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2010R73-Creation of Cibolo Valley LGC RESOLUTION NO. 10-R-73 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING AND APPROVING THE CREATION OF A NONPROFIT CORPORATION TO ACT ON BEHALF OF THE CITY OF SCHERTZ, TEXAS; AND OTHER MATTERS IN CONNECTION THEREWITH WHEREAS, Subchapter D of Chapter 431 (Sections 431.101-431.109) of the Texas Transportation Code, as amended (the "Act") authorizes local governments to create local government corporations to aid, assist, and act on behalf of local governments; and WHEREAS, the City Council (the "City Council") of the City of Schertz, Texas (the "City") has reviewed and approved the Articles of Incorporation attached hereto as Exhibit A and the Bylaws attached hereto as Exhibit B and has determined to authorize and approve the creation of a local government corporation, a nonprofit entity, as its constituted authority and instrumentality to accomplish the specific public purpose of acquiring, constructing, leasing, improving, enlarging, extending, repairing, maintaining, and operating a water utility system (the "Project"), pursuant to the provisions of Chapter 552 of the Texas Local Government Code, as amended, and other applicable law; and - WHEREAS, the City Council hereby finds and determines that the adoption of this Resolution is in the best interests of the citizens of the City; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS THAT: s Section 1. The City Council has found and determined, and hereby finds and determines, that it is advisable that a nonprofit corporation be authorized and created, with such corporation to be known as the Cibolo Valley Local Government Corporation (the "Corporation"). Section 2. The City Council hereby approves the Articles of Incorporation and Bylaws proposed to be used in organizing the Corporation (copies of which are attached to this Resolution as Exhibit A and Exhibit B, respectively, and made a part hereof for all purposes); hereby grants authority for the incorporation of the Corporation; and hereby appoints as the City Councilmember to serve Ex Officio with the Corporation. Prior to the filing of the Articles of Incorporation with the Texas Secretary of State, the City Council shall by Resolution appoint the City's initial director on the Corporation's Board of Directors. The Articles of Incorporation and Bylaws shall be modified as required to reflect the participating cities in addition Schertz and all initial directors. Section 3. The public purposes of the City which the Corporation may further on behalf of the City are acquiring, constructing, leasing, improving, enlarging, extending, repairing, maintaining, and operating a water utility system, pursuant to the provisions of Texas law, including, but not limited to, Chapter 552 of the Texas Local Government Code, as amended, and other applicable law, and to take all lawful actions necessary or useful in furthering such public purposes. 50357758.1 - 1 - Section 4. The Corporation is hereby designated as a duly constituted authority and instrumentality of the City (within the meaning of those terms in the regulations of the Treasury and the rulings of the Internal Revenue Service prescribed and promulgated pursuant to section 103 of the Internal Revenue Code of 1986, as amended) and shall be authorized to act on behalf of the City for the specific public purposes set forth in Section 3 hereof; but the Corporation is not intended to be and shall not be a political subdivision or a political corporation within the meaning of the Constitution and the general laws of the State of Texas (the "State"), including without limitation Article III, Section 52 of the State Constitution, and the City does not delegate to the Corporation any of its attributes of sovereignty, including the power to tax, the power of eminent domain, or the police power. However, for the purposes of the Texas Tort Claims Act (Subchapter A, Chapter 101, Texas Civil Practice and Remedies Code, as amended, the Corporation is intended to be, and shall be, a governmental unit, and its actions are intended to be, and shall be, governmental functions. Section 5. The Corporation may, under the conditions set forth in the Act and in this Resolution, issue, or provide for the issuance of, bonds or notes on behalf of the City, acquire, lease, sell, or convey certain properties, and enter into purchase agreements, lease agreements, credit agreements, and all other agreements necessary or useful in connection with the Project. The City shall not lend its credit or grant any public money or thing of value in aid of the Corporation. Furthermore, bonds or notes issued by the Corporation shall be deemed not to constitute a debt of the State, the City, or of any other political corporation, subdivision, or agency of the State or a pledge of the faith and credit or taxing power of any of them, but such bonds or notes shall be payable solely from the revenues pledged to the payment of such bonds or notes. In no event shall the Corporation be authorized to levy ad valorem taxes to pay all or part of the principal of or interest on such bonds or notes. Section 6. Upon dissolution of the Corporation, the City (together with other cities participating in the control of the Corporation through director appointments) shall accept, each on an equal basis, title to or other interest in any real or personal property owned by the Corporation at such time. Section 7. This Resolution is adopted for the purpose of satisfying the conditions and requirements of the Act and of section 103 of the Internal Revenue Code of 1986, as amended, and the regulations prescribed thereunder from time to time and for the benefit of the Corporation, the City, the owners or holders from time to time of the bonds or notes of the Corporation, and all other interested persons. Section 8. The City Council authorizes the Mayor, or his designee, in consultation with legal counsel and the City's financial advisors to take all actions necessary to call and conduct the organizational meeting of the Corporation and to file, at the expense of the Corporation, any and all documents with the offices of the Secretary of State, the Comptroller of Public Accounts, and the United States Department of Treasury, as appropriate, to effectuate the creation and organization of the Corporation. Section 9. The recitals contained in the preamble hereof are hereby found to be true, and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a part of the judgment and findings of the City Council. 50357758.1 - 2 - Section 10. All ordinances and resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain controlling as to the matters ordained herein. Section 11. This Resolution shall be construed and enforced in accordance with the laws of the State and the United States of America. Section 12. If any provision of this Resolution or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Resolution and the application of such provision to other persons and circumstances shall nevertheless be valid, and the City Council hereby declares that this Resolution would have been enacted without such invalid provision. Section 13. It is officially found, determined, and declared that the meeting at which this Resolution 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 Resolution, was given, all as required by Chapter 551, Texas Government Code, as amended. Section 14. This Resolution shall be in force and effect from and after its final passage and it is so resolved. The Yemainder of this page intentionally left blank) so3s~~sa.i - 3 - PASSED AND APPROVED this the 23'~d day of November, 2010. CITY OF SCH TZ, TEXAS Mayor ATTEST: C~ ~ City Secretary (CITY SEAL) 50357758.1 S-1 EXHIBIT A ARTICLES OF INCORPORATION OF THE CIBOLO VALLEY LOCAL GOVERNMENT CORPORATION 50357758.1 A-1 ARTICLES OF INCORPORATION OF THE CIBOLO VALLEY LOCAL GOVERNMENT CORPORATION We, the undersigned natural persons, each of whom is eighteen (18) years of age or older, a resident of the City of Cibolo, Texas ("Cibolo"), the City of Converse, Texas ("Converse"), the City of Live Oak, Texas ("Live Oak"), the City of Schertz, Texas ("Schertz"), the City of Seguin, Texas ("Seguin"), or the City of Selma, Texas ("Selma"), and a citizen of the State of Texas (the "State"), acting as incorporators of a nonprofit corporation (the "Corporation") created in accordance with the provisions of the Texas Transportation Corporation Act, Chapter 431 of the Texas Transportation Code, as amended (the "Act"), and the Texas Housing Finance Corporations Act, Chapter 394 of the Texas Local Government Code, as amended ("Chapter 394"), hereby adopt the following Articles of Incorporation for such Corporation: ARTICLE I The name of the Corporation is the Cibolo Valley Local Government Corporation. ARTICLE II The Corporation is a public, nonprofit corporation. ARTICLE III Subject to the provisions of Article XV hereof, the period of its duration is perpetual. ARTICLE IV The purposes for which the Corporation is organized are as follows: (a) to aid, assist, and act on behalf of Cibolo, Converse, Live Oak, Schertz, Seguin, and Selma (collectively, the "Cities") in acquiring, constructing, leasing, improving, enlarging, extending, repairing, maintaining, and operating a water utility system (the "Project") pursuant to the provisions of Chapter 552 of the Texas Local Government Code, as amended ("Chapter 552"), and other applicable laws of the State; (b) to aid, assist, and act on behalf of the Cities in accomplishing a governmental purpose of the Cities in the provision of water for public use; (c) to engage in activities permitted under the laws of the State, including, but not limited to, Chapter 552 and to own and operate all property, real, personal, or mixed, and conduct such activities as are now or hereafter permitted under the laws of the State, including, but not limited to, Chapter 552, and as are convenient or necessary to the ownership, maintenance, and operation of the Project; (d) to receive, hold, administer, and disburse any money, securities, or other property which maybe transferred to the Corporation by gift, devise, bequest, or otherwise, for any of the uses or purposes set forth above, and to invest, lend, conserve, use, and disburse such money, 50357758. I A-2 securities, or other property, and the income derived therefrom, for the uses and purposes herein specified, in accordance with the judgment and discretion of the Board of Directors; (e) to purchase, exchange, contract for, lease, rent, and in any and all other ways acquire, take, own, improve, and hold, and to sell, convey, mortgage, lease, rent to others, or otherwise dispose of real estate, improvements in real estate, interests in real estate, and personal property of every kind, character, and description; (f) to borrow money or raise money and to issue notes, bills, bonds, and other obligations and to mortgage, pledge, hypothecate, or otherwise encumber any and all of the revenues and assets of the Corporation as security therefor for the purpose of carrying out the goals of the Corporation; and (g) to do any and all things necessary or convenient to the accomplishment of any of the purposes or for the exercise of any of the powers herein set forth, whether herein specified or not, either alone or in connection with other firms, individuals, or corporations, whether in the State or throughout the United States, and elsewhere. The Corporation shall have the purposes and powers permitted by the Act, but the Corporation does not have, and shall not exercise the powers of sovereignty of the Cities, including the power to tax, the power of eminent domain, and police power. However, for the purposes of the Texas Tort Claims Act (Subchapter A, Chapter 101, Texas Civil Practice and Remedies Code, as amended), the Corporation is a governmental unit and its actions are governmental functions. The Corporation is formed as a local government corporation pursuant to the provisions of Subchapter D of the Act. ARTICLE V (a) Before the consummation of the sale and delivery of any bonds or notes, the Corporation shall obtain approval by the governing body of each of the Cities (collectively, the "Governing Bodies") as evidenced by the adoption of written resolutions. (b) In the exercise of the powers of the Corporation, the Corporation may enter into loan, lease, trust, or other agreements as authorized by the Act that are necessary and appropriate to the fulfillment of the public purpose of the Corporation, all of which agreements, and the specific uses, and the method of withdrawals and expenditure of the proceeds of the bonds or notes, and must be included as a part of the approval process of the Governing Bodies required by paragraph (a) above. ARTICLE VI The Corporation shall have no members and shall be a nonstock corporation. 50357758. I A-3 ARTICLE VII The Governing Bodies have, by resolutions adopted on November 2010 (Cibolo), November , 2010 (Converse), November 2010 (Live Oak), November 2010 (Schertz), November 2010 (Seguin), and November 2010 (Selma), authorized the creation of the Corporation and approved these Articles of Incorporation and the Corporation's Bylaws pursuant to Subchapter D of the Act. The Corporation shall have and exercise all of the rights, powers, privileges, authority, and functions given under the Act, Chapter 394, Chapter 552, and under the general laws of the State to nonprofit corporations incorporated under the Texas Nonprofit Corporation Law (now known as Chapter 22 of Title 1 of the Texas Business Organizations Code, as amended) which are consistent with the provisions of the Act with respect to the development and operation of the Project together with all powers incidental thereto or necessary therefor. The Corporation shall have all other powers of a like or different nature not prohibited by law which are available to nonprofit corporations in the State and which are necessary or useful for the development and operation of the Project. The Corporation is a constituted authority and a public instrumentality within the meaning of the regulations of the United States Treasury Department and the rulings of the Internal Revenue Service prescribed and promulgated pursuant to section 103 of the Internal Revenue Code of 1986, as amended, and the Corporation is authorized to act on behalf of the Cities as provided in these Articles of Incorporation. However, the Corporation is not a political subdivision or political corporation of the State within the meaning of its constitution and laws, including, without limitation, Article III, Section 52 of the constitution, and no agreements, bonds, debts, or obligations of the Corporation are or shall ever be deemed to be the agreements, bonds, debts, or obligations, or the lending of credit, or a grant of public money or thing of value, of or by the Cities or any other political corporation, subdivision, or agency of the State, or a pledge of the faith and credit of any of them. However, for the purposes of the Texas Tort Claims Act (Subchapter A, Chapter 101, Texas Civil Practice and Remedies Code, as amended), the Corporation is a governmental unit and its actions are governmental functions. ARTICLE VIII These Articles of Incorporation may at any time and from time to time be amended as provided in the Act and Chapter 394 so as to make any changes therein and add any provisions thereto which might have been included in the Articles of Incorporation in the first instance. Any such amendment shall be effected in either of the following manners: (i) the members of the Board of Directors of the Corporation shall file with each of the Governing Bodies, a written application requesting permission to amend the Articles of Incorporation, specifying in such application the amendments proposed to be made, the Governing Bodies may consider such application and, if they shall each by appropriate resolution duly find and determine that it is advisable that the proposed amendments be made and shall approve the form of the proposed amendments, then the Board of Directors of the Corporation may amend the Articles of Incorporation by adopting such amendments at a meeting of the Board of Directors and delivering the articles of amendment to the Secretary of State; or (ii) the Governing Bodies may 50357758.1 A-4 collectively, at their sole discretion, and at any time, amend these Articles of Incorporation, and change the structure, organization, programs, or activities of the Corporation, or terminate or dissolve the Corporation (subject to the provisions of the Act and any limitation provided by the Constitution and general laws of the State and the United States of America on the impairment of contracts entered into by the Corporation), by written resolution adopting the amendment to the Articles of Incorporation of the Corporation or articles of dissolution at a meeting of each of the Governing Bodies and delivering articles of amendment or dissolution to the Secretary of State, as provided in the Act and Chapter 394. Restated articles of incorporation may be filed with the Secretary of State as provided in the Act and Chapter 394. ARTICLE IX The Corporation shall be subject to the Open Meetings Act, Chapter 551 of the Texas Government Code, as amended, and the Public Information Act, Chapter 552 of the Texas Government Code, as amended. ARTICLE X The street address of the initial registered office of the Corporation is 600 River Drive West, Seguin, TX 78155, and the name of its initial registered agent at such address is R. Alan Cockerell. ARTICLE XI The initial Bylaws of the Corporation shall be adopted by the Corporation's Board of Directors and shall, together with these Articles of Incorporation, govern the initial affairs of the Corporation until and unless amended in accordance with the provisions of the Act and Chapter 394 and these Articles of Incorporation. The Bylaws and each amendment and repeal of the Bylaws must be approved by each of the Governing Bodies by resolution. ARTICLE XII The number of directors constituting the initial Board of Directors of the Corporation is six (6). One (1) director has initially been appointed by each of the Governing Bodies. The names and addresses of the persons who are to serve as the initial Board of Directors, each of whom is a resident of one of the Cities are as follows: Cibolo, Texas Converse, Texas Live Oak, Texas Schertz, Texas 50357758.1 A-5 Seguin, Texas Selma, Texas ARTICLE XIII The name and street address of each incorporator, each of whom is a resident of one of the Cities are as follows: Cibolo, Texas Converse, Texas Live Oak, Texas Schertz, Texas Seguin, Texas Selma, Texas ARTICLE XIV No director shall be liable to the Corporation for monetary damages for an act or omission in the director's capacity as a director, except to the extent the director is found liable, (i) for any breach of the director's duty of loyalty to the Corporation, (ii) for acts or omissions not in good faith that constitute a breach of duty or which involve intentional misconduct of the director or a knowing violation of law, (iii) for any transaction from which the director received an improper benefit, whether or not the benefit resulted from an act taken within the scope of the director's office, or (iv) for acts or omissions for which the liability of a director is expressly provided by statute. Any repeal or amendment of this Article by the Board of Directors shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director existing at the time of such repeal or amendment. In addition to the circumstances in which a director is not personally liable as set forth in the preceding sentences, a director shall not be liable to the fullest extent permitted by an amendment to the State statutes hereafter enacted that further limits the liability of a director. ARTICLE XV (a) The Governing Bodies, by written resolutions, may authorize and direct the dissolution of the Corporation. However, the Corporation shall not be dissolved, and its business so3s~~sa.i A-6 shall not be terminated, by act of the Governing Bodies or otherwise, so long as the Corporation shall be obligated to pay any bonds, notes, or other obligations. (b) No action shall be taken pursuant to paragraph (a) of this Article or pursuant to paragraph (b) of Article XVI of these Articles of Incorporation, in any manner or at any time that would impair any contract, lease, right, or other obligation theretofore executed, granted, or incurred by the Corporation. ARTICLE XVI (a) All properties owned by the Corporation shall be held for the use and benefit of the public on a nondiscriminatory basis. No dividends shall ever be paid by the Corporation and no part of its net earnings remaining after payment of its expenses and other obligations shall be distributed to or inure to be benefit of its directors or officers, or any individual, private firm, or private corporation or association, except in reasonable amounts for services rendered. (b) If, after the close of any fiscal year (as determined by the Bylaws), the Board of Directors shall determine that sufficient provision has been made for the full payment of all current expenses, together with all amounts payable on the contracts, agreements, bonds, notes, and other obligations of the Corporation, and that all of the terms, provisions, and covenants therein have been met, then any net earnings derived from sources thereafter accruing in connection with public facilities financed pursuant to the Act, and revenues received in connection with public facilities financed pursuant to the Act shall be used solely for the purposes permitted by the Act and these Articles of Incorporation. (c) If the Corporation ever should be dissolved when it has, or is entitled to, any interest in any funds or property of any kind, real, personal or mixed, such funds or property or rights thereto shall not be transferred to private ownership, but shall be transferred and delivered to the Cities, on an equal basis, after satisfaction of debts and claims. ARTICLE XVII The Corporation may indemnify any director, officer, employee or agent or former director, officer, employee, or agent of the Corporation for expenses and costs, including attorney's fees, actually or necessarily incurred by the person in connection with any claim asserted against the person, by action in court or other forum, by reason of such person having been a director, officer, employee or other agent, except that the Corporation may not provide indemnity in a matter if the director, officer, employee, or agent is guilty of negligence or misconduct in relation to the matter. [The remainder of this page intentionally left blank.) 50357758.1 A-7 IN WITNESS WHEREOF, we have hereunto set our hands this day of 2010. Incorporator Incorporator Incorporator Incorporator Incorporator Incorporator 50357758.1 A-g EXHIBIT B BYLAWS OF THE CIBOLO VALLEY LOCAL GOVERNMENT CORPORATION 50357758.1 B-1 _ BYLAWS OF THE CIBOLO VALLEY LOCAL GOVERNMENT CORPORATION ARTICLE I PURPOSE AND POWERS Section 1.1. Name. The name of the nonprofit corporation is the Cibolo Valley Local Government Corporation (the "Corporation"). Section 1.2. Purpose. The Corporation is incorporated for the purposes set forth in Article IV of its Articles of Incorporation, the same to be accomplished on behalf of the City of Cibolo Texas ("Cibolo"), the City of Converse, Texas ("Converse"), the City of Live Oak, Texas ("Live Oak"), the City of Schertz, Texas ("Schertz"), the City of Seguin, Texas ("Seguin"), and the City of Selma, Texas ("Selma"), as their duly constituted authority and instrumentality in accordance with Subchapter D of Chapter 431, Texas Transportation Code, as amended (the "Act"), and other applicable laws of the State of Texas (the "State"). Section 1.3. Powers. In the fulfillment of its corporate purpose, the Corporation shall be governed by the Act, and shall have all the powers set forth and conferred in its Articles of Incorporation, in the Act, and in other applicable law, subject to the limitations prescribed therein and herein and to the provisions thereof and hereof. Section 1.4. Nonprofit Corporation. The Corporation shall be a public, nonprofit corporation, and no part of its net earnings remaining after payment of its bonds and expenses shall inure to the benefit of any person other than Cibolo, Converse, Live Oak, Schertz, Seguin, and Selma (collectively, the "Cities"). ARTICLE II BOARD OF DIRECTORS Section 2.1. Powers Number and Term of Office. (a) The property and affairs of the Corporation shall be managed and controlled by a Board of Directors (the "Board") subject to the restrictions imposed by law, the Act, the Articles of Incorporation, and these Bylaws, the Board shall exercise all of the powers of the Corporation. (b) The Board shall consist of six (6) directors, each of whom must at all times while serving as director be a resident of the City that appointed such director. Each City shall appoint one (1) director. One (1) director has been appointed as an initial director by resolution of the governing body of each of the Cities (collectively, the "Governing Bodies"), and such persons and the City appointing him or her are as follows, and such persons shall serve the following terms as initial directors. 50357758.1 B-2 _ Initially Place Name Appointed By End of Initial Term 1 September 30, 2011 2 September 30, 2011 3 September 30, 2012 4 September 30, 2012 5 September 30, 2013 6 September 30, 2013 Thereafter, each member of the Board shall be appointed for afour-year term until the Corporation is dissolved. A director maybe reappointed. (c) A member of each Governing Body, selected by such Governing Body, shall serve as an ex-officio, non-voting member of the Board for the purpose of serving as a liaison between the Board and the Governing Bodies, as appropriate. These ex- officio members shall be appointed by, be replaced by, and be subject to removal by the appropriate Governing Body. (d) The number of directors may be changed by amendment to these Bylaws, but such number must be at least three (3). Any such amendments to the Bylaws shall establish the methodology for the appointment and terms of the directors. (e) The directors constituting the initial Board shall be those persons set forth in Section 2.1(b) above, who are the initial directors named in the Articles of Incorporation. Successor directors shall have the qualifications and shall be appointed to the terms set forth herein. (f) Any director may be removed from office by the Governing Body that appointed the director for cause or at any time without cause. (g) In case of a vacancy in the Board through removal or by reason of death, resignation, failure to be a resident of his or her appointing City or other disqualification, or other cause or incapacity, a successor to hold office for the remainder of the former director's term shall be appointed by the appropriate Governing Body. This replacement director shall be appointed within thirty (30) days after written notice by the Executive Director, or his designee, to the appropriate Governing Body of the need for a replacement director. Section 2.2. Additional Powers. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board may exercise all such powers of the Corporation and do all lawful acts and things as are not by statute, other law, or by these Bylaws prohibited. Without prejudice to such general powers and other powers conferred by statute, other law, and by these Bylaws, it is hereby expressly declared the Board shall have the powers set forth in the Act. 50357758.1 B-3 Section 2.3. Meetings of Directors. (a) The directors may hold their meetings at such place or places inside or outside the State as the Board may from time to time determine; provided, however, in the absence of any such determination by the Board, the meetings shall be held at the principal office of the Corporation as specified in Section 5.1(a) of these Bylaws. The Corporation shall also conduct at least one annual regular meeting of the Corporation on September 1 or the next business day thereafter. In addition, regular meetings of the Board shall beheld without the necessity of notice to directors at such times and places as shall be designated from time to time by the Board. Special meetings of the Board shall be held whenever called by the President, by the Secretary, by a majority of the directors, or by a majority of the Governing Bodies. (b) The Secretary shall give notice to each director of each meeting in person or by mail or telephone at least twenty-four (24) hours before the meeting. In the event of an emergency meeting, such notice shall be in person or by telephone at least two (2) hours before the meeting. (c) Subject to Section 2.4 hereof, except for an emergency meeting, whenever any notice is required to be given to the Board, said notice shall be deemed to be sufficient if given by depositing the same in a post office box in a sealed postpaid wrapper addressed to the person entitled thereto at his or her post office address as it appears on the books of the Corporation, and such notice shall be deemed to have been given on the day of such mailing. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except attendance of a director at a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called or convened. Neither the business to be transacted at nor the purpose of any regular or special meeting of the Board need be specified in the notice to directors or waiver of notice of such meeting, unless required by the Board. A waiver of notice in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Section 2.4. Open Meetings Act. All meetings and deliberations of the Board shall be called, convened, held, and conducted, and notice shall be given to the public, in accordance with the Texas Open Meetings Act, Chapter 551, Texas Government Code, as amended. Section 2.5. uorum. A majority of the entire membership of the Board shall constitute a quorum to conduct official business of the Corporation. The act of a majority of the Board present at a meeting at which a quorum is in attendance shall constitute the act of the Board and of the Corporation, unless the act of a greater number is required bylaw. Section 2.6. Conduct of Business. (a) At the meetings of the Board, matters pertaining to the business of the Corporation shall be considered in accordance with rules of procedure as from time to time prescribed by the Board. soss~~sa. i B-4 (b) At all meetings of the Board, the President shall preside. In the absence of the President, the Vice President shall preside. In the absence of both the President and Vice President, a member of the Board selected by the members present, shall preside. (c) The President shall be a voting member of the Board. (d) The Secretary of the Corporation shall act as Secretary of all meetings of the Board, but in the absence of the Secretary, the presiding officer may appoint any person to act as Secretary of the meeting. The Executive Director, Treasurer, and any Assistant Secretary may, at the option of the Board, be employees of any one of the Cities and each member of the Board with the exception of the President, Vice President, or Secretary, maybe appointed as Assistant Secretaries. Section 2.7. Committees of the Board. The Board may designate two (2) or more directors to constitute an official committee of the Board to exercise such authority, as approved by resolution of the Board. It is provided, however, that all final, official actions of the Corporation may be exercised only by the Board. Each committee so designated shall keep regular minutes of the transactions of its meetings and shall cause such minutes to be recorded in books kept for that purpose in the principal office of the Corporation and any such meetings must be conducted in accordance with the provisions of the Texas Open Meetings Act, Chapter 551, Texas Government Code, as amended, if applicable. Section 2.8. Compensation of Directors. Directors shall not receive any salary or compensation for their services as directors. However, they shall be reimbursed for their actual expenses incurred in the performance of their official duties as directors. ARTICLE III OFFICERS Section 3.1. Titles and Terms of Office. (a) The officers of the Corporation shall be a President, a Vice President, Treasurer, a Secretary, an Assistant Secretary, an Executive Director, and such other officers as the Board may from time to time elect. One person may hold more than one office, except that the President shall not hold the office of Secretary or Assistant Secretary. Officers shall serve for terms ending on the next September 30 or until his or her successor is elected or appointed; provided, the initial officers shall serve until September 30, 2011 or until their successors are elected. Upon the expiration of the terms, each officer shall have the right to be reelected. (b) All officers shall be subject to removal from office at any time by a vote of a majority of the Board. (c) A vacancy in any office shall be filled by a vote of a majority of the Board. 50357758.1 B-5 Section 3.2. Powers and Duties of the President. The President shall be the chief operating executive officer of the Corporation, and subject to the authority of the Board, the President shall be in general charge of the properties and affairs of the Corporation, and execute all contracts, conveyances, franchises, bonds, deeds, assignments, mortgages, notes and other instruments in the name of the Corporation. The President shall preside over the meetings of the Corporation. Unless otherwise authorized by unanimous vote of the Board, the President shall be the same person who served as Vice President for the previous year, the President shall be the representative of a different City each year, and a City's representative may not again hold the office of President until all of the other Cities' representatives have held such office. Section 3.3. Vice President. The Vice President shall have such powers and duties as may be prescribed by the Board end shall exercise the powers of the President during that officer's absence or inability to act, in their respective order. Any action taken by the Vice President in the performance of the duties of the President shall be conclusive evidence of the absence or inability to act of the President at the time such action was taken. Subject to the second paragraph of Section 3.2 and the following sentence, the Vice President shall serve as President-elect, in order to maintain consistency in the management of the Corporation. Unless otherwise authorized by unanimous vote of the Board, the Vice President shall be the representative of a different City each year, and a City's representative may not again hold the office of Vice President until all of the other Cities' representatives have held such office. Section 3.4. Treasurer. The Treasurer shall be the chief fiscal officer of the Corporation, and shall have the responsibility to see to the handling, custody, and security of all funds and securities of the Corporation in accordance with these Bylaws. When necessary or proper, the Treasurer may endorse and sign, on behalf of the Corporation, for collection or issuance, checks, notes, and other obligations in or drawn upon such bank, banks or depositories as shall be designated by the Board consistent with these Bylaws. The Treasurer shall see to the entry in the books of the Corporation full and accurate accounts of all money received and paid out on account of the Corporation. The Treasurer. shall, at the expense of the Corporation, give such bond for the faithful discharge of his/her duties in such form, and amount as the Board may require. All check writing authority will follow all applicable policies adopted by the Governing Bodies concerning authorizations, signatures and disbursements. It is intended that all checks, drafts, or other payment obligations of the Corporation must be approved by the President or Vice President of the Board and the Executive Director and Treasurer. Section 3.5. Secretary. The Secretary shall keep the minutes of all meetings of the Board and books provided for that purpose, shall give and serve all notices, may sign with the President in the name of the Corporation, and/or attest the signature thereto, all contracts, conveyances, franchises, bonds, deeds, assignments, mortgages, notes and other instruments of the Corporation, shall have charge of the corporate books, records, documents and instruments, except the books of account and financial records and securities, and such other books and papers as the Board may direct, all of which shall at all reasonable times be open to public 50357758.1 B-6 inspection upon application at the office of the Corporation during business hours, and shall in general perform all duties incident to the office of Secretary subject to the control of the Board. Section 3.6. Assistant Secretary. The Assistant Secretary (one or more) shall act as Secretary in the event of the absence or unavailability of the Secretary. Section 3.7. Executive Director. Alan Cockerell will serve as the initial Executive Director of the Corporation to provide administrative support services for the Corporation and to perform other duties as prescribed by Board. Section 3.8. Additional Provisions Relating to Officers. The President, Vice President, and Secretary shall be named from among the members of the Board. The Executive Director, Treasurer, and any additional Assistant Secretary may, at the option of the Board, be employees of the Cities. The Executive Director shall retain legal counsel and financial advisors for the Corporation, subject to the approval of the majority of the Board. Section 3.9. Compensation. Officers who are members of the Board shall not receive any salary or compensation for their services, except that they shall be reimbursed for the actual expenses incurred in the performance of their official duties as officers. ARTICLE IV FUNCTIONAL CORPORATE DUTIES AND REQUIREMENTS Section 4.1. Cibolo Valley Local Government Corporation Plan. (a) It shall be the duty and obligation of the Board to establish, finance, and implement the Cibolo Valley Local Government Corporation Plan, subject to approval or disapproval by each Governing Body. (b) In carrying out its obligations under subsection (a), the Corporation shall be authorized to exercise all rights and powers granted under the Act. (c) The Board shall submit an annual report to each Governing Body as to the status of its activities in carrying out its obligations under this Section and shall report periodically as requested in writing by any Governing Body. (d) Any and all agreements between the Corporation and other parties shall be authorized, executed, and approved, and delivered in accordance with applicable law. Section 4.2. Annual Corporate Budd. Prior to the commencement of each fiscal year of the Corporation, the Board shall adopt a proposed budget of expected revenues from sources set out in Section 4.5 of this article and proposed expenditures for the next ensuing fiscal year. The budget shall contain such classifications and shall be in such form as may be prescribed from time to time by any Governing Body. The budget shall not be effective until the same has been approved by each Governing Body, which approval shall not be unreasonably withheld. 50357758.1 B-7 Section 4.3. Books, Records, Audits. (a) The Corporation shall keep and properly maintain in accordance with generally accepting accounting principles, complete books, records, accounts, and financial statements pertaining to its corporate funds, activities, and affairs. (b) At the direction of each Governing Body, the books, records, accounts, and financial statements of the Corporation may be maintained for the Corporation by the accountants, staff, and personnel of any of the Cities. (c) The Corporation, or the person selected above, if the option of subsection (b) is selected, shall cause its books, records, accounts, and financial statements to be studied at least once each fiscal year by an outside, independent auditing and accounting firm selected by each Governing Body and approved by the Board. Such an audit shall be at the expense of the Corporation. A copy of the Corporation's annual audit shall be delivered to each Governing Body within ten (10) days after it is approved by the Board, but in no event later than 150 days after the end of the fiscal year of the Corporation. A copy of each quarterly unaudited financial statement of the Corporation shall be provided to each Governing Body within thirty (30) days after the end of each fiscal quarter. (d) All books and records of the Corporation maybe inspected by any director or his or her agent or attorney for any purpose at any reasonable time and at all times each Governing Body shall have access to the books, records, and financial statements of the Corporation. Section 4.4. Deposit and Investment of Corporation Funds. (a) All proceeds from loans or from the issuance of bonds, notes, or other debt instruments ("Obligations") issued by the Corporation in accordance with the provisions of the Act shall be deposited and invested as provided in the resolution, order, indenture, or other documents authorizing or relating to their execution or issuance. (b) Subject to the requirements of contracts, loan agreements, indentures or other agreements securing Obligations, all other money of the Corporation, if any, shall be deposited, secured, and/or invested in the manner provided for the deposit, security, and/or investment of the public funds of Texas municipalities. The Board shall designate the accounts and depositories to be created and designated for such purposes, and the methods of withdrawal of funds therefrom for use by and for the purposes of the corporation upon the signature of its Treasurer and such other persons as the Board designates. The accounts, reconciliation, and investment of such funds and accounts shall be performed by the Executive Director, or his designee. Section 4.5. Expenditure of Corporate Money. The proceeds from the investment of funds of the Corporation, the proceeds from the sale of property, revenues generated by and payable to the Corporation pursuant to the Act or any other source of revenues that are payable to the Corporation, and the proceeds derived from the sale of Obligations, may be expended by 50357758.1 B-g the Corporation for any of the purposes authorized by the Act, subject to the following limitations: (a) Expenditures that may be made from a fund created with the proceeds of Obligations, and expenditures of money derived from sources other than the proceeds of Obligations may be used for the purpose of financing or otherwise providing for the acquisition, construction, rehabilitation, renovation, repair, equipping, furnishing and placement in service of public facilities of the Corporation under the terms of the Act; or (b) All other proposed expenditures shall be made in accordance with and shall be set forth in the annual budget required by Section 4.2 or in contracts meeting the requirements of Section 4.1(d) of this Article. Section 4.6. Issuance of Obli atg ions. No Obligations, including refunding obligations, shall be authorized or sold and delivered by the Corporation unless each Governing Body approves such Obligations by action taken prior to the date of initial delivery of the Obligations to the initial purchasers thereof. ARTICLE V MISCELLANEOUS PROVISIONS Section 5.1. Principal Office. (a) The registered office of the Corporation shall be the Corporation's principal office. (b) The Corporation shall have and shall continually designate a registered agent at its office, as required by the Act. Section 5.2. Fiscal Year. The fiscal year of the Corporation shall commence on October lst and shall conclude on September 30th of each year. Section 5.3. Seal. The Corporation shall not have a corporate seal. Section 5.4. Resi agn tions. Any director or officer may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or, if no time is specified, at the time of its receipt by the President or Secretary. The acceptance of resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Section 5.5. Approval or Advice and Consent of a Governing Body. To the extent that these Bylaws refer to any approval by a Governing Body or refer to advice and consent by a Governing Body, such advice and consent shall be evidenced by a certified copy of a resolution, order, ordinance, or motion duly adopted by a Governing Body. 50357758.1 B-9 Section 5.6. Indemnification ofDirectors, Officers and Employ. (a) The Corporation is, for the purposes of the Texas Tort Claims Act (Subchapter A, Chapter 101, Texas Civil Practices and Remedies Code), a governmental unit and its actions are governmental functions. (b) The Corporation shall indemnify each and every member of the Board, its officers and its employees and each member of the Board and each employee of the Corporation, to the fullest extent permitted by law, against any and all liability or expense, including attorneys fees, incurred by any of such persons by reason of any actions or omissions that may arise out of the sanctions and activities of the Corporation; provided, however, that the Corporation may not provide indemnity in any manner if the director, officer, employee, or agent is guilty of negligence or misconduct in relation to the matter. The legal counsel for the Corporation is authorized to provide a defense for members of the Board, officers, and employees of the Corporation. ARTICLE VI EFFECTIVE DATE, AMENDMENTS; MISCELLANEOUS Section 6.1. Effective Date. These Bylaws shall become effective upon the occurrence of the following events: (a) the approval of these Bylaws by each Governing Body, which approval maybe granted prior to the creation of the Corporation; and (b) the adoption of the Bylaws by the Board. Section 6.2. Amendments to Articles of Incorporation and Bvlaws. The Articles of Incorporation of the Corporation and these Bylaws maybe amended only in the manner provided in the Articles of Incorporation and the Act. Section 6.3. Interpretation of Bvlaws. These Bylaws shall be liberally construed to effectuate the purposes set forth herein. If any word, phrase, clause, sentence, paragraph, section or other part of these Bylaws, or the application thereof to any person or circumstances, shall ever be held to be invalid or unconstitutional by any court of competent jurisdiction, the remainder of these Bylaws and the application of such word, phrase, clause, sentence, paragraph, section or other part of these Bylaws to any other person or circumstance shall not be affected thereby. Section 6.4. Dissolution. Upon the dissolution of the Corporation after payment of all obligations of the Corporation, all remaining assets of the Corporation shall be transferred to the Cities, on an equal basis. ~ ~ ~ Adopted: December 2010 50357758.1 B-10