class postage prepaid,
to the Holder hereof at the address appearing in the Security Register or by such other method,
acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder
hereof.
G. Insurance Legend. If bond insurance is obtained by the City or the Purchasers for the
Certificates, the Definitive Certificates and the Initial Certificate(s) shall bear an appropriate legend
as provided by the insurer.
SECTION 9. Definitions. For all purposes of this Ordinance (as defined below), except as
otherwise expressly provided or unless the context otherwise requires: the terms defined in this
Section have the meanings assigned to them in this Section, and certain terms used in Section 27 of
this Ordinance have the meanings assigned to them in Section 27 of this Ordinance, and all such
terms, include the plural as well as the singular; (ii) all references in this Ordinance to designated
"Sections" and other subdivisions are to the designated Sections and other subdivisions of this
Ordinance as originally adopted; and (iii) the words "herein", "hereof, and "hereunder" and other
words of similar import refer to this Ordinance as a whole and not to any particular Section or other
subdivision.
#45059039vl - 16-
(a)
(c)
(d)
(e)
(0
(g)
The term Additional Junior Lien Obligations shall mean (i) bonds, notes, warrants,
certificates of obligation or other evidences of indebtedness hereafter issued by the
City payable wholly or in part from and equally and ratably secured by a junior and
inferior lien and pledge of the Net Revenues of the System all as further provided in
Section 20 of this Ordinance and (ii) any obligations issued to refund the foregoing
that are payable from and secured by a junior lien on and pledge of the Net Revenues
of the System as determined by the City Council in accordance with any applicable
law.
The term Additional Limited Pledge Obligations shall mean (i) any bonds, notes,
warrants, certificates of obligation or other evidences of indebtedness hereafter issued
by the City payable wholly or in part from a pledge of and lien on Net Revenues of
the System which pledge of revenues is limited pursuant to Section 1502.052, as
amended, Texas Government Code or as required by the provisions of Texas Revised
Civil Statutes Annotated Article 1112, as amended (now repealed), all as further
provided in Section 20 of this Ordinance, and (ii) any obligations issued to refund the
foregoing as determined by the City Council in accordance with any applicable law.
The termAdditionalPrior Lien Obligations shall mean (i) any bonds, notes, warrants,
certificates of obligation, or other evidences of indebtedness which the City reserves
the fight to issue or enter into, as the case may be, in the furore under the terms and
conditions provided in Section 20 of this Ordinance and which are equally and ratably
secured solely by a prior and first lien on and pledge of the Net Revenues of the
System and (ii) obligations hereafter issued to refund any of the foregoing if issued
in a manner so as to be payable from and secured by a first lien on and pledge of the
Net Revenues as determined by the City Council in accordance with applicable law.
The term Certificates shall mean the $4,500,000 "CITY OF SCHERTZ, TEXAS
COMBINATION TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF
OBLIGATION, SERIES 2001" authorized by this Ordinance.
The term Certificate Fund shall mean the special Fund created and established by the
provisions of Section 10 of this Ordinance.
The term Certificate Insurer shall mean MBIA Insurance Corporation, or any
successor thereto or assignee thereof.
The term City shall mean the City of Schertz, located in Bexar, Comal, and Guadalupe
Counties, Texas and, where appropriate, the City Council of the City.
#45059039vl - 17-
(i)
(J)
The term Closing Date shall mean the date of physical delivery of the Initial
Certificates in exchange for the payment of the agreed purchase price for the
Certificates.
The term Collection Date shall mean, when reference is being made to the levy and
collection of annual ad valorem taxes, the date the annual ad valorem taxes levied
each year by the City become delinquent.
The term Debt Service Requirement shall mean, as of any particular date of
computation, with respect to any obligations and with respect to any period, the
aggregate of the amounts to be paid or set aside by the City as of such date or in such
period for the payment of the principal of, premium, if any, and interest (to the extent
not capitalized) on such obligations; assuming, in the case of obligations without a
fixed numerical rate, that such obligations bear interest at the maximum rate permitted
by the terms thereof and further assuming in the case of obligations required to be
redeemed or prepaid as to principal prior to Stated Maturity, the principal amounts
thereof will be redeemed prior to Stated Maturity in accordance with the mandatory
redemption provisions applicable thereto.
The term Depository shall mean an official depository bank of the City.
The term Fiscal Year shall mean the annual financial accounting period for the System
now ending on September 30th of each year; provided, however, the City Council
may change such annual financial accounting period to end on another date if such
change is found and determined to be necessary for accounting purposes or is
required by applicable law.
The term Government Securities, as used herein, shall mean (i) direct noncallable
obligations of the United States, including obligations that are unconditionally
guaranteed by, the United States of America; (ii) noncallable obligations of an agency
or instrumentality of the United States, including obligations that are unconditionally
guaranteed or insured by the agency or instrumentality and that, on the date the
governing body of the issuer adopts or approves the proceedings authorizing the
issuance of refunding bonds, are rated as to investment quality by a nationally
recognized investment rating firm not less than AAA or its equivalent; or
(iii) noncallable obligations of a state or an agency or a county, municipality, or other
political subdivision of a state that have been refunded and that, on the date the
governing body of the issuer adopts or approves the proceedings authorizing the
issuance of refunding bonds, are rated as to investment quality by a nationally
recognized investment rating firm not less than AAA or its equivalent.
#45059039vl - 18-
(n)
(o)
(P)
(q)
(r)
(s)
The term Gross Revenues for any period shall mean all revenue during such period
in respect or on account of the operation or ownership of the System, excluding
refundable meter deposits, restricted gifts, and grants in aid of construction, but
including earnings and income derived from the investment or deposit of money in any
special fund or accoum (except the Certificate Fund) created and established for the
payment or security of the Certificates.
The term Holder or Holders shall mean the registered owner, whose name appears
in the Security Register, for any Certificate.
The term Insurance Policy shall mean the municipal bond guaranty insurance policy
issued by the Certificate Insurer insuring the payment when due of the principal of and
interest on the Certificates as provided therein.
The term Interest Payment Date shall mean the date semiannual interest is payable on
the Certificates, being February 1 and August 1 of each year, commencing February 1,
2002, while any of the Certificates remain Outstanding.
The term Junior Lien Obligations shall mean (i) the outstanding and unpaid
obligations of the City that are payable, in part, from and equally and secured by a
junior and inferior lien on and pledge of the Net Revenues of the System and
designated as follows:
(1) "City of Schertz, Texas Combination Tax and
Junior Lien Revenue Certificates of Obligation, Series
1992", dated December 1, 1992, in the original
principal amoum of $200,000;
and (ii) obligations hereafter issued to refund any of the foregoing that are payable
from and equally and ratably secured by a junior and inferior lien on and pledge of the
Net Revenues of the System as determined by the City Council in accordance with
any applicable law.
The term Limited Pledge Obligations shall mean (i) the outstanding and unpaid
obligations of the City that are payable, in part, from and secured by a subordinate and
inferior lien on and pledge of a limited amount of the Net Revenues of the System and
designated as follows'
(1) "City of Schertz, Texas Combination Tax and Limited Pledge
Revenue Certificates of Obligation, Series 1990, dated February 1,
1990", in the original principal amount of $850,000;
#45059039vl - 19-
(t)
(u)
(v)
(w)
and (ii) obligations hereaiter issued to refund any of the foregoing as determined by
the City Council in accordance with any applicable law.
The term Maintenance and Operating Expenses shall mean all current expenses of
operating and maintaining the System not paid from the proceeds of the Certificates,
including (1) the cost of all salaries, labor, materials, repairs, and extensions necessary
to render efficient service, but only if, in the case of repairs and extensions, they are,
in the judgment of the City Council (reasonably and fairly exercised), necessary to
maintain operation of the System and render adequate service to the City and the
inhabitants thereof, or are necessary to meet some physical accident or condition
which would otherwise impair obligations payable from Net Revenues, (2) payments
to pension, retirement, health, hospitalization, and other employee benefit funds for
employees of the City engaged in the operation or maintenance of the System,
(3) payments under contracts for the purchase of water supply, treatment of sewage,
or other materials, goods, or services for the System to the extent authorized by law
and the provisions of such contract, (4) payments to auditors, attorneys, and other
consultants incurred in complying with the obligations of the City hereunder, and
(5) any legal liability of the City arising out of the operation, maintenance, or
condition of the System, but excluding any allowance for depreciation, property
retirement, depletion, obsolescence, and other items not requiting an outlay of cash
and any interest on the Certificates or other bonds, notes, warrants, or similar
obligations of the City payable from Net Revenues.
The term Net Revenues for any period shall mean the Gross Revenues of the System
less the Maintenance and Operating Expenses of the System.
The term Ordinance shall mean this ordinance as finally passed and adopted by the
City Council of the City.
The term Outstanding when used in this Ordinance with respect to Certificates shall
mean, as of the date of determination, all Certificates issued and delivered under this
Ordinance, except'
(1) those Certificates canceled by the Paying Agent/Registrar or delivered to the
Paying Agent/Registrar for cancellation;
(2) those Certificates for which payment has been duly provided by the City in
accordance with the provisions of Section 29 of this Ordinance; and
(3) those Certificates that have been mutilated, destroyed, lost, or stolen and
replacemem Certificates have been registered and delivered in lieu thereof as provided
in Section 25 of this Ordinance.
#45059039vl -20-
(x)
(y)
(z)
(aa)
(ab)
(ac)
The term Pledged Revenues shall mean, while the Certificates remain Outstanding,
an amount of Net Revenues not in excess of $1,000. The Pledged Revenues shall be
deposited, allocated, and expended in accordance with Section 10 of this Ordinance.
The termPledgedRevenue Amount shall mean the total amount, not to exceed $1,000
while the Certificates are Outstanding, of Net Revenues that may be transferred in
whole or in part by the City in any given Fiscal Year (however, any amounts
transferred prior to the final maturity date of the Certificates may not exceed the total
amount of $1,000) to the Certificate Fund.
The term Prior Lien Obligations shall mean (i) the outstanding and unpaid obligations
of the City that are payable from and equally and secured solely by a first and prior
lien on and pledge of the Net Revenues of the System and designated as follows:
(1) "City of Schertz, Texas Utility System Revenue
and Refunding Bonds, Series 2001", dated April 1,
2001, in the original principal amount of $5,550,000;
and (ii) obligations hereafter issued to refund any of the foregoing that are payable
from and equally and ratably secured by a first and prior lien on and pledge of the Net
Revenues of the System as determined by the City Council in accordance with any
applicable law.
The term Purchasers shall mean the initial purchaser or purchasers of the Certificates
named in Section 26 of this Ordinance.
The term StatedMaturity shall mean the annual principal payments of the Certificates
payable on February 1 of each year the Certificates are Outstanding as set forth in
Section 2 of this Ordinance.
The term Subordinate Lien Obligations shall mean (i) any bonds, notes, warrants,
certificates of obligation, or any similar obligations hereafter issued by the City that
are payable, in whole or in part, from and secured by a lien on and pledge of the Net
Revenues of the System, such pledge being subordinate and inferior to the lien on and
pledge of the Net Revenues of the System that is or may be pledged to the payment
of the currently outstanding Prior Lien Obligations and Junior Lien Obligations or
any Additional Prior Lien Obligations or Additional Junior Lien Obligations hereafter
issued by the City, but prior and superior to the lien on and pledge of the Pledged
Revenues securing, in part, the payment of the currently outstanding Limited Pledge
Obligations, the Certificates, or any Additional Limited Pledge Obligations hereafter
issued by the City, all as further provided in Section 20 of this Ordinance and
(ii) obligations hereafter issued to refund any of the foregoing that are payable from
#45059039vl -21-
and equally and ratably secured by a subordinate and inferior lien on and pledge of the
Net Revenues as determined by the City Council in accordance with any applicable
law.
(ad)
The term System shall mean all properties, facilities, and plants currently owned,
operated, and maintained by the City for the supply, treatment, transmission, and
distribution of treated potable water and the collection, treatment, and disposal of
waterborne wastes together with all future extensions, improvements, and additions
thereto and replacements thereof, excluding from the foregoing, however, to the
extent now or hereafter authorized or permitted by law, facilities of any kind which
are declared by the City Council, prior to the acquisition or construction thereof by
the City, not to be a part of the System and which are not acquired or constructed by
or on behalf of the City with Net Revenues of the System or any part thereof or with
proceeds from the issuance of obligations of the City which are payable from Net
Revenues of the System or any part thereof.
SECTION 10. Certificate Fund, Investments. For the purpose of paying the interest
on and to provide a sinking fund for the payment, redemption, and retirement of the Certificates, there
shall be and is hereby created a special fund to be designated "COMBINATION TAX AND
LIMITED PLEDGE RE~~ CERTIFICATES OF OBLIGATION, SERIES 2001, INTE~ST
AND SINKING FUND" (the Certificate Fund), which fund shall be kept and maintained at the
Depository, and money deposited in such fund shall be used for no other purpose and shall be
maintained as provided in Section 27. Authorized officials of the City are hereby authorized and
directed to make withdrawals from said fund sufficient to pay the principal of and interest on the
Certificates as the same become due and payable and shall cause to be transferred to the Paying
Agent/Registrar from money on deposit in the Certificate fund an amount sufficient to pay the amount
of principal and/or interest falling due on the Certificates, such transfer of funds to the Paying
Agent/Registrar to be made in such manner as will cause immediately available funds to be deposited
with the Paying Agent/Registrar on or before the last business day next preceding each interest and
principal payment date for the Certificates.
The City, at its sole discretion, may deposit the Pledged Revenue Amount to the certificate
Fund. The Pledged Revenue Amount, if deposited, shall be expended annually to pay principal of and
interest on the Certificates as the same become due and payable. This Pledged Revenue Amount shall
be accounted for and transferred to the Paying Agent/Registrar in accordance with the provisions of
the previous paragraph of this Section.
Pending the transfer of funds to the Paying Agent/Registrar, money in any fund established
by this Ordinance may, at the option of the City, be placed in time deposits or certificates of deposit,
as permitted by the provisions of the Public Funds Investment Act, as amended, Chapter 2256, Texas
Government Code, secured (to the extent not insured by the Federal Deposit Insurance Corporation)
by obligations of the type hereinafter described, or be invested, as authorized by any law, including
#45059039vl -22-
investments held in book-entry form, in securities, including, but not limited to, direct obligations of
the United States of America, obligations guaranteed or insured by the United States of America,
which, in the opinion of the Attorney General of the United States, are backed by its full faith and
credit or represent its general obligations, or invested in indirect obligations of the United States of
America, including, but not limited to, evidences of indebtedness issued, insured or guaranteed by
such governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks, Banks
for Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, Farmers
Home Administration, Federal Home Loan Mortgage Association, or Federal Housing Association;
provided that all such deposits and investments shall be made in such a manner that the money
required to be expended from such fund will be available at the proper time or times. All interest and
income derived from deposits and investments in any fund established pursuant to the provisions of
this Ordinance shall be credited to, and any losses debited to, such fund. All such investments shall
be sold promptly when necessary to prevent any default in connection with the Certificates.
SECTION 11. Tax Levy.. To provide for the payment of the Debt Service
Requirements on the Certificates being the interest on the Certificates and (ii) a sinking fund for their
redemption at Stated Maturity or a sinking fund of 2% (whichever amount shall be the greater), there
shall be and there is hereby levied for the current year and each succeeding year thereafter while the
Certificates or any interest thereon shall remain Outstanding, a sufficient tax on each one hundred
dollars valuation of taxable property in the City, adequate to pay such Debt Service Requirements,
full allowance being made for delinquencies and COSotS of collection; said tax shall be assessed and
collected each year and applied to the payment of the Debt Service Requirements, and the same shall
not be diverted to any other purpose. The taxes so levied and collected shall be paid into the
Certificate Fund. The City Council hereby declares its purpose and intent to provide and levy a tax
legally and fully sufficient to pay the said Debt Service Requirements, it having been determined that
the existing and available taxing authority of the City for such purpose is adequate to permit a legally
sufficient tax in consideration of all other outstanding indebtedness.
The amoum of taxes to be provided annually for the payment of the principal of and interest
on the Certificates shall be determined and accomplished in the following manner:
A. Prior to the date the City Council establishes the annual tax rate and passes an
ordinance levying ad valorem taxes each year, the City Council shall determine'
(1) the amount of Debt Service Requirements to become due and payable on the
Certificates between the Collection Date for the taxes then to be levied and the Collection
Date for the taxes to be levied during the next succeeding calendar year;
(2) the amount on deposit in the Certificate Fund after (a) deducting therefrom
the total amount of Debt Service Requirements to become due on Certificates prior to the
Collection Date for the ad valorem taxes to be levied and (b) adding thereto the amount of
the Pledged Revenues, if any, to be appropriated and allocated during such year to pay such
#45059039vl -23-
Debt Service Requirements, if any, prior to the Collection Date for the ad valorem taxes to
be levied; and
(3) the amount of Pledged Revenues, if any, to be appropriated and to be set aside
for the payment of the Debt Service Requirements on the Certificates between the Collection
Date for the taxes then to be levied and the Collection Date for the taxes to be levied during
the next succeeding Fiscal Year.
B. The amount of taxes to be levied annually each year to pay the Debt Service
Requiremems on the Certificates shall be the amoum established in paragraph (1) above less the sum
total of the amounts established in paragraphs (2) and (3), after taking into consideration
delinquencies and costs of collecting such annual taxes.
SECTION 12. Pledge of Revenues. The City hereby covenants and agrees that, subject
to any prior lien on and pledge of the Net Revenues of the System to the payment and security of
the (i) currently outstanding Prior Lien Obligations and Junior Lien Obligations and any Additional
Prior Lien Obligations, Additional Junior Lien Obligations, or Subordinate Lien Obligations hereafter
issued by the City or (ii) currently outstanding Limited Pledge Obligations, the Pledged Revenues are
hereby irrevocably pledged to the payment of the principal of and interest on the Certificates and the
pledge of the Pledged Revenues herein made for the payment of the Certificates shall constitute a lien
on the Pledged Revenues in accordance with the terms and provisions hereof and be valid and binding
without any physical delivery thereof or further act by the City.
SECTION 13. System Fund. The City hereby covenants and agrees that all Gross Revenues
derived from the operation of the System shall be kept separate and apart from all other funds,
accounts and money of the City and shall be deposited as collected into the "CITY OF SCHERTZ,
TEXAS UTILITY SYSTEM FUND" (the System Fund). All money deposited in the System Fund
shall be pledged and appropriated to the extent required for the following purposes and in the order
of priority shown:
First' To the payment of the reasonable and proper Maintenance and Operating
Expenses of the System required by statute or ordinances authorizing the issuance of
any indebtedness of the City to be a first charge on and claim against the Gross
Revenues of the System;
Second: To the payment of the amounts that must be deposited in the special funds
and accounts created and established for the payment, security, and benefit of the
currently outstanding Prior Lien Obligations and any Additional Prior Lien
Obligations hereafter issued by the City;
Third' To the payment of the amounts that must be deposited in the special funds and
accounts created and established for the payment, security, and benefit of the
#45059039vl
-24-
currently outstanding Junior Lien Obligations and any Additional Junior Lien
Obligations hereafter issued by the City;
Fourth: To the payment of the amounts that must be deposited in the special funds
and accounts created and established for the payment, security, and benefit of any
Subordinate Lien Obligations hereafter issued by the City;
Fifth: To the payment of the amounts that may be deposited in the special funds and
accounts established for the payment of the currently outstanding Limited Pledge
Obligations, the Certificates, and any Additional Limited Pledge Obligations hereafter
issued by the City.
Any Net Revenues remaining in the System Fund after satisfying the foregoing payments, or
making adequate and sufficient provision for the payment, security and benefit thereof, may be
appropriated and used for any other City purpose now or hereafter permitted by law.
SECTION 14. Deposits to Certificate Fund, Excess Certificate Proceeds. The City
hereby covenants and agrees to cause to be deposited in the Certificate Fund prior to a principal and
interest payment date for the Certificates, from the Pledged Revenues in the System Fund, after the
deduction of all payments required to be made to the special funds or accounts created for the
payment, security, and benefit of the currently outstanding Prior Lien Obligations and Junior Lien
Obligations and any Additional Prior Lien Obligations, Additional Junior Lien Obligations, or
Subordinate Lien Obligations hereafter issued by the City, any amounts budgeted to be paid therefrom
in such Fiscal Year.
Accrued interest and premium, if any, received from the Purchasers of the Certificates shall
be deposited to the Certificate Fund and ad valorem taxes levied and collected for the benefit of the
Certificates shall be deposited to the Certificate Fund. In addition, any surplus proceeds, including
investment income therefrom, from the sale of the Certificates not expended for authorized purposes
shall be deposited in the Certificate Fund, and such amounts so deposited shall reduce the sums
otherwise required to be deposited in said fund from ad valorem taxes.
SECTION 15. Security of Funds. All money on deposit in the funds for which this
Ordinance makes provision (except any portion thereof as may be at any time properly invested as
provided herein) shall be secured in the manner and to the fullest extent required by the laws of Texas
for the security of public funds, and money on deposit in such funds shall be used only for the
purposes permitted by this Ordinance.
SECTION 16. Maintenance of System- Insurance. The City covenants and agrees that
while the Certificates remain Outstanding it will maintain and operate the System with all possible
efficiency and maintain casualty and other insurance (including a system of self-insurance) on the
properties of the System and its operations of a kind and in such amounts customarily carded by
#45059039vl -25-
municipal corporations in the State of Texas engaged in a similar type of business and that it will
faith~lly and punctually perform all duties with reference to the System required by the laws of the
State of Texas. All money received from losses under such insurance policies, other than public
liability policies, are held for the benefit of the holders of the Certificates until and unless the proceeds
are paid out in making good the loss or damage in respect of which such proceeds are received, either
by replacing the property destroyed or repairing the property damaged, and adequate provision for
making good such loss or damage must be made within ninety (90) days at, er the date of loss. The
payment of premiums for all insurance policies required under the provisions hereof shall be
considered Maintenance and Operating Expenses. 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 17. Rates and Charges. The City hereby covenants and agrees with the
Holders of the Certificates that rates and charges for utility services afforded by the System will be
established and maintained to provide Gross Revenues sufficient at all times:
A. to pay all operating, maintenance, depreciation, replacement, betterment, and other
costs incurred in the maintenance and operation of the System, including, but not limited to,
Maintenance and Operating Expenses;
B. to produce Net Revenues sufficient, together with any other lawfially available funds,
to pay (i) the interest on and principal of the currently outstanding Prior Lien Obligations and any
Additional Prior Lien Obligations hereafter issued by the City as the same becomes due and payable
and the amounts required to be deposited in any special fund created and established for the payment,
security, and benefit thereof, (ii) the interest on and principal of the currently outstanding Junior Lien
Obligations and any Additional Junior Lien Obligations hereafter issued by the City as the same
becomes due and payable and the amounts required to be deposited in any special fund created and
established for the paymem, security, and benefit thereof, (iii) the interest on and principal of any
Subordinate Lien Obligations hereafter issued by the City as the same becomes due and payable and
the amounts required to be deposited in any special fund created and established for the payment,
security, and benefit thereof, and (iv) the amounts that may be deposited in the special funds
established for the payment of the Limited Pledge Obligations, the Certificates, or any Additional
Limited Pledge Obligations hereafter issued by the City; and
C. to pay other legally incurred indebtedness payable from the Net Revenues of the
System and/or secured by a lien on the System or the Net Revenues thereof.
SECTION 18. Records and Accounts - Annual Audit. The City further covenants and
agrees that so long as any of the Certificates remain Outstanding it will keep and maintain separate
and complete records and accounts pertaining to the operations of the System in which complete and
correct entries shall be made of all transactions relating thereto, as provided by Chapter 1502, as
amended, Texas Government Code or other applicable law. The Holders of the Certificates or any
#45059039vl -26-
duly authorized agent or agents of the Holders shall have the fight to inspect the System and all
properties comprising the same. The City further agrees that, following the close of each Fiscal Year,
it will cause an audit of such books and accounts to be made by an independent firm of Certified
Public Accountants. Copies of each annual audit shall be furnished to the Executive Director of the
Municipal Advisory Council of Texas at his office in Austin, Texas, and, upon written request, to the
Purchasers of the Certificates and any subsequent holder thereof. Expenses incurred in making the
annual audit of the operations of the System are to be regarded as Maintenance and Operating
Expenses.
SECTION 19. Remedies in Event of Default. In addition to all the fights 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 the payments to be made to the Certificate Fund, or (b) defaults in the
observance or performance of any other of the covenants, conditions, or obligations set forth in this
Ordinance, the Holders of any of the Certificates shall be entitled to seek a writ of mandamus issued
by a court of proper jurisdiction compelling and requiting the governing body of the City and other
officers of the City to observe and perform any covenant, condition, or obligation prescribed in this
Ordinance.
No delay or omission to exercise any fight 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 acquiescence
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 20. Issuance of Additional Prior Lien Obligations, Additional Junior Lien
Obligations, Subordinate Lien Obligations and Additional Limited Pledge Obligations. The City
hereby expressly reserves the fight to hereafter issue bonds, notes, warrants, certificates of obligation,
or similar obligations, payable, wholly or in part, as appropriate, from and secured by a pledge of and
lien on the Net Revenues of the System with the following priorities, without limitation as to principal
amount, but subject to any terms, conditions, or restrictions applicable thereto under existing
ordinances, laws, or otherwise:
A. Additional Prior Lien Obligations payable from and equally and ratably secured by a
first and prior lien on and pledge of the Net Revenues of the System;
B. Additional Junior Lien Obligations payable from and equally and ratably secured by
a lien on and pledge of the Net Revenues that is junior and inferior to the lien on and pledge thereof
securing the payment of the currently outstanding Prior Lien Obligations and any Additional Prior
Lien Obligations hereafter issued by the City, but prior and superior to the lien on and pledge of the
Net Revenues securing, in part, the payment of the currently outstanding Limited Pledge Obligations,
the Certificates, and any Subordinate Lien Obligations or Additional Limited Pledge Obligations
hereat~er issued by the City; and
#45059039vl -27-
C. Subordinate Lien Obligations payable from and equally and ratably secured by a lien
on and pledge of the Net Revenues that is subordinate and inferior to the lien on and pledge thereof
securing the payment of the currently outstanding Prior Lien Obligations and Junior Lien Obligations
and any Additional Prior Lien Obligations or Additional Junior Lien Obligations hereafter issued by
the City, but prior and superior to the lien on and pledge of the Net Revenues securing, in part, the
payment of the currently outstanding Limited Pledge Obligations, the Certificates, and any Additional
Limited Pledge Obligations hereat~er issued by the City; and
D. Additional Limited Pledge Obligations secured by a lien on and pledge of a limited
amount of the Net Revenues in accordance with the provisions of the following paragraph.
Additional Prior Lien Obligations, Additional Junior Lien Obligations, and Subordinate Lien
Obligations, if issued, may be payable, in whole or in part, from Net Revenues (without impairment
of the obligation of contract with the Holders of the Limited Pledge Obligations or the Certificates)
upon such terms and conditions as the City Council may determine. Additional Limited Pledge
Obligations, if issued and payable, in whole or in part, from Pledged Revenues shall not in any event
be construed to be payable from the Pledged Revenues authorized by the ordinance authorizing the
issuance of the Certificates. However, the lien on and pledge of the limited amount of Net Revenues
securing, in part, the payment of any Additional Limited Pledge Obligations shall be subordinate and
inferior to the pledge of and lien on the Net Revenues securing the payment of the currently
outstanding Prior Lien Obligations and Junior Lien Obligations and any Additional Prior Lien
Obligations, Additional Junior Lien Obligations, or Subordinate Lien Obligations hereafter issued by
the City.
SECTION 21.
Special Covenants. The City hereby further covenants that'
A. it has the lawfial power to pledge the Pledged Revenues supporting the Certificates
and has lawfully exercised said powers under the laws of the State of Texas, including power existing
under Chapter 1502, as amended, Texas Government Code, the Certificate of Obligation Act of 1971,
as amended, Local Government Code, Section 271.041 through Section 271.063, and the City's
Home Rule Charter.
B. other than for the paymem of the currently outstanding Prior Lien Obligations, the
Junior Lien Obligations, the Limited Pledge Obligations, and the Certificates, the Net Revenues of
the System have not in any manner been pledged to the paymem of any debt or obligation of the City
or of the System;
C. as long as any Certificates or any interest thereon remain Outstanding, the City will
not sell, lease or encumber (except in the manner provided in Section 20 of this Ordinance) the
System or any substantial part thereof, provided that this covenant shall not be construed to prohibit
the sale of such machinery, or other properties or equipment which has become obsolete or otherwise
unsuited to the efficient operation of the System;
#45059039vl -28-
D. to the extent that it legally may, the City further covenants and agrees that, so long
as any of the Certificates, or any imerest thereon, are Outstanding, no franchise shall be granted for
the installation or operation of any competing utility systems other than those owned by the City, and
the operation of any such systems by anyone other than the City is hereby prohibited; and
E. 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 income
of the System.
SECTION 22. Application of the Covenants and Agreements of the Prior Lien
Obligations, Junior Lien Obligations, or Subordinate Lien Obligations. It is the intention of the City
Council and accordingly hereby recognized and stipulated that the provisions, agreements, and
covenants contained herein beating upon the management and operations of the System, and the
administering and application of Gross Revenues derived from the operation thereof, shall to the
extent possible be harmonized with like provisions, agreements, and covenants contained in the
ordinances authorizing the issuance of the currently outstanding Prior Lien Obligations and Junior
Lien Obligations and any Additional Prior Lien Obligations, Additional Junior Lien Obligations, or
Subordinate Lien Obligations hereafter issued by the City, and to the extem of any irreconcilable
conflict between the provisions contained herein and in the ordinances authorizing the issuance of the
currently outstanding Prior Lien Obligations and Junior Lien Obligations and any Additional Prior
Lien Obligations, Additional Junior Lien Obligations or Subordinate Lien Obligations, the provisions,
agreements and covenants contained therein shall prevail to the extent of such conflict and be
applicable to this Ordinance, especially the priority of fights and benefits conferred thereby to the
Holders of the currently outstanding Prior Lien Obligations and Junior Lien Obligations and any
Additional Prior Lien Obligations, Additional Junior Lien Obligations, or Subordinate Lien
Obligations hereafter issued by the City. It is expressly recognized that prior to the issuance of any
Additional Prior Lien Obligations, Additional Junior Lien Obligations, or Subordinate Lien
Obligations, the City must comply with each of the conditions precedent contained in the ordinances
authorizing the issuance of the currently outstanding Prior Lien Obligations and Junior Lien
Obligations, as appropriate.
SECTION 23. Notices to Holders, Waiver. Wherever this Ordinance provides for
notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and sent by United States mail, first-class postage prepaid, to the
address of each Holder as it appears in the Security Register.
In any case where notice to Holders is given by mail, neither the failure to mail such notice
to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of such
notice with respect to all other Holders. Where this Ordinance provides for notice in any manner,
such notice may be waived in writing by the Holder entitled to receive such notice, either before or
after the event with respect to which such notice is given, and such waiver shall be the equivalent of
#45059039vl -29-
such notice. Waivers of notice by Holders shall be filed with the Paying Agent/Registrar, but such
filing shall not be a condition precedent to the validity of any action taken in reliance upon such
waiver.
SECTION 24. Cancellation. All Certificates surrendered for payment, transfer,
exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly canceled
by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not
already canceled, shall be promptly canceled by the Paying Agent/Registrar. The City may at any time
deliver to the Paying Agent/Registrar for cancellation any Certificates previously certified or
registered and delivered which the City may have acquired in any manner whatsoever, and all
Certificates so delivered shall be promptly canceled by the Paying Agent/Registrar. All canceled
Certificates held by the Paying Agent/Registrar shall be destroyed as directed by the City.
SECTION 25. Mutilated, Destroyed, Lost, and Stolen Certificates. If(l) any mutilated
Certificate is surrendered to the Paying Agent/Registrar, or the City and the Paying Agent/Registrar
receive evidence to their satisfaction of the destruction, loss, or theft of any Certificate, and (2) there
is delivered to the City and the Paying Agent/Registrar such security or indemnity as may be required
to save each of them harmless, then, in the absence of notice to the City or the Paying
Agent/Registrar that such Certificate has been acquired by a bona fide purchaser, the City shall
execute and, upon its request, the Paying Agent/Registrar shall register and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost, or stolen Certificate, a new Certificate of the same
Stated Maturity and interest rate and of like tenor and principal amount, beating a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost, or stolen Certificate has become or is about to
become due and payable, the City in its discretion may, instead of issuing a new Certificate, pay such
Certificate.
Upon the issuance of any new Certificate or paymem in lieu thereof, under this Section, the
City may require payment by the Holder of a sum sufficient to cover any tax or other govemmemal
charge imposed in relation thereto and any other expenses (including attorney's fees and the fees and
expenses of the Paying Agent/Registrar) connected therewith.
Every new Certificate issued pursuant to this Section in lieu of any mutilated, destroyed, lost,
or stolen Certificate shall constitute a replacement of the prior obligation of the City, whether or not
the mutilated, destroyed, lost, or stolen Certificate shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding
Certificates.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other
rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost, or
stolen Certificates.
#45059039vl -30-
SECTION 26. Sale of the Certificates; Use of Certificate Proceeds. The sale of the
Certificates to Morgan Stanley DW Inc. (the Purchasers and having all the fights, benefits, and
obligations of a Holder) at the price of par, plus accrued interest to the date of delivery, is hereby
confirmed. The Initial Certificate shall be registered in the name of Morgan Stanley DW Inc. The
Certificates were awarded to the bidder whose bid produced the lowest net interest cost to the City.
Delivery of the Certificates to the Purchasers shall occur as soon as practicable after the adoption of
this Ordinance, upon payment therefor in accordance with the terms of sale.
Proceeds from the sale of the Certificates shall be applied as follows:
(1) Accrued interest and premium, if any, received from the Purchasers shall be deposited
into the Certificate Fund.
(2) The balance of the proceeds derived from the sale of the Certificates (after paying
costs of issuance) shall be deposited into the special construction account or accounts created for the
projects to be constructed with the proceeds of the Certificates. This special construction account
shall be established and maintained at the City's Depository and shall be invested in accordance with
the provisions of Section 10 of this Ordinance. Interest earned on the proceeds of the Certificates
pending completion of construction of the projects financed with such proceeds shall be accounted
for, maintained, deposited, and expended as permitted by the provisions of Chapter 1201, as
amended, Texas Government Code, or as required by any other applicable law. Thereafter, such
amounts shall be expended in accordance with Section 14 of this Ordinance.
SECTION 27.
Covenants to Maintain Tax-Exempt Stares.
Ao
meanings'
Definitions.
When used in this Section, the following terms have the following
"Code" means the Internal Revenue Code of 1986, as amended by all legislation, if
any, effective on or before the Closing Date.
"Computation Date" has the meaning set forth in Section 1.148-1(b) of the
Regulations.
"Gross Proceeds" means any proceeds as defined in Section 1.148-1(b) of the
Regulations, and any replacement proceeds as defined in Section 1.148-1(c) of the
Regulations, of the Certificates.
"Investment" has the meaning set forth in Section 1.148-1 (b) of the Regulations.
#45059039vl -31-
"Nonpurpose Investment" means any investment property, as defined in
section 148(b) of the Code, in which Gross Proceeds of the Certificates are invested and
which is not acquired to carry out the governrnental purposes of'the Certificates.
"Rebate Amount" has the meaning set forth in Section 1.148-1 (b) of the Regulations.
"Regulations" means any proposed, temporary, or final Income Tax Regulations
issued pursuant to Sections 103 and 141 through 150 of the Code, and 103 of the Internal
Revenue Code of 1954, which are applicable to the Certificates. Any reference to any specific
Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax
Regulation designed to supplement, amend or replace the specific Regulation referenced.
"YieM" of
(1) any Investment has the meaning set forth in Section 1.148-5 of the
Regulations; and
(2)
Regulations.
the Certificates has the meaning set forth in Section 1.148-4 of the
B. Not to Cause Interest to Become Taxable. The City shall not use, permit the use of,
or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction
or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner
which if made or omitted, respectively, would cause the interest on any Certificate to become
includable in the gross income, as defined in section 61 of the Code, of the owner thereof for federal
income tax purposes. Without limiting the generality of the foregoing, unless and until the City
receives a written opinion of counsel nationally recognized in the field of municipal bond law to the
effect that failure to comply with such covenant will not adversely affect the exemption from federal
income tax of the interest on any Certificate, the City shall comply with each of the specific covenants
in this Section.
C. No Private Use or Private Payments. Except to the extent that it will not cause the
Certificates to become "private activity bonds" within the meaning of section 141 of the Code and
the Regulations and rulings thereunder, the City shall at all times prior to the last Stated Maturity of
Certificates:
(1) exclusively own, operate and possess all property the acquisition, construction
or improvement of which is to be financed or refinanced directly or indirectly with Gross
Proceeds of the Certificates, and not use or permit the use of such Gross Proceeds (including
all contractual arrangements with terms different than those applicable to the general public)
or any property acquired, constructed or improved with such Gross Proceeds in any activity
carded on by any person or entity (including the United States or any agency, department and
#45059039vl -32-
instrumentality thereof) other than a state or local government, unless such use is solely as a
member of the general public; and
(2) not directly or indirectly impose or accept any charge or other payment by any
person or entity who is treated as using Gross Proceeds of the Certificates or any property
the acquisition, construction or improvement of which is to be financed or refinanced directly
or indirectly with such Gross Proceeds, other than taxes of general application within the City
or interest earned on investments acquired with such Gross Proceeds pending application for
their intended purposes.
D. No Private Loan. Except as would not cause the Certificates to become "private
activity bonds" within the meaning of section 141 of the Code and the Regulations and rulings
thereunder, the City shall not use Gross Proceeds of the Certificates to make or finance loans to any
person or entity other than a state or local government. For purposes of the foregoing covenant, such
Gross Proceeds are considered to be "loaned" to a person or entity if- (1) property acquired,
constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a
transaction which creates a debt for federal income tax purposes; (2) capacity in or service from such
property is committed to such person or entity under a take-or-pay, output or similar contract or
arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds
or any property acquired, constructed or improved with such Gross Proceeds are otherwise
transferred in a transaction which is the economic equivalent of a loan.
E. Not to Invest at Higher Yield. Except as would not cause the Certificates to become
"arbitrage bonds" within the meaning of section 148 of the Code and the Regulations and rulings
thereunder, the City shall not at any time prior to the final Stated Maturity of the Certificates directly
or indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield of
any Investment acquired with Gross Proceeds, whether then held or previously disposed of, materially
exceeds the Yield of the Certificates.
F. Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the
Code and the Regulations and rulings thereunder, the City shall not take or omit to take any action
which would cause the Certificates to be federally guaranteed within the meaning of section 149(b)
of the Code and the Regulations and rulings thereunder.
G. Information Ret)ort. The City shall timely file the information required by section
149(e) of the Code with the S~cretary of the Treasury on Form 8038-G or such other form and in
such place as the Secretary may prescribe.
H. Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(f)
of the Code and the Regulations and rulings thereunder:
#45059039vl -33-
(1) The City shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from all
other funds (and receipts, expenditures and investments thereof) and shall retain all records
of accounting for at least six years at~er the day on which the last Outstanding Certificate is
discharged. However, to the extent permitted by law, the City may commingle Gross
Proceeds of the Certificates with other money of the City, provided that the City separately
accounts for each receipt and expenditure of Gross Proceeds and the obligations acquired
therewith.
(2) Not less frequently than each Computation Date, the City shall calculate the
Rebate Amount in accordance with roles set forth in section 48(f) of the Code and the
Regulations and rulings thereunder. The City shall maintain such calculations with its official
transcript of proceedings relating to the issuance of the Certificates until six years after the
final Computation Date.
(3) As additional consideration for the purchase of the Certificates by the
Purchasers and the loan of the money represented thereby and in order to induce such
purchase by measures designed to insure the excludability of the interest thereon from the
gross income of the owners thereof for federal income tax purposes, the City shall pay to the
United States out of the Certificate Fund or its general fund, as permitted by applicable Texas
statute, regulation or opinion of the Attorney General of the State of Texas, the amount that
when added to the future value of previous rebate payments made for the Certificates equals
in the case of a Final Computation Date as defined in Section 1. 1453(e)(2) of the
Regulations, one hundred percent (100%) of the Rebate Amount on such date; and in the case
of any other Computation Date, ninety percent (90%) of the Rebate Amount on such date.
In all cases, the rebate payments shall be made at the times, in the installments, to the place
and in the manner as is or may be required by section 148(0 of the Code and the Regulations
and rulings thereunder, and shall be accompanied by Form 8038-T or such other forms and
information as is or may be required by Section 148(0 of the Code and the Regulations and
rulings thereunder.
(4) The City shall exercise reasonable diligence to assure that no errors are made
in the calculations and payments required by paragraphs (2) and (3), and if an error is made,
to discover and promptly correct such error within a reasonable amount of time thereafter
(and in all events within one hundred eighty (180) days at~er discovery of the error), including
payment to the United States of any additional Rebate Amount owed to it, interest thereon,
and any penalty imposed under Section 1.148-3(h) of the Regulations.
I. Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the
Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the earlier
of the Stated Maturity or final payment of the Certificates, enter into any transaction that reduces the
amount required to be paid to the United States pursuant to Subsection H of this Section because
#45059039vl -34-
such transaction results in a smaller profit or a larger loss than would have resulted if the transaction
had been at arm's length and had the Yield of the Certificates not been relevant to either party.
Certificates Not Hedge Certificates.
(1) The City reasonably expects to spend at least 85% of the spendable proceeds
of the Certificates within three years after such Certificates are issued.
(2) Not more than 50% of the proceeds of the Certificates will be invested in
Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years or
more.
K. Elections. The City hereby directs and authorizes the Mayor, Mayor Pro Tem, City
Manager, City Secretary, or City Attorney, either or any combination of them, to make elections
permitted or required pursuant to the provisions of the Code or the Regulations, as they deem
necessary or appropriate in connection with the Certificates, in the Certificate as to Tax Exemption
or similar or other appropriate certificate, form or document.
SECTION 28. Control and Custody of Certificates. The Mayor of the City shall be
and 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 Certificates pending their approval by the Attorney General, the registration thereof
by the Comptroller of Public Accounts and the delivery of the Certificates to the Purchasers.
Furthermore, the Mayor, Mayor Pro Tem, City Manager, City Secretary, or City Attorney,
either or all, are hereby authorized and directed to furnish and execute such documents relating to
the City and its financial affairs as may be necessary for the issuance of the Certificates, the approval
of the Attorney General and their registration by the Comptroller of Public Accounts and, together
with the City's financial advisor, bond counsel, and the Paying Agent/Registrar, make the necessary
arrangements for the delivery of the Initial Certificate to the Purchasers and the initial exchange
thereof for definitive Certificates.
SECTION 29. Satisfaction of Obligation of City. If the City shall pay or cause to be
paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest
on the Certificates, at the times and in the manner stipulated in this Ordinance, then the pledge of
taxes levied and the lien on and pledge of the Pledged Revenues under this Ordinance and all
covenants, agreements, and other obligations of the City to the Holders shall thereupon cease,
terminate, and be discharged and satisfied.
Certificates, or any principal amount(s) thereof, shall be deemed to have been paid within the
meaning and with the effect expressed above in this Section when (i) money sufficient to pay in full
such Certificates or the principal amount(s) thereof at Stated Maturity or to the redemption date
#45059039vl -35-
therefor, together with all interest due thereon, shall have been irrevocably deposited with and held
in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Securities
shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an authorized
escrow agent, which Government Securities have been certified by an independent accounting firm
to mature as to principal and interest in such amoums and at such times as will insure the availability,
without reinvestment, of sufficient money, together with any money deposited therewith, if any, to
pay when due the principal of and interest on such Certificates, or the principal amount(s) thereof,
on and prior to the Stated Maturity thereof or (if notice of redemption has been duly given or waived
or if irrevocable arrangements therefor acceptable to the Paying Agent/Registrar have been made)
the redemption date thereof. The City covenants that no deposit of money or Government Securities
will be made under this Section and no use made of any such deposit which would cause the
Certificates to be treated as arbitrage bonds within the meaning of section 148 of the Code (as defined
in Section 27 hereof).
Any money so deposited with the Paying Agent/Registrar, and all income from Government
Securities held in trust by the Paying Agent/Registrar, or an authorized escrow agent, pursuant to this
Section which is not required for the payment of the Certificates, or any principal amount(s) thereof,
or interest thereon with respect to which such money has been so deposited shall be remitted to the
City or deposited as directed by the City. Furthermore, any money held by the Paying Agent/Registrar
for the payment of the principal of and interest on the Certificates and remaining unclaimed for a
period of four (4) years after the Stated Maturity of the Certificates or applicable redemption date,
such money was deposited and is held in trust to pay shall upon the request of the City be remitted
to the City against a written receipt therefor, subject to the unclaimed property laws of the State of
Texas.
Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided
that any determination not to redeem defeased Certificates that is made in conjunction with the
payment arrangements specified in subsection (i) or (ii) above shall not be irrevocable, provided that'
(1) in the proceedings providing for such defeasance, the City expressly reserves the fight to call the
defeased Certificates for redemption; (2) gives notice of the reservation of that fight to the owners
of the defeased Certificates immediately following the defeasance; (3) directs that notice of the
reservation be included in any redemption notices that it authorizes; and (4) at the time of the
redemption, satisfies the conditions of (i) or (ii) above with respect to such defeased debt as though
it was being defeased at the time of the exercise of the option to redeem the defeased Certificates,
at~er taking the redemption into account in determining the sufficiency of the provisions made for the
payment of the defeased Certificates.
SECTION 30. Primed Opinion. The Purchasers' obligation to accept delivery of the
Certificates is subject to their being furnished a final opinion of Fulbright & Jaworski L.L.P.,
Attorneys at Law, approving certain legal matters as to the Certificates, said opinion to be dated and
delivered as of the date of initial delivery and payment for such Certificates. Priming of a tree and
correct copy of said opinion on the reverse side of each of said Certificates, with appropriate
#45059039vl -36-
certificate pertaining thereto executed by facsimile signature of the City Secretary of the City is
hereby approved and authorized.
SECTION 31. CUSIP Numbers. CUSIP numbers may be primed or typed on the
definitive Certificates. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Certificates shall be of no significance or effect as regards the legality
thereof, and neither the City nor bond counsel are to be held responsible for CUSIP numbers
incorrectly printed or typed on the definitive Certificates.
SECTION 32. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
SECTION 33. Ordinance a Contract, Amendments - Outstanding Certificates. The
City acknowledges that the covenants and obligations of the City herein contained are a material
inducement to the purchase of the Certificates. This Ordinance shall constitute a contract with the
Holders from time to time, binding on the City and its successors and assigns, and it shall not be
amended or repealed by the City so long as any Certificate remains Outstanding except as permitted
in this Section. The City may, without the consent of or notice to any Holders, from time to time and
at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders,
including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition,
the City may, with the written consent of Holders holding a majority in aggregate principal amount
of the Certificates then Outstanding affected thereby, amend, add to, or rescind any of the provisions
of this Ordinance; provided that, without the consent of all Holders of Outstanding Certificates, no
such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal
of and interest on the Certificates, reduce the principal amount thereof or the rate of interest thereon,
or in any other way modify the terms of payment of the principal of or interest on the Certificates,
(2) give any preference to any Certificate over any other Certificate, or (3) reduce the aggregate
principal amount of Certificates required for consent to any such amendment, addition, or rescission.
SECTION 34. Benefits of Ordinance. Nothing in this Ordinance, expressed or implied,
is intended or shall be construed to confer upon any person other than the City, Bond Counsel, Paying
Agent/Registrar, and the Holders, any fight, remedy, or claim, legal or equitable, under or by reason
of this Ordinance or any provision hereof, this Ordinance and all its provisions being intended to be
and being for the sole and exclusive benefit of the City, Bond Counsel, Paying Agent/Registrar, and
the Holders.
SECTION 35. Inconsistent Provisions. All ordinances and resolutions, or pans
thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed
to the extent of such conflict, and the provisions of this Ordinance shall be and remain controlling as
to the matters ordained herein.
#45059039vl -37-
SECTION 36. Governing Law. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
SECTION 37. Severability.. If any provision of this Ordinance or the application
thereof to any person or circumstance shall be held to be invalid, the remainder of this Ordinance and
the application of such provision to other persons and circumstances shall nevertheless be valid, and
the City Council hereby declares that this Ordinance would have been enacted without such invalid
provision.
SECTION 38. Construction of Terms. If appropriate in the context ofthis Ordinance,
words of the singular number shall be considered to include the plural, words of the plural number
shall be considered to include the singular, and words of the masculine, feminine or neuter gender
shall be considered to include the other genders.
SECTION 39. Incorporation of Preamble Recitals. The recitals contained in the
preamble hereof are hereby found to be tree, and such recitals are hereby made a part of this
Ordinance for all purposes and are adopted as a part of the judgment and findings of the City Council
of the City.
SECTION 40. Authorization ofPa¥ing AgentIRegistrar Agreement. The City Council
of the City hereby finds and determines that it is in the best interest of the City to authorize the
execution of a Paying Agent/Registrar Agreement concerning the payment, exchange, and
transferability of the Certificates. A copy of the Paying Agent/Registrar Agreement is attached hereto,
in substantially final form, as Exhibit A and is incorporated by reference to the provisions of this
Ordinance.
SECTION 41. Official Statement. The City Council ratifies and confirms its prior
approval of the form and content of the Official Statement prepared in the initial offering and sale of
the Certificates and hereby approves the form and content of any addenda, supplement, or amendment
thereto. The use of such Official Statement in the reoffering of the Certificates by the Purchasers is
hereby approved and authorized. The proper officials of the City are hereby authorized to execute
and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the
date of paymem for and delivery of the Certificates.
SECTION 42. Public Meeting. It is officially found, determined, and declared that the
meeting at which this Ordinance is adopted was open to the public and public notice of the time,
place, and subject matter of the public business to be considered at such meeting, including this
Ordinance, was given, all as required by Chapter 551, as amended, Texas Government Code.
SECTION 43. Unavailability of Authorized Publication. If, because of the temporary
or permanent suspension of any newspaper, journal, or other publication, or, for any reason,
publication of notice cannot be made meeting any requirements herein established, any notice required
#45059039vl -38-
to be published by the provisions of this Ordinance shall be given in such other manner and at such
time or times as in the judgment of the City or of the Paying Agent/Registrar shall most effectively
approximate such required publication and the giving of such notice in such manner shall for all
purposes of this Ordinance be deemed to be in compliance with the requirements for publication
thereof.
SECTION 44. No Recourse Against City. No recourse shall be had for the payment
of principal of, premium, if any, or interest on any Certificate or for any claim based thereon or on
this Ordinance against any official of the City or any person executing any Certificate.
SECTION 45.
Continuing Disclosure Undertaking.
A. Definitions.
As used in this Section, the following terms have the meanings ascribed to such terms below:
"MSRB" means the Municipal Securities Rulemaking Board.
"NRMSIR" means each person whom the SEC or its staff has determined to be a
nationally recognized municipal securities information repository within the meaning of the Rule from
time to time.
"Rule" means SEC Rule 15c2-12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
"SID" means any person designated by the State of Texas or an authorized
department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state
information depository within the meaning of the Rule from time to time.
B. Annual Reports.
The City shall provide annually to each NRMSIR and any SID, within six months after the
end of each fiscal year ending in or after 2001, financial information and operating data with respect
to the City of the general type included in the final Official Statement authorized by Section 41 of this
Ordinance, being the information described in Exhibit E hereto. Any financial statements so to be
provided shall be (i) prepared in accordance with the accounting principles described in Exhibit E
hereto, or such other accounting principles as the City may be required to employ from time to time
pursuant to state law or regulation and audited, if the City commissions an audit of such statements
and the audit is completed within the period during which they must be provided. If the audit of such
financial statements is not complete within such period, then the City shall provide unaudited financial
#45059039vl -39-
statements for the applicable fiscal year to each NRMSIR and any SID, with the financial information
and operating data and will file the annual audit report when and if the same becomes available.
If the City changes its fiscal year, it will notify each NRMSIR and any SID of the change (and
of the date of the new fiscal year end) prior to the next date by which the City otherwise would be
required to provide financial information and operating data pursuant to this Section.
The financial information and operating data to be provided pursuant to this Section may be
set forth in full in one or more documents or may be included by specific reference to any document
(including an official statemem or other offering document, if it is available from the MSRB) that
theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
Co
Material Event Notices.
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of
any of the following events with respect to the Certificates, if such event is material within the
meaning of the federal securities laws:
(i)
Principal and imerest payment delinquencies;
(ii)
Non-payment related defaults;
(iii)
Unscheduled draws on debt service reserves reflecting financial difficulties;
(iv)
Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
Adverse tax opinions or events affecting the tax-exempt status of the Certificates;
(vii)
Modifications to fights of holders of the Certificates;
(viii) Certificate calls;
(ix) Defeasances;
(x)
Release, substitution, or sale of property securing repayment of the Certificates; and
(xi) Rating changes.
#45059039vl -40-
The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of
any failure by the City to provide financial information or operating data in accordance with this
Section of this Ordinance by the time required by this Section.
Do
Limitations, Disclaimers, and Amendments.
The City shall be obligated to observe and perform the covenants specified in this Section with
respect to the City and the Certificates while, but only while, the City remains an "obligated person"
with respect to the Certificates within the meaning of the Rule, except that the City in any event will
give the notice required by subsection (c) hereof of any Certificate calls and defeasance that cause
the City to be no longer such an "obligated person".
The provisions of this Section are for the sole benefit of the Holders and beneficial owners
of the Certificates, and nothing in this Section, express or implied, shall give any benefit or any legal
or equitable fight, remedy, or claim hereunder to any other person. The City undertakes to provide
only the financial information, operating data, financial statements, and notices which it has expressly
agreed to provide pursuant to this Section and does not hereby undertake to provide any other
information that may be relevant or material to a complete presentation of the financial results,
condition, or prospects of the City or hereby undertake to update any information provided in
accordance with this Section or otherwise, except as expressly provided herein. The City does not
make any representation or warranty concerning such information or its usefulness to a decision to
invest in or sell Certificates at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR
BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT
OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY
THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY
COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY
SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH
SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties
of the City under federal and state securities laws.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances resulting from a change in legal requirements, a change in law, or a change
in the identity, nature, status, or type of operations of the City, but only if (i) the provisions of this
Section, as so amended, would have permitted an underwriter to purchase or sell Certificates in the
#45059039vl -41-
primary offering of the Certificates in compliance with the Rule, taking into account any amendments
or interpretations of the Rule to the date of such amendment, as well as such changed circumstances,
and either the Holders of a majority in aggregate principal amount (or any greater amount required
by any other provision of this Ordinance that authorizes such an amendment) of the Outstanding
Certificates consent to such amendment or a person that is unaffiliated with the City (such as
nationally recognized bond counsel) determines that such amendment will not materially impair the
interests of the Holders and beneficial owners of the Certificates. The City may also repeal or amend
the provisions of this Section if the SEC amends or repeals the applicable provisions of the Rule or
any court of final jurisdiction enters judgment that such provisions of the Rule are invalid, and the
City also may amend the provisions of this Section in its discretion in any other manner or
circumstance, but in either case only if and to the extent that the provisions of this sentence would
not have prevented an underwriter from lawfully purchasing or selling Certificates in the primary
offering of the Certificates, giving effect to (a) such provisions as so amended and (b) any
amendments or interpretations of the Rule. If the City so amends the provisions of this Section, it
shall include with any amended financial information or operating data next provided in accordance
with paragraph (b) of this Section an explanation, in narrative form, of the reasons for the amendment
and of the impact of any change in the type of financial information or operating data so provided.
SECTION 46.
Book-Entry_ Only System.
It is intended that the Certificates initially be registered so as to participate in a securities
depository system (the D TC System) with the Depository Trust Company, New York, New York,
or any successor entity thereto (DTC), as set forth herein. Each Stated Maturity of the Certificates
shall be issued (following cancellation of the Initial Certificates described in Section 7) in the form
of a separate single definitive Certificate. Upon issuance, the ownership of each such Certificate shall
be registered in the name of Cede & Co., as the nominee of DTC, and all of the Outstanding
Certificates shall be registered in the name of Cede & Co., as the nominee of DTC. The City and the
Paying Agent/Registrar are authorized to execute, deliver, and take the actions set forth in such
letters to or agreements with DTC as shall be necessary to effectuate the DTC System, including the
Letter of Representation attached hereto as Exhibit C (the Representation Letter).
With respect to the Certificates registered in the name of Cede & Co., as nominee of DTC,
the City and the Paying Agent/Registrar shall have no responsibility or obligation to any
broker-dealer, bank, or other financial institution for which DTC holds the Certificates from time to
time as securities depository (a Depository Participant) or to any person on behalf of whom such a
Depository Participant holds an interest in the Certificates (anlndirect Participant). Without limiting
the immediately preceding sentence, the City and the Paying Agent/Registrar shall have no
responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or
any Depository Participant with respect to any ownership interest in the Certificates, or (ii) the
delivery to any Depository Participant or any other person, other than a registered owner of the
Certificates, as shown on the Security Registrar, of any notice with respect to the Certificates,
including any notice of redemption, or (iii) the delivery to any Depository Participant or any Indirect
#45059039vl ' -42-
Participant or any other Person, other than a Holder of a Certificate, of any amount with respect to
principal of, premium, if any, or interest on the Certificates. While in the DTC System, no person
other than Cede & Co., or any successor thereto, as nominee for DTC, shall receive a Certificate
evidencing the obligation of the City to make payments of principal, premium, if any, and interest
pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice
to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and
subject to the provisions in this Ordinance with respect to interest checks or drafts being mailed to
the Holder, the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC.
In the event that (a) the City determines that DTC is incapable of discharging its
responsibilities described herein and in the Representation Letter, (b) the Representation Letter shall
be terminated for any reason, or (c) DTC or the City determines that it is in the best interest of the
beneficial owners of the Certificates that they be able to obtain certificated Certificates, the City shall
notify the Paying Agent/Registrar, DTC, and the Depository Participants of the availability within a
reasonable period of time through DTC of bond certificates, and the Certificates shall no longer be
restricted to being registered in the name of Cede & Co., as nominee of DTC. At that time, the City
may determine that the Certificates shall be registered in the name of and deposited with a successor
depository operating a securities depository system, as may be acceptable to the City, or such
depository's agent or designee, and if the City and the Paying Agent/Registrar do not select such
alternate securities depository system then the Certificates may be registered in whatever name or
names the Holders of Certificates transferring or exchanging the Certificates shall designate, in
accordance with the provisions hereof.
Notwithstanding any other provision of this Ordinance to the contrary, so long as any
Certificate is registered in the name of Cede & Co., as nominee of DTC, all payments with respect
to principal of, premium, if any, and interest on such Certificate and all notices with respect to such
Certificate shall be made and given, respectively, in the manner provided in the Representation Letter.
SECTION 47. Further Procedures. The officers and employees ofthe City are hereby
authorized, empowered and directed from time to time and at any time to do and perform all such
acts and things and to execute, acknowledge and deliver in the name and under the corporate seal and
on behalf of the City all such instruments, whether or not herein mentioned, as may be necessary or
desirable in order to carry out the terms and provisions of this Ordinance, the initial sale and delivery
of the Certificates and the Paying Agent/Registrar Agreement, and the Official Statement. In
addition, prior to the initial delivery of the Certificates, the Mayor or the City Manager and Bond
Counsel are hereby authorized and directed to approve any technical changes or corrections to this
Ordinance or to any of the instruments authorized and approved by this Ordinance necessary in order
to (i) correct any ambiguity or mistake or properly or more completely document the transactions
contemplated and approved by this Ordinance and as described in the Official Statement, (ii) obtain
a rating from any of the national bond rating agencies, or (iii) obtain the approval of the Certificates
by the Texas Attorney General's office. In case any officer of the City whose signature shall appear
on any certificate shall cease to be such officer before the delivery of such certificate, such signature
#45059039vl -43-
shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in
office umil such delivery.
SECTION 48. Municipal Bond Guaranty Insurance. The payment of the debt service
requirements on the Certificates is insured by the Certificate Insurer pursuant to the Insurance Policy.
SECTION 49. Effective Date. This Ordinance shall be in force and effect from and
after its final passage, and it is so ordained.
[The remainder of this page intentionally left blank.]
#45059039vl -44-
2001.
FIRST READING on the 17th day of July, 2001.
SECOND AND FINAL READING, PASSED AND ADOPTED on the 7th day of August,
ATTEST:
CITY OF SCHERTZ. TEXAS
City Secretary
(CITY SEAL)
EXHIBIT A- Paying Agent/Registrar Agreement
EXHIBIT B - Description of Annual Financial Information
EXHIBIT C - DTC Letter of Representations
tt45059039vl S-1
EXHIBIT A
PAYING AGENT/REGISTRAR AGREEMENT
SEE TAB NO.
#45059039vl A- 1
EXHIBIT B
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 45 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided annually
in accordance with such Section are as specified (and included in the Appendix or under the headings
of the Official Statement referred to) below:
The City' s audited financial statements for the most recently concluded fiscal year or
to the extent these audited financial statements are not available, the portions of the
unaudited financial statements of the City appended to the Official Statement as
Appendix D, but for the most recently concluded fiscal year.
Table 1 of the Official Statement and Tables 1 through 14 of Appendix A.
Accounting Principles
The accounting principles referred to in such Section are generally accepted accounting
principles for governmental units as prescribed by the Government Accounting Standards Board from
time to time.
#45059039vl B- 1
EXHIBIT C
DTC LETTER OF REPRESENTATIONS
SEE TAB NO.
#45059039vl
C-1
THE STATE OF TEXAS,
PUBLISHER'S AFFIDAVIT
.:
County of Guadalupe
Before me, the undersigned authority, on this date personally appeared
2'ommy C row knowfl ~to me who being by me duly sworn on
his oath deposes ~nd says that he is the Publisher of The Seguin Gazette-Enterprise, a
newspaper published in said county; that a copy of the within and foregoing notice was.
published in said newspaper ~ time(s) before the return day named therein, such
publications being on the following dates:
and a newspaper copy of which is hereto attached.
Sworn to an
p.,~ b;~~ore me th is ~~¢-~ day of
,'~~'. , A.D., 2001.
'q,e. C^~OL ^UN ^VEF~Y ~v Notaw Public, Guadalupe Count, Texas
~ My Comm~ ~k~ 08-31-2004 ~
:*,. ,. NOTICEOF ;: . :~
·: ~'INTENTiON -TO .'
,,,~ '.i55UE-'CITY OF . ' ~i ~ .
'\~,SCHER'r~-~XAS ' <: _for other public purposes,
CERTIFICATE$ OF t to-wit: (1) constructing
( stl-eet~ and sidewalk'im-
OBLIGATION r pro~/ements (including util-
NOTICE IS HEREBY G1V- ( ities repair, replacement.
EN that the City 'Council,of
the City of Schertz, Texas _~ and. relocation), and drain-
wiil convene at its regular age incidental thereto re-.
meeting place in the 'City '::::: lating to Schertz Parkway ..... .... .,-
Hall in Set,ri:z, TeXas, at' ~ (2) constructing* drainage
7:00 o'clock RM, Schertz, : improvements relating to
Texas time On .August 7, ~. ,Schertz Parkway, (3)con-
2001, and, during such ~ structing drainage and oth-
meeting,-the City Council '1 er improvements designat-
Will consider the' passage ing Schertz Parkway, (4)
of an ordinance and take the purchase of land and
such other actions as may fights-of-way for author-
be. deemed necessary to ized needs and purposes
'authoriZe. 'the issUance of With respect to the street
.one or more series of. cer- ? improvements relating to
tifmates-of obligation in an Schertz Parkway, and (5)
aggregate . principal the payment of professio-
amount '.n°t to exceed nal services' related to the
· construction and financing
$4,500,000 for the .put;
pose of purposes of pay- of the. aforementioned
ing .contractual obligations projects. The certificates of
of the City to be incurred obligation (the Certif~,_,ates)
for making permanent will be payable from the
public improvements and ~ levy of an annual ad valor-
· em tax, within the limita-
tions prescribed by law,'~
upon all taxable property
within rise Gity and from
lien on and pledge o~ cer-
tain revenues derived by
~`~.:~.~`~`~?~r..`..`~:~.`:~.~.~i~.`~`..~``~.~.``~i`.~.~:i~`::~:!~ the City from the operation ::.~.::::~..~:~.~,~.~,,~:!~
~" - of the City's utility system.
The certificates are to be
issued, and this notice is
given, under and pursuant
to the provisions of the
Certificate Obligation Act
~f 1971, as amended, Lo-
;al Government 'Code
Bection 271.041 through
3ection - 271.;063, Chapter
1502, as amended, Texas
3o{/ernment ' Code,. and-
he City's H, ome Rule ~.
.~harter. · .
~lorma Althouse S
3ity Secretary ' (~'
3ity of Schertz, TeXas
.......
' wi, Consider'.'
sigr~. -. . '.?.".:-'" ,~' ' ". .
CAUSE NO.'G-11268' of an ordinance- . and : :take ~
.GUARDIANSHIP" .OF such other .' a~' as ma,,~ -. -t' .-
AGNES CLAIRE 'VAN" be deemed.:necessary.~. ::
DERLO0 BURGART authorize -the. · issuance ..of '.
· one or more ~ o! cer- '
· ADDRESS:% KATHLEEN .... tificates' of-. obligation .in. an,,
EBERT VIESCA, Attorney . '
"~:);i 8' N.'FLORES, .:'-:'..-:':"...'.:- ......... · .aggregate';:.:::;-;? :i:~:.i~i:pri. _r~_ _~:
78212?::: :.~-~ :-? :.-::-' '%':::' ~-:~.:: '
'DATED AT' pose of Purposes of pay-~
SAN'ANTONIO~TEX~S; "ing contractual ot~igati.ons '.
jULY 24, 2001 ' ..,, of '.the City ,to be incurred
i f°r'"~::~':m~ing .permanent
· .,..:.;;!... i~i'_, publ~ ii:npr0vements arid
: EAZ .... p rP° ..nS-
· Before~~: 'our ad? to-wit~ (1) construct~ g
379-5441,~ o~'203-- street, and-Sidewalk ira-'
" NOTICE OF' .- pr0Vernen? '(ir~dding ~-,
C~.~ INTENTION TO ities repair, replacemen~
ISSUE CITY OF and relocation) and drain-
cSCHER 'I7., TEXAS age incidental thereto re-
ERTIFICATES 'OF - lating'to. Schertz Parkw~,
OBLIGATION ' '"" (2) construCtir~g' drainage
NOTICE IS HEREBY GIV- improvements relating to
EN that the ~ty council of Sche~ Parkway .... (3) con'
- structing ;: drainage and oth-
l the City Of ~ Texas
'- I will convene.. at'its :regular er impr°vements''-designat-
~' ~ .meeting ._place in the City "ing"schertz Pad(way; (4)
I. Hall in Schertz, Texas,. at the pun:~ of land and
,n ~ 7:00' o'clod< P.M, Schertz, dghtS..0f.way for · author-.
h ~ TexaS time on August 7, ized needs and purP°ses
~ 2001, and, during 'such with respect to the street
THE STATE OF TEXAS,
PUBLISHER'S AFFIDAVIT
..
County of Guadalupe
Before me, the undersigned authority, on this date personally appeared
~:ommy crow ,, known to me, who, being by me duly sworn, on
his oath deposes and says that he is the Publisher of The Seguin Gazette-Enterprise, a
newspaper published in said county; that a copy of the within and foregoing notice was
published in said newspaper \ _ time(s) before the return day named therein, such
publications being on the following dates'
and a newspaper copy of which is hereto attached.
Sworn ~subscribed before me this
CAROL ANN AVERY
Notary Public Stat~ 0~ Texas
My Commission Expire~ 08-31-2004
/.~~d ay of
Notary Public, Guadalupe County, Texas