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11-13 - Paris Firefighters Relief & Retirement Fund - Pension Bond - Freeze Fire Pension - Transfer Employees to TMRSNos. 11-13 TO: Mayor, Mayor Pro Tem & City Council FROM: Grayson Path, City Manager Gene Anderson, Finance Director Thomas McMonigle, Fire Chief SUBJECT: PARIS FIREFIGHTERS RELIEF AND RETIREMENT FUND PENSION BOND FREEZE FIRE PENSION TRANSFER EMPLOYEES TO TMRS DATE: August 8, 2022 BACKGROUND: On June 13, 2022, the City Council heard a presentation on freezing the Paris Firefighter Relief and Retirement Fund ("pension") while simultaneously issuing a pension bond and transferring the Fire Department Employees to the Texas Municipal Retirement System (TMRS). Due to the significance and complexity of this matter, and to prevent from repeating too much or too little information in this memo, the June 13, 2022 agenda memo has been included below for your reference. STATUS OF ISSUE: Following the June 13, 2022 City Council meeting, City Staff worked with our Financial Advisors, Bond Legal Counsel, TMRS Legal Counsel, Board of Trustee Actuary, and Board of Trustee Legal Counsel to prepare the needed documents to implement this project for your consideration tonight and on August 22, 2022. The Board of Trustees hosted amendments to their pension plan and submitted it for review by the pension members (employees). A vote was held resulting in an approval of the plan amendments to make this change, 45-0. The Board of Trustees have further agreed to this change. Before you tonight are three (3) agenda items. There will be a fourth agenda item that will appear on August 22, 2022. On August 8, 2022, the following agenda items will appear: 1. Resolution approving a Bond Agreement between the City of Paris and Board of Trustees, agreeing to issue the pension bond necessary to fund the pension per the actuary calculations. a. Requirement of State of Texas Statute for issuing a pension bond — both parties must agree to issuing the bond, receiving the bond, and utilizing the bond to pay in the pension. 2. Resolution approving an Agreement between the City of Paris and Board of Trustees, agreeing to certain terms to effectively implement the freezing of the fund and transferring of employees to the TMRS. a. Not a requirement of State of Texas Statute to issue a pension bond, however, in order to effectively freeze the pension and prevent future changes that could complicate the matter, an agreement is necessary that protects both parties (City and Board of Trustees / Members). 3. Ordinance issuing a pension bond. a. Requirement of State of Texas Statute for issuing a pension bond. With this timeline, we expect to have the money on September 8, 2022. On August 22, 2022, the following agenda item will appear: 4. Ordinance approving TMRS participation for all Fire Department members. a. Requirement of State of Texas Statute for choosing to join TMRS — participating in TMRS occurs the first day of the second month TMRS receives notice of an election to participate. This will allow the employees to join on October 1, 2022 which corresponds to their amendments made to freeze the plan. Given the City has previously excluded the Fire Department, an ordinance will authorize the removal of this exclusion. If you have any questions regarding these items, City Staff and Chris Settle (McCall, Parkhurst & Horton Legal Counsel) are available and will do our best to answer your questions. BUDGET: Working with the Board of Trustee's Actuarial Firm as well as our Financial Advisors, we have identified a need for a $12.15 million bond to fund the Fire Pension. Our first debt payment is currently estimated to be $1,074,875.00 which has been added to the Proposed FY22/23 Budget. More detailed information will likely be available the night of the City Council meeting as pricing is scheduled to occur on August 8th. Under State of Texas Statute, the City Council has the authority to issue this debt via ordinance. This new payment along with the outstanding obligations and M & O will be supported by the City's proposed new tax rate of $0.44278 which is slightly less than the current tax rate of $0.45373. OPTIONS: 1. Approve the Resolutions, Agreements and Ordinances to authorize the freezing of the Paris Firefighter Relief and Retirement Fund while simultaneously issuing a pension bond to fund the program and transfer employees to the TMRS. a. Note: An ordinance at the August 22, 2022 City Council Meeting will need to be approved in order to authorize Fire Department participation in TMRS. 2. Request additional information regarding this project, specific terms, timelines, etc. This information can be brought back at the next meeting, however it may impact the TMRS timeline for receiving employees by October 1, 2022. 3. Reject this project and advise City Staff as to next steps for addressing the state of the Paris Firefighter Relief and Retirement Fund. RECOMMENDATION: 1. Approve the Resolutions, Agreements and Ordinances to authorize the freezing of the Paris Firefighter Relief and Retirement Fund while simultaneously issuing a pension bond to fund the program and transfer employees to the TMRS. Memorandum TO: Mayor, Mayor Pro Tem & City Council FROM.• Grayson Path, City Manager Gene Anderson, Finance Director Thomas McMonigle, Fire Chief SUBJECT. PARIS FIREFIGHTERS RELIEFAND RETIREMENT FUND PURSUE A PENSION BOND FREEZE FIRE PENSION TRANSFER EMPLOYEES TO TMRS DA TE: June 13, 2022 BACKGROUND: The City of Paris provides two separate retirement programs for its employees: 1) Texas Municipal Retirement System (TMRS) for non -fire department personnel, and 2) Paris Firefighters' Relief and Retirement Fund ("Pension') for fire department personnel. The Pension was created circa 1941, is regulated under the Texas Local Fire Fighters Retirement Act (TLFFRA), and is managed by a local Board of Trustees. In August 2020, it was brought to my attention that an article appeared in a Dallas newspaper discussing the various TLFFRA funds throughout the state and their individual funded status. According to this article, the Paris Pension was the least funded TLFFRA fund in the state of Texas. It stated that we were 30% funded, but many of our sister cities were not much better. The main point of the article was that this is an issue that cities all over the state were facing and very few of those cities had found away to address the problem. It is a growing problem for both the employees served by the pension as well as the taxpayers responsible for funding it. Having been spurred by the information in the article, I began investigating our Pension. Through this process, I learned that our Pension would become `fully funded" in approximately 30 years under our current contribution and payout formula. I also learned that this has been the expectation for the previous approximately 40 years. In other words, changes in legislation, the economy, and the benefit payout itself have all acted to make the 'fully funded" goal a moving goal post. This situation carries the ever present danger that the fund could eventually run out and/or be so far behind that any hope of catching up would become highly improbable. Each of us have heard of stories from large metropolitan areas that have had to make drastic changes to their benefits due to insurmountable costs to sustain their pension funds. This often has unfortunate consequences for the men and women who worked their entire career for their retirement pension. In December 2020, we learned that there was legislation being considered to amend the TLFFRA to force cities to dramatically increase their contribution amounts to address this growing issue. Such a change would present challenges because other legislation has placed caps on the city's ability to raise funding each year. To our knowledge, the legislation never went anywhere, but it is reasonable to assume that someday the legislature could actually pass this or something similar which will take effect whether we are prepared for it or not. In November 2021, we met with the Board of Trustees to get an update on the Pension. The Pension's actuary had just completed a study to incorporate the substantial pay increases that the Fire Department had been given starting in October 2021 to see if this made an impact. While the fund was still at 29% funded, and while we still needed an approximate $16 million to be fully funded with only $5 million in the fund already, the pay increases did shrink the `fully funded" trajectory from 33 years down to 23 years. This is of course a significant improvement. But I was then educated on another key component in this equation. Our trajectory to a fully funded status assumes that the retirement benefit payout itself will not change. In the early 2000s, the Board of Trustees voted to set the benefit payout at $94 multiplied by your number of years of service, per month. Therefore, if you worked 30 years (in any position/s), you will be paid approximately $94 x 30 years of service x 12 months = $33,840. 00 each year. If the Department voted to increase this formula, it would increase the unfunded liability and thus push out our fully funded status. This would also require an increase to the annual contribution by both the city and firefighter. Currently the employee puts in 16% of their pay as contribution while the city puts in 14% (total of 30%). This contribution, along with the current balance of approximately $S million in the fund as an investment, is what is currently keeping the fund afloat. However, I also learned that we are spending more annually on benefits to current retirees than we are bringing in through collection. Therefore, our trajectory will not be accomplished without an increase in the contribution and/or a large deposit of funding in to the Pension fund by the city. In addition, the benefit payout bears no relation to the amount of contribution you place in. Whether you make higher rank pay or lower rank pay, you will still receive the same benefit amount for the same number of years of service. With the above information in hand, and after discussing this with our team, I reached the following conclusions: 1. Under our current mode of operation, it is unlikely we will ever reach a fully funded status. 2. To simply deposit a large sum of money in to the fund requires a) money the city does not have without issuing long term debt and b) accepting that in a few years, this process might need to be repeated. 3. Reaching a fully funded status hinges on the department not increasing their benefit payout and therefore accepting that in 30+ years from now, employees will be only making approximately ,$34k in retirement, which is unlikely to keep pace with the rising cost of living. 4. This will deter young men and women from considering a career as a Paris Firefighter, let alone promoting as there are no retirement incentives to either. 5. The growing unfunded liability will become more challenging for our future taxpayers to take on and address, particularly if an increase in benefits is ever approved, which could one day lead to the city's having to make difficult decisions. 6. If the legislature ever passes legislation like that referred to above, the city could be forced in a direction it is not ready to move in a very short period of time. 7. To ask the fire employees and taxpayers to increase their annual contribution beyond the 16%/14% will continue to become a challenging request, particularly given this only seems to be a costly and perpetual band aid for the situation. 8. And finally, even if annual contributions are increased, the annual benefit is not increased, and the city deposits a large sum of money, what ground has been gained? Eventually the retirement benefit will become undesirable by employees and/or we will need to issue more longterm debt to keep the fund afloat for an indefinite period of time. This seems to be the inevitable future for many small scale pension funds. After considering all of this, we concluded that something needs to change. You don't just keep throwing wood into afire: eventually you need to take the necessary steps to put the fire out. STATUS OF ISSUE: Having learned all of this, we set out to explore an option of moving the Paris Fire Fighters from the Pension over to the city's TMRS. TMRS is a well-established, well run, and well funded program. The contribution rate is 7% Employee / 14% city matching contributions (it was 616/12% until it was changed for FY21/22). In reality, the city's required contribution is actuarially determined each year and generally has averaged below 8%. All in all, it is a much more cost friendly program for the employee and the taxpayer. In addition, assuming the same factors at play for pay and years of service, the benefit is believed to be much more advantageous to the employee than the current Pension. With this in mind, we reached out to TMRS and the Pension actuary to explore the options. While a blending or merger of the assets in the Pension with TMRS is not possible, we are working out a plan where the city would 'freeze " the Pension and move all existing and future employees over to TMRS accounts. For existing employees under the Pension, you would be vested for your years of service to date, but it would be frozen as of the date the transition takes place, with all future years counting towards TMRS. The employee and city's annual contribution rate would drop from 16%/14% to 7916/14% respectively (again, the city's actual contribution would be closer to 8016). Doing this, however, would require the city to take out a large bond to fund the unfunded liability of the Pension. If managed correctly, this funding would serve the life of the Pension and, in time, when the last existing beneficiary passes away, the Pension would cease to exist. For existing employees, when they retire, they would have a Pension account and a TMRS account. The two combined should equate to something greater than what the current Pension would pay. In the meantime, the employee will keep more of their paycheck (16% - 7% = 9%), which they could, in turn, invest in a private retirement on the side (the city would not contribute towards that). It must also be noted that the City of Paris maintains a State of Texas Section 218 Agreement (with some amendments) for Social Security payments. This agreement from 1956 (with amendments in 1965 and 1983) brought in all employees in to Social Security, excluding "emergency services ", "elective positions ", and 'fee basis positions ". It should be noted that "p olice " was added in 1965 while other emergency services remained excluded and EMS did not start until later, but they were brought straight into Social Security. To the point, the Fire Department is currently excluded from Social Security. We are currently seeking legal confirmation, but it is our understanding at this time that whatever is done to the Fire Pension in this process has no bearing on whether or not the City and employee contributes to Social Security, until this agreement is ever amended. At this time, we are not recommending this. If that were to occur, then the employee and City would have to contribute the social security rate. The Board of Trustees' actuary has opined that an approximate amount of $12 million will be needed in a bond to fund the Pension. He has also determined that the TMRS retirement benefit is more advantageous than the Pension retirement benefit for the employee. Unfortunately, TMRS is not as direct and simple as a $94 multiplied by your number of years of service, per month, calculation, so we cannot predict the final benefit for individual employees. We have, however, created test cases which reasonably show that employees should have a greater return on investment if converted to TMRS. TMRS has made it plain that they will not touch the Pension itself; the Pension will forever be the responsibility of the city and Board of Trustees. They, however, will onboard all the fire department employees as if they were brand new employees in any other department. They would be starting with a zero balance in their TMRS account, but that would grow with their contributions. Their benefit would also be commensurate to their pay. The more they make, the greater their retirement benefit will be. With the revamped pay schedule and a move to TMRS, the desire to make a career with the City of Paris Fire Department and even to promote to a higher rank should be more financially appealing than it was two years ago. Along with the city's financial advisor and bond counsel, we are working out the needed steps to issue a 20 year pension bond under state law. As a disclaimer, we can find no other precedent of other communities having 1) taken out a pension bond, while simultaneously: 2) freezing their fire pension, and 3) moving their employees to TMRS, so we have reached out to the Attorney General to see if there are any additional steps they are going to ask of us. Our legal counsel feels quite confident we have a way forward, but until that is ironed out, nothing is a guarantee. In addition, we are working with the Board of Trustee legal counsel regarding pension -specific statutory requirements and areas that need to be ironed out in an agreement between the City of Paris and Board of Trustees. Please see the Budget section below for additional commentary. ext Steffi Assuming the City Council is favorable to addressing this issue, we are still working with the Attorney General, Bond Legal Counsel, Pension Legal Counsel, Actuary, Financial Advisor, Third Party Legal Counsel regarding Social Security, and the Fire Pension Board to address several final details. But, the next step is to determine whether the City Council is willing to entertain this project. If so, then we intend to bring back to you a Pension Bond as well as an agreement with the Pension Board by the July 25, 2022 City Council meeting (or thereabouts). 1 feel very good that we have found a solution that will work long term for the Fire Department, City of Paris, and Paris taxpayers; one that our descendants will look back and be grateful for. We will happily do our best to answer questions. There is a large team of individuals working together on this, so I feel confident we can find an answer when a question arises. BUDGET: Assuming it moves along as planned, the city happens to have an existing bond retiring in FY21 /22, which means in FY22123 there will be available property tax rate that could be moved to this bond. The goal is to find a way to minimize the impact to the taxpayers while increasing retirement benefits for fire department personnel. Given the taxpayers are already acclimated to the existing property tax rate, instead of dropping the rate and asking that it be raised again later, my recommendation to the City Council will be to keep the rate and replace the retiring bond with the new bond. In conjunction with that recommendation, 1 will ask that the City Council consider adding an additional I cent in property tax. According to our calculations, assuming the numbers we have to date, this should save the taxpayers an additional $3 — 5 million over the life of the bond. This is a significant financial investment that the city and taxpayers would be taking on to solve this problem, but I believe it is mutually beneficial to all parties. With a drop from 14% contribution to approximately 8% with TMRS, and assuming the City does not have to enter the employees in to Social Security, the City will realize a significant increase in available funds within the General Fund. It is recommended that this be repurposed to help offset other costs the City has and/or must take on. Along with this, we have been working with our financial advisor to address our property tax caps under state law. We have developed a means, under state law, to issue this pension bond without impacting our Senate Bill 2 property tax caps from 2020. If the City Council agrees to pursue this, more will be explained at a later date. For the employees, they will goftom 16% annual contribution to the existingpension to 7% annual contribution to the new TMRS account like all other employees. This will be a significant benefit to these employees. All in all, there appear to be significant wins.for the employees, taxpayers, and municipal operations if this works out. Andfinally, assuming the market and return on investment holds .favorably, the large deposit could see the fund through final life of the program, the taxpayer's expense for pension should end when the final paymentfor debt is completed (20 years), and the pension itse�f will terminate upon the passing of the final beneficiary with allfuture beneficiaries within the department coming under the TMRS. Disclaimer — It must be stated that this all assumes afavorable market and return on investments, It is not impossible that at some future point, the City might have to deposit additional funds (possibly even another smaller bond) to fund the Pension. We are working off of best estimates assuming future variables, all produced by an actuary. However, having frozen the fund with no new employees entering in to it, the City will have hedged its risk and eventually will bring it to a conclusion, RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS APPROVING AN AGREEMENT REGARDING FREEZE OF FIRE PENSION FUND AND AUTHORIZING THE MAYOR TO EXECUTE SAME ON BEHALF OF THE CITY; MAKING OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, City records indicate that the Paris Firefighters' Relief and Retirement Fund, a public retirement system and a municipal retirement plan (the "Fund" or the "Plan") was created in 1941 and the Fund continues to operate pursuant to the authority of Vernon's Ann.Texas Civ.St. Art. 6243e, as amended, also known as the Texas Local Fire Fighters Retirement Act; and WHEREAS, the Fund was amended and restated as of January 1, 2019 (the "2019 Plan); and WHEREAS, the City Council has authorized the City to issue its City of Paris, Texas, General Obligation Pension Bonds, Taxable Series 2022 (the "Bonds") pursuant to Chapter 107 of the Texas Local Government Code ("Chapter 107") for the purpose of funding all or any part of the unfunded, accrued liability of the City to the Fund, as determined by actuarial analysis (the "Unfunded Liability"); and WHEREAS, at present, the beneficiaries of the Fund are the City's Firefighters, their Spouses (as such terms are defined in the Plan) and such other persons who are entitled to benefits by the terms of the Plan as of the Effective Date (collectively the "2022 Fund Beneficiaries"); and WHEREAS, upon the issuance of the Bonds, both the City and the Board of Trustees (the "Board") of the fund desire to preserve the vested rights solely of and for the 2022 Fund Beneficiaries in the Fund, but to simultaneously transition all current and future Firefighters into the Texas Municipal Retirement System ("TMRS") for participation thereafter in TMRS on the same basis as all other City employees who participate in TMRS; and WHEREAS, to effectuate the immediately preceding recital, the Board has revised the Plan to implement said objective, and the amended and restated Plan (the "2022 Plan") has been approved by a vote of the City Firefighters as required by Section 7 of Vernon's Ann.Texas Civ.St. 6243e, as amended, the Texas Local Fire Fighters Retirement Act (the "Act") and all prerequisites of the Act for the Board to amend the Plan to change the benefits or eligibility requirements for benefits payable from the Plan have been met, including the approval of the 2022 Plan by Definiti LLC, which is eligible actuary pursuant to the Act selected by the Board; and WHEREAS, the 2022 Plan provides that it shall be effective only upon the funding by the City of the Unfunded Liability; and WHEREAS, pursuant to City Ordinance No. adopted on August 8, 2022, the Council has approved the 2022 Plan and provided for it to be implemented only upon the funding by the City of the Unfunded Liability; and WHEREAS, in order to effectuate the intent of the Plan and the movement of the Plan's beneficiaries to TMRS, it is necessary that the Fund be frozen and no further changes in benefits be approved thereunder; and WHEREAS, the City Council, in furtherance of the above, finds that it is in the best interest of the City, the Fund, and its beneficiaries to enter into the Agreement Regarding Freezing of the Fire Pension Fund ("Agreement") attached hereto as Exhibit A with the Board. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS: Section 1. That the findings set out in the preamble to this resolution are hereby in all things approved. Section 2. That the Agreement attached hereto as Exhibit A and incorporated herein by reference is hereby approved. Section 3. That the Mayor is hereby authorized to execute said Agreement on behalf of the City. Section 3. That this resolution shall be effective from and after its date of passage. PASSED AND APPROVED this 8th day of August, 2022. Paula Portugal, Mayor ATTEST: Janice Ellis, City Clerk APPROVED AS TO FORM: Stephanie H. Harris, City Attorney AGREEMENT REGARDING FREEZE OF FIRE PENSION FUND This AGREEMENT REGARDING FREEZE OF FIRE PENSION FUND (this ("Agreement") is entered into by and between the City Council (the "Council") of the City of Paris, Texas (the "City") and the Board of Trustees (the "Board") of the Paris Firefighters' Relief and Retirement Fund, a public retirement system and a municipal retirement plan (the "Fund" or the "Plan") created by the City, and will be effective for all purposes as of the date this Agreement is signed by the latter party to do so below ("Effective Date"). WHEREAS, City records indicate that the Fund was created in 1941 and the Fund continues to operate pursuant to the authority of Vernon's Ann.Texas Civ.St. Art. 6243e, as amended, also known as the Texas Local Fire Fighters Retirement Act; and WHEREAS, the Fund as currently constituted was amended and restated as of January 1, 2019 (the "2019 Plan); and WHEREAS, the Council has authorized the City to issue its City of Paris, Texas, General Obligation Pension Bonds, Taxable Series 2022 (the "Bonds") pursuant to Chapter 107 of the Texas Local Government Code ("Chapter 107") for the purpose of funding all or any part of the unfunded, accrued liability of the City to the Fund, as determined by actuarial analysis (the "Unfunded Liability"); and WHEREAS, at present, the beneficiaries of the Fund are the City's Firefighters, their Spouses (as such terms are defined in the Plan) and such other persons who are entitled to benefits by the terms of the Plan as of the Effective Date (collectively the "2022 Fund Beneficiaries"); and WHEREAS, upon the issuance of the Bonds, both the City and the Board desire to preserve the vested rights solely of and for the 2022 Fund Beneficiaries in the Fund, but to simultaneously transition all current and future Firefighters into the Texas Municipal Retirement System ("TMRS") for participation thereafter in TMRS on the same basis as all other City employees who participate in TMRS; and WHEREAS, to effectuate the immediately preceding recital, the Board has revised the Plan to implement said objective, and the amended and restated Plan (the "2022 Plan") has been approved by a vote of the City Firefighters as required by Section 7 of Vernon's Ann.Texas Civ.St. 6243e, as amended, the Texas Local Fire Fighters Retirement Act (the "Act") and all prerequisites of the Act for the Board to amend the Plan to change the benefits or eligibility requirements for benefits payable from the Plan have been met, including the approval of the 2022 Plan by Definiti LLC, which is eligible actuary pursuant to the Act selected by the Board; and WHEREAS, the 2022 Plan provides that it shall be effective only upon the funding by the City of the Unfunded Liability; and WHEREAS, pursuant to City Ordinance No. _LL adopted on August 8, 2022, the Council has approved the 2022 Plan and provided for it to be implemented only upon the funding by the City of the Unfunded Liability; and WHEREAS, in furtherance of the issuance of the Bonds, the parties have entered into an Agreement Regarding City Pension Obligation Bonds concurrently herewith, a copy of which is attached hereto as Exhibit A. NOW THEREFORE, the Council and the Board enter into this Agreement pursuant to Section 107.003, as follows: 1. The recitals and terms of the Agreement Regarding City Pension Obligation Funds attached hereto as Exhibit A, are incorporated into this Agreement as if set forth in full herein. 2. The City acknowledges and agrees that: (a) upon the issuance of the Bonds and the funding of the 2022 UAAL, the City will move all current Firefighters into the TMRS retirement program while preserving the vested rights in the Fund of the 2022 Fund Beneficiaries: (b) following the events described in Section 2(a) above, the City will (i) continue to honor its funding obligations pursuant to the requirements of the Fund to the 2022 Fund Beneficiaries and (ii) make provision for all current and future Firefighters to participate in TMRS on the same basis as other City employees who participate in TMRS; and (c) the City will issue the Bonds and provide for the payment of the debt service on the Bonds. 3. The Board acknowledges and agrees that: (a) following the events described in Section 2(a) above, the Plan effective as of October 1, 2022 provides only the 2022 Fund Beneficiaries shall be entitled to any portion of the benefits of the Fund, in effect "freezing" the Fund for the 2022 Fund Beneficiaries and foreclosing the Fund to any new participants not already provided for under the Fund; and (b) no further increases or substantive changes may be made to the Fund because the Texas Local Fire Fighters Retirement Act, Article 6243e of Vernon's Civil Statutes requires any change in benefit be approved by a majority of participating members of the Fund and after the effective date of 2022 Plan there will be no participating members; and (c) upon final payout to the last person qualifying as a 2022 Fund Beneficiary, any remaining amounts in the Fund shall be allocated in accordance with applicable State law. 4. This Agreement may be amended only by a written instrument executed by the parties hereto. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement. IN WITNESS'WHEREOF, the parties have executed this Agreement on the date(s) set forth opposite the signatures of their authorized representatives to be effective for all purposes on the Effective Date. CITY COUNCIL OF THE CITY OF PARIS, TEXAS BY.... _......... .. Name: Paula Portugal Title: Mayor Date: August 8, 2022 BOARD OF TRUSTEES OF THE PARIS FIREFIGHTERS' RELIEF AND RETIREMENT FUND Name: Bob Rast Title: Chairman Date: August 8, 2022 PARIS FIREFIGHTERS' RELIEF AND RETIREMENT FUND Plan Document Effective October 1, 2022 Paris Firefighters' Relief and Retirement Fund Plan Document Effective October 1, 2022 Table of Contents Page Section 1 - Definitions 1 Section 2 - Frozen Benefits 3 Section 3 - Disability Benefits 4 Section 4 - Reserved 6 Section 5 - Optional Forms of Retirement Income 7 Section 6 - Death Benefits 9 Section 7 - Return of Firefighter's Own Contributions 11 Section 8 - Contributions 12 Section 9 - Maximum Benefit 13 Section 10 - Distribution of Benefits 22 Section 11 - Amendment and Termination 26 Section 12 - Board of Trustees 27 Section 13 - Miscellaneous Provisions Applicable to the Fund 29 PARIS FIREFIGHTERS' RELIEF AND RETIREMENT FUND This Adoption agreement is adopted by the Board of Trustees as follows: WITNESSETH: WHEREAS, the Board of Trustees, has heretofore adopted the Paris Firefighters' Relief and Retirement Fund herein referred to as the "Plan" or the "Fund" pursuant to Vernon's Annotated Civil Statute, Article 6243e, the Texas Local Fire Fighters Retirement Act; and WHEREAS, the Board of Trustees now desires to amend and restate the Plan. NOW, THEREFORE, to carry such amendment and restatement into effect, the Board of Trustees does hereby adopt the amended and restated Paris Firefighters' Relief and Retirement Fund, the terms and conditions of which are fully set out in the attached Sections 1 through 13, which are incorporated by reference. Except as otherwise specifically designated in the Plan, the effective date of the Plan as hereby amended and restated is the latest of the following: (a) the adoption of an ordinance authorizing the issuance of the City of Paris, Texas Pension Bonds, Taxable Series 2022; (b) the execution of the Agreement Regarding City Pension Obligation Bonds by the Mayor and the Chairman of the Fund; (c) the deposit by the City of Paris, Texas of a City contribution to the Fund of an amount equal to the proceeds from the issuance of the City of Paris, Texas Pension Bonds; or (d) October 1, 2022 (the Effective Date). The provisions of the Plan set out below shall be applicable to all Firefighters of the Paris Firefighters' Relief and Retirement Fund who are active Firefighters of the Fund as of the Effective Date, and to those who become Firefighters on or after that date. The benefits of each Firefighter who had retired, become disabled, or terminated, as well as each beneficiary whose benefits had already been determined as of the Effective Date, shall be as specified under the Fund provisions in effect prior to this amendment. Signed this day of , 2022. TRUSTEES OF THE PARIS FIREFIGHTERS' RELIEF AND RETIREMENT FUND Section 1 Definitions The following terms used in this document shall have the meanings stated below unless a different meaning is clearly required by the context. 1.01 "Act" shall mean the Texas Local Fire Fighters Retirement Act, Vernon's Annotated Civil Statutes, Article 6243e. 1.02 "Board" or "Trustees" shall mean the Board of Trustees of the Paris Firefighters' Relief and Retirement Fund. The Board of Trustees shall be the plan administrator. 1.03 "City" shall mean the City of Paris, a political subdivision established within the state of Texas. 1.04 "Code" shall mean the Internal Revenue Code of 1986 as amended from time to time. 1.05 "Compensation" shall mean regular salary pay, overtime pay, longevity pay, certificate pay, step up pay, vacation pay, sick pay, holiday pay and administrative leave pay. Compensation specifically excludes accumulated sick leave paid at the time of retirement or termination of employment and amounts paid by the City as a benefit (such as clothing allowances, social security match, health insurance premiums and workers compensation premiums). Compensation also specifically excludes lump sum payments made at any time for unused accrued vacation, sick leave, holiday pay, administrative leave and compensatory leave time. The annual compensation of each Firefighter taken into account under the Plan for any year shall not exceed the limitations of Code §401(a)(17). In determining benefit accruals in plan years beginning after December 31, 2001, the annual compensation limit for determination periods before January 1, 2002, shall be $200,000. For plan years beginning on or after January 1, 2002, Compensation in excess of $200,000 shall be disregarded for all purposes. Such amount shall be adjusted by the Commissioner for increases in the cost -of -living in accordance with Code §401(a)(17(B). The cost -of -living adjustment in effect for a calendar year applies to any determination period beginning with or within such calendar year. If a determination period consists of fewer than twelve (12) months, the $200,000 annual compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period and the denominator of which is twelve (12). Effective for plan years beginning on or after January 1, 2001, "Compensation" shall include elective amount that are not included in the gross income of the Firefighter under Code §132(f)(4). For years beginning after December 31, 2008: (i) an individual receiving a differential wage payment, as defined by Code §3401(h)(2), is treated as an employee of the employer making the payment; and (ii) the differential wage payment is treated as Compensation. 1.06 "Firefighter" shall mean all members of the Fund as of September 30, 2022 with a Frozen Benefit. No other person employed with the City Fire Department on or after the Effective Date shall be eligible to become a member of the Fund. 1.07 "Fund" or "Plan" shall mean the Paris Firefighters' Relief and Retirement Fund. 1.08 RESERVED 1.09 "Normal Retirement Date" shall mean the date on which the Firefighter has attained age 55. "Early Retirement Date" shall mean the date on which the sum of the Firefighter's age and years of Service first equals 80, provided, he has completed twenty (20) years of Service before the Effective Date. In determining a Firefighter's Early Retirement Date, both age and Service shall be calculated in completed months. 1.10 "Plan Year" shall mean the twelve month period ending December 31st of each year. 1.11 "Service," for purposes of determining Early Retirement Date and the Frozen Benefit, is credited by the Fund for each month for which a Firefighter makes contributions to the Plan. Service shall be computed in completed months. No additional Service will be credited on or after the Effective Date. 1.12 "Spouse" shall mean the lawful wife or husband of a Firefighter. 1.13 "Termination of Service" or to "Terminate Service credited by the Fund", shall require a Firefighter to terminate employment from the City Fire Department and from any position of employment with the City in an emergency, medical or fire department - related capacity. The Board of Trustees shall have the sole power and discretion to determine whether any position of employment with the City is in an emergency, medical or fire department -related capacity. The Board of Trustees shall have the sole power and discretion to determine if a Firefighter has Terminated Service and shall determine all questions arising in connection with the interpretation of whether a Firefighter has Terminated Service. Section 2 Frozen Benefit 2.01 Eligibility for Frozen Benefit. A Firefighter will be eligible for a frozen benefit on or after his Normal Retirement Date or Early Retirement Date. 2.02 Amount of Frozen Benefit. The monthly benefit payable to a Firefighter who was credited with Service prior to the Effective Date, on or after his Normal Retirement Date or Early Retirement Date shall be an amount equal to $94.00 multiplied by the Firefighter's total years of Service as of the Effective Date. 2.03 Normal Form of Benefit. Unless the Firefighter elects an optional form of payment under Section 5, the benefit under this section shall be paid through the date of the Firefighter's death. In the event the Firefighter's death precedes that of his Spouse, two thirds of such frozen benefit shall be continued after the Firefighter's death to an Eligible Surviving Spouse for the Spouse's lifetime. An Eligible Surviving Spouse of a retired, disabled or terminated Firefighter must have been married to the Firefighter at the time of the earlier of (a) the Firefighter's Termination of Service, or (b) the commencement of benefits to the Firefighter, and remained continuously married to such Firefighter until the time of his death. Section 3 Disability Benefits 3.01 Eligibility for Disability Benefit. Effective for active Firefighters who are determined to be disabled on or after the Effective Date, an active Firefighter will qualify for a disability allowance if he becomes disabled for either physical or mental reasons (except as the result of a condition the Firefighter had on the date he became an employee Firefighter) before the Firefighter attains Normal Retirement Date. The Firefighter need only be disabled to the extent of being unable to perform the duties of his occupation to be entitled to benefits; however, he will not be entitled to receive any disability allowance if the disability is a result of: a. Excessive and habitual use by the Firefighter of drugs, intoxicants, or narcotics; b. Injury or disease sustained by the Firefighter while willfully and illegally participating in fights, riots, civil insurrections, or while committing a criminal act; C. Injury or disease sustained by the Firefighter while serving in any armed forces; d. Injury or disease sustained by the Firefighter diagnosed or discovered subsequent to the date his employment has terminated; e. Injury or disease sustained by the Firefighter as a result of an act of war, whether or not such act arises from a formally declared state of war; or f. Any attempt at suicide while sane or insane, or by injuries intentionally self- inflicted. elf- inflicted. 3.02 Payment of Disability Allowance. The disability benefit will commence after expiration of all of the Firefighter's annual leave and sick leave. The disability benefit will continue thereafter for as long as the Firefighter remains disabled as defined above. 3.03 Amount of Disability Allowance. The monthly disability allowance of a Firefighter will be equal to $100 per month. 3.04 Termination, Reduction or Reinstatement of Disability Benefit. The Board of Trustees shall have the power to continue, to terminate, to reduce or to reinstate a Firefighter's disability benefits subject to the following constraints: a. During the first one and one-half (1'/2) years, the Board of Trustees may terminate the Firefighter's disability benefit if the Firefighter recovers to the extent that he is able to perform the duties of his job as a Firefighter; b. After the disabled Firefighter has received disability benefits from the Plan for at least one and one-half (11/2) years, the Board of Trustees may review the situation of the disabled Firefighter to determine the status of his disability. If the Firefighter has recovered to the extent he is able to perform the duties of any occupation for which he is reasonably suited by education, training and experience; The Board of Trustees shall have the power to reinstate any disability benefit which has been previously terminated or reduced provided the disabled 4 Firefighter's condition has worsened due to the same cause for which he was originally disabled; or d. The Board of Trustees established under the Act may require periodic medical examinations of, periodic vocational rehabilitation examinations of, or periodic financial information from disability retirees to determine whether the retiree remains eligible to receive disability retirement benefits as provided herein. A failure by a retiree to comply with a request by the Board of Trustees may result in the suspension and/or termination of disability retirement benefits. 3.05 Recovery from Disability. If a disabled Firefighter recovers to the extent that his disability allowance is terminated, the Firefighter shall be entitled to the following: if the Firefighter has not attained his Normal Retirement Date, the recovered Firefighter will be eligible to receive a Frozen Benefit described in Section 2.02, to commence as of: (i) the date on which the Firefighter has attained age 55; or (ii) the date on which the Firefighter's age and years of Service first equals 80, provided he has completed twenty (20) years of Service; or b. if the recovered Firefighter has attained his Normal Retirement Date or Early Retirement Date, he will be eligible to receive the Frozen Benefit described in Section 2.02 above. 5 Section 4 RESERVED Section 5 Optional Forms of Retirement Income 5.01 General Rules. A Firefighter eligible to receive a benefit under the Plan may elect to receive his retirement income under any of the options listed below. Option Three, the DROP, may be combined with any other optional form of payment; however, a member may elect only one of the optional forms of payments available under Options One or Two. A Firefighter who has not been credited with twenty (20) years of Service before the Effective Date, may elect to receive his retirement income only under Option One or Two. If a Firefighter elects an optional form of payment and then dies prior to the date his payments commence, the election of the optional form of payment shall be null and void, and the survivor's benefits payable under the Fund shall be paid as if no optional form of payment had ever been elected. 5.02 Option One - Joint and 100% Spouse Annuity. A Firefighter who elects Option One will receive the monthly Frozen Benefit payable for the Firefighter's lifetime with the provision that upon his death, one hundred percent (100%) of the same monthly Frozen Benefit shall be paid to his Eligible Surviving Spouse. The monthly benefit payable under Option One will equal the benefit calculated under Section 2, multiplied by the Conversion Factor specified in Exhibit A, based upon the ages of the Firefighter and the Firefighter's Spouse at the date monthly payments commence 5.03 Option Two - Straight Life Annuity. A Firefighter who elects Option Two will receive a monthly retirement benefit payable for his lifetime and which ceases upon his death. If Option Two is elected by a Firefighter who is married at the time of the earlier of (i) Termination of Service, or (ii) the commencement of benefits, then it is available only after the Board of Trustees receives written consent of the spouse for election of this option. The monthly benefit payable under Option Two will equal the benefit calculated under Section 2, multiplied by the Conversion Factor specified below, based upon the Firefighter's age at the date monthly payments commence. Conversion Factors from Normal Form of Benefit to Straight Life Annuit_wwwwwwww Firefighter's Age Conversion Firefighter's Age Conversion Nearest Birthday Factor Nearest Birt�hday, 451.04_914 mm_ 56 M__.........57 .............._Factor' 1.09820 46 1.05238 1.10437 47 1.05584 ........ .... ........ ............. 58 1.11083 48 1.05952 59 1.11757 . .. 49 1.06343 ......� 60 ........ 1.124611 50 1.06758 61 1.13193 51 1.07199 62 1.13953 52 1.07666 63 1.14736 �........ 531.08160 .. ......................1.08682....�..............._.mm._...._..65.....'...w 64 1.15537 54 .....w�v W w ...�. 1.16352 55 1.09234 1 . 5.04 Option Three - DROP. A Firefighter may elect to have his benefit calculated as if he had Terminated Service on his DROP Eligibility Date. a. A Firefighter's DROP Eligibility Date is the later of (A) the earlier of Firefighter's Normal Retirement Date or Early Retirement Date, or (B) the date two years prior to the date the Firefighter elects to receive benefits. A Firefighter may elect to have his monthly pension and DROP payment calculated using a date 7 which is later than his DROP Eligibility Date as long as such date is prior to his actual retirement date and as long as such date results in an integer number of months between his DROP Eligibility Date and his actual date of retirement. b. The monthly benefit of a Firefighter who elects to receive his benefits under the DROP will be based on his years of Service as of his DROP Eligibility Date (or such later date selected by the Firefighter in accordance with Section 5.04.a. C. In addition to his monthly retirement benefit a Firefighter who makes an election under the DROP will also be entitled to receive a lump sum amount (the "DROP payment"). The DROP payment will equal the sum of i and ii, below, where: is the Firefighter's monthly retirement benefit as of his DROP Eligibility Date (or such later date selected by the Firefighter in accordance with Section 5.04a) calculated without regard to any optional form of payment as set forth in Section 5.02 or 5.03, multiplied by the number of months, including fractional parts of a month, between the Firefighter's DROP Eligibility Date and the date the Firefighter elects to receive benefits; and ii. is equal to (A) minus (B), where (A) equals the amount of the Firefighter's accumulated contributions as of the date the Firefighter elects to receive benefits, and (B) equals the amount of the Firefighter's accumulated contributions as of his DROP Eligibility Date. d. In calculating the monthly benefit for a Firefighter who elects Option One or Option Two in addition to the DROP, the Firefighter's monthly benefit shall first be calculated under the DROP. Next, the appropriate factor for Option One or Option Two shall be applied to the Firefighter's monthly benefit under the DROP, based on the Firefighter's attained age at his actual date of retirement. e. General Rules for DROP Elections: Election of a DROP is in lieu of Frozen Benefits. 2. If a Firefighter dies after electing a DROP but prior to the date his payments commence, the DROP election shall be null and void, and no DROP payment shall be made. Forms of Payment of DROP Benefits. A Firefighter who elects to receive benefits under a DROP shall receive the DROP payment in a single installment. N. Section 6 Death Benefits 6.01 Benefits Payable to Eligible Surviving Spouse. In the event of a Firefighter's death, the Firefighter's Eligible Surviving Spouse will receive a monthly benefit in the following amount: a. if the Firefighter was receiving the Frozen Benefit at the time of his death, the amount of death benefits as determined in accordance with the Normal Form of Benefit or the optional form of payment the Firefighter was receiving at the time of his death, whichever is applicable; or b. if the Firefighter was entitled to a Benefit under Section 2 and his death occurred prior to the commencement of such income, two-thirds of the income that he would have received at commencement of such income; or C. if the Firefighter was employed and not receiving the Frozen Benefit at the time of his death, two-thirds of his Frozen Benefit as defined in Section 2.02 above. d. An Eligible Surviving Spouse of a retired, disabled, or terminated Firefighter must have been married to the Firefighter at the time of the earlier of his Termination of Service or commencement of benefits and remained continuously married to that same spouse until the time of his death. In order for the Eligible Surviving Spouse of an actively employed Firefighter to qualify for the benefit, he or she must have been married to the Firefighter at the time of his death. e. Benefits shall not be curtailed by reason of the remarriage of an Eligible Surviving Spouse. However, no person may receive benefits on account of more than one Firefighter. In the event an Eligible Surviving Spouse becomes eligible for benefits on account of the death of more than one Firefighter, the only benefit payable shall be the greatest of the benefits to which such Eligible Surviving Spouse was otherwise entitled. 6.02 Benefits Payable to Children. Each unmarried surviving child of the deceased Firefighter less than 18 years of age shall receive or have paid on his or her behalf a monthly benefit. The amount of such benefit shall equal a divided by b where: a. equals the Frozen Benefit provided under the Fund, and b. equals 7.5. C. If the Firefighter's Eligible Surviving Spouse dies after receiving benefits pursuant to Section 6.01 or if there is no Eligible Surviving Spouse, the monthly benefit that each unmarried child receives will equal two times the benefit specified in Section 6.02. 6.03 If no Eligible Surviving Spouse or child is entitled to benefits, at the time of the Firefighter's death, the amount the eligible surviving spouse would have received will be paid to the Firefighter's dependent parent(s). For this purpose, a dependent parent is the parent of the deceased Firefighter which the Firefighter was entitled to treat as a dependent for federal income tax purposes for either (a) the calendar year preceding the Firefighter's death, or (b) the calendar year of the Firefighter's death. W 6.04 Death benefits are payable only in the event that there is an Eligible Surviving Spouse, children, or dependent parent(s) of the Firefighter. Should a Firefighter die with no eligible surviving spouse, children, or dependent parent(s), then the total of his contributions (which have not otherwise been distributed to the Firefighter), without interest, shall be payable to his estate but no other benefits will be payable. 6.05 The monthly death benefits described in Sections 6.01, 6.02 or 6.03 shall commence on the date of the Firefighter's date of death. 6.06 No monthly benefit paid as a result of the death of a Firefighter or a Firefighter's Eligible Surviving Spouse will be paid to a person convicted of causing the death of such Firefighter or such Firefighter's Eligible Surviving Spouse but instead such benefit will be payable to a person who would be entitled to the benefit had the convicted person predeceased the Firefighter or the Firefighter's Eligible Surviving Spouse. If no person would be entitled to the benefit, the benefit is payable to the Firefighter's estate. The fund may delay payment of a benefit payable on the death of a Firefighter or the death of the Firefighter's Eligible Surviving Spouse pending the results of a criminal investigation and the legal proceedings relating to the cause of death. A person has been convicted of causing the death of a Firefighter or a Firefighter's Eligible Surviving Spouse if the person has pleaded guilty or nolo contendere to or has been found guilty by a court of an offense at the trial of which it is established that the person's intentional knowing or reckless act or omission resulted in the death of a Firefighter or a Firefighter's Eligible Surviving Spouse, regardless of whether sentence is imposed or probated and has no appeal of the conviction pending and the time provided to appeal has expired. 10 Section 7 Return of Firefighter's Own Contribution A Firefighter who Terminates Service may elect to receive, at the time of his Termination of Service or attainment of Normal Retirement Age, the excess of his own contributions to the Fund over the amount of any benefits he has received from the Fund. Such election must be made prior to the date his monthly benefits commence. In making such an election, the Firefighter will forfeit his rights to receive all other benefits which he would have otherwise been entitled to receive. The amount refunded shall not include any interest accumulated on account of the Firefighter's contributions. 11 Section 8 Contributions 8.01 Effective as of the Effective Date, no Firefighter may make contributions to the Plan. 8.02 Effective as of the Effective Date, the City will make contributions at the recommended contribution determined by actuarial valuations required pursuant to Section 802.101 of the Texas Government Code. 8.03 All contributions shall be held in and administered in accordance with the Fund. All contributions for each Plan Year shall be paid deposited into the Fund within the period as may be established by law. 8.04 This Plan shall be funded by one or more separate trusts. If more than one trust is used, each trust shall be designated by the name of this Plan followed by a number assigned by the Board of Trustees at the time the trust is established. Each trust is a part of this Plan. All rights or benefits which accrue to a person under this shall be subject also to the terms of the agreements creating the trust or trusts and any amendments to them which are not in direct conflict with this Plan. 8.05 All benefits under the Plan shall be provided solely from the Fund. 12 Section 9 Maximum Benefit 9.01 Annual Benefit. a. Effective date. The limitations of this Section apply in "Limitation Years" beginning on or after July 1, 2007, except as otherwise provided herein. b. Annual Benefit. The "Annual Benefit" otherwise payable to a Firefighter under the Fund at any time shall not exceed the "Defined Benefit Dollar Limitation". C. Adjustment if in two defined benefit plans. If the Firefighter is, or has ever been, a participant in another qualified defined benefit plan (without regard to whether the plan has been terminated) maintained by the City, the sum of the Firefighter's "Annual Benefits" from all such plans may not exceed the "Defined Benefit Dollar Limitation". Where the Firefighter's employer-provided benefits under all such defined benefit plans (determined as of the same age) would exceed the "Defined Benefit Dollar Limitation" applicable at that age, the Firefighter's benefit shall be limited in accordance with the terms of the plans. d. Other rules applicable. The limitations of this Section shall be determined and applied taking into account the rules in Section 9.03. 9.02 Definitions. For purposes of this Section, the following definitions apply. Annual Benefit. "Annual Benefit" means a benefit that is payable annually in the form of a "Straight Life Annuity". Except as provided below, where a benefit is payable in a form other than a "Straight Life Annuity", the benefit shall be adjusted to an actuarially equivalent "Straight Life Annuity" that begins at the same time as such other form of benefit and is payable on the first day of each month, before applying the limitations of this Section. For a Firefighter who has or will have distributions commencing at more than one annuity starting date, the "Annual Benefit" shall be determined as of each such annuity starting date (and shall satisfy the limitations of this Section as of each such date), actuarially adjusting for past and future distributions of benefits commencing at the other annuity starting dates. For this purpose, the determination of whether a new annuity starting date has occurred shall be made without regard to Regulations §1.401(a)-20, Q&A 10(d), and with regard to Regulations §1.415(b)- 1(b)(1)(iii)(B) and (C). No actuarial adjustment to the benefit shall be made for (a) survivor benefits payable to a surviving spouse under a qualified joint and survivor annuity to the extent such benefits would not be payable if the Firefighter's benefit were paid in another form; (b) benefits that are not directly related to retirement benefits (such as a qualified disability benefit, preretirement incidental death benefits, and postretirement medical benefits); or (c) the inclusion in the form of benefit of an automatic benefit increase feature, provided the form of benefit is not subject to Code §417(e)(3) and would otherwise satisfy the limitations of this Section, and the Fund provides that the amount payable under the form of benefit in any "Limitation Year" shall not exceed the limits of this Section applicable at the annuity starting date, as increased in subsequent years pursuant to Code §415(d). For this purpose, an automatic benefit increase feature is included in a form of benefit if the form of benefit provides for automatic, periodic increases to the benefits paid in that form. 13 Effective for distributions in Plan Years beginning after December 31, 2003, the determination of actuarial equivalence of forms of benefit other than a "Straight Life Annuity" shall be made in accordance with (1) or (2)a (1) Benefit Forms not Subject to Code 417(e)(3), For Limitation Years beginning before July 1, 2007, the "Straight Life Annuity" which is actuarially equivalent to the Firefighter's form of benefit shall be determined under this subsection (i) for all forms of benefit other than a "Straight Life Annuity". The actuarially equivalent "Straight Life Annuity" is equal to the annual amount of the "Straight Life Annuity" commencing at the same annuity starting date which has m value as the Firefighter's form of benefit computed using whichever of the following produces the greater annual amount: (1) the interest rate and mortality table (or other tabular factor) specified in the Fund for adjusting benefits in the same form; and (11) 5% interest rate assumption and the applicable mortality table defined in Section 9.02.g. M (i i) -If the annuity starting date of the Firefighter's form of benefit in a Plan Year beginning in or after 2009, and if the Fund maintained by an eligible employer as defined in I §408(p)(2)(C)(i), the actuarially equivalent Straight Life Annui is equal to the greatest of (I) the annual amount of the Straig Life Annuity commencing at the same annuity starting date whi has the same actuarial present value as the Firefighter's form benefit, computed using the interest rate and the mortality tab (or other tabular factor) specified as the Fund for adjusti benefits in the same form, or (II) the annual amount of t Straight Life Annuity commencing at the same annuity starti date which has the same actuarial present value Firefighter's form of benefit computed using a 5.5 interest rate assumption and the applicable mortalit defined in Section 9.02.g. b. Defined Benefit Dollar Limitation. "Defined Benefit Dollar Limitation" mean effective for "Limitation Years" ending after December 31, 2001, $160,00 automatically adjusted under Code §415(d), effective January 1 of each ,, automaticas published in the Internal Revenue Bulletin, and payable in the form of "Straight Life Annuity". The new limitation shall apply to "Limitation Year ending with or within the calendar year of the date of the adjustment, but Firefighter's benefits shall not reflect the adjusted limit prior to January I that calendar year. The Dollar Limitation" under Code §415(d) shall apply to Firefighters who have h a separation from employment. W The "Defined Benefit Dollar Limitation" shall be adjusted as provided below: (1) Adjustment for Less Than 10 Years of Participation or Service: If the Firefighter has less than 10 years of participation in the Fund, the "Defined Benefit Dollar Limitation" shall be multiplied by a fraction -- (i) the numerator of which is the number of "Years of Participation" in the Fund (or part thereof, but not less than one (1) year), and (ii) the denominator of which is ten (10). (2) Adjustment of "Defined Benefit Dollar Limitation" for Benefit Commencement Before Age 62 or after Age 65: Effective for benefits commencing in "Limitation Years" ending after December 31, 2001, the "Defined Benefit Dollar Limitation" shall be adjusted if the annuity starting date of the Firefighter's benefit is before age 62 or after age 65. If the annuity starting date is before age 62, the "Defined Benefit Dollar Limitation" shall be adjusted under Section 9.02.b(2)(i), as modified by Section 9.02.b(2)(iii). If the annuity starting date is after age 65, the "Defined Benefit Dollar Limitation" shall be adjusted under Section 9.02.b(2)(ii), as modified by Section 9.02.b(2)(ii). (i) Adjustment of "Defined Benefit Dollar Limitation" for benefit commencement Before Age 62: (I) "Limitation Years" Beginning Before July 1, 2007. If the annuity starting date for the Firefighter's benefit is prior to age 62 and occurs in a "Limitation Year" beginning before July 1, 2007, the "Defined Benefit Dollar Limitation" for the Firefighter's annuity starting date is the annual amount of a benefit payable in the form of a "Straight Life Annuity" commencing at the Firefighter's annuity starting date that is the actuarial equivalent of the "Defined Benefit Dollar Limitation" (adjusted under Section 9.02.b(1) for years of participation less than ten (10), if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (1) the interest rate and mortality table (or other tabular factor) specified in the Fund; or (2) a five percent (5%) interest rate assumption and the applicable mortality table as defined in Section 9.02.g. (II) "Limitation Years" Beginning on or After July 1, 2007. If the annuity starting date for the Firefighter's benefit is prior to age 62 and occurs in a "Limitation Year" beginning on or after July 1, 2007, the "Defined Benefit Dollar Limitation" for the Firefighter's annuity starting date is the lesser of: (A) the annual amount of a benefit payable in the form of a "Straight Life Annuity" commencing at the Firefighter's annuity starting date that is the actuarial equivalent of the "Defined Benefit Dollar Limitation" (adjusted under Section 9.02.b(1) for years of participation less than ten (10), if required) with actuarial equivalence computed 16 using a five percent (5%) interest rate assumption and the applicable mortality table for the annuity starting date as defined in Section 9.02.g (and expressing the Firefighter's age based on completed calendar months as of the annuity starting date); or (B) the "Defined Benefit Dollar Limitation" (adjusted under Section 9.02.b(1) for years of participation less than ten (10), if required) multiplied by the ratio of the annual amount of the immediately commencing "Straight Life Annuity" under the Fund at the Firefighter's annuity starting date to the annual amount of the immediately commencing "Straight Life Annuity" under the Fund at age 62, both determined without applying the limitations of this Section. Adjustment of "Defined Benefit Dollar Limitation" for Benefit Commencement After Age 65: (I) "Limitation Years" Beginning Before July 1, 2007. If the annuity starting date for the Firefighter's benefit is after age 65 and occurs in a Limitation Year beginning before July 1, 2007, the "Defined Benefit Dollar Limitation" for the Firefighter's annuity starting date is the annual amount of a benefit payable in the form of a "Straight Life Annuity" commencing at the Firefighter's annuity starting date that is the actuarial equivalent of the "Defined Benefit Dollar Limitation" (adjusted under Section 9.02.b(1) for years of participation less than ten (10), if required) with actuarial equivalence computed using whichever of the following produces the smaller annual amount: (1) the interest rate and mortality table (or other tabular factor) specified in the Fund; or (2) a five percent (5%) interest rate assumption and the applicable mortality table as defined in Section 9.02.g. (II) "Limitation Years" Beginning After July 1, 2007. If the annuity starting date for the Firefighter's benefit is after age 65 and occurs in a "Limitation Year" beginning on or after July 1, 2007, the "Defined Benefit Dollar Limitation" at the Firefighter's annuity starting date is the lesser of: (A) the annual amount of a benefit payable in the form of a "Straight Life Annuity" commencing at the Firefighter's annuity starting date that is the actuarial equivalent of the "Defined Benefit Dollar Limitation" (adjusted under Section 9.02.b(1)for years of participation less than ten (10), if required), with actuarial equivalence computed using a five percent (5%) interest rate assumption and the applicable mortality table for that annuity starting date as defined in Section 9.02.8 (and 17 expressing the Firefighter's age based on completed calendar months as of the annuity starting date); or (B) the "Defined Benefit Dollar Limitation" (adjusted under Section 9.02.b(1) for years of participation less than ten (10), if required) multiplied by the ratio of the annual amount of the adjusted immediately commencing "Straight Life Annuity" under the Fund at the Firefighter's annuity starting date to the annual amount of the adjusted immediately commencing "Straight Life Annuity" under the Fund at age 65, both determined without applying the limitations of this Section. For this purpose, the adjusted immediately commencing "Straight Life Annuity" under the Fund at the Firefighter's annuity starting date is the annual amount of such annuity payable to the Firefighter, computed disregarding the Firefighter's accruals after age 65 but including actuarial adjustments even if those actuarial adjustments are used to offset accruals; and the adjusted immediately commencing "Straight Life Annuity" under the Fund at age 65 is the annual amount of such annuity that would be payable under the Fund to a hypothetical Firefighter who is age 65 and has the same accrued benefit as the Firefighter. (iii) Notwithstanding the other requirements of this Section 9.02.b(2), no adjustment shall be made to the "Defined Benefit Dollar Limitation" to reflect the probability of a Firefighter's death between the annuity starting date and age 62, or between age 65 and the annuity starting date, as applicable, if benefits are not forfeited upon the death of the Firefighter prior to the annuity starting date. To the extent benefits are forfeited upon death before the annuity starting date, such an adjustment shall be made. For this purpose, no forfeiture shall be treated as occurring upon the Firefighter's death if the Fund does not charge Firefighters for providing a qualified preretirement survivor annuity, as defined in Code §417(c), upon the Firefighter's death. (3) Notwithstanding anything else in this Section to the contrary, the benefit otherwise payable to a Firefighter under this Fund shall be deemed not to exceed the "Defined Benefit Dollar Limitation" if: (i) the retirement benefits payable for a "Limitation Year" under any form of benefit with respect to such Firefighter under this Fund and under all other defined benefit plans (without regard to whether a plan has been terminated) ever maintained by the City do not exceed $10,000 multiplied by a fraction - (I) the numerator of which is the Firefighter's number of Years (or part thereof, but not less than one year) of Participation (not to exceed ten (10)) with the City, and (II) the denominator of which 18 is ten (10); and the City has not at any time maintained a defined contribution plan in which the Firefighter participated (for this purpose, mandatory Employee contributions under a defined benefit plan, individual medical accounts under Code §401(h), and accounts for post-retirement medical benefits established under Code §419A(d)(1) are not considered a separate defined contribution plan); or (ii) the retirement benefits are payable to a Firefighter whose period of service taken into account in determining the benefit under the Fund includes at least fifteen (15) years of service as a full- time employee of any fire department which is organized and operated by the City to provide firefighting services for any area within the jurisdiction of the City; or (iii) the benefits are payable as a pension, annuity or similar allowance from the Fund as the result of the Firefighter becoming disabled by reason of personal injuries or sickness; or (iv) the benefits are payable from the Fund to a beneficiary as a result of the death of the Firefighter. C. City. "City"" means, for purposes of this Section, the City that has adopted the Fund, and all Firefighters of a controlled group of corporations, as defined in Code §414(b), as modified by Code §415(h), all commonly controlled trades or businesses (as defined in Code §414(c), as modified, except in the case of a brother -sister group of trades or businesses under common control, by Code §415(h)), or affiliated service groups (as defined in Code §414(m)) of which the City is a part, and any other entity required to be aggregated with the City pursuant to Code §414(o). For the purposes of this Section, City also includes with respect to a Firefighter, a former employer of such Firefighter if the City maintains a plan that provides a benefit which the Firefighter accrued while performing services for the former employer. A former entity that antedates the City is a "Predecessor Employer" with respect to a Firefighter if, under the facts and circumstances, the City constitutes a continuation of all or a portion of the trade or business of the former entity. For this purpose, the formerly affiliated plan rules in Regulations §1.415(f) 1(b)(2) apply as if the City and "Predecessor Employer" constituted a single employer under the rules described in Regulations §1.415(a) 1(f)(1) and (2) immediately prior to the cessation of affiliation (and as if they constituted two, unrelated employers under the rules described in Regulations §1.415(a) 1(f)(1) and (2) immediately after the cessation of affiliation) and cessation of affiliation was the event that gives rise to the "Predecessor Employer" relationship, such as a transfer of benefits or plan sponsorship. d. Limitation Year. "Limitation Year" means the twelve (12) month period ending December 31st of each year. The "Limitation Year" may only be changed by a fund amendment. Furthermore, if the Fund is terminated effective as of a date other than the last day of the Fund's "Limitation Year", then the Fund is treated as if the Fund had been amended to change its "Limitation Year". e. Straight Life Annuity. "Straight Life Annuity" means an annuity payable in equal installments for the life of a Firefighter that terminates upon the Firefighter's death. 19 Year of Participation. "Year of Participation" means, with respect to a Firefighter, each accrual computation period (computed to fractional parts of a year) for which the following conditions are met: (1) the Firefighter is credited with at least the number of Hours of Service (or Period of Service if the Elapsed Time Method is used) for benefit accrual purposes, required under the terms of the Fund in order to accrue a benefit for the accrual computation period, and (2) the Firefighter is included as a Firefighter under the eligibility provisions of the Fund for at least one day of the accrual computation period. If these two conditions are met, the portion of a "Year of Participation" credited to the Firefighter shall equal the amount of benefit accrual service credited to the Firefighter for such accrual computation period. A Firefighter who is permanently and totally disabled within the meaning of Code §415(c)(3)(C)(i) for an accrual computation period shall receive a "Year of Participation" with respect to that period. In addition, for a Firefighter to receive a "Year of Participation" (or part thereof) for an accrual computation period, the Fund must be established no later than the last day of such accrual computation period. In no event shall more than one "Year of Participation" be credited for any twelve (12) month period. g. Applicable Actuarial Assumptions. The actuarial assumptions used to determine Code §415 limits under the Fund shall be the interest rate specified in Section 13.03, and the applicable mortality table prescribed by the Secretary of the Treasury under Code §415(b)(2)(E)(v). Effective for distributions with annuity starting dates on or after December 31, 2002, the applicable mortality table used for purposes of adjusting any benefit or limitation under Code §415(b)(2)(B), (C) or (D) as set forth in the Fund is the table described in Revenue Ruling 2001-62. Effective for distributions with annuity starting dates on or after January 1, 2008, the applicable mortality table used for purposes of adjusting any benefit or limitation under Code §415(b)(2)(B),(C) or (D) as set forth in the Fund, or any provision directly or indirectly prescribing the use of the mortality table described in Revenue Ruling 2001-62 shall be amended to prescribe the use of the applicable annual mortality table within the meaning of Code §417(e)(3)(B), as initially described in Revenue Ruling 2007-67. Effective for distributions with annuity starting dates on or after January 1, 2008, the applicable interest rate for the purposes of adjusting any benefit or limitation under Section 9.02.a(2)(i) shall be the rate of interest described in Code §417(e) after its amendment by the Pension Protection Act of 2006. Specifically, the applicable interest rate shall be the adjusted first, second and third segment rates applied under the rules similar to the rules of Code §430(h)(2)(C) for the second calendar month (lookback month) before the first day of the Plan Year in which the annuity starting date occurs (stability period). For this purposes, the first, second and third segment rules are the first, second and third segment rates which would be determined under Code §430(h)(2)(C) if: (1) Code §430(h)(2)(D) was applied by substituting the average yields for the month described in the preceding paragraph for the average yields for the 24 -month period described in such section; (2) Code §430(h)(2)(G)(i)(II) was applied by substituting "§417(e)(3)(A) (ii)(II)" for "§412(b)(5)(B)(ii)(II)"; and 20 (3) The applicable percentage under Code §430(h)(2)(G) is treated as being 20 percent in 2008, 40 percent in 2009, 60 percent in 2010, and 80 percent in 2011. 9.03 Other rules: a. Benefits under terminated plans. If a defined benefit plan maintained by the City has terminated with sufficient assets for the payment of benefit liabilities of all plan Firefighters and a Firefighter in the plan has not yet commenced benefits under the plan, the benefits provided pursuant to the annuities purchased to provide the Firefighter's benefits under the terminated plan at each possible annuity starting date shall be taken into account in applying the limitations of this Section. If there are not sufficient assets for the payment of all Firefighters' benefit liabilities, the benefits taken into account shall be the benefits that are actually provided to the Firefighter under the terminated plan. b. Benefits transferred from the Fund. If a Firefighter's benefits under a defined benefit plan maintained by the City are transferred to another defined benefit plan maintained by the City and the transfer is not a transfer of distributable benefits pursuant Regulations §1.411(d)-4, Q&A -3(c), then the transferred benefits are not treated as being provided under the transferor plan (but are taken into account as benefits provided under the transferee plan). If a Firefighter's benefits under a defined benefit plan maintained by the City are transferred to another defined benefit plan that is not maintained by the City and the transfer is not a transfer of distributable benefits pursuant to Regulations §1.411(d)-4, Q&A -3(c), then the transferred benefits are treated by the City's Fund as if such benefits were provided under annuities purchased to provide benefits under a plan maintained by the City that terminated immediately prior to the transfer with sufficient assets to pay all Firefighters' benefit liabilities under the plan. If a Firefighter's benefits under a defined benefit plan maintained by the City are transferred to another defined benefit plan in a transfer of distributable benefits pursuant to Regulations §1.411(d)-4, Q&A -3(c), the amount transferred is treated as a benefit paid from the transferor plan. C. Plans of a "Predecessor Employer". If the City maintains a defined benefit plan that provides benefits accrued by a Firefighter while performing services for a "Predecessor Employer", then the Firefighter's benefits under a plan maintained by the "Predecessor Employer" shall be treated as provided under a plan maintained by the City. However, for this purpose, the plan of the "Predecessor Employer" shall be treated as if it had terminated immediately prior to the event giving rise to the "Predecessor Employer" relationship with sufficient assets to pay Firefighters' benefit liabilities under the plan, and had purchased annuities to provide benefits; the City and the "Predecessor Employer" shall be treated as if they were a single employer immediately prior to such event and as unrelated employers immediately after the event; and if the event giving rise to the predecessor relationship is a benefit transfer, the transferred benefits shall be excluded in determining the benefits provide under the plan of the "Predecessor Employer". d. Special rules. The limitations of this Section shall be determined and applied taking into account the rules in Regulations §1.415(f) -1(d), (e) and (h). 21 Section 10 Distribution of Benefits 10.01 Required Minimum Distributions. The provisions of Code §401(a)(9) are hereby incorporated in the Plan by reference. All distributions of benefits shall satisfy the minimum distribution requirements of such Code §401(a)(9) if the Fund complies with a reasonable and good faith interpretation of Code §401(a)(9). 10.02 Direct Transfers of Eligible Rollover Distributions: a. This Section applies to distributions made on or after January 1, 1993. Notwithstanding any provisions of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the plan administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. b. Definitions: (1) Eligible rollover distribution: An eligible rollover distribution is any distribution described in IRC §402(c)(4) and generally includes any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten (10) years or more; any distribution to the extent that such distribution is required under Code §401(a)(9); and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities); any distribution which is made upon hardship of distribution; and any other distribution reasonably expected to total less than $200 during a year. (2) Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Code §408(b), an annuity plan described in Code §403(a), or a qualified trust described in Code §401(a), that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (3) Distributee: A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code §414(p), are distributees with regard to the interest of the spouse or former spouse. (4) Direct rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. 22 C. Firefighter notice: A Firefighter entitled to an "eligible rollover distribution" must receive a written explanation of the right to a "direct rollover", the tax consequences of not making a "direct rollover", and if applicable, any available special income tax elections. The notice must be provided no less than thirty (30) days and no more than one hundred eighty (180) days before the first day on which the distribution is eligible to be made. The "direct rollover" notice must be provided to all Firefighters, unless the total amount the Firefighter will receive as a distribution during the calendar year is expected to be less than $200. The provisions of this Section shall be effective January 1, 1993. Effective for distributions made after December 31, 2001, for purposes of the direct rollover provisions of the plan, an eligible retirement plan shall also mean an annuity contract described in Code §403(b) and an eligible plan under Code §457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code §414(p). If this plan contains after-tax employee contributions, then for purposes of the direct rollover provisions of the plan, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after- tax employee contributions which are not includible in gross income. However, such portion may be paid only to an individual retirement account or annuity described in Code §408(a) or (b), or to a qualified defined contribution plan described in Code §401(a) or Code §403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible. For taxable years beginning after December 31, 2006, a Firefighter may elect to transfer employee after-tax contributions by means of a direct rollover to a qualified plan or to a 403(b) plan that agrees to account separately for amounts so transferred (including interest thereon), including accounting separately for the portion of such distribution which is includible in gross income and the portion of such distribution which is not includible in gross income. Effective for distributions made on or after March 28, 2005, in the event of a distribution of an "eligible rollover distribution" greater than $1,000 that is made in accordance with the provisions of the Plan, if the Firefighter does not elect to have such distribution paid directly to an "eligible retirement plan" specified by the Participant in a direct rollover or to receive the distribution directly, then the Board of Trustees shall pay the distribution in a direct rollover to an individual retirement plan designated by the Board of Trustees. 10.03 For distributions after December 31, 2009, a non -spouse beneficiary, only as otherwise permitted by the Fund who is a "designated beneficiary" under Code §401(a)(9)(E) and the Regulations thereunder, by a direct trustee -to -trustee transfer ("direct rollover"), may roll over all or any portion of his or her distribution to an Individual Retirement Account (IRA) the beneficiary establishes for purposes of receiving the 23 distribution. In order to be able to roll over the distribution, the distribution otherwise must satisfy the definition of an "eligible rollover distribution" under Code §401(a)(31). The distribution is subject to the direct rollover requirements of Code §401(a)(31) (including Code §401(a)(31)(B)), the notice requirements of Code §402(f) and the mandatory withholding requirements of Code §3405(c). If a non -spouse beneficiary receives a distribution from the Fund, the distribution is not eligible for a sixty (60) day (non -direct) rollover. If the Firefighter's named beneficiary is a trust, the Fund may make a direct rollover to an IRA on behalf of the trust, provided the trust satisfies the requirements to be a designated beneficiary within the meaning of Code §401(a)(9)(E). A non -spouse beneficiary may not roll over an amount that is a required minimum distribution, as determined under applicable Treasury Regulations and other Internal Revenue Service guidance. If the Firefighter dies before his or her required beginning date and the non -spouse beneficiary rolls over to an IRA the maximum amount eligible for rollover, the beneficiary may elect to use either the five (5) year rule or the life expectancy rule, pursuant to Treasury Regulations §1.401(a)(9)-3, A -4(c), in determining the required minimum distributions from the IRA that receives the non - spouse beneficiary's distribution. 10.04 For distributions made after December 31, 2007, a Firefighter or beneficiary may elect to roll over directly an "eligible rollover distribution" to a Roth IRA described in Code §408A(b). For this purpose, the term "eligible rollover distribution" includes employee after-tax contributions, if applicable. 10.05 HELPS. Notwithstanding the foregoing and Section 5 of the Act, a Firefighter may elect to direct the Fund to directly pay deductions from distributions to a provider of accident or health plan or qualified long-term care insurance contract. 10.06 Facility of Payment. If the Board of Trustees receives satisfactory evidence that a person entitled to receive a benefit is physically, mentally or legally incompetent to receive the benefit and to give a valid receipt, that an individual or institution is maintaining or has custody of the person and that no guardian, committee or other representative of the estate of the person has been appointed, the Board of Trustees may direct the payment to the individual or institution maintaining or having the custody of the person. Receipt of that individual or institution shall be a valid and complete discharge for the payment of the benefit. Also, a deposit to the credit of a Firefighter or beneficiary in any bank or trust company shall be deemed payment to a person. 10.07 Name and Address Changes. Each Firefighter, spouse, and beneficiary is responsible to notify the Board of Trustees of any change in his name or address to which his benefit checks and other communications are to be mailed. If any check in payment of a benefit is mailed by regular United States mail to the last address of the payee as shown on the Board of Trustees' records and is returned unclaimed, the Trustee shall discontinue further payments until corrected information is given to the Board of Trustees. 10.08 Release of Claims. All payments to Firefighters or former Firefighters or beneficiaries shall, to the amount of the payments, be in full satisfaction of claims against the Plan. The Board of Trustees may require the payee, as a condition precedent to payment, to execute a receipt and release in a form approved by the Board of Trustees. 24 10.09 Correction of Payment Error. If any error in payment of benefits occurs, including an overpayment, the Fund shall correct such error and may adjust any future payment so the correct benefit will be paid, except as provided in subsection c below, and the Texas Government Code §802.1024(b). The adjustment for an overpayment or underpayment may be made to one or more future payments at the discretion of the Board and pursuant to Texas Government Code §§802.1024 and 802.1025. If no future payments are due, the Board may recover an overpayment in any manner permitted by Section 8 of the Act and Texas Government Code §§802.1024 and 802.1025. The Board must begin the adjustment of future payment to correct an overpayment or recovery of an overpayment not later than the ninetieth (90th) day after the date the notice described below is delivered or the date the second notice described below is mailed a. Notice. Upon discovery of an overpayment error but not later than ninety (90) days after discovery, the Board of Trustees shall give written notice of the overpayment error to the affected person by certified mail, return receipt requested. If the Board does not receive a signed receipt evidencing delivery on or before the thirtieth (30th) day after the date the notice is mailed, the Board shall send the notice a second time, by certified mail, return receipt requested. b. The written notice will include: (1) the amount of the correction; (2) how the correction was calculated; (3) an explanation of the reason for the correction; (4) a statement that the affected person may file a written complaint with the Fund if the affected person does not agree with the correction; (5) instructions for filing a written complaint with the Fund; and (6) a payment plan option if no future payments are due. C. Any overpayment of benefits may not be corrected or recovered if: (1) the overpayment was made more than three (3) years before the date of the discovery of the overpayment; or (2) if the Board does not adjust future payments or begin recovery within the time prescribed above. d. If the affected person files a written complaint, the Board will follow the procedure as set out in Texas Government Code §802.1025. 25 Section 11 Amendment and Termination 11.01 The Board of Trustees reserves the right to amend or terminate the Fund, subject to the provisions and requirements of the Act. a. An amendment or other change adopted shall not deprive a Firefighter of the Fund of a right to receive a vested benefit unless that Firefighter gives his written consent or unless the reduction in benefits is made in accordance with Section 16 of the Act. b. All amendments to the Fund shall be made under the procedures prescribed by the Act. C. The Board has the power to make any amendment to the Fund to insure the Fund is and remains qualified for purposes of Code §401 and to obtain a favorable determination letter from the IRS. d. In the event of termination of the Plan, the rights of all Firefighters to the benefits accrued to the date of such termination (to the extent funded as of such date) shall be non -forfeitable. In such event, the Plan assets will be allocated and paid in accordance with applicable law. No such termination shall cause any part of the corpus or income of the Plan to be used for or diverted to purposes other than the exclusive benefit of Firefighters or their beneficiaries. ►W Section 12 Board of Trustees 12.01 Appointment, Term of Service and Removal. The Board of Trustees shall administer this Plan. The members shall serve until their resignation, death, removal, or their term otherwise expires. Any member may resign at any time by mailing a written resignation to the Board of Trustees. Any member may be removed in accordance with the Act. Likewise, vacancies may be filled in accordance with the Act from time to time. 12.02 Members of the Board of Trustees. The members of the Board of Trustees shall consist of the members as set forth in Section 19 of the Act. Effective as of the Effective Date and thereafter, there will be no "participating members" of the Fund. The three members of the Board of Trustees who were participating members shall continue to serve out their term. Thereafter, the members of the board of trustees as provided by Subdivisions (1) and (2) of subsection (a) of Section 19 of the Act shall appoint additional board members. These board members will be members of the Fund. 12.03 Powers. The Board of Trustees is a fiduciary. It has the exclusive responsibility for the general administration of the Fund, and has all powers necessary to accomplish that purpose, including but not limited to the following rights, powers, and authorities: a. To make rules for administering the Fund so long as they are not inconsistent with the terms of the Fund; b. To construe all provisions of the Fund and trust or trusts; C. To correct any defect, supply any omission, or reconcile any inconsistency which may appear in the Fund or trust or trusts; d. To select, employ, and compensate at any time any consultants, actuaries, accountants, attorneys, and other agents and employees the Board of Trustees believes necessary or advisable for the proper administration of the Fund; e. To determine all questions relating to eligibility, Service, Compensation and all other matters relating to benefits; f. To resolve all controversies relating to the administration of the Fund, including but not limited to any differences of opinion arising between the Board of Trustees and the City or a Firefighter, or any combination of them and any questions it believes advisable for the proper administration of the Fund; g. To direct or to appoint an investment manager or managers who can direct the Board of Trustees in all matters relating to the investment, reinvestment and management of the Fund; provided, however such investment of assets shall be in accordance with Section 27 of the Act, as amended from time to time; h. To direct the payment of Plan benefits; To delegate any clerical or recordation duties as it believes is advisable to properly administer the Fund; and To take all other such actions that are not inconsistent with the Act and to operate the Plan in accordance with the Act. 27 12.04 Standard of Performance. The Board of Trustees and each of its members shall use the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man, acting in a like capacity and familiar with such matters, would use in conducting his business as the administrator of the Plan. 12.05 Liability of Board of Trustees and Liability Insurance. No member of the Board of Trustees shall be liable for any act or omission of any other member, any investment manager appointed by the Board of Trustees or any other agent appointed by the Board of Trustees. 12.06 Standard of Judicial Review of Board of Trustees' Actions. The Board of Trustee have full and absolute discretion in the exercise of each and every aspect of its authority under the Plan, including without limitation, the authority to determine any person's right to benefits under the Plan, the correct amount and form of any benefits, the authority to decide any appeal, the authority to review and correct the actions of any prior administrative committee, and all of the right, powers, and authorities specified in this Plan. Notwithstanding any provision of law or any explicit or implicit provision of this document or, any action taken, or ruling or decision made by the Board of Trustees in the exercise of any of its powers and authorities under the Plan, its actions shall be final and conclusive as to all parties, including without limitation all Firefighters and beneficiaries, regardless of whether the Board of Trustees or one or more of its members may have an actual or potential conflict of interest with respect to the subject matter of the action, ruling, or decision. No final action, ruling, or decision of the Board of Trustees shall be subject to de novo review in any judicial proceeding; and no final action, ruling, or decision of the Board of Trustees may be set aside unless it is held to have been arbitrary and capricious by a final judgment of a court having jurisdiction with respect to the issue. 12.07 Administrative Policies. The Board shall establish administrative procedures to be utilized in processing claims or matters which affect the substantial rights of any person, including Participants, retirees, beneficiaries or any person affected by a decision of the Board. 12.08 Evidence Furnished Conclusive. Any person or persons involved in the administration of the Plan shall be entitled to rely upon any representation made or evidence furnished by a Firefighter or beneficiary with respect to his age or other facts required to be determined under any of the provisions of the Plan and shall not be liable on account of the payment of any monies in reliance on those representations. Any representation or evidence shall be binding upon the Firefighter or beneficiary making or furnishing it but not upon the City of Paris, the Board of Trustees or any other person or persons involved in the administration of the Plan. Any of those parties may contest any representation or evidence. Each Firefighter and beneficiary has a duty to submit satisfactory proof of his age and other facts. 28 Section 13 Miscellaneous Provisions Applicable to the Fund 13.01 Exclusive Benefit Requirement. It shall be impossible under this Plan and trust, at any time prior to the satisfaction of all liabilities with respect to Firefighters and their beneficiaries under the Plan and trust for any part of the corpus or income to be used for, or diverted to, purposes other than the exclusive benefit of Firefighters or their beneficiaries. In the event of termination of the Plan or complete discontinuance of contributions under the Plan, the rights of all Firefighters to benefits accrued to the date of such termination or discontinuance (to the extent funded as of such date), shall be nonforfeitable. 13.02 Forfeitures. Forfeitures shall not be applied to increase the benefits any Firefighter would otherwise receive under the Plan. 13.03 Actuarial Equivalent. For the purposes of calculating actuarially equivalent benefits, the following assumptions shall be used for all Plan participants unless other factors are specified in the Plan: Mortality: UP 1994 Mortality Table, Male Rates Interest: Eight percent per annum, compounded annually 13.04 Spendthrift Provisions. The right of any Firefighter or beneficiary to any benefit or payment under this Fund shall not be subject to voluntary or involuntary transfer, alienation, or assignment; a. All amounts in the Fund and all rights accruing or accrued under the Fund to any Firefighter or beneficiary are exempt from garnishment, attachment, execution, state and municipal taxation, sale, levy and any other process and are unassignable; b. The above prohibition shall also apply to the creation, assignment or recognition of a right to any benefit payable pursuant to a domestic relations order, unless such order is determined to be a Qualified Domestic Relations Order under Subchapter A of Chapter 804 of the Texas Government Code. Payments may be made to an alternate payee under a qualified domestic relations order only if the Board of Trustees determines an order constitutes a qualified domestic relations order (Qualified Domestic Relations Order) as defined by Subchapter A of Chapter 804 of the Texas Government Code. A Qualified Domestic Relations Order may not (i) require the Plan to provide any type or form of benefits or any option that is not otherwise provided herein, (ii) require the Plan to provide increased benefits, and (iii) require the payment of benefits to an alternate payee which are required to be paid to another alternate payee under another Qualified Domestic Relations Order. 13.05 Severable Provisions. If any provision of this Plan is held to be illegal or invalid, such illegal or invalid provision shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid provision had never been in the Plan. 13.06 Governing Law. All provisions of the Fund shall be administered under the laws of the State of Texas unless superseded by federal law. 29 13.07 Qualified Domestic Relations Order. The Board of Trustees has adopted the provisions of Subchapter A and Subchapter C of Chapter 804 of Texas Government Code. This election is intended to comply with the provisions of §804.002 of the Texas Government Code, 13.08 Duplication of Benefits. There is to be no duplication of pension, disability, termination of employment or death benefits payable under the Plan for any reason. F:\CLIENTS\Paris\Restatement 2022 to Freeze Benefits\Plan Freeze Draft 2022 -CA Copy FINAL.docx 30 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS, APPROVING AN AGREEMENT WITH THE PARIS FIREFIGHTERS' RELIEF AND RETIREMENT FUND PERTAINING TO THE CITY OF PARIS, TEXAS, GENERAL OBLIGATION PENSION BONDS, TAXABLE SERIES 2022; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on the date hereof, the City Council of the City (the "Council") adopted an ordinance authorizing the issuance of the City of Paris, Texas, General Obligation Pension Bonds, Taxable Series 2022 (the "Bonds") pursuant to Chapter 107, Texas Local Government Code ("Chapter 107"), for the purpose of funding all or any part of the unfunded, accrued liability of the City to the Paris Firefighters' Relief and Retirement Fund (the "PFRRF"), as determined by actuarial analysis (the "Unfunded Liability"); and WHEREAS, Section 107.003, Texas Local Government Code, requires that the Council enter into a written agreement with the Board of Trustees of the PFRRF (the "Board"), which is the governing body of the PFRRF, which written agreement (the "Pension Obligation Agreement") must state the amount of the Unfunded Liability and the date or dates on which the PFRRF will accept the net proceeds of the Bonds to be issued in payment of all or a portion of the Unfunded Liability; and WHEREAS, the Council desires to enter into the Pension Obligation Agreement in compliance with Chapter 107 and in connection with the issuance of the Bonds; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS: Section 1. The recitals set forth in the preamble of this Resolution are true and correct in all material respects. Section 2. The Council hereby approves the Pension Obligation Agreement by and between the City and the Board in substantially the form attached hereto as Exhibit A. The Mayor is hereby authorized to execute the Pension Obligation Agreement and the City Clerk may attest such signature. Section 3. It is hereby found, determined, and declared that sufficient written notice of the date, hour, place, and subject of this meeting of the Council was posted at a place convenient to the public at the City Hall of the City for the time required by law preceding this meeting, as required by the Open Meetings Act, Chapter 551, Texas Government Code, and that this meeting has been open to the public as required by law at all times during which this Resolution and the subject matter thereof has been discussed, considered and formally acted upon. Council further ratifies, approves and confirms such written notice and the contents and posting thereof. Section 4. This Resolution shall be effective immediately upon its adoption. PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS at a regular meeting on the 8�h day of August, 2022. ATTEST: CITY OF PARIS, TEXAS Janice Ellis, City Clerk Paula Portugal, Mayor AGREEMENT REGARDING FREEZE OF FIRE PENSION FUND This AGREEMENT REGARDING FREEZE OF FIRE PENSION FUND (this ("Agreement") is entered into by and between the City Council (the "Council") of the City of Paris, Texas (the "City") and the Board of Trustees (the "Board") of the Paris Firefighters' Relief and Retirement Fund, a public retirement system and a municipal retirement plan (the "Fund" or the "Plan") created by the City, and will be effective for all purposes as of the date this Agreement is signed by the latter party to do so below ("Effective Date"). WHEREAS, City records indicate that the Fund was created in 1941 and the Fund continues to operate pursuant to the authority of Vernon's Ann.Texas Civ.St. Art. 6243e, as amended, also known as the Texas Local Fire Fighters Retirement Act; and WHEREAS, the Fund as currently constituted was amended and restated as of January 1, 2019 (the "2019 Plan); and WHEREAS, the Council has authorized the City to issue its City of Paris, Texas, General Obligation Pension Bonds, Taxable Series 2022 (the "Bonds") pursuant to Chapter 107 of the Texas Local Government Code ("Chapter 107") for the purpose of funding all or any part of the unfunded, accrued liability of the City to the Fund, as determined by actuarial analysis (the "Unfunded Liability"); and WHEREAS, at present, the beneficiaries of the Fund are the City's Firefighters, their Spouses (as such terms are defined in the Plan) and such other persons who are entitled to benefits by the terms of the Plan as of the Effective Date (collectively the "2022 Fund Beneficiaries"); and WHEREAS, upon the issuance of the Bonds, both the City and the Board desire to preserve the vested rights solely of and for the 2022 Fund Beneficiaries in the Fund, but to simultaneously transition all current and future Firefighters into the Texas Municipal Retirement System ("TMRS") for participation thereafter in TMRS on the same basis as all other City employees who participate in TMRS; and WHEREAS, to effectuate the immediately preceding recital, the Board has revised the Plan to implement said objective, and the amended and restated Plan (the "2022 Plan") has been approved by a vote of the City Firefighters as required by Section 7 of Vernon's Ann.Texas Civ. St. 6243e, as amended, the Texas Local Fire Fighters Retirement Act (the "Act") and all prerequisites of the Act for the Board to amend the Plan to change the benefits or eligibility requirements for benefits payable from the Plan have been met, including the approval of the 2022 Plan by Definiti LLC, which is eligible actuary pursuant to the Act selected by the Board; and WHEREAS, the 2022 Plan provides that it shall be effective only upon the funding by the City of the Unfunded Liability; and WHEREAS, pursuant to City Ordinance No. adopted on August 8, 2022, the Council has approved the 2022 Plan and provided for it to be implemented only upon the funding by the City of the Unfunded Liability; and WHEREAS, in furtherance of the issuance of the Bonds, the parties have entered into an Agreement Regarding City Pension Obligation Bonds concurrently herewith, a copy of which is attached hereto as Exhibit A. NOW THEREFORE, the Council and the Board enter into this Agreement pursuant to Section 107.003, as follows: The recitals and terms of the Agreement Regarding City Pension Obligation Funds attached hereto as Exhibit A, are incorporated into this Agreement as if set forth in full herein. 2. The City acknowledges and agrees that: (a) upon the issuance of the Bonds and the funding of the 2022 UAAL, the City will move all current Firefighters into the TMRS retirement program while preserving the vested rights in the Fund of the 2022 Fund Beneficiaries: (b) following the events described in Section 2(a) above, the City will (i) continue to honor its funding obligations pursuant to the requirements of the Fund to the 2022 Fund Beneficiaries and (ii) make provision for all current and future Firefighters to participate in TMRS on the same basis as other City employees who participate in TMRS; and (c) the City will issue the Bonds and provide for the payment of the debt service on the Bonds. 3. The Board acknowledges and agrees that: (a) following the events described in Section 2(a) above, the Plan effective as of October 1, 2022 provides only the 2022 Fund Beneficiaries shall be entitled to any portion of the benefits of the Fund, in effect "freezing" the Fund for the 2022 Fund Beneficiaries and foreclosing the Fund to any new participants not already provided for under the Fund; and (b) no further increases or substantive changes may be made to the Fund because the Texas Local Fire Fighters Retirement Act, Article 6243e of Vernon's Civil Statutes requires any change in benefit be approved by a majority of participating members of the Fund and after the effective date of 2022 Plan there will be no participating members; and (c) upon final payout to the last person qualifying as a 2022 Fund Beneficiary, any remaining amounts in the Fund shall be allocated in accordance with applicable State law. 4, This Agreement may be amended only by a written instrument executed by the parties hereto. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the date(s) set forth opposite the signatures of their authorized representatives to be effective for all purposes on the Effective Date. CITY COUNCIL OF THE CITY OF PARIS, TEXAS By:...._..:.:.:.:.:........ ...... ��.�..........�....�.�.�.�.............................�W�W�W�W....................................�........... Name: Paula Portugal Title: Mayor Date: August 8, 2022 BOARD OF TRUSTEES OF THE PARIS FIREFIGHTERS' RELIEF AND RETIREMENT FUND Name: Bob Rast Title: Chairman Date: August 8, 2022 2201 "'1 "'hurl i Hll�aamlh II°Ince, �� dte 150 1 (800) 822 ��� �4����u July 14, 2022 Mr. Bob Rast 144 N. Main St., Box 300 Paris, TX 75460-2652 Re: Freezing the Firefighter's Relief & Retirement Fund Dear Bob, This letter contains actuarial estimates of the Unfunded Actuarial Accrued Liability (UAAL) assuming the plan is frozen effective June 30, 2022 based on the draft amendment provided by ERISA counsel and replaces the results provided May 16, 2022. These estimates are part of the Board's considerations regarding the potential transition of the Paris Firefighters from the existing Texas Local Firefighters Retirement Act (TLFFRA) Fund to the Texas Municipal Retirement System (TMRS). However, there are other legal and administrative issues that the Board will need to consider that are beyond the scope of the actuarial information contained herein. Current Situation Paris firefighters currently contribute 16% of pay and accrue benefits in the Paris Firefighter's Relief & Retirement Fund ("Fund"). The Fund has a number of challenges including low funded status, high member contributions, and relatively low benefits compared to other TLFFRA Funds. City of Paris Strategy Based on discussions with the City of Paris management, they are aware of the situation. Rather than funnel a considerable amount of money into the Fund and continue with the separate TLFFRA Fund, the City wants to work with the Board and its members to freeze the benefits in the existing Fund, and transition future benefits to the Texas Municipal Retirement System (TMRS) where other City employees earn their retirement benefits. That is, the retirement benefit in the Fund would be frozen at current levels for active members and future retirement benefits would begin to be earned in TMRS. Since member contributions would cease, the City will be responsible for the existing Unfunded Actuarial Accrued Liability (UAAL). The City intends to improve the funded status by issuing a pension obligation bond and depositing the proceeds into the Fund's trust. We estimated the June 30, 2022 UAAL at several discount rates. 6/30/2022 7.25% 6.75% AAL .� $15,500,000 $16 300,000 MVA $4,150,000 $4,150,000 i UAAL i $11,3501000 $12,150,000 her returning,equities to fixed income as the plan population eventually only covers retirees. Based on these two considerations, we were asked to also provide the UAAL measurements at a lower discount rate to illustrate the sensitivity of results of this important the asset allocation. could be materially higher or lower than $11.35 million at the point when the proceeds from the pension obligation bond are deposited. As of now, the effective date of the plan amendment is expected to be October 1, 2022. At that time, the AAL, using the 7.25% discount rate, is projected to be approximately $15,750,000 or about $250 thousand higher. At that time, the assets could be higher or lower than the June 30, 2022 value of $4.150 million. I While there is no way to precisely predict the URAL at the time the bond proceeds are deposited, that volatility in the UAAL measurement will exist in the future as well. That is, the actual long-term coast of the Fund won't be known until the last participant passes away, but these estimates should provide the City with the actuarial information needed to determine the size of the bond issuance. Summary of Plan Changes In addition to freezing the benefit as of June 30, 2022, there were a few other changes made to the plan provisions that are listed below: reach... Benefits earned in the Fund will be fully vested. Since service is frozen, Normal Retirement Age will change from age 55 with 20 years of service to age 55, Since all members were hired before age 35, this doesn't result in earlier eligibility, but rather addresses the fact that most active members will never ... The Early Retirement Eligibility, Rule of 80, will be limited to those that already have 20 years of service as of the effective date of the amendment. Going forward, members will be eligible for in-service distributions once they reach retirement eligibility rather than having to terminate, That is, they can start their benefit at age 55 even if they haven't terminated employment yet. ... Since members can commence their benefit at age 55, eligibility for the DROP was frozen to those currently eligible as of the effective date of the plan freeze. ... The pre -retirement death benefit will be based on the frozen benefit without the minimum benefit based on 20 years of service. ... The disability benefit was reduced to the TLFFRA minimum of $1,200 per year until the member reaches age 55, then it reverts to the frozen ... Active members cease making contributions to the Fund. Bob Rast July 14, 2022 Plan Administration Administration of the plan will continue until all benefits are paid. Retirees shouldn't notice any difference, but current active members will eventually receive a benefit from the Fund as well as TMRS. Employees hired after the effective date will only receive a retirement benefit from TMRS. Measurement Basis for the Plan Freeze ... Results based on discount rates of 6.75% and 7.25% are provided ... The mortality projection scale was updated from the MP -2018 to the ultimate rates from MP -2021 ... Active members are assumed to retire at age 55, or current age if older ... Except for the changes mentioned above, all other assumptions are the same as shown in the 12/31/2020 actuarial report. ... The cost method was changed from Entry Age Normal (EAN) to Unit Credit. The Unit Credit cost method measures the actuarial present value of the accrued benefit rather than allocating the ultimate projected cost (including expected future service) levelly over a member's career as the EAN method does, so it is more appropriate for frozen plans when no additional benefits will be earned. ... Census data was based on member data as of June 30, 2022 as provided by the Board. The new data had 51 active members, 11 deferred vested, and 40 retirees/beneficiaries. ... The changes to the plan provisions were described above. Any plan provision not mentioned herein is the same as described in the 2020 actuarial report. Except for the most senior active members, the active members' accumulated contributions exceed the actuarial present value of accrued benefits (PVAB). Over time, the PVAB will increase as the members approach retirement (less discounting), but the accumulated contributions will not grow in value. These estimates assumed the changes being made would not result in a mass exodus of the active member population. Since the TMRS benefits will provide higher benefits at a lower member contribution rate, this is a reasonable assumption. However, if all active members below age 50 were to immediately terminate and take a refund of contributions, then the PVAB/AAL would increase by $1.2 million. Over time, the PVAB based on the underlying assumptions will increase, and the $1.2 million difference will gradually decrease. Closing The information contained in this analysis is intended to assist the Board in its discussions with the City of Paris on this important topic. As noted at the beginning, this is not a comprehensive summary of everything the Board will need to consider, and we recommend continuing discussions with the Fund's attorney. If you have any questions about this analysis, I'm happy to meet with you at your earliest convenience. Best regards, David A. Sawyer, FSA EA FCA MAAA Senior Consulting Actuary ye»�w»?»: �era«v© , . . . , . . :<: ..a� «»« 2� £K»©t a» «r«»2<: �wa v.::e«, +«r: R£< « w » ar ,.»:r: » :», » m>< *f<>« 2 « »z :«� ��}? . < . :z .av zy� «»2>«,: :z�««»«ra,© �a 2<6» «°: »»:S \i£d�: ? d y y6f«2� :»«a> ?e�«-,»: «:«. .e:«� ..», .<a�a<»,««: «,;y:>....:«� ,a, « .� .� � e »�t «� X21»� »w«�. °2»°e«»w,y<£?»ma.«�<- ew«�w.: � «a«: ,.:«.nw«:<2.w««� , . . �: ©:y2«�y«»�. �G�i2»�� �,»2 eea..»: �a,wr. 2222°�? G:» «« � ?r+2< e e«,�.»�: :m » ««» � a r .L; »22 ..§2«� c<z »«: ..,» ..:»<«» <2a%» rae»«:¥w :ym� .:»» ««e»�� :%»2 .w.; » « » c y «»a<z %:z::..a » c:��� (b) Bonds are hereby authorized to be issued and delivered in the maximum aggregate principal amount hereinafter set forth for the Project. (c) Each Bond issued pursuant to this Ordinance shall be designated: "CITY OF PARIS, TEXAS, GENERAL OBLIGATION PENSION BOND, TAXABLE SERIES 2022," and initially there shall be issued, sold, and delivered hereunder one fully registered Bond, without interest coupons, dated August 1, 2022, in the principal amount stated above and in the denominations hereinafter stated, numbered T-1, with Bonds issued in replacement thereof being in the denominations and principal amounts hereinafter stated and numbered consecutively from R-1 upward, payable to the respective Registered Owners thereof (with the initial Bond being made payable to the Underwriter as described herein), or to the registered assignee or assignees of said Bonds or any portion or portions thereof (in each case, the "Registered Owner"), and said Bonds shall mature and be payable serially on June 15 in each of the years and in the principal amounts, respectively, and shall bear interest from the date set forth in the FORM OF BOND set forth in Exhibit A hereto to their respective dates of maturity or redemption prior to maturity at the rates per annum, as set forth in the schedule included in the FORM OF BOND set forth in Exhibit A hereto. Section 2. DEFINITIONS. Unless otherwise expressly provided or unless the context clearly requires otherwise in this Ordinance, the following terms shall have the meanings specified below: "Attorney General" means the Attorney General of the State. "Authorized Officials" shall mean the Mayor, the Mayor Pro Tem, the City Manager, the Director of Finance and the City Clerk of the City. "Bonds" means the "City of Paris, Texas, General Obligation Pension Bonds, Taxable Series 2022", authorized and issued pursuant to this Ordinance. The term "Bonds" as used in this Ordinance shall mean and include collectively 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, unless the context clearly indicates otherwise in connection with the use of the term "Bonds". "Chapter 107" means Chapter 107, Texas Local Government Code, as amended. "City" means the City of Paris, Texas. "Code" means the Internal Revenue Code of 1986, as amended. "Comptroller" means the Comptroller of Public Accounts of the State. "Council" means the City Council of the City of Paris, Texas. "Defeasance Securities" means any securities and obligations now or hereafter authorized by State law that are eligible to refund, retire or otherwise discharge obligations such as the Bonds. "Delivery Date" means date of delivery of the Bonds to the Underwriter, which is anticipated to occur on September 8, 2022. "DTC" means The Depository Trust Company of New York, New York. "Outstanding", when used in this Ordinance with respect to the Bonds, means, as of the date of determination, all Bonds theretofore sold, issued and delivered by the City, except: (1) those Bonds cancelled or delivered to the transfer agent or registrar for cancellation in connection with the exchange or transfer of such Bonds; (2) those Bonds paid or deemed to be paid in accordance with the provisions hereof; and (3) those Bonds that have been mutilated, destroyed, lost, or stolen and replacement Bonds have been registered and delivered in lieu thereof. "Paying Agent/Registrar" means, initially, BOKF, NA, Dallas, Texas. "Pension Obligation Agreement" means the written agreement between the Council and the PFRRF Board, dated and effective on August 8, 2022, that states the amount of the Unfunded Liability and the date or dates on which the PFRRF will accept the net proceeds of the Bonds in payment of all or a portion of the Unfunded Liability. "Permitted Investments" means any security or obligation or combination thereof permitted under the Public Funds Investments Act, Chapter 2256, Texas Government Code, as amended, or other applicable law. "PFRRF" means the Paris Firefighters' Relief and Retirement Fund. "PFRRF Board" means the Board of Trustees of the PFRRF, the governing body of the PFRRF that has (i) fiduciary responsibility for assets of the PFRRF and (ii) the duty to oversee the investment and expenditure of the assets of the PFRRF. "Project" means the funding of all or a portion of the Unfunded Liability and the payment of costs of issuance of the Bonds. "State" means the State of Texas. "Underwriter" means FHN Financial Capital Markets, the initial purchaser of the Bonds. "Unfunded Liability" means the unfunded, accrued liability of the City to the PFRRF, as determined by actuarial analysis. Section 3. REDEMPTION PROVISIONS. (a) O:tional Redem. tion. The Bonds are subject to optional redemption as set forth in the Form of Bond attached hereto as Exhibit A. [(b) Mandatoa Redemption. The Bonds are subject to mandatory sinking fund redemption as set forth in the Form of Bond attached hereto as Exhibit A.] [(c)] Notice of Redemp tion. At least thirty days prior to the date fixed for any redemption of Bonds, or portions thereof, prior to maturity, the City shall cause written notice of such redemption to be sent by United States mail, first class, postage prepaid, to each Registered Owner of a Bond to be redeemed, in whole or in part, at the address of the Registered Owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing of such notice. All notices of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Registered Owner. [(d)] Firm Banking and Financial Arrangements. By the date fixed for any prior redemption, due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof that are to be redeemed. If written notice of redemption is mailed and if due provision for such payment is made, all as provided above, the Bonds or portions thereof that are to be redeemed shall automatically be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the Registered Owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed, a substitute Bond having the same maturity date, bearing interest at the same rate, in an Authorized Denomination, at the written request of the Registered Owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the Registered Owner upon the surrender thereof for cancellation, at the expense of the City. [(e)] Selection of Bonds for Redemption. If less than all Bonds of the same maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall randomly select by lot the Bonds within such maturity to be redeemed. [(f)] Conditional Notice of Redemption. With respect to any optional redemption of the Bonds, unless certain prerequisites to such redemption required by this Ordinance have been met and money sufficient to pay the principal of and premium, if any, and interest on the Bonds to be redeemed will have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption may, at the option of the City, be conditional upon the satisfaction of such prerequisites and receipt of such money by the Paying Agent/Registrar on or prior to the date fixed for such redemption or upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption are not fulfilled, such notice will be of no force and effect, the City will not redeem such Bonds, and the Paying Agent/Registrar will give notice in the manner in which the notice of redemption was given, to the effect that such Bonds have not been redeemed. Section 4. CHARACTERISTICS OF THE BONDS. (a) Appointment of Payjgg PayingAggnt/Re Ri�ar. The City hereby appoints the Paying Agent/Registrar to serve as paying agent and registrar for the Bonds. The Mayor and Mayor Pro Tem are each authorized and directed to execute and deliver in the name and under the corporate seal and on behalf of the City a Paying Agent/Registrar Agreement with the Paying Agent/Registrar in substantially the form presented at this meeting. (b) Registration Transfer, Conversion and Exchan ,e. The City shall keep or cause to be kept at the corporate trust office of the Paying Agent/Registrar books or records for the registration of the transfer, conversion 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, conversions 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, conversions and exchanges as herein provided within three days of presentation in due and proper form. 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. 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 City shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, conversion, exchange and delivery of a substitute Bond or Bonds. Registration of assignments, transfers, conversions and exchanges of Bonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in Exhibit A hereto. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. (c) Authentication. Except as provided in subsection 0) of this section, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign said Bond, and no such Bond shall be deemed to be issued or outstanding unless such Bond is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for conversion 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 conversion 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. Pursuant to Subchapter D, Chapter 1201, Texas Government Code, the duty of conversion and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Bond, the converted 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. (d) Pay,12jent of Principal 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, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Ordinance. However, in the event of a nonpayment of interest on a scheduled payment date, and for thirty (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 (which shall be 15 days after the Special Record Date) shall be sent at least five (5) 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 at the close of business on the last business day next preceding the date of mailing of such notice. (e) Pad inent to Re M steredwwwwOwner. Notwithstanding any other provision of this Ordinance to the contrary, the City and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Registration Books as the absolute owner of such Bond for the purpose of payment of principal and interest with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of and interest on the Bonds only to or upon the order of the registered owners, as shown in the Registration Books as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than a registered owner, as shown in the Registration Books, shall receive a Bond certificate evidencing the obligation of the City to make payments of principal and interest pursuant to this Ordinance. (f) Paying 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 agency 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. 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. (g) Substitute Pain, Ment/Re6strar. 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. (h) Book -Entry -Only System. The Bonds issued in exchange for the Bonds initially issued to the Underwriter shall be initially issued in the form of a separate single fully registered Bond for each of the maturities thereof and the ownership of each such Bond shall be registered in the name of Cede & Co., as nominee of DTC, and except as provided in subsections 0) and (k) of this Section, all of the outstanding Bonds shall be registered in the name of Cede & Co., as nominee of DTC. (i) Blanket Issuer Letter of Re )resp entations. The previous execution and delivery of the Blanket Issuer Letter of Representations with respect to obligations of the City is hereby ratified and confirmed; and the provisions thereof shall be fully applicable to the Bonds. Notwithstanding anything to the contrary contained herein, while the Bonds are subject to DTC's Book -Entry -Only System and to the extent permitted by law, the Blanket Issuer Letter of Representations is hereby incorporated herein and its provisions shall prevail over any other provisions of this Ordinance in the event of conflict. 0) Bonds Registered in the Name of Cede & Co. With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations on whose behalf DTC was created ("DTC Participant") to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a registered owner of Bonds, as shown on the Registration Books, of any notice with respect to the Bonds, or (iii) the payment to any DTC Participant or any other person, other than a registered owner of Bonds, as shown in the Registration Books of any amount with respect to principal of or interest on the Bonds. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks being mailed to the registered owner at the close of business on the Record date, the words "Cede & Co." in this Ordinance shall refer to such new nominee of DTC. (k) Successor Securities De:�op sitor� Transfers Outside Book-Entry-Onl��lstem. In the event that the City determines that DTC is incapable of discharging its responsibilities described herein and in the representation letter of the City to DTC or that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City shall (i) appoint a successor securities depository, qualified to act as such under Section 17A of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Registration Books in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names registered owners transferring or exchanging Bonds shall designate, in accordance with the provisions of this Ordinance. (1) Pa pients_to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the representation letter of the City to DTC. (m) General Characteristics of the Bonds. 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 and shall be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed, sealed, and executed, (vii) the principal of and interest on the Bonds shall be payable, 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 Exhibit A hereto. The Bonds initially issued and delivered pursuant to this Ordinance is not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall execute the Paying Agent/registrar's Authentication Bond, in the FORM OF BOND set forth in Exhibit A hereto. (n) Cancellation of Initial Bond. On the Delivery Date, one initial Bond representing the entire principal amount of the Bonds, payable in stated installments to the order of the Underwriter or its designee, executed by manual or facsimile signature of the Mayor or Mayor Pro Tem and City Clerk, approved by the Attorney General, and registered and manually signed by the Comptroller, will be delivered to the Underwriter or its designee. Upon payment for the initial Bond, the Paying Agent/Registrar shall insert the date of initial delivery of the bonds on Bond No. T-1, cancel the initial Bond and deliver to DTC on behalf of the Underwriter 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, registered in the name of Cede & Co., as nominee of DTC. To the extent that the Paying Agent/Registrar is eligible to participate in DTC's FAST System, pursuant to an agreement between the Paying Agent/Registrar and DTC, the Paying Agent/Registrar shall hold the definitive Bonds in safekeeping for DTC. Section 5. FORM OF BONDS. The form of the Bond, 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 to be attached only to the Bonds initially issued and delivered pursuant to this Ordinance, shall be, respectively, substantially in the form provided in Exhibit A hereto, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance. Section 6. TAX LEVY. (a) A special "Interest and Sinking Fund" is hereby created and shall be established and maintained by the City as a separate fund or account and the funds therein shall be deposited into and held at an official depository bank of said City. Said Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of said City, and shall be used only for paying the interest on and principal of said Bonds. All amounts received from the sale of the Bonds as accrued interest shall be deposited upon receipt to the Interest and Sinking Fund, and all ad valorem taxes levied and collected for and on account of said Bonds shall be deposited, as collected, to the credit of said Interest and Sinking Fund. During each year while any of said Bonds are outstanding and unpaid, the governing body of said City shall compute and ascertain a rate and amount of ad valorem tax that will be sufficient to raise and produce the money required to pay the interest on said Bonds as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of said Bonds as such principal matures (but never less than 2% of the original amount of said Bonds as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of said City, with full allowances 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 said City, for each year while any of said Bonds are outstanding and unpaid, and said tax shall be assessed and collected each such year and deposited to the credit of the aforesaid Interest and Sinking Fund. Said ad valorem taxes sufficient to provide for the payment of the interest on and principal of said Bonds, as such interest comes due and such principal matures, are hereby pledged for such payment, within the limit prescribed by law. If lawfully available moneys of the City are actually on deposit in the Interest and Sinking Fund in advance of the time when ad valorem taxes are scheduled to be levied for any year, then the amount of taxes that otherwise would have been required to be levied pursuant to this Section may be reduced to the extent and by the amount of the lawfully available funds then on deposit in the Interest and Sinking Fund. (b) Chapter 1208, Government Code, applies to the issuance of the Bonds and the pledge of the taxes granted by the City under this Section, and is therefore valid, effective, and perfected. Should State law be amended at any time while the Bonds are outstanding and unpaid, the result of such amendment being that the pledge of the taxes granted by the City under this Section is to be subject to the filing requirements of Chapter 9, Business and Commerce Code, in order to preserve to the registered owners of the Bonds a security interest in said pledge, the City agrees to take such measures as it determines are reasonable and necessary under State law to comply with the applicable provisions of Chapter 9, Texas Business and Commerce Code and enable a filing of a security interest in said pledge to occur. Section 7. DEFEASANCE OF 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 below, 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 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, and thereafter the City will have no further responsibility with respect to amounts available to the Paying Agent/Registrar (or other financial institution permitted by applicable law) for the payment of such Defeased Bonds, including any insufficiency therein caused by the failure of the Paying Agent/Registrar (or other financial institution pern fitted by applicable law) to receive payment when due on the Defeasance Securities. Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any determination not to redeem Defeased Bonds that is made in conjunction with the payment arrangements specified in subsections (a)(i) or (ii) of this Section shall not be irrevocable, provided that (1) in the proceedings providing for such payment arrangements, the City expressly reserves the right to call the Defeased Bonds for redemption; (2) gives notice of the reservation of that right to the owners of the Defeased Bonds immediately following the making of the payment arrangements; and (3) directs that notice of the reservation be included in any redemption notices that it authorizes. (b) Any moneys so deposited with the Paying Agent/Registrar may at the written direction of the City also 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 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 subsections (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) 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. (d) 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 8. 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 Res )lacement 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. 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 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 Rej lacement Bonds. In accordance with Subchapter B, Chapter 1206, Texas Government Code, this Section 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 this Ordinance for Bonds issued in conversion and exchange for other Bonds. Section 9. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION; CUSIP NUMBERS; CONTINGENT INSURANCE PROVISION, IF OBTAINED; ENGAGEMENT OF BOND COUNSEL; ATTORNEY GENERAL FILING FEE; APPROPRIATION. (a) The Mayor and Mayor Pro Tem of the City are each 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 and their registration by the Comptroller. Upon registration of the Bonds the Comptroller (or a deputy designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Bonds, and the seal of the Comptroller shall be impressed, or placed in facsimile, on such Bond. The approving legal opinion of the City's Bond Counsel and the assigned CUSIP numbers 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. In addition, if bond insurance is obtained, the Bonds may bear an appropriate legend as provided by the insurer. (b) The obligation of the Underwriter to accept delivery of the Bonds is subject to the Underwriter being furnished with the final, approving opinion of McCall, Parkhurst & Horton L.L.P., bond counsel to the City, which opinion shall be dated as of and delivered on the Delivery Date. The engagement of such firm as bond counsel to the City in connection with issuance, sale. and delivery of the Bonds is hereby approved and confirmed. (c) To pay the debt service coming due on the Bonds, if any, prior to receipt of the taxes levied to pay such debt service, there is hereby appropriated from current funds on hand, which are hereby certified to be on hand and available for such purpose, an amount sufficient to pay such debt service, and such amount shall be used for no other purpose. (d) In accordance with the provisions of Section 1202.004, Texas Government Code, in connection with the submission of the Bonds to the Attorney General for review and approval, a statutory fee (an amount equal to 0.1% principal amount of the Bonds, subject to a minimum of $750 and a maximum of $9,500) is required to be paid to the Attorney General upon the submission of the transcript of proceedings for the Bonds. The City hereby authorizes and directs that a check in the amount of the Attorney General filing fee for the Bonds, made payable to the "Texas Attorney General," be promptly furnished to the City's Bond Counsel, for payment to the Attorney General in connection with his review of the Bonds. Section 10. SALE OF BONDS; APPROVAL OF OFFICIAL STATEMENT; FURTHER PROCEDURES. (a) The Bonds are hereby sold and shall be delivered to the Underwriter for the purchase price of $ (representing the aggregate principal amount of the Bonds, plus a [net] reoffering premium of $ , less an underwriter's discount of $ The Bonds shall initially be registered in the name of the Underwriter or its designee. (b) The Bonds are sold pursuant to the terms and provisions of a Bond Purchase Agreement, in substantially the form presented at this meeting, which the Mayor and Mayor Pro Tem are hereby authorized to execute and deliver. It is hereby officially found, determined and declared that the terms of this sale are the most advantageous reasonably obtainable to the City. (c) The City hereby approves the form and content of the Official Statement relating to the Bonds and any addenda, supplement or amendment thereto, and approves the distribution of such Official Statement in the reoffering of the Bonds by the Underwriter in final form, with such changes therein or additions thereto as any Authorized Official may deem advisable. The distribution and use of the Preliminary Official Statement prior to the date hereof is hereby ratified and confirmed. (d) The Authorized Officials, individually or jointly, 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 such documents, certificates and 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 Blanket Issuer Letter of Representations, the Bonds and the sale of the Bonds. In addition, prior to the delivery of the Bonds, the Authorized Officials are each hereby authorized and directed to approve any changes or corrections to this Ordinance or to any of the documents authorized and approved by this Ordinance: (i) in order to cure any ambiguity, formal defect, or omission in this Ordinance or such other document, or (ii) as requested by the Attorney General or his representative to obtain the approval of the Bonds by the Attorney General. In. case any officer whose signature shall appear on any and 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 11. COMPLIANCE WITH RULE 15c2-12. (a) Definition& As used in this Section, the following terms have the meanings ascribed to such terms below: "Financial Obligation!" means as (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an. existing or planned debt obligation; or (c) a guarantee of the foregoing (a) and (b), The to Iain tial. Obligation does not include any municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with. the Rule. "MSRB" means the Municipal Securities Rulemaking Board. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission, (b) Annual Reports. (i) The City shall provide annually to the MSRB, in the electronic format 'bed by the MSRB certain updated financial information and operating data prescn pertaining to the City, being the following: (i) the City's annual financial audit report; and (ii) the information found in tables numbered 1, 2, 10, 11, 12, 15 and 20 in Appendix A to the Official. Statement for the Bonds. The City will update and provide the information in the numbered tables within. six months after the end of each fiscal year ending in and after 2022 and, if not submitted as part of such annual financial. information., the City will provide its audited financial statements when and if available, and in any event, within 12 months after the end of each fiscal year ending in and after 2022. If the audit of such financial statements is not complete within 12 months after any such fiscal year end, then. the City will file unaudited financial statements within. such 12 -month period and audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix D to the Official Statement or such other accounting principles as the City may be required to employ from time to time pursuant to State law or regulation. (ii) Any financial information so to be provided shall be (i) prepared in accordance with the accounting principles described in the financial statements of the City appended to the Official Statement, or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation, and (ii) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. (iii) If the City changes its fiscal year, it will notify the MSRB of the change (and of the date of the new fiscal year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any documents available to the public on the MSRB's internet website or filed with the SEC. All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (c) Event Notices. (i) The City shall notify the MSRB, in a timely manner not in excess of ten business days after the occurrence of the event, of any of the following events with respect to the Bonds: (1) Principal and interest payment delinquencies; (2) Non-payment related defaults, if material; (3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) Modifications to rights of holders of the Bonds, if material; (8) Bond calls, if material, and tender offers; (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the Bonds, if material; (11) Rating changes; (12) Bankruptcy, insolvency, receivership, or similar event of the City; (13) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all. or substantially all of the assets of the City, other than. in the ordinary course of business, the entry into of a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) Appointment of a successor or additional paying agent/registrar or the change of name of a paying agent/registrar, if material; (15) Incurrence of a Financial Obligation of the City, if material., or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders, if material.; and (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties. For these purposes, (a) any event described in the immediately preceding paragraph (1 2) is considered to occur when. any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal. law in which a court or governmental authority has assumed jurisdiction over substantially all. of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers of the City in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization., arrangement, or liquidation by a court or govenunental authority having supervision or jurisdiction over substantially all of the assets or business of the City, and (b) the City intends the words used in the immediately preceding paragraphs (15) and (16) and the definition of Financial Obligation in this Section. to have the same meanings as when they are used in the Rule, as evidenced by SEC Release No. 34-83885, dated August 20, 2018. (ii) The City shall notify the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (b)(i) of this Section by the time required by such subsection. (d) Limitations, Disclaimers., and Amendments. (i) The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the City remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the City in any event will give notice of any deposit made in accordance with. this Ordinance or applicable law that causes Bonds no longer to be outstanding, (ii) The provisions of this Section are for the sole benefit of the Registered Owners and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. (iii) UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. (iv) No default by the City in observing or performing its obligations under this Section shall comprise a breach of or default under this Ordinance for purposes of any other provision of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. (v) Should the Rule be amended to obligate the City to make filings with or provide notices to entities other than the MSRB, the City hereby agrees to undertake such obligation with respect to the Bonds in accordance with the Rule as amended. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the City, but only if (1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the Registered Owners of a majority in aggregate principal amount (or any greater amount required by any other provision of this Ordinance that authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that is unaffiliated with the City (such as nationally recognized bond counsel) determined that such amendment will not materially impair the interest of the Registered Owners and beneficial owners of the Bonds. The City may also amend or repeal the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. If the City so amends the provisions of this Section, it shall include with any amended fmancial information or operating data next provided in accordance with subsection (b) of this Section an explanation, in narrative form, of the reason for the amendment and of the impact of any change in the type of financial information or operating data so provided. Section 12. METHOD OF AMENDMENT. The City hereby reserves the right to amend this Ordinance subject to the following terms and conditions, to -wit: (a) The City may from time to time, without the consent of any Registered Owner, except as otherwise required by paragraph (b) below, amend or supplement this Ordinance to (i) cure any ambiguity, defect or omission in this Ordinance that does not materially adversely affect the interests of the Registered Owners, (ii) grant additional rights or security for the benefit of the Registered Owners, (iii) add events of default as shall not be inconsistent with the provisions of this Ordinance and that shall not materially adversely affect the interests of the Registered Owners, (v) qualify this Ordinance under the Trust Indenture Act of 1939, as amended, or corresponding provisions of federal laws from time to time in effect, or (iv) make such other provisions in regard to matters or questions arising under this Ordinance as shall not be materially inconsistent with the provisions of this Ordinance and that shall not, in the opinion of nationally -recognized bond counsel, materially adversely affect the interests of the Registered Owners. (b) Except as provided in paragraph (a) above, the holders of Bonds aggregating in a majority of the principal amount of then outstanding Bonds that are the subject of a proposed amendment shall have the right from time to time to approve any amendment hereto that may be deemed necessary or desirable by the City; provided, however, that without the consent of 100% of the Registered Owners in aggregate principal amount of the then outstanding Bonds, nothing herein contained shall permit or be construed to permit amendment of the terms and conditions of this Ordinance or in any of the Bonds so as to: (1) Make any change in the maturity of any of the outstanding Bonds; (2) Reduce the rate of interest borne by any of the outstanding Bonds; (3) Reduce the amount of the principal of, or redemption premium, if any, payable on any outstanding Bonds; (4) Modify the terms of payment of principal or of interest or redemption premium on outstanding Bonds or any of them or impose any condition with respect to such payment; or (5) Change the minimum percentage of the principal amount of the Bonds necessary for consent to such amendment. (c) If at any time the City shall desire to amend this Ordinance under this Section, the City shall send by U.S. mail to each registered owner of the affected Bonds a copy of the proposed amendment. (d) Whenever at any time within one year from the date of mailing of such notice the City shall receive an instrument or instruments executed by the Registered Owners of at least a majority in aggregate principal amount of all of the Bonds then outstanding that are required for the amendment (or 100% if such amendment is made in accordance with paragraph (b)), which instrument or instruments shall refer to the proposed amendment and which shall specifically consent to and approve such amendment, the City may adopt the amendment in substantially the same form. (e) Upon the adoption of any amendatory Ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be modified and amended in accordance with such amendatory Ordinance, and the respective rights, duties, and obligations of the City and all Registered Owners of such affected Bonds shall thereafter be determined, exercised, and enforced, subject in all respects to such amendment. (f) Any consent given by the Registered Owner of a Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of such consent and shall be conclusive and binding upon all future Registered Owners of the same Bond during such period. Such consent may be revoked at any time after six months from the date of said consent by the Registered Owner who gave such consent, or by a successor in title, by filing notice with the City, but such revocation shall not be effective if the Registered Owners the required amount of the affected Bonds then outstanding, have, prior to the attempted revocation, consented to and approved the amendment. (g) For the purposes of establishing ownership of the Bonds, the City shall rely solely upon the registration of the ownership of such Bonds on the Registration Books kept by the Paying Agent/Registrar. Section 13. DEPOSIT OF PROCEEDS; USE OF PREMIUM; INVESTMENTS; SECURITY OF FUNDS. (a) Deposit of Proceeds. On the Delivery Date, proceeds from the sale of the Bonds in the amount of $12,150,000.00 shall be deposited with the PFRRF pursuant to the terms of the Pension Obligation Agreement. (b) Use of Premium. The [net] premium received from the sale of the Bonds in the amount of $ shall be applied as follows: (i) the sum of $ shall be applied to pay costs of issuance incurred in connection with the issuance of the Bonds, including underwriter's discount, with any excess to be deposited into the Interest and Sinking Fund, and (ii) the sum of $ shall be deposited with the PFRRF pursuant to the terms of the Pension Obligation Agreement. (c) Investments,. The City may place proceeds of the Bonds (including investment earnings thereon) and amounts deposited into the Interest and Sinking Fund in Permitted Investments. (d) S.ecuritof Funds. All deposits authorized or required by this Ordinance shall be secured to the fullest extent required by law for the security of public funds. Section 14. EVENTS OF DEFAULT. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an event of default (an "Event of Default"): (i) the failure to make payment of the principal of or interest on. any of the Bonds when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement or obligation of the City, the failure to perform which materially, adversely affects the rights of the Registered Owners, including, but not limited to, their prospect or ability to be repaid in. accordance with this Ordinance, and the continuation thereof for a period of 60 days after notice of such default is given by any Registered Owner to the City, Section 15. REMEDIES FOR DEFAULT. (a) Upon the happening of any Event of Default, then and in every case, any Owner or an. authorized representative thereof, including, but not limited to, a trustee or trustees therefor, may proceed against the City for the purpose of protecting and enforcing the rights of the Owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction., for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful. or in violation of any right of the Owners hereunder or any combination of such remedies. (b) It is provided that all such proceedings shall be instituted and maintained for the equal. benefit of all Owners of Bonds then outstanding. Section. 16. REMEDIES NOT EXCLUSIVE. (a) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition. to every other remedy given hereunder or under the Bonds or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate -the debt evidenced by the Bonds shall not be available as a remedy under this Ordinance. (b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. (c) By accepting the delivery of a Bond authorized under this Ordinance, such Owner agrees that the certifications required to effectuate any covenants or representations contained in this Ordinance do not and shall. never constitute or give rise to a personal. or pecuniary liability or charge against the officers, employees or officials of the City or the Council. Section. 17. NO TAX EXEMPTION. The City does not intend to issue the Bonds in a manner such that the Bonds would constitute obligations described in section 103(a) of the Code and all applicable temporary, proposed and final regulations and procedures promulgated thereunder or promulgated under the Internal Revenue Code of 1954, to the extent applicable to the Code. Section 18. GOVERNING LAW. This Ordinance shall be construed and enforced in accordance with the laws of the State and the United States of America. Section 19. 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 20. EFFECTIVE DATE. In accordance with the provisions of Texas Government Code, Section 1201.028, this Ordinance shall be effective immediately upon its adoption by the Council. W—j", MT Iff1w FORM OF BOND (a) The form of the Bond, including the form of Paying Agent/Registrar's Authentication Certificate, the form. of Assignment and the forin 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. NO. R UNITED STATES OF AMERICA PRINCIPAL STATE OF TEXAS AMOUNT CITY OF PARIS, TEXAS, GENERAL OBLIGATION PENSION BOND, TAXABLE, SERIES 2022 INTEREST DELIVERY MATURITY RATE DATE DATE CUSIP NO. --------- - - ----- ------ % September 8, 2022 June 1.5, 20® REGISTERED OWNER: PRINCIPA-L AMOUNT: ON THE MATURITY DATE specified above, CITY OF PARIS, TEXAS, in Lamar County, Texas (the "City"), being a political subdivision of the State of Texas, hereby promises to pay to the Registered Owner set forth above, or registered assigns (hereinafter called the '6registered owner") the principal amount set forth above, and to pay interest thereon from the Delivery Date, on December 15, 2022, and on each June 15 and December 15 thereafter to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum 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 fro m 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 or converted fi-orn is due but has not been paid, then this Bond shall be 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, or upon the date fixed for its redemption prior to maturity, at the designated corporate trust office of BOKF, NA, Dallas, 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 or draft, 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 the Bonds (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft 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 last 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 addition, interest may be paid by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner. 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 (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 owner of a Bond appearing on the Registration Books at the close of business on the last business day next preceding the date of mailing of such notice. ANY ACCRUED INTEREST due at maturity or upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this Bond for payment at the principal corporate trust office of the Paying Agent/Registrar. The City covenants with the registered owner of this Bond that on or before each principal payment date 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 Bond 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 any payment due on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the principal corporate trust office of the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close, 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 dated as of August 1, 2022, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $ _ for the public purpose of (i) funding all or a portion of the City's unfunded, accrued liability to the Paris Firefighters' Relief and Retirement Fund and (ii) paying the costs incurred in connection with the issuance of the Bonds. ON JUNE 15, 2031, or on any date thereafter, the Bonds may be redeemed prior to their scheduled maturities, at the option of the City, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the City (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at a redemption price equal to the principal amount to be redeemed plus accrued interest to the date fixed for redemption. M IN ADDITION TO THE FOREGOING OPTIONAL REDEMPTION, the Bonds scheduled to mature on June 15 in each of the years 20_ and 20_ (the "Term Bonds") are subject to scheduled mandatory redemption by the Paying Agent/Registrar by lot, or by any other customary method that results in a random selection, at a price equal to the principal amount thereof, plus accrued interest to the redemption date, out of moneys available for such purpose in the interest and sinking fund for the Bonds, on the dates and in the respective principal amounts, set forth in the following schedule: Term Bond Term Bond Maturity: June 15, 20 Maturity: June 15, 20_ Mandatory Redemption Principal Mandatory Redemption Principal Date Amount Date Amount June 15, 20_ June 15, 20_ June 15, 20 June 15, 20 June 15, 20_ June 15, 20_ June 15, 20_ June 15, 20_ June 15, 20_* June 15, 20®* * Stated maturity. The principal amount of Term Bonds required to be redeemed on any mandatory redemption date pursuant to the operation of the mandatory sinking fund redemption provisions shall be reduced, at the option of the City, by the principal amount of any Term Bonds which, at least forty-five (45) days prior to a mandatory redemption date (1) shall have been acquired by the City at a price not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the Paying Agent/Registrar at the request of the City at a price not exceeding the principal amount of such Term Bonds plus accrued interest to the date of purchase, or (3) shall have been redeemed pursuant to the optional redemption provisions and not theretofore credited against a mandatory redemption requirement. AT LEAST 30 days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity a written notice of such redemption shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, to the registered owner of each Bond to be redeemed at its address as it appeared at the close of business on the day of mailing such notice; provided, however, that the failure of the registered owner to receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for any such redemption, due provision shall be made with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed. If such written notice of redemption is sent and if due provision for such payment is made, all as provided above, the Bonds or portions thereof which are to be so redeemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being A-3 outstanding except for the right of the registered owner to receive the redemption price from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the City, all as provided in the Bond Ordinance. WITH RESPECT TO ANY OPTIONAL REDEMPTION OF THE BONDS, unless certain prerequisites to such redemption required by the Bond Ordinance have been met and moneys sufficient to pay the principal of and premium, if any, and interest on the Bonds to be redeemed shall have been received by the Paying Agent/Registrar prior to the giving of such notice of redemption, such notice may state that said redemption may, at the option of the City, be conditional upon the satisfaction of such prerequisites and receipt of such moneys by the Paying Agent/Registrar on or prior to the date fixed for such redemption, or upon any prerequisite set forth in such notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption and sufficient moneys are not received, such notice shall be of no force and effect, the City shall not redeem such Bonds and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Bonds have not been redeemed. 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 Bond Ordinance, this Bond may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred, converted into and exchanged for a like aggregate amount of fully registered Bonds, without interest coupons, payable to the appropriate registered owner, assignee or assignees, as the case may be, having any authorized denomination or denominations 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 Bond 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 authorized denomination 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 assigning, transferring, converting and exchanging any Bond or portion thereof will be paid by the City. In any circumstance, any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer, conversion 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 of any Bonds 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 or, with respect to any Bond or A-4 any portion thereof called for redemption prior to maturity, within 30 days prior to its redemption 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 Bond 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; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in said City, and have been pledged for such payment, within the limits prescribed by law. THE CITY ALSO HAS RESERVED THE RIGHT to amend the Bond 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 Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Bond 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 Bond 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 signature of the City Clerk of the City, and has caused the official seal of the City to be duly impressed, or placed in facsimile, on this Bond. City Clerk City of Paris, Texas (City Seal) Mayor City of Paris, Texas (b) 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) A-5 It is hereby certified that this Bond has been issued under the provisions of the Bond Ordinance described in the text of this Bond; and that this Bond has been issued in conversion or replacement of, or in exchange for, a bond, bonds, or a portion of a bond or bonds 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: BOKF, NA, Dallas, Texas, Paying Agent/Registrar 2 Authorized Representative (c) Form of Assignment. ASSIGNMENT (Please print or type clearly) For value received, the undersigned hereby sells, assigns and transfers unto: Transferee's Social Security or Taxpayer Identification Number: Transferee's name and address, including zip code: the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints __._. ,. www �, attorney, to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a securities transfer association recognized signature guarantee program. NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, without alteration or enlargement or any change whatsoever. we () Form ____. __ _ o._, Re istration Certificate of the Com stroller 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) (e) Insertions for the Initial Bond. Comptroller of Public Accounts of the State of Texas (i) The initial Bond shall be in the form set forth in paragraph (a) of this Section, except that: (A) immediately under the name of the Bond, the headings "INTEREST RATE" and "MATURITY DATE" shall both be completed with the words "As shown below" and "CUSIP NO. " shall be deleted. (B) the first paragraph shall be deleted, and the following will be inserted: "THE CITY OF PARIS, TEXAS (the "City"), being a political subdivision located in Lamar County, Texas, hereby promises to pay to the Registered Owner specified above, or registered assigns (hereinafter called the "Registered Owner"), on June 15 in each of the years, in the principal installments and bearing interest at the per annum rates set forth in the following schedule: Maturity Principal Interest Date Amount Rate 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 A-7 3035 2036 2037 2038 2039 2040 2041 2042 The City promises to pay interest on the unpaid principal amount hereof (calculated on the basis of a 360 -day year of twelve 30 -day months) from the Delivery Date at the respective Interest Rate per annum specified above. Interest is payable on December 15, 2022, and on each June 15 and December 15 thereafter to the date of payment of the principal installment specified above, or the date of redemption prior to maturity; 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." (C) The initial Bond shall be numbered "T-1." M