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ORD 952 10/26/2010 ORDINANCE NO. 9 5 2 ORDINANCE AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF $920,000 IN AGGREGATE PRINCIPAL AMOUNT OF "CITY OF CIBOLO, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2010"; SECURING THE PAYMENT THEREOF BY AUTHORIZING THE LEVY OF AN ANNUAL AD VALOREM TAX; APPROVING AND AUTHORIZING THE EXECUTION OF ALL INSTRUMENTS AND PROCEDURES RELATED THERETO INCLUDING AN INVESTMENT LETTER, A PAYING AGENT/REGISTRAR AGREEMENT, AND A DEPOSIT AGREEMENT; AND PROVIDING FOR AN IMMEDIATE EFFECTIVE DATE SALE DATE: OCTOBER 26,2010 1 TABLE OF CONTENTS Section 1. AMOUNT AND PURPOSE OF THE BONDS. 3 Section 2. DESIGNATION, DATE, DENOMINATIONS,NUMBERS, AND MATURITIES OF THE BONDS 3 Section 3. INTEREST 4 Section 4. CHARACTERISTICS OF THE BONDS; APPROVAL OF PAYING AGENT/REGISTRAR AGREEMENT 4 Section 5. FORM OF BOND 7 Section 6. INTEREST AND SINKING FUND; TAX LEVY 13 Section 7. INVESTMENTS 13 Section 8. EMPOWERED 14 Section 9. DEFEASANCE OF THE BONDS 14 Section 10. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS 15 Section 11. CUSTODY, APPROVAL,AND REGISTRATION OF THE BONDS; BOND COUNSEL'S OPINION, BOND INSURANCE, AND CUSIP NUMBERS 16 Section 12. COVENANTS REGARDING TAX-EXEMPTION OF INTEREST ON THE BONDS 16 Section 13. NO RULE 15c2-12 UNDERTAKING 19 Section 14. SALE AND DELIVERY OF BONDS 19 Section 15. APPROVAL OF DEPOSIT AGREEMENT; REFUNDING OF REFUNDED OBLIGATIONS 19 Section 16. REDEMPTION OF REFUNDED OBLIGATIONS 19 Section 17. AUTHORITY FOR OFFICERS TO EXECUTE DOCUMENTS AND APPROVE CHANGES 19 Section 18. ORDINANCE A CONTRACT; AMENDMENTS 20 2 Section 19. SECURITY INTEREST 20 Section 20. REMEDIES IN EVENT OF DEFAULT 21 Section 21. INTERESTED PARTIES 21 Section 22. INCORPORATION OF RECITALS 21 Section 23. SEVERABILITY 21 Section 24. EFFECTIVE DATE 22 SIGNATURES Exhibit A PAYING AGENT/REGISTRAR AGREEMENT Exhibit B INVESTMENT LETTER Exhibit C PAYING AGENT/REGISTRAR AGREEMENT Exhibit D FORM OF NOTICE OF REDEMPTION ii J 0 F Ci8 Ao ifz(-• Texas -ow of chotcc- ORDINANCE NO. ci69., ORDINANCE AUTHORIZING THE ISSUANCE, SALE AND DELIVERY OF $920,000 IN AGGREGATE PRINCIPAL AMOUNT OF "CITY OF CIBOLO, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2010"; SECURING THE PAYMENT THEREOF BY AUTHORIZING THE LEVY OF AN ANNUAL AD VALOREM TAX; APPROVING AND AUTHORIZING THE EXECUTION OF ALL INSTRUMENTS AND PROCEDURES RELATED THERETO INCLUDING AN INVESTMENT LETTER, A PAYING AGENT/REGISTRAR AGREEMENT, AND A DEPOSIT AGREEMENT; AND PROVIDING FOR AN IMMEDIATE EFFECTIVE DATE THE STATE OF TEXAS COUNTY OF GUADALUPE CITY OF CIBOLO WHEREAS, the CITY OF CIBOLO,TEXAS (the "City") in Guadalupe County, Texas, is a political subdivision of the State of Texas operating as a home-rule municipality pursuant to the Texas Local Government Code and its City Charter; and WHEREAS, among other obligations of the City which are secured by the full faith and credit of the City and a pledge by the City to levy ad valorem taxes sufficient to pay principal of and interest on such obligations as they become due, there are specifically outstanding the following series of obligations: City of Cibolo, Texas Combination Tax and Limited Pledge Revenue Certificates of Obligation, Series 2001, dated September 1, 2001, maturing on February 1 in the years 2011 through 2016, inclusive, and in the years 2019 and 2021, currently outstanding in the aggregate principal amount of $935,000 (the "Series 2001 Certificates'); and WHEREAS,the City now desires to refund all of the outstanding Series 2001 Certificates maturing in the years 2012 through 2016, inclusive, and in the years 2019 and 2021, which obligations are referred to collectively herein as the "Refunded Obligations" and are more specifically described as maturing in the years and in the respective principal amounts (aggregating$870,000 in principal amount) and bearing interest as shown in the following table: iii CITY OF CIBOLO,TEXAS COMBINATION TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF OBLIGATION,SERIES 2001 PRINCIPAL AMOUNT PRINCIPAL AMOUNT STATED MATURITY MATURING BEING INTEREST CUSIP NO. (FEBRUARY 1) IN YEAR($) REFUNDED($) RATE(%) (171637) 2012 70,000 70,000 4.75 BV2 2013 75,000 75,000 4.75 BWO 2014 75,000 75,000 5.00 BX8 2015 80,000 80,000 5.00 BY6 2016 85,000 85,000 5.00 BZ3 *** *** *** *** *** 2019 285,000 285,000 5.00 CC3 *** *** *** *** *** 2021 200,000 200,000 5.10 CE9 Totals: 870,000 870,000 *** *** *Term Certificates WHEREAS, all of the Refunded Obligations mature or are subject to redemption prior to maturity within 20 years of the date of the bonds hereinafter authorized; in particular, the Refunded Obligations and the ordinance which authorized the issuance of the Refunded Obligations provide that the Refunded Obligations may be refunded at the option of the County on February 1, 2011, or any date thereafter; and WHEREAS, Chapter 1207, Texas Government Code, as amended ("Chapter 1207"), authorizes the County to issue refunding bonds and to deposit the proceeds from the sale thereof, and any other available funds or resources, directly with a place of payment (paying agent) for the Refunded Obligations, or with another trust company or commercial bank that does not act as a depository for the County, in an amount sufficient to provide for the payment and/or redemption of the Refunded Obligations, and such deposit, if made before such payment dates, shall constitute the making of firm banking and financial arrangements for the discharge and final payment or redemption of the Refunded Obligations; and WHEREAS, Chapter 1207 (specifically Section 1207.062, Texas Government Code) further authorizes the County to enter into an escrow agreement with(i) any paying agent for the Refunded Obligations, or (ii) another trust company or commercial bank that does not act as a depository for the Board and is named in the proceedings authorizing such escrow agreement, with respect to the safekeeping, investment, reinvestment, administration and disposition of any such deposit, upon such terms and conditions as the County and such paying agent, trust company or commercial bank may agree; provided that such deposits may be invested and reinvested in direct noncallable obligations of the United States, including obligations that are unconditionally guaranteed by the United States, which mature,and bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment or redemption of the Refunded Obligations; and WHEREAS, THE BANK OF NEW YORK MELLON TRUST COMPANY,N.A., is the paying agent for the Refunded Obligations (the "Refunded Bond Paying Agent"), and the Deposit Agreement hereinafter authorized between the City and the Refunded Obligations Paying Agent constitutes an escrow agreement of the kind authorized and permitted by Chapter 1207; and WHEREAS, the City Council of the City hereby finds and declares a public purpose and deems it advisable and in the best interests of the City to issue the Bonds, the proceeds of which a will be used to pay costs of issuance and to refund the Refunded Obligations in order to achieve a gross debt service savings of$68,182.25 and a net present value savings of$57,095.14, after taking into account a contribution from the City of$2,561.03; and WHEREAS, the Bonds hereinafter authorized and designated are to be issued and delivered pursuant to Chapter 1207, Texas Government Code; and WHEREAS, it is hereby officially found and determined that the meeting at which this Ordinance was passed was open to the public, and public notice of the time, place, and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code. NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CIBOLO, TEXAS: SECTION 1. AMOUNT AND PURPOSE OF THE BONDS. The bond or bonds of the City further described in Section 2 of this Ordinance and referred to herein as the "Bonds" are hereby authorized to be issued and delivered in the aggregate principal amount of$920,000 FOR THE PURPOSE OF REFUNDING A PORTION OF THE CITY'S OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS,AND TO PAY COSTS OF ISSUANCE. SECTION 2. DESIGNATION, DATE, DENOMINATIONS, NUMBERS AND MATURITIES OF THE BONDS. Each bond issued pursuant to and for the purpose described in Section 1 of this Ordinance shall be designated: CITY OF CIBOL0, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2010, and initially there shall be issued, sold and delivered hereunder one fully registered bond, without interest coupons, dated November 1, 2010, in the aggregate principal amount of$920,000, numbered T-1 (the "Initial Bond"), with bonds issued in replacement thereof being in the denomination of$5,000 or any integral multiple thereof and numbered consecutively from R-1 upward, all payable to the initial registered owner thereof (with the Initial Bond being payable to the initial purchaser designated in Section 14 hereof), or to the registered assignee or assignees of said bond or any portion or portions thereof (in each case, the "Registered Owner"), and the bonds shall mature and be payable serially on February 1 in each of the years and in the principal amounts, respectively, as set forth in the following schedule: YEAR OF PRINCIPAL YEAR OF PRINCIPAL MATURITY AMOUNT($) MATURITY AMOUNT($) 2011 25,000 2017 90,000 2012 80,000 2018 95,000 2013 85,000 2019 95,000 2014 85,000 2020 95,000 2015 85,000 2021 95,000 2016 90,000 **** **** The term "Bonds" as used in this Ordinance shall mean and include the Bonds initially issued and delivered pursuant to this Ordinance and all substitute bonds exchanged therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds. SECTION 3. INTEREST. The Bonds shall bear interest calculated on the basis of a 360- day year composed of twelve 30-day months from the dates specified in the FORM OF BOND set forth in this Ordinance to their respective dates of maturity at the rates per annum as set forth below: YEAR OF INTEREST YEAR OF INTEREST MATURITY RATE(%) MATURITY RATE(%) 2011 1.13 2017 2.77 2012 1.36 2018 3.05 2013 1.59 2019 3.30 2014 1.85 2020 3.55 2015 2.15 2021 3.73 2016 2.46 **** **** Said interest shall be payable in the manner provided and on the dates stated in the FORM OF BOND set forth in this Ordinance. SECTION 4. CHARACTERISTICS OF THE BONDS; APPROVAL OF PAYING AGENT/REGISTRAR AGREEMENT. (a) Registration, Transfer, and Exchange; Authentication. The City shall keep or cause to be kept at the designated corporate trust or commercial banking office of the BROADWAY NATIONAL BANK (currently located in San Antonio, Texas) (the "Paying Agent/Registrar") books or records for the registration of the transfer and exchange of the Bonds (the "Registration Books"), and the City hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the City and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such registrations, transfers and exchanges as herein provided. Attached hereto as Exhibit A is a copy of the Paying Agent/Registrar Agreement between the City and the Paying Agent/Registrar which is hereby approved in substantially final form, and the Mayor and City Secretary of the City are hereby authorized to execute the Paying Agent/Registrar Agreement and approve any changes in the final form thereof. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. To the extent possible and under reasonable circumstances, all transfers of Bonds shall be made within three business days after request and presentation thereof. The City shall have the right to inspect the Registration ' Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. The Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided in the FORM BOND set forth in this Ordinance. Registration of assignments, transfers and exchanges of Bonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in this Ordinance. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. Except as provided in (c) below, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the Paying Agent/Registrar's Authentication Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for transfer and exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the City or any other body or person so as to accomplish the foregoing transfer and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Chapter 1201, Texas Government Code, and particularly Subchapter D and Section 1201.067 thereof, the duty of transfer and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Certificate, the transferred and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) Payment of Bonds and Interest. The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all as provided in this Ordinance. The Paying Agent/ Registrar shall keep proper records of all payments made by the City and the Paying Agent/Registrar with respect to the Bonds. (c) In General. The Bonds (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may not be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) shall be payable as to principal and interest, and (viii) shall be administered and the Paying Agent/Registrar and the City shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF BOND set forth in this Ordinance. The Initial Bond is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in exchange for the Initial Bond issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF BOND. In lieu of the executed Paying Agent/Registrar's Authentication Certificate described above, the Initial Bond delivered on the closing date (as further described in subparagraph (i) below) shall have attached thereto the Comptroller's Registration Certificate substantially in the form set forth in the FORM OF BOND below, manually executed by the Comptroller of Public Accounts of the State of Texas or by her duly authorized agent, which certificate shall be evidence that the Initial Bond has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the City, and has been registered by the Comptroller. (d) Substitute Paving Agent/Registrar. The City covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the City will provide a competent and legally qualified bank, trust company, financial institution, or other entity to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity and shall be an entity registered with the Securities and Exchange Commission. The City reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the City covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the City. Upon any change in the Paying Agent/Registrar, the City promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. (e)Delivery of Initial Bond. On the closing date, one Initial Bond representing the entire principal amount of the Bonds, payable in stated installments to the initial registered owner named in Section 14 of this Ordinance or its designee, executed by manual or facsimile signature of the Mayor and City Secretary of the City, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas, will be delivered to the initial purchaser or its designee. Upon payment for the Initial Bond, the Paying Agent/Registrar, upon request of the initial registered owner named in Section 14 of this Ordinance, shall cancel the Initial Bond and deliver to the initial registered owner or its designee one registered definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all of the Bonds for such maturity. SECTION 5. FORM OF BOND. The form of the Bonds, including the form of Paying Agent/Registrar's Authentication Certificate, the form of Assignment, and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas (to be attached only to the Bonds initially issued and delivered pursuant to this Ordinance), shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance. FORM OF BOND ' - # - .�' ' .� r PRINCI P 1° t�� E� S . Tl,, �Al/drE�RNI. � `� - �� °� � _ ��r F�r StTA E �d �' V O�IN1 C© 41 T ' CUA D A C01101, OLIC GblYEaRA ) -ATI® w ifYINBONOS:'SEI Sgad INTEREST RATE DATE OF SERIES MATURITY DATE November 1,2010 February 1, 20 REGISTERED OWNER: PRINCIPAL AMOUNT: ON THE MATURITY DATE specified above, the CITY OF CIBOLO, TEXAS (the "City"), in Guadalupe County, Texas, being a political subdivision and home-rule municipality of the State of Texas, hereby promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"), the Principal Amount specified above, and to pay interest thereon (calculated on the basis of a 360-day year of twelve 30-day months) from the date of initial delivery of the series of Bonds described above (as shown on the records of the Paying Agent/Registrar described below) at the Interest Rate per annum specified above, payable on February 1, 2011, and semiannually on each February 1 and August 1 thereafter to the Maturity Date specified above; except that if this Bond is required to be authenticated and the date of its authentication is later than the first Record Date (hereinafter defined), such Principal Amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date; provided, however, that if on the date of authentication hereof the interest on the Bond or Bonds, if any, for which this Bond is being exchanged is due but has not been paid, then this Bond shall bear interest from the date to which such interest has been paid in full. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the Registered Owner hereof upon presentation and surrender of this Bond at maturity, at the designated corporate trust or commercial banking office of the BROADWAY NATIONAL BANK (currently located in San Antonio, Texas), which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the Registered Owner hereof on each interest payment date by check, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the City required by the Ordinance authorizing the issuance of this Bond (the "Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the Registered Owner hereof, at its address as it appeared on the fifteenth business day of the month next preceding each such date (the "Record Date") on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date" which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class,postage prepaid, to the address of each Registered Owner appearing on the Registration Books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. The City covenants with the Registered Owner of this Bond that on or before each principal and interest payment date for this Bond it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Ordinance, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, or the United States Postal Service is not open for business, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized-to close, or the United States Postal Service is not open for business; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS BOND is one of a series of Bonds dated as of November 1, 2010, authorized in accordance with the Constitution and laws of the State of Texas in the aggregate principal amount of$920,000 FOR THE PURPOSE OF REFUNDING A PORTION OF THE CITY'S OUTSTANDING GENERAL OBLIGATION INDEBTEDNESS, AND TO PAY COSTS OF ISSUANCE. ALL BONDS OF THIS SERIES are issuable solely as fully registered Bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Ordinance, this Bond, may, at the request of the Registered Owner or the assignee or assignees hereof, be assigned, transferred and exchanged for a like aggregate principal 'amount of fully registered Bonds, without interest coupons, payable to 'the appropriate Registered Owner, assignee or assignees, as the case may be, having the same denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate Registered Owner, assignee or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the 11 Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be registered. The form of Assignment printed or endorsed on this Bond may be executed by the Registered Owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the Registered Owner. The Paying Agent/Registrar's reasonable standard or customary fees and charges for transferring and exchanging any Bond or portion thereof shall be paid by the City, but any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer or exchange as a condition precedent to the exercise of such privilege. The Paying Agent/Registrar shall not be required to make any such transfer or exchange during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the City, resigns, or otherwise ceases to act as such, the City has covenanted in the Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and cause written notice thereof to be mailed to the Registered Owners of the Bonds. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a general obligation of the City, issued on the full faith and credit thereof; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due, and as such principal matures, have been levied and ordered to be levied against all taxable property in the City, and have been pledged for such payment, within the limits prescribed by law, all as provided in the Ordinance authorizing the Bonds. THE CITY also has reserved the right to amend the Ordinance as provided therein, and under some (but not all) circumstances amendments thereto must be approved by the registered owners of a majority in aggregate principal amount of the outstanding Bonds. BY BECOMING the Registered Owner of this Bond, the Registered Owner thereby acknowledges all of the terms and provisions of the Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the City, and agrees that the terms and provisions of this Bond and the Ordinance constitute a contract between each Registered Owner hereof and the City. IN WITNESS WHEREOF, the City has caused this Bond to be signed with the manual or facsimile signature of the Mayor of the City, and countersigned with the manual or facsimile 12 signature of the City Secretary of the City, and the official seal of the City has been duly impressed, or placed in facsimile, on this Bond. Countersigned: (facsimile signature) (facsimile signature) City Secretary, City of Cibolo, Texas Mayor, City of Cibolo, Texas (CITY SEAL) FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS: COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this (COMPTROLLER'S SEAL) Comptroller of Public Accounts of the State of Texas FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions of the Ordinance described in the text of this Bond; and that this Bond has been issued in exchange for a bond or bonds, or a portion of a bond or bond of a series which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated BROADWAY NATIONAL BANK San Antonio,Texas Paying Agent/Registrar By Authorized Representative 13 FORM OF ASSIGNMENT: ASSIGNMENT FOR VALUE RECEIVED, the undersigned Registered Owner of this Bond, or duly authorized representative or attorney thereof, hereby sells, assigns and transfers this Bond and all rights hereunder unto (Assignee's Social Security or (Please print or typewrite Assignee's name and address, Taxpayer Identification Number) including zip code) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed NOTICE: The signature above must by a member firm of the New York Stock correspond with the name of the Registered Exchange or a commercial bank or trust Owner as it appears upon the front of this company. Bond in every particular, without alteration or enlargement or any change whatsoever. INITIAL BOND INSERTIONS The Initial Bond shall be in the form set forth above except that: (A) Immediately under the name of the Bond, the headings "INTEREST RATE" and "MATURITY DATE" shall be completed with the words "As shown below". (B) The first paragraph shall be deleted and the following shall be inserted: "ON THE RESPECTIVE MATURITY DATES specified below, the CITY OF CIBOLO, TEXAS (the "City"), in Guadalupe County, Texas, being a political subdivision and municipal corporation of the State of Texas, hereby promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"), the respective Principal Installments specified below, and to pay interest thereon (calculated on the basis of a 360-day year composed of twelve 30-day months) from the date of initial delivery of the series of Bonds described above (as shown on the records of the Paying Agent/Registrar described below), at the respective Interest Rates per annum specified below, payable on February 1, 2011, and semiannually on each February 1 and August 1 thereafter to the respective Maturity Dates 14 specified below. The respective Maturity Dates, Principal Installments and Interest Rates for this Bond are set forth in the following schedule: a — v 1YIATtJRITY =. :�MATI7R,[TY AT s` �:PItTNCi AI,�t {INTERE 'T�`�' DAT 4 -•.�;'' �. -`t� �INTEREST',' z.t H. FEB � 'Y `IN� - �-f s;. R, AR 1:`�;;_ ,STALLMENT=:;'� j'RA'�E;:=` EBBUi��1;_, `-INSTA[:IibrEN:y �'' �. z=,RATE;,. [Insert principal and interest information from Sections 2 and 3 above]" (C) The Initial Bond shall be numbered "T-1." SECTION 6. INTEREST AND SINKING FUND; TAX LEVY. A special Interest and Sinking Fund for the Bonds (the "Interest and Sinking Fund") is hereby created solely for the benefit of the Bonds, and the Interest and Sinking Fund shall be established and maintained by the City at an official depository bank of the City. The Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of the City, and shall be used only for paying the interest on and principal of the Bonds. All ad valorem taxes levied and collected for and on account of the Bonds shall be deposited, as collected, to the credit of the Interest and Sinking Fund. During each year while any of the Bonds or interest thereon are outstanding and unpaid, the City shall compute and ascertain a rate and amount of ad valorem tax which will be sufficient to raise and produce the money required to pay the interest on the Bonds as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of its Bonds as such principal matures (but never less than 2% of the original principal amount of the Bonds as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of the City, with full allowance being made for tax delinquencies and the cost of tax collection. Said rate and amount of ad valorem tax is hereby levied, and is hereby ordered to be levied, against all taxable property in the City for each year while any of the Bonds or interest thereon are outstanding and unpaid; and said tax shall be assessed and collected each such year and deposited to the credit of the respective Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. 15 SECTION 7. INVESTMENTS. Funds on deposit in the Interest and Sinking Fund shall be secured by the depository bank of the City in the manner and to the extent required by law to secure other public funds of the City and may be invested from time to time in any investment authorized by applicable law, including but not limited to the Public Funds Investment Act (Chapter 2256, Texas Government Code), and the City's investment policy adopted in accordance with the provisions of the Public Funds Investment Act; provided, however, that investments purchased for and held in the Interest and Sinking Fund shall have a final maturity no later than the next principal or interest payment date for which such funds are required. Income and profits from such investments shall be deposited in the Interest and Sinking Fund. It is further provided, however, that any interest earnings on Bond proceeds which are required to be rebated to the United States of America pursuant to Section 12 hereof in order to prevent the Bonds from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section. SECTION 8. EMPOWERED. The City Manager and chief financial officer of the City are hereby ordered to do any and all things necessary to accomplish the transfer of monies to the Interest and Sinking Fund of this issue in ample time to pay such items of principal and interest. SECTION 9. DEFEASANCE OF THE BONDS. (a) Any Bond and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar in accordance with an escrow agreement or other instrument (the "Future Escrow Agreement") for such payment(1) lawful money of the United States of America sufficient to make such payment or (2) Defeasance Securities that mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the City with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the ad valorem taxes herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Defeasance Securities. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the City be invested in Defeasance Securities, maturing in the amounts and times as hereinbefore set forth, and all income from such Defeasance Securities received by the Paying Agent/Registrar that is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the City, or deposited as directed in writing by the City. Any Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held for the payment of Defeased Bonds may contain 16 provisions permitting the investment or reinvestment of such moneys in Defeasance Securities or the substitution of other Defeasance Securities upon the satisfaction of the requirements specified in subsection (a)(i) or (ii) of this Section. All income from such Defeasance Securities received by the Paying Agent/Registrar which is not required for the payment of the Defeased Bonds, with respect to which such money has been so deposited, shall be remitted to the City or deposited as directed in writing by the City. (c) The term "Defeasance Securities" means (i) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America, (ii) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date of the purchase thereof are rated as to investment quality by a 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 on the date the governing body of the City adopts or approves the proceedings authorizing the financial arrangements are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (iv) any other then authorized securities or obligations under applicable state law that may be used to defease obligations such as the Bonds. (d) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the City shall make proper arrangements to provide and pay for such services as required by this Ordinance. (e) In the event that the City elects to defease less than all of the principal amount of Bonds of a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount of Bonds by such random method as it deems fair and appropriate. SECTION 10. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new Bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for Replacement Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement Bond shall furnish to the City and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the City and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as 17 the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the City may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement Bond, the Paying Agent/Registrar shall charge the registered owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement Bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the City whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. (e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1201, Texas Government Code, as amended, this Section of this Ordinance shall constitute authority for the issuance of any such replacement Bond without necessity of further action by the governing body of the City or any other body or person, and the duty of the replacement of such Bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the form and manner and with 'the effect, as provided in Section 4(a) of this Ordinance for Bonds issued in exchange for other Bonds. SECTION 11. CUSTODY, APPROVAL, AND REGISTRATION OF THE BONDS; BOND COUNSEL'S OPINION, BOND INSURANCE, AND CUSIP NUMBERS. The Mayor of the City is hereby authorized to have control of the Bonds initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation, examination, and approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Bonds said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Certificate. The approving legal opinion of the City's Bond Counsel (with an appropriate certificate pertaining thereto executed by facsimile signature of the City Secretary of the City) and the assigned CUSIP numbers (if obtained) may, at the option of the City, be printed on the Bonds issued and delivered under this Ordinance, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. If bond insurance is obtained, the Bonds may bear an appropriate legend as provided by the insurer. 18 SECTION 12. COVENANTS REGARDING TAX-EXEMPTION OF INTEREST ON THE BONDS. (a) Covenants. The City covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof,the City covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, if more than 10 percent of the proceeds of the Bonds or the projects financed therewith are so used, such amounts, whether or not received by the City, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" which is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use; (3) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (4) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; • (5) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property(as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with-- (A) proceeds of the Bonds invested for a reasonable temporary period of 90 days, 19 (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; (7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. (b) Rebate Fund. In order to facilitate compliance with the above covenant (8), a "Rebate Fund" is hereby established by the City for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other person, including without limitation the bondholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) Proceeds. The City understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the City that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the City agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the City hereby authorizes and directs the Mayor, the City Manager or the chief financial officer of the City to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of 20 the City, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. (d) Disposition of Project. The City covenants that the property constituting the projects financed or refinanced with the proceeds of the Bonds will not be sold or otherwise disposed in a transaction resulting in the receipt by the City of cash or other compensation, unless the City obtains an opinion of nationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the City shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e) Qualified Tax-Exempt Obligations. The City hereby designates the Bonds as "qualified tax-exempt obligations" as defined in section 265(b)(3) of the Code. In furtherance of such designation, the City represents, covenants and warrants the following: (a) that during the calendar year in which the Bonds are issued, the City(including any subordinate entities)has not designated nor will designate bonds or other obligations, which when aggregated with the Bonds, will result in more than $30,000,000 of"qualified tax-exempt obligations" being issued; (b) that the City reasonably anticipates that the amount of tax-exempt obligations issued during the calendar year in which the Bonds are issued by the City (or any subordinate entities) will not exceed $30,000,000; and, (c) that the City will take such action or refrain from such action as necessary, and as more particularly set forth in this Section, in order that the Bonds will not be considered "private activity bonds" within the meaning of section 141 of the Code. SECTION 13. NO RULE 15c2-12 UNDERTAKING. The City has not made an undertaking in accordance with Rule 15c2-12 of the Securities and Exchange Commission (the "Rule") with respect to the Bonds. The City is not, therefore, obligated pursuant to the Rule to provide any on-going disclosure relating to the City or the Bonds. SECTION 14. SALE AND DELIVERY OF BONDS. The Bonds are hereby initially sold and shall be delivered to the BROADWAY NATIONAL BANK(the "Purchaser") for cash for the par value thereof, pursuant to the private placement letter, attached hereto as Exhibit B, dated the date of the final passage of this Ordinance, which the Mayor is hereby authorized to execute and deliver. The Bonds shall initially be registered in the name of the Purchaser. It is hereby officially found, determined, and declared that the terms of this sale are the most advantageous reasonably obtainable. SECTION 15. APPROVAL OF DEPOSIT AGREEMENT; REFUNDING OF REFUNDED OBLIGATIONS. Concurrently with the initial delivery of the Bonds the City shall deposit an amount from the proceeds from the sale of the Bonds and other available funds of the City, if required, with THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as "Deposit Agent," sufficient to provide for the refunding of the Refunded Obligations, all in 21 accordance with Chapter 1207. Attached hereto as Exhibit C is a Deposit Agreement between the City and the Deposit Agent, which is hereby approved in substantially final form, and the Mayor and City Secretary of the City are hereby authorized, for and on behalf of the City, to approve any changes in the Deposit Agreement from the form attached hereto and to execute the Deposit Agreement in final form. SECTION 16. REDEMPTION OF REFUNDED OBLIGATIONS. There is attached to this Ordinance as Exhibit D and made a part hereof for all purposes, a NOTICE OF REDEMPTION with respect to the Refunded Obligations being refunded pursuant to this Ordinance. The Refunded Obligations are hereby called for redemption on the "Redemption Date" set forth in the NOTICE OF REDEMPTION. As soon as practicable after the adoption of this Ordinance, a copy of such NOTICE shall be (i) posted with the MSRB through the EMMA system, and (ii) sent to all registered owners of the respective Refunded Obligations by first class mail postage prepaid, addressed to such registered owners at their respective addresses shown on the registration books of the paying agent/registrar for the Refunded Obligations. SECTION 17. AUTHORITY FOR OFFICERS TO EXECUTE DOCUMENTS AND APPROVE CHANGES. The Mayor, City Manager, City Secretary and chief financial officer of the City, and all other officers, employees, and agents of the City, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the City all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Bonds, the sale of the Bonds, the Official Statement, and the Paying Agent/Registrar Agreement. In addition, prior to the initial delivery of the Bonds, the Mayor, City Manager, City Secretary and chief financial officer of the City, and the City Attorney and the City's Bond Counsel are hereby authorized and directed to approve any technical changes or correction to this Ordinance or to any of the instruments authorized and approved by this Ordinance necessary in order to (i) correct any ambiguity or mistake or properly or more completely document the transactions contemplated and approved by this Ordinance and as described in the Official Statement, (ii) obtain a rating from any of the national bond rating agencies or satisfy any requirements of the provider of a municipal bond insurance policy, if any, or (iii) obtain the approval of the Bonds by the Attorney General's office. In case any officer whose signature shall appear on any Bond shall cease to be such officer before the delivery of such Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. SECTION 18. ORDINANCE A CONTRACT; AMENDMENTS. This Ordinance shall constitute a contract with the Registered Owners of the Bonds, binding on the City and its successors and assigns, and shall not be amended or repealed by the City as long as any Bond remains outstanding except as permitted in this Section. The City may, without the consent of or notice to any Registered Owners, amend, change, or modify this Ordinance as may be required (i)by the provisions hereof, (ii) for the purpose of curing any ambiguity, inconsistency, or formal defect or omission herein, or (iii) in connection with any other change which is not to the 22 prejudice of the Registered Owners. The City may, with the written consent of the Registered Owners of a majority in aggregate principal amount of the Bonds then outstanding affected thereby, amend, change, modify, or rescind any provisions of this Ordinance; provided that without the consent of all of the Registered Owners affected, no such amendment, change, modification, or rescission shall (i) extend the time or times of payment of the principal of and interest on the Bonds, reduce the principal amount thereof or the rate of interest thereon, (ii) give any preference to any Bond over any other Bond, (iii) extend any waiver of default to subsequent defaults, or(iv) reduce the aggregate principal amount of Bonds required for consent to any such amendment, change, modification, or rescission. Whenever the City shall desire to make any amendment or addition to or rescission of this Ordinance requiring consent of the Registered Owners, the City shall cause notice of the amendment, addition, or rescission to be sent by first class mail, postage prepaid, to the Registered Owners at the respective addresses shown on the Registration Books. Whenever at any time within one year after the date of the giving of such notice, the City shall receive an instrument or instruments in writing executed by the Registered Owners of a majority in aggregate principal amount of the Bonds then outstanding affected by any suchamendment, addition, or rescission requiring the consent of the Registered Owners, which instrument or instruments shall refer to the proposed amendment, addition, or rescission described in such notice and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice,thereupon,but not otherwise, the City may adopt such amendment, addition, or rescission in substantially such form, except as herein provided. No Registered Owner may thereafter object to the adoption of such amendment, addition, or rescission, or to any of the provisions thereof, and such amendment, addition, or rescission shall be fully effective for all purposes. SECTION 19. SECURITY INTEREST. Chapter 1208, Texas Government Code, applies to the issuance of the Bonds and the pledge of the ad valorem taxes granted by the City under Section 6 of this Ordinance, and is therefore valid, effective, and perfected. If Texas law is amended at any time while the Bonds are outstanding and unpaid such that the pledge of the ad valorem taxes granted by the City under Section 6 of this Ordinance is to be subject to the filing requirements of Chapter 9, Texas Business & Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in said pledge, the City agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Texas Business & Commerce Code, and enable a filing to perfect the security interest in said pledge to occur. SECTION 20. REMEDIES IN EVENT OF DEFAULT. In addition to all the rights and remedies provided by the laws of the State of Texas, it is specifically covenanted,and agreed particularly that in the event the City (i) defaults in the payment of the principal, premium, if any, or interest on the Bonds, (ii) defaults in the deposits and credits required to be made to the Interest and Sinking Fund, or (iii) 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. 23 No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient. The specific remedy herein provided shall be cumulative of all other existing remedies, and the specification of such remedy shall not be deemed to be exclusive. SECTION 21. INTERESTED PARTIES. Nothing in this Ordinance expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the City, the Underwriters and the registered owners of the Bonds, any right, remedy or claim under or by reason of this Ordinance or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Ordinance contained by and on behalf of the City shall be for the sole and exclusive benefit of the City, the Underwriters and the registered owners of the Bonds. SECTION 22. INCORPORATION OF RECITALS. The City hereby finds that the statements set forth in the recitals of this Ordinance are true and correct, and the City hereby incorporates such recitals as a part of this Ordinance. SECTION 23. SEVERABILITY. If any provision of this Ordinance or the application thereof to any circumstance shall be held to be invalid, the remainder of this Ordinance and the application thereof to other circumstances shall nevertheless be valid, and this governing body hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 24. EFFECTIVE DATE. Pursuant to the provisions of Section 1201.028, Texas Government Code, this Ordinance shall become effective immediately after its is approved by the City Council. [The remainder of this page left blank intentionally] 24 PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF CIBOLO, TEXAS ATA REGULAR MEETING ON THE 26TH DAY OF OCTOBER, 2010,AT WHICH MEETING A QUORUM WAS PRESENT. ATTEST: fWgAdYnS14/0 City Secretary, City of Cibolo, Texas yor, C of ibolo, Texas •A � = -EJ� ** ** ** ** ** • 25 EXHIBIT A FORM OF PAYING AGENT/REGISTRAR AGREEMENT THE PAYING AGENT/REGISTRAR AGREEMENT IS OMITTED AT THIS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN THIS TRANSCRIPT. EXHIBIT B INVESTMENT LETTER THE INVESTMENT LETTER IS OMITTED AT THIS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN THIS TRANSCRIPT. EXHIBIT C FORM OF DEPOSIT AGREEMENT THE DEPOSIT AGREEMENT IS OMITTED AT THIS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN THIS TRANSCRIPT. EXHIBIT D NOTICE OF REDEMPTION of CITY OF CIBOLO,TEXAS COMBINATION TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF OBLIGATION,SERIES 2001 (Maturing on February 1 in the years 2012-2016,inclusive,and 2019 and 2021) NOTICE IS HEREBY GIVEN that the City of Cibolo, Texas(the"City"),in Guadalupe County,Texas,has called for redemption at the redemption price equal to par, plus accrued interest, on February 1, 2011 (the "Redemption Date"), all of the City's outstanding COMBINATION TAX AND LIMITED PLEDGE REVENUE CERTIFICATES OF OBLIGATION,SERIES 2001,dated September 1,2001,maturing on February 1 in the years 2012 through 2016, inclusive, and in the years 2019 and 2021, which are further described as follows (the "Refunded Obligations"): PRINCIPAL AMOUNT PRINCIPAL AMOUNT MATURITY MATURING BEING STATED INTEREST CUSIP NO. (FEBRUARY 1) IN YEAR($) REFUNDED($) RATE(%) (171637) 2012 70,000 70,000 4.75 BV2 2013 75,000 75,000 4.75 BWO 2014 75,000 75,000 5.00 BX8 2015 80,000 80,000 5.00 BY6 2016 85,000 85,000 5.00 BZ3 *** *** *** *** *** 2019* 285,000 285,000 5.00 CC3 *** *** *** *** *** 2021* 200,000 200,000 5.10 CE9 *Term Certificates The Refunded Obligations shall be redeemed and shall become due and payable on the Redemption Date, and the interest thereon shall cease to accrue from and after the Redemption Date. NOTICE IS FURTHER GIVEN THAT the Refunded Obligations will be payable at and should be submitted either in person or by certified or registered mail to the following address: First Class/Registered/Certified Mail: By Overnight or Courier: By Hand: The Bank of New York Mellon The Bank of New York Mellon The Bank of New York Mellon Trust Company,N.A. Trust Company,N.A. Trust Company,N.A. • Institutional Trust Services Institutional Trust Services GIS Unit Trust Window P.O.Box 2320 2001 Bryan Street,9th Floor 4 New York Plaza, 1s`Floor Dallas,Texas 75221-2320 Dallas,Texas 75201 New York,New York 10004 To avoid a backup withholding tax required by Section 3406 of the Internal Revenue Code of 1986,holders must submit a properly completed IRS Form W-9. *THE ABOVE REFERENCED CUSIP NUMBERS ARE PROVIDED FOR THE CONVENIENCE OF THE HOLDERS. NEITHER THE PAYING AGENT NOR THE CITY ARE RESPONSIBLE FOR ANY ERROR OF ANY NATURE RELATING TO THE CUSIP NUMBERS. DRAFT DATE: OCTOBER 19,2010 PAYING AGENT/REGISTRAR AGREEMENT THIS PAYING AGENT/REGISTRAR AGREEMENT, dated`as of November 1, 2010 (this 'Agreement"),by and between CITY OF CIBOLO,TEXAS(the "Issuer") and the BROADWAY NATIONAL BANK,San Antonio,Texas(the"Bank"),a national banking association duly organized and operating under the laws of the United States of America. WHEREAS, the Issuer has duly authorized and provided for the issuance of its CITY OF CIBOLO,TEXAS GENERAL OBLIGATION REFUNDING BONDS,SERIES 2010(the"Securities"),such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS,the Securities are scheduled to be delivered to the initial purchasers thereof on or about November 30,2010; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of,premium,if any,and interest on the Securities and with respect to the registration,transfer,and exchange thereof by the registered owners thereof;and WHEREAS,the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR SECTION 1.01. APPOINTMENT. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal,premium(if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all in accordance with this Agreement and the "Ordinance" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities,the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the Ordinance,a copy of which books and records shall be maintained at the office of the Bank located in the State of Texas or shall be available to be accessed from such office located in the State of Texas. The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. SECTION 1.02. COMPENSATION. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities,which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses,disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof(including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS SECTION 2.01. DEFINITIONS. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means, if applicable, the date on and after which the principal or any or all installments of interest,or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the corporate trust or commercial banking office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year" means the fiscal year of the Issuer, ending September 30. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Legal Holiday"means a day on which the Bank is required or authorized to be closed. "Ordinance"means the resolutions,orders or ordinances of the governing body of the Issuer pursuant to which the Securities are issued, certified by the Secretary or any other officer of the Issuer and delivered to the Bank,together with any pricing certificate executed pursuant thereto. "Person" means any individual, corporation, partnership,joint venture, association,joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security(and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a 2 replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinance). "Redemption Date"when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinance. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice- Chairman of the Board of Directors,the Chairman or Vice-chairman of the Executive Committee of the Board of Directors,the President,any Vice President,the Secretary,any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Ordinance the principal of a Security is scheduled to be due and payable. SECTION 2.02. OTHER DEFINITIONS. The terms "Bank," "Issuer," and "Securities" ("Security")have the meanings assigned to them in the recital paragraphs of this Agreement. The term"Paying Agent/Registrar"refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT SECTION 3.01. DUTIES OF PAYING AGENT. (a)Principal Payments. As Paying Agent,the Bank shall,provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer,pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the Bank Office. (b)Interest Payments. As Paying Agent,the Bank shall,provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer,pay on behalf of the Issuer the interest on each Security when due,by computing the amount of interest to be paid each Holder and preparing and sending checks by United States mail, first class postage prepaid, on each payment date, to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date,to the address appearing on the Security Register or by such other method,acceptable to the Bank,requested in writing by the Holder at the Holder's risk and expense. 3 (c) Federal Tax Information Reporting. To the extent required by the Code and the Regulations it shall be the duty of the Bank to report to the owners of the Securities and the Internal Revenue Service (i) the amount of"reportable payments," if any, subject to back up withholding during each year and the amount of tax withheld, if any, with respect to the payments on the Securities, and (ii) the amount of interest or amount treated as interest, such as original issue discount, on the Securities required to be included in the gross income of the owners thereof for federal income tax purposes. SECTION 3.02.PAYMENT DATES. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. ARTICLE FOUR REGISTRAR SECTION 4.01. SECURITY REGISTER-TRANSFERS AND EXCHANGES. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities,the transfer,exchange,and replacement of the Securities,and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. If the Bank Office is located outside the State of Texas,a copy of the Security Register shall be kept in the State of Texas. All transfers, exchanges, and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer,the signature on which has been guaranteed by an officer of a federal or state bank or a member of the Financial Industry Regulatory Authority, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re- registration,transfer, or exchange of the Securities. To the extent possible and under reasonable circumstances,the Bank agrees that,in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. SECTION 4.02. SECURITIES. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping,which shall be not less than 4 the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. SECTION 4.03. FORM OF SECURITY REGISTER. The Bank, as Registrar,will maintain the Security Register relating to the registration,payment, transfer, and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. SECTION 4.04. LIST OF SECURITY HOLDERS. The Bank will provide the Issuer at any time requested by the Issuer,upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. Unless required by law, the Bank will not release or disclose the contents of the Security Register to any person other than to,or at the written request of,an authorized officer or employee of the Issuer,except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register,the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. SECTION 4.05. RETURN OF CANCELLED SECURITIES. The Bank will, at such reasonable intervals as it determines,surrender Securities to the Issuer in lieu of which or in exchange for which other Securities have been issued, or which have been paid, or will provide a certificate of destruction relating thereto. SECTION 4.06. MUTILATED,DESTROYED, LOST, OR STOLEN SECURITIES. The Issuer hereby instructs the Bank,subject to the applicable provisions of the Ordinance,to deliver and issue Securities in exchange for or in lieu of mutilated,destroyed,lost,or stolen Securities as long as the same does not result in an over issuance. In case any Security shall be mutilated, or destroyed, lost, or stolen, the Bank, in its discretion,may execute and deliver a replacement Security of like form and tenor,and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security,or in lieu of and in substitution for such destroyed,lost,or stolen Security,only after(i)the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss, or theft of such Security, and of the authenticity of the ownership thereof and(ii)the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity • 5 and with the preparation, execution, and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost, or stolen. SECTION 4.07. TRANSACTION INFORMATION TO ISSUER. The Bank will, within a reasonable time after receipt of written request from the Issuer,furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01,and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. ARTICLE FIVE THE BANK SECTION 5.01. DUTIES OF BANK. The Bank undertakes to perform the duties set forth herein and in the Ordinance and agrees to use reasonable care in the performance thereof. The Bank is also authorized to transfer funds relating to the closing and initial delivery of the Securities in the manner disclosed in the closing memorandum as prepared by the Issuer's financial advisor, bond counsel or other agent. The Bank may act on a facsimile or e-mail transmission of the closing memorandum acknowledged by the financial advisor or the Issuer as the fmal closing memorandum. The Bank shall not be liable for any losses, costs or expenses arising directly or indirectly from the Bank's reliance upon and compliance with such instructions. SECTION 5.02. RELIANCE ON DOCUMENTS,ETC. (a) The Bank may conclusively rely,as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any fmancial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order,bond,note,security,or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, 6 statement,instrument,opinion,report,notice,request,direction,consent,order,bond,note,security, or other paper or document supplied by the Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. SECTION 5.03. RECITALS OF ISSUER. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer,any Holder or Holders of any Security,or any other Person for any amount due on any Security from its own funds. SECTION 5.04. MAY HOLD SECURITIES. The Bank,in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. SECTION 5.05. MONEY HELD BY BANK. The Bank shall deposit any moneys received from the Issuer into an account to be held in a fiduciary capacity for the payment of the Securities,with such moneys in the account that exceed the deposit insurance, available to the Issuer,provided by the Federal Deposit Insurance Corporation to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas and to the extent practicable under the laws of the United States of America to secure and be pledged as collateral for trust accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such trust account shall be made by check drawn on such trust account unless the owner of such Securities shall, at its own expense and risk,request such other medium of payment. Funds held by the Bank hereunder need not be segregated from any other funds provided appropriate accounts are maintained in the name and for the benefit of the Issuer. The Bank shall be under no liability for interest on any money received by it hereunder. Any money deposited with the Bank for the payment on any Security and remaining unclaimed for three years after final maturity of the Security has become due and payable will be held by the Bank and disposed of only in accordance with Title 6 of the Property Code(Unclaimed Property). 7 The Bank will comply with the reporting provisions of Chapter 74 of the Property Code with respect to property that is presumed abandoned under Chapter 72 or Chapter 75 of the Property Code or inactive under Chapter 73 of the Property Code. SECTION 5.06. INDEMNIFICATION. To the extent permitted by law, the Issuer agrees to indemnify the Bank for,and hold it harmless against,any loss,liability,or expense incurred without negligenceor bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder,including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. SECTION 5.07. INTERPLEADER. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit,in either a Federal or State District Court located in the County in the State of Texas where either the Bank maintains an office or the administrative offices of the Issuer is located, and agree that service ofprocess by certified or registered mail,return receipt requested,to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction located in the State of Texas to determine the rights of any Person claiming any interest herein. SECTION 5.08. DEPOSITORY TRUST COMPANY SERVICES. It is hereby represented and warranted that,in the event the Securities are otherwise qualified and accepted for"Depository Trust Company" services or equivalent depository trust services by other organizations,the Bank has the capability and,to the extent within its control, will comply with the "Operational Arrangements," effective from time to time,which establishes requirements for securities to be eligible for such type depository trust services,including,but not limited to,requirements for the timeliness of payments and funds availability,transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS SECTION 6.01. AMENDMENT. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. SECTION 6.02. ASSIGNMENT. This Agreement may not be assigned by either party without the prior written consent of the other. SECTION 6.03. NOTICES. Any request, demand, authorization, direction,notice, consent, waiver,or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank,respectively,at the addresses shown on the signature page of this Agreement. SECTION 6.04. EFFECT OF HEADINGS. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 8 SECTION 6.05. SUCCESSORS AND ASSIGNS. All covenants and agreements herein by the Issuer shall bind its successors and assigns,whether so expressed or not. SECTION 6.06. SEVERABILITY. In case any provision herein shall be invalid, illegal, or unenforceable,the validity,legality,and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6.07. BENEFITS OF AGREEMENT. Nothing herein, express or implied, shall give to any Person,other than the parties hereto and their successors hereunder,any benefit or any legal or equitable right,remedy, or claim hereunder. SECTION 6.08. ENTIRE AGREEMENT. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Ordinance,the Ordinance shall govern. SECTION 6.09. COUNTERPARTS. This Agreement may be executed in any number of counterparts,each of which shall be deemed an original and all of which shall constitute one and the same Agreement. SECTION 6.10. TERMINATION. This Agreement will terminate on the date of final payment of the principal of and interest on the Securities to the Holders thereof or may be earlier terminated by either party upon 60 days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and(b)notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. If the 60-day notice period expires and no successor has been appointed,the Bank has the right to petition a court of competent jurisdiction to appoint a successor under this Agreement. Furthermore,the Bank and the Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay, or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register(or a copy thereof), together with other pertinent books and records relating to the Securities,to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. SECTION 6.11. GOVERNING LAW. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. 9 IN WITNESS WHEREOF,the parties hereto have executed this Agreement as of the day and year first above written. BROADWAY NATIONAL BANK By: Title: Address: 1177 N.E. Loop 410 San Antonio, Texas 78209 Attest: Title: CITY OF CIBOLO,TEXAS By: Title: Mayor Address: 200 S. Main Cibolo,Texas 78108-3519 Attest: Title: City Secretary [SIGNATURE PAGE TO PAYING AGENT/REGISTRAR AGREEMENT] SCHEDULE A PAYING AGENT/REGISTRAR FEE SCHEDULE $ ANNUAL ADMINISTRATION FEE (plus out of pocket expenses) LAW OFFICES M2CALL, PARKHURST & HORTON L.L.P. 717 NORTH HARWOOD 700 N.ST MARY'S STREET 600 CONGRESS AVENUE NINTH FLOOR 1525 ONE RIVERWALK PLACE 1800 ONE AMERICAN CENTER DALLAS,TEXAS 75201-6587 SAN ANTONIO,TEXAS 78205-3503 AUSTIN,TEXAS 78701-3248 TELEPHONE:214754-9200 TELEPHONE:210225-2800 TELEPHONE:512478-3805 FACSIMILE:214 754-9250 FACSIMILE:210225-2984 FACSIMILE.512 472-0871 November ,2010 CITY OF CIBOLO,TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2010 DATED NOVEMBER 1,2010 IN THE AGGREGATE PRINCIPAL AMOUNT OF $920,000 AS BOND COUNSEL FOR THE CITY OF CIBOLO, TEXAS(the "Issuer"), we have examined into the legality and validity of the Bonds described above (the "Bands"), which bear interest from the dates specified in the text of the Bonds until maturity at the rates, and payable on the dates, all in accordance with the terms and conditions stated in the text of the Bonds. - WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas and a transcript of certified proceedings of the Issuer,and other pertinent instruments authorizing and relating to the issuance of the Bonds including (i) the ordinance authorizing the issuance of the Bonds (the "Ordinance"), (ii) the Deposit Agreement, dated as of November 1, 2010, between the Issuer and the THE BANK OF NEW YORK MELLON TRUST COMPANY,N.A.,Dallas,Texas, as Deposit Agent(the "Deposit Agreement"), (iii)the Certificate of Sufficiency prepared by SOUTHWEST SECURITIES,INC.,as Financial Advisor to the Issuer,with respect to the adequacy of certain funds deposited into the trust account established by the Deposit Agreement to accomplish the refunding purposes of the Bonds(the"Sufficiency Certificate"),(iv) one of the executed Bonds(Bond No.T-1),and(v)the Issuer's Federal Tax Certificate of even date herewith. BASED ON SAID EXAMINATION,ITIS OUR OPINION that the Bonds have been duly authorized,issued and delivered in accordance with law;and that except as the enforceability thereof may be limited by bankruptcy,insolvency,reorganization,moratorium,liquidation and other similar laws now or hereafter enacted relating to creditors'rights generally or by general principles of equity which permit the exercise of judicial discretion, the Bonds constitute valid and legally binding obligations of the Issuer; and that ad valorem taxes sufficient to provide for the payment of the interest on and principal of said Bonds have been levied and pledged for such purpose, within the limit prescribed by law. IT IS FURTHER OUR OPINION that the Deposit Agreement has been duly authorized, executed and delivered by the Issuer and constitutes a binding and enforceable agreement in accordance with its terms and that the"Refunded Obligations"(as defined in the Ordinance)being refunded by the Bonds are outstanding under the ordinance authorizing their issuance only for the purpose of receiving the funds provided by,and are secured solely by and payable solely from,the Deposit Agreement and the cash and investments, including the income therefrom, held by the Deposit Agent pursuant to the Deposit Agreement. In rendering this opinion,we have relied upon City of Cibolo, Texas General Obligation Refunding Bonds, Series 2010 November_, 2010 Page 2 the verifications contained in the Verification Report as to the sufficiency of the cash and investments deposited pursuant to the Deposit Agreement for the purpose of paying the principal of,redemption premium, if any, and interest on the Refunded Obligations. ITIS FURTHER OUR OPINION,except as discussed below,that the interest on the Bonds is excludable from the gross income of the owners for federal income tax purposes under the statutes,regulations,published rulings,and court decisions existing on the date of this opinion. We are further of the opinion that the Bonds are not "specified private activity bonds" and that, accordingly, interest on the Bonds will not be included as an individual or corporate alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). In expressing the aforementioned opinions,we have relied on,certain representations,the accuracy of which we have not independently verified, and assume compliance with certain covenants,regarding the use and investment of the proceeds of the Bonds and the use of the property • financed or refmanced therewith. We call your attention to the fact that if such representations are determined to be inaccurate or upon a failure by the Issuer to comply with such covenants,interest on the Bonds may become includable in gross income retroactively to the date of issuance of the Bonds. EXCEPT AS STATED ABOVE,we express no opinion as to any other federal,state or local tax consequences of acquiring, carrying, owning or disposing of the Bonds. WE CALL YOUR ATTENTION TO THE FACT that the interest on tax-exempt obligations, such as the Bonds, is included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. WE EXPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Bonds, nor as to any such insurance policies issued in the future. OUR OPINIONS ARE BASED ON EXISTING LAW,which is subject to change. Such opinions are furtherKbased on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service(the"Service");rather, such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representations and covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Bonds. If an audit is commenced,in accordance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or City of Cibolo, Texas General Obligation Refunding Bonds,Series 2010 November , 2010 _ Page 3 omitted, respectively, may result in the treatment of interest on the Bonds as includable in gross income for federal income tax purposes. OUR SOLE ENGAGEMENT in connection with the issuance of the Bonds is as Bond Counsel for the Issuer,and,in that capacity,we have been engaged by the Issuer for the sole purpose of rendering an opinion with respect to the legality and validity of the Bonds under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the Bonds for federal income tax purposes, and for no other reason or purpose. The foregoing opinions represent our legal judgment based upon a review of existing legal authorities that we deem relevant to render such opinions and are not a guarantee of a result.We have not been requested to investigate or verify,and have not independently investigated or verified any records,data,or other material relating to the fmancial condition or capabilities of the Issuer,or the disclosure thereof in connection with the sale of the Bonds,and have not assumed any responsibility with respect thereto. We express no opinion and make no comment with respect to the marketability of the Bonds and have relied solely on certificates executed by officials of the Issuer as to the current outstanding indebtedness of, and assessed valuation of taxable property within,the Issuer. Respectfully,