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Ord 822 Authorizing the Issuance and Sale of Tax Note 2017 CERTIFICATE FOR ORDINANCE THE STATE OF TEXAS COUNTIES OF TARRANT AND DENTON TOWN OF WESTLAKE We, the undersigned Mayor and Town Secretary of the Town of Westlake, Texas (the "Town"), hereby certify as follows: 1. The Town Council of said Town convened in Regular Meeting on April 24, 2017, at the designated meeting place,and the roll was called of the duly constituted officers and members of said Town Council,to-wit: Laura Wheat,Mayor Carol Langdon,Mayor Pro Tem Michael Barrett, Council Member Alesa Belvedere, Council Member Wayne Stoltenberg, Council Member Rick Rennhack, Council Member Kelly Edwards,Town Secretary and all of said persons were present, except , thus constituting a quorum. Whereupon, among other business, the following was transacted at said meeting: a written Ordinance entitled ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF WESTLAKE, TEXAS, TAX NOTE, SERIES 2017; LEVYING AN ANNUAL AD VALOREM TAX AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID NOTES; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT was duly introduced for the consideration of said Town Council. It was then duly moved and seconded that said Ordinance be adopted and, after due discussion, said motion, carrying with it the adoption of said Ordinance,prevailed and carried with all members present voting"AYE" except the following: NOES: ABSTAIN: 2. A true, full and correct copy of the aforesaid Ordinance passed at the meeting described in the above and foregoing paragraph is attached to and follows this Certificate; said Ordinance has been duly recorded in the official minutes of said Town Council; the above and foregoing paragraph is a true and correct excerpt from said minutes of said meeting pertaining to the passage of said Ordinance; the persons named in the above and foregoing paragraph,at the time of said meeting and the passage of said Ordinance, were the duly chosen,qualified and acting members of said Town Council as indicated therein;each of said officers and member was duly and sufficiently notified officially and personally in advance, of the time, place and purpose of the aforesaid meeting and that said Ordinance would be introduced and considered for passage at said meeting; and said meeting was open to the public, and public notice of the time,place and purpose of said meeting was given,all as required by Texas Government Code, Chapter 551. 3. The Town Council has approved and hereby approves the aforesaid Ordinance; and the Mayor and the Town Secretary of the Town hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Ordinance for all purposes. SIGNED AND SEALED APRIL 24,2017. Town Secretary Mayor (TOWN SEAL) Certificate for Ordinance Authorizing the Issuance of Town of Westlake, Texas, Tax Note, Series 2017 TOWN OF WESTLAKE ORDINANCE 822 ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF WESTLAKE, TEXAS, TAX NOTE, SERIES 2017; LEVYING AN ANNUAL AD VALOREM TAX AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID NOTES; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT WHEREAS, the Town Council (the "Council") of the Town of Westlake, Texas (the "Issuer") hereby finds and determines that it is necessary, useful and appropriate for the Issuer's public purposes to authorize and provide for the issuance and sale of notes of the Issuer for the purposes hereinafter set forth, as authorized by Chapter 1431, Texas Government Code, as amended; and WHEREAS, it is officially found, determined, and declared that the meeting at which this Ordinance has been adopted was open to the public and public notice of the time,place and subject matter of the public business to be considered and acted upon at said meeting, including this Ordinance, was given, all as required by the applicable provisions of Texas Government Code, Chapter 551; Now, Therefore BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: Section 1. RECITALS, AMOUNT AND PURPOSE OF THE NOTES. The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in this Section. The tax note of the Town of Westlake, Texas(the "Issuer")is hereby authorized to be issued and delivered in the aggregate principal amount of $1,530,000 for the public purpose of(i) acquiring, constructing, installing and equipping fire-fighting facilities, with any surplus proceeds to be used for (1) equipping Town Hall, including related parking, landscaping, and signage; and (2) constructing and improving streets, roads and sidewalks in the Town, including related drainage, signalization, landscaping, lighting, signage and utility relocation(collectively, the "Project") and(ii)payment of costs of issuance of the Notes. Section 2. DESIGNATION, DATE, DENOMINATION, NUMBER, AND MATURITY AND INTEREST RATE OF NOTES. (a) Each Note issued pursuant to this Ordinance shall be designated: "TOWN OF WESTLAKE, TEXAS, TAX NOTE, SERIES 2017," and initially there shall be issued, sold, and delivered hereunder one fully registered Note, without interest coupons, dated May 15, 2017, in the denomination and principal amount of$1,530,000, numbered R-1, with any Note issued in replacement thereof being in the denomination and principal amount hereinafter stated and numbered consecutively from R-2 upward,payable in installments to the registered owner thereof, or to the registered assignee of said Note(in each case,the "Registered Owner"). Principal of said Note shall be payable in installments on the dates and in the amounts stated in the FORM OF NOTE set forth in Exhibit A hereto. The Note shall bear interest, calculated on the basis of a 360- 1 day year of twelve 30-day months from the Delivery Date set forth in Exhibit A hereto at the rate of 1.81%per annum. Said interest shall be payable in the manner provided and on the dates stated in the FORM OF NOTE set forth in Exhibit A hereto. The term "Notes" as used in this Ordinance shall mean and include collectively the Note initially issued and delivered pursuant to this Ordinance and all substitute Notes exchanged therefor, as well as all other substitute notes and replacement notes issued pursuant hereto, and the term "Note" shall mean any of the Notes. (b) The Notes shall be subject to redemption prior to maturity as set forth in the FORM OF NOTE attached hereto as Exhibit A. Section 3. CHARACTERISTICS OF THE NOTES. (a) Registration. The Issuer shall keep or cause to be kept at the principal corporate trust office of TIB - The Independent BankersBank, Farmers Branch, Texas (the "Paying Agent/Registrar"), books or records for the registration of the transfer and exchange of the Notes (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such registrations, transfers and exchanges as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the Registered Owner of each Notes to which payments with respect to the Notes 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 Issuer 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 Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, exchange and delivery of substitute Notes. Registration of assignments, transfers and exchanges of a Notes shall be made in the manner provided and with the effect stated in the FORM OF NOTES set forth in this Ordinance. Each substitute Note shall bear a letter and/or number to distinguish it from each other Note. (b) Transfer and Exchange. Except as provided in Section 3(f) of this Ordinance, an authorized representative of the Paying Agent/Registrar shall,before the delivery of any such Note, date and manually sign said Note, and no such Note shall be deemed to be issued or outstanding unless such Note is so executed. The Paying Agent/Registrar promptly shall cancel any Note surrendered for exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing transfer and exchange of any Note, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of a substitute Note in the manner prescribed herein. Pursuant to Chapter 1201, Government Code, as amended,the duty of transfer of a Note as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Note, the exchanged Note shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Note that initially was issued and delivered pursuant to this Ordinance, approved by the 2 Attorney General and registered by the Comptroller of Public Accounts. The Note may be transferred and registered in the name of the new registered owner in whole but not in part. (c) Payment of Notes and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Notes, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Notes, shall properly and accurately record all payments on the Notes on the Registration Books, and shall keep proper records of all exchanges of Notes, and all replacements of Notes, as provided in this Ordinance. However, in the event of a nonpayment 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 Issuer. Notice of the past due interest shall be sent at least 5 business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of the 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. (d) In General. The Notes (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Notes to be payable only to the Registered Owner thereof, (ii) may be prepaid or redeemed prior to its scheduled maturity, (iii) may be exchanged for another Notes, (iv) may be transferred and assigned, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Notes shall be payable, and (viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the Notes, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF NOTES set forth in this Ordinance. The Notes initially issued and delivered pursuant to this Ordinance are not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Note issued in exchange for any Note issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF NOTES. (e) Pang Agent/Re isg tray. The Issuer covenants with the Registered Owner of the Notes that at all times while the Notes are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other entity to act as and perform the services of Paying Agent/Registrar for the Notes under this Ordinance, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 20 days written notice to the Paying Agent/Registrar,to be effective not later than 15 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 Issuer 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 Notes, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar,the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to the Registered 3 Owner of the Notes,by United States mail,first-class postage prepaid,which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. (f) Authentication. Except as provided below,no Note shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar. It shall not be required that the same authorized representative of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on the Notes. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Note delivered on the closing date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Ordinance, manually executed by the Comptroller of Public Accounts of the State of Texas or by his duly authorized agent, which certificate shall be evidence that the Initial Note has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the Issuer, and has been registered by the Comptroller. (g) Delivery of Initial Note. On the closing date, one initial Note representing the entire principal amount of the Notes,payable in stated installments to the Purchaser designated in Section 10 or its designee, executed by manual or facsimile signature of the Mayor and Town Secretary of the Issuer, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas,and with the date of delivery inserted thereon by the Paying Agent/Registrar, will be delivered to such Purchaser or its designee. (h) Conditional Notice of Redemption. With respect to any optional redemption of the Notes, unless certain prerequisites to such redemption required by this Ordinance have been met and moneys sufficient to pay the principal of and premium, if any, and interest on the Notes 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 Issuer, 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 Issuer shall not redeem such Notes and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given,to the effect that the Notes have not been redeemed. Section 4. FORM OF NOTES. The form of the Notes, including the form of Paying Agent/Registrar's Authentication Certificate,the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Notes initially issued and delivered pursuant to this Ordinance, shall be,respectively, substantially in the FORM OF NOTES provided in Exhibit A, with such appropriate variations, omissions or insertions as are permitted or required by this Ordinance. 4 Section 5. INTEREST AND SINKING FUND. (a) A special "Interest and Sinking Fund" is hereby created and shall be established and maintained by the Issuer at an official depository bank of said Issuer. Said Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of said Issuer, and shall be used only for paying the interest on and principal of said Notes. All ad valorem taxes levied and collected for and on account of said Notes shall be deposited, as collected, to the credit of said Interest and Sinking Fund. During each year while any of said Notes is outstanding and unpaid, the governing body of said Issuer 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 Notes as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of said Notes as such principal matures (but never less than 2% of the original amount of said Notes as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of said Issuer, 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 Issuer, for each year while said Notes 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 Notes, 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 Issuer 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) Article 1208, Government Code, applies to the issuance of the Notes and the pledge of the taxes granted by the Issuer under this Section, and is therefore valid, effective, and perfected. Should Texas law be amended at any time while the Notes are outstanding and unpaid, the result of such amendment being that the pledge of the taxes granted by the Issuer under this Section is to be subject to the filing requirements of Chapter 9, Business & Commerce Code, in order to preserve to the Registered Owner of the Notes a security interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce Code and enable a filing of a security interest in said pledge to occur. Section 6. DEFEASANCE OF NOTES. (a) Any Note and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Note") within the meaning of this Ordinance, except to the extent provided in subsection(d)of this Section,when payment of the principal of such Note,plus interest thereon to the due date(whether such due date be by reason of maturity or otherwise)either(i) shall have been made or caused to be made in accordance with the terms thereof, or(ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar in accordance with an escrow agreement or other instrument (the "Future Escrow Agreement")for such payment(1) lawful money of the United States of America sufficient to make such payment or(2) Defeasance Securities that mature as to principal and interest in such amounts and at such times as will insure the availability,without reinvestment,of sufficient money 5 to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until the Defeased Note shall have become due and payable. At such time as a Note shall be deemed to be a Defeased Note hereunder, as aforesaid, such Note 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. Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any determination not to redeem a Defeased Note that is made in conjunction with the payment arrangements specified in subsection 6(a)(i) or(ii) shall not be irrevocable, provided that: (1) in the proceedings providing for such payment arrangements, the Issuer expressly reserves the right to call the Defeased Note for redemption; (2) gives notice of the reservation of that right to the Registered Owner of the Defeased Note 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 Issuer 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 Notes and interest thereon,with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. Any Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held for the payment of a Defeased Note 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 subsection 6(a)(i) or (ii). All income from such Defeasance Securities received by the Paying Agent/Registrar which is not required for the payment of the Defeased Note,with respect to which such money has been so deposited,shall be remitted to the Issuer or deposited as directed in writing by the Issuer. (c) The term "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 Notes, which currently includes the following: (i) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America., (ii) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. (d) Until the Defeased Note shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Note the 6 same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 7. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED NOTES. (a) Replacement Notes. In the event any outstanding Note is damaged, mutilated, lost, stolen or destroyed, the Paying Agent/Registrar shall cause to be printed, executed and delivered, a new Note of the same principal amount, maturity and interest rate, as the damaged, mutilated, lost, stolen or destroyed Note, in replacement for such Note in the manner hereinafter provided. (b) Application for Replacement Notes. Application for replacement of a damaged, mutilated, lost, stolen or destroyed Note shall be made by the Registered Owner thereof to the Paying Agent/Registrar. In every case of loss,theft or destruction of a Note,the Registered Owner applying for a replacement Note shall furnish to the Issuer 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 Note, the Registered Owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft or destruction of such Note, as the case may be. In every case of damage or mutilation of a Note, the Registered Owner shall surrender to the Paying Agent/Registrar for cancellation the Note so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Notes shall have matured, and no default has occurred that is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Notes, the Issuer may authorize the payment of the same(without surrender thereof except in the case of a damaged or mutilated Note) instead of issuing a replacement Note, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Notes. Prior to the issuance of any replacement Notes, the Paying Agent/Registrar shall charge the Registered Owner of such Notes with all legal, printing, and other expenses in connection therewith. Every replacement Note issued pursuant to the provisions of this Section by virtue of the fact that any Note is lost, stolen or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen or destroyed Note shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance. (e) Authority for Issuing Replacement Notes. In accordance with Section 1206.022, Government Code, this Section of this Ordinance shall constitute authority for the issuance of any such replacement Notes without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such Notes is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Notes in the form and manner and with the effect, as provided in Section 3(a) of this Ordinance for a Note issued in exchange for another Note. 7 Section 8. CUSTODY, APPROVAL, AND REGISTRATION OF NOTES; BOND COUNSEL'S OPINION; AND ENGAGEMENT OF BOND COUNSEL AND PLACEMENT AGENT. (a) The Mayor of the Issuer is hereby authorized to have control of the Note initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Note pending its delivery and their investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Note said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate attached to such Note, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Note. The approving legal opinion of the Issuer's bond counsel may, at the option of the Issuer, be printed on the Notes issued and delivered under this Ordinance, but shall have no legal effect, and shall be solely for the convenience and information of the Registered Owner of the Notes. (b) The obligation of the Purchaser to accept delivery of the Notes is subject to the Purchaser being furnished with the final,approving opinion of McCall,Parkhurst&Horton L.L.P., bond counsel to the Issuer, which opinion shall be dated as of and delivered on the date of initial delivery of the Notes to the Purchaser. The engagement of such firm as bond counsel to the Issuer in connection with issuance, sale and delivery of the Notes is hereby approved and confirmed. (c) In accordance with the provisions of Section 1202.004, Texas Government Code in connection with the submission of the Notes to the Attorney General of Texas for review and approval, a statutory fee (an amount equal to 0.1% principal amount of the Notes, 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 Notes. The Issuer hereby authorizes and directs that a check in the amount of the Attorney General filing fee for the Notes, made payable to the "Texas Attorney General," be promptly furnished to the Issuer's bond counsel, for payment to the Attorney General in connection with his review of the Notes. Section 9. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE NOTES. (a) Covenants. The Issuer covenants to take any action necessary to assure,or refrain from any action that would adversely affect, the treatment of the Notes as obligations described in section 103 of the Code,the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Notes (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6)of the Code or,if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Notes, in contravention of section 141(b)(2) of the Code; 8 (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Notes or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" that is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use; (3) to take any action to assure that no amount that is greater than the lesser of $5,000,000,or 5 percent of the proceeds of the Notes(less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (4) to refrain from taking any action that would otherwise result in the Notes being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (5) to refrain from taking any action that would result in the Notes being "federally guaranteed" within the meaning of section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the Notes, directly or indirectly, to acquire or to replace funds that were used, directly or indirectly, to acquire investment property(as defined in section 148(b)(2)of the Code)that produces a materially higher yield over the term of the Notes, other than investment property acquired with: (A) proceeds of the Notes invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond, for a period of 90 days or less until such proceeds are needed for the purpose for which the bonds are issued, (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148 1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Notes; (7) to otherwise restrict the use of the proceeds of the Notes or amounts treated as proceeds of the Notes, as may be necessary, so that the Notes do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Notes)an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Notes have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and 9 (9) to assure that the proceeds of the Notes will be used solely for new money projects. (b) Rebate Fund. In order to facilitate compliance with the above covenant (a)(8), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the Noteholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) Use of Proceeds. For purposes of the foregoing covenants (a)(1) and(a)(2),the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Notes. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated that modify or expand provisions of the Code,as applicable to the Notes,the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Notes under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated that impose additional requirements applicable to the Notes, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Notes under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor, Mayor Pro Tem, Town Manager, Finance Director and Town Secretary, individually or jointly,to execute any documents,Notes or reports required by the Code and to make such elections, on behalf of the Issuer, that may be permitted by the Code as are consistent with the purpose for the issuance of the Notes. (d) Allocation of, and Limitation on, Expenditures for the Project. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the construction and acquisition of the Project on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Project is completed. The foregoing notwithstanding, the Issuer shall not expend proceeds of the sale of the Notes or investment earnings thereon more than 60 days after the earlier of(1)the fifth anniversary of the delivery of the Notes, or (2) the date the Notes are retired, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the status,for federal income tax purposes, of the Notes or the interest thereon. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e) Disposition of Project. The Issuer covenants that the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation,unless any action taken in connection with such disposition will not adversely affect the tax-exempt status of the Notes. For purpose of the foregoing,the Issuer may rely on an opinion of nationally-recognized bond counsel that the action taken in connection with such sale or other 10 disposition will not adversely affect the tax-exempt status of the Notes. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for federal income tax proposes from gross income of the interest. (f) Designation as Qualified Tax Exempt Obligations. The Issuer hereby designates the Notes as "qualified tax exempt obligations" as defined in section 265(b)(3) of the Code. In furtherance of such designation, the Issuer represents, covenants and warrants the following: (a) that during the calendar year in which the Notes are issued, the Issuer(including any subordinate entities) has not designated nor will designate obligations that when aggregated with the Notes, will result in more than $10,000,000 of"qualified tax exempt obligations" being issued; (b) that the Issuer reasonably anticipates that the amount of tax exempt obligations issued, during the calendar year in which the Notes are issued, by the Issuer (or any subordinate entities) will not exceed $10,000,000; and, (c) that the Issuer will take such action or refrain from such action as necessary, and as more particularly set forth in Section 9 hereof, in order that the Notes will not be considered "private activity bonds" within the meaning of section 141 of the Code. Section 10. SALE OF NOTES. The Notes are hereby initially sold and shall be delivered to TIB - The Independent BankersBank (the "Purchaser"), for cash for the par value thereof, pursuant to the purchase agreement dated the date of the final passage of this Ordinance which the Mayor is hereby authorized to execute and deliver. The Notes shall initially be registered in the name of the Purchaser. It is hereby officially found, determined, and declared that the terms of this sale are the most advantageous reasonably obtainable. Section 11. FURTHER PROCEDURES. The Mayor, Mayor Pro Tem, Town Manager, Finance Director and Town Secretary 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 Issuer a Paying Agent/Registrar Agreement with the Paying Agent/Registrar and all other 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 Notes and the sale of the Notes. In case any officer whose signature shall appear on any Note shall cease to be such officer before the delivery of such Note, 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 12. NO RULE 15c2-12 UNDERTAKING. The Issuer has not made an undertaking in accordance with Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"). Section 13. DEFAULT AND REMEDIES. (a) 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: 11 (i) the failure to make payment of the principal of or interest on the Notes when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement or obligation of the Issuer,the failure to perform which materially, adversely affects the rights of the registered owners of the Notes, including,but not limited to its 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 the registered owner to the Issuer. (b) Remedies for Default. Upon the happening of any Event of Default, then and in every case, any registered owner or an authorized representative thereof, including, but not limited to, a trustee or trustees therefor, may proceed against the Issuer for the purpose of protecting and enforcing the rights of the registered owner 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 registered owner hereunder or any combination of such remedies. (c) Remedies Not Exclusive. (i) 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 Notes 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 Notes shall not be available as a remedy under this Ordinance. (ii) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. (iii) By accepting the delivery of Notes authorized under this Ordinance, such registered owner agrees that the certifications 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 trustees of the Issuer or the Council. Section 14. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend this Ordinance subject to the following terms and conditions, to-wit: (a) The Issuer 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- 12 recognized bond counsel, materially adversely affect the interests of the Registered Owners. (b) Except as provided in paragraph (a) above, a majority of the Registered Owners of Notes then outstanding 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 Issuer;provided,however,that without the consent of 100%of the Registered Owners in aggregate principal amount of the then outstanding Notes, nothing herein contained shall permit or be construed to permit amendment of the terms and conditions of this Ordinance or in any of the Notes so as to: (1) Make any change in the maturity of any of the outstanding Notes; (2) Reduce the rate of interest borne by any of the outstanding Notes; (3) Reduce the amount of the principal of, or redemption premium, if any, payable on any outstanding Notes; (4) Modify the terms of payment of principal or of interest or redemption premium on outstanding Notes 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 Notes necessary for consent to such amendment. (c) If at any time the Issuer shall desire to amend this Ordinance under this Section,the Issuer shall send by U.S.mail to each registered owner of the affected Notes a copy of the proposed amendment. (d) Whenever at any time within one year from the date of mailing of such notice the Issuer shall receive an instrument or instruments executed by the Registered Owners of at least a majority in aggregate principal amount of all of the Notes 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 Issuer 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 Issuer and all Registered Owners of such affected Notes shall thereafter be determined, exercised, and enforced, subject in all respects to such amendment. (f) Any consent given by the Registered Owner of a Note 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 Note 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 Issuer,but such revocation shall not be effective if the Registered Owners the required amount 13 of the affected Notes then outstanding, have, prior to the attempted revocation, consented to and approved the amendment. (g) For the purposes of establishing ownership of the Notes,the Issuer shall rely solely upon the registration of the ownership of such Notes on the Registration Books kept by the Paying Agent/Registrar. Section 15. PROJECT FUND. (a) The Issuer hereby creates and establishes and shall maintain on the books of the Issuer a separate fund or account to be entitled the "Series 2017 Note Project Fund" for use by the Issuer for payment of all lawful costs associated with the Project as hereinbefore provided, and to pay the costs of issuance of the Notes. Upon payment of all such costs, any moneys remaining on deposit in said fund shall be transferred to the Interest and Sinking Fund. Amounts so deposited to the Interest and Sinking Fund shall be used in the manner described in Section 5 of this Ordinance. (b) The Issuer may place proceeds of the Notes (including investment earnings thereon) and amounts deposited into the Interest and Sinking Fund in investments authorized by the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended; provided, however, that the Issuer hereby covenants that the proceeds of the sale of the Notes will be used as soon as practicable for the purposes for which the Notes are issued. (c) 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 16. SEVERABILITY. If any section, article,paragraph, sentence, clause,phrase or word in this Ordinance, or application thereof to any persons or circumstances is held invalid or unconstitutional by a court of competent jurisdiction, such holding shall not affect the validity of the remaining portion of this Ordinance, despite such invalidity,which remaining portions shall remain in full force and effect. Section 17. INTEREST EARNINGS ON NOTE PROCEEDS. Interest earnings derived from the investment of proceeds from the sale of the Notes shall be used along with other Note proceeds for the Project; provided that after completion of such purpose, if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided,however,that any interest earnings on Note proceeds that are required to be rebated to the United States of America pursuant to Section 9 hereof in order to prevent the Notes from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section. Section 18. APPROPRIATION. To pay the debt service coming due on the Notes 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. 14 Section 19. 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. ------------------------------ 15 EXHIBIT A The form of the Note, including the form of Paying Agent/Registrar's Authentication Certificate, the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Note 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. (a) Form of Note. NO. R- UNITED STATES OF AMERICA PRINCIPAL STATE OF TEXAS AMOUNT TOWN OF WESTLAKE, TEXAS $ TAX NOTE, SERIES 2017 Interest Rate Delivery Date Maturity Date % May 23, 2017 February 15, 2024 REGISTERED OWNER: PRINCIPAL AMOUNT: THE TOWN OF WESTLAKE,in Tarrant and Denton Counties,Texas(the"Issuer"),being a political subdivision and municipal corporation of the State of Texas, for value received, promises to pay, from the sources described herein, to the registered owner specified above, or registered assigns, the principal amount specified above, and to pay interest thereon, from the Delivery Date set forth above,on the balance of said principal amount from time to time remaining unpaid, at the interest rate per annum set forth above. The unpaid principal of this Note shall finally mature on February 15,2024 (the "Maturity Date"),but shall be paid in installments on the dates and in the amounts set forth in the table below: Payment Date Principal (February 15) Amount 2018 $ 202,000 2019 212,000 2020 215,000 2021 219,000 2022 223,000 2023 227,000 2024 232,000 THE PRINCIPAL OF AND INTEREST ON THIS NOTE are payable in lawful money of the United States of America,without exchange or collection charges. The Issuer shall pay interest A-1 on this Note on February 15, 2018, and on each August 15 and February 15 thereafter to the date of final maturity or redemption prior to maturity. The last principal installment of this Note shall be paid to the registered owner hereof upon presentation and surrender of this Note at final maturity, or upon the date fixed for its redemption prior to maturity, at the principal office of TIB -The Independent BankersBank in Farmers Branch,Texas,which is the "Paying Agent/Registrar" for this Note. The payment of all other principal installments of and interest on this Note shall be made by the Paying Agent/Registrar to the registered owner hereof without presentation of this Note to the Paying Agent/Registrar on each principal and interest payment date by check or draft, dated as of such principal and interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Note(the "Note 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, principal and 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. ANY ACCRUED INTEREST due in connection with the final installment of principal of this Note or upon redemption of this Note in whole at the option of the Issuer prior to final maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this Note for payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the registered owner of this Note that on or before each principal payment date and interest payment date for this Note it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Note Ordinance, the amounts required to provide for the payment,in immediately available funds,of all principal of and interest on the Note,when due. IF THE DATE for the payment of the principal of or interest on this Note 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 that 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 NOTE is dated May 15, 2017, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of$1,530,000 for paying all or a portion of the Issuer's contractual obligations incurred in connection with (i) acquiring, constructing, installing and equipping fire-fighting facilities,with any surplus proceeds to be used for(1) equipping Town Hall, including related parking, landscaping, and signage; and (2) constructing and improving streets, roads and sidewalks in the Town, including related drainage, signalization, landscaping, lighting, signage and utility relocation (collectively, the "Project") and (ii) payment of costs of issuance of the Note. A-2 ON ANY DATE, the Note may be redeemed prior to its scheduled maturity, at the option of the Issuer, with funds derived from any available and lawful source, as a whole, or in part, and, if in part, the particular Note, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Note may be redeemed only in an integral multiple of $1,000), at a redemption price equal to the principal amount to be redeemed plus accrued interest to the date fixed for redemption. AT LEAST THIRTY days prior to the date fixed for any redemption of Note 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 Note to be redeemed at its address as it appeared on the 45th day prior to such redemption date; 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 Note. 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 Note or portions thereof that 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 Note or portions thereof that 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 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 Note shall be redeemed, a substitute Note having the same maturity date,bearing interest at the same rate, in any denomination or denominations in any integral multiple of$1,000, at the written request of the registered owner, and in 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 Issuer, all as provided in the Note Ordinance. WITH RESPECT TO ANY OPTIONAL REDEMPTION OF THE NOTE, unless certain prerequisites to such redemption required by the Note Ordinance have been met and moneys sufficient to pay the principal of and premium, if any, and interest on the Note 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 Issuer, 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 Issuer shall not redeem such Note and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given, to the effect that the Note have not been redeemed. THE NOTE is issuable solely as a fully registered Note, without interest coupons, in the principal denomination of any integral multiple of$1,000. As provided in the Note Ordinance,this Note 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 principal amount of a fully registered Note,without interest coupons,payable to the appropriate registered owner, assignee or A-3 assignees, as the case may be, having the same denomination or denominations in any integral multiple of $1,000 as requested in writing by the appropriate registered owner, assignee or assignees, as the case may be, upon surrender of this Note to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Note Ordinance. Among other requirements for such assignment and transfer, this Note 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 Note or any portion or portions hereof in any integral multiple of$1,000 to the assignee or assignees in whose name or names this Note or any such portion or portions hereof is or are to be registered. The form of Assignment printed or endorsed on this Note 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 Note 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 Note or portion thereof will be paid by the Issuer. 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, conversion, or exchange (i) 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(ii)with respect to any Note or any portion thereof called for redemption prior to maturity,within 45 days prior to its redemption date. IN THE EVENT any Paying Agent/Registrar for the Note is changed by the Issuer,resigns, or otherwise ceases to act as such,the Issuer has covenanted in the Note 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 Note. IT IS HEREBY certified, recited and covenanted that this Note 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 Note have been performed, existed and been done in accordance with law; that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Note, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in said Issuer, and have been pledged for such payment, within the limit prescribed by law. THE ISSUER HAS RESERVED THE RIGHT to amend the Note 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 Note. BY BECOMING the registered owner of this Note, the registered owner thereby acknowledges all of the terms and provisions of the Note Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Note Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that A-4 the terms and provisions of this Note and the Note Ordinance constitute a contract between each registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Note to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the Town Secretary of said Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Note. (signature) (signature) Town Secretary Mayor (SEAL) PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Note is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Note has been issued under the provisions of the Note Ordinance described in the text of this Note; and that this Note has been issued in replacement of, or in exchange for, a Note that 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: TIB - THE INDEPENDENT BANKERSBANK, Farmers Branch, Texas Paying Agent/Registrar By: Authorized Representative 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 Note and all rights thereunder, and hereby irrevocably constitutes and appoints , attorney, to register the transfer of the within Note on the books kept for registration thereof, with full power of substitution in the premises. A-5 Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by NOTICE: The signature above must an eligible guarantor institution participating in correspond with the name of the registered a securities transfer association recognized owner as it appears upon the front of this Note signature guarantee program. in every particular, without alteration or enlargement or any change whatsoever. (d) Form of Registration Certificate of the Comptroller of Public Accounts. COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Note has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and that this Note has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) PREPAYMENT RECORD Principal Prepayment (amount and installment(s) to Remaining Name and Title of Date of which payment is Principal Authorized Officer Signature of Authorized Payment applied) Balance making Entry Officer A-6 A-7 TRANSCRIPT OF C RELATING TO $ 1, 530, 000 Tonin of Westlake, Texas Tax Note, Series 2017 DATE OF DELIVERY May 23, 2017 v1 Ic CA L L PARKHURST & HORTON 717 North Harwood, Suite 900, Dallas, TX. 75201 0 214.754.9200 CONTACT Chris Settle 214.754.9237 Transcript of Proceedings $1,530,000 Town of Westlake, Texas Tax Note, Series 2017 Document Tab Certified Ordinance Authorizing the Issuance of the Tax Note......................... 1 Purchase Agreement........................................................................................... 2 Paying Agent/Registrar Agreement.................................................................... 3 Signature Identification and General Certificate................................................ 4 ClosingCertificate.............................................................................................. 5 Federal Tax Certificate....................................................................................... 6 Form8038-G ...................................................................................................... 7 Attorney General Opinion and Comptroller Registration Certificate................. 8 Opinion of Bond Counsel................................................................................... 9 Receipt and Disbursement of Funds................................................................... 10 Closing Instructions Letter ................................................................................. 11 CERTIFICATE FOR ORDINANCE THE STATE OF TEXAS COUNTIES OF TARRANT AND DENTON TOWN OF WESTLAKE We, the undersigned Mayor and Town Secretary of the Town of Westlake, Texas (the "Town"), hereby certify as follows: 1. The Town Council of said Town convened in Regular Meeting on April 24, 2017, at the designated meeting place,and the roll was called of the duly constituted officers and members of said Town Council,to-wit: Laura Wheat,Mayor Carol Langdon,Mayor Pro Tem Michael Barrett,Council Member Alesa Belvedere,Council Member Wayne Stoltenberg, Council Member Rick Rennhack,Council Member Kelly Edwards,Town Secretary and all of said persons were present, thus constituting a quorum. Whereupon, among other business, the following was transacted at said meeting: a written Ordinance entitled ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF WESTLAKE, TEXAS, TAX NOTE, SERIES 2017; LEVYING AN ANNUAL AD VALOREM TAX AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID NOTES;AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT was duly introduced for the consideration of said Town Council. It was then duly moved and seconded that said Ordinance be adopted and, after due discussion, said motion, carrying with it the adoption of said Ordinance,prevailed and carried with all members present voting"AYE" except the following: NOES: 0 ABSTAIN: 0 2. A true,full and correct copy of the aforesaid Ordinance passed at the meeting described in the above and foregoing paragraph is attached to and follows this Certificate;said Ordinance has been duly recorded in the official minutes of said Town Council; the above and foregoing paragraph is a true and correct excerpt from said minutes of said meeting pertaining to the passage of said Ordinance;the persons named in the above and foregoing paragraph,at the time of said meeting and the passage of said Ordinance, were the duly chosen,qualified and acting members of said Town Council as indicated therein;each of said officers and member was duly and sufficiently notified officially and personally in advance, of the time, place and purpose of the aforesaid meeting and that said Ordinance would be introduced and considered for passage at said meeting; and said meeting was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Texas Government Code,Chapter 551. 3. The Town Council has approved and hereby approves the aforesaid Ordinance; and the Mayor and the Town Secretary of the Town hereby'declare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Ordinance for,al I purposes. SIGNED.AND SEALED APRIL 24;2017. own Secretary Mayor OF UVEST( (TOWN 'r E)( Certificate for Ordinance Authorizing the.Issuance of Toivn of Westlake, Texas, Tax Note, Series 2017 TOWN OF WESTLAKE ORDINANCE 822 ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF TOWN OF WESTLAKE, TEXAS, TAX NOTE, SERIES 2017; LEVYING AN ANNUAL AD VALOREM TAX AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID NOTES;AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT WHEREAS, the Town Council (the "Council") of the Town of Westlake, Texas (the "Issuer") hereby finds and determines that it is necessary, useful and appropriate for the Issuer's public purposes to authorize and provide for the issuance and sale of notes of the Issuer for the purposes hereinafter set forth, as authorized by Chapter 1431, Texas Government Code, as amended; and WHEREAS, it is officially found, determined, and declared that the meeting at which this Ordinance has been adopted was open to the public and public notice of the time,place and subject matter of the public business to be considered and acted upon at said meeting, including this Ordinance, was given, all as required by the applicable provisions of Texas Government Code, Chapter 551;Now, Therefore BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: Section 1. RECITALS, AMOUNT AND PURPOSE OF THE NOTES. The recitals set forth in the preamble hereof are incorporated herein and shall have the same force and effect as if set forth in this Section. The tax note of the Town of Westlake,Texas(the "Issuer")is hereby authorized to be issued and delivered in the aggregate principal amount of $1,530,000 for the public purpose of(i) acquiring, constructing, installing and equipping fire-fighting facilities, with any surplus proceeds to be used for (1) equipping Town Hall, including related parking, landscaping, and signage; and (2) constructing and improving streets, roads and sidewalks in the Town, including related drainage, signalization, landscaping, lighting, signage and utility relocation(collectively, the "Project") and(ii)payment of costs of issuance of the Notes. Section 2. DESIGNATION, DATE, DENOMINATION, NUMBER, AND MATURITY AND INTEREST RATE OF NOTES. (a) Each Note issued pursuant to this Ordinance shall be designated: "TOWN OF WESTLAKE, TEXAS, TAX NOTE, SERIES 2017," and initially there shall be issued, sold, and delivered hereunder one fully registered Note, without interest coupons, dated May 15, 2017, in the denomination and principal amount of$1,530,000, numbered R-1, with any Note issued in replacement thereof being in the denomination and principal amount hereinafter stated and numbered consecutively from R-2 upward,payable in installments to the registered owner thereof, or to the registered assignee of said Note(in each case,the "Registered Owner"). Principal of said Note shall be payable in installments on the dates and in the amounts stated in the FORM OF NOTE set forth in Exhibit A hereto. The Note shall bear interest,calculated on the basis of a 360- 1 day year of twelve 30-day months from the Delivery Date set forth in Exhibit A hereto at the rate of 1.81%per annum. Said interest shall be payable in the manner provided and on the dates stated in the FORM OF NOTE set forth in Exhibit A hereto. The term "Notes" as used in this Ordinance shall mean and include collectively the Note initially issued and delivered pursuant to this Ordinance and all substitute Notes exchanged therefor,as well as all other substitute notes and replacement notes issued pursuant hereto,and the term "Note" shall mean any of the Notes. (b) The Notes shall be subject to redemption prior to maturity as set forth in the FORM OF NOTE attached hereto as Exhibit A. Section 3. CHARACTERISTICS OF THE NOTES. (a) Registration. The Issuer shall keep or cause to be kept at the principal corporate trust office of TIB - The Independent BankersBank, Farmers Branch, Texas (the "Paying Agent/Registrar"), books or records for the registration of the transfer and exchange of the Notes (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such registrations, transfers and exchanges as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the Registered Owner of each Notes to which payments with respect to the Notes 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 Issuer 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 Issuer shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, exchange and delivery of substitute Notes. Registration of assignments, transfers and exchanges of a Notes shall be made in the manner provided and with the effect stated in the FORM OF NOTES set forth in this Ordinance. Each substitute Note shall bear a letter and/or number to distinguish it from each other Note. (b) Transfer and Exchange. Except as provided in Section 3(f) of this Ordinance, an authorized representative of the Paying Agent/Registrar shall,before the delivery of any such Note, date and manually sign said Note, and no such Note shall be deemed to be issued or outstanding unless such Note is so executed. The Paying Agent/Registrar promptly shall cancel any Note surrendered for exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing transfer and exchange of any Note,and the Paying Agent/Registrar shall provide for the printing,execution,and delivery of a substitute Note in the manner prescribed herein. Pursuant to Chapter 1201,Government Code,as amended,the duty of transfer of a Note as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said Note, the exchanged Note shall be valid,incontestable, and enforceable in the same manner and with the same effect as the Note that initially was issued and delivered pursuant to this Ordinance, approved by the 2 Attorney General and registered by the Comptroller of Public Accounts. The Note may be transferred and registered in the name of the new registered owner in whole but not in part. (c) Payment of Notes and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Notes, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Notes, shall properly and accurately record all payments on the Notes on the Registration Books, and shall keep proper records of all exchanges of Notes, and all replacements of Notes, as provided in this Ordinance. However, in the event of a nonpayment 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 Issuer. Notice of the past due interest shall be sent at least 5 business days prior to the Special Record Date by United States mail, first-class postage prepaid, to the address of the 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. (d) In General. The Notes (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Notes to be payable only to the Registered Owner thereof, (ii) may be prepaid or redeemed prior to its scheduled maturity, (iii) may be exchanged for another Notes, (iv) may be transferred and assigned, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Notes shall be payable, and (viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the Notes, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF NOTES set forth in this Ordinance. The Notes initially issued and delivered pursuant to this Ordinance are not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Note issued in exchange for any Note issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF NOTES. (e) Paving A ent/Re ig strar. The Issuer covenants with the Registered Owner of the Notes that at all times while the Notes are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other entity to act as and perform the services of Paying Agent/Registrar for the Notes under this Ordinance, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to, and may, at its option,change the Paying Agent/Registrar upon not less than 20 days written notice to the Paying Agent/Registrar,to be effective not later than 15 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 Issuer 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 Notes, to the new Paying Agent/Registrar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar,the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to the Registered 3 Owner of the Notes,by United States mail,first-class postage prepaid,which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. (f) Authentication. Except as provided below,no Note shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided in this Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar. It shall not be required that the same authorized representative of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on the Notes. In lieu of the executed Certificate of Paying Agent/Registrar described above,the Initial Note delivered on the closing date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Ordinance, manually executed by the Comptroller of Public Accounts of the State of Texas or by his duly authorized agent, which certificate shall be evidence that the Initial Note has been duly approved by the Attorney General of the State of Texas and that it is a valid and binding obligation of the Issuer, and has been registered by the Comptroller. (g) Delivery of Initial Note. On the closing date, one initial Note representing the entire principal amount of the Notes,payable in stated installments to the Purchaser designated in Section 10 or its designee, executed by manual or facsimile signature of the Mayor and Town Secretary of the Issuer, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas,and with the date of delivery inserted thereon by the Paying Agent/Registrar,will be delivered to such Purchaser or its designee. (h) Conditional Notice of Redemption. With respect to any optional redemption of the Notes, unless certain prerequisites to such redemption required by this Ordinance have been met and moneys sufficient to pay the principal of and premium, if any, and interest on the Notes 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 Issuer, 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 Issuer shall not redeem such Notes and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given,to the effect that the Notes have not been redeemed. Section 4. FORM OF NOTES. The form of the Notes, including the form of Paying Agent/Registrar's Authentication Certificate,the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Notes initially issued and delivered pursuant to this Ordinance, shall be,respectively, substantially in the FORM OF NOTES provided in Exhibit A, with such appropriate variations, omissions or insertions as are permitted or required by this Ordinance. 4 Section 5. INTEREST AND SINKING FUND. (a) A special "Interest and Sinking Fund" is hereby created and shall be established and maintained by the Issuer at an official depository bank of said Issuer. Said Interest and Sinking Fund shall be kept separate and apart from all other funds and accounts of said Issuer,and shall be used only for paying the interest on and principal of said Notes. All ad valorem taxes levied and collected for and on account of said Notes shall be deposited, as collected, to the credit of said Interest and Sinking Fund. During each year while any of said Notes is outstanding and unpaid, the governing body of said Issuer 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 Notes as such interest comes due, and to provide and maintain a sinking fund adequate to pay the principal of said Notes as such principal matures (but never less than 2% of the original amount of said Notes as a sinking fund each year); and said tax shall be based on the latest approved tax rolls of said Issuer, 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 Issuer, for each year while said Notes 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 Notes, 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 Issuer 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) Article 1208, Government Code, applies to the issuance of the Notes and the pledge of the taxes granted by the Issuer under this Section, and is therefore valid, effective, and perfected. Should'Texas law be amended at any time while the Notes are outstanding and unpaid, the result of such amendment being that the pledge of the taxes granted by the Issuer under this Section is to be subject to the filing requirements of Chapter 9, Business & Commerce Code, in order to preserve to the][registered Owner of the Notes a security interest in said pledge, the Issuer agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Business & Commerce Code and enable a filing of a security interest in said pledge to occur. Section 6. (DEFEASANCE OF NOTES. (a) Any Note and the interest thereon shall be deemed to be paid, retired and no longer outstanding (a "Defeased Note") within the meaning of this Ordinance, except to the extent provided in subsection(d)of this Section,when payment of the principal of such Note,plus interest thereon to the due date(whether such due date be by reason of maturity or otherwise)either(i) shall have been made or caused to be made in accordance with the terms thereof, or(ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar in accordance with an escrow agreement or other instrument(the "Future Escrow Agreement")for such payment(1) lawful money of the United States of America sufficient to make such payment or(2)Defeasance Securities that mature as to principal and interest in such amounts and at such times as will insure the availability,without reinvestment,of sufficient money 5 to provide for such payment, and when proper arrangements have been made by the Issuer with the Paying Agent/Registrar for the payment of its services until the Defeased Note shall have become due and payable. At such time as a Note shall be deemed to be a Defeased Note hereunder, as aforesaid, such Note 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. Notwithstanding any other provision of this Ordinance to the contrary, it is hereby provided that any determination not to redeem a Defeased Note that is made in conjunction with the payment arrangements specified in subsection 6(a)(i) or(ii) shall not be irrevocable,provided that: (1) in the proceedings providing for such payment arrangements, the Issuer expressly reserves the right to call the Defeased Note for redemption; (2) gives notice of the reservation of that right to the Registered Owner of the Defeased Note 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 Issuer 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 Notes and interest thereon,with respect to which such money has been so deposited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. Any Future Escrow Agreement pursuant to which the money and/or Defeasance Securities are held for the payment of a Defeased Note 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 subsection 6(a)(i) or (ii). All income from such Defeasance Securities received by the Paying Agent/Registrar which is not required for the payment of the Defeased Note,with respect to which such money has been so deposited,shall be remitted to the Issuer or deposited as directed in writing by the Issuer. (c) The term "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 Notes, which currently includes the following: (i) direct, noncallable obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America., (ii) noncallable obligations of an agency or instrumentality of the United States of America, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that,on the date the governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, (iii) noncallable obligations of a state or an agency or a county,municipality, or other political subdivision of a state that have been refunded and that,on the date the governing body of the Issuer adopts or approves the proceedings authorizing the financial arrangements, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent. (d) Until the Defeased Note shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Note the 6 same as if they had not been defeased, and the Issuer shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 7. DAMAGED, MgJTELAT ED, LOST, STOLEN, OR DESTROYED IND'IC'ES. (a) Replacement Notes. In the event any outstanding Note is damaged, mutilated, lost, stolen or destroyed, the Paying Agent/Registrar shall cause to be printed, executed and delivered, a new Note of the same principal amount, maturity and interest rate, as the damaged, mutilated, Host, stolen or destroyed Note, in replacement for such Note in the manner hereinafter provided. (b) Application for Replacement Notes. Application for replacement of a damaged, mutilated, lost, stolen or destroyed Note shall be made by the Registered Owner thereof to the Paying Agent/Registrar. In every case of loss,theft or destruction of a Note,the Registered Owner applying for a replacement Note shall furnish to the Issuer 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 Note, the Registered Owner shall furnish to the Issuer and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft or destruction of such Note, as the case may be. In every case of damage or mutilation of a Note, the Registered Owner shall surrender to the Paying Agent/Registrar for cancellation the Note so damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Notes shall have matured, and no default has occurred that is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Notes, the Issuer may authorize the payment of the same(without surrender thereof except in the case of a damaged or mutilated Note) instead of issuing a replacement Note, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Notes. Prior to the issuance of any replacement Notes, the Paying Agent/Registrar shall charge the Registered Owner of such Notes with all legal, printing, and other expenses in connection therewith. Every replacement Note issued pursuant to the provisions of this Section by virtue of the fact that any Note is lost, stolen or destroyed shall constitute a contractual obligation of the Issuer whether or not the lost, stolen or destroyed Note shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance. (e) Authority for Issuing Replacement Notes. In accordance with Section 1206.022, Government Code,this Section of this Ordinance shall constitute authority for the issuance of any such replacement Notes without necessity of further action by the governing body of the Issuer or any other body or person, and the duty of the replacement of such Notes is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Notes in the form and manner and with the effect, as provided in Section 3(a) of this Ordinance for a Note issued in exchange for another Note. 7 Section 8. CUSTODY, APPROVAL, AND REGISTRATION OF NOTES; BOND COUNSEL'S OPINION; AND ENGAGEMENT OF BOND COUNSEL. (a) The Mayor of the Issuer is hereby authorized to have control of the Note initially issued and delivered hereunder and all necessary records and proceedings pertaining to the Note pending its delivery and their investigation,examination,and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Note said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller)shall manually sign the Comptroller's Registration Certificate attached to such Note, and the seal of said Comptroller shall be impressed, or placed in facsimile, on such Note. The approving legal opinion of the Issuer's bond counsel may, at the option of the Issuer, be printed on the Notes issued and delivered under this Ordinance, but shall have no legal effect, and shall be solely for the convenience and information of the Registered Owner of the Notes. (b) The obligation of the Purchaser to accept delivery of the Notes is subject to the Purchaser being furnished with the final,approving opinion of McCall,Parkhurst&Horton L.L.P., bond counsel to the Issuer, which opinion shall be dated as of and delivered on the date of initial delivery of the Notes to the Purchaser. The engagement of such firm as bond counsel to the Issuer in connection with issuance, sale and delivery of the Notes is hereby approved and confirmed. '(c) In accordance with the provisions of Section 1202.004, Texas Government Code in connection with the submission of the Notes to the Attorney General of Texas for review and approval, a statutory fee (an amount equal to 0.1% principal amount of the Notes, 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 Notes. The Issuer hereby authorizes and directs that a check in the amount of the Attorney General filing fee for the Notes, made payable to the "Texas Attorney General," be promptly furnished to the Issuer's bond counsel, for payment to the Attorney General in connection with his review of the Notes. Section 9. COVENANTS REGARDING TAX EXEMPTION OF INTEREST ON THE NOTES. (a) Covenants. The Issuer covenants to take any action necessary to assure,or refrain from any action that would adversely affect, the treatment of the Notes as obligations described in section 103 of the Code,the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Notes (less amounts deposited to a reserve fund, if any)are used for any "private business use,"as defined in section 141(b)(6)of the Code or,if more than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Notes, in contravention of section 141(b)(2) of the Code; 8 (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Notes or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" that is "related" and not "disproportionate," within the meaning of section 141(b)(3) of the Code, to the governmental use; (3) to take any action to assure that no amount that is greater than the lesser of $5,000,000,or 5 percent of the proceeds of the Notes(less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (4) to refrain from taking any action that would otherwise result in the Notes being treated as "private activity bonds"within the meaning of section 141(b) of the Code; (5) to refrain from taking any action that would result in the Notes being"federally guaranteed" within the meaning of section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the Notes, directly or indirectly, to acquire or to replace funds that were used, directly or indirectly, to acquire investment property(as defined in section 148(b)(2)of the Code)that produces a materially higher yield over the term of the Notes, other than investment property acquired with: (A) proceeds of the Notes invested for a reasonable temporary period of 3 years or less or, in the case of a refunding bond,for a period of 90 days or less until such proceeds are needed for the purpose for which the bonds are issued, (B) amounts invested in a bona fide debt service fund,within the meaning of section 1.148 1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Notes; (7) to otherwise restrict the use of the proceeds of the Notes or amounts treated as proceeds of the Notes, as may be necessary, so that the Notes do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Notes)an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America,not later than 60 days after the Notes have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and 9 (9) to assure that the proceeds of the Notes will be used solely for new money projects. (b) Rebate Fund. In order to facilitate compliance with the above covenant (a)(8), a "Rebate Fund" is hereby established by the Issuer for the sole benefit of the United States of America, and such Fund shall not be subject to the claim of any other person, including without limitation the Noteholders. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) Use of Proceeds. For purposes of the foregoing covenants (a)(1) and(a)(2),the Issuer understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds,transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Notes. It is the understanding of the Issuer that the covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated that modify or expand provisions of the Code,as applicable to the Notes,the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel,will not adversely affect the exemption from federal income taxation of interest on the Notes under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated that impose additional requirements applicable to the Notes, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Notes under section 103 of the Code. In furtherance of such intention, the Issuer hereby authorizes and directs the Mayor, Mayor Pro Tem, Town Manager, Finance Director and Town Secretary,individually or jointly,to execute any documents,Notes or reports required by the Code and to make such elections, on behalf of the Issuer, that may be permitted by the Code as are consistent with the purpose for the issuance of the Notes. (d) Allocation of, and Limitation on, Expenditures for the Project. The Issuer covenants to account for the expenditure of sale proceeds and investment earnings to be used for the construction and acquisition of the Project on its books and records by allocating proceeds to expenditures within 18 months of the later of the date that(1)the expenditure is made, or (2)the Project is completed. The foregoing notwithstanding, the Issuer shall not expend proceeds of the sale of the Notes or investment earnings thereon more than 60 days after the earlier of(1)the fifth anniversary of the delivery of the Notes, or (2) the date the Notes are retired, unless the Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the status,for federal income tax purposes,of the Notes or the interest thereon.For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. (e) Disposition of Projeet. The Issuer covenants that the Project will not be sold or otherwise disposed in a transaction resulting in the receipt by the Issuer of cash or other compensation,unless any action taken in connection with such disposition will not adversely affect the tax-exempt status of the Notes. For purpose of the foregoing,the Issuer may rely on an opinion of nationally-recognized bond counsel that the action taken in connection with such sale or other 10 disposition will not adversely affect the tax-exempt status of the Notes. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Issuer shall not be obligated to comply with this covenant if it obtains a legal opinion that such failure to comply will not adversely affect the excludability for federal income tax proposes from gross income of the interest. (f) Designation as Qualified Tax Exempt Obligations. The Issuer hereby designates the Notes as "qualified tax exempt obligations" as defined in section 265(b)(3) of the Code. In furtherance of such designation, the Issuer represents, covenants and warrants the following: (a) that during the calendar year in which the Notes are issued, the Issuer(including any subordinate entities) has not designated nor will designate obligations that when aggregated with the Notes, will result in more than $10,000,000 of"qualified tax exempt obligations" being issued; (b) that the Issuer reasonably anticipates that the amount of tax exempt obligations issued, during the calendar year in which the Notes are issued, by the Issuer (or any subordinate entities) will not exceed $10,000,000; and, (c) that the Issuer will take such action or refrain from such action as necessary, and as more particularly set forth in Section 9 hereof, in order that the Notes will not be considered "private activity bonds"within the meaning of section 141 of the Code. Section 10. SALE OF NOTES. The Notes are hereby initially sold and shall be delivered to TIB - The Independent BankersBank (the "Purchaser"), for cash for the par value thereof, pursuant to the purchase agreement dated the date of the final passage of this Ordinance which the Mayor is hereby authorized to execute and deliver. The Notes shall initially be registered in the name of the Purchaser. It is hereby officially found, determined, and declared that the terms of this sale are the most advantageous reasonably obtainable. Section 11. FURTHER PROCEDURES. The Mayor,Mayor Pro Tem,Town Manager, Finance Director and Town Secretary 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 Issuer a Paying Agent/Registrar Agreement with the Paying Agent/Registrar and all other 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 Notes and the sale of the Notes. In case any officer whose signature shall appear on any Note shall cease to be such officer before the delivery of such Note, 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 12. NO RULE 15c2-12 UNDERTAKING. The Issuer has not made an undertaking in accordance with Rule 15c2-12 of the Securities and Exchange Commission (the "Rule"). Section 13. DEFAULT AND REMEDIES. (a) 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: 11 (i) the failure to make payment of the principal of or interest on the Notes when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement or obligation of the Issuer,the failure to perform which materially,adversely affects the rights of the registered owners of the Notes,including,but not limited to its 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 the registered owner to the Issuer. (b) Remedies for Default. Upon the happening of any Event of Default,then and in every case, any registered owner or an authorized representative thereof, including, but not limited to, a trustee or trustees therefor, may proceed against the Issuer for the purpose of protecting and enforcing the rights of the registered owner 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 registered owner hereunder or any combination of such remedies. (c) Remedies Not Exclusive. (i) 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 Notes 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 Notes shall not be available as a remedy under this Ordinance. (ii) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. (iii) Ey accepting the delivery of Notes authorized under this Ordinance, such registered owner agrees that the certifications 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 trustees of the Issuer or the Council. Section 14. METHOD OF AMENDMENT. The Issuer hereby reserves the right to amend this Ordinance subject to the following terms and conditions,to-wit: (a) The Issuer 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- 12 recognized bond counsel,materially adversely affect the interests of the Registered Owners. (b) .Except as provided in paragraph(a)above, a majority of the Registered Owners of Notes then outstanding 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 Issuer;provided,however,that without the consent of 100%of the Registered Owners in aggregate principal amount of the then outstanding Notes, nothing herein contained shall permit or be construed to permit amendment of the terms and conditions of this Ordinance or in any of the Notes so as to: (1) Make any change in the maturity of any of the outstanding Notes; (2) Reduce the rate of interest borne by any of the outstanding Notes; (3) Reduce the amount of the principal of, or redemption premium, if any, payable on any outstanding Notes; (4) Modify the terms of payment of principal or of interest or redemption premium on outstanding Notes 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 Notes necessary for consent to such amendment. (c) If at any time the Issuer shall desire to amend this Ordinance under this Section,the Issuer shall send by U.S.mail to each registered owner of the affected Notes a copy of the proposed amendment. (d) Whenever at any time within one year from the date of mailing of such notice the Issuer shall receive an instrument or instruments executed by the Registered Owners of at least a majority in aggregate principal amount of all of the Notes 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 Issuer 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 Issuer and all Registered Owners of such affected Notes shall thereafter be determined,exercised,and enforced, subject in all respects to such amendment. (f) Any consent given by the Registered Owner of a Note 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 Note 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 Issuer,but such revocation shall not be effective if the Registered Owners the required amount 13 of the affected Notes then outstanding, have, prior to the attempted revocation, consented to and approved the amendment. (g) For the purposes of establishing ownership of the Notes,the Issuer shall rely solely upon the registration of the ownership of such Notes on the Registration Books kept by the Paying Agent/Registrar. Section 15. PROJECT FUND. (a) The Issuer hereby creates and establishes and shall maintain on the books of the Issuer a separate fund or account to be entitled the "Series 2017 Note Project Fund" for use by the Issuer for payment of all lawful costs associated with the Project as hereinbefore provided, and to pay the costs of issuance of the Notes. Upon payment of all such costs, any moneys remaining on deposit in said fund shall be transferred to the Interest and Sinking Fund. Amounts so deposited to the Interest and Sinking Fund shall be used in the manner described in Section 5 of this Ordinance. (b) The Issuer may place proceeds of the Notes (including investment earnings thereon) and amounts deposited into the Interest and Sinking Fund in investments authorized by the Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended; provided, however, that the Issuer hereby covenants that the proceeds of the sale of the Notes will be used as soon as practicable for the purposes for which the Notes are issued. (c) 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 16. SEVERABILITY. If any section,article,paragraph, sentence,clause,phrase or word in this Ordinance, or application thereof to any persons or circumstances is held invalid or unconstitutional by a court of competent jurisdiction, such holding shall not affect the validity of the remaining portion of this Ordinance, despite such invalidity,which remaining portions shall remain in full force and effect. Section 17. INTEREST EARNINGS ON NOTE PROCEEDS. Interest earnings derived from the investment of proceeds from the sale of the Notes shall be used along with other Note proceeds for the Project; provided that after completion of such purpose, if any of such interest earnings remain on hand, such interest earnings shall be deposited in the Interest and Sinking Fund. It is further provided,however,that any interest earnings on Note proceeds that are required to be rebated to the United States of America pursuant to Section 9 hereof in order to prevent the Notes from being arbitrage bonds shall be so rebated and not considered as interest earnings for the purposes of this Section. Section 18. APPROPRIATION. To pay the debt service coming due on the Notes 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. 14 Section 19. 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. ------------------------------ 15 EXHIBIT A The form of the Note, including the form of Paying Agent/Registrar's Authentication Certificate,the form of Assignment and the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be attached to the Note 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. (a) Form of Note. NO. R-_ UNITED STATES OF AMERICA PRINCIPAL STATE OF TEXAS AMOUNT TOWN OF WESTLAKE, TEXAS $ TAX NOTE, SERIES 2017 Interest Rate Delivery Date Maturity Date % May 23,2017 February 15, 2024 REGISTERED OWNER: PRINCIPAL AMOUNT: THE TOWN OF WESTLAKE,in Tarrant and Denton Counties,Texas(the"Issuer"),being a political subdivision and municipal corporation of the State of Texas, for value received, promises to pay, from the sources described herein, to the registered owner specified above, or registered assigns, the principal amount specified above, and to pay interest thereon, from the Delivery Date set forth above,on the balance of said principal amount from time to time remaining unpaid, at the interest rate per annum set forth above. The unpaid principal of this Note shall finally mature on February 15,2024(the "Maturity Date"),but shall be paid in installments on the dates and in the amounts set forth in the table below: Payment Date Principal (February 15) Amount 2018 $202,000 2019 212,000 2020 215,000 2021 219,000 2022 223,000 2023 227,000 2024 232,000 THE PRINCIPAL OF AND INTEREST ON THIS NOTE are payable in lawful money of the United States of America,without exchange or collection charges. The Issuer shall pay interest A-1 on this Note on February 15, 2018, and on each August 15 and February 15 thereafter to the date of final maturity or redemption prior to maturity. The last principal installment of this Note shall be paid to the registered owner hereof upon presentation and surrender of this Note at final maturity, or upon the date fixed for its redemption prior to maturity, at the principal office of TIB -The Independent BankersBank in Farmers Branch,Texas,which is the"Paying Agent/Registrar" for this Note. The payment of all other principal installments of and interest on this Note shall be made by the Paying Agent/Registrar to the registered owner hereof without presentation of this Note to the Paying Agent/Registrar on each principal and interest payment date by check or draft, dated as of such principal and interest payment date,drawn by the Paying Agent/Registrar on,and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of the Note(the "Note 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, principal and 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. ANY ACCRUED INTEREST due in connection with the final installment of principal of this Note or upon redemption of this Note in whole at the option of the Issuer prior to final maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this Note for payment at the principal corporate trust office of the Paying Agent/Registrar. The Issuer covenants with the registered owner of this Note that on or before each principal payment date and interest payment date for this Note it will make available to the Paying Agent/Registrar, from the "Interest and Sinking Fund" created by the Note Ordinance, the amounts required to provide for the payment,in immediately available funds,of all principal of and interest on the Note,when due. IF THE DATE for the payment of the principal of or interest on this Note 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 that 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 NOTE is dated May 15, 2017, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of$1,530,000 for paying all or a portion of the Issuer's contractual obligations incurred in connection with (i) acquiring, constructing, installing and equipping fire-fighting facilities,with any surplus proceeds to be used for(1) equipping Town Hall, including related parking, landscaping, and signage; and (2) constructing and improving streets, roads and sidewalks in the Town, including related drainage, signalization, landscaping, lighting, signage and utility relocation (collectively, the "Project") and (ii) payment of costs of issuance of the Note. A-2 ON ANY DATE, the Note may be redeemed prior to its scheduled maturity, at the option of the Issuer,with funds derived from any available and lawful source,as a whole, or in part, and, if in part,the particular Note, or portions thereof,to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Note may be redeemed only in an integral multiple of $1,000), at a redemption price equal to the principal amount to be redeemed plus accrued interest to the date fixed for redemption. AT LEAST THIRTY days prior to the date fixed for any redemption of Note 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 Note to be redeemed at its address as it appeared on the 45th day prior to such redemption date; 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 Note. 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 Note or portions thereof that 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 Note or portions thereof that 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 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 Note shall be redeemed, a substitute Note having the same maturity date,bearing interest at the same rate, in any denomination or denominations in any integral multiple of$1,000, at the written request of the registered owner, and in 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 Issuer,all as provided in the Note Ordinance. WITH RESPECT TO ANY OPTIONAL REDEMPTION OF THE NOTE, unless certain prerequisites to such redemption required by the Note Ordinance have been met and moneys sufficient to pay the principal of and premium, if any, and interest on the Note 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 Issuer, 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 Issuer shall not redeem such Note and the Paying Agent/Registrar shall give notice, in the manner in which the notice of redemption was given,to the effect that the Note have not been redeemed. THE NOTE is issuable solely as a fully registered Note, without interest coupons, in the principal denomination of any integral multiple of$1,000.As provided in the Note Ordinance,this Note 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 principal amount of a fully registered Note,without interest coupons,payable to the appropriate registered owner,assignee or A-3 assignees, as the case may be, having the same denomination or denominations in any integral multiple of $1,000 as requested in writing by the appropriate registered owner, assignee or assignees, as the case may be, upon surrender of this Note to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Note Ordinance. Among other requirements for such assignment and transfer, this Note 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 Note or any portion or portions hereof in any integral multiple of$1,000 to the assignee or assignees in whose name or names this Note or any such portion or portions hereof is or are to be registered. The form of Assignment printed or endorsed on this Note 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 Note 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 Note or portion thereof will be paid by the Issuer. 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, conversion, or exchange (i) 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(ii)with respect to any Note or any portion thereof called for redemption prior to maturity,within 45 days prior to its redemption date. IN THE EVENT any Paying Agent/Registrar for the Note is changed by the Issuer,resigns, or otherwise ceases to act as such,the Issuer has covenanted in the Note 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 Note. IT IS HEREBY certified, recited and covenanted that this Note 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 Note have been performed, existed and been done in accordance with law;that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Note, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in said Issuer, and have been pledged for such payment, within the limit prescribed by law. THE ISSUER HAS RESERVED THE RIGHT to amend the Note 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 Note. BY BECOMING the registered owner of this Note, the registered owner thereby acknowledges all of the terms and provisions of the Note Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Note Ordinance is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that A-4 the terms and provisions of this Note and the Note Ordinance constitute a contract between each registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Note to be signed with the manual or facsimile signature of the Mayor of the Issuer and countersigned with the manual or facsimile signature of the Town Secretary of said Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Note. (signature) (signature) Town Secretary Mayor (SEAL) PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Note is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Note has been issued under the provisions of the Note Ordinance described in the text of this Note; and that this Note has been issued in replacement of, or in exchange for, a Note that 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: TIB -THE INDEPENDENT BANKERSBANK, Farmers Branch, Texas Paying Agent/Registrar By: Authorized Representative 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 Note and all rights thereunder, and hereby irrevocably constitutes and appoints , attorney,to register the transfer of the within Note on the books kept for registration thereof,with full power of substitution in the premises. A-5 Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by NOTICE: The signature above must an eligible guarantor institution participating in correspond with the name of the registered a securities transfer association recognized owner as it appears upon the front of this Note signature guarantee program. in every particular, without alteration or enlargement or any change whatsoever. (d) Form of Registration Certificate of the Comptroller of Public Accounts. COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Note has been examined, certified as to validity and approved by the Attorney General of the State of Texas, and that this Note has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL.,) PREPAYMENT RECORD Principal Prepayment (amount and installment(s) to Remaining Name and Title of Date of which payment is Principal Authorized Officer Signature of Authorized Payment applied) Balance making Entry Officer A-6 A-7 PURCHASE AGREEMENT Town of Westlake,Texas, Tax Note, Series 2017 April 24, 2017 Town of Westlake 1301 Solana Blvd., Suite 4202 Westlake, Texas 76262-1674 I,the undersigned,being an authorized officer of TIB -The Independent BankersBank(the "Bank"), being a financial institution, to-wit: a bank within the definition of section 3(a)(2) of the Securities Act of 1933, engaged in the business of investing in securities such as the Town of Westlake, Texas, Tax Note, Series 2017 (the "Note"), acknowledge that the Town of Westlake, Texas (the "Issuer") is issuing the Note for the purpose of paying all or a portion of the Issuer's contractual obligations incurred in connection with (i) acquiring, constructing, installing and equipping fire-fighting facilities, with any surplus proceeds to be used for (1) equipping Town Hall, including related parking, landscaping, and signage; and (2) constructing and improving streets, roads and sidewalks in the Town, including related drainage, signalization, landscaping, lighting, signage and utility relocation (collectively, the "Project") and (ii) payment of costs of issuance of the Notes. The Bank hereby acknowledges receipt of the ordinance authorizing the issuance and sale of the Note (the "Ordinance"). The Bank understands that the Note will constitute a general obligation of the Issuer. The Bank further understands that the Note will be payable from, and secured by a lien on and pledge of, an annual ad valorem tax levied, within the limits prescribed by law, against all taxable property located within the Issuer. The Bank further understands that the Note will be sold for cash, will be approved by the Attorney General of the State of Texas, and will be delivered in the form of one fully-registered Note representing the full maturity amount of the Note. The Note shall be issued in the principal amount of$1,530,000 and shall have a final maturity of February 15, 2024.. Annual principal installment payments shall be made to the registered owner thereof, as described in the Ordinance. The Note will initially be made payable to the order of the Bank,but may be assigned by the Bank in whole,but not in part,and the Bank or any assignee of the Note from any prior registered owner shall be the registered owner thereof. The Note will be delivered in physical form, and will not be subject to a book-entry system of payment,registration and transfer. In connection with the purchase of the Note,the Bank agrees as follows: A. Delivery of the Note to the Bank (the "Closing") shall be made at the Bank on or about May 23, 2017, it being understood that this delivery date may be extended by mutual consent of the Bank and the Issuer. Town of Westlake, Texas, Tax Note,Series 2017 Purchase Agreement B. The first interest payment date for the Note shall be February 15, 2018, with interest payable on each August 15 and February 15 thereafter. C. Principal of the Note will be payable in annual installments, or upon redemption at the option of the Issuer, under the terms and conditions described in the Ordinance. D. It is understood and agreed that the principal installments of the Note are subject to redemption at the option of the Issuer on the dates and in the manner set forth in the Ordinance. E. The Note will be fully registered as to principal and interest, and the Bank shall serve as the initial paying agent and registrar for the Note without charge to the Issuer, except for the reimbursement of any reasonable expenditures incurred by the Bank in the capacity of paying agent and registrar, as provided in the Paying Agent/Registrar Agreement between the Issuer and the Bank. F. In regard to its purchase of the Note, the Bank acknowledges that no prospectus, official statement or other offering document has been prepared;however,the Issuer has furnished the Bank with all information necessary and requested by the Bank to permit the Bank to make an informed decision concerning its purchase of the Note, and the Bank has made such inspections and investigations as it has deemed necessary to determine the investment quality of the Note and to assess all risk factors associated with the purchase and ownership of the Note. The Bank hereby acknowledges and represents that it has made itself familiar with the financial condition of the Issuer and the ability of the Issuer to timely pay the principal of and interest on the Note. The Bank has been furnished with such financial information relating to the Issuer as it has requested for the purposes of making its assessment of an investment in the Note. The Bank has had a reasonable opportunity to request and review such other information as it needs from the Issuer in order to enable it to make its investment decision. The Bank is not relying on McCall, Parkhurst&Horton L.L.P., the Issuer's Bond Counsel, or Lawrence Financial Consulting LLC, the Issuer's Financial Advisor, as to the completeness or accuracy of any financial information provided to the Bank by the Issuer in connection with its determination to make an investment in the Note. G. The Note is being purchased by the Bank for the account of the Bank as evidence of a loan (and not on behalf of another),and the Bank has no present intention of reselling such Note or dividing its interest therein, either currently or after the passage of a fixed or determinable period of time or upon the occurrence or nonoccurrence of any predetermined event or circumstance; provided, however that the Bank reserves the right to sell, pledge, transfer, convey,hypothecate or dispose of the Note at some future date. H. The Bank acknowledges that the Note will not be rated. In addition, the Bank acknowledges that the Note will not be listed on any securities exchange. Further, no trading market now exists for the Note, and none may exist in the future. Accordingly,the Bank understands that it may need to bear the risks of this investment for an indefinite Town of Westlake, Texas, Tax Note,Series 2017 Purchase Agreement 2 time, since any sale prior to the maturity of the Note may not be possible or may be at a price below that which the Bank is paying for the Note. I. It is understood and agreed that the Bank is buying the Note in a private placement by the Issuer to the Bank. The Note is exempt from any federal securities registration requirements by virtue of Section 3(a)(2) of the Securities Act of 1933. The private placement of the Note is exempt from the provisions of Rule 15c2-12 of the Securities and Exchange Commission (the "Rule") and the Issuer has not undertaken, and will not undertake, to make any on-going disclosures for the benefit of the holder of the Note pursuant to the Rule;provided, however, that in consideration of the purchase of the Note by the Bank, for so long as the Bank is the holder of the Note, the Issuer shall provide to the Bank the Issuer's annual financial report upon written request. J. This Agreement shall be terminated by delivery of the Note in the amount of$1,530,000 to the Bank at the Closing date,provided that the representations of the Bank in F. and G. above shall survive the termination hereof. K. As a condition to the purchase of the Note,the Bank shall receive at the Closing an opinion of Bond Counsel in substantially the form attached hereto as Exhibit A. In addition, the Bank shall receive at the Closing an opinion of the Attorney General of the State of Texas to the effect that the Note has been lawfully issued by the Issuer and is a valid and binding obligation of the Issuer under applicable laws of the State of Texas. L. As a further condition to the purchase of the Note, the Bank shall receive at the Closing a certificate, dated the date of Closing, of an appropriate official of the Issuer, to the effect that (i) the Issuer is not a party to any litigation or other prgceeding pending or, to such official's knowledge, threatened which, if decided adversely to the Issuer, would have a materially adverse effect on the financial condition of the Issuer and(ii)there has not been any materially adverse change in the financial condition of the Issuer since September 30, 2016,the latest date as of which audited financial information is available. M. This Agreement may be executed in any number of counterparts, each of which shall be deemed as an original and all of which shall constitute one and the same agreement. [Execution pages follow] Town of Westlake, Texas, Tax Note,Series 2017 Purchase Agreement 3 Respectfully submitted; TIB-THE INDEPENDENT BANKERSBANK By: Title: SiQrature Paee 8 of 21 PURCHASE AGREEMENT TOWN OF WESTLAKE,TEXAS,TAx NOTE,SERIFS 2017 ACCEPTANCE ACCEPTED on April 24,2017. TOWN OF WESTLAKE,TEXAS Mayor Signature Pale(2 oft} PURCHASE AGREEMENT TOWN OF WESTLAKE,TEXAS,TAX NOTE,SERIES 2017 Exhibit A Form of Opinion of Bond Counsel [Closing Date] $1,530,000 TOWN OF WESTLAKE,TEXAS, TAx NOTE, SERIES 2017 Town of Westlake 1301 Solana Blvd., Suite 4202 Westlake, Texas 76262-1674 TIB -The Independent BankersBank 11701 ]Luna Road Farmers Branch, Texas 75234 AS BOND COUNSEL FOR the Town of Westlake, Texas (the "Issuer"), of the note described above (the "Obligation") we have examined into the legality and validity of the Obligation,which bears interest from the date specified in the text of the Obligation,until maturity or redemption, at the rate and is payable on the dates as stated in the text of the Obligation, and maturing in serial installments on February 15 in each of the years 2018 through 2024, inclusive, with the Obligation being subject to redemption prior to maturity,all in accordance with the terms and conditions stated in the text of the Obligation. WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas,and a transcript of certified proceedings of the Issuer,and other pertinent instruments authorizing and relating to the issuance of the Obligation, including the executed Obligation Numbered R-1. BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Obligation has been duly authorized, issued and delivered in accordance with law, and that the Obligation, except as may be limited by laws applicable to the Issuer relating to bankruptcy, reorganization and other similar matters affecting creditors' rights generally, and by general principles of equity which permit the exercise of judicial discretion, constitute a valid and legally binding obligation of the Issuer, and ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Obligation have been levied and pledged for such purpose, within the limits as to rate or amount prescribed by law. IT IS FURTHER OUR OPINION, except as discussed below, that the interest on the Obligation is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Obligation is not a"specified private activity bond" and that, accordingly, interest on the Obligation will not be included as an individual or corporate alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of A-1 1986 (the "Code"). Except as stated above, we express no opinion as to any other federal, state, or local tax consequences of acquiring, carrying, owning, or disposing of the Obligation. WE EXPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Obligation, nor as to any such insurance policies issued in the future. IN EXPRESSING THE AFOREMENTIONED OPINIONS,we have relied on and assume continuing compliance with, certain representations contained in the federal tax certificate of the Issuer and covenants set forth in the ordinance adopted by the Issuer to authorize the issuance of the Obligation, relating to, among other matters, the use of the project being financed and the investment and expenditure of the proceeds and certain other amounts used to pay or to secure the payment of debt service on the Obligation, the accuracy of which we have not independently verified. We call your attention to the fact that if such representations are determined to be inaccurate or if the Issuer fails to comply with such covenants, interest on the Obligation may become includable in gross income retroactively to the date of issuance of the Obligation. WE CALL YOUR ATTENTION TO THE FACT that the interest on tax-exempt obligations, such as the Obligation, is included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. OUR OPINIONS ARE BASED ON EXISTING LAW, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service (the "Service");rather, such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representations and covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Obligation. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or omitted, respectively, may result in the treatment of interest on the Obligation as includable in gross income for federal income tax purposes. OUR SOLE ENGAGEMENT in connection with the issuance of the Obligation is as Bond Counsel for the Issuer, and, in that capacity,-we have been engaged by the Issuer for the sole purpose of rendering our opinions with respect to the legality and validity of the Obligation under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the Obligation for federal income tax purposes, and for no other reason or purpose. The foregoing opinions represent our legal judgment based upon a review of existing legal authorities that we deem relevant to render such opinions and are not a guarantee of a result. We have not been requested to investigate or verify, and have not independently investigated or A-2 verified, any records, data, or other material relating to the financial condition or capabilities of the Issuer, or the disclosure thereof in connection with the sale of the Obligation, and have not assumed any responsibility with respect thereto. We express no opinion and make no comment with respect to the marketability of the Obligation and have relied solely on certificates executed by officials of the Issuer as to the current outstanding indebtedness of, and assessed valuation of taxable property within the Issuer. Respectfully A-3 PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT is entered into as of April 24,2017(this "Agreement"),by and between the Town of Westlake, Texas (the "Issuer"), and TIB - The Independent BankersBank, Farmers Branch, Texas(the 'Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its Town of Westlake,Texas, Tax Note, Series 2017 (the "Note"), such Note to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS, the Note is scheduled to be delivered to the initial purchaser thereof on or about May 23,2017; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on the Note and with respect to the registration,transfer and exchange thereof by the registered owners thereof;and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Note; NOW,THEREFORE,it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Note. As Paying Agent for the Note,the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Note as the same become due and payable to the registered owners thereof,all in accordance with this Agreement and the"Order" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Note. As Registrar for the Note, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Note and with respect to the transfer and exchange thereof as provided herein and in the "Order." The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Note. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Note means the date on and after which the principal or any or all installments of interest, or both, are due and payable on any Note which has become accelerated pursuant to the terms of the Note. "Bank Office" means the principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Financial Advisor" means Lawrence Financial Consulting LLC. "Fiscal Year" means the fiscal year of the Issuer. "Holder" and "Note Holder" each means the Person in whose name a Note is registered in the Note Register. "Issuer Request" and "Issuer Order" means a written request or order signed in the name of the Issuer by the Mayor, Mayor Pro Tem, Finance Director or Town Manager of the Issuer or other authorized official of the Issuer and delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Note" of any particular Note means every previous Note evidencing all or a portion of the same obligation as that evidenced by such particular Note (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Note for which a replacement Note has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Order). "Redemption Date" when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to the terms of the Order. "Order" means the order, ordinance or resolution of the governing body of the Issuer pursuant to which the Note is issued, certified by the Town Secretary or any other officer of the Issuer and delivered to the Bank. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice- Chairman of the Board of Directors, the Chairman or Vice-Chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter,any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Note Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Note. "Stated Maturity" means the date specified in the Order the principal of a Note is scheduled to be due and payable. Section 2.02. Other Definitions. The terms 'Bank," Issuer," and "Note" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying Age As Paying Agent,the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Note at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Note to the Bank at the Bank Office. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer,pay on behalf of the Issuer the interest on each Note when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date, to the Holders of the Note (or the Predecessor Note) on the respective Record Date, to the address appearing on the Note Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Note on the dates specified in the Order. ARTICLE FOUR REGISTRAR Section 4.01. Note Register-Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Note Register") and, if the Bank Office is located outside the State of Texas, a copy of such books and records shall be kept in the State of Texas, for recording the names and addresses of the Holders of the Note, the transfer, exchange and replacement of the Note and the payment of the principal of and interest on the Note to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges and replacement of Note shall be noted in the Note Register. Every Note surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. .The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer or exchange of the Note. To the extent possible and under reasonable circumstances,the Bank agrees that, in relation to an exchange or transfer of the Note, the exchange or transfer by the Holders thereof will be completed and a new Note delivered to the Holder or the assignee of the Holder in not more than three (3) business days after the receipt of the Note to be canceled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Certificates. At any time that the Note is not subject to a book-entry-only system of registration and transfer,at the Bank's request,the Issuer shall provide an adequate inventory of printed Notes to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Notes will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Notes in safekeeping. Section 4.03. Form of Note Re i�ster. The Bank, as Registrar, will maintain the Note Register relating to the registration, payment, transfer and exchange of the Note in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Note Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Note Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Note Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Note Register. The Issuer may also inspect the information contained in the Note Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. The Bank will not release or disclose the contents of the Note Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Note Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Note Register. Section 4.05. Cancellation of Certificates. All certificates surrendered to the Bank, at the designated Payment/Transfer Office, for payment, redemption, transfer or replacement shall be promptly canceled by the Bank. The Bank will provide to the Issuer, at reasonable intervals determined by it, a certificate evidencing the destruction of canceled certificates. Section 4.06. Mutilated,Destroyed,Lost or Stolen Note. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Order,to deliver and issue a Note in exchange for or in lieu of a mutilated, destroyed, lost, or stolen Note as long as the same does not result in an overissuance. In case any Note shall be mutilated, or destroyed, lost or stolen, the Bank, in its discretion, may execute and deliver a replacement Note of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Note, or in lieu of and in substitution for such destroyed lost or stolen Note, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss or theft of such Note, and of the authenticity of the ownership thereof and (ii)the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution and delivery of a replacement Note shall be borne by the Holder of the Note mutilated,or destroyed,lost or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Note it has paid pursuant to Section 3.01, the Note it has delivered upon the transfer or exchange of the Note pursuant to Section 4.01, and the Note it has delivered in exchange for or in lieu of a mutilated,destroyed,lost, or stolen Note pursuant to Section 4.06. Section 4.08. Reportinu Requirements. To the extent required by the Internal Revenue Code of 1986, as amended, and any regulations or rulings promulgated by the U.S. Department of the Treasury pursuant thereto, the Bank shall report or assure that a report is made to the Holder and the Internal Revenue Service the amount of interest paid or the amount treated as interest accrued on the Note which is required to be reported by a Holder on its returns of federal income tax. ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. The Bank is also authorized to transfer funds relating to the closing and initial delivery of the Note in the manner disclosed in the closing memorandum as prepared by the Issuer's Financial Advisor or other agent. The Bank may act on a facsimile or e-mail transmission of the closing memorandum acknowledged by the Financial Advisor or the Issuer as the final closing memorandum. The Bank shall not be liable for any losses, costs or expenses arising directly or indirectly from the Bank's reliance upon and compliance with such instructions. Section 5.02. Reliance on Documents,Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Note, but is protected in acting upon receipt of a Note containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction,consent, order,bond,note, security or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered,or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Note shall be taken as the statements of the Issuer,and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Note, or any other Person for any amount due on any Note from its own funds. Section 5.04. May Hold Note. The Bank, in its individual or any other capacity, may become the owner or pledgee of Note and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar,or any other agent. Section 5.05. Moneys Held by B The Bank shall deposit any moneys received from the Issuer into a trust account to be held in a paying agency capacity for the payment of the Note, with such moneys in the account that exceed the deposit insurance available to the Issuer by the Federal Deposit Insurance Corporation, to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas to secure and be pledged as collateral for trust accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such trust account shall be made by check drawn on such trust account unless the owner of the Note shall, at its own expense and risk,request such other medium of payment. Subject to the Unclaimed Property Law of the State of Texas,any money deposited with the Bank for the payment of the principal, premium (if any), or interest on any Note and remaining unclaimed for three years after the final maturity of the Note has become due and payable will be paid by the Bank to the Issuer if the Issuer so elects, and the Holder of such Note shall hereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such monies shall thereupon cease. If the Issuer does not elect,the Bank is directed to report and dispose of the funds in compliance with Title Six of the Texas Property Code,as amended. Section 5.06. Indemnification. To the extent permitted by law,the Issuer agrees to indemnify the Bank for, and hold it harmless against,any loss,liability,or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail,return receipt requested,to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction in the State of Texas to determine the rights of any Person claiming any interest herein. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank,respectively,at the addresses set forth below: Issuer Town of Westlake,Texas 1301 Solana Blvd., Suite 4202,2nd Floor Westlake,Texas 76262 Paying Agent/Regis tray TIB -The Independent BankersBank 11701 Luna Road Farmers Branch,Texas 75234 Attention:Loan Operations Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severability. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder,any benefit or any legal or equitable right,remedy,or claim hereunder. Section 6.08. Entire Agreement. This Agreement and the Order constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Order,the Order shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Note to the Holders thereof or (ii) may be earlier terminated by either party upon sixty (60) days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Note of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay or otherwise adversely affect the payment of the Note. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Note Register(or a copy thereof),together with other pertinent books and records relating to the Note, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. The resigning Paying Agent/Registrar may petition any court of competent jurisdiction for the appointment of a successor Paying Agent/Registrar if an instrument of acceptance by a successor Paying Agent/Registrar has not been delivered to the resigning Paying Agent/Registrar within sixty (60) days after giving such notice of resignation. Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. [The remainder of this page is left blank intentionally] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. TOWN OF WESTLAKE,TEXAS. F By. W or TIB-THE INDEPENDENT BANKERSBANK By: Title: � P SCHEDULE A PAYING AGENT/REGISTRAR FEE SCHEDULE N/A SIGNATURE IDENTIFICATION AND GENERAL CERTIFICATE THE STATE OF TEXAS § TARRANT AND DENTON COUNTIES § TOWN OF WESTLAKE § We, the undersigned officers of the Town of Westlake, Texas (the "Issuer"), hereby certify that we are executing and delivering this certificate with reference to the Town of Westlake, Texas, Tax Note, Series 2017, dated May 15, 2017, in the principal amount of $1,530,000 (the "Note"). The certifications herein are made this, the 23`d day of May, 2017. Certifications as to Execution of Note and Issuer Seal 1. We officially executed and signed the Note with our manual signatures or by causing facsimiles of our manual signatures to be placed on the Note, and we hereby adopt said facsimile signatures as our own, respectively, and declare that said facsimile signatures constitute our signatures the same as if we had manually signed the Note. 2. The Note is substantially in the form, and have been duly executed and signed in the manner,prescribed in the Ordinance authorizing the issuance of the Note. 3. At the time we so executed and signed the Note we were, and at the time of executing this certificate we are, the duly chosen, qualified and acting officers indicated therein, and authorized to execute the same. 4. We have caused the official seal of the Issuer to be impressed or placed in facsimile on the Note; and said seal on the Note has been duly adopted as, and is hereby declared to be,the official seal of the Issuer. Certifications as to Liti ag tion 5. No litigation of any nature has been filed or is now pending to restrain or enjoin the issuance or delivery of the Note, or which would affect the provision made for their payment or security, or in any manner questioning the proceedings or authority concerning the issuance of the Note, and that so far as we know and believe no such litigation is threatened. 6. No litigation of any nature has ever been filed pertaining to, affecting, questioning or contesting, and so far as we know and believe no such litigation is threatened, with respect to: (a) the issuance, delivery, payment, security or validity of the Note, (b)the authority of the Town Council and the officers of said Town Council to issue, execute and deliver the Note; or(c)the current Tax Rolls of the Issuer. 7. Neither the corporate existence nor boundaries of the Issuer is being contested, no litigation has been filed or is now pending, and so far as we know and believe no such litigation is threatened, that would affect the authority of the officers of the Issuer to issue, execute, sign, and deliver the Note, and no authority or proceedings for the issuance of the Note have been repealed,revoked or rescinded. Certifications as to the Organization,Existence and Oualifications of the Issuer 8. The Issuer is a duly incorporated Type A general law municipality, having less than 5,000 inhabitants, operating under the Constitution and laws of the State of Texas. The Issuer's population as of the last census was 992. Certification as to No Default 9. The Issuer is not in default with respect to the Note or the ordinance authorizing the issuance of the Note. Certification as to the Issuer's Tax-Supported Debt 10. After the issuance of the Note, the Issuer will have $36,207,000 in aggregate principal amount of tax-supported bonded indebtedness outstanding. A schedule of the debt service requirements for all outstanding general obligation tax debt of the Issuer, including the Note, is set forth in Exhibit A hereto. Certification as to the Issuer's Current Tax Roll 11. That the currently effective ad valorem tax appraisal roll of the Issuer (the "Tax Roll") is the Tax Roll prepared and approved during the calendar year 2016-17, being the most recently approved Tax Roll of the Issuer; that the taxable property in the Issuer has been appraised, assessed and valued as required and provided by the Texas Constitution and Property Tax Code (collectively, "Texas law"); that the Tax Roll for said year has been submitted to the Town Council of the Issuer as required by Texas law, and has been approved and recorded by said Town Council; and according to the Tax Roll for said year the net aggregate taxable value of taxable property in the Issuer (after deducting the amount of all applicable exemptions required or authorized under Texas law), upon which the annual ad valorem tax of the Issuer has been or will be imposed and levied, is $1,105,075,652. Submission of Documents to the Attorney General 12. The initial securities certificate for the Note is directed to be sent to the Office of the Attorney General of the State of Texas, Public Finance Division (the "Attorney General"), by the Issuer's Bond Counsel, McCall, Parkhurst & Horton L.L.P. The Issuer requests that the Attorney General examine and approve the initial Certificate in accordance with applicable law. After such approval, the Attorney General is requested to deliver the Note to the Comptroller of Public Accounts for registration. 2 Authorization of the Attorney General to Execute this Certificate 13. The Attorney General is hereby authorized and directed to date this Certificate concurrently with the date of approval of the Note. If any litigation or contest should develop pertaining to the Note or any other matters covered by this Certificate, the undersigned will notify the Attorney General thereof immediately by telephone. With this assurance the Attorney General can rely on the absence of any such litigation or contest, and on the veracity and currency of this Certificate, at the time the Note is approved, unless the Attorney General is notified otherwise as aforesaid. Certification as to Texas Ethics Commission 14. With respect to the contracts contained within the transcript of proceedings filed with the Attorney General in connection with the issuance of the Note, all disclosure filings and acknowledgments required by Section 2252.908, Texas Government Code, and the rules of the Texas Ethics Commission related to said provision,have been made. [Remainder ofpage left blank intentionally] 3 The persons named below were,on the date of authorization of the Note, the duly elected and qualified incumbents of,the offices of the Issuer set opposite their respective names, and the signatures below are the genuine signatures of said officers. By signing .below, such officers hereby evidence their lawful signatures, adopt same as facsimiles for the purpose of executing the Note and,attest tothe truthfulness of the foregoing certifications. MANUAL SIGNATURES OFFICIAL"TITLES Mayor, Town of..Westlake. Town Secretary, Town of Westlake Before me, on this day personally appeared theforegoing individuals, known to me to be the officers whose true and genuine signatures were subscribed to the foregoing instrument in my presence. Given.under my hand and seal of office;this, <15 day of April,2017. 4 tary Pu lic (Notary Seal) TANYA D. MORRIS Notary Public STATE OFTEXAS `:Vi Pei Notary YO 8 12916489-3 ''7jf ��r4+� ply Cown.FYp.Octobts 3!.2020 S-1 EXHIBIT A DEBT SERVICE SCHEDULE DATE 2011 co 2011 R(d 2013 R(d 2013 co 2014 Rfd 119,;9 16,clu 00 ,I oz,I A6104-; 6 :46.:16,00 5,0 D.0�4�i :,i7j4o,w .................. ............ ...... ............ M,500.W ifi2,000,00 t-w,i 1 F1 Du 4 "1 Al�'.76 %) ----------- '47 7JWUh) DATE 2016 co 2017 Rfd 2017 Motes TOTAL 09 ,zoi.) ZO ow',ownZ6 t;vox"o :Z4,2f� 76 I s..To A 4010150'M Tout CLOSING CERTIFICATE THE STATE OF TEXAS COUNTIES OF TARRANT AND DENTON TOWN OF WESTLAKE I, the undersigned, hereby certify that I am the Mayor of the Town of Westlake, Texas (the "Town"), and I further certify as follows: 1. That this certificate is executed for and on behalf of the Town with reference to the issuance of Town of Westlake, Texas, Tax Note, Series 2017, dated May 15, 2017, in the princi- pal amount of$1,530,000 (the "Notes"). 2. That capitalized words and terms contained in this certificate shall have the same meanings as set forth in the Purchase Agreement, dated as of April 24, 2017, by and between the Town and Branch Banking and Trust Company(the "Agreement"). 3. That in my official capacity, (i) the Town is not a party to any litigation or other proceeding pending or, to my knowledge, threatened which, if decided adversely to the Town, would have a materially adverse effect on the financial condition of the Town and (ii) there has not been any materially adverse change in the financial condition of the Town since September 30, 2016,the latest date as of which audited financial information is available. SIGNED this May 23,'2017. TOWN OF WESTLAKE, TEXAS Mayor FEDERAL TAX CERTIFICATE 1. In General. 1.1. The undersigned is an authorized representative of the Town of Westlake, Texas (the "Issuer"). 1.2. This Certificate is executed for the purpose of establishing the reasonable expectations of the Issuer as to future events regarding the Issuer's Tax Note, Series 2017 (the "Notes"). The Notes are being issued pursuant to an Ordinance duly adopted by the Issuer(the "Ordinance"). The Ordinance is incorporated herein by reference. 1.3. To the best of the undersigned's knowledge, information and belief, the expectations contained in this Federal Tax Certificate are reasonable. 1.4. The undersigned is an officer of the Issuer delegated with the responsibility of issuing and delivering the Notes. 1.5. The undersigned is not aware of any facts or circumstances that would cause him to question the accuracy of the representations made by TIB - The Independent BankersBank (the "Purchaser") in the Issue Price Certificate attached hereto as Exhibit "D", and by Lawrence Financial Consulting LLC (the "Financial Advisor")with respect to the Schedules attached hereto as Exhibit"E". 2. The Purpose of the Notes and Useful Lives of Projects. 2.1. The Notes are being issued pursuant to the Ordinance(a)to provide for the payment of costs of issuing the Notes and (b) for acquiring, constructing, installing and equipping fire-fighting facilities, with any surplus proceeds to be used for (1) equipping Town Hall, including related parking, landscaping, and signage; and (2) constructing and improving streets, roads and sidewalks in the Issuer, including related drainage,signalization, landscaping,lighting,signage and utility relocation(the"Projects"). 2.2. The Issuer expects that the aggregate useful lives of the Projects exceed 20 years from the later of the date the Projects are placed in service or the date on which the Notes are issued. 2.3. All earnings, such as interest and dividends,received from the investment of the proceeds of the Notes during the period of acquisition and construction of the Projects and not used to pay interest on the Notes,will be used to pay the costs of the Projects,unless required to be rebated and paid to the United States in accordance with section 148(f) of the Internal Revenue Code of 1986 (the "Code"). The proceeds of the Notes,together with any investment earnings thereon,are expected not to exceed the amount necessary for the governmental purpose of the Notes. The Issuer expects that no disposition proceeds will arise in connection with the Projects or the Notes. 3. Expenditure of Bond Proceeds and Use of Projects. 3.1. The Issuer will incur, within six months after the date of issue of the Notes, a binding obligation to commence the Projects,either by entering into contracts for the construction of the Projects or by entering into contracts for architectural or engineering services for such Projects, or contracts for the development,purchase of construction materials, or purchase of equipment, for the Projects, with the amount to be paid under such contracts to be in excess of five percent of the proceeds which are estimated to be used for the cost of the Projects. F:\bond counsel\Cities\Westlake\2017\Tax Notes\tax docs\Westlake Texas(Town of)-New$-CSST)-fedtaxceit-v2.doc 5/2/2017 9:08 AM 3.2. After entering into binding obligations,work on such Projects will proceed promptly with due diligence to completion. 3.3. All original proceeds derived from the sale of the Notes to be applied to the Projects and all investment earnings thereon (other than any amounts required to be rebated to the United States pursuant to section 148(f)of the Code)will be expended for the Projects no later than a date which is three years after the date of issue of the Notes. 3.4. The Issuer will account for the expenditure of bond proceeds (including investment earnings thereon)for the purposes described in Section 2 herein on its books and records by allocating such proceeds to expenditures within 18 months of the later of the date that(i)the expenditure is made, or(ii)the purposes for which the Notes are issued have been accomplished. The foregoing notwithstanding, the Issuer will not expend such sale proceeds more than 60 days after the earlier of(i)the fifth anniversary of the delivery of the Notes, or(ii)the date the Notes are retired,unless the Issuer obtains an opinion of nationally-recognized bond counsel that such expenditure will not adversely affect the tax-exempt status of the Notes. 3.5. Only Project costs paid or incurred by the Issuer on or after 60 days prior to the date the Issuer approved the funding of the Projects (the "60-day period") through its declaration of official intent ("Qualified Costs") will be paid or reimbursed with bond proceeds. For this purpose Qualified Costs also include preliminary expenditures, incurred prior to the 60-day period before the approval of the Issuer through its declaration of official intent, up to an amount not in excess of 20 percent of the aggregate amount of the Notes. No Qualified Cost represents the cost of property or land acquired from a related party. 3.6. The Issuer will allocate the Project costs to "capital expenditure". For this purpose, "capital expenditure" means any cost that is properly chargeable to capital.account(or would be so chargeable with a proper election)under general federal income tax principles. For example, costs incurred to acquire, construct or improve land,building and equipment generally are capital expenditures. 3.7. The Issuer will not invest the proceeds prior to such expenditure in any guaranteed investment contract or other nonpurpose investment with a substantially guaranteed yield for a period equal to or greater than four years. 3.8. Other than members of the general public,the Issuer expects that throughout the lesser of the term of the Notes, or the useful lives of the Projects, the only user of the Projects will be the Issuer or the Issuer's employees and agents, except as described in this Section 3.8. The Issuer will be the manager of the Projects.In no event will the proceeds of the Notes or facilities financed therewith be used for private business use in an amount greater than$15 million. 3.9. Except as stated below, the Issuer expects not to sell or otherwise dispose of property constituting the Projects prior to the earlier of the end of such property's useful life or the final maturity of the Notes. The Ordinance provides that the Issuer will not sell or otherwise dispose of the Projects unless the Issuer receives an opinion of nationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Notes. For purposes of this Subsection, the Issuer has not included the portion of the Projects comprised of personal property that is disposed in the ordinary course at a price that is expected to be less than 25 percent of the original purchase price. The Issuer, upon any disposition of such property, will transfer the receipts from the disposition of such property to the general operating fund and expend such receipts within six months for other governmental programs. 2 4. Yield. 4.1. The issue price of the Notes included in the Form 8038-G, is based on the Issue Price Certificate attached hereto. 4.2. The Issuer has not entered into any qualified guarantee or qualified hedge with respect to the Notes. The yield on the Notes will not be affected by subsequent unexpected events, except to the extent provided in section 1.148-4(h)(3) of the Treasury Regulations when and if the Issuer enters into a qualified hedge or into any transaction transferring,waiving or modifying any right that is part of the terms of any bond. The Issuer will consult with nationally recognized bond counsel prior to entering into any of the foregoing transactions. 5. Interest and Sinking Fund. 5.1. A separate and special Interest and Sinking Fund has been created and established,other than as described herein, solely to pay the principal of and interest on the Notes (the "Bona Fide Debt Service Portion"). The Bona Fide Debt Service Portion constitutes a fund that is used primarily to achieve a proper matching of revenues and debt service within each bond year. Such portion will be completely depleted at least once each year except for an amount not in excess of the greater of(a)one-twelfth of the debt service on the Notes for the previous year, or(b)the previous year's earnings on such portion of the Interest and Sinking Fund. Amounts deposited in the Interest and Sinking Fund constituting the Bona Fide Debt Service Portion will be spent within a thirteen-month period beginning on the date of deposit, and any amount received from the investment of money held in the Interest and Sinking Fund will be spent within a one-year period beginning on the date of receipt. 5.2. Any money deposited in the Interest and Sinking Fund and any amounts received from the investment thereof that accumulate and remain on hand therein after thirteen months from the date of deposit of any such money or one year after the receipt of any such amounts from the investment thereof shall constitute a separate portion of the Interest and Sinking Fund. The yield on any investments allocable to the portion of the Interest and Sinking Fund exceeding the sum of(a)the Bona Fide Debt Service Portion and (b)an amount equal to the lesser of five percent of the sale and investment proceeds of the Notes or$100,000 will be restricted to a yield that does not exceed the yield on the Notes. 6. Invested Sinking Fund Proceeds,Replacement Proceeds. 6.1. The Issuer has, in addition to the moneys received from the sale of the Notes, certain other moneys that are invested in various funds which are pledged for various purposes. These other funds are not available to accomplish the purposes described in Section 2 of this Certificate. 6.2. Other than the Interest and Sinking Fund, there are, and will be, no other funds or accounts established,or to be established,by or on behalf of the Issuer(a)which are reasonably expected to be used, or to generate earnings to be used, to pay debt service on the Notes, or (b) which are reserved or pledged as collateral for payment of debt service on the Notes and for which there is reasonable assurance that amounts therein will be available to pay such debt service if the Issuer encounters financial difficulties. Accordingly, there are no other amounts constituting"gross proceeds"of the Notes,within the meaning of section 148 of the Code. 3 7. Other Obligations. 7.1. There are no other obligations of the Issuer that(a) are sold at substantially the same time as the Notes, i.e., within 15 days of the date of sale of the Notes, (b) are sold pursuant to a common plan of financing with the Notes,and(c)will be payable from the same source of funds as the Notes. 7.2. The Issuer(including any of its related entities)has not issued nor does it expect to issue any other tax-exempt obligations during the current calendar year, including certain lease purchase agreements, in an amount which when aggregated with the Notes would exceed $10,000,000, within the meaning of section 265(b)of the Code. 8. Federal Tax Audit Responsibilities. The Issuer acknowledges that in the event of an examination by the Internal Revenue Service (the "Service") to determine compliance of the Notes with the provisions of the Code as they relate to tax-exempt obligations, the Issuer will respond, and will-direct its agents and assigns to respond, in a commercially reasonable manner to any inquiries from the Service in connection with such an examination. The Issuer understands and agrees that the examination may be subject to public disclosure under applicable Texas law. The Issuer acknowledges that this Certificate, including any attachments, does not constitute an opinion of Bond Counsel as to the proper federal tax or accounting treatment of any specific transaction. 9. Record Retention and Private Business Use. The Issuer has covenanted in the Ordinance that it will comply with the requirements of the Code relating to the exclusion of the interest on the Notes under section 103 of the Code. The Service has determined that certain materials, records and information should be retained by the issuers of tax-exempt obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations under section 103 of the Code. ACCORDINGLY, THE ISSUER SHALL TAKE STEPS TO ENSURE THAT ALL MATERIALS, RECORDS AND INFORMATION NECESSARY TO CONFIRM THE EXCLUSION OF THE INTEREST ON THE NOTES UNDER SECTION 103 OF THE CODE ARE RETAINED FOR THE PERIOD BEGINNING ON THE ISSUE DATE OF THE NOTES AND ENDING THREE YEARS AFTER THE DATE THE NOTES ARE RETIRED. The Issuer acknowledges receipt of the letters attached hereto as Exhibit 'B" which discusses limitations related to private business use and Exhibit "C" which, in part, discusses specific guidance by the Service with respect to the retention of records relating to tax-exempt bond transactions. 10. Rebate to United States. The Issuer has covenanted in the Ordinance that it will comply with the requirements of the Code, including section 148(f) of the Code, relating to the required rebate to the United States. Specifically, the Issuer will take steps to ensure that all earnings on gross proceeds of the Notes in excess of the yield,on the Notes required to be rebated to the United States will be timely paid to the United States. The Issuer acknowledges receipt of the memorandum attached hereto as Exhibit "A" which discusses regulations promulgated pursuant to section 148(f)of the Code. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] 4 DATED as of May 23,2017. TOWN Or WESTLAKE,TEXAS By:- Mayor y Town of Westlake,Texas,Tax Note,Series,2017 The undersigned represents that, to the best of the undersigned's knowledge, information and belief, the representations contained in the Schedules attached hereto as Exhibit"E" are,as of May 23,2017,accurate and complete. We understand that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in this Federal Tax Certificate and by McCall, Parkhurst & Horton L.L.P. (i)in connection with rendering its opinion to the Issuer that interest on the Notes is excludable from gross income thereof for income tax purposes,and(ii)for purposes of completing the IRS Form 8038-G. The undersigned is certifying only as to facts in existence on the date hereof.Nothing herein represents the undersigned's interpretation of any laws or the application of any laws to these facts. LAWRENCE FINANCIAL CONSULTING LLC By: Name: Tom Lawrence Title: President Town of Westlake,Texas Tax Note,Series 2017 CCALL PA kHUR.S' T & HORTON Exhibit "A" November 1, 2016 ARBITRAGE REBATE REGULAT0QNS© The arbitrage rebate requirements set forth in section 148(f) of the Internal Revenue Code of 1986 (the "Code") generally provide that in order for interest on any issue of bonds' to be excluded from gross income (i.e., tax-exempt) the issuer must rebate to the United States the sum of, (1) the excess of the amount earned on all "nonpurpose investments" acquired with "gross proceeds" of the issue over the amount which would have been earned if such investments had been invested at a yield equal to the yield on the issue, and (2) the earnings on such excess earnings. On June 18, 1993, the U.S. Treasury Department promulgated regulations relating to the computation of arbitrage rebate and the rebate exceptions. These regulations, which replace the previously-published regulations promulgated on May 15, 1989, and on May 18, 1992, are effective for bonds issued after .Pune 30, 1993, have been amended. This memorandum was prepared by 'McCall, Parkhurst & Horton L.L.P. and provides a general discussion of these arbitrage rebate regulations, as amended. This memorandum does not otherwise discuss the general arbitrage regulations, other than as they may incidentally relate to rebate. This memorandum also does not attempt to provide an exhaustive discussion of the arbitrage rebate regulations and should clot be considered advice with respect to the arbitrage rebate requirements as applied to any individual or governmental unit or any specific transaction. Any tax advice contained in this memorandum is of a general nature and is not intended to be used, and should not be used, by any person to avoid penalties under the Code. McCall, Parkhurst & Horton L.L.P. remains available to provide legal advice to issuers with respect to the provisions of these tax regulations but recommends that issuers seek competent financial and accounting assistance in calculating the amount of such issuer's rebate liability under section 148(f) of the Code and in making elections to apply the rebate exceptions. 1 In this memorandum the word "bond" is defined to include any bond, note, certificate, financing lease or other obligation of an issuer. Copyright 2016 by McCaii, Parkhurst&Morton L.L.P. Ali rights reserved. 600 Congress Ave.,Suite 1800 } 717 North Harwood,Suite 900 700 N.St.Mary's Street,Suite 1525 Austin, texas 78701 Dallas,Texas 75201 San Antonio,Texas 78205 T 512.478.3805 T 214.754.9200 T 210.2252800 F 512.472.0871 € F 214.754.9250 F 210.2252984 www.mphlegal.com Effective Dates The regulations promulgated on June 18, 1993, generally apply to bonds delivered after June 30, 1993, although they do permit an issuer to elect to apply the rules to bonds issued prior to that date. The temporary regulations adopted by the D.S. Treasury Department in 1989 and 1992 incorporated the same effective dates which generally apply for purposes of section 148(f) of the Code. As such, the previous versions of the rebate regulations generally applied to bonds issued between August 1986 and June 30, 1993 (or, with an election, to bonds issued prior to August 15, 1993). The statutory provisions of section 148(f) of the Code, other than the exception for construction issues, apply to all bonds issued after August 15, 1986, (for private activity bonds) and August 31, 1986, (for governmental public purpose bonds). The statutory exception to rebate applicable for construction issues generally applies if such issue is delivered after December 19, 1989. The regulations provide numerous transitional rules for bonds sold prior to July 1, 1993. Moreover, since, under prior law, rules were previously published with respect to industrial development bonds and mortgage revenue bonds, the transitional rules contained in these regulations permit an issuer to elect to apply certain of these rules for computing rebate on pre-1986 bonds. The regulations provide for numerous elections which would permit an issuer to apply the rules (other than 18-month spending exception) to bonds which were issued prior to July 1, 1993 and remain outstanding on June 30, 1993. Due to the complexity of the regulations, it is impossible to discuss in this memorandum all circumstances for which specific elections are provided. If an issuer prefers to use these final version of rebate regulations in lieu of the computational method stated under prior law (e.g., due to prior redemption) or the regulations, please contact McCall, Parkhurst & Horton L.L.P. for advice as to the availability of such options. Future Value Computation Method The regulations employ an actuarial method for computing the rebate amount based on the future value of the investment receipts (i.e., earnings) and payments. The rebate method employs a two-step computation to determine the amount of the rebate payment. First, the issuer determines the bond yield. Second, the issuer determines the arbitrage rebate amount. The regulations require that the computations be made at the end of each five-year period and upon final maturity of the issue (the "computation dates"). THE FINAL MATURITY DATE WILL ACCELERATE IN CIRCUMSTANCES IN WWI CH THE BONDS ARE OPTIONALLY REDEEMED PRIOR TO MATURITY. AS SUCH, IF BONDS ARE REFUNDED OR OTHERWISE REDEEMED, THE REBATE MAY BE DUE EARLIER THAN INITIALLY PROJECTED. In order to accommodate accurate record-keeping and to assure that sufficient amounts will be available for the payment of arbitrage rebate liability, however, we recommend that the computations be performed at least annually. Please refer to other materials provided by McCall, Parkhurst & Horton L.L.P. relating to federal tax rules regarding record retention. Under the future value method, the amount of rebate is determined by compounding the aggregate earnings on all the investments from the date of receipt by the issuer to the 2 www mphlecgalxom computation date. Similarly, a payment for an investment is future valued from the date that the payment is made to the computation date. The receipts and payments are future valued at a discount rate equal to the yield on the bonds. The rebatable arbitrage, as of any computation date, is equal to the excess of the (1) future value of all receipts from investments (i.e., earnings), over(2) the future value of all payments. The following example is provided in the regulations to illustrate how arbitrage rebate is computed under the future value method for a fixed-yield bond: "On January 1, 1994, City A issues a fixed yield issue and invests all the sale proceeds of the issue ($49 million). There are no other gross proceeds. The issue has a yield of 7.0000 percent per year compounded semiannually (computed on a 30 day month/360 day year basis). City A receives amounts from the investment and immediately expends them for the governmental purpose of the issue as follows: ®ate Amount 2/1/1994 $ 3,000,000 4/1/1994 5,000,000 6/1/1994 14,000,000 9/1/1994 20,000,000 7/1/1995 10,000,000 City A selects a bond year ending on January 1, and thus the first required computation date is January 1, 1999. The rebate amount as of this date is computed by determining the future value of the receipts and the payments for the investment. The compounding interval is each 6-month (or shorter) period and the 30 day month/360 day year basis is used because these conventions were used to compute yield on the issue. The future value of these amounts, plus the computation credit, as of January 1, 1999, is: ®ate Receipts (Payments) FY (7.0000 percent) 1/1/1994 ($49,000,000) ($69,119,339) 2/1/1994 3,000,000 4,207,602 4/1/1994 5,000,000 6,932,715 6/1/1994 14,000,000 19,190,277 9/1/1994 20,000,000 26,947,162 1/1/1995 (1,000) (1,317) 7/1/1995 10,000,000 12,722,793 1/1/1996 (1,000) (1,229) Rebate amount (01/01/1999) $878,664" 3 www.mphlegal.com Genera0 Method for Computing uting YWd our Bonds In general, the term "yield," with respect to a bond, means the discount rate that when used in computing the present value of all unconditionally due payments of principal and interest and all of the payments for a qualified guarantee produces an amount equal to the issue price of the bond. The term "issue price" has the same meaning as provided in sections 1273 and 1274 of the Code. That is, if bonds are publicly offered (i.e., sold by the issuer to a bond house, broker or similar person acting in the capacity of underwriter or wholesaler), the issue price of each bond is determined on the basis of the initial offering price to the public (not to the aforementioned intermediaries) at which price a substantial amount of such bond was sold to the public (not to the aforementioned intermediaries). The "issue price" is separately determined for each bond (i.e., maturity) comprising an issue. The regulations also provide varying periods for computing yield on the bonds depending on the method by which the interest payment is determined. Thus, for example, yield on an issue of bonds sold with variable interest rates (i.e., interest rates which are reset periodically based on changes in market) is computed separately for each computation period ending at least on each five-year anniversary of the delivery date that the issue. In effect, yield on a variable yield issue is determined on each computation date by 'looking back" at the interest payments for such period. Yield on a fixed interest rate issue (i.e., an issue of bonds the interest rate on which is determined as of the date of the issue) is computed over the entire term of the issue. Issuers of fixed-yield issues generally use the yield computed as of the date of issue for all rebate computations. The yield on fixed-yield issues must be computed by assuming retirements of principal on a call date earlier than the stated maturity date of a bond if (1) the bond is sold at a substantial premium, it may be retired within five years of the date of delivery, and such date is earlier than its scheduled maturity date, or (2) the issue is a stepped-coupon bond. Similarly, recomputation may occur in circumstances in which the issuer or bondholder modify or waive certain terms of, or rights with respect to, the issue or in sophisticated hedging transactions. EIN SUCH MRCUMSTANCES, MUERS ARE ADV�SIE® TO CONSULT McCAILL, PARKHURST & HORT®N L.L.P. TO ADDRESS THE FEDERAL WC®MlE TAX CONSEQUENCES OF THESE TRANSACTMNS, For purposes of determining the principal or redemption payments on a bond, different rules are used for fixed-rate and variable-rate bonds. The payment is computed separately on each maturity of bonds rather than on the issue as a whole. In certain circumstances, the yield on the bond is determined by assuming that principal on the bond is paid as scheduled and that the bond is retired on the final maturity date for the stated retirement price. For bonds subject to early redemption or stepped-coupon bonds, described above, or for bonds subject to mandatory early redemption, the yield is computed assuming the bonds are paid on the early redemption date for an amount equal to their value. Premiums paid to guarantee the payment of debt service on bonds are taken into account in computing the yield on the bond. Payments for guarantees are taken into account by treating such premiums as the payment of interest on the bonds. This treatment, in effect, raises the yield on the bond, thereby permitting the issuer to recover such fee with excess earnings. 4 www.mphlegal.com The guarantee must be an unconditional obligation of the guarantor enforceable by the bondholder for the payment of principal or interest on the bond or the tender price of a tender bond. The guarantee may be in the form of an insurance policy, surety bond, irrevocable letter or line of credit, or standby purchase agreement. Importantly, the guarantor must be legally entitled to full reimbursement for any payment made on the guarantee either immediately or upon commercially reasonable repayment terms. The guarantor may not be a co-obligor of the bonds or a user of more than 10 percent of the proceeds of the bonds. Payments for the guarantee may not exceed a reasonable charge for the transfer of credit risk. This reasonable charge requirement is not satisfied unless it is reasonably expected that the guarantee will result in a net present value savings on the bond (i.e., the premium does not exceed the present value of the interest savings resulting by virtue of the guarantee). If the guarantee is entered into after ,Mune 14, 1989, then any fees charged for the nonguarantee services must be separately stated or the guarantee fee is not recoverable. The regulations also treat certain "hedging" transactions in a manner similar to qualified guarantees. "Hedges" are contracts, e.g., interest rate swaps, futures contracts or options, which are intended to reduce the risk of interest rate fluctuations. Hedges and other financial derivatives are sophisticated and ever-evolving financial products with which a memorandum, such as this, cannot readily deal. IC I SUCH CIRCUMSTAf�CES, MUERS ARE ADVISED TO CONSULT McCAILtL, PARKHURST & HORTON L.L.P. TO ADDRESS THE FEDERAL NCOME TAX CONSEQUENCES OF THESE TRANSACTMNS, Earnun gs on Nonpurpose Investments The arbitrage rebate provisions apply only to the receipts from the investment of "gross proceeds" in "nonpurpose investments." For this purpose, nonpurpose investments are stock, bonds or other obligations acquired with the gross proceeds of the bonds for the period prior to the expenditure of the gross proceeds for the ultimate purpose. For example, investments deposited to construction funds, reserve funds (including surplus taxes or revenues deposited to sinking funds) or other similar funds are nonpurpose investments. Such investments include only those which are acquired with "gross proceeds." For this purpose, the term "gross proceeds" includes original proceeds received from the sale of the bonds, investment earnings from the investment of such original proceeds, amounts pledged to the payment of debt service on the bonds or amounts actually used to pay debt service on the bonds. The regulations do not provide a sufficient amount of guidance to include an exhaustive list of "gross proceeds" for this purpose; however, it can be assumed that "gross proceeds" represent all amounts received from the sale of bonds, amounts earned as a result of such sale or amounts (including taxes and revenues) which are used to pay, or secure the payment of, debt service for the bonds. The total amount of "gross proceeds" allocated to a bond generally cannot exceed the outstanding principal amount of the bonds. 5 www.mphlegal.com The regulations provide that an investment is allocated to an issue for the period (1) that begins on the date gross proceeds are used to acquire the investment, and (2) that ends on the date such investment ceases to be allocated to the issue. In general, proceeds are allocated to a bond issue until expended for the ultimate purpose for which the bond was issued or for which such proceeds are received (e.g., construction of a bond-financed facility or payment of debt service on the bonds). Deposit of gross proceeds to the general fund of the issuer (or other fund in which they are commingled with revenues or taxes) does not eliminate or ameliorate the Issuer's obligation to compute rebate in most cases. As such, proceeds commingled with the general revenues of the issuer are not "freed-up" from the rebate obligation. An exception to this commingling limitation for bonds, other than private activity bonds, permits "investment earnings" (but not sale proceeds or other types of gross proceeds) to be considered spent when deposited to a commingled fund if those amounts are reasonably expected to be spent within six months. Other than for these amounts, issuers may consider segregating investments in order to more easily compute the amount of such arbitrage earnings by not having to allocate investments. Special rules are provided for purposes of advance refundings. These rules are too complex to discuss in this memorandum. Essentially, the rules relating to refundings, however, do not require that amounts deposited to the escrow fund to defease the prior obligations of the issuer be subject to arbitrage rebate to the extent that the investments deposited to the escrow fund do not have a yield in excess of the yield on the bonds. Any loss resulting from the investment of proceeds in an escrow fund below the yield on the bonds, however, may be recovered by combining those investments with investments deposited to other funds, e.g., reserve or construction funds. The arbitrage regulations also provide an exception to the arbitrage limitations for the investment of bond proceeds in tax-exempt obligations. As such, investment of proceeds in tax exempt bonds eliminates the Issuer's rebate obligation. A caveat; this exception does not apply to gross proceeds derived allocable to a bond, which is not subject to the alternative minimum tax under section 57(a)(5) of the Code, if invested in tax- exempt bonds subject to the alternative minimum tax, i.e., "private activity bonds." Such "AMT-subject" investment is treated as a taxable investment and must comply with the arbitrage rules, including rebate. Earnings from these tax-exempt investments are subject to arbitrage restrictions, including rebate. Similarly, the investment of gross proceeds in certain tax-exempt mutual funds are treated as a direct investment in the tax-exempt obligations deposited in such fund. While issuers may invest in such funds for purposes of avoiding arbitrage rebate, they should be aware that if "private activity bonds" are included in the fund then a portion of the earnings will be subject to arbitrage rebate. Issuers should be prudent in assuring that the funds do not contain private activity bonds. The arbitrage regulations provide a number of instances in which earnings will be imputed to nonpurpose investments. Receipts generally will be imputed to investments that do not bear interest at an arm's-length (i.e., market) interest rate. As such, the regulations adopt a "market price" rule. In effect, this rule prohibits an issuer from investing bond proceeds in investments at a price which is higher than the market price of comparable obligations, in order to reduce the yield. Special rules are included for determining the market price for investment contracts, certificates of deposit and certain U.S. Treasury 6 www.mphlegal.com obligations. For example, to establish the fair market value of investment contracts a bidding process between three qualified bidders must be used. The fair market value of certificates of deposit which bear a fixed interest rate and are subject to an early withdrawal penalty is its purchase price if that price is not less than the yield on comparable U.S. Treasury obligations and is the highest yield available from the institution. In any event, a basic "common sense" rule-of-thumb that can be used to determine whether a fair market value has been paid is to ask whether the general funds of the issuer would be invested at the same yield or at a higher yield. An exception to this market price rule is available for United States Treasury Obligations - State or Local Government Series in which case the purchase price is always the market price. Reimbursement and Working Capital The regulations provide rules for purposes of determining whether gross proceeds are used for working capital and, if so, at what times those proceeds are considered spent. In general, issuers can finance short-term or long-term working capital with tax-exempt bonds. . By adopting a "proceeds-spent-last" rule, the regulations also generally require that an issuer actually incur a deficit (i.e., expenditures must exceed receipts) for the computation period (which generally corresponds to the issuer's fiscal year in the case of short-term working capital financing). Also, the regulations permit an operating reserve, but unlike prior regulations the amount of such reserve may not exceed five percent of the issuer's actual working capital expenditures for the prior fiscal year. A change was made to the regulations in 2016 allows issuers to finance the operating reserve with proceeds of a tax-exempt obligation. The regulations generally continue the prior regulations' 13-month temporary period for short-term working capital financing. Long-term working capital financings are beyond the scope of this memorandum. In the event long-term working capital financing is needed, issuers are advised to consult Mccall, Parkhurst & Horton L.L.P. to address the federal income tax consequences of these transactions. Importantly, the regulations contain rules for determining whether proceeds used to reimburse an issuer for costs paid prior to the date of issue of the obligation, in fact, are considered spent at the time of reimbursement. These rules apply to an issuer who uses general revenues for the payment of all or a portion of the costs of a project then uses the proceeds of the bonds to reimburse those general revenues. Failure to comply with these rules would result in the proceeds continuing to be subject to federal income tax restrictions, including rebate. To qualify for reimbursement, a cost must be described in an expression (e.g., resolution, legislative authorization) evidencing the issuer's intent to reimburse which is made no later than 60 days after the payment of the cost. Reimbursement must occur no later than 18 months after the later of (1) the date the cost is paid or (2) the date the project is placed in service. Except for projects requiring an extended construction period or small issuers, in no event can a cost be reimbursed more than three years after the cost is paid. Reimbursement generally is not permitted for working capital; only capital costs, grants and loans may be reimbursed. Moreover, certain anti-abuse rules apply to prevent issuers from avoiding the limitations on refundings. IN CASES INVOLVING WORKING 7 www.mphlegal.com CAPITAL OR REIMBURSEMENT, ISSUERS ARE ADVISED TO CONTACT McCALL, PARKHURST & NORTON L.L.P. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THE TRANSACTION. Relate Payments Rebate payments generally are due 60 days after each installment computation date. The interim computation dates occur each fifth anniversary of the issue date. The final computation date is on the latest of (1) the date 60 days after the date the issue of bonds is no longer outstanding, (2) the date eight months after the date of issue for certain short-term obligations (i.e., obligations retired within three years), or (3) the date the issuer no longer reasonably expects any spending exception, discussed below, to apply to the issue. On such payment dates, other than the final payment date, an issuer is required to pay 90 percent of the rebatable arbitrage to the United States. -On the final payment date, an issuer is required to pay 100 percent of the remaining rebate liability. Failure to timely pay rebate does not necessarily result in the loss of tax-exemption. Late payments, however, are subject to the payment of interest, and unless waived, a penalty of 50 percent (or, in the case of private activity bonds, other than qualified 501(c)(3) bonds, 100 percent) of the rebate amount which is due. IN SUCH CIRCUMSTANCES, ISSUERS ARE ADVISED TO CONSULT McCALL, PARKHURST & HORTON L.L.P. TO ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THESE TRANSACTIONS. Rebate payments are refundable. The issuer, however, must establish to the satisfaction of the Commissioner of the.Internal Revenue Service that the issuer paid an amount in excess of the rebate and that the recovery of the overpayment on that date would not result in additional rebatable arbitrage. An overpayment of less than $5,000 may not be recovered before the final computation date. Alternative Penalty Amount In certain cases, an issuer of a bond the proceeds of which are to be used for construction may elect to pay a penalty, in lieu of rebate. The penalty may be elected in circumstances in which the issuer expects to satisfy the two-year spending exception which is more fully described under the heading "Exceptions to Rebate." The penalty is payable, if at all, within 60 days after the end of each six-month period. This is more often than rebate. The election of the alternative penalty amount would subject an issuer, which fails the two- year spend-out requirements, to the payment of a penalty equal to one and one-half of the excess of the amount of proceeds which was required to be spent during that period over the amount which was actually spent during the period. The penalty has characteristics which distinguish it from arbitrage rebate. First, the penalty would be payable without regard to whether any arbitrage profit is actually earned. Second, the penalty continues to accrue until either (1) the appropriate amount is expended or (2) the issuer elects to terminate the penalty. To be able to terminate the penalty, the issuer must meet specific requirements and, in some instances, must pay an additional penalty equal to three percent of the unexpended proceeds. s www mphlegal,com Avrf, Exceptions to Rebate The Code and regulations provide certain exceptions to the requirement that the excess investment earnings be rebated to the United States. a. Small Issuers. The first exception provides that if an issuer (together with all subordinate issuers) during a calendar year does not issue tax-exempt bonds2 in an aggregate face amount exceeding $5 million, then the obligations are not subject to rebate. Only issuers with general taxing powers may take advantage of this exception. Subordinate issuers are those issuers which derive their authority to issue bonds from the same issuer, e.g., a city and a health facilities development corporation, or which are controlled by the same issuer, e.g., a state and the board of a public university. In the case of bonds issued for public school capital expenditures, the $5 million cap may be increased to as much as $15 million. For purposes of measuring whether bonds in the calendar year exceed these dollar limits, current refunding bonds can be disregarded if they meet certain structural requirements. Please contact McCall, Parkhurst & Horton L.L.P. for further information. b. Spendinq Exceptions. Six-Month Exception. The second exception to the rebate requirement is available to all tax-exempt bonds, all of the gross proceeds of which are expended during six months. The six month rule is available to bonds issued after the effective date of the Tax Reform Act of 1986. See the discussion of effective dates on page two. For this purpose, proceeds used for the redemption of bonds (other than proceeds of a refunding bond deposited to an escrow fund to discharge refunded bonds) cannot be taken into account as expended. As such, bonds with excess gross proceeds generally cannot satisfy the second exception unless the amount does not exceed the lesser of five percent or $100,000 and such de minimis amount must be expended within one year. Certain gross proceeds are not subject to the spend-out requirement, including amounts deposited to a bona fide debt service fund, to a reserve fund and amounts which become gross proceeds received from purpose investments. These amounts themselves, however, may be subject to rebate even though the originally expended proceeds were not. The Code provides a special rule for tax and revenue anticipation notes (i.e., obligations issued to pay operating expenses in anticipation of the receipt of taxes and other revenues). Such notes are referred to as TRANs. To determine the timely expenditure of the proceeds of a TRAM, the computation of the "cumulative cash flow deficit" is important. If the "cumulative cash flow deficit" (i.e., the point at which the operating expenditures of the issuer on a cumulative basis exceed the revenues of the issuer during the fiscal year) occurs within the first six months of the date of issue and must be equal to at least 90 percent of the proceeds of the TRAM, then the notes are deemed to satisfy the exception. This special rule requires, however, that the deficit actually occur, not that the issuer merely have an expectation that the deficit will occur. In lieu of the statutory exception for TRANs, the regulations also provide a second exception. Under this exception, 100 percent of the proceeds must be spent within six months, but before note proceeds can be considered 2 For this purpose, "private activity bonds"neither are afforded the benefit of this exception nor are taken into account for purposes of determining the amount of bonds issued. 9 www.mphlegal.com -klx� spent, all other available amounts of the issuer must be spent first ("proceeds-spent-last" rule). In determining whether all available amounts are spent, a reasonable working capital reserve equal to five percent of the prior year's expenditures may be set aside and treated as unavailable. 18-Month Exception. The regulations also establish a non-statutory exception to arbitrage rebate if all of the gross proceeds (including investment earnings) are expended within 18 months after the date of issue. Under this exception, 15 percent of the gross proceeds must be expended within a six-month spending period, 60 percent within a 12- month spending period and 100 percent within an 18-month spending period. The rule permits an issuer to rely on its reasonable expectations for computing investment earnings which are included as gross proceeds during the first and second spending period. A reasonable retainage not to exceed five percent of the sale proceeds of the issue is not required to be spent within the 18-month period but must be expended within 30 months. Rules similar to the six-month"exception relate to the definition of gross proceeds. Two Year Exception. Bonds issued after December 19, 1989 (i.e., the effective date of the Omnibus Reconciliation Act of 1989), at least 75 percent of the net proceeds of which are to be used for construction, may be exempted from rebate if the gross proceeds are spent within two years. Bonds more than 25 percent of the proceeds of which are used for acquisition or working capital may not take advantage of this exception. The exception applies only to governmental bonds, qualified 501(c)(3) bonds and private activity bonds for governmentally-owned airports and docks and wharves. The two-year exception requires that at least 10 percent of the available construction proceeds must be expended within six months after the date of issue, 45 percent within 12 months, 75 percent within 18 months and 100 percent within 24 months. The term "available construction proceeds" generally means sale proceeds of the bonds together with investment earnings less amounts deposited to a qualified reserve fund or used to pay costs of issuance. Under this rule, •a reasonable retainage not to exceed five percent need not be spent within 24 months but must be spent within 36 months. The two-year rule also provides for numerous elections which must be made not later than the date of issuance of the bonds. Once made, the elections are irrevocable. Certain elections permit an issuer to bifurcate bond issues, thereby treating only a portion of the issue as a qualified construction bond; and, permit an issuer to disregard earnings from reserve funds for purposes of determining "available construction proceeds." Another election permits an issuer to pay the alternative penalty amount discussed above in lieu of rebate if the issuer ultimately fails to satisfy the two-year rule. Issuers should discuss these elections with their financial advisors prior to issuance of the bonds. Of course, McCall, Parkhurst & Horton L.L.P. remains available to assist you by providing legal interpretations thereof. Debt Service Funds. Additionally, an exception to the rebate requirement, whether or not any of the previously discussed exceptions are available, applies for earnings on "bona fide debt service funds." A "bona fide debt service fund" is one in which the amounts are expended within 13 months of the accumulation of such amounts by the issuer. In general, most interest and sinking funds (other than any excess taxes or revenues accumulated therein) satisfy these requirements. For private activity bonds, short term bonds (i.e., have a term of less than five years) or variable rate bonds, the exclusion is 10 www.mphlegal.com available only if the gross earnings in such fund does not exceed $100,000, for the bond year. For other bonds issued after November 11, 1988, no limitation is applied to the gross earnings on such funds for purposes of this exception. Therefore, subject to the foregoing discussion, the issuer is not required to take such amounts into account for purposes of the computation. Conclusion McCall, Parkhurst & Horton L.L.P. hopes that this memorandum will prove to be useful as a general guide to the arbitrage rebate requirements. Again, this memorandum is not intended as an exhaustive discussion nor as specific advice with respect to any specific transaction. We advise our clients to seek competent financial and accounting assistance. Of course, we remain available to provide legal advice regarding all federal income tax matters, including arbitrage rebate. If you have any questions, please feel free to contact either Harold T. Flanagan or Stefano Taverna at (214) 754-9200. 11 www mphlegaLcom Rw C LL PARKHURS T & HORTON EXHIBIT "B" November 1,2016 Certain Federal Income Tax Considerations for Private Business Use of Bond-Financed Facilities This memorandum provides a general discussion of those types of contractual arrangements which give rise to private business use, and to what extent that use rises to a prohibited level. Generally, in order for bonds issued by governmental units to be tax-exempt, no more than a de minimis amount of the proceeds of the bonds or the facilities financed with such proceeds may be used by non-governmental users. That is,there may be no more than an incidental use by persons, other than state or local governments. Too much private business use can cause the bonds to become taxable. Private business use for this purpose can be direct or can result from indirect benefits being conveyed to a private person by contractual arrangement. The following discussion describes,in general terms,those types of arrangements which need to be scrutinized. We hope that this general guideline will be useful to you in interacting with private parties regarding the use of bond proceeds or bond-financed facilities. While the statements contained herein are not intended as advice with regard to any specific transaction,McCall,Parkhurst&Horton L.L.P.remains available should you have questions about these rules. Any tax advice contained in this memorandum, including any attachments, was not intended or written to be used for the purpose of avoiding federal tax related penalties or promoting, marketing or recommending to another party any transaction or matter addressed herein. If you have any specific questions or comments,please feel free to contact Stefano Taverna or Harold T.Flanagan at(214)754-9200. I. Private Business Use Arrangements that involve use in a trade or business by a nongovernmental person of bond proceeds or facilities financed with bond proceeds may cause a "private business use" problem. Bond-financed facilities may be used by a variety of people with differing consequences underthese rules. For example,students,teachers,employees and the general public may use bond-financed facilities on a non-exclusive basis without constituting private business use. More problematic, however, is use of bond-financed facilities by groups such as managers, lessees(e.g., book store owners), persons providing services (e.g., food or cleaning), seminar groups, sports and entertainment groups,and even alumni associations. The benefits also may be considered to pass to a private person where the right to the output produced by the facility is transferred. For this purpose,the federal government is considered a non-governmental person. Use by an organization organized under section 501(c)(3)of the Internal Revenue Code in a trade or business unrelated to the exempt purpose of such organization also is considered use by a private person. The term"use"includes both actual and beneficial use. As such,private business use may arise in a variety of ways. For example,ownership of a bond-financed facility by a non-governmental person is private business use. The leasing of a bond-financed facility by a non-governmental person can also cause a private business use problem. Along the same line,management of such facilities by a non-governmental person can cause a problem with private business use,absent compliance with the management contract rules discussed below. Essentially,such use can occur in connection with 600 Congress Ave,Suite 1800 717 North Harwood,Suite 900 700 N.St.Mary's Street,Suite 1525 Austin,Texas 78701 Dallas,Texas 75201 San Antonio,Texas 78205 T 512.478.3805 T 214,754.9200 T 210.225.2800 F 512.472.0871 F 214.754.9250 1 F 210.225.2984 www.mphlegal.com any arrangement in which the non-governmental user has a preference to benefit from the proceeds or the facilities. Therefore,any arrangement which results in a non-governmental person being the ultimate beneficiary of the bond financing must be considered. 1. Sales and Leases. The sale of a bond-financed facility to a non-governmental person would cause a private business use problem if that facility involved the use of more than 10 percent of the bond proceeds. Since state law often prohibits a governmental issuer from lending credit, this circumstance generally does not occur. Leases, however, also could be a problem because such arrangements grant a possessory interest in the facility which results in the lessee receiving a right to use the facility which is superior to members of the general public. 2. Management Contracts. Having a private manager will give rise to private business use unless certain terms of the management agreement demonstrate that beneficial use has not been passed to the manager. These factors relate to the compensation arrangements, contract term,cancellation provisions,and the relationship of the parties. The primary focus of these rules is on compensation. In general, compensation must be reasonable and not be based, in whole or in part, on a share of net profits. Compensation arrangements may take one of four forms: (1)periodic fixed fee;(2)capitation fee;(3)per-unitfee; or(4)percentage of fees charged. In general,a periodic fixed fee arrangement,however,is required in which at least 50 percent of annual compensation be based on a predetermined fee. During the initial two year start-up period,compensation may be based on a percentage of fees charged(i.e., gross revenues,adjusted gross revenues or expenses). The term of a management contract, generally, may not exceed five years, including all renewal options,and must be cancelable by the governmental unit at the end of the third year. If per-unit fee compensation is used,the term is limited to three years,with a cancellation option for the governmental unit at the end of two years. Where compensation is based on a percentage of gross revenues, the contract may not extend beyond a term of two years, cancelable by the governmental unit at the end of the first year. In each instance, cancellation may be upon reasonable notice,but must be"without penalty or cause,"meaning no covenant not to compete, buy-out provision or liquidated damages provision is allowed. Finally,the manager may not have any role or relationship with the governmental unit that would limit the ability of the governmental unit to exercise its rights under the contract. Any voting power of either party which is vested in the other party,including its officers,directors,shareholders and employees,may not exceed 20 percent. Further,the chief executive officer of either party may not serve on the governing board of the other party. Similarly,the two parties must not be members of the same controlled group or be related persons,as defined in certain provisions of federal tax law. 3. Cooperative Research Agreements. A cooperative research agreement with a private sponsor whereby the private party uses bond-financed facilities may cause a private business use problem.Nevertheless,such use of a bond-financed facility by a non-governmental person is to be disregarded for purposes of private business use if the arrangement is in one of the following forms. First, the arrangement may be disregarded if the sponsoring party is required to pay a competitive price for any license or other use of resulting technology, and such price must be determined at the time the technology is available. Second,an arrangement may also qualify if a four-part requirement is met: (1)multiple, unrelated industry sponsors must agree to fund university-performed basic research;(2)the university must determine the research to be performed and the manner in which it is to be performed; (3)the university must have exclusive title to any 2 www.mphlegal.com �r patent or other product incidentally resulting from the basic research; and (4)sponsors must be limited to no more than a nonexclusive,royalty-free license to use the product of anysuch research. 4. Output Contracts. In some circumstances,private business use arises by virtue of contractual arrangements in which a governmental unit agrees to sell the output from a bond- financed facility to a non-governmental person. If then on-govern mental person is obligated to take the output or to pay for output even if not taken,then private business use will arise. This is because the benefits and burdens of the bond-financed facility are considered as inuring to the non- governmental purchaser. In addition to the general rule,output-type facilities,including electric and gas generation,transmission and related facilities(but not water facilities)are further limited in the amount of private business use which may be permitted. If more than 5 percent of the proceeds are used for output facilities and if more than 10 percent of the output is sold pursuant to an output arrangement, then the aggregate private business use which may result (for all bond issues) is $15,000,000. II. How Much Private Business Use is Too Much? In general,there is too much private business use if an amount in excess of 10 percent of the proceeds of the bond issue are to be used,directly or indirectly,in a trade or business carried on by persons other than governmental units, and other than as members of the general public. All trade or business use by persons on a basis different than that of the general public is aggregated for the 10 percent limit. Private business use is measured on a facility or bond issue basis. On a facility basis, such use is generally measured by relative square footage, fair market rental value or the percentage of cost allocable to the private use. On a bond issue basis,the proceeds of the bond issue are allocated to private and governmental (or public) use of the facility to determine the amount of private business use over the term of the bond issue. Temporary use is not necessarily "bad"(Le,private use)even though it results in more than 10 percent of the facility being so used. For example,if 100 percent of a facility is used for a period equal to five percent of the term of the bond such use may not adversely impact the bonds. The question is whether the benefits and burdens of ownership have transferred to the private user, as in the case of a sale, lease or management contract. If these benefits and burdens have not transferred, such use may be disregarded for purposes of private business use. In no event should private business use exceed $15,000,000. In addition, if the private use is considered "unrelated or disproportionate" to the governmental purpose for issuance of the bonds,the private business use test is met if the level of the prohibited private use rises to 5 percent. The"unrelated" question turns on the operational relationship between the private use and use forthe governmental purpose. In most cases,a related use facility must be located within or adjacent to the related governmental facility,e.g.,a privately- operated school cafeteria would be related to the school in which it is located. Whereas,the use of a bond-financed facility as an administrative office building for a catering company that operates cafeterias for a school system would not be a related use of bond proceeds. Nonetheless,even if a use is related, it is disproportionate to the extent that bond proceeds used for the private use will exceed proceeds used for the related governmental use. III. When are the tests applied to analyze the qualification of a bond? A bond is tested both(1)on the date of issue,and(2)over the term. The tests are applied to analyze the character of the bond on the date of issue,based on how the issuer expects to use the proceeds and the bond-financed property. This is known as the "reasonable expectations" standard. The tests also continuously are applied during the term of the bonds to determine whether there has been a deviation from those expectations. This is known as the"change of use" 3 www.rraphlegat.eam P f € U standard. When tested,bonds are viewed on an"issue-by-issue"basis. Generally,bonds secured by the same sources of funds are part of the same"issue"if they are sold within 15 days of one another. IV. What is the reasonable expectations standard? The reasonable expectations standard will be the basis on which McCall,Parkhurst&Horton L.L.P.,as bond counsel,will render the federal income tax opinion on the bonds. The statement of expectations will be incorporated into the Federal Tax Certificate, previously referred to as the Federal Tax Certificate. The certificate also will contain information about the amounts to be expended on different types of property, e.g., land, buildings, equipment, in order to compute a weighted useful life of the bond-financed property. Based on the information on useful life,the maximum weighted average maturity of the bonds tested to ensure that is restricted to no more than 120 percent of the useful life of the property being financed or refinanced. V. Change of Use Standard. The disqualified private business use need not existon the date of issue. Subsequent use by non-governmental persons also can cause a loss of tax-exemption. Post-issuance"change of use"of bond-financed facilities could result in the loss of the tax-exempt status of the bonds,unless certain elements exist which demonstrate the change was unforeseen. For this purpose,a change in use includes a failure to limit private business use subsequent to the date of issuance of the bonds. A reasonable expectation element requires that,as of the date of issue of the bonds,the governmental unit reasonably have expected to use the proceeds of the issue for qualified facilities for the entire term of the issue. To fall within the safe harbor rules which avoid loss of tax-exempt status the governmental unit must assure that no circumstances be present which indicate an attempt to avoid directly or indirectly the requirements of federal income tax law. Finally,the safe harbor requires thatthe governmental unittake remedial action thatwould satisfy one of the following provisions: redemption of bonds;alternative use of disposition proceeds of a facility that is financed by governmental bonds;or,alternative use of a facilitythat is financed by governmental bonds. For purposes of the latter two remedial action provisions,the governmental unit has 90 days from the date of the change of use to satisfy the requirements. In addition,there is an exception for small transactions for dispositions at a loss. VI. Written Procedures. Each governmental issuer should establish written procedures to assure continuing compliance with the private use and arbitrage limitations imposed by the Code. Moreover, the Internal Revenue Service("IRS")is asking issuers to state in a bond issue's informational return(such an 8038-G)whether such post-issuance procedures have been adopted. The federal tax certificate, together with the attached memoranda and bond covenants can be supplemented by standard written practices adopted by the executive officer or legislative bodies of the issuer. Accordingly,our firm is prepared to advise you with respect to additional practices which we believe would be beneficial in monitoring compliance and taking remedial action in cases of change in use. There is no standard uniform practice for all issuers to adopt because each issuer operates in unique fashion. However, if you wish us to assist you in developing practices which might assist you in complying with the viewpoints expressed by the IRS and its personnel, please contact your bond lawyer at McCall, Parkhurst&Horton LLP. 4 www.mphlegal.com e Y; ALL L AR.`1 Y u I\S 6 & H O G DTO l V Exhibit"C" April 24,2017 Debbie Piper Finance Director Town of Westlake,Texas 1301 Solana Blvd.,Suite 4202 Westlake,Texas 76262 Re: Town of Westlake,Texas Tax Note,Series 2017 Dear Mr.Piper: As you know, the Town of Westlake, Texas (the "Issuer") will issue the captioned notes in order to provide for the acquisition and construction of the projects. As a result of that issuance,the federal income tax laws impose certain restrictions on the investment and expenditure of amounts to be used for the projects or to be deposited to the interest and sinking fund for the captioned notes. The purpose of this letter is to set forth, in somewhat less technical language, those provisions of the tax law which require the timely use of bond proceeds and that investment of these amounts be at a yield which is not higher than the yield on the captioned notes. For this purpose,please refer to line 21(e)of the Form 8038-G included in the transcript of proceedings for the yield on the captioned notes. Please note that the Form 8038-G has been prepared based on the information provided by or on your behalf by your financial advisor. Accordingly, while we believe that the information is correct you may wish to have the yield confirmed before your rebate consultant or the paying agent attempt to rely on it. Generally,the federal tax laws provide that,unless excepted, amounts to be used for the project or to be deposited to the interest and sinking fund must be invested in obligations the combined yield on which does not exceed the yield on the notes. Importantly, for purposes of administrative convenience, the notes, however,have been structured in such a way as to avoid,for the most part,this restriction on investment yield. They also contain certain covenants relating to expenditures of proceeds designed to alert you to unintentional failures to comply with the laws affecting expenditures of proceeds and dispositions of property. IMPORTANTLY, THE PROCEEDS OF THE NOTES MAY NOT BE USED TO FINANCE EMPLOYEE COMPENSATION, INCLUDING SALARIES OR RETIREMENT PAYMENTS, OR TO PAY SERVICE CONTRACT EXPENSES WITHOUT SUBJECTING THE NOTES TO ADDITIONAL FEDERAL INCOME TAX REQUIREMENTS. First,the sale and investment proceeds to be used for the new money project may be invested for up to three years without regard to yield. (Such amounts, however, may be subject to rebate.) Thereafter, they must be invested at or below the bond yield. Importantly, expenditure of these proceeds must be accounted in your books and records. Allocations of these expenditures must occur within 18 months of the later of the date paid or the date the project is completed. The foregoing notwithstanding,the allocation should not occur later than 60,days after the earlier of(1)of five years after the delivery date of the notes or(2)the date the notes are retired unless you obtain an opinion of bond counsel. Second, the interest and sinking fund is made up of amounts which are received annually for the payment of current debt service on all the Issuer's outstanding obligations. Any taxes or revenues deposited to the interest and sinking fund which are to be used for the payment of current debt service on the captioned notes, or any other outstanding obligations, are not subject to yield restriction. By definition, current debt 600 Congress Ave.,Suite 1800 717 North Harwood,Suite 900 700 N.St.Mary's Street,Suite 1525 Austin,Texas 78701 Dallas,Texas 75201 San Antonio,Texas 78205 T 512.478.3805 T 214.754.9200 T 210.225.2800 F 512.472.0871 F 214.754.9250 F 210.225.2984 www.mphlegal.com service refers only to debt service to be paid within one year of the date of receipt of these amounts. For the most part, this would be debt service in the current fiscal year. These amounts deposited to the account for current debt service may be invested without regard to any constraint imposed by the federal income tax laws. Third, a portion of the interest and sinking fund is permitted to be invested without regard to yield restriction as a"minor portion." The"minor portion"exception is available for de minimis amounts of taxes or revenues deposited to the interest and sinking fund. The maximum amount that may be invested as part of this account may not exceed the lesser of five percent of the principal amount of the notes or$100,000. Accordingly, you should review the current balance in the interest and sinking fund in order to determine if such balance exceeds the aggregate amounts discussed above. Additionally, in the future it is important that you be aware of these restrictions as additional amounts are deposited to the interest and sinking fund. The amounts in this fund which are subject to yield restriction would only be the amounts which are in excess of the sum of(1)the current debt service account and(2)the"minor portion" account. Moreover,to the extent that additional obligations are issued by the Issuer, whether for new money projects or for refunding, these amounts will change in their proportion. The Ordinance contains covenants that require the Issuer to comply with the requirements of the federal tax laws relating to the tax-exempt obligations. The Internal Revenue Service (the "Service") has determined that certain materials, records and information should be retained by the issuers of tax-exempt obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations under the Internal Revenue Code. Accordingly, the Issuer should retain such materials, records and information for the period beginning on the issue date of the captioned notes and ending three years after the date the captioned notes are retired. Please note this federal tax law standard may vary from state law standards. The material, records and information required to be retained will generally be contained in the transcript of proceedings for the captioned notes, however, the Issuer should collect and retain additional materials,records and information to ensure the continued compliance with federal tax law requirements. For example, beyond the transcript of proceedings for the notes, the Issuer should keep schedules evidencing the expenditure of bond proceeds, documents relating to the use of bond-financed property by governmental and any private parties (e.g., leases and management contracts, if any) and schedules pertaining to the investment of bond proceeds. In the event that you have questions relating to record retention,please contact us. The Service also wants some assurance that any failure to comply with the federal tax laws was not due to an issuer's intentional disregard or gross neglect of the responsibilities imposed on it by the federal tax laws. Therefore, to ensure post-issuance compliance, an issuer should consider adopting formalized written guidelines to help the issuer perform diligence reviews at regular intervals. The goal is for issuers to be able to timely identify and resolve violations of the laws necessary to maintain their obligations' tax-favored status. While the federal tax certificate,together with its attachments,may generally provide a basic written guideline when incorporated in an organizations' operations,the extent to which an organization has appropriate written compliance procedures in place is to be determined on a case-by-case basis Moreover, the Service has indicated that written procedures should identify the personnel that adopted the procedures,the personnel that is responsible for monitoring compliance, the frequency of compliance check activities, the nature of the compliance check activities undertaken, and the date such procedures were originally .adopted and subsequently updated, if applicable. The Service has stated that the adoption of such procedures will be a favorable factor that the Service will consider when determining the amount of any penalty to be imposed on an issuer in the event of an unanticipated and non-curable failure to comply with the tax laws. Finally,you should notice that the Ordinance contains a covenant that limits the ability of the Issuer to sell or otherwise dispose of bond-financed property for compensation. Beginning for obligations issued after May 15, 1997 (including certain refunding obligations), or in cases in which an issuer elects to apply new 2 v tin w.mphlegaLcarri private activity bond regulations, such sale or disposition causes the creation of a class of proceeds referred to as "disposition proceeds." Disposition proceeds, like sale proceeds and investment earnings,are tax-restricted funds. Failure to appropriately account,invest or expend such disposition proceeds would adversely affect the tax-exempt status of the notes. In the event that you anticipate selling property, even in the ordinary course, please contact us. Obviously, this letter only presents a fundamental discussion of, among other tax rules, the yield restriction rules as applied to amounts deposited to the interest and sinking fund. This letter does not address the rebate consequences with respect to the interest and sinking fund and you should review the memorandum attached to the Federal Tax Certificate as Exhibit "A" for this purpose. If you have certain concerns with respect to the matters discussed in this letter or wish to ask additional questions with regards to certain limitations imposed, please feel free to contact our firm. Thank you for your consideration and we look forward to our continued relationship. Very truly yours, McCALL,PARKHURST&HORTON L.L.P. cc: Chris Settle 3 `iWWW.Mt hlegal*.corn Exhibit"D" ISSUE PRICE CERTIRCATE The undersigned, as the duly authorized representative of TIB - The Independent BankersBank (the "Purchaser")of the Tax Note,Series 2017(the"Notes")issued by the Town of Westlake,Texas(the"Issuer"), hereby certifies and represents on behalf of the Purchaser,but not in his/her own right,based on its records and information available to it that it believes,after reasonable inquiry,to be accurateand complete as of the date hereof,as follows: All of the Notes have been purchased by the Purchaser, who is acquiring as the first buyer of the 'Notes and not for the present purposes of resale,at a purchase price equal to 100 percent of the stated principal amount thereof. The Purchaser neither has nor wi11 offer the Notes to the public. The Purchaser is not acquiring the Notes from the Issuer in consideration for the payment of property,other than money. The undersigned understands that the representations made in this Issue Price Certificate will be,relied upon,by the Issuer with respect to certain of the representations set forth in this Federal Tax Certificate and by McCall,Parkhurst&Horton L.L.P.(i)in connection with rendering its opinion to the Issuer that interest on the Notes is excludable from gross income thereof for income tax purposes,and(ii)for purposes of completing the IRS Form 8038-G. The undersigned is certifying only as to facts in existence on the date hereof. Nothing herein represents the undersigned's interpretation of any laws or the application of any laws to these facts. EXECUTED and DELIVERED as of this May 23,2017. TIB-THE INDEPENDENT BANKERSBANK E i t i By: Name: f Title: -.S- i t i` k f 5, Exhibit"E" SCHEDULES OF FINANCIAL ADVISOR [To be attached hereto] 777 Town of WestEake, Texas 'pax Note, Series 2017 (Prepayable anytime at par) T.%lbIle of Contents Report Debt Service Schedule 1 Sources&Uses 2 Aggregate Debt Service 3 2017 Note SINGLE PURPOSE 1 4/18/2017 1 10:04 AM 'ff �, ,s�4g ',,,��`�` ;��'�v� i � �e�&, 1st LL�t t ����•�` t �'�1r �'��� �', }���� � `�', `�u �`� �.s` > a � sn � r e � »+ i" �.� fit ""3. e �' - �,` �'- .•g�,� "�" `4 � 'S .�_-x,�". �� -�z?- .'Z Town of Westlake,Texas Tax Note, Series 2017 (Prepayable anytime at par) Debt Service Schedule Date Principal Coupon Interest Total P+I Fiscal Total 05/23/2017 - - - - - 02/15/2018 202,000.00 1.810% 20,154.35 222,154.35 - 08/15/2018 - - 12,018.40 12,018.40 - 09/30/2018 - - - - 234,172.75 02/15/2019 212 000.00 1.810% 12 018.40 224 018.40 - 08/15/2019 - - 10,099.80 10,099.80 - 09/30/2019 - - - - 234,118.20 02/15/2020 215,000.00 1.810% 10,099.80 225,099.80 - 08/15/2020 - - 8,154.05 8,154.05 09/30/2020 - - - 233,2S3.85 02/15/2021 219,000.00 1.810% 8,154.05 227,154.05 - 08/15/2021 - - 6,172.10 6,172.10 - 09/30/2021 - - - - 233,326.15 02/15/2022 223,000.00 1.810% 6,172.10 229,172.10 - 08/15/2022 - - 4153.95 4153.95 09/30/2022 - - - - 233,326.05 02/15/2023 227,000.00 1.810% 4,153.95 231,153.95 - 08/15/2023 - - 2,099.60 2,099.60 - 09/30/2023 - - - - 233,253.55 02/15/2024 232 000.00 1.810% 2,099.60 234 099.60 09/30/2024 - - - - 234,099.60 Total $1,530,000.00 - $105,550.15 $1,635,550.15 - Yield Statistics Bond Year Dollars $5,831.50 Average Life 3.811 Years Average Coupon 1.8100000% Net Interest Cost(NIC) 1.8100000% True Interest Cost(TIC) 1.8092639% Bond Yield for Arbitrage Purposes 1.8092639% All Inclusive Cost(AIC; 2.3476641% IRS Form 8038 Net Interest Cost 1.8100000% Weighted Average Maturity 3.811 Years 2017 Note I SINGLE PURPOSE 1 4/18/2017 1 10:04 AM ® s Towle of Westlake,'Texas Tax Note, Series 2017 (Prepayable anytime at par) Sources & Uses Dated 05123/2017 1 Delivered 05/23/2017 Sources Of Funds Principal Amount $1,530,000.00 Total Sources S1,530,000.00 Uses Of Funds Deposit to Project Construction Fund 1,500,000.00 Transaction Costs 29 530.00 Rounding Amount 470.00 Total Uses $1,530,000.00 2017 Note SINGLE PURPOSE 4/18/2017 1 10:04 AM 315 .G t ® fix` k., 'S 7 r yv r F,•• c,1;4.� "�,y. i. - €; Y- Town of Westlake,Texas Tax Note, Series 2017 (Prepayable anytime at par) Aggregate Debt Service Part, of 3 DATE 2011 CO 2011 Rfd 2013 Rfd 2013 CO 2014 Rfd 09/30/2018 115,300.00 892,650.00 162,400.00 500,193.76 70,040.00 09/30/2019 117,356.00 886,425.00 169,462.50 501,143.76 69,860.00 09/30/2020 119,316.00 879,750.00 171,025.00 506,943.76 69,680.00 09/30/2021 121,180.00 877,550.00 172,462.50 502,106.26 69,500.00 09/30/2022 123,936.00 874,750.00 168,837.50 506,606.26 69,320.00 09/30/2023 126,572.00 871,350.00 170,375.00 505,343.76 69,140.00 09/30/2024 129,088.00 875,150.00 162,130.00 508,293.76 68,960.00 09/30/2025 131,484.00 296,250.00 168,830.00 501,093.76 68,780.00 09/30/2026 134,748.00 287,150.00 175,062.50 508,668.76 68,600.00 09/30/2027 137 868.00 292 100.00 166,000.00 505 618.76 68 420.00 09/30/2028 140,844.00 295,800.00 162,000.00 507,006.26 68,240.00 09/30/2029 144,664.00 - - 615,793.76 406,150.00 09/30/2030 148,316.00 - - 616,881.26 401,950.00 09/30/2031 151,800.00 - - 612,531.26 402,250.00 09/30/2032 - - 773 368.76 404 875.00 09/30/2033 - - - 475,168.76 - 09/30/2034 - - - 477,268.76 - 09/30/2035 - - - 478,768.76 - 09/30/2036 - - - 479,668.76 - 09/30/2037 - - 475,762.51 - 09/30/2038 - - - 477,078.13 - 09/30/2039 - - - 477,850.00 - 09/30/2040 - - - 477,300.00 - 09/30/2041 - - - 475,400.00 - 09/30/2042 - - 477 800.00 09/30/2043 - - - 479,400.00 - 09/30/2044 - - - - - 09/30/2045 - - - - - 09/30/2046 - - - - - Total $1,842,472.00 $7,328,925.00 $1,848,585.00 $13,423,059.58 $2,375,765.00 Aggregate 1 4/18/2017 1 10:04 AM Y 3 3 w Zr:. Z- `�x?•` a. .•.: `^� - '�. � 6 �.�.,�`:a ,,a W,_, F ,P' Via_„ s Town of Westlake, Texas Tax Note, Series 2017 (Prepayable anytime at par) Aggregate Debt Service Part 2 of 3 DATE 2016 CO 2017 Rfd 2017 Note TOTAL 09/30/2018 510,800.00 257,625.00 234,172.75 2,743,181.51 09/30/2019 509,725.00 257,025.00 234,118.20 2,745,115.46 09/30/2020 508,500.00 261,375.00 233,253.85 2,749,843.61 09/30/2021 507,125.00 260,675.00 233;326.15 2,743,924.91 09/30/2022 510,525.00 259,887.50 233 326.05 2,747,188.31 09/30/2023 508,700.00 258,925.00 233,253.55 2,743,659.31 09/30/2024 506,725.00 262,800.00 234,099.60 2,747,246.36 09/30/2025 509,525.00 815,100.00 - 2,491,062.76 09/30/2026 507,100.00 810,500.00 - 2,491,829.26 09/30/2027 509 450.00 805 100.00 - 2,484,556.76 09/30/2028 506,575.00 808,700.00 - 2,489,165.26 09/30/2029 508,475.00 820,900.00 - 2,495,982.76 09/30/2030 510,075.00 811,900.00 - 2,489,122.26 09/30/2031 506,450.00 821,700.00 - 2,494,731.26 09/30/2032 507 600.00 795 600.00 2,481,443.76 09/30/2033 508,450.00 - - 983,618.76. 09/30/2034 509,000.00 - - 986,268.76 09/30/2035 509,250.00 - - 988,018.76 09/30/2036 509,200.00 - - 988,868.76 09/30/2037 508 850.00 - - 984 612.51 09/30/2038 506,400.00 - - 983,478.13 09/30/2039 506,700.00 - - 984,550.00 09/30/2040 506,400.00 - - 983,700.00 09/30/2041 510,400.00 - - 985,800.00 09/30/2042 508 700.00 - 986 500.00 09/30/2043 506,400.00 - - 985,800.00 09/30/2044 508,400.00 - - 508,400.00 09/30/2045 509,600.00 - - 509,600.00 09/30/2046 510,000.00 - - 510,000.00 Total $14,745,100.00 $8,307,812.50 $1,635,550.15 $51,507,269.23 Aggregate 1 4/18/2017 1 10:04 AM Town of Westlake,Texas Tax Note, Series 2017 (Prepayable anytime at par) Aggregate Debt Service Part 3 of 3 Par Amounts Of Selected Issues 2011 CO 1,552,000.00 2011 Rfd 6,360,000.00 2013 Rfd 1,625,000.00 2013 CO 8,630,000.00 2014 Rfd 1535 000.00 2016 CO 9,180,000.00 2017 Rfd 5,795,000.00 2017 Note 1,530,000.00 TOTAL 36,207,000.00 Aggregate 4/18/2017 10:04 AM Exhibit"F" CERTIFICATE OF ELECTION PURSUANT TO SECTION 148(fx4)(C) OF THE INTERNAL REVENUE CODE OF 1986 I,the undersigned,being the duly authorized representative of the Town of Westlake,Texas(the "Issuer") hereby state that the Issuer elects the provisions of section 148(f)(4)(C)of the Internal Revenue Code of 1986 (the "Code"), relating to the exception to arbitrage rebate for temporary investments, as more specifically designated below, with respect to the Issuer's Tax Note, Series 2017 (the "Notes") which are being issued on the date of delivery of the Notes. The CUSIP Number for the Notes is stated on the Form 8038-G filed in connection with the Notes. The Issuer intends to take action to comply with the two-year temporary investments exception to rebate afforded construction bonds under section 148(f)(4)(C)of the Code or any of the other exceptions available to the Issuer in accordance with section 1.148-7 of the Treasury Regulations. Capitalized terms have the same meaning as defined in the Federal Tax Certificate. M 1. PENALTY ELECTION. In the event that the Issuer should fail to expend the "available construction proceeds" of the Notes in accordance with the provisions of section 148(f)(4)(C) of the Code, the Issuer elects, in lieu of rebate, the penalty provisions of section 148(f)(4)(C)(vii)(I)of the Code. ® 2. RESERVE FUND ELECTION. The Issuer elects to exclude from "available construction proceeds," within the meaning of section 148(f)(4)(C)(vi)of the Code, of the Notes, earnings on the Reserve Fund in accordance with section 148(f)(4)(C)(vi)(IV)of the Code. ® 3. MULTIPURPOSE ELECTION. The Issuer elects to treat that portion of the Notes the proceeds of which are to be used for the payment of expenditures for construction, reconstruction or rehabilitation of the Projects, as defined in the instrument authorizing the issuance of the Notes, in an amount which is currently expected to be equal to$ as a separate issue in accordance with the provisions of section l48(0(4)(C)(v)(II)of the Code.(Note.- This Note:This election is not necessary unless less than 75 percent of the proceeds of the Notes will be used for construction,reconstruction or renovation) M4. ACTUAL FACTS. For purposes of determining compliance with section 148(f)(4)(c) of the Code(other than qualification of the Notes as a qualified construction issue), the Issuer elects to use actual facts rather than reasonable expectations. M5. NO ELECTION. The Issuer understands that the elections which are adopted as evidenced by the check in the box adjacent to the applicable provision are irrevocable. Further, the Issuer understands that qualification of the Notes for eligibility for the exclusion from the rebate requirement set forth in section 148(f) of the Code is based on subsequent events and is unaffected by the Issuer's expectations of such events as of the date of delivery of the Notes. Accordingly,while failure to execute this certificate and to designate the intended election does not preclude qualification, it would preclude lite Issuer front the relief afforded by such election. DATED:May 23,2017 Town of Westlake,Texas By: L� Name: Thomas E.Brymer Title: Town Manager 1301 Solana Blvd.,Suite 4202 Westlake,Texas 76262 Employer I.D.Number: 75-2449357 rMcu"ALL' , PARKHURST & HORTON June 15, 2017 VIA UPS 2ND DAY AIR#1Z56404W0292022031 Internal evenue Service Center 1973 Nort Rulon White Boulevard Ogden,Ut 84201-1000 Re: lformation Reporting-Tax-Exempt Bonds Town of Westlake, Texas Tax Note, Series 2017 Ladies and Gentlemen: Pursuant to the requirements of Section 149(e) of the Internal Revenue Code of 1986, enclosed please find an original of Form 803 8-G which is hereby submitted to you for the above-captioned bonds issued May 23, 2017. Sincerely, McCALL,PARKHURST&HORTON L.L.P. Stefano Taverna ST: vm Enclosures V/ cc: Chris Settle 600 Congress Ave.,Suite 1800 717 North Harwood,Suite 900 700 N.St. Mary's Street,Suite 1525 Austin,Texas 78701 Dallas,Texas 75201 San Antonio,Texas 78205 T 512.478.3805 T 214.754.9200 T 21D.225.280D F 512.472.0871 F 214.754.9250 F 210.225.2984 www.mphlegal.com I v Form$ ®G Information Return for Tax-Exempt Governmental Obligations Do-Under internal Revenue Code section 149(e) (Rev.September 2011) � OMB No.1545-0720 ®See separate instructions. Department of the Treasury Internal Revenue Service Caution:If the issue price is under$100,000,use Form 8038-GC. Reporting Authority If Amended Return,check here ® ❑ 1 Issuer's name 2 Issuer's employer identification number(EIN) Westlake,Texas(Town of) 75-2449357 3a Name of person(other than issuer)with whom the IRS may communicate about this return(see instructions) 3b Telephone number of other person shown on 3a None N/A 4 Number and street(or P.O.box if mail is not delivered to street address) Room/suite 5 Report number(For IRS Use Only) 1301 Solana Boulevard 4202 3 6 City,town,or post office,state,and ZIP code 7 Date of Issue Westlake,Texas 76262.1674 05/23/2017 6 Name of Issue 9 CUSIP number Tax Note,Series 2017 None 10a Name and title of officer or other employee of the Issuer whom the IRS may call for more Information(see 10b Telephone number of officer or other Instructions) employee shown on 10a Thomas E.Brymer,Town Manager (817)490.5720 >fype of issue(enter the issue price).See the instructions and attach schedule. 11 Education. . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Public safety . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Environment(including sewage bonds) . . . . . . . . .. . . . . . . . . . . . 15 16 Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18 Other.Describe ® various municipal projects 18 1 1,530,000 19 If obligations are TANS or RANs,check only box 19a . . . . . . . . . . . . . 1111- El 9 3�: If obligations are BANS,check only box 19b 10- 20 20 If obligations are in the form of a lease or installment sale,check box . . . . . . . . No- E] ®escription of Obligations.Complete for the entire issue for which this form is being filed. (a)Final maturity date (b)Issue price (c)Stated redemption (d)Weighted (e)Yield price at maturity average maturity 21 02/15/2024 1,530,000 1,530,000 3.81 vears 1.8092 % t➢ses of Proceeds of Bond Issue(including underwriters'discount) 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . . . 22 -0- 23 Issue price of entire issue(enter amount from line 21,column(b)) . . . . . 23 1,530,000 24 Proceeds used for bond issuance costs(including underwriters'discount). 24 29,530 25 Proceeds used for credit enhancement . . . . . . . . . . . . 25 =0= p, 26 Proceeds allocated to reasonably required reserve or replacement fund 26 -0- d 27 Proceeds used to currently refund prior issues . . . . . . . . . 27 -o- a 28 Proceeds used to advance refund prior issues . . . . . . . . . 28 -0- 29 Total(add lines 24 through 28) . . . . . . . . . . . . . . . . . . . . . . . 29 29,530 30 Nonrefunding proceeds.of the issue(subtract line 29 from line 23 and enter amount here) 30 1,500,470 [Z[17-Description of Refunded Bonds.Complete this art onlyfor refundin bonds. Not applicable 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . . ® years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . . ® years 33 Enter the last date on which the refunded bonds will be called(MM/DD/YYYY) . . . . . . 34 Enter the dates)the refunded bonds were issued®(MM/DD/YYYY) For Paperwork Reduction Act Notice,see separate instructions. Cat.No.637735 Form 8038-0(Rev.9-2011) r Westlake,Texas(Town of) EIN: 75.2449357 Form 8038-G(Rev.9-2011) Page 2 IVllscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . . 35 .0- 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC)(see instructions) . . . . : . . . . . . . . . . . . . . . . . . . . 36a -0- b Enter the final maturity date of the GIC Do. fflk- c Enter the name of the GIC provider 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans ' to other governmental units . . . . . . . . . . . . . . . . . . . . . . . . 37 p. 38a If this issue is a loan made from the proceeds of another tax-exempt issue,check box lo, ❑and enter the following information: b Enter the date of the master pool obligation 10- c ►c Enter the EIN of the issuer of the master pool obligation Op- d Enter the name of the issuer of the master pool obligation 39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III)(small issuer exception),check box . . . . 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate,check box . . . . . . . . . ® ❑ 41a If the issuer has identified a hedge,check here® ❑ and enter the following information: b Name.of hedge provider Do- 0 Type of hedge Po- d Term of hedge 42 If the issuer has superintegrated the hedge,check box . . . . . . . . . . . . . . . . . . . . . ❑ 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations(see instructions),check box . . . . . . . . ❑✓ 44 If the issuer has established written procedures to monitor the requirements of section 148,check box . . . . . ❑ 45a If some portion of the proceeds was used to reimburse expenditures,check here® ❑ and enter the amount of reimbursement . . . . . . . . . lo- b Enter the date the official intent was adopted Ig Under penalties of perjury,I declare that I have examined this return and accompanying schedules and statements,and to the best of my knowledge Signature and belief,they are true,correct,and complete.I further declare that I consent to the IRS's disclosure of the Issuer's return Information,as necessaryto and process this return,to th on that I have authorized above. Consent 05/23/2017 ��'lA 2Q� Signature of Issuer's a r e od rept s tative Date Type or print name and title Paid Print[rype preparer's name f Prepar n Date Check❑ if PTIN Pf eparer Stefano Taverna 1 1 05/23/2017 1 self-employed P01067358 Use Only Firm's name I► McCall,Parkhurst&Horton L.L.P. Firm's EIN ® 75.0799392 Firm's address > 717 N.Harwood,Suite 900,Dallas,TX 75201 Phone no. 214.754.9200 Form 8038-G(Rev.9-2011) V t 0 EyG x ?EXAS KEN PAXTON ATTORNEY GENERAL OF TEXAS May 19, 2017 THIS IS TO CERTIFY that the Town of Westlake,Texas (the "Issuer"),has submitted the Town of Westlake, Texas Tax Note, Series 2017 (the "Note"), in the principal amount of $1,530,000, for approval. The Note is dated May 15, 2017, numbered R-1, and was authorized by Ordinance No. 822 of the Issuer passed April 24, 2017. The Office of the Attorney General has examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Issuer contained in the certified proceedings and other certifications of public officials furnished to us without undertaking to verify the same by independent investigation. We express no opinion relating to any official statement or any other offering material relating to the Note. Based on our examination, we are of the opinion, as of the date hereof and under existing law, as follows: (1) The Note has been issued in accordance with law and is a valid and binding obligation of the Issuer. (2) The Note is payable from an annual ad valorem tax levied, against all taxable property within the Issuer, within the limit prescribed by law. Therefore, the Note is approved. .No.62767 Attorney General of the State of Texas Book No.2017-B JCH *See attached Signature Authorization Post Office Box 12548, Austin, Texas 78711-2548 e (512) 463-2100 o www.texasattorneygencral.gov OFFICE OF THE ATTORNEY GENERAL § OF THE S'L'ATE OF 'TEXAS § 1,KEN PAXTON,Attorney General for the State of Texas,do hereby authorize the employees of the Public Finance Division of the Office of the Attorney General to affix a digital image of my signature, in my capacity as Attorney General, to the opinions issued by this office approving the issuance of public securities by the various public agencies, nonprofit corporations, district, entities, bodies politic or corporate, or political subdivisions of this State as required by lave, the opinions approving those contracts designated by the Legislature as requiring the approval of the Attorney General, and the obligations, proceedings and credit agreements required by law to be approved by the Attorney General. The authorized digital image of my signature is attached as Exhibit A and is hereby adopted as my own for the purposes set forth herein. This supersedes any prior signature authorizations for the same purpose. The authority granted herein is to be exercised on those occasions when I am unavailable to personally sign said opinions, and upon the condition that the opinions to which the digital image signature is affixed have been approved by an authorized Assistant Attorney General following the completion of the Public Finance Division's review of the transcripts of proceedings to which the opinions relate. Given under my hand and seal of office at Austin, Texas, this the �M day of January,2015. ;E t4`o,yIGEN PAX ON Attorney General of the State of Texas A r e OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, Glean Hegar, Comptroller of Public Accounts of the State of Texas, do hereby certify that the attachment is a true and correct copy of the opinion of the Attorney General approving the: Town of Westlake, Texas Tax dote, Series 2017 numbered R-1, of the denomination of $ 1,530,000, dated May 1, 2017, as authorized by issuer, interest 1.81 percent, under and by authority of which said note was registered in the office of the Comptroller, on the 19th day of May 2017, under Registration Number 88945. Given under my hand and seal of office, at Austin, Texas, the 19th day of May 2017. GLENN HEGAR Comptroller of Public Accounts of the State of Texas OFFICE OF COMPTROLLER OF THE STATE OF TEXAS I, Melissa Mora, ❑ Bond Clerk® Assistant Bond Clerk in the office of the Comptroller of the State of Texas, do hereby certify that, acting under the direction and authority of the Comptroller on the 19th day of May 2017, 1 signed the name of the Comptroller to the certificate of registration endorsed upon the: Town of Westlake, Texas Tax Note, Series 2017, numbered R-1, dated May 1, 2017, and that in signing the certificate of registration I used the following signature: & ( IN WITNESS WHEREOF I have executed this rtificate this the 19th day of May 2017. I, Glenn Hegar, Comptroller of Public Accounts of the State of Texas, certify that the person who has signed the above certificate was duly designated and appointed by me under authority vested in me by Chapter 403, Subchapter H, Government Code, with authority to sign my name to all certificates of registration, and/or cancellation of bonds required by law to be registered and/or cancelled by me, and was acting as such on the date first mentioned in this certificate, and that the bonds/certificates' described in this certificate have been duly registered in the office of the Comptroller, under Registration Number 88945. GIVEN under my hand and seal of office at Austin, Texas, this the 19th day of May 2017. GLENN HEGAR Comptroller of Public Accounts of the State of Texas MCCALL PARKHURST & HORTON May 23, 2017 $1,530,000 TOWN OF WESTLAKE,TEXAS, TAX NOTE, SERIES 2017 Town of Westlake 1301 Solana Blvd., Suite 4202 Westlake,Texas 76262-1674 TIB - The Independent BankersBank 11701 Luna Road Farmers Branch, Texas 75234 AS BOND COUNSEL FOR the Town of Westlake, Texas (the "Issuer"), of the note described above (the "Obligation") we have examined into the legality and validity of the Obligation,which bears interest from the date specified in the text of the Obligation,until maturity or redemption, at the rate and is payable on the dates as stated in the text of the Obligation, and maturing in serial installments on February 15 in each of the years 2018 through 2024, inclusive, with the Obligation being subject to redemption prior to maturity, all in accordance with the terms and conditions stated in the text of the Obligation. WE HAVE EXAMINED the applicable and pertinent provisions of the Constitution and laws of the State of Texas,and a transcript of certified proceedings of the Issuer,and other pertinent instruments authorizing and relating to the issuance of the Obligation, including the executed Obligation Numbered R 1. BASED ON SAID EXAMINATION, IT IS OUR OPINION that the Obligation has been duly authorized, issued and delivered in accordance with law, and that the Obligation, except as may be limited by laws applicable to the Issuer relating to bankruptcy, reorganization and other similar matters affecting creditors' rights generally, and by general principles of equity which permit the exercise of judicial discretion, constitute a valid and legally binding obligation of the Issuer, and ad valorem taxes sufficient to provide for the payment of the interest on and principal of the Obligation have been levied and pledged for such purpose, within the limits as to rate or amount prescribed by law. IT IS FURTHER OUR OPINION, except as discussed below, that the interest on the Obligation is excludable from the gross income of the owners for federal income tax purposes under the statutes, regulations, published rulings, and court decisions existing on the date of this opinion. We are further of the opinion that the Obligation is not a"specified private activity bond" and that, accordingly, interest on the Obligation will not be included as an individual or corporate alternative minimum tax preference item under section 57(a)(5) of the Internal Revenue Code of 1986 (the "Code"). Except as stated above, we express no opinion as to any other federal, state, or local tax consequences of acquiring, carrying, owning, or disposing of the Obligation. 600 Congress Ave.,Suite 1800 717 North Harwood,Suite 900 700 N.St. Mary's Street,Suite 1525 Austin,Texas 78701 Dallas,Texas 75201 San Antonio,Texas 78205 T 512.478.3805 T 214.754.9200 T 210.225.2800 F 512.472.0871 F 214.754.9250 F 210.225.2984 www.mphlegal.com WE EXPRESS NO OPINION as to any insurance policies issued with respect to the payments due for the principal of and interest on the Obligation, nor as to any such insurance policies issued in the future. IN EXPRESSING THE AFOREMENTIONED OPINIONS,we have relied on and assume continuing compliance with, certain representations contained in the federal tax certificate of the Issuer and covenants set forth in the ordinance adopted by the Issuer to authorize the issuance of the Obligation, relating to, among other matters, the use of the project being financed and the investment and expenditure of the proceeds and certain other amounts used to pay or to secure the payment of debt service on the Obligation, the accuracy of which we have not independently verified. We call your attention to the fact that if such representations are determined to be inaccurate or if the Issuer fails to comply with such covenants, interest on the Obligation may become includable in gross income retroactively to the date of issuance of the Obligation. WE CALL YOUR ATTENTION TO THE FACT that the interest on tax-exempt obligations, such as the Obligation, is included in a corporation's alternative minimum taxable income for purposes of determining the alternative minimum tax imposed on corporations by section 55 of the Code. OUR OPINIONS ARE EASED ON EXISTING LAW, which is subject to change. Such opinions are further based on our knowledge of facts as of the date hereof. We assume no duty to update or supplement our opinions to reflect any facts or circumstances that may thereafter come to our attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, our opinions are not a guarantee of result and are not binding on the Internal Revenue Service (the "Service"); rather, such opinions represent our legal judgment based upon our review of existing law and in reliance upon the representations and covenants referenced above that we deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Obligation. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the Issuer as the taxpayer. We observe that the Issuer has covenanted not to take any action, or omit to take any action within its control, that if taken or omitted, respectively, may result in the treatment of interest on the Obligation as includable in gross income for federal income tax purposes. OUR SOLE ENGAGEMENT in connection with the issuance of the Obligation is as Bond Counsel for the Issuer, and, in that capacity, we have been engaged by the Issuer for the sole purpose of rendering our opinions with respect to the legality and validity of the Obligation under the Constitution and laws of the State of Texas, and with respect to the exclusion from gross income of the interest on the Obligation for federal income tax purposes, and for no other reason or purpose. The foregoing opinions represent our legal judgment based upon a review of existing legal authorities that we deem relevant to render such opinions and are not a guarantee of a result. We have not been requested to investigate or verify, and have not independently investigated or verified, any records, data, or other material relating to the financial condition or capabilities of www.mphlegal.com M� the Issuer, or the disclosure thereof in connection with the sale of the Obligation, and have not assumed any responsibility with respect thereto. We express no opinion and make no comment with respect to the marketability of the Obligation and have relied solely on certificates executed by officials of the Issuer as to the current outstanding indebtedness of, and assessed valuation of taxable property within the Issuer. Respectfully www.mphlegal.com RECEIPT AND DISBURSEMENT OF FUNDS TIB-The Independent BankersBank(the'Bank")hereby acknowledges receipt of the sum of$1,530,000.00 for the account and on behalf of the Town of Westlake,Texas(the"Town"),with respect to its Tax Note,Series 2017,and pursuant to instructions from the Town,such funds have been applied,allo- cated and deposited in the manner set forth in the attached Exhibit A. DATED this May 23,2017. TIB-THE INDEPENDENT BANKERSBANK By: uthori d Officer See Tab No. 11 Lawrence Financial Consulting LLC Registered Municipal Advisor& Texas Securities Dealer Austin,Texas (512)375-3424(Phone) (512)582-8259(Fax) Closing Memorandum To: Tom Brymer Town of Westlake,Texas 817-490-5720(ph) Debbie Piper Town of Westlake,Texas 817-490-5712 (ph) Chris Settle McCall,Parkhurst& Horton L.L.P. 214-754-9237(ph) Leroy Grawunder McCall,Parkhurst&Dorton L.L.P. 214-754-9201 (ph) Barry Renfroe TIB—The Independent BankersBank 210-697-0502 (ph) Alicia Garrison TIB—The Independent BankersBank 972-444-3627 (ph) Ricca Coursey First Financial Bank,NA 817-329-8601 (ph) From: Tom Lawrence Lawrence Financial Consulting LLC 512-375-3424(ph) Re: $1,530,000 Town of Westlake,Texas Tax Note, Series 2017 Date: April 27,2017 The purpose of this memorandum is to describe certain events and transfers that will occur on May 23, 2017 (the "Closing" or "Closing Date") with respect to the above captioned Tax Note (the "Note" or "Loan")payable by the Town of Westlake, Texas (the "Town") to TIB — The Independent BankersBank (the "Lender"). The Closing will take place at 10:00 AM, Central Time, at the offices of the Lender, 11701 Luna Road, Farmers Branch, TX 75234, Attention: Alicia Garrison, 972-444-3627 (phone). 1. Registration of Note The Note is being executed in fully registered definitive form as set forth in the ordinance authorizing the Note (the "Ordinance"), in the name of TIB - The Independent BankersBank (the "Lender"). Prior to the Closing, one Note representing the entire principal amount of the Loan, in the name of the Lender, will be prepared by McCall, Parkhurst & Horton L.L.P. ("Bond Counsel") and delivered to the Attorney General for approval. Upon approval by the Attorney General, the Note will be registered by the Comptroller of Public Accounts of the State of Texas and delivered by Bond Counsel no later than the Closing Date to the paying agent/registrar for the Note, TIB - The Independent BankersBank (in such capacity,the"Paying Agent"). 11. Loan Proceeds Available for the Project Pursuant to the terms of the Purchase Agreement between the Town and the Lender, dated April 24, 2017, the Lender will wire transfer, on the Closing Date, the amount of $1,500,000.00 (representing the $1,530,000.00 original principal amount of the Loan, 1 less $30,000.00 required to pay professional fees and expenses related to the Loan), to the Town's local depository bank, as follows: Amount: $1,500,000.00 To: First Financial Bank,N.A. 95 Trophy Club Dr,Trophy Club,TX 76262 ABA: 111301122 Account Number: 9111-000-6904 Account Name Town of Westlake General Fund Attn: Ricca Coursey(817-329-8601) The amount so transferred, together with the earnings thereon and project disbursements therefrom, shall be separately accounted for by the Town as its "Series 2017 Note Project Fund" established pursuant to Section 15 of the Ordinance. III. Loan Proceeds Available for Legal and Financial Advisory Fees & Expenses Upon Closing, the remaining $30,000.00 balance of the Loan shall be disbursed by the Paying Agent to pay the professional fees and expenses related to the Loan upon receipt of invoices therefor: (1) Bond Counsel fee and expenses (including Attorney General fee) payable to McCall, Parkhurst & Horton L.L.P., and- (2) financial advisor fee and expenses payable to Lawrence Financial Consulting LLC. Invoices should be submitted to the Paying Agent, Attention: Alicia Garrison, agarrisongmybankersbank.com (email), with a copy to Tom Lawrence, tlawrenceglfetexas.coin (email). Funds remaining after the payment of the foregoing transaction expenses, if any (the "rounding amount"), shall be wire transferred to the Town and deposited in the same manner as provided for in section II above. IV. Final Approval of Closing Immediately upon completion of the wire transfer of the Loan proceeds in accordance with Section 1I above and approval of the Closing by Bond Counsel, all the closing documents will be dated the Closing Date, the Loan will immediately take effect, and the Paying Agent will deliver the Note to the Lender. 2 CERTIFICATE OF INTERESTED PARTIES FORM 1295 10f1 Complete Nos.1-4 and 6 if there are interested parties. OFFICE USE ONLY Complete Nos.1,2,3,5,and 6 if there are no interested parties. CERTIFICATION OF FILING 1 Name of business entity filing form,and the city,state and country of the business entity's place Certificate Number: of business. 2017-202123 TIB-The Independent BankersBank Farmers Branch,TX United States Date Filed: 2 Name of governmental entity or state agency that is a party to the contract for which the form is 05/03/2017 being filed. Town of Westlake Date Acknowledged: 3 Provide the identification number used by the governmental entity or state agency to track or identify the contract,and provide a description of the services,goods,or other property to be provided under the contract. Westlake 2017 Tax Note Paying Agent 4 Nature of interest Name of Interested Party City,State,Country(place of business) (check applicable) Controlling I Intermediary O'Rourke, Michael Farmers Branch,TX United States X Linaburg, David Farmers Branch,TX United States X Drew, Kevin Farmers Branch,TX United States X Gray, Patrick Farmers Branch,TX United States X Renfroe, Barry Boerne,TX United States X 5 Check only if there is NO Interested Party. ❑ 6 AFFIDAVIT I swear,or affirm,under penalty of perjury,that the above disclosure is true and correct. e�:= ANNE RENFROE�iqy pUfNotary Public,State o Texas s Comm. Expires 02-01-2021 OD0991 Signature of authoriz agent of contracting business entity Notary I13844 AFFIX NOTARY STAMP/SEAL ABOVE ,', �! Sworn to and subscribed before me,by the said CtA ke ti` be, -this the day of 20 )q to certify which,witness my hand and seal of offic . dx,j 4_444,) A" ReA6 Signature of officer a ministering oath Printed name of officer administering oath Title of officer administering oath Forms provided by Texas Ethics Commission www.ethics.state.tx.us Version V1.0.883 CERTIFICATE OF INTERESTED PARTIES FORM 1295 1 of 1 Complete Nos. 1-4 and 6 if there are interested parties. OFFICE USE ONLY Complete Nos. 1,2,3,5,and 6 if there are no interested parties. CERTIFICATION OF FILING 1 Name of business entity filing form,and the city,state and country of the business entity's place Certificate Number: of business. 2017-202123 TIB-The Independent BankersBank Farmers Branch,TX United States Date Filed: 2 Name of governmental entity or state agency that is a party to the contract for which the form is 05/03/2017 being filed. Town of Westlake Date Acknowledged: 05/04/2017 3 Provide the identification number used by the governmental entity or state agency to track or identify the contract,and provide a description of the services,goods,or other property to be provided under the contract. Westlake 2017 Tax Note Paying Agent Nature of interest 4 Name of Interested Party City,State,Country(place of business) (check applicable) Controlling I Intermediary O'Rourke, Michael Farmers Branch, TX United States X Linaburg, David Farmers Branch, TX United States X Drew, Kevin Farmers Branch, TX United States X Gray, Patrick Farmers Branch, TX United States X Renfroe, Barry Boerne, TX United States X 5 Check only if there is NO Interested Party. ❑ 6 AFFIDAVIT I swear,or affirm, under penalty of perjury,that the above disclosure is true and correct. Signature of authorized agent of contracting business entity AFFIX NOTARY STAMP/SEAL ABOVE Sworn to and subscribed before me,by the said this the day of 20 ,to certify which,witness my hand and seal of office. Signature of officer administering oath Printed name of officer administering oath Title of officer administering oath Forms provided by Texas Ethics Commission www.ethics.state.tx.us Version V1.0.883