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2003M03-FUND SCHERTZ/SEGUIN LGC ORDINANCE NO. ~) ~,~ -/9~ - AN ORDINANCE AUTHORIZING THE ADVANCEMENT OF FUNDS TO SCHERTZ-SEGUIN LOCAL GOVERNMENT CORPORATION AND RELATED MATTERS; AND DECLARING AN EMERGENCY AND SETTING AN EFFECTIVE DATE WHEREAS, the City of Schertz, Texas (the "City"), together with the City of Seguin, Texas ("Seguin'), has assisted in the creation and operation of the Schertz-Seguin Local Government Corporation (the "Corporation"), which provides essential water to the City and Seguin; and WHEREAS, the Corporation has requested the financial assistance of the City to permit the Corporation to pay for engineering services relating to Corporation Wells Nos. 7 and 8, engineering services and construction of roads for such Wells, and preparation of related special studies and services; and WHEREAS, the City Council has considered providing such financial assistance to the Corporation and has been provided with the form of a Promissory Note to be executed by the Corporation to reflect the Corporation's agreement to repay the City for the funds advanced pursuant to this Ordinance; and WHEREAS, the actions authorized by this Ordinance are in the public interest of the citizens of the City and are in furtherance of an important public purpose and policy of the City. NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AS FOLLOWS: SECTION 1. The City is hereby authorized to loan the Corporation $341,700 for the purposes set forth in this Ordinance subject to the execution and delivery to the City by a duly authorized representative of the Corporation of a Promissory Note in substantially the form attached hereto as Exhibit A. SECTION 2. By vote of not less than two-thirds of the members of the City Council present at the meeting at which this Ordinance was considered, the City Council has determined that an emergency exists which requires immediate action, and this Ordinance is hereby adopted on a single reading. This Ordinance shall be in force and effect from and after its final passa~, and it is so ordained. / PASSED AND APPROVED the /OW~ay o~.J~ , 03. ATTEST: City Secretary 20051109.1 EXHIBIT A PROMISSORY NOTE $341,700.00 January __, 2003 FOR VALUE RECEIVED, Schertz-Seguin Local Government Corporation, a Texas local government corporation, its successors and assigns (the "Borrower"), promises to pay to the City of Schertz, Texas, a Texas municipal corporation, its successors and assigns (the "City"), the principal sum of Three Hundred Forty One Thousand Seven Hundred and No/100 Dollars ($341,700.00) payable on September 30, 2003 (the "Maturity Date"), together with interest accrued on the unpaid portion thereof from the date hereof at the rate for each day of accrual equal to zero percent (0.0%) through the Maturity Date and seven percent (7.0%) thereafter until paid in full. The principal hereof and the interest hereon shall be payable at the principal office of the City, 1400 Schertz Parkway, Schertz, Texas, Attention: City Manager. All such payments shall be in immediately available funds or in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All sums due hereon shall be payable at the opening of business of the City on the date such payments become due. If the specified date for any such payment shall be a day other than a day on which the principal office of the City is open (a "Business Day"), then such payment may be made on the next succeeding day which is a Business Day without additional interest and with the same force and effect as if made on the specified date for such payment. The Borrower may prepay the outstanding principal sum hereof, in whole or in part, at any time without penalty or notice. This Note is unsecured. The Borrower hereby expressly waives all notices, demands for payment, presentments for payment, and notations of payment. In no event shall the aggregate amounts contracted for, demanded, charged, or collected in connection herewith which are deemed "interest" exceed the Lawful Rate. The term "Lawful Rate" shall mean the highest lawful rate of interest applicable to this Note permitted by Texas law. In determining the Lawful Rate, due regard shall be given to all payments, fees, charges, deposits, balances, and agreements which may constitute interest or be deducted from principal when calculating interest. For purposes of determining the Lawful Rate, the indicated rate ceiling specified in Texas Finance Code, Chapter 303 shall be used; however, if permitted by law, the City may implement any ceiling under that law used to compute the rate of interest hereunder by notice to the Borrower as provided in such Chapter. Notwithstanding the foregoing sentence, if Section 501 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (as amended) applies to this Note and preempts Chapter 303 and applicable Texas law, the term "Lawful Rate" shall mean the highest interest rate permitted to be charged under such Act. It is expressly stipulated and agreed to be the intent of the Borrower and the City at all times to comply with the applicable law governing the Lawful Rate or amount of interest payable on or in connection with this Note (or applicable United States federal law to the extent that it permits the City to contract for, demand, charge, take, reserve, or receive a greater amount of interest than under law of the State of Texas). If the applicable law, as judicially interpreted from time to time, shall ever render usurious any amount called for under this Note or contracted for, demanded, charged, taken, reserved, or 20051109.1 A-1 received with respect to this Note, or if acceleration of the maturity of this Note or if any prepayment by the Borrower results in the Borrower having paid any interest in excess of that permitted by law, then it is the Borrower's and the City's express intent that all excess amounts theretofore collected by the City be credited on the principal balance of this Note (or, if this Note has been or would thereby be paid in full, the excess refunded to the Borrower), and the provisions of this Note immediately shall be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new documents, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder. All sums paid or agreed to be paid to the City for the use, forbearance, or detention of the indebtedness evidenced hereby shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full term of such indebtedness until payment in full so that the rate or amount of interest on the account of such indebtedness does not exceed the applicable usury ceiling. Notwithstanding any provision contained in this Note that permits the compounding of interest, including, without limitation, any provision by which any accrued interest is added to the principal amount of this Note, the total amount of interest that the Borrower is obligated to pay and the City is entitled to receive with respect to this Note shall not exceed the amount calculated on a simple (i.e., noncompounded) interest basis at the Lawful Rate on principal amounts actually advanced to or for the account of the undersigned, so long as such advances remain outstanding. This Note is a contract made under and shall be construed in accordance with and governed by the laws of the State of Texas. SCHERTZ-SEGU1N LOCAL GOVERNMENT CORPORATION By: Name: Title: 20051109.1 A-2