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Ordinance 13-B-39 - General Obligation Refunding Bonds
FINAL ORDINANCE NO.: 13-8-39 AN ORDINANCE BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS AUTHORIZING THE ISSUANCE OF ~SCITY OF SCHERTZ, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2413", 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 A PURCHASE AND INVESTMENT LETTER PERTAINING THERETO; AUTHORIZING THE EXECUTION OF A PAYING AGENT/REGISTRAR AGREEMENT AND AN ESCROW AND TRUST AGREEMENT; COMPLYING WITH THE LETTER OF REPRESENTATIONS ON FILE WITH THE DEPOSITORY TRUST COMPANY; AUTHORIZING THE EXECUTION OF ANY NECESSARY ENGAGEMENT AGREEMENTS WITH THE CITY'S FINANCIAL ADVISORS ANDIOR BOND COUNSEL; AND PROVIDING AN EFFECTIVE DATE WI-IEREAS, the City Council {the City Cot~ncrlj of the City of Schertz, Texas {the Ciry) has heretofore issued, sold, and delivered, and there are currently outstanding obligations in the aggregate original principal amount of $2,070,000 being the obligations set forth on Schedule I hereto which is incorporated by reference for all purposes to this ordinance (the Refirrzded Obligations); and WHEREAS, the City Council intends to issue an aggregate principal amount of $2,160,000 in general obligation refunding bonds the proceeds of which will be utilized to provide for the (i) refunding of the Refi~nded Obligations and {ii) payment of the costs of issuance of the general obligation refitnding bonds; and WHEREAS, pursuant to the provisions of Chapter 1207, as amended, Texas Government Code (the Act), the City Council is authorized to issue refunding bonds and deposit the proceeds of sale under an esc~•ow agreement to provide for the payment of the Refunded Obligations, and such deposit, when made in accordance with the Act, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Obligations; and WHEREAS, the Act permits that the deposit of the proceeds from the sale of the refi~nding bonds be deposited directly with any designated escrow agent which is not the depository bank of the City; and WHEREAS, when firtrz banking arrangements have been made for the payment of principal of and interest to the stated maturity or redemption dates of the Refunded Obligations, then the Refi~nded Obligations shall no longer be regarded as outstanding except for the purpose of receiving payment from the fitnds provided for such purpose and may not be included in or 57279482.3 considered to be an indebtedness of the City for the purpose of a limitation an outstanding indebtedness or taxation or for any other purpose; and WHEREAS, 'Wells Fargo Bank, National Association, Minneapolis, Minnesota currently serves as the paying agent for the Refiinded Obligations; and WHEREAS, Wells Fargo Bank, National Elssocia#iorr, Minneapolis, Minnesota (which is not the depository bank of the City) is hereby appointed as the Escrow Agent (hereinafter defined) and Paying Agent/Registrar (hereafter defined) for the general obligation refunding bonds; and Vi~bIEREAS, Compass Bank, an Alabama batrking corporation, Houston, Texas is hereby appointed as Paying Agent/Registrar {hereafter defined) for the general obligation refiuiding bands; and WHEREAS, the City Council also hereby finds acrd determines that the Refunded Obligations are scheduled to mature or are subject to being redeemed, not more than twenty' (20) years from the date of the general obligation refunding bonds herein authorized and being issued to restructure the City's debt service and associated tax rates in the coming years, and such refimdirrg will result in a net prasent value savings of $133,020 and a gross savings of $133,024, including the City's contribution of $0.00; and WHEREAS, the City Council hereby finds and determines drat the issuance of the general obligation refunding bonds for the purpose of refunding the Refunded Obligations is in the best interests of the residents of the City, now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF SCHERTZ, TEXAS THAT: SECTION 1. Authorization -Designation -Principal Amount -Purpose. General obligation refitnding bonds of the City shall be and are hereby authorized to be issued in the aggregate principal amount of TWO MILLION ONE HUNDRED SIXTY THOUSAND AND NO/100 DOLLARS ($2,160,000), to be designated and bear the title of "CITY OF SCHERTZ, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013" {the Bonds), for the ptnpose of providing fiends for the (i} discharge and heal payment of the Refunded Obligations and {ii} payment of the costs of issuance of the Bonds, all in conformity with the laws of the State of Texas, particularly Chapter 1207, as amended, Texas Government Code, an ordinance adopted by the City Council on September 10, 2013, and the City's Home Rule Charter. SECTION 2. Fully Registered Obligations - Authorized Denominations - Stated Maturities _ Interest Rates -Dated Date. The Bonds shall be issued as fully registered obligations, without coupons, shall be dated September 1, 2013 (the Dated Date), and shall be generally in denominations of $100,000 or any integral multiple of $5,000 in excess thereof, and the Bonds shall be lettered "R" and numbered consecutively from One (1) upward, and principal shall become dtte and payable on February 1 in each of the years and in principal amounts (the Stated Mah~r•ities) and bear interest on the unpaid principal amounts from the Closing Date (hereinafter defined}, or from the mast rece~rt Interest Payment Date (hereinafter defined) to which interest has been paid or duly provided for, to Stated Maturity, at the per annum rates, while Outstanding, in accordance ~~~ith the following schedule: 57279~1R23 -2- Years of Principal Interest Stated Maturity Amounts {$) Rates 2014 30,000 2.580 2015 175,000 2.580 2016 175,000 2.580 2017 180,000 2.580 2018 180,000 2,580 2019 190,000 2.580 2020 190,000 2.580 2021 200,000 2.580 2022 205,000 2.580 2023 205,000 2.580 2024 215,000 2.580 2025 215,000 2.580 The Bonds shalt bear interest on the unpaid principal amounts born the Closing Date (hereinafter defined}, or from the most recent Interest Payment Dale (hereinafter defined) to which interest has been paid oi' duly provided for, to the earlier of redemption or Stated Maturity, while Outstanding, at the rates per annum shown in the above schedule (calculated on the basis of a 3b0-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, 2014 {the It~lerest Payment Date}, while the Bonds are Outstanding. SECTION 3. Payment of Bonds - Paying A eg nt/Re ig stray. The principal of, premium, if any, and the interest on the Bonds, due and payable by reason of Stated Maturity, redemption, oi• 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 Compass Bank, Houston, Texas {the Payit7g Agent/Regrstt•ar) to serve as the initial Paying AgentlRegistrar for tl~e Bonds is hei•eb}~ approved and confirmed, and the City agrees and covenants to cause io be kept and maintained at the corporate trust office of the Paying Agent/Registrar books and records (the Secrzrrry Register) for the registration, payment, and transfer of the Bonds, all as provided herein, in accordance with the terms and provisions of a Paying AgentlRegistrar Agreement, attached, ill substantially final form, as Exhibit A hereto, and such reasonable rules and regulations as the Paying Agent/Registrar and the City tnay prescribe. The City covenants to maintain and provide a Paying AgentlRegistrar at all times wliile the Bands are Outstanding, and any successor Paying AgentlRegistrar 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 57279482.3 -3- any state, authorized under such laws to exercise trust powers, Sueh Paying AgentlRegistrar 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 rigi~t 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. Principal of, premium, if any, and interest on the Bonds, due and payable by reason of Stated Maturity, or otherwise, shall be payable onl}T to the registered owner of the 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 an the Bonds, (ii} on the date of surrender of the Bonds for purposes of receiving payment of principal thereof upon redemption or at the Bonds' Stated Maturity, and (iii) on any other 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 (provided, however, with respect to principal payments prior to the final Stated Maturity, the Bonds need not be surrendered to the Paying Agent/Registrar, who will merely document #his payment on an internal ledger maintained by the Paying AgentlRegistrar). Interest on the Bands 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 ~rext preceding an Interest Payment Date for the Bonds (the Recof•d Dcrte} and shall be paid (i} by check sent on or prior to the appropriate date of payment by United States mail, first-class postage prepaid, by the Paying Agent/Registrar, to the address of tl~e Holder appearing in the Seciuity 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 «~here 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 anon-payment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment {a Special Retard Date) will be established by the Paying Agent/Registrar, if and rvlfen fiends 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 Payrt~ent Date -which shall be fifteen (15) days after the Special Record Date) shall be sent at bast five (5} business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of each sn~~asa.~ -4- I-Iolder 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. Ot~tional Redemption. The Bonds havi~ag Stated Maturities on and after February 1, 202d shall be subject to redemption prior to Stated Maturity, at the option of the City, on February 1, 2423, or on any date thereafter, as a whole or in paz•t, in principal ama~mts of $5,000 or any integral multiple thereof (and if within a Stated Maturity selected at random and by lot by the Paying AgentlRegistrar), at the redemption price of par plus accrued interest to the date of redemption. B. Exez•cise 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/Registraz• 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 of the governing body of the City. C, Selection of Bonds foz• Redemption. If less tha~~ all Outstanding Bonds of the same Stated Maturity are to be redeemed on a redemption date, the Paying AgentlRegistrar shall select at random and by lot the Bonds to be redeemed, prodded 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 mzmber of Bands Outstanding which is obtained by dividing the principal amount of such Bond by $5,400. D. Notice of Redemption. Not less than thirty (30) days prior to a redemption date for the Bonds, 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 AgentlRegistrar 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 duty given irrespective of r~vhether received by the Holder. All notices of redemption shall (i) specify the date of z•edemption 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, sha11 cease to accrue from and after the z•edemption 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. This notice may also be published once in a ftnancial publication, journal, ar reporter of general circulation among securities dealers in the City of New York, Ne~v York (including, but not limited to, Tlae Bona Btryer and The N~crll Street Jot~z°naT), or in the State of Texas {including, but not limited ta, "lhe Texcrs Bond Reparter~). 57279482.3 -5- 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 faz• redemption shall become daze and payable, and if money sufficient for the payment of szzch 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 AgentlRegistz•ar, then on the redemption date designated in such notice, inte~•est on tlae 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. E. Transfer/Exel~ange of Bonds. Neither the City nor the Paying Agezzt/Registrar shall be required (1) to transfer or exchange any Bond during a pez•iod beginning foz•ty-five (45) days prior to the date fixed for redemption of the Bands or (2) 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 paz•t. SECTION 5. Execution - Re~.istration. The Bonds shall be executed on behalf of the City by its Mayo-• or Mayor Pro Tezn under the seal of the City reproduced o-• 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 (hereinafter defined), all as authorized and provided in Chapter 12x1, as amended, Texas Governinent 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 oar 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 lzer duly authorized agent by manual sigiiatui•e, or a certificate of i•egistiation substantially in the form provided in Section SD, executed by the Paying Agent/Registra-` by inanual signatzzz•e, 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. Re istration -Transfer - Exchan e of Bonds -Predecessor Bands. The Paying AgentlRegistrar shall obtain, record, and maintain in the Security Register the name and addz•ess 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 Securit}~ Register by tl~e Holder, iir person or by his duly authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for cancellation, accompanied by a written insti•~zment of transfer or request far exchange duly executed by the Holder or by his duly authorized agent, in form satisfactoz•y ko the Paying Agent/Registra-•. Upon surrender for transfez• 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, iz~ the name of the designated transferee or t-•ansferees, one oz• more new Bonds of authorized 57279482.3 -~~ 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 far 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 Bands 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. 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 trail 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. A11 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 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 evideiaced by the new Bond or Bonds registered and delivered in the exchange or transfer therefor. Additionally, the term Predecessor Bands shall include any Bond registered and delivered pursuant to Section 17 in Iieu of a mutilated, lost, destroyed, or stolen Band which shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond. SECTION 7. Initial Bonds. The Bands herein authorized shall be initially issued as a single fitlly registered Bond in the aggregate principal amount of $2,16Q,000 with principal installments to become due and payable as provided in Section 2 hereof and numbered T-1 (the Initial Bands}, and the Initial Bonds shall be registered in the name of the Purchasers or the designee thereof. The Initial Bo~ids sha11 6e 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 AgentlRegistrar, pursuant to written instructions fi•otn the Purchasers, or tl~e 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 bearing applicable interest rates, and shall be lettered "R" and numbered consecutively fi•otn one (1 }upward for transfer and delivery to tl~e 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. 57279482.3 -~~ 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 Paying AgentlRegistrar, 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 ether variations as are permitted or required by this Ordinance and inay have such letters, numbers, or other marks of identification (i~~eludizag 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 insurance legends acid any reproduction of an opinion of Bond Counsel) thereon as may, consistent herewith, be established by the City oi• determined by the officers executing the Bands as 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 Borids shall be printed, lithographed, or engraved, produced by any combination of these methods, oi• 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 inay be typewritten or photocopied or otherwise reproduced, 57279~f82.3 -8- B. Form of Definitive Band. REGISTERED REGISTERED NO. PRINCIPAL AMOUNT United States of America State of Texas Counties of Bexar, Comal, acid Guadalupe CITY OF SCHERTZ, TEXAS GENERAL OBLIGATION REFUNDING BOND, SERIES 2013 Dated Date: Interest Rate: Stated Maturity: CUSIP NO: September 1, 2013 REGISTERED OWNER: PRINCIPAL AMOUNT; Tl~e City of Schertz, Texas (the City), a body corporate and a muaaicipal corporation in the Counties of Bexar, Carnal, and Guadalupe, State of Texas, for value received, acknowledges itself indebted to and hereby prainises to pay To the order of the Registered O«~ner specified above, or the registered assigns thereof, an the Stated Maturity date specified above, the Principal Amount specified above (or so much thereof as shall not have bean paid upon prior redemption} and to pay interest on tl~e unpaid Pri~zeipal Amount hereof from the Closing Date or from the ~l~ost 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 ar Stated Maturity, while Outstanding, at the per annum rate of interest specified above computed an the basis of a 3t;0-day year of Twelve 30-day months; such interest being payable on February 1 and August i of each year, commencing February 1, 2014. Principal on this Bond shall be payable to the Registered Owner hereof (the Ilolde~•}, upon presentation and surrender at the corporate trl-st office of the Paying Agent/Registrar executing tlae registration certificate appearing hereon ar a successor thereof (provided, however, with respect to principal payments prior to the final Stated Maturity, the Bonds need not be surrendered to the Paying Agent/RegisTrar, who will merely document this payment on an internal ledger maintained by the Paying Agent/Registrar), 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 an 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 ar 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 tl~e 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 57279482.3 -g` 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. This Bond is one of the series specified in its title issued in the aggz•egate principal amount of $2,160,000 (the Bot~ds) pursuant to an ordinance adopted by the governing body of the City (the Of•~1i~zance}, for the piupase of providing funds foz• tl~e (i) dischaz•ge and final payment of the Refiznded Obligations and (ii} payment of the costs of issuance of the general obiigatian refunding bonds, under and in strict conformity with the laws of the State of Texas, including Chapter 1207, as amended, Texas Government Code, and the City's Home Rule Charter. As specified in the Ordinance, the Bonds stated to mature on and after February 1, 2024 may be redeemed prior to their Stated Maturities, at tl~e option of the City, on February 1, 2023, or on any date thereafter, in whole or izz part in principal amouzzts of $5,000 or any integral multiple thereof {and if within a Stated Maturity selected at random and by lot by the Paying AgentlRegistrar} at the redemption price of par plus accrued interest to the date of redemption; provided, however, that at least thirty (30} days prior written notice snail be sent to the Holder of the Bands to be redeemed by United States mail, first-class postage prepaid, and subject to the terms and provisions relating thereto contained in the Ordinance, if this Bond is subject to redemption prior to Stated Maturity and is in a deno-nination in excess of $5,000, portions of the principal sum hereof irz installments of $5,000, ar any integral multiple thereof zna}l 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 tlje Paying AgentlRegistrar at its corporate trust office, a new Band 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 (ar any portion of tine principal sum hereof] shall have been duly called for redemption and notice of such redemption has been 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 the money for the payment of the zedemption price and the interest accrued on the pria~eipal amount to be -•edeemed to the date of redemption is held for the purpose of such payment by the Paying AgentlRegistrar, interest shall cease to accrue and be payable hereon from and after the redenption date on the p-•incipal amount hereof to be redeemed. if this Bond is called for cede-nption, in uThole or in part, the City ar the Paying Agent/Registrar shall not be required to issue, transfer, or exchange this Bond within f©rty-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 bala~~ce 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 ail taxable propez•ty within the City within the limitations prescribed by law. Reference is hereby made to the Ordinance, a copy of which is an fzle in the corporate trust office of the Paying Agent/Regist-•ar, and to all of the provisions of which the Holder by his acceptance hereof hereby assents, for definitions of terms; the descz•iption 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 ~vl~ich the Ordinance may be amended ar s~z79asz.s -10- supplemented with or without the consent of the Holders; the rights, duties, and obligations of the City and the Paying AgentlRegistr•ai;the tennis and provisions upon which this Bond may be i•edeen~ed or discharged at or prior to the Stated Maturity thereof, and deemed to be rlo longer Outstanding thereunder; and for the other tel•ins and provisions specified in the Ordinance. Capitalized ter-xls used herein l3ave the same meanings assigned in the Ordinance. This Bond, subject to certain limitations contained in the Ordinance, may be tlansfel•red on the Sec~rrity Register upon presentation and surrender at the corporate trust office of the Paying AgentlRegistl•ar, duly endorsed by, or accompanied by a written instl•ument 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 oI• transferees. The City and the Paying Agent/Registrar, and any agent of Dither, 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 far 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 ou7ner 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 anon-payment of interest on a scheduled payment date, and for thirty {30) days thereafter, a ner~v record date for such interest payment {a Special Record Date) will be established by the Paying AgentlRegistrar, if and when fiinds for the payment of such interest have been received from the City. Native of the Special Record Date and of the scheduled payment date of the past due interest (the Special Payrnefzt Date - which shall be fifteen {15) days after the Special Recol•d Date) shall be sent at least five {5} business days prier To The Special Reeor•d Date by United States mail, first-class postage prepaid, to the address of each I-Ioldel• appealing on the Security Register at ilie close of business on the last business day next preceding the date of mailing of such notice. It is lier•eby certified, covenanted, and represented that all acts, condltrons, and things required to he perfol•med, 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 the laws of the State of Texas and the Ordinance, and that the issuance of the Bonds does not exceed any constitutional or• statutory limitation; and that due provision has been made far 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 i~x~paired 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. The rejnai~rder of this page iratentrr~~urlly left blank.] 57279~I82.3 - l l - IN WITNESS WHEREOF, the City leas caused this Bond to be duly executed under its official seal. CITY Oh' SCHERTZ, TEXAS Mayor ATTEST: City Secretary (CITY SEAL) The r°er~7ainder of this page is7te~zfior~ally left blank.] 57279~l82.3 - 1Z- C. *Farm of Re istration Certificate of Com troller of Public Accounts to A ear on Initial Bonds Onl ~. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF `I'HE COMPTROLLER OF § PUBLIC ACCOUNTS § § REGISTER NO. THE STATE OF TEXAS § I I~EREBY CERTIFY that this Bond leas 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 Accaunts of the State of Texas. WITNESS my signature and seal of office this Comptroller of Public Accounts of the State ofTexas (SEAL) * Note to Printer; Not to appear on printed Bonds D. Form of Certificate of Pa in A ent/Re istrar to A ear on Definitive Bonds Oiiiy• 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: COMPASS BANK, Houston, Texas, as Paying Agent/Registrar By: Authorized Signature s~a~~~s~.~ -13- E. Form of Assi nrg a~e~~t. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print or typewrite Warne, address, and zip code of transferee): {Social Security or other identifying number): the within Bond and ail 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 an this assignment must correspond with the Warne of the registered owner as it appears on the face of the within Bond in every particular. Signature guaranteed: F. The Initial Bonds shall be in the r•es ective forms set Earth in ara ra h B of this Section exce t that the form of a 5111 le full re istered Initial Band 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 Sclrertz, Texas (the City), a body corporate and municipal corporation in the Counties of Bexar•, Carnal, and Guadalupe, State of Texas, for value received, acknawledges itself indebted to and hereby promises to pay to the order of the Registered Owner` named above, or the registered assigns ther•eaf, the Principal Amount specified above an 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: 57279482.3 - ~ ~' Years of Principal Interest Stated Maturity Amounts~~ 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 zu~paid Principal Amount hereof from the Closing Date (anticipated to be October 10, 2013), or from the most recent interest payment date to ~vhicla interest has been paid or duly provided far, to the earlier of redemption or Stated Maturity, at the per annum rates of interest specified above computed on the basis of a 360-day year of twelve 30-day months; such interest being payable on February 1 and August 1 of each year, commencing February 1, 2014. Principal of this Bond shall be payable to the Registered Owner hereof (the Halde~•), upon its presentation and surrender to Stated Maturity or prior redemption, while Outstanding, at the corporate tl'List office of Compass Banlc, Houston, Texas {the Pcryif7g ~1gej~t/Regist~•ar) (provided, however, with respect to principal payments prior to the final Stated Maturity, the Bonds need not be surrendered to the Paying AgentlRegistrar, who will merely document this payment on an internal ledger maintained by the Paying AgentlRegistrar). 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 AgentlRegistrar, requested by, and at the risk and expense of, the Holder hereof. fThe r•erra~crinder of this page intentiot~all~~ left blar~k.J s~z~sasz.3 -15- G. 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 theirs in this Section, and certain terms used in Sections 21 and 38 of this Ordinance have the meanings assigned to thorn iii 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 Azatlaorized ~f>lcials shall mean the Mayor, Mayor Pro Tein, City Manager, and/or City Secretary. B. The term Bond Fund shall mean the special fund created azrd established by the provisions of Section 10 of this Ordinance. C. The term Bor2ds shall mean the $2,160,000 "CITY OF SCHERTZ, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013" authorized by this Ordinance. D. The term City shall mean City of Schertz, located in the Counties of Bexar, Corral, and Guadalupe, Texas and, where appropriate, the City Council of the City. E. The term Closirrg Date shall mean the date of physical delivery of the Initial Bands in exchazrge for the payment in fiill by the Purchasers. F. The term Debt Service Rec~rrir•errzents shall mean, as of any particular date of computation, ~~rith 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 peI•mitted 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 wi11 be redeemed prior to Stated Maturity in accordance with the mandatory redemption provisions applicable thereto. G. The term Depositor y shall mean an official depository bank of the City. H. The term Goverrrrrrent Seczrr•ities, 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) noncailable obligations of an agency oi• instrumeirtality 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 oi• approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a 57279482.3 - ~ 6' nationally recognized investment rating firm not less than AAA or its equivalent; (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 tl~e governing body of the issuer adopts or approves the proceedings authorizing the issuance of refirnding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA ar its Equivalent, or (iv) any additional securities and obligations hereafter authorized by the laws of the State of Texas as eligible for use to accomplish the discharge of obligations such as the Bonds. I. The term Ilolder• or Holders shall mean the registered owner, whose name appears in the Security Register, for any Bond. J. The term 1'nter•est Pcryrnerat Dcrte snail mean the date interest is payable on the Bonds, being February 1 and August 1 of each year, commencing February 1, 2014, while any of the Bonds remain Outstanding. K. The term ~rdinar~ce shall mean this ordinance adopted by the City Council of the City on September 10, 2013. L. 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 AgentlRegistrar or delivered to the Paying Agent/Registrar for cancellation; (2) those Bonds for which payment has been duly provided by the City in accordance urith the provisions of Section 23 of this Ordinance; and (3) those Bonds that have been mutilated, destroyed, lost, or stolen and replacement Bands leave been registered and delivered in lieu thereof as provided in Section 17 of this Ordinance. M. The term Prrr•chaser•s shall mean the initial purchasers of the Bonds named in Section 1$ of this Ordinance. N. The term Stated MattrritJ~ shall mean the annual principal payments of the Bonds payable on February 1 of each year, as sot forth in Section 2 of this Ordinance. SECTION 10. Bond Fund; Investments. Far the purpose of paying the interest on and to provide a sinking fund far the payment, redemption, and retirement of the Bands, there shall be and is hereby created a special fu~~d to be designated "CITY OF SCHERTZ, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2013 INTEREST AND SINKING FUND" (the Bond Fund), «rhich fund shall be kept and maintained at the Depository, and money deposited in such fitnd shall be used for no other purpose and shall be maintained as provided in Section 21. Authorized Officials of the City are hereby authorized and directed to make withdrawals from the Bond Fund sufficient to pay the purchase price or tl~e amount of principal of, premium, if any, and interest on the Bonds as the same become due and payable and shall cause to be 57279482.3 -1 ~- transferred to the Paying Agent/Registrar from money on deposit in the Bond Fund au amount sufficient to pay the amount of principal andlor interest stated to mature on the Bonds, such transfer of fiznds to the Paying Agent/Registrar to be made in such manner as will cause immediately available finds 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 transfe-• of funds to the Paying AgentlRegistrar, money in any fund created and established pursuant to the provisions of this O-•dinance, at the option of the City, may be placed in time deposits, certificates of deposit, guaranteed investment contracts, o-• similar contractual agreements as permitted by the p-•ovisions of the Public Funds Investment Act, as amended, Chapter 2256, Texas Goveriunent Code, secured (to the extent not insured by the Federal Deposit Insurance Carpa-'ationj by obligations of the type hereinafter described, or be invested, as authorized by any law, including investments held in book-entry forth, in sera-•ities including, but not limited to, direct obligations of the United States of America, obligations guaranteed or ins~u-ed by tl~e United States of Ame-•ica, which, in the opinion of the Attorney Gene-•al of the United States, are backed by its fill faith and credit o-• 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 suer governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks, Banks for Cooperatives, Federal Home Loan Banks, Government National Mortgage Association, Farmers Home Administration, Federal Home Loan Mortgage Association, Small Business Administration, or Federal Housing Association; provided that all such deposits and investments shall be made in such a manner that the money required to be expended from such fund will be available at the proper time or times. All interest and income derived from deposits and investments in such fund shall be credited to, and any losses debited to, such fund. All such investments shall be sold promptly when necessa-y to prevent any default in connection with the Bonds. SECTION 11. Tax Levy. Ta provide for the payment of the Debt Service Requirements on the Bonds being (ij the interest on the Bo-ids and (iij a si-ilcing fund for their redemption at Stated Maturity o-• a sinking fiend of 2% (whichever amount shall be the greater), there shall be and there is hereby levied fo-• 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 casts 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 hat 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 tlae existing a-id available taxing authority of the City for such purpose is adegi-ate 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 far the Bonds, from the annual levy of an ad valorem tax ar from other lawfully available funds, amounts sufficient to fully pay and discharge promptly each installment of 57279482.3 -1 g- interest and principal of the Bonds as the same accrues or matures or comes due by reason of Stated Maturity. Accrued interest, if any, received from the Purchasers of the Bands, along with any taxes collected pertaining to the Refunded Obligations, after the Closing Date, 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 Bo~td Fund, and such amounts so deposited shall reduce the sums othe~•~vise required to be deposited in said fiend from ad valorem taxes, SECTION 13. Security of Funds. All money on deposit in the finds 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 fi~llest extent required by the laws of the State of Texas for the security of public fiends, and money on deposit in such funds shall be used only far the purposes permitted by this Ordinance. S1/CTION 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 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 dela}r 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 ar acquiescence therein, and every such right and power may he exercised from time to tune 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 6e deemed to be exclusive. SECTION 1 S. 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 appearing in the Security Register at the close of business oii the business day next preceding the mailing of such notice. 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 tl~e Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. s~z~9~sz.~ -19- SEC"TION 16. Cancellation. All Bonds surrendered for payment, transfer, exchange, or replacement, if surrendered to The Paying Agent/Registrar, shall be promptl}r canceled by it and, if surrendered to the City, shall be delivered to the Paying Age~it/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 Bands previously certified or registered and delivered which the City ruay have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly canceled by the Paying AgentfRegistrar. 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 AgentlRegistrar, 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 AgentlRegistrar 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, last, 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 contemporaneously outstanding. In case any such mutilated, destroyed, lost, or stolen Bond has become ar is about to become due and payable, the City in its discretion inay, instead of issuing a new Bond, pay such Band. Upon the issuance of any new Bond ar payment in lieu thereof, under this Section, the City may require payment by the Holder of a sum sufficient to cover any tax ar other governmental charge imposed in relation thereto and any other expenses and charges (including attorney's fees and the fees and expenses of the Paying Age~it/Registrar) connected therewith. Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost, or stolen Band shall constitute a replacement of the prio~• obligation of the City, ~rheilier ar not the mutilated, destra}rcd, 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 Bands. The provisions of this Section are exclusive and shall preclude (to the extent lawfi~l) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost, ar stolen Bonds. SECTION 18. Sale of Bonds ~- Authorization of Purchase Contract A roval. The Bonds authorized by this Ordinance are hereby sold to Compass Bank, an Alabama banking corporation, Houston, Texas (tl~e Ptri•chaser•s, and having all the rights, benefits, and obligations of a I-Ialder) in accordance with the provisions of a Purchase and Investment Letter dated Septe~xlber 10, 2013 (the Parf•clrcr~~e Contrnet) attached hereto as Exhibit B and incorporated herein by reference as a part. of this Ordinance for all purposes. Tl~e Initial Bond shall be registered in the name of Compass Bank. The pricing and terms of the sale of the Bands are hereby found and determined to be the most advantageous reasonably obtainable by the City. 57279982.3 -20 Each Authorized Official is hereby authorized and directed to execute the Purchase Contract for and on behalf of the City and as the act and deed of the City Council, and iia 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 carz•ect in all material respects and shall be honored and performed by the City. Delivery of the Bonds to the Purchasers sha11 occur as soon as practicable after the adoption of this Ordinance, upon payment therefoz• in accordance with the terms of the Punchase Contract. SECTION 19. Escrow Agreement Approval and Execution; Proceecls. , of _ Sale; Contribution by Citx. The Escrow and Trust Agreement dated as of September 10, 2013 to be effective upon the initial delivery of tlue Bonds to the Purchasers (the Ag~•eernen!} between the City and Wells Fargo Bank, National Associatio~a, Minneapolis, Mim~esota (the Fscr•oi~~ Agent), attached hereto as Exhibit C and incorporated herein b}' reference as a part of this Ordinance for all purposes, is hereby approved as to form and content, and such Agreement in substantially the farm and substance attached hereto, together with such changes or revisions as may be necessary to accomplish the refunding or benefit the City, is hereby authorized to be executed by the Mayor, Mayor Pro Tem, and City Secretary and on behalf of the City and as the act and deed of this City Council; and such Agreement as executed by said officials shall be deemed approved by the City Council and constitute the Agreement herein approved. Furthermore, any Authorized Official, or any one or more of said officials, and Bond Counsel in cooperation with the Escrow Agent are hereby authorized and directed to make the necessary arrangements for The purchase of the Federal Securities referenced in the Agreement and the initial delivery thereof to the Escrow Agent on the day of delivery of the Bands to the Purchasers far deposit to the credit of the "CITY OF SCI-IERTZ, TEXAS GENERAL OBLIGATION REFUNDING BOND SERIES 2013 ESCROW FUND" (the Fsca•o»~ Firnc~, including the execution of The subscription farms for the purchase and issuance of the "United States Treasury Securities -State and Local Government Series", if any, for deposit to the Escrow Fund; all as contemplated and provided by the provisions of the Act, this Ordinance, and the Agreement. Immediately following the delivery of the Bands, the proceeds of sale along with a cash contribution, if any, from the City (less certain costs of issuance, and accrued interest, if any, received from the Purchasers of the Bonds) shall be deposited with the Escrow Agent for application and disbursement in accordance u7ith the provisions of the Agreement. The proceeds of sale of the Bands not so deposited ~~~ith the Escrow Agent for the refunding of the Refiuided Obligations shall be disbursed for payment of costs of issuance and deposited with the place of payment (of the Refinded Obligations) in an account in the name of the City and applied for the purposes of providing for the payment of the costs and expenses incurred in connection therewith or deposited in the Bond Fund for the Bonds, all in accarda~rce with written instructions from the Mayas or City Manager. SECTION 20. Redemption of _Refiinded Obli ate ions. The Refiinded Obligations referenced in the preamble hereof become subject to redemption prior to their stated maturities at the price of par, premium, if any, and accrued interest to the date of redemption. The Mayor shall give written notice to the paying agentlregistrar for the Refinded Obligations and the 57279482.3 -21- Escrow Agent that the Refunded Obligations have been called for redemption, and the City Council orders that such obligations are called for redemption on the date set forth on Schedule I attached to this Ordinance, and such order to redeem the Refunded Obligations on such date shall be irrevocable upon the delivery of the Bonds. A copy of the notice of redemption pertaining to the Refiinded Obligations is attached to this Ordinance as Exhibit D and is incorporated herein by reference for all purposes. The paying agent for the Refunded Obligations is authorized and instil~cted to provide notice of this redemption to the holders of the Refimded Obligations in the form and manner dese~•ibed in the ordinance authorizing the issuance of the Refunded Obligations. SECTION 21. Covenants to Maintain Tax-Exempt Status. A. Definitions. When used in this Section, the following terms have the following meanings; Certificates means the $5,000,000 "CITY OF SCHERTZ, TEXAS COMBINATION TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF OBLIGATION, SERIES 2013" authorized by a separate Ordinance. Closing Date means the date of physical delivery of the Initial Bands in exchange for the payment in full by the Purchasers. Cade means the Internal I~evenue Code of 1986, as amended by ail legislation, if any, effective on or before the Closing Date. CoPnptrtatio~7 Date has the meaning set forth in Section 1.148-1(b) of the Regulations. G3•oss Proceeds means any proceeds as defined in Section 1.148-1(b) of the Regulations, a~~d any replacement proceeds as defined in Section 1,148-1(c) of the Regulations, of the Bonds. If~vestr~ae~zt has the meaning set Earth in Section 1.148-1(b) of the Regulations. 1Vonpar~pase Ijavestfnent means any investment property, as defined in section 148(b) of the Code, in which Grass Proceeds of the Bonds are invested and which is not acquired to carry out the governmental purposes of the Bonds. Rebate Ar~~otrrrt has the meaning sat forth in Section 1.148-1(b) of the Regulations. Rega~7ations means any proposed, temporary, or final Income Tax Regulations issued pursuant to sections 103 and 141 through 150 of the Code, and 103 of the Internal Revenue Code of 1954, rvhich 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. 5727982.3 -22- Field of (1) any Investment has tlae meaning set forth in Section 1.148-5 of the Regulations; and (2) the Bonds means the combined yield on the Bonds and the Certificates, treating them as a single issue and as calculated pursuant to Section 1.148-4 of the Regulations. B. Not to Cause Interest to Became Taxable. The City shall not use, pcrmit the use of, or omit to use Gross Proceeds or any other arnOUrlts (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 oumer thereof for federal income tax purposes. VL~ithout limiting the generality of the foregoing, unless and until the City receives a written opinion of counsel nationally recognized in the held 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 of the specific covenants in this Section. C. No Private Use or Private Pa menu. 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 ar refinanced directly or indirectl}r ~vith Gross Proceeds of the Bonds (including property financed with Gross Proceeds of the Refunded Obligations), and not use or• permit the use of such Grass Proceeds (including all contractual arrangements with terms different than those applicable to the general public) or• any property acquired, constructed or improved with such Grass Proceeds in any activity carried on by any person or entity (inchrding 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 Grass 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 «~ith Gross Proceeds of the Refilnded Obligations), other than taxes of general application within the City or interest earned on investments acquired with such Gross Proceeds pending application far their intended purposes. 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 Bands to make or finance loans to any person or entity other than a state ar local goverrunent. lror purposes of the foregoing s~2~~asa.3 -23- 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 far 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; aI• (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 iI~ a transaction which is the economic equivalent of a loan. E. Not , to Invest at Higher Yield. Except to the extelrt that it will not cause the Bonds to become "arbitrage bonds" «~itilin 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 Mah-rity 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 theta held oI• 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 Cade and the Regulations and rulings thereunder, the City shall not take or omit to take any action which would cause tl~e Bonds to be federally guaranteed within the meaning of section 149{b) of the Code and the Regulations and rulings thereunder. G. I~IfoI•Ixlation Rem. The City shall timely file the information required by sectiolu 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 in 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 fi•oIn 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 ~xlay commingle Gross Proceeds of the Bonds ~~~ith other money of the City, provided that the City separately accounts for each receipt and expenditure of Grass 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 fortll 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 I•elati~ug to the issuance of the Bonds until six years after the final Computation Date. {3) As additional consideration for the purchase of the Bonds by the Purchasers and the loali of the money represented thereby and in order to induce such purchase by Ineasures 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 57Z79~182.3 _~4- the United States out of the Band FLII1d or its general filnd, 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 Cornputatlon Date as defined in Section 1.148-3(e)(2) of the Regulations, one hundred percent (100°/©) of the Rebate Arnou~rt 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 iustalllnents, to the place and in the manner as is or may be required by section l48(f) of the Code and the Regl~lations and rulings thereunder, and shall be accompanied by Form 8038-T or such other forms and information as is or may be required b}T section 148(f) of the Code and the Regulations and rulings thereunder. (4) The City s11a11 exercise reaso~aable diligence to assure that no errors are made in the calculations and payments required by paragraphs (2j 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), ialcluding payment to the United States of any additional Rebate Amount owed to it, interest thereon, and any penalty imposed I.mder Section 1.148-3(h) of the Regulations. I. Nok 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 Bands not been relevant to either paI-ky. J. Bonds Nat 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 Inore. K. ualified Advance Refundin The Bonds are issued, in part, to refund the Refunded Obligations, and certain proceeds thereof will be used more than 90 days before the redemption of such Refimded Obligations. The City represents as follows: (1) The Bonds are the "first advance refunding" of any original bonds issued after 1985 and are the "first or second advance refilnding" of any original bonds issued before 198b, both within the meaning of section 149(d)(3) of the Code. (2) The Refunded Obligations are being called for redemption, and will be redeemed: (i) in the case of Refunded Obligations issued after 1985, not later than the earliest date on which such bonds may be I•edeellled and on which the City will realize 5727482.3 -25- present value debt service savings (determined without regard to administrative expenses} in connection with the issuance of the Bonds; and (ii} iza the case of Refunded Obligations issued before 19$6, not later than the earliest date on which such issue znay be redeemed at par or at a premium of 3 percent or less and on which the City will realize present value debt service savings (determined without regard to administrative expenses) in connection with the issuance of the Bonds. (3) The initial temporary period under section 1 ~18(c) of the Code will end: (i} with respect to the proceeds of the Bonds used to refiznd the Refunded Obligations not later than 30 days after the date of issue of such Bonds; and (ii} with respect to proceeds of the Refiizuded Obligations on the Closing Date if not ended prior thereto. (4} On and after the date of issue of the Bonds, no proceeds of the Refunded Obligations will be invested in Nonpurpose Investments having a Yield in excess of the Yield on such Refunded Obligations. (5} The Bonds are being issued for the purposes stated in tl~e preamble of this Ordinance. There is a present valuze savings associated with the refunding. In the issuance of the Bonds the City has: (i) neither issued more bonds, nor issued bonds earlier, and will not allow bonds to z•emaiai ouitstanding longer, than reasonably necessary to accomplish the governmental purposes for which the Bonds were issued; (ii) not employed an "abusive arbitrage device" within the meaning of Section 1.148-10(a} of the Regulations; and {iii) not employed a "device" to obtain a material financial advantage based on arbitrage, within the meaning of section 149(d)(4) of the Code, apart from savings attributable to lower interest rates. L. Elections. The City hereby directs and authorizes the Mayor, Mayor Pro Tem, City Manager, and City Secretary, either or any combination of the foregoing, to make such elections in the Cez•tificate 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. Sutclz elections shall be deemed to be made on Clue Closing Date. M. Qualified Tax-Exempt Obli atg ions. The City hereby designates the Bonds as gtralified tax-e~errrpt obligations for purposes of section 2G5(b) of the Code. 1za furtherance of such designation, the City represents, covenants and waz•rants the following: (a) during the calendar year in which the Bonds are issued, the City (including any subordinate entities) has not designated nor will designate obligations, which when aggregated with the Bonds, will result in more than $10,000,000 of "qualified tax-exempt obligations" being issued; (b} the City reasonably anticipates that the amount of tax-exempt obligations issued duzring the calendar year 2013 by the City (including any subordinate entities} will not exceed $10,000,000; and (c} the City will take such action or refrain from such actiozu as is necessary in order that the Bonds will not be considered "private activity bo3~ds" within the meaning of section 141 of the Code. SECTION 22. Control and Custody of Bonds. The Mayor shall be and is hereby authorized to take azzd have charge of all necessary orders and records pending investigation by the Attoz•ney Genez•al of the State of Texas and shall take and have charge and control of the 57279482.3 -2~- 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, any Authorized Official or all, are hereby authorized and directed to fi-rnisl~ 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 fnancial 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 23. Satisfaction of Obligation of City, If the City shall pay or cause to be paid, or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest an 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 suff cient to pay in fill SUCK Bp11dS or the principal amount(s) thereof on or prior to Stated Maturity, or to the redemption date therefor, together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, and/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, in the case of a net defeasance, 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 mane}~ 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 ar waived or if irrevocable arrangements therefor acceptable to the Paying Agent/Registrar have been made} the redemption date thereof for the Bonds. In the event of a grass defeasance of the Bonds, the City shall deliver a certificate from its financial advisor, the Paying Agent/Registrar, or another qualified third party concerning the deposit of cash andlor Government Securities to pay, when due, the principal of, redemption premium (if any), a~~d interest due on any defeased Bonds. The City covenants that no deposit of mo~~ey or Government Securities will be made under this Section and no use made of any such deposit which would causo the Bonds to be treated as arbitrage bands within the meaning of section 14& of the Code (as defined in Section 21 hereof). Any money so deposited with the Paying Agent/Registrar, and all income from Govermnent Securities held in trust by the Paying Agent/Registrar, or an authorized escrow agent, pursuant to this Section which is not req~.ured far 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 three (3) years after the Stated Maturity of the Bonds, such money was deposited and is held intrust to pay shall upon the request of the City be remitted to the City against a written receipt therefor, subject to the unclaimed prope~•ty laws of the State of Texas. 57279482.3 -27- Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any deter•rnination not to redeem defeased Bonds that is made in conjunction with the payment arrangements specified i~~ subsection (i) ar (ii) above shall not be irrevocable, provided that: (1) in the proceedings providing foi• such defeasance, the City expressly reserves the right to call the defeased Bands 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 eras being defeased at the time of tl~e 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 24, Printed Opinion. The Purchasers' obligation to accept delivery of the Bonds is subject to its being furnished a final opinion of Fulbright & Ja~vorski LLI~, as 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 oath 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 25. CUSIP Numbers. CUSIP numbers may be printed or typed on the defr~ritive Bands. It is expressly provided, however, that the presence or absence of CUSIP numbers an tlae definitive Bonds shall be of no significance or effect as regards the legality thereof, and neither the City nor attorneys approving said Bands as to legality ar•e to he held responsible far, CUSIP numbers incorrectly printed or typed on the definitive Bonds. SECTION 26. Effect of Headings. The Section headings herein are far convenience only and shall not affect the construction heroo£ SECTION 27. Ordinance a Contract, Amendments _ Outstandin Bands. The City acknowledges that the covenants and obligations of the City herein contai~aed are a material inducement to the pur•ehase 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 sa long as any Bond remains Outstanding except as permitted in this Section, The City niay, without the consent of or notice to any Holders, from time to tiu~e and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders, inchrding 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 inajarity in aggregate principal amount of the Bonds then Outstanding affected thereby, amend, add to, or rescind any of the provisions of this Ordinance; provided; ho«rever, that, without the consent of all I-ialders of Outstanding Bonds, na such amendment, addition, ar rescission shall (I) extend the time or times of payment of the principal of, and interest on the Bonds, reduce the principal amount thereof, ar the rate of interest thereon, or in any other stay modify the terms of payrncnt of the principal of, the redemption price tlrerefor, or interest on the Bonds, (2) give any preference to any Band over any other Bond, or (3) reduce the aggregate principal amount of Bonds required for consent to any such amendment, addition, or rescission, s~z~~~s2.~ -28- SECTION 28. Benefzts 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 benefzt of the City, Bond Counsel, the Paying Agent/Registz•ar, and the Holders. SECTION 29. Inconsistent Pz•ovisions. All ordinances and resolutions, oz• parts thereof, ~~rhich are in conflict or inconsistent with any provision of this Ordinance are hereby z•epealed to the extent of such conflict, and the provisions of this Ordinance shall be and remain controlling as to the matters ordained herein. SECTION 30. Construction of Terms. If appropriate in the context of this Ordinance, words of the singular number shall be considered to include the plural, «rords 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 31. Governing Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. SECTION 32. 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 33. 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 paz•t of the judgment az~d findings of the City Council. SECTION 3~1. Authorization of Pa rin A ent/Re istrar A z•eement, 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, registration, and transferability of the Bonds. A copy of the Paying Agent/Registrar Agreement is attached hereto, in substantially fznal form, as Exhibit A and is incorporated by reference to the provisions of this Ordinance. SECTION 3S. 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 36. Uzzavailability of Authorized Publication. If, because of the temporary or permanent suspension of any nenrspaper, 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 suelz other manner and at such time or tunes as in the judgment of the City or of the Paying AgentlRegistrar shall 57279482.3 -~~- most effectively approximate such required publication and the g~v~ng of such ~iotice in such manner shall for all purposes of this Ordinance be deemed to be in compliance with the requirements for publication thereof. SECTION 37. No Recotn•se A ainst Cit 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 auy Bond. SECTION 38. Continuing Disclosure Undertaking. below: A. Definitions. As used in this Section, the following terms have the mea~~ings ascribed to such terms R~rle means SEC Rule 15c2-12, as amended from time to time. SEC means the U~aited States Securities and Exchange Conunission. The Bo~~ds are being sold pursuant to a private placement with the Purchasers, in denominations of generally $100,000 or any integral multiple of $5,000 in excess thereof, to less than thirty-five sophisticated investors, and therefore the Rule is not applicable to the offering of the Bonds. Accordingly, no contract to provide continuing disclosure information after the issuance of the Bonds has been made by the City ~j~ith investors. SECTION 39. Book-Entry Onl~• sue. The Bands may initially be registered so as to participate in a securities depository system (tile DTC Systerrr} 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 E {the Representation Letter). With respect to the Bands 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 otl~er financial institution far which DTC holds the Bonds fiam time to time as securities depository {a Depository Pat•ticipaj~t) or to any person on behalf of wham such a Depository Participant holds an interest in the Bonds (an h~dif•ect Pctrticipctfzt), Without limiting the inunediately 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 o~vnership interest in the Bonds, (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 s7z~~asz.s -30- notice of redeillption, of (Ill) 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 certificate evidencing the obligation of the City to make payments of principal, premium, if any, and interest pursuant to this Ordinance. Upon delivery by DTC to the Paying AgentlRegistra-' of ~~~ritten 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 hailed to the Holder, the word "Cede & Ca." 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 Pa-•ticipants of the availability within a reasonable period of time tlrlough 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 Bands shall be registered in the name of and deposited with a successor depository operating a securities depository system, as may be acceptable to the City, or such depository's agent or designee, and if the City and the Paying Agent/Registrar do not select such alternate securities depository system then the Bonds may be registered in whatever name or names the Holders of Bonds tl•ansfel•ring 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 s11a11 be made and given, -•espectively, in the manner provided in the Representation Letter. SECTION 40. Fuithe-• 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 ol• not herein mentioned, as may be -reeessary 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 Ag-•eement, the Purchase Contract, and the Agreement. In addition, prior to the initial delivery of the Bonds, any Authorized Official and Bond Counsel are hereby authorized and directed to approve any technical changes or corrections to this Ordinance o-• to any of the instruments authorized and approved by this Ordinance necessary in order to (i) col•1•ect any ambiguity or mistake or properly o-• more completely document the transactions contemplated and approved by this Ordinance, (ii) abtain a rating from any of the national bond rating agencies, or (iii) abtain the approval of the Bonds by the Texas Attorney General's off-ce. In case any officer of tl~e City whose signature shall appear on any certificate shall cease to be such officer before the derive-y of such certificate, such signature shall nevertheless be valid and sufficient for all purposes the salve as if such officer had remained in office until such delivery. 57279482.3 -3 l - SECTION 41 • Contracts with Financial Advisor and/or Bond Counsel. The City Council authorizes the Mayor and/or the City Manager, or their designees, to take all actia~~s ~~ecessaiy to execute any necessary financial advisory contracts with Sauthwrest Securities, Inc., as the financial advisor to the City (the Frncrnercrl Aclvisat•}. The City understands that under applicable fedcral securities laws and regulations that the City must have a contractual arrangement with its Financial Advisor relating to the sale, issuance, and delivery of the Bonds. In addition, the City Council also authorizes the Mayor and/or the City Manager, or their designees, to take all actions necessary to execute any ~~eccssary engagement agreement with Fulbright & Jaworski LLP, as the Bond Counsel to the City. SECTION 42. Accountingports. The City shall provide annually to tlae Purchasers, for so long as it is the holder of the Bonds, within 180 days after the end of each fiscal year ending in or after 2013, financial information and operating data urith respcct to the City; provided that such financial statements so to be provided shall be (1) prepared in accordance with the generally accepted accounting principles, or such other accounting principles as the City nay be required to employ from time to time pursuant to Texas law or regulations, 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 (1}unaudited financial statements for the applicable fiscal year within six months after the end of such fiscal year, a~ad (2} audited financial statements for the applicable fiscal year to the Purchasers when and if the audit report oar such statements become available. SECTION 43. Effective Date. Pursuant to the provisions of Section 1201.028, as amended, Texas Government Code, this Ordinance shall be effective immediately upon adoption, noh~tithstauding any provision in the City's Home Rule Charter to the contrary concerning a multiple reading requirement for the adoption of ordinances. The rerrrainder of lbrs ~c~ge intentro~zcrlly left blank.] s~2~a~s2,~ -32- "J .. ~ I~ ~ ~ II . . r - ~_~~~ INDEX TO SCHEDULE AND EXHIBITS Schedule L ..................................................................Table of Refi-nded Obligations Exhibit A ....................................................................Paying Agent/Registrar Agreement Exhibit B ....................................................................Purchase and In~restment Letter Exhibit C ....................................................................Escrow and Trust Agreement Exhibit D ....................................................................Notice of Redemption Exhibit E ....................................................................DTC Letter of Representations sn7a~sz.~ Index Sel~edule I Refunded Obligations City of Schertz, Texas Combination Tax and Subordinate Lien Re~renue Certificates of Obligation, Series 2005, dated May 1, 2005, in the original principal amount of $3,200,000 stated to mature on February 1 in each of the years 2015, 2017 through 2021, and February 1, 2025, in the aggregate principal amount of $2,070,000, to be redeemed on Feba•uary l , 2014. s~z~9~€sz.s Schedule I-1 EXHIBIT A Paying Agent/Itegistrar Agreement See Tab No. s~z7~4az.a A-1 EXHIBIT B Purchase and Divestment Letter See Tab No. 572794823 ~-1 EXHIBIT C Escro`~~ and Trust Agreement See Tab No. 57279482.3 C~ ~ EXHIBIT D Notice of Redemption See Tab No. s7~~~4s2.a D-1 EXHYBYT ~ DTC Letter of Representations See Tab No, s~2~g~ts2.a E-1