2006B38-Bonds
ORDINANCE NO. 06-8-38
FINAL
AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF
SCHERTZ, TEXAS AUTHORIZING THE ISSUANCE OF "CITY OF
SCHERTZ, TEXAS GENERAL OBLIGATION BONDS, SERIES 2006",
LEVYING AN ANNUAL AD VALOREM TAX, WITHIN THE
LIMITATIONS PRESCRIBED BY LAW, FOR THE PAYMENT OF THE
BONDS; PRESCRIBING THE FORM, TERMS, CONDITIONS, AND
RESOLVING OTHER MATTERS INCIDENT AND RELATED TO THE
ISSUANCE, SALE, AND DELIVERY OF THE BONDS, INCLUDING THE
APPROVAL AND DISTRIBUTION OF AN OFFICIAL STATEMENT
PERTAINING THERETO; AUTHORIZING THE EXECUTION OF A
PAYING AGENT/REGISTRAR AGREEMENT AND A PURCHASE
CONTRACT; COMPLYING WITH THE REQUIREMENTS IMPOSED
BY THE LETTER OF REPRESENTATIONS PREVIOUSLY EXECUTED
WITH THE DEPOSITORY TRUST COMPANY; AND PROVIDING FOR
AN EFFECTIVE DATE
WHEREAS, the City Council (the City Council) of the City hereby finds and determines
that general obligation bonds of the City in the total principal amount of $15,000,000 should be
issued and sold at this time, being the first installment of general obligation bonds approved and
authorized to be issued at an election held on May 13, 2006, the respective authorized purposes
and amounts authorized to be issued therefor, amounts previously issued, amounts being issued
pursuant to this ordinance, and amounts remaining to be issued from such voted authorizations
subsequent to the date hereof being as follows:
Date Amount Previously Bonds Amount
Voted Purpose Authorized Issued Bonds Issued Unissued
Herein
5-13-06 Library Facility $6,000,000 $0 $6,000,000 $0
Improvements
5-13-06 Construct and Equip $7,500,000 $0 $0 $7,500,000
Recreation Center
5-13-06 Construct Street, Curb, $20,000,000 $0 $7,000,000 $13,000,000
and Sidewalk
Improvements
5-13-06 Construct drainage $4,000,000 $0 $2,000,000 $2,000,000
Improvements
WHEREAS, the City Council intends to issue an aggregate principal of $15,000,000 in
general obligation bonds the proceeds of which will be utilized to provide for the (i) purpose of
making permanent public improvements and for public purposes described above, and
(ii) payment of the costs of issuance of the general obligation bonds;
WHEREAS, the City Council hereby finds and determines that the issuance of the
general obligation bonds is in the best interests of the citizens of the City, now, therefore,
45802369.2
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
THAT:
SECTION 1: Authorization - Designation - Principal Amount - Purpose - Dated Date.
General obligation bonds of the City shall be and are hereby authorized to be issued in the
aggregate principal amount of FIFTEEN MILLION and NollOO Dollars ($15,000,000), to be
designated and bear the title of "CITY OF SCHERTZ, TEXAS GENERAL OBLIGATION
BONDS, SERIES 2006" (the Bonds), for the purpose of providing funds: (i) to construct and
equip a library facility, (ii) to construct street, curb and sidewalk improvements, (iii) to construct
drainage improvements, and (ii) to pay the costs related to the issuance of the Bonds, all in
conformity with the laws of the State of Texas, particularly Chapters 1251 and 1331, as
amended, Texas Govemment Code, an election held in the City on May 13, 2006, and the City's
Home Rule Charter.
SECTION 2: Fully Registered Obligations - Authorized Denominations - Stated
Maturities - Interest Rates. The Bonds shall be issued as fully registered obligations, without
coupons, shall be dated August 1, 2006 (the Dated Date) and shall be in denominations of
$5,000 or any integral multiple thereof, shall be lettered "R- " and numbered consecutively from
One (1) upward and principal shall become due and payable on February 1 in each of the years
and in amounts (the Stated Maturities) and bear interest at the rates per annum in accordance
with the following schedule:
Y ears of Principal Interest
Stated Maturity Amounts ($) Rates (%)
2007 475,000 4.000
2008 570,000 4.000
2009 100,000 4.000
2010 100,000 4.000
xxxx xxxxxx xxxx
2012 100,000 4.000
2013 200,000 4.000
2014 200,000 4.000
2015 350,000 4.000
2016 400,000 4.000
2017 425,000 4.125
2018 475,000 4.200
2019 655,000 4.300
2020 685,000 4.375
2021 715,000 4.400
xxxx xxxxxx xxxx
2023 1,540,000 5.250
xxxx xxxxxx xxxx
2025 1,715,000 5.250
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Years of Principal Interest
Stated Maturity Amounts ($) Rates (%)
xxxx xxxxxx xxxx
2027 1,900,000 5.250
xxxx xxxxxx xxxx
2031 4,395,000 4.625
The Bonds shall bear interest on the unpaid principal amounts from the Dated Date, or
from the most recent Interest Payment Date to which interest has been paid or duly provided for,
to the 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 Bonds shall be payable on
February 1 and August 1 in each year, commencing February 1, 2007 (the Interest Payment
Date), while the Bonds are Outstanding.
SECTION 3: Payment of Bonds - Paying Agent/Registrar.
The principal of, premium, if any, and the interest on the Bonds, 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, premium, if any, and interest on the
Bonds shall be without exchange or collection charges to the Holder (as hereinafter defined) of
the Bonds.
The selection and appointment of Wells Fargo Bank, National Association, Austin,
Texas, to serve as the initial Paying Agent/Registrar for the Bonds 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 Security Register) for the
registration, payment, and transfer of the Bonds, 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 Bonds 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 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 Bonds 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 Bonds, due and payable by reason
of Stated Maturity, redemption, or otherwise, shall be payable only to the registered owner of the
45802369.2
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Bonds 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 Bonds, (ii) on the date of surrender of the
Bonds for purposes of receiving payment of principal thereof at the Bonds' Stated Maturity or
upon redemption of the Bonds, 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 Bond 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 Bonds shall be payable only upon presentation
and surrender of the Bonds to the Paying Agent/Registrar at its corporate trust office. Interest on
the Bonds 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 Bonds
(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 Bonds
shall be a Saturday, a Sunday, a legal holiday, or a day on which banking institutions in the city
where the corporate trust office of 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 Bonds 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 Bond 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. Mandatory Redemption. The Bonds stated to mature on February 1, 2023,
February 1, 2025, February 1, 2027, and February 1, 2031 are referred to herein as the "Term
Bonds". The Term Bonds are subject to mandatory sinking fund redemption prior to their stated
maturities from money required to be deposited in the Bond Fund for such purpose and shall be
redeemed in part, by lot or other customary method, at the principal amount thereof plus accrued
interest to the date of redemption in the following principal amounts on February 1 in each of the
years as set forth below:
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Term Bonds
Stated to Mature
on February L 2023
Term Bonds
Stated to Mature
on February L 2025
Year
Principal
Amount ($)
Year
Principal
Amount ($)
2022
2023
750,000
790,000*
2024
2025
835,000
880,000*
Term Bonds
Stated to Mature
on February 1,2027
Term Bonds
Stated to Mature
on February L 2031
Year
Principal
Amount ($)
Year
Principal
Amount ($)
2026
2027
925,000
975,000*
2028
2029
2030
2031
1,025,000
1,070,000
1,125,000
1,175,000*
*Payable at Stated Maturity.
The principal amount of a Term Bond required to be redeemed pursuant to the operation
of such mandatory redemption provisions shall be reduced, at the option of the City, by the
principal amount of any Term Bonds of such Stated Maturity which, at least 50 days prior to the
mandatory redemption date (1) shall have been defeased or acquired by the City and delivered to
the Paying Agent/Registrar for cancellation or (2) shall have been purchased and canceled by the
Paying Agent/Registrar at the request of the City with money in the Bond Fund.
B. Optional Redemption. The Bonds having Stated Maturities on and after
February 1, 2017 shall be subject to redemption prior to Stated Maturity at the option of the
City, on February 1, 2016, or on any date thereafter, as a 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.
C. Exercise of Redemption Option. At least forty-five (45) days prior to a date set
for the redemption of Bonds (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 right to redeem Bonds, 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 right to
redeem Bonds shall be entered in the minutes ofthe governing body of the City.
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D. Selection of Bonds for Redemption. If less than all Outstanding Bonds of the
same Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall
select at random and by lot the Bonds to be redeemed, provided that if less than the entire
principal amount of a Bond is to be redeemed, the Paying Agent/Registrar shall treat such Bond
then subject to redemption as representing the number of Bonds outstanding which is obtained
by dividing the principal amount of such Bond by $5,000.
E. Notice of Redemption. Not less than thirty (30) days prior to a redemption date
for the Bonds, 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 Bond 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 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 Bonds,
(ii) identify the Bonds 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 Bonds, or the portion of the principal amount 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 Bonds, 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. If a Bond 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 Bond (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 Bonds (or of the principal amount thereof to be redeemed) at the then
applicable redemption price is held for the purpose of such payment by the Paying
Agent/Registrar, then on the redemption date designated in such notice, interest on said Bonds
(or the principal amount thereof to be redeemed) called for redemption shall cease to accrue, and
such Bonds shall not be deemed to be Outstanding in accordance with the provisions of this
Ordinance. 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 Bond is subject by its terms to redemption and has been called for redemption and
notice of redemption thereof has been duly given as hereinabove provided, such Bond (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 Bonds (or of the principal amount
thereof to be redeemed) at the then applicable redemption price is held for the purpose of such
payment by the Paying Agent/Registrar, then on the redemption date designated in such notice,
interest on the Bond (or the principal amount thereof to be redeemed) called for redemption shall
cease to accrue and such Bonds shall not be deemed to be Outstanding.
45802369.2
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F. Transfer/Exchange of Bonds. Neither the City nor the Paying Agent/Registrar
shall be required to transfer or exchange any Bond during a period beginning forty-five (45)
days prior to the date fixed for redemption of the Bonds or to transfer or exchange any Bond
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 Bond which is subject to redemption
in part.
SECTION 5: Execution - Registration. The Bonds 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. The signature of any of said officers on the Bonds may be manual or facsimile.
Bonds bearing the manual or facsimile signatures of individuals who were, at the time of the
Dated 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 Bonds to
the Purchasers, all as authorized and provided in Chapter 1201, as amended, Texas Government
Code.
No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Bond 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 signature, and either such certificate upon any Bond shall be
conclusive evidence, and the only evidence, that such Bond has been duly certified or registered
and delivered.
SECTION 6: Registration - Transfer - Exchange of Bonds - Predecessor Bonds. The
Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and
address of every owner of the Bonds, or, if appropriate, the nominee thereof. Any Bond may, in
accordance with its terms and the terms hereof, be transferred or exchanged for Bonds of other
authorized denominations upon the Security Register by the Holder, in person or by his duly
authorized agent, upon surrender of such Bond 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 Bond 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 Bonds of authorized
denomination and having the same Stated Maturity and of a like interest rate and aggregate
principal amount as the Bond or Bonds surrendered for transfer.
At the option of the Holder, Bonds may be exchanged for other Bonds of authorized
denominations and having the same Stated Maturity, bearing the same rate of interest and of like
aggregate principal amount as the Bonds surrendered for exchange upon surrender of the Bonds
to be exchanged at the corporate trust office of the Paying Agent/Registrar. Whenever any
Bonds are so surrendered for exchange, the City shall execute, and the Paying Agent/Registrar
shall register and deliver, the Bonds to the Holder requesting the exchange.
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All Bonds issued upon any transfer or exchange of Bonds 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 Bonds surrendered upon such transfer or exchange.
All transfers or exchanges of Bonds 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 fee, tax or other governmental charges required to be paid with respect to such transfer or
exchange.
Bonds canceled by reason of an exchange or transfer pursuant to the provisions hereof are
hereby defined to be Predecessor Bonds, evidencing all or a portion, as the case may be, of the
same debt evidenced by the new Bond or Bonds registered and delivered in the exchange or
transfer therefor. Additionally, the term Predecessor Bonds shall include any Bond registered
and delivered pursuant to Section 17 in lieu of a mutilated, lost, destroyed, or stolen Bond which
shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond.
SECTION 7: Initial Bonds. The Bonds herein authorized shall be initially issued as a
single fully registered Bond in the aggregate principal amount of $15,000,000 with principal
installments to become due and payable as provided in Section 2 hereof and numbered T-1 (the
Initial Bonds), and the Initial Bonds shall be registered in the name of the Purchasers or the
designee thereof. The Initial Bonds shall be the Bonds 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 Bonds, the Paying Agent/Registrar, pursuant to written
instructions from the Purchasers, or the designee thereof, shall cancel the Initial Bonds delivered
hereunder and exchange therefor definitive Bonds 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 Bonds, the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas, the Registration Certificate of the Paying Agent/Registrar,
and the form of Assignment to be printed on each of the Bonds 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 Bonds, 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 Bonds as
45802369.2
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evidenced by their execution thereof. Any portion of the text of any Bond may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the Bond.
The definitive Bonds 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 Bonds as evidenced by their execution thereof, but the Initial Bond(s)
submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise
reproduced.
[The remainder of this page intentionally left blank.)
45802369.2
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Form of Definitive Bond.
REGISTERED
NO.
REGISTERED
PRINCIP AL AMOUNT
$
United States of America
State of Texas
Counties of Guadalupe, Bexar and Comal
CITY OF SCHERTZ, TEXAS
GENERAL OBLIGATION BOND,
SERIES 2006
Dated Date:
August 1, 2006
Interest Rate:
Stated Maturity:
CUSIP NO:
REGISTERED OWNER:
PRINCIP AL AMOUNT:
The City of Schertz, Texas (the City), a body corporate and a municipal corporation in
the Counties of Guadalupe, Bexar and Comal, 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 Dated 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, 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, 2007.
Principal and premium, if any, on this Bond 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 Bond (or one or more Predecessor Bonds, 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 Bond 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.
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This Bond is one of the series specified in its title issued in the aggregate principal
amount of $15,000,000 (the Bonds) pursuant to an ordinance adopted by the governing body of
the City (the Ordinance), for the purpose of providing funds: (i) to construct and equip a library
facility, (ii) to construct street, curb and sidewalk improvements, (iii) to construct drainage
improvements, and (ii) to pay the costs related to the issuance of the Bonds, all in conformity
with the laws of the State of Texas, particularly Chapters 1251 and 1331, as amended, Texas
Government Code, an election held in the City on May 13, 2006, and the City's Home Rule
Charter.
As specified in the Ordinance, the Bonds stated to mature on February 1, 2023, February
1,2025, February 1, 2027, and February 1, 2031 are referred to herein as the "Term Bonds".
The Term Bonds are subject to mandatory sinking fund redemption prior to their stated
maturities from money required to be deposited in the Bond Fund for such purpose and shall be
redeemed in part, by lot or other customary method, at the principal amount thereof plus accrued
interest to the date of redemption in the following principal amounts on February 1 in each of the
years as set forth below:
Term Bonds
Stated to Mature
on February 1, 2023
Term Bonds
Stated to Mature
on February L 2025
Year
Principal
Amount ($)
Year
Principal
Amount ($)
2022
2023
750,000
790,000*
2024
2025
835,000
880,000*
Term Bonds
Stated to Mature
on February L 2027
Term Bonds
Stated to Mature
on February L 2031
Year
Principal
Amount ($)
Year
Principal
Amount ($)
2026
2027
925,000
975,000*
2028
2029
2030
2031
1,025,000
1,070,000
1,125,000
1,175,000*
*Payable at Stated Maturity.
The principal amount of a Term Bond required to be redeemed pursuant to the operation
of such mandatory redemption provisions shall be reduced, at the option of the City, by the
principal amount of any Term Bonds of such Stated Maturity which, at least 50 days prior to the
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mandatory redemption date (1) shall have been defeased or acquired by the City and delivered to
the Paying Agent/Registrar for cancellation or (2) shall have been purchased and canceled by the
Paying Agent/Registrar at the request of the City with money in the Bond Fund.
The Bonds stated to mature on and after February 1,2017 may be redeemed prior to their
Stated Maturities at the option of the City, on February 1, 2016, 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, together with accrued interest to the date of redemption, and upon thirty (30) days
prior written notice being given by United States Mail, first-class postage prepaid, to Holders of
the Bonds to be redeemed, and subject to the terms and provisions relating thereto contained in
the Ordinance. If this Bond 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 Bond to the Paying Agent/Registrar at its corporate trust office, a new Bond or
Bonds 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 Bond (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 Bond
(or the portion of the principal sum hereof to be redeemed) shall become due and payable, and, if
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 payment by the Paying
Agent/Registrar, 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 Bond 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 Bond within forty-five (45) days of the date fixed for
redemption; provided, 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 Bonds 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.
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 Bonds; the terms and conditions relating to the
transfer or exchange of the Bonds; 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 Agent/Registrar; the terms and provisions upon which this Bond 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 Bond, 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
45802369.2
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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 Bonds 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 Bond 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 Bond 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 Bonds does not exceed any constitutional or statutory limitation; and that due provision
has been made for the payment of the principal of, premium if any, and interest on the Bonds by
the levy of a tax as aforestated. In case any provision in this Bond 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 Bond and the Ordinance shall be construed in accordance with and
shall be governed by the laws of the State of Texas.
45802369.2
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IN WITNESS WHEREOF, the City has caused this Bond to be duly executed under its
official seal.
CITY OF SCHERTZ, TEXAS
Mayor
ATTEST:
City Secretary
(CITY SEAL)
[The remainder of this page intentionally left blank.)
45802369.2
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B. *Form of Registration Certificate of Comptroller of Public Accounts to Appear on
Initial Bonds Only.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER OF
PUBLIC ACCOUNTS
s
s
S REGISTER NO.
S
THE STATE OF TEXAS
I HEREBY CERTIFY that this Bond 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
(SEAL)
* Note to Printer: Not to appear on printed Bonds
C. Form of Certificate of Paying Agent/Registrar to Appear on Definitive Bonds
Only.
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued under the provisions of the within-mentioned Ordinance;
the Bond or Bonds 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:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Paying Agent/Registrar
By:
Authorized Signature
45802369.2
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D. 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 Bond and all rights thereunder, and hereby irrevocably constitutes and appoints
attorney to transfer the within Bond 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 Bond in every particular.
Signature guaranteed:
E. The Initial Bonds shall be in the respective forms set forth in paragraph B of this
Section, except that the form of a single fully registered Initial Bond shall be modified as
follows:
(i) immediately under the name of the Bond(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 Guadalupe, Bexar and Comal, 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 on the first day of
February in each of the years and in principal amounts and bearing interest at per annum rates in
accordance with the following schedule:
45802369.2
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Years of
Stated Maturity
Principal
Amounts ($)
Interest
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 Amount hereof from the Dated Date, 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 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 1,2007.
Principal of this Bond shall be payable to the Registered Owner hereof (the Holder),
upon its presentation and surrender, at the corporate trust office of Wells Fargo Bank, National
Association, Austin, Texas (the Paying Agent/Registrar). Interest shall be payable to the Holder
of this Bond 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 Bond 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 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.
F. Insurance Legend. If bond insurance is obtained by the City or the Purchasers for
the Bonds, the Definitive Bonds and the Initial Bonds 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: (i) the terms defined in
this Section have the meanings assigned to them in this Section, and certain terms used in
Sections 19 and 36 of this Ordinance have the meanings assigned to them in such Sections, 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.
A. The term Authorized Officials shall mean the Mayor, City Secretary, and/or the
City Manager.
B. The term Bond Fund shall mean the special Fund created and established by the
provisions of Section 10 of this Ordinance.
C. The term Bonds shall mean the $15,000,000 "CITY OF SCHERTZ, TEXAS
GENERAL OBLIGATION BONDS, SERIES 2006" authorized by this Ordinance.
45802369.2
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D. The term Closing Date shall mean the date of physical delivery of the Initial
Bonds in exchange for the payment in full by the Purchasers.
E. The term City shall mean City of Schertz, located in the Counties of Guadalupe,
Bexar and Comal, Texas and, where appropriate, the City Council of the City.
F. 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 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.
G. The term Depository shall mean an official depository bank of the City.
H. 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.
1. The term Holder or Holders shall mean the registered owner, whose name
appears in the Security Register, for any Bond.
J. The term Insurance Policy shall mean the municipal bond insurance policy issued
by the Insurer insuring the payment when due of the principal of and interest on the Bonds as
provided therein.
K. The term Insurer shall mean MBIA Insurance Corporation, or any successor
the.r;eto or assignee thereof.
L. The term Interest Payment Date shall mean the date semiannual interest is
payable on the Bonds, being February 1 and August 1 of each year, commencing February 1,
2007, while any of the Bonds remain Outstanding.
M. The term Ordinance shall mean this ordinance adopted by the City Council of the
City on August 15, 2006.
45802369.2
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N. The term Outstanding when used in this Ordinance with respect to Bonds shall
mean, as of the date of determination, all Bonds issued and delivered under this Ordinance,
except:
(1) those Bonds canceled by the Paying Agent/Registrar or delivered to the
Paying Agent/Registrar for cancellation;
(2) those Bonds for which payment has been duly provided by the City in
accordance with the provisions of Section 21 of this Ordinance; and
(3) those Bonds that have been mutilated, destroyed, lost, or stolen and
replacement Bonds have been registered and delivered in lieu thereof as provided in
Section 17 of this Ordinance.
O. The term Purchasers shall mean the initial purchasers of the Bonds named in
Section 18 of this Ordinance.
P. The term Stated Maturity shall mean the annual principal payments of the Bonds
payable on February 1 of each year, as set forth in Section 2 of this Ordinance.
SECTION 10: Bond Fund; Investments. For the purpose of paying the interest on and to
provide a sinking fund for the payment, redemption and retirement of the Bonds, there shall be
and is hereby created a special Fund to be designated "GENERAL OBLIGATION BONDS,
SERIES 2006 INTEREST AND SINKING FUND" (the Bond 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 Bond Fund sufficient to pay the
principal of, premium, if any, and interest on the Bonds as the same become due and payable and
shall cause to be transferred to the Paying Agent/Registrar from money on deposit in the Bond
Fund an amount sufficient to pay the amount of principal and/or interest falling due on the
Bonds, 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 Bonds.
Pending the transfer of funds to the Paying Agent/Registrar, money in any Fund
established by this Ordinance, at the option of the City, may 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 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
45802369.2
-19-
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 Bonds.
SECTION 11: Tax Levy. To provide for the payment of the Debt Service Requirements
on the Bonds being (i) the interest on the Bonds 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
Bonds or any interest thereon shall remain Outstanding, a sufficient tax, within the limitations
prescribed by law, 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 Bond Fund and are thereafter
pledged to the payment of the Bonds. 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 and other obligations of the City.
SECTION 12: Deposits to Bond Fund; Surplus Bond Proceeds. The City hereby
covenants and agrees to cause to be deposited in the Bond Fund prior to a principal and interest
payment date for the Bonds, 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 Bonds as the same accrues or matures or comes due by reason of
Stated Maturity.
Accrued interest, plus the premium received from the Purchasers shall be deposited to the
Bond Fund. In addition, any surplus proceeds from the sale of the Bonds, including investment
income thereon, not expended for authorized purposes shall be deposited in the Bond Fund, and
such amounts so deposited shall reduce the sums otherwise required to be deposited in said Fund
from ad valorem taxes.
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 the State 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 Bond 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 Bonds shall be entitled to seek a writ of mandamus
45802369.2
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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 right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver of any such default or
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 Bonds 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 Bonds previously certified or
registered and delivered which the City may have acquired in any manner whatsoever, and all
Bonds so delivered shall be promptly canceled by the Paying Agent/Registrar. All canceled
Bonds held by the Paying Agent/Registrar shall be destroyed as directed by the City.
SECTION 17: Mutilated, Destroyed, Lost, and Stolen Bonds. If (1) any mutilated Bond
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 Bond, 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 Bond 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 Bond, a new Bond of the same
Stated Maturity and interest rate and of like tenor and principal amount, bearing a number not
contemporaneousl y outstanding.
45802369.2
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In case any such mutilated, destroyed, lost, or stolen Bond has become or is about to
become due and payable, the City in its discretion may, instead of issuing a new Bond, pay such
Bond.
Upon the issuance of any new Bond 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 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 Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost,
or stolen Bond shall constitute a replacement of the prior obligation of the City, whether or not
the mutilated, destroyed, lost, or stolen Bond 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 Bonds.
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 Bonds.
SECTION 18: Sale of Bonds - Approval of Purchase Contract - Official Statement
Approval - Use of Proceeds. The Bonds authorized by this Ordinance are hereby sold by the
City to SAMCO Capital Markets, Inc., as the authorized representative of a group of
underwriters (the Purchasers, having all the rights, benefits, and obligations of a Holder) in
accordance with the provisions of a Purchase Contract (the Purchase Contract), dated August
15, 2006, attached hereto as Exhibit B and incorporated herein by reference as a part of this
Ordinance for all purposes. The Initial Bonds shall be registered in the name of SAMCO Capital
Markets, Inc. The Mayor of the City is hereby authorized and directed to execute the Purchase
Contract for and on behalf of the City and as the act and deed of this City Council, and in regard
to the approval and execution of the Purchase Contract, the City Council hereby finds,
determines and declares that the representations, warranties, and agreements of the City
contained in the Purchase Contract are true and correct in all material respects and shall be
honored and performed by the City. Delivery of the Bonds to the Purchasers shall occur as soon
as practicable after the adoption of this Ordinance, upon payment therefor in accordance with the
terms of the Purchase Contract.
Furthermore, the use and distribution of the Preliminary Official Statement by the
Purchasers in connection with the public offering and sale of the Bonds is hereby ratified,
confirmed and approved in all respects. The final Official Statement, being a modification and
amendment of the Preliminary Official Statement to reflect the tenus of sale, attached as
Exhibit A to the Purchase Contract (together with such changes approved by the Mayor and City
Secretary and the City Manager, anyone or more of said officials), shall be and is hereby in all
respects approved and the Purchasers are hereby authorized to use and distribute the final
Official Statement, dated August 15, 2006, in the reoffering, sale and delivery of the Bonds to
the public. The Mayor and City Secretary are further authorized and directed to manually
execute and deliver for and on behalf of the City copies of the Official Statement in final form as
may be required by the Purchasers, and such final Official Statement in the form and content
manually executed by said officials shall be deemed to be approved by the City Council and
45802369.2
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constitute the Official Statement authorized for distribution and use by the Purchasers. 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 payment for and delivery of
the Bonds.
Proceeds from the sale of the Bonds shall be applied as follows:
A. Accrued interest (in the amount of$95,384.11) received from the Purchasers shall
be deposited into the Bond Fund. The City received a net premium from the sale of the Bonds of
$226,090.45 which is hereby allocated by the City in the following manner: (1) $103,033.00 to
pay the Purchasers' compensation, (2) $45,120.79 to pay the premium of the Insurer, and
(3) $77,936.66 to pay certain other costs of issuance.
B. The balance of the proceeds derived from the sale of the Bonds (after making the
deposits referenced in A above) shall be deposited into the special construction account or
accounts created for the projects to be constructed with the Bond proceeds. This special
construction account shall be established and maintained at the City's depository bank and shall
be invested in accordance with the provisions of Section 10 of this Ordinance. Interest earned on
the proceeds of the Bonds pending completion 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 11.
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 111 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 Bonds.
"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 Bonds are invested and which
is not acquired to carry out the governmental purposes of the Bonds.
"Rebate Amount" has the meaning set forth in Section 1.148-1 (b) of the
Regulations.
45802369.2
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"Regulations" means any proposed, temporary, or final Income Tax Regulations
issued pursuant to Sections 1 03 and 141 through 150 of the Code, and 1 03 of the Internal
Revenue Code of 1954, which are applicable to the Bonds. 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.
"Yielcf' of
(1) any Investment has the meanIng set forth 111 Section 1.148-5 of the
Regulations; and
(2) the Bonds has the meaning set forth in Section 1.148-4 of the Regulations.
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 or refinanced directly or indirectly with
Gross Proceeds) in a manner which if made or omitted, respectively, would cause the interest on
any Bond 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 Bond, the City shall comply
with each ofthe specific covenants in this Section.
C. No Private Use or Private Payments. Except to the extent that it will not cause the
Bonds 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
Bonds:
(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 Bonds (including property financed with Gross
Proceeds of the Refunded Obligations), 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 carried on by any person or entity (including the
United States or any agency, department and 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 Bonds or any property
the acquisition, construction or improvement of which is to be financed or refinanced
directly or indirectly with such Gross Proceeds (including property financed with Gross
Proceeds of the Refunded Obligations), 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.
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D. No Private Loan. Except to the extent that it will not cause the Bonds 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 Bonds 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 to the extent that it will not cause the
Bonds 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 Bonds 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 Bonds.
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 Bonds 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. Except to the extent otherwise provided 111
section 148(f) of the Code and the Regulations and rulings thereunder:
(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
Bond is discharged. However, to the extent permitted by law, the City may commingle
Gross Proceeds of the Bonds 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(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 Bonds until six years after
the final Computation Date.
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(3) As additional consideration for the purchase of the Bonds 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 Bond 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
Bonds equals (i) in the case of a Final Computation Date as defined in
Section1.148-3(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, 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(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(f) 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 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.
1. 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 Bonds, 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 Bonds not been
relevant to either party.
1. Bonds Not Hedge Bonds.
(1) At the time the original bonds refunded by the Bonds were issued, the City
reasonably expected to spend at least 85% of the spendable proceeds of such bonds
within three years after such bonds were issued.
(2) Not more than 50% of the proceeds of the original bonds refunded by the
Bonds were 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, City Secretary, or
City Attorney, either or any combination of the foregoing, to make such elections in the
Certificate as to Tax Exemption or similar or other appropriate certificate, form, or document
permitted or required pursuant to the provisions of the Code or the Regulations, as they deem
necessary or appropriate in connection with the Bonds. Such elections shall be deemed to be
made on the Closing Date.
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SECTION 20: Control and Custody of Bonds. 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
Bonds pending their approval by the Attorney General, the registration thereof by the
Comptroller of Public Accounts and the delivery of the Bonds 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 Bonds, 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 Bonds to the Purchasers and the
initial exchange thereof for definitive Bonds.
SECTION 21: Satisfaction of Obligation of City. If the City shall payor cause to be
paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and
interest on the Bonds, 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.
Bonds, 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 Bonds or the principal amount(s) 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 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 Bonds, or the principal amount(s) thereof,
at 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
Bonds to be treated as arbitrage bonds within the meaning of section 148 of the Code (as defined
in Section 19 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 Bonds, 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
Bonds and remaining unclaimed for a period of four (4) years after the Stated Maturity or
applicable redemption date of the Bonds 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.
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Notwithstanding any other provision of this Ordinance to the contrary, it is hereby
provided that any determination not to redeem defeased Bonds 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 right to call the defeased Bonds for redemption; (2) gives notice of the reservation of that
right to the owners of the defeased Bonds 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 Bonds, after taking the redemption into account in determining the sufficiency of the
provisions made for the payment of the defeased Bonds.
SECTION 22: Printed Opinion. The Purchasers' obligation to accept delivery of the
Bonds is subject to its being furnished a final opinion of Fulbright & Jaworski L.L.P., Bond
Counsel, approving certain legal matters as to the Bonds, said opinion to be dated and delivered
as of the date of initial delivery and payment for such Bonds. Printing of a true and correct copy
of said opinion on the reverse side of each of the Bonds, with appropriate certificate pertaining
thereto executed by facsimile signature of the City Secretary of the City is hereby approved and
authorized.
SECTION 23: CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Bonds shall be of no significance or effect as regards the legality
thereof, and neither the City nor attorneys approving said Bonds as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds.
SECTION 24: Effect of Headings. The Section headings herein are for convenience only
and shall not affect the construction hereof.
SECTION 25: Ordinance a Contract: Amendments - Outstanding Bonds. The City
acknowledges that the covenants and obligations of the City herein contained are a material
inducement to the purchase of the Bonds. 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 amended or repealed by the City so long as any Bond 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 Bonds then Outstanding affected thereby, amend,
add to, or rescind any of the provisions of this Ordinance; provided; however, that, without the
consent of all Holders of Outstanding Bonds, no such amendment, addition, or rescission shall
(1) extend the time or times of payment of the principal of and interest on the Bonds, 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, the redemption price therefor, or interest on the Bonds, (2) give any
preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of
Bonds required for consent to any such amendment, addition, or rescission.
45802369.2
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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 111
accordance with the laws ofthe State of Texas and the United States of America.
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: Incorporation 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.
SECTION 32: Authorization of Paying Agent/Registrar 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 Bonds. 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 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 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
45802369.2
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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 Against City Officials. No recourse shall be had for the
payment of principal of, premium, if any, or interest on any Bond or for any claim based thereon
or on this Ordinance against any official of the City or any person executing any Bond.
SECTION 36: Continuing Disclosure of Information.
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 2006, financial information and operating data with
respect to the City of the general type included in the final Official Statement authorized by
Section 18 of this Ordinance, being the information described in Exhibit C hereto. Any financial
statements so to be provided shall be (1) prepared in accordance with the accounting principles
described in Exhibit C 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 (2) 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 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 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.
45802369.2
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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 statement 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.
C. 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 Bonds, if such event is material within
the meaning ofthe federal securities laws:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults;
(3) Unscheduled draws on debt servIce reserves reflecting financial
difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions or events affecting the tax-exempt status of the
Bonds;
(7) Modifications to rights of holders of the Bonds;
(8) Bond calls;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds;
and
(11) Rating changes.
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 by the time required by this Section.
D. 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 Bonds while, but only while, the City remains an "obligated
person" with respect to the Bonds within the meaning of the Rule, except that the City in any
event will give the notice required by subsection (C) hereof of any Bond calls and defeasance
that cause the City to be no longer such an "obligated person".
45802369.2
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The provisions of this Section are for the sole benefit of the Holders and beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or
any legal or equitable right, 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
undeIiake to provide any other information that may be relevant or material to a complete
presentation of the City's financial results, condition, or prospects 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 Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY BOND 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 WITH 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
comprise a breach of or default under the 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 ofthe 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 that arise 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 (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or
sell Bonds in the primary offering of the Bonds 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 (2) either (a) 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 Bonds consent to such amendment or (b) 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
Bonds. 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 the Bonds in the primary offering of the Bonds, 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 this Section an explanation, in
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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 37: Book-Entry Only System.
It is intended that the Bonds 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 Bonds
shall be issued (following cancellation of the Initial Bonds described in Section 7) in the form of
a separate single definitive Bond. Upon issuance, the ownership of each such Bond shall be
registered in the name of Cede & Co., as the nominee of DTC, and all of the Outstanding Bonds
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 Representations attached hereto as Exhibit D (the Representation Letter).
With respect to the Bonds 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 Bonds 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 Bonds (an Indirect 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 Bonds, or (ii) the
delivery to any Depository Participant or any other person, other than a registered owner of the
Bonds, as shown on the Security Register, of any notice with respect to the Bonds, 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 Bond, of any amount with respect to
principal of, premium, if any, or interest on the Bonds. While in the DTC System, no person
other than Cede & Co., or any successor thereto, as nominee for DTC, shall receive a Bond
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 Bonds that they be able to obtain certificated Bonds, 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 Bonds 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 Bonds 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
45802369.2
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not select such alternate securities depository system then the Bonds may be registered in
whatever name or names the Holders of Bonds transferring or exchanging the Bonds shall
designate, in accordance with the provisions hereof.
Notwithstanding any other provision of this Ordinance to the contrary, so long as any
Bond 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 Bond and all notices with respect to such
Bond 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 Bonds, the Paying Agent/Registrar Agreement, the Purchase Contract,
and the Official Statement. In addition, prior to the initial delivery of the Bonds, the Mayor, City
Manager, or the City Secretary 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 Bonds 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 shall nevertheless be
valid and sufficient for all purposes the same as if such officer had remained in office until such
delivery.
SECTION 39: Municipal Bond Insurance. The payment of the debt service requirements
on the Bonds is insured by the Insurer pursuant to the Insurance Policy.
SECTION 40: Insurance Provisions. The following provisions shall be effective as long
as any of the Bonds are insured by the Insurer pursuant to the Insurance Policy:
A. In the event that, on the second Business Day, and again on the Business Day,
prior to the payment date on the Bonds, the Paying Agent/Registrar has not received sufficient
money to pay all principal of and interest on the Bonds due on the second following or
following, as the case may be, Business Day, the Paying Agent/Registrar shall immediately
notify the Insurer or its designee on the same Business Day by telephone or telegraph, confirmed
in writing by registered or certified mail, of the amount of the deficiency.
B. If the deficiency is made up in whole or in part prior to or on the payment date,
the Paying Agent/Registrar shall so notify the Insurer or its designee.
C. In addition, if the Paying Agent/Registrar has notice that any Holder has been
required to disgorge payments of principal or interest on the Bonds to a trustee in bankruptcy or
creditors or others pursuant to a final judgment by a court of competent jurisdiction that such
payment constitutes an avoidable preference to such Holder within the meaning of any
45802369.2
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applicable bankruptcy laws, then the Paying Agent/Registrar shall notify the Insurer or its
designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or
certified mail.
D. The Paying Agent/Registrar is hereby irrevocably designated, appointed, directed
and authorized to act as attorney-in-fact for Holders ofthe Bonds as follows:
(1) If and to the extent there is a deficiency in amounts required to pay interest
on the Bonds, the Paying Agent/Registrar shall (a) execute and deliver to U.S. Bank Trust
National Association, or its successors under the Insurance Policy (the Insurance Paying
Agent/Registrar), in form satisfactory to the Insurance Paying Agent/Registrar, an
instrument appointing the Insurer as agent for such Holders in any legal proceeding
related to the payment of such interest and an assignment to the Insurer of the claims for
interest to which such deficiency relates and which are paid by the Insurer, (b) receive as
designee of the respective Holders (and not as Paying Agent/Registrar) in accordance
with the tenor of the Insurance Policy payment from the Insurance Paying
Agent/Registrar with respect to the claims for interest so assigned, and ( c) disburse the
same to such respective Holders; and
(2) If and to the extent of a deficiency in amounts required to pay principal of
the Bonds, the Paying Agent/Registrar shall (a) execute and deliver to the Insurance
Paying Agent/Registrar in form satisfactory to the Insurance Paying Agent/Registrar an
instrument appointing the Insurer as agent for such Holder in any legal proceeding
relating to the payment of such principal and an assignment to the Insurer of any of the
Bonds surrendered to the Insurance Paying Agent/Registrar of so much of the principal
amount thereof as has not previously been paid or for which moneys are not held by the
Paying Agent/Registrar and available for such payment (but such assignment shall be
delivered only if payment from the Insurance Paying Agent/Registrar is received),
(b) receive as designee of the respective Holders (and not as Paying Agent/Registrar) in
accordance with the tenor of the Insurance Policy payment therefor from the Insurance
Paying Agent/Registrar, and (c) disburse the same to such Holders.
E. Payments with respect to claims for interest on and principal of Bonds disbursed
by the Paying Agent/Registrar from proceeds of the Insurance Policy shall not be considered to
discharge the obligation of the City with respect to such Bonds, and the Insurer shall become the
owner of such unpaid Bond and claims for the interest in accordance with the tenor of the
assignment made to it under the provisions of this subsection or otherwise.
F. Irrespective of whether any such assignment is executed and delivered, the City
and the Paying Agent/Registrar hereby agree for the benefit of the Insurer that,
(1) They recognize that to the extent the Insurer makes payments, directly or
indirectly (as by paying through the Paying Agent/Registrar), on account of principal of
or interest on the Bonds, the Insurer will be subrogated to the rights of such Holders to
receive the amount of such principal and interest from the City, with interest thereon as
provided and solely from the sources stated in this Ordinance and the Bonds; and
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(2) They will accordingly pay to the Insurer the amount of such principal and
interest (including principal and interest recovered under subparagraph (ii) of the first
paragraph of the Insurance Policy, which principal and interest shall be deemed past due
and not to have been paid), with interest thereon as provided in this Ordinance and the
Bond, but only from the sources and in the manner provided herein for the payment of
principal of and interest on the Bonds to Holders, and will otherwise treat the Insurer as
the owner of such rights to the amount of such principal and interest.
G. In connection with the issuance of additional bonds, the City shall deliver to the
Insurer a copy of the disclosure document, if any, circulated with respect to such additional
bonds.
H. Copies of any amendments made to the documents executed in connection with
the issuance of the Bonds which are consented to by the Insurer shall be sent to Standard &
Poor's Corporation.
1. The Insurer shall receive notice of the resignation or removal of the Paying
Agent/Registrar and the appointment of a successor thereto.
J. The Insurer shall receive copies of all notices required to be delivered to Holders
and, on an annual basis, copies of the City's audited financial statements and annual budget.
K. Any notice that is required to be given to a Holder of the Bond or to the Paying
Agent/Registrar pursuant to the Ordinance shall also be provided to the Insurer. All notices
required to be given to the Insurer under the Ordinance shall be in writing and shall be sent by
registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk,
New York 10504, Attention: Surveillance.
L. The City agrees to reimburse the Insurer immediately and unconditionally upon
demand, to the extent permitted by law, for all reasonable expenses, including attorneys' fees
and expenses incurred by the Insurer in connection with (i) the enforcement by the Insurer of the
City's obligations, or the preservation or defense of any rights of the Insurer under this
Ordinance and any other document executed in connection with the issuance of the Bonds, and
(ii) any consent, amendment, waiver or other action with respect to the Ordinance or any related
document, whether or not granted or approved, together with interest on all such expenses from
and including the date incurred to the date of payment at Citibank's Prime Rate plus 3% or the
maximum interest rate permitted by law, whichever is less. In addition, the Insurer reserves the
right to charge a fee in connection with its review of any such consent, amendment or waiver,
whether or not granted or approved. The obligation of the City to make the payments and
reimbursements described in this paragraph shall be subject to annual appropriation by the City.
M. The City agrees not to use the Insurer's name in any public document including,
without limitation, a press release or presentation, announcement or forum without the Insurer's
prior consent; provided however, such prohibition on the use of the Insurer's name shall not
relate to the use of the Insurer's standard approved form of disclosure in public documents issued
in connection with the Bonds to be issued in accordance with the terms of the Commitment; and
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provided further such prohibition shall not apply to the use of the Insurer's name in order to
comply with public notice, public meeting or public reporting requirements.
N. The City shall not enter into any agreement nor shall it consent to participate in
any arrangement pursuant to which the Bonds are tendered or purchased for any purpose other
than the redemption and cancellation or legal defeasance of the Bonds without the prior written
consent ofthe Insurer.
SECTION 41: Effective Date. Pursuant to the provIsIOns of Section 1201.028, as
amended, Texas Government Code, this Ordinance shall be effective immediately upon
adoption, notwithstanding any provision in the City's Home Rule Charter to the contrary
concerning a multiple reading requirement for the adoption of ordinances.
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45802369.2
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PASSED, APPROVED AND ADOPTED on the 15th day of August, 2006.
CITY OF SCHERTZ, TEXAS
~
Mayor
ATTEST:
~~
(CITY SEAL)
Exhibit A- Paying Agent/Registrar Agreement
Exhibit B - Purchase Contract
Exhibit C- Annual Financial Information
Exhibit D - DTC Letter of Representations
45802369.2
S-l
EXHIBIT A
Paying Agent/Registrar Agreement
See Tab No.
45802369.2
A-I
EXHIBIT B
Purchase Contract
See Tab No.
45802369.2
B-1
EXHIBIT C
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 36 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:
1. 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.
2. The information contained in the Official Statement in Table 1 and Tables 1
through 10 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.
45802369.2
C-1
EXHIBIT D
DTC Letter of Representations
See Tab No.
45802369.2
D-1