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Home My WebLink About01-15-15 TC Agenda packet Mission Statement Westlake is a unique community blending preservation of our natural environment and viewscapes, while serving our residents and businesses with superior municipal and academic services that are accessible, efficient, cost-effective, and transparent. Westlake, Texas – “One-of-a-kind community; natural oasis – providing an exceptional level of service.” Page 1 of 3 TOWN OF WESTLAKE, TEXAS Vision Statement An oasis of natural beauty that maintains our open spaces in balance with distinctive development, trails, and quality of life amenities amidst an ever expanding urban landscape. TOWN COUNCIL MEETING AGENDA January 15, 2015 WESTLAKE TOWN HALL 3 VILLAGE CIRCLE, 2ND FLOOR WESTLAKE, TX 76262 COUNCIL CHAMBERS Regular Session: 8:00 a .m. Page 2 of 3 Regular Session 1. CALL TO ORDER 2. EXECUTIVE SESSION The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners - Solana Land, L.P., related to Centurion’s development known as Entrada. 3. RECONVENE MEETING 4. TAKE ANY ACTION, IF NEEDED, FROM EXECUTIVE SESSION ITEMS. 5. CONDUCT A PUBLIC HEARING AND CONSIDERATION OF ORDINANCE 741, ACCEPTING AND APPROVING A SERVICE AND ASSESSMENT PLAN AND ASSESSMENT ROLL FOR THE SOLANA PUBLIC IMPROVEMENT DISTRICT; MAKING A FINDING OF SPECIAL BENEFIT TO THE PROPERTY IN THE DISTRICT; LEVYING SPECIAL ASSESSMENTS AGAINST PROPERTY WITHI N THE DISTRICT AND ESTABLISHING A LIEN ON SUCH PROPERTY; PROVIDING FOR PAYMENT OF THE ASSESSMENTS IN ACCORDANCE WITH CHAPTER 372, TEXAS LOCAL GOVERNMENT CODE, AS AMENDED; PROVIDING FOR THE METHOD OF ASSESSMENT AND THE PAYMENT OF THE ASSESSMENTS; PROVIDING PENALTIES AND INTEREST ON DELINQUENT ASSESSMENTS; PROVIDING FOR SEVERABILITY; AND PROVIDING AN EFFECTIVE DATE. 6. DISCUSSION AND CONSIDERATION OF ORDINANCE 742, AUTHORIZING THE MAYOR TO EXECUTE AND DELIVER A FINANCING AGREEMENT, A REIMBURSEMENT AGREEMENT AND OTHER AGREEMENTS WITH MAGUIRE PARTNERS - SOLANA LAND, L.P. IN CONNECTION WITH SOLANA PUBLIC IMPROVEMENT DISTRICT. 7. DISCUSSION AND CONSIDERATION OF ORDINANCE 743, REGARDING ALL MATTERS INCIDENT AND RELATED TO THE ISSUANCE AND SALE OF “TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT)”, AUTHORIZING THE ISSUANCE IN THE AMOUNT OF $26,175,000 OF SUCH BONDS AND APPROVING AND AUTHORIZING RELATED AGREEMENTS. Page 3 of 3 8. ADJOURNMENT ANY ITEM ON THIS POSTED AGENDA COULD BE DISCUSSED IN EXECUTIVE SESSION AS LONG AS IT IS WITHIN ONE OF THE PERMITTED CATEGORIES UNDER SECTIONS 551.071 THROUGH 551.076 AND SECTION 551.087 OF THE TEXAS GOVERNMENT CODE. CERTIFICATION I certify that the above notice was posted at the Town Hall of the Town of Westlake, 3 Village Circle, January 9, 2015, by 5:00 p.m. under the Open Meetings Act, Chapter 551 of the Texas Government Code. _____________________________________ Kelly Edwards, TRMC, Town Secretary If you plan to attend this public meeting and have a disability that requires special needs, please advise the Town Secretary 48 hours in advance at 817-490-5710 and reasonable accommodations will be made to assist you. EXECUTIVE SESSION a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners -Solana Land, L.P., related to Centurion’s development known as Entrada. Town of Westlake Item # 2 – Executive Session Town of Westlake Item # 3 – Reconvene Meeting The Council will conduct a closed session pursuant to Texas Government Code, annotated, Chapter 551, Subchapter D for the following: a. Section 551.087. Deliberation Regarding Economic Development Negotiations (1) to discuss or deliberate regarding commercial or financial information that the governmental body has received from a business prospect that the governmental body seeks to have locate, stay, or expand in or near the territory of the governmental body and with which the governmental body is conducting economic development negotiations; or (2) to deliberate the offer of a financial or other incentive to a business prospect described by Subdivision (1). Maguire Partners-Solana Land, L.P., related to Centurion’s development known as Entrada. Town of Westlake Item # 4 – Take any Necessary Action, if necessary Page 1 of 3 estlake Town Council TYPE OF ACTION Action Item Westlake Town Council Meeting Thursday, January 15, 2015 1. TOPIC: Conduct a Public Hearing and Consideration Of Ordinance 741, Accepting and Approving a Service and Assessment Plan and Assessment Roll for the Solana Public Improvement District; Making a Finding of Special Benefit to the Property in the District; Levying Special Assessments Against Property Within the District and Establishing a Lien on Such Property; Providing for Payment of the Assessments in Accordance With Chapter 372, Texas Local Government Code, as Amended; Providing for fhe Method of Assessment and the Payment of the Assessments; Providing Penalties and Interest on Delinquent Assessments; Providing for Severability; and Providing an Effective Date. STAFF CONTACT: Tom Brymer, Town Manager Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high -quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: January 15, 2015 Funding Amount: $26,175,000 in Public Improvement District (PID) Bonds Status - PID Bonds to Considered for Issuance at this Meeting Source – PID Bonds Page 2 of 3 EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) Previously, this property (located at the northeast corner of FM 1938 (Davis Blvd) and Solana Boulevard) was zoned for office and retail uses. In April 2013, after much public input and meetings, the Town Council, with a unanimous recommendation from the Planning & Zoning Commission, approved a request by the owner to amend the zoning in this PD1-2 zoning district. Also in April 2013, prior to consideration of this zoning change request, the land use plan component of the Town’s Comprehensive Plan was amended to provide for the uses requested in the zoning change request for this property. The amended zoning adds certain residential and entertainment uses in order to allow development of a mixed use Planned Development on this tract. The zoning ordinance, as amended, is intended to achieve a design that emulates a European style village with a Spanish architectural theme. The development’s name is Entrada. Following those steps, the Developer had a preliminary plat approved for Entrada. Also approved for Entrada was a Development Plan (i.e. a master site plan), and a site plan for one lot with a building elevation for the building to be built on that lot (where a sales information center is to be located on the west side of Entrada near FM1938). During the re-zoning approval process it was pointed out by Town Staff, as well as discussed by Council, that if the zoning request was approved, the developer intended to submit to the Town a petition to create a Public Improvement District (PID) to fund the construction of the public infrastructure for this development. Further, in the Economic Development with the developer of Entrada, the Town agreed to consider creating a PID for this purpose. This Economic Development Agreement also was approved by the Town Council in April 2013. The owner submitted a petition to the Town to create a PID on this tract in October 2013. This Proposed PID was specifically discussed at several Council workshops (October 28th, November 11th, and December 9, 2013 as well as January 27th, February 24th, March 24th, and May 19, 2014 workshops plus discussed as a part of Entrada updates as a standing item at other Council workshops). During much this entire time t he Town Staff, along with our PID consultants, have been reviewing various iterations of a draft Appraisal, Preliminary Official Statement (POS), and Service and Assessment Plan (SAP) since the petition to establish this PID was submitted by the owner of this tract. After the December 9, 2013 Council Workshop, it was determined that, due to IRS regulations related to previous issuance of bank qualified (BQ) debt by the Town, modifications to the approach previously discussed with Council for issuance of PID bonds would need to be modified. Options of splitting the bond issuance, as well as using a conduit issuer for one larger issue were explored. The conduit issuer option, while allowed in other stat es, is not something the Texas Attorney General’s Office would provide a preliminary approval. The developer’s team discussed this at the Town Council’s January 27, 2014 workshop. The developer requested that, while waiting to see which path was best for PID bond issuance, it would be prudent to go ahead and establish the PID on this site. The Council approved the resolution to begin the public notification process for a public hearing on creating the PID for the petitioned property at its January 27, 2014 regular Meeting. Following a public hearing (no one spoke in opposition), this Public Improvement District was approved to be created by the Town Council at its February 24, 2014 Regular Meeting. Page 3 of 3 The process continued on with a May 19, 2014 date targeted for first PID bond issuance. Eventually, prior to this May 19, 2014 date, the Developer determined that it would be best to delay bond issuance until 2015 when the BQ issue was no longer a factor. This eliminated the need to split the first issue into two issues over 2 years and simply issue a larger initial bond amount (as they had initially intended before the BQ issue surfaced). Further, the Entrada PID creation was delayed by the assignment of the Entrada agreements to Marquis Construction in July 2014. But, these agreements were subsequently reassigned by the Council back to the original Developer (Mehrdad Moayedi) on August 25, 2014 when the property did not close. It should be noted that the PID document review process had to be halted during the time this assignment was under consideration as there was no purpose in working on PID documents until Staff knew for certain who was going to conduct the Entrada project. At the August 25, 2014 Council Workshop, having been reassigned the Entrada Economic Development and Developer Agreements, Developer Mehrdad Moayedi assured the Council of his commitment to the Entrada development and that he planned on proceeding with the PID bond issuance targeting issuance in January 2015. A new calendar was prepared with Town Staff and its consultants resuming work with the Developer’s PID team on PID documents. That process has been in motion since that time per the calendar attached to this agenda memo. At the Council’s December 15, 2014 meeting the Council discussed the remaining PID bond issuance calendar. The Town Council adopted a resolution approving the Preliminary Official Statement (POS) for $26,175,000 in PID Bonds as well as the distribution of this POS for the planned sale and issuance of these bonds to construct certain authorized infrastructure improvements in the Solana Improvement District (i.e. Entrada). At this same meeting the Council also adopted a resolution determining the costs of certain authorized improvements to be financed by the Solana Pubic Improvement District (i.e. Entrada) as well as approving a Preliminary Service Plan and Assessment Plan (including a Proposed Assessment Roll). This resolution also directed the filing of the Proposed Assessment Roll with the Town Secretary, and called a special meeting and Noticing a Public Hearing on January 15, 2015 to consider levying assessment on property within the Solana Public Improvement District. RECOMMENDATION Hold public hearing and consider adoption of Ordinance 741 as related to the Solana Public Improvement District (i.e. Entrada). ATTACHMENTS 1. Ordinance 741. Ordinance 741 Page 1 of 9 TOWN OF WESTLAKE ORDINANCE 741 AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE ACCEPTING AND APPROVING A SERVICE AND ASSESSMENT PLAN AND ASSESSMENT ROLL FOR THE SOLANA PUBLIC IMPROVEMENT DISTRICT; MAKING A FINDING OF SPECIAL BENEFIT TO THE PROPERTY IN THE DISTRICT; LEVYING SPECIAL ASSESSMENTS AGAINST PROPERTY WITHIN THE DISTRICT AND ESTABLISHING A LIEN ON SUCH PROPERTY; PROVIDING FOR PAYMENT OF THE ASSESSMENTS IN ACCORDANCE WITH CHAPTER 372, TEXAS LOCAL GOVERNMENT CODE, AS AMENDED; PROVIDING FOR THE METHOD OF ASSESSMENT AND THE PAYMENT OF THE ASSESSMENTS; PROVIDING PENALTIES AND INTEREST ON DELINQUENT ASSESSMENTS; PROVIDING FOR SEVERABILITY; AND PROVIDING AN EFFECTIVE DATE RECITALS WHEREAS, on October 18, 2013, a petition was submitted and filed with the Town Secretary (the “Town Secretary”) of the Town of Westlake , Texas (the “Town”) pursuant to the Public Improvement District Assessment Act, Chapter 372, Texas Local Government Code, as amended (the “PID Act ”), requesting the creation of a public improvement district in the Town; and WHEREAS, the petition contained the signatures of the owner of taxable property representing more than fifty percent of the appraised value of taxable real property liable for assessment within the District, as determined by the then current ad valorem tax rolls of Tarrant County Central Appraisal District and the signature of the property owners who owns taxable real property that constitutes more than fifty percent of the area of all taxable property within the District that is liable for assessment; and WHEREAS, on February 24, 2014, after due notice, the Town Council of the Town (the “Town Council”) held a public hearing in the manner required by law on the advisability of the public improvements and services described in the petition as required by Sec. 372.009 of the PID Act and made the findings required by Sec. 372.009(b) of the PID Act and, by Resolution No. 14-07 (the “Authorization Resolution”) adopted by a majority of the members of the Town Council, authorized and created the Solana Public Improvement District (the “District ”) in accordance with its finding as to the advisability of the Authorized Improvements; and WHEREAS, on February 28, 2014, the Town published the Authorization Resolution in The Star-Telegram, a newspaper of general circulation in the Town; and Ordinance 741 Page 2 of 9 WHEREAS, no written protests regarding the creation of the District from any owners of record of property within the District were filed with the Town Secretary within 20 days after February 28, 2014; and WHEREAS, on December 15, 2014, the Council adopted a resolution (the “Cost Resolution”) determining the total costs of the Authorized Improvements, directing the filing of a proposed Assessment Roll, authorizing the publication of notice of a public hearing to consider the levying of the Assessments against the property within the District (the “Levy and Assessment Hearing”) in a newspaper of general circulation in the Town, and directing related action; and WHEREAS, the Town Council, pursuant to Section 372.016(b) of the PID Act, published notice of the Levy and Assessment Hearing on December 22, 2014 in The Star- Telegram, a newspaper of general circulation in the Town; and WHEREAS, the Town Council, pursuant to Section 372.016(c) of the PID Act, mailed the notice of the Levy and Assessment Hearing to the last known address of the owners of the property liable for the Assessments; and WHEREAS, the Town Council convened the Levy and Assessment Hearing on January 15, 2015, at which all persons who appeared, or requested to appear, in person or by their attorney, were given the opportunity to contend for or contest the Assessment Roll, and the proposed Assessment s, and to offer testimony pertinent to any issue presented on the amount of the Assessments, the allocation of the costs of the Authorized Improvements, the purposes of the Assessment s, the special benefits of the Assessment s, and the penalties and interest on annual installments and on delinquent annual installments of the Assessment s; and WHEREAS, the Town Council finds and determines that the Assessment Roll and the Solana Public Improvement District Service and Assessment Plan, dated January 15, 2015 (the “Service and Assessment Plan”), attached as Exhibit A hereto and which is incorporated herein for all purposes, should be approved and that the Assessments should be levied as provided in this Ordinance and the Service and Assessment Plan and Assessment Roll attached thereto as Appendix E; and WHEREAS, the Town Council further finds that there were no written objections or evidence submitted to the Town Secretary in opposition to the Service and Assessment Plan, the allocation of the costs of the Authorized Improvements, the Assessment Roll, and the levy of the Assessments; and WHEREAS, prior to the issuance of bonds secured by the Assessments, the owners (the “Landowners” or the “Assessed Parties”) of the majority of the privately-owned and taxable property located within the District, and who are the persons to be assessed pursuant to this Ordinance, will have executed and presented to the Town Council for approval and acceptance a Ordinance 741 Page 3 of 9 landowner agreement (the “Landowner Agreement”) in the form and substance acceptable to the Town, in which the Assessed Parties acknowledge and accept the Service and Assessment Plan, approve the Assessment Roll, acknowledge and accept this Ordinance and acknowledge and accept the levy of the Assessments against their property located within the District, and agree to pay the Assessments when due and payable; and WHEREAS, the Town Council closed the hearing, and, after considering all written and documentary evidence presented at the hearing, including all written comments and statements filed with the Town, determined to proceed with the adoption of this Ordinance in conformity with the requirements of the PID Act. NOW, THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: Terms. Terms not otherwise defined herein are as defined in the Service and Assessment Plan. SECTION 2: Findings. The findings and determinations set forth in the preambles hereof are hereby incorporated by reference and made a part of this Ordinance for all purposes as if the same were restated in full in this Section. The Town Council hereby finds, determines, and ordains, as follows: (a) The apportionment of the costs of the Authorized Improvements (as reflected in the Service and Assessment Plan, and the Administrative Expenses pursuant to the Service and Assessment Plan) is fair and reasonable, reflects an accurate presentation of the special benefit each assessed Parcel will receive from the construction of the Authorized Improvements identified in the Service and Assessment Plan, and is hereby approved; (b) The Service and Assessment Plan covers a period of at least five years and defines the annual indebtedness and projected costs for the Authorized Improvements; (c) The Service and Assessment Plan apportions the costs of the Authorized Improvements to be assessed against the property in the District and such apportionment is made on the basis of special benefits accruing to the property because of the Authorized Improvement s; (d) All of the real property in the District which is being assessed in the amounts shown in the Assessment Roll will be benefited by the Authorized Improvements proposed to be constructed as described in the Service and Assessment Plan, and each assessed Parcel will receive special benefits in each year equal to or Ordinance 741 Page 4 of 9 greater than each annual Assessments and will receive special benefits during the term of the Assessments equal to or greater than the total amount assessed; (e) The method of apportionment of the costs of the Authorized Improvements and Administrative Expenses set forth in the Service and Assessment Plan result s in imposing equal shares of the costs of the Authorized Improvements and Administrative Expenses on property similarly benefited, and results in a reasonable classification and formula for the apportionment of such costs; (f) The Service and Assessment Plan should be approved as the service plan and assessment plan for the District as described in Sectio ns 372.013 and 372.014 of the PID Act; (g) The Assessment Roll in the form attached as Appendix E to the Service and Assessment Plan (the “Assessment Roll”) should be approved as the Assessment Roll for the District; (h) The provisions of the Service and Assessment Plan relating to due and delinquency dates for the Assessments, interest on Annual Installments, interest and penalties on delinquent Assessments and delinquent Annual Installments, and procedures in connection with the imposition and collection of Assessments should be approved and will expedite collection of the Assessments in a timely manner in order to provide the services and improvements needed and required for the area within the District; and (i) A written notice of the date, hour, place and subject of this meeting of the Town Council was posted at a place convenient to the public for the time required by law preceding this meeting, as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended, and that this meeting has been open to the public as required by law at all times during which this Ordinance and the subject matter hereof has been discussed, considered, and formally acted upon. SECTION 3: Assessment Plan. The Service and Assessment Plan is hereby accepted and approved pursuant to Sections 372.013 and 372.014 of the PID Act as the service plan and the assessment plan for the District. SECTION 4: Assessment Roll. The Assessment Roll is hereby accepted and approved pursuant to Section 372.016 of the PID Act as the Assessment Roll of the District. SECTION 5: Levy and Payment of Special Assessments for Costs of the Authorized Improvement s. Ordinance 741 Page 5 of 9 (a) The Town Council hereby levies an assessment on each tract of property (excluding non-benefitted property) located within the District, as shown and described in the Service and Assessment Plan and the Assessment Roll, in the respective amounts shown on the Assessment Roll as a special assessment on the properties set forth in the Assessment Roll. (b) The levy of the Assessments shall be effective on the date of execution of this Ordinance levying Assessments and strictly in accordance with the terms of the Service and Assessment Plan and the PID Act. (c) The collection of the Assessments shall be as described in the Service and Assessment Plan and the PID Act . (d) Each Assessment may be paid in a lump sum at any time or may be paid in Annual Installments pursuant to the terms of the Service and Assessment Plan. (e) Each Assessment shal l bear interest at the rate or rates specified in the Service and Assessment Plan. (f) Each Annual Installment shall be collected each year in the manner set forth in the Service and Assessment Plan. (g) The Administrative Expenses for Assessed Properties shall be calculated pursuant to the terms of the Service and Assessment Plan. SECTION 6: Method of Assessment . The method of apportioning the costs of the Authorized Improvements and Administrative Expenses are set forth in the Service and Assessment Plan. SECTION 7: Penalties and Interest on Delinquent Assessments. Delinquent Assessments shall be subject to the penalties, interest, procedures, and foreclosure sales set forth in the Service and Assessment Plan and as allowed by law. The Assessments shall have lien priority as specified in the PID Act and the Service and Assessment Plan. SECTION 8: Prepayments of Assessments. As provided in Section VI(E) of the Service and Assessment Plan, the owner of any Assessed Property may prepay the Assessments levied by this Ordinance. SECTION 9: Lien Priority. As provided in the Landowner Agreement, the Town Council and the Landowners intend for the obligations, covenants and burdens on the landowners of Assessed Property, including Ordinance 741 Page 6 of 9 without limitation such Landowners’ o bligations related to payment of the Assessments and the Annual Installments thereof, to constitute covenants that shall run with the land. The Assessments and the Annual Installments thereof which are levied hereby shall be binding upon the Assessed Part ies, as the owners of Assessed Property, and their respective transferees, legal representatives, heirs, devisees, successors and assigns in the same manner and for the same period as such parties would be personally liable for the payment of ad valorem taxes under applicable law. The Assessments shall have lien priority as specified in the Service and Assessment Plan and the PID Act. SECTION 10: Appointment of Administrator and Collector of Assessments. (a) Appointment of Administrator. MuniCap, Inc., of Columbia, Maryland, is hereby appointed and designated as the initial Administrator of the Service and Assessment Plan and of Assessments levied by this Ordinance. The administrator shall perform the duties of the Administrator described in the Service and Assessment Plan and in this Ordinance. The Administrator’s fees, charges and expenses for providing such service shall constitute an Administrative Expense. The Mayor is hereby authorized to execute a PID Administration Services Agreement with MuniCap, Inc. (b) Appointment of Temporary Collector. The Town’s Finance Director or other authorized Town official are each hereby authorized to act as the temporary collector of the Assessments (each such Town official is herein referred to as the “Collector”). The Collector shall serve in such capacity until such time as the Town shall arrange for the Collector’s duties to be performed by the Tarrant County Tax Assessor, or another qualified collection agent selected by the Town. SECTION 11: Applicability of Tax Code. To the extent not inconsistent with this Ordinance, and not inconsistent with the PID Act or the other laws governing public improvement districts, the provisions of the Texas Tax Code shall be applicable to the imposition and collection of Assessments by the Town. SECTION 12: Filing in Land Records. The Town Secretary is directed to cause a copy of this Ordinance, including the Service and Assessment Plan, to be recorded in the real property records of Tarrant County. The Town Secretary is further directed to similarly file each Annual Service Plan Update approved by the Town Council. SECTION 13: Severability. If any provision, section, subsection, sentence, clause, or phrase of this Ordinance, or the application of same to any person or set of circumstances is for any reason held to be Ordinance 741 Page 7 of 9 unconstitutional, void, or invalid, the validity of the remaining portions of this Ordinance or the application to other persons or sets of circumstances shall not be affected thereby, it being the intent of the Town Council that no portion hereof, or provision or regulation contained herein shall become inoperative or fail by reason of any unconstitutionality, voidness, or invalidity or any other portion hereof, and all provisions of this ordinance are declared to be severable for that purpose. SECTION 14: Effective Date. This Ordinance shall take effect, and the levy of the Assessments and the provisions and terms of the Service and Assessment Plan shall be and become effective upon passage and execution hereof. However, the Service and Assessment Plan and this Ordinance shall automatically terminate if bonds secured by the Assessments are not issued by the Town on or before January 15, 2016. Ordinance 741 Page 8 of 9 PASSED AND APPROVED ON THIS THE 15TH DAY OF JANUARY, 2015. ATTEST: _____________________________ Laura L. Wheat, Mayor ____________________________ ______________________________ Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: ____________________________ L. Stanton Lowry, Town Attorney Ordinance 741 Page 9 of 9 Exhibit A Service and Assessment Plan Draft MuniCap Inc. v6.2 SOLANA PUBLIC IMPROVEMENT DISTRICT SERVICE AND ASSESSMENT PLAN NOVEMBER 21, 2014 MuniCap, Inc. v6.2 SOLANA PUBLIC IMPROVEMENT DISTRICT SERVICE AND ASSESSMENT PLAN Table of Contents Section I Plan Description and Defined Terms 1 Section II Property Included in the PID 7 Section III Description of Authorized Improvements 9 Section IV Service Plan 13 Section V Assessment Plan 16 Section VI Terms of the Assessments 23 Section VII Assessment Roll 29 Section VIII Miscellaneous Provisions 30 List of Appendix Appendix A The PID Map Appendix B Estimated Costs of the Authorized Improvements Appendix C Diagrams of the Authorized Improvements Appendix D Land Use Class, Equivalent Units and Allocation of Assessment Part A Appendix E Assessment Rolls 1 Section I PLAN DESCRIPTION AND DEFINED TERMS A. Introduction On February 24, 2014, (the “Creation Date”) the Town of Westlake Town Council (“Town Council”) passed Resolution No. 14-07 approving and authorizing the creation of the Solana Public Improvement District (the “PID”) to finance the costs of certain public improvements for the benefit of property in the PID, all of which is located within the boundaries of the Town of Westlake, Texas (“Town”). Upon application of the current property owners, the property within the PID was zoned by Ordinance No. 703 (the “Zoning Ordinance”) adopted by the Town on April 22, 2013, as amended and including all required approvals. The Zoning Ordinance designates the type of land uses that are permitted within the project and includes development standards for each land use type. Chapter 372 of the Texas Local Government Code, “the Public Improvement Assessment Act” (as amended, the “PID Act”), governs the creation and operation of public improvement districts within the State of Texas. This Service and Assessment Plan has been prepared pursuant to the PID Act and specifically Sections 372.013, 372.014, 372.015 and 372.016, which address the requirements of a service and assessment plan and the assessment roll. According to Section 372.013 of the PID Act, a service plan “must cover a period of at least five years and must also define the annual indebtedness and the projected costs for improvements. The plan shall be reviewed and updated annually for the purpose of determining the annual budget for improvements.” The service plan is described in Section IV of this Service and Assessment Plan. Section 372.014 of the PID Act states that “an assessment plan must be included in the annual service plan.” The assessment plan is described in Section V of this Service and Assessment Plan. Section 372.015 of the PID Act states that “the governing body of the municipality or county shall apportion the cost of an improvement to be assessed against property in an improvement district.” The method of assessing the PID Costs (herein after defined) and apportionment of such costs to the property in the PID is included in Section V of this Service and Assessment Plan. Section 372.016 of the PID Act states that “after the total cost of an improvement is determined, the governing body of the municipality or county shall prepare a proposed assessment roll. The roll must state the assessment against each parcel of land in the district, as determined by the method of assessment chosen by the municipality or county under this subchapter.” The Assessment Rolls for the PID are included as Appendix E of this Service and Assessment Plan. The Assessments as shown on the Assessment Rolls are based on the method of assessment and apportionment of costs described in Section V of this Service and Assessment Plan. B. Definitions Capitalized terms used herein shall have the meanings ascribed to them as follows: 2 “Actual Cost(s)” means, with respect to an Authorized Improvement, the demonstrated, reasonable, allocable, and allowable costs of constructing such Authorized Improvement, as specified in a Certification for Payment that has been reviewed and approved by the Town. Actual Cost may include but are not limited to (a) the costs for the design, planning, financing, administration, management, acquisition, installation, construction and/or implementation of such Authorized Improvement, including general contractor construction management fees, if any, (b) the costs of preparing the construction plans for such Authorized Improvement, (c) the fees paid for obtaining permits, licenses or other governmental approvals for such Authorized Improvement, (d) the costs for external professional costs associated with such Authorized Improvement, such as engineering, geotechnical, surveying, land planning, architectural landscapers, advertising, marketing and research studies, appraisals, legal, accounting and similar professional services, taxes (property and franchise) (e) the costs of all labor, bonds and materials, including equipment and fixtures, incurred by contractors, builders and material men in connection with the acquisition, construction or implementation of the Authorized Improvements, (f) all related permitting, zoning and public approval expenses, architectural, engineering, legal, and consulting fees, financing charges, taxes, governmental fees and charges (including inspection fees, County permit fees, development fees), insurance premiums, miscellaneous expenses, and all advances and payments for Administrative Expenses. Actual Costs include general contractor’s fees in an amount up to a percentage equal to the percentage of work completed and accepted by the City or construction management fees in an amount up to five percent of the eligible Actual Costs described in a Certification for Payment (and subject to approval by the Town). General contractor’s fees and construction management fees shall be budgeted in the project budget and itemized on each submittal on a payment request; and the amounts expended on legal costs, taxes, governmental fees, insurance premiums, permits, financing costs, and appraisals shall be excluded from the base upon which the general contractor and construction management fees are calculated. “Administrator” means the employee or designee of the Town who shall have the responsibilities provided for herein, in the Trust Indenture related to Bonds issued for the PID or otherwise approved by the Town Council. “Administrative Expenses” mean the costs associated with or incident to the administration, organization, maintenance and operation of the PID, including, but not limited to, the costs of: (i) creating and organizing the PID, including conducting hearings, preparing notices and petitions, and all costs incident thereto, engineering fees, legal fees and consultant fees, (ii) the annual administrative, organization, maintenance, and operation costs and expenses associated with, or incident and allocable to, the administration, organization, maintenance and operation of the PID and the Authorized Improvements, (iii) computing, levying, billing and collecting Assessments or the installments thereof, (iv) maintaining the record of installments of the Assessments and the system of registration and transfer of the Bonds, (v) paying and redeeming the Bonds, (vi) investing or depositing of monies, (vii) complying with the PID Act and codes with respect to the Bonds, (viii) Trustee fees and expenses relating to the Bonds, (ix) legal counsel, engineers, accountants, financial advisors, investment bankers or other consultants and advisors providing services related to the Bonds, and (x) administering the construction of the Authorized Improvements. Administrative Expenses do not include payment of the actual principal of, redemption premium, and interest on the Bonds. Amounts collected in conjunction with Annual 3 Installments for Administrative Expenses and not expended for actual Administrative Expenses shall be carried forward and applied to reduce Administrative Expenses in subsequent years to avoid the over-collection of Administrative Expenses. “Annual Installment” means, with respect to each Parcel, each annual payment of: (i) the Assessments, including any applicable interest, as shown on the Assessment Rolls attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section IV of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section IV of this Service and Assessment Plan. “Annual Installment Part A” means, with respect to each Parcel, each annual payment of: (i) the Assessment Part A, including any applicable interest, as shown on the Assessment Roll attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section V of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section V of this Service and Assessment Plan. “Annual Installment Part B” means, with respect to each Parcel, each annual payment of: (i) the Assessment Part B, including any applicable interest, as shown on the Assessment Roll attached hereto as Appendix E, as applicable, or in an Annual Service Plan Update, and calculated as provided in Section VI of this Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve described in Section V of this Service and Assessment Plan, and (iv) the delinquency reserve as described in Section V of this Service and Assessment Plan. “Annual Service Plan Update” has the meaning set forth in the first paragraph of Section IV of this Service and Assessment Plan. “Assessed Property” means the property within the PID that benefits from the Authorized Improvements, as determined by the Town Council, on which Assessments have been imposed as shown in the Assessment Rolls, as the Assessment Rolls are updated each year by the Annual Service Plan Update. Assessed Property includes all Parcels within the PID other than Non- Benefited Property. “Assessment” means the assessment(s) levied against Parcels within the PID imposed pursuant to the Assessment Ordinance and the provisions herein as shown on the Assessment Rolls, subject to reallocation upon the subdivision of such Parcel or reduction according to the provisions herein and the PID Act. “Assessment Ordinance” means an Ordinance adopted by the Town Council approving the Service and Assessment Plan (including updates, amendments or supplements to the Service and Assessment Plan) and levying the Assessments. “Assessment Part A” means the portion of the Assessments levied for Improvement Project A as shown in the Assessment Rolls. 4 “Assessment Part B” means the portion of the Assessments levied for Improvement Project B as shown in the Assessment Rolls, as may be updated in the Annual Service Plan Updates. “Assessment Revenues” mean the revenues actually received by the Town from Assessments. “Assessment Roll” means an assessment roll included in Appendix E of this Service and Assessment Plan, as it may be updated, amended, or replaced by a supplement to this Service and Assessment Plan or an Annual Service Plan Update. “Authorized Improvements” mean those public improvements described in Section III and Appendix B of this Service and Assessment Plan and any future updates and/or amendments. “Authorized Improvement Costs” mean the actual or budgeted costs, as applicable, of all or any portion of the Authorized Improvements, as described in Section III and shown in Appendix B, as these costs may be updated from time to time. “Bonds” mean any bonds issued by the Town in one or more series and secured by the Assessment Revenues. “Bond Indenture” means the indenture, ordinance or similar document setting forth the terms and other provisions relating to the Bonds, as modified, amended, or supplemented from time to time. “Certification for Payment” means the document to be provided by the Developer to substantiate the Actual Cost of one or more Authorized Improvements, as approved by the Town. “Delinquent Collection Costs” mean interest, penalties and expenses incurred or imposed with respect to any delinquent installment of an Assessment in accordance with the PID Act and the costs related to pursuing collection of a delinquent Assessment and foreclosing the lien against the Assessed Property, including attorney’s fees. “Developer” means Maguire Partners – Solana Land, L.P. “Equivalent Units” mean, as to any Parcel, the number of dwelling units by Land Use Class or non-residential development by type expected to be built on the Parcel multiplied by the factors calculated and shown in Appendix D attached hereto, as Appendix D may be updated by an Annual Service Plan Update. “Improvement Area #1” means the area of the PID to be improved by Improvement Project A and Improvement Project B, consisting of the property shown within Improvement Area #1 on Appendix A, and commonly referred to as the Mixed-Use Core. “Improvement Area #2” means the area of the PID to be improved by Improvement Project A, consisting of the property shown within Improvement Area #2 on Appendix A, and commonly referred to as West Residential. 5 “Improvement Area #3” means the area of the PID to be improved by Improvement Project A, consisting of the property shown within Improvement Area #3 on Appendix A and commonly referred to as East Residential. “Improvement Area #1 Assessed Property” means the property within the PID that benefits from the Improvement Project A and Improvement Project B as determined by the Town Council on which Assessments Part A and Assessments Part B have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #1 Assessed Property includes all Parcels within Improvement Area #1 of the PID other than Non-Benefited Property. “Improvement Area #2 Assessed Property” means the property within the PID that benefits from the Improvement Project A as determined by the Town Council on which Assessments Part A have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #2 Assessed Property includes all Parcels within Improvement Area #2 of the PID other than Non-Benefited Property. “Improvement Area #3 Assessed Property” means the property within the PID that benefits from the Improvement Project A as determined by the Town Council on which Assessments Part A have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. Improvement Area #3 Assessed Property includes all Parcels within Improvement Area #3 of the PID other than Non-Benefited Property. “Improvement Project A” means the Authorized Improvements described as such in Section III and shown in Appendix B of this Service and Assessment Plan and any future updates and/or amendments. “Improvement Project B” means the portion of the Authorized Improvements described as such in Section III and shown in Appendix B of this Service and Assessment Plan and any future updates and/or amendments. “Land Use Class” means a classification of property with similar characteristics regarding the intended use of the property (e.g., residential, retail, office, hotel, etc.), as allowed by the Zoning Ordinance. “Lot” means a tract of land described as a “lot” in a subdivision plat recorded in the official public records of Tarrant County, Texas. “Non-Benefited Property” means Parcels within the boundaries of the PID that accrue no special benefit from the Authorized Improvements, as determined by the Town Council, including Property Owner Association Property, public property and easements that create an exclusive use for a public utility provider. Property identified as Non-Benefited Property at the time the Assessments (i) are imposed or (ii) are reallocated pursuant to a subdivision of a Parcel, is not assessed. Assessed Property converted to Non-Benefited Property, if the Assessments may not be reallocated pursuant to the provisions herein, remains subject to the Assessments and requires the Assessments to be prepaid as provided for in Section VI. C. 2. 6 “Parcel” or “Parcels” means a parcel or parcels within the PID identified by either a tax map identification number assigned by the Tarrant Central Appraisal District for real property tax purposes or by lot and block number in a final subdivision plat recorded in the real property records of Tarrant County. “PID” has the meaning set forth in Section I.A of this Service and Assessment Plan. “PID Act” means Texas Local Government Code Chapter 372, Public Improvement Assessment Act, Subchapter A, Public Improvement Districts, as amended. "PID Costs" means the Administrative Expenses and the Authorized Improvement Costs “Prepayment Costs” mean interest and expenses to the date of prepayment, plus any additional expenses related to the prepayment, reasonably expected to be incurred by or imposed upon the Town as a result of any prepayment of an Assessment. “Property Owners’ Association” means that mandatory association of all property owners in the PID other than owners only of non-benefitted property, which shall be responsible for the operation and maintenance of the Property Owner’s Association Property, public infrastructure, and the right-of-ways. “Property Owner Association Property” means property within the boundaries of the PID that is owned by or dedicated to, whether in fee simple or through an exclusive use easement, a property owners’ association. All Property Owner Association Property will be identified on approved plats. “Property Owner Association Property – Public Access” means property (as shown in Exhibit _) within the boundaries of the PID that is owned or dedicated to, whether in fee simple or through an exclusive use easement, a property owners’ association and that allows public access through public access easements or similar instruments. “Public Property” means property within the boundaries of the PID that is owned by or irrevocably offered for dedication to the federal government, the State of Texas, Tarrant County, the Town, a school district or any other public agency, whether in fee simple, through dedication by plat, or through an exclusive use easement. “Service and Assessment Plan” means this Service and Assessment Plan prepared for the PID pursuant to the PID Act, as the same may be amended from time to time. “Town” means the Town of Westlake, Texas. “Town Council” means the duly elected governing body of the Town. “Trustee” means the fiscal agent or trustee as specified in the Trust Indenture, including a substitute fiscal agent or trustee. “Zoning Ordinance” has the meaning set forth in Section I.A of this Service and Assessment Plan. 7 Section II PROPERTY INCLUDED IN THE PID Property Included in the PID The PID is presently located within the Town and contains approximately 85 acres of land. A map of the property within the PID is shown on Appendix A to this Service and Assessment Plan. At completion, the PID is expected to consist of approximately 322 residential units, approximately 1,158,299 square feet of commercial development, landscaping, and infrastructure necessary to provide roadways, drainage, and utilities for the property in the PID. The estimated number of lots and the classification of each lot are based upon the Zoning Ordinance. The property within the PID is proposed to be developed as follows: Table II-A Proposed Development Proposed Development Type Improvement Area #1 Improvement Area #2 Improvement Area #3 Planned No. of Units Unit of Measure Planned No. of Units Unit of Measure Planned No. of Units Unit of Measure Residential Condo Units (more than 3,600 sq. ft) 38 Units 0 Units 0 Units Condo Units (2,500 to 3,600sq. ft) 71 Units 0 Units 0 Units Condo Units (1,800 to 2,500 sq. ft) 6 Units 0 Units 0 Units Villa - West (more than 3,600 sq. ft) 0 Units 42 Units 0 Units Villa - West (2,500 to 3,600sq. ft) 0 Units 16 Units 0 Units Villa - West (1,800 to 2,500 sq. ft) 0 Units 69 Units 0 Units Villa - East (more than 3,600 sq. ft) 0 Units 0 Units 21 Units Villa - East (2,500 to 3,600sq. ft) 0 Units 0 Units 23 Units Villa - East (1,800 to 2,500 sq. ft) 0 Units 0 Units 36 Units Subtotal - Residential 115 Units 127 Units 80 Units Commercial Commercial - Retail 372,099 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Office 266,100 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Hospitality 255,500 Sq. Ft 0 Sq. Ft 0 Sq. Ft Commercial - Institutional 264,600 Sq. Ft 0 Sq. Ft 0 Sq. Ft Subtotal – Commercial 1,158,299 Sq. Ft 0 Sq. Ft 0 Sq. Ft The current Parcels in the PID are shown on the Assessment Roll included as Appendix E and the map included as Appendix A. 8 The estimated number of units at the build-out of the PID is based on the land use approvals for the property, the anticipated subdivision of property in the PID, and the Developer’s estimate of the highest and best use of the property within the PID subject to the land use approvals. 9 Section III DESCRIPTION OF THE AUTHORIZED IMPROVEMENTS A. Authorized Improvements Overview Section 372.003 of the PID Act defines the improvements that may be undertaken by a municipality or county through the establishment of a public improvement district, as follows: 372.003. Authorized Improvements (a) If the governing body of a municipality or county finds that it promotes the interests of the municipality or county, the governing body may undertake an improvement project that confers a special benefit on a definable part of the municipality or county or the municipality’s extraterritorial jurisdiction. A project may be undertaken in the municipality or county or the municipality’s extraterritorial jurisdiction. (b) A public improvement may include, among others: (i) landscaping; (ii) erection of fountains, distinctive lighting, and signs; (iii) acquiring, constructing, improving, widening, narrowing, closing, or rerouting of sidewalks or of streets, any other roadways, or their rights-of way; (iv) construction or improvement of pedestrian malls; (v) acquisition and installation of pieces of art; (vi) acquisition, construction, or improvement of libraries; (vii) acquisition, construction, or improvement of off-street parking facilities; (viii) acquisition, construction, or improvement of water, wastewater, or drainage facilities or improvements; (ix) the establishment or improvement of parks; (x) projects similar to those listed in Subdivisions (i)-(x); (xi) acquisition, by purchase or otherwise, of real property in connection with an authorized improvement; (xii) special supplemental services for improvement and promotion of the district, including services relating to advertising, promotion, health and sanitation, water and wastewater, public safety, security, business recruitment, development, recreation, and cultural enhancement; and (xiii) payment of expenses incurred in the establishment, administration and operation of the district. 10 After analyzing the public improvement projects authorized by the PID Act, the Town has determined that the Authorized Improvements as described in Appendix B and shown on the diagrams included as Appendix C should be undertaken by the Town for the benefit of the property within the PID. B. Description of the Authorized Improvements The Authorized Improvements are described below. The costs of the Authorized Improvements are shown in Table III-A. The costs shown in Table III-A are estimates and may be revised in Annual Service Plan Updates, including such other improvements as deemed necessary to further improve the properties within the PID. Improvement Project A The Authorized Improvements to be constructed as Improvement Project A include roadway improvements, water distribution system improvements, storm sewer collection system improvements, wastewater collection system improvements and landscaping & public park improvements that will provide service to the property intended for development within the PID. The Authorized Improvements benefit all of the property within Improvement Area #1, Improvement Area #2 and Improvement Area #3. As a result, Improvement Project A benefits all of the property within the PID proposed for development. Road Improvements The roadway improvements include approximately 49,116 SY of 6-inch reinforced concrete pavement, 34,506 SY of 8-inch reinforced concrete pavements, 89,500 SY of 8-inch treated sub- grade compacted to 95% SPD, striping, street signage and signals, turn lanes and bridges. A detailed description of the roadway improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All roadway improvements will be constructed according to the Town requirements. See Table III-A for cost details. Water Distribution System Improvements The water distribution system improvements consist of approximately 15,640 linear feet of 12- inch water lines, approximately 6,149 linear feet of 8-inch water lines, fire hydrants and trench safety procedures. A detailed description of the water distribution system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All water distribution system improvements will be constructed according to the Town requirements. This development will be served in its entirety by the Town for all water and sewer services. See Table III-A for cost details. Sanitary Sewer Improvements The sanitary sewer collection system improvements consist of approximately 14,554 linear feet of 8-inch PVC, including sewer laterals, manholes and trench safety procedures. A detailed description of the sanitary sewer collection system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All sanitary sewer collection 11 system improvements will be constructed according to the Town requirements. See Table III-A for cost details. Storm Drainage Improvements The storm sewer collection system improvements consist of approximately 6,014 linear feet of various sized RCP pipes, manholes, junction boxes, inlets, headwalls and trench safety procedures. A detailed description of the storm sewer collection system improvements and the related costs are provided in the engineering cost estimates included as Appendix B. All storm sewer collection system improvements will be constructed according to the Town requirements. See Table III-A for cost details. Landscaping Landscaping, which includes public park improvements, include the creation of a 12-acre central lake, vineyards, trees, rubble stone walls and pathways on approximately nine acres, installation of over 2½ miles of 8-12’ wide concrete paths with seating areas, public art and public lighting details, including bollards, gathering area lighting and street lighting. All landscaping improvements will be constructed according to the Town requirements. See Table III-A for cost details. The water and sanitary sewer improvements listed above help create the grid for the water line system and the sanitary sewer collection system for the property. The storm sewer improvements collect and control the runoff created on each Parcel and conveys this runoff to the large central lake, which also serves as a storm water detention pond for the property in the PID. The road improvements provide for the traffic circulation within the property, allowing access to and from the adjacent roadways to each Parcel. Duct Bank Extension The duct bank extension improvements include 4,955 linear feet of double conduit with pull boxes and 13,891 linear feet of single conduit with pull boxes that runs parallel to the street network and to be used by franchise utilities such as cable and fiber. Improvement Project B The Authorized Improvements to be constructed as Improvement Project B include a parking structure with approximately 440 parking spaces. Improvement Project B will provide service to the property intended for development with the PID. These Authorized Improvements benefit all of the property within Improvement Area #1. As shown in the map on Appendix A, the Improvement Area #1 boundary covers a portion of the property in the PID. As a result, Improvement Project B benefits the property within Improvement Area #1 of the PID proposed for development. 12 Table III-A Estimated Authorized Improvement Costs Authorized Improvements Improvement Project A Improvement Project B Total Estimated Costs Road improvements $4,389,900 $0 $4,389,900 Water distribution system improvements $1,061,720 $0 $1,061,720 Sanitary sewer collection system improvements $1,881,296 $0 $1,881,296 Storm sewer collection system improvements $1,733,872 $0 $1,733,872 Landscaping improvements $1,830,501 $0 $1,830,501 Duct bank improvements $733,954 $0 $733,954 Other costs (See Appendix B for details) $8,694,755 $0 $8,694,755 Parking facility improvements $0 $6,160,000 $6,160,000 Total – Estimated Authorized Improvement Costs $20,325,998$6,160,000 $26,485,998 The detailed cost estimates are provided as Appendix B to this Service and Assessment Plan. The costs shown in Table III-A are current estimates and may be revised in Annual Service Plan Updates. Savings from one line item may be applied to a cost increase of an Authorized Improvement in another line item, to construct additional Authorized Improvements or to pay debt service on the Bonds, as determined by the Town. 13 Section IV SERVICE PLAN A. Sources and Uses of Funds The PID Act requires the service plan to cover a period of at least five years. The service plan is required to define the annual projected costs and indebtedness for the Authorized Improvements undertaken within the PID during the five year period. It is anticipated that it will take approximately 24 to 36 months for Improvement Project A to be constructed. The Authorized Improvement Costs of Improvement Project A and Improvement Project B, including costs related to the issuance of the Bonds and payment of expenses incurred in the establishment, administration and operation of the PID, are estimated at $36,390,000 as shown in Table IV-A. Improvement Project A is anticipated to be funded with the Series 2015 Bonds and a Reimbursement Agreement in the total amounts of $26,175,000 and $3,400,000, respectively, as shown in Table IV-A. Improvement Project B is anticipated to be funded in the total amount of $2,425,000, which shall be funded through a deferred Assessment Part B, as shown in Table IV-A. The service plan shall be reviewed and updated at least annually for the purpose of determining the annual budget for Administrative Expenses, updating the estimated Authorized Improvement costs, and updating the Assessment Rolls. Any update to this Service and Assessment Plan is herein referred as an “Annual Service Plan Update.” Table IV-A summarizes the estimated sources and uses of funds required to construct the Authorized Improvements, establish the PID, and issue the Bonds. The sources and uses of funds shown in Table V-A shall be updated each year in the Annual Service Plan Update to reflect any changes including budget revisions and Actual Costs. The Bonds shown in Table IV-A (the “Series 2015 Bonds”) are anticipated to be issued starting early 2015 and will be used to pay and/or reimburse the Developer for a portion of Improvement Project A. The remaining costs of Improvement Project A will be financed through a Reimbursement Agreement dated as of ______ (the “Reimbursement Agreement”), which is anticipated to be replaced by one or more series of future Bonds (“Future Bonds”). The Future Bonds are anticipated to be issued in 2017 after some or all of the Authorized Improvements are constructed and will be used to replace the Town’s obligations under the Reimbursement Agreement to reimburse the Developer for the remaining portion of the costs of the Authorized Improvements. 14 Table IV-A Estimated Sources and Uses Sources of Funds Series 2015 Bonds Reimbursement Agreement Deferred Assessment Part B Total Estimated Authorized Improvements Improvement Project A Improvement Project A Improvement Project B Estimated Bond par amount $26,175,000 $3,400,000 $2,425,000 $32,000,000 Developer funds $0 $0 $4,390,000 $4,390,000 Total Sources $26,175,000 $3,400,000 $6,815,000 $36,390,000 Uses of Funds Authorized Improvements Road improvements $3,767,430 $622,470 $0 $4,389,900 Water distribution system improvements $890,040 $171,680 $0 $1,061,720 Sanitary sewer improvements $1,531,196 $350,100 $0 $1,881,296 Storm drainage improvements $1,154,306 $579,566 $0 $1,733,872 Landscaping improvements $1,830,501 $0 $0 $1,830,501 Duct bank improvements $640,304 $93,650 $0 $733,954 Other costs (See Appendix B) $8,195,623 $499,132 $0 $8,694,755 Parking facility improvement $0 $0 $6,160,000 $6,160,000 Subtotal $18,009,400 $2,316,598 $6,160,000 $26,485,998 Bond issue costs Capitalized interest $3,664,500 $238,000 $364,125 $4,072,500 Debt service reserve $2,225,600 $340,000 $485,500 $2,808,100 Other Bond issuance related costs $2,275,500 $505,402 $485,500 $3,023,402 Subtotal $8,165,600 $1,083,402 $1,335,125 $9,904,002 Total Uses $26,175,000$3,400,000$6,815,000 $36,390,000 B. Annual Projected Costs and Annual Projected Indebtedness The annual projected costs and annual projected indebtedness is shown by Table IV-B. The annual projected costs and indebtedness are subject to revision and each shall be updated in the Annual Service Plan Update to reflect any changes in the costs or indebtedness expected for each year. 15 Table IV-B Annual Projected Costs and Annual Projected Indebtedness Year Annual Projected Cost Annual Projected Indebtedness Sources other than PID Bonds 2014 $0 $0 $0 2015 $26,175,000$26,175,000 $0 2016 $0 $0 $0 2017 $3,400,000$3,400,000 $0 2018 $6,815,000$2,425,000$4,390,000 Total $36,390,000$32,000,000$4,390,000 The annual projected costs shown in Table IV-B are the annual expenditures relating to the Authorized Improvement Costs shown in Table III-A, including costs associated with setting up the PID and Bond issuance costs, shown in Table IV-A. The difference between the total projected cost and the total projected indebtedness is the amount contributed by the Developer. The Town obtained an estimate of the cost of the Authorized Improvements, specifically, the parking garage, and an estimate of the appraised value of the property within the PID. As a result, the Town may, in compliance with the PID Act, in the Assessment Ordinance, defer the levy of an assessment to pay for the parking garage until a future date, specifically, at the date that the Town gives its final approval to a site plan and construction drawings for the construction of the Parking Garage. The estimated costs and related indebtedness for Improvement Project B are not shown in Table IV-B as a result of the Assessment Part B deferral. C. Maintenance of the Authorized Improvements Administrative and operation expenses of the PID shall include the expenses of maintaining and repairing the Authorized Improvements other than the water distribution system improvements, sanitary system improvements and duct bank extension in order to operate and maintain the applicable Authorized Improvements in a manner consistent with the Town's standards for maintenance of similar public improvements throughout the Town and as further described in the Development Agreement with the Developer dated as of________. The Town shall be responsible for the maintenance and repair expenses of the water distribution system improvements, sanitary system improvements and duct bank extension. The Annual Installments may include in Administrative Expenses a Maintenance Assessment as described in V.C.3 to pay such expenses. The Town may enter into an agreement (a "Maintenance Agreement") with a Property Owners' Association ("POA") wherein the POA agrees to operate, maintain and repair the applicable Authorized Improvements in accordance with the standards set forth in the Maintenance Agreement. In the event the POA fails to operate, maintain and repair the applicable Authorized Improvements in accordance with the standards set forth in the Maintenance Agreement, the Town may operate, maintain and repair the applicable Authorized Improvements or contract with another third party to operate, maintain and repair the applicable Authorized Improvements. 16 Section V ASSESSMENT PLAN A. Introduction The PID Act requires the Town Council to apportion the PID Costs on the basis of special benefits conferred upon the property because of the Authorized Improvements. The PID Act provides that the PID Costs may be assessed: (i) equally per front foot or square foot; (ii) according to the value of the property as determined by the governing body, with or without regard to improvements on the property; or (iii) in any other manner that results in imposing equal shares of the cost on property similarly benefited. The PID Act further provides that the governing body may establish by ordinance or order reasonable classifications and formulas for the apportionment of the cost between the municipality and the area to be assessed and the methods of assessing the special benefits for various classes of improvements. This section of this Service and Assessment Plan describes the special benefit received by each Parcel within the PID as a result of the Authorized Improvements, provides the basis and justification for the determination that this special benefit exceeds the amount of the Assessments, and establishes the methodologies by which the Town Council allocates and reallocates the special benefit of the Authorized Improvements to Parcels in a manner that results in equal shares of the Actual Costs being apportioned to Parcels similarly benefited. The determination by the Town Council of the assessment methodologies set forth below is the result of the discretionary exercise by the Town Council of its legislative authority and governmental powers and is conclusive and binding on the Developer and all future owners and developers of the Assessed Property. For purposes of this Service and Assessment Plan, the Town Council has determined that the Authorized Improvement Costs shall be allocated to the Assessed Property as described below: 1. The Authorized Improvement Costs for Improvement Project A and Improvement Project B shall be allocated to the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property respectively, on the basis of the total estimated improvement costs that benefit each Improvement Area (“Direct Improvement Costs”) and the improvement costs that benefit the entire PID (“Common Improvement Costs), as allocated to each Improvement Area based on the ratio of the Direct Improvement Costs of each Improvement Area, and that such method of allocation will result in the imposition of equal shares of the Authorized Improvement Costs to Parcels similarly benefited. 2. The Town Council has concluded that larger more expensive homes are likely to be built on the larger lots, and that larger more expensive homes are likely to make greater use of and receive greater benefit from the Authorized Improvements. In determining the relative construction costs of Parcels, the Town Council has taken in to consideration (i) the type of development (i.e., residential, commercial, etc), (ii) residential lot sizes and the size of homes likely to be built on lots of different sizes, (iii) current and projected construction costs per square foot as provided by the Developer, (iv) the Authorized Improvements to be provided and the estimated costs, and (v) the ability of different property types to utilize and benefit from the improvements. 17 3. The Assessed Property is classified into different Land Use Classes as described in Appendix D based on the type and size of proposed development on each Parcel. 4. Equivalent Units are calculated for each Land Use Class in each Improvement Area based on the relative average construction cost per unit of each Land Use Class as shown in Appendix D. The average construction cost for each Land Use Class in each Improvement Area is calculated based on the estimated average square feet of each unit of residential Land Use Class or 1,000 square feet of each commercial Land Use Class, as applicable, and the estimated average construction cost per square foot of each Land Use Class. 5. The Authorized Improvement Costs of Improvement Project A and Improvement Project B that benefit the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property, respectively, are proportionally allocated based on the total Equivalent Units estimated for each Parcel of Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property. Table V-A provides the estimated allocation of costs of the Authorized Improvements. B. Special Benefit Assessed Property must receive a direct and special benefit from the Authorized Improvements, and this benefit must be equal to or greater than the amount of the Assessments. For the purpose of this Service and Assessment Plan, special benefit means a specific and localized benefit, and a quantifiable amount of benefit, that infrastructure has on a tract of land. An example is a roadway providing a specific benefit to the tracts of land immediately in the vicinity of the roadway, for without its construction, the tracts near a proposed roadway would likely remain underdeveloped. The quantifiable benefit may be expressed as the increased value of the land and improvements located on the land because of the placement of public infrastructure near that land. The Authorized Improvements (more particularly described in line-item format in Appendix B to this Service and Assessment Plan) and the costs of issuance and payment of costs incurred in the establishment of the PID shown in Table IV-A are authorized by the Act. These improvements are provided specifically for the benefit of the Assessed Property. Each owner of the Assessed Property has acknowledged that the Authorized Improvements confer a special benefit on the Assessed Property and has consented to the imposition of the Assessments to pay for the Actual Costs associated therewith. Pursuant to the Landowner’s Agreement, each owner of the Assessed Property has ratified, confirmed, accepted, agreed to and approved; (i) the determinations and finding by the Town Council as to the special benefits described in this Service and Assessment Plan and the Assessment Ordinance; (ii) the Service and Assessment Plan and the Assessment Ordinance, and (iii) the levying of Assessments on the Assessed Property. Each of the owners is acting in its interest in consenting to this apportionment and levying of the Assessments because the special benefit conferred upon the Assessed Property by the Authorized Improvements exceeds the amount of the Assessments. The public improvements provide a special benefit to the Assessed Property as a result of the close proximity of these improvements to the Assessed Property and the specific purpose of 18 these improvements of providing infrastructure for the Assessed Property so that the property may be developed as proposed. In other words, the Assessed Property could not be used in the manner proposed without the construction of the Authorized Improvements. The Authorized Improvements are being provided specifically to meet the needs of the Assessed Property as required for the proposed use of the property. The Assessments are being levied to provide the Authorized Improvements that are required for the highest and best use of the Assessed Property (i.e., the use of the property that is most valuable, including any costs associated with that use). Highest and best use can be defined as “the reasonably probable and legal use of property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.” (Dictionary of Real Estate Appraisal, Third Edition.) The Authorized Improvements are expected to be required for the proposed use of the Assessed Property to be physically possible, appropriately supported, financially feasible, and maximally productive. The Developer has evaluated the potential use of the property and has determined that the highest and best use of the property is the use intended and the legal use for the property as described in Section II of this Service and Assessment Plan. The use of the Assessed Property as described herein will require the construction of the Authorized Improvements. The special assessments will repay financing that is on advantageous terms, as the Bonds issued to finance the public improvements will pay interest that is exempt from federal income tax. As a result, all other terms being equal (e.g., maturity, fixed vs. variable rate, risk and credit quality), the tax-exempt bonds will have a lower interest rate than debt that is not tax-exempt. Use of the Assessed Property as described in this Service and Assessment Plan and as authorized by the Zoning Ordinance requires that Authorized Improvements be acquired, constructed, installed, or improved. Funding the Actual Costs through the PID has been determined by the Town Council to be the most beneficial means of doing so. Since the Authorized Improvements are required for the highest and best use of the property, and the PID provides the most beneficial means of financing the Authorized Improvements, the improvements provided by the PID will be equal to or greater than the cost of the Assessments levied on the property. Accordingly, the Assessments result in a special benefit to the Assessed Property, and this special benefit exceeds the amount of the Assessments. This conclusion is based on and supported by the evidence, information, and testimony provided to the Town Council. In summary, the Assessments result in a special benefit to the Assessed Property for the following reasons: 1. The Authorized Improvements are being provided specifically for the use of the Assessed Property and a special benefit to the Assessed Property as a result; 2. The Developer has consented to the imposition of the Assessments for the purpose of providing the Authorized Improvements and the Developer is acting in its interest by consenting to this imposition; 19 3. The Authorized Improvements are required for the highest and best use of the property; 4. The highest and best use of the Assessed Property is the use of the Assessed Property that is most valuable (including any costs associated with the use of the Assessed Property); 5. Financing of the PID Costs by establishing the PID is determined to be the most beneficial means of providing for the Authorized Improvements; and, 6. As a result, the special benefits to the Assessed Property from the Authorized Improvements will be equal to or greater than the Assessments. C. Assessment Methodology C.1 Assessment Part A The Actual Costs of Improvement Project A may be assessed using any methodology that results in the imposition of equal shares of the Actual Costs on the Assessed Property in each Improvement Area similarly benefited. For purpose of this Service and Assessment Plan, the Town Council has determined that the Actual Costs of Improvement Project A to be financed with the Series 2015 Bonds and the Reimbursement Agreement shall be allocated to the Improvement Area #1 Assessed Property by spreading the entire Assessment Part A across the Parcels based on the estimated Equivalent Units as calculated and shown in Appendix D using the types and number of lots anticipated to be developed on each Parcel of the Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property. As part of the determination as to the ability of different Land Use Classes to utilize and benefit from the Authorized Improvements, the Town Council has taken into consideration that larger, more expensive homes, on average, will create more vehicle trips and greater demands for water and wastewater consumption, and larger, more expensive homes are likely to be built on larger, more valuable lots. Based on the estimates of the costs of Improvement Project A that benefit the Assessed Property in all Improvement Areas, as provided by G&A Consultants, LLC., and set forth in Table III-A, the Town Council has determined that the benefit to the Assessed Property in each Improvement Area, is at least equal to the Assessment Part A levied on the Assessed Property in each Improvement Area. The Assessment Part A and Annual Installment Part A for each Parcel or Lot of the Assessed Property in each Improvement Area are shown on the Assessment Rolls, attached as Appendix E, and no Assessment Part A shall be changed except as authorized by this Service and Assessment Plan or the PID Act. Upon subdivisions of any Parcel, the Assessment Part A applicable to a Parcel will be apportioned pro rata to the resulting Parcels based on the Equivalent Units of each newly created Parcel. For residential Lots, when final residential building sites are platted, Assessment Part A will be apportioned proportionately among each Land Use Class based on the ratio of the Equivalent Unit applicable to each Land Use Class at the time Lots are platted to the total Equivalent Units of all Lots in the platted Parcel, as determined by the Administrator and confirmed by the Town Council. The result of this approach is that each final Lot within a recorded subdivision plat with similar values will have the same Assessment Part A, with larger, 20 more valuable Lots having a proportionately larger share of the Assessments than smaller, less valuable Lots. The detailed calculation of the Equivalent Units and allocation of Assessment Part A to each Improvement Area is shown in Appendix D. Table V-A below sets forth a summary of Assessment Part A per unit for each of the Land Use Classes in each Improvement Area of the PID. Table V-A Assessment Part A per Unit Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Improvement Area #1 Land Use Class 1 38 $58,797.94 1.00 $58,797.94 per dwelling unit $2,234,321.65 Land Use Class 2 71 $58,797.94 0.62 $36,454.72 per dwelling unit $2,588,285.24 Land Use Class 3 6 $58,797.94 0.60 $35,278.76 per dwelling unit $211,672.58 Land Use Class 10 372.10 $58,797.94 0.22 $12,935.55 per 1,000 Sq. Ft $4,813,303.88 Land Use Class 11 266.10 $58,797.94 0.20 $11,759.59 per 1,000 Sq. Ft $3,129,226.27 Land Use Class 12 255.50 $58,797.94 0.21 $12,347.57 per 1,000 Sq. Ft $3,154,803.37 Land Use Class 13 264.60 $58,797.94 0.19 $11,171.61 per 1,000 Sq. Ft $2,956,007.55 Subtotal: Improvement Area #1 $19,087,620.54 Improvement Area #2 Land Use Class 4 42 $63,349.00 1.00 $63,349.00 per dwelling unit $2,660,658.15 Land Use Class 5 16 $63,349.00 0.68 $43,077.32 per dwelling unit $689,237.16 Land Use Class 6 69 $63,349.00 0.52 $32,941.48 per dwelling unit $2,272,962.25 Subtotal: Improvement Area #2 $5,622,857.55 Improvement Area #3 Land Use Class 7 21 $86,189.26 1.00 $86,189.26 per dwelling unit $1,809,974.49 Land Use Class 8 23 $86,189.26 0.68 $58,608.70 per dwelling unit $1,348,000.05 Land Use Class 9 36 $86,189.26 0.52 $47,404.09 per dwelling unit $1,706,547.37 Subtotal: Improvement Area #3 $4,864,521.90 Grand Total Assessment Part A $29,575,000.00 C.2 Assessment Part B The Actual Costs of Improvement Project B may be assessed using any methodology that results in the imposition of equal shares of the Actual Costs on Improvement Area #1 Assessed Property similarly benefited. The Town obtained an estimate of the cost of the Authorized Improvements, specifically, the parking garage, and an estimate of the appraised value of the property within the PID. As a result, the Town may, in compliance with the PID Act, in the Assessment Ordinance, defer the levy of an assessment to pay for the parking garage until a future date, specifically, at the date that the Town gives its final approval to a site plan and construction drawings for the construction of the Parking Garage. The methodology for allocating Assessment Part B to each 21 Parcel in Improvement Area #1 will be provided as part of an Annual Service Plan Update at the Assessment Part B is levied. C.3 Maintenance Assessment The annual Maintenance Assessment may be assessed using any methodology that results in the imposition of equal shares of the Maintenance Assessment on Assessed Property similarly benefited. For purpose of this Service and Assessment Plan, the Town Council has determined that the Maintenance Assessment to be collected in any given year shall be allocated to each Improvement Area based on a ratio of the total Equivalent Units for each Improvement Area. In recognition of the higher traffic generated by the non-residential Land Use Classes in Improvement Area #1 as compared to the residential Land Use Classes, the Town has determined approximately 65% of the total Maintenance Assessment allocated to Improvement Area #1 will be collected from the non-residential Land Use Classes and the remaining 35% of the total Maintenance Assessment allocated to Improvement Area #1 will be collected from the residential Land Use Classes. The total amount of Maintenance Assessment allocated to the non- residential Land Use Classes in Improvement Area #1 will then be allocated to each Land Use Class based on the relative Equivalent Unit of each Land Use Class. The total amount of Maintenance Assessment allocated to the residential Land Use Classes in Improvement Area #1 will be allocated to each residential unit equally based on the number of units. The total amount of Maintenance Assessment allocated to Improvement Area #2 and Improvement Area #3 will also be allocated to each residential unit equally based on the number of units. D. Assessments The Assessments for the Authorized Improvements will be levied on each Parcel according to the Assessment Rolls, attached hereto as Appendix E. The Assessment Part A and Assessment Part B on each Parcel was allocated as explained above based on the development to occur on each Parcel and the Assessment per unit by Land Use Class. The Annual Installment Part A and Annual Installment Part B will be collected at the time and in the amounts shown on the Assessment Rolls, subject to any revisions made during an Annual Service Plan Update. E. Administrative Expenses The cost of administering the PID and collecting the Annual Installments shall be paid for on a pro rata basis by each Parcel based on the amount of Assessment levied against the Parcel. The Administrative Expenses shall be collected as part of and in the same manner as Annual Installments in the amounts shown on the Assessment Roll, which may be revised based on actual costs incurred in Annual Service Plan Updates. Administrative Expenses other than Maintenance Assessments shall be allocated among Parcels in proportion to the amount of the respective Annual Installments for the Parcels. G. Additional Interest Pursuant to the PID Act, the interest rate for Assessments may exceed the actual interest rate per annum paid on the Bonds by no more than one half of one percent (0.50%). The interest rate used to determine the Assessments is one half of one percent (0.50%) per annum higher than the actual rate paid on the Bonds. The Town may allocate up to 0.50% of the interest rate component 22 of the Annual Installments to pay for a prepayment reserve, delinquency reserve, Administrative Expenses, improvement costs, any other use that benefits the Assessed Property or reduce the Assessments, as determined by the Town Council. 1. Prepayment Reserve The Town Council has provided for up to 0.20% of the additional interest may be allocated to fund the associated interest charged between the date of prepayment of an Assessment and the date on which Bonds are prepaid. The actual amount of the additional interest to be set aside in the prepayment reserve shall be determined in the Annual Service Plan Updates in accordance with the provisions of the Bond Indentures. 2. Delinquency Reserve Up to 0.30% of the additional interest component of the Annual Installments may be allocated to offset any possible delinquent payments. The actual amount of the additional interest to be set aside in the delinquency reserve shall be determined in the Annual Service Plan Updates in accordance with the provisions of the Bond Indentures. 23 Section VI TERMS OF THE ASSESSMENTS A. Amount of Assessments and Annual Installments The Assessments and Annual Installments for each Parcel of Assessed Property located within the PID are shown on the Assessment Rolls, attached as Appendix E, and no Assessment shall be changed except as authorized by this Service and Assessment Plan and the PID Act. The Annual Installments shall be collected in an amount sufficient to pay principal and interest on the Bonds and amounts payable pursuant to the Reimbursement Agreement, to fund the prepayment reserve and delinquency reserve described in Section V and to pay Administrative Expenses. The annual Maintenance Assessments shall be collected in an amount sufficient to pay the estimated costs of maintenance included in the Authorized Improvements maintenance budget for the year and/or an amount sufficient to replenish withdrawals during the previous year(s), if any, from any funds or accounts established and maintained for such purpose. B. Reallocation of Assessments 1. Subdivision Upon the subdivision of any Parcel, the Assessment Part A for the Parcel prior to the subdivision shall be reallocated among the new subdivided Parcels according to the following formula: A = B x (C ÷ D) Where the terms have the following meanings: A = the Assessment Part A for each new subdivided Parcel B = the Assessment Part A for the Parcel prior to subdivision C = the estimated Equivalent Units to be built on each new subdivided Parcel D = the sum of the estimated Equivalent Units to be built on all of the new subdivided Parcels Similarly, upon the subdivision of any Parcel, the Assessment Part B for the Parcel prior to the subdivision, if any, shall be reallocated among the new subdivided Parcels according to the following formula: A = B x (C ÷ D) Where the terms have the following meanings: A = the Assessment Part B for each new subdivided Parcel B = the Assessment Part B for the Parcel prior to subdivision C = the estimated Equivalent Units to be built on each new subdivided Parcel 24 D = the sum of the estimated Equivalent Units to be built on all of the new subdivided Parcels The calculation of the estimated number of units to be built on a Parcel shall be performed by the Administrator and confirmed by the Town Council based on the information available regarding the use of the Parcel. The estimate as confirmed shall be conclusive. The number of units to be built on a Parcel may be estimated by net land area and reasonable density ratios. The sum of the Assessment Part A for all newly subdivided Parcels shall equal the Assessment Part A for the Parcel prior to subdivision. The calculation shall be made separately for each newly subdivided Parcel. The reallocation of an Assessment Part A for a Parcel that is a homestead under Texas law may not exceed the Assessment Part A prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the subdivision of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. Similarly, the sum of the Assessment Part B for all newly subdivided Parcels shall equal the Assessment Part A for the Parcel prior to subdivision. The calculation shall be made separately for each newly subdivided Parcel. The reallocation of an Assessment Part B for a Parcel that is a homestead under Texas law may not exceed the Assessment Part B prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the subdivision of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. 2. Consolidation Upon the consolidation of two or more Parcels, the Assessment Part A for the consolidated Parcel shall be the sum of the Assessment Part A for the Parcels prior to consolidation. The reallocation of an Assessment Part A for a Parcel that is a homestead under Texas law may not exceed the Assessment Part A prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the consolidation of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. Similarly, upon the consolidation of two or more Parcels, the Assessment Part B for the consolidated Parcel shall be the sum of the Assessment Part B for the Parcels prior to consolidation. The reallocation of an Assessment Part B for a Parcel that is a homestead under Texas law may not exceed the Assessment Part B prior to the reallocation and to the extent the reallocation would exceed such amount, such excess shall be prepaid by the party requesting the consolidation of the Parcels. Any reallocation pursuant to this section shall be reflected in an Annual Service Plan Update approved by the Town Council. 3. Payment of Excess Assessment If a subdivision of a Parcel or consolidation of Parcels results in a reallocated Assessment Part A or Assessment Part B for a Parcel that would exceed the respective Assessment per Equivalent Unit shown in this Service and Assessment Plan for the applicable Land Use Class (the "Maximum Assessment"), the owner shall pay to the Town at the time of the subdivision or consolidation the amount by which the reallocated Assessment for the Parcel exceeds the 25 Maximum Assessment plus, if applicable, accrued interest through the date of such payment. Prepayment Costs, if any, that result from such owner-initiated subdivision or consolidation shall be paid by the owner to the Town at the time of the subdivision or consolidation. The Town Council will not approve for recordation any subdivision plat within the PID until subdivision regulation and platting requirements are fulfilled and the Administrator has notified the Town Council in writing that (a) the plat does not contain any Parcels for which the Assessment exceeds the Maximum Assessment, or (b) the appropriate payment has been received by the Town for any Parcel for which the allocated Assessment would have exceeded the Maximum Assessment. Payments made by an owner pursuant to this section shall be used to reduce the outstanding principal amount of Bonds and reduce the Assessments and Annual installments for the affected Parcels, which reductions shall be calculated by the Administrator in accordance with the applicable Bond Indenture and approved by the Town Council in the next Annual Service Plan Update. If Bonds have not been issued, payments made by an owner pursuant to this section shall be used to reduce the outstanding principal due under the Reimbursement Agreement and reduce the Assessments and Annual Installments for the affected Parcels, which reductions shall be calculated by the Administrator and approved by the Town Council in the next Annual Service Plan Update. C. Mandatory Prepayment of Assessments 1. If at any time the Assessment per Equivalent Unit on a Parcel exceeds the Maximum Assessment calculated in this Service and Assessment Plan as a result of any changes in Land Use Class, subdivision, consolidation or reallocation of the Assessment authorized by this Service and Assessment Plan and initiated by the owner of the Parcel, then such owner shall pay to the Town prior to the recordation of the document subdividing the Parcel the amount calculated by the Administrator by which the Assessment per Equivalent Unit for the Parcel exceeds the Maximum Assessment calculated in this Service and Assessment Plan. The Town shall not approve the recordation of a plat or other document subdividing a Parcel without a letter from the Administrator either (a) confirming that the Assessment per Equivalent Unit for any new Parcel created by the subdivision will not exceed the Maximum Assessment for each Parcel, or (b) confirming the payment of the Assessments, plus all Prepayment Costs, as provided for herein. 2. If a Parcel subject to Assessment Part A and/or Assessment Part B is transferred to a party that is exempt from the payment of the Assessments under applicable law, or if an owner causes a Parcel subject to Assessments to become Non-Benefited Property, the owner of such Parcel shall pay to the Town the full amount of the Assessment Part A and/or Assessment Part B on such Parcel, plus all Prepayment Costs, prior to any such transfer or act. 3. The payments required above shall be treated the same as any Assessment that is due and owing under the Act, the Assessment Ordinance, and this Service and Assessment Plan, including the same lien priority, penalties, procedures, and foreclosure specified by the Act. D. Reduction of Assessments 26 1. If after all Authorized Improvements to be funded with a series of Bonds have been completed and Actual Costs for such Authorized Improvements are less than the Actual Costs used to calculate the Assessments securing such series of Bonds, resulting in excess Bond proceeds being available to redeem Bonds of such series, then the Assessment securing such series of Bonds for each Parcel of Assessed Property shall be reduced by the Town Council pro rata such that the sum of the resulting reduced Assessments for all Assessed Properties equals the actual reduced Actual Costs and such excess Bond proceeds shall applied to redeem Bonds of such series. The Assessments shall not be reduced to an amount less than the related outstanding series of Bonds. 2. If all the Authorized Improvements are not undertaken, resulting in excess Bond proceeds being available to redeem Bonds, then the Assessments and Annual Installments for each Parcel shall be appropriately reduced by the Town Council to reflect only the amounts required to repay the Bonds, including interest on the Bonds and Administrative Expenses, and such excess Bond proceeds shall be applied to redeem Bonds. The Town Council may reduce the Assessments and the Annual Installments for each Parcel (i) in amounts that would result in the Assessments and Annual Installments to more accurately reflect the Authorized Improvements provided for each Parcel, (ii) by an equal percentage calculated based on Equivalent Units, or (iii) in another method if the Town Council determines such method would better reflect the benefit received by the Parcels from the Authorized Improvements provided to the Parcels. E. Payment of Assessments 1. Payment in Full (a) The Assessment Part A and/or Assessment Part B for any Parcel may be paid in full at any time. Such payment shall include all Prepayment Costs. If prepayment in full will result in redemption of Bonds, the payment amount shall be reduced by the amount, if any, of reserve funds applied to the redemption under the Trust Indenture, net of any other costs applicable to the redemption of Bonds. (b) If an Annual Installment has been billed prior to payment in full of an Assessment, the Annual Installment shall be due and payable and shall be credited against the payment-in-full amount. (c) Upon payment in full of the Assessment and all Prepayment Costs, the Town shall deposit the payment in accordance with the Trust Indenture; whereupon, the Assessment shall be reduced to zero, and the owner’s obligation to pay the Assessment and Annual Installments thereof shall automatically terminate. (d) At the option of the owner, the Assessment Part A and/or Assessment Part B on any Parcel plus Prepayment Costs may be paid in part at any time. Such prepayment shall include all Prepayment Costs. Upon the payment of such amounts for a Parcel, the respective Assessment for the Parcel shall be reduced, the Assessment Roll shall be updated to reflect such partial payment, and the obligation to pay the respective Annual Installment for such Parcel shall be reduced to the extent the partial payment is made. 27 2. Payment in Annual Installments The Act provides that an Assessment for a Parcel may be paid in full at any time. If not paid in full, the Act authorizes the Town to collect interest, administrative expenses and other authorized charges in Annual Installments. An Assessment for a Parcel that is not paid in full will be collected in Annual Installments each year in the amounts shown in the Assessment Rolls, as updated as provided for herein, which include interest, Administrative Expenses, prepayment reserve and delinquency reserve. Payment of the Annual Installments shall commence with tax bills mailed after the initial issuance of Bonds. Each Assessment shall include an interest component of equal to (i) the actual interest rate paid on the Bonds and (ii) up to 0.5% per annum. The Assessment Roll sets forth for each year the Annual Installment for each Parcel based on an estimated interest rate of 7% on the Series 2015 Bonds, an estimated interest rate of 6.72% on the Reimbursement Agreement and additional interest at the rate of 0.5% for administrative expenses, prepayment reserve and delinquency reserve. Furthermore, the Annual Installments may not exceed the amounts shown on the Assessment Rolls. The Assessment Rolls, to be updated with the actual interest rates on the Bonds and the Reimbursement Agreement once the Bonds are issued and/or the Reimbursement Agreement is executed, are shown as Appendix E. The Annual Installment Part A and Annual Installment Part B shall be reduced in the Service and Assessment Plan or Annual Service Plan Updates to equal the actual costs of repaying the Bonds, the Reimbursement Agreement and actual Administrative Expenses (as provided for in the definitions of such terms), taking into consideration any other available funds for these costs, such as interest income on account balances. The Town reserves and shall have the right and option to refund the Bonds in accordance with Section 372.027 of the PID Act. In the event of such refunding, the Administrator shall recalculate the Annual Installments and , and if necessary, may adjust the amount of the Annual Installments so that total Annual Installments of Assessments will be produced in annual amounts that are required to pay the refunding bonds when due and payable as required by and established in the ordinance and/or the indenture authorizing and securing the refunding bonds, and such refunding bonds shall constitute Bonds for purposes of this Service and Assessment Plan. F. Collection of Annual Installments No less frequently than annually, the Administrator shall prepare, and the Town Council shall approve, an Annual Service Plan Update to allow for the billing and collection of Annual Installments Part A, Annual Installments Part B and annual Maintenance Assessments, if any. Each Annual Service Plan Update shall include updated Assessment Rolls and calculations of the Annual Installment Part A, Annual Installment Part B and Annual Parcel Maintenance Assessment for each Parcel. Each Annual Installment shall be reduced by any credits applied under the applicable Trust Indenture, such as capitalized interest, interest earnings on any account balances, and any other funds available to the Trustee for such purpose, including any existing deposits for a prepayment reserve. Annual Installments and annual Maintenance Assessments shall be collected by the Town in the same manner and at the same time as ad 28 valorem taxes and shall be subject to the same penalties, procedures, and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the Town. The Town Council may provide for other means of collecting the Annual Installments and annual Maintenance Assessments to the extent permitted under the PID Act. The Assessments shall have lien priority as specified in the Act. Any sale of property for nonpayment of the Annual Installments shall be subject to the lien established for the remaining unpaid Annual Installments against such property and such property may again be sold at a judicial foreclosure sale if the purchaser thereof fails to make timely payment of the non-delinquent Annual Installments against such property as they become due and payable. Any party taking title to a Parcel, including a buyer at a foreclosure sale, shall take title to the Parcel subject to the obligation to pay the Assessment on such Parcel thereafter as provided for herein. If for any reason the Assessment may not be collected thereafter, the Assessment for the Parcel, along with other charges and credits as would apply for a prepayment of the Assessment, shall be due and payable at the time of the transfer without further action required by the Town Council. 29 Section VII THE ASSESSMENT ROLL A. The Assessment Roll Each Parcel within the PID has been evaluated by the Town Council (based on the Zoning Ordinance, developable area, proposed Property Owner Association Property and Public Property, the Authorized Improvements, best and highest use of land, and other development factors deemed relevant by the Town Council) to determine the Assessed Property within each Parcel. The Assessed Property in each Improvement Area will be assessed for the special benefits conferred upon the property as a result of the Authorized Improvements that benefit the property within each Improvement Area of the PID. Table IV-A summarizes the $36,390,000 in special benefit received by the Assessed Property from the Authorized Improvements, the costs of the PID formation, and Bond issuance costs. The total amount of the Bonds and the Reimbursement Agreement is $29,575,000, which is less than the benefit received by the Assessed Property, and as such the total Assessment Part A for Improvement Area #1 Assessed Property, Improvement Area #2 Assessed Property and Improvement Area #3 Assessed Property is $29,575,000. The total amount of deferred Assessment Part B for Improvement Area #1 Assessed Property is $2,425,000, which shall be collected with annual Administrative Expenses and other authorized charges once levied. The Assessment Part A for each Parcel of Assessed Property in each Improvement Area is calculated based on the allocation methodologies described in Section V.C and Appendix D of this Service and Assessment Plan. The Assessment Rolls for each Improvement Area are attached hereto as Appendix E. B. Annual Assessment Roll Updates The Administrator shall prepare, and shall submit to the Town Council for approval, annual updates to the Assessment Rolls in conjunction with the Annual Service Plan Update to reflect the following matters, together with any other changes helpful to the Administrator or the Town and permitted by the Act: (i) the identification of each Parcel (ii) the Assessment for each Parcel of Assessed Property, including any adjustments authorized by this Service and Assessment Plan or in the PID Act; (iii) the Annual Installment for the Assessed Property for the year (if the Assessment is payable in installments); (iii) the annual Maintenance Assessment the Assessed Property for the year (if any); and (iv) payments of the Assessment, if any, as provided by Section VI.E of this Service and Assessment Plan. Once the Bonds are issued and/or the Reimbursement Agreement is executed, the Assessment Rolls shall be updated, which update may be done in the next Annual Service Plan Update, to reflect any changes resulting from the issuance of the Bonds and/or execution of the Reimbursement Agreement. This update shall reflect the actual interest on the Bonds and/or the Reimbursement Agreement on which the Annual Installments shall be paid, any reduction in the Assessments, and any revisions in the Actual Costs to be funded by the Bonds and/or the Reimbursement Agreement and Developer funds. 30 Section VIII MISCELLANEOUS PROVISIONS A. Administrative Review The Town may elect to designate a third party to serve as Administrator. The Town shall notify Developer in writing at least thirty (30) days in advance before appointing a third party Administrator. To the extent consistent with the Act, an owner of an Assessed Parcel claiming that a calculation error has been made in the Assessment Roll(s), including the calculation of the Annual Installment, shall send a written notice describing the error to the Town not later than thirty (30) days after the date any amount which is alleged to be incorrect is due prior to seeking any other remedy. The Administrator shall promptly review the notice, and if necessary, meet with the Assessed Parcel owner, consider written and oral evidence regarding the alleged error and decide whether, in fact, such a calculation error occurred. If the Administrator determines that a calculation error has been made and the Assessment Roll should be modified or changed in favor of the Assessed Parcel owner, such change or modification shall be presented to the Town Council for approval to the extent permitted by the Act. A cash refund may not be made for any amount previously paid by the Assessed Parcel owner (except for the final year during which the Annual Installment shall be collected or if it is determined there are sufficient funds to meet the expenses of the PID for the current year), but an adjustment may be made in the amount of the Annual Installment to be paid in the following year. The decision of the Administrator regarding a calculation error relating to the Assessment Roll may be appealed to the Town Council. Any amendments made to the Assessment Roll(s) pursuant to calculation errors shall be made pursuant to the PID Act. The decision of the Administrator, or if such decision is appealed to the Town Council, the decision of the Town Council shall be conclusive as long as there is a reasonable basis for such determination. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any other appeal or legal action by such owner. B. Termination of Collection of Assessments Each Assessment shall be extinguished on the date the Assessment is paid in full, including unpaid Annual Installments. After the extinguishment of an Assessment and the collection of any delinquent Annual Installments and Delinquent Collection Costs, the Town shall provide the owner of the affected Parcel a recordable notice of the satisfaction and release of the Assessment. C. Amendments Amendments to the Service and Assessment Plan can be made as permitted or required by the PID Act and under Texas law. The Town Council reserves the right to the extent permitted by the Act to amend this Service and Assessment Plan without notice under the Act and without notice to property owners of Parcels: (i) to correct mistakes and clerical errors; (ii) to clarify ambiguities; and (iii) to provide 31 procedures for the collection and enforcement of Assessments, Prepayment Costs, Collection Costs, and other charges imposed by the Service and Assessment Plan. D. Administration and Interpretation of Provisions The Town Council shall administer the PID, this Service and Assessment Plan, and all Annual Service Plan Updates consistent with the PID Act, and shall make all interpretations and determinations related to the application of this Service and Assessment Plan unless stated otherwise herein or in the Trust Indenture, such determination shall be conclusive. E. Severability If any provision, section, subsection, sentence, clause or phrase of this Service and Assessment Plan or the application of same to an Assessed Parcel or any person or set of circumstances is for any reason held to be unconstitutional, void or invalid, the validity of the remaining portions of this Service and Assessment Plan or the application to other persons or sets of circumstances shall not be affected thereby, it being the intent of the Town Council in adopting this Service and Assessment Plan that no part hereof or provision or regulation contained herein shall become inoperative or fail by reason of any unconstitutionality, voidness or invalidity of any other part hereof, and all provisions of this Service and Assessment Plan are declared to be severable for that purpose. If any provision of this Service and Assessment Plan is determined by a court to be unenforceable, the unenforceable provision shall be deleted from this Service and Assessment Plan and the unenforceable provision shall, to the extent possible, be rewritten to be enforceable and to give effect to the intent of the Town. Draft Appendix A The PID MAP Draft Appendix B ESTIMATED COSTS OF AUTHORIZED IMPROVEMENTS Im p r o v e m e n t P r o j e c t B (t o b e t o b e f u n d e d wi t h S e r i e s 2 0 1 5 Bo n d s ) (i n i t i a l l y f u n d e d wi t h R e i m b u r s e m e n t Ag r e e m e n t ) To t a l Im p r o v e m e n t Pr o j e c t A ( D e f e r r e d A s s e s s m e n t s ) Pa v i n g , S t r i p i n g , T r a f f i c s i g n a l $ 4 , 3 8 9 , 9 0 0 $ 3 , 7 6 7 , 4 3 0 $ 6 2 2 , 4 7 0 $ 4 , 3 8 9 , 9 0 0 $ 0 Wa t e r d i s t r i b u t i o n s y s t e m i m p r o v e m e n t s $ 1 , 0 6 1 , 7 2 0 $ 8 9 0 , 0 4 0 $ 1 7 1 , 6 8 0 $ 1 , 0 6 1 , 7 2 0 $ 0 Se w e r c o l l e c t i o n s y s t e m i m p r o v e m e n t s $ 1 , 8 8 1 , 2 9 6 $ 1 , 5 3 1 , 1 9 6 $ 3 5 0 , 1 0 0 $ 1 , 8 8 1 , 2 9 6 $ 0 St o r m d r a i n a g e c o l l e c t i o n s y s t e m i m p r o v e m e n t s $ 1 , 7 3 3 , 8 7 2 $ 1 , 1 5 4 , 3 0 6 $ 5 7 9 , 5 6 6 $ 1 , 7 3 3 , 8 7 2 $ 0 La n d s c a p i n g Pe r i m e t e r l a n d s c a p e b u f f e r i m p r o v e m e n t s $ 1 , 8 3 0 , 5 0 1 $ 1 , 8 3 0 , 5 0 1 $ 0 $ 1 , 8 3 0 , 5 0 1 $ 0 Du c t b a n k i m p r o v e m e n t s Si n g l e d u c t b a n k $ 4 8 6 , 1 8 4 $ 3 9 2 , 5 3 4 $ 9 3 , 6 5 0 $ 4 8 6 , 1 8 4 $ 0 Do u b l e D u c t B a n k $ 2 4 7 , 7 7 0 $ 2 4 7 , 7 7 0 $ 0 $ 2 4 7 , 7 7 0 $ 0 Ot h e r c o s t s $0 Pu b l i c s i d e w a l k s $ 4 3 2 , 0 0 0 $ 4 3 2 , 0 0 0 $ 0 $ 4 3 2 , 0 0 0 $ 0 Re t a i n i n g w a l l + / - 1 0 ' a v e r a g e h t . $ 1 , 8 8 9 , 7 3 0 $ 1 , 8 8 9 , 7 3 0 $ 0 $ 1 , 8 8 9 , 7 3 0 $ 0 Un c l a s s i f i e d e x c a v a t i o n ( c u t b a n k y a r d s ) $ 1 , 1 5 5 , 0 0 0 $ 1 , 1 5 5 , 0 0 0 $ 0 $ 1 , 1 5 5 , 0 0 0 $ 0 St r e e t l i g h t s $ 8 4 , 0 0 0 $ 8 4 , 0 0 0 $ 0 $ 8 4 , 0 0 0 $ 0 Bo l l a r d l i g h t s $ 1 5 0 , 0 0 0 $ 1 5 0 , 0 0 0 $ 0 $ 1 5 0 , 0 0 0 $ 0 Ir o n o r n a m e n t b e n c h e s a n d o t h e r s e a t i n g $ 2 3 8 , 5 0 0 $ 2 3 8 , 5 0 0 $ 0 $ 2 3 8 , 5 0 0 $ 0 Ri g h t - o f - w a y $ 0 $ 0 $ 0 $ 0 $ 0 R. O . W S o d $ 9 , 7 5 8 $ 9 , 7 5 8 $ 0 $ 9 , 7 5 8 Ge o t e c h $ 4 3 0 , 0 0 0 $ 3 8 0 , 0 0 0 $ 5 0 , 0 0 0 $ 4 3 0 , 0 0 0 $ 0 Er o s i o n c o n t r o l $ 2 6 0 , 0 0 0 $ 2 6 0 , 0 0 0 $ 0 $ 2 6 0 , 0 0 0 $ 0 Si g n s $ 7 5 , 0 0 0 $ 7 0 , 0 0 0 $ 5 , 0 0 0 $ 7 5 , 0 0 0 $ 0 La r g e c a p a c i t y w e l l $ 0 $ 0 $ 0 $ 0 $ 0 En g i n e e r i n g , s u r v e y i n g , c o n s t r u c t i o n m a n a g e m e n t $ 1 , 8 8 2 , 8 3 1 $ 1 , 7 6 4 , 4 7 0 $ 1 1 8 , 3 6 1 $ 1 , 8 8 2 , 8 3 1 $ 0 Bo n d s $ 1 8 1 , 3 3 5 $ 1 4 6 , 8 5 9 $ 3 4 , 4 7 6 $ 1 8 1 , 3 3 5 $ 0 In s p e c t i o n f e e s $ 9 2 2 , 0 7 8 $ 8 1 3 , 0 3 0 $ 1 0 9 , 0 4 8 $ 9 2 2 , 0 7 8 $ 0 Co n t i n g e n c y & p u b l i c p a r k i n g $ 9 8 4 , 5 2 3 $ 8 0 2 , 2 7 6 $ 1 8 2 , 2 4 7 $ 9 8 4 , 5 2 3 $ 0 S u b t o t a l : O t h e r c o s t s $ 8 , 6 9 4 , 7 5 5 $ 8 , 1 9 5 , 6 2 3 $ 4 9 9 , 1 3 2 $ 8 , 6 9 4 , 7 5 5 $ 0 Pa r k i n g f a c i l i t y i m p r o v e m e n t s $ 6 , 1 6 0 , 0 0 0 $ 0 $ 0 $ 0 $ 6 , 1 6 0 , 0 0 0 $2 6 , 4 8 5 , 9 9 8 $ 1 8 , 0 0 9 , 4 0 0 $ 2 , 3 1 6 , 5 9 8 $ 2 0 , 3 2 5 , 9 9 8 $ 6 , 1 6 0 , 0 0 0 Es t i m a t e d B o n d i s s u a n c e c o s t s Ca p i t a l i z e d I n t e r e s t $ 4 , 0 7 2 , 5 0 0 $ 3 , 6 6 4 , 5 0 0 $ 2 3 8 , 0 0 0 $ 3 , 9 0 2 , 5 0 0 $ 1 7 0 , 0 0 0 De b t S e r v i c e R e s e r v e F u n d $ 2 , 8 0 8 , 1 0 0 $ 2 , 2 2 5 , 6 0 0 $ 3 4 0 , 0 0 0 $ 2 , 5 6 5 , 6 0 0 $ 2 4 2 , 5 0 0 Ot h e r b o n d i s s u e c o s t s $ 3 , 0 2 3 , 4 0 2 $ 2 , 2 7 5 , 5 0 0 $ 5 0 5 , 4 0 2 $ 2 , 7 8 0 , 9 0 2 $ 2 4 2 , 5 0 0 Su b t o t a l : E s t i m a t e d B o n d i s s u a n c e c o s t s $9 , 9 0 4 , 0 0 2 $ 8 , 1 6 5 , 6 0 0 $ 1 , 0 8 3 , 4 0 2 $ 9 , 2 4 9 , 0 0 2 $ 6 5 5 , 0 0 0 Gr a n d T o t a l A u t h o r i z e d I m p r o v e m e n t C o s t s $ 3 6 , 3 9 0 , 0 0 0 $ 2 6 , 1 7 5 , 0 0 0 $ 3 , 4 0 0 , 0 0 0 $ 2 9 , 5 7 5 , 0 0 0 $ 6 , 8 1 5 , 0 0 0 Le s s : D e v e l o p e r f u n d e d c o s t s ( $ 4 , 3 9 0 , 0 0 0 ) $ 0 $ 0 $ 0 ( $ 4 , 3 9 0 , 0 0 0 ) $3 2 , 0 0 0 , 0 0 0 $ 2 6 , 1 7 5 , 0 0 0 $ 3 , 4 0 0 , 0 0 0 $ 2 9 , 5 7 5 , 0 0 0 $ 2 , 4 2 5 , 0 0 0 No t e s : S e e a t t a c h e d e n g i n e e r i n g e s t i m a t e s f o r d e t a i l e d l i n e i t e m b u d g e t s . Th e p a r k i n g f a c i l i t i e s i m p r o v e m e n t c o s t s a r e e s t i m a t e d b y t h e d e v e l o p e r a t $ 1 4 , 0 0 0 p e r p a r k i n g s p a c e f o r a p p r o x i m a t e l y 4 4 0 p a r k i n g s p a c e s . Ap p e n d i x B - S u m m a r y o f E s t i m a t e d A u t h o r i z e d I m p r o v e m e n t C o s t s Im p r o v e m e n t P r o j e c t A Au t h o r i z e d I m p r o v e m e n t To t a l i m p r o v e m e n t c o s t s Ro a d i m p r o v e m e n t s Wa t e r i m p r o v e m e n t s To t a l E s t i m a t e d Au t h o r i z e d Im p r o v e m e n t C o s t s Sa n i t a r y s e w e r i m p r o v e m e n t s St o r m d r a i n a g e i m p r o v e m e n t s To t a l A u t h o r i z e d I m p r o v e m e n t s F u n d e d Dr a f t B‐1 PID Common to All 5,439,422$ Improvement Area #1 9,089,967$ Improvement Area #2 2,677,735$ Improvement Area #3 (Future)2,134,351$ Current Area 1, 2, & Common to All PID Water 890,040$ Sewer 1,531,196$ Storm 1,154,306$ Paving, Signs, Lights 4,353,430$ Unclassified Excavation / Wall / Erosion 3,304,730$ R.O.W. Sod 9,758$ Duct Bank 640,304$ Landscaping 2,219,001$ Engineering, Surv, CA, & Geotech 2,144,470$ Contingency & Public Parking 802,276$ Bonds & Inspection Fees 959,890$ Total 18,009,400$ Future Area #3 PID Water 171,680$ Sewer 350,100$ Storm 579,566$ Paving 627,470$ Duct Bank 93,650$ 10% Contingency & Escalation 182,247$ Remaining Surv, CA, & Geotech 168,361$ Bonds & Inspection Fees 143,524$ Total 2,316,598$ Entrada ‐ PID Budget Summary PID Water406,585$ Sewer910,910$ Storm861,975$ Paving & 1‐Traffic Signal Intersection 1,603,070$ Unclassified Excavation (Cut Bank Yards)350,000$ Double Duct Bank 247,770$ Geotech 60,000$ Erosion Control 40,000$ Signs 5,000$ Engineering, Surveying, Construction Management 613,243$ Bonds 75,651$ Inspection Fees 265,219$ TOTAL 5,439,422$ ENTRADA COMMON TO ALL Item No.UnitDescriptionQtyUnit PriceTotal 1LSFurnish and install connection to the Existing 12-inch waterlines, complete and in place, per lump sum 51,500.00$ 7,500.00$ 2LFFurnish and install 12-inch PVC waterline, includes valves, taps and fittings, complete and in place, per linear foot 1084030.00$ 325,200.00$ 3LFFurnish and install 8-inch PVC waterline, includes valves, taps and fittings,complete and in place, per linear foot 49523.00$ 11,385.00$ 4EAFurnish and install Standard Fire Hydrant Assembly Inc. 6-inch 90 Deg. Bend, complete and in place, per each 113,500.00$ 38,500.00$ 5EAFurnish and install single service water line, complete and in place, per each 10800.00$ 8,000.00$ 6EAFurnish and install 12" blow-off valves, complete and in place, per each 28,000.00$ 16,000.00$ Total Water Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1EAFurnish and install lift station and wet well, complete and in place, per each 1287,000.00$ 287,000.00$ 2EAFurnish and install TRA meter station and injection connection to the existing sanitary sewer force main, complete and in place, per each 1362,000.00$ 362,000.00$ 3LFFurnish and install 4-inch force main sanitary sewer line, complete and in place, per linear foot 130020.00$ 26,000.00$ 4LFFurnish and install 8-inch SDR 35 PVC sanitary sewer line, complete and in place, per linear foot 448525.00$ 112,125.00$ 5EAFurnish and install Manhole, complete and in place, per each 323,500.00$ 112,000.00$ 6EAFurnish and install single service sanitary sewer lateral, complete and in place, per each 8750.00$ 6,000.00$ 7LF Furnish and install Sanitary Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 5785 1.00$ 5,785.00$ Total Sanitary Sewer Line Improvements: ENTRADA COMMON TO ALL $910,910.00 $406,585.00 WATER LINE IMPROVEMENTS SANITARY SEWER LINE IMPROVEMENTS Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install various sizes of RCP storm pipe, complete and in place, per each 354050.00$ 177,000.00$ 2EAFurnish and install Junction Box, complete in place, per each 152,500.00$ 37,500.00$ 3EAFurnish and install curb inlet complete and in place, per each 193,000.00$ 57,000.00$ 4LF Furnish and install Storm Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 2425 1.00$ 2,425.00$ 5LFFurnish and install retaining wall around perimeter of Lake, complete and in place, per each 619095.00$ 588,050.00$ Storm Sewer Improvements Total: Item No.UnitDescriptionQtyUnit PriceTotal 1SYFurnish and install 8-inch 4200 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 1290036.00$ 464,400.00$ 2SYFurnish and install 6-inch 3600 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 2622530.00$ 786,750.00$ 3SYFurnish and install 8-inch Stabilized Subgrade, complete and in place, per square yard 275352.00$ 55,070.00$ 4SYFurnish and install 10-inch Stabilized Subgrade, complete and in place, per square yard 138002.25$ 31,050.00$ 5TON Furnish and install Lime, complete and in place, per ton 460130.00$ 59,800.00$ 6LSFurnish Traffic Contol 120,000.00$ 20,000.00$ 7EATraffic Signal at Davis and Solana Blvd 1176,000.00$ 176,000.00$ 8LSFurnish and install misc pavement striping, complete and in place, per lump sum 110,000.00$ 10,000.00$ Paving and Striping Improvements Total: Total Wet Utilities, & Paving: $861,975.00 $3,782,540.00 $1,603,070.00 PAVING AND STRIPING IMPROVEMENTS STORM SEWER IMPROVEMENTS Item No.UnitDescriptionQtyUnit PriceTotal 1CYUnclassified excavation (cut bank yards)100000 3.50$ 350,000.00$ 2LFDouble Duct Bank 4955 50.00$ 247,769.50$ 3LSGeotech 1 60,000.00$ 60,000.00$ 4LSErosion Control 1 40,000.00$ 40,000.00$ 5LSSigns 1 5,000.00$ 5,000.00$ 6LSEngineering, Surveying, Construction Management 1 613,243.33$ 613,243.33$ 7LSBonds @ 2%1 75,650.80$ 75,650.80$ 8LSInspection Fees @ 6%1 265,218.57$ 265,218.57$ Miscellaneous Improvements Total:$1,656,882.20 MISC. PID Water207,750$ Sewer242,916$ Storm177,300$ Paving 1,750,100$ Perimeter Landscaping Buffer Improvements 1,830,501$ Public Sidewalks 4" 3600 PSI Reinforced w/ #3 Bars 432,000$ Retaining Wall +/‐ 5' Average Height 125,550$ Retaining Wall +/‐ 10' Average Height 1,090,980$ Unclassified Excavation (Cut Bank Yards)805,000$ R.O.W. Sod 3,212$ Street lights 84,000$ Bollard lights 150,000$ Iron Ornamental Benches and Other Seating 238,500$ Single Duct Bank 201,609$ Geotech 160,000$ Erosion Control 120,000$ Signs 45,000$ Engineering, Surveying, Construction Management 958,966$ Bonds 47,561$ Inspection Fees 419,022$ TOTAL 9,089,967$ ENTRADA IMPROVEMENT AREA #1 Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch PVC waterline, includes valves, taps and fittings,complete and in place, per linear foot 4250 23.00$ 97,750.00$ 2EAFurnish and install Standard Fire Hydrant Assembly Inc. 6-inch 90 Deg. Bend, complete and in place, per each 203,500.00$ 70,000.00$ 3EAFurnish and install single service water line, complete and in place, per each 50 800.00$ 40,000.00$ Total Water Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch SDR 35 PVC sanitary sewer line, complete and in place, per linear foot 3300 25.00$ 82,500.00$ 2EAFurnish and install Manhole, complete and in place, per each 333,500.00$ 115,500.00$ 3EAFurnish and install single service sanitary sewer lateral, complete and in place, per each 50 750.00$ 37,500.00$ 4LF Furnish and install Sanitary Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 7416 1.00$ 7,416.00$ Total Sanitary Sewer Line Improvements: Item No.Unit Description QtyUnit PriceTotal 1LFFurnish and install various sizes of RCP storm pipe, complete and in place, per each 2300 50.00$ 115,000.00$ 2EAFurnish and install Junction Box, complete in place, per each 6 2,500.00$ 15,000.00$ 3EAFurnish and install curb inlet complete and in place, per each 153,000.00$ 45,000.00$ 4LF Furnish and install Storm Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 2300 1.00$ 2,300.00$ Storm Sewer Improvements Total: ENTRADA IMPROVEMENT AREA #1 WATER LINE IMPROVEMENTS $207,750.00 SANITARY SEWER LINE IMPROVEMENTS $242,916.00 STORM SEWER IMPROVEMENTS $177,300.00 Item No.UnitDescriptionQtyUnit PriceTotal 1SYFurnish and install 6-inch 3600 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 13940 30.00$ 418,200.00$ 2SYFurnish and install 8-inch Stabilized Subgrade, complete and in place, per square yard 14900 2.00$ 29,800.00$ 3TON Furnish and install Lime, complete and in place, per ton 170 130.00$ 22,100.00$ 4EAPlaza Bridge 1840,000.00$ 840,000.00$ 5EAMercado Ricardo Pedestrian Bridge 1425,000.00$ 425,000.00$ 6LSFurnish Traffic Contol 1 5,000.00$ 5,000.00$ 7LSFurnish and install misc pavement striping, complete and in place, per lump sum 110,000.00$ 10,000.00$ Paving and Striping Improvements Total: Total Wet Utilities, & Paving: Item No.UnitDescriptionQtyUnit PriceTotal 1LSIrrigation along Davis Blvd. and Solana Blvd. 198,709.00$ 98,709.00$ 2LS Vineyards / Plantings along Davis Blvd. and Solana Blvd. 1146,731.00$ 146,731.00$ 3LSTrees along Davis Blvd. and Solana Blvd.1330,003.00$ 330,003.00$ 4LSRubble Walls along Davis Blvd. and Solana Blvd. 1128,700.00$ 128,700.00$ 5LSWalks along Davis Blvd. and Solana Blvd.1110,880.00$ 110,880.00$ 6LSRest Areas along Davis Blvd. and Solana Blvd.1176,977.00$ 176,977.00$ 7LSIrrigation along 114 Frontage 1117,800.00$ 117,800.00$ 8LS Vineyards / Plantings along 114 Frontage 1274,866.00$ 274,866.00$ 9LSTrees along 114 Frontage 147,120.00$ 47,120.00$ 10LS Rubble Walls along 114 Frontage 178,533.00$ 78,533.00$ 11LS Rest Areas along 114 Frontage 139,182.00$ 39,182.00$ 12LS Four small wells (25 gmp each)462,000.00$ 248,000.00$ 13LS Lake bubblers (3) for aeriation 311,000.00$ 33,000.00$ Perimeter Landscape Buffer Improvements Total:$1,830,501.00 $2,378,066.00 PERIMETER LANDSCAPE BUFFER IMPROVEMENTS PAVING AND STRIPING IMPROVEMENTS $1,750,100.00 Item No.UnitDescriptionQtyUnit PriceTotal 1SYPublic Sidewalks 4" 3600 PSI reinforced w/ #3 bars 12000 36.00$ 432,000.00$ 2LFRetaining wall +/‐ 5' average ht.1674 75.00$ 125,550.00$ 3LFRetaining wall +/‐ 10' average ht.5510 198.00$ 1,090,980.00$ 4CYUnclassified excavation (cut bank yards)230000 3.50$ 805,000.00$ 5SFR.O.W. Sod 10705 0.30$ 3,211.50$ 6EAStreet lights 21 4,000.00$ 84,000.00$ 7EABollard lights 60 2,500.00$ 150,000.00$ 8EAIron ornamental benches and other seating 45 5,300.00$ 238,500.00$ 9LFSingle Duct Bank 5760 35.00$ 201,609.45$ 10LS Geotech 1 160,000.00$ 160,000.00$ 11LS Erosion Control 1 120,000.00$ 120,000.00$ 12LS Signs 1 45,000.00$ 45,000.00$ 13LS Engineering, Surveying, Construction Management 1 958,965.70$ 958,965.70$ 14LS Bonds @ 2%1 47,561.32$ 47,561.32$ 15LS Inspection Fees @ 6%1 419,022.39$ 419,022.39$ Miscellaneous Improvements Total:$4,881,400.36 MISC. PID Water275,705$ Sewer377,370$ Storm115,031$ Paving 414,260$ Retaining Wall +/‐ 10' Average Height 673,200$ R.O.W. Sod 6,546$ Single Duct Bank 190,925$ Geotech 160,000$ Erosion Control 100,000$ Signs 20,000$ Engineering, Surveying, Construction Management 192,261$ Bonds 23,647$ Inspection Fees 128,789$ TOTAL 2,677,735$ ENTRADA IMPROVEMENT AREA #2 Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch PVC waterline, includes valves, taps and fittings,complete and in place, per linear foot 513523.00$ 118,105.00$ 2EAFurnish and install Standard Fire Hydrant Assembly Inc. 6-inch 90 Deg. Bend, complete and in place, per each 163,500.00$ 56,000.00$ 3EAFurnish and install single service water line, complete and in place, per each 127800.00$ 101,600.00$ Total Water Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch SDR 35 PVC sanitary sewer line, complete and in place, per linear foot 412025.00$ 103,000.00$ 2EAFurnish and install Manhole, complete and in place, per each 503,500.00$ 175,000.00$ 3EAFurnish and install single service sanitary sewer lateral, complete and in place, per each 127750.00$ 95,250.00$ 4LF Furnish and install Sanitary Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 4120 1.00$ 4,120.00$ Total Sanitary Sewer Line Improvements: Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install various sizes of RCP storm pipe, complete and in place, per each 148150.00$ 74,050.00$ 2EAFurnish and install Junction Box, complete in place, per each 52,500.00$ 12,500.00$ 3EAFurnish and install curb inlet complete and in place, per each 93,000.00$ 27,000.00$ 4LF Furnish and install Storm Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 1481 1.00$ 1,481.00$ Storm Sewer Improvements Total: $377,370.00 ENTRADA IMPROVEMENT AREA #2 WATER LINE IMPROVEMENTS $275,705.00 SANITARY SEWER LINE IMPROVEMENTS STORM SEWER IMPROVEMENTS $115,031.00 Item No.UnitDescriptionQtyUnit PriceTotal 1SYFurnish and install 6-inch 3600 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 1165530.00$ 349,650.00$ 2SYFurnish and install 8-inch Stabilized Subgrade, complete and in place, per square yard 12455 2.00$ 24,910.00$ 3TON Furnish and install Lime, complete and in place, per ton 190130.00$ 24,700.00$ 6LSFurnish Traffic Contol 15,000.00$ 5,000.00$ 7LSFurnish and install misc pavement striping, complete and in place, per lump sum 110,000.00$ 10,000.00$ Paving and Striping Improvements Total: Total Wet Utilities, & Paving: PAVING AND STRIPING IMPROVEMENTS $414,260.00 $1,182,366.00 Item No.UnitDescriptionQtyUnit PriceTotal 1LFRetaining wall +/‐ 10' average ht.3400 198.00$ 673,200.00$ 2SFR.O.W. Sod 21820 0.30$ 6,546.00$ 3LFSingle Duct Bank 5455 35.00$ 190,925.00$ 4LSGeotech 1 160,000.00$ 160,000.00$ 5LSErosion Control 1 100,000.00$ 100,000.00$ 6LSSigns 1 20,000.00$ 20,000.00$ 7LSEngineering, Surveying, Construction Management 1 192,260.74$ 192,260.74$ 8LSBonds @ 2%1 23,647.32$ 23,647.32$ 9LSInspection Fees @ 6%1 128,789.46$ 128,789.46$ Miscellaneous Improvements Total: MISC. $1,495,368.52 PID Water171,680$ Sewer 350,100$ Storm 579,566$ Paving & 2‐Offsite Traffic Light Intersections 622,470$ Single Duct Bank 93,650$ Geotech50,000$ Signs5,000$ Engineering, Surveying, Construction Management 118,361$ Bonds 34,476$ Inspection Fees 109,048$ TOTAL2,134,351$ ENTRADA IMPROVEMENT AREA #3 Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install 8-inch PVC waterline, includes valves, taps and fittings,complete and in place, per linear foot 316023.00$ 72,680.00$ 2EAFurnish and install Standard Fire Hydrant Assembly Inc. 6-inch 90 Deg. Bend, complete and in place, per each 103,500.00$ 35,000.00$ 3EAFurnish and install single service water line, complete and in place, per each 80800.00$ 64,000.00$ Total Water Line Improvements: Item No.Unit Description QtyUnit PriceTotal 1EAFurnish and install lift station and wet well, complete and in place, per each 1125,000.00$ 125,000.00$ 2LFFurnish and install 4-inch force main sanitary sewer line, complete and in place, per linear foot 155020.00$ 31,000.00$ 3LFFurnish and install 8-inch SDR 35 PVC sanitary sewer line, complete and in place, per linear foot 267525.00$ 66,875.00$ 4EAFurnish and install Manhole, complete and in place, per each 183,500.00$ 63,000.00$ 5EAFurnish and install single service sanitary sewer lateral, complete and in place, per each 80750.00$ 60,000.00$ 6LF Furnish and install Sanitary Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 4225 1.00$ 4,225.00$ Total Sanitary Sewer Line Improvements: ENTRADA IMPROVEMENT AREA 3 WATER LINE IMPROVEMENTS $171,680.00 SANITARY SEWER LINE IMPROVEMENTS $350,100 Item No.UnitDescriptionQtyUnit PriceTotal 1LFFurnish and install various sizes of RCP storm pipe, complete and in place, per each 74150.00$ 37,050.00$ 2EAFurnish and install Junction Box, complete in place, per each 12,500.00$ 2,500.00$ 3EAFurnish and install curb inlet complete and in place, per each 123,000.00$ 36,000.00$ 4LF Furnish and install Storm Sewer Line Trench Safety System in accordance with current OSHA standards, complete and in place, per linear foot 741 1.00$ 741.00$ 5LSCulvert Crossing & Waterfall 1100,000.00$ 100,000.00$ 6LFFurnish and install retaining wall around perimeter of Lake, complete and in place, per each 4,24595.00$ 403,275.00$ 7LStwo small wells (25 gmp each)262,000.00$ 124,000.00$ 8LSLake bubblers (2) for aeriation 211,000.00$ 22,000.00$ Storm Sewer Improvements Total: Item No.UnitDescriptionQtyUnit PriceTotal 1SYFurnish and install 6-inch 3600 PSI Concrete with #3 bars 18-inch on center each way, complete and in place, per square yard 7,95030.00$ 238,500.00$ 2SYFurnish and install 8-inch Stabilized Subgrade, complete and in place, per square yard 8,510 2.00$ 17,020.00$ 3TON Furnish and install Lime, complete and in place, per ton 115130.00$ 14,950.00$ 4EATraffic Signal at Solana Blvd & at 114 pending warrant 2176,000.00$ 352,000.00$ Paving and Striping Improvements Total: Total Wet Utilities & Paving STORM SEWER IMPROVEMENTS 579,566 PAVING AND STRIPING IMPROVEMENTS 622,470 1,723,816 Item No.UnitDescriptionQtyUnit PriceTotal 1LFSingle Duct Bank 2676 35.00$ 93,650.20$ 2LSGeotech 1 50,000.00$ 50,000.00$ 3LSSigns 1 5,000.00$ 5,000.00$ 4LSEngineering, Surveying, Construction Management 1 118,361.00$ 118,361.00$ 5LSBonds @ 2%1 34,476.32$ 34,476.32$ 6LSInspection Fees @ 6%1 109,047.97$ 109,047.97$ Miscellaneous Improvements Total: MISC. $410,535 Draft Appendix C DIAGRAM OF THE AUTHORIZED IMPROVEMENTS Draft Appendix D LAND USE CLASSS, EQUIVALENT UNITS AND ALLOCATION OF ASSESSMENTS DRAFT D - 1 v6.2 Appendix D Land Use Classes, Equivalent Units and Allocation of Assessments For purposes of allocating the Assessments, the Assessed Property in each Improvement Area has been classified in one of thirteen Land Use Classes. The following table shows the proposed residential and non-residential development planned within the PID. Table D-1 Proposed Development within the PID – All Improvement Areas Land Use Class Description Proposed Development Residential Land Use Class 1 Condo Units (more than 3,600 sq. ft) 38 Units Land Use Class 2 Condo Units (2,500 to 3,600sq. ft) 71 Units Land Use Class 3 Condo Units (1,800 to 2,500 sq. ft) 6 Units Land Use Class 4 Villa - West (more than 3,600 sq. ft) 42 Units Land Use Class 5 Villa - West (2,500 to 3,600sq. ft) 16 Units Land Use Class 6 Villa - West (1,800 to 2,500 sq. ft) 69 Units Land Use Class 7 Villa - East (more than 3,600 sq. ft) 21 Units Land Use Class 8 Villa - East (2,500 to 3,600sq. ft) 23 Units Land Use Class 9 Villa - East (1,800 to 2,500 sq. ft) 36 Units Total - Residential 322 Units Non-Residential Land Use Class 10 Commercial - Retail 372,099 Sq. Ft Land Use Class 11 Commercial - Office 266,100 Sq. Ft Land Use Class 12 Commercial - Hospitality 255,500 Sq. Ft Land Use Class 13 Commercial - Institutional 264,600 Sq. Ft Total – Non-residential 1,158,299 Sq. Ft The following table shows the proposed residential and non-residential Land Use Classes within Improvement Area #1 of the PID. DRAFT D - 2 v6.2 Table D-2 Proposed Development within the PID – Improvement Area #1 (Mixed-Use Core) Land Use Class Description Proposed Development Residential Land Use Class 1 Condo Units (more than 3,600 sq. ft) 38 Units Land Use Class 2 Condo Units (2,500 to 3,600sq. ft) 71 Units Land Use Class 3 Condo Units (1,800 to 2,500 sq. ft) 6 Units Total - Residential 115 Units Non-Residential Land Use Class 10 Commercial - Retail 372,099 Sq. Ft Land Use Class 11 Commercial - Office 266,100 Sq. Ft Land Use Class 12 Commercial - Hospitality 255,500 Sq. Ft Land Use Class 13 Commercial - Institutional 264,600 Sq. Ft Total – Non-residential 1,158,299 Sq. Ft The following table shows the proposed residential Land Use Classes within Improvement Area #2 of the PID. Table D-3 Proposed Development within the PID – Improvement Area #2 (West Residential) Land Use Class Description Proposed Development Residential Land Use Class 4 Villa - West (more than 3,600 sq. ft) 42 Units Land Use Class 5 Villa - West (2,500 to 3,600sq. ft) 16 Units Land Use Class 6 Villa - West (1,800 to 2,500 sq. ft) 69 Units Total - Residential 127 Units The following table shows the proposed residential Land Use Classes within Improvement Area #3 of the PID. DRAFT D - 3 v6.2 Table D-4 Proposed Development within the PID – Improvement Area #3 (East Residential) Land Use Class Description Proposed Development Residential Land Use Class 7 Villa - East (more than 3,600 sq. ft) 21 Units Land Use Class 8 Villa - East (2,500 to 3,600sq. ft) 23 Units Land Use Class 9 Villa - East (1,800 to 2,500 sq. ft) 36 Units Total - Residential 80 Units The Land Use Classes shown in the above tables are defined as follows: “Land Use Class 1” means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having more than 3,600 square feet area with structured parking provided. “Land Use Class 2” means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having between 2,500 and 3,600 square feet area with structured parking provided. “Land Use Class 3” means lots identified as such on the Assessment Roll, which are referred to as condominium residential units in the Zoning Ordinance and being generally lots for a condominium dwelling unit placed over retail and office uses, having 1,800 to 2,500 square feet area with structured parking provided. “Land Use Class 4” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having more than 3,600 square feet area and located in the development commonly referred to as West Residential. “Land Use Class 5” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having between 2,500 and 3,600 square feet area and located in the development commonly referred to as West Residential. “Land Use Class 6” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having 1,800 to 2,500 square feet area and located in the development commonly referred to as West Residential. “Land Use Class 7” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single DRAFT D - 4 v6.2 family residential units, having more than 3,600 square feet area and located in the development commonly referred to as East Residential. “Land Use Class 8” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having between 2,500 and 3,600 square feet area and located in the development commonly referred to as East Residential. “Land Use Class 9” means lots identified as such on the Assessment Roll, which are referred to as single-family residential units in the Zoning Ordinance and being generally lots for a single family residential units, having 1,800 to 2,500 square feet area and located in the development commonly referred to as East Residential. “Land Use Class 10” means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used for retail purposes that may be comprised of a single tenant or multiple tenants that make up a retail establishment and are generally located on the ground floor of buildings or in a single building. “Land Use Class 11” means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used for office purposes that may include a group of offices or a single office and are generally located in a single building, on one or more floors, or multiple buildings. “Land Use Class 12” means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally a building or group of buildings designed and occupied for hospitality uses. “Land Use Class 13” means lots identified as such on the Assessment Roll, which are referred to as commercial in the Zoning Ordinance, and being generally parcels used institutional purposes such as assisted living, nursing and other similar residential uses that are either on the water or on the central plaza. As explained under Section V, for purpose of this Service and Assessment Plan, the Town Council has determined that the Actual Costs of the Authorized Improvements to be financed with the Bonds shall be allocated to the Assessed Property by spreading the entire Assessment across the Parcels based on the estimated Equivalent Units. For purposes of this Service and Assessment Plan, the Town Council has determined that the Authorized Improvement Costs shall be allocated to the Assessed Property in each Improvement Area spreading the entire Assessment across the Parcels of Assessed Property in each Improvement Area on the basis of the Direct Improvement Costs and Common Improvement Costs excluding estimated right-of–way costs, as allocated to each Improvement Area based on the ratio of the Direct Improvement Costs of each Improvement Area, and that such method of allocation will result in the imposition of equal shares of the Authorized Improvement Costs to Parcels similarly benefited. Table D-5 below shows the allocation of the Common Improvement DRAFT D - 5 v6.2 Costs to each Improvement Area and the resulting ratio for allocating Assessment Part A to each Improvement Area. Table D-5 Allocation of Common Improvement Costs and Calculation of Assessment Part A Allocation Ratio Improvement Area Description Estimated Cost CIC Allocation Ratio Allocation of CIC Total Estimated Costs Assessment Allocation Ratio All Common Improvement Costs (CIC) $6,241,698 -100.0%($6,241,698) $0 1 Direct Improvement Costs $9,089,967 64.5%$4,028,374 $13,118,34264.5% 2 Direct Improvement Costs $2,677,735 19.0%$1,186,684 $3,864,41919.0% 3 Direct Improvement Costs $2,316,598 16.4%$1,026,640 $3,343,23816.4% Subtotal: Part A $20,325,998100.0%$0 $20,325,999100.00% 1 Parking Garage $6,160,000 $0 $6,160,000100.00% Subtotal: Part B $6,160,000 $0 $6,160,000 Total $26,485,998 $0 $26,485,998 For purposes of this Service and Assessment Plan, the Town Council has determined that the Assessment Part A allocated to the Assessed Property in each Improvement Area based on the above calculated Assessment allocation ratio is spread to each Land Use Class on the basis of the estimated Equivalent Units as calculated for each Land Use Class in each Improvement Area. The estimated Equivalent Units will be calculated based on the relative average construction cost per unit of each Land Use Class as shown herein. The average construction cost for each Land Use Class in each Improvement Area is calculated based on the estimated average square feet of each unit of residential Land Use Class or 1,000 square feet of commercial Land Use Class, as applicable, and the estimated average construction cost per square foot of each Land Use Class. Upon subsequent divisions of any Parcel, the Assessment applicable to it will then be apportioned pro rata based on the Equivalent Units of each newly created Parcel. Equivalent Units – Improvement Area #1 Having taken into consideration the matters described above, the Town Council has determined that allocating the Assessments among Parcels based on estimated average construction cost per unit is best accomplished by creating classifications of benefited Parcels in each Improvement Area based on the “Land Use Class” defined above. These classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 1 in Improvement Area #1 are set forth in Table D-6 below. The total Assessment Part A allocated to Improvement Area #1 is spread to each Land DRAFT D - 6 v6.2 Use type in Improvement Area #1 on the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #1 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build-out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 1 in Improvement Area #1 to 1.0. The Equivalent Unit factor for Land Use Class 2 is calculated to be 0.62 ($468,350 ÷ $756,210 = 0.62). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #1 is calculated accordingly and shown in Table D-6. Table D-6 Estimated Equivalent Units – Improvement Area #1 Land Use Class Estimated Average Square Feet per Unit Estimated Average Construction Cost per Square Foot Estimated Average Construction Cost per Unit Equivalent Unit Factor Land Use Class 1 3,601 $210 $756,210 1.00 per dwelling unit Land Use Class 2 2,755 $170 $468,350 0.62 per dwelling unit Land Use Class 3 1,800 $250 $450,000 0.60 per dwelling unit Land Use Class 10 1,000 $165 $165,000 0.22 per 1,000 sq. ft Land Use Class 11 1,000 $150 $150,000 0.20 per 1,000 sq. ft Land Use Class 12 1,000 $161 $161,000 0.21 per 1,000 sq. ft Land Use Class 13 1,000 $141 $141,000 0.19 per 1,000 sq. ft The total estimated Equivalent Units for Improvement Area #1 of the PID are shown in Table D- 7 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #1. Table D-7 Total Equivalent Units – Improvement Area #1 Land Use Class Planned No. of Units Equivalent Unit Factor Total Equivalent Units Land Use Class 1 38 1.00 38.00 Land Use Class 2 71 0.62 44.02 Land Use Class 3 6 0.60 3.60 Land Use Class 10 (in 1,000 sq. ft) 372.1 0.22 81.86 Land Use Class 11 (in 1,000 sq. ft) 266.1 0.20 53.22 Land Use Class 12 (in 1,000 sq. ft) 255.5 0.21 53.66 Land Use Class 13 (in 1,000 sq. ft) 264.6 0.19 50.27 Total 324.63 DRAFT D - 7 v6.2 Equivalent Units – Improvement Area #2 The classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 4 in Improvement Area #2 are set forth in Table D-8 below. The total Assessment Part A allocated to Improvement Area #2 is spread to each Land Use type in Improvement Area #2 the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #2 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build-out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 4 in Improvement Area #2 to 1.0. The Equivalent Unit factor for Land Use Class 5 is calculated to be 0.68 ($485,280 ÷ $708,750 = 0.68). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #2 is calculated accordingly and shown in Table D-8. Table D-8 Estimated Equivalent Units – Improvement Area #2 Land Use Class Estimated Average Square Feet per Unit Estimated Average Construction Cost per Square Foot Estimated Average Construction Cost per Unit Equivalent Unit Factor Land Use Class 4 4,050 $175 $708,7501.00 per dwelling unit Land Use Class 5 2,696 $180 $485,2800.68 per dwelling unit Land Use Class 6 2,069 $178 $368,2820.52 per dwelling unit The total estimated Equivalent Units for Improvement Area #1 of the PID are shown in Table D- 9 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #2. Table D-9 Total Equivalent Units – Improvement Area #2 Land Use Class Planned No. of Units Equivalent Unit Factor Total Equivalent Units Land Use Class 4 42 1.00 42.00 Land Use Class 5 16 0.68 10.88 Land Use Class 6 69 0.52 35.88 Total 127 88.76 DRAFT D - 8 v6.2 Equivalent Units – Improvement Area #3 The classifications representing the estimated average construction cost per unit relative to the highest estimated average construction cost per unit of Land Use Class 7 in Improvement Area #3 are set forth in Table D-10 below. The total Assessment Part A allocated to Improvement Area #3 is spread to each Land Use type in Improvement Area #3 the basis of the estimated average construction cost for each Land Use Class. This is accomplished by giving each Land Use Class in Improvement Area #3 an Equivalent Unit factor. Equivalent Units are the ratio of the estimated average value at build-out within each Land Use Class, setting the Equivalent Unit factor for Land Use Class 7 in Improvement Area #3 to 1.0. The Equivalent Unit factor for Land Use Class 8 is calculated to be 0.68 ($464,112 ÷ $681,596 = 0.68). The Equivalent Unit factor for each of the remaining Land Use Classes in Improvement Area #3 is calculated accordingly and shown in Table D-10. Table D-10 Estimated Equivalent Units – Improvement Area #3 Land Use Class Estimated Average Square Feet per Unit Estimated Average Construction Cost per Square Foot Estimated Average Construction Cost per Unit Equivalent Unit Factor Land Use Class 7 4,106 $166 $681,5961.00 per dwelling unit Land Use Class 8 2,637 $176 $464,1120.68 per dwelling unit Land Use Class 9 2,054 $184 $377,9360.55 per dwelling unit The total estimated Equivalent Units for Improvement Area #3 of the PID are shown in Table D- 11 below as calculated based on the Equivalent Unit factors shown above, estimated Land Use Class and number of units estimated to be built within Improvement Area #3. Table D-11 Total Equivalent Units – Improvement Area #3 Land Use Class Planned No. of Units Equivalent Unit Factor Total Equivalent Units Land Use Class 7 21 1.00 21.00 Land Use Class 8 23 0.68 15.64 Land Use Class 9 36 0.55 19.80 Total 80 56.44 Allocation of Assessments As shown in Section IV of this Service and Assessment Plan, the total amount of the Series 2015 Bonds and the Reimbursement Agreement for Improvement Project A, which represents the total DRAFT D - 9 v6.2 Assessment Part A to be allocated on all Parcels within the PID, is $29,575,000. As shown in Table D-5 above, the Assessment Part A allocation ratio for Improvement Area #1, Improvement Area #2 and Improvement Area #3 are 64.5%, 19.0% and 16.4%, respectively. As a result, the total Assessment Part A allocated to Improvement Area #1 is calculated to be $19,087,620.54 ($29,575,000 × 64.5% = $19,087,620.54), the total Assessment Part A allocated to Improvement Area #2 is calculated to be $5,622,857.55 ($29,575,000 × 19.0% = $5,622,857.55) and the total Assessment Part A allocated to Improvement Area #3 is calculated to be $4,864,521.90 ($29,575,000 × 16.4% = $4,864,521.90). Improvement Area #1 As described above, the total amount of Assessment Part A allocated to Improvement Area #1 is $19,087,620.54. As shown in Table D-7 above, there are a total of 324.63 estimated Equivalent Units in Improvement Area #1 of the PID, resulting in an Assessment Part A per Equivalent Unit of $58,797.94 ($19,087,621 ÷ 324.63 = $58,797.94). The Assessment Part A for each Parcel in Improvement Area #1 is calculated as the product of (i) $58,797.94 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 1 (Condo Residential – more than 3,600 square feet) dwelling unit is $58,797.94 (i.e. $58,797.94 × 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 1 would, therefore, have an Assessment of $58,797.94. Table D-12 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #1. Table D-12 Assessment Part A per Unit – Improvement Area #1 Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Residential Land Use Class 1 38 $58,797.94 1.00 $58,797.94 per dwelling unit $2,234,321.65 Land Use Class 2 71 $58,797.94 0.62 $36,454.72 per dwelling unit $2,588,285.24 Land Use Class 3 6 $58,797.94 0.60 $35,278.76 per dwelling unit $211,672.58 Land Use Class 10 372.10 $58,797.94 0.22 $12,935.55 per 1,000 Sq. Ft $4,813,303.88 Land Use Class 11 266.10 $58,797.94 0.20 $11,759.59 per 1,000 Sq. Ft $3,129,226.27 Land Use Class 12 255.50 $58,797.94 0.21 $12,347.57 per 1,000 Sq. Ft $3,154,803.37 Land Use Class 13 264.60 $58,797.94 0.19 $11,171.61 per 1,000 Sq. Ft $2,956,007.55 Total $19,087,620.54 DRAFT D - 10 v6.2 Improvement Area #2 As described above, the total amount of Assessment Part A allocated to Improvement Area #2 is $5,622,857.55. As shown in Table D-9 above, there are a total of 88.76 estimated Equivalent Units in Improvement Area #2 of the PID, resulting in an Assessment Part A per Equivalent Unit of $63,349.00 ($5,622,858 ÷ 88.76 = $63,349.00). The Assessment Part A for each Parcel in Improvement Area #2 is calculated as the product of (i) $63,349.00 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 4 (Villa West – more than 3,600 square feet) dwelling unit is $63,349.00 (i.e. $63,349.00 × 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 4 would therefore have an Assessment of $63,349.00. Table D-13 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #2. Table D-13 Assessment Part A per Unit – Improvement Area #2 Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Residential Land Use Class 4 42 $63,349.00 1.00 $63,349.00 per dwelling unit $2,660,658.15 Land Use Class 5 16 $63,349.00 0.68 $43,077.32 per dwelling unit $689,237.16 Land Use Class 6 69 $63,349.00 0.52 $32,941.48 per dwelling unit $2,272,962.25 Total 127 $5,622,857.55 Improvement Area #3 As described above, the total amount of Assessment Part A allocated to Improvement Area #3 is $4,864,521.90. As shown in Table D-11 above, there are a total of 56.44 estimated Equivalent Units in Improvement Area #3 of the PID, resulting in an Assessment Part A per Equivalent Unit of $86,189.26 ($4,864,521.90 ÷ 56.44 = $86,189.26). The Assessment Part A for each Parcel in Improvement Area #3 is calculated as the product of (i) $86,189.26 multiplied by (ii) the applicable Equivalent Unit value for each Land Use Class to be developed on each Parcel. For example, the Assessment Part A for a Land Use Class 7 (Villa East – more than 3,600 square feet) dwelling unit is $86,189.26 (i.e. $86,189.26 × 1.00). A Lot to be developed with a single dwelling unit in Land Use Class 7 would therefore have an Assessment of $86,189.26. DRAFT D - 11 v6.2 Table D-14 below sets forth the Assessment Part A per unit for each of the Land Use Classes in Improvement Area #3. Table D-14 Assessment Part A per Unit – Improvement Area #3 Type Planned No. of Units Assessment Part A per Equivalent Unit Equivalent Unit Factor Assessment Part A per Unit Total Assessment Part A Residential Land Use Class 7 21 $86,189.26 1.00 $86,189.26 per dwelling unit $1,809,974.49 Land Use Class 8 23 $86,189.26 0.68 $58,608.70 per dwelling unit $1,348,000.05 Land Use Class 9 36 $86,189.26 0.52 $47,404.09 per dwelling unit $1,706,547.37 Total 80 $4,864,521.90 Draft Appendix E ASSESSMENT ROLL DRAFT v6.0 Parcel All Assessment Part A $29,575,000 Maintenance Assessment Other Administrative Expenses 1$1,128,797$279,324 $10,000 $30,000$1,448,121 2$1,963,125$245,480 $10,200 $30,600$2,249,405 3$2,238,125$246,480 $10,404 $31,212$2,526,221 4$2,237,500$250,408 $10,612 $31,836$2,530,356 5$2,240,375$254,047 $10,824 $32,473$2,537,719 6$2,236,375$257,397 $11,041 $33,122$2,537,935 7$2,235,875$261,458 $11,262 $33,785$2,542,380 8$2,238,500$265,159 $11,487 $34,461$2,549,606 9$2,238,875$269,498 $11,717 $35,150$2,555,240 10$2,237,000$273,404 $11,951 $35,853$2,558,208 11$2,237,875$271,343 $12,190 $36,570$2,557,978 12$2,236,125$275,395 $12,434 $37,301$2,561,255 13$2,236,750$279,955 $12,682 $38,047$2,567,435 14$2,239,375$283,954 $12,936 $38,808$2,575,073 15$2,238,625$289,391 $13,195 $39,584$2,580,795 16$2,239,500$294,126 $13,459 $40,376$2,587,461 17$2,236,625$299,159 $13,728 $41,184$2,590,695 18$2,240,000$304,420 $14,002 $42,007$2,600,429 19$2,238,875$309,838 $14,282 $42,847$2,605,843 20$2,238,250$315,344 $14,568 $43,704$2,611,866 21$2,237,750$320,867 $14,859 $44,578$2,618,055 22$2,237,000$327,337 $15,157 $45,470$2,624,963 23$2,240,625$332,613 $15,460 $46,379$2,635,078 24$2,237,875$339,697 $15,769 $47,307$2,640,648 25$2,238,750$346,376 $16,084 $48,253$2,649,463 26$2,237,500$352,581 $16,406 $49,218$2,655,705 27$2,238,750$360,241 $16,734 $50,203$2,665,928 28$2,236,750$368,147 $17,069 $51,207$2,673,172 29$2,236,125$375,157 $17,410 $52,231$2,680,923 30$2,236,125$384,202 $17,758 $53,275$2,691,361 31$2,236,000 $0 $18,114 $15,275$3,632,420 Total$67,989,797$9,032,798$405,681$1,217,042$76,409,318 (1) Interest rates on the 2015 Bonds are estimated at coupon rate of 7.5% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 6.72% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. Principal and Interest2 Principal and Interest1Year Annual Installment Part A Administrative Expenses3 Assessment Roll All Improvement Areas E ‐ 1 DRAFT DRAFT Parcel All Assessment Part A $19,087,621 Maintenance Assessment Other Administrative Expenses 1$728,522$180,275 $6,910 $19,362 $935,069 2$1,266,995$158,432 $7,048 $19,749$1,452,224 3$1,444,479$159,077 $7,189 $20,144$1,630,890 4$1,444,076$161,612 $7,332 $20,547$1,633,568 5$1,445,932$163,961 $7,479 $20,958$1,638,330 6$1,443,350$166,123 $7,629 $21,377$1,638,479 7$1,443,027$168,745 $7,781 $21,805$1,641,358 8$1,444,722$171,133 $7,937 $22,241$1,646,032 9$1,444,964$173,933 $8,096 $22,686$1,649,678 10$1,443,753$176,454 $8,258 $23,139$1,651,605 11$1,444,318$175,124 $8,423 $23,602$1,651,467 12$1,443,189$177,739 $8,591 $24,074$1,653,593 13$1,443,592$180,682 $8,763 $24,556$1,657,593 14$1,445,286$183,263 $8,938 $25,047$1,662,534 15$1,444,802$186,772 $9,117 $25,548$1,666,239 16$1,445,367$189,828 $9,299 $26,059$1,670,553 17$1,443,511$193,076 $9,485 $26,580$1,672,653 18$1,445,690$196,472 $9,675 $27,111$1,678,948 19$1,444,964$199,969 $9,869 $27,654$1,682,454 20$1,444,560$203,522 $10,066 $28,207$1,686,355 21$1,444,237$207,087 $10,267 $28,771$1,690,362 22$1,443,753$211,262 $10,473 $29,346$1,694,834 23$1,446,093$214,668 $10,682 $29,933$1,701,376 24$1,444,318$219,239 $10,896 $30,532$1,704,985 25$1,444,883$223,550 $11,114 $31,142$1,710,689 26$1,444,076$227,555 $11,336 $31,765$1,714,732 27$1,444,883$232,499 $11,563 $32,401$1,721,345 28$1,443,592$237,601 $11,794 $33,049$1,726,035 29$1,443,189$242,125 $12,030 $33,710$1,731,053 30$1,443,189$247,963 $12,270 $34,384$1,737,805 31$1,443,108 $0 $12,516 $9,858 $1,465,482 32 $0 $0 $0 $0 $0 33 $0 $0 $0 $0 $0 34 $0 $0 $0 $0 $0 Total$43,880,421$5,829,742$292,822 $795,334$50,798,318 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. Assessment Roll Improvement Area #1 Year Principal and Interest1 Principal and Interest2 Administrative Expenses3 Annual Installment Part A E ‐ 1 DRAFT DRAFT Parcel All Assessment Part A $5,622,858 Maintenance Assessment Other Administrative Expenses 1$214,609$53,106 $1,889 $5,704 $275,308 2$373,233$46,671 $1,927 $5,818 $427,649 3$425,517$46,861 $1,966 $5,934 $480,278 4$425,398$47,608 $2,005 $6,053 $481,064 5$425,945$48,300 $2,045 $6,174 $482,463 6$425,184$48,937 $2,086 $6,297 $482,504 7$425,089$49,709 $2,128 $6,423 $483,349 8$425,588$50,413 $2,170 $6,552 $484,722 9$425,659$51,238 $2,213 $6,683 $485,793 10$425,303$51,980 $2,258 $6,816 $486,357 11$425,469$51,588 $2,303 $6,953 $486,313 12$425,137$52,359 $2,349 $7,092 $486,936 13$425,255$53,226 $2,396 $7,234 $488,111 14$425,754$53,986 $2,444 $7,378 $489,562 15$425,612$55,020 $2,493 $7,526 $490,650 16$425,778$55,920 $2,543 $7,676 $491,917 17$425,232$56,877 $2,593 $7,830 $492,532 18$425,873$57,877 $2,645 $7,987 $494,382 19$425,659$58,907 $2,698 $8,146 $495,411 20$425,541$59,954 $2,752 $8,309 $496,556 21$425,445$61,004 $2,807 $8,475 $497,732 22$425,303$62,234 $2,863 $8,645 $499,045 23$425,992$63,237 $2,921 $8,818 $500,968 24$425,469$64,584 $2,979 $8,994 $502,026 25$425,636$65,854 $3,039 $9,174 $503,702 26$425,398$67,033 $3,099 $9,357 $504,888 27$425,636$68,490 $3,161 $9,545 $506,831 28$425,255$69,993 $3,225 $9,735 $508,208 29$425,137$71,326 $3,289 $9,930 $509,681 30$425,137$73,045 $3,355 $10,129 $511,665 31$425,113 $0 $3,422 $2,904 $431,439 32 $0 $0 $0 $0 $0 33 $0 $0 $0 $0 $0 34 $0 $0 $0 $0 $0 Total$12,926,355$1,717,333$80,063 $234,291$14,958,042 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. Assessment Roll Improvement Area #2 Year Principal and Interest1 Principal and Interest2 Administrative Expenses3 Annual Installment Part A E ‐ 1 DRAFT DRAFT Parcel All Assessment Part A $4,864,522 Maintenance Assessment Other Administrative Expenses 1$185,665$45,944 $1,201 $4,934 $237,745 2$322,897$40,377 $1,225 $5,033 $369,532 3$368,129$40,541 $1,250 $5,134 $415,054 4$368,026$41,187 $1,275 $5,236 $415,725 5$368,499$41,786 $1,300 $5,341 $416,926 6$367,841$42,337 $1,326 $5,448 $416,952 7$367,759$43,005 $1,353 $5,557 $417,673 8$368,190$43,614 $1,380 $5,668 $418,852 9$368,252$44,327 $1,407 $5,781 $419,768 10$367,944$44,970 $1,436 $5,897 $420,246 11$368,088$44,631 $1,464 $6,015 $420,198 12$367,800$45,297 $1,494 $6,135 $420,726 13$367,903$46,047 $1,524 $6,258 $421,731 14$368,334$46,705 $1,554 $6,383 $422,977 15$368,211$47,599 $1,585 $6,511 $423,906 16$368,355$48,378 $1,617 $6,641 $424,991 17$367,882$49,206 $1,649 $6,774 $425,511 18$368,437$50,071 $1,682 $6,909 $427,100 19$368,252$50,962 $1,716 $7,048 $427,978 20$368,149$51,868 $1,750 $7,189 $428,956 21$368,067$52,776 $1,785 $7,332 $429,961 22$367,944$53,841 $1,821 $7,479 $431,084 23$368,540$54,709 $1,857 $7,629 $432,734 24$368,088$55,874 $1,894 $7,781 $433,637 25$368,232$56,972 $1,932 $7,937 $435,073 26$368,026$57,993 $1,971 $8,095 $436,085 27$368,232$59,253 $2,010 $8,257 $437,752 28$367,903$60,553 $2,050 $8,423 $438,929 29$367,800$61,706 $2,091 $8,591 $440,188 30$367,800$63,194 $2,133 $8,763 $441,890 31$367,779 $0 $2,176 $2,512 $372,468 32 $0 $0 $0 $0 $0 33 $0 $0 $0 $0 $0 34 $0 $0 $0 $0 $0 Total$11,183,021$1,485,722$50,910 $202,693$12,922,346 (1) Interest rates on the Sereis 2014 and 2015 Bonds are estimated at coupon rates between 6.55 and 7.75% per annum. Actual interest rate will be used once the bonds are issued. The interest amounts also include the additional 0.5% interest for prepayment reserve and delinquency reserve. (2) Interest rates on the Reimbursement Agreement are estimated at coupon rates at 7.5% per annum. The applicable rates will be determined at the time the Assessment are levied. (3) The Administrative Expense amounts are estimated and will be updated each year as part of the annual service plan update. The estimated Maintenance Assessment amount shown will be updated each year based on the actual budget for maintenance of the improvements. Assessment Roll Improvement Area #3 Year Principal and Interest1 Principal and Interest2 Administrative Expenses3 Annual Installment Part A E ‐ 1 Page 1 of 3 estlake Town Council TYPE OF ACTION Action Item Westlake Town Council Meeting Thursday, January 15, 2015 TOPIC: Discussion and Consideration of Ordinance 742, Authorizing the Mayor to Execute and Deliver a Financing Agreement, A Reimbursement Agreement, and Other Agreements with Maguire Partners - Solana Land, L.P. in Connection With Solana Public Improvement District. STAFF CONTACT: Tom Brymer, Town Manager Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high -quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: January 15, 2015 Funding Amount: $26,175,000 in Public Improvement District (PID) Bonds Status - PID Bonds to Considered for Issuance at this Meeting Source – PID Bonds EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) Previously, this property (located at the northeast corner of FM 1938 (Davis Blvd) and Solana Boulevard) was zoned for office and retail uses. In April 2013, after much public input and meetings, the Town Council, with a unanimous recommendation from the Planning & Zoning Commission, approved a request by the owner to amend the zoning in this PD1-2 zoning district. Also in April 2013, prior to consideration of this zoning change request, the land use plan component of the Town’s Comprehensive Plan was amended to provide for the uses requested in the zoning change request for this property. Page 2 of 3 The amended zoning adds certain residential and entertainment uses in order to allow development of a mixed use Planned Development on this tract. The zoning ordinance, as amended, is intended to achieve a design that emulates a European style village wit h a Spanish architectural theme. The development’s name is Entrada. Following those steps, the Developer had a preliminary plat approved for Entrada. Also approved for Entrada was a Development Plan (i.e. a master site plan), and a site plan for one lot with a building elevation for the building to be built on that lot (where a sales information center is to be located on the west side of Entrada near FM1938). During the re-zoning approval process it was pointed out by Town Staff, as well as discussed by Council, that if the zoning request was approved, the developer intended to submit to the Town a petition to create a Public Improvement District (PID) to fund the construction of the public infrastructure for this development. Further, in the Economic Development with the developer of Entrada, the Town agreed to consider creating a PID for this purpose. This Economic Development Agreement also was approved by the Town Council in April 2013. The owner submitted a petition to the Town to create a PID on this tract in October 2013. This Proposed PID was specifically discussed at several Council workshops (October 28th, November 11th, and December 9, 2013 as well as January 27th, February 24th, March 24th, and May 19, 2014 workshops plus discussed as a part of Entrada updates as a standing item at other Council workshops). During much this entire time t he Town Staff, along with our PID consultants, have been reviewing various iterations of a draft Appraisal, Preliminary Official Statement (POS), and Service and Assessment Plan (SAP) since the petition to establish this PID was submitted by the owner of this tract. After the December 9, 2013 Council Workshop, it was determined that, due to IRS regulations related to previous issuance of bank qualified (BQ) debt by the Town, modifications to the approach previously discussed with Council for issuance of PID bonds would need to be modified. Options of splitting the bond issuance, as well as using a conduit issuer for one larger issue were explored. The conduit issuer option, while allowed in other states, is not something the Texas Attorney General’s Office would provide a preliminary approval. The developer’s team discussed this at the Town Council’s January 27, 2014 workshop. The developer requested that, while waiting to see which path was best for PID bond issuance, it would be prudent to go ahead and establish the PID on this site. The Council approved the resolution to begin the public notification process for a public hearing on creating the PID for the petitioned property at its January 27, 2014 regular Meeting. Following a public hearing (no one spoke in opposition), this Public Improvement District was approved to be created by the Town Council at its February 24, 2014 Regular Meeting. The process continued on with a May 19, 2014 date targeted for first PID bond issuance. Eventually, prior to this May 19, 2014 date, the Developer determined that it would be best to delay bond issuance until 2015 when the BQ issue was no longer a factor. This eliminated the need to split the first issue into two issues over 2 years and simply issue a larger initial bond amount (as they had initially intended before the BQ issue surfaced). Further, the Entrada PID creation was delayed by the assignment of the Entrada agreements to Marquis Construction in July 2014. But, these agreements were subsequently reassigned by the Council back to the original Developer (Mehrdad Moayedi) on August 25, 2014 when the property did not close. It Page 3 of 3 should be noted that the PID document review process had to be halted during the time this assignment was under consideration as there was no purpose in working on PID documents until Staff knew for certain who was going to conduct the Entrada project. At the August 25, 2014 Council Workshop, having been reassigned the Entrada Economic Development and Developer Agreements, Developer Mehrdad Moayedi assured the Council of his commitment to the Entrada development and that he planned on proceeding with the PID bond issuance target ing issuance in January 2015. A new calendar was prepared with Town Staff and its consultants resuming work with the Developer’s PID team on PID documents. That process has been in motion since that time per the calendar attached to this agenda memo. At the Council’s December 15, 2014 meeting the Council discussed the remaining PID bond issuance calendar. The Town Council adopted a resolution approving the Preliminary Official Statement (POS) for $26,175,000 in PID Bonds as well as the distribution of this POS for the planned sale and issuance of these bonds to construct certain authorized infrastructure improvements in the Solana Improvement District (i.e. Entrada). At this same meeting the Council also adopted a resolution determining the costs of certain authorized improvements to be financed by the Solana Pubic Improvement District (i.e. Entrada) as well as approving a Preliminary Service Plan and Assessment Plan (including a Proposed Assessment Roll). This resolution also directed the filing of the Proposed Assessment Roll with the Town Secretary, and called a special meeting and Noticing a Public Hearing on January 15, 2015 to consider levying assessment on property within the Solana Public Improvement District. RECOMMENDATION Consider adoption of Ordinance 742 as related to the Solana Public Improvement District (i.e. Entrada). ATTACHMENTS 1. Ordinance 742. Ordinance 742 Page 1 of 7 TOWN OF WESTLAKE ORDINANCE 742 AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, AUTHORIZING THE MAYOR TO EXECUTE AND DELIVER A FINANCING AGREEMENT, A REIMBURSEMENT AGREEMENT AND OTHER AGREEMENTS WITH MAGUIRE PARTNERS - SOLANA LAND, L.P. IN CONNECTION WITH SOLANA PUBLIC IMPROVEMENT DISTRICT WHEREAS, the Town of Westlake, Texas (the "Town"), pursuant to and in accordance with the terms, provisions and requirements of the Public Improvement District Assessment Act, Subchapter A of Chapter 372, Texas Local Government Code, has previously established the "Solana Public Improvement District" (the "District"), pursuant to Resolution No. 14-07 adopted by the Town Council (the "Council") on February 24, 2014; and WHEREAS, the Council has found and determined that it is in the best interests of the Town to enter into that certain Construction, Funding, and Acquisition Agreement (the "Financing Agreement") between the Town and Maguire Partners - Solana Land, L.P. (the "Developer"), pursuant to which the Town may issue revenue bonds payable from assessments levied to pay a portion of the costs of constructing improvements located in the District; and WHEREAS, the Council has found and determined that it is in the best interests of the Town to enter into that certain Reimbursement Agreement (the "Reimbursement Agreement") between the Town and the Developer, pursuant to which the Town will agree to reimburse the Developer for certain specified costs paid by the Developer from assessments levied on benefitted property in the District or from proceeds of revenue bonds payable from such assessments; and WHEREAS, the Council has additionally found and determined that it is in the best interests of the Town to enter into a Landowner Agreement (defined below) and a Redemption Agreement (defined below) with the Developer in connection with the development of the District; and WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and the public notice of the time, place and purpose of said meeting was given as required by Chapter 551, Texas Government Code, as amended; and WHEREAS, the Council finds that the passage of this Ordinance is in the best interests of the citizens of the Town; NOW, THEREFORE, BE IT RESOLVED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS: SECTION 1: Recitals. All matters stated in the Recitals hereinabove are found to be true and correct and are incorporated herein by reference as if copied in their entirety. Ordinance 742 Page 2 of 7 SECTION 2: Approval of Financing Agreement. The Financing Agreement is hereby authorized and approved in the substantially final form attached hereto as Exhibit A and incorporated herein as a part hereof for all purposes and the Mayor of the Town is hereby authorized and directed to execute and deliver such Financing Agreement with such changes as may be required to carry out the purposes of this Ordinance. SECTION 3: Approval of Reimbursement Agreement. The Reimbursement Agreement is hereby authorized and approved in the substantially final form attached hereto as Exhibit B and incorporated herein as a part hereof for all purposes and the Mayor of the Town is hereby authorized and directed to execute and deliver such Reimbursement Agreement with such changes as may be required to carry out the purposes of this Ordinance. SECTION 4: Approval of Landowner Agreement. The Landowner Agreement (the "Landowner Agreement") between the Town and the Developer is hereby authorized and approved in the substantially final form attached hereto as Exhibit C and incorporated herein as a part hereof for all purposes and the Mayor of the Town is hereby authorized and directed to execute and deliver such Landowner Agreement with such changes as may be required to carry out the purposes of this Ordinance. SECTION 5: Approval of Redemption Agreement. The Maguire Partners-Solana Land, L.P. Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation - Solana PID (the "Redemption Agreement") between the Town and the Developer is hereby authorized and approved in the substantially final form attached hereto as Exhibit D and incorporated herein as a part hereof for all purposes and the Mayor of the Town is hereby authorized and directed to execute and deliver such Redemption Agreement with such changes as may be required to carry out the purposes of this Ordinance. SECTION 6: Severability. If any portion of this Ordinance shall, for any reason, be declared invalid by any court of competent jurisdiction, such invalidity shall not affect the remaining provisions hereof and the Council hereby determines that it would have adopted this Ordinance without the invalid provision. SECTION 7: Effective Date. This Ordinance shall become effective from and after its date of passage. [Remainder of page left blank intentionally] Ordinance 742 Page 3 of 7 PASSED AND APPROVED ON THIS 15TH DAY OF JANUARY, 2015. Laura Wheat, Mayor ATTEST: Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: L. Stanton Lowry, Town Attorney (Town Seal) Signature page to Ordinance Approving PID Agreements Ordinance 742 Page 4 of 7 EXHIBIT A FINANCING AGREEMENT SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 1 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT THIS CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT (this "Agreement"), dated as of January 15, 2015, is by and between TOWN OF WESTLAKE, TEXAS, a Type A general law municipality of the State of Texas (the "Town"), and MAGUIRE PARTNERS-SOLANA LAND, L.P., a Texas limited partnership, owner of approximately 85.90 acres within the town limits of the Town (the "Developer"). ARTICLE I DEFINITIONS The following terms shall have the meanings ascribed to them in this Article I for purposes of this Agreement. Unless otherwise indicated, any other terms, capitalized or not, when used herein shall have the meanings ascribed to them in the Indenture (as hereinafter defined). "Act" means the Public Improvement District Assessment Act, Texas Local Government Code, Chapter 372, as amended. “Actual Costs” shall have the meaning assigned to such term in the Service and Assessment Plan. “Administrator” means the individual or entity designated by the Town to administer the District. “Annual Service Plan Update” means the annual update to the Service and Assessment Plan conducted by the Administrator pursuant to Section IV of the Service and Assessment Plan. "Assessments" means the assessments levied against property within the District as described in the Service and Assessment Plan. "Assessment Revenues" mean the revenues actually received by the Town from Assessments. "Authorized Improvements" mean, collectively, the Improvement Project A and Improvement Project B improvements listed in Exhibit A attached hereto. An individual Authorized Improvement, including a completed segment or part, shall be referred to as an Authorized Improvement. "Bond Ordinance" means an ordinance adopted by the Town Council authorizing the issuance of a series of Bonds. "Bonds" means any bonds issued by the Town in one or more series and secured by the Assessment Revenues. "Budgeted Costs" means the costs shown on Exhibit A attached hereto. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 2 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT "Business Day" means the days between and including Monday to Friday and do not include public holidays and weekends. "Certification for Payment" means a certificate, substantially in the form of Exhibit B hereto or otherwise agreed to by the Developer, Administrator, and Town Representative, executed by an engineer, construction manager or other person or entity acceptable to the Town, as evidenced by the signature of a Town Representative, provided each month to the Town Representative and the Trustee, specifying the amount of work performed and the amount charged for that work, including materials and labor costs, presented to the Trustee to request payment under an Indenture. "Closing Date" means the date on which the Series 2015 Bonds are delivered to the initial purchaser(s) thereof. "Closing Disbursement Request" means the certificate, substantially in the form of Exhibit C hereto or otherwise agreed to by the Developer, Administrator, and Town Representative, executed by the Developer or other person or entity acceptable to the Town, as evidenced by the signature of a Town Representative, specifying the amounts to be disbursed for the costs of creation of the District, levy of Assessments and the costs of issuance of any Bonds incurred by the Developer. "Construction Contracts" means the contracts for the construction of the Authorized Improvements. "Construction Contract" means any one of the Construction Contracts. "Cost Overrun" means, with respect to each Authorized Improvement, the Actual Cost of such Authorized Improvement in excess of the Budgeted Cost. "Development Agreement" means that certain Development and Subdivision Improvement Agreement executed on October 29, 2013 between the Town and the Developer. "Development Plan" means _________________________________. "District" means the Solana Public Improvement District created by the Town by Town Resolution No. 14-07, approved February 24, 2014. "Economic Development Agreement" means that certain "Economic Development Agreement Program" executed by and between Maguire Partners-Solana Land, L.P. and the Town effective April 22, 2013. "Future Bonds" means Bonds issued subsequent to the Series 2015 Bonds. "Improvement Project A" means the Authorized Improvements described as such in Section III and shown in Appendix B of the Service and Assessment Plan and any future updates and/or amendments. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 3 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT "Improvement Project B" means the portion of the Authorized Improvements described as such in Section III and shown in Appendix B of the Service and Assessment Plan and any future updates and/or amendments. "Indenture" means an indenture of trust for a series of Bonds between the Town and a Trustee, as it may be from time to time supplemented or amended. "Inspector" means an individual employed by the Town whose job is, in part or in whole, to inspect infrastructure for compliance with all rules and regulations applicable to the development and the infrastructure inspected. "Plans" means the plans, specifications, schedules and related construction contracts for the Authorized Improvements, respectively, approved pursuant to the applicable standards and directives of the Town, the Economic Development Agreement, the Development and Subdivision Improvement Agreement, Town Regulations, and any other applicable governmental entity. "Preliminary Plat" means _____________________________________. "Project Fund" means the fund created under an Indenture, including the accounts created and established under such fund, where monies from the proceeds of the sale of a series of the Bonds, excluding those deposited in other funds in accordance with such Indenture, shall be deposited. "Reimbursement Agreement" means the Reimbursement Agreement dated as of January 15, 2015, by and between the Town and the Developer providing for the construction and financing of certain Authorized Improvements by the Developer for which the Developer will later be reimbursed by the Town pursuant to the Act. "Reimbursement Fund" means the fund created pursuant to the Reimbursement Agreement for the deposit of Assessments that are not otherwise obligated pursuant to an Indenture. "Series 2015 Bonds" means the "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)". "Service and Assessment Plan" means the Service and Assessment Plan adopted by Ordinance No. 741 on January 15, 2015 by the Town Council, prepared pursuant to the Act. "Town Regulations" means the Development Agreement, the Development Plan, the Economic Development Agreement, the Preliminary Plat and the Zoning Ordinance, the Land Development Ordinances and Regulations, and each as amended from time to time. "Town Representative" means that official or agent of the Town authorized by the Town Council to undertake the action referenced herein. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 4 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT "Trustee" means the entity appointed by the Town to serve as trustee pursuant to an Indenture. "Zoning Ordinance" means ______________________________________. ARTICLE II RECITALS Section 2.01. The District and the Authorized Improvements. (a) The Town has created the District under the Act for the financing of, among other things, the acquisition, construction and installation of the Authorized Improvements. (b) The Town has authorized the issuance of the Series 2015 Bonds in accordance with the provisions of the Act, the Bond Ordinance for the Series 2015 Bonds and the Indenture for the Series 2015 Bonds, the proceeds of which Series 2015 Bonds shall be used, in part, to finance all or a portion of the Authorized Improvements. (c) It is anticipated that there shall be multiple bond issues, including the Series 2015 Bonds currently being issued and additional future bonds ("Future Bonds") in the event the Town, in its sole discretion, elects to issue Future Bonds, to fund the costs of Authorized Improvements. Concurrently with the authorization of the Series 2015 Bonds, the Developer and the Town have entered into the Reimbursement Agreement to provide for the construction and financing of certain Authorized Improvements prior to the issuance of any Future Bonds and to provide means for reimbursement to the Developer for such costs from the proceeds of Future Bonds. (d) All Authorized Improvements are eligible to be financed with proceeds of the Bonds, the Assessments, or any combination thereof, to the extent specified herein and in the SAP. (e) The proceeds from the sale of each series of Bonds shall be deposited in accordance with the relevant section of the Indenture relating to such series of Bonds. (f) The Developer will undertake the construction and development of the Authorized Improvements for acquisition and acceptance by the Town. Section 2.02. Agreements. In consideration of the mutual promises and covenants set forth herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Town and the Developer agree that the foregoing recitals, as applicable to each, are true and correct and further make the agreements set forth herein. ARTICLE III FUNDING Section 3.01. Bonds. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 5 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT (a) The Town, concurrently with the approval of this Agreement, has authorized the issuance and delivery of the Series 2015 Bonds. (b) The payment of Actual Costs from the proceeds of the Series 2015 Bonds for Improvement Project A Improvements shall be made from the Improvement Project A Improvement Account of the Project Fund established under the Indenture for the Series 2015 Bonds with the remainder of the costs of Improvement Project A Improvements and Improvement Project B Improvements to be paid pursuant to the Reimbursement Agreement and Future Bonds, if issued. (c) The Costs for Improvement Project B Improvements are anticipated to be paid through a levy and assessment on land benefitted by the Improvement Project B Improvements with the levy and collection of such assessment to occur at a future date. (d) The Town’s obligation with respect to the payment for the Authorized Improvements shall be limited to the lesser of (i) Actual Costs or (ii) Assessment Revenues and the proceeds of Bonds available to pay such costs. The Developer agrees and acknowledges that it is responsible for all Cost Overruns, as qualified, however, by the distribution of Cost Underrun monies, as detailed in Section 4.04. (e) The Town shall have no responsibility whatsoever to the Developer with respect to the investment of any funds held in the Project Fund by the Trustee under the provisions of an Indenture, including any loss of all or a portion of the principal invested or any penalty for liquidation of an investment. A property owner’s obligation to pay Assessments is not in any way dependent on the availability of amounts in the Project Fund to pay for all or any portion of the costs of the Authorized Improvements hereunder. (f) The Developer acknowledges that any lack of availability of amounts in the funds or accounts established in an Indenture to pay the Actual Costs of the Authorized Improvements shall in no way diminish any obligation of the Developer with respect to the construction of or contributions for the Authorized Improvements required by this Agreement, the Town Regulations, or any other agreement to which the Developer is a party or any governmental approval to which the Developer or any land within the District is subject. (g) The Developer acknowledges that as a result of Bonds being issued in multiple series, funds may not be immediately available for payment or reimbursement of Actual Costs submitted and approved with an approved Certification for Payment. Both parties acknowledge that these remaining amounts will be disbursed, to the extent of available monies in a Project Fund or the Reimbursement Fund, as applicable, under the terms of an Indenture and the Reimbursement Agreement, as money is deposited for the payment of such Actual Costs into (i) a Project Fund (for the Authorized Improvements to be paid from such Project Fund) or (ii) the Reimbursement Fund. Both parties acknowledge that the availability of funds in a Project Fund or the Reimbursement Fund does not relieve the Developer from its responsibility to acquire and SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 6 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT construct the Authorized Improvements (as listed in Exhibit A) in accordance with the Town Regulations, the Service and Assessment Plan, the Reimbursement Agreement and this Agreement. Section 3.02. Disbursements and Transfers at Bond Closing. (a) The Town and the Developer agree that from the proceeds of the Bonds and upon the presentation of evidence satisfactory to the Administrator, the Town will cause the Trustee to pay at closing of the Series 2015 Bonds up to $_______________ from the Cost of Issuance Account of the Project Fund to the persons entitled to the payment for costs of issuance and payment of costs incurred in the establishment, administration, and operation of the District as of the time of the delivery of the Series 2015 Bonds, as described in the Service and Assessment Plan. (b) A Certification for Payment for Costs expended up through ______________________ shall be submitted to the Town Representative by _________________ and processed for payment from the applicable Improvement Account of the Project Fund at the closing of the Bonds subject to the review and approval provisions of Section 5.02 below. Actual Costs shall be paid solely from: (i) Assessment Revenues as collected pursuant to the terms of the Reimbursement Agreement; and/or (ii) from the proceeds of Bonds deposited into a Project Fund, which proceeds shall be used to pay to Owner the unpaid reimbursement amount plus accrued and unpaid interest, if any, due under the applicable Reimbursement Agreement. Section 3.03 (a) The Improvement Account of the Project Fund. Proceeds from the issuance and sale of the Series 2015 Bonds shall be deposited into the Improvement Project A Improvement Account of the Project Fund in the amount shown in Section 6.2 of the Indenture. Any Future Bonds shall be used to reimburse the Developer for any Costs relating to the Authorized Improvements awaiting reimbursement, with any remaining amount to be deposited into the applicable Improvement Account of the Project Fund to pay for any unconstructed Authorized Improvements. (b) Cost of Issuance Account of the Project Fund. Proceeds from the issuance and sale of the Series 2015 Bonds shall be deposited into the Cost of Issuance Account of the Project Fund in the amount shown in Section 6.2 of the Indenture. These proceeds shall be used to pay for the costs of creating the District, issuing the Series 2015 Bonds, and any other authorized and related costs. Section 3.04. Security for Authorized Improvements. Prior to completion and conveyance to the Town of an Authorized Improvement, the Developer shall provide to the Town a Maintenance Bond in the amount of ___% of each Authorized Improvement, which Maintenance Bond shall be for a term of two years from the date of final acceptance of the Authorized SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 7 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT Improvement. Any surety company through which a bond is written shall be a surety company duly authorized to do business in the State of Texas, provided that the Town, through the Town Attorney, shall retain the right to reject any surety company as a surety for any work hereunder regardless of such company’s authorization to do business in Texas. Approvals by the Town shall not be unreasonably withheld or delayed. The Developer shall construct the Authorized Improvements in accordance with the Town Regulations. The Developer shall, however, provide an “all bills paid” affidavit, in the standard form for Town construction projects and shall also provide such supporting documentation as required by the Town, that affirms that all invoices and bills were paid for the Authorized Improvement. Section 3.05. Limitation of Town Responsibility Nothing in this Agreement, the Reimbursement Agreement, or any Bonds shall give rise to or create: (1) a charge against the general credit or taxing powers of the Town or any other taxing unit; (2) a debt or other obligation of the Town payable from any source of revenue, taxes, income, or properties of the Town other than from Assessment Revenues and proceeds of Bonds; (3) any obligation of the Town to issue Bonds or other obligations; or (4) any obligation of the Town to pay any amount due or to become due under the Reimbursement Agreement or any Bonds other than Assessment Revenues and funds established under an Indenture. Developer shall not have the right to request or demand payment for any cost or expenditure related to any Authorized Improvement from funds other than Assessment Revenues and the proceeds of Bonds deposited in a Project Fund established under an Indenture. ARTICLE IV DEDICATION OF THE RIGHTS-OF-WAY; CONSTRUCTION OF AUTHORIZED IMPROVEMENTS Section 4.01. Duty of Developer to Construct. (a) All Authorized Improvements shall be constructed by or at the direction of the Developer in accordance with the Plans and in accordance with this Agreement and the Town Regulations. The Developer shall perform all of its obligations and shall conduct all operations with respect to the construction of Authorized Improvements in a good, workmanlike and SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 8 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT commercially reasonable manner, with the standard of diligence and care normally employed by duly qualified persons utilizing their commercially reasonable efforts in the performance of comparable work and in accordance with generally accepted practices appropriate to the activities undertaken. The Developer shall employ at all times adequate staff or consultants with the requisite experience necessary to administer and coordinate all work related to the design, engineering, acquisition, construction and installation of the Authorized Improvements to be acquired and accepted by the Town from the Developer as provided in this Agreement. (b) The Developer shall not be relieved of its obligation to construct or cause to be constructed each Authorized Improvement and, upon completion, inspection, and acceptance, convey each such Authorized Improvement to the Town in accordance with the terms hereof, even if there are insufficient funds in the Project Fund to pay the Actual Costs thereof. In any event, this Agreement shall not affect any obligation of the Developer under any other agreement to which the Developer is a party or any governmental approval to which the Developer or any land within the District is subject, with respect to the Authorized Improvements required in connection with the development of the land within the District. Section 4.02. No Competitive Bidding. Authorized Improvements shall not require competitive bidding pursuant to Section 252.022 of the Texas Local Government Code, as amended. The Town shall have the right to examine and approve the contractor selected by the Developer, which approval shall not be unreasonably delayed or withheld. Section 4.03. Independent Contractor. In performing this Agreement, the Developer is an independent contractor and not the agent or employee of the Town with respect to the Authorized Improvements. Section 4.04. Remaining Funds after Completion of an Authorized Improvement. Upon the completion of an Authorized Improvement or a completed segment or part of an Authorized Improvement in compliance with existing Town standards for dedication under the Town’s ordinances and the Town Regulations and payment of all outstanding invoices for such Authorized Improvement, if the Actual Cost of such Authorized Improvement is less than the Budgeted Cost (a "Cost Underrun"), any remaining Budgeted Cost will be available to pay Cost Overruns on any other Authorized Improvement. The Town shall promptly confirm to the Administrator that such remaining amounts are available to pay such Cost Overruns, and the Developer, the Administrator and the Town Representative will agree how to use such moneys to secure the payment and performance of the work for other Improvements. Section 4.05. Contracts and Change Orders. The Developer shall be responsible for entering into all contracts and any supplemental agreements (herein referred to as “change orders”) required for the construction of the Authorized Improvements. Developer may approve and implement any change orders, even if such change order would increase the cost of an Authorized Improvement, but the Developer shall be solely responsible for payment of any Cost Overruns SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 9 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT resulting from such change orders except to the extent amounts are available pursuant to Section 4.04. ARTICLE V ACQUISITION, CONSTRUCTION, AND PAYMENT Section 5.01. Payment Requests for Disbursements at Closing. (a) In order to receive disbursement from the Costs of Issuance Account of the Project Fund described in Section 3.02 and established pursuant to the Indenture for the Series 2015 Bonds, the Developer shall execute a Closing Disbursement Request, substantially in the form of Exhibit C attached hereto or otherwise agreed to by the Developer and the Town, to be delivered to the Town no less than ___ Business Days prior to the scheduled Closing Date for the Series 2015 Bonds in accordance with the provisions of the Indenture for the Series 2015 Bonds. Upon approval by the Town, the Town shall submit a Town Certificate to the Trustee for disbursement to be made from such Costs of Issuance Account upon closing of the Series 2015 Bonds. (b) In order to receive disbursement from the Improvement Project A Improvement Account of the Project Fund described in Section 3.02 and established pursuant to the Indenture for the Series 2015 Bonds, the Developer shall execute a Certification for Payment, substantially in the form of Exhibit B hereto or otherwise agreed to by the Developer, the Town and the Administrator, to be delivered to the Town no less than ___Business Days prior to the scheduled Closing Date for the Series 2015 Bonds for payment in accordance with the provisions of the Indenture for the Actual Costs of the Authorized Improvements performed up to _____, 2015. Upon approval by the Town, the Town shall submit a Town Certificate to the Trustee for disbursement to be made from the Improvement Project A Improvement Account upon closing of the Series 2015 Bonds. Section 5.02. Certification for Payment for the Authorized Improvements. (a) Except as provided in Section 3.02 and 5.01(a), no payment hereunder shall be made from the Project Fund to the Developer for work on an Authorized Improvement until a monthly Certification for Payment is submitted by the Developer to the Town for the work with respect to such Authorized Improvement. Upon receipt by the Town of a Certification for Payment substantially in the form of Exhibit B hereto (and all accompanying documentation) from the Developer, the Inspector shall conduct a review in order to (i) confirm that such request is complete, (ii) confirm that the work with respect to such Authorized Improvement identified therein for which payment is requested was performed in accordance with all applicable governmental laws, rules and regulations and applicable Plans therefor and with the terms of this Agreement and the Town Regulations, and (iii) verify and approve the Actual Cost of such work specified in such Certification for Payment and (iv) confirm the matters certified in the Certification for Payment. (collectively, the “Developer Compliance Requirements”). The SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 10 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT approval of the Certification for Payment by the Inspector shall constitute a representation by the Inspector to the Town and the Trustee that the Developer Compliance Requirements have been satisfied with respect to the Authorized Improvement identified therein. The Developer agrees to cooperate with the Inspector in conducting each such review and to provide the Inspector with such additional information and documentation as is reasonably necessary for the Inspector to conduct each such review. (b) Within ten (10) Business Days of receipt of any Certification for Payment, the Inspector shall (i) approve and execute the Certification for Payment and forward the same to the Town Representative for approval and delivery to the Trustee for payment to the Developer in accordance with Section 5.03 hereof or (ii) in the event the Inspector disapproves the Certification for Payment, give written notification to the Developer of the Inspector’s disapproval, in whole or in part, of such Certification for Payment, specifying the reasons for such disapproval and the additional requirements to be satisfied for approval of such Certification for Payment. If a Certification for Payment seeking reimbursement is approved only in part, the Inspector shall specify the extent to which the Certification for Payment is approved and shall deliver such partially approved Certification for Payment to the Town for approval and delivery to the Developer in accordance with Section 5.03 hereof, and such approved amount shall be processed for payment under Section 5.03 notwithstanding such partial denial. (c) If the Inspector fails to act with respect to a Certification for Payment within the time period herein provided, the Developer shall submit the Certification for Payment to the Town Representative for approval. Within ten (10) Business Days of receipt of any Certification for Payment, the Town Representative shall approve or deny the Certification for Payment and provide notice to the Administrator and Developer. Upon approval of a Certification for Payment, the approval shall be forwarded by the Town to the Trustee for payment and delivery to the Developer in accordance with Section 5.03 hereof. The approval of the Certification for Payment by the Town Representative shall constitute a representation by the Town Representative to the Trustee of the Developer’s compliance therein. Pursuant to the terms of Section 5.03 and the Indenture, the Trustee shall make a payment to the Developer, or pursuant to the Developer’s directions, of an approved Certification for Payment. (d) If the Town Representative denies a Certification for Payment or fails to act within ten (10) Business Days of receipt thereof, the denial or failure to act may be appealed to the Town Council for approval of the Certification for Payment within 30 days of being denied or the expiration of the approval period. (e) The Town shall deliver the approved or partially approved Certification for Payment to the Trustee for payment in accordance with the applicable Indenture. Section 5.03. Payment for Authorized Improvements. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 11 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT (a) Upon receipt of a reviewed and approved Certification for Payment, the Trustee shall make payment from the applicable Improvement Account of the Project Fund as designated in the Certification for Payment. (b) Approved Certifications for Payment that await reimbursement may accrue interest at the rate provided for in the SAP, and as provided for by Texas Local Government Code Section 372.018, which interest shall also be deposited into the Project Fund upon collection and be available for disbursement to pay approved but unpaid Certifications for Payment. If the Future Bonds are issued, all outstanding Certifications for Payment that have been approved, if any, but not yet paid in full, shall be paid in accordance with the Reimbursement Agreement and the applicable Indenture from Assessments or the proceeds (after payment of costs of issuance, including the costs paid or incurred by the Town) of such Future Bonds available for such payment. (c) Notwithstanding any other provisions of this Agreement, when payment is made, the Trustee shall make payment to the party identified in an approved Certification for Payment, out of available funds in the Project Fund. If an unconditional lien release related to the items referenced in the Certification for Payment is attached to such Certification for Payment, the Trustee shall make such payment to the Developer or any permitted assignee of the Developer. In the event the Developer provides a general contractor’s or supplier of materials unconditional lien release for a portion of the work covered by a Certification for Payment, the Trustee will make such payment directly to the Developer or any permitted assignee of the Developer to the extent of such lien release. (d) Withholding Payments. Nothing in this Agreement shall be deemed to prohibit the Developer or the Town from contesting in good faith the validity or amount of any mechanics or materialman’s lien and/or judgment nor limit the remedies available to the Developer or the Town with respect thereto so long as such delay in performance shall not subject the Authorized Improvement to foreclosure, forfeiture, or sale. In the event that any such lien and/or judgment with respect to an Authorized Improvement is contested, the Developer shall be required to post or cause the delivery of a surety bond in an amount determined by the Town. ARTICLE VI OWNERSHIP AND TRANSFER OF IMPROVEMENT Section 6.01. Conveyance of Authorized Improvements. (a) Prior to conveyance of an Authorized Improvement to the Town, the Inspector shall conduct a review in order to confirm that the work with respect to such Authorized Improvement was completed in accordance with all applicable governmental laws, rules and regulations and applicable Plans therefor and with the terms of this Agreement, and to verify and approve the Actual Costs of such Authorized Improvement. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 12 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT (b) Except as provided in Section 5.02 above, upon approval by the Inspector, and as a condition to the acceptance of an Authorized Improvement by the Town, the Developer shall deliver to the Town any and all documents necessary to vest in the Town all right, title, and interest in and to such Authorized Improvement, free and clear of all liens, leasehold interests, and encumbrances, including without limitation affidavits of lien waivers. (c) The Developer agrees to provide to the Inspector, the Administrator and the Town all invoices, bills of sale and other documentation reasonably requested to evidence the Actual Costs of the Authorized Improvements. (d) Unless otherwise agreed to by the Town, the Developer shall obtain and file, and provide to the Town, a maintenance bond for each Authorized Improvement with a term of coverage of at least two (2) years from the date of acceptance of the Authorized Improvement by the Town in form and issued by surety companies satisfactory to the Town or as otherwise required by law with respect to the Authorized Improvement; provided a maintenance bond may provide coverage for one or more Authorized Improvements. (e) The Developer acknowledges that any liens incurred with respect to the Authorized Improvements shall be solely the responsibility of the Developer or any authorized assignee of the Developer. Such limitation shall not prohibit Developer from granting a lien on any property within the District that is owned by Developer, provided that any such lien shall be subordinate to any lien securing the payment of Assessments. Section 6.02. Authorized Improvement Constructed on Town Land or Developer Land. If the Authorized Improvement is on land owned by the Town, the Town hereby grants to the Developer a license to enter upon such land for purposes related to construction (and maintenance pending acquisition and acceptance) of the Authorized Improvement. The provisions for inspection and acceptance of such Authorized Improvement otherwise provided herein shall apply. Section 6.03. Maintenance of the Authorized Improvements. Within five days of the Closing Date of the Bonds, the Developer agrees to deposit $200,000.00 into a separate escrow account of the Town for the purpose of providing funds for the Town to upkeep the District should the POA, as defined herein, fail in its responsibilities listed below (the “Developer Maintenance Deposit”). The Developer Maintenance Deposit is intended to temporarily provide funds for the Town to upkeep the District as the Town prepares to adjust the Maintenance Assessments as detailed further below. The Property Owner’s Association (“POA”) will be responsible for the operation and maintenance of the road improvements in the District including the maintenance of the public rights-of-way and other public access easements. The POA shall charge a fee to its property owners on an annual basis, and shall be responsible for repair, landscaping, trash removal, street light replacement, painting, striping of roadways, and other maintenance and repairs, in order to keep the District in a state of cleanliness and full repair as required by the Town (the “POA SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 13 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT Responsibilities”). It is intended that the revenues from the POA fee shall be sufficient to cover the vast majority of the costs associated with the POA Responsibilities. There shall also be an assessment and a collection of assessments for such purposes (the “Maintenance Assessments”) in accordance with the SAP. It is intended that the Maintenance Assessments will initially be a small proportion of the revenues received from the POA fees, but may be increased in the event that the POA fails to operate and maintain the applicable Authorized Improvements in a manner consistent with the Town’s standards for maintenance of similar public improvements throughout the Town. On a quarterly basis, the Town shall review the state of the applicable Authorized Improvements in the District, and provide a written report on the state of repair and cleanliness to the POA. If the Town, in its review, finds the District does not meet Town standards, then the Town shall detail the specific instances of failure and shall promptly forward such letter to the POA. Upon receipt of the written notice, the POA shall have thirty (30) days (the “Correction Period”) to address the specific failure(s). If the POA lacks the funds to address the specific failure(s), the Town may, after the Correction Period, send written notice to the Administrator of its intention to remove funds sufficient to correct the failure(s) from the Developer Maintenance Deposit. The Administrator shall immediately forward the written notice to the Trustee, who shall withdraw funds from such funds or accounts. These funds shall be used solely to correct the specific instances of failure, as listed in the quarterly report. The Town shall return any unused monies back to the fund or account, and notify the Administrator and Trustee of the amount spent to rectify the failures. The total such amounts spent in a given year plus related administrative costs may be added to the annual Maintenance Assessment for the following year, in order to replenish the withdrawals. ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS Section 7.01. Representations, Covenants and Warranties of the Developer. The Developer represents and warrants for the benefit of the Town as follows: (a) Organization. The Developer consists of one limited partnership duly formed, organized and validly existing under the laws of the State of Texas, is in compliance with the laws of the State of Texas, and has the power and authority to own its properties and assets and to carry on its business in the State of Texas as now being conducted as hereby contemplated. (b) Authority. The Developer has the power and authority to enter into this Agreement, and has taken all action necessary to cause this Agreement to be executed and delivered, and this Agreement has been duly and validly executed and delivered by the Developer. (c) Binding Obligation. This Agreement is a legal, valid and binding obligation of the Developer, enforceable against the Developer in accordance with its terms, subject to bankruptcy and other equitable principles. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 14 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT (d) Compliance with Law. The Developer shall not commit, suffer or permit any act to be done in, upon or to the lands of the Developer in the District or the Authorized Improvements in violation of any law, ordinance, rule, regulation or order of any governmental authority or any covenant, condition or restriction now or hereafter affecting the lands in the District or the Authorized Improvements. (e) Requests for Payment. The Developer represents and warrants that (i) it will not request payment from the Project Fund for the acquisition or construction of any improvements that are not part of the Authorized Improvements, and (ii) it will diligently follow all procedures set forth in this Agreement with respect to the Certification for Payments. (f) Financial Records. For a period of two years after completion of the Authorized Improvements, the Developer covenants to maintain proper books of record and account for the construction of the Authorized Improvements and all Costs related thereto. Such accounting books shall be maintained in accordance with generally accepted accounting principles, and shall be available for inspection by the Town or its agents at any reasonable time during regular business hours on reasonable notice. (g) Plans. The Developer represents that it has obtained or will obtain approval of the Plans from all appropriate departments of the Town and from any other public entity or public utility from which such approval must be obtained. The Developer further agrees that, subject to the terms hereof, the Authorized Improvements have been or will be constructed in full compliance with such Plans and any change orders thereto consistent with the Act, and the Town Regulations. (h) Additional Information. The Developer agrees to cooperate with all reasonable written requests for nonproprietary information by the Underwriter of the Bonds or the Town Representative related to the status of construction of improvements within the District, the anticipated completion dates for future improvements and any other matter that the Underwriter of the Bonds or Town Representative deems material to the investment quality of the Bonds. (i) Continuing Disclosure Agreement. The Developer agrees to provide the information required pursuant to the Continuing Disclosure Agreement executed by the Developer in connection with the Bonds. (j) Tax Certificate. If upon the issuance of Bonds the Town is required to deliver a certificate to satisfy requirements of the Internal Revenue Code, Developer covenants to provide, or cause to be provided, such facts and estimates as the Town reasonably considers necessary to enable it to execute and deliver its Tax Certificate. The Developer further covenants that (i) such facts and estimates will be based on its reasonable expectations on the date of issuance of the Bonds and will be, to the best of the knowledge of the officers of the Developer providing such facts and estimates, true, correct and complete as of that date, and (ii) the Developer will make reasonable inquiries to ensure such truth, correctness and completeness. The Developer covenants that it will not make, or (to the extent that it exercises control or direction) permit to be made, any SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 15 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT use or investment of the Bond proceeds (including, but not limited to, the use of the Authorized Improvements) that would cause any of the covenants or agreements of the Town contained in the Tax Certificate to be violated or that would otherwise have an adverse effect on the tax-exempt status of the interest payable on the Bonds for federal income tax purposes. (k) Financial Resources. The Developer represents and warrants that it has the financial resources, or the ability to obtain sufficient financial resources, to meet its obligations under this Agreement and the Town Regulations. Section 7.02. Indemnification and Hold Harmless. THE DEVELOPER SHALL INDEMNIFY AND HOLD HARMLESS THE INSPECTOR, THE TOWN, ITS OFFICIALS, EMPLOYEES, OFFICERS, REPRESENTATIVES AND AGENTS (EACH AN "INDEMNIFIED PARTY"), FROM AND AGAINST ALL ACTIONS, DAMAGES, CLAIMS, LOSSES OR EXPENSE OF EVERY TYPE AND DESCRIPTION TO WHICH THEY MAY BE SUBJECTED OR PUT: (I) BY REASON OF, OR RESULTING FROM THE BREACH OF ANY MATERIAL PROVISION OF THIS AGREEMENT BY THE DEVELOPER, (II) THE NEGLIGENT DESIGN, ENGINEERING AND/OR CONSTRUCTION BY THE DEVELOPER OR ANY ARCHITECT, ENGINEER OR CONTRACTOR HIRED BY THE DEVELOPER OF ANY OF THE AUTHORIZED IMPROVEMENTS ACQUIRED FROM THE DEVELOPER HEREUNDER, (III) THE DEVELOPER'S NONPAYMENT UNDER CONTRACTS BETWEEN THE DEVELOPER AND ITS CONSULTANTS, ENGINEERS, ADVISORS, CONTRACTORS, SUBCONTRACTORS AND SUPPLIERS RELATING TO THE AUTHORIZED IMPROVEMENTS, (IV) ANY CLAIMS OF PERSONS EMPLOYED BY THE DEVELOPER OR ITS AGENTS TO CONSTRUCT THE AUTHORIZED IMPROVEMENTS, OR (V) ANY CLAIMS AND/OR SUITS OF THIRD PARTIES, INCLUDING BUT NOT LIMITED TO THE DEVELOPER'S RESPECTIVE PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS, ASSIGNEES, VENDORS, GRANTEES AND/OR TRUSTEES, REGARDING OR RELATED TO THE AUTHORIZED IMPROVEMENTS OR ANY AGREEMENT OR RESPONSIBILITY REGARDING THE AUTHORIZED IMPROVEMENTS, INCLUDING CLAIMS AND CAUSES OF ACTION WHICH MAY ARISE OUT OF THE SOLE OR PARTIAL NEGLIGENCE OF AN INDEMNIFIED PARTY (THE "CLAIMS"). NOTWITHSTANDING THE FOREGOING, NO INDEMNIFICATION IS GIVEN HEREUNDER FOR ANY ACTION, DAMAGE, CLAIM, LOSS OR EXPENSE DETERMINED BY A COURT OF COMPETENT JURISDICTION TO BE DIRECTLY ATTRIBUTABLE TO THE WILLFUL MISCONDUCT OF ANY INDEMNIFIED PARTY. THE DEVELOPER IS EXPRESSLY REQUIRED TO DEFEND THE TOWN AGAINST ALL SUCH CLAIMS, AND THE TOWN IS REQUIRED TO REASONABLY COOPERATE AND ASSIST THE DEVELOPER IN PROVIDING SUCH DEFENSE. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 16 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT IN ITS REASONABLE DISCRETION, THE TOWN SHALL HAVE THE RIGHT TO APPROVE OR SELECT DEFENSE COUNSEL TO BE RETAINED BY THE DEVELOPER IN FULFILLING ITS OBLIGATIONS HEREUNDER TO DEFEND AND INDEMNIFY THE INDEMNIFIED PARTIES, UNLESS SUCH RIGHT IS EXPRESSLY WAIVED BY THE TOWN IN WRITING. THE INDEMNIFIED PARTIES RESERVE THE RIGHT TO PROVIDE A PORTION OR ALL OF THEIR/ITS OWN DEFENSE, AT THEIR/ITS SOLE COST; HOWEVER, INDEMNIFIED PARTIES ARE UNDER NO OBLIGATION TO DO SO. ANY SUCH ACTION BY AN INDEMNIFIED PARTY IS NOT TO BE CONSTRUED AS A WAIVER OF THE DEVELOPER'S OBLIGATION TO DEFEND THE INDEMNIFIED PARTIES OR AS A WAIVER OF THE DEVELOPER'S OBLIGATION TO INDEMNIFY THE INDEMNIFIED PARTIES PURSUANT TO THIS AGREEMENT. THE DEVELOPER SHALL RETAIN THE TOWN-APPROVED DEFENSE COUNSEL WITHIN SEVEN (7) BUSINESS DAYS OF WRITTEN NOTICE FROM AN INDEMNIFIED PARTY THAT IT IS INVOKING ITS RIGHT TO INDEMNIFICATION UNDER THIS AGREEMENT. IF THE DEVELOPER FAILS TO RETAIN COUNSEL WITHIN SUCH TIME PERIOD, THE INDEMNIFIED PARTIES SHALL HAVE THE RIGHT TO RETAIN DEFENSE COUNSEL ON THEIR/ITS OWN BEHALF, AND THE DEVELOPER SHALL BE JOINTLY AND SEVERALLY LIABLE FOR ALL REASONABLE COSTS INCURRED BY THE INDEMNIFIED PARTIES. THIS SECTION 7.02 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT. THE PARTIES AGREE AND STIPULATE THAT THIS INDEMNIFICATION COMPLIES WITH THE CONSPICUOUSNESS REQUIREMENT AND THE EXPRESS NEGLIGENCE TEST, AND IS VALID AND ENFORCEABLE AGAINST THE DEVELOPER. Section 7.03. Use of Monies by Town; Changes to Indenture. The Town agrees not to take any action or direct the Trustee to take any action to expend, disburse or encumber the monies held in the Project Fund and any monies to be transferred thereto for any purpose other than the purposes permitted by the Indenture. Except as may otherwise be permitted herein, prior to the acceptance of all the Authorized Improvements, the Town agrees not to modify or supplement the Indenture without the approval of the Developer if as a result or as a consequence of such modification or supplement (a) the amount of monies that would otherwise have been available under the Indenture for disbursement for the costs of the Authorized Improvements is reduced, delayed or deferred, (b) the obligations or liabilities of the Developer are or may be increased or otherwise adversely affected in any manner, or (c) the rights of the Developer are or may be modified, limited, restricted or otherwise adversely affected in any manner. Section 7.04. No Reduction of Assessments. The Developer agrees not to take any action or actions to reduce the total amount of such Assessments to be levied as of the effective date of this Agreement. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 17 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT ARTICLE VIII CONDITIONS OF ISSUING BONDS Subject to the satisfaction of conditions set forth in this Article, the Town may in its sole discretion issue bonds, including the Series 2015 Bonds, or other obligations (collectively referred to in this Article VIII as "PID Bonds") secured by and payable from special assessments levied against all or any portion of the benefitted property located in the District. The Developer may request the issuance of PID Bonds by filing with the Town a list of the public improvements to be funded with the PID Bonds and the estimated costs of such public improvements. The Developer acknowledges that the Town may require at that time a professional services agreement that obligates the Developer to fund the costs of the Town's professionals relating to the preparation for and issuance of PID Bonds, which amount shall be agreed to by the Parties and considered a cost payable from such PID Bonds. The issuance of PID Bonds is subject to the following conditions: (a) The adoption of a service and assessment plan and an assessment ordinance levying assessments on all or any portion of the property benefitted by such public improvements in amounts sufficient to pay all costs related to such PID Bonds. (b) The aggregate principal amount of PID Bonds issued and to be issued shall not exceed amounts sufficient to fund the public improvements. (c) Each series of PID Bonds shall be in an amount estimated to be sufficient to fund the public improvements or portions thereof for which such PID Bonds are being issued. (d) Delivery by the Developer to the Town of a certification or other evidence from an independent appraiser or other professional confirming that the special benefits conferred on the properties being assessed for the public improvements increase the value of the property by an amount at least equal to the amount assessed against such property. (e) Approval by the Texas Attorney General of the PID Bonds and registration of the PID Bonds by the Comptroller of Public Accounts of the State of Texas. (f) The Developer is current on all taxes, fees and obligations owed to the Town. (g) The Developer is not in default under this Agreement, the Development Agreement or any other agreement between the Town and the Developer. (h) No outstanding PID Bonds are in default and no reserve funds have been drawn upon that have not been replenished. (i) Review and approval by the Town of the plats and construction plans for the public improvements. (j) The Administrator has certified that the costs of the public improvements to be paid from the proceeds of the PID Bonds are eligible to be paid with the proceeds of such PID Bonds. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 18 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT (k) The public improvements to be financed by the PID Bonds have been or will be constructed according to the approved design specifications and construction standards imposed by the Development Agreement. (o) The Town’s evaluation and determination that there will be no negative impact on the Town’s creditworthiness, bond rating, access to or cost of capital, or potential for liability. (p) The Town has determined that the amount of proposed assessments and the structure, terms, conditions and timing of the issuance of PID Bonds are reasonable for the project costs to be financed and the degree of development activity within the District, and that there is sufficient security for the PID Bonds to be creditworthy. (q) The maximum maturity for PID Bonds shall not exceed __ years from the date of delivery thereof. (r) The final maturity for any PID Bonds shall be not later than __ years from the date of this Agreement. (s) Unless otherwise agreed to by the Town, PID Bonds shall be sold and may be transferred or assigned only in minimum denominations of $___________ or integral multiples of $1,000 in excess thereof; provided that the limitation on transferability or assignment shall not apply (A) if the PID Bonds are assigned a rating of not less than rated "BBB" by Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, "Baa" by Moody's Investors Service, Inc., "BBB" by Fitch Ratings, or an equivalent rating by a nationally recognized municipal securities rating service acceptable to the Town, and (B) upon compliance with applicable securities laws. (t) No information regarding the Town, including without limitation financial information, shall be included in any offering document relating to PID Bonds without the consent of the Town. (u) Simultaneous with closing the PID Bonds, the Developer shall fund or cause the funding of the public improvements to the extent that the public improvements have not already been completed and paid for by the Developer or otherwise to the extent that the PID Bonds are insufficient to fund such public improvements.(v) The Developer agrees to provide periodic information and notices of certain specified events regarding the Developer and the Developer's development within the District in accordance with Securities and Exchange Commission Rule 15c2-12. ARTICLE IX TERMINATION Section 9.01. Mutual Consent. This Agreement may be terminated by the mutual, written consent of the Town and the Developer, in which event the Town may either execute contracts for or perform any remaining work related to the Authorized Improvements not accepted by the Town or other appropriate entity and use all or any portion of funds on deposit in the Project Fund or other amounts transferred to the Project Fund under the terms of the Indenture to pay for same, SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 19 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT and the Developer shall have no claim or right to any further payments for the costs of an Authorized Improvement hereunder, except as otherwise may be provided in such written consent. Section 9.02. Town’s Election for Cause. (a) The Town, upon notice to Developer and the passage of the cure period identified in subsection (b) below, may terminate this Agreement, without the consent of the Developer if the Developer shall breach any covenant or default in the performance of any obligation hereunder. (b) If any such event occurs, the Town shall give written notice of its knowledge of a breach of any covenant thereof to the Developer, and the Developer agrees to meet and confer with the Inspector and other appropriate Town staff and consultants as to options available to assure timely completion, subject to the terms of this Agreement, of the Authorized Improvement. Such options may include, but not be limited to, the termination of this Agreement by the Town. If the Town elects to terminate this Agreement, the Town shall first notify the Developer (and any mortgagee or trust deed beneficiary specified in writing by the Developer to the Town to receive such notice) of the grounds for such termination and allow the Developer a minimum of 45 days to eliminate or mitigate to the satisfaction of the Town the grounds for such termination. Such period may be extended, at the reasonable discretion of the Town, if the Developer, to the reasonable satisfaction of the Town, is proceeding with diligence to eliminate or mitigate such grounds for termination. If at the end of such period (and any extension thereof), as determined reasonably by the Town, the Developer has not eliminated or completely mitigated such grounds to the satisfaction of the Town, the Town may then terminate this Agreement. In the event of the termination of this Agreement, the Developer is entitled to payment for work accepted by the Town related to the Authorized Improvement undertaken prior to the termination date of this Agreement solely from the Project Fund according to the terms and conditions set forth in this Agreement. Notwithstanding the foregoing, so long as the Developer has breached any covenant or defaulted in the performance of any obligation hereunder, notice of which has been given by the Town to the Developer, and such event has not been cured or otherwise eliminated by the Developer, the Town may in its discretion cause the Trustee to cease making payments for the Actual Costs of Authorized Improvements, provided that the Developer shall receive payment of the Actual Costs of any Authorized Improvement that was accepted by the Town at the time of the occurrence of such breach or default by the Developer upon submission of the documents and compliance with the other applicable requirements of this Agreement. (c) If this Agreement is terminated by the Town for cause, the Town may either execute contracts for or perform any remaining work related to the Improvement not accepted by the Town and use all or any portion of the funds on deposit in the Project Fund or other amounts transferred to the Project Fund and the Developer shall have no claim or right to any further payments for the Improvement hereunder, except for those Authorized Improvements where Certifications for Payment have been approved by the Town and await payment from available funds in the Project SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 20 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT Fund, and except as otherwise may be provided upon the mutual written consent of the Town and the Developer. Section 9.03. Termination Upon Redemption or Defeasance of Bonds. This Agreement will terminate automatically and with no further action by the Town or the Developer upon the redemption or defeasance of all outstanding Bonds Similarly Secured issued under the Indenture. Section 9.04. Construction of Authorized Improvements Upon Termination of this Agreement. Notwithstanding anything to the contrary contained herein, upon the termination of this Agreement pursuant to this Article IX, the Developer shall perform its obligations with respect to the Authorized Improvements in accordance with the terms of this Agreement and the Town Regulations. Section 9.05. Force Majeure. Whenever performance is required of a party hereunder, that party shall use all due diligence and take all necessary measures in good faith to perform, but if completion of performance is delayed by reasons of floods, earthquakes or other acts of God, war, civil commotion, riots, strikes, picketing or other labor disputes, damage to work in progress by casualty or by other cause beyond the reasonable control of the party (financial inability excepted), then the specified time for performance shall be extended by the amount of the delay actually so caused. ARTICLE X MISCELLANEOUS Section 10.01. Limited Liability of Town. The Developer agrees that any and all obligations of the Town arising out of or related to this Agreement are special obligations of the Town, and the Town’s obligations to make any payments hereunder are restricted entirely to the moneys, if any, in the Project Fund and from no other source. Neither the Town, the Inspector nor any other Town employee or agent shall incur any liability hereunder to the Developer or any other party in their individual capacities by reason of their actions hereunder or execution hereof. Section 10.02. Audit. The Inspector or a finance officer of the Town shall have the right, during normal business hours and upon the giving of three business days’ prior written notice to a Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer with respect to any of the Authorized Improvements and any bids taken or received for the construction thereof or materials therefor. Section 10.03. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to any party shall be deemed to have been received when personally delivered or transmitted by telecopy or facsimile transmission (which shall be immediately confirmed by telephone and shall be followed by mailing an original of the same within 24 hours after such transmission) or 72 hours following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows: SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 21 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT To the Town: Attn: Thomas Brymer Town Manager 3 Village Circle, Suite 202 Westlake, Texas 76262 FAX: 817.430.1812 With a copy to: Attn: L. Stanton Lowry Town Attorney Boyle & Lowry, L.L.P. 4201 Wingren, Suite 108 Irving, Texas 75062 FAX: 972.650.7105 To the Developer: Attn: Mehrdad Moayedi 1800 Valley View Lane, Suite 300 Farmers Branch, Texas 75234 FAX: 817.391.2501 With a copy to: Miklos Law, PLLC Attn: Robert Miklos 1800 Valley View Lane, Suite 360 Farmers Branch, Texas 75234 E-mail: robert@mikloslegal.com Any party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party. The Town shall advise the Developer of the name and address of any Inspector who is to receive any notice or other communication pursuant to this Agreement. Section 10.04. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent possible. Section 10.05. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Agreement shall not be assigned by the Developer without the prior written consent of the Town Manager, except (a) pursuant to a collateral assignment to any person providing construction financing to the Developer for the Authorized Improvements, provided such person expressly agrees to assume all obligations of the Developer hereunder if there is a default under such financing and such person elects to complete the applicable Authorized Improvements, or (b) to an affiliate of the Developer or a related entity of the Developer. In connection with any consent of the Town Manager, the Town Manager may condition its consent upon the acceptability of the financial condition of the proposed assignee, upon the assignee's express assumption of all obligations of the Developer SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 22 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT hereunder and/or upon any other reasonable factor which the Town Manager deems relevant in the circumstances. In any event, any such assignment shall be in writing, shall clearly identify the scope of the rights and/or obligations assigned and shall not be effective until approved in writing by the Town Manager. The Town may assign by a separate writing its rights hereunder to the Trustee and the Developer hereby consents to such assignment. Section 10.06. Other Agreements. The obligations of the Developer hereunder shall be those of a party hereto and not as an owner of property in the District. Nothing herein shall be construed as affecting the Town’s or the Developer’s rights or duties to perform their respective obligations under other agreements, use regulations or subdivision requirements relating to the development of the lands in the District, including the applicable Construction Contracts and the Town Regulations. To the extent there is a conflict between this Agreement and the Town Regulations, this Agreement shall control. Section 10.07. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by any other party, or the failure by a party to exercise its rights upon the default of any other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by such other party with the terms of this Agreement thereafter. Section 10.08. Merger. No other agreement, statement or promise made by any party or any employee, officer or agent of any party with respect to any matters covered hereby that is not in writing and signed by all the parties to this Agreement shall be binding. Section 10.09. Parties in Interest. Nothing in this Agreement, expressed or implied, is intended to or shall be construed to confer upon or to give to any person or entity other than the Town and the Developer any rights, remedies or claims under or by reason of this Agreement or any covenants, conditions or stipulations hereof, and all covenants, conditions, promises and agreements in this Agreement contained by or on behalf of the Town or the Developer shall be for the sole and exclusive benefit of the Town and the Developer. Section 10.10. Amendment. Except as otherwise provided in Section 8.02, this Agreement may be amended, from time to time in a manner consistent with the Act and the Ordinance, by written supplement hereto and executed in counterparts, each of which shall be deemed an original. Section 10.11. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Section 10.12. Effective Date. This Agreement has been dated as of the date first above written solely for the purpose of convenience of reference and shall become effective upon its execution and delivery, on the Closing Date, by the parties hereto. All representations and warranties set forth therein shall be deemed to have been made on the Closing Date. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 23 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement as of this the __________________________. ATTEST: TOWN OF WESTLAKE ________________________ By: ____________________ Name: Kelly Edwards Name: Laura Wheat Title: Town Secretary Title: Mayor APPROVED AS TO FORM _______________________ Name: L. Stanton Lowry Title: Town Attorney SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 24 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT DEVELOPER MAGUIRE PARTNERS-SOLANA LAND, L.P. By: MMM Ventures, LLC, its general partner By: 2M Ventures, LLC, its manager By: _______________________________________ Mehrdad Moayedi, Manager SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 25 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT Exhibit A List of Authorized Improvements and Budgeted Costs SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 26 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT Exhibit B FORM OF CERTIFICATION FOR PAYMENT The undersigned is an agent for Maguire Partners-Solana Land, L.P, (the “Developer”) and requests payment from the Improvement Account of the Project Fund (as defined in the Construction, Funding, and Acquisition Agreement) from the Town of Westlake, Texas (the “Town”) in the amount of __________________ for labor, materials, fees, and/or other general costs related to the construction of certain Authorized Improvements related to Authorized Improvements for the Solana Public Improvement District (the “Authorized Improvements”). Unless otherwise defined, any capitalized terms used herein shall have the meanings ascribed to them in the Construction, Funding, and Acquisition Agreement (the “CFA Agreement”). In connection to the above referenced payment, the Developer represents and warrants to the Town as follows: 1. The undersigned is a duly authorized officer of the Developer, is qualified to execute this Certification for Payment on behalf of the Developer, and is knowledgeable as to the matters set forth herein. 2. The payment requested for the below referenced Authorized Improvements has not been the subject of any prior payment request submitted to the Town or, if previously requested, no disbursement was made with respect thereto. 3. The amount listed for the Authorized Improvements below is a true and accurate representation of the costs associated with the creation, acquisition, or construction of said Authorized Improvement(s), and such costs are in compliance with the CFA Agreement and the Service and Assessment Plan. 4. The Developer is in compliance with the terms and provisions of the CFA Agreement, the Indenture, the Economic Development Agreement, Development and Subdivision Improvement Agreement, and the Service and Assessment Plan. 5. All conditions set forth in the Indenture, the CFA Agreement, the Development and Subdivision Improvement Agreement, and the Economic Development Agreement for the payment hereby requested have been satisfied. 6. The work with respect to the Authorized Improvement(s) referenced below (or its completed segment) has been completed and the Town may begin inspection of the Authorized Improvement(s). 7. The Developer agrees to cooperate with the Town in conducting its review of the requested payment, and agrees to provide additional information and documentation as is reasonably necessary for the Town to complete said review. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 27 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT 8. As required by Texas Local Government Code, Section 252.051, as amended, the Developer has provided the Town with an independent appraisal of any Authorized Improvement consisting of any real property, or any interest in real property including easements and rights-of-way, to be acquired by the Town with Bond proceeds, including specifically monies on deposit in the Improvement Account of the Project Fund. Payments requested are as follows: [Information regarding Payee, amount, and deposit instructions] Payee / Description of Authorized Improvement Total Cost of Authorized Improvement Budgeted Cost of Authorized Improvement Amount to be paid from the Improvement Account of the Project Fund TOTAL Attached hereto, are receipts, purchase orders, change orders, and similar instruments which support and validate the above requested payments. Pursuant to the CFA Agreement, after receiving this Certification for Payment, the Town is authorized to inspect the Authorized Improvement (or completed segment) and confirm that said work has been completed in accordance with all applicable governmental laws, rules, and Plans. Afterwards, the Town must then accept or deny this Certification for Payment. If denied by the Town, the denial must be in writing, stating the reason(s) for denial. The denial may be appealed to the Town Manager within 10 calendar days of being denied, and the Town Manager will endeavor to hear such appeal within 30 days. Denial of the payment request by the Town Manager shall be resolved by mediation between the parties in the event an agreement is not otherwise reached by the parties. I hereby declare that the above representations and warranties are true and correct. Maguire Partners-Solana Land, L.P By:_____________________________ Name: __________________________ Title: ___________________________ Date: ___________________________ SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 28 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT APPROVAL OF REQUEST BY TOWN The Town is in receipt of the attached Certification for Payment, acknowledges the Certification for Payment, and finds the Certification for Payment to be in order. After reviewing the Certification for Payment, the Town approves the Certification for Payment. TOWN OF WESTLAKE By: ____________________ Name: ____________________ Title: ____________________ Date: ___________ SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 29 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT Exhibit C FORM OF CLOSING DISBURSEMENT REQUEST The undersigned is an agent for Maguire Partners-Solana Land, L.P, (the “Developer”) and requests payment from the Costs of Issuance Account of the Project Fund (as defined in the Construction, Funding, and Acquisition Agreement) from _______________________________ (the “Trustee”) in the amount of ________________________ ($_____________) to be transferred from the Cost of Issuance Account of the Project Fund upon the delivery of the Bonds for costs incurred in the establishment, administration, and operation of Authorized Improvements for the Solana Public Improvement District (the “District”), as follows. In connection to the above referenced payment, the Developer represents and warrants to the Town as follows: 1. The undersigned is a duly authorized officer of the Developer, is qualified to execute this Closing Disbursement Request on behalf of the Developer, and is knowledgeable as to the matters set forth herein. 2. The payment requested for the below referenced establishment, administration, and operation of the District at the time of the delivery of the Bonds have not been the subject of any prior payment request submitted to the Town. 3. The amount listed for the below costs is a true and accurate representation of the costs associated with the establishment, administration and operation of the District at the time of the delivery of the Bonds, and such costs are in compliance with the Service and Assessment Plan. 4. The Developer is in compliance with the terms and provisions of the Construction, Funding, and Acquisition Agreement, the Indenture, the Development and Subdivision Improvement Agreement, the Economic Development Agreement and the Service and Assessment Plan. 5. All conditions set forth in the Indenture (as defined in the Construction, Funding, and Acquisition Agreement), the Construction Funding and Acquisition Agreement, the Development and Subdivision Improvement Agreement, and the Economic Development Agreement for the payment hereby requested have been satisfied. 6. The Developer agrees to cooperate with the Town in conducting its review of the requested payment, and agrees to provide additional information and documentation as is reasonably necessary for the Town to complete said review. SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 30 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT Payments requested hereunder shall be made as directed below: [Information regarding Payee, amount, and deposit instructions] I hereby declare that the above representations and warranties are true and correct. Maguire Partners-Solana Land, L.P By:_____________________________ Name: __________________________ Title: ___________________________ Date: ___________________________ SOLANA PUBLIC IMPROVEMENT DISTRICT PAGE 31 OF 31 CONSTRUCTION, FUNDING, AND ACQUISITION AGREEMENT APPROVAL OF REQUEST BY TOWN The Town is in receipt of the attached Closing Disbursement Request, acknowledges the Closing Disbursement Request, and finds the Closing Disbursement Request to be in order. After reviewing the Closing Disbursement Request, the Town approves the Closing Disbursement Request and shall include said payments in the Town Certificate submitted to the Trustee directing payments to be made from Costs of Issuance Account upon delivery of the Bonds. TOWN OF WESTLAKE By: ____________________ Name: ____________________ Title: ____________________ Date: ____________ Ordinance 742 Page 5 of 7 EXHIBIT B REIMBURSEMENT AGREEMENT SOLANA PUBLIC IMPROVEMENT DISTRICT REIMBURSEMENT AGREEMENT This Solana Public Improvement District Reimbursement Agreement (this “Reimbursement Agreement”) is executed between the Town of Westlake, Texas (the “Town”) and Maguire Partners – Solana Land, L.P., a Texas limited partnership (the “Developer”) to be effective January 15, 2015 (individually referred to as a “Party” and collectively as the “Parties”). RECITALS WHEREAS, capitalized terms used in this Reimbursement Agreement shall have the meanings given to them in this Reimbursement Agreement or in the Solana Public Improvement District Service and Assessment Plan, dated January 15, 2015, as the same may be amended from time to time (the “SAP”) approved by Ordinance No. 14-07 passed and approved by the Town Council on January 15, 2015 (“Ordinance No. 741”); and WHEREAS, on February 24, 2014, the Town Council passed and approved Resolution No. ___ (the "Resolution") authorizing the creation of the Solana Public Improvement District (the “District”) covering approximately 85.90 acres of land described by metes and bounds in the Resolution (the “District Property”); and WHEREAS, the purpose of the District is to finance public improvements (the “Authorized Improvements”) as provided by Chapter 372, Texas Local Government Code, as amended (the “Act”) that promote the interests of the Town and confer a special benefit on the Assessed Property within the District; and WHEREAS, the District Property is being developed in phases, and special assessments for each phase have been or will be levied against the Assessed Property within each such phase to pay the costs of Authorized Improvements that confer a special benefit on the Assessed Property within each such phase; and WHEREAS, Improvement Project A improvements will be developed as described in the SAP, including specifically Appendix C; and WHEREAS, on December 15, 2014, the Town Council passed and approved Resolution No. ________ determining, among other things, the estimated costs of the Improvement Project A improvements, including the costs of creating the District and issuing the bonds, to be $26,175,000.00 (the “Project A Improvements Costs”); and WHEREAS, in addition to approving the SAP, Ordinance No. 741 levied Assessments (as defined in the Series 2015 Indenture) against the Improvement Area #1 Assessed Parcels, the Improvement Area #2 Assessed Parcels and the Improvement Area #3 Assessed Parcels (each as defined in the Series 2015 Indenture and herein collectively referred to as the “Project A Improvements Assessed Property”) for the Improvement Project A improvements in accordance with the Assessment Roll (as defined in the Series 2015 Indenture) attached as Appendix E to the SAP; and WHEREAS, on January 15, 2015, the Town adopted Ordinance No. 743 authorizing the issuance and sale of the “Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)" (the "Series 2015 Bonds”), to finance a portion of the Project A Improvements Costs; and WHEREAS, the Assessment Revenues (as defined in the Series 2015 Indenture) are dedicated and pledged to the Series 2015 Bonds as provided in the Assessment Roll and secured under the Indenture of Trust relating to the Series 2015 Bonds, dated February 1, 2015 (the “Series 2015 Indenture”), between the Town and U.S. Bank National Association, as trustee (the “Trustee”); and WHEREAS, the Parties have entered into that certain “Construction, Funding, and Acquisition Agreement” dated as of January 15, 2015 (the “Construction Funding Agreement”) for the construction of the Authorized Improvements, including the Improvement Project A improvements; and WHEREAS, the Parties intend for the portion of the Project A Improvements Costs that is not financed by the Series 2015 Bonds to be financed under the terms of this Reimbursement Agreement and the Construction Funding Agreement; and WHEREAS, in the Series 2015 Indenture, the Town will establish a project fund segregated from all other funds of the Town (the “Project Fund”) for the Improvement Project A improvements and will establish an “Improvement Project A Improvement Account” and a “Developer Improvement Account” within such Project Fund under the Series 2015 Indenture; and WHEREAS, in the Series 2015 Indenture, the Town will establish a fund segregated from all other funds of the Town for the deposit of the Assessment Revenues (the “Pledged Revenue Fund”) and will establish a “Bond Pledged Revenue Account” and a “Developer Reimbursement Pledged Revenue Account” within such Pledged Revenue Fund under the Series 2015 Indenture; and WHEREAS, in the Series 2015 Indenture, the Town will establish a fund segregated from all other funds of the Town for the purpose of paying and reimbursing the Developer (the “Reimbursement Fund”) for the Project A Improvements Costs paid from the Developer Improvement Account of the Project Fund under the Series 2015 Indenture and amounts awaiting payment and reimbursement from the Improvement Project A Improvement Account, from Assessments yet to be collected and/or future bond issues to be issued and monies to be collected (the “Reimbursement Amount”); and WHEREAS, pursuant to the Series 2015 Indenture, amounts deposited in the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund shall be transferred to the Reimbursement Fund and used solely and exclusively to pay and reimburse the Developer the Reimbursement Amount, plus interest, as set forth in this Reimbursement Agreement. NOW THEREFORE, FOR VALUABLE CONSIDERATION THE RECEIPT AND ADEQUACY OF WHICH ARE ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS: 1. The recitals in the “WHEREAS” clauses of this Reimbursement Agreement are true and correct, create obligations of the Parties, and are incorporated as part of this Reimbursement Agreement for all purposes. 2. The Town shall cause to be deposited into the Pledged Revenue Fund all Assessment Revenues collected (excluding the portion of the Assessment Revenues and Annual Installments allocated to the payment of Administrative Expenses and Delinquent Collection Costs, which shall be deposited to the Administrative Fund) as provided in the Series 2015 Indenture. 3. The Developer shall make an initial deposit of $_______ to the Developer Improvement Account of the Project Fund (the “Developer Initial Deposit”) on the Closing Date (as defined in the Series 2015 Indenture). Project A Improvements Costs shall be paid first from the Developer Improvement Account of the Project Fund up to the amount of such Developer Initial Deposit as provided in the Series 2015 Indenture and the Construction Funding Agreement. After the Developer Initial Deposit has been disbursed from the Developer Improvement Account of the Project Fund in accordance with the terms of the Series 2015 Indenture and the Construction Funding Agreement, the Project A Improvements Costs shall be paid from the Improvement Project A Improvement Account of the Project Fund as provided in the Indenture and the Construction Funding Agreement. If after the Developer Initial Deposit has been disbursed from the Developer Improvement Account of the Project Fund, the amounts in the Improvement Project A Improvement Account of the Project Fund are insufficient to pay the Project A Improvements Costs, the Developer shall make one or more additional deposits to the Developer Improvement Account of the Project Fund for the payment of the Costs of the Improvement Project A improvements. Notwithstanding anything herein to the contrary, the sum of the Developer Initial Deposit plus any additional deposits to the Developer Improvement Account of the Project Fund required hereunder shall never exceed the Reimbursement Amount (defined below). 4. Strictly subject to the terms, conditions, and requirements and solely from the revenues herein provided, the Town agrees to pay to the Developer, and the Developer shall be entitled to receive from the Town, the amount equal to the Project A Improvements Costs paid from the Developer Improvement Account of the Project Fund (the “Reimbursement Amount”) plus interest on the unpaid balance in accordance with the terms of this Reimbursement Agreement until January 15, 2045 (the “Maturity Date”); provided, however, the Reimbursement Amount shall not exceed ________________________. The Reimbursement Amount shall be payable to the Developer solely from: (i) the Assessment Revenues deposited in the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund and transferred to the Reimbursement Fund as provided in Article VI of the Series 2015 Indenture; (ii) the net proceeds (after payment of costs of issuance, including the costs paid or incurred by the Town) of one or more series of bonds (the “Future Project A Improvement Bonds”) issued by the Town and secured by the Assessment Revenues; or (iii) a combination of items (i) and (ii). The Project A Improvements Costs are authorized by the Act, were approved by the Town Council and represent the total costs to be assessed against the Project A Improvements Assessed Property for the Improvement Project A improvements which, upon completion, will be dedicated in fee and accepted by the Town, in the Town's sole discretion. The unpaid Reimbursement Amount shall bear simple interest per annum at the rate of (x) ____ % for years one through five and (y) ____% for years six through thirty or until Future Project A Improvement Bonds are sold, if ever. If any portion of the Reimbursement Amount remains unpaid after the Town has elected to sell Future Project A Improvement Bonds, the interest rate paid to the Developer shall be the same as the interest rate on the Future Project A Improvement Bonds. The interest rate has been approved by the Town Council and is authorized by the Act. 5. The Reimbursement Amount, plus interest as described above (collectively, the “Unpaid Balance”), is payable to the Developer and secured under this Reimbursement Agreement solely as described in paragraph 4 above. No other Town funds, revenue, taxes, income, or property shall be used even if the Unpaid Balance is not paid in full at the Maturity Date. Notwithstanding its collection efforts, if the Town fails to receive all or any part of the Assessments, such failure and inability shall not constitute a Failure or Default by the Town under this Reimbursement Agreement. This Reimbursement Agreement and/or any Future Project A Improvement Bonds shall never give rise to or create: a. a charge against the general credit or taxing powers of the Town or any other taxing unit; or b. a debt or other obligation of the Town payable from any source of revenue, taxes, income, or properties of the Town other than from the Developer Improvement Account of the Project Fund, the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund or the Reimbursement Fund as provided in the Series 2015 Indenture or from the net proceeds of any Future Project A Improvement Bonds; or c. any obligation of the Town to issue Future Project A Improvement Bonds or other obligations; or d. any obligation of the Town to pay any amount due or to become due under this Reimbursement Agreement other than from (i) the Developer Improvement Account of the Project Fund, the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund or the Reimbursement Fund as provided in the Series 2015 Indenture and this Reimbursement Agreement, or (ii) from the net proceeds of any Future Project A Improvement Bonds. 6. If Future Project A Improvement Bonds are issued, the net proceeds of such Future Project A Improvement Bonds shall be used, from time to time, first to pay costs of issuing any Future Project A Improvement Bonds, then to pay the Unpaid Balance due the Developer for Project A Improvements Costs already incurred and for which the Developer has received an approved Certification for Payment under the Construction Funding Agreement and then to pay all or any portion of any Project A Improvements Costs. If, after application of the net proceeds of such Future Project A Improvement Bonds, any Project A Improvements Costs remain unpaid, then the Developer shall pay such cost. If, after application of the net proceeds of any Future Project A Improvement Bonds, the Unpaid Balance due the Developer remains unpaid, all payments toward the Unpaid Balance due the Developer shall be paid from (i) amounts transferred to the Reimbursement Fund from the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund under the Series 2015 Indenture and (ii) amounts deposited into any funds created for such purpose under any indenture relating to any Future Project A Improvement Bonds. Once the principal amount of all Future Project A Improvement Bonds plus all payments paid to the Developer under this Reimbursement Agreement equal the Unpaid Balance, this Reimbursement Agreement shall terminate. 7. If on the Maturity Date, after application of the net proceeds of any Future Project A Improvement Bonds, any portion of the Unpaid Balance remains unpaid, such Unpaid Balance shall be canceled and for all purposes this Reimbursement Agreement shall be deemed to have been conclusively and irrevocably PAID IN FULL, and such Unpaid Balance shall no longer be deemed to be payable; provided, however, if any Assessment Revenues remain due and payable and are uncollected on the Maturity Date, such Assessment Revenues, when, as, and if collected after the Maturity Date, shall first be applied to any amounts due in connection with outstanding Series 2015 Bonds and outstanding Future Project A Improvement Bonds; and, then paid to the Developer and applied against the Unpaid Balance. 8. The Developer has the right to convey, transfer, assign, mortgage, pledge, or otherwise encumber, in whole or in part without the consent of (but with written notice to) the Town, the Developer’s right, title, or interest under this Reimbursement Agreement including, but not limited to, any right, title, or interest of the Developer in and to payment of the Unpaid Balance, whether such payment is from (i) amounts transferred to the Reimbursement Fund from the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund under the Series 2015 Indenture, or (ii) net proceeds of any Future Project A Improvement Bonds (any of the foregoing, a “Transfer,” and the person or entity to whom the Transfer is made, a “Transferee”). Notwithstanding the foregoing, however, no Transfer shall be effective until five days after notice of the Transfer is received by the Town, including for each Transferee the information required by Section 16. The Town may rely on any notice of a Transfer received from the Developer without obligation to investigate or confirm the validity or occurrence of such Transfer. The Developer waives all rights or claims against the Town for any such funds provided to a third party as a result of a Transfer for which the Town has received notice, and the Developer’s sole remedy shall be to seek the funds directly from the third party. 9. The inability or failure of the Town to issue Future Project A Improvement Bonds shall not constitute a Failure or Default under this Reimbursement Agreement. 10. The obligations of the Town under this Reimbursement Agreement are non-recourse and payable only from (i) amounts transferred to the Reimbursement Fund from the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund under the Series 2015 Indenture, or (ii) net proceeds of any Future Project A Improvement Bonds; and such obligations do not create a debt or other obligation payable from any other Town revenues, taxes, income, or property. None of the Town or any of its elected or appointed officials or any of its officers or employees shall incur any liability hereunder to the Developer or any other party in their individual capacities by reason of this Reimbursement Agreement or their acts or omissions under this Reimbursement Agreement. 11. Following the Town’s inspection and approval of the Improvement Project A improvements, in accordance with the provisions of the Construction Funding Agreement and until Future Project A Improvement Bonds are issued, if ever, there will be no conditions or defenses to the obligation of the Town to use amounts transferred to the Reimbursement Fund from the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund under the Series 2015 Indenture to pay the Unpaid Balance. 12. Following the Town’s inspection and approval of the Improvement Project A improvements and if Future Project A Improvement Bonds are issued, there will be no conditions or defenses to the obligation of the Town to use the net proceeds of any Future Project A Improvement Bonds to pay the Unpaid Balance and to pledge the Assessment Revenues as security for such Future Project A Improvement Bonds, other than the Town's right to pay costs of issuance of such Future Project A Improvement Bonds and/or other costs incurred by the Town relating to the Improvement Project A improvements. 13. Nothing in this Reimbursement Agreement is intended to constitute a waiver by the Town of any remedy the Town may otherwise have outside this Reimbursement Agreement against any person or entity involved in the design, construction, or installation of the Improvement Project A improvements. 14. The Town will consider issuing one or more series of Future Project A Improvement Bonds to pay the Unpaid Balance; however, the Parties covenant and acknowledge that approval of the issuance of any Future Project A Improvement Bonds by the Town Council is a governmental function within the Town’s sole discretion and is further subject to the conditions contained in the Construction Funding Agreement. 15. This Reimbursement Agreement is being executed and delivered, and is intended to be performed in the State of Texas. Except to the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the State of Texas shall govern the validity, construction, enforcement, and interpretation of this Reimbursement Agreement. In the event of a dispute involving this Reimbursement Agreement, venue for such dispute shall lie in any court of competent jurisdiction in Tarrant County, Texas. 16. Any notice required or contemplated by this Reimbursement Agreement shall be deemed given at the addresses shown below: (i) when delivered by a national company such as FedEx or UPS with evidence of delivery signed by any person at the delivery address regardless of whether such person was the named addressee; or (ii) 72 hours after the notice was deposited with the United States Postal Service, Certified Mail, Return Receipt Requested. Any Party may change its address by delivering written notice of such change in accordance with this section. Town: Town of Westlake, Texas Attn: Town Manager 3 Village Circle, Suite 202 Westlake, Texas 76262 With a copy to: Town Attorney L. Stanton Lowry 3 Village Circle, Suite 202 Westlake, Texas 76262 Developer: Maguire Partners – Solana Land, L.P., Attn: Mehdad Moayedi 1800 Valley View Lane, Suite 300 Farmers Branch, Texas 75234 FAX: 817.391.2501 With a copy to: Miklos Law, PLLC Attn: Robert Miklos 1800 Valley View Lane, Suite 360 Farmers Branch, Texas 75234 E-mail: robert@mikloslegal.com 17. If any provision of this Reimbursement Agreement is held invalid by any court, such holding shall not affect the validity of the remaining provisions, and the remainder of this Reimbursement Agreement shall remain in full force and effect. 18. Failure; Default; Remedies. a. If either Party fails to perform an obligation imposed on such Party by this Reimbursement Agreement (a “Failure”) and such Failure is not cured after written notice and the expiration of the cure periods provided in this section, then such Failure shall constitute a “Default.” Upon the occurrence of a Failure by a non-performing Party, the other Party shall notify the non-performing Party and all Transferees of the non-performing Party in writing specifying in reasonable detail the nature of the Failure. The non-performing Party to whom notice of a Failure is given shall have at least 30 days from receipt of the notice within which to cure the Failure; however, if the Failure cannot reasonably be cured within 30 days and the non-performing Party has diligently pursued a cure within such 30-day period and has provided written notice to the other Party that additional time is needed, then the cure period shall be extended for an additional 30 day period so long as the non-performing Party is diligently pursuing a cure. Any Transferee shall have the right, but not the obligation, to cure any alleged Failure by the Developer within the same time periods that are provided to the Developer. The election by a Transferee to cure a Failure by the Developer shall constitute a cure by the Developer but shall not obligate the Transferee to be bound by this Reimbursement Agreement unless the Transferee agrees to be bound. b. If the Developer is in Default, the Town’s sole and exclusive remedy shall be to seek specific enforcement of this Reimbursement Agreement. No Default by the Developer, however, shall: (1) affect the obligations of the Town to use the amounts transferred to the Reimbursement Fund from the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund under the Series 2015 Indenture and the net proceeds of Future Project A Improvement Bonds as provided in Sections 10 and 11 of this Reimbursement Agreement; or (2) entitle the Town to terminate this Reimbursement Agreement. c. If the Town is in Default, the Developer’s sole and exclusive remedies shall be to: (1) seek a writ of mandamus to compel performance by the Town; (2) seek specific enforcement of this Reimbursement Agreement; or (3) terminate this Reimbursement Agreement. 19. In the event of any conflict between this Reimbursement Agreement and any other agreement between the Town and the Developer directly or indirectly related to the amounts transferred to the Reimbursement Fund from the Developer Reimbursement Pledged Revenue Fund under the Series 2015 Indenture and the net proceeds of Future Project A Improvement Bonds, the Parties intend that the provisions and intent of this Reimbursement Agreement shall control. 20. The failure by a Party to insist upon the strict performance of any provision of this Reimbursement Agreement by the other Party, or the failure by a Party to exercise its rights upon a Default by the other Party shall not constitute a waiver of such Party’s right to insist and demand strict compliance by such other Party with the provisions of this Reimbursement Agreement. 21. The Town does not waive or surrender any of its governmental powers, immunities, or rights except to the extent permitted by law and necessary to allow the Developer to enforce its remedies under this Reimbursement Agreement. 22. Nothing in this Reimbursement Agreement, expressed or implied, is intended to or shall be construed to confer upon or to give to any person or entity other than the Town and the Developer any rights, remedies, or claims under or by reason of this Reimbursement Agreement, and all covenants, conditions, promises, and agreements in this Reimbursement Agreement shall be for the sole and exclusive benefit of the Town and the Developer. 23. This Reimbursement Agreement may be amended only by written agreement of the Parties. 24. This Reimbursement Agreement may be executed in counterparts, each of which shall be deemed an original. [Signature pages to follow] IN WITNESS WHEREOF, the Parties have caused this Reimbursement Agreement to be executed as of January 15, 2015. ATTEST: TOWN OF WESTLAKE ________________________ By: ____________________ Name: Kelly Edwards Name: Laura Wheat Title: Town Secretary Title: Mayor APPROVED AS TO FORM _______________________ Name: L. Stanton Lowry Title: Town Attorney DEVELOPER Maguire Partners-Solana Land, L.P. a Texas limited partnership, By: __________________________ Mehrdad Moayedi, its manager Ordinance 742 Page 6 of 7 EXHIBIT C LANDOWNER AGREEMENT ‐1‐ LANDOWNER AGREEMENT This LANDOWNER AGREEMENT (the “Agreement”), is entered into as of January 15, 2015, among the Town of Westlake, Texas (the “Town”), a general law municipality of the State of Texas (the "State"), and Maguire Partners-Solana Land, LP, a Texas limited partnership (the “Landowner”). RECITALS: WHEREAS, Landowner owns the Assessed Parcels described by a metes and bounds description attached as Exhibit A to this Agreement and which is incorporated herein for all purposes, comprising all of the taxable, privately-owned land described in Exhibit A (the “Landowner Parcel”) which is coterminous with the Solana Public Improvement District (the “District”) in the Town; and WHEREAS, the Town Council has adopted an assessment ordinance for the Authorized Improvements (including all exhibits and attachments thereto, the “Assessment Ordinance”) and the Service and Assessment Plan included as an exhibit to the Assessment Ordinance, a copy of which Service and Assessment Plan, is attached hereto as Exhibit B (the “Service and Assessment Plan”) and which is incorporated herein for all purposes, and has levied an assessment on each Assessed Parcel in the District (as identified in the Service and Assessment Plan) that will be pledged as the security for the payment of bonds (the “Bonds”) to be issued for the purpose of paying the costs of constructing the Authorized Improvements that will benefit the Assessed Property (as defined in the Service and Assessment Plan); and WHEREAS, the Covenants, Conditions and Restrictions attached to this Agreement as Exhibit C and which are incorporated herein for all purposes, include the statutory notification required by Texas Property Code, Section 5.014, as amended, to be provided by the seller of residential property that is located in a public improvement district established under Chapter 372 of the Texas Local Government Code, as amended (the "PID Act"), to the purchaser. NOW, THEREFORE, for and in consideration of the mutual promises, covenants, obligations and benefits hereinafter set forth, the Town and the Landowner hereby contract, covenant and agree as follows: DEFINITIONS; APPROVAL OF AGREEMENTS Definitions. Capitalized terms used but not defined herein (including each exhibit hereto) shall have the meanings ascribed to them in the Service and Assessment Plan. Affirmation of Recitals. The findings set forth in the Recitals of this Agreement are hereby incorporated as the official findings of the Town Council. ‐2‐ I. AGREEMENTS OF LANDOWNER A. Affirmation and Acceptance of Agreements and Findings of Benefit. Landowner hereby ratifies, confirms, accepts, agrees to, and approves: (i) the creation and boundaries of the District, and the boundaries of the Landowner’s Parcel which are coterminous with the District, all as shown on Exhibit A, and the location and development of the Authorized Improvements on the Landowner Parcel and on the property within the District; (ii) the determinations and findings as to the benefits by the Town Council in the Service and Assessment Plan and the Assessment Ordinance; (iii) the Assessment Ordinance and the Service and Assessment Plan. B. Acceptance and Approval of Assessments and Lien on Property. Landowner consents to, agrees to, acknowledges and accepts the following: (i) each Assessment levied on the Landowner’s Parcel within the District, as shown on the assessment rolls attached as Appendix E to the Service and Assessment Plan (the “Assessment Rolls”); (ii) the Authorized Improvements specially benefit the District, and the Landowner’s Parcel, in an amount in excess of the Assessment levied on the Landowner’s Parcel within the District, as such Assessment is shown on the Assessment Rolls; (iii) each Assessment is final, conclusive and binding upon Landowner and any subsequent owner of the Landowner’s Parcel, regardless of whether such landowner may be required to prepay a portion of, or the entirety of, such Assessment upon the occurrence of a Mandatory Prepayment Event (as defined herein); (iv) the obligation to pay the Assessment levied on the Landowner’s Parcel owned by it when due and in the amount required by and stated in the Service and Assessment Plan and the Assessment Ordinance; (v) each Assessment or reassessment, with interest, the expense of collection, and reasonable attorney’s fees, if incurred, is a first and prior lien against the Landowner’s Parcel, superior to all other liens and monetary claims except liens or monetary claims for state, county, school district, or municipal ad valorem taxes, and is a personal liability of and charge against the owner of the Landowner’s Parcel regardless of whether such owner is named; ‐3‐ (vi) the Assessment lien on the Landowner’s Parcel is a lien and covenant that runs with the land and is effective from the date of the Assessment Ordinance and continues until the Assessment is paid and may be enforced by the governing body of the Town in the same manner that an ad valorem tax lien against real property may be enforced by the Town; (vii) delinquent installments of the Assessment shall incur and accrue interest, penalties, and attorney’s fees as provided in the PID Act; (viii) the owner of an Landowner’s Parcel may pay at any time the entire Assessment, with interest that has accrued on the Assessment, on any parcel in the Landowner’s Parcel; (ix) the Annual Installments of the Assessments (as defined in the Service and Assessment Plan and Assessment Rolls) may be adjusted, decreased and extended; and, the assessed parties shall be obligated to pay their respective revised amounts of the annual installments, when due, and without the necessity of further action, assessments or reassessments by the Town, the same as though they were expressly set forth herein; and (x) Landowner has received, or hereby waives, all notices required to be provided to it under State law, including the PID Act, prior to the Effective Date (defined herein). C. Mandatory Prepayment of Assessments. Landowner agrees and acknowledges that Landowner may have an obligation to prepay an Assessment upon the occurrence of a “Mandatory Prepayment Event” as described in the Service and Assessment Plan. D. Notice of Assessments. Landowner further agrees as follows: (i) the Covenants, Conditions and Restrictions attached hereto as Exhibit C shall be terms, conditions and provisions running with the Landowner’s Parcel and shall be recorded (the contents of which shall be consistent with the Assessment Ordinance and the Service and Assessment Plan as reasonably determined by the Town), in the records of the County Clerk of Tarrant County, as a lien and encumbrance against such Landowner’s Parcel, and Landowner hereby authorizes the Town to so record such documents against the Landowner’s Parcel owned by Landowner; (ii) reference to the Covenants, Conditions and Restrictions attached hereto as Exhibit C shall be included on all recordable subdivision plats and such plats shall be recorded in the real property records of Tarrant County, Texas; (iii) in the event of any subdivision, sale, transfer or other conveyance by the Landowner of the right, title or interest of the Landowner in the Landowner’s Parcel or any part thereof, the Landowner’s Parcel, or any such part thereof, shall continue to be bound ‐4‐ by all of the terms, conditions and provisions of such Covenants, Conditions and Restrictions and any purchaser, transferee or other subsequent owner shall take such Landowner’s Parcel subject to all of the terms, conditions and provisions of such Covenants, Conditions and Restrictions; and (iv) Landowner shall comply with, and shall contractually obligate (and promptly provide written evidence of such contractual provisions to the Town) any party who purchases any Landowner’s Parcel owned by Landowner, or any portion thereof, for the purpose of constructing residential properties that are eligible for “homestead” designations under State law, to comply with, the Homebuyer Education Program described on Exhibit D to this Agreement. Such compliance obligation shall terminate as to each Lot (as defined in the Service and Assessment Plan) if, and when, (i) a final certificate of occupancy for a residential unit on such Lot is issued by the Town, and (ii) there is a sale of a Lot to an individual homebuyer, it being the intent of the undersigned that the Homebuyer Education Program shall apply only to a commercial builder who is in the business of constructing and/or selling residences to individual home buyers (a “Builder”) but not to subsequent sales of such residence and Lot by an individual home buyer after the initial sale by a Builder. Notwithstanding the provisions of this Section, upon the Landowner’s request and the Town’s consent, in the Town’s sole and absolute discretion, the Covenants, Conditions and Restrictions may be included with other written restrictions running with the land on property within the District, provided they contain all the material provisions and provide the same material notice to prospective property owners as does the document attached as Exhibit C. II. OWNERSHIP AND CONSTRUCTION OF AUTHORIZED IMPROVEMENTS A. Ownership and Transfer of Authorized Improvements. Landowner acknowledges that all of the Authorized Improvements and the land (or easements, as applicable) needed therefor shall be owned by the Town as constructed and Landowner will execute such conveyances and/or dedications of public rights of way and easements as may be reasonably required to evidence such ownership, as generally described on the current plats of the property within the District. B. Grant of Easement and License, Construction of Authorized Improvements. (i) Any subsequent owner of the Landowner’s Parcel shall, upon the request of the Town or Developer, grant and convey to the Town or Developer and its contractors, materialmen and workmen a temporary license and/or easement, as appropriate, to construct the Authorized Improvements on the property within the District, to stage on the property within the District construction trailers, building materials and equipment to be used in connection with such construction of the Authorized Improvements and for passage ‐5‐ and use over and across parts of the property within the District as shall be reasonably necessary during the construction of the Authorized Improvements. Any subsequent owner of the Landowner’s Parcel may require that each contractor constructing the Authorized Improvements cause such owner of the Landowner’s Parcel to be indemnified and/or named as an additional insured under liability insurance reasonably acceptable to such owner of the Landowner’s Parcel. The right to use and enjoy any easement and license provided above shall continue until the construction of the Authorized Improvements is complete; provided, however, any such license or easement shall automatically terminate upon the recording of the final plat for the Landowner’s Parcel in the real property records of Tarrant County, Texas. (ii) Landowner hereby agrees that any right or condition imposed by the Development Agreement, or other agreement, with respect to the Assessment has been satisfied, and that Landowner shall not have any rights or remedies against the Town under the Development Agreement, or under any law or principles of equity concerning the Assessments, with respect to the formation of the District, approval of the Service and Assessment Plan and the Town’s levy and collection of the Assessments. III. COVENANTS AND WARRANTIES; MISCELLANEOUS A. Special Covenants and Warranties of Landowner. Landowner represents and warrants to the Town as follows: (i) Landowner is duly organized, validly existing and, as applicable, in good standing under the laws of the state of its organization and has the full right, power and authority to enter into this Agreement, and to perform all the obligations required to be performed by Landowner hereunder. (ii) This Agreement has been duly and validly executed and delivered by, and on behalf of, Landowner and, assuming the due authorization, execution and delivery thereof by and on behalf of the Town and the Landowner, constitutes a valid, binding and enforceable obligation of such party enforceable in accordance with its terms. This representation and warranty is qualified to the extent the enforceability of this Agreement may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors in general. (iii) Neither the execution and delivery hereof, nor the taking of any actions contemplated hereby, will conflict with or result in a breach of any of the provisions of, or constitute a default, event of default or event creating a right of acceleration, termination or cancellation of any obligation under, any instrument, note, mortgage, contract, ‐6‐ judgment, order, award, decree or other agreement or restriction to which Landowner is a party, or by which Landowner or Landowner’s Parcel is otherwise bound. (iv) Landowner is, subject to all matters of record in the Tarrant County, Texas Real Property Records, the sole owner of the Landowner’s Parcel. (v) The Landowner’s Parcel owned by Landowner is not subject to, or encumbered by, any covenant, lien, encumbrance or agreement which would prohibit (i) the creation of the District, (ii) the levy of the Assessments, or (iii) the construction of the Authorized Improvements on those portions of the property within the District which are to be owned by the Town, as generally described on the current plats of the property within the District (or, if subject to any such prohibition, the approval or consent of all necessary parties thereto has been obtained). (vi) Landowner covenants and agrees to execute any and all documents necessary, appropriate or incidental to the purposes of this Agreement, as long as such documents are consistent with this Agreement and do not create additional liability of any type to, or reduce the rights of, such Landowner by virtue of execution thereof. B. Waiver of Claims Concerning Authorized Improvements. The Landowner, with full knowledge of the provisions, and the rights thereof pursuant to such provisions, of applicable law, waives any claims against the Town and its successors, assigns and agents, pertaining to the installation of the Authorized Improvements. C. Notices. Any notice or other communication to be given to the Town or Landowner under this Agreement shall be given by delivering the same in writing to: To the Town: Attn: Thomas Brymer Town Manager 3 Village Circle, Suite 202 Westlake, Texas 76262 With a copy to: Attn: L. Stanton Lowry Town Attorney Boyle & Lowry, L.L.P. 4201 Wingren, Suite 108 Irving, Texas 75062 To the Developer: Attn: Mehrdad Moayedi 1800 Valley View Lane, Suite 300 Farmers Branch, Texas 75234 ‐7‐ With a copy to: Miklos, PLLC Attn: Robert Miklos 1800 Valley View Lane, Suite 360 Farmers Branch, Texas 75234 Any notice sent under this Agreement (except as otherwise expressly required) shall be written and mailed, or sent by electronic or facsimile transmission confirmed by mailing written confirmation at substantially the same time as such electronic or facsimile transmission, or personally delivered to an officer of the recipient as the address set forth herein. Each recipient may change its address by written notice in accordance with this Section. Any communication addressed and mailed in accordance with this provision shall be deemed to be given when so mailed, any notice so sent by electronic or facsimile transmission shall be deemed to be given when receipt of such transmission is acknowledged, and any communication so delivered in person shall be deemed to be given when receipted for, or actually received by, the addressee. D. Parties in Interest. This Agreement is made solely for the benefit of the Town and the Landowner and is not assignable, except, in the case of Landowner, in connection with the sale or disposition of all or substantially all of the parcels which constitute the Landowner’s Parcel. However, the parties expressly agree and acknowledge that the Town, the Landowner, each current owner of any parcel which constitutes the Landowner’s Parcel, and the holders of bonds issued by the Town to finance the costs of the Authorized Improvements and which are secured by a pledge of the Assessments or any part thereof, are express beneficiaries of this Agreement and shall be entitled to pursue any and all remedies at law or in equity to enforce the obligations of the parties hereto. This Agreement shall be recorded in the real property records of Tarrant County, Texas. E. Amendments. This Agreement may be amended only by written instrument executed by the Town and the Landowner. No termination or amendment shall be effective until a written instrument setting forth the terms thereof has been executed by the then-current owners of the property within the District and recorded in the Real Property Records of Tarrant County, Texas. F. Effective Date. This Agreement shall become and be effective (the “Effective Date”) upon the date of final execution by the latter of the Town and the Landowner and shall be valid and enforceable on said date and thereafter. ‐8‐ G. Estoppels. Within 10 days after written request from a party hereto, the other party shall provide a written certification, indicating whether this Agreement remains in effect as to the Landowner’s Parcel, and whether any party is then in default hereunder. H. Termination. This Agreement shall terminate and be of no further force and effect as to the Landowner’s Parcel upon payment in full of the Assessment(s) against such Landowner’s Parcel. [Signature pages to follow] ‐9‐ EXECUTED by the Town and Landowner on this January 15, 2015. ATTEST: TOWN OF WESTLAKE ________________________ By: ____________________ Name: Kelly Edwards Name: Laura Wheat Title: Town Secretary Title: Mayor APPROVED AS TO FORM _______________________ Name: L. Stanton Lowry Title: Town Attorney [Signature Page Landowner Agreement] ‐10‐ LANDOWNER Maguire Partners-Solana Land, L.P. a Texas limited partnership, By: __________________________ Mehrdad Moayedi, its manager STATE OF TEXAS ) ) COUNTY OF __________ ) This instrument was acknowledged before me on the __ day of ____________, 2014, by Mehrdad Moayedi in his capacity as Manager of Maguire Partners-Solana Land, L.P., known to be the person whose name is subscribed to the foregoing instrument, and that he executed the same on behalf of and as the act of Manager of Maguire Partners-Solana Land, L.P.. _____________________________________ Notary Public, State of Texas My Commission Expires: ________________________________ [Signature Page Landowner Agreement] ‐11‐ EXHIBIT A METES AND BOUNDS DESCRIPTION OF LANDOWNER’S PARCEL 85.90 Acres BEING a tract of land situated in the C.M. Throop Survey, Abstract No. 1510, the W. Medlin Survey, Abstract No. 1958, the William Pea Survey, Abstract No. 1246 and the Joseph Henry Survey, Abstract No. 742, Tarrant County, Texas and being a portion of Tract 2 as described in the Special Warranty Deed to MAGUIRE PARTNERS – SOLANA LAND, L.P. as recorded in Volume 16858, Page 176 of the Deed Records of Tarrant County, Texas and being more particularly described as follows: BEGINNING at a 5/8 inch iron rod found with “Huitt-Zollars” cap at the southwest corner of Lot 2, Block 1, Westlake/Southlake Park Addition No. 1, an addition to the Town of Westlake, Texas as recorded in Volume 388-214, Page 78 of the Plat Records of Tarrant County, Texas, being on the northeasterly right-of-way line of Kirkwood Boulevard, a variable width right-of-way as dedicated by said Westlake/Southlake Park Addition No. 1 and being the beginning of a non- tangent curve to the left having a central angle of 9 degrees 13 minutes 11 seconds, a radius of 1428.00 feet and being subtended by a chord which bears North 47 degrees 49 minutes 50 seconds West a distance of 229.54 feet; THENCE along the northeasterly right-of-way line of Kirkwood Boulevard, a variable with right- of-way, as described in Dedication Deed to the Town of Westlake as recorded under instrument No. D208427746, Deed Records of Tarrant County, Texas the following: Along said curve to the left an arc distance of 229.79 feet to a ½ inch rod found with Graham cap at the end of said curve; North 52 degrees 30 minutes 14 seconds west a distance of 32.60 feet to ½ inch iron rod found with Graham cup beginning of a curve to the right having a central angle of 18 degrees 54 minutes 48 seconds, a radius of 612.00 feet and being subtended by a chord which bears North 43 degrees 02 minutes 03 seconds West a distance of 201.11 feet; Along said curve to the right an arc distance of 202.02 feet to a ½ inch iron rod found with Graham cap at the beginning of a compound curve to the right having a central angle of 24 degrees 06 minutes 47 seconds, a radius of 812.00 feet and being subtended by a chord which bears North 21 degrees 32 minutes 03 seconds West a distance of 339.22 feet; Along said curve to the right an arc distance of 341.73 feet to a ½ inch iron rod found with Graham cap at the end of a said curve; North 09 degrees 28 minutes 39 seconds West a distance of 132.24 feet to a ½ inch iron rod found with Graham cap at the beginning of a curve to the left having a central angle of 45 degrees 43 ‐12‐ minutes 19 seconds, a radius of 708.00 feet and being subtended by a chord which bears North 32 degrees 20 minutes 19 seconds West a distance of 550.11 feet; Along said curve to the left an arc distance of 564.98 feet to a ½ inch iron rod found with Graham cap at the end of said curve; North 55 degrees 11 minutes 58 seconds West a distance of 190.50 feet to a ½ inch iron rod found with Graham cap; North 08 degrees 56 minutes 27 seconds West a distance off 21.41 feet to a ½ inch iron rod found with Graham cap on the easterly right-of-way line of Precinct Line Road, a variable width right- of-way, as described in Dedication Deed to Town of Westlake as recorded under Instrument No. D208427746, Deed Records of Tarrant County, Texas and being the beginning of a non-tangent curve to the left having a central angle of 16 degrees 09 minutes 21 seconds, a radius of 1,432.50 feet and being subtended by a chord which bears North 27 degrees 07 minutes 42 seconds East a distance of 402.59 feet; THENCE along the easterly right-of-way line of Precinct Line Road, the following; Along said curve to the left an arc distance of 403.92 feet to a ½ inch iron rod found with Graham cap at the end of said curve; North 18 degrees 47 minutes 24 seconds East a distance of 185.36 feet to a ½ inch iron rod found with Graham cap; North 17 degrees 03 minutes 03 seconds East a distance of 322.64 feet to a ½ inch iron rod found on the southerly right-of-way line of State Highway 114 (a variable width ROW); THENCE along the southerly right-of-way line of State Highway 114, the following; North 60 degrees 06 minutes 26 seconds East a distance of 44.54 feet to a Texas Department of Transportation brass disk in concrete found; South 71 degrees 03 minutes 32 seconds East a distance of 254.55 feet to a point for corner from which a Texas Department of Transportation brass disk in concrete found bears North 10 degrees 48 minutes 28 seconds West a distance of 0.43 feet; South 77 degrees 26 minutes 06 seconds East a distance of 746.74 feet to a Texas Department of Transportation brass disk in concrete found; South 71 degrees 03 minutes 31 seconds East a distance of 1443.85 feet to a Texas Department of Transportation brass disk in concrete found; South 62 degrees 34 minutes 19 seconds East a distance of 404.34 feet to a Texas Department of Transportation brass disk in concrete found at the beginning of a curve to the right having a central ‐13‐ angle of 08 degrees 19 minutes 09 seconds, a radius of 2,709.79 feet and being subtended by a chord which bears South 58 degrees 24 minutes 45 seconds East a distance of 393.11 feet; Along said curve to the right an arc distance of 393.45 feet to a Texas Department of Transportation brass disk in concrete found; South 54 degrees 15 minutes 11 seconds East a distance of 399.24 feet to a Texas Department of Transportation brass disk in concrete found; South 64 degrees 19 minutes 50 seconds East a distance of 56.55 feet to a 5/8 inch iron rod found with “Huitt-Zollars” cap at the beginning of a non-tangent curve to the right having a central angle of 02 degrees 13 minutes 56 seconds, a radius of 2,754.79 feet and being subtended by a chord which bears South 43 degrees 17 minutes 37 seconds East a distance of 107.32 feet; Along said curve to the right n arc distance of 107.33 feet to a ½ inch rod found with “Huitt- Zollars” cap for the northeast corner of Lot 1, Block 1, of the aforementioned Westlake/Southlake Park Addition No. 1; THENCE departing the southerly right-of-way line of State Highway 114, North 90 degrees 00 minutes 00 seconds west along the north line of said Lot 1, Block 1, a distance of 2,132.54 feet to a 5/8 inch iron rod with “Carter-Burgess” cap found for the northwest corner of said Lot 2, Block 1, Westlake/Southlake Park Addition No. 1; THENCE South 52 degrees 00 minutes 00 seconds West along the northwesterly line said Lot 2, Block 1, a distance of 1000.00 feet to a 5/8 inch iron rod with “Carter & Burgess” cap found at an angle point in the west line of Lot 2, Block 1; THENCE along the west line of said Lot 2, Block 1, South 00 degrees 00 minutes 00 seconds East a distance of 168.55 feet to the POINT OF BEGINNING and containing 85.90 acres of land, more or less. ‐14‐ EXHIBIT B SERVICE AND ASSESSMENT PLAN ‐15‐ EXHIBIT C DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS This DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (as it may be amended from time to time, this “Declaration”) is made as of _____________________ by Maguire Partners – Solana Land, L.P. a Texas limited partnership (the “Landowner”). RECITALS: A. The Landowner holds record title to that portion of the real property located in Tarrant County, Texas, which is described in the attached Exhibit A (the “Landowner’s Parcel”). B. The Town Council of the Town of Westlake (the “Town Council”) upon a petition requesting the establishment of a public improvement district covering the property within the District to be known as the Solana Public Improvement District (the “District”) by the then current owners of more than 50% of the appraised value of the taxable real property and more than 50% of the area of all taxable real property within the area requested to be included in the District created such District, in accordance with the Public Improvement District Assessment Act, Chapter 372, Texas Local Government Code, as amended (the “PID Act”). C. The Town Council has adopted an assessment ordinance to levy assessments for the Authorized Improvements (including all exhibits and attachments thereto, the “Assessment Ordinance”) and the Service and Assessment Plan included as an exhibit to the Assessment Ordinance (as amended from time to time, the “Service and Assessment Plan”), and has levied the assessments (as amended from time to time, the “Assessments”) on property in the District. D. The statutory notification required by Texas Property Code, Section 5.014, as amended, to be provided by the seller of residential property that is located in a public improvement district established under Chapter 372 of the Texas Local Government Code, as amended, to the purchaser, is incorporated into these Covenants, Conditions and Restrictions. DECLARATIONS: NOW, THEREFORE, the Landowner hereby declares that the Landowner’s Parcel is and shall be subject to, and hereby imposes on the Landowner’s Parcel, the following covenants, conditions and restrictions: 1. Acceptance and Approval of Assessments and Lien on Property: (a) Landowner accepts each Assessment levied on the Landowner’s Parcel owned by such Landowner. (b) The Assessment (including any reassessment, the expense of collection, and reasonable attorney’s fees, if incurred) is (a) a first and prior lien (the “Assessment Lien”) against the property assessed, superior to all other liens or claims except for liens or claims for state, county, school district or municipality ad valorem property ‐16‐ taxes whether now or hereafter payable, and (b) a personal liability of and charge against the owners of the property to the extent of their ownership regardless of whether the owners are named. The Assessment Lien is effective from the date of the Assessment Ordinance until the Assessments are paid and may be enforced by the Town in the same manner as an ad valorem property tax levied against real property that may be enforced by the Town. The owner of any assessed property may pay, at any time, the entire Assessment levied against any such property. Foreclosure of an ad valorem property tax lien on property within the District will not extinguish the Assessment or any unpaid but not yet due annual installments of the Assessment, and will not accelerate the due date for any unpaid and not yet due annual installments of the Assessment. It is the clear intention of all parties to these Declarations of Covenants, Conditions and Restrictions, that the Assessments, including any annual installments of the Assessments (as such annual installments may be adjusted, decreased or extended), are covenants that run with the Landowner’s Parcel and specifically binds the Landowner, its successors and assigns. In the event of delinquency in the payment of any annual installment of the Assessment, the Town is empowered to order institution of an action in district court to foreclose the related Assessment Lien, to enforce personal liability against the owner of the real property for the Assessment, or both. In such action the real property subject to the delinquent Assessment may be sold at judicial foreclosure sale for the amount of such delinquent property taxes and Assessment, plus penalties, interest and costs of collection. 2. Landowner or any subsequent owner of the Landowner’s Parcel waives: (a) any and all defects, irregularities, illegalities or deficiencies in the proceedings establishing the District and levying and collecting the Assessments or the annual installments of the Assessments; (b) any and all notices and time periods provided by the PID Act including, but not limited to, notice of the establishment of the District and notice of public hearings regarding the levy of Assessments by the Town Council concerning the Assessments; (c) any and all defects, irregularities, illegalities or deficiencies in, or in the adoption of, the Assessment Ordinance by the Town Council; (d) any and all actions and defenses against the adoption or amendment of the Service and Assessment Plan, the Town’s finding of a ‘special benefit’ pursuant to the PID Act and the Service and Assessment Plan, and the levy of the Assessments; and (e) any right to object to the legality of any of the Assessments or the Service and Assessment Plan or to any of the previous proceedings connected therewith which occurred prior to, or upon, the Town Council’s levy of the Assessments. ‐17‐ 3. Amendments: This Declaration may be terminated or amended only by a document duly executed and acknowledged by the then-current owner(s) of the Landowner’s Parcel and the Town. No such termination or amendment shall be effective until a written instrument setting forth the terms thereof has been executed by the parties by whom approval is required as set forth above and recorded in the real Property Records of Tarrant County, Texas. 4. Third Party Beneficiary: The Town is a third party beneficiary to this Declaration and may enforce the terms hereof. 5. Notice to Subsequent Purchasers: Upon the sale of a dwelling unit within the District, the purchaser of such property shall be provided a written notice that reads substantially similar to the following: TEXAS PROPERTY CODE SECTION 5.014 NOTICE OF OBLIGATION TO PAY PUBLIC IMPROVEMENT DISTRICT ASSESSMENT TO THE TOWN OF WESTLAKE, TARRANT COUNTY, TEXAS CONCERNING THE ASSESSED PARCELS As the purchaser of this parcel of real property, you are obligated to pay an assessment to the Town of Westlake, Texas, for improvement projects undertaken by a public improvement district under Chapter 372 of the Texas Local Government Code, as amended. The amount of the assessment against your property may be paid in full at any time together with interest to the date of payment. If you do not pay the assessment in full, it will be due and payable in annual installments (including interest and collection costs). More information concerning the amount of the assessment and the due dates of that assessment may be obtained from the Town of Westlake, 3 Village Circle Westlake, Texas 76262 Your failure to pay the assessment or the annual installments could result in the foreclosure of your property. Signature of Purchaser(s)___________________________ Date:___________________ The seller shall deliver this notice to the purchaser before the effective date of an executory contract binding the purchaser to purchase the property. The notice may be given separately, as part of the contract during negotiations, or as part of any other notice the seller delivers to the purchaser. If the notice is included as part of the executory contract or another notice, the title of the notice prescribed by this section, the references to the street address and date in the notice, and the purchaser’s signature on the notice may be omitted. EXECUTED by the undersigned on the date set forth below to be effective as of the date first above written. ‐18‐ [Signature Page to Follow] LANDOWNER Maguire Partners-Solana Land, L.P. a Texas limited partnership, By: __________________________ Mehrdad Moayedi, its manager STATE OF TEXAS ) ) COUNTY OF __________ ) This instrument was acknowledged before me on the __ day of ____________, 2014, by Mehrdad Moayedi in his capacity as Manager of Maguire Partners-Solana Land, L.P., known to be the person whose name is subscribed to the foregoing instrument, and that he executed the same on behalf of and as the act of Manager of Maguire Partners-Solana Land, L.P.. _____________________________________ Notary Public, State of Texas My Commission Expires: ________________________________ ‐19‐ EXHIBIT D HOMEBUYER EDUCATION PROGRAM As used in this Exhibit D, the recorded Notice of the Authorization and Establishment of the Solana Public Improvement District and the Covenants, Conditions and Restrictions in Exhibit C of this Agreement are referred to as the “Recorded Notices.” 1. Any Landowner who is a Builder shall attach the Recorded Notices and the final Assessment Rolls for such Assessed Parcel (or if the Assessment Rolls are not available for such Assessed Parcel, then a schedule showing the maximum 30 year payment for such Assessed Parcel) as an addendum to any residential homebuyer’s contract. 2. Any Landowner who is a Builder shall provide evidence of compliance with 1 above, signed by such residential homebuyer, to the Town. 3. Any Landowner who is a Builder shall prominently display signage in its model homes, if any, substantially in the form of the Recorded Notices. 4. If prepared and provided by the Town, any Landowner who is a Builder shall distribute informational brochures about the existence and effect of the District in prospective homebuyer sales packets. 5. Any Landowner who is a Builder shall include Assessments in estimated property taxes, if such Builder estimates monthly ownership costs for prospective homebuyers. Ordinance 742 Page 7 of 7 EXHIBIT D REDEMPTION AGREEMENT MAGUIRE PARTNERS-SOLANA LAND, L.P. AGREEMENT REGARDING CONVEYANCE OF RIGHT OF REDEMPTION AND WAIVER OF AGRICULTURAL VALUATION – SOLANA PID This AGREEMENT REGARDING CONVEYANCE OF RIGHT OF REDEMPTION AND WAIVER OF AGRICULTURAL VALUATION – SOLANA PID (this “Agreement”), dated January 15, 2015 (the “Effective Date”), by and among Maguire Partners-Solana Land, L.P., a Texas limited partnership, (the “Developer”), the TOWN OF WESTLAKE, TEXAS (the “Town”), a municipal corporation, and U.S. BANK NATIONAL ASSOCIATION (the “Trustee”). The Town, the Trustee, and the Developer are sometimes referred to herein individually as a “Party,” and together as the “Parties.” RECITALS A. WHEREAS, the Developer owns a total of approximately 85.90 acres of land located in Tarrant County, Texas, as described in the attached Exhibit “A” (the “Property”), which Property is located within the Town’s corporate limits; B. WHEREAS, the Developer desires to develop the Property as a master-planned mixed-use development (the “Project”); C. WHEREAS, the Developer proposes to construct certain public improvements and transfer those improvements to the Town in accordance with the terms and provisions of (i) the Construction, Funding and Acquisition Agreement (the “Financing Agreement”) having an effective date of January 15, 2015, between the Developer and the Town, and (ii) the Economic Development Agreement, (the “Economic Development Agreement”), having an effective date of April 22, 2013, and entered into by and between the Developer and the Town, and (iii) the Development and Subdivision Improvement Agreement (the “Development Agreement”), having an effective date of October 29, 2013; D. WHEREAS, upon the petition of the Developer, on February 24, 2014, the Town authorized the formation of the Solana Public Improvement District (the “District”) on the Property in accordance with Chapter 372, Texas Local Government Code, as amended; E. WHEREAS, the Property constitutes all of the land within the District; F. WHEREAS, the Town intends to (upon satisfaction of the conditions and in accordance with the terms set forth in the Financing Agreement), at the request, and with the consent, approval and agreement of the Developer, adopt an ordinance levying special assessments on the Property (the “Assessment Ordinance”) and adopting the Service and Assessment Plan (as defined in the Financing Agreement) that provides for the construction and financing of Authorized Improvements (as defined in the Service and Assessment Plan) for the benefit of Assessed Property (as herein defined) within the District pursuant to the Service and Assessment Plan, payable in whole or in part by and from the Assessments (as defined in the Service and Assessment Plan) levied against Assessed Property, as more specifically provided for in the Service and Assessment Plan; G. WHEREAS, the Town intends to (upon satisfaction of the conditions and in accordance with the terms set forth in the Financing Agreement) levy Assessments on all or a portion of the Property (the “Assessed Property”) and issue bonds for payment of costs associated with construction and/or acquisition of the Authorized Improvements included in the Service and Assessment Plan, as such plan may be amended from time to time; H. WHEREAS, pursuant to the Service and Assessment Plan, the Town will maintain Assessment Rolls (as defined in the Service and Assessment Plan) that identify all parcels within the District that are Assessed Property and all parcels that are not subject to an assessment (the “Non-Benefitted Property”); I. WHEREAS, as the Property is developed, portions of the Assessed Property may be converted into Non-Benefitted Property and the Town will update the Assessment Rolls from time to time to identify Assessed Property and Non-Benefitted Property within the District; J. WHEREAS, from the proceeds of the bonds the Town issues in connection with the Authorized Improvements, the Town will, upon satisfaction of the conditions and in accordance with the terms set forth in the Financing Agreement, the Economic Development Agreement, and the Development Agreement, acquire and accept those certain Authorized Improvements provided for in the Financing Agreement and the Developer will be paid or reimbursed for all or a portion of the costs of acquisition, construction, and improvement of the Authorized Improvements; and K. WHEREAS, as a condition precedent to the Town’s performance of its obligations under the Financing Agreements, the Developer has agreed to execute this Agreement conveying all rights to redeem any portion of the Property that is subject to an Assessment and has an agricultural use valuation following a tax sale, and to execute and deliver into escrow with the Trustee multiple originals of waivers of special appraisal in the form attached as Exhibit “B” hereto (the “Agricultural Use Waiver”); and L. WHEREAS, U.S. Bank National Association is the trustee under the Indenture (as defined in the Financing Agreement). NOW, THEREFORE, in consideration of the premises set forth above, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows: SECTION 1. DEFINITIONS (a) “Assessed Property” shall include any portion of the Property that is subject to an Assessment levied pursuant to the Assessment Ordinance and identified on the Assessment Rolls maintained by the Town. (b) “Developer’s Continuing Disclosure Agreement” shall mean the agreement entered into by the Developer and the Trustee in which the Developer, and its successors and assigns, covenant to provide certain information, including information regarding delinquent tax and Assessment payments, to the Trustee. (c) “Exempt Property” shall include any portion of the Property that is designated for agricultural use (which shall include, but not be limited to, any of the uses described in Section 23.51 of the Texas Tax Code, as amended) or is otherwise claimed for agricultural use by the owner thereof for ad valorem tax purposes pursuant to Section 23.41 of the Texas Tax Code or any other applicable statute, law or right. (d) “Lender” shall mean American Bank of Texas, signing a Lienholder Consent to a Waiver of Special Appraisal (in substantially the form included in Exhibit “B”) delivered to Trustee. (e) “Non-Redeemable Property” shall be those portions of the Property that are Assessed Property and have an Exempt Property status at the time either the applicable ad valorem taxes become past due or at the time that the annual installment of the Assessment levied against such property becomes past due. (f) “Trustee” means U.S. Bank National Association, and any successor thereto permitted under the Indenture (as defined in the Financing Agreement). SECTION 2. CONVEYANCE OF RIGHT OF REDEMPTION. The Developer has GRANTED, BARGAINED, SOLD, and CONVEYED, and by these presents does hereby GRANT, BARGAIN, SELL, and CONVEY, unto the Trustee all rights that the Developer and its successors and assigns now have or in the future may have in equity, or under common law, statutory law, the Constitution of the State of Texas or otherwise to redeem, repurchase or reacquire Non-Redeemable Property following a foreclosure of a tax lien or sale, transfer or conveyance in connection with a tax sale, including, without limitation, any and all rights arising under Section 34.21 of the Texas Tax Code, as amended (“Tax Redemption Rights”). TO HAVE AND TO HOLD the Tax Redemption Rights in the Non-Redeemable Property belonging in any way to the Developer, unto the Trustee, its successors and assigns, forever, subject to the Restrictions and Reservations set forth herein; and the Developer does hereby bind itself and its successors and assigns, to WARRANT AND FOREVER DEFEND all and singular, the Tax Redemption Rights in the Non-Redeemable Property unto the Trustee, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same, or any part thereof by, through, or under the Developer, but not otherwise, subject to the Restrictions and Reservations set forth in this Agreement. Restrictions and Reservations IT IS EXPRESSLY UNDERSTOOD AND AGREED that if all or a portion of the Non- Redeemable Property ceases to be Assessed Property, as shown on the Assessment Rolls maintained by the Town, then the owner of such land shall have the right to assume ownership of the Tax Redemption Rights for said portion of the Non-Redeemable Property. Upon request by an owner of land that is Non-Redeemable Property that has ceased to be Assessed Property, the Town and the Trustee shall execute a Release from this Agreement in the form attached hereto as Exhibit “C.” SECTION 3. RESTRICTION AGAINST REDEMPTION OF NON-REDEEMABLE PROPERTY In the event that a court of competent jurisdiction enters a final judgment that the foregoing conveyance of Tax Redemption Rights is not effective, the Developer hereby absolutely, unconditionally and irrevocably waives, releases, relinquishes and surrenders forever, on behalf of itself and its successors and assigns, and agrees not to assert or exercise any and all Tax Redemption Rights it now has or in the future may have in equity, pursuant to statute, the Constitution of the State of Texas or otherwise to redeem, repurchase or reacquire any portion of the Property that is Non-Redeemable Property following a foreclosure of a tax lien or sale, transfer or conveyance in connection with a tax sale, including, without limitation, any and all rights arising under Section 34.21 of the Texas Tax Code, as amended. SECTION 4. WAIVER OF AGRICULTURAL USE VALUATION. (a) Delivery of Agricultural Use Waiver Into Escrow. Concurrently with the execution and delivery of this Agreement, the Developer has executed and has delivered or will promptly deliver to the Trustee to be held in escrow six (6) originals of the Agricultural Use Waiver waiving any agricultural use valuation and any right to special appraisal arising based on agricultural use with respect to Non-Redeemable Property. The Agricultural Use Waiver shall be held in escrow, and shall only be released from escrow in accordance with the provisions of this Section 4. (b) Authorization to File Agricultural Use Waiver. (i) Prior to the Trustee taking any action described in subsection 4(b)(ii) below, the Trustee shall pay past due or delinquent taxes using funds in the Developer Property Tax Reserve Fund held under the applicable Indenture. This payment shall be made pursuant to a request by the Town in a form similar to that attached as Exhibit “D”. If the funds in the applicable Developer Property Tax Reserve Fund are not sufficient to pay all past due ad valorem taxes, including any accrued interest and penalties, then the Trustee shall notify the Developer and the Lender of such deficiency and provide the Developer and the Lender thirty (30) days to deliver to the Trustee the requisite amount of funds to pay all past due taxes and restore the applicable Developer Property Tax Reserve Fund to the level required by the Financing Agreement. (ii) The Town, or the entity appointed by the Town to monitor and collect delinquent taxes, shall report to the Trustee any delinquent taxes that are secured by a lien against any portion of the Non-Redeemable Property by March 15 of each year. In the event that any taxes secured by a lien against any portion of the Non-Redeemable Property have not been paid by March 1st following the year for which such taxes are levied, the Trustee shall provide the Lender notice of the deficiency and provide the Lender ten (10) days to cure said deficiency. If the Lender fails to cure the deficiency, Trustee shall (unless otherwise instructed by holders of not less than twenty percent (20%) of the Bonds, as defined in the Financing Agreement, secured by the applicable Indenture then outstanding) and the Developer hereby irrevocably authorizes the Trustee to, release the Agricultural Use Waiver from escrow and deliver same to the Tarrant County Tax Assessor/Collector or its successor. The Trustee shall, and the Developer further authorizes the Trustee to, attach to the Agricultural Use Waiver a description of that portion of the Non-Redeemable Property for which taxes are delinquent; provided, the Trustee shall verify with the Town the descriptions of the Non-Redeemable Property to be attached to such waiver. Any such descriptions of property shall be provided to the Trustee by the Town, or an entity appointed by the Town for such purpose. In the event that the Trustee receives notice that delinquent taxes and all penalties and interest have been paid prior to Trustee’s transmittal of the Agricultural Use Waiver to Tarrant County Tax Assessor/Collector or its successor, then Trustee shall not transmit the Waiver of Agricultural Use to the Tarrant County Tax Assessor/Collector and such waiver shall be returned to escrow. In the event that the number of Agricultural Use Waivers held by Trustee is less than three (3) and some portion of the Property is Non-Redeemable Property, the Developer agrees to promptly execute and deliver to the Trustee, to be held in and released from escrow as provided herein, another Agricultural Use Waiver for use with any remaining Non-Redeemable Property owned by the Developer; provided, however, the Trustee shall deliver to the Tarrant County Tax Assessor/Collector or its successor an Agricultural Use Waiver with respect to the remaining Non- Redeemable Property owned by the Developer, if the Developer does not execute and deliver to the Trustee such additional Agricultural Waivers within thirty (30) days of a written request by the Trustee. Notwithstanding anything to the contrary contained herein, the Lender is under no obligation to cure any deficiency. (iii) The entity responsible for administrating the District (the “PID Administrator”) shall be responsible for notifying the Town and, at the Town’s direction, the Trustee of all delinquent Assessment payments by March 15 of each year. Except as provided in Section 4(b)(iv), in the event that any Assessments levied by the Town pursuant to the Assessment Ordinance that are secured by a lien against any portion of the Non-Redeemable Property have not been paid by March 1st following the year for which such Assessments are levied (or ten (10) days before such Assessments become delinquent, if earlier), the Trustee shall provide the Lender notice of the failure to pay Assessments and provide the Lender ten (10) days to cure such failure. If the Lender fails to cure, the Trustee shall (unless otherwise instructed by holders of not less than fifty-one percent (51%) of the Bonds secured by the applicable Indenture then outstanding) and the Developer hereby irrevocably authorizes the Trustee to, release the Agricultural Use Waiver from escrow and deliver same to the Tarrant County Tax Assessor/Collector or its successor. The Trustee shall, and the Developer further authorizes the Trustee to, attach to the Agricultural Use Waiver a description of that portion of the Non- Redeemable Property for which Assessments are delinquent. Any such descriptions of property shall be provided to the Trustee by the Town, or an entity appointed by the Town for such purpose. In the event that the number of Agricultural Use Waivers held by Trustee is less than three (3) and some portion of the Property is Non- Redeemable, the Developer agrees to promptly execute and deliver to the Trustee, to be held in and released from escrow as provided herein, another Agricultural Use Waiver for use with any remaining Non-Redeemable Property owned by the Developer; provided, however, the Trustee shall deliver to the Tarrant County Tax Assessor/Collector or its successor an Agricultural Use Waiver with respect to the remaining Non-Redeemable Property owned by the Developer, if the Developer does not execute and deliver to the Trustee such additional Agricultural Waivers within thirty (30) days of a written request by the Trustee. Notwithstanding anything to the contrary contained herein, the Lender is under no obligation to cure the failure to pay. (iv) If, by case law, statute or an opinion of the Attorney General of the State of Texas it is determined that Tax Redemption Rights do not apply to the Assessments levied on behalf of the District, then Section 4(b)(iii) shall immediately become non-operative and non-effective upon Trustee’s receipt of written notice of such decision, statute or opinion. SECTION 5. REPRESENTATIONS AND WARRANTIES. The Developer each hereby represents and warrants to the Town as follows: (a) The Developer represents and warrants that it is a limited partnership duly organized and validly existing under the laws of the State of Texas, is qualified to do business in and is in good standing under the laws of the State of Texas, is in compliance with the laws of the State of Texas, and has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated. (b) The Developer represents and warrants that it has the power and authority to enter into this Agreement, and has taken all action necessary to cause this Agreement to be executed and delivered, and this Agreement has been duly and validly executed and delivered on behalf of the Developer. (c) The Developer represents and warrants that this Agreement is a valid and enforceable obligation of the Developer and is enforceable against the Developer in accordance with its terms, subject to bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors’ rights in general and by general equity principles. SECTION 6. DEFAULT AND REMEDIES. In the event that the Developer shall violate, or indicate that the Developer intends to violate, any of the terms and provisions set forth in this Agreement, in addition to any other remedies available at law or in equity, the Trustee shall have the right to sue for and obtain a prohibitive or mandatory injunction or any other equitable remedy to prevent the breach of, or to enforce the observance of, the terms of this Agreement. The foregoing remedies shall be cumulative with, in addition to, and non-exclusive of one another, and the exercise of any one remedy shall not bar the exercise of any other remedy. In the event of any legal action commenced by the Trustee to enforce the obligations of the Developer hereunder, the Trustee shall be entitled to recover its reasonable attorney’s fees and costs. The Trustee shall provide ten (10) days’ notice to the Lender prior to taking any enforcement action. SECTION 7. MISCELLANEOUS. (a) Term of Agreement. This Agreement shall continue in full force and effect so long as any obligations remain outstanding under any Indenture. (b) Headings Descriptive. The headings of the several Sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. (c) Interpretation. The singular number includes the plural and the masculine gender includes the feminine and neuter. (d) Covenants Run with the Land; Transfers of the Property. This Agreement shall run with the land and the ownership of any Non-Redeemable Property and will act as an appurtenant burden on the Non-Redeemable Property and shall be binding upon the Non- Redeemable Property and all owners, tenants, subtenants, licensees, assignees and occupants thereof and any other party having any interest therein. Upon the acquisition by any party of any interest in the Non- Redeemable Property, such party shall automatically and without further action by such party or any other party be deemed to have assumed and agreed to be bound by this Agreement. Without limiting the foregoing, any person who acquires a fee interest in any portion of the Non- Redeemable Property (“Subsequent Owner”) shall, and hereby shall be deemed to have agreed to, (i) execute and record in the Real Property Records of Tarrant County, Texas, promptly following the recording of the conveyance instrument, an agreement in the form attached hereto as Exhibit “E” (the “Acknowledgment and Agreement”) to acknowledge that such person is subject to the terms of this Agreement, expressly agreeing to comply with the terms and provisions of this Agreement applicable to the portion of the Non-Redeemable Property acquired by such person, and waiving such person’s right to redeem such portion of the Non-Redeemable Property, and (ii) execute and deliver to the Trustee, concurrently with the recording of the Acknowledgment and Agreement, four (4) Agricultural Use Waivers in the form attached hereto as Exhibit “B” for that portion of the Non- Redeemable Property acquired by such person. In the event that the number of Agricultural Use Waivers signed by a Subsequent Owner that are held by Trustee is less than two (2) and some portion of the Property owned by the Subsequent Owner is Non-Redeemable Property, such Subsequent Owner agrees to promptly execute and deliver to the Trustee, to be held in and released from escrow as provided herein, another Agricultural Use Waiver for use with any remaining Non-Redeemable Property owned by such Subsequent Owner; provided, however, the Trustee shall deliver to the Tarrant County Tax Assessor/Collector or its successor an Agricultural Use Waiver with respect to the remaining Non-Redeemable Property owned by a Subsequent Owner that has not paid taxes or Assessments as required by this Agreement, if said Subsequent Owner does not execute and deliver to the Trustee such additional Agricultural Waivers within thirty (30) days of a written request by the Trustee. (e) Material Agreement. The Developer acknowledges that the agreements and obligations of the Parties set forth herein are a material inducement to the Town’s entering into the Financing Agreement, that the Developer is represented by counsel of its own choice with respect to this Agreement, and that the Developer is entering into this Agreement freely and voluntarily and not acting under coercion or duress. (f) Binding Effect. This Agreement shall be binding upon the Developer and the successors, receivers, trustees and assigns of the Developer, including all successors in interest of the Developer in and to all or any part of the Property, and shall inure to the benefit of the Town, the Trustee and the successors and assigns of the Trustee. (g) Amendments. This Agreement may be modified or amended only by a written agreement executed by the Trustee, the Town, and each owner of that portion of the Property to be affected by such amendment and recorded in the Real Property Records of Tarrant County, Texas. (h) Severability; No Waiver. If any provision of this Agreement is held invalid or unenforceable, no other provision of this Agreement will be affected by such holding and all other provisions of this Agreement will continue in full force and effect. Any failure by a Party to insist upon strict performance by the other Party of any material provision of this Agreement will not be deemed a waiver of such requirement or of any other provision, and such Party may at any time thereafter insist upon strict performance of any and all of the provisions of this Agreement. (i) Notices. Any notice, communication or disbursement required to be given or made hereunder shall be in writing and shall be given or made by facsimile, hand delivery, overnight courier, or by United States mail, certified or registered mail, return receipt requested, postage prepaid, at the addresses set forth below or at such other addresses as any be specified in writing by any Party hereto to the other parties hereto. Each notice which shall be mailed or delivered in the manner described above shall be deemed sufficiently given, served, sent and received for all purpose at such time as it is received by the addressee (with return receipt, the delivery receipt or the affidavit of messenger being deemed conclusive evidence of such receipt) at the following addresses: To the Town: Attn: Thomas Brymer Town Manager 3 Village Circle, Suite 202 Westlake, Texas 76262 FAX: 817.430.1812 With a copy to: Attn: L. Stanton Lowry Town Attorney Boyle & Lowry, L.L.P. 4201 Wingren, Suite 108 Irving, Texas 75062 FAX: 972.650.7105 To the Developer: Attn: Mehrdad Moayedi 1800 Valley View Lane, Suite 300 Farmers Branch, Texas 75234 FAX: 817.391.2501 With a copy to: Miklos Law, PLLC Attn: Robert Miklos 1800 Valley View Lane, Suite 360 Farmers Branch, Texas 75234 E-mail: robert@mikloslegal.com If to the Trustee: U.S. Bank National Association 13737 Noel Road, Suite 800 Dallas, Texas 75240 Attn: Corporate Trust Services Fax: (972) 581-1660 If to the Lender: _____________________________ (j) Third Party Beneficiaries. The provisions of this Agreement are and will be for the benefit of the Parties, the Trustee and the holders of the Bonds only and are not for the benefit of any other third party and, accordingly, no other third party shall have the right to enforce the provisions of this Agreement. (k) Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. (l) Further Assurances. The Parties agree to take all further action and execute and deliver to the Town such additional documents as may be necessary or as the Town may reasonably request to carry out the purposes of this Agreement. (m) Governing Law. This Agreement and the rights and obligations of the Parties hereunder shall be governed by, and construed in accordance with the laws of the State of Texas (without giving effect to the principles thereof relating to conflicts of law). (i) Exhibits. The following exhibits are attached to and incorporated into this Agreement for all purposes: Exhibit “A” – Description of the Property Exhibit “B” – Form of Agricultural Use Waiver Exhibit “C” – Form of Release From Agreement Exhibit “D” – Acknowledgment of Assumption of Waiver of Right of Redemption [Signature pages follow] IN WITNESS WHEREOF, the parties have executed this Agreement as of this January 15, 2015. ATTEST: TOWN OF WESTLAKE ________________________ By: ____________________ Name: Kelly Edwards Name: Laura Wheat Title: Town Secretary Title: Mayor APPROVED AS TO FORM _______________________ Name: L. Stanton Lowry Title: Town Attorney DEVELOPER MAGUIRE PARTNERS-SOLANA LAND, L.P. By: MMM Ventures, LLC, its general partner By: 2M Ventures, LLC, its manager By: _______________________________________ Mehrdad Moayedi, Manager STATE OF TEXAS ) ) COUNTY OF __________ ) This instrument was acknowledged before me on the __ day of ____________, 2014, by Mehrdad Moayedi in his capacity as Manager of MMM Ventures, LLC, in its capacity as general partner of Maguire Partners-Solana Land, L.P., (the “General Partner”) known to be the person whose name is subscribed to the foregoing instrument, and that he executed the same on behalf of and as the act of the General Partner of Maguire Partners-Solana Land, L.P. _____________________________________ Notary Public, State of Texas My Commission Expires: ________________________________ U.S. BANK NATIONAL ASSOCIATION, as Trustee By: Authorized Officer THE STATE OF § § COUNTY OF § This instrument was acknowledged before me on this day of ___________________, 2015, by ________________________, the _________________ of _____________________, on behalf of said entity. Notary Public, State of EXHIBIT A (Property Description and Depiction) LEGAL DESCRIPTION 85.90 Acres BEING a tract of land situated in the C.M. Throop Survey, Abstract No. 1510, the W. Medlin Survey, Abstract No. 1958, the William Pea Survey, Abstract No. 1246 and the Joseph Henry Survey, Abstract No. 742, Tarrant County, Texas and being a portion of Tract 2 as described in the Special Warranty Deed to MAGUIRE PARTNERS – SOLANA LAND, L.P. as recorded in Volume 16858, Page 176 of the Deed Records of Tarrant County, Texas and being more particularly described as follows: BEGINNING at a 5/8 inch iron rod found with “Huitt-Zollars” cap at the southwest corner of Lot 2, Block 1, Westlake/Southlake Park Addition No. 1, an addition to the Town of Westlake, Texas as recorded in Volume 388-214, Page 78 of the Plat Records of Tarrant County, Texas, being on the northeasterly right-of-way line of Kirkwood Boulevard, a variable width right-of-way as dedicated by said Westlake/Southlake Park Addition No. 1 and being the beginning of a non- tangent curve to the left having a central angle of 9 degrees 13 minutes 11 seconds, a radius of 1428.00 feet and being subtended by a chord which bears North 47 degrees 49 minutes 50 seconds West a distance of 229.54 feet; THENCE along the northeasterly right-of-way line of Kirkwood Boulevard, a variable with right-of-way, as described in Dedication Deed to the Town of Westlake as recorded under instrument No. D208427746, Deed Records of Tarrant County, Texas the following: Along said curve to the left an arc distance of 229.79 feet to a ½ inch rod found with Graham cap at the end of said curve; North 52 degrees 30 minutes 14 seconds west a distance of 32.60 feet to ½ inch iron rod found with Graham cup beginning of a curve to the right having a central angle of 18 degrees 54 minutes 48 seconds, a radius of 612.00 feet and being subtended by a chord which bears North 43 degrees 02 minutes 03 seconds West a distance of 201.11 feet; Along said curve to the right an arc distance of 202.02 feet to a ½ inch iron rod found with Graham cap at the beginning of a compound curve to the right having a central angle of 24 degrees 06 minutes 47 seconds, a radius of 812.00 feet and being subtended by a chord which bears North 21 degrees 32 minutes 03 seconds West a distance of 339.22 feet; Along said curve to the right an arc distance of 341.73 feet to a ½ inch iron rod found with Graham cap at the end of a said curve; North 09 degrees 28 minutes 39 seconds West a distance of 132.24 feet to a ½ inch iron rod found with Graham cap at the beginning of a curve to the left having a central angle of 45 degrees 43 minutes 19 seconds, a radius of 708.00 feet and being subtended by a chord which bears North 32 degrees 20 minutes 19 seconds West a distance of 550.11 feet; Along said curve to the left an arc distance of 564.98 feet to a ½ inch iron rod found with Graham cap at the end of said curve; North 55 degrees 11 minutes 58 seconds West a distance of 190.50 feet to a ½ inch iron rod found with Graham cap; North 08 degrees 56 minutes 27 seconds West a distance off 21.41 feet to a ½ inch iron rod found with Graham cap on the easterly right-of-way line of Precinct Line Road, a variable width right-of-way, as described in Dedication Deed to Town of Westlake as recorded under Instrument No. D208427746, Deed Records of Tarrant County, Texas and being the beginning of a non- tangent curve to the left having a central angle of 16 degrees 09 minutes 21 seconds, a radius of 1,432.50 feet and being subtended by a chord which bears North 27 degrees 07 minutes 42 seconds East a distance of 402.59 feet; THENCE along the easterly right-of-way line of Precinct Line Road, the following; Along said curve to the left an arc distance of 403.92 feet to a ½ inch iron rod found with Graham cap at the end of said curve; North 18 degrees 47 minutes 24 seconds East a distance of 185.36 feet to a ½ inch iron rod found with Graham cap; North 17 degrees 03 minutes 03 seconds East a distance of 322.64 feet to a ½ inch iron rod found on the southerly right-of-way line of State Highway 114 (a variable width ROW); THENCE along the southerly right-of-way line of State Highway 114, the following; North 60 degrees 06 minutes 26 seconds East a distance of 44.54 feet to a Texas Department of Transportation brass disk in concrete found; South 71 degrees 03 minutes 32 seconds East a distance of 254.55 feet to a point for corner from which a Texas Department of Transportation brass disk in concrete found bears North 10 degrees 48 minutes 28 seconds West a distance of 0.43 feet; South 77 degrees 26 minutes 06 seconds East a distance of 746.74 feet to a Texas Department of Transportation brass disk in concrete found; South 71 degrees 03 minutes 31 seconds East a distance of 1443.85 feet to a Texas Department of Transportation brass disk in concrete found; South 62 degrees 34 minutes 19 seconds East a distance of 404.34 feet to a Texas Department of Transportation brass disk in concrete found at the beginning of a curve to the right having a central angle of 08 degrees 19 minutes 09 seconds, a radius of 2,709.79 feet and being subtended by a chord which bears South 58 degrees 24 minutes 45 seconds East a distance of 393.11 feet; Along said curve to the right an arc distance of 393.45 feet to a Texas Department of Transportation brass disk in concrete found; South 54 degrees 15 minutes 11 seconds East a distance of 399.24 feet to a Texas Department of Transportation brass disk in concrete found; South 64 degrees 19 minutes 50 seconds East a distance of 56.55 feet to a 5/8 inch iron rod found with “Huitt-Zollars” cap at the beginning of a non-tangent curve to the right having a central angle of 02 degrees 13 minutes 56 seconds, a radius of 2,754.79 feet and being subtended by a chord which bears South 43 degrees 17 minutes 37 seconds East a distance of 107.32 feet; Along said curve to the right n arc distance of 107.33 feet to a ½ inch rod found with “Huitt- Zollars” cap for the northeast corner of Lot 1, Block 1, of the aforementioned Westlake/Southlake Park Addition No. 1; THENCE departing the southerly right-of-way line of State Highway 114, North 90 degrees 00 minutes 00 seconds west along the north line of said Lot 1, Block 1, a distance of 2,132.54 feet to a 5/8 inch iron rod with “Carter-Burgess” cap found for the northwest corner of said Lot 2, Block 1, Westlake/Southlake Park Addition No. 1; THENCE South 52 degrees 00 minutes 00 seconds West along the northwesterly line said Lot 2, Block 1, a distance of 1000.00 feet to a 5/8 inch iron rod with “Carter & Burgess” cap found at an angle point in the west line of Lot 2, Block 1; THENCE along the west line of said Lot 2, Block 1, South 00 degrees 00 minutes 00 seconds East a distance of 168.55 feet to the POINT OF BEGINNING and containing 85.90 acres of land, more or less. Exhibit “B” WAIVER OF SPECIAL APPRAISAL THE STATE OF TEXAS § § KNOW EVERYONE BY THESE PRESENTS: COUNTY OF _____________ § THAT this Waiver of Special Appraisal (this “Waiver”) is made and entered into as of the _____ day of __________, 20___, for the benefit of the Town of Westlake, Texas (the “Town”) and U.S. Bank National Association (as “Trustee”), by (“Landowner,” whether one or more), owner of the property described on Schedule 1 hereto (the “Property”), which Property is located within the Solana Public Improvement District (the “District”), a public improvement district of the Town, pursuant to Texas Tax Code Ann. §23.20. RECITALS A. The Town has the right to levy special assessments on land located within the District pursuant to a separate ordinance enacted by the Town Council of the Town, which assessments are intended to provide for the financing of certain improvements for the benefit of the District (the “Authorized Improvements”). B. The purpose of the Town in selling its special assessments revenue bonds (the “Bonds”) is to provide, among other things, financing for certain improvements to serve the District (the “Facilities”). C. In furtherance of this purpose, the Town has agreed to reimburse Landowner for payments made for certain Authorized Improvements, subject to the execution and delivery by Landowner of this Waiver. D. Landowner acknowledges that the election by Landowner to claim agricultural use exemptions or valuations arising under Section 34.21 of the Texas Tax Code, as amended (collectively, the “Exemptions”), but not including any residential homestead exemption, for the Property would be detrimental to the property valuation base and may significantly impair the ability of the Town to meet its debt obligations for the Bonds. WAIVER Section 1. Waiver of Exemptions. Landowner, on behalf of itself, its successors and assigns, (i) irrevocably waives its right to claim any of the Exemptions with respect to the Property for a period of thirty (30) years beginning on the date this Waiver is received by the Tarrant County Tax Assessor/Collector; (ii) authorizes the Town and/or the Trustee to file this Waiver with the Chief Appraiser of the Tarrant County Appraisal District, or its successor, in accordance with the terms of the Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation – Solana PID having an effective date of January 15, 2015; and (iii) covenants that it will not make any claim for a special appraisal except on written authorization of the Trustee. Landowner acknowledges that it may have the right under Article 8 of the Texas Constitution to assert some or all of the Exemptions which it is waiving herein, and agrees that it shall be estopped from claiming such Exemptions for so long as this Waiver shall remain in effect; provided, however, it is expressly acknowledged and agreed by Landowner that mechanisms for single family residences now available or to be made available by any change in Texas laws for the reduction of ad valorem tax liability or of valuation for the purposes of ad valorem taxes or other assessments with respect to real property, such as exemptions for homesteads, disabled veterans, and elderly homesteads, are not included in the definition of Exemptions and are expressly allowed, to the extent such exemptions would be otherwise available, with respect to the Property. Section 2. Disclosures of Lienholders. Lienholder represents and warrants that is the only lienholder on the Property. Section 3. Reliance on Waiver. Landowner or its predecessor in interest has induced the Town into issuing bonds based, in significant part, on the covenants hereunder and the Town has agreed to issue such bonds in reliance upon such covenants. Section 4. Covenants to Run with Land. The terms and provisions hereof shall be deemed to be restrictive covenants encumbering and running with the Property and shall be binding upon the Landowner and its successors and assigns. In particular, each successive purchaser of the Property shall, upon purchase thereof (or any portion thereof), waive its right to claim any of the Exemptions with respect to the Property (or such portion thereof) for so long as this Waiver shall remain in effect. Section 5. Enforceability. The covenants and restrictions binding the Property hereunder shall be enforceable only by the Town, the Trustee and their respective successors and assigns. This Waiver is for the sole benefit of the parties hereto, and of the Trustee, and no other third party is intended to be a beneficiary of this Waiver. Section 6. Termination. This Waiver shall continue in full force and effect until the earlier to occur of the following: (i) thirty (30) years; or (ii) such time as the Trustee approves a revocation in writing. Section 7. Severability. Every provision of this Waiver is intended to be severable. In the event any term or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court of competent jurisdiction, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable to the maximum extent permitted by law, it being the intent of the parties hereto to give full force and effect to the agreements made hereunder to the maximum extent permitted by law. Section 8. Headings. The Section headings are included in this Waiver for convenience and reference only, and shall not be deemed to affect the substantive provisions of this Waiver. Section 9. Remedies. If Landowner breaches its obligations hereunder, the Trustee or the Town (on behalf of the Trustee), in addition to all other remedies set forth herein or otherwise available at law or in equity, shall be entitled to recover from Landowner the amount of assessments that would have been due to the Town had Landowner complied with this Waiver. Such payment will be due and payable, and will incur penalties and charges under the same terms as if the payment had been an assessment obligation of Landowner to Town. [EXECUTION PAGES FOLLOW] IN WITNESS WHEREOF, the parties hereto have executed this Waiver in one or more counterparts, each of which shall be of equal dignity, as of the date and year set forth in the acknowledgements below, to be effective for all purposes as of the date first set forth above. LANDOWNER: THE STATE OF _________ § § COUNTY OF ___________ § This instrument was acknowledged before me on this day of ______________. 20___, by _____________________, the _______________________ of _______________________, on behalf of said entity. ______________________________ Notary Public, State of CONSENT OF LIENHOLDER __________________________ (“Lienholder”), being a lienholder on the Property, hereby consents to this Waiver of Special Appraisal (the “Waiver”) and accepts and agrees to the terms and provisions of this Waiver; provided that Lienholder is provided notice and an opportunity to cure pursuant to Section 4 of the Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation – Solana PID. LIENHOLDER: By: _________________________________________ Name: _______________________________________ Title: _______________________________________ THE STATE OF § § COUNTY OF § This instrument was acknowledged before me on this ___ day of ______________, 20__, by_ _______________________, the ___________________ of _______________________, on behalf of said entity. _______________________________ Notary Public, State of After recording, return to: * Attached description of the Property as Schedule 1 prior to executing. Exhibit “C” RELEASE OF REDEMPTION AGREEMENT THE STATE OF TEXAS § § KNOW EVERYONE BY THESE PRESENTS: COUNTY OF _____________ § WHEREAS, the land described in the attached Exhibit “A” (the “Property”) is located within the Solana Public Improvement District (the “District”); WHEREAS, ________________ is the owner of the Property (“Owner”); WHEREAS, the Property is subject to the terms of the Agreement Regarding Conveyance of Right of Redemption And Waiver of Agricultural Valuation – Solana PID with an effective date of January 15, 2015, and recorded in Document No. ________, Official Public Records of Tarrant County, Texas (“Redemption Agreement”); WHEREAS, the Town of Westlake and the Trustee are parties to the Redemption Agreement; WHEREAS, pursuant to the Redemption Agreement certain Tax Redemption Rights to redeem the Property under the Texas Tax Code (as described in the Redemption Agreement) were conveyed to the Trustee (defined below); WHEREAS, the U.S. Bank National Association is the Trustee, as defined in the Redemption Agreement (the “Trustee”); WHEREAS, pursuant to Section 4 of the Redemption Agreement, the Trustee is authorized to deliver a Waiver of Agricultural Use to the appropriate Tax Assessor/Collector office in the event that delinquent ad valorem taxes or Special Assessments are owed on the Property; WHEREAS, pursuant to Section 2 of the Redemption Agreement, the Town and the Trustee are authorized to release property from the terms of the Redemption Agreement; and WHEREAS, the Town and the Trustee have determined that the Property should be released from the terms of the Redemption Agreement; NOW, THEREFORE, for and in consideration of the above stated premises, and for other good and valuable consideration, the receipt and sufficiency of all of which are hereby acknowledged by the Town of Westlake and the Trustee, the Town of Westlake and the Trustee do hereby forever release and discharge the Property from all terms, restrictions, covenants and conditions of the Redemption Agreement in its entirety, and release any and all rights that the Town of Westlake and the Trustee had, have or may have by virtue of the Redemption Agreement. In no event shall this release have any impact on land within the District other than the Property described in the attached Exhibit “A”. Trustee has GRANTED, BARGAINED, SOLD, and CONVEYED, and by these presents does hereby GRANT, BARGAIN, SELL, and CONVEY, unto Owner all rights that Trustee and its successors and assigns now have or in the future may have in equity, or under common law, statutory law, the Constitution of the State of Texas or otherwise in the “Tax Redemption Rights,” as defined in the Redemption Agreement with respect to the Property described in the attached Exhibit “A”. TO HAVE AND TO HOLD the Tax Redemption Rights in the Property, described in the attached Exhibit “A”, belonging in any way to Trustee, unto the Owner, its successors and assigns, forever, and Trustee does hereby bind itself and its respective successors and assigns, to WARRANT AND FOREVER DEFEND all and singular, the Tax Redemption Rights in the Property, described in the attached Exhibit “A”, unto the Owner, its successors and assigns, against every person whomsoever lawfully claiming or to claim the same, or any part thereof by, through, or under Trustee, but not otherwise. [SIGNATURE PAGE FOLLOWS] WITNESS THE EXECUTION HEREOF this the ___ day of _____________, 20__. Town of Westlake By: THE STATE OF TEXAS § § COUNTY OF COLLIN § This instrument was acknowledged before me on ________________, 20___, by ____________________________, the ___________ of the Town of Westlake, Texas, a home rule Town and Texas municipal corporation, on behalf of said Town and municipal corporation. ______________________________ Notary Public, State of Texas WITNESS THE EXECUTION HEREOF this the ___ day of ________, 20___. U.S. Bank National Association, as Trustee By: THE STATE OF § § COUNTY OF § This instrument was acknowledged before me on this _____ day of ________________, 20__, by ______________________, of U.S. Bank National Association, on behalf of said entity. _______________________________ Notary Public, State of * Attached description of the Land as Exhibit A prior to recording. After Recording Mail to: EXHIBIT “D” Westlake Request to Trustee Dear Trustee, In accordance with the Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation – Solana PID, the Town of Westlake requests that funds in the amount of $___________ be released from the Developer Property Tax Reserve Fund, authorized in section 4(b)(i), in order to satisfy past due or delinquent taxes, penalties, and additional fees. Please remit payment as soon as possible. This amount has been determined by the Town based on information received from _____________ as attached to this request (the “Certificate of Delinquent Taxes.”) Such funds listed above shall be deposited as follows: Payee: Address: Amount to be Transferred: Transfer Instructions and Location: (e.g. Account Number) TOWN OF WESTLAKE By: ____________________ Name: ____________________ Title: ____________________ Date: ___________ EXHIBIT “E” ACKNOWLEDGMENT OF ASSUMPTION AND CONVEYANCE OF RIGHT OF REDEMPTION This Acknowledgment of Assumption and Conveyance of Right of Redemption (this “Acknowledgment and Agreement”) is entered into effective ____________________, 20__ by __________________________, a ____________________ (whether one or more, the “Buyer”) in favor of the Town of Westlake, Texas (the “Town”) and the Trustee, as such term is defined in the Redemption Agreement (defined below). R E C I T A L S A. WHEREAS, Buyer has purchased and acquired certain land described on Exhibit A attached hereto (the “Land”); and B. WHEREAS, the Land is subject to that certain Agreement Regarding Conveyance of Right of Redemption and Wavier of Agricultural Valuation, dated on or about January 15, 2015 (the “Redemption Agreement”); and C. WHEREAS, pursuant to a the requirements of the Redemption Agreement, it is a condition to the acquisition of the Land that the Buyer execute this Acknowledgment and Agreement and record same in the Real Property Records of Tarrant County, Texas; and D. WHEREAS, the purchase price paid by Buyer for the Property was calculated and determined, in part, based upon the benefits and restrictions applicable to the Land and arising in connection with the Redemption Agreement and the other agreements executed in connection therewith and the requirement that Buyer execute this Acknowledgment and Agreement. NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Buyer hereby represents, warrants and agrees as follows: 1. Buyer acknowledges that the Redemption Agreement continues to affect the Land, and that Buyer has assumed, and Buyer hereby does assume and agree to perform, the obligations of the Developer (as such term is defined in the Redemption Agreement) under the Redemption Agreement with respect to the Land. 2. Buyer hereby grants, sells, conveys and assigns to the Trustee all rights Buyer and its successors and assigns now have or in the future may have in equity, pursuant to statute, the Constitution of the State of Texas or otherwise to redeem, repurchase or reacquire, following any foreclosure of a tax lien or sale, transfer or conveyance in connection with a tax sale, any portion of the Land that constitutes Exempt Property (as defined in the Redemption Agreement), including, without limitation, any and all rights arising under Section 34.21 of the Texas Tax Code, as amended but excluding any redemption rights arising out of the homestead status of the Property. In the event that the foregoing conveyance is not effective, Buyer hereby absolutely, unconditionally and irrevocably waives, releases, relinquishes and surrenders forever, on behalf of itself and its successors and assigns, and agrees not to assert or exercise any and all rights it now has or in the future may have in equity, pursuant to statute, the Constitution of the State of Texas or otherwise to redeem, repurchase or reacquire, following any foreclosure of a tax lien or sale, transfer or conveyance in connection with a tax sale, any portion of the Land that constitutes Exempt Property, including, without limitation, any and all rights arising under Section 34.21 of the Texas Tax Code, as amended. 3. Concurrently with the execution and delivery of this Acknowledgment and Agreement, Buyer has executed and has delivered (or will promptly deliver) to the Trustee to be held in escrow a Agricultural Use Waiver (as defined in the Redemption Agreement) in the form attached as Exhibit B to the Redemption Agreement waiving any agricultural use valuation and any right to special appraisal arising based on agricultural use with respect to the Land. Such agreement shall be held in, and released from, escrow in accordance with the provisions of Section 4 of the Redemption Agreement. EXECUTED to be effective as of the date first above written. [SIGNATURE PAGES FOLLOW] BUYER: THE STATE OF TEXAS § § COUNTY OF § This document was acknowledged before me on __________________, 20__, by __________________, the _________________ of ____________________, a _____________, on behalf of said entity. _______________________________ Notary Public in and for the State of TEXAS * Attached description of the Land as Exhibit A prior to recording. Page 1 of 3 estlake Town Council TYPE OF ACTION Action Item Westlake Town Council Meeting Thursday, January 15, 2015 1. TOPIC: Discussion and Consideration of Ordinance 743, Regarding All Matters Incident and Related to the Issuance and Sale of “Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)”, Authorizing the Issuance of Such Bonds and Approving and Authorizing Related Agreements. STAFF CONTACT: Tom Brymer, To wn Manager Strategic Alignment Vision, Value, Mission Perspective Strategic Theme & Results Outcome Objective Planned / Responsible Development N/A High Quality Planning, Design & Development - We are a desirable well planned, high-quality community that is distinguished by exemplary design standards. Preserve Desirability & Quality of Life Strategic Initiative Outside the Scope of Identified Strategic Initiatives Time Line - Start Date: December 15, 2014 Completion Date: January 15, 2015 Funding Amount: $26,175,000 in Public Improvement District (PID) Bonds Status - PID Bonds to Considered for Issuance at this Meeting Source – PID Bonds EXECUTIVE SUMMARY (INCLUDING APPLICABLE ORGANIZATIONAL HISTORY ) Previously, this property (located at the northeast corner of FM 1938 (Davis Blvd) and Solana Boulevard) was zoned for office and retail uses. In April 2013, after much public input and meetings, the Town Council, with a unanimous recommendation from the Planning & Zoning Commission, approved a request by the owner to amend the zoning in this PD1-2 zoning district. Page 2 of 3 Also in April 2013, prior to consideration of this zoning change request, the land use plan component of the Town’s Comprehensive Plan was amended to provide for the uses requested in the zoning change request for this property. The amended zoning adds certain residential and entertainment uses in order to allow development of a mixed use Planned Development on this tract. The zoning ordinance, as amended, is intended to achieve a design that emulates a European style village with a Spanish architectural theme. The development’s name is Entrada. Following those steps, the Developer had a preliminary plat approved for Entrada. Also approved for Entrada was a Development Plan (i.e. a master site plan), and a site plan for one lot with a building elevation for the building to be built on that lot (where a sales information center is to be located on the west side of Entrada near FM1938). During the re-zoning approval process it was pointed out by Town Staff, as well as discussed by Council, that if the zoning request was approved, the developer intended to submit to the Town a petition to create a Public Improvement District (PID) to fund the construction of the public infrastructure for this development. Further, in the Economic Development with the developer of Entrada, the Town agreed to consider creating a PID for this purpose. This Economic Development Agreement also was approved by the Town Council in April 2013. The owner submitted a petition to the Town to create a PID on this tract in October 2013. This Proposed PID was specifically discussed at several Council workshops (October 28th, November 11th, and December 9, 2013 as well as January 27th, February 24th, March 24th, and May 19, 2014 workshops plus discussed as a part of Entrada updates as a standing item at other Council workshops). During much this entire time t he Town Staff, along with our PID consultants, have been reviewing various iterations of a draft Appraisal, Preliminary Official Statement (POS), and Service and Assessment Plan (SAP) since the petition to establish this PID was submitted by the owner of this tract. After the December 9, 2013 Council Workshop, it was determined that, due to IRS regulations related to previous issuance of bank qualified (BQ) debt by the Town, modifications to the approach previously discussed with Council for issuance of PID bonds would need to be modified. Options of splitting the bond issuance, as well as using a conduit issuer for one larger issue were explored. The conduit issuer option, while allowed in other states, is not something the Texas Attorney General’s Office would provide a preliminary approval. The developer’s team discussed this at the Town Council’s January 27, 2014 workshop. The developer requested that, while waiting to see which path was best for PID bond issuance, it would be prudent to go ahead and establish the PID on this site. The Council approved the resolution to begin the public notification process for a public hearing on creating the PID for the petitioned property at its January 27, 2014 regular Meeting. Following a public hearing (no one spoke in opposition), this Public Improvement District was approved to be created by the Town Council at its February 24, 2014 Regular Meeting. The process continued on with a May 19, 2014 date targeted for first PID bond issuance. Eventually, prior to this May 19, 2014 date, the Developer determined that it would be best to delay bond issuance until 2015 when the BQ issue was no longer a factor. This eliminated the need to split the first issue into two issues over 2 years and simply issue a larger initial bond amount (as they had initially intended before the BQ issue surfaced). Further, the Entrada PID Page 3 of 3 creation was delayed by the assignment of the Entrada agreements to Marquis Construction in July 2014. But, these agreements were subsequently reassigned by the Council back to the original Developer (Mehrdad Moayedi) on August 25, 2014 when the property did not close. It should be noted that the PID document review process had to be halted during the time this assignment was under consideration as there was no purpose in working on PID documents until Staff knew for certain who was going to conduct the Entrada project. At the August 25, 2014 Council Workshop, having been reassigned the Entrada Economic Development and Developer Agreements, Developer Mehrdad Moayedi assured the Council of his commitment to the Entrada development and that he planned on proceeding with the PID bond issuance targeting issuance in January 2015. A new calendar was prepared with Town Staff and its consultants resuming work with the Developer’s PID team on PID documents. That process has been in motion since that time per the calendar attached to this agenda memo. At the Council’s December 15, 2014 meeting the Council discussed the remaining PID bond issuance calendar. The Town Council adopted a resolution approving the Preliminary Official Statement (POS) for $26,175,000 in PID Bonds as well as the distribution of this POS for the planned sale and issuance of these bonds to construct certain authorized infrastructure improvements in the Solana Improvement District (i.e. Entrada). At this same meeting the Council also adopted a resolution determining the costs of certain authorized improvements to be financed by the Solana Pubic Improvement District (i.e. Entrada) as well as approving a Preliminary Service Plan and Assessment Plan (including a Proposed Assessment Roll). This resolution also directed the filing of the Proposed Assessment Roll with the Town Secretary, and called a special meeting and Noticing a Public Hearing on January 15, 2015 to consider levying assessment on property within the Solana Public Improvement District. RECOMMENDATION Consider adoption of Ordinance 743 as related to the Solana Public Improvement District (i.e. Entrada). ATTACHMENTS 1. Ordinance 743. Ordinance 743 Page 1 of 5 ORDINANCE NO. 743 AN ORDINANCE AUTHORIZING THE ISSUANCE OF THE "TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT)"; APPROVING AND AUTHORIZING AN INDENTURE OF TRUST, A BOND PURCHASE AGREEMENT, AN OFFICIAL STATEMENT, A CONTINUING DISCLOSURE AGREEMENT AND OTHER AGREEMENTS AND DOCUMENTS IN CONNECTION THEREWITH; MAKING FINDINGS WITH RESPECT TO THE ISSUANCE OF SUCH BONDS; AND PROVIDING AN EFFECTIVE DATE WHEREAS, the Town of Westlake, Texas (the "Town"), pursuant to and in accordance with the terms, provisions and requirements of the Public Improvement District Assessment Act, Subchapter A of Chapter 372, Texas Local Government Code (the "PID Act"), has previously established the "Solana Public Improvement District" (the "District"), pursuant to Resolution No. 14-07 adopted by the Town Council of the Town (the "Council") on February 24, 2014; and WHEREAS, the authorization creating the District became effective on February 28, 2014 upon publication of Resolution No. 14-07 in the Fort Worth Star Telegram, a newspaper of general circulation in the Town; and WHEREAS, no written protests of the District from any owners of record of property within the District were filed with the Town Secretary within 20 days after the date of publication of such notice; and WHEREAS, pursuant to the PID Act, on December 22, 2014, the Council published notice of the assessment hearing in the Fort Worth Star Telegram, a newspaper of general circulation in the Town, and held a public hearing on January 15, 2015, regarding the levy of special assessments within the District, and on January 15, 2015, the Council adopted Ordinance No. 741 (the "Assessment Ordinance"); and WHEREAS, in the Assessment Ordinance, the Council approved and accepted the Service and Assessment Plan (as defined and described in the Assessment Ordinance, the "Service and Assessment Plan") relating to the District and levied the Assessments (as defined in the Service and Assessment Plan, the "Assessments") against the Assessment Roll (as defined and described in the Service and Assessment Plan, the "Assessment Roll"). Capitalized terms used in this preamble and not otherwise defined shall have the meaning assigned thereto in the Service and Assessment Plan; and WHEREAS, the Council has found and determined that it is in the best interests of the Town to issue its bonds to be designated "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)" (the "Bonds"), such Bonds to be payable from and secured by the Pledged Revenues, as defined in the Indenture (defined below); and Ordinance 743 Page 2 of 5 WHEREAS, the Town is authorized by the PID Act to issue the Bonds for the purpose of (i) paying the Costs, (ii) paying interest on the Bonds during and after the period of acquisition and construction of the Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds and (iv) paying the costs of issuance of the Bonds; and WHEREAS, in connection with the issuance of the Bonds, the Improvement Project A Improvements are located within the District, and the Town has determined that the Improvement Project A Improvements confer a special benefit on Improvement Area #1, Improvement Area #2 and Improvement Area #3 as provided in Section V.B. of the Service and Assessment Plan; and WHEREAS, the Council has found and determined to approve (i) the issuance of the Bonds to finance the Improvement Project A Improvements, (ii) the form, terms and provisions of an indenture of trust securing the Bonds authorized hereby, (iii) the form, terms and provisions of a Bond Purchase Agreement (defined below) between the Town and the purchaser of the Bonds, (iv) an Official Statement (defined below), and (v) a Continuing Disclosure Agreement (defined below); and WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and the public notice of the time, place and purpose of said meeting was given as required by Chapter 551, Texas Government Code, as amended; NOW, THEREFORE BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, THAT: Section 1. Findings. The findings and determinations set forth in the preamble hereof are hereby incorporated by reference for all purposes as if set forth in full herein. Section 2. Approval of Issuance of Bonds and Indenture of Trust. (a) The issuance of the Bonds in the principal amount of [$26,175,000] for the purpose of (i) paying a portion of the Costs, (ii) paying a portion of the interest on the Bonds during and after the period of acquisition and construction of the Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds, (iv) paying a portion of the costs incidental to the organization of the District, and (v) paying the costs of issuance of the Bonds, is hereby authorized and approved. (b) The Bonds shall be issued and secured under that certain Indenture of Trust (the "Indenture") dated as of February 1, 2015, between the Town and U.S. Bank National Association, as trustee (the "Trustee"), with such changes as may be necessary or desirable to carry out the intent of this Ordinance and as approved by the Mayor or Mayor Pro Tem of the Town, such approval to be evidenced by the execution and delivery of the Indenture, which Indenture is hereby approved in substantially final form attached hereto as Exhibit A and incorporated herein as a part hereof for all purposes. Ordinance 743 Page 3 of 5 The Mayor or Mayor Pro Tem of the Town is hereby authorized and directed to execute the Indenture and the Town Secretary is hereby authorized and directed to attest such signature of the Mayor or Mayor Pro Tem. (c) The Bonds shall be dated, shall mature on the date or dates and in the principal amount or amounts, shall bear interest, shall be subject to redemption and shall have such other terms and provisions as set forth in the Indenture. The Bonds shall be in substantially the form set forth in the Indenture, with such insertions, omissions and modifications as may be required to conform the form of Bond to the actual terms of the Bonds. The Bonds shall be payable from and secured by the Pledged Revenues (as defined in the Indenture) and other assets of the Trust Estate (as defined in the Indenture) pledged to the Bonds, and shall never be payable from ad valorem taxes or any other funds or revenues of the Town. Section 3. Sale of Bonds; Approval of Bond Purchase Agreement. The Bonds shall be sold to Jefferies, LLC (the "Underwriter") at the price and on the terms and provisions set forth in that certain Bond Purchase Agreement (the "Bond Purchase Agreement"), dated the date hereof, between the Town and the Underwriter, attached hereto as Exhibit B and incorporated herein as a part hereof for all purposes, which terms of sale are declared to be in the best interest of the Town. The form, terms and provisions of the Bond Purchase Agreement are hereby authorized and approved and the Mayor or Mayor Pro Tem of the Town is hereby authorized and directed to execute and deliver the Bond Purchase Agreement. The Mayor's or Mayor Pro Tem's signature on the Bond Purchase Agreement may be attested by the Town Secretary. Section 4. Official Statement. The form and substance of the Preliminary Official Statement for the Bonds and any addenda, supplement or amendment thereto and the final Official Statement (the "Official Statement") presented to and considered at the meeting at which this Ordinance is considered are hereby in all respects approved and adopted. The Official Statement, with such appropriate variations as shall be approved by the Mayor or Mayor Pro Tem of the Town and the Underwriter, may be used by the Underwriter in the offering and sale of the Bonds. The Town Secretary is hereby authorized and directed to include and maintain a copy of the Preliminary Official Statement and Official Statement and any addenda, supplement or amendment thereto thus approved among the permanent records of this meeting. The use and distribution of the Preliminary Official Statement in the offering of the Bonds is hereby ratified, approved and confirmed. Notwithstanding the approval and delivery of such Preliminary Official Statement and Official Statement by the Council, the Council is not responsible for and proclaims no specific knowledge of the information contained in the Preliminary Official Statement and Official Statement pertaining to the Improvement Project A Improvements, the Developer or its financial ability, any builders, any landowners, or the appraisal of the property in the District. Section 5. Continuing Disclosure Agreement. The Continuing Disclosure Agreement (the "Continuing Disclosure Agreement") between the Town and U.S. Bank National Association is hereby authorized and approved in substantially final form attached hereto as Exhibit C and incorporated herein as a part hereof for all purposes and the Town Manager of the Town is hereby authorized and directed to execute and deliver such Continuing Disclosure Ordinance 743 Page 4 of 5 Agreement with such changes as may be required to carry out the purpose of this Ordinance and approved by the Town Manager, such approval to be evidenced by the execution thereof. Section 6. Additional Actions. The Mayor, the Mayor Pro Tem, the Town Manager and the Town Secretary are hereby authorized and directed to take any and all actions on behalf of the Town necessary or desirable to carry out the intent and purposes of this Ordinance and to issue the Bonds in accordance with the terms of this Ordinance. The Mayor, the Mayor Pro Tem, the Town Manager and the Town Secretary are hereby authorized and directed to execute and deliver any and all certificates, agreements, notices, instruction letters, requisitions, and other documents which may be necessary or advisable in connection with the sale, issuance and delivery of the Bonds and the carrying out of the purposes and intent of this Ordinance. Section 7. Severability. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. Section 8. Effective Date. This Ordinance is passed on one reading as authorized by Texas Government Code, Section 1201.028, and shall be effective immediately upon its passage and adoption. [Remainder of page left blank intentionally] Signature page to Bond Ordinance Ordinance 743 Page 5 of 5 PASSED, APPROVED AND EFFECTIVE this January 15, 2015. Laura Wheat, Mayor ATTEST: Kelly Edwards, Town Secretary Thomas E. Brymer, Town Manager APPROVED AS TO FORM: L. Stanton Lowry, Town Attorney (Town Seal) A-1 EXHIBIT A INDENTURE OF TRUST INDENTURE OF TRUST By and Between TOWN OF WESTLAKE, TEXAS and U.S. BANK NATIONAL ASSOCIATION, as Trustee DATED AS OF FEBRUARY 1, 2015 SECURING [$26,175,000] TOWN OF WESTLAKE, TEXAS SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) TABLE OF CONTENTS Page ARTICLE I DEFINITIONS, FINDINGS AND INTERPRETATION ...................................... 4 Section 1.1. Definitions........................................................................................................... 4 Section 1.2. Findings............................................................................................................. 13 Section 1.3. Table of Contents, Titles and Headings. ........................................................... 13 Section 1.4. Interpretation. .................................................................................................... 13 ARTICLE II THE BONDS ......................................................................................................... 14 Section 2.1. Security for the Bonds. ..................................................................................... 14 Section 2.2. Limited Obligations. ......................................................................................... 14 Section 2.3. Authorization for Indenture. ............................................................................. 14 Section 2.4. Contract with Owners and Trustee. .................................................................. 15 ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE BONDS ................................................................................................................................ 15 Section 3.1. Authorization. ................................................................................................... 15 Section 3.2. Date, Denomination, Maturities, Numbers and Interest. .................................. 15 Section 3.3. Conditions Precedent to Delivery of Bonds. ..................................................... 16 Section 3.4. Medium, Method and Place of Payment. .......................................................... 16 Section 3.5. Execution and Registration of Bonds. .............................................................. 17 Section 3.6. Ownership. ........................................................................................................ 18 Section 3.7. Registration, Transfer and Exchange. ............................................................... 18 Section 3.8. Cancellation. ..................................................................................................... 19 Section 3.9. Temporary Bonds. ............................................................................................. 19 Section 3.10. Replacement Bonds. ......................................................................................... 20 Section 3.11. Book-Entry Only System. ................................................................................. 21 Section 3.12. Successor Securities Depository: Transfer Outside Book-Entry-Only System.22 Section 3.13. Payments to Cede & Co. ................................................................................... 22 ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY ......................................... 22 Section 4.1. Limitation on Redemption ................................................................................ 22 Section 4.2. Mandatory Sinking Fund Redemption .............................................................. 22 Section 4.3. Optional Redemption ........................................................................................ 24 Section 4.4. Extraordinary Optional Redemption ................................................................. 24 Section 4.5. Partial Redemption............................................................................................ 24 Section 4.6. Notice of Redemption to Owners. .................................................................... 25 Section 4.7. Payment Upon Redemption .............................................................................. 25 Section 4.8. Effect of Redemption ........................................................................................ 25 ARTICLE V FORM OF THE BONDS ..................................................................................... 26 Section 5.1. Form Generally ................................................................................................. 26 Section 5.2. Form of the Bonds. ........................................................................................... 26 Section 5.3. CUSIP Registration ........................................................................................... 34 ii Section 5.4. Legal Opinion. .................................................................................................. 34 ARTICLE VI FUNDS AND ACCOUNTS ................................................................................ 34 Section 6.1. Establishment of Funds and Accounts .............................................................. 34 Section 6.2. Initial Deposits to Funds and Accounts ............................................................ 36 Section 6.3. Pledged Revenue Fund ..................................................................................... 36 Section 6.4. Bond Fund ......................................................................................................... 38 Section 6.5. Project Fund ...................................................................................................... 38 Section 6.6. Redemption Fund .............................................................................................. 39 Section 6.7. Reserve Fund .................................................................................................... 39 Section 6.8. Rebate Fund: Rebatable Arbitrage .................................................................... 42 Section 6.9. Administrative Fund. ........................................................................................ 42 Section 6.10. Developer Property Tax Reserve Fund ........................................................... 432 Section 6.11. Investment of Funds .......................................................................................... 43 Section 6.12. Security of Funds ............................................................................................ 434 Section 6.13. Reimbursement Fund ...................................................................................... 434 ARTICLE VII COVENANTS .................................................................................................... 45 Section 7.1. Confirmation of Assessments. .......................................................................... 45 Section 7.2. Collection and Enforcement of Assessments. ................................................... 45 Section 7.3. Against Encumbrances. ..................................................................................... 46 Section 7.4. Records, Accounts, Accounting Reports. ......................................................... 46 Section 7.5. Covenants Regarding Tax Exemption of Interest on Bonds. ............................ 46 ARTICLE VIII LIABILITY OF TOWN ..................................................................................... 49 Section 8.1. Liability of Town. ............................................................................................. 49 ARTICLE IX THE TRUSTEE .................................................................................................. 50 Section 9.1. Acceptance of Trust; Trustee as Registrar and Paying Agent. ......................... 50 Section 9.2. Trustee Entitled to Indemnity. .......................................................................... 51 Section 9.3. Responsibilities of the Trustee. ......................................................................... 51 Section 9.4. Property Held in Trust. ..................................................................................... 51 Section 9.5. Trustee Protected in Relying on Certain Documents. ....................................... 52 Section 9.6. Compensation. .................................................................................................. 52 Section 9.7. Permitted Acts. .................................................................................................. 53 Section 9.8. Resignation of Trustee. ..................................................................................... 53 Section 9.9. Removal of Trustee. .......................................................................................... 53 Section 9.10. Successor Trustee.............................................................................................. 53 Section 9.11. Transfer of Rights and Property to Successor Trustee. ..................................... 54 Section 9.12. Merger, Conversion or Consolidation of Trustee. ............................................ 55 Section 9.13. Trustee To File Continuation Statements. ........................................................ 55 Section 9.14. Accounts, Periodic Reports and Certificates. ................................................... 55 Section 9.15. Construction of Indenture. ................................................................................ 55 ARTICLE X MODIFICATION OR AMENDMENT OF THIS INDENTURE ...................... 55 Section 10.1. Amendments Permitted. .................................................................................... 55 Section 10.2. Owners' Meetings. ............................................................................................ 56 iii Section 10.3. Procedure for Amendment with Written Consent of Owners. .......................... 56 Section 10.4. Procedure for Amendment Not Requiring Owner Consent. ............................. 56 Section 10.5. Effect of Supplemental Indenture. .................................................................... 57 Section 10.6. Endorsement or Replacement of Bonds Issued After Amendments. ................ 58 Section 10.7. Amendatory Endorsement of Bonds. ............................................................... 58 Section 10.8. Waiver of Default. ............................................................................................ 58 Section 10.9. Execution of Supplemental Indenture. .............................................................. 58 ARTICLE XI DEFAULT AND REMEDIES ............................................................................ 59 Section 11.1. Events of Default. ............................................................................................. 59 Section 11.2. Immediate Remedies for Default. ..................................................................... 59 Section 11.3. Restriction on Owner's Action. ......................................................................... 60 Section 11.4. Application of Revenues and Other Moneys After Default. ............................. 61 Section 11.5. Effect of Waiver. ............................................................................................... 62 Section 11.6. Evidence of Ownership of Bonds. .................................................................... 62 Section 11.7. No Acceleration. ............................................................................................... 62 Section 11.8. Mailing of Notice. ............................................................................................. 63 Section 11.9. Exclusion of Bonds. .......................................................................................... 63 ARTICLE XII GENERAL COVENANTS AND REPRESENTATIONS ................................ 63 Section 12.1. Representations as to Pledged Revenues. ......................................................... 63 Section 12.2. General. ............................................................................................................. 63 ARTICLE XIII SPECIAL COVENANTS .................................................................................. 64 Section 13.1. Further Assurances; Due Performance. ............................................................ 64 Section 13.2. Other Obligations or Other Liens; Additional Bonds. ...................................... 64 Section 13.3. Books of Record. .............................................................................................. 65 ARTICLE XIV PAYMENT AND CANCELLATION OF THE BONDS AND SATISFACTION OF THE INDENTURE ................................................................................................................. 66 Section 14.1. Trust Irrevocable. .............................................................................................. 66 Section 14.2. Satisfaction of Indenture. .................................................................................. 66 Section 14.3. Bonds Deemed Paid. ......................................................................................... 66 ARTICLE XV MISCELLANEOUS........................................................................................... 67 Section 15.1. Benefits of Indenture Limited to Parties. .......................................................... 67 Section 15.2. Successor is Deemed Included in All References to Predecessor. ................... 67 Section 15.3. Execution of Documents and Proof of Ownership by Owners. ........................ 67 Section 15.4. No Waiver of Personal Liability. ...................................................................... 68 Section 15.5. Notices to and Demands on Town and Trustee. ............................................... 68 Section 15.6. Partial Invalidity................................................................................................ 69 Section 15.7. Applicable Laws. .............................................................................................. 69 Section 15.8. Payment on Business Day. ................................................................................ 69 Section 15.9. Counterparts. ..................................................................................................... 69 EXHIBIT A DESCRIPTION OF THE PROPERTY WITHIN THE SOLANA PUBLIC IMPROVEMENT DISTRICT INDENTURE OF TRUST THIS INDENTURE, dated as of February 1, 2015, is by and between the TOWN OF WESTLAKE, TEXAS (the "Town"), and U.S. Bank National Association, as trustee (together with its successors, the "Trustee"). Capitalized terms used in the preambles, recitals and granting clauses and not otherwise defined shall have the meanings assigned thereto in Article I. WHEREAS, on October 18, 2013, a petition was submitted and filed with the Town Secretary of the Town (the "Town Secretary") pursuant to the Public Improvement District Assessment Act, Chapter 372, Texas Local Government Code, as amended (the "PID Act"), requesting the creation of a public improvement district located within the corporate limits of the Town to be known as Westlake Public Improvement District No. 1 (later renamed the "Solana Public Improvement District") (the "District" or "PID"); and WHEREAS, the petition contained the signatures of the owners of taxable real property representing more than fifty percent of the appraised value of taxable real property liable for assessment within the District, as determined by the then current ad valorem tax rolls of the Tarrant Appraisal District, and the signatures of record property owners who own taxable real property that constitutes more than fifty percent of the area of all taxable property that is liable for assessment by the District; and WHEREAS, on February 24, 2014, after due notice, the Town Council of the Town (the "Town Council") held the public hearing in the manner required by law on the advisability of the improvement projects and services described in the petition as required by Section 372.009 of the PID Act and on February 24, 2014, the Town Council made the findings required by Section 372.009(b) of the PID Act and, by Resolution No. 14-07, adopted by a majority of the members of the Town Council, authorized the District in accordance with its finding as to the advisability of the improvement projects and services; and WHEREAS, following the adoption of Resolution No. 14-07, the Town published notice of its authorization of the District in the Fort Worth Star Telegram, a newspaper of general circulation in the Town; and WHEREAS, no written protests of the District from any owners of record of property within the District were filed with the Town Secretary within 20 days after the date of publication of such notice; and WHEREAS, the Town Council, pursuant to Section 372.0l6(b) of the PID Act, published notice of a public hearing in a newspaper of general circulation in the Town to consider the proposed "Assessment Roll" and the "Service and Assessment Plan" and the levy of the "Assessments" on property in the District; and WHEREAS, the Town Council, pursuant to Section 372.0l6(c) of the PID Act, mailed notice of the public hearing to consider the proposed Assessment Roll and the Service and Assessment Plan and the levy of Assessments on property in the District to the last known address of the owners of the property liable for the Assessments; and 2 WHEREAS, the Town Council convened the hearing on January 15, 2015, at which all persons who appeared, or requested to appear, in person or by their attorney, were given the opportunity to contend for or contest the Service and Assessment Plan, the Assessment Roll, and the Assessments, and to offer testimony pertinent to any issue presented on the amount of the Assessment, the allocation of Costs, the purposes of the Assessments, the special benefits of the Assessments, and the penalties and interest on annual installments and on delinquent annual installments of the Assessment; and WHEREAS, at the January 15, 2015 public hearing referenced above, there were no written objections or evidence submitted to the Town Secretary in opposition to the Service and Assessment Plan, the allocation of Costs, the Assessment Roll, or the levy of the Assessments; and WHEREAS, the Town Council closed the hearing and, after considering all written and documentary evidence presented at the hearing, including all written comments and statements filed with the Town, at a meeting held on January 15, 2015, approved and accepted the Service and Assessment Plan in conformity with the requirements of the PID Act and adopted the Assessment Ordinance, which Assessment Ordinance approved the Assessment Roll and levied the Assessments; and WHEREAS, the Assessment Ordinance also approved the levy and collection of maintenance assessments (the "Maintenance Assessments") in the event such Maintenance Assessments ever become required under the provisions of the Service and Assessment Plan; and WHEREAS, the Maintenance Assessments are not pledged to the payment of the Bonds and are not a part of the Trust Estate; and WHEREAS, on January 15, 2015, the Town Council adopted a resolution approving the execution of the Financing Agreement, the Redemption Waiver Agreement and the Reimbursement Agreement; and WHEREAS, the Town Council is authorized by the PID Act to issue its revenue bonds payable from the Assessments for the purpose of (i) paying the Costs, (ii) paying interest on the Bonds during and after the period of acquisition and construction of the Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds and (iv) for funding other funds as provided in Section 6.2; and WHEREAS, the Town Council now desires to issue its revenue bonds, in accordance with the PID Act, such bonds to be entitled "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)" (the "Bonds"), such Bonds being payable solely from the Assessments and other funds pledged under this Indenture to the payment of the Bonds and for the purposes set forth in this preamble; and WHEREAS, the Trustee has agreed to accept the trusts herein created upon the terms set forth in this Indenture; NOW, THEREFORE, the Town, in consideration of the foregoing premises and acceptance by the Trustee of the trusts herein created, of the purchase and acceptance of the 3 Bonds by the Owners thereof, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, does hereby GRANT, CONVEY, PLEDGE, TRANSFER, ASSIGN, and DELIVER to the Trustee for the benefit of the Owners, a security interest in all of the moneys, rights and properties described in the Granting Clauses hereof, as follows (collectively, the "Trust Estate"): FIRST GRANTING CLAUSE The Pledged Revenues, as herein defined, including all moneys and investments held in the Pledged Funds, but excluding any moneys held in the Developer Improvement Account of the Project Fund, including any contract or any evidence of indebtedness related thereto or other rights of the Town to receive any of such moneys or investments, whether now existing or hereafter coming into existence, and whether now or hereafter acquired; and SECOND GRANTING CLAUSE Any and all other property or money of every name and nature which is, from time to time hereafter by delivery or by writing of any kind, conveyed, pledged, assigned or transferred, to the Trustee as additional security hereunder by the Town or by anyone on its behalf or with its written consent, and the Trustee is hereby authorized to receive any and all such property or money at any and all times and to hold and apply the same subject to the terms thereof; and THIRD GRANTING CLAUSE Any and all proceeds of the foregoing property and proceeds from the investment of the foregoing property; TO HAVE AND TO HOLD the Trust Estate, whether now owned or hereafter acquired, unto the Trustee and its successors or assigns; IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the benefit of all present and future Owners of the Bonds from time to time issued under and secured by this Indenture, and for enforcement of the payment of the Bonds in accordance with their terms, and for the performance of and compliance with the obligations, covenants, and conditions of this Indenture; PROVIDED, HOWEVER, if the Town or its assigns shall well and truly pay, or cause to be paid, the principal or Redemption Price of and the interest on the Bonds at the times and in the manner stated in the Bonds, according to the true intent and meaning thereof, then this Indenture and the rights hereby granted shall cease, terminate and be void; otherwise this Indenture is to be and remain in full force and effect; IN ADDITION, the Bonds are special obligations of the Town payable solely from the Pledged Revenues, as and to the extent provided in this Indenture. The Bonds do not give rise to a charge against the general credit or taxing powers of the Town and are not payable except as provided in this Indenture. Notwithstanding anything to the contrary herein, the Owners of the Bonds shall never have the right to demand payment thereof out of any funds of the Town other 4 than the Pledged Revenues. The Town shall have no legal or moral obligation to pay for the Bonds out of any funds of the Town other than the Pledged Revenues. THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated, and delivered and the Trust Estate hereby created, assigned, and pledged is to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses, and purposes as hereinafter expressed, and the Town has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective Owners from time to time of the Bonds as follows: ARTICLE I DEFINITIONS, FINDINGS AND INTERPRETATION Section 1.1. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise in this Indenture, the following terms shall have the meanings specified below: "Account", in the singular, means any of the accounts established pursuant to Section 6.1 of this Indenture, and "Accounts", in the plural, means, collectively, all of the accounts established pursuant to Section 6.1 of this Indenture. "Additional Bonds" means the additional parity bonds that are authorized to be issued in accordance with the terms and conditions prescribed in Section 13.2(c) of this Indenture. "Administrative Fund" means that Fund established by Section 6.1 and administered pursuant to Section 6.9. "Administrative Expenses" means the costs associated with or incident to the administration, organization, maintenance and operation of Improvement Area #1, Improvement Area #2 and Improvement Area #3, including, but not limited to, the costs of: (i) creating and organizing the PID, including conducting hearings, preparing notices and petitions, and all costs incident thereto, engineering fees, legal fees and consultant fees, (ii) the annual administrative, organization, maintenance and operation costs and expenses associated with, or incident and allocable to, the administration, organization, maintenance and operation of Improvement Area #1, Improvement Area #2 and Improvement Area #3 in relation to the Improvement Project A Improvements, (iii) computing, levying, billing and collecting Assessments or the installments thereof, (iv) maintaining the record of installments of the Assessments and the system of registration and transfer of the Bonds, (v) paying and redeeming the Bonds, (vi) investing or depositing of monies, (vii) complying with the PID Act and codes with respect to the Bonds, (viii) Trustee fees and expenses relating to the Bonds, (ix) legal counsel, engineers, accountants, financial advisors, investment bankers or other consultants and advisors providing services related to the Bonds, and (x) administering the construction of the Improvement Project A Improvements. Administrative Expenses do not include payment of the actual principal of, redemption premium, and interest on the Bonds. Amounts collected in conjunction with Annual Installments for Administrative Expenses and not expended for actual 5 Administrative Expenses shall be carried forward and applied to reduce Administrative Expenses in subsequent years to avoid the over-collection of Administrative Expenses. "Administrator" means an employee or designee of the Town who shall have the responsibilities provided in the Service and Assessment Plan, this Indenture, or any other agreement or document approved by the Town related to the duties and responsibilities of the administration of the District. "Annual Debt Service" means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year (excluding interest paid from funds on deposit in the Capitalized Interest Account of the Bond Fund), assuming that the Outstanding Bonds are retired as scheduled (including by reason of Sinking Fund Installments), and (ii) the principal amount of the Outstanding Bonds due in such Bond Year (including any Sinking Fund Installments due in such Bond Year). "Annual Installment" means, with respect to each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel each annual payment of: (i) the Assessments as shown on the Assessment Rolls or in an Annual Service Plan Update, and calculated as provided in Section VI of the Service and Assessment Plan, (ii) Administrative Expenses, (iii) the prepayment reserve, and (iv) the delinquency reserve. "Annual Service Plan Update" means the annual review and update of the Service and Assessment Plan required by the PID Act and the Service and Assessment Plan. "Applicable Laws" means the PID Act, and all other laws or statutes, rules, or regulations, and any amendments thereto, of the State or of the United States, by which the Town and its powers, securities, operations, and procedures are, or may be, governed or from which its powers may be derived. "Assessment Ordinance" means Ordinance No. _____ adopted by the Town Council on January 15, 2015, as may be amended or supplemented, that levied the Assessments on the Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels. "Assessment Revenues" means the revenues received by the Town from the collection of Assessments, including Prepayments, Annual Installments and Foreclosure Proceeds. "Assessment Roll" means the document attached as Appendix E to the Service and Assessment Plan, showing the total amount of the Assessments against each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel, as updated, modified, or amended from time to time in accordance with the terms of the Service and Assessment Plan and the PID Act. "Assessments" means the "Assessment Part A" (as defined in the Service and Assessment Plan) levied against the Improvement Area #1 Assessed Parcels, the Improvement Area #2 Assessed Parcels and the Improvement Area #3 Assessed Parcels based on the special benefit conferred on such Parcels by the Improvement Project A Improvements. 6 "Attorney General" means the Attorney General of the State. "Authorized Denomination" means $25,000 and any integral multiple of $5,000 in excess thereof. The Town prohibits any Bond to be issued in a denomination of less than $25,000 and further prohibits the assignment of a CUSIP number to any Bond with a denomination of less than $25,000, and any attempt to accomplish either of the foregoing shall be void and of no effect. "Authorized Improvements" mean those public improvements described in Section III.B. and Appendix B of the Service and Assessment Plan and any future updates and/or amendments. "Bond" means any of the Bonds. "Bond Counsel" means McCall, Parkhurst & Horton L.L.P. or any other attorney or firm of attorneys designated by the Town that are nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. "Bond Date" means the date designated as the initial date of the Bonds by Section 3.2(a) of this Indenture. "Bond Fund" means the Fund established pursuant to Section 6.1 and administered pursuant to Section 6.4. "Bond Ordinance" means Ordinance No. _____ adopted by the Town Council on January 15, 2015 authorizing the issuance of the Bonds pursuant to this Indenture. "Bond Year" means the one-year period beginning on October 1 in each year and ending on the day prior to October 1 in the following year. "Bonds" means the Town's bonds authorized to be issued by Section 3.1 of this Indenture entitled "Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)." "Bonds Similarly Secured" means, collectively, any Outstanding Bonds and Additional Bonds. "Business Day" means any day other than a Saturday, Sunday or legal holiday in the State observed as such by the Town or the Trustee or any national holiday observed by the Trustee. "Certification for Payment" means a certificate executed by an engineer, construction manager or other person or entity acceptable to the Town, as evidenced by the signature of a Town Representative, specifying the amount of work performed and the cost thereof, presented to the Trustee to request funding for Costs from money on deposit in the Project Fund. Each Certification for Payment shall be substantially in the form attached to the Financing Agreement as Exhibit B. "Closing Date" means the date of the initial delivery of and payment for the Bonds. 7 "Code" means the Internal Revenue Code of 1986, as amended, including applicable regulations, published rulings and court decisions. "Comptroller" means the Comptroller of Public Accounts of the State. "Costs" means the costs of the Improvement Project A Improvements to be assessed against the Improvement Area #1 Assessed Parcels, the Improvement Area #2 Assessed Parcels and the Improvement Area #3 Assessed Parcels. "Defeasance Securities" means Investment Securities then authorized by applicable law for the investment of funds to defease public securities. "Delinquency Reserve Requirement" means an amount equal to 4% of the principal amount of the then Outstanding Bonds, which amount will be funded from Assessments and Annual Installments deposited to the Pledged Revenue Fund in accordance with the terms of this Indenture. "Delinquent Collection Costs" means, for a Parcel, interest, penalties and attorneys' fees that are authorized by the PID Act and by the Assessment Ordinance and that directly or indirectly relate to the collection of delinquent Assessments, delinquent Annual Installments, or any other delinquent payments due under the SAP, including costs and expenses related to the foreclosure of liens. "Designated Payment/Transfer Office" means (i) with respect to the initial Paying Agent/Registrar named in this Indenture, the transfer/payment office designated by the Paying Agent/Registrar and (ii) with respect to any successor Paying Agent/Registrar, the office of such successor designated and located as may be agreed upon by the Town and such successor. "Developer" means Solana Partners - Solana Land, L.P., a Texas limited partnership, and any successor thereto under the Financing Agreement. "Developer Property Tax Delinquency Amount" means, as of any date of determination, any amount of ad valorem taxes levied by any taxing entity on Parcels located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 subject to an agricultural valuation for purposes of such ad valorem taxes remaining unpaid on or after February 1 of the year after such ad valorem taxes are due. "Developer Property Tax Reserve Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.10. "Developer Property Tax Reserve Fund Release Date" means the March 1 specified in Section 6.10(b). "DTC" means The Depository Trust Company of New York, New York, or any successor securities depository. 8 "DTC Participant" means brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations on whose behalf DTC was created to hold securities to facilitate the clearance and settlement of securities transactions among DTC Participants. "Financing Agreement" means the Construction, Funding, and Acquisition Agreement between the City and the Developer, dated as of January 15, 2015, as may be amended and supplemented from time to time. "Foreclosure Proceeds" means the proceeds, including interest and penalty interest, received by the Town from the enforcement of the Assessments against any Improvement Area #1 Assessed Parcel(s), Improvement Area #2 Assessed Parcel(s) or Improvement Area #3 Assessed Parcel(s), whether by foreclosure of lien or otherwise, but excluding and net of all Delinquent Collection Costs. "Fund", in the singular, means any of the funds established pursuant to Section 6.1 of this Indenture, and "Funds", in the plural, means, collectively, all of the funds established pursuant to Section 6.1 of this Indenture. "Improvement Area #1" means the area of the District to be improved by the Improvement Project A Improvements and the Improvement Project B Improvements, consisting of the property depicted in Appendix A to the Service and Assessment Plan. "Improvement Area #1 Assessed Parcels" means the property that benefits from the Improvement Project A Improvements and the Improvement Project B Improvements to be provided by the PID as determined by the Town Council on which, (i) with respect to the Improvement Project A Improvements, the Assessments have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update and, (ii) with respect to the Improvement Project B Improvements, the "Assessment Part B" (as defined in the Service and Assessment Plan), which may be imposed in the future. The Assessment Part B is not part of the Trust Estate and shall not be security for the Bonds. "Improvement Area #2" means the area of the District to be improved by the Improvement Project A Improvements, consisting of the property depicted in Appendix A to the Service and Assessment Plan. "Improvement Area #2 Assessed Parcels" means the property that benefits from the Improvement Project A Improvements to be provided by the PID as determined by the Town Council on which the Assessments have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. "Improvement Area #3" means the area of the District to be improved by the Improvement Project A Improvements, consisting of the property depicted in Appendix A to the Service and Assessment Plan. "Improvement Area #3 Assessed Parcels" means the property that benefits from the Improvement Project A Improvements to be provided by the PID as determined by the Town Council on which the Assessments have been imposed as shown in the Assessment Roll, as the Assessment Roll is updated each year by the Annual Service Plan Update. 9 "Improvement Project A Improvements" means the portion of the Authorized Improvements which will benefit Improvement Area #1, Improvement Area #2 and Improvement Area #3 (defined as "Improvement Project A" in the Service and Assessment Plan) and are more particularly described Section III.B. of the Service and Assessment Plan and any future updates and/or amendments thereto. "Improvement Project B Improvements" means the portion of the Authorized Improvements which will benefit Improvement Area #1 (defined as "Improvement Project B" in the Service and Assessment Plan) and are more particularly described Section III.B. of the Service and Assessment Plan and any future updates and/or amendments thereto. The Improvement Project B Improvements will not be funded from Bond proceeds. "Indenture" means this Indenture of Trust as originally executed or as it may be from time to time supplemented or amended by one or more indentures supplemental hereto and entered into pursuant to the applicable provisions hereof. "Independent Financial Consultant" means any consultant or firm of such consultants appointed by the Town who, or each of whom: (i) is judged by the Town, as the case may be, to have experience in matters relating to the issuance and/or administration of the Bonds; (ii) is in fact independent and not under the domination of the Town; (iii) does not have any substantial interest, direct or indirect, with or in the Town, or any owner of real property in the District, or any real property in the District; and (iv) is not connected with the Town as an officer or employee of the Town, but who may be regularly retained to make reports to the Town. "Initial Bonds" means the Initial Bonds authorized by Section 5.2 of this Indenture. "Interest Payment Date" means the date or dates upon which interest on the Bonds is scheduled to be paid until their respective dates of maturity or prior redemption, such dates being on March 1 and September 1 of each year, commencing September 1, 2015. "Investment Securities" means those authorized investments described in the Public Funds Investment Act, Chapter 2256, Government Code, as amended, which investments are, at the time made, included in and authorized by the Town's official investment policy as approved by the Town Council from time to time. "Maximum Annual Debt Service" means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. "Outstanding" means, as of any particular date when used with reference to Bonds, all Bonds authenticated and delivered under this Indenture except (i) any Bond that has been canceled by the Trustee (or has been delivered to the Trustee for cancellation) at or before such date, (ii) any Bond for which the payment of the principal or Redemption Price of and interest on such Bond shall have been made as provided in Article IV, (iii) any Bond in lieu of or in substitution for which a new Bond shall have been authenticated and delivered pursuant to Section 3.10 and (iv) Bond alleged to have been mutilated, destroyed, cost or stolen which have been paid as provided in this Indenture. 10 "Owner" means the Person who is the registered owner of a Bond or Bonds, as shown in the Register, which shall be Cede & Co., as nominee for DTC, so long as the Bonds are in book- entry only form and held by DTC as securities depository in accordance with Section 3.11. The term "Owner", when used in connection with the Bonds Similarly Secured, shall also include the Person who is the registered owner of a Bond Similarly Secured under the terms of any indenture relating to any Additional Bonds. "Parcel" or "Parcels" means a parcel or parcels within the District identified by either a tax map identification number assigned by the Tarrant Appraisal District for real property tax purposes or by lot and block number in a final subdivision plat recorded in the real property records of Tarrant County. "Paying Agent/Registrar" means initially the Trustee, or any successor thereto as provided in this Indenture. "Person" or "Persons" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "PID Act" means Chapter 372, Improvement Districts in Municipalities and Counties, Subchapter A, Public Improvement Districts, Texas Local Government Code, as amended. "Pledged Funds" means, collectively, the Pledged Revenue Fund, the Bond Fund, the Project Fund (but excluding the Developer Improvement Account), the Reserve Fund, and the Redemption Fund. "Pledged Revenue Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.3. "Pledged Revenues" means, collectively, the (i) Assessment Revenues (excluding the portion of the Assessments and Annual Installments collected for the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan), (ii) the moneys held in any of the Pledged Funds and (iii) any additional revenues that the Town may pledge to the payment of the Bonds and Additional Bonds. "Prepayment" means the payment of all or a portion of an Assessment before the due date thereof. Amounts received at the time of a Prepayment which represent a payment of principal, interest or penalties on a delinquent installment of an Assessment are not to be considered a Prepayment, but rather are to be treated as the payment of the regularly scheduled Assessment. "Prepayment Costs" means interest and expenses to the date of Prepayment, plus any additional expenses related to the Prepayment, reasonably expected to be incurred by or imposed upon the Town as a result of any Prepayment. "Prepayment Reserve Requirement" means an amount equal to 1.5% of the principal amount of the then Outstanding Bonds, which amount will be funded from Assessments and Annual Installments deposited to the Pledged Revenue Fund in accordance with the terms of this Indenture. 11 "Project Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.5. "Purchaser" means the initial purchaser of the Bonds. "Rebatable Arbitrage" means rebatable arbitrage as defined in Section 1.148-3 of the Treasury Regulations. "Rebate Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.8. "Record Date" means the close of business on the fifteenth calendar day of the month next preceding an Interest Payment Date. "Redemption Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.6. "Redemption Price" means, when used with respect to any Bond or portion thereof, the principal amount of such Bond or such portion thereof plus the applicable premium, if any, plus accrued and unpaid interest on such Bond to the date fixed for redemption payable upon redemption thereof pursuant to this Indenture. "Redemption Waiver Agreement" means the Maguire Partners-Solana Land, L.P. Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation - Solana PID by and between the Town, the Developer and the Trustee, dated as of January 15, 2015, as may be amended and supplemented from time to time. "Register" means the register specified in Article III of this Indenture. "Reimbursement Agreement" means the Reimbursement Agreement by and between the City and the Developer, dated as of January 15, 2015, as may be amended and supplemented from time to time. “Reimbursement Fund” means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.13 herein. "Reserve Fund" means that fund established pursuant to Section 6.1 and administered pursuant to Section 6.7. "Reserve Fund Obligations" means cash or Investment Securities. "Reserve Fund Requirement" means the least of: (i) Maximum Annual Debt Service on the Bonds Similarly Secured as of the date of issuance, (ii) 125% of average Annual Debt Service on the Bonds Similarly Secured as of the date of issuance, and (iii) 10% of the proceeds of the Bonds Similarly Secured; provided, however, that such amount shall be reduced by the amount of any transfers made pursuant to Section 6.7(c); and provided further that as a result of (1) a mandatory sinking fund redemption pursuant to Section 4.2, (2) an optional redemption 12 pursuant to Section 4.3 or (3) an extraordinary optional redemption pursuant to Section 4.4, the Reserve Fund Requirement shall be reduced by a percentage equal to the pro rata principal amount of Bonds Similarly Secured redeemed by such optional redemption divided by the total principal amount of the Outstanding Bonds Similarly Secured prior to such redemption. As of the date of delivery of the Bonds, the Reserve Fund Requirement is $_____ which is an amount equal to Maximum Annual Debt Service on the Bonds Similarly Secured as of the date of issuance. "Service and Assessment Plan" and "SAP" each mean the document, including the Assessment Roll, which is attached as Exhibit B to the Assessment Ordinance, as may be updated, amended and supplemented from time to time. "Service Plan Updates" means the updates to the Service and Assessment Plan defined as "Service Plan Updates" in the Service and Assessment Plan. "Sinking Fund Installment" means the amount of money to redeem or pay at maturity the principal of a Stated Maturity of Bonds payable from such installments at the times and in the amounts provided in Section 4.2. "State" means the State of Texas. "Stated Maturity" means the date the Bonds, or any portion of the Bonds, as applicable are scheduled to mature without regard to any redemption or prepayment. "Subaccount" means any of the subaccounts established pursuant to Section 6.1 of this Indenture. "Supplemental Indenture" means an indenture which has been duly executed by the Town Representative pursuant to an ordinance adopted by the Town Council and which indenture amends or supplements this Indenture, but only if and to the extent that such indenture is specifically authorized hereunder. "Town Certificate" means a certificate signed by the Town Representative and delivered to the Trustee. "Town Order" means written instructions by the Town, executed by a Town Representative. "Town Representative" means that official or agent of the Town authorized by the Town Council to undertake the action referenced herein. "Treasury Regulations" shall have the meaning assigned to such term in Section 7.5(c). "Trust Estate" means the Trust Estate described in the granting clauses of this Indenture. "Trustee" means U.S. Bank National Association and its successors, and any other corporation or association that may at any time be substituted in its place, as provided in Article IX, such entity to serve as Trustee and Paying Agent/Registrar for the Bonds. 13 "Value of Investment Securities" means the amortized value of any Investment Securities, provided, however, that all United States of America, United States Treasury Obligations – State and Local Government Series shall be valued at par and those obligations which are redeemable at the option of the holder shall be valued at the price at which such obligations are then redeemable. The computations shall include accrued interest on the investment securities paid as a part of the purchase price thereof and not collected. For the purposes of this definition "amortized value," when used with respect to a security purchased at par means the purchase price of such security and when used with respect to a security purchased at a premium above or discount below par, means as of any subsequent date of valuation, the value obtained by dividing the total premium or discount by the number of interest payment dates remaining to maturity on any such security after such purchase and by multiplying the amount as calculated by the number of interest payment dates having passed since the date of purchase and (i) in the case of a security purchased at a premium, by deducting the product thus obtained from the purchase price, and (ii) in the case of a security purchased at a discount, by adding the product thus obtained to the purchase price. Section 1.2. Findings. The declarations, determinations and findings declared, made and found in the preamble to this Indenture are hereby adopted, restated and made a part of the operative provisions hereof. Section 1.3. Table of Contents, Titles and Headings. The table of contents, titles, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Indenture or any provision hereof or in ascertaining intent, if any question of intent should arise. Section 1.4. Interpretation. (a) Unless the context requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. (b) Words importing persons include any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or agency or political subdivision thereof. (c) Any reference to a particular Article or Section shall be to such Article or Section of this Indenture unless the context shall require otherwise. (d) When used in Article XI of this Indenture in connection with the Bonds Similarly Secured, any reference to this Indenture, Article XI of this Indenture or any Section thereunder, and/or any events of default or remedies set forth therein, such terms and references shall be read 14 and interpreted to include any indenture relating to any Additional Bonds, the related Article or Section in such indenture, and/or the events of default and remedies set forth therein. (e) This Indenture and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein to sustain the validity of this Indenture. ARTICLE II THE BONDS Section 2.1. Security for the Bonds. (a) The Bonds, as to both principal and interest, are and shall be equally and ratably secured by and payable from a first lien on and pledge of the Trust Estate. (b) The lien on and pledge of the Pledged Revenues shall be valid and binding and fully perfected from and after the Closing Date, which is the date of the delivery of this Indenture, without physical delivery or transfer of control of the Pledged Revenues, the filing of this Indenture or any other act; all as provided in Chapter 1208 of the Texas Government Code, as amended, which applies to the issuance of the Bonds and the pledge of the Pledged Revenues granted by the Town under this Indenture, and such pledge is therefore valid, effective and perfected. If Texas law is amended at any time while the Bonds are Outstanding such that the pledge of the Pledged Revenues granted by the Town under this Indenture is to be subject to the filing requirements of Chapter 9, Business and Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in said pledge, the Town 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 and Commerce Code and enable a filing to perfect the security interest in said pledge to occur. Section 2.2. Limited Obligations. The Bonds are special and limited obligations of the Town, payable solely from and secured solely by the Trust Estate, including the Pledged Revenues and the Pledged Funds; and the Bonds shall never be payable out of funds raised or to be raised by taxation or from any other revenues, properties or income of the Town. Section 2.3. Authorization for Indenture. The terms and provisions of this Indenture and the execution and delivery hereof by the Town to the Trustee have been duly authorized by official action of the Town Council of the Town. The Town has ascertained and it is hereby determined and declared that the execution and delivery of this Indenture is necessary to carry out and effectuate the purposes set forth in the preambles of this Indenture and that each and every covenant or agreement herein contained and made is necessary, useful and/or convenient in order to better secure the Bonds and is a contract or agreement necessary, useful and/or convenient to carry out and effectuate the purposes herein described. 15 Section 2.4. Contract with Owners and Trustee. (a) The purposes of this Indenture are to establish a lien and the security for, and to prescribe the minimum standards for the authorization, issuance, execution and delivery of, the Bonds and to prescribe the rights of the Owners, and the rights and duties of the Town and the Trustee. (b) In consideration of the purchase and acceptance of any or all of the Bonds by those who shall purchase and hold the same from time to time, the provisions of this Indenture shall be a part of the contract of the Town with the Owner, and shall be deemed to be and shall constitute a contract among the Town, the Owners, and the Trustee. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE BONDS Section 3.1. Authorization. The Bonds are hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State, including particularly the PID Act, as amended. The Bonds shall be issued in the aggregate principal amount of [$26,175,000] for the purpose of (i) paying a portion of the Costs, (ii) paying a portion of the interest on the Bonds during and after the period of acquisition and construction of the Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds, (iv) paying a portion of the costs incidental to the organization of the District, and (v) paying the costs of issuance of the Bonds. Section 3.2. Date, Denomination, Maturities, Numbers and Interest. (a) The Bonds shall be dated the date of the initial delivery thereof (the "Bond Date") and shall be issued in Authorized Denominations. The Bonds shall be in fully registered form, without coupons, and shall be numbered separately from R-1 upward, except the Initial Bond, which shall be numbered T-1. (b) Interest shall accrue and be paid on each Bond from the later of the Bond Date or the most recent Interest Payment Date to which interest has been paid or provided for, at the rate per annum set forth below until the principal thereof has been paid on the maturity date specified below or otherwise provided for. Such interest shall be payable semiannually on March 1 and September 1 of each year, commencing September 1, 2015, computed on the basis of a 360-day year of twelve 30-day months. (c) The Bonds shall mature on September 1 in the years and in the principal amounts and shall bear interest at the rates set forth below: 16 Year Principal Amount Interest Rate 20__ 20__ 20__ 20__ (d) The Bonds shall be subject to mandatory sinking fund redemption, optional redemption, and extraordinary optional redemption prior to maturity as provided in Article IV, and shall otherwise have the terms, tenor, denominations, details, and specifications as set forth in the form of Bond set forth in Section 5.2. Section 3.3. Conditions Precedent to Delivery of Bonds. The Bonds shall be executed by the Town and delivered to the Trustee, whereupon the Trustee shall authenticate the Bonds and, upon payment of the purchase price of the Bonds, shall deliver the Bonds upon the order of the Town, but only upon delivery to the Trustee of: (a) a certified copy of the Assessment Ordinance; (b) a certified copy of the Bond Ordinance; (c) a copy of the executed Financing Agreement; (d) a copy of the executed Reimbursement Agreement; (e) a copy of a Continuing Disclosure Agreement between the Town and the Trustee (in its capacity as dissemination agent thereunder) and a Continuing Disclosure Agreement between the Developer and the Trustee (in its capacity as dissemination agent thereunder); (f) a copy of this Indenture executed by the Trustee and the Town; and (g) a Town Certificate directing the authentication and delivery of the Bonds, describing the Bonds to be authenticated and delivered, designating the purchasers to whom the Bonds are to be delivered, stating the purchase price of the Bonds and stating that all items required by this Section are therewith delivered to the Trustee in form and substance satisfactory to the Town. Section 3.4. Medium, Method and Place of Payment. (a) Principal of and interest on the Bonds shall be paid in lawful money of the United States of America, as provided in this Section. (b) Interest on the Bonds shall be payable to the Owners thereof as shown in the Register at the close of business on the relevant Record Date. (c) Interest on the Bonds shall be paid by check, dated as of the Interest Payment Date, and sent, first class United States mail, postage prepaid, by the Paying Agent/Registrar to 17 each Owner at the address of each as such appears in the Register or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the Owner; provided, however, the Owner shall bear all risk and expense of such other banking arrangement. (d) The principal of each Bond shall be paid to the Owner of such Bond on the due date thereof, whether at the maturity date or the date of prior redemption thereof, upon presentation and surrender of such Bond at the Designated Payment/Transfer Office of the Paying Agent/Registrar. (e) If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Designated Payment/Transfer Office of the Paying Agent/Registrar is located are required or authorized by law or executive order to close, the date for such payment shall be the next succeeding day that is not a Saturday, Sunday, legal holiday, or day on which banking institutions are required or authorized to close, and payment on such date shall for all purposes be deemed to have been made on the due date thereof as specified in Section 3.2 of this Indenture. (f) Unclaimed payments of amounts due hereunder shall be segregated in a special account and held in trust, uninvested by the Paying Agent/Registrar, for the account of the Owner of the Bonds to which such unclaimed payments pertain. Subject to any escheat, abandoned property, or similar law of the State, any such payments remaining unclaimed by the Owners entitled thereto for three (3) years after the applicable payment or redemption date shall be applied to the next payment or payments on the Bonds thereafter coming due and, to the extent any such money remains after the retirement of all Outstanding Bonds, shall be paid to the Town to be used for any lawful purpose. Thereafter, none of the Town, the Paying Agent/Registrar, or any other Person shall be liable or responsible to any holders of such Bonds for any further payment of such unclaimed moneys or on account of any such Bonds, subject to any applicable escheat law or similar law of the State. Section 3.5. Execution and Registration of Bonds. (a) The Bonds shall be executed on behalf of the Town by the Mayor and Town Secretary, by their manual or facsimile signatures, and the official seal of the Town shall be impressed or placed in facsimile thereon such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the Town had been manually impressed upon each of the Bonds. (b) In the event that any officer of the Town whose manual or facsimile signature appears on the Bonds ceases to be such officer before the authentication of such Bonds or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Indenture unless and until there appears thereon the Certificate of Trustee substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Trustee. It shall not be required that 18 the same officer or authorized signatory of the Trustee sign the Certificate of Trustee on all of the Bonds. In lieu of the executed Certificate of Trustee described above, the Initial Bond delivered at the Closing Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided herein, manually executed by the Comptroller, or by her duly authorized agent, which certificate shall be evidence that the Initial Bond has been duly approved by the Attorney General, is a valid and binding obligation of the Town, and has been registered by the Comptroller. (d) On the Closing Date, one Initial Bond representing the entire principal amount of all Bonds, payable in stated installments to the Purchaser, or its designee, executed with the manual or facsimile signatures of the Mayor and the Town Secretary, approved by the Attorney General, and registered and manually signed by the Comptroller, will be delivered to the Purchaser or its designee. Upon payment for the Initial Bond, the Trustee shall cancel the Initial Bond and deliver to DTC on behalf of the Purchaser one registered definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all Bonds for such maturity, registered in the name of Cede & Co., as nominee of DTC. Section 3.6. Ownership. (a) The Town, the Trustee, the Paying Agent/Registrar and any other Person may treat the Person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment as provided herein (except interest shall be paid to the Person in whose name such Bond is registered on the Record Date) and for all other purposes, whether or not such Bond is overdue, and none of the Town, the Trustee or the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. (b) All payments made to the Owner of any Bond shall be valid and effectual and shall discharge the liability of the Town, the Trustee and the Paying Agent/Registrar upon such Bond to the extent of the sums paid. Section 3.7. Registration, Transfer and Exchange. (a) So long as any Bond remains outstanding, the Town shall cause the Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a Register in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Bonds in accordance with this Indenture. The Paying Agent/Registrar represents and warrants that it will maintain a copy of the Register, and shall cause the Register to be current with all registration and transfer information as from time to time may be applicable. (b) A Bond shall be transferable only upon the presentation and surrender thereof at the Designated Payment/Transfer Office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar. No transfer of any Bond shall be effective until entered in the Register. (c) The Bonds shall be exchangeable upon the presentation and surrender thereof at the Designated Payment/Transfer Office of the Paying Agent/Registrar for a Bond or Bonds of the same maturity and interest rate and in any Authorized Denomination and in an aggregate 19 principal amount equal to the unpaid principal amount of the Bond presented for exchange. The Trustee is hereby authorized to authenticate and deliver Bonds exchanged for other Bonds in accordance with this Section. (d) The Trustee is hereby authorized to authenticate and deliver Bonds transferred or exchanged in accordance with this Section. A new Bond or Bonds will be delivered by the Paying Agent/Registrar, in lieu of the Bond being transferred or exchanged, at the Designated Payment/Transfer Office, or sent by United States mail, first class, postage prepaid, to the Owner or his designee. Each transferred Bond delivered by the Paying Agent/Registrar in accordance with this Section shall constitute an original contractual obligation of the Town and shall be entitled to the benefits and security of this Indenture to the same extent as the Bond or Bonds in lieu of which such transferred Bond is delivered. (e) Each exchange Bond delivered in accordance with this Section shall constitute an original contractual obligation of the Town and shall be entitled to the benefits and security of this Indenture to the same extent as the Bond or Bonds in lieu of which such exchange Bond is delivered. (f) No service charge shall be made to the Owner for the initial registration, subsequent transfer, or exchange for a different denomination of any of the Bonds. The Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection with the registration, transfer, or exchange of a Bond. (g) Neither the Town nor the Paying Agent/Registrar shall be required to issue, transfer, or exchange any Bond or portion thereof called for redemption prior to maturity within forty-five (45) days prior to the date fixed for redemption; provided, however, such limitation shall not be applicable to an exchange by the Owner of the uncalled principal balance of a Bond. Section 3.8. Cancellation. All Bonds paid or redeemed before scheduled maturity in accordance with this Indenture, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance with this Indenture, shall be cancelled, and proper records shall be made regarding such payment, redemption, exchange, or replacement. Whenever in this Indenture provision is made for the cancellation by the Trustee of any Bonds, the Trustee shall destroy such Bonds and deliver a certificate of such destruction to the Town. Section 3.9. Temporary Bonds. (a) Following the delivery and registration of the Initial Bond and pending the preparation of definitive Bonds, the proper officers of the Town may execute and, upon the Town's request, the Trustee shall authenticate and deliver, one or more temporary Bonds that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Bonds in lieu of which they are delivered, without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers of the Town executing such temporary Bonds may determine, as evidenced by their signing of such temporary Bonds. 20 (b) Until exchanged for Bonds in definitive form, such Bonds in temporary form shall be entitled to the benefit and security of this Indenture. (c) The Town, without unreasonable delay, shall prepare, execute and deliver to the Trustee the Bonds in definitive form; thereupon, upon the presentation and surrender of the Bond or Bonds in temporary form to the Paying Agent/Registrar, the Paying Agent/Registrar shall cancel the Bonds in temporary form and the Trustee shall authenticate and deliver in exchange therefor a Bond or Bonds of the same maturity and series, in definitive form, in the Authorized Denomination, and in the same aggregate principal amount, as the Bond or Bonds in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.10. Replacement Bonds. (a) Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Bond, the Trustee shall authenticate and deliver in exchange therefor a replacement Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding. The Town or the Paying Agent/Registrar may require the Owner of such Bond to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected therewith. (b) In the event that any Bond is lost, apparently destroyed or wrongfully taken, the Trustee, pursuant to the applicable laws of the State and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall authenticate and deliver a replacement Bond of like tenor and principal amount bearing a number not contemporaneously outstanding, provided that the Owner first complies with the following requirements: (i) furnishes to the Paying Agent/Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction or theft of such Bond; (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar and the Trustee to save them and the Town harmless; (iii) pays all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Trustee and the Paying Agent/Registrar and any tax or other governmental charge that is authorized to be imposed; and (iv) satisfies any other reasonable requirements imposed by the Town and the Trustee. (c) After the delivery of such replacement Bond, if a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the Town and the Paying Agent/Registrar shall be entitled to recover such replacement Bond from the Person to whom it was delivered or any Person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost, or expense incurred by the Town, the Paying Agent/Registrar or the Trustee in connection therewith. 21 (d) In the event that any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Bond, may pay such Bond if it has become due and payable or may pay such Bond when it becomes due and payable. (e) Each replacement Bond delivered in accordance with this Section shall constitute an original additional contractual obligation of the Town and shall be entitled to the benefits and security of this Indenture to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. Section 3.11. Book-Entry Only System. (a) The Bonds shall initially be issued in book-entry-only form and shall be deposited with DTC, which is hereby appointed to act as the securities depository therefor, in accordance with the letter of representations from the Town to DTC. On the Closing Date the definitive Bonds shall be issued in the form of a single typewritten certificate for each maturity thereof registered in the name of Cede & Co., as nominee for DTC. (b) With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the Town and the Paying Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any Person on behalf of whom such a DTC Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the Town and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant will respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other Person, other than an Owner, as shown on the Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other Person, other than an Owner, as shown in the Register of any amount with respect to principal of, premium, if any, or interest on the Bonds. Notwithstanding any other provision of this Indenture to the contrary, the Town and the Paying Agent/Registrar shall be entitled to treat and consider the Person in whose name each Bond is registered in the Register as the absolute owner of such Bond for the purpose of payment of principal of, premium, if any, and interest on Bonds, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfer with respect to such Bond, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners as shown in the Register, as provided in this Indenture, and all such payments shall be valid and effective to fully satisfy and discharge the Town's obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the Register, shall receive a Bond certificate evidencing the obligation of the Town to make payments of amounts due pursuant to this Indenture. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Indenture with respect to interest checks or drafts being mailed to the registered owner at the close of business on the Record Date, the word "Cede & Co." in this Indenture shall refer to such new nominee of DTC. 22 Section 3.12. Successor Securities Depository: Transfer Outside Book-Entry-Only System. In the event that the Town determines that DTC is incapable of discharging its responsibilities described herein and in the letter of representations from the Town to DTC, the Town shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository; or (ii) notify DTC and DTC Participants of the availability through DTC of certificated Bonds and cause the Paying Agent/Registrar to transfer one or more separate registered Bonds to DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in the Register in the name of Cede & Co., as nominee of DTC, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Owners transferring or exchanging Bonds shall designate, in accordance with the provisions of this Indenture. Section 3.13. Payments to Cede & Co. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bonds are registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bonds, and all notices with respect to such Bonds shall be made and given, respectively, in the manner provided in the blanket letter of representations from the Town to DTC. ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY Section 4.1. Limitation on Redemption. The Bonds shall be subject to redemption before their scheduled maturity only as provided in this Article IV. Section 4.2. Mandatory Sinking Fund Redemption. (a) The Bonds maturing on September 1 in the years 20__, 20__, 20__ and 20__ (collectively, "Term Bonds"), are subject to mandatory sinking fund redemption prior to their respective maturities and will be redeemed by the Town in part at the redemption price equal to the principal amount of the Bonds called for redemption, plus accrued and unpaid interest to the date fixed for redemption from moneys available for such purpose in the Principal and Interest Account of the Bond Fund pursuant to Article VI, on the dates and in the respective sinking fund installments as set forth in the following schedule: 23 Term Bonds Maturing September 1, 20__ Redemption Date Principal Amount September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__* Term Bonds Maturing September 1, 20__ Redemption Date Principal Amount September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__* Term Bonds Maturing September 1, 20__ Redemption Date Principal Amount September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__* Term Bonds Maturing September 1, 20__ Redemption Date Principal Amount September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__* __________ * Stated maturity. (b) At least thirty (30) days prior to each sinking fund redemption date, the Trustee shall select a principal amount of Bonds of such maturity equal to the Sinking Fund Installment amount of such Bonds to be redeemed, shall call such Bonds for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in Section 4.6. (c) The principal amount of Bonds required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section 4.2 shall be reduced, at the option of the Town, by 24 the principal amount of any Bonds of such maturity which, at least 30 days prior to the sinking fund redemption date shall have been acquired by the Town at a price not exceeding the principal amount of such Bonds plus accrued unpaid interest to the date of purchase thereof, and delivered to the Trustee for cancellation. (d) The principal amount of Bonds required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section 4.2 shall be reduced on a pro rata basis among Sinking Fund Installments by the principal amount of any Bonds which, at least 30 days prior to the sinking fund redemption date, shall have been redeemed pursuant to the optional redemption provisions in Section 4.3 hereof or the extraordinary optional redemption provisions in Section 4.4 hereof and not previously credited to a mandatory sinking fund redemption. Section 4.3. Optional Redemption. The Town reserves the right and option to redeem Bonds before their scheduled maturity date, in whole or in part, on any date on or after September 1, 20__, such redemption date or dates to be fixed by the Town, at the redemption price (expressed as a percentage of principal amount) applicable to the date of redemption falling within the applicable redemption period, as set forth in the following schedule, plus accrued interest to the date of redemption: Redemption Period Redemption Price September 1, 20__ through August 31, 20__ 103% September 1, 20__ through August 31, 20__ 102% September 1, 20__ through August 31, 20__ 101% September 1, 20__ and thereafter. 100% Section 4.4. Extraordinary Optional Redemption. The Town reserves the right and option to redeem Bonds before their respective scheduled maturity dates, in whole or in part, on the fifteenth day of any month, at a redemption price equal to the principal amount of the Bonds called for redemption, plus accrued and unpaid interest to the date fixed for redemption, from amounts on deposit in the Redemption Fund as a result of Prepayments (including related transfers to the Redemption Fund as provided in Section 6.7(c)) or any other transfers to the Redemption Fund under the terms of this Indenture. Section 4.5. Partial Redemption. (a) If less than all of the Bonds are to be redeemed pursuant to either Sections 4.2, 4.3 or 4.4, Bonds shall be redeemed in increments of $5,000 by any method selected by the Trustee that results in a random selection, provided that no redemption shall cause the principal amount of any Bond to be less than the minimum Authorized Denomination for such Bond. Each Bond shall be treated as representing the number of Bonds that is obtained by dividing the principal amount of such Bond by the minimum Authorized Denomination for such Bond. 25 (b) Upon surrender of any Bond for redemption in part, the Trustee in accordance with Section 3.7 of this Indenture, shall authenticate and deliver an exchange Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered, such exchange being without charge. Section 4.6. Notice of Redemption to Owners. (a) The Trustee shall give notice of any redemption of Bonds by sending notice by first class United States mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the Owner of each Bond or portion thereof to be redeemed, at the address shown in the Register. (b) The notice shall state the redemption date, the Redemption Price, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds Outstanding are to be redeemed, and subject to Section 4.5, an identification of the Bonds or portions thereof to be redeemed, any conditions to such redemption and that on the redemption date, if all conditions, if any, to such redemption have been satisfied, such Bond shall become due and payable. (c) Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. (d) The Town has the right to rescind any optional redemption or extraordinary optional redemption described in Section 4.3 or 4.4 by written notice to the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be cancelled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under this Indenture. The Trustee shall mail notice of rescission of redemption in the same manner notice of redemption was originally provided. Section 4.7. Payment Upon Redemption. (a) The Trustee shall make provision for the payment of the Bonds to be redeemed on such date by setting aside and holding in trust an amount from the Redemption Fund or otherwise received by the Trustee from the Town and shall use such funds solely for the purpose of paying the Redemption Price on the Bonds being redeemed. (b) Upon presentation and surrender of any Bond called for redemption at the designated corporate trust office of the Trustee on or after the date fixed for redemption, the Trustee shall pay the Redemption Price on such Bond to the date of redemption from the moneys set aside for such purpose. Section 4.8. Effect of Redemption. Notice of redemption having been given as provided in Section 4.6 of this Indenture, the Bonds or portions thereof called for redemption shall become due and payable on the date fixed for redemption provided that funds for the payment of the principal amount plus accrued unpaid interest on such Bonds to the date fixed for redemption are on deposit with the Trustee; 26 thereafter, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Bonds are presented and surrendered for payment on such date. ARTICLE V FORM OF THE BONDS Section 5.1. Form Generally. (a) The Bonds, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Trustee, and the Assignment to appear on each of the Bonds, (i) shall be substantially in the form set forth in this Article with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Indenture, and (ii) may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including any reproduction of an opinion of counsel) thereon as, consistently herewith, may be determined by the Town or by the officers executing such Bonds, as evidenced by their execution thereof. (b) Any portion of the text of any Bonds may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Bonds. (c) The definitive Bonds shall be typewritten, printed, lithographed, or engraved, and may be produced by any combination of these methods or produced in any other similar manner, all as determined by the officers executing such Bonds, as evidenced by their execution thereof. (d) The Initial Bond submitted to the Attorney General may be typewritten and photocopied or otherwise reproduced. Section 5.2. Form of the Bonds. (a) Form of Bond. REGISTERED NO. ______ United States of America State of Texas TOWN OF WESTLAKE, TEXAS SPECIAL ASSESSMENT REVENUE BOND, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) REGISTERED $ NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF TEXAS, THE TOWN, OR ANY OTHER POLITICAL CORPORATION, SUBDIVISION OR AGENCY THEREOF, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THIS BOND. 27 INTEREST RATE MATURITY DATE DATE OF DELIVERY CUSIP NUMBER ______% September 1, 20__ February 5, 2015 _______ ___ The Town of Westlake, Texas (the "Town"), for value received, hereby promises to pay, solely from the Pledged Revenues, to or registered assigns, on the Maturity Date, as specified above, the sum of ______________________________ DOLLARS unless this Bond shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provision for such payment shall have been made, and to pay interest on the unpaid principal amount hereof from the later of the Date of Delivery, as specified above, or the most recent Interest Payment Date to which interest has been paid or provided for until such principal amount shall have been paid or provided for, at the per annum rate of interest specified above, computed on the basis of a 360-day year of twelve 30-day months, such interest to be paid semiannually on March 1 and September 1 of each year, commencing September 1, 2015. Capitalized terms appearing herein that are defined terms in the Indenture (defined below), have the meanings assigned to them in the Indenture. Reference is made to the Indenture for such definitions and for all other purposes. The principal of this Bond shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Bond at the corporate trust office in St. Paul, Minnesota (the "Designated Payment/Transfer Office"), of U.S. Bank National Association, as trustee and paying agent/registrar (the "Trustee"), or, with respect to a successor trustee and paying agent/registrar, at the Designated Payment/Transfer Office of such successor. Interest on this Bond is payable by check dated as of the Interest Payment Date, mailed by the Trustee to the registered owner at the address shown on the registration books kept by the Trustee or by such other customary banking arrangements acceptable to the Trustee, requested by, and at the risk and expense of, the Person to whom interest is to be paid. For the purpose of the payment of interest on this Bond, the registered owner shall be the Person in whose name this Bond is registered at the close of business on the "Record Date," which shall be the fifteenth calendar day of the month next preceding such Interest Payment Date; provided, however, that in the event of nonpayment of interest on a scheduled Interest Payment Date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Trustee, if and when funds for the payment of such interest have been received from the Town. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five Business Days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Owner of a Bond appearing on the books of the Trustee at the close of business on the last Business Day preceding the date of mailing such notice. ______________________________________ 28 If a date for the payment of the principal of or interest on the Bonds is a Saturday, Sunday, legal holiday, or a day on which banking institutions in the city in which the Designated Payment/Transfer Office is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date payment was due. This Bond is one of a duly authorized issue of assessment revenue bonds of the Town having the designation specified in its title (herein referred to as the "Bonds"), dated as of the Date of Delivery and issued in the aggregate principal amount of [$26,175,000] and issued, with the limitations described herein, pursuant to an Indenture of Trust, dated as of February 1, 2015 (the "Indenture"), by and between the Town and the Trustee, to which Indenture reference is hereby made for a description of the amounts thereby pledged and assigned, the nature and extent of the lien and security, the respective rights thereunder to the holders of the Bonds, the Trustee, and the Town, and the terms upon which the Bonds are, and are to be, authenticated and delivered and by this reference to the terms of which each holder of this Bond hereby consents. All Bonds issued under the Indenture are equally and ratably secured by the amounts thereby pledged and assigned. The Bonds are being issued for the purpose of (i) paying a portion of the Costs, (ii) paying a portion of the interest on the Bonds during and after the period of acquisition and construction of the Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds, (iv) paying a portion of the costs incidental to the organization of the District, and (v) paying the costs of issuance of the Bonds. The Bonds are limited obligations of the Town payable solely from the Pledged Revenues. Reference is hereby made to the Indenture, copies of which are on file with and available upon request from the Trustee, for the provisions, among others, with respect to the nature and extent of the duties and obligations of the Town, the Trustee and the Owners. The Owner of this Bond, by the acceptance hereof, is deemed to have agreed and consented to the terms, conditions and provisions of the Indenture. Notwithstanding any provision hereof, the Indenture may be released and the obligation of the Town to make money available to pay this Bond may be defeased by the deposit of money and/or certain direct or indirect Defeasance Securities sufficient for such purpose as described in the Indenture. The Bonds are issuable as fully registered bonds only in denominations of $25,000 and any multiple of $5,000 in excess thereof ("Authorized Denominations"). The Town prohibits the breaking up or allocation of CUSIP numbers to any Bond or Bonds in denominations of less than $25,000, and any attempt to do so will be void and of no effect. The Bonds maturing on September 1 in the years 20__, 20__, 20__ and 20__ (collectively, "Term Bonds"), are subject to mandatory sinking fund redemption prior to their respective maturities and will be redeemed by the Town in part a redemption price equal to the principal amount thereof plus accrued and unpaid interest thereon to the date set for redemption from moneys available for such purpose in the Principal and Interest Account of the Bond Fund pursuant to Article VI of the Indenture, on the dates and in the respective sinking fund installments as set forth in the following schedule: 29 Term Bonds Maturing September 1, 20__ Redemption Date Principal Amount September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__* Term Bonds Maturing September 1, 20__ Redemption Date Principal Amount September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__* Term Bonds Maturing September 1, 20__ Redemption Date Principal Amount September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__* Term Bonds Maturing September 1, 20__ Redemption Date Principal Amount September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__* __________ * Stated maturity. At least thirty (30) days prior to each sinking fund redemption date, the Trustee shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Bonds of such maturity equal to the sinking fund installments of such Bonds to be redeemed, shall call such Bonds for redemption on such scheduled mandatory sinking fund redemption date, and shall give notice of such redemption, as provided in Section 4.6 of the Indenture. 30 The principal amount of Bonds required to be redeemed on any sinking fund redemption date shall be reduced, at the option of the Town, by the principal amount of any Bonds of such maturity which, at least 30 days prior to the sinking fund redemption date shall have been acquired by the Town at a price not exceeding the principal amount of such Bonds plus accrued and unpaid interest to the date of purchase thereof, and delivered to the Trustee for cancellation. The principal amount of Bonds required to be redeemed on any sinking fund redemption date shall be reduced on a pro rata basis among Sinking Fund Installments by the principal amount of any Bonds which, at least 30 days prior to the sinking fund redemption date, shall have been redeemed pursuant to the optional redemption or extraordinary optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. The Town reserves the right and option to redeem Bonds before their scheduled maturity date, in whole or in part, on any date on or after September 1, 20__, such redemption date or dates to be fixed by the Town, at the redemption price (expressed as a percentage of principal amount) applicable to the date of redemption falling within the applicable redemption period, as set forth in the following schedule, plus accrued interest to the date of redemption: Redemption Period Redemption Price September 1, 20__ through August 31, 20__ 103% September 1, 20__ through August 31, 20__ 102% September 1, 20__ through August 31, 20__ 101% September 1, 20__ and thereafter. 100% Bonds are subject to extraordinary optional redemption prior to maturity in whole or in part, on the fifteenth day of any month, at a redemption price equal to the principal amount of the Bonds called for redemption, plus accrued and unpaid interest to the date fixed for redemption from amounts on deposit in the Redemption Fund as a result of Prepayments or any other transfers to the Redemption Fund under the terms of the Indenture. The Trustee shall give notice of any redemption of Bonds by sending notice by first class United States mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the Owner of each Bond (or part thereof) to be redeemed, at the address shown on the Register. The notice shall state the redemption date, the Redemption Price, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds Outstanding are to be redeemed, an identification of the Bonds or portions thereof to be redeemed. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. With respect to any optional redemption of the Bonds, unless the Trustee has received funds sufficient to pay the Redemption Price of the Bonds to be redeemed before giving of a notice of redemption, the notice may state the Town may condition redemption on the receipt of such funds by the Trustee on or before the date fixed for the redemption, or on the satisfaction of any other prerequisites set forth in the notice of redemption. If a conditional notice of redemption is given and such prerequisites to the redemption and sufficient funds are not received, the notice 31 shall be of no force and effect, the Town shall not redeem the Bonds and the Trustee shall give notice, in the manner in which the notice of redemption was given, that the Bonds have not been redeemed. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Town and the rights of the holders of the Bonds under the Indenture at any time Outstanding affected by such modification. The Indenture also contains provisions permitting the holders of specified percentages in aggregate principal amount of the Bonds at the time Outstanding, on behalf of the holders of all the Bonds, to waive compliance by the Town with certain past defaults under the Bond Ordinance or the Indenture and their consequences. Any such consent or waiver by the holder of this Bond or any predecessor Bond evidencing the same debt shall be conclusive and binding upon such holder and upon all future holders thereof and of any Bond issued upon the transfer thereof or in exchange therefor or in lieu thereof, whether or not notation of such consent or waiver is made upon this Bond. As provided in the Indenture, this Bond is transferable upon surrender of this Bond for transfer at the Designated Payment/Transfer Office, with such endorsement or other evidence of transfer as is acceptable to the Trustee, and upon delivery to the Trustee of such certifications and/or opinion of counsel as may be required under the Indenture for the transfer of this Bond. Upon satisfaction of such requirements, one or more new fully registered Bonds of the same Stated Maturity, of Authorized Denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the Town nor the Trustee shall be required to issue, transfer or exchange any Bond called for redemption where such redemption is scheduled to occur within 45 calendar days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. The Town, the Trustee, and any other Person may treat the Person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except interest shall be paid to the Person in whose name this Bond is registered on the Record Date or Special Record Date, as applicable) and for all other purposes, whether or not this Bond be overdue, and neither the Town nor the Trustee shall be affected by notice to the contrary. The Town has reserved the right to issue Additional Bonds on the terms and conditions specified in the Indenture. NEITHER THE FULL FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE TOWN OF WESTLAKE, TEXAS, TARRANT COUNTY, TEXAS OR THE STATE OF TEXAS, OR ANY POLITICAL SUBDIVISION THEREOF, IS PLEDGED TO THE PAYMENT OF THE BONDS. IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Bond and the series of which it is a part is duly authorized by law; that all acts, conditions and things required to be done precedent to and in the issuance of the Bonds have been properly done and performed and have happened in regular and due time, form and manner, as required by law; and that the 32 total indebtedness of the Town, including the Bonds, does not exceed any Constitutional or statutory limitation. IN WITNESS WHEREOF, the Town Council of the Town has caused this Bond to be executed under the official seal of the Town. ____________________________ Town Secretary, Town of Westlake, Texas Mayor, Town of Westlake, Texas [TOWN SEAL] (b) Form of Comptroller's Registration Certificate. The following Registration Certificate of Comptroller of Public Accounts shall appear on the Initial Bond: REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER § OF PUBLIC ACCOUNTS § REGISTER NO. ______________ THE STATE OF TEXAS § I HEREBY CERTIFY THAT there is on file and of record in my office a certificate to the effect that the Attorney General of the State of Texas has approved this Bond, and that this Bond has been registered this day by me. WITNESS MY SIGNATURE AND SEAL OF OFFICE this _______________ _______________________________ Comptroller of Public Accounts of the State of Texas [SEAL] (c) Form of Certificate of Trustee. CERTIFICATE OF TRUSTEE It is hereby certified that this is one of the Bonds of the series of Bonds referred to in the within mentioned Indenture. U.S. Bank National Association, as Trustee DATED: _________________ 33 By: _____________________________ Authorized Signatory (d) Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (print or typewrite name and address, including zip code, of Transferee.) _____________________________________________________________________________ _____________________________________________________________________________ _____________________________________________________________________________ (Social Security or other identifying number: ____________________________) the within Bond and all rights hereunder, and hereby irrevocably constitutes and appoints ___________________________________________, attorney, to register the transfer of the within Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: ___________________________ Signature Guaranteed by: ___________________________________ Authorized Signatory NOTICE: The signature on this Assignment must correspond with the name of the registered owner as it appears on the face of the within Bond in every particular and must be guaranteed in a manner acceptable to the Trustee. (e) The Initial Bond shall be in the form set forth in paragraphs (a) through (d) of this section, except for the following alterations: (i) immediately under the name of the Bond the heading "INTEREST RATE" and "MATURITY DATE" shall both be completed with the expression "As Shown Below," and the reference to the "CUSIP NUMBER" shall be deleted; (ii) in the first paragraph of the Bond, the words "on the Maturity Date, as specified above, the sum of ______________________________ DOLLARS" shall be deleted and the following will be inserted: "on September 1 in each of the years, in the principal installments and bearing interest at the per annum rates set forth in the following schedule: Years Principal Installments Interest Rates" 34 (Information to be inserted from Section 3.2(b)); and (iii) the Initial Bond shall be numbered T-1. Section 5.3. CUSIP Registration. The Town may secure identification numbers through the CUSIP Service Bureau Division of Standard & Poor's Corporation, New York, New York, and may authorize the printing of such numbers on the face of the Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the Bonds shall be of no significance or effect as regards the legality thereof and none of the Town, the attorneys approving said Bonds as to legality or the Trustee are to be held responsible for CUSIP numbers incorrectly printed on the Bonds. The Town prohibits any Bond to be issued in a denomination of less than $25,000 and further prohibits the assignment of a CUSIP number to any Bond with a denomination of less than $25,000, and any attempt to accomplish either of the foregoing shall be void and of no effect. The Trustee may include in any redemption notice a statement to the effect that the CUSIP numbers on the Bonds have been assigned by an independent service and are included in such notice solely for the convenience of the Bondholders and that neither the Town nor the Trustee shall be liable for any inaccuracies in such numbers. Section 5.4. Legal Opinion. The approving legal opinion of Bond Counsel may be printed on or attached to each Bond over the certification of the Town Secretary of the Town, which may be executed in facsimile. ARTICLE VI FUNDS AND ACCOUNTS Section 6.1. Establishment of Funds and Accounts. (a) Creation of Funds. The following Funds are hereby created and established under this Indenture: (i) Pledged Revenue Fund; (ii) Bond Fund; (iii) Project Fund; (iv) Reserve Fund; (v) Redemption Fund; (vi) Rebate Fund; 35 (vii) Administrative Fund; (viii) Reimbursement Fund; and (ix) Developer Property Tax Reserve Fund. (b) Creation of Accounts and Subaccounts. (i) The following Accounts are hereby created and established under the Bond Fund: (A) Capitalized Interest Account; and (B) Principal and Interest Account. (ii) The following Accounts are hereby created and established under the Reserve Fund: (A) Reserve Account; (B) Prepayment Reserve Account; and (C) Delinquency Reserve Account. (iii) The following Accounts are hereby created and established under the Project Fund: (A) Improvement Project A Improvement Account; (B) Developer Improvement Account; and (C) Costs of Issuance Account. (iv) The following Accounts are hereby created and established under the Pledged Revenue Fund: (A) Bond Pledged Revenue Account; and (B) Developer Reimbursement Pledged Revenue Account. (c) Each Fund, each Account and each Subaccount created within such Fund shall be maintained by the Trustee separate and apart from all other funds and accounts of the Town. The Pledged Funds shall constitute trust funds which shall be held in trust by the Trustee as part of the Trust Estate solely for the benefit of the Owners of the Bonds. Amounts on deposit in the Funds, Accounts and Subaccounts shall be used solely for the purposes set forth herein. 36 (d) Interest earnings and profit on each respective Fund and Account established by this Indenture shall be applied or withdrawn for the purposes of such Fund or Account as specified below. Section 6.2. Initial Deposits to Funds and Accounts. (a) The proceeds from the sale of the Bonds shall be paid to the Trustee and deposited or transferred by the Trustee as follows: (i) to the Capitalized Interest Account of the Bond Fund: $_____; (ii) to the Reserve Account of the Reserve Fund $_____, which is equal to the initial Reserve Fund Requirement; (iii) to the Costs of Issuance Account of the Project Fund: $_____; and (iv) to the Improvement Project A Improvement Account of the Project Fund: $_____. (b) Funds received from the Developer or other sources on the Closing Date pursuant to the terms of the Reimbursement Agreement in the amount of $_____ shall be deposited to the Developer Improvement Account of the Project Fund. [(c) Funds received from the Developer on the Closing Date in the amount of $_____ shall be deposited to the Capitalized Interest Account of the Bond Fund.] (d) Funds received from the Developer on the Closing Date in the amount of $_____ (the "Initial Deposit", as defined by the Redemption Waiver Agreement) shall be deposited to the Developer Property Tax Reserve Fund. Section 6.3. Pledged Revenue Fund. (a) Immediately upon receipt thereof, the Town shall transfer to the Trustee for deposit to the Pledged Revenue Fund the Assessments and Annual Installments (other than the portion of the Assessments and Annual Installments allocated to the payment of Administrative Expenses and Delinquent Collection Costs, which shall be deposited to the Administrative Fund pursuant to Section 6.9 hereof), as set forth in the Service and Assessment Plan. Specifically, the City shall deposit or cause to be deposited the foregoing amounts as follows: (i) first, to the Bond Pledged Revenue Account of the Pledged Revenue Fund in an amount sufficient to pay debt service on the Bonds next coming due, (ii) second, to the Reserve Account of the Reserve Fund in an amount to cause the amount in the Reserve Account to equal the Reserve Fund Requirement, (iii) third to the Developer Reimbursement Pledged Revenue Account of the Pledged Revenue Fund to pay and reimburse the Developer for costs of Improvement Project A Improvements that have been paid from the Developer Improvement Account of the Project Fund (pursuant to the terms of the Reimbursement Agreement), (iv) fourth to pay other costs of the Authorized Improvements, and (v) fifth to pay other costs permitted by the PID Act. Notwithstanding the foregoing, 0.50% of the interest rate component of the Annual Installments shall only be utilized for the purposes set forth in Section 6.7(a) hereof and, immediately 37 following the initial deposit to the Pledged Revenue Fund, such 0.50% of the interest rate component of the Annual Installments will be deposited into the Prepayment Reserve Account, the Delinquency Reserve Account and/or the Redemption Fund, as applicable. Moneys transferred to the Developer Reimbursement Pledged Revenue Account shall not be a part of the Trust Estate and are not security for the Bonds. (b) From time to time as needed to pay the obligations relating to the Bonds, but no later than five (5) Business Days before each Interest Payment Date, the Trustee shall withdraw from the Pledged Revenue Fund and transfer to the Principal and Interest Account of the Bond Fund, an amount, taking into account any amounts then on deposit in such Principal and Interest Account and any expected transfers from the Capitalized Interest Account to the Principal and Interest Account, such that the amount on deposit in the Principal and Interest Account equals the principal (including any Sinking Fund Installments) and interest due on the Bonds on the next Interest Payment Date. (c) Subject to the provisions of the Reimbursement Agreement, from time to time as needed to pay the obligations relating to costs of Improvement Project A Improvements that are paid with funds withdrawn from the Developer Improvement Account of the Project Fund the Trustee shall withdraw from the Developer Reimbursement Pledged Revenue Account and transfer to the Reimbursement Fund such amount needed to reimburse the Developer for funds withdrawn from the Developer Improvement Account of the Project Fund used to fund costs of Improvement Project A Improvements. (c) If, after the foregoing transfers and any transfer from the Reserve Fund as provided in Section 6.7, there are insufficient funds to make the payments provided in paragraph (b) above, the Trustee shall apply the available funds in the Principal and Interest Account first to the payment of interest, then to the payment of principal (including any Sinking Fund Installments) on the Bonds. (d) The Trustee shall transfer Prepayments to the Redemption Fund promptly after deposit of such amounts into the Pledged Revenue Fund. (e) Upon receipt of Foreclosure Proceeds, the Trustee shall transfer such Foreclosure Proceeds first to the Reserve Fund to restore any transfers from the Reserve Fund made with respect to the Improvement Area #1 Assessed Parcel(s), the Improvement Area #2 Assessed Parcel(s) and the Improvement Area #3 Assessed Parcel(s) to which the Foreclosure Proceeds relate, and second, to the Redemption Fund. (f) After satisfaction of the requirement to provide for the payment of the principal and interest on the Bonds and to fund any deficiency that may exist in the Reserve Fund and to fund any obligations due to the Developer with funds deposited to the Reimbursement Fund, the Trustee shall transfer any Pledged Revenues remaining in the Pledged Revenue Fund to the Town, which monies may be used for any lawful purpose for which Assessments may be used under the PID Act. 38 Section 6.4. Bond Fund. (a) On each Interest Payment Date, the Trustee shall withdraw from the Principal and Interest Account and transfer to the Paying Agent/Registrar the principal (including any Sinking Fund Installments) and interest then due and payable on the Bonds, less any amount to be used to pay interest on the Bonds on such Interest Payment Date from the Capitalized Interest Account as provided below. (b) If amounts in the Principal and Interest Account are insufficient for the purposes set forth in paragraph (a) above, the Trustee shall withdraw from the Reserve Fund amounts to cover the amount of such insufficiency. Amounts so withdrawn from the Reserve Fund shall be deposited in the Principal and Interest Account and transferred to the Paying Agent/Registrar. (c) Moneys in the Capitalized Interest Account shall be used for the payment of all interest due on the Bonds on [March 1, 2015 and September 1, 2015 and _____% of the interest due on March 1, 2016]. Any amounts on deposit to the Capitalized Interest Account after the payment of interest on the dates and in the amounts listed above shall be transferred to the Project Fund, or if the Project Fund has been closed as provided in Section 6.5(d), such amounts shall be transferred to the Redemption Fund to be used to redeem Bonds and the Capitalized Interest Account shall be closed. Section 6.5. Project Fund. (a) Money on deposit in the Project Fund shall be used for the purposes specified in Section 3.1. (b) Disbursements from the Costs of Issuance Account of the Project Fund shall be made by the Trustee to pay costs of issuance of the Bonds pursuant to one or more Town Certificates. Disbursements from all other Accounts of the Project Fund to pay Costs shall be made by the Trustee upon receipt by the Trustee of a properly executed and completed Certification for Payment. The disbursement of funds from the Project Fund pursuant to a Certification for Payment shall be pursuant to and accordance with the disbursement procedures described in the Financing Agreement. Each such Town Certificate shall include a list of the payees and the payments (not to exceed) to be made to such payees as well as a statement that all payments shall be made by check or wire transfer in accordance with the payment instructions set forth in such written request or in the invoices submitted in accordance therewith and the Trustee may rely on such payment instructions though given by the Town with no duty to investigate or inquire as to the authenticity of or authorization for the invoice or the payment instructions contained therein. (c) Except as provided in Section 6.5(d) and (f), money on deposit in the Improvement Project A Improvement Account shall be used solely to pay Costs. (d) If the Town Representative determines in his or her sole discretion that amounts then on deposit in the Project Fund are not expected to be expended for purposes of the Project Fund due to the abandonment, or constructive abandonment, of one or more of the Improvement Project A Improvements such that, in the opinion of the Town Representative, it is unlikely that the amounts in the Project Fund will ever be expended for the purposes of the Project Fund, the 39 Town Representative shall file a Town Certificate with the Trustee which identifies the amounts then on deposit in the Project Fund that are not expected to be used for purposes of the Project Fund. If such Town Certificate is so filed, the amounts on deposit in the Project Fund shall be transferred to the Redemption Fund to redeem Bonds on the earliest practicable date after notice of redemption has been provided in accordance with this Indenture. Upon such transfers, the Project Fund shall be closed. (e) In making any determination pursuant to this Section, the Town Representative may conclusively rely upon a certificate of an Independent Financial Consultant. (f) Upon the filing of a Town Certificate stating that all Improvement Project A Improvements have been completed and that all Costs have been paid, or that any Costs are not required to be paid from the Project Fund pursuant to a Certification for Payment, the Trustee shall transfer the amount, if any, remaining within the Project Fund to the Bond Fund or to the Redemption Fund as directed by the Town Representative in a Town Certificate filed with the Trustee and shall transfer any remaining amount in the Developer Improvement Account of the Project Fund to the Developer. Upon such transfers, the Project Fund shall be closed. (g) Upon a determination by the Town Representative that all costs of issuance of the Bonds have been paid, any amounts remaining in the Costs of Issuance Account shall be transferred to another Account or Subaccount in the Project Fund and used to pay Costs or to the Principal and Interest Account and used to pay interest on the Bonds, as directed in a Town Certificate filed with the Trustee. Section 6.6. Redemption Fund. The Trustee shall cause to be deposited to the Redemption Fund from the Pledged Revenue Fund an amount sufficient to redeem Bonds as provided in Sections 4.3 and 4.4 on the dates specified for redemption as provided in Sections 4.3 and 4.4. Amounts on deposit in the Redemption Fund shall be used and withdrawn by the Trustee to redeem Bonds as provided in Article IV. Section 6.7. Reserve Fund. (a) The Town agrees with the Owners of the Bonds to accumulate and, when accumulated, maintain in the Reserve Account of the Reserve Fund, an amount equal to not less than the Reserve Fund Requirement. All amounts deposited in the Reserve Account of the Reserve Fund shall be used and withdrawn by the Trustee for the purpose of making transfers to the Principal and Interest Account of the Bond Fund as provided in this Indenture. The Trustee will transfer from the Pledged Revenue Fund to the Prepayment Reserve Account on March 1 and September 1 of each year, commencing _____, 20__, an amount equal to 0.20% of the interest rate component of the Annual Installments in the Prepayment Reserve Account until the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account. Once the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account, such 0.20% of the interest rate component of the Annual Installments will be deposited into the Delinquency Reserve Account until the Delinquency Reserve Requirement has been accumulated in the Delinquency Reserve Account; provided, however, that at any time the amount on deposit in the Prepayment Reserve Account is less than Prepayment Reserve 40 Requirement, the Trustee shall resume depositing such 0.20% into the Prepayment Reserve Account until the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account. Furthermore, once the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account, any amounts in excess of the Prepayment Reserve Requirement shall be transferred by the Trustee first to the Delinquency Reserve Account in the event such account contains less than the Delinquency Reserve Requirement, or, if the Delinquency Reserve Account contains the Delinquency Reserve Requirement, then to the Redemption Fund to redeem Bonds as provided in Article IV. In addition, the Trustee shall deposit from the Pledged Revenue Fund to the Delinquency Reserve Account on March 1 and September 1, commencing _____, 20__, an amount equal to 0.30% of the interest rate component of the Annual Installments. Once the Delinquency Reserve Requirement has accumulated in the Delinquency Reserve Account, any amounts in excess of the Delinquency Reserve Requirement in the Delinquency Reserve Account shall be transferred by the Trustee to the Redemption Fund to redeem Bonds as provided in Article IV; provided, however, that at any time the amount on deposit in the Delinquency Reserve Account is less than Delinquency Reserve Requirement, the Trustee shall resume depositing such 0.30% into the Delinquency Reserve Account until the Delinquency Reserve Requirement has accumulated in the Delinquency Reserve Account. Once the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account and the Delinquency Reserve Requirement has accumulated in the Delinquency Reserve Account, such 0.50% of the interest rate component of the Annual Installments will be deposited into Redemption Fund to redeem Bonds as provided in Article IV; provided, however, that (i) at any time the amount on deposit in the Prepayment Reserve Account is less than Prepayment Reserve Requirement, the Trustee shall resume depositing 0.20% of the interest rate component of the Annual Installments into the Prepayment Reserve Account until the Prepayment Reserve Requirement has accumulated in the Prepayment Reserve Account and (ii) at any time the amount on deposit in the Delinquency Reserve Account is less than Delinquency Reserve Requirement, the Trustee shall resume depositing 0.30% of the interest rate component of the Annual Installments into the Delinquency Reserve Account until the Delinquency Reserve Requirement has accumulated in the Delinquency Reserve Account. In calculating the amounts to be transferred pursuant to this Section, the Trustee may conclusively rely on the Annual Installments as shown on the Assessment Roll in the Service and Assessment Plan unless it receives a Town Order specifying that a different amount be used. (b) Whenever a transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Trustee shall provide written notice thereof to the Town, specifying the amount withdrawn and the source of said funds. (c) In the event of an extraordinary optional redemption of Bonds from the proceeds of a Prepayment pursuant to Section 4.4, the Trustee, pursuant to written directions from the Town, shall transfer from the Reserve Account of the Reserve Fund to the Redemption Fund the amount specified in such directions, which shall be an amount equal to the principal amount of Bonds to be redeemed multiplied by the lesser of: (i) the amount required to be in the Reserve Account of the Reserve Fund divided by the principal amount of Outstanding Bonds prior to the redemption, and (ii) the amount actually in the Reserve Account of the Reserve Fund divided by the principal amount of Outstanding Bonds prior to the redemption. If after such transfer, and after applying investment earnings on the Prepayment toward payment of accrued interest, there are insufficient funds to pay the principal amount plus accrued and unpaid interest on such Bonds to the date fixed for redemption of the Bonds to be redeemed as a result of such 41 Prepayment, the Trustee shall transfer an amount equal to the shortfall from the Prepayment Reserve Account to the Redemption Fund to be applied to the redemption of the Bonds. (d) Whenever, on any Interest Payment Date, or on any other date at the request of a Town Representative, the value of cash and Value of Investment Securities on deposit in the Reserve Account exceeds the Reserve Fund Requirement, the Trustee shall provide written notice to the Town Representative of the amount of the excess. Such excess shall be transferred to the Principal and Interest Account to be used for the payment of interest on the Bonds on the next Interest Payment Date in accordance with Section 6.4, unless within thirty days of such notice to the Town Representative, the Trustee receives a Town Order instructing the Trustee to apply such excess: (i) to pay amounts due under Section 6.8 hereof, (ii) to the Administrative Fund in an amount not more than the Administrative Expenses for the Bonds or (iii) to the Project Fund to pay Costs if such application and the expenditure of funds is expected to occur within three years of the date hereof. (e) Whenever, on any Interest Payment Date, or on any other date at the written request of the Town Representative, the amount in the Prepayment Reserve Account exceeds the Prepayment Reserve Requirement, the Trustee shall provide written notice to the Town of the amount of the excess, and the Trustee shall transfer such excess pursuant to Section 6.7(a) hereof. (f) Whenever, on any Interest Payment Date, or on any other date at the written request of the Town Representative, the amount in the Delinquency Reserve Account exceeds the Delinquency Reserve Requirement, the Trustee shall provide written notice to the Town of the amount of the excess, and the Trustee shall transfer such excess pursuant to Section 6.7(a) hereof. (g) Whenever, on any Interest Payment Date, the amount on deposit in the Bond Fund is insufficient to pay the debt service on the Bonds Similarly Secured due on such date, the Trustee shall transfer first from the Delinquency Reserve Account of the Reserve Fund, second from the Reserve Account of the Reserve Fund and third from the Prepayment Reserve Account to the Bond Fund the amounts necessary to cure such deficiency. (h) At the final maturity of the Bonds Similarly Secured, the amount on deposit in the Reserve Account, the Prepayment Reserve Account and the Delinquency Reserve Account shall be transferred to the Redemption Fund and applied to the payment of the principal of the Bonds Similarly Secured. (i) If, after a Reserve Account withdrawal, the amount on deposit in the Reserve Account is less than the Reserve Fund Requirement, the Trustee shall transfer from the Pledged Revenue Fund to the Reserve Account the amount of such deficiency, but only to the extent that such amount is not required for the timely payment of principal, interest, or Sinking Fund Installments. (j) If the amount held in the Reserve Fund together with the amount held in the Pledged Revenue Fund, the Bond Fund and Redemption Fund is sufficient to pay the principal amount and of all Outstanding Bonds Similarly Secured on the next date the Bonds Similarly Secured may be optionally redeemed by the Town at a redemption price of par, together with the 42 unpaid interest accrued on such Bonds Similarly Secured as of such date, the moneys shall be transferred to the Redemption Fund and thereafter used to redeem all Bonds Similarly Secured on such date. Section 6.8. Rebate Fund: Rebatable Arbitrage. (a) The Rebate Fund is to be held by the Trustee in accordance with the terms and provisions of this Indenture. Amounts on deposit in the Rebate Fund shall be used solely for the purpose of paying amounts due the United States Government in accordance with the Code. The Rebate Fund shall not be part of the Trust Estate and shall not be security for the Bonds. (b) In order to assure that Rebatable Arbitrage is paid to the United States rather than to a third party, investments of funds on deposit in the Rebate Fund shall be made in accordance with the Code and the Tax Certificate. (c) The Trustee conclusively shall be deemed to have complied with the provisions of this Section and shall not be liable or responsible if it follows the instructions of the Town and shall not be required to take any action under this Section in the absence of instructions from the Town. (d) If, on the date of each annual calculation, the amount on deposit in the Rebate Fund exceeds the amount of the Rebatable Arbitrage, the Town may direct the Trustee, pursuant to a Town Order, to transfer the amount in excess of the Rebatable Arbitrage to the Bond Fund. Section 6.9. Administrative Fund. (a) Immediately upon receipt thereof, the Town shall deposit or cause to be deposited to the Administrative Fund the portion of the Assessments and Annual Installments allocated to the payment of Administrative Expenses and Delinquent Collection Costs, as set forth in the Service and Assessment Plan. (b) Moneys in the Administrative Fund shall be held by the Trustee separate and apart from the other Funds created and administered hereunder and used as directed by a Town Order solely for the purposes set forth in the Service and Assessment Plan, including payment of Administrative Expenses and Delinquent Collection Costs. The Administrative Fund shall not be part of the Trust Estate and shall not be security for the Bonds. Section 6.10. Developer Property Tax Reserve Fund. (a) The Developer shall deposit or cause to be deposited the Initial Deposit into the Developer Property Tax Reserve Fund on or prior to the issuance of the Bonds. Prior to the Developer Property Tax Reserve Fund Release Date, and upon receipt by the Trustee of a Town Order specifying (1) the amount to be transferred and that such amount is equal to all outstanding Developer Property Tax Delinquency Amounts and (2) the dates on which such transfer shall be made, funds deposited in the Developer Property Tax Reserve Fund shall be transferred by the Trustee in an aggregate amount equal to all outstanding Developer Property Tax Delinquency Amounts to the Town for payment of the related unpaid delinquent ad valorem taxes levied by any taxing entity on any property located in Improvement Area #1, Improvement Area #2 and 43 Improvement Area #3 and any penalties, costs and interest related thereto. The Town shall use amounts received by the Trustee from the Developer Property Tax Reserve Fund solely for payment of outstanding Developer Property Tax Delinquency Amounts and any penalties, costs and interest related thereto, all in accordance with the Redemption Waiver Agreement. Prior to the Developer Property Tax Reserve Fund Release Date, upon any transfer of funds deposited in the Developer Property Tax Reserve Fund to the Town in accordance with this clause (a), the Developer shall deposit or cause to be deposited an equivalent amount of funds into the Developer Property Tax Reserve Fund to replenish such Fund, all in accordance with the Redemption Waiver Agreement. (b) Any amounts deposited in the Developer Property Tax Reserve Fund shall be released to the Developer, except during the occurrence of an ongoing current Event of Default, on or after March 1 of the first year after the tax year in which no property located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 is subject to an agriculture valuation for purposes of ad valorem taxes levied by any taxing entity. Such amounts shall be released only upon the filing of evidence satisfactory to the Town of payment of all ad valorem taxes due and owing with respect to property located in Improvement Area #1, Improvement Area #2 and Improvement Area #3 subject to an agriculture valuation. The Town shall provide the Trustee with a Town Certificate to this effect, upon which the Trustee may conclusively rely. At such time as the condition for release is met, any amounts deposited in the Developer Property Tax Reserve Fund shall be irrevocably and unconditionally released to the Developer, or to the Developer's successors and assigns or designees as identified in a written notice from the Developer to the Trustee and the Town. The Town and the Trustee shall solely and conclusively rely as to payment of amounts released from the Developer Property Tax Reserve Fund on any such written notice from the Developer as to their successors and assigns or designees. The Town shall provide written notice of the release to the Trustee and Developer, or to the Developer's successors and assigns. Section 6.11. Investment of Funds. (a) Money in any Fund or Account, other than the Reserve Account, shall be invested by the Trustee as directed by the Town pursuant to a Town Order filed with the Trustee in Investment Securities; provided that all such deposits and investments shall be made in such manner that the money required to be expended from any Fund or Account will be available at the proper time or times. Money in the Reserve Account shall be invested in such Investment Securities as directed by the Town pursuant to a Town Order filed with the Trustee, provided that the final maturity of any individual Investment Security shall not exceed 270 days and the average weighted maturity of any investment pool or no-load money market mutual fund shall not exceed 90 days. Each such Town Order shall be a certification that the investment directed therein constitutes an Investment Security and that such investments meet the maturity and average weighted maturity requirements set forth in the preceding sentence. Such investments shall be valued each year in terms of the Value of Investment Securities as of September 30. For purposes of maximizing investment returns, to the extent permitted by law, money in the Funds and Accounts may be invested in common investments of the kind described above, or in a common pool of such investment which shall be kept and held at an official depository bank, which shall not be deemed to be or constitute a commingling of such money or funds provided 44 that safekeeping receipts or certificates of participation clearly evidencing the investment or investment pool in which such money is invested and the share thereof purchased with such money or owned by such Fund or Account are held by or on behalf of each such Fund or Account. If necessary, such investments shall be promptly sold to prevent any default under this Indenture. To ensure that cash on hand is invested, if the Town does not give the Trustee written or timely instructions with respect to investments of funds, the Trustee may invest cash balances in obligations the principal and interest on which are unconditionally guaranteed by, the United States of America, in obligations of any agencies or instrumentalities thereof, or in such other investments as are permitted under the Public Funds Investment Act, Texas Government Code, Chapter 2256, as amended, or any successor law, as in effect from time to time, so long as such investments constitute Investment Securities and the money required to be expended from any Fund will be available at the proper time or times. (b) Obligations purchased as an investment of moneys in any Fund or Account shall be deemed to be part of such Fund or Account, subject, however, to the requirements of this Indenture for transfer of interest earnings and profits resulting from investment of amounts in Funds and Accounts. Whenever in this Indenture any moneys are required to be transferred by the Town to the Trustee, such transfer may be accomplished by transferring a like amount of Investment Securities. (c) The Trustee and its affiliates may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. The Trustee shall not incur any liability for losses arising from any investments made pursuant to this Section. The Trustee shall not be required to determine the legality of any investments. (d) Investments in any and all Funds and Accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular Funds or Accounts of amounts received or held by the Trustee hereunder, provided that the Trustee shall at all times account for such investments strictly in accordance with the Funds and Accounts to which they are credited and otherwise as provided in this Indenture. (e) The Trustee will furnish to the Town, upon the Town's written request, periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the Town. Upon the Town's election, such statements will be delivered via the Trustee's online service and upon electing such service, paper statements will be provided only upon request. The Town waives the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The Town further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker. Section 6.12. Security of Funds. All Funds heretofore created or reaffirmed, to the extent not invested as herein permitted, shall be secured in the manner and to the fullest extent required by law for the security of public funds, and such Funds shall be used only for the purposes and in the manner permitted or required by this Indenture. 45 Section 6.13 Reimbursement Fund. Money on deposit in the Reimbursement Fund shall be used to reimburse the Developer for funds withdrawn from the Developer Improvement Account of the Project Fund and used to pay costs of Improvement Project A Improvements as provided in the Reimbursement Agreement. When all amounts due to the Developer to reimburse it for the funds withdrawn from the Developer Improvement Account of the Project Fund have been paid to the Developer, whether through Assessments received and applied in accordance with the Service and Assessment Plan or an Annual Service Plan Update or through the proceeds of Additional Bonds, no further deposits shall be made to the Reimbursement Fund and the Reimbursement Fund shall be closed. ARTICLE VII COVENANTS Section 7.1. Confirmation of Assessments. The Town hereby confirms, covenants, and agrees that, in the Assessment Ordinance, it has levied the Assessments against the respective Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and Improvement Area #3 Assessed Parcels from which the Assessment Revenues will be collected and received. Section 7.2. Collection and Enforcement of Assessments. (a) For so long as any Bonds are Outstanding and amounts are due to the Developer under the Reimbursement Agreement to reimburse it for its funds it has contributed to pay Costs of the Improvement Project A Improvements, the Town covenants, agrees and warrants that it will take and pursue all reasonable actions pemissib1e under Applicable Laws to cause the Assessments to be collected and the liens thereof enforced continuously, in the manner and to the maximum extent permitted by Applicable Laws, and to cause no reduction, abatement or exemption in the Assessments. (b) To the extent permitted by law, notice of the Annual Installments shall be sent by, or on behalf of, the Town to the affected property owners on the same statement or such other mechanism that is used by the Town, so that such Annual Installments are collected simultaneously with ad valorem taxes and shall be subject to the same penalties, procedures, and foreclosure sale in case of delinquencies as are provided for ad valorem taxes of the Town. (c) The Town will determine or cause to be determined, no later than February 15 of each year, whether or not any Annual Installment is delinquent and, if such delinquencies exist, the Town will order and cause to be commenced as soon as practicable any and all appropriate and legally permissible actions to obtain such Annual Installment, and any delinquent charges and interest thereon, including diligently prosecuting an action in district court to foreclose the currently delinquent Annual Installment. Notwithstanding the foregoing, the Town shall not be required under any circumstances to purchase or make payment for the purchase of the 46 delinquent Assessments or the corresponding Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel and Improvement Area #3 Assessed Parcel. (d) The Town shall not be required under any circumstances to expend any funds for Delinquent Collection Costs or Administrative Expenses in connection with its covenants and agreements under this Section or otherwise other than funds on deposit in the Administrative Fund. Section 7.3. Against Encumbrances. (a) The Town shall not create and, to the extent Pledged Revenues are received, shall not suffer to remain, any lien, encumbrance or charge upon the Pledged Revenues or upon any other property pledged under this Indenture, except the pledge created for the security of the Bonds Similarly Secured, and other than a lien or pledge subordinate to the lien and pledge of such property related to the Bonds Similarly Secured. (b) So long as Bonds Similarly Secured are Outstanding hereunder or under any indenture relating to any Additional Bonds, the Town shall not issue any bonds, notes or other evidences of indebtedness, other than the Bonds and Additional Bonds, secured by any pledge of or other lien or charge on the Pledged Revenues or other property pledged under this Indenture or under any indenture relating to any Additional Bonds, other than a lien or pledge subordinate to the lien and pledge of such property related to the Bonds Similarly Secured. Section 7.4. Records, Accounts, Accounting Reports. The Town hereby covenants and agrees that so long as any Bonds are Outstanding and amounts are due to the Developer under the Reimbursement Agreement to reimburse it for its funds it has contributed to pay Costs of the Improvement Project A Improvements, it will keep and maintain a proper and complete system of records and accounts pertaining to the Assessments. The Trustee and holder or holders of any Bonds or any duly authorized agent or agents of such holders shall have the right at all reasonable times to inspect all such records, accounts, and data relating thereto, upon written request to the Town by the Trustee or duly authorized representative, as applicable. The Town shall provide the Trustee or duly authorized representative, as applicable, an opportunity to inspect such books and records relating to the Bonds during the Town's regular business hours and on a mutually agreeable date not later than thirty days after the Town receives such request. Section 7.5. Covenants Regarding Tax Exemption of Interest on Bonds. (a) The Town covenants to take any action necessary to assure, or refrain from any action that would adversely affect, the treatment of the Bonds as an obligation 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 Town covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds (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 47 the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the Town, with respect to such private business use, do not, under the terms of this Article or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10 percent of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (2) to take any action to assure that in the event that the "private business use" described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of 5 percent is used for a "private business use" 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 Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (4) to refrain from taking any action that would otherwise result in the Bonds being treated as a "private activity bond" within the meaning of section 141(b) of the Code; (5) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (6) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds 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 Bonds, other than investment property acquired with – (A) proceeds of the Bonds invested for a reasonable temporary period of 3 years or less or, in the case of an advance refunding bond, for a period of 30 days or less until such proceeds are needed for the purpose for which the Bonds is issued, and in the case of a current refunding bond, for a period of 90 days or less, (B) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (C) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the proceeds of the Bonds; (7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds does not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and 48 (8) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to pay to the United States of America, not later than 60 days after the Bonds has been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. (b) In order to facilitate compliance with the above covenant (a)(8), the Rebate Fund is established by the Town pursuant to Section 6.1 for the sole benefit of the United States of America, and such Rebate Fund shall not be subject to the claim of any other person, including without limitation the Registered Owner. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. (c) The Town understands that the term "proceeds" includes "disposition proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Town 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 (the "Treasury Regulations"). In the event that regulations or rulings are hereafter promulgated that modify or expand provisions of the Code, as applicable to the Bonds, the Town will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated that impose additional requirements applicable to the Bonds, the Town agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of such intention, the Town hereby authorizes and directs the Mayor to execute any documents, certificates or reports required by the Code and to make such elections, on behalf of the Town, that may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. (d) The Town covenants to account for the expenditure of sale proceeds and investment earnings to be used for Costs on its books and records in accordance with the requirements of the Code. The Town recognizes that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds must be allocated to expenditures within 18 months of the later of the date that (1) the expenditure is made, or (2) the Improvement Project A Improvements are completed; but in no event later than three years after the date on which the original expenditure is paid. The foregoing notwithstanding, the Town recognizes that in order for proceeds to be expended under the Code, the sale proceeds or investment earnings must be expended no more than 60 days after the earlier of (1) the fifth anniversary of the delivery of the Bonds, or (2) the date the Bonds is retired. The Town agrees to obtain the advice of nationally- recognized bond counsel if such expenditure fails to comply with the foregoing to assure that such expenditure will not adversely affect the tax-exempt status of the Bonds. For purposes hereof, the Town 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. 49 (e) The Town covenants that the projects funded with the proceeds of the Bonds will not be sold or otherwise disposed in a transaction resulting in the receipt by the Town of cash or other compensation, unless the Town obtains an opinion of nationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Town 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. ARTICLE VIII LIABILITY OF TOWN Section 8.1. Liability of Town. (a) Neither the full faith and credit nor the general taxing power of the Town is pledged to the payment of the Bonds, and no Town taxes, fee or revenues from any source are pledged to the payment of, or available to pay any portion of, the Bonds or any other obligations relating to the District. The Town shall never be liable for any obligations relating to the Bonds or other obligations relating to the District, other than as specifically provided for in this Indenture. (b) The Town shall not incur any responsibility in respect of the Bonds or this Indenture other than in connection with the duties or obligations explicitly herein or in the Bonds assigned to or imposed upon it. The Town shall not be liable in connection with the performance of its duties hereunder, except for its own willful default or act of bad faith. The Town shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions covenants or agreements of the Trustee herein or of any of the documents executed by the Trustee in connection with the Bonds, or as to the existence of a default or event of default thereunder. (c) In the absence of bad faith, the Town may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Town and conforming to the requirements of this Indenture. The Town shall not be liable for any error of judgment made in good faith unless it shall be proved that it was negligent in ascertaining the pertinent facts. (d) No provision of this Indenture, the Bonds, the Assessment Ordinance, or any agreement, document, instrument, or certificate executed, delivered or approved in connection with the issuance, sale, delivery, or administration of the Bonds (collectively, the "Bond Documents"), shall require the Town to expend or risk its own general funds or other funds or otherwise incur any financial liability (other than with respect to the Pledged Revenues) in the performance of any of its obligations hereunder, or in the exercise of any of its rights or powers, if in the judgment of the Town there are reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it. 50 (e) Neither the Owners nor any other Person shall have any claim against the Town or any of its officers, officials, agents, or employees for damages suffered as a result of the Town's failure to perform in any respect any covenant, undertaking, or obligation under any Bond Documents or as a result of the incorrectness of any representation in, or omission from, any of the Bond Documents, except to the extent that any such claim relates to an obligation, undertaking, representation, or covenant of the Town, in accordance with the Bond Documents and the PID Act. Any such claim shall be payable only from Pledged Revenues. Nothing contained in any of the Bond Documents shall be construed to preclude any action or proceeding in any court or before any governmental body, agency, or instrumentality against the Town or any of its officers, officials, agents, or employees to enforce the provisions of any of the Bond Documents or to enforce all rights of the Owners of the Bonds by mandamus or other proceeding at law or in equity. (f) The Town may rely on and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Town may consult with counsel with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. Whenever in the administration of its duties under this Indenture the Town shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Town, be deemed to be conclusively proved and established by a certificate of the Trustee, an Independent Financial Consultant, an independent inspector or Town Manager or other person designated by the Town Council to so act on behalf of the Town, and such certificate shall be full warrant to the Town for any action taken or suffered under the provisions of this Indenture upon the faith thereof, but in its discretion the Town may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may deem reasonable. (g) In order to perform its duties and obligations hereunder, the Town may employ such persons or entities as it deems necessary or advisable. The Town shall not be liable for any of the acts or omissions of such persons or entities employed by it in good faith hereunder, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations, and directions of such persons or entities. ARTICLE IX THE TRUSTEE Section 9.1. Acceptance of Trust; Trustee as Registrar and Paying Agent. (a) The Trustee accepts and agrees to execute the respective trusts imposed upon it by this Indenture, but only upon the terms and conditions and subject to the provisions of this Indenture to all of which the parties hereto and the respective Owners of the Bonds agree. (b) The Trustee is hereby designated and agrees to act as Paying Agent/Registrar for and in respect to the Bonds. 51 Section 9.2. Trustee Entitled to Indemnity. The Trustee shall be under no obligation to institute any suit, or to undertake any proceeding under this Indenture, or to enter any appearance or in any way defend in any suit in which it may be made defendant, or to take any steps in the execution of the trusts hereby created or in the enforcement of any rights and powers hereunder, until it shall be indemnified to its satisfaction by the Owners against any and all costs and expenses, outlays, and counsel fees and other reasonable disbursements, and against all liability except as a consequence of its own negligence or willful misconduct; provided, however, that in no event shall the Trustee request or require indemnification as a condition to making any deposits, payments or transfers when required hereunder, or to deliver any notice when required hereunder. Nevertheless, the Trustee may begin suit, or appear in and defend suit, or do anything else in its judgment proper to be done by it as the Trustee, without indemnity, and in such case the Trustee may make transfers from the Pledged Revenue Fund and Administrative Fund to pay all costs and expenses, outlays, and counsel fees and other reasonable disbursements properly incurred in connection therewith and shall be entitled to a preference therefor over any Bonds Outstanding hereunder. Section 9.3. Responsibilities of the Trustee. (a) The recitals contained in this Indenture and in the Bonds shall be taken as the statements of the Town and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity or sufficiency of this Indenture or the Bonds or with respect to the security afforded by this Indenture, and the Trustee shall incur no liability with respect thereto. Except as otherwise expressly provided in this Indenture, the Trustee shall have no responsibility or duty with respect to: (i) the issuance of Bonds for value; (ii) the application of the proceeds thereof, except to the extent that such proceeds are received by it in its capacity as Trustee; (iii) the application of any moneys paid to the Town or others in accordance with this Indenture, except as to the application of any moneys paid to it in its capacity as Trustee; or (iv) any calculation of arbitrage or rebate under the Code. (b) The duties and obligations of the Trustee shall be determined by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture. (c) The Trustee shall not be liable for any action taken or omitted by it in the performance of its duties under this Indenture, except for its own negligence or willful misconduct. In no event shall the Trustee be liable for incidental, indirect, special or consequential damages in connection with or arising from this Indenture for the existence, furnishing or use of the Project. Section 9.4. Property Held in Trust. All moneys and securities held by the Trustee at any time pursuant to the terms of this Indenture shall be held by the Trustee in trust for the purposes and under the terms and conditions of this Indenture. 52 Section 9.5. Trustee Protected in Relying on Certain Documents. (a) The Trustee may rely upon any order, notice, request, consent, waiver, certificate, statement, affidavit, requisition, bond, or other document provided to the Trustee in accordance with the terms of this Indenture that it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper board or Person or to have been prepared and furnished pursuant to any of the provisions of this Indenture, or upon the written opinion of any counsel, architect, engineer, insurance consultant, management consultant, or accountant believed by the Trustee to be qualified in relation to the subject matter, and the Trustee shall be under no duty to make any investigation or inquiry into any statements contained or matters referred to in any such instrument. Subject to Section 9.1 and 9.3, the Trustee may consult with counsel selected by the Trustee with due care, who may or may not be Bond Counsel, and any advice from such counsel with respect to compliance with the provisions of this Indenture shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder, reasonably and in good faith, in accordance with such advice. (b) Whenever the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under this Indenture, such matter may be deemed to be conclusively proved and established by a Town Certificate, unless other evidence in respect thereof be hereby specifically prescribed. Such Town Certificate shall be full warrant for any action taken or suffered in good faith under the provisions hereof, but in its discretion the Trustee may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as it may deem reasonable. Except as otherwise expressly provided herein, any request, order, notice, or other direction required or permitted to be furnished pursuant to any provision hereof by the Town to the Trustee shall be sufficiently executed if executed in the name of the Town by the Town Representative. (c) The Trustee shall not be under any obligation to see to the recording or filing of this Indenture, or otherwise to the giving to any Person of notice of the provisions hereof except as expressly required in Section 9.13. Section 9.6. Compensation. Unless otherwise provided by contract with the Trustee, the Trustee shall transfer from the Administrative Fund, from time to time, reasonable compensation for all services rendered by it hereunder, including its services as Paying Agent/Registrar, together with all its reasonable expenses, charges, and other disbursements and those of its counsel, agents and employees, incurred in and about the administration and execution of the trusts hereby created and the exercise of its powers and the performance of its duties hereunder, all pursuant to a Town Order and subject to any limit on the amount of such compensation or recovery of expenses or other charges as shall be prescribed by such Town Order, and the Trustee shall have a lien therefor on any and all funds at any time held by it hereunder prior to any Bonds Outstanding. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if in the judgment of the Trustee there are reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it. If the Town shall fail to make any payment required by this Section, the Trustee may make such payment 53 from any moneys in its possession under the provisions of this Indenture and shall be entitled to a preference therefor over any Bonds Outstanding hereunder. Section 9.7. Permitted Acts. The Trustee and its directors, officers, employees, or agents may become the owner of or may in good faith buy, sell, own, hold and deal in Bonds and may join in any action that any Owner of Bonds may be entitled to take as fully and with the same rights as if it were not the Trustee. The Trustee may act as depository, and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, the Town or any committee formed to protect the rights of holders of Bonds or to effect or aid in any reorganization growing out of the enforcement of the Bonds or this Indenture, whether or not such committee shall represent the holders of a majority of the Bonds. Section 9.8. Resignation of Trustee. The Trustee may at any time resign and be discharged of its duties and obligations hereunder by giving not fewer than 60 days' notice, specifying the date when such resignation shall take effect, to the Town and each Owner of any Outstanding Bond. Such resignation shall take effect upon the appointment of a successor as provided in Section 9.10 and the acceptance of such appointment by such successor. Section 9.9. Removal of Trustee. The Trustee may be removed at any time by (i) the Owners of at least a majority of the Bonds by an instrument or concurrent instruments in writing signed and acknowledged by such Owners or by their attorneys-in-fact, duly authorized and delivered to the Town, or (ii) so long as the Town is not in default under this Indenture, the Town. Copies of each such instrument shall be delivered by the Town to the Trustee and any successor thereof. The Trustee may also be removed at any time for any breach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provision of this Indenture with respect to the duties and obligations of the Trustee by any court of competent jurisdiction upon the application of the Town or the Owners of not less than 10% of the Bonds. Section 9.10. Successor Trustee. (a) If the Trustee shall resign, be removed, be dissolved, or become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver, liquidator, or conservator of the Trustee or of its property shall be appointed, or if any public officer shall take charge or control of the Trustee or of its property or affairs, the position of the Trustee hereunder shall thereupon become vacant. (b) If the position of Trustee shall become vacant for any of the foregoing reasons or for any other reason, a successor Trustee may be appointed within one year after any such vacancy shall have occurred by the Owners of at least 25% of the Bonds by an instrument or concurrent instruments in writing signed and acknowledged by such Owners or their attorneys- in-fact, duly authorized and delivered to such successor Trustee, with notification thereof being given to the predecessor Trustee and the Town. 54 (c) Until such successor Trustee shall have been appointed by the Owners of the Bonds, the Town shall forthwith appoint a Trustee to act hereunder. Copies of any instrument of the Town providing for any such appointment shall be delivered by the Town to the Trustee so appointed. The Town shall mail notice of any such appointment to each Owner of any Outstanding Bonds within 30 days after such appointment. Any appointment of a successor Trustee made by the Town immediately and without further act shall be superseded and revoked by an appointment subsequently made by the Owners of Bonds. (c) If in a proper case no appointment of a successor Trustee shall be made within 45 days after the giving by any Trustee of any notice of resignation in accordance with Section 9.8 or after the occurrence of any other event requiring or authorizing such appointment, the Trustee or any Owner of Bonds may apply to any court of competent jurisdiction for the appointment of such a successor, and the court may thereupon, after such notice, if any, as the court may deem proper, appoint such successor and the Town shall be responsible for the costs of such appointment process. (e) Any successor Trustee appointed under the provisions of this Section shall be a commercial bank or trust company or national banking association (i) having a capital and surplus and undivided profits aggregating at least $50,000,000, if there be such a commercial bank or trust company or national banking association willing and able to accept the appointment on reasonable and customary terms, and (ii) authorized by law to perform all the duties of the Trustee required by this Indenture. (f) Each successor Trustee shall mail, in accordance with the provisions of the Bonds, notice of its appointment to the Trustee, any rating agency which, at the time of such appointment, is providing a rating on the Bonds and each of the Owners of the Bonds. Section 9.11. Transfer of Rights and Property to Successor Trustee. Any successor Trustee appointed under the provisions of Section 9.10 shall execute, acknowledge, and deliver to its predecessor and the Town an instrument in writing accepting such appointment, and thereupon such successor, without any further act, deed, or conveyance, shall become fully vested with all moneys, estates, properties, rights, immunities, powers, duties, obligations, and trusts of its predecessor hereunder, with like effect as if originally appointed as Trustee. However, the Trustee then ceasing to act shall nevertheless, on request of the Town or of such successor, execute, acknowledge, and deliver such instruments of conveyance and further assurance and do such other things as may reasonably be required for more fully and certainly vesting and confirming in such successor all the rights, immunities, powers, and trusts of such Trustee and all the right, title, and interest of such Trustee in and to the Trust Estate, and shall pay over, assign, and deliver to such successor any moneys or other properties subject to the trusts and conditions herein set forth. Should any deed, conveyance, or instrument in writing from the Town be required by such successor for more fully and certainly vesting in and confirming to it any such moneys, estates, properties, rights, powers, duties, or obligations, any and all such deeds, conveyances, and instruments in writing, on request and so far as may be authorized by law, shall be executed, acknowledged, and delivered by the Town. 55 Section 9.12. Merger, Conversion or Consolidation of Trustee. Any corporation or association into which the Trustee may be merged or with which it may be consolidated or any corporation or association resulting from any merger, conversion or consolidation to which it shall be a party or any corporation or association to which the Trustee may sell or transfer all or substantially all of its corporate trust business shall be the successor to such Trustee hereunder, without any further act, deed or conveyance, provided that such corporation or association shall be a commercial bank or trust company or national banking association qualified to be a successor to such Trustee under the provisions of Section 9.10, or a trust company that is a wholly-owned subsidiary of any of the foregoing. Section 9.13. Trustee To File Continuation Statements. If necessary, the Trustee shall file or cause to be filed, at the Town's expense, such continuation statements as may be delivered to the Trustee and which may be required by the Texas Uniform Commercial Code, as from time to time in effect (the "UCC"), in order to continue perfection of the security interest of the Trustee in such items of tangible or intangible personal property and any fixtures as may have been granted to the Trustee pursuant to this Indenture in the time, place and manner required by the UCC. Section 9.14. Accounts, Periodic Reports and Certificates. The Trustee shall keep or cause to be kept proper books of record and account (separate from all other records and accounts) in which complete and correct entries shall be made of its transactions relating to the Funds and Accounts established by this Indenture and which shall at all times be subject to inspection by the Town, and the Owner or Owners of not less than 10% in principal amount of the Bonds then Outstanding or their representatives duly authorized in writing. Section 9.15. Construction of Indenture. The Trustee may construe any of the provisions of this Indenture insofar as the same may appear to be ambiguous or inconsistent with any other provision hereof, and any construction of any such provisions hereof by the Trustee in good faith shall be binding upon the Owners of the Bonds. ARTICLE X MODIFICATION OR AMENDMENT OF THIS INDENTURE Section 10.1. Amendments Permitted. (a) This Indenture and the rights and obligations of the Town and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Indenture, except as provided below, pursuant to the affirmative vote at a meeting of Owners of the Bonds, or with the written consent without a meeting, of the Owners of the Bonds of at least fifty-one percent (51%) of the aggregate principal amount of the Bonds then Outstanding and Town approval of such modification or amendment. No such modification or amendment shall (i) extend the 56 maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the Town to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the Town of any pledge or lien upon the Pledged Revenues superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by Applicable Laws or this Indenture), or reduce the percentage of Bonds required for the amendment hereof. Any such amendment may not modify any of the rights or obligations of the Trustee without its written consent. (b) This Indenture and the rights and obligations of the Town and of the Owners may also be modified or amended at any time by a Supplemental Indenture, without the consent of any Owners, only to the extent permitted by law, and only for anyone or more of the following purposes: (i) to add to the covenants and agreements of the Town in this Indenture contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the Town; (ii) to make modifications not adversely affecting any Outstanding Bonds in any material respect; (iii) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Indenture, or in regard to questions arising under this Indenture, as the Town and the Trustee may deem necessary or desirable and not inconsistent with this Indenture, and that shall not adversely affect the rights of the Owners of the Bonds; and (iv) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest on the Bonds. Section 10.2. Owners' Meetings. The Town may at any time call a meeting of the Owners of the Bonds. In such event the Town is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof, and to fix and adopt rules and regulations for the conduct of said meeting. Section 10.3. Procedure for Amendment with Written Consent of Owners. (a) The Town and the Trustee may at any time adopt a Supplemental Indenture amending the provisions of the Bonds or of this Indenture, to the extent that such amendment is permitted by Section 10.1, to take effect when and as provided in this Section. A copy of such Supplemental Indenture, together with a request to Owners for their consent thereto, if such consent is required pursuant to Section 10.1, shall be mailed by first class mail, by the Trustee to each Owner of Bonds from whom consent is required under this Indenture, but failure to mail copies of such Supplemental Indenture and request shall not affect the validity of the Supplemental Indenture when assented to as in this Section provided. 57 (b) Such Supplemental Indenture shall not become effective unless there shall be filed with the Trustee the written consents of the Owners as required by this Indenture and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 11.6. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof), unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Trustee prior to the date when the notice hereinafter in this Section provided for has been mailed. (c) After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Indenture, the Town shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Indenture, stating in substance that the Supplemental Indenture has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Indenture or consents thereto). Proof of the mailing of such notice shall be filed with the Trustee. A record, consisting of the papers required by this Section 10.3 to be filed with the Trustee, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Indenture shall become effective upon the filing with the Trustee of the proof of mailing of such notice, and the Supplemental Indenture shall be deemed conclusively binding (except as otherwise hereinabove specifically provided in this Article) upon the Town and the Owners of all Bonds at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty-day period. Section 10.4. Procedure for Amendment Not Requiring Owner Consent. (a) The Town and the Trustee may at any time adopt a Supplemental Indenture amending the provisions of the Bonds or of this Indenture, to the extent that such amendment is permitted by Section 10.1, to take effect when and as provided in this Section. A copy of such Supplemental Indenture, together with a notice stating that the Supplemental Indenture does not require Owner consent, shall be mailed by first class mail by the Trustee to each Owner of Bonds, but failure to mail copies of such Supplemental Indenture shall not affect the validity of the Supplemental Indenture. The Trustee shall retain the proof of its mailing of such notice. A record, consisting of the papers required by this Section 10.4, shall be proof of the matters therein stated until the contrary is proved. (b) The Supplemental Indenture shall become effective upon the execution and delivery of such Supplemental Indenture by the Trustee and the Town, and the Supplemental Indenture shall be deemed conclusively binding upon the Town and the Owners of all Bonds as of the date of such execution and delivery. Section 10.5. Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article X, this Indenture shall be deemed to be modified and amended in accordance therewith, 58 the respective rights, duties, and obligations under this Indenture of the Town and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 10.6. Endorsement or Replacement of Bonds Issued After Amendments. The Town may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article X shall bear a notation, by endorsement or otherwise, in form approved by the Town, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the designated office of the Trustee or at such other office as the Town may select and designate for that purpose, a suitable notation shall be made on such Bond. The Town may determine that new Bonds, so modified as in the opinion of the Town is necessary to conform to such Owners' action, shall be prepared, executed, and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the designated office of the Trustee without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds. Section 10.7. Amendatory Endorsement of Bonds. The provisions of this Article X shall not prevent any Owner from accepting any amendment as to the particular Bonds held by such Owner, provided that due notation thereof is made on such Bonds. Section 10.8. Waiver of Default. With the written consent of at least a majority in aggregate principal amount of the Bonds then Outstanding, the Owners may waive compliance by the Town with certain past defaults under this Indenture and their consequences. Any such consent shall be conclusive and binding upon the Owners and upon all future Owners. Section 10.9. Execution of Supplemental Indenture. In executing, or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall receive, and shall be fully protected in relying upon, an opinion of counsel addressed and delivered to the Trustee and the Town stating that the execution of such Supplemental Indenture is permitted by and in compliance with this Indenture. The Trustee may, but shall not be obligated to, enter into any such Supplemental Indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. 59 ARTICLE XI DEFAULT AND REMEDIES Section 11.1. Events of Default. Each of the following occurrences or events shall be and is hereby declared to be an "Event of Default," to wit: (i) The failure of the Town to deposit the Pledged Revenues to the Pledged Revenue Fund; (ii) The failure of the Town to enforce the collection of the Assessments including the prosecution of foreclosure proceedings, in accordance with Section 7.2; and (iii) Default in the performance or observance of any covenant, agreement or obligation of the Town under this Indenture and the continuation thereof for a period of ninety (90) days after written notice specifying such default and requiring same to be remedied shall have been given to the Town by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of the Owners of not less than fifty-one percent (51%) in principal amount of the Bonds Similarly Secured then Outstanding; provided, however, if the default stated in the notice is capable of cure but cannot reasonably be cured within the applicable period, the Town shall be entitled to a further extension of time reasonably necessary to remedy such default so long as corrective action is instituted by the Town within the applicable period and is diligently pursued until such failure is corrected, but in no event for a period of time of more than one hundred eighty (180) days after such notice. Section 11.2. Immediate Remedies for Default. (a) Subject to Article VIII, upon the happening and continuance of any of the Events of Default described in Section 11.1, then and in every such case the Trustee may proceed, and upon the written request of the Owners of not less than fifty-one percent (51%) in principal amount of the Bonds Similarly Secured then Outstanding hereunder shall proceed, to protect and enforce the rights of the Owners under this Indenture, by action seeking mandamus or by other suit, action, or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief to the extent permitted by Applicable Laws, including, but not limited to, the specific performance of any covenant or agreement contained herein, or injunction; provided, however, that no action for money damages against the Town may be sought or shall be permitted. (b) PURSUANT TO SECTION 11.7, THE PRINCIPAL OF THE BONDS SHALL NOT BE SUBJECT TO ACCELERATION UNDER ANY CIRCUMSTANCES. (c) If the assets of the Trust Estate are sufficient to pay all amounts due with respect to Outstanding Bonds Similarly Secured, in the selection of Trust Estate assets to be used in the payment of Bonds Similarly Secured due under this Article, the Town shall determine, in its absolute discretion, and shall instruct the Trustee by Town Order, which Trust Estate assets shall be applied to such payment and shall not be liable to any Owner or other Person by reason of such selection and application. In the event that the Town shall fail to deliver to the Trustee such 60 Town Order, the Trustee shall select and liquidate or sell Trust Estate assets as provided in the following paragraph, and shall not be liable to any Owner, or other Person, or the Town by reason of such selection, liquidation or sale. (d) Whenever moneys are to be applied pursuant to this Article XI, irrespective of and whether other remedies authorized under this Indenture shall have been pursued in whole or in part, the Trustee may cause any or all of the assets of the Trust Estate, including Investment Securities, to be sold. The Trustee may so sell the assets of the Trust Estate and all right, title, interest, claim and demand thereto and the right of redemption thereof, in one or more parts, at any such place or places, and at such time or times and upon such notice and terms as the Trustee may deem appropriate and as may be required by law and apply the proceeds thereof in accordance with the provisions of this Section. Upon such sale, the Trustee may make and deliver to the purchaser or purchasers a good and sufficient assignment or conveyance for the same, which sale shall be a perpetual bar both at law and in equity against the Town, and all other Persons claiming such properties. No purchaser at any sale shall be bound to see to the application of the purchase money proceeds thereof or to inquire as to the authorization, necessity, expediency, or regularity of any such sale. Nevertheless, if so requested by the Trustee, the Town shall ratify and confirm any sale or sales by executing and delivering to the Trustee or to such purchaser or purchasers all such instruments as may be necessary or, in the judgment of the Trustee, proper for the purpose which may be designated in such request. Section 11.3. Restriction on Owner's Action. (a) No Owner shall have any right to institute any action, suit or proceeding at law or in equity for the enforcement of this Indenture or for the execution of any trust thereof or any other remedy hereunder, unless (i) a default has occurred and is continuing of which the Trustee has been notified in writing as provided in Section 11.1, or of which by such Section it is deemed to have notice, (ii) such default has become an Event of Default and the Owners of fifty-one percent (51%) of the aggregate principal amount of the Bonds Similarly Secured then Outstanding have made written request to the Trustee and offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, (iii) the Owners have furnished to the Trustee indemnity as provided in Section 9.2, (iv) the Trustee has for 60 days after such notice failed or refused to exercise the powers hereinbefore granted, or to institute such action, suit, or proceeding in its own name, (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Owners of fifty-one percent (51%) of the aggregate principal amount of the Bonds Similarly Secured then Outstanding, and (vi) notice of such action, suit, or proceeding is given to the Trustee; however, no one or more Owners of the Bonds Similarly Secured shall have any right in any manner whatsoever to affect, disturb, or prejudice this Indenture by its, his or their action or to enforce any right hereunder except in the manner provided herein, and that all proceedings at law or in equity shall be instituted and maintained in the manner provided herein and for the equal benefit of the Owners of all Bonds Similarly Secured then Outstanding. The notification, request and furnishing of indemnity set forth above shall, at the option of the Trustee, be conditions precedent to the execution of the powers and trusts of this Indenture and to any action or cause of action for the enforcement of this Indenture or for any other remedy hereunder. 61 (b) Subject to Article VIII, nothing in this Indenture shall affect or impair the right of any Owner to enforce, by action at law, payment of any Bond at and after the maturity thereof, or on the date fixed for redemption or the obligation of the Town to pay each Bond issued hereunder to the respective Owners thereof at the time and place, from the source and in the manner expressed herein and in the Bonds. (c) In case the Trustee or any Owners of Bonds Similarly Secured shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or any Owners of Bonds Similarly Secured, then and in every such case the Town, the Trustee and the Owners of Bonds Similarly Secured shall be restored to their former positions and rights hereunder, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken. Section 11.4. Application of Revenues and Other Moneys After Default. (a) All moneys, securities, funds and Pledged Revenues and the income therefrom received by the Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the cost and expenses of the proceedings resulting in the collection of such amounts, the expenses (including its counsel), liabilities, and advances incurred or made by the Trustee and the fees of the Trustee in carrying out this Indenture, during the continuance of an Event of Default, notwithstanding Section 11.2, be applied by the Trustee, on behalf of the Town, to the payment of interest and principal or Redemption Price then due on Bonds Similarly Secured, as follows: FIRST: To the payment to the Owners entitled thereto all installments of interest then due in the direct order of maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts due on such installment, to the Owners entitled thereto, without any discrimination or preference; and SECOND: To the payment to the Owners entitled thereto of the unpaid principal of Outstanding Bonds Similarly Secured, or Redemption Price of any Bonds Similarly Secured which shall have become due, whether at maturity or by call for redemption, in the direct order of their due dates and, if the amounts available shall not be sufficient to pay in full all the Bonds Similarly Secured due on any date, then to the payment thereof ratably, according to the amounts of principal due and to the Owners entitled thereto, without any discrimination or preference. Within thirty (30) days of receipt of such good and available funds, the Trustee may fix a record date and a payment date for any payment to be made to Owners of Bonds Similarly Secured pursuant to this Section 11.4. (b) In the event funds are not adequate to cure any of the Events of Default described in Section 11.1, the available funds shall be allocated to the Bonds Similarly Secured that are Outstanding in proportion to the quantity of Bonds Similarly Secured that are currently due and in default under the terms of this Indenture. 62 (c) The restoration of the Town to its prior position after any and all defaults have been cured, as provided in Section 11.3, shall not extend to or affect any subsequent default under this Indenture or impair any right consequent thereon. Section 11.5. Effect of Waiver. No delay or omission of the Trustee, or any Owner, to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Indenture to the Trustee or the Owners, respectively, may be exercised from time to time and as often as may be deemed expedient. Section 11.6. Evidence of Ownership of Bonds. (a) Any request, consent, revocation of consent or other instrument which this Indenture may require or permit to be signed and executed by the Owners of Bonds may be in one or more instruments of similar tenor, and shall be signed or executed by such Owners in person or by their attorneys duly appointed in writing. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, or the holding by any Person of the Bonds shall be sufficient for any purpose of this Indenture (except as otherwise herein expressly provided) if made in the following manner: (i) The fact and date of the execution of such instruments by any Owner of Bonds or the duly appointed attorney authorized to act on behalf of such Owner may be provided by a guarantee of the signature thereon by a bank or trust company or by the certificate of any notary public or other officer authorized to take acknowledgments of deeds, that the Person signing such request or other instrument acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such signature guarantee, certificate, or affidavit shall also constitute sufficient proof of his authority. (ii) The ownership of Bonds and the amount, numbers and other identification and date of holding the same shall be proved by the Register. (b) Except as otherwise provided in this Indenture with respect to revocation of a consent, any request or consent by an Owner of any Bond shall bind all future Owners of the same Bond in respect of anything done or suffered to be done by the Town or the Trustee in accordance therewith. Section 11.7. No Acceleration. In the event of the occurrence of an Event of Default under Section 11.1, the right of acceleration of any Stated Maturity is not granted as a remedy hereunder and the right of acceleration under this Indenture is expressly denied. 63 Section 11.8. Mailing of Notice. Any provision in this Article for the mailing of a notice or other document to Owners shall be fully complied with if it is mailed, first class postage prepaid, only to each Owner at the address appearing upon the Register. Section 11.9. Exclusion of Bonds. Bonds owned or held by or for the account of the Town will not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding Bonds provided for in this Indenture, and the Town shall not be entitled with respect to such Bonds to give any consent or take any other action provided for in this Indenture. ARTICLE XII GENERAL COVENANTS AND REPRESENTATIONS Section 12.1. Representations as to Pledged Revenues. (a) The Town represents and warrants that it is authorized by Applicable Laws to authorize and issue the Bonds, to execute and deliver this Indenture and to pledge the Pledged Revenues in the manner and to the extent provided in this Indenture, and that the Pledged Revenues are and will be and remain free and clear of any pledge, lien, charge, or encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge and lien created in or authorized by this Indenture except as expressly provided herein. (b) The Town shall at all times, to the extent permitted by Applicable Laws, defend, preserve and protect the pledge of the Pledged Revenues and all the rights of the Owners and the Trustee, under this Indenture against all claims and demands of all Persons whomsoever. (c) Subject to Section 7.2(d), the Town will take all steps reasonably necessary and appropriate, and will direct the Trustee to take all steps reasonably necessary and appropriate, to collect all delinquencies in the collection of the Assessments and any other amounts pledged to the payment of the Bonds to the fullest extent permitted by the PID Act and other Applicable Laws. Section 12.2. General. The Town shall do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of the Town under the provisions of this Indenture. 64 ARTICLE XIII SPECIAL COVENANTS Section 13.1. Further Assurances; Due Performance. (a) At any and all times the Town will duly execute, acknowledge and deliver, or will cause to be done, executed and delivered, all and every such further acts, conveyances, transfers, and assurances in a manner as the Trustee shall reasonably require for better conveying, transferring, pledging, and confirming unto the Trustee, all and singular, the revenues, Funds, Accounts and properties constituting the Pledged Revenues, and the Trust Estate hereby transferred and pledged, or intended so to be transferred and pledged. (b) The Town will duly and punctually keep, observe and perform each and every term, covenant and condition on its part to be kept, observed and performed, contained in this Indenture. Section 13.2. Other Obligations or Other Liens; Additional Bonds. (a) The Town reserves the right to issue obligations under other indentures, assessment ordinances, or similar agreements or other obligations which do not constitute or create a lien on the Trust Estate and are not payable from Pledged Revenues. (b) The Town will not create or voluntarily permit to be created any debt, lien or charge on the Trust Estate, and will not do or omit to do or suffer to be done or omit to be done any matter or things whatsoever whereby the lien of this Indenture or the priority hereof might or could be lost or impaired; and further covenants that it will pay or cause to be paid or will make adequate provisions for the satisfaction and discharge of all lawful claims and demands which if unpaid might by law be given precedence over or any equality with this Indenture as a lien or charge upon the Pledged Revenues or Pledged Funds; provided, however, that nothing in this Section shall require the Town to apply, discharge, or make provision for any such lien, charge, claim, or demand so long as the validity thereof shall be contested by it in good faith, unless thereby, in the opinion of counsel to the Trustee, the same would endanger the security for the Bonds. (c) The Town reserves the right to issue Additional Bonds for any purpose permitted by the PID Act and in accordance with the conditions set forth below: (i) A Town Representative shall certify that the Town is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Indenture. (ii) The Developer, through an authorized representative, shall certify that: a. It is not in default in the performance and observance of any of the terms, provisions and conditions applicable to it contained in the Financing Agreement; 65 b. At least 75% of the residential lots within Improvement Area #3 (East Residential) to be financed are under contract with merchant homebuilders unaffiliated with the Developer; c. Construction has commenced or been completed on at least 33% of the single-family homes located within Improvement Area #2 (West Residential); d. The appraised value of the Improvement Area #1, Improvement Area #2, and Improvement Area #3 Assessed Parcels, assuming completion of all Improvement Project A Improvements, is equal to at least three (3) times the principal amount of all outstanding Bonds Similarly Secured, taking into account the Additional Bonds to be issued; and e. The appraised value allocated to each Improvement Area #1 Assessed Parcel, Improvement Area #2 Assessed Parcel, and Improvement Area #3 Assessed Parcel is at least two and a half (2.5) times the portion of the principal amount of all Outstanding Bonds Similarly Secured, taking into account the Additional Bonds to be issued, that is allocated to each such Assessed Parcel. (iii) The principal of and interest on the Additional Bonds must be scheduled to be paid or mature on March 1 or September 1, or both, of the years in which principal or interest is scheduled to be paid or mature with a final maturity date no more than thirty (30) years from their date of issuance. (iv) There shall be deposited to the Reserve Fund an amount equal to the Reserve Fund Requirement taking into account the Outstanding Bonds Similarly Secured and the Additional Bonds then proposed to be issued. Section 13.3. Books of Record. (a) The Town shall cause to be kept full and proper books of record and accounts, in which full, true and proper entries will be made of all dealings, business and affairs of the Town, which relate to the Pledged Revenues, the Pledged Funds, and the Bonds. (b) The Trustee shall have no responsibility with respect to the financial and other information received by it pursuant to this Section 13.3 except to receive and retain same, subject to the Trustee's document retention policies, and to distribute the same in accordance with the provisions of this Indenture. 66 ARTICLE XIV PAYMENT AND CANCELLATION OF THE BONDS AND SATISFACTION OF THE INDENTURE Section 14.1. Trust Irrevocable. The trust created by the terms and provisions of this Indenture is irrevocable until the Bonds secured hereby are fully paid or provision is made for their payment as provided in this Article. Section 14.2. Satisfaction of Indenture. If the Town shall pay or cause to be paid, or there shall otherwise be paid to the Owners, principal of and interest on all of the Bonds, at the times and in the manner stipulated in this Indenture, and all amounts due and owing with respect to the Bonds have been paid or provided for, then the pledge of the Trust Estate and all covenants, agreements, and other obligations of the Town to the Owners of such Bonds, shall thereupon cease, terminate, and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Town copies of all such documents as it may have evidencing that principal of and interest on all of the Bonds has been paid so that the Town may determine if this Indenture is satisfied; if so, the Trustee shall pay over or deliver all moneys held by it in the Funds and Accounts held hereunder to the Person entitled to receive such amounts, or, if no Person is entitled to receive such amounts, then to the Town. Section 14.3. Bonds Deemed Paid. (a) Any Outstanding Bonds shall, prior to the Stated Maturity or redemption date thereof, be deemed to have been paid and no longer Outstanding within the meaning of this Trust Indenture (a "Defeased Debt"), and particularly this Article XIV, when payment of the principal of, premium, if any, on such Defeased Debt, plus interest thereon to the due date thereof (whether such due date be by reason of maturity, redemption, or otherwise), either (1) shall have been made in accordance with the terms thereof, or (2) shall have been provided by irrevocably depositing with the Trustee, in trust, and irrevocably set aside exclusively for such payment, (A) money sufficient to make such payment or (B) Defeasance Securities, certified by an independent public accounting firm of national reputation to mature as to principal and interest in such amount and at such times as will insure the availability, without reinvestment, of sufficient money to make such payment, and all necessary and proper fees, compensation, and expenses of the Trustee pertaining to the Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. Neither Defeasance Securities nor moneys deposited with the Trustee pursuant to this Section nor principal or interest payments on any such Defeasance Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and interest on the Bonds. Any cash received from such principal of and interest on such Defeasance Securities deposited with the Trustee, if not then needed for such purpose, shall, be reinvested in Defeasance Securities as directed by the Town maturing at times and in amounts sufficient to pay when due the principal of and interest on the Bonds on and prior to such redemption date or maturity date thereof, as the case may be. Any payment for Defeasance Securities purchased for 67 the purpose of reinvesting cash as aforesaid shall be made only against delivery of such Defeasance Securities. (b) Any determination not to redeem Defeased Debt that is made in conjunction with the payment arrangements specified in Sections 14.3(a)(1) or 14.3(a)(2) shall not be irrevocable, provided that: (1) in the proceedings providing for such defeasance, the Town expressly reserves the right to call the Defeased Debt for redemption; (2) the Town gives notice of the reservation of that right to the Owners of the Defeased Debt immediately following the defeasance; (3) the Town directs that notice of the reservation be included in any defeasance or redemption notices that it authorizes; and (4) at or prior to the time of the redemption, the Town satisfies the conditions of clause (a) of this Section 14.3 with respect to such Defeased Debt as though it was being defeased at the time of the exercise of the option to redeem the Defeased Debt, after taking the redemption into account in determining the sufficiency of the provisions made for the payment of the Defeased Debt. ARTICLE XV MISCELLANEOUS Section 15.1. Benefits of Indenture Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any Person other than the Town, the Trustee and the Owners, any right, remedy, or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture by and on behalf of the Town shall be for the sole and exclusive benefit of the Owners and the Trustee. Section 15.2. Successor is Deemed Included in All References to Predecessor. Whenever in this Indenture or any Supplemental Indenture either the Town or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Town or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 15.3. Execution of Documents and Proof of Ownership by Owners. (a) Any request, declaration, or other instrument which this Indenture may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys duly appointed in writing. (b) Except as otherwise expressly provided herein, the fact and date of the execution by any Owner or his attorney of such request, declaration, or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the Person signing such request, declaration, or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. 68 (c) Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number, and date of holding the same shall be proved by the Register. (d) Any request, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the Town or the Trustee in good faith and in accordance therewith. Section 15.4. No Waiver of Personal Liability. No member, officer, agent, or employee of the Town shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent, or employee from the performance of any official duty provided by law. Section 15.5. Notices to and Demands on Town and Trustee. (a) Except as otherwise expressly provided herein, all notices or other instruments required or permitted under this Indenture shall be in writing and shall be faxed, delivered by hand, or mailed by first class mail, postage prepaid, and addressed as follows: If to the Town Town of Westlake, Texas 3 Village Circle, Suite 202 Westlake, Texas 76226 Attn: Town Manager Telephone: (817) 490-5720 If to the Trustee Or the Paying Agent/Registrar U.S. Bank National Association 13737 Noel Road, Suite 800 Dallas, Texas 75240 Attn: Corporate Trust Services Fax: (972) 581-1660 (b) Any such notice, demand, or request may also be transmitted to the appropriate party by telegram or telephone and shall be deemed to be properly given or made at the time of such transmission if, and only if, such transmission of notice shall be confirmed in writing and sent as specified above. (c) Any of such addresses may be changed at any time upon written notice of such change given to the other party by the parry effecting the change. Notices and consents given by mail in accordance with this Section shall be deemed to have been given five Business Days after the date of dispatch; notices and consents given by any other means shall be deemed to have been given when received. (d) The Trustee shall mail to each Owner of a Bond notice of (1) any substitution of the Trustee; or (2) the redemption or defeasance of all Bonds Outstanding. 69 Section 15.6. Partial Invalidity. If any Section, paragraph, sentence, clause, or phrase of this Indenture shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Indenture. The Town hereby declares that it would have adopted this Indenture and each and every other Section, paragraph, sentence, clause, or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that anyone or more Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid, or unenforceable. Section 15.7. Applicable Laws. This Indenture shall be governed by and enforced in accordance with the laws of the State applicable to contracts made and performed in the State. Section 15.8. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Indenture is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day that is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date. Section 15.9. Counterparts. This Indenture may be executed in counterparts, each of which shall be deemed an original. [Remainder of page left blank intentionally] IN WITNESS WHEREOF, the Town and the Trustee have caused this Indenture of Trust to be executed as of the date hereof. TOWN OF WESTLAKE, TEXAS By: ___________________________ Mayor Attest: _________________________ Town Secretary (TOWN SEAL) Town Signature Page to Indenture of Trust U.S. BANK NATIONAL ASSOCIATION, as Trustee By: ___________________________ Authorized Officer Trustee Signature Page to Indenture of Trust A-1 EXHIBIT A DESCRIPTION OF THE PROPERTY WITHIN THE SOLANA PUBLIC IMPROVEMENT DISTRICT B-1 EXHIBIT B BOND PURCHASE AGREEMENT Draft 12/30/2014 HOU:3432279.2 $26,175,000* TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) BOND PURCHASE AGREEMENT January __, 2015 Honorable Mayor and Town Council Town of Westlake, Texas 3 Village Circle, Suite 202 Westlake, Texas 76262 Ladies and Gentlemen: The undersigned, Jefferies LLC (the “Underwriter”), offers to enter into this Agreement (this “Agreement”) with the Town of Westlake, Texas (the “Town”), which will be binding upon the Town and the Underwriter upon the acceptance hereof by the Town. This offer is made subject to its acceptance by the Town by execution of this Agreement and its delivery to the Underwriter on or before 10:00 p.m., Central Time, on the date hereof and, if not so accepted, will be subject to withdrawal by the Underwriter upon written notice delivered to the Town at any time prior to the acceptance hereof by the Town. All capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Indenture (defined herein) between the Town and U.S. Bank, National Association, as trustee (the “Trustee”), authorizing the issuance of the Bonds (defined herein), and in the Official Statement (defined herein). 1. Purchase and Sale of Bonds. Upon the terms and conditions and upon the basis of representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the Town, and the Town hereby agrees to sell to the Underwriter, all (but not less than all) of $26,175,000 aggregate principal amount of the Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the “Bonds”), at a purchase price of $____________ (representing the aggregate principal amount of the Bonds, less an Underwriter’s discount of $____________). Inasmuch as this purchase and sale represents a negotiated transaction, the Town understands, and hereby confirms, that the Underwriter is not acting as a fiduciary of the Town, but rather is acting solely in its capacity as Underwriter for its own account. The Town acknowledges and agrees that (i) the purchase and sale of the Bonds pursuant to this Agreement is an arm’s-length commercial transaction among the Town and the Underwriter, (ii) in connection therewith and with the discussions, undertakings, and procedures leading up to the 2 HOU:3432279.2 consummation of this transaction, the Underwriter is and has been acting solely as a principal and is not acting as the agent or fiduciary of the Town, (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the Town with respect to the offering described herein or the discussions, undertakings, and procedures leading thereto (regardless of whether the Underwriter has provided other services or is currently providing other services to the Town on other matters) and the Underwriter has no obligation to the Town with respect to the offering described herein except the obligations expressly set forth in this Agreement, and (iv) the Town has consulted its own legal, financial, and other advisors to the extent it has deemed appropriate. The Town further acknowledges and agrees that following the issuance and delivery of the Bonds, the Underwriter has indicated that it may have periodic discussions with the Town regarding the expenditure of Bond proceeds and the construction of the projects financed with the Bonds and, in connection with such discussions, the Underwriter shall be acting solely as a principal and will not be acting as the agent or fiduciary of, and will not be assuming an advisory or fiduciary responsibility in favor of, the Town. The Bonds shall be dated the date of their issuance and delivery and shall have the maturities and redemption features, if any, and bear interest at the rates per annum shown on Appendix A hereto. Payment for and delivery of the Bonds, and the other actions contemplated hereby, shall take place on February 5, 2015 (or such other date as may be agreed to by the Town and the Underwriter) (the “Closing Date”). 2. Authorization Instruments and Law. The Bonds were authorized by an Ordinance enacted by the Town Council of the Town (the “Town Council”) on January 15, 2015 (the “Bond Ordinance”) and shall be issued pursuant to the provisions of Subchapter A of Chapter 372, Texas Local Government Code, as amended (the “Act”), and the Indenture of Trust, dated February 1, 2015, between the Town and the Trustee, authorizing the issuance of the Bonds (the “Indenture”). The Bonds shall be substantially in the form described in, and shall be secured under the provisions of, the Indenture. The Bonds and interest thereon shall be secured by the proceeds of special assessments (the “Assessments”) levied on the assessable parcels within Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the Solana Public Improvement District (the “District”) established by Resolution No. 14-07 (the “Creation Resolution”), enacted by the Town Council on February 24, 2014, in accordance with the Act. A Service and Assessment Plan (the “Service and Assessment Plan”) which sets forth the costs of the Improvement Project A Improvements (as defined in the Indenture) and the method of payment of the Assessments was adopted by the Town Council on January 15, 2015, pursuant to Ordinance No. ____ (the “Assessment Ordinance” and, together with the Creation Resolution, the Indenture and the Bond Ordinance, the “Authorizing Documents”). The Bonds shall be further secured by certain applicable funds and accounts created under the Indenture. The Bonds shall be as described in Appendix A, the Indenture and the Official Statement (defined below). The proceeds of the Bonds shall be used for (i) paying a portion of the Costs of the Improvement Project A Improvements (as defined in the Indenture), (ii) paying a portion of the interest on the Bonds during and after the period of acquisition and construction of the 3 HOU:3432279.2 Improvement Project A Improvements, (iii) funding a reserve fund for payment of principal and interest on the Bonds, (iv) paying a portion of the costs incidental to the organization of the District, and (v) paying the costs of issuing the Bonds. 3. Public Offering. Subject to the provisions of the following paragraph, the Underwriter agrees to make a bona fide public offering of all of the Bonds at prices not to exceed the public offering prices set forth on the inside cover page of the Official Statement and may subsequently change such offering prices without any requirement of prior notice. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the public offering prices (or yields higher than the public offering yields) stated on the inside cover page of the Official Statement. On or before the third (3rd) business day before Closing, the Underwriter shall execute and deliver to Bond Counsel the Issue Price Certificate, in substantially the form attached hereto as Appendix B. 4. Official Statement. (a) Delivery of Official Statement. The Town previously has delivered, or caused to be delivered, to the Underwriter the Preliminary Official Statement for the Bonds dated December 22, 2014, (the “Preliminary Official Statement”), in a “designated electronic format,” as defined in the Municipal Securities Rulemaking Board (“MSRB”) Rule G-32 (“Rule G-32”). The Town will prepare, or cause to be prepared, a final Official Statement relating to the Bonds (the “Official Statement”) which will be (i) dated the date of this Agreement, (ii) complete within the meaning of the United States Securities and Exchange Commission’s Rule 15c2-12, as amended (the “Rule”), (iii) in a “designated electronic format” and (iv) substantially in the form of the most recent version of the Preliminary Official Statement provided to the Underwriter before the execution hereof. The Official Statement, including the cover page thereto, all exhibits, schedules, appendices, maps, charts, pictures, diagrams, reports, and statements included or incorporated therein or attached thereto, and all amendments and supplements thereto that may be authorized for use with respect to the Bonds are collectively referred to herein as the “Official Statement.” Until the Official Statement has been prepared and is available for distribution, the Town shall provide to the Underwriter sufficient quantities (which may be in electronic format) of the Preliminary Official Statement as the Underwriter deems necessary to satisfy the obligation of the Underwriter under the Rule with respect to distribution to each potential customer, upon request, of a copy of the Preliminary Official Statement. (b) Preliminary Official Statement Deemed Final. The Preliminary Official Statement has been prepared for use by the Underwriter in connection with the public offering, sale and distribution of the Bonds. The Town hereby represents and warrants that the Preliminary Official Statement has been deemed final by the Town as of its date, except for the omission of such information which is dependent upon the final pricing of the Bonds for completion, all as permitted to be excluded by Section (b)(1) of the Rule. (c) Use of Official Statement in Offering and Sale. The Town hereby authorizes the Official Statement and the information therein contained to be used by the Underwriter in connection with the public offering and the sale of the Bonds. The Town 4 HOU:3432279.2 consents to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection with the public offering of the Bonds. The Town shall provide, or cause to be provided, to the Underwriter as soon as practicable after the date of the Town’s acceptance of this Agreement (but, in any event, not later than within seven (7) business days after the Town’s acceptance of this Agreement) copies of the Official Statement which is complete as of the date of its delivery to the Underwriter. The Town shall provide the Official Statement, or cause the Official Statement to be provided, (i) in a “designated electronic format” consistent with the requirements of Rule G-32 and (ii) in a printed format in such quantity as the Underwriter shall request in order for the Underwriter to comply with Section (b)(4) of the Rule and the rules of the MSRB. (d) Updating of Official Statement. If, after the date of this Agreement, up to and including the date the Underwriter is no longer required to provide an Official Statement to potential customers who request the same pursuant to the Rule (the earlier of (i) ninety (90) days from the “end of the underwriting period” (as defined in the Rule) and (ii) the time when the Official Statement is available to any person from the MSRB, but in no case less than twenty-five (25) days after the “end of the underwriting period” for the Bonds), the Town becomes aware of any fact or event which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary to amend or supplement the Official Statement to comply with law, the Town will notify the Underwriter (and for the purposes of this clause provide the Underwriter with such information as it may from time to time reasonably request), and if, in the reasonable judgment of the Underwriter, such fact or event requires preparation and publication of a supplement or amendment to the Official Statement, the Town will forthwith prepare and furnish, at the Town’s own expense (in a form and manner approved by the Underwriter), either an amendment or a supplement to the Official Statement so that the statements therein as so amended and supplemented will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or so that the Official Statement will comply with law; provided, however, that for all purposes of this Agreement and any certificate delivered by the Town in accordance herewith, the Town makes no representations with respect to (i) the descriptions in the Preliminary Official Statement or the Official Statement of The Depository Trust Company, New York, New York (“DTC”), or its book-entry-only system, (ii) the Preliminary Official Statement or the Official Statement under the captions “THE IMPROVEMENT PROJECT A IMPROVEMENTS,” “THE DEVELOPMENT,” “THE DEVELOPER,” “THE DEVELOPMENT CONSULTANT,” “BONDHOLDERS’ RISKS” (only as it pertains to the Developer and the Development) and “LEGAL MATTERS — Litigation — The Developer.” If such notification shall be subsequent to the Closing, the Town, at the expense of the Developer, shall furnish such legal opinions, certificates, instruments and other documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy of such supplement or amendment to the Official Statement. The Town shall provide any such amendment or supplement, or cause any such amendment or supplement to be provided, (i) in a “designated electronic format” consistent with the 5 HOU:3432279.2 requirements of Rule G-32 and (ii) in a printed format in such quantity as the Underwriter shall request in order for the Underwriter to comply with Section (b)(4) of the Rule and the rules of the MSRB. (e) Filing with MSRB. The Underwriter hereby agrees to timely file the Official Statement with MSRB through its Electronic Municipal Market Access (“EMMA”) system on or before the date of Closing. Unless otherwise notified in writing by the Underwriter, the Town can assume that the “end of the underwriting period” for purposes of the Rule is the date of the Closing. 5. Town Representations, Warranties and Covenants. The Town represents, warrants and covenants to the Underwriter that: (a) Due Organization, Existence and Authority. The Town is a political subdivision of the State of Texas (the “State”), and has, and at the Closing Date will have, full legal right, power and authority (i) to enter into this Agreement, the Indenture, the Construction, Funding and Acquisition Agreement (the “Financing Agreement”), dated as of _____________, executed and delivered by the Town and Maguire Partners – Solana Land, L.P. (the “Developer”), the Continuing Disclosure Agreement of Issuer with respect to the Bonds, dated as of February 1, 2015 (the “Continuing Disclosure Agreement of Issuer”), executed and delivered by the Town, the Developer and U.S. Bank National Association, as Dissemination Agent, the Landowner Agreement, dated as of January 15, 2015 (the “Landowner Agreement”), executed and delivered by the Town and the Developer, and the Maguire Partners-Solana Land, L.P. Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation - Solana PID, dated as of January 15, 2015 (the “Redemption Agreement”), executed and delivered by the Town, the Developer and the Trustee, (ii) to issue, sell and deliver the Bonds to the Underwriter as provided herein, and (iii) to carry out and consummate the transactions on its part contemplated by the Authorizing Documents, this Agreement, the Financing Agreement, the Landowner Agreement, the Official Statement, the Redemption Agreement, the Continuing Disclosure Agreement of Issuer and any other documents and certificates contemplated by any of the foregoing (collectively, the “Town Documents”). (b) Due Authorization and Approval of Town. By all necessary official action of the Town, the Town has duly authorized and approved the adoption or execution and delivery by the Town of, and the performance by the Town of the obligations on its part contained in, the Town Documents and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded, except as may have been approved by the Underwriter. When validly executed and delivered by the other parties thereto, Town Documents will constitute the legally valid and binding obligations of the Town enforceable upon the Town in accordance with their respective terms, except insofar as enforcement may be limited by principles of sovereign immunity, bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally. The Town has complied, and will at the Closing (defined herein) be in compliance in all material respects, with the obligations on its part to be performed on or prior to the Closing Date under the Town Documents. 6 HOU:3432279.2 (c) Due Authorization for Issuance of the Bonds. The Town has duly authorized the issuance and sale of the Bonds pursuant to the Bond Ordinance, the Indenture and the Act. The Town has, and at the Closing Date will have, full legal right, power and authority (i) to enter into, execute, deliver and perform its obligations under this Agreement and the Town Documents, (ii) to issue, sell and deliver the Bonds to the Underwriter pursuant to the Indenture, the Bond Ordinance, the Act and as provided herein, and (iii) to carry out, give effect to and consummate the transactions on the part of the Town described by the Town Documents and the Bond Ordinance. (d) No Breach or Default. As of the time of acceptance hereof, the Town is not and, as of the Closing Date, the Town will not be, in breach of or in default in any material respect under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument related to the Bonds and to which the Town is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach, default or event could have a material adverse effect on the Town’s ability to perform its obligations under the Bonds or the Town Documents; and, as of such times, the authorization, execution and delivery of the Bonds and the Town Documents and compliance by the Town with obligations on its part to be performed in each of such agreements or instruments does not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Town (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties are bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be permitted by the Town Documents. (e) No Litigation. At the time of acceptance hereof there is, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “Action”) pending against the Town with respect to which the Town has been served with process, nor to the knowledge of the Town is any Action threatened against the Town, in which any such Action (i) in any way questions the existence of the Town or the rights of the members of the Town Council to hold their respective positions, (ii) in any way questions the formation or existence of the District, (iii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the Town Documents or the consummation of the transactions on the part of the Town contemplated thereby, or contests the exclusion of the interest on the Bonds from federal income taxation, or (iv) which may result in any material adverse change in the financial condition of the Town; and, to the best knowledge of the Town, as of the time of acceptance hereof there is no 7 HOU:3432279.2 basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence. (f) Bonds Issued Pursuant to Indenture. The Town represents that the Bonds, when issued, executed and delivered in accordance with the Indenture and sold to the Underwriter as provided herein, will be validly issued and outstanding obligations of the Town subject to the terms of the Indenture, entitled to the benefits of the Indenture and the security of the pledge of the proceeds of the levy of the Assessments received by the Town, all to the extent provided for in the Indenture. The Indenture creates a valid pledge of the monies in certain funds and accounts established pursuant to the Indenture to the extent provided for in the Indenture, including the investments thereof, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. (g) Assessments. The Assessments constituting the security for the Bonds have been levied by the Town in accordance with the Act on those parcels of land identified in the Assessment Roll (as defined in the Service and Assessment Plan). According to the Act, such Assessments constitute a valid and legally binding first and prior lien against the properties assessed, superior to all other liens and claims, except liens or claims for State, county, school district, or municipality ad valorem taxes. (h) Consents and Approvals. All authorizations, approvals, licenses, permits, consents, elections, and orders of or filings with any governmental authority, legislative body, board, agency or commission having jurisdiction in the matters which are required by the Closing Date for the due authorization of, which would constitute a condition precedent to or the absence of which would adversely affect the due performance by the Town of, its obligations in connection with the Town Documents have been duly obtained or made and are in full force and effect, except for the approval of the Bonds by the Attorney General of the State, registration of the Bonds by the Comptroller of Public Accounts of the State, and the approvals, consents and orders as may be required under Blue Sky or securities laws of any jurisdiction. (i) No Adverse IRS Listing. The Town has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that the Town is an issuer whose arbitrage certifications may not be relied upon. (j) Public Debt. Prior to the Closing, the Town will not offer or issue any bonds, notes or other obligations for borrowed money or incur any material liabilities, direct or contingent, payable from or secured by a pledge of the Assessments which secure the Bonds without the prior approval of the Underwriter. (k) Preliminary Official Statement. The information contained in the Preliminary Official Statement with respect to the Town under the captions and subcaptions “THE TOWN,” “THE DISTRICT” and “LEGAL MATTERS — Litigation - The Town” and “CONTINUING DISCLOSURE” is true and correct in all material respects, and such information does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the 8 HOU:3432279.2 statements therein, in the light of the circumstances under which they were made, not misleading. (l) Official Statement. At the time of the Town’s acceptance hereof and (unless the Official Statement is amended or supplemented pursuant to paragraph (d) of Section 4 of this Agreement) at all times subsequent thereto during the period up to and including twenty-five (25) days subsequent to the “end of the underwriting period,” the information contained in the Official Statement with respect to the Town under the captions and subcaptions “THE TOWN,” “THE DISTRICT” and “LEGAL MATTERS — Litigation - The Town” and “CONTINUING DISCLOSURE” does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that if the Town notifies the Underwriter of any fact or event as required by Section 4(d) hereof, and the Underwriter determines that such fact or event does not require preparation and publication of a supplement or amendment to the Official Statement, then the Official Statement in its then-current form shall be conclusively deemed to be complete and correct in all material respects. (m) Supplements or Amendments to Official Statement. If the Official Statement is supplemented or amended pursuant to paragraph (d) of Section 4 of this Agreement, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto during the period up to and including the twenty-fifth (25th) day subsequent to the “end of the underwriting period,” the Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that if the Town notifies the Underwriter of any fact or event as required by Section 4(d) hereof, and the Underwriter determines that such fact or event does not require preparation and publication of a supplement or amendment to the Official Statement, then the Official Statement in its then-current form shall be conclusively deemed to be complete and correct in all material respects. (n) Compliance with the Rule. During the last five (5) years, the Town has complied in all material respects with its previous continuing disclosure undertakings made by it in accordance with the Rule, except as described in the Official Statement. (o) Use of Bond Proceeds. The Town will apply, or cause to be applied, the proceeds from the sale of the Bonds as provided in and subject to all of the terms and provisions of the Indenture and will not take or omit to take any action which action or omission will adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds. (p) Blue Sky and Securities Laws and Regulations. The Town will furnish such information and execute such instruments and take such action in cooperation with the Underwriter as the Underwriter may reasonably request, at no expense to the Town, 9 HOU:3432279.2 (i) to (y) qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions in the United States as the Underwriter may designate and (z) determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and (ii) to continue such qualifications in effect so long as required for the initial distribution of the Bonds by the Underwriter (provided, however, that the Town will not be required to qualify as a foreign corporation or to file any general or special consents to service of process under the laws of any jurisdiction) and will advise the Underwriter immediately of receipt by the Town of any notification with respect to the suspension of the qualification of the Bonds for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose. (q) Certificates of the Town. Any certificate signed by any official of the Town authorized to do so in connection with the transactions described in this Agreement shall be deemed a representation and warranty by the Town to the Underwriter as to the statements made therein and can be relied upon by the Underwriter as to the statements made therein. (r) Intentional Actions Regarding Representations and Warranties. The Town covenants that between the date hereof and the Closing it will not intentionally take actions which will cause the representations and warranties made in this Section to be untrue as of the Closing. (s) Financial Advisor. The Town has engaged Lawrence Financial Consulting LLC, as financial advisor in connection with its debt offerings, including the Bonds. The Town covenants to notify the Underwriter and the Developer in a timely manner of any engagement by the Town of a new or additional financial advisor with respect to the Bonds. By delivering the Official Statement to the Underwriter, the Town shall be deemed to have reaffirmed, with respect to the Official Statement, the representations, warranties and covenants set forth above with respect to the Preliminary Official Statement. 6. Town to Cause Developer to Act. The Town will cause the Developer to deliver, at the signing hereof, a Developer Letter of Representation in the form of Appendix C hereto, and at the Closing, a certificate signed by the Developer as set for in Section 9(e). The “Developer Documents” consist of the Financing Agreement, the Development Agreement, the Reimbursement Agreement, the Continuing Disclosure Agreement of Developer with respect to the Bonds, dated as of February 1, 2015 (the “Continuing Disclosure Agreement of Developer”) and any other documents and certificates of the Developer contemplated by any of the foregoing. 7. The Closing. At 10:00 a.m., Central time, on the Closing Date, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the Town and the Underwriter, (i) the Town will deliver or cause to be delivered to The Depository Trust Company, New York, New York, (“DTC”) through its “FAST” System, the Bonds in the form of one fully registered Bond for each maturity, registered in the name of Cede & Co., as nominee for DTC, duly executed by the Town and authenticated by the Trustee as provided in 10 HOU:3432279.2 the Indenture, and (ii) the Town will deliver the closing documents hereinafter mentioned to McCall, Parkhurst & Horton L.L.P. (“Bond Counsel”), or a place to be mutually agreed upon by the Town and the Underwriter. Settlement will be through the facilities of DTC. The Underwriter will accept delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by wire transfer in federal funds payable to the order of the Town or its designee. These payments and deliveries, together with the delivery of the aforementioned documents, are herein called the “Closing.” The Bonds will be made available to the Underwriter for inspection not less than twenty-four (24) hours prior to the Closing. 8. Closing Conditions. The Underwriter has entered into this Agreement in reliance upon the representations and covenants herein and the performance by the Town and the Developer of their respective obligations under this Agreement and the Developer Letter of Representations, respectively, both as of the date hereof and as of the date of the Closing. The Underwriter’s obligations under this Agreement are and shall be subject to the following additional conditions: (a) Bring-Down Representations of the Town and the Developer. The representations and covenants of the Town and the Developer contained herein and the Developer Letter of Representation, respectively, shall be true and correct in all material respects as of the date hereof and at the time of the Closing, as if made on the Closing Date. (b) Executed Agreements and Performance Thereunder. At the time of the Closing (i) the Town Documents and the Developer Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriter, (ii) the Authorizing Documents shall be in full force and effect; (iii) there shall be in full force and effect such other resolutions or actions of the Town as, in the opinion of Bond Counsel and Counsel to the Underwriter, shall be necessary on or prior to the Closing Date in connection with the transactions on the part of the Town contemplated by this Agreement and the Town Documents, (iv) there shall be in full force and effect such other resolutions or actions of the Developer as, in the opinion of Miklos Law, PLLC (“Developer’s Counsel) shall be necessary on or prior to the Closing Date in connection with the transactions on the part of the Developer contemplated by this Agreement and the Developer Documents and (v) the Town and the Developer shall perform or have performed their respective obligations required or specified in the Town Documents and the Developer Documents, respectively, to be performed at or prior to Closing. (c) No Default. At the time of the Closing, no default shall have occurred or be existing and no circumstances or occurrences that, with the passage of time or giving of notice, shall constitute an event of default under this Agreement, the Indenture, the Developer Documents, the Town Documents or other documents relating to the financing and construction of the Improvement Project A Improvements and the Development, and the Developer shall not be in default in the payment of principal or interest on any of its indebtedness which default shall materially adversely impact the ability of such Developer to pay the Assessments when due. 11 HOU:3432279.2 (d) Closing Documents. At or prior to the Closing, the Underwriter shall have received each of the documents required under Section 9 below. (e) Termination Events. The Underwriter shall have the right to cancel its obligation to purchase the Bonds and to terminate this Agreement without liability therefor by written notification to the Town if between the date of this Agreement and the Closing, in the Underwriter’s sole and reasonable judgment, any of the following shall have occurred: (i) legislation shall have been introduced in or enacted by the Congress of the United States or adopted by either House thereof, or legislation pending in the Congress of the United States shall have been amended, or legislation shall have been recommended to the Congress of the United States or otherwise endorsed for passage (by press release, other form of notice, or otherwise) by the President of the United States, the Treasury Department of the United States, or the Internal Revenue Service or legislation shall have been proposed for consideration by either the U.S. Senate Committee on Finance or the U.S. House of Representatives Committee on Ways and Means or legislation shall have been favorably reported for passage to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or a decision by a court of the United States or the Tax Court of the United States shall be rendered or a ruling, regulation, or official statement (final, temporary, or proposed) by or on behalf of the Treasury Department of the United States, the Internal Revenue Service, or other federal agency shall be made, which would result in federal taxation of revenues or other income of the general character expected to be derived by the Town or upon interest on securities of the general character of the Bonds or which would have the effect of changing, directly or indirectly, the federal income tax consequences of receipt of interest on securities of the general character of the Bonds in the hands of the holders thereof, and which in either case, makes it, in the reasonable judgment of the Underwriter, impracticable or inadvisable to proceed with the offer, sale, or delivery of the Bonds on the terms and in the manner contemplated in the Official Statement; or (ii) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture need to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or 12 HOU:3432279.2 (iii) a general suspension of trading in securities on the New York Stock Exchange, the establishment of minimum prices on such exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, a general banking moratorium declared by federal, State of New York, or State officials authorized to do so; or (iv) there shall have occurred any outbreak of hostilities (including, without limitation, an act of terrorism) or other national or international calamity or crisis, including, but not limited to, an escalation of hostilities that existed prior to the date hereof, and the effect of any such event on the financial markets of the United States shall be such as would make it impracticable, in the reasonable judgment of the Underwriter, for it to sell the Bonds on the terms and in the manner contemplated by the Official Statement; or (v) there shall have occurred since the date of this Agreement any materially adverse change in the affairs or financial condition of the Town, except for changes which the Official Statement disclose are expected to occur; or (vi) any state blue sky or securities commission or other governmental agency or body in any state in which more than 10% of the Bonds have been offered and sold shall have withheld registration, exemption or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating thereto; or (vii) any amendment to the federal or state Constitution or action by any federal or state court, legislative body, regulatory body, or other authority materially adversely affecting the tax status of the Town, its property, income securities (or interest thereon), or the validity or enforceability of the Assessments to pay principal of and interest on the Bonds; or (viii) the New York Stock Exchange or other national securities exchange or any governmental authority, shall impose, as to the Bonds or as to obligations of the general character of the Bonds, any restrictions not now in force, or increase those now in force, materially affecting the market for the securities including the imposition of any limitations on interest rate) with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter; or (ix) any fact or event shall exist or have existed, or information shall become known which, in the reasonable judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; or 13 HOU:3432279.2 (x) a material disruption in securities settlement, payment or clearance services shall have occurred and shall be continuing as of the day preceding the Closing Date; or (xi) the purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission. With respect to the conditions described in subparagraphs (i) and (ii) above, the Underwriter is not aware of any current, pending or proposed law or government inquiry or investigation as of the date of execution of this Agreement which would permit the Underwriter to invoke its termination rights hereunder. 9. Closing Documents. At or prior to the Closing, the Underwriter shall receive the following documents: (a) Bond Opinion. The approving opinion of Bond Counsel, dated the Closing Date and substantially in the form included as Appendix C to the Official Statement, together with a reliance letter from Bond Counsel, dated the date of the Closing and addressed to the Underwriter, which may be included in the supplemental opinion required by Section 9(b), to the effect that the foregoing opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to it. (b) Supplemental Opinion. A supplemental opinion of Bond Counsel dated the Closing Date and addressed to the Town, the Developer and the Underwriter, in form and substance acceptable to counsel for the Underwriter, to the following effect: (i) Except to the extent noted therein, Bond Counsel has not verified and is not passing upon, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements and information contained in the Official Statement but that Bond Counsel has reviewed the statements and information appearing under the captions and subcaptions “PLAN OF DEVELOPMENT AND FINANCE – Financing of Public Improvements” (with respect to the first two paragraphs only), “DESCRIPTION OF THE BONDS,” “SECURITY FOR THE BONDS; THE INDENTURE,” “ASSESSMENT PROCEDURES” (except for the subcaptions “Assessment Methodology” and “Assessment Amounts”), “THE DISTRICT,” “TAX MATTERS,” “LEGAL MATTERS – Legal Proceedings” (with respect to first paragraph only), “LEGAL MATTERS – Legal Opinions,” “CONTINUING DISCLOSURE” (first paragraph only), “LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS,” “REGISTRATION AND QUALIFICATION OF BONDS FOR SALE” and “APPENDIX A – FORM OF INDENTURE” and Bond Counsel is of the opinion that the information relating to the Bonds and legal issues contained under such captions and subcaptions is an accurate and fair description of the laws and legal issues addressed therein and, with respect to the Bonds, such information conforms to the Bond Ordinance and Indenture; 14 HOU:3432279.2 (ii) The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (iii) The Town has full power and authority to adopt the Assessment Ordinance, the Creation Ordinance and the Bond Ordinance and perform its obligations thereunder and the Assessment Ordinance, the Creation Ordinance and the Bond Ordinance have been duly adopted, are in full force and effect and have not been modified, amended or rescinded; and (iv) The Indenture, the Financing Agreement, the Landowner Agreement, the Continuing Disclosure Agreement of Issuer, the Redemption Agreement and this Agreement have been duly authorized, executed and delivered by the Town and, assuming the due authorization, execution and delivery of such instruments, documents and agreements by the other parties thereto, constitute the legal, valid and binding obligations of the Town, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors rights, or by the application of equitable principles if equitable remedies are sought and to the application of Texas law relating to governmental immunity applicable to governmental entities. (c) Town Attorney Opinion. An opinion of the Town Attorney, dated the Closing Date and addressed to the Underwriter, the Developer and the Trustee, with respect to matters relating to the Town, substantially in the form of Appendix D hereto or in form otherwise agreed upon by the Underwriter. (d) Developer’s Counsel Opinion. An opinion of Developer’s Counsel, substantially in the form of Appendix E hereto, dated the Closing Date and addressed to the Town, Bond Counsel, the Underwriter and the Trustee, or in form otherwise agreed upon by the Town and the Underwriter. (e) Developer Certificate. A certificate or certificates of the Developer, dated the Closing Date, to the effect that: (i) the representations and warranties of the Developer contained in the Developer Letter of Representation and in the Developer Documents are true and correct in all material respects on and as of the Closing Date as if made on the date thereof; (ii) the Developer Documents have been properly executed by the Developer, have not been amended or rescinded, and the delivery and due performance thereof by the Developer has been authorized by the Developer; (iii) to the best of its knowledge after due inquiry, there is no action, suit, proceeding or investigation before any court, public board or body pending, with respect to which the Developer has been served with process, or, to the 15 HOU:3432279.2 knowledge of the Developer threatened against the Developer wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the Developer or its officers to their offices; or (b) in any way question or affect this Agreement, the Developer Letter of Representation or the transactions contemplated by this Agreement, the Developer Letter of Representation, or the Developer Documents; (iv) the Developer has complied in all material respects with all of its agreements and covenants and satisfied all conditions required to be complied with or satisfied by the Developer under the Developer Letter of Representation at or prior to the Closing; (v) the information set forth in the Official Statement under the captions “THE IMPROVEMENT PROJECT A IMPROVEMENTS,” “THE DEVELOPMENT” and “THE DEVELOPER,” and, to the best of its knowledge after due inquiry, under the captions “BONDHOLDERS’ RISKS” (only as it pertains to the Developer and the Development) and “LEGAL MATTERS — Litigation – The Developer” is true and correct and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, as of the date thereof; and (vi) although it has not verified and does not assume any responsibility for the accuracy, completeness or fairness of the information contained in the Preliminary Official Statement or the Official Statement other than that described in clause (v), it has participated in the preparation of the Preliminary Official Statement and the Official Statement and without independent verification, no facts came to its attention to lead it to believe that the Preliminary Official Statement, as of its date or as of the date of this Agreement, or the Official Statement, as of its date or as of the date of Closing (except for financial, forecast, technical and statistical statements and data therein and the information regarding The Depository Trust Company and its book-entry only system, in each case as to which it is not called upon to comment) contained or contains any untrue statement of a material fact, or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (f) Town Certificate. A certificate of the Town, dated the Closing Date, to the effect that, to the best of its knowledge after due inquiry: (i) the representations and warranties of the Town contained herein and in the Town Documents are true and correct in all material respects on and as of the Closing Date as if made on the date thereof; (ii) the Authorizing Documents and Town Documents are in full force and effect and have not been amended, modified or supplemented; 16 HOU:3432279.2 (iii) except as disclosed in the Official Statement, no litigation or proceeding against the Town is pending or, to the knowledge of such persons, threatened in any court or administrative body nor is there a basis for litigation which would (a) contest the right of the members or officials of the Town to hold and exercise their respective positions, (b) contest the due organization and valid existence of the Town or the establishment of the District, (c) contest the validity, due authorization and execution of the Bonds or the Town Documents or (d) attempt to limit, enjoin or otherwise restrict or prevent the Town from levying and collecting the Assessments pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof; and (iv) the Town has, to the best of its knowledge, complied in all material respects with all agreements and covenants and satisfied all conditions set forth in the Town Documents, on its part to be complied with or satisfied hereunder at or prior to the Closing. (g) Trustee’s Certificate. A certificate of the Trustee, dated the date of Closing, in form and substance acceptable to counsel for the Underwriter to the following effect: (i) The Trustee is duly organized and validly existing as a national banking association organized under the laws of the United States of America, having the full power and authority, including trust powers, to accept and perform its duties under the Indenture; and (ii) No consent, approval, authorization or other action by any governmental authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Trustee of the other transactions contemplated to be performed by the Trustee in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture. (h) Underwriter Counsel’s Opinion. An opinion, dated the Closing Date and addressed to the Underwriter, of Andrews Kurth LLP, counsel to the Underwriter, in a form satisfactory to the Underwriter to the effect that: (i) based on (A) such counsel’s review of the Bond Ordinance, the Indenture, and the Official Statement; (B) its discussions with bond counsel and with the Underwriter; (C) its review of the documents, certificates, opinions and other instruments delivered at the closing of the sale of the Bonds on the date hereof; and (D) such other matters as it deems relevant, such counsel is of the opinion that the Bonds are exempt securities under the Securities Act, and the Trust Indenture Act, and it is not necessary, in connection with the offering and sale of the Bonds, to register any securities under the Securities Act and the Indenture is not required to be qualified under the Trust Indenture Act; 17 HOU:3432279.2 (ii) based upon (A) such counsel’s review of Rule 15c2-12 of the Securities Exchange Act (the “Rule”) and interpretive guidance published by the United States Securities and Exchange Commission relating thereto; (B) its review of the continuing disclosure undertaking of the City contained in the Continuing Disclosure Agreement of Issuer; and (C) the inclusion in the Official Statement of a description of the specifics of such undertaking, and assuming that the Bond Ordinance, the Indenture, and the Continuing Disclosure Agreement of Issuer have been duly adopted by the City and are in full force and effect, such undertaking provides a suitable basis for the Underwriter, to make a reasonable determination that the City has met the qualifications of paragraph (b)(5)(i) of the Rule; and (iii) although such counsel has not verified and is not passing upon, and does not assume any responsibility for, the accuracy, completeness or fairness of the information contained in the Official Statement, it has participated in the preparation of the Official Statement and without independent verification, no facts came to its attention that caused it to believe that the Official Statement (except for the Appendices as well as any other financial, engineering and statistical data contained therein or included therein by reference or any litigation disclosed therein, as to which it expresses no view) as of its date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) Official Statement. The Official Statement and each supplement or amendment, if any, thereto. (j) Delivery of Town Documents and Developer Documents. The Town Documents and Developer Documents shall have been executed and delivered in form and content satisfactory to the Underwriter. (k) Organizational Documents. The Developer shall have delivered to the Underwriter and the Town fully executed copies of each of the Developer’s Organizational Documents. (l) Form 8038. Evidence that the federal tax information form 8038-G has been prepared by Bond Counsel for filing. (m) Federal Tax Certificate. A certificate of the Town in form and substance satisfactory to Bond Counsel and counsel to the Underwriter (a) setting forth the facts, estimates and circumstances in existence on the date of the Closing, which establish that it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), and any applicable regulations (whether final, temporary or proposed), issued pursuant to the Code, and (b) certifying that to the best of the knowledge and belief of the Town there are no other facts, 18 HOU:3432279.2 estimates or circumstances that would materially change the conclusions, representations and expectations contained in such certificate. (n) Attorney General Opinion and Comptroller Registration. The approving opinion of the Attorney General of the State regarding the Bonds and the Comptroller of the State’s Certificate of Registration for the Initial Bond; (o) Continuing Disclosure Agreements. The Continuing Disclosure Agreement of Issuer and Continuing Disclosure Agreement of Developer shall have been executed by the parties in substantially the form attached to the Preliminary Official Statement as Appendix E. (p) Letter of Representation of the Appraiser. Letter of Representation of the Appraiser, substantially in the form of Appendix F hereto, dated the Closing Date and addressed to the Town, Bond Counsel, the Underwriter and the Trustee, or in form otherwise agreed upon by the Underwriter and the Town. (q) Letter of Representation of Municap, Inc. Letter of Representation of Municap, Inc., substantially in the form of Appendix G hereto, dated the Closing Date and addressed to the Town, Bond Counsel, the Underwriter and the Trustee, or in form otherwise agreed upon by the Underwriter. (r) Letter of Representation of Co-Developer and Development Consultant. Letter of Representation of Building Villages, LLC, substantially in the form of Appendix H hereto and Letter of Representation of Lenart Development Company, L.L.C. substantially in the form of Appendix I hereto, dated the Closing Date and addressed to the Town, Bond Counsel, the Underwriter and the Trustee, or in form otherwise agreed upon by the Underwriter. (s) Evidence of Filing of Creation Resolution and Assessment Ordinance. Evidence that the Creation Resolution and Assessment Ordinance have been filed of record in the real property records of Tarrant County, Texas. (t) Evidence of Filing of Landowner Agreement and Redemption Agreement. Evidence that the Landowner Agreement and Redemption Agreement have been filed of record in the real property records of Tarrant County, Texas. (u) Lender Consent Certificate. Lender Consent Certificate of American Bank of Texas, a Texas banking corporation, and any other lienholder on land in the District, consenting to and acknowledging the creation of the District, the adoption of the Assessment Ordinance, the levy of the Assessments, and the subordination of their respective liens to the lien created by the Assessments. (v) Evidence of Ownership of Property. Evidence that on the date the Assessment Ordinance was adopted (i) all Assessed Parcels were owned by the Developer or a homebuilder and that the Developer and the homebuilders are not entities that may claim a homestead exemption under Texas law, or (ii) identification of all Improvement Area #1 Assessed Parcels, Improvement Area #2 Assessed Parcels and 19 HOU:3432279.2 Improvement Area #3 Assessed Parcels that on the date that the Assessment Ordinance was adopted were subject to pre-existing homestead rights. (w) BLOR. A copy of the Blanket Letter of Representation to DTC relating to the Bonds and signed by the City (x) Additional Documents. Such additional legal opinions, certificates, instruments and other documents as the Underwriter or their counsel may reasonably deem necessary. If either the Town or the Developer shall be unable to satisfy the conditions contained in this Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Agreement, this Agreement shall terminate and neither the Underwriter nor the Town shall be under further obligation hereunder, except as further set forth in Sections 11 and 13 hereof. 10. Costs and Expenses. (a) The Underwriter shall be under no obligation to pay, and the Town shall cause to be paid from proceeds of the Bonds the following expenses incident to the issuance of the Bonds and performance of the Town’s obligations hereunder: (i) the costs of the preparation and printing of the Bonds; (ii) the cost of preparation, printing and mailing of the Preliminary Official Statement, the final Official Statement and any supplements and amendments thereto; (iii) the fees and disbursements of the Town’s financial advisor, the Trustee’s counsel, Bond Counsel, Developer’s counsel, counsel to the Underwriter and the Trustee relating to the issuance of the Bonds, (iv) the Attorney General’s review fees, (v) the fees and disbursements of accountants, advisers and any other experts or consultants retained by the Town or the Developer, including but not limited to the fees and expenses of the Appraiser, and (vi) the expenses incurred by or on behalf of Town employees and representatives that are incidental to the issuance of the Bonds and the performance by the Town of its obligations under this Agreement. (b) The Underwriter shall pay the following expenses: (i) all advertising expenses in connection with the limited offering of the Bonds; and (ii) all other expenses, including CUSIP fees (including out-of-pocket expenses and related regulatory expenses), incurred by it in connection with its public offering and distribution of the Bonds, except as noted in Subsection 10(a) above. (c) The Issuer acknowledges that the Underwriter will pay from the underwriters’ expense allocation of the underwriting discount the applicable per bond assessment charged by the Municipal Advisory Counsel of Texas, a non-profit corporation whose purpose is to collect, maintain and distribute information relating to issuing entities of municipal securities. 11. Notice. Any notice or other communication to be given to the Town under this Agreement may be given by delivering the same in writing to: Town of Westlake, Texas, 100 West Eldorado Parkway, Westlake, Texas 75068, Attention: Town Manager. 20 HOU:3432279.2 Any notice or other communication to be given to the Underwriter under this Agreement may be given by delivering the same in writing to: Jefferies LLC, 300 Crescent Court, Suite 500, Dallas, Texas 75201, Attention: Mark Curran, Managing Director. 12. Entire Agreement. This Agreement is made solely for the benefit of the Town and the Underwriter (including their respective successors and assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. All of the Town’s and the Developer’s representations, warranties and agreements contained in this Agreement and in the Developer Letter of Representation, respectively, shall remain operative and in full force and effect regardless of: (i) any investigations made by or on behalf of the Underwriter, provided the Town and the Developer shall have no liability with respect to any matter of which the Underwriter has actual knowledge prior to the purchase of the Bonds; or (ii) delivery of any payment for the Bonds pursuant to this Agreement. The agreements contained in this Section and in Section 13 shall survive any termination of this Agreement. 13. Survival of Representations and Warranties. All representations and warranties of the parties made in, pursuant to or in connection with this Agreement shall survive the execution and delivery of this Agreement, notwithstanding any investigation by the parties. All statements contained in any certificate, instrument or other writing delivered by a party to this Agreement or in connection with the transactions contemplated by this Agreement constitute representations and warranties by such party under this Agreement to the extent such statement is set forth as a representation and warranty in the instrument in question. 14. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 15. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof. 16. State Law Governs. The validity, interpretation and performance of this Agreement shall be governed by the laws of the State of Texas. 17. No Assignment. The rights and obligations created by this Agreement shall not be subject to assignment by the Underwriter or the Town without the prior written consent of the other parties hereto. 18. No Personal Liability. None of the members of the Town Council, nor any officer, agent, or employee of the Town, shall be charged personally by the Underwriter with any liability, or be held liable to the Underwriter under any term or provision of this Agreement, or any other document relating to the Bonds or the District, or because of execution or attempted execution, or because of any breach or attempted or alleged breach of this Agreement. [The remainder of this page is intentionally left blank.] S-1 HOU:3432279.2 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first set forth above. JEFFERIES LLC, as Underwriter By: _____________________________________ Name: Mark Curran Title: Managing Director S-2 HOU:3432279.2 Accepted as of the date first stated above: TOWN OF WESTLAKE, TEXAS By: __________________________________ Mayor A-1 HOU:3432279.2 APPENDIX A $26,175,000* TOWN OF WESTLAKE, TEXAS, (a municipal corporation of the State of Texas located in Denton and Tarrant Counties) SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2014 (SOLANA PUBLIC IMPROVEMENT DISTRICT) $______ ___% Term Bonds, Due __________, Priced to Yield ___% (a)(b)(f) $______ ___% Term Bonds, Due __________, Priced to Yield ___% (a)(c)(f) $______ ___% Term Bonds, Due __________, Priced to Yield ___% (a)(d)(f) $______ ___% Term Bonds, Due __________, Priced to Yield ___% (a)(d)(f) (a) The Bonds are subject to redemption, in whole or in part, prior to stated maturity, at the option of the Town, on any date on or after September 1, 20__, at the prices at the prices shown below, plus accrued interest to the redemption date. Redemption Date Redemption Price September 1, 20__ - October 31, 20__ 103% September 1, 20__ - October 31, 20__ 102 September 1, 20__ - October 31, 20__ 101 September 1, 20__ and thereafter 100 (b) The Term Bonds maturing September 1, 20__, are also subject to mandatory sinking fund redemption on the dates and in the respective principal amounts as set forth in the following schedule. $_______ Term Bonds due September 1, 20__ Redemption Date Principal Amount September 1, 20__ $ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ (c) The Term Bonds maturing September 1, 20__, are also subject to mandatory sinking fund redemption on the dates and in the respective principal amounts as set forth in the following schedule. $_______ Term Bonds due September 1, 20__ Redemption Date Principal Amount September 1, 20__ $ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ (d) The Term Bonds maturing September 1, 20__, are also subject to mandatory sinking fund redemption on the dates and in the respective principal amounts as set forth in the following schedule. $_______ Term Bonds due September 1, 20__ Redemption Date Principal Amount September 1, 20__ $ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ (e) The Term Bonds maturing September 1, 20__, are also subject to mandatory sinking fund redemption on the dates and in the respective principal amounts as set forth in the following schedule. $_______ Term Bonds due September 1, 20__ A-2 HOU:3432279.2 Redemption Date Principal Amount September 1, 20__ $ September 1, 20__ September 1, 20__ September 1, 20__ September 1, 20__ (f) The Bonds are also subject to extraordinary optional redemption as described in the Official Statement under “DESCRIPTION OF THE BONDS — Redemption Provisions.” B-1 HOU:3432279.2 APPENDIX B FORM OF ISSUE PRICE CERTIFICATE The undersigned, as the duly authorized representative of Jefferies LLC (the "Underwriter"), with respect to the underwriting of Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the "Bonds") issued by the Town of Westlake, Texas (the "Issuer"), hereby certifies and represents on behalf of the Underwriter, but not in his/her own right, based on the Underwriter’s records and information available to it that it believes, after reasonable inquiry, to be accurate and complete as of the date hereof, as follows: (a) The Underwriter has offered all of the Bonds to members of the public in a bona fide initial offering at a price which, on the date of such offering, was reasonably expected by the Underwriter to be equal to the fair market value of such maturity. For purposes of this Issue Price Certificate, the term "public" does not include any bondhouses, brokers, dealers, and similar persons or organizations acting in the capacity of underwriters or wholesalers (including the Underwriter or members of the selling group or persons that are related to, or controlled by, or are acting on behalf of or as agents for the undersigned or members of the selling group). (b) Other than the obligations maturing in (the "Retained Maturity or Maturities"), the first price at which a substantial amount (i.e., at least 10 percent) of the principal amount of each maturity of the Bonds was sold to the public is set forth in the Official Statement. In the case of the Retained Maturities, the Underwriter reasonably expected on the offering date to sell a substantial amount (i.e., at least 10 percent) of each Retained Maturity at the initial offering price set forth in the Official Statement. The Official Statement is included in the transcript for the Bonds and is incorporated herein by reference. The Underwriter 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 Bonds 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 this . JEFFERIES LLC By: Title: C-1 APPENDIX C FORM OF DEVELOPER LETTER OF REPRESENTATION $26,175,000* TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) DEVELOPER LETTER OF REPRESENTATION January __, 2015 Jefferies LLC 300 Crescent Court, Suite 500 Dallas, Texas 75201 Honorable Mayor and Town Council Town of Westlake, Texas 3 Village Circle, Suite 202 Westlake, Texas 76262 Ladies and Gentlemen: This letter is being delivered to Jefferies LLC (the “Underwriter”) and the Town of Westlake, Texas (the “Town”), in consideration for your entering into the Bond Purchase Agreement dated the date hereof (the “Bond Purchase Agreement”) for the sale and purchase of the $26,175,000* “Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)” (the “Bonds”). Pursuant to the Bond Purchase Agreement, the Underwriter has agreed to purchase from the Town, and the Town has agreed to sell to the Underwriter the Bonds. In order to induce the Town to enter into the Bond Purchase Agreement and as consideration for the execution, delivery, and sale of the Bonds by the Town and the purchase of them by the Underwriter, the undersigned, Maguire Partners – Solana Land, L.P. (the “Developer”), makes the representations, warranties, and covenants contained in this Developer Letter of Representation. Unless the context clearly indicates otherwise, each capitalized term used in this Developer Letter of Representation will have the meaning set forth in the Bond Purchase Agreement. 1. Purchase and Sale of Bonds. Inasmuch as the purchase and sale of the Bonds represents a negotiated transaction, the Developer understands, and hereby confirms, that the Underwriter is not acting as a fiduciary of the Developer, but rather is acting solely in its capaTown as Underwriter of the Bonds for its own account. C-2 HOU:3432279.2 2. Updating of the Official Statement. If, after the date of this Developer Letter of Representation, up to and including the date the Underwriter is no longer required to provide an Official Statement to potential customers who request the same pursuant to the Rule (the earlier of (i) ninety (90) days from the “end of the underwriting period” (as defined in the Rule) and (ii) the time when the Official Statement is available to any person from the MSRB, but in no case less than twenty-five (25) days after the “end of the underwriting period” for the Bonds), the Developer becomes aware of any fact or event which might or would cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary to amend or supplement the Official Statement to comply with law, the Developer will notify the Underwriter (and for the purposes of this clause provide the Underwriter with such information as it may from time to time request); however, that for the purposes of this Developer Letter of Representation and any certificate delivered by the Developer in accordance the Bond Purchase Agreement, the Developer makes no representations with respect to (i) the descriptions in the Preliminary Official Statement or the Official Statement of The Depository Trust Company, New York, New York, or its book-entry- only system and (ii) the information in the Preliminary Official Statement and the Official Statement under the captions “THE TOWN,” “THE DISTRICT,” and “LEGAL MATTERS — Litigation – The Town.” 3. Developer Representations, Warranties and Covenants. The Developer represents, warrants, and covenants to the Underwriter and the Town that: (a) Due Organization, Existence and Authority. The Developer is duly formed and validly existing as a limited partnership under the laws of the State of Texas, with full rights, power and authority to execute, deliver, and perform its obligations under this Developer Letter of Representation, the Financing Agreement, the Development Agreement, the Continuing Disclosure Agreement of Developer, the Landowner Agreement, the Redemption Agreement, and any other documents and certificates of the Developer contemplated by any of the foregoing (collectively, the “Developer Documents”). (b) Organizational Documents. The copies of the organizational documents of the Developer delivered on the Closing Date (the “Developer Organizational Documents”) are fully executed, true, correct, and complete copies of such documents and such documents have not been amended or supplemented and are in full force and effect as of the date hereof. (c) Due Authorization and Approval. By all necessary action, the Developer has duly authorized and approved its execution and delivery of the Developer Documents and the performance by the Developer of its obligations contained in the Developer Documents and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified, or rescinded. (d) No Breach or Default. The execution and delivery of the Developer Documents by the Developer and compliance by the Developer with the provisions thereof under the circumstances contemplated thereby do not and will not in any material respect conflict with or constitute on the part of the Developer a breach or default under C-3 HOU:3432279.2 (i) any order, writ, judgment, injunction, decree, determination, or award of any governmental authority against or with respect to the Developer or (ii) any agreement or instrument to which the Developer is a party or by which it is bound, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would, in any material respect, constitute a default or an event of default by the Developer under the Developer Documents. (e) No Litigation. Other than as described in the Preliminary Official Statement and the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or, to the knowledge of the Developer, threatened by or against the Developer: (i) in any way questioning the due formation and valid existence of the Developer; (ii) in any way challenging the titles of its officers executing the Developer Documents; (iii) in any way contesting or affecting the validity or enforceability or the execution and delivery by it of the Developer Documents or the consummation of the transactions contemplated thereby; (iv) in any way questioning or contesting the validity of any governmental approval of the District or any aspect thereof; (v) in any way questioning or contesting the construction and development of the Development; or (vi) which would have a material adverse effect upon the financial condition of the Developer or its ability to own or develop property within the District. (f) Information. The information prepared and submitted by the Developer to the Town or the Underwriter in connection with the preparation of the Preliminary Official Statement and the Official Statement was, and is, as of this date, true and correct in all material respects. (g) Preliminary Official Statement and Official Statement. The Developer represents and warrants that the information set forth in the Preliminary Official Statement and Official Statement under the captions “PLAN OF DEVELOPMENT AND FINANCE – Development Plan,” “THE IMPROVEMENT PROJECT A IMPROVEMENTS,” “THE DEVELOPMENT,” and “THE DEVELOPER,” and, to the best of its knowledge after due inquiry, under the captions and subcaptions “BONDHOLDERS’ RISKS” (only as it pertains to the Developer, the Improvement Project A Improvements, and the Development), “LEGAL MATTERS — Litigation – The Developer,” and “CONTINUING DISCLOSURE” (only as it pertains to the Developer) is true and correct and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Developer agrees to provide a certificate dated the Closing Date affirming, as of such date, the representations contained in this subsection (g) with respect to the Preliminary Official Statement and the Official Statement. (h) Consent to Bond Issuance. The Developer hereby consents to the issuance of the Bonds. (i) Consent to Terms of Indenture. The Developer hereby consents to all of the terms and conditions contained in the Indenture. C-4 HOU:3432279.2 (j) Agreement. The Developer covenants that, while the Bonds are outstanding, it will not bring any action, suit, proceeding, inquiry, or investigation at law or in equity, before any court, regulatory agency, public board, or body which in any way seeks to challenge or overturn the District, the validity of the Developer Documents, the levy or collection of the Assessments, or the validity of the Bonds or the proceedings relating to their issuance. (k) Permits, Licenses, Etc. The Developer has obtained and there are currently in force and effect, or the Developer is not aware of any fact that will prevent it from receiving at or prior to the Closing Date or the date required therefor, all consents, permits, licenses, certificates, and other approvals (governmental or otherwise) required of it that: (i) are necessary to conduct its business as it is currently being conducted; (ii) (with the exception of the Authorizing Documents) would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance of its obligations under this Developer Letter of Representation, the Developer Documents, and any other material agreement or instrument to which it is a party and which is to be used or contemplated for use in the consummation of the transactions contemplated hereby or by the Official Statement relating to the financing and construction of the Improvement Project A Improvements; or (iii) are necessary for the acquisition, construction, and operation of the Improvement Project A Improvements. (l) Events of Default. No “Event of Default” or “event of default” by the Developer under any of the Developer Documents, any documents to which Developer is a party described in the Official Statement, or under any material documents relating to the financing and construction of the Improvement Project A Improvements to which the Developer is a party, or event that, with the passage of time or the giving of notice or both, would constitute such “Event of Default” or “event of default,” by the Developer has occurred and is continuing. (m) Financing. Other than the Assessments and the Lender Lien, which Lender will acknowledge and consent to the subordination of the Lender Lien, no debt has been or will be issued nor will any additional liens be placed on the property within Improvement Area #1, Improvement Area #2 or Improvement Area #3 of the District in order to complete the construction of the Improvement Project A Improvements. (n) Taxes and Assessments. All ad valorem taxes and assessments are current on the property which the Developer owns within the District. 4. Closing Conditions. The Developer will provide the following as of the Closing Date: C-5 HOU:3432279.2 (a) Bring-Down. The representations and covenants of the Developer contained under this Developer Letter of Representation shall be true and correct in all material respects as of the date hereof and at the time of the Closing, as if made on the Closing Date. (b) Executed Agreements and Performance Thereunder. There shall be in full force and effect such other resolutions or actions of the Developer as, in the opinion of Miklos Law, PLLC (“Developer’s Counsel”) shall be necessary on or prior to the Closing Date in connection with the transactions on the part of the Developer contemplated by the Developer Documents and the Developer shall perform or have performed their respective obligations required or specified in the Developer Documents, to be performed at or prior to Closing. 5. Indemnification. (a) The Developer will indemnify and hold harmless the Town and the Underwriter and each of their officers, directors, employees and agents against any losses, claims, damages or liabilities to which any of them may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained or incorporated by reference in the Official Statement under the captions “THE IMPROVEMENT PROJECT A IMPROVEMENTS,” “THE DEVELOPMENT” and “THE DEVELOPER,” and, to the best of its knowledge after due inquiry, under the captions “BONDHOLDERS’ RISKS” (only as it pertains to the Developer, the Improvement Project A Improvements, and the Development), “LEGAL MATTERS — Litigation – The Developer,” and “CONTINUING DISCLOSURE” (only as it pertains to the Developer) or any amendment or supplement to the Official Statement amending or supplementing the information contained under the aforementioned captions (as qualified above), or arise out of or are based upon the omission or alleged untrue statement or omission to state therein a material fact necessary to make the statements under the aforementioned captions (as qualified above) not misleading under the circumstances under which they were made and will reimburse any indemnified party for any reasonable legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred. (b) The Underwriter will indemnify and hold harmless the Developer against any losses, claims, damages or liabilities to which the Developer may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Official Statement, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading under the circumstances under which they were made, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Official Statement or any such amendment or supplement in reliance upon and in conformity with information under the heading “UNDERWRITING” in the Official Statement, and will reimburse the Developer and the C-6 HOU:3432279.2 Town for any legal or other expenses reasonably incurred by the Developer and the Town in connection with investigating or defending any such actions or claims as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve the indemnifying party from any liability which it may have to the indemnified party otherwise than under such subsection, unless such indemnifying party was prejudiced by such delay or lack of notice. In case any such action shall be brought against an indemnified party, it shall promptly notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. The indemnifying party shall not be liable for any settlement of any such action effected without its consent, but if settled with the consent of the indemnifying party or if there is a final judgment for the plaintiff in any such action, the indemnifying party will indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. The indemnity agreement in this Section 10 shall survive delivery of the Bonds and shall survive any investigation made by or on behalf of the Town, the Developer or the Underwriter. 6. Notice. Any notice or other communication to be given to the Underwriter under this Developer Letter of Representation may be given by delivering the same in writing to: Jefferies LLC, 300 Crescent Court, Suite 500, Dallas, Texas 75201, Attention: Mark Curran, Managing Director. Any notice or other communication to be given to the Town under this Agreement may be given by delivering the same in writing to: Town of Westlake, Texas, 3 Village Circle, Suite 202, Westlake, Texas 76262, Attention: Town Manager. 7. Survival of Representations, Warranties and Covenants. All representations, warranties, and agreements in this Developer Letter of Representation will survive regardless of (a) any investigation or any statement in respect thereof made by or on behalf of the Underwriter, (b) delivery of any payment by the Underwriter for the Bonds hereunder, and (c) any termination of the Bond Purchase Agreement. 8. Binding on Successors and Assigns. This Developer Letter of Representation will be binding upon the Developer and its successors and assigns and inure solely to the benefit of the Underwriter and the Town, and no other person or firm or entity will acquire or have any right under or by virtue of this Developer Letter of Representation. C-7 HOU:3432279.2 MAGUIRE PARTNERS – SOLANA LAND, L.P., a Texas Limited Partnership By: MMM Ventures, LLC, a Texas limited liability company, its general partner By: 2M Ventures, LLC, a Delaware limited liability company, its manager By:____________________________ Name: Mehrdad Moayedi Title: Manager D-1 HOU:3432279.2 APPENDIX D [Letterhead of the Town of Attorney] [Closing Date] [Include Developer, Trustee, Underwriter, Developer’s Counsel and Bond Counsel as addressees] $26,175,000 TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2014 (SOLANA PUBLIC IMPROVEMENT DISTRICT) Ladies and Gentlemen: I am the Town Attorney for the Town of Westlake, Texas (the “Town”), and am rendering this opinion in connection with the issuance and sale of $26,175,000 Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the “Bonds”), by the Town, a political subdivision of the State of Texas. The Bonds are authorized pursuant to Ordinance No. ____ and enacted by the Town Council of the Town (the “Town Council”) on January 15, 2015 (the “Bond Ordinance”) and shall be issued pursuant to the provisions of Subchapter A of the Public Improvement District Act, Chapter 372, Texas Local Government Code, as amended (the “Act”) and the Indenture of Trust dated as of February 1, 2015 (the “Indenture”) by and between the Town and U.S. Bank, National Association, as trustee (the “Trustee”). Capitalized terms not defined herein shall have the same meanings as in the Indenture, unless otherwise stated herein. In connection with rendering this opinion, I have reviewed the: (a) The Bond Ordinance. (b) The Resolution No. 14-07 (the “Creation Resolution”) enacted by the Town Council on February 24, 2014. (c) The Ordinance No. ____ accepted and approved by Town Council on January 15, 2015, and the Service and Assessment plan attached as an exhibit thereto (the “Special Assessment Ordinance”). (d) The Indenture. (e) The Construction, Funding and Acquisition Agreement dated as of January 15, 2015, executed and delivered by the Town and the Developer (the “Financing Agreement”). D-2 HOU:3432279.2 (f) The Landowner Agreement, dated as of January 15, 2015, executed and delivered by the Town and the Developer (the “Landowner Agreement”). (g) The Continuing Disclosure Agreement of Issuer, dated as of February 1, 2015, executed and delivered by the Town and the Dissemination Agent (the “Disclosure Agreement”). (h) The Agreement Regarding Conveyance of Right of Redemption and Waiver of Agricultural Valuation, dated as of January 15, 2015, executed and delivered by the Town, the Developer and the Trustee (the “Redemption Agreement”). The Bond Ordinance, the Creation Resolution, the Assessment Ordinance, the Financing Agreement and the Landowner Agreement shall herein after be referred to as the “Authorizing Documents” and the remaining documents shall herein after be collectively referred to as the “Town Documents.” In all such examinations, I have assumed that all signatures on documents and instruments executed by the Town are genuine and that all documents submitted to me as copies conform to the originals. In addition, for purposes of this opinion, I have assumed the due authorization, execution and delivery of the Town Documents by all parties other than the Town. Based upon and subject to the foregoing and the additional qualifications and assumptions set forth herein, I am of the opinion that: 1. The Town is a Texas political subdivision and has all necessary power and authority to enter into and perform its obligations under the Town Documents. The Town has taken or obtained all actions, approvals, consents and authorizations required of it by applicable laws in connection with the execution of the Town Documents and the performance of its obligations thereunder. 2. There is no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, public board or body, pending or, to the best of my knowledge, threatened against the Town (a) affecting the organization and existence of the Town or the titles of its officers to their respective offices, (b) in any way questioning the formation or existence of the District, (c) affecting, contesting or seeking to prohibit, restrain or enjoin the delivery of any of the Bonds, or the payment, collection or application of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, including the special assessments in the Solana Public Improvement District pursuant to the provisions of the Special Assessment Ordinance and the Service and Assessment Plan referenced therein, (d) contesting or affecting the validity or enforceability or the Town’s performance of the Town Documents, (e) contesting the exclusion of the interest on the Bonds from federal income taxation, or (f) which may result in any material adverse change relating to the financial condition of the Town; and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (a) through (f) of this sentence. 3. The Bond Ordinance, the Creation Resolution and the Assessment Ordinance were duly enacted by the Town and remain in full force and effect on the date hereof. D-3 HOU:3432279.2 4. The Financing Agreement, the Landowner Agreement, the Redemption Agreement, the Indenture and the Continuing Disclosure Agreement of Issuer have been duly authorized, executed and delivered by the Town and remain legal, valid and binding obligations of the Town enforceable against the Town in accordance with their terms. However, the enforceability of the obligations of the Town under such Town Documents may be limited or otherwise affected by (a) bankruptcy, insolvency, reorganization, moratorium and other laws affecting the rights of creditors generally, (b) principles of equity, whether considered at law or in equity, and (c) the application of Texas law relating to governmental immunity applicable to governmental entities. 5. The performance by the Town of the obligations under the Town Documents will not violate any provision of any Federal or Texas constitutional or statutory provision. 6. No further consent, approval, authorization or order of any court or governmental agency or body or official is required to be obtained by the Town as a condition precedent to the performance by the Town of its obligations under the Town Documents. 7. The adoption of the Bond Ordinance, the Creation Resolution and the Assessment Ordinance and the execution and delivery of the Financing Agreement, the Landowner Agreement, the Redemption Agreement, the Indenture and the Continuing Disclosure Agreement of Issuer and the compliance with the provisions of the Authorizing Documents and the Town Documents under the circumstances contemplated thereby (a) do not and will not to my knowledge in any material respect conflict with or constitute on the part of the Town a breach of or default under any agreement to which the Town is a party or by which it is bound, and (b) do not and will not in any material respect conflict with or constitute on the part of the Town a violation, breach of or default under any existing law, regulation, court order or consent decree to which the Town is subject. This opinion may not be relied upon by any other person except those specifically addressed in this letter. Very truly yours, E-1 HOU:3432279.2 APPENDIX E [Letterhead of Counsel to the Developer] [Closing Date] [Include Town, Underwriter, Bond Counsel and Trustee as addressees] $26,175,000 TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) Ladies and Gentlemen: We have acted as special counsel for Maguire Partners – Solana Land, L.P. (the “Developer”), in connection with the issuance and sale by the Town of Westlake, Texas (the “Town”), of $26,175,000 Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2014 (Solana Public Improvement District) (the “Bonds”), pursuant to Indenture of Trust dated as of February 1, 2015 (the “Indenture”), by and between the Town and U.S Bank National Association, as trustee (the “Trustee”). Proceeds from the sale of the Bonds will be used, in part, to fund certain public infrastructure improvements in the development known as “Westlake Entrada” (the “Project”) located in the Town. The Bonds are being sold to Jefferies LLC (the “Underwriter”), pursuant to that certain Bond Purchase Agreement dated January 15, 2015 (the “Bond Purchase Agreement”), by and among the Town and the Underwriter. This opinion is being delivered pursuant to Section 9(d) of the Bond Purchase Agreement. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Bond Purchase Agreement. Assumptions and Bases for Opinions and Assurances In our capacity as special counsel to the Developer, and for purposes of rendering the opinions set forth herein, we have examined originals or copies, certified or otherwise identified to our satisfaction, of: (a) The following documents being executed, entered into and/or issued, as the case may be, in connection with the issuance of the Bonds (collectively, the “Documents”): E-2 HOU:3432279.2 (1) The Indenture; (2) The Bond Purchase Agreement; (3) The Financing Agreement; (4) The Landowner Agreement; (5) The Redemption Agreement; and (6) The Continuing Disclosure Agreement of Developer. (b) Certificates of the Developer dated as of the closing date certifying as to (i) the Developer’s organization documents as such are in effect as of the date hereof (the “Developer Basic Documents”); (ii) the resolution of the Developer adopted as of _____________, 20__, authorizing its execution of the applicable Documents to which it is a party and related matters; and (iii) certain other matters (collectively, the “Developer Certificates”); (c) Evidence that the Developer is authorized to do business in the State of Texas and is in good standing; (d) The Preliminary Official Statement, dated December 22, 2014, relating to the issuance of the Bonds (the “Preliminary Official Statement”); (e) The final Official Statement relating to the issuance of the Bonds, dated January 15, 2015 (the “Official Statement”); and (f) Such other documents, records, agreements and certificates of the Developer and such other parties as we have deemed necessary or appropriate to enable us to render the opinions expressed below. In basing the opinions and other matters set forth herein on “our knowledge,” the words “our knowledge” signify that, in the course of our representation of the Developer the principal attorneys in this firm involved in the current actual transaction do not have actual knowledge or actual notice that any such opinions or other matters are not accurate or that any of the documents, certificates, reports and information on which we have relied are not accurate and complete. Except as otherwise stated herein, we have undertaken no independent investigation or certification of such matters. The words “our knowledge” and similar language used herein are intended to be limited to the knowledge of the attorneys within our firm who have worked on the matters contemplated by our representation as special counsel. In rendering the opinions set forth herein, we have assumed, without independent investigation, that (i) all persons other than the Developer have duly and validly executed and delivered each instrument, document, and agreement constituting a Document or executed in connection therewith to which such party is a signatory, and each such party’s obligations set forth therein are its legal, valid, and binding obligations, enforceable in accordance with the terms thereof; (ii) each person executing any such instrument, document, or agreement other than the Developer is duly authorized and has the legal power to do so; (iii) each natural person E-3 HOU:3432279.2 executing any such instrument, document, or agreement is legally competent to do so; (iv) there are no oral or written modifications of, or amendments to, the Documents, and there has been no waiver of any of the provisions thereof, by actions or conduct of the parties or otherwise; (v) all representations of fact set forth in the Documents are complete and accurate, insofar as such facts pertain to the subject matter of the opinions rendered hereby; and (vi) all documents submitted to us as originals are complete and authentic, all documents submitted to us as certified, conformed or photostatic copies conform to the original documents, all signatures on all documents submitted to us for examination are genuine, and all public records and certificates of public officials are accurate and complete. In addition, we have assumed that the Documents accurately reflect the complete understanding of the parties with respect to the transactions contemplated thereby and the rights and obligations of the parties thereunder. We have also assumed that the terms and conditions of the transaction as reflected in the Documents have not been amended, modified or supplemented, directly or indirectly, by any other agreement or understanding of the parties or waiver of any of the material provisions of the Documents. We assume that none of the parties to the Documents (other than Developer) is a party to any court or regulatory proceeding relating to or otherwise affecting the Documents or is subject to any order, writ, injunction or decree of any court or federal, state or local governmental agency or commission that would prohibit the execution and delivery of the Documents, or the consummation of the transactions therein contemplated in the manner therein provided, or impair the validity or enforceability thereof. We assume that each of the parties to the Documents (other than Developer) has full authority to close this transaction in accordance with the terms and provisions of the Documents. We assume that neither the Underwriter nor the Town nor their respective counsel has any current actual knowledge of any facts not known to us or any law or judicial decision which would make the opinions set forth herein incorrect, and that no party upon whom we have relied for purposes of this opinion letter has perpetrated a fraud. We have only been engaged by our clients in connection with the Documents (and the transactions contemplated in the Documents) and do not represent these clients generally. Opinions and Assurances Based solely upon the foregoing, and subject to the assumptions and limitations set forth herein, we are of the opinion that: 1. The general partner of the Developer is in good standing and the Developer is qualified to do business in and in good standing under the laws of the State of Texas. 2. The Developer has the full legal right, power and authority to execute, deliver and perform its obligations under each of the Documents to which it is a party and has taken all necessary actions to authorize the execution, distribution and delivery by it of such Documents and the performance by it of such obligations. E-4 HOU:3432279.2 3. The execution, delivery and performance by the Developer of the Documents to which it is a party, and compliance and performance by the Developer with the terms and provisions thereof and obligations thereunder, will not: (i) to our knowledge, violate or conflict with any provision of any existing law, statute, rule or regulation applicable to the Developer by reason of the general conduct of its business and operation of its assets: (ii) based solely upon the Developer Certificates and our knowledge, conflict with or result in the breach of any court decree or order of any governmental body binding upon or affecting the Developer, the conflict with which or breach of which would have a material, adverse effect on the ability of the Developer to perform its obligations under the Documents to which it is a party; or (iii) contravene or conflict with the Developer Basic Documents. 4. To our knowledge, no consent, approval, authorization or other action by, or filing with, any governmental authority is required for the execution and delivery by the Developer of the Documents to which the Developer is a party or the performance of its obligations thereunder, other than as are required with respect to the financing transaction evidenced thereby, or if required, and not otherwise obtained, with respect to which the requisite consent, approval or authorization has been obtained, the requisite filing has been accomplished or the requisite action has been taken at or prior to the date required therefor. 5. The Developer has duly executed and delivered each of the Documents to which it is a party, and each of such Documents constitutes the legal, valid and binding obligation of the Developer, enforceable against the Developer in accordance with its terms. 6. To our knowledge after reasonable inquiry, there are no actions, suits or proceedings pending against the Developer in any court of law or equity, or before or by any governmental instrumentality with respect to (i) its organization or existence or qualification to do business in the State of Texas; (ii) its authority to execute or deliver the Documents to which it is a party; (iii) the validity or enforceability against it of such Documents or the transactions contemplated thereby; (iv) the titles of its officers executing the Documents; (v) the execution and delivery of the Documents on behalf of the Developer; or (vi) the operations or financial condition of the Developer that would materially adversely affect those operations or the financial condition of the Developer. 7. To our knowledge, no taxes or other charges, including, without limitation, intangible or documentary stamp taxes, mortgage or recording taxes, transfer taxes or similar charges, are payable to the State of Texas by the Developer on account of its execution or delivery of any of the Documents or the creation of the indebtedness evidenced or secured by any of the Documents or the recording or filing of any of the Documents, except for normal filing or recording fees. 8. In addition, we advise you that no facts have come to our attention that would lead us to believe that the information set forth in the Official Statement under the captions “THE IMPROVEMENT PROJECT A IMPROVEMENTS,” “THE DEVELOPMENT,” “THE E-5 HOU:3432279.2 DEVELOPER” and “BONDHOLDERS’ RISK FACTORS” (only as it pertains to the Developer and the Project) does not fairly and accurately present the information purported to be shown therein, and (except for Appendices A, D and F, as well as any other financial, engineering and statistical data contained therein or elsewhere in the Official Statement or included therein by reference, as to which we express no view) as of the date hereof, nothing has come to the attention of those individuals working on this matter on behalf of this firm which would lead us to believe that such information contains an untrue statement of a material fact or that such information omits to state a material fact required to be stated therein in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 9. To our knowledge, the execution and delivery of the Developer Basic Documents and the Documents do not, and the transactions contemplated thereby may be consummated and the terms and conditions thereof may be observed and performed in a manner that does not, conflict with or constitute a breach of or default under any loan agreement, indenture, bond note, resolution, agreement or other instrument to which the Developer is a party or is otherwise subject which violation, breach or default would materially adversely affect the Developer or the transactions contemplated by the Documents; nor will any such execution, delivery, adoption, fulfillment, or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Developer, except as expressly contemplated by the Documents (a) under the terms of any such law, administrative regulation, judgment or decree or (b) under any such loan agreement, indenture, bond note, resolution, agreement, or other instrument. Qualifications In addition to any assumptions, qualifications and other matters set forth elsewhere herein, the opinions set forth above are subject to the following assumptions and qualifications: (a) We have not examined any court dockets, agency files or other public records regarding the entry of any judgments, writs, decrees or orders or the pendency of any actions, proceedings, investigations or litigation. (b) We have relied upon the Developer Certificates, as well as the representations of the Developer contained in the Documents, with respect to certain facts material to our opinion. Except as otherwise specifically indicated herein, we have made no independent investigation regarding any of the foregoing documents or the representations contained therein. (c) Our opinion delivered pursuant to Section 5 above is subject to the effect of any applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws affecting creditors’ rights generally and to the effect of general principles of equity, including (without limitation) remedies of specific performance and injunctive relief and concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law). E-6 HOU:3432279.2 (d) Except for the Documents, we have not reviewed, and express no opinion as to, any other contracts or agreements to which the Developer is a party or by which the Developer is or may be bound. (e) The opinions expressed herein are based upon and limited to the applicable laws of the State of Texas and the laws of the United States of America, excluding the principles of conflicts of laws thereof, as in effect as of the date hereof, and our knowledge of the facts relevant to such opinions on such date. In this regard, we note that we are members of the Bar of the State of Texas, we do not express any opinion herein as to matters governed by the laws of any other jurisdiction, except the United States of America, we do no purport to be experts in any other laws and we can accept no responsibility for the applicability or effect of any such laws. In addition, we assume no obligation to supplement the opinions expressed herein if any applicable laws change after the date hereof, or if we become aware of any facts or circumstances that affect the opinions expressed herein. (f) This letter is strictly limited to the matters expressly set forth herein and no statements or opinions should be inferred beyond such matters. (g) Notwithstanding anything contained herein to the contrary, we express no opinion whatsoever concerning the status of title to any real or personal property. (h) We express no opinion as to the laws of any jurisdiction other than the laws of the State of Texas and the laws of the United States of America. The opinions expressed above concern only the effect of the laws (excluding the principles of conflict of laws, except as specifically provided herein) of the State of Texas and the United States of America as currently in effect. We assume no obligation to supplement this opinion if any applicable laws change after the date of this opinion, or if we become aware of any facts that might change the opinions expressed above after the date of this opinion. (i) The opinions expressed herein regarding the enforceability of the Documents is subject to the qualification that certain of the remedial, waiver or other provisions thereof may not be enforceable; but such unenforceability will not, in our judgment, render the Documents invalid as a whole or substantially interfere with the practical realization of the principal legal benefits provided in the Documents, except to the extent of any economic consequences of any procedural delays which may result therefrom. (j) The opinion expressed herein as to the enforceability of the Documents is specifically subject to the qualification that enforceability of the Documents is limited by the following: (i) the rights of the United States under the Federal Tax Lien Act of 1966, as amended; (ii) principles of equity, public policy and unconscionability which may limit the availability of certain remedies; (iii) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, liquidation, probate, conservatorship and other laws applicable to creditors’ rights or the collection of debtors’ obligations generally; and (iv) requirements of due process under the United States Constitution, the Constitution of the State of Texas and other laws or court decisions limiting the rights of creditors to repossess, foreclose or otherwise realize upon the property of a debtor without appropriate notice or hearing or both. E-7 HOU:3432279.2 (k) We express no opinion as to whether a court would grant specific performance or any other equitable remedy with respect to the enforcement of the Documents. (l) We express no opinion as to the validity, binding effect, or enforceability of: (i) provisions which purport to waive rights or notices, including rights to trial by jury, counterclaims or defenses, jurisdiction or venue; (ii) provisions relating to consent judgments, waivers of defenses or the benefits of statutes of limitations, marshaling of assets, the transferability of any assets which by their nature are nontransferable, sales in inverse order of alienation, or severance; (iii) provisions purporting to waive the benefits of present or of future laws relating to exemptions, appraisement, valuation, stay of execution, redemption, extension of time for payment, setoff and similar debtor protection laws; or (iv) provisions requiring a party to pay fees and expenses regardless of the circumstances giving rise to such fees or expenses or the reasonableness thereof. (m) The opinions expressed herein are subject to the effect of generally applicable rules of law that provide that forum selection clauses in contracts are not necessarily binding on the court(s) in the forum selected. (n) We express no opinion as to the enforceability of any provisions in the Documents purporting to entitle a party to indemnification in respect of any matters arising in whole or in part by reason of any negligent, illegal or wrongful act or omission of such party. This opinion is furnished to you solely in connection with the transactions, for the purposes and on the terms described above and may not be relied upon by you for any other purpose or by any other person in any manner or for any purpose. Very truly yours, F-1 HOU:3432279.2 APPENDIX F [Letterhead of Appraiser] [Date] [Include Town, Underwriter, Bond Counsel and Trustee as addressees] Re: Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the “Bonds”) Ladies and Gentlemen: The undersigned, ______________, of Jackson Claborn, Inc., appraiser of the property contained in the Solana Public Improvement District (the “District”), does hereby represent the following: 1. On behalf of Jackson Claborn, Inc., I have supplied certain information contained in the Preliminary Official Statement for the Bonds, dated December 22, 2014, and the Official Statement for the Bonds, dated January 15, 2015 (together, the “Official Statement”), relating to the issuance of the Bonds by the Town of Westlake, Texas, as described above. The information I have provided is the real estate appraisal of the property in the District, located in Appendix F to the Official Statement. 2. To the best of my professional knowledge and belief, as of the date of my report, the portion of the Official Statement described above does not contain an untrue statement of a material fact as to the information and data set forth therein, and does not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 3. I agree to the use of the name of my firm in the Official Statement for the Bonds. 4. I agree that, to the best of my ability, I will inform you immediately should I learn of any event(s) or information of which you are not aware subsequent to the date of this letter and prior to the actual time of delivery of the Bonds (anticipated to occur on or about February 5, 2015) which would render any such information in the Official Statement untrue, incomplete, or incorrect, in any material fact or render any statement in the appraisal materially misleading. 5. The undersigned hereby represents that he has been duly authorized to execute this letter of representation. Sincerely yours, JACKSON CLABORN, INC. F-2 HOU:3432279.2 By: Its: G-1 HOU:3432279.2 EXHIBIT G [Letterhead of Municap, Inc.] [Date] [Include Town, Underwriter, Bond Counsel and Trustee as addressees] Re: Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the “Bonds”) Ladies and Gentlemen: The undersigned, _________________, of Municap, Inc., consultant in connection with the creation by the Town of Westlake, Texas (the “Town”), of the Solana Public Improvement District (the “District”), does hereby represent the following: 1. On behalf of Municap, Inc., I have supplied certain information contained in the Preliminary Official Statement, dated December 22, 2014, and the Official Statement, dated January 15, 2015, both in connection with the Bonds (the “Official Statement”), relating to the issuance of the Bonds by the Town, as described above. The information I have provided is the Service and Assessment Plan (the “SAP”) for the District located in Appendix B to the Official Statement. 2. To the best of my professional knowledge and belief, as of the date of the SAP, the portion of the Official Statement described above does not contain an untrue statement of a material fact as to the information and data set forth therein, and does not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 3. I agree to the inclusion of the SAP and the use of the name of my firm in the Official Statement for the Bonds. 4. I agree that, to the best of my ability, I will inform you immediately should I learn of any event(s) or information of which you are not aware subsequent to the date of this letter and prior to the actual time of delivery of the Bonds (anticipated to occur on or about February 5, 2015) which would render any such information in the Official Statement untrue, incomplete, or incorrect, in any material fact or render any statement in the SAP materially misleading. 5. The undersigned hereby represents that he has been duly authorized to execute this letter of representation. Sincerely yours, MUNICAP, INC. By: Its: H-1 HOU:3432279.2 EXHIBIT H [Letterhead of Building Villages, LLC] [Date] [Include Town, Underwriter, Bond Counsel and Trustee as addressees] Re: Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the “Bonds”) Ladies and Gentlemen: The undersigned, _________________, of Building Villages, LLC, Co-Developer in connection with the creation by the Town of Westlake, Texas (the “Town”), of the Solana Public Improvement District (the “District”), does hereby represent the following: 1. On behalf of Building Villages, LLC, I have supplied certain information contained in the Preliminary Official Statement, dated December 22, 2014, and the Official Statement, dated January 15, 2015, both in connection with the Bonds (the “Official Statement”), relating to the issuance of the Bonds by the Town, as described above. The information I have provided is located under the caption “THE DEVELOPER – Co-Developer: Building Villages, LLC” in the Official Statement. 2. To the best of my professional knowledge and belief after due inquiry, as of its date, the portion of the Official Statement described above is true and correct and does not contain an untrue statement of a material fact as to the information and data set forth therein, and does not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 3. I agree to the inclusion of the information under the caption “THE DEVELOPER – Co-Developer: Building Villages, LLC” and the use of the name of my firm in the Official Statement for the Bonds. 4. I agree that, to the best of my ability, I will inform you immediately should I learn of any event(s) or information of which you are not aware subsequent to the date of this letter and prior to the actual time of delivery of the Bonds (anticipated to occur on or about February 5, 2015) which would render any such information in the Official Statement untrue, incomplete, or incorrect, in any material fact or render any such information materially misleading. 5. The undersigned hereby represents that he has been duly authorized to execute this letter of representation. Sincerely yours, BUILDING VILLAGES, LLC By: Its: I-1 HOU:3432279.2 EXHIBIT I [LETTERHEAD OF LENART DEVELOPMENT COMPANY, L.L.C.] [DATE] [Include City, Underwriter, Bond Counsel and Trustee as addressees] Re: Town of Westlake, Texas, Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) (the “Bonds”) Ladies and Gentlemen: The undersigned, _________________, of Lenart Development Company, L.L.C., a development consultant in connection with the creation by the Town of Westlake, Texas (the “City”), of the Solana Public Improvement District (the “District”), does hereby represent the following: 1. On behalf of Lenart Development Company, L.L.C., I have supplied certain information contained in the Preliminary Official Statement, dated December 22, 2014, and the Official Statement, dated January 15, 2015, both in connection with the Bonds (the “Official Statement”), relating to the issuance of the Bonds by the City, as described above. The information I have provided is located under the caption “THE DEVELOPMENT CONSULTANT” in the Official Statement. 2. To the best of my professional knowledge and belief after due inquiry, as of its date, the portion of the Official Statement described above is true and correct and does not contain an untrue statement of a material fact as to the information and data set forth therein, and does not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 3. I agree to the inclusion of the information under the caption “THE DEVELOPMENT CONSULTANT” in the Official Statement for the Bonds. 4. I agree to the use of the name of my firm in the Official Statement for the Bonds. 5. I agree that, to the best of my ability, I will inform you immediately should I learn of any event(s) or information of which you are not aware subsequent to the date of this letter and prior to the actual time of delivery of the Bonds (anticipated to occur on or about July 1, 2014) which would render any such information in the Official Statement untrue, incomplete, or incorrect, in any material fact or render any such information materially misleading. 6. The undersigned hereby represents that he has been duly authorized to execute this letter of representation. I-2 HOU:3432279.2 Sincerely yours, LENART DEVELOPMENT COMPANY, L.L.C. a Texas limited liability company By: Its: C-1 EXHIBIT C CONTINUING DISCLOSURE AGREEMENT TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) CONTINUING DISCLOSURE AGREEMENT OF THE ISSUER This Continuing Disclosure Agreement dated as of February 1, 2015 (this “Disclosure Agreement”) is executed and delivered by and between the Town of Westlake, Texas (the “Issuer”) and U.S. Bank National Association (the “Dissemination Agent”) with respect to the Issuer’s “Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District)” (the “Bonds”). The Issuer and the Dissemination Agent covenant and agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer and the Dissemination Agent for the benefit of the Owners (as hereinafter defined) and beneficial owners of the Bonds. Unless and until a different filing location is designated by the MSRB or the SEC, all filings made by the Dissemination Agent pursuant to this Agreement shall be filed with the MSRB through EMMA (defined below). SECTION 2. Definitions. In addition to the definitions set forth above and in the Indenture of Trust dated as of February 1, 2015, relating to the Bonds (the “Indenture”), which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: “Administrator” shall mean the employee or designee of the Town, identified in any indenture of trust or relating to the Bonds, the District’s Service and Assessment Plan, or any other agreement or document approved by the Issuer related to the duties and responsibilities of the administration of the District. “Annual Financial Information” shall mean annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Sections 4(b) through (g) of this Disclosure Agreement. “Annual Issuer Report” shall mean any Annual Bond Disclosure Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. “Developer” shall mean Maguire Partners – Solana Land, L.P., a Texas limited partnership, and its successors and assigns. “Disclosure Agreement of Developer” shall mean the Continuing Disclosure Agreement of the Developer dated as of February 1, 2015 executed and delivered by the Developer and the Dissemination Agent. “Disclosure Representative” shall mean the Town Manager of the Issuer or his or her designee, or such other officer or employee as the Issuer, may designate in writing to the Dissemination Agent from time to time. 2 “Dissemination Agent” shall mean the Trustee, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Trustee a written acceptance of such designation. “District” shall mean the Solana Public Improvement District. “EMMA” shall mean the Electronic Municipal Market Access System available on the internet at http://emma.msrb.org. “Fiscal Year” shall mean the calendar year from October 1 through September 30. “Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. “MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. “Owner” shall mean the registered owner of any Bonds. “Participating Underwriter” shall mean Jefferies LLC and its successors and assigns. “Rule” shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “SEC” shall mean the United States Securities and Exchange Commission. “Tax-exempt” shall mean that interest on the Bonds is excluded from gross income for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax liability. “Trustee” shall mean U.S. Bank National Association, or any successor trustee pursuant to the Indenture. SECTION 3. Provision of Annual Bond Disclosure Reports. (a) The Issuer shall cause and hereby directs the Dissemination Agent to, not later than six months after the end of the Issuer’s Fiscal Year, commencing with the Fiscal Year ending September 30, 2014, provide or cause to be provided to the MSRB, in the electronic or other form required by the MSRB, an Annual Issuer Report provided to the Dissemination Agent which is consistent with the requirements of Section 4 of this Disclosure Agreement. In each case, the Annual Issuer Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Issuer, if prepared and when available, may be submitted separately from the balance of the Annual Issuer Report, and later than the date required in this paragraph for the filing of the Annual Issuer Report if audited financial statements are not available by that date; provided further, however, that the Annual Financial Information must be submitted not later than six 3 months after the end of the Issuer’s Fiscal Year. If the Issuer’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(d). All documents provided to the MSRB shall be accompanied by identifying information as prescribed by the MSRB. (b) The Issuer shall or shall cause the Dissemination Agent to: (i) determine the filing address or other filing location of the MSRB each year prior to filing the Annual Issuer Report on the date required in subsection (a); (ii) file the Annual Issuer Report (excluding the audited financial statements of the Issuer, if any, which shall be filed by the Issuer or the Dissemination Agent upon receipt from the Issuer) containing or incorporating by reference the information set forth in Section 4 hereof; and (iii) if the Issuer has provided the Dissemination Agent with the completed Annual Issuer Report and the Dissemination Agent has filed such Annual Issuer Report with the MSRB, then the Dissemination Agent shall file a report with the Issuer certifying that the Annual Issuer Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and that it was filed with the MSRB SECTION 4. Content of Annual Issuer Reports. The Annual Issuer Report for the Bonds shall contain or incorporate by reference, and the Issuer agrees to provide or cause to be provided to the Dissemination Agent, the following: (a) If prepared and when available, the audited financial statements of the Issuer for the most recently ended Fiscal Year, prepared in accordance with generally accepted accounting principles applicable from time to time to the Issuer. If audited financial statements of the Issuer are not available by the date required by Section 3(a), the Issuer shall provide the Annual Financial Information not later than such date. (b) Tables setting forth the following information, as of the end of such Fiscal Year: (i) For the Bonds, the maturity date or dates, the interest rate or rates, the original aggregate principal amount and principal amount remaining Outstanding. (ii) The amounts in the funds and accounts securing the Bonds. (c) Updates to the information in the Service and Assessment Plan (“SAP”) as most recently amended or supplemented, including any changes to the methodology for levying the Assessments in Improvement Area #1, Improvement Area #2, and Improvement Area #3. (d) The total amount of Annual Installments, delinquent Annual Installments, Foreclosure Proceeds and prepaid Assessments collected during the immediate preceding billing period (generally, October 1 of the preceding calendar year through January 31 of the current calendar year). (e) The total amount of Annual Installments assessed and collected during such Fiscal Year, together with the amount of delinquent Assessments collected and Assessments prepaid during such Fiscal Year. 4 (f) The principal and interest paid on the Bonds during the most recent Fiscal Year and the minimum scheduled principal and interest required to be paid on the Bonds in the next Fiscal Year. (g) A description of any amendment to this Disclosure Agreement and a copy of any restatements to the Issuer’s audited financial statements. See Exhibit B hereto for a form for submitting the information set forth in the preceding paragraph. The Town has designated MuniCap, Inc. as the initial Administrator. The Administrator, and if no Administrator is designated, Town staff, shall prepare the Annual Financial Information. Any or all of the items listed above may be included by specific reference to other documents, including disclosure documents of debt issues of the Issuer, which have been submitted to and are publicly accessible from the MSRB. If the document included by reference is a final offering document, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, each of the following is a Listed Event with respect to the Bonds: 1. Principal and interest payment delinquencies. 2. Non-payment related defaults, if material. 3. Unscheduled draws on debt service reserves reflecting financial difficulties. 4. Unscheduled draws on credit enhancements reflecting financial difficulties. 5. Substitution of credit or liquidity providers, or their failure to perform. 6. Adverse tax opinions, the issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds. 7. Modifications to rights of Owners, if material. 8. Bond calls, if material. 9. Defeasances. 10. Release, substitution, or sale of property securing repayment of the Bonds, if material. 11. Rating changes. 12. Bankruptcy, insolvency, receivership or similar event of the Issuer. 5 13. The consummation of a merger, consolidation, or acquisition of the Issuer, or the sale of all or substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. 14. Appointment of a successor or additional trustee under the Indenture or the change of name of a trustee, if material. For these purposes, any event described in the immediately preceding paragraph (12) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Issuer in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Issuer, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Issuer. Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the Issuer shall promptly notify the Dissemination Agent in writing and the Issuer shall direct the Dissemination Agent to file a notice of such occurrence with the MSRB. The Dissemination Agent shall file such notice no later than the Business Day immediately following the day on which it receives written notice of such occurrence from the Issuer. Any such notice is required to be filed within ten (10) Business Days of the occurrence of such Listed Event. Additionally, the Issuer shall notify the MSRB, in a timely manner, of any failure by the Issuer to provide annual audited financial statements or unaudited financial information as required under this Disclosure Agreement. See Exhibit A hereto for a form for submitting “Notice To MSRB of Failure To File.” Any notice under the preceding paragraphs shall be accompanied with the text of the disclosure that the Issuer desires to make, the written authorization of the Issuer for the Dissemination Agent to disseminate such information as provided herein, and the date the Issuer desires for the Dissemination Agent to disseminate the information (which date shall not be more than ten (10) Business Days after the occurrence of the Listed Event or failure to file). In all cases, the Issuer shall have the sole responsibility for the content, design and other elements comprising substantive contents of all disclosures. In addition, the Issuer shall have the sole responsibility to ensure that any notice required to be filed under this Section 5 is filed within (10) Business Days of the occurrence of the Listed Event. (b) The Dissemination Agent shall, within three (3) Business Days of obtaining actual knowledge of the occurrence of any Listed Event with respect to the Bonds, notify the Disclosure Representative of such Listed Event. The Dissemination Agent shall not be required to file a notice of the occurrence of such Listed Event with the MSRB unless and until it receives written instructions from the Disclosure Representative to do so. It is agreed and understood that the duty to make or cause to be made the disclosures herein is that of the Issuer and not that of the Trustee or the Dissemination 6 Agent. It is agreed and understood that the Dissemination Agent has agreed to give the foregoing notice to the Issuer as an accommodation to assist it in monitoring the occurrence of such event, but is under no obligation to investigate whether any such event has occurred. As used above, “actual knowledge” means the actual fact or statement of knowing, without a duty to make any investigation with respect thereto. In no event shall the Dissemination Agent be liable in damages or in tort to the Participating Underwriter, the Issuer or any Owner or beneficial owner of any interests in the Bonds as a result of its failure to give the foregoing notice or to give such notice in a timely fashion. (c) If in response to a notice from the Dissemination Agent under subsection (b), the Issuer determines that the Listed Event under number 2, 7, 8, 10, 13, or 14 of subparagraph (a) above is not material under applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent and the Trustee (if the Dissemination Agent is not the Trustee) in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (d). (d) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Event, the Dissemination Agent shall immediately file a notice of such occurrence with the MSRB. SECTION 6. Termination of Reporting Obligations. The obligations of the Issuer and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds, when the Issuer is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required. So long as any of the Bonds remain Outstanding, the Dissemination Agent may assume that the Issuer is an obligated person with respect to the Bonds until it receives written notice from the Disclosure Representative stating that the Issuer is no longer an obligated person with respect to the Bonds, and the Dissemination Agent may conclusively rely upon such written notice with no duty to make investigation or inquiry into any statements contained or matters referred to in such written notice. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event with respect to such series of Bonds under Section 5(d). SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent or successor Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Issuer shall be the Dissemination Agent. The initial Dissemination Agent appointed hereunder shall be the Trustee. SECTION 8. Amendment; Waiver. Notwithstanding any other provisions of this Disclosure Agreement, the Issuer and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall not unreasonably withhold its consent to any amendment so requested by the Issuer), and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal 7 requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the delivery of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or beneficial owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Issuer shall describe such amendment in the next related Annual Issuer Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(d), and (ii) the Annual Issuer Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. No amendment which adversely affects the Dissemination Agent may be made without its prior written consent (which consent will not be unreasonably withheld or delayed). SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Issuer Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Issuer Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Bond Disclosure Report or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Agreement, the Dissemination Agent may (and, at the request of any Participating Underwriter or the Owners of at least 25% aggregate principal amount of Outstanding Bonds, shall, upon being indemnified to its satisfaction as provided in the Indenture), or any Owner or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate to cause the Issuer, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture with respect to the Bonds, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer to comply with this Disclosure Agreement shall be an action to mandamus or specific performance. A default under this Disclosure Agreement by the Issuer shall not be deemed a default under the Disclosure Agreement of Developer by the Developer, and a default under the Disclosure Agreement 8 of the Developer by the Developer shall not be deemed a default under this Disclosure Agreement by the Issuer. SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not have any duty with respect to the content of any disclosures made pursuant to the terms hereof. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and no implied covenants shall be read into this Disclosure Agreement with respect to the Dissemination Agent. To the extent permitted by law, the Issuer agrees to hold harmless the Dissemination Agent, its officers, directors, employees and agents, but only with funds to be provided by the Developer or from Assessments collected from the property owners in Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the District, against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct; provided, however, that nothing herein shall be construed to require the Issuer to indemnify the Dissemination Agent for losses, expenses or liabilities arising from information provided to the Dissemination Agent by the Developer or the failure of the Developer to provide information to the Dissemination Agent as and when required under the Disclosure Agreement of Developer. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment in full of the Bonds. Nothing in this Disclosure Agreement shall be construed to mean or to imply that the Dissemination Agent is an “obligated person” under the Rule. The Dissemination Agent is not acting in a fiduciary capacity in connection with the performance of its respective obligations hereunder. The fact that the Dissemination Agent may have a banking relationship with the Issuer or any person with whom the Issuer contracts in connection with the transaction described in the Indenture, apart from the relationship created by the Indenture or this Disclosure Agreement, shall not be construed to mean that the Dissemination Agent has actual knowledge of any event described in Section 5 above, except as may be provided by written notice to the Dissemination Agent pursuant to this Disclosure Agreement. The Dissemination Agent may, from time to time, consult with legal counsel of its own choosing in the event of any disagreement or controversy, or question or doubt as to the construction of any of the provisions hereof or their respective duties hereunder, and the Dissemination Agent shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. UNDER NO CIRCUMSTANCES SHALL THE DISSEMINATION AGENT OR THE ISSUER BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER OR THE DISSEMINATION AGENT, RESPECTIVELY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS DISCLOSURE AGREEMENT, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. THE DISSEMINATION AGENT IS UNDER NO OBLIGATION NOR IS IT REQUIRED TO BRING SUCH AN ACTION. SECTION 12. Assessment Timeline. The basic expected timeline for the collection of Assessments and the anticipated procedures for pursuing the collection of delinquent Assessments is 9 set forth in Exhibit C which is intended to illustrate the general procedures expected to be followed in enforcing the payment of delinquent Assessments. SECTION 13. No Personal Liability. No covenant, stipulation, obligation or agreement of the Issuer or Dissemination Agent contained in this Disclosure Agreement shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future council members, officer, agent or employee of the Issuer or Dissemination Agent in other than that person's official capacity. SECTION 14. Severability. In case any section or provision of this Disclosure Agreement, or any covenant, stipulation, obligation, agreement, act or action, or part thereof made, assumed, entered into, or taken thereunder or any application thereof, is for any reasons held to be illegal or invalid, such illegality or invalidity shall not affect the remainder thereof or any other section or provision thereof or any other covenant, stipulation, obligation, agreement, act or action, or part thereof made, assumed, entered into, or taken thereunder (except to the extent that such remainder or section or provision or other covenant, stipulation, obligation, agreement, act or action, or part thereof is wholly dependent for its operation on the provision determined to be invalid), which shall be construed and enforced as if such illegal or invalid portion were not contained therein, nor shall such illegality or invalidity of any application thereof affect any legal and valid application thereof, and each such section, provision, covenant, stipulation, obligation, agreement, act or action, or part thereof shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law. SECTION 15. Sovereign Immunity. The Dissemination Agent agree that nothing in this Disclosure Agreement shall constitute or be construed as a waiver of the Issuer’s sovereign or governmental immunities regarding liability or suit. SECTION 16. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriter and the Owners and the beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. Nothing in this Disclosure Agreement is intended or shall act to disclaim, waive or otherwise limit the duties of the Issuer under federal and state securities laws. SECTION 17. Dissemination Agent Compensation. The Issuer shall pay or reimburse the Dissemination Agent, but only with funds to be provided by the Developer or from Assessments collected from the property owners in Improvement Area #1, Improvement Area #2 and Improvement Area #3 of the District, for its fees and expenses for the Dissemination Agent’s services rendered in accordance with this Disclosure Agreement. SECTION 18. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of Texas. SECTION 19. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. [remainder of page left blank intentionally] SIGNATURE PAGE OF CONTINUING DISCLOSURE AGREEMENT TOWN OF WESTLAKE, TEXAS By: Mayor SIGNATURE PAGE OF CONTINUING DISCLOSURE AGREEMENT U.S. BANK NATIONAL ASSOCIATION (as Dissemination Agent) By: Authorized Officer A-1 EXHIBIT A NOTICE TO MSRB OF FAILURE TO FILE ANNUAL ISSUER REPORT Name of Issuer: Town of Westlake, Texas Name of Bond Issue: Special Assessment Revenue Bonds, Series 2015 (Solana Public Improvement District) Date of Delivery: ______________, 20__ NOTICE IS HEREBY GIVEN that the Town of Westlake, Texas, has not provided an Annual Issuer Report with respect to the above-named bonds as required by the Continuing Disclosure Agreement dated _________ __, 2014, between the Issuer and U.S. Bank National Association, as dissemination agent. The Issuer anticipates that the Annual Issuer Report will be filed by ________________. Dated: _________________ U.S. Bank National Association, on behalf of the Town of Westlake, Texas (as Dissemination Agent) By: Title: cc: Town of Westlake, Texas B-1 EXHIBIT B TOWN OF WESTLAKE, TEXAS, SPECIAL ASSESSMENT REVENUE BONDS, SERIES 2015 (SOLANA PUBLIC IMPROVEMENT DISTRICT) ANNUAL BOND DISCLOSURE REPORT* Delivery Date: __________, 20__ TRUSTEE Name: U.S. Bank National Association Address: _________________________________________ Town: _________________________________________ Telephone: _________________________________________ Contact Person: _________________________________________ BONDS OUTSTANDING CUSIP Number Maturity Date Interest Rate Original Principal Amount Outstanding Principal Amount Outstanding Interest Amount INVESTMENTS Fund/ Account Name Investment Description Par Value Book Value Market Value _________________________ *Excluding Audited Financial Statements of the Issuer B-2 ASSETS AND LIABILITIES OF PLEDGED TRUST ESTATE Bonds (Principal Balance) ___________________ Funds and Accounts [list] ___________________ TOTAL ASSETS ___________________ LIABILITIES Outstanding Bond Principal ___________________ Outstanding Program Expenses (if any) ___________________ TOTAL LIABILITIES ___________________ EQUITY Assets Less Liabilities ___________________ Parity Ratio ___________________ Form of Accounting Cash Accrual Modified Accrual ITEMS REQUIRED BY SECTION 4(c) - (g) [Insert a line item for each applicable listing] C-1 EXHIBIT C BASIC TIMELINE FOR ASSESSMENT COLLECTIONS AND PURSUIT OF DELINQUENCIES Date Delinquency Clock (Days) Activity January 31 Assessments are due. February 1 1 Assessments Delinquent if not received February 15 15 Issuer forwards payment to Trustee for all collections received as of February 15, along with detailed breakdown. Subsequent payments and relevant details will follow monthly thereafter. Issuer and/or Administrator should be aware of actual and specific delinquencies Issuer and/or Administrator should be aware if Reserve Fund needs to be utilized for debt service payment on March 1. If there is to be a shortfall, the Trustee and Dissemination Agent should be immediately notified. Issuer and/or Administrator should also be aware if, based on collections, there will be a shortfall for September payment. Issuer and/or Administrator should determine if previously collected surplus funds, if any, plus actual collections will be fully adequate for debt service in March and September. At this point, if total delinquencies are under 5% and if there is adequate funding for March and September payments, no further action is anticipated for collection of Assessments except that the Issuer or Administrator, working with the Town Attorney or an appropriate designee, will begin process to cure deficiency. For properties delinquent by more than one year or if the delinquency exceeds $10,000 the matter will be referred for commencement of foreclosure. If there are over 5% delinquencies or if there is inadequate funding in the Pledged Revenue Fund for transfer to the Principal and Interest Account of such amounts as shall be required for the full March and September payments, the collection-foreclosure procedure will C-2 proceed against all delinquent properties. March 1 29/30 Trustee pays bond interest payments to bondholders. Reserve Fund payment to Bond Fund may be required if Assessments are below approximately 50% collection rate. Issuer, or the Trustee on behalf of the Issuer, to notify Dissemination Agent of the occurrence of draw on the Reserve Fund and, following receipt of such notice, Dissemination Agent to notify MSRB of such draw or Fund for debt service. Use of Reserve Fund for debt service payment should trigger commencement of foreclosure on delinquent properties. March 5 33/34 Issuer and/or Administrator to notify Dissemination Agent for disclosure to MSRB of all delinquencies. If any property owner with ownership of property responsible for more than $10,000 of the Assessments is delinquent or if a total of delinquencies is over 5%, or if it is expected that Reserve Fund moneys will need to be utilized for either the March or September bond payments, the Disclosure Representative shall work with Town Attorney's office, or the appropriate designee, to satisfy payment of all delinquent Assessments. April 15 74/75 Preliminary Foreclosure activity commences, and Issuer to notify Dissemination Agent of the commencement of preliminary foreclosure activity. If Dissemination Agent has not received Foreclosure Schedule and Plan of Collections, Dissemination Agent to request same from the Issuer. May 1 89/90 If the Issuer has not provided the Dissemination Agent with Foreclosure Schedule and Plan of Collections, and if instructed by the bondholders under Section 11.2 of the Indenture, Dissemination Agent requests that the Issuer commence foreclosure or provide plan for collection. May 15 103/104 The designated lawyers or law firm will be C-3 preparing the formal foreclosure documents and will provide periodic updates to the Dissemination Agent for dissemination to those bondholders who have requested to be notified of collections progress. The goal for the foreclosure actions is a filing by no later than June 1 (day 120/121). June 1 120/121 Foreclosure action to be filed with the court. June 15 134/135 Issuer notifies Trustee and Dissemination Agent of Foreclosure filing status. Dissemination Agent notifies bondholders. July 1 150/151 If bondholders and Dissemination Agent have not been notified of a foreclosure action, Dissemination Agent will notify the Issuer that it is appropriate to file action. Town of Westlake Item # 8 – Adjournment Back up material has not been provided for this item.