SSLGC ARTICLES OF INCORPARTICLES OF INCORPORATION
OF THE
SCHERTZ /SEGUIN LOCAL GOVERNMENT CORPORATION
We, the undersigned natural persons, each of whom is eighteen (1 S) years of age or
older, a resident of the City of Schertz, Texas ( "Schertz ") or the City of Seguin, Texas ( "Seguin "),
and a citizen of the State of Texas (the "State "), acting as incorporators of a nonprofit corporation
(the "Corporation ") created in accordance with the provisions of the Texas Transportation
Corporation Act (the "Act "), Tex. Transp. Code Ann. § 431.001 ei sec/. and Tex. Loc. Gov't Code
§ 394.001 et .seq. (the "Local Government Code "), hereby adopt the following articles of
incorporation for such Corporation.
ARTICLE I
The name of the Corporation is the Schertz/Seguin Local Government Corporation.
ARTICLE II
The Corporation is a public, nonprofit corporation.
ARTICLE III
Subject to the provisions of Article YV hereof, the period of its duration is perpetual.
ARTICLE IV
The purposes for which the Corporation is organized are as f:.l'.ows:
to aid, assist, and act on behalf of Schertz and Seguin (collectively, the
"Cities ") in acquiring, constructing, leasing, improving, enlarging, extending,
repairing, maintaining, and operating a water utility system (the "Project ")
pursuant to the provisions of Tex. Loc. Gov't Code § 402.001 et .sec/.
( "Chapter 402 ") and other applicable laws of the State;
2. to aid, assist, and act on behalf of Schertz and Seguin in accomplishing a
governmental purpose of Schertz and Seguin in the provision of water for
public use;
to engage in activities permitted under the laws of the State, including, but not
limited to, Chapter 402 and to own and operate all properly, real, person, or
mixed, and conduct such activities as are now or hereafter permitted under the
laws of the State, including, but not limited to, Chapter 402 and as are
r,07rr.v5
convenient or necessary to the ownership, maintenance, and operation of the
Project;
4. to receive, hold, administer, and disburse any money, secui ities, or other
property which may be transferred to Corporation by gift, devise, bequest, or
otherwise, for any of the uses or purposes set forth above, and to invest, lend,
conserve, use, and disburse such money, securities, or other property, and the
income derived therefrom, for the uses and purposes herein specified, in
accordance with the judgment and discretion of the board of directors;
S. to purchase, exchange, contract for, lease, rent, and in any and all other wars
acquire, take, own, improve, and hold, and to sell, convey, mortgage, lease,
rent to others, or otherwise dispose of real estate, improvements in real estate.
interests in real estate, and personal property of every kind, character, and
description;
6. to borrow money or raise money and to issue notes, bills, bonds, and other
obligations and to mortgage, pledge, hypothecate, or otherwise encumber am-
and all of the revenues and assets of the Corporation as security therefor for
the purpose of carrying out the goals of the Corporation; and
to do any and all things necessary or convenient to the accomplishment of any
of the purposes or for the exercise of any of the powers herein set forth_
whether herein specified or not, either alone or in connection with other firms.
individuals, or corporations, whether in the State or throughout the United
States, and elsewhere.
The Corporation shall have the purposes and powers permitted by the Act, but the
Corporation does not have, and shall not exercise the powers of sovereignty of the Cities, including
the power to tax, eminent domain, and police power. However, for the purposes of the Texas Tort
Claims Act (Subchapter A, Chapter 101, Texas Civil Practice and Remedies Code), the Corporation
is a governmental unit and its actions are governmental functions.
The Corporation is formed as a local government corporation pursuant to the
provisions of Subchapter D of the Act.
ARTICLE V
(a) Before the consummation of the sale and delivery of any bonds or notes, the
Corporation shall obtain approval by the governing bodies of the Cities as evidenced by the adoption
of a written resolution.
(b) In the exercise ofthe powers of the Corporation, the Corporation may enter into loam
lease, trust, or other agreements as authorized by the Act that are necessary and appropriate to the
fulfillment of the public purpose of the Corporation, all of which agreements, and the specific uses,
and the method of withdrawals and expenditure of the proceeds of the bonds or notes, and must be
519756.v5 -2-
included as a part ofthe approval process ofthe governing bodies ofthe Cities required by paragraph
(a) above.
ARTICLE VI
The Corporation shall have no members and is a nonstock corporation.
ARTICLE VII
The City Council of Schertz and the City Council of Seguin (collectively, the "Cite
Councils ") have, by resolutions adopted on the 151 day of December, 1998, authorized the creation
of the Corporation and approved the Corporation's articles of incorporation and bylaws as a loca:
government corporation pursuant to Subchapter D of the Act.
The Corporation shall have and exercise all ofthe rights, powers, privileges, authority.
and functions given under the Act, the Local Government Code, Chapter 402, and under the general
laws ofthe State to nonprofit corporations incorporated under the Texas Non- Profit Corporation Ac-.
which are consistent with the provisions of the Act with respect to the development and operatio~
of the Project together with all powers incidental thereto or necessary therefor.
The Corporation shall have all other powers of like or different nature not prohibited
by law which are available to nonprofit corporations in Texas and which are necessary or useful for
the development and operation of the Project.
The Corporation is a constituted authority and a public instrumentality within the
meaning of the regulations of the United States Treasury Department and the rulings of the Interna:
Revenue Service prescribed and promulgated pursuant to Section 103 of the Internal Revenue Code
of 1986, as amended, and the Corporation is authorized to act on behalf of Schertz and Seguin as
provided in these Articles of Incorporation_ However, the Corporation is not a political subdivision
or political corporation ofthe State within the meaning of its constitution and laws, including, without
limitation, Article III, Section 52 of the constitution, and no agreements, bonds, debts, or obligations
of the Corporation are or shall ever be deemed to be the agreements, bonds, debts, or obligations.
or the lending of credit, or a grant of public money or thing of value, of or by Schertz and Seguin or
any other political corporation, subdivision, or agency of the State, or a pledge ofthe faith and credit
of any of them.
ARTICLE VIII
These Articles of Incorporation may at any time and from time to time be amended
as provided in the Local Government Code so as to make any changes therein and add any provisions
thereto which might have been included in the Articles of Incorporation in the first instance.
such amendment shall be effected in either ofthe following manners: (1) the members of the Board
of Directors of the Corporation shall file with each City Council a written application requesting
permission to amend the Articles of Incorporation, specifying in such application the amendment:
proposed to be made, the City Councils may consider such application and, if they shall by
appropriate resolution duly find and determine that it is advisable that the proposed amendments be
319766.v5 -3-
made and shall approve the form of the proposed amendments, then the Board of Directors of the
Corporation may amend the Articles of Incorporation by adopting such amendments at a meeting of
the Board of Directors and delivering the articles of amendment to the Secretary of State, or (ii) the
City Councils may, at their sole discretion, and at any time, amend these Articles of Incorporation;
and change the structure, organization, programs, or activities of the Corporation, or terminate or
dissolve the Corporation (subject to the provisions of the Act and any limitation provided by the
constitution and laws of the State of Texas and the United States of America on the impairment of
contracts entered into by the Corporation), by written resolution adopting the amendment to the
Articles of Incorporation of the Corporation or articles of dissolution at a meeting of each of the CitV
Councils and delivering articles of amendment or dissolution to the Secretary of State, as provided
in the Act. Restated Articles of Incorporation may be filed with the Secretary of State as provided
in the Act.
ARTICLE IX
The Corporation shall be subject to the Open Meetings Act, Tex. Gov't Code
§ 551.001 et serf. and the Open Records Act, Tex. Gov't Cade § 552.001 et serf., in the same manner
as if the Corporation were a municipality.
ARTICLE X
The street address of the initial registered office of the Corporation is 300 Convent
Street, Suite 2200, San Antonio, Texas 78205 and the name of its initial registered agent at such
address is W. Jeffrey Kuhn.
ARTICLE XI
The initial Bylaws ofthe Corporation shall be adopted by the Corporation's board of directors
and shall, together with these Articles of Incorporation, govern the initial affairs of the Corporation
until and unless amended in accordance with the provisions of the Act and these Articles of
Incorporation. The Bylaws and each amendment and repeal of the Bylaws must be approved by each
of the City Councils of the Cities by resolution.
ARTICLE XII
The number of directors constituting the initial board of directors of the Corporation
is five (5). Two (2) directors shall be initially appointed by the Schertz City Council and three (3)
directors shall be initially appointed by the Seguin City Council. The names and addresses of the
persons who are to serve as the initial Board of Directors, each of whom is a resident of Schertz or
Seguin are:
Sidney Bauer 210 East Gonzales
Seguin, Texas 78155
Robin Dwyer 210 East Gonzales
Seguin, Texas 78155
519766,v5 -4-
Gloria Rivera 210 East Gonzales
Seguin, Texas 78155
Raymond Cook 1400 Schertz Parkway
Schertz, Texas 78154
Jim Wolverton 1400 Schertz Parkway
Schertz, Texas 78154
ARTICLE XIII
The name and street address of each incorporator, each of whom is a resident of
Schertz or Seguin is:
Jack Hamlett
Mark Stautzenberger
Eric Vordenbaum
Steve Simonson
Evelyn Boggess
Le Roy Cinnamon
ARTICLE XIV
210 East Gonzales
Seguin, Texas 78155
210 East Gonzales
Seguin, Texas 78155
210 East Gonzales
Seguin, Texas 78155
1400 Schertz Parkway
Schertz, Texas 78154
1400 Schertz Parkway
Schertz, Teas 78154
1400 Schertz Parkway
Schertz, Texas 78154
No director shall be liable to the Corporation for monetary damages for an act or
omission in the director's capacity as a director, except to the extent the director is found liable.
(i) for any breach of the director's duty of loyalty to the Corporation, (ii) for acts or omissions not
in good faith that constitute a breach of duty or which involve intentional misconduct of the director
or a knowing violation of law, (iii) for any transaction from which the director received an improper
benefit, whether or not the benefit resulted from an act taken within the scope of the director's office.
or (iv) for acts or omissions for which the liability of a director is expressly provided by statute. Am"
repeal or amendment of this Article by the board of directors shall be prospective only, and shall nor
aaversely affect any limitation on the personal liability of a director existing at the time of such repeal
or amendment. In addition to the circumstances in which a director is not personally liable as set
forth in the preceding sentences, a director shall not be liable to the fullest extent permitted by an
519766.x5 -5-
amendment to the Texas statutes hereafter enacted that further limits the liability of a director.
ARTICLE XV
(a) The City Councils, by written resolution, may authorize and direct the dissolution of
the Corporation. However, the Corporation shall not be dissolved, and its business shall not be
terminated, by act of the City Councils or otherwise, so long as the Corporation shall be obligated
to pay any bonds, notes, or other obligations.
(b) No action shall be taken pursuant to paragraph (a) of this Article or pursuant to
paragraph (b) of Article XVII of these Articles, in any manner or at any time that would impair any
contract, lease, right, or other obligation theretofore executed, granted, or incurred by the
Corporation.
ARTICLE XVI
If the Corporation is ever determined to be a private foundation within the meaning of
section 5.09(x) of the Internal Revenue Code of 1986, as amended (the "Code "), the Corporation:
(1) shall distribute its income for each taxable year at such time and in such manner as not
to become subject to the tax on undistributed income imposed by section 4942 of the Code;
(2) shall not engage in any act of self - dealing as defined in section 4941(d) of the Code.
(3) shall not retain any excess business holdings as defined in section 4943(c) ofthe Code;
(4) shall not make any investments in such manner as to subject it to tax under
section 4944 of the Code; and
(5) shall not make any taxable expenditures as defined in section 4945(d) of the Code.
ARTICLE XVII
(a) All properties owned by the Corporation shall be held for the use and benefit of the
public on a nondiscriminatory basis. No dividends shall ever be paid by the Corporation and no part
of its net earnings remaining aver payment of its expenses and other obligations shall be distributed
to or inure to be benefit of its directors or officers, or any individual, private firm, or private
corporation or association, except in reasonable amounts for services rendered.
519766.v5 -6-
(b) If, after the close of any fiscal year, the board of directors shall determine that
sufficient provision has been made for the full payment of all current expenses, together with all
amounts payable on the contracts, agreements, bonds, notes, and other obligations of the
Corporation, and that all of the terms, provisions, and covenants therein have been met, then any net
earnings derived from sources thereafter accruing in connection with public facilities financed
pursuant to the Act, and revenues received in connection with public facilities financed pursuant to
the Act shall be used solely for the purposes permitted by the Act and these Articles.
(c) If the Corporation ever should be dissolved when it has, or is entitled to, any interest
in any funds or property of any kind, real, personal or mixed, such funds or property or rights thereto
shall not be transferred to private ownership, but shall be transferred and delivered to the Cities, on
an equal basis, after satisfaction of debts and claims.
(d) No part of the Corporation's activities shall consist of the carrying on of propaganda,
or otherwise attempting to influence legislation, and the Corporation shall not participate in any
political campaign of or in opposition to any candidate for public office.
ARTICLE XVIII
The Corporation may indemnify any director, officer, employee or agent or former director,
officer, employee or agent of the Corporation for expenses and costs, including attorney's fees.
actually or necessarily incurred by the person in connection with any claim asserted against the
person, by action in court or other forum, by reason of such person having been a director, officer,
employee or other agent, except that the Corporation may not provide indemnity in a matter if the
director, officer, employee, or agent is guilty of negligence or misconduct in relation to the matter.
[The remainder of this page in1errtiO11ally 1e/i Hank.]
539766.v6 -7-
M WITNESS WHEREOF, we have hereunto set our hands this 1 day of
Dd 1998.
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519766.x5 -8-
THE STATE OF.;TEXAS §
COUNTY
BEFORE ME, the undersigned authority, on this day personally appeared
known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the �� day of
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„ �_ _. -..._ �•�� --� 1_�� `,: _�, . � _�, 'mil „ � 1... v f E� f
Notary Public in and for the
State of Texas
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THE STATE OF TEXAS §
COUNTY
BEI76RE ME, the undersigned authority, on this day personally appeared
c s' '�- ;fkritivn to me to be the person whose name is subscribed to
the foregoing instrument an.d "acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
,GIVEN UNDER MY HAND AND SEAL OF OFFICE; this the f' day of
✓ 1998.
Notary Public in and for the
State of Texas
519766.5 _4_
THE STATE OF TEXAS
COUNTY OF k
BEFORE ME, the undersigned authority, on this day personally appeared C=
I J P known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the �l� day of
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1998.
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s`=n1ly
• . ° • s
KAREN S. GARR
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THE STATE OF TEXAS §
COUNTY Old- §
Notary Public in and for the
State of Texas
EFORE ME, the undersigned authority, on this day personally appeared
,��yy7 a7f1 known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the A/ "/L day of
,L— d , 1998.
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State of Texas
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THE STATE OF TEXAS §
COUNTY O §
BEFORE ME, the undersigned authority, on this day personally appeared
known to me to be the person whose name is subscribed to
the foregoii g instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the N 4 day of
1998.
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THE STATE OF TEXAS §
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Notary Public in and for the
State of Texas
FARE ME, the undersigned authority, on this day personally appeared
known to me to be the person whose name is subscribed to
the forego ft instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.
Q 2 ��— � GIVEN CINDER MY HAND AND SEAL OF OFFICE, this the IVIF-L day of
1998.
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Notary Public in and for the
State of Texas