2002M15-TAX NOTES SERIES 2002 ORDINANCE NO. ~-~-/_~
ORDINANCE
AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SCHERTZ,
TEXAS AUTHORIZING THE ISSUANCE OF"CITY OF SCHERTZ, TEXAS
TAX NOTES, SERIES 2002", LEVYING AN ANNUAL AD VALOREM TAX,
WITHIN THE LIMITATIONS PRESCRIBED BY LAW, FOR THE
PAYMENT OF THE NOTES; PRESCRIBING THE FORM, TERMS,
CONDITIONS, AND RESOLVING OTHER MATTERS INCIDENT AND
RELATED TO THE ISSUANCE, SALE, AND DELIVERY OF THE NOTES;
AUTHORIZING THE EXECUTION OF A PAYING AGENT/REGISTRAR
AGREEMENT AND A PURCHASE AND INVESTMENT LETTER;
COMPLYING WITH THE REQUIREMENTS OF THE DEPOSITORY
TRUST COMPANY'S LETTER OF REPRESENTATIONS; AND
PROVIDING AN EFFECTIVE DATE
WHEREAS, pursuant to the provisions of Chapter 1431, as amended, Texas Government
Code (the Act), the City Council is authorized and empowered to issue anticipation notes to pay a
contractual obligations incurred or to be incurred for the construction of any public works, for the
purchase of materials, supplies, equipment, machinery, buildings, lands, and rights-of-way for the
City's authorized needs and purposes, and for professional services, including services provided by
tax appraisal engineers, engineers, architects, attorneys, auditors, mapmakers, financial advisors, and
fiscal agents; and
WHEREAS, in accordance with the provisions of the Act, the City Council hereby finds and
determines that anticipation notes should be issued and sold at this time to finance the costs of
paying contractual obligations to be incurred for (i) the purchase ofcomptuer hardware and software
for general municipal and utility system purposes and (ii) the payment of professional services
related to the acquisition and financing of the aforementioned projects;
WHEREAS, the City Council hereby finds and determines that the issuance of anticipation
notes is in the best interests of the citizens of the City, now, therefore,
BE 1T ORDAINED BY THE CITY COUNCiL OF THE CITY OF SCHERTZ, TEXAS
THAT:
SECTION 1: Authorization - Designation - Principal Amount - Purpose - Issue Date
General obligation anticipation notes of the City shall be and are hereby authorized to be issued in
the aggregate principal amount of FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($400,000), to be designated and bear the title of"C1TY OF SCHERTZ, TEXAS TAX NOTES,
SERIES 2002" (the Notes), for the purpose of providing funds for (i) the purchase of computer
hardware and software for general municipal and utility system purposes and (ii) the payment of
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professional services related to the acquisition and financing of the aforementioned projects, all in
conformity with the laws of the State of Texas, particularly Chapter 1431, as amended, Texas
Government Code, and an ordinance finally adopted by the City Council on July 2, 2002.
SECTION 2: Fully Registered Obligations - Authorized Denominations - Stated Maturities
- Interest Rates. The Notes shall be issued as fully registered obligations, without coupons, shall be
dated July I, 2002 (the Issue Date) and shall be in denominations of $5,000 or any integral multiple
(within a Stated Maturity) thereof, shall be lettered "R-" and numbered consecutively from One (1)
upward and principal shall become due and payable on February 1 in each of the years and in
amounts (the Stated Maturities) and bear interest at the rates per annum in accordance with the
following schedule:
Years of Principal lntemst
Stated Maturity Amounts ($) Rates (%)
2003 130,000 2.90
2004 135,000 3.10
2005 135,000 3.15
The Notes shall bear interest on the unpaid principal amounts from the Issue Date, or from
the most recent Interest Payment Date to which interest has been paid or duly provided for, to Stated
Maturity, at the rates per annum shown in the above schedule (calculated on the basis of a 360-day
year of twelve 30-day months). Interest on the Notes shall be payable on February 1 and August 1
in each year, commencing February 1, 2003 (the Interest Payment Date).
SECTION 3: Payment of Notes - Paying Agent/Registrar. The principal of, premium, if
any, and the interest on the Notes, due and payable by reason of Stated Maturity 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, premium,
if any, and interest on the Notes shall be without exchange or collection charges to the Holder (as
hereinafter defined) of the Notes.
The selection and appointment of The Bank of New York Trust Company of Florida, N.A.,
Jacksonville, Florida, to serve as the initial Paying Agent/Registrar for the Notes is hereby approved
and confirmed, and the 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 Sec~trily Register) for the
registration, payment, and transfer of the Notes, all as provided herein, in accordance with the terms
and provisions of a Paying Agent/Registrar Agreement, attached, in substantially final form, as
Exhibit A hereto, and such reasonable rules and regulations as the Paying Agent/Registrar and the
City may prescribe. The City covenants to maintain and provide a Paying Agent/Registrar at all
times while the Notes 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
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to exercise trust powers. Such Paying Agent/Registrar shall be subject to supervision or examination
by federal or state authority and authorized by law to serve as a Paying Agent/Registrar.
The City reserves the right to appoint a successor Paying Agent~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 Notes by United States mail, first-class postage prepaid, which notice shall
also give the address of the new Paying Agent/Registrar.
Both principal of, premium, if any, and interest on the Notes, due and payable by reason of
Stated Maturity or otherwise, shall be payable only to the registered owner of the Notes 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 (hereinafter defined) for purposes of
payment of interest on the Notes, (ii) on the date of surrender of the Notes for purposes of receiving
payment of principal thereof at the Notes' Stated Maturity, and (iii) on any date for any other
purpose. The City and the Paying Agent/Registrar, and any agent of either, shall treat the Holder as
the owner of a Note for purposes of receiving payment and all other purposes whatsoever, and
neither the City nor the Paying Agent/Registrar, or any agent of either, shall be affected by notice
to the contrary.
Principal of and premium, if any, on the Notes shall be payable only upon presentation and
surrender of the Notes to the Paying Agent/Registrar at its corporate trust office. Interest on the
Notes 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 Notes (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.
lfthe date for the payment of the principal of, premium, if any, or interest on the Notes shall
be a Saturday, a 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
shall have the same force and effect as if made on the original date any such payment on the Notes
was due.
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 of a Note appearing on the
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Security Register at the close of business on the last business day next preceding the date of mailing
of such notice.
SECTION 4: Redemption. The Notes are not subject to redemption prior to Stated
Maturity.
SECTION 5: Execution - Registration. The Notes shall be executed on behalf of the City
by its Mayor under the seal of the City reproduced or impressed thereon and attested by its City
Secretary or Deputy City Secretary. The signature of any of said officers on the Notes may be
manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were, at
the time of the Issue 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 Notes
to the Purchasers, all as authorized and provided in Chapter 1201, as amended, Texas Government
Code.
No Note shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Note 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 agent by manual signature, or a certificate of registration
substantially in the form provided in Section 8D executed by the Paying Agent/Registrar by manual
s~gnature, and either such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly certified or registered and delivered.
SECTION 6: Registration - Transfer- Exchange of Notes - PredecessorNotes. The Paying
Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of
.every owner of the Notes, or, if appropriate, the nominee thereof. Any Note may, in accordance with
~ts terms and the terms hereof, be transferred or exchanged for Notes of other authorized
denominations upon the Security Register by the Holder, in person or by his duly authorized agent,
upon surrender of such Note 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 Note 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 Notes of authorized
denomination and having the same Stated Maturity and ora like interest rate and aggregate principal
amount as the Note or Notes surrendered for transfer.
At the option of the Holder, Notes may be exchanged for other Notes of authorized
denominations and having the same Stated Maturity, bearing the same rate of interest and of like
aggregate principal amount as the Notes surrendered for exchange upon surrender of the Notes to
be exchanged at the corporate trust office of the Paying Agent/Registrar. Whenever any Notes are
g45194373vl ~-
so surrendered for exchange, the City shall execute, and the Paying Agent/Registrar shall register and
deliver, the Notes to the Holder requesting the exchange.
All Notes issued upon any transfer or exchange of Notes 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 Notes surrendered upon such transfer or exchange.
All transfers or exchanges of Notes pursuant to this Section shall be made without expense
or service charge to the Holder, except as otherwise herein provided, and except that the 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.
Notes canceled by reason of an exchange or transfer pursuant to the provisions hereof are
hereby defined to be Predecessor Notes, evidencing all or a portion, as the case may be, of the same
debt evidenced by the new Note or Notes registered and delivered in the exchange or transfer
therefor. Additionally, the term Predecessor Notes shall include any Note registered and delivered
pursuant to Section 17 in lieu of a mutilated, lost, destroyed, or stolen Note which shall be deemed
to evidence the same obligation as the mutilated, lost, destroyed, or stolen Note.
SECTION 7: Initial Notes. The Notes herein authorized shall be initially issued as a single
fully registered Note in the aggregate principal amount of $400,000 with principal installments to
become due and payable as provided in Section 2 hereof and numbered T-1 (the Initial Notes), and
the Initial Notes shall be registered in the name of the Purchasers or the designee thereof. The Initial
Notes shall be the Notes 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 Notes, the Paying
Agent/Registrar, pursuant to written instructions from the Purchasers, or the designee thereof, shall
cancel the Initial Notes delivered hereunder and exchange therefor definitive Notes of like kind and
of authorized denominations, Stated Maturities, principal amounts 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 Notes, 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 Notes 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 Notes, or any Stated Maturities thereof, are insured and identifying
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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 Notes as evidenced by their execution thereof. Any portion of the text
of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face
of the Note.
The definitive Notes shall be printed, 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 Notes as evidenced by their execution thereof, but the Initial Note(s) submitted
to the Attomey General of Texas may be typewritten or photocopied or otherwise reproduced.
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B. Form of Definitive Note.
REGISTERED REGISTERED
NO. PRINCIPAL AMOUNT
$
United States of America
State of Texas
Counties of Bexar, Comal, and Guadalupe
CITY OF SCHERTZ, TEXAS
TAX NOTES, SERIES 2002
Issue Date: Interest Rate: Stated Maturity: CUSIP NO:
July 1, 2002
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Schertz, Texas (the City), a body corporate and a municipal corporation in the
Counties of Bexar, 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 and to pay interest on the unpaid Principal Amount hereof from the Issue Date, or
from the most recent interest payment date to which interest has been paid or duly provided for until
such Principal Amount has become due and payment thereof has been made or duly provided for,
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 I and August 1 of each year
commencing February 1, 2003.
Principal on this Note 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, lntemst shall be payable to the
Holder of this Note (or one or more Predecessor Notes, 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 fifteenth day of the month next preceding
each interest payment date. All payments of principal of and interest on this Note 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 other method, acceptable
to the Paying Agent/Registrar, requested by the Holder hereof at the Holder's risk and expense.
tC15194373vl -7-
This Note is one of the series specified in its title issued in the aggregate principal amount
of $400,000 (the Notes) pursuant to an ordinance adopted by the governing body of the City (the
Ordinance), for the purpose of providing funds for (i) the purchase of computer hardware and
software for general municipal and utility system purposes and (ii) the payment of professional
services related to the acquisition and financing of the aforementioned projects under and in strict
conformity with the laws of the State of Texas, including Chapter 1431, as amended, Texas
Government Code.
The Notes of this series are payable from the proceeds of an annual ad valorem tax levied
upon all taxable property within the City within the limitations prescribed by law.
As specified in the Ordinance, the Notes are not subject to redemption prior to Stated
Maturity.
Reference is hereby made to the Ordinance, a copy of which is on file in the corporate trust
office of the Paying Agent/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 for the payment of the Notes; the terms and conditions relating to the transfer
or exchange of the Notes; the conditions upon which the Ordinance may be amended or
supplemented with or without the consent of the Holders; the rights, duties, and obligations of the
City and the Paying AgenffRegistrar; the terms and provisions upon which this Note may be
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 Note, subject to certain limitations contained in the Ordinance, may be transferred on
the Security Register upon presentation and surrender 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 hereo f, or his duly authorized
agent, and thereupon one or more new fully registered Notes 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.
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 Note as the
owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity, and (iii) on
any 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
AgenffRegistrar, 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 (I 5) days after the Special Record Date) shall be
#45194373vl -8-
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 fifteenth 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 Note 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 Notes does
not exceed any constitutional or statutory limitation; and that due provision has been made for the
payn/ent of the principal of, premium if any, and interest on the Notes by the levy of a tax as
aforestated. In case any provision in this Note 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
Note and the Ordinance shall be construed in accordance with and shall be governed by the laws of
the State of Texas.
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IN WITNESS WHEREOF, the City has caused this Note to be duly executed under its
official seal.
CITY OF SCHER/Z, TEXAS
Mayor
ATTEST:
City Secretary
(CITY SEAL)
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C. *Form of Registration Certificate of Comptroller of Public Accounts to Appear on
Initial Notes Only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER §
OF PUBLIC ACCOUNTS §
§ REGISTER NO.
THE STATE OF TEXAS §
1 HEREBY CERTIFY that this Note 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
Coinptroller of Public Accounts
of the State of Texas
(SEAL)
* Note to Printer: Not to appear on printed Notes
D. Form of Certificate of Paying Agent/Registrar to Appear on Definitive Notes Only.
This Note has been duly issued under the provisions of the within-mentioned Ordinance; the
Note or Notes 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.
THE BANK OF NEW YORK TRUST
COMPANY OF FLORIDA, N.A., as Paying
Agent/Registrar
By
Authorized Officer
Registered this date:
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E. Form of Assignment.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print
or typewrite name, address, and zip code of transferee):.
(Social Security or other identifying number: )
the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Note on the books kept for
registration thereof, with full power of substitution in the premises.
DATED:
NOTICE: The signature on this assignment must
correspond with the name of the registered owner as
it appears on the face of the within Note in every
particular.
Signature guaranteed:
F. The Initial Notes shall be in the respective forms set forth in paragraph B of this
Section, except that the form ora single fully registered Initial Note shall be modified
.as follows:
(i) immediately under the name of the Note(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
Counties of Bexar, Comal, and Guadalupe, State of Texas, for value received, acknowledges itself
#4S194373vl -12-
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 on the first day of May in each of
the years and in principal amounts and bearing interest at per annum rates in accordance with the
following schedule:
Years of Principal Interest
Stated MaturiW Amounts ($) Rates (%)
(Information to be inserted from
schedule in Section 2 hereof).
and to pay interest on the unpaid Principal Amount hereof from the Issue Date to the date of delivery
of the Notes to the initial purchasers, or from the most recent interest payment date to which interest
has been paid or duly provided for until the Principal Amount has become due and payment thereof
has been made or duly provided for, at the per annum rates of interest specified above computed on
the basis ora 360-day year of twelve 30-day months; such interest being payable on February 1 and
August I of each year, conunencing February 1, 2003.
Principal of this Note 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 Trust Company
of Florida, N.A., Jacksonville, Florida (the PayingAgent/Registrar). Interest shall be payable to the
Holder of this Note 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 fifteenth day of the month
next preceding each interest payment date. All payments of principal of and interest on this Note
shall he 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 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 hereofi
G. Insurance Legend. lfbond insurance is obtained by the City or the Purchasers for the
.Notes, the Definitive Notes and the Initial Notes 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 otherwi'se requires: (i) the terms defined in this
Section have the meanings assigned to them in this Section, and certain terms used in Section 19 of
this Ordinance have the meanings assigned to them in such Section, 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.
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(1) The term Closing Date shall mean the date of physical delivery of the
Initial Notes in exchange for the payment in full by the Purchasers.
(2) The term City shall mean City of Schertz, Texas located in Bexar,
Comal, and Guadalupe Counties, Texas and, where appropriate, the City Council of
the City.
(3) The term Debt Service Requirements 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 rote, 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.
(4) The term Depository shall mean an official depository bank of the
City.
(5) The term Government Securities shall mean (i) direct noncallable
obligations of the United States, including obligations that are unconditionally
gu.aranteed by, the United States of America; (ii) noncallable obligations o£an agency
or tnstrumentality 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.
(6) The term Holder or Holders shall mean the registered owner, whose
name appears in the Security Register, for any Note.
(7) The term Interest Payment Date shall mean the date semiannual
interest is payable on the Notes, being February I and August 1 of each year,
commencing February 1, 2003, while any of the Notes remain Outstanding.
(8) The term Note Fund shall mean the special Fund created and
established by the provisions of Section 10 of this Ordinance.
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(9) The term Notes shall mean the $400,000 "CITY OF SCHERTZ,
TEXAS TAX NOTES, SERIES 2002" authorized by this Ordinance.
(10) The term Ordinance shall mean this ordinance finally adopted by the
City Council of the City on July 2, 2002.
(11) The term Outstanding when used in this Ordinance with respect to
Notes shall mean, as of the date of determination, all Notes issued and delivered
under this Ordinance, except:
(a) those Notes canceled by the Paying AgentJRegistrar or
delivered to the Paying Agent/Registrar for cancellation;
(b) those Notes for which payment has been duly provided
by the City in accordance with the provisions of Section 21 of this
Ordinance; and
(c) those Notes that have been mutilated, destroyed, lost,
or stolen and replacement Notes have been registered and delivered
in lieu thereof as provided in Section 17 of this Ordinance.
(12) The term Purchasers shall mean the initial purchasers of the Notes
named in Section 18 of this Ordinance.
(13) The term Stated Maturity shall mean the annual principal payments
of the Notes payable on February 1 of each year, as set forth in Section 2 of this
Ordinance.
SECTION 10: Note Fund; Investments. For the purpose of paying the interest on and to
provide a sinking fund for the payment, redemption, and retirement of the Notes, there shall be and
is hereby created a special Fund to be designated "TAX NOTES, SERIES 2002, INTEREST AND
SINKiNG FUND" (the Note 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 19. Authorized officials of the City are hereby authorized and directed to make
withdrawals from the Note Fund sufficient to pay the principal of, premium, if any, and interest on
the Notes as the same become due and payable and shall cause to be transferred to the Paying
A~en?Registmr from money on deposit in the Note Fund an amount sufficient to pay the amount of
pnnc~pal and/or interest falling due on the Notes, 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 business day next preceding each interest
and principal payment date for the Notes.
Pending the transfer of funds to the Paying Agent/Registrar, money in any Fund established
by this Ordinance, at the option of the City, inay be placed in time deposits or certificates of deposit
#45104373vl -1 5-
as permitted by the provisions of the Public Funds Investment Act, as amended, Chapter 2256, as
amended, 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 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, Small Business Administration, 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 such Fund 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 Notes.
SECT1ON 11: Tax Levy. To provide for the payment of the Debt Service Requirements on
the Notes being (i) the interest on the Notes 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 Notes 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 costs 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 Note Fund and are thereafter
pledged to the payment of the Notes. The City Council hereby declares its purpose and intent to
provide and levy a tax legally and fully sufficient to pay such 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.
SECTION 12: Deposits to Note Fund; Excess Note Proceeds The City hereby covenants
and agrees to cause to be deposited in the Note Fund prior to a principal and interest payment date
for the Notes, from the annual levy of an ad valorem tax or from other lawfully available funds,
amounts sufficient to fully pay and discharge promptly each installment of interest and principal of
the Notes as the same accrues or matures or comes due by reason of Stated Maturity.
Accrued interest and premium, if any, received from the Purchasers of the Notes shall be
deposited to the Note Fund. In addition, any surplus proceeds from the sale of the Notes, including
investinent income thereon, not expended for authorized purposes, as described in Section 1 hereof,
shall be deposited in the Note Fund, and such amounts so deposited shall reduce the sums otherwise
required to be deposited in said Fund from ad valorem taxes.
#45194373vl -16-
SECTION 13: 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 14: Remedies in Event of Default. In addition to all the rights and remedies
provided by the laws of the State of Texas, the City covenants and agrees particularly that in the
event the City (a) defaults in the payments to be made to the Note 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 Notes shall be entitled to seek a writ of mandamus issued by
a court of proper jurisdiction compelling and requiring 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 fight 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 15: 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 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 16: Cancellation. All Notes 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 Notes previously certified or registered and delivered
which the City may have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly canceled by the Paying Agent/Registrar. All canceled Notes held by the Paying
Agent/Registrar shall be destroyed as directed by the City.
#45194373vl -17-
SECTION 17: Mutilated, Destroyed, Lost, and Stolen Notes. If(I) any mutilated Note 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 Note, 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 Note 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 Note, a new Note of the same Stated Matuhty and interest rote
and of like tenor and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost, or stolen Note has become or is about to become
due and payable, the City in its discretion may, instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note or payment in lieu thereof, under this Section, the City
.may require payment by the Holder of a sum sufficient to cover any tax or other governmental charge
~mposed 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 Note issued pursuant to this Section in lieu of any mutilated, destroyed, lost, or
stolen Note shall constitute a replacement of the prior obligation of the City, whether or not the
mutilated, destroyed, lost, or stolen Note shall be at any ti~ne enforceable by anyone, and shall be
entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Notes.
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 Notes.
SECTION 18: Sale of the Notes; Authorization of Purchase and Investment Letter; Use
Proceeds. The Notes authorized by this Ordinance are hereby sold by the City to Presidio Short
Term Tax Exempt Fund, L.P. (the Purchasers) in accordance with the provisions of the Purchase
and Investment Letter dated July 2, 2002 (the Purchase Letter), attached hereto as Exhibit B and
incorporated herein by reference as a part of this Ordinance for all purposes. The Initial Note shall
be registered in the name of Presidio Short Term Tax Exempt Fund, L.P. The Mayor and/or City
Secretary or Deputy City Secretary are hereby authorized and directed to execute the Purchase Letter
for and on behalf of the City and as the act and deed of the City Council and in regard to the approval
and execution of the Purchase Letter, the City Council hereby finds, determines, and declares that
the representations, warranties, and agreements of the City contained in the Purchase Letter are true
and correct in all material respects and shall be honored and performed by the City. Delivery of the
Notes shall be made to the Purchasem as soon as practicable after the adoption of this Ordinance,
upon payment therefor in accordance with the terms of the Purchase Letter.
Proceeds from the sale of the Notes shall be applied as follows:
(1) Accrued interest and premium, if any, received from the Purchasers shall be deposited
into the Note Fund.
#45194373vl -I 8-
(2) The balance of the proceeds derived from the sale of the Notes (after paying costs of
issuance) shall be deposited into the special acquisition account or accounts created for the projects
to be acquired with the proceeds of the Notes. This special acquisition account shall be established
and maintained at the Depository and shall be invested in accordance with the provisions of
Section 10 of this Ordinance. Interest earned on the proceeds of the Notes pending completion of
acquisition 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 12 of this Ordinance.
SECTION 19: Covenants to Maintain Tax-Exempt Status.
A. Definitions. When used in this Section, the following terms have the following
meanings:
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 Notes.
Investment has the meaning set forth in Section 1.148-1(b) of the Regulations.
Nonpurpose Investment means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Notes are invested and which is not acquired to
carry out the governmental purposes of the Notes.
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 Notes. 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) the Notes has the meaning set forth in Section 1.148-4 of the
Regulations.
#45194373vl -19-
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, acquisition 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 Notes to become includable
in the gross income, as defined in section 61 of the Code, of the owner thereof for federal inco~ne
tax purposes. Without linfiting 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 Note, 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
Notes 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
Notes:
(1) exclusively own, operate and possess all properly the acquisition, constmction
or improvement of which is to be financed or refinanced directly or indirectly with Gross
Proceeds of the Notes, 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
~arfied on by any person or entity (including the United States or any agency, department and
~nstmmentality 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 Notes 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 to the extent that it will not cause the Notes 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 Notes 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 iff (i) property acquired,
constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a
transactio, n which creates a debt for federal income tax purposes; (ii) capacity in or service from such
property ~s committed to such person or entity under a take-or-pay, output or similar contract or
arrangement; or (iii) 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.
#45194373vl -20-
E. Not to Invest at Higher Yield Except to the extent that it will cause the Notes to
become"private activity 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 Notes
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 Notes.
F. Not FederalS. 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 Notes to be federally guaranteed within the meaning of section 149(b) of the
Code and the Regulations and rulings thereunder.
G. Information Report. The City shall timely file the information required by section
149(e) of the Code with the Secretary 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. Excepttotheextent otherwiseprovidedinsection 148(0
of the Code and the Regulations and rulings thereunder or except to the extent the City complies with
Subsection K of this Section:
(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 after the day on which the last Outstanding Note is
discharged. However, to the extent permitted by law, the City may commingle Gross
Proceeds of the Notes 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 rules set forth in section 148(0 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 Notes until six years after the
final Computation Date.
(3) As additional consideration for the purchase of the Notes 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 Note 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 Notes equals (i) in the case of a Final
Computation Date as defined in Section 1.148-3(e)(2) of the Regulations, one hundred
percent (100%) of the Rebate Amount on such date; and (ii) in the case of any other
Computation Date, ninety percent (90%) of the Rebate Amount on such date. in all cases,
#45194373vl -21-
the rebate payments shall be made at the times, in the instalhnents, to the place and in the
manner as is or may be required by section 148(f) 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 exemise 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 after 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 Notes, enter into any transaction that reduces the
amount required to be paid to the United States pursuant to Subsection H of this Section because
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 Notes not been relevant to either party.
J. Notes Not Hedge Bonds.
(1) The City reasonably expects to spend at least 85% of the spendable proceeds
of the Notes within three years after such Notes are issued.
(2) Not more than 50% of the proceeds of the Notes will be invested in
Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years or
more.
K. No Rebate Required. The City need not comply with the covenants and duties
imposed by the provisions of Subsection H. of this Section if:
(1) the City is a governmental unit with general taxing powers;
(2) 95% of the Net Proceeds of the Notes and all income from the investment
thereof will be used for the governmental activities of the City;
(3) the aggregate face amount, within the meaning of Section 1.148-8(c)(1) of the
Regulations, of all debt obligations (other than private activity bonds) issued or expected to
be issued by the City or any subordinate entity in the calendar year in which the Notes are
issued is not reasonably expected to exceed $5,000,000; and
(4) the City otherwise satisfies the requirements of paragraph (4)(c) of
section 148(f) of the Code and Section 1.148-8 of the Regulations and rulings thereunder.
#45194373vl -22-
L Elections. The City hereby directs and authorizes the Mayor, Mayor Pro Tern, City
Secretary, Deputy City Secretary, City Attorney, or City Manager, 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 approphate in connection with the Notes, in the Certificate as to Tax
Exemption or similar or other appropriate certificate, form or document.
M. Qualified Tax-Exempt Obligations. The City hereby designates the Notes as qualified
tax-exempt obligations for purposes of section 265(b) of the Code. In furtherance of such
designation, the City represents, covenants and warrants the following: (a) during the calendar year
in which the Notes are issued, the City (including any subordinate entities) has not designated nor
will designate obligations, which when aggregated with the Notes, will result in more than
$10,000,000 of"qualified tax-exempt obhgations' being issued; (b) the City reasonably anticipates
that the amount of tax-exempt obligations issued during the calendar year 2002 by the City
(including any subordinate entities) will not exceed $10,000,000; and (c) the City will take such
action or refrain from such action as is necessary in order that the Notes will not be considered
"private activity bonds" within the meaning of section 141 of the Code.
SECTION 20: Control and Custody of Notes. The Mayor 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 Notes pending their
approval by the Attorney General, the registration thereof by the Comptroller of Public Accounts and
the delivery of the Notes to the Purchasers.
Furthermore, the Mayor, Mayor Pro Tem, City Secretary, Deputy City Secretary, City
Manager, 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 Notes, the approval of the Attorney General and their registration by the Comptroller of Public
Accounts and, together with the City's financial advisors, Bond Counsel, and the Paying
Agent/Registrar, make the necessary arrangements for the delivery of the Initial Notes to the
Purchasers and the initial exchange thereof for definitive Notes.
SECTION 21: 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
Notes, at the times and in the manner stipulated in this Ordinance, then the pledge of taxes levied
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.
Notes, or any principal amounts 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 Notes or the principal amounts thereof at Stated Maturity, 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
amounts and at such ti~nes as will insure the availability, without reinvestment, of sufficient ~noney,
#45194373 v I -23 -
together with any money deposited therewith, if any, to pay when due the principal of and interest
on such Notes, or the principal amounts thereof, on and prior to the Stated Maturity 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 Notes to be treated as arbitrage bonds
within the meaning of section 148 of the Code (as defined in Section 19).
Any money so deposited with the Paying Agent/Registrar, and all income from Govemment
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 Notes, or any principal amounts thereof, or
interest thereon with respect to which such moneyhas 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 Notes and remaining unclaimed for a period
of three (3) years after the Stated Maturity 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.
SECTION 22: Printed Opinion. The Purchasers' obligation to accept delivery of the Notes
is subject to its being furnished a final opinion of Fulbright & Jaworski L.L.P., Attorneys at Law,
approving certain legal matters as to the Notes, said opinion to be dated and delivered as of the date
of initial deliveD' and payment for such Notes. Printing of a true and correct copy of said opinion
on the reverse side of each of said Notes, with appropriate certificate pertaining thereto executed by
facsimile signature of the City Secretary or Deputy City Secretary of the City is hereby approved and
authorized.
SECTION 23: CUSIP Numbers. CUSIP numbers may be printed or typed on the definitive
Notes. It is expressly provided, however, that the presence or absence of CUSIP numbers on the
definitive Notes shall be of no significance or effect as regards the legality thereof, and neither the
City nor attorneys approving said Notes as to legality are to be held responsible for CUSIP numbers
incorrectly printed or typed on the definitive Notes.
SECTION 24: Effect of Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
SECTION25: Ordinance a Contract; Amendments - Outstanding Notes. The City
acknowledges that the covenants and obligations of the City herein contained are a material
inducement to the purchase of the Notes. This Ordinance shall constitute a contract with the Holders
from time to time, shall be binding on the City and its successors and assigns, and shall not be
mnended or repealed by the City so long as any Note 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
Notes 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 Notes, no such
amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of
#45194373vl -24-
and interest on the Notes, 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 Notes, (2) give any
preference to any Note over any other Note, or (3) reduce the aggregate principal amount of Notes
required for consent to any such amendment, addition, or rescission.
SECTION 26: 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 right, 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, the Paying Agent/Registrar,
and the Holders.
SECTION 27.' Inconsistent Provisions. All ordinances and resolutions, or parts 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.
SECTION 28: Construction of Terms. If appropriate in the context of this 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 29: Governing Law. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of A~nerica.
SECTION 30: 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 31: Incomoration of Preamble Recitals. The recitals contained in the preamble
hereof are hereby found to be true, 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.
SECTION32: AuthorizationofPayingAgent/RegistrarAgreement. TheCityCouncilofthe
City hereby finds and determines that it is in the best interest of the City to authorize the execution
ora Paying Agent/Registrar Agreement concerning the payment, exchange, and transferability o fthe
Notes. 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 33: Public Meeting It is officially found, determined, and declared that the
meeting at which this Ordinance is finally 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.
1/45194373vl -25-
SECTION 34: 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 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 35: No Recourse A~ainst City Officials. No recourse shall be had for the payment
of principal of, premium, if any, or interest on any Note or for any claim based thereon or on this
Ordinance against any official of the City or any person executing any Note.
SECTION 36: Continnin~ Disclosure Undertaking
Definitions. As used in this Section, the following terms have the meanings ascribed to such
terms below:
Rule means SEC Rule 15c2-12, as amended from time to time.
SEC means the United States Securities and Exchange Commission.
The aggregate principal amount of the Notes is less than $1,000,000 and therefore SEC Rule
15c2-12 is not applicable to the offering of the Notes. Accordingly, no contract to provide
continuing disclosure information after the issuance of the Notes has been made by the City with
investors.
SECTION 37: Book-Entry Only System
It is intended that the Notes initially be registered so as to participate in a securities
depository system (the DTC 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 Notes shall
b.e issued (following cancellation of the Initial Notes described in Section 7) in the form of a separate
single definitive Note. Upon issuance, the ownership of each such Note shall be registered in the
name of Cede & Co., as the nominee of DTC, and all of the Outstanding Notes 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 Notes registered in the nan~e 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 Notes 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 Notes (an Indirect Participant). Without limiting the immediately
#45194373v I -26-
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 Notes, or (ii) the delivery to any Depository
Participant or any other person, other than a registered owner of the Notes, as shown on the Security
Registrar, of any notice with respect to the Notes, including any notice of redemption, or (iii) the
delivery to any Depository Participant or any Indirect Participant or any other Person, other than a
Holder of a Note, of any amount with respect to principal of, premium, if any, or interest on the
Notes. While in the DTC System, no person other than Cede & Co., or any successor thereto, as
nominee for DTC, shall receive a Note 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 A~ent/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 Notes that they be able to obtain certificated Notes, 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 Notes 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 Notes 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 Notes may be registered in whatever name or names the Holders of Notes
transferring or exchanging the Notes shall designate, in accordance with the provisions hereof.
Notwithstanding any other provision of this Ordinance to the contrary, so long as any Note
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 Note and all notices with respect to such Note shall be made
and given, respectively, in the manner provided in the Representation Letter.
SECTION 38. Further Procedures. The officers and employees of the 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 Notes and the Paying Agent/Registrar Agreement. In addition, prior to the initial
delivery of the Notes, the Mayor, the City Manager, the City Attorney 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 Notes by the Texas Attorney
//45194373vl -27-
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 shall nevertheless be
valid and sufficient for all purposes the same as if such officer had remained in office until such
delivery.
SECTION 39: Effective Date. Pursuant to the provisions of Section 1201.028, as amended,
Texas Government Code, this Ordinance shall be effective immediately upon adoption,
notwithstandin an rovisionin the ' '
g Yp City s Home Rule Charter to the contraryconcerning a multiple
reading requirement for the adoption of ordinances.
[The remainder of this page intentionally left blank.]
#45194373vi -28-
PASSED AND ADOPTED on the 2nd day of July, 2002.
CITY OF ~Z, TEXAS
City Secretary
(CITY SEAL)
Exhibit A - Paying Agent/Registrar Agreement
Exhibit B - Purchase and investment Letter
Exhibit C - DTC Letter of Representation
EXHIBIT A
Paying Agent/Registrar Agreement
See Tab No.
A-1
EXHIBIT B
Purchase and Investment Letter
See Tab No.
EXHIBIT C
DTC Letter of Representations
See Tab No.
C-1
PUBLISHER'S AFFIDAVIT
THE STATE OF TEXAS,
County of Guadalupe
Before me, the undersigned authority, on this date personally appeared
, known to me, who, being by me duly sworn, on
his oath deposes and says that he is the Managing Editor 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 z time(s) before the return day
named therein, such publications being on the following dates:
July 10, 2002
and a newspaper copy of which is hereto attached.
Sworn t ed before me this//r/c'' ~'~ day of
o~cr..~ib , A.D., 2002.
[~'~"~ c~ll C:'-~N^V~¥ ~ Nota, Public, Guadalupe Count, lexas
A 60 x 104 Foot Lot ....... ' Chow mix, shaved rear- the northwest, paralleling an
&nd a 19 x 115 Foot WE NOW ACCEPT end, reddish color. Lost Service ((;PS) 345 kV
i-or, Block 65, West Ad- Master Card, Visa, Amed- in the Burges St. area. approxirnalely 9 800 feet. Ihe
dition to the City of Se- can Express & Discover 830-379-8648 makes a turn to the southwest
guin, Suadalupa Coun- Card on all ads. PAI~.~KEET~ existing 345 kV line) and fi)Ilo,,
ty, Texas being that 379-5441. t~ Ji...(Y°ung) & cages, 106 for approx hate v 5,200 feet to a
j2roperty more particu-
I~ry described in Vol- - ¢tl31.tll~l&Mt.~.ll~!~S. Sttuders acrOss from Home Road, approximately 1,70
~r~t344¢: Page~ ~ 02-M,1- 4o -430 . Wodke Road.~
~tnd Vo~u~ ~,.~ An ordinance ~ the At this point, the preferred rot
440 of the Deed Re- City Council of tile. City matcl¥ 2,001~ feet to the existh
cords, Guad~' of Scherlz, Texas
County, Texas, thorizing the i~suance CLEAN COAST- Substation.
or upon the written re- of "City of Scheilz, AL HAY Route 1 (D,E-G-I)
quest of said defend- Texas tax notes, sades $4.0Oabale. Thisaltemateroute(Routellb
ants or their attorney, a 2002", an annual ad Call 830-822-1100 on the prey ous y certified Cap,
sufficient portion-there- valorem tax, within the CLEAN COAST- II 17, approximately I mile nort.
of to satisfy saki judg- limitations prescribed AL HAY Road. The route proceeds west
ment for delinquent by law, for lhe payment ~ $4.00 a bale. from this point for approxinlate[}r
Dmperty taxes and ac- o~ ~he notes; prescrib- Call 830-822-1100 second circuit on the Capote to
srued penalties and in- lng the form, terms,
{ernst and costs of st)it conditions, and resolv- FENCES stmctms.
~ver, to the right of m- dent and related to the needs. Sexton, hlc.
Ilemption, the defend- issuance, sale, and de- 830-875-3931
~nts or any parson hav- livery of ~ notes; au-
{ag an interest therein, thodzing the execution QUALITY COASTAL
~o redeem the said of a paying agent/reg-- Sq. bales, baling soon.
roperty, or their inter- trar agreement and a $300 in field, del. avail.,
st therein, within the pumhasa and inve~t-Sexton, Inc. 830-875-
I~erled of time and in ment letter; ~g, ~931
903 Painting
904 Plumbing