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Ord 932 Authorizing the Issuance of CO, Levying a Tax
[Form of Bond Counsel Opinion [Date] TOWN OF WESTLAKE, TEXAS GENERAL OBLIGATION REFUNDING BONDS SERIES 2021 WE HAVE ACTED as bond counsel for the Town of Westlake, Texas (the "Issuer"), in connection with the bonds hereinafter described (the "Bonds"): TOWN OF WESTLAKE, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2021, dated August 15, 2021, in the aggregate principal amount of $ The Bonds mature, bear interest, are subject to redemption prior to maturity and may be transferred and exchanged as set out in the Bonds and in the ordinance adopted by the Town Council of the Issuer authorizing their issuance (the "Ordinance"). WE HAVE REPRESENTED the Issuer as bond counsel for the sole purpose of rendering our opinion with respect to the legality and validity of the Bonds under the Constitution and laws of the State of Texas and with respect to the excludability of interest on the Bonds from gross income for federal income tax purposes. We have not investigated or verified original proceedings, records, data or other material, but have relied solely upon the transcript of proceedings described in the following paragraph. We have not assumed any responsibility with respect to the financial condition or capabilities of the Issuer or the disclosure thereof in connection with the sale of the Bonds. Our role in connection with the Issuer's Official Statement prepared for use in connection with the sale of the Bonds has been limited as described therein. IN OUR CAPACITY as bond counsel, we have participated in the preparation of and have examined a transcript of proceedings pertaining to the Bonds, on which we have relied in giving our opinion. The transcript contains certified copies of certain proceedings of the Issuer; a deposit agreement (the "Deposit Agreement") between the Issuer and the paying agent/registrar for the obligations being refunded (the "Refunded Bonds Paying Agent"); the certification of the Refunded Bonds Paying Agent (the "Sufficiency Certificate") verifying the sufficiency of the deposits made with the Refunded Bonds Paying Agent for defeasance of the obligations being refunded (the "Refunded Bonds"); customary certificates of officers, agents and representatives of the Issuer and other public officials; and other certified showings relating to the authorization and issuance of the Bonds. We have also analyzed such laws, regulations, guidance, documents and other materials as we have deemed necessary to render the opinions herein. Moreover, we have also examined executed Bond No. 1 of this issue. Capitalized terms used herein, unless otherwise defined, have the meanings set forth in the Ordinance. In providing the opinions set forth herein, we have relied representations and certifications of the Issuer and other parties involved with the issuance of the Bonds with respect to matters solely within the knowledge of the Issuer and such parties, which we have not independently verified. In addition, we have assumed for purposes of this opinion continuing compliance with the covenants in the Ordinance, including, but not limited to, covenants relating to the tax-exempt status of the Bonds. BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT: (1) The transcript of proceedings evidences complete legal authority for the issuance of the Bonds in full compliance with the Constitution and laws of the State of Texas presently effective, and therefore, the Bonds constitute valid and legally binding obligations of the Issuer; (2) Firm banking and financial arrangements have been made for the discharge and final payment of the Refunded Bonds pursuant to the deposit of funds with the Refunded Bonds Paying Agent, made in accordance with the Deposit Agreement, and therefore, the Refunded Bonds are deemed to be fully paid and no longer outstanding except for the purpose of being paid from the funds provided therefor to the Refunded Bonds Paying Agent for the Refunded Bonds; and (3) A continuing ad valorem tax upon all taxable property within the Issuer, necessary to pay the principal of and interest on the Bonds, has been levied and pledged irrevocably for such purposes, within the limit prescribed by law, and the total indebtedness of the Issuer, including the Bonds, does not exceed any constitutional, statutory or other limitations; and (4) Interest on the Bonds is excludable from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended. In addition, interest on the Bonds is not a specific preference item for purposes of the alternative minimum tax. THE RIGHTS OF THE OWNERS of the Bonds are subject to the applicable provisions of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions generally, and may be limited by general principles of equity which permit the exercise of judicial discretion. Except as stated above, we express no opinion as to the amount of interest on the Bonds or any federal, state or local tax consequences resulting from the receipt or accrual of interest on, or the acquisition, ownership or disposition of, the Bonds. This opinion is specifically limited to the laws of the State of Texas and, to the extent applicable, the laws of the United States of America. Further, in the event that the representations of the Issuer and other parties are determined to be inaccurate or incomplete or the Issuer fails to comply with the covenants of the Ordinance, interest on the Bonds could become includable in gross income for federal income tax purposes from the date of the original delivery of the Bonds, regardless of the date on which the event causing such inclusion occurs. Our opinions are based on existing law and our knowledge of facts as of the date hereof and may be affected by certain actions that may be taken or omitted on a later date. We assume no duty to update or supplement our opinions, and this opinion letter may not be relied upon in connection with any changes to the law or facts, or actions taken or omitted, after the date hereof. [Form of Bond Opinion] [Date] TOWN OF WESTLAKE, TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021 WE HAVE represented the Town of Westlake, Texas (the "Issuer"), as its bond counsel in connection with an issue of certificates of obligation (the "Certificates") described as follows: TOWN OF WESTLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021, dated August 15, 2021, in the principal amount of The Certificates mature, bear interest, are subject to redemption prior to maturity and may be transferred and exchanged as set out in the Certificates and in the ordinance adopted by the City Council of the Issuer authorizing their issuance (the "Ordinance"). WE HAVE represented the Issuer as its bond counsel for the purpose of rendering an opinion with respect to the legality and validity of the Certificates under the Constitution and laws of the State of Texas and with respect to the exclusion of interest on the Certificates from gross income for federal income tax purposes. We have not investigated or verified original proceedings, records, data or other material, but have relied solely upon the transcript of proceedings described in the following paragraph. We have not assumed any responsibility with respect to the financial condition or capabilities of the Issuer or the disclosure thereof in connection with the sale of the Certificates. Our role in connection with the Issuer's Official Statement prepared for use in connection with the sale of the Certificates has been limited as described therein. IN OUR CAPACITY as bond counsel, we have participated in the preparation of and have examined a transcript of certified proceedings pertaining to the Certificates, on which we have relied in giving our opinion. The transcript contains certified copies of certain proceedings of the Issuer; customary certificates of officers, agents and representatives of the Issuer and other public officials and other certified showings relating to the authorization and issuance of the Certificates. We also have analyzed such laws, regulations, guidance, documents and other materials as we have deemed necessary to render the opinions herein. We have also examined executed Certificate No. 1 of this issue. In providing the opinions set forth herein, we have relied on representations and certifications of the City and other parties involved with the issuance of the Certificates with respect to matters solely within the knowledge of the City and such parties, which we have not independently verified. In addition, we have assumed for purposes of this opinion continuing compliance with the covenants in the Ordinance, including, but not limited to, covenants relating to the tax-exempt status of the Certificates. BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT: (A) The transcript of certified proceedings evidences complete legal authority for the issuance of the Certificates in full compliance with the Constitution and laws of the State of Texas presently effective and, therefore, the Certificates constitute valid and legally binding obligations of the Issuer; and (B) A continuing ad valorem tax upon all taxable property within the Town of Trophy Club necessary to pay the principal of and interest on the Certificates, has been levied and pledged irrevocably for such purposes, within the limit prescribed by law, and the total indebtedness of the Issuer, including the Certificates, does not exceed any constitutional, statutory or other limitations. In addition, the Certificates are further secured by a limited pledge of the surplus net revenues of the Issuer's waterworks and sewer system as provided in the Ordinance. (C) Interest on the Certificates is excludable from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended. In addition, interest on the Certificates is not a specific preference item for purposes of the alternative minimum tax. The rights of the owners of the Certificates are subject to the applicable provisions of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions generally, and may be limited by general principles of equity which permit the exercise of judicial discretion. Except as stated above, we express no opinion as to the amount of interest on the Certificates or any federal, state or local tax consequences resulting from the receipt or accrual of interest on, or the acquisition, ownership or disposition of, the Certificates. This opinion is specifically limited to the laws of the State of Texas and, to the extent applicable, the laws of the United States of America. Further, in the event that the representations of the Issuer and other parties upon which we relied are determined to be inaccurate or incomplete or the Issuer fails to comply with the covenants of the Ordinance, interest on the Certificates could become includable in gross income for federal income tax purposes from the date of the original delivery of the Certificates, regardless of the date on which the event causing such inclusion occurs. Our opinions are based on existing law and our knowledge of facts as of the date hereof and may be affected by certain actions that may be taken or omitted on a later date. We assume no duty to update or supplement our opinions, and this opinion letter may not be relied upon in connection with any changes to the law or facts, or actions taken or omitted, after the date hereof. -2- THIS PAGE LEFT BLANK INTENTIONALLY Financial Advisory Services Provided By M RapSecu ri ties A Hilltop Holdings Company- 4 T N F T 0 W N O F W ESTLAKE $4,430,000 General Obligation Refunding Bonds, Series 2021 And $3,21.5,000 Combination Tax and Revenue Certificates of Obligation, Series 2021 "AAA" STANDARD &POOWS Hillt Securities J�w A Hilltop Holdings Company_ CONTACT: Nick Bulaich, Managing Director 777 Main Street, Suite 1525, Fort Worth, Texas 76102 Phone: 817.332.9710 e-mail: nick. bulaichnhilltopsecurities.com Adam LanCarte, Vice President 777 Main Street, Suite 1525, Fort Worth, Texas 76102 Phone: 817.332.9710 e-mail: adam.lancarte n hilltopsecurities.com © 2021 Hilltop Securities Inc. All rights reserved. Member FINRA/SIPC/NYSE s �G°� C�Qo��d Ratings Summary: Westlake, Texas; General Obligation Primary Credit Analyst: Jaclde Dove, Centennial + 3037214317; jaclde.dove@spglobal.com Secondary Contact: Andy A Hobbs, Farmers Branch + 1 (972) 367 3345; Andy.Hobbs@spglobal.com 'Fable Of Contents ............................................................................................................. Rating Action Stable Outlook WWW.STANDARDANDPOORS.COM/RATINGSDIRECT AUGUST 6, 2021 1 Westlake, Texas; General Obligation CredM!11, gfil i ZKill US$19.43 mil GO rfdg bnds ser 2021• • IC 1 due 02/15/2046 Long Term Rating AAA/Stable US$3.4 mil comb tax & rev certs of oblig dtd 08/15/2021 due 02/15/2041 Long Term Rating Westlake GO Long Term Rating Rating Action AAA/Stable AAA/Stable New New Affirmed S&P Global Ratings assigned its'AAA' rating to Westlake, Texas' proposed $19.43 million series 2021 general obligation (GO) refunding bonds and proposed $3.4 million certificates of obligation. At the same time, S&P Global Ratings has affirmed the 'AAA' rating on Westlake's debt outstanding. The outlook on all ratings is stable. The bonds are secured by the town's direct and continuing annual ad valorem tax, levied within the limits prescribed by law, on all taxable property within the town. The maximum allowable rate in Texas is $2.50 per $100 of assessed value (AV) for all purposes with the portion dedicated to debt service limited to $1.50. The town's levy is well below the maximum, at 16.7 cents, 0.43 cents of which is for debt service. We rate the bonds under our GO criteria because we do not differentiate between the town's limited- and unlimited -tax pledges due to its tax rate flexibility, very strong liquidity, and high investment -grade debt. Officials intend to use series 20121 bond proceeds to refund a portion of the town's existing debt (series 2011 GO and COs) for present value savings and the COs will be used to finance public works projects. A limited pledge of net waterworks and sewer system revenue --not to exceed $1,000--further secures the certificates. Given the limited nature of the additional pledged revenue, the ratings on these obligations reflect the strength of the town's ad valorem tax pledge. Westlake's GO debt is eligible to be rated above the sovereign because we assess the town can maintain better credit characteristics than the U.S. in a stress scenario. Under our criteria "Ratings Above the Sovereign --Corporate and Government Ratings: Methodology And Assumptions" (published Nov. 19, 2013), U.S. local governments are considered to have moderate sensitivity to country risk. The town's GO pledge is the primary source of security on the debt; this severely limits the possibility of negative sovereign intervention in the payment of the debt or in the town's operations. The institutional framework in the U.S. is predictable for local governments, allowing them significant autonomy and independent treasury management, and has no history of government intervention. Westlake has considerable financial flexibility, as demonstrated by its very strong general fund balance as a percentage of expenditures, as well as very strong liquidity. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT AUGUST 6, 2021 2 Summary: Westlake, Texas; General Obligation Credit overview The town of Westlake is favorably located northwest of Dallas, with both commercial and residential developments contributing to a growing tax base, with 38% growth from fiscal 2020 to fiscal 2022. The expectation is that the tax base will continue to grow with the completion of the mixed -use development, Entrada, by an estimated $300 million and with the development of the remaining 60% of the land. Despite a reliance on sales tax revenues, the district has maintained very strong reserves and financial performance, managing swings in revenues (both sales and hotel occupancy) during the pandemic, reflective of good financial practices and policies. Offsetting these credit strengths, the town has an elevated debt profile, which we believe is affordable given the size of the tax base and expectation for future growth and lack of near -term borrowing plans. The rating reflects our opinion of the town's: • Very strong economy, with access to a broad and diverse metropolitan statistical area (MSA); • Strong management, with good financial policies and practices under our Financial Management Assessment (FMA) methodology; • Strong budgetary performance, closing with operating surpluses in the general fund and at the total governmental fund level in fiscal 2020; • Very strong budgetary flexibility, with a high available fund balance in fiscal 2020 of 166% of operating expenditures; • Very strong liquidity, with total government available cash at 100.6% of total governmental fund expenditures and 8.Ox governmental debt service, and access to external liquidity we consider strong; • Very weak debt and contingent liability profile, with debt service carrying charges at 12.6% of expenditures and net direct debt that is 208.1% of total governmental fund revenue; and • Strong institutional framework score. Environmental, social, and governance (ESG) factors We analyzed the district's environmental, social, and governance risks relative to its economy, management, financial measures, and debt and liability profile, and determined that all are in line with our view of the sector standard. Stable Outlook Downside scenario We could lower the rating if the town were to experience multi -year financial deterioration resulting in a material reduction of available reserves, coupled with an elevated debt profile, and weakening economic characteristics. Very strong economy We consider Westlake's economy very strong. The town, with an estimated population of 1,780, is located in Denton and Tarrant counties in the Dallas -Fort Worth -Arlington MSA, which we consider to be broad and diverse. The town has a projected per capita effective buying income of 271% of the national level, which we view as extremely high, and a positive credit factor and per capita market value of $1.3 million. Overall, the town's market value grew by 38.5% over the past year to $1.6 billion in 2021. The weight -averaged unemployment rate of the counties was 7.3% in 2020. WWW.STANDARDAN0POORS.COM/RATINGSDI RECT AUGUST 6, 2021 3 Summary: Westlake, Texas; General Obligation Its favorable location among leading regional cities offers residents several employment opportunities, including nearby Dallas -Fort Worth International Airport and Fort Worth's Alliance Gateway Airport. The town's tax base, while predominantly residential, also has a significant commercial base as well, making up approximately 51%, and 27% of 2021 assessed value, respectively. According to representatives, the town has five residential developments with entitlements to approximately 200 homes, with an expected price range of $2.5 million to $7 million. Overall, the average house price in the town has increased from $1.5 million in 2017 to $2 million. Additionally, the district has a mixed -used development, Entrada, with 322 residential units with an estimated value of $1 million each and approximately one million square feet of commercial entitlement (retail, hotel, and office spaces). The town's commercial presence includes major employers and taxpayers such as Deloitte University, an international training facility for Deloitte; Fidelity Investments regional headquarters; Charles Schwab corporate headquarters, newly established in the last three years; and the Solana complex. The Solana mixed -use complex contains several offices, eateries, and a hotel. Continued growth in these sectors has supported significant cumulative AV growth over the last five years to $1.3 billion. We expect growth to continue as the town has approximately 60% of land available for development. Town officials attribute residential demand to the town's favorable location as well as the opening of a local charter school, Westlake Academy, which is operated by the town's management and funded through the town. The large commercial presence contributes to the town's concentrated tax base; however, officials have no concerns with any of the town's leading taxpayers and employers. Additionally, continued economic expansion has resulted in the improvement of tax base concentration from 38% in fiscal 2017 to 31% in fiscal 2021. We anticipate further planned residential and commercial construction to continue to support local tax base growth and further diversification over the next two years. Strong management We view the town's management as strong, with good financial policies and practices under our FMA methodology, indicating financial practices exist in most areas, but that government officials might not formalize or monitor all of them regularly. Highlights of the town's practices include its: • Revenue and expenditure assumptions based, in part, on five years of historical trends and estimates of the town's needs; • Quarterly budget reports to the city council on a year-to-date comparison of the budget and amendments performed as needed; Formal investment policy that management reviews annually with quarterly reports on investment performance and holdings to the council; Formal long term financial plan and five-year forecast of revenue and expenditures across all funds; Rolling five-year capital plan that identifies funding sources and uses; and Formal minimum general fund balance policy of maintaining 180 days' operating expenditures in available fund balance, though preference is to hold 300 days. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT AUGUST 6, 2021 4 Summary: Westlake, Texas; General Obligation The town currently lacks a comprehensive debt management policy. Strong budgetary performance Westlake's budgetary performance is strong in our opinion. The town had operating surpluses of 13.8% of expenditures in the general fund and 4.0% across all governmental funds in fiscal 2020. Our view of the town's budgetary performance includes adjustments made to account for recurring transfers in and out in each of the last three audited years. In fiscal 2020, Westlake posted strong operating results, with a $1.4 million general fund surplus. Sales tax is the town's leading revenue source followed by franchise tax, accounting for 64% and 19% of general fund revenue, respectively. Property taxes account for less than 1% of revenues in the general fund. Solid gains in year -over -year sales tax collections in 2018 and 2019 have given way to fluctuations in more recent years. Management notes that although sales tax, hotel occupancy tax, and user development fees were down, 8%, 57%, and 66%, respectively, in 2020 due to the pandemic, property taxes increased 23% in the same period, partially offsetting some losses. Management also notes that these fees are rebounding and improving consistently in the current year. The town conservatively budgeted for a total governmental deficit in fiscal 2021 due to the uncertainties surrounding the pandemic However, the town's historical operational performance has demonstrated the ability to exceed budgeted expectations and per the most recent budget report, the town is expecting a modest surplus in the general fund at fiscal year-end. For fiscal 2022, the district is budgeted for a 6% increase in revenues and 2% increase in expenditures, indicating another year of positive performance. Based on the town's historical performance, rebounding revenue sources, and the addition of federal stimulus funds, we expect the town's financial performance to remain consistent in the near term. Very Strong budgetary flexibility Westlake currently maintains available fund balances of more than 75% of expenditures, which we believe to be exceptional. Management has maintained available fund balances of more than 100% of expenditures in each of the last three audited fiscal years. Officials are projecting the fund balance ratio will remain more than 100% in fiscal years 2021 and 2022. Based on projections, we do not expect the budgetary flexibility score to decrease below what we consider a very strong level. Flexibility is additionally supported by the town's formal fund balance policy equal to a minimum of 180 days of operating expenses. Very strong liquidity In our opinion, Westlake's liquidity is very strong, with total government available cash at lx of total governmental fund expenditures and 8.Ox governmental debt service in 2020. In our view, the town has strong access to external liquidity if necessary. The town has demonstrated its access to external liquidity through its frequent debt issuance over the past two decades. As of Sept. 30, 2020, investments were primarily held in mutual funds, with a small portion in TexPool, the state's local government investment pool. We do not consider these investments to be aggressive. The town of Westlake has privately placed three series of debt totaling $5.2 million in debt. These series include 2017 tax notes, series 2011 COs, and a capital lease. The legal documents for this debt include standard events of default, WWW.STANDARDANDPOORS.COM/RATINGSDIRECT AUGUST 6, 2021 5 Summary: Westlake, Texas; General Obligation and do not include acceleration of principal or default rates as remedies for default. Therefore, we do not consider this debt to be a contingent liability risk - Very weak debt and contingent liability profile In our view, Westlake's debt and contingent liability profile is very weak. Total governmental fund debt service is 12.6% of total governmental fund expenditures, and net direct debt is 208.1% of total governmental fund revenue. Following this issuance, the town will have approximately $49.8 million outstanding limited tax debt. The district has no authorized but unissued debt after this issuance, and they do not have plans to get voter authorization for additional debt at this time. Given the lack of near -term borrowing plans, we anticipate the town debt profile to remain stable. Pension and other post -employment benefits (OPEB) We do not view pension and OPEB liabilities as a source of credit risk for the town, as required contributions currently represent an affordable share of total governmental expenditures. The town participates in: • Texas Municipal Retirement System (TMRS): 84.9% funded with a net pension liability of $1.4 million as of Dec. 31, 2019. • Texas Retirement System (TRS): 75.5% funded with a net pension liability of $1.5 million as of Dec. 31, 2019. • The town also participates in the TMRS supplemental death benefits fund, offering term life insurance to retirees. However, the town's participation in the plan is voluntary and can be discontinued in any year at council discretion. Therefore, we do not view OPEB liabilities as a credit risk. • Texas Public School Retired Employees' Group Insurance program (TRS-Care), which provides health insurance coverage to members of the TRS pension plan is 4.99% funded and the district has a proportionate share of the net OPEB liability of $2.3 million. TMRS' and TRS' actuarially determined contributions fell short of our minimum funding progress (MFP) metric. The MFP metric assesses whether the most recent employer and employee contributions cover total service cost, plus unfunded interest cost, plus one -thirtieth of the principal. When MFP is achieved, it indicates that an issuer has a strong funding discipline that aims to ensure timely progress on reducing its plans' liabilities. The plans use certain assumptions that could increase contribution volatility, including 6.75% and 7.25% discount rates, respectively, which we view as aggressive, though there are other offsetting factors. For more information on pensions, see "Pension Spotlight: Texas," published Feb. 25, 2020. Despite the potential for contribution volatility, we expect strong reserves would allow the town to absorb the increases with minimal disruption to financial performance in the near term. Westlake's combined required pension and actual other postemployment benefit (OPEB) contributions totaled 3.2% of total governmental fund expenditures in 2020. The town made its full required pension contribution in 2020. Strong institutional framework The institutional framework score for Texas municipalities is strong. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT AUGUST 6, 2021 6 Summary: Westlake, Texas; General Obligation Westlake Combination tax and rev certs of oblig Long Term Rating AAA/Stable Affirmed Westlake Twn go rfdg bnds Long Term Rating AAA/Stable Affirmed Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. Complete ratings information is available to subscribers of RatingsDirect at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings' public website at www.standardandpoors.com. Use the Ratings search box located in the left column. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT AUGUST 6, 2021 7 Copyright © 2021 by Standard & Poor's Financial Services LLC. All rights reserved. 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WWW.STANDARDANDPOORS.COM/RATINGSDIRECT AUGUST 6, 2021 8 TABULATION OF BIDS RECEIVED BIDS DUE MONDAY AUGUST 23, 2021 AT 10:00AM CDT $4,430,000 TOWN OF WESTLAKE, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2021 ACCOUNT MANAGER TRUE INTEREST COST BOK Financial Securities, Inc. 0.614571% Raymond James & Associates, Inc. 0.693201% Robert W. Baird & Co., Inc. 0.745537% Piper Sandler & Co 0.765504% FHN Financial Capital Markets 0.813069% Prepared by: HilltopSecurities J�w A Hilltop Holdings Company. 777 Main Street, Suite 1525 Fort Worth, Texas 76102 (817)332-9710 TABULATION OF BIDS RECEIVED BIDS DUE MONDAY AUGUST 23, 2021 AT 10:00AM CDT $4,430,000 TOWN OF WESTLAKE, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2021 ACCOUNT MANAGER TRUE INTEREST COST BOK Financial Securities, Inc. 0.614571% Raymond James & Associates, Inc. 0.693201% Robert W. Baird & Co., Inc. 0.745537% Piper Sandler & Co 0.765504% FHN Financial Capital Markets 0.813069% Prepared by: Hilltop5ecurities J�w A Hilltop Holdings Company. 777 Main Street, Suite 1525 Fort Worth, Texas 76102 (817)332-9710 Final Town of Westlake General Obligation Refunding Bonds, Series 2021 $4,430,000 Debt Service Schedule Date Principal Coupon Interest Total P+I 09/30/2021 - - - - 09/30/2022 850,000.00 3.000% 107,195.00 957,195.00 09/30/2023 865,000.00 3.000% 95,625.00 960,625.00 09/30/2024 900,000.00 3.000% 69,150.00 969,150.00 09/30/2025 340,000.00 3.000% 50,550.00 390,550.00 09/30/2026 340,000.00 3.000% 40,350.00 380,350.00 09/30/2027 360,000.00 3.000% 29,850.00 389,850.00 09/30/2028 375,000.00 3.000% 18,825.00 393,825.00 09/30/2029 125,000.00 4.000% 10,700.00 135,700.00 09/30/2030 135,000.00 4.000% 5,500.00 140,500.00 09/30/2031 140,000.00 2,000% 1,400.00 141,400.00 Total S4,430,000.00 - $429,145.00 $4,859,145.00 Cash Premium from Purchaser $337,297.90 True Interest Cost (TIC) 0.6120834% Hilltop Securities Final Town of Westlake General Obligation Refunding Bonds, Series 2021 $4,430,000 Debt Service Comparison Refunded 2021 Refunding Date Debt Service Debt Service Savings 09/30/2021 - - - 09/30/2022 998,686.00 957,195.00 41,491.00 09/30/2023 997,922.00 960,625.00 37,297.00 09/30/2024 1,004,238.00 969,150.00 35,088.00 09/30/2025 427,734.00 390,550.00 37,184.00 09/30/2026 421,898.00 380,350.00 41,548.00 09/30/2027 429,968.00 389,850.00 40,118.00 09/30/2028 436,644.00 393,825.00 42,819.00 09/30/2029 144,664.00 135,700.00 8,964.00 09/30/2030 148,316.00 140,500.00 7,816.00 09/30/2031 151,800.00 141,400.00 10,400.00 Total $5,161,870.00 $4,859,145.00 $302,725.00 Present Value Analysis Summary Net Present Value Benefit $289,900.90 Net PV Benefit / $4,677,000 Refunded Principal 6.198% Hilltop Securities Public Finance Page 2 Final Town of Westlake General Obligation Refunding Bonds, Series 2021 $4,430,000 Summary Of Bonds Refunded Maturity Issue Maturity Coupon Value Call Date Call Price 2011 CO 02/15/2022 2.400% 96,000 09/28/2021 100.000% 2011 CO 02/15/2023 2.400% 101,000 09/28/2021 100.000% 2011 CO 02/15/2024 2.400% 106,000 09/28/2021 100.000% 2011 CO 02/15/2025 2.400% 111,000 09/28/2021 100.000% 2011 CO 02/15/2026 2.400% 117,000 09/28/2021 100.000% 2011 CO 02/15/2027 2.400% 123,000 09/28/2021 100.000% 2011 CO 02/15/2028 2.400% 129,000 09/28/2021 100.000% 2011 CO 02/15/2029 2.400% 136,000 09/28/2021 100.000% 2011 CO 02/15/2030 2.400% 143,000 09/28/2021 100.000% 2011 CO 02/15/2031 2.400% 150,000 09/28/2021 100.000% Subtotal - - $1,212,000 - - 2011 GO REF 02/15/2022 3.000% 770,000 09/28/2021 100.000% 2011 GO REF 02/15/2023 3.000% 790,000 09/28/2021 100.000% 2011 GO REF 02/15/2024 3.500% 820,000 09/28/2021 100.000% 2011 GO REF 02/15/2025 3.500% 260,000 09/28/2021 100.000% 2011 GO REF 02/15/2026 3.500% 260,000 09/28/2021 100.000% 2011 GO REF 02/15/2027 4.000% 275,000 09/28/2021 100.000% 2011 GO REF 02/15/2028 4.000% 290,000 09/28/2021 100.000% Subtotal - - $3,465,000 - - Total - $4,677,000 - - Average Interest Rate of Refunded Bonds: 3.105% Hilltop Securities Inc. Public Finance .- TABULATION OF BIDS RECEIVED BIDS DUE MONDAY AUGUST 23, 2021 AT 10:30 AM CDT $3,215,000 TOWN OF WESTLAKE, TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021 ACCOUNT MANAGER TRUE INTEREST COST BOK Financial Securities, Inc. 1,631817% Raymond James & Associates, Inc. 1.639803% FHN Financial Capital Markets 1.658522% Piper Sandler & Co 1.673774% Robert W. Baird & Co., Inc. 1.680846% The Baker Group 1.741797% Prepared by: Hilltop5ecurities j�* A Hilltop Holdings Company_ 777 Main Street, Suite 1525 Fort Worth, Texas 76102 (817)332-9710 Final Town of Westlake Certificates of Obligation, Series 2021 $3,215,000 Debt Service Schedule Date Principal Coupon Interest Total P+I 09/30/2021 - - - - 09/30/2022 125,000.00 4.000% 79,788.89 204,788.89 09/30/2023 120,000.00 4.000% 84,600.00 204,600.00 09/30/2024 125,000.00 4.000% 79,700.00 204,700.00 09/30/2025 130,000.00 4.000% 74,600.00 204,600,00 09/30/2026 135,000.00 4.000% 69,300.00 204,300.00 09/30/2027 140,000.00 4.000% 63,800.00 203,800.00 09/30/2028 145,000.00 4.000% 58,100.00 203,100.00 09/30/2029 150,000.00 4.000% 52,200.00 202,200.00 09/30/2030 155,000.00 4.000% 46,100.00 201, 100.00 09/30/2031 160,000.00 4.000% 39,800.00 199,800.00 09/30/2032 165,000.00 2.000% 34,950.00 199,950.00 09/30/2033 170,000.00 2.000% 31,600.00 201,600.00 09/30/2034 175,000.00 2.000% 28,150.00 203,150.00 09/30/2035 180,000.00 2.000% 24,600.00 204,600.00 09/30/2036 180,000.00 2.000% 21,000.00 201,000.00 09/30/2037 185,000.00 2.000% 17,350.00 202,350.00 09/30/2038 190,000.00 2.000% 13,600.00 203,600.00 09/30/2039 190,000.00 2.000% 9,800.00 199,800.00 09/30/2040 195,000.00 2.000% 5,950.00 200,950.00 09/30/2041 200,000.00 2.000% 2,000.00 202,000.00 Total $3,215,000.00 - $836,988.89 $4,051,988.89 Cash Premium from Purchaser $249,741.54 True Interest Cost (TIC) 1.6294184% •• Securities Inc. HTSContinuingDisclosureServicesjfSOPRELIMINARY OFFICIAL STATEMENT Ratings: (SeewConlinumg Disclosure of In[omm6W herein) S&P: "AAA" Dated August 13, 2021 (See "OTHER INFORMATION - NEW ISSUE - Book -Entry -Only Ratings" herein) In the opinion of Bond Counsel, tinder existing law, interest on the Bonds is excludable from gross income for federal income tax puiposes tinder section 103 of the Internal Revenue Code of 1986, as amended, and is not a specific preference item for purposes of the alternative minimum tax. See "TAX MATTERS" herein for a discussion of the opinion of Bond Counsel. THE BONDS WILL BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $4,430,000- TOWN OF WESTLAKE, TEXAS (Tarrant and Denton Counties) GENERAL OBLIGATION REFUNDING BONDS, SERIES 2021 Dated Date: August 15, 2021 Due: February 15, as shown on page 2 Interest to accrue from Date of Delivery PAYMENT TERMS ... Interest on the $4,430,000* Town of Westlake, Texas, General Obligation Refunding Bonds, Series 2021 (the "Bonds"), will accrue from the Date of Delivery (defined below), will be payable February 15 and August 15 of each year, commencing February 15, 2022, until maturity or prior redemption, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Bonds will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book -Entry -Only System described herein. Beneficial ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples thereof within a maturity. No physical delivery of the Bonds will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "THE OBLIGATIONS - Book -Entry -Only System" herein. The initial Paying Agent/Registrar is U.S. Bank N.A., Dallas, Texas (see "THE OBLIGATIONS - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE ... The Bonds are issued pursuant to the Constitution and general laws of the State of Texas (the "State"), including particularly Texas Government Code, Chapter 1207, as amended, and are direct obligations of the Town of Westlake, Texas (the "Town"), payable from an annual ad valorem tax levied on all taxable property within the Town, within the limits prescribed by law, as provided in the ordinance authorizing the Bonds (the "Bond Ordinance" and together with the Certificate Ordinance, the "Ordinances") (see "THE OBLIGATIONS - Authority for Issuance"). PURPOSE ... Proceeds from the sale of the Bonds will be used for (i) refunding a portion of the Town's outstanding debt (the "Refunded Obligations") for debt service savings and (ii) to pay the costs of issuance associated with the sale of the Bonds. (See "PLAN OF FINANCING" also see Schedule I for a detailed listing of the Refunded Obligations and their redemption dates). MATURITY SCHEDULE See page 2 SEPARATE ISSUES ... The Bonds are being offered by the Town concurrently with the "Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021" (the "Certificates"), and such Bonds and Certificates are hereinafter sometimes referred to collectively as the "Obligations". The Bonds and Certificates are separate and distinct securities offerings being issued and sold independently except for the common Preliminary Official Statement, and, while the Obligations share certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation being offered, its terms for payment, the security for its payment, the rights of the holders the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations and other features. LEGALITY ... The Bonds are offered for delivery when, as and if issued and received by the Initial Purchaser of the Bonds and subject to the approving opinion of the Attorney General of Texas and the opinion of Bracewell LLP, Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's Opinions"). DELIVERY ... It is expected that the Bonds will be available for delivery through DTC on September 23, 2021 (the "Date of Delivery"). BIDS DUE MONDAY, AUGUST 23, 2021, AT 10:00 AM CDT * Preliminary, subject to change. See "Adjustment of Principal Amounts and/or Types of Bids" in the "Notice of Sale and Bidding Instructions for the Bonds". February 15 Amount* Maturity $ 835,000 2022 855,000 2023 895,000 2024 340,000 2025 345,000 2026 MATURITY SCHEDULE* CUSIP Rate Yield Suffix(l) February 15 Amount* M aturity $ 370,000 2027 385,000 2028 125,000 2029 135,000 2030 145,000 2031 (Interest to accrue from the Date of Delivery) CUSIP Prefix: 96048P t11 CUSIP Rate Yield Suffix(l) (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard and Poor's Financial Services LLC on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the Town nor the Financial Advisor shall be responsible for the selection or correctness of the CUSIP numbers set forth herein. OPTIONAL. REDEMPTION ... The Town reserves the right, at its option, to redeem Bonds having stated maturities on February 15, 2031, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2030, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS — Optional Redemption"). MANDATORY SINKING FUND REDEMPTION ... In the event any of the Bonds are Structured as "tenn" Bonds at the option of the Initial Purchaser, such term Bonds will be subject to mandatory sinking fund redemption in accordance with the applicable provisions ofthe Bond Ordinance, which provisions will be included in the final Official Statement. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) * Preliminary, subject to change. t c a+ R V E a a, � u O — O y 'i L a o ,c c G. 7 d� u � R o• c � o h 0 R •�• E � R O � u V u u � o � E c 7 C. O u u o w •R V C vi O R u 7 u_ C 17 F E O u C 0 u In R E — ` C u uD u W L R C C L. E G L i Ew O u C � o u u C u L � R r. c E O u C •u C L u � h 0 E 0 E= L R t u C u C .0 L � 7 'r' u •.� L C c o R ... F u u � � E— C u ., 7 c• +R-• u T. E c — u R R 7 w O t 'u 'L w7 u L •.+ a E o HTSContinuingDisdosureServices PRELIMINARY OFFICIAL STATEMENT Ratings: (Scc'Canlinuing Diulosum arinfom�olion"hcn:in) S&P: "AAA" Dated August 13, 2021 (See "OTHER INFORMATION - NEW ISSUE - Book -Entry -Only Ratings" herein) In the opinion of Bond Counsel, under existing law, interest on the Certificates is excludable from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended, and is not a specific preference item for purposes of the alternative minimum tax. See "TAX MATTERS" herein for a discussion of the opinion of Bond Counsel. THE BONDS WILL BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS $3,220,000* TOWN OF WESTLAKE, TEXAS (Tarrant and Denton Counties) COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021 Dated Date: August 15, 2021 Due: February 15 as shown on page 4 Interest Accrues from Delivery Date PAYMENT TERMS ... Interest on the $3,220,000* Town of Westlake, Texas Combination Tax and Revenue Certificates of Obligation, Series 2021 (the "Certificates") will accrue from the date of initial delivery to the purchaser here of (the "Delivery Date"), will be payable February 15 and August 15 of each year until maturity or prior redemption, commencing February 15, 2022, and will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The definitive Certificates will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company New York, New York ("DTC") pursuant to the Book-Entry-Orily System described herein. Beneficial ownership of the Certificates maybe acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Certificates will be made to the owners thereof. Principal of, premium, if any, and interest on the Certificates will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Certificates. See "THE OBLIGATIONS - Book -Entry -Only System" herein. The initial Paying Agent/Registrar is U.S. Bank N.A., Dallas, Texas (see "THE OBLIGATIONS - Paying Agent/Registrar"). AUTHORITY FOR ISSUANCE ... The Certificates are issued pursuant to the Constitution, and general laws of the State of Texas (the "State"), including particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and Subchapter B of Chapter 1502, Texas Government Code, as amended, and are direct obligations of the Town of Westlake, Texas (the "Town"), payable from an annual ad valorem tax levied on all taxable property within the Town, within the limits prescribed by law and a limited pledge (not to exceed $1,000) of the net revenues of the Town's waterworks and sewer system, as provided in the ordinance authorizing the Certificates (tire "Certificate Ordinance" and together with the Bond Ordinance, the "Ordinances") (see "THE OBLIGATIONS - Authority for Issuance"). PURPOSE ... Proceeds of the Certificates are expected to be used for (i) designing, developing, constructing and acquiring drainage improvements and facilities within the Town, including the acquisition of land therefor; (ii) designing, developing, constructing, improving and renovating Town parks, trails and recreation facilities, including the acquisition of land therefor, (iii) designing, developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks, bridges, and other public ways of the Town, including streetscaping, signage, streetlighting, right-of-way protection, utility relocation, and related storm drainage improvements; and acquiring rights -of -way in connection therewith, (iv) designing, developing, constructing, and renovating Town cemetery improvements; and (v) to pay the costs associated with the issuance of the Certificates. MATURITY SCIIEDULE See page 4 SEPARATE ISSUES ... The Certificates are being offered by the Town concurrently with the "Town of Westlake, Texas, General Obligation Refunding Bonds, Series 2021" (the "Bonds"), and such Certificates and Bonds are hereinafter sometimes referred to collectively as the "Obligations". The Certificates and Bonds are separate and distinct securities offerings being issued and sold independently except for the common Preliminary Official Statement, and, while the Obligations share certain common attributes, each issue is separate from the other and should be reviewed and analyzed independently, including the type of obligation being offered, its terms for payment, the security for its payment, the rights of the holders the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations and other features. LEGALITY ... The Certificates are offered for delivery when, as and if issued and received by the Purchaser of the Certificates and subject to the approving opinion of the Attorney General of Texas and the opinion of Bracewell LLP, Bond Counsel, Dallas, Texas (see APPENDIX C, "Forms of Bond Counsel's Opinions"). DELIVERY ... It is expected that the Certificates will be available for delivery through the facilities of The Depository Trust Company on September 23, 2021. BIDS DUE MONDAY, AUGUST 23, 2021, AT 10:30 AM CDT * Preliminary, subject to change. See "Adjustment of Principal Amounts and/or Types of Bids" in the "Notice of Sale and Bidding Instructions for the Certificates". MATURITY SCHEDULE* CUSIP Prefix t11: 96048P February 15 CUSIP February 15 CUSIP Amount* Maturity Rate Yield Suffix(l) Amount* Maturity Rate Yield Suffix(l) $125,000 2022 $ 165,000 2032 120,000 2023 170,000 2033 125,000 2024 170,000 2034 130,000 2025 175,000 2035 135,000 2026 180,000 2036 140,000 2027 185,000 2037 145,000 2028 190,000 2038 150,000 2029 195,000 2039 155,000 2030 200,000 2040 160,000 2031 205,000 2041 (1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard and Poor's Financial Services LLC on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the Town nor the Financial Advisor shall be responsible for the selection or correctness of the CUSIP numbers set forth herein. OPTIONAL. REDEMPTION ... The Town reserves the right, at its option, to redeem Certificates having stated maturities on and after February 15, 2031, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2030, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS — Optional Redemption"). MANDATORY SINKING FUND REDEMPTION ... In the event any of the Certificates are structured as "tern" Certificates at the option of the Initial Purchaser, such term Certificates will be subject to mandatory sinking fund redemption in accordance with the applicable provisions of the Certificate Ordinance, which provisions will be included in the final Official Statement. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) * Preliminary, subject to change. See "Adjustment of Principal Amounts and/or Types of Bids" in the "Notice of Sale and Bidding Instructions for the Certificates". 4 For purposes of compliance with Rule 1 Sc2-12 of the Securities and Exchange Commission, as amended and in effect on the date hereof, this document constitutes a Preliminary Official Statement of the Town with respect to the Obligations that has been "deemed final" by the Town as of its date except for the omission of no more than the informationpermitted by Rule 1 Sc2-12. This Preliminary Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer, solicitation or sale. No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those contained in this Preliminary Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Town This Preliminary Official Statement does not constitute an offer to sell Obligations in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. The infonnation set forth herein has been obtained from the Town and other sources believed to be reliable, but such information is not guaranteed as to accuracy or completeness and is not to be construed as the promise or guarantee of the Financial Advisor. This Preliminary Official Statement contains, in part, estimates and matters of opinion which are not intended as statements offact, and no representation is made as to the correctness ofsuch estimates and opinions, or that they will be realized THE OBLIGATIONS ARE EXEMPT FROM REGISTRA TION WITH THE SECURITIES AND EXCHANGE COMMISSION AND CONSEQ UENTL Y HA YE NOTBEEN REGISTERED THERE WITH THE REGISTRA TION, QUALIFICATION, OR EXEMP TION OF THE OBLIGA TIONS IN A CCORDANCE WITH APPLICABLE SEC URITIES LA WPRO VISIONS OF THE JURISDICTION IN WHICH THE OBLIGA TIONS HA VE BEENREGISTERED, QUALIFIED, OR EXEMPTED SHOULD NOT BE REGARDED A S A RECOMvIENDA TION THEREOF. NEITHER THE TOWN, ITS FINANCIAL ADVISOR, NOR THE INITIAL PURCHASER MAKE ANY REPRESENTA TION OR WARRANTY WITH RESPECT TO THE INFORMATIONCONTAINED IN THIS PRELIMINARYOFPICIAL STATEMENTREGARDING DTC OR ITS BOOK-ENTRY-ONLYSYSTEM IN CONNECTION WITH THE OFFERING OF THE OBLIGATIONS, THE INITIAL PURCHASER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICHSTABILM, ORA&INTAIN THE MARKETPRICES OF THE OBLIGATIONSATA LEVELABOVE THAT WHICHMIGHTOTHER WISEPREVAIL INTHE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAYBE DISCONTINUED AT ANY TIME. THE INFORAM TIONAND EXPRESSIONS OF OPINION CONTAINED HEREINARE SUBJECT TO CHANGE WITHOUTNOTICL AND NEITHER THE DELIVERYOFTHISPRELIMINARYOFFICIALSTATEMENTNORANYSALEAMDEHEREUNDERSHALL, UNDERANYCIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE TOWN OR OTHER MATTERS DESCRIBED HEREIN. SEE "CONTINUING DISCLOSURE OF INFORMATION" FOR A DESCRIPTION OF THE TOWN'S UNDERTAKING TO PROVIDE CERTAIN INFORMATION ON A CONTINUING BASIS. THISPRELIMINARYOFFICIAL STATEMENT CONTAINS 'FORWARD-LOOKING"STATEMENTS WITHIN THEMEANING OF SECTION2IE OFTHE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAYCAUSE THEACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE DIFFERENT FROMFUTURE RESULTS, PERFORMANCE, AND ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -LOOKING STATEMENTS. INVESTORS ARE CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD -LOOKING STATEMENTS TABLE OF CONTENTS PRELIMINARY OFFICIAL STATEMENT SUMMARY ....... 6 FINANCIAL INFORMATION................................................29 TABLE 13 - CHANGES IN NET ASSETS .............................. 29 TOWN OFFICIALS, STAFF AND CONSULTANTS ..............8 TABLE 13A — GENERAL FUND REVENUES AND ELECTED OFFICIALS.............................................................8 EXPENDITURE HISTORY.......................................... 30 SELECTED ADMINISTRATIVE STAFF.....................................8 TABLE 14 - MUNICIPAL SALES TAX HISTORY .................... 31 CONSULTANTS AND ADVISORS............................................8 TABLE 15 - CURRENT INVESTMENTS ................................. 34 INTRODUCTION........................................................................9 TAX MATTERS ..................................................................... ..35 .............................................. INFECTIOUS DISEASE OUTBREAK — COVID-19............... 9 CONTINUING DISCLOSURE OF INFORMATION ............ 37 PLANOF FINANCING............................................................10 OTHER INFORMATION ........................................................ 39 BONDS......................................................... 11 RATINGS........................................... ......... ........................ 39THE LITIGATION ....................... TAX INFORMATION...............................................................17 REGISTRATION AND QUALIFICATION OF OBLIGATIONS TABLE 1 - VALUATION, EXEMPTIONS AND FOR SALE................................................................ 39 GENERAL OBLIGATION DEBT..................................22 LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE TABLE 2 - TAXABLE ASSESSED VALUATIONS BY PUBLIC FUNDS IN TEXAS ........................................ 39 CATEGORY..............................................................23 LEGAL MATTERS ............................................................... 39 TABLE 3 - VALUATION AND GENERAL OBLIGATION FINANCIAL ADVISOR......................................................... 40 DEBT HISTORY........................................................24 INITIAL PURCHASER OF THE BONDS .................................. 40 TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY ... 24 INITIAL PURCHASER OF THE CERTIFICATES ....................... 40 TABLE 5 - TEN LARGEST TAXPAYERS................................24 CERTIFICATION OF THE OFFICIAL STATEMENT AND TABLE 6 - TAX ADEQUACY................................................25 NO -LITIGATION CERTIFICATE................................. 40 TABLE 7 - ESTIMATED OVERLAPPING DEBT.......................25 FORWARD -LOOKING STATEMENTS DISCLAIMER ............... 40 MISCELLANEOUS............................................................... 41 DEBT INFORMATION............................................................26 TABLE 8 - PRO -FORMA GENERAL OBLIGATION SCHEDULE OF REFUNDED OBLIGATIONS ........ Schedule I DEBT SERVICE REQUIREMENTS...............................26 TABLE 9 - INTEREST AND SINKING FUND APPENDICES BUDGET PROJECTION..............................................27 GENERAL INFORMATION REGARDING THE TOWN ..................... A TABLE 10 - AUTHORIZED BUT UNISSUED GENERAL EXCERPTS FROM THE TOWN's ANNUAL FINANCIAL REPORT ... B OBLIGATION BONDS................................................27 FORM OF BOND COUNSEL'S OPINIONS ................................ C TABLE 11 - COMPUTATION OF SELF-SUPPORTING DEBT ....27 TABLE 12— OTHER OBLIGATIONS ......................................27 The cover page hereof, this page, the Appendices included herein and any addenda, supplement or amendment hereto, are part of the Official Statement. PRELIMINARY OFFICIAL STATEMENT SUMMARY This summary is subject in all respects to the more complete information and definitions contained or incorporated in this Official Statement. The offering of the Obligations to potential investors is made only by means of this entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. THE TOWN ................................... The Town of Westlake, Texas (the "Town") is a political subdivision and municipal corporation of the State, located in Tarrant and Denton Counties, Texas. The Town covers approximately 6.92 square miles (see "INTRODUCTION - Description of the Town"). THE BONDS .................................. The $4,430,000* Town of Westlake, Texas, General Obligation Refunding Bonds, Series 2021 are issued as serial Bonds maturing on February 15 in each of the years 2022 through 2031, unless the Initial Purchaser (defined herein) designates one or more maturities as one or more term Bonds (see "THE OBLIGATIONS - Description of the Obligations"). THE CERTIFICATES ..................... The $3,220,000* Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021 are issued as serial Certificates maturing on February 15 in each of the years 2022 through 2041, unless the Initial Purchaser (defined herein) designates one or more maturities as one or more term Certificates (see "THE OBLIGATIONS - Description of the Obligations"). PAYMENT of INTEREST .............. Interest on the Obligations accrues from the date of initial delivery of the Obligations to the Initial Purchaser, and is payable February 15, 2022, and each August 15 and February 15 thereafter until maturity or prior redemption (see "THE OBLIGATIONS - Description of the Obligations"). AUTHORITY FOR ISSUANCE ......... The Bonds are issued pursuant to the general laws of the State, including particularly Texas Government Code, Chapter 1207, Texas Government Code, as amended, and the Bond Ordinance to be passed by the Town Council of the Town (see "THE OBLIGATIONS - Authority for Issuance"). The Certificates are issued pursuant to the Constitution, and general laws of the State, including particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and including Subchapter B of Chapter 1502, Texas Government Code, as amended, as provided in the ordinance authorizing the Certificates (the "Certificate Ordinance") (see "THE OBLIGATIONS - Authority for Issuance"). SECURITY FOR THE BONDS .......... The Bonds are direct obligations of the Town payable from the levy and collection of a direct and continuing ad valorem tax, within the limits prescribed by law, on all taxable property located within the Town, as provided in the Bond Ordinance (see "THE OBLIGATIONS - Security and Source of Payment"). SECURITY FOR THE CERTIFICATES ........................... The Certificates constitute direct obligations of the Town, payable from an annual ad valorem tax levied on all taxable property within the Town, within the limits prescribed by law, and a limited pledge (not to exceed $1,000) of the net revenues of the Town's Waterworks and Sewer System, as provided in the Certificate Ordinance (see "THE OBLIGATIONS - Security and Source of Payment"). QUALIFIED TAX-EXEMPT OBLIGATIONS ................................ The Town will designate the Obligations as "Qualified Tax -Exempt Obligations" for financial institutions (see "Tax Matters - Qualified Tax -Exempt Obligations for Financial Institutions"). REDEMPTION ............................... The Town reserves the right, at its option, to redeem Obligations having stated maturities on and after February 15, 2031, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2030, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption (see "THE OBLIGATIONS - Optional Redemption"). TAX EXEMPTION .......................... In the opinion of Bond Counsel, under existing law, interest on the Obligations is excludable from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended, and is not a specific preference item for purposes of the alternative minimum tax. See "TAX MATTERS" for a discussion of the opinion of Bond Counsel. * Preliminary, subject to change. USE OF PROCEEDS ....................... Proceeds from the sale of the Bonds will be used for (i) refunding a portion of the Town's outstanding debt (the "Refunded Obligations") for debt service savings and (ii) to pay the costs of issuance associated with the sale of the Bonds (see "Plan of Financing" also see SCHEDULE I for a detailed listing of the Refunded Obligations and their redemption dates). Proceeds of the Certificates are expected to be used for (i) designing, developing, constructing and acquiring drainage improvements and facilities within the Town, including the acquisition of land therefor; (ii) designing, developing, constructing, improving and renovating Town parks, trails and recreation facilities, including the acquisition of land therefor, (iii) designing, developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks, bridges, and other public ways of the Town, including streetscaping, signage, streetlighting, right-of-way protection, utility relocation, and related storm drainage improvements; and acquiring rights -of -way in connection therewith, (iv) designing, developing, constructing, and renovating Town cemetery improvements; and (v) to pay the costs associated with the issuance of the Certificates. RATINGS ...................................... The Obligations and the presently outstanding tax supported debt of the Town are rated "AAA" by S&P Global Ratings, a division of S&P Global Inc. ("S&P"), without regard to credit enhancement (see "OTHER INFORMATION - Ratings"). BOOIc-ENTRY-ONLY SYSTEM...... The definitive Obligations will be initially registered and delivered only to Cede & Co., the nominee of DTC pursuant to the Book -Entry -Only System described herein. Beneficial ownership of the Obligations may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Obligations will be made to the beneficial owners thereof. Principal of, premium, if any, and interest on the Obligations will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Obligations (see "THE OBLIGATIONS - Book -Entry -Only System"). PAYMENT RECORD ..................... The Town has never defaulted in payment of its bonded indebtedness SELECTED FINANCIAL INFORMATION Per Ratio Funded Fiscal Per Capita Gross Capita Tax Debt to Year Estimated Taxable Taxable Funded Funded Taxable %of Ended City Assessed Assessed Tax Tax Assessed Total Tax 9/30 Population Valuation Valuation Debt Debt Valuation Collections 2017 1,486 $1,163,403,289 $782,909 $36,207,000 $24,365 3.11% 100.00% 2018 1,558 1,209,080,303 776,046 36,766,000 23,598 3.04% 99.16% 2019 1,610 1,297,542,558 805,927 35,171,000 21,845 2.71% 98.88% 2020 1,664 1,187,777,595 713,809 33,449,000 20,102 2.82% 101.31% 2021 1,798 1,644,642,510 914,707 34,657,000 (�1 19,275 2.11% 98.24% (21 (1) Includes the Obligations, excludes the Refunded Obligations. Preliminary, subject to change. (2) Collection for part year only, through June 1, 2021. Tax bills are mailed in October of each year and are delinquent, if not paid, on February 1, of the following year. For additional information regarding the Town, please contact: Jarrod Greenwood Nick Bulaich Ginger R. Awtry Adam Lancarte Town of Westlake or Hilltop Securities, Inc. 1500 Solana Blvd. 777 Main Street, Suite 1525 Bldg7, Suite 7200 Fort Worth, Texas 76102 Westlake, TX 76262 (817) 332-9710 (817)430-0941 7 ELECTED OFFICIALS Town Council Laura Wheat Mayor Carol Langdon Mayor Pro Tern Alesa Belvedere Councilmember Chandrika Dasgupta Councilmember Rajiv Trivedi Councilmember Dr. Anna White Councilmember SELECTED ADMINISTRATIVE STAFF TOWN OFFICIALS, STAFF AND CONSULTANTS Length of Term Service Expires Occupation 13 Years May, 2022 Community Service 13 Years May, 2023 Retired, Marketing 7 Years May, 2022 Real Estate Agent 1 Month May, 2023 Self -Employed - Real Estate 1 Year May, 2022 Investments 1 Month May, 2023 Healthcare Consulting Length of Service Naive Position With Town Amanda DeGan Town Manager 19 Years Noah Simon Deputy Town Manager 2 Years Jarrod Greenwood Assistant Town Manager 18 Years Ginger Awtry Director of Finance 17 Years Todd Wood Town Secretary 19 Years CONSULTANTS AND ADVISORS Auditors................................................................................................................................................. Weaver and Tidwell, L.L.P. Dallas, Texas BondCounsel........................................................................................................................................................................Bracewell LLP Dallas, Texas Financial Advisor..............................................................................................................................................Hilltop Securities Inc. Fort Worth, Texas 8 PRELIMINARY OFFICIAL STATEMENT RELATING TO $4,430,000* $3,220,000* TOWN OF WESTLAIE, TEXAS TOWN OF WESTLAKE, TEXAS GENERAL OBLIGATION REFUNDING BONDS, COMBINATION TAX AND REVENUE SERIES 2021 CERTIFICATES OF OBLIGATION, SERIES 2021 INTRODUCTION This Preliminary Official Statement, which includes the Appendices hereto, provides certain information regarding the issuance of $4,430,000* Town of Westlake, Texas, General Obligation Refunding Bonds, Series 2021 (the "Bonds") and the $3,220,000* Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021 (the "Certificates"). The Bonds and Certificates are separate and distinct securities offerings being authorized for issuance under separate authorizations (the "Bond Ordinance" and the "Certificates Ordinance", respectively, each as defined below and collectively the "Ordinances"), to be adopted by the Town but are being offered and sold pursuant to a common Official Statement, and while the Bonds and Certificates share certain common attributes, each issue is separate and apart from the other and should be reviewed and analyzed independently, including the kind and type of obligation being issued, its terms of payments, the security for its payment, the rights of the holders, the federal, state or local tax consequences of the purchase, ownership or disposition of the Obligations and the covenants and agreements made with respect thereto. Capitalized terms used in this Official Statement have the same meanings assigned to such terms in terms in each respective ordinance, except as otherwise indicated herein. There follows in this Preliminary Official Statement descriptions of the Obligations and certain information regarding the Town of Westlake, Texas (the "Town") and its finances. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each such document. Copies of such documents may be obtained from the Town's Financial Advisor, Hilltop Securities Inc., Fort Worth, Texas. DESCRIPTION OF THE TOWN ... The Town is a political subdivision and Type A general law municipal corporation of the State, duly organized and existing under the laws of the State, including the laws of a General Law municipality. The Town was incorporated in 1956 and operates under a Council/Manager form of government with a Town Council comprised of the Mayor and 5 Councilmembers. The 2010 Census population for the Town was 992, while the estimated 2021 population is 1,798. INFECTIOUS DISEASE OUTBREAK — COVID-19 The outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus, has been characterized as a pandemic (the "Pandemic") by the World Health Organization and is currently affecting many parts of the world, including the United States and Texas. On January 31, 2020, the Secretary of the United States Health and Human Services Department declared a public health emergency for the United States and on March 13, 2020, the President of the United States declared the outbreak of COVID-19 in the United States a national emergency. Subsequently, the President's Coronavirus Guidelines for America and the United States Centers for Disease Control and Prevention called upon Americans to take actions to slow the spread of COVID-19 in the United States. The outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus, has been characterized as a pandemic (the "Pandemic") by the World Health Organization and is currently affecting many parts of the world, including the United States and the State. On January 31, 2020, the Secretary of the United States Health and Human Services Department declared a public health emergency for the United States and on March 13, 2020, the President of the United States declared the outbreak of COVID-19 in the United States a national emergency. Subsequently, the President's Coronavirus Guidelines for America and the United States Centers for Disease Control and Prevention called upon Americans to take actions to slow the spread of COVID-19 in the United States. On March 13, 2020, the Governor of Texas (the "Governor") declared a state of disaster for all counties in the State in response to the Pandemic. Pursuant to Chapter 418 of the Texas Government Code, the Governor has broad authority to respond to disasters, including suspending any regulatory statute prescribing the procedures for conducting State business or any order or rule of a State agency (including TEA) that would in any way prevent, hinder, or delay necessary action in coping with the disaster, and issuing executive orders that have the force and effect of law. The Governor has since issued a number of executive orders relating to COVID-19 preparedness and mitigation. On March 2, 2021, the Governor issued Executive Order GA-34, effective March 10, 2021, which among other things rescinds and supersedes various prior executive orders and provides that (i) in all counties not in an "area with high hospitalization" (as defined in Executive Order GA 34) there are no COVID-19 related operating limits for any business or other establishment and (ii) no person may be required by any jurisdiction to wear or to mandate the wearing of a face covering. In "areas with high hospitalizations" a county judge may impose COVID-19 related mitigation strategies, including reinstituting business occupancy limits. The Governor retains the right to impose additional restrictions on activities. Additional information regarding executive orders issued by the Governor is accessible on the website of the Governor at https:Hgov.texas.gov/. Neither the information on (nor accessed through) such website of the Governor is incorporated by reference, either expressly or by implication, into this Official Statement. * Preliminary, subject to change. The full extent of the ongoing impact of COVID-19 on the Town's longer -term operational and financial performance will depend on future developments, many of which are outside of its control, including the effectiveness of the mitigation strategies discussed above, the duration and spread of COVID-19, and future governmental actions, all of which are highly uncertain and cannot be predicted. While the potential impact of the Pandemic on the Town cannot be quantified at this time, the continued outbreak of COVID-19 could have an adverse effect on the Town's operations and financial condition. The Pandemic has negatively affected travel, commerce, and financial markets globally, and is widely expected to continue negatively affecting economic growth and financial markets worldwide. These negative impacts may reduce or negatively affect property values within the Town. It is unclear at this time what effect, if any, COVID-19 and resulting economic disruption may have on future assessed values or the collection of taxes, either because of delinquencies or collection and valuation relief resulting from the declared emergency. The Obligations are secured by a limited ad valorem tax, and a reduction in property values may require an increase in the ad valorem tax rate required to pay the Obligations as well as the Town's share of operations and maintenance expenses payable from ad valorem taxes. WINTER STORM URI ... Between February 14 and February 19, 2021, the State of Texas experienced a severe winter storm causing widespread, record breaking cold temperatures throughout the State. As a result of the winter storm. there were widespread disruptions to the operations of Texas electric and gas utilities, which have been widely reported in the press, and approximately four million Texas residents lost power for significant portions of the week. The power outages caused water pipes to burst, resulting in damage to many structures, and in some areas affected the safety of the public water supply for a period of time. The President declared a major disaster in the State, making disaster assistance from the Federal Emergency Management Agency ("FEMA") available to homeowners and businesses that sustained damage. Based on preliminary assessments, the Town did not experience any financial loss related to the storm. While the Town continues to assess the overall impact of the storm, the Town does not anticipate a material adverse impact on its operations or financial condition as a result of the storm. There are special taxing procedures for areas declared to be disaster area which could affect the amount of taxes due and when they are collected. See "TAX INFORMATION -Temporary Exemption for Qualified Property Damaged by a Disaster." PLAN OF FINANCING PURPOSE ... Proceeds from the sale of the Bonds will be used for (i) refunding a portion of the Town's outstanding debt (the "Refunded Obligations") for debt service savings and (ii) to pay the costs of issuance associated with the sale of the Bonds. (See Schedule I for a detailed listing of the Refunded Obligations and their redemption dates). Proceeds of the Certificates are expected to be used for (i) designing, developing, constructing and acquiring drainage improvements and facilities within the Town, including the acquisition of land therefor; (ii) designing, developing, constructing, improving and renovating Town parks, trails and recreation facilities, including the acquisition of land therefor, (iii) designing, developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks, bridges, and other public ways of the Town, including streetscaping, signage, streetlighting, right-of-way protection, utility relocation, and related storm drainage improvements; and acquiring rights -of -way in connection therewith, (iv) designing, developing, constructing, and renovating Town cemetery improvements; and (v) to pay the costs associated with the issuance of the Certificates. REFUNDED OBLIGATIONS ... The principal and interest due on the Refunded Obligations are to be paid on the redemption date of such Refunded Obligations (the "Redemption Date") from funds to be deposited pursuant to a certain Deposit Agreement (the "Deposit Agreement") between the Town and the paying agent/registrar for the Refunded Obligations (the "Refunded Obligations Paying Agent"). The Bond Ordinance provides that from the proceeds of the sale of the Obligations received from the Initial Purchaser of the Obligations, together with other lawfully available funds of the Town, the Town will deposit with the Refunded Obligations Paying Agent the amount necessary to accomplish the discharge and final payment of the Refunded Obligations on the Redemption Date. Such funds will be held by the Refunded Obligations Paying Agent, uninvested, in a special deposit account (the "Deposit Account") and used to defease and redeem the Refunded Obligations on the Redemption Date. The Town's financial advisor or the Refunded Obligations Paying Agent will execute a certificate verifying that the funds on deposit in the Deposit Account will be sufficient to pay, when due, the amount necessary to accomplish the discharge and final payment of the Refunded Obligations on the Redemption Date (the "Sufficiency Certificate"). By the deposit of cash with the Refunded Obligations Paying Agent pursuant to the Deposit Agreement, the Town will have effected the defeasance of all of the Refunded Obligations in accordance with the law. It is the opinion of Bond Counsel that as a result of such defeasance and in reliance upon the Sufficiency Certificate, the Refunded Obligations will be outstanding only for the purpose of receiving payments from the cash held for such purpose by the Refunded Obligations Paying Agent and such Refunded Obligations will not be deemed as being outstanding obligations of the Town payable System revenues nor for the purpose of applying any limitation on the issuance of debt. 10 SOURCES AND USES OF PROCEEDS ... The proceeds from the sale of the Obligations will be applied approximately as follows: Sources: Principal Amount of Bonds Original Issue Premium Total Sources of Funds Uses: Deposit to refund Refunded Obligations Deposit to Construction Fund Costs of Issuance Total Uses of Funds TILE OBLIGATIONS The The Bonds Certificates DESCRIPTION OF THE OBLIGATIONS ... The Obligations are dated August 15, 2021. The Obligations mature on February 15 in each of the years and in the amounts shown on page 2 and 4 hereof Interest on the Obligations will accrue from the date of initial delivery of the Obligations to the initial purchasers of the Obligations (the "Initial Purchaser"), and will be payable on February 15 and August 15 of each year, commencing February 15, 2022, until maturity or prior redemption. The definitive Obligations will be issued only in fully -registered form in any integral multiple of $5,000 for any one maturity and will be initially registered and delivered only to Cede & Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book -Entry -Only System described herein. No physical delivery of the Obligations will be made to the beneficial owners thercof. Principal of, premium, if any, and interest on the Obligations will be payable by the Paying Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Obligations. See "THE OBLIGATIONS - Book -Entry -Only System" herein. AUTHORITY FOR ISSUANCE ... The Bonds are being authorized and issued pursuant to the Constitution and general laws of the State, particularly Chapter 1207, Texas Government Code, as amended, and the ordinance to be passed by the Town Council of the Town (the 'Bond Ordinance" and together with the Certificate Ordinance, the "Ordinances"). The Certificates are being issued pursuant to the Constitution and general laws of the State, particularly Subchapter C of Chapter 271, Texas Local Government Code, as amended, and the ordinance to be passed by the Town Council of the Town (the "Certificate Ordinance" and together with the Bond Ordinance, the "Ordinances"). SECURITY AND SOURCE OF PAYMENT ... The Bonds ... All taxable property within the Town is subject to a continuing direct annual ad valorem tax levied by the Town, within the limits prescribed by law, sufficient to provide for the payment of principal of and interest on the Bonds as provided in the Bond Ordinance. The Certificates ...The principal of and interest on the Certificates is payable from (i) a continuing direct annual ad valorem tax levied by the Town against all taxable property in the Town within limits prescribed by law, and (i) a pledge of the Surplus Revenues of the Town's Waterworks and Sewer System (the "System") in an amount not to exceed $1,000, as provided in the Certificate Ordinance. TAx RATE LIMITATION ... All taxable property within the Town is subject to the assessment, levy and collection by the Town of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 4, of the Texas Constitution is applicable to the Town, and limits its maximum ad valorem tax rate to $1.50 per $100 taxable assessed valuation for all Town purposes. Administratively, the Attorney General of the State of Texas will permit allocation of $1.00 of the $1.50 maximum tax rate for ad valorem tax debt service, calculated at the time of issuance and based on a 90% collection rate. OPTIONAL REDEMPTION ... The Town reserves the right, at its option, to redeem the Obligations having stated maturities on and after February 15, 2031, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2030, or any date thereafter, at the par value thereof plus accrued interest to the date of redemption. If less than all of the Obligations are to be redeemed, the Town may select the maturities of Obligations to be redeemed. If less than all of the Obligations of any maturity are to be redeemed, the Paying Agent/Registrar (or DTC while the Obligations are in Book -Entry -Only form) shall determine by lot the Obligations, or portions thereof, within such maturity to be redeemed. If a Obligation (or any portion of the principal sum thereof) shall have been called for redemption and notice of such redemption shall have been given, such Obligation 11 (or the principal amount thereof to be redeemed) shall become due and payable on such redemption date and interest thereon shall cease to accrue from and after the redemption date, provided funds for the payment of the redemption price and accrued interest thereon are held by the Paying Agent/Registrar on the redemption date. MANDATORY SINKING FUND REDEMPTION ... In the event any of the Obligations are structured as term Obligations, such term Obligations will be subject to mandatory sinking fund redemption in accordance with the applicable provisions of the respective Ordinance, which provisions will be included in the final Official Statement. NOTICE OF REDEMPTION ... Not less than 30 days prior to a redemption date for the Obligations, the Town shall cause a notice of redemption to be sent by United States mail, first class, postage prepaid, to the registered owners of the Obligations to be redeemed, in whole or in part, at the address of the registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the business day next preceding the date of mailing such notice. ANY NOTICE SO MAILED SHALL BE CONCLUSIVELY PRESUMED TO HAVE BEEN DULY GIVEN, WHETHER OR NOT THE REGISTERED OWNER RECEIVES SUCH NOTICE. NOTICE HAVING BEEN SO GIVEN, THE OBLIGATIONS CALLED FOR REDEMPTION SHALL BECOME DUE AND PAYABLE ON THE SPECIFIED REDEMPTION DATE, AND NOTWITHSTANDING THAT ANY CERTIFICATE OR PORTION THEREOF HAS NOT BEEN SURRENDERED FOR PAYMENT, INTEREST ON SUCH OBLIGATIONS OR PORTION THEREOF SHALL CEASE TO ACCRUE. The Town reserves the right, in the case of an optional redemption, to give notice of its election or direction to redeem Obligations conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or authorized securities, in an amount equal to the amount necessary to effect the redemption, with the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the redemption date, or (ii) that the Town retains the right to rescind such notice at any time on or prior to the scheduled redemption date if the Town delivers a certificate of the Town to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice, and such notice and redemption shall be of no effect if such moneys and/or authorized securities are not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of redemption to the affected Holders. Any Obligations subject to conditional redemption and such redemption has been rescinded shall remain Outstanding, and the rescission of such redemption shall not constitute an event of default. Further, in the case of a conditional redemption, the failure of the Town to make moneys and/or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default by the Town. The Paying Agent/Registrar and the Town, so long as a book -entry -only system is used for the Obligations will send any notice of redemption or other notices with respect to the Obligations only to DTC. Any failure by DTC to advise any DTC participant, or of any DTC participant or indirect participant to notify the beneficial owner, shall not affect the validity of the redemption of the Obligations called for redemption or any other action premised or any such notice. Redemption of portions of the Obligations by the Town will reduce the outstanding principal amount of such Obligations held by DTC. In such event, DTC may implement, through its book -entry -only system, a redemption of such Obligations held for the account of DTC participants in accordance with its rules or other agreements with DTC participants and then DTC participants and indirect participants may implement a redemption of such Obligations from the beneficial owners. Any such selection of Obligations to be redeemed will not be governed by the respective Ordinance and will not be conducted by the Town or the Paying Agent/Registrar. Neither the Town nor the Paying Agent/Registrar will have any responsibility to DTC participants, indirect participants or the persons for whom DTC participants act as nominees, with respect to the payments on the Obligations or the providing of notice to DTC participants, indirect participants, or beneficial owners of the selection of portions of the Obligations for redemption. See "THE OBLIGATIONS - Book -Entry -Only System" herein. AMENDMENTS ... The Town, may, without the consent of or notice to any registered owners, from time to time and at any time, amend the Ordinances in any manner not detrimental to the interests of the registered owners, including the curing of any ambiguity, inconsistency, or formal defect or omission therein. In addition, the Town may, with the written consent of holders of a majority in aggregate principal amount of the Obligations, as the case may be, then outstanding, amend, add to, or rescind any of the provisions of the Ordinances; provided that, without the consent of the registered owners of all of the Obligations, as the case may be, no such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of, premium, if any, and interest on the Obligations, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of, premium, if any, or interest on the Obligations, (2) give any preference to any Obligation over any other Obligation, as the case may be, or (3) reduce the aggregate principal amount of the Obligations, as the case may be, required to be held by the owners of the Obligations, as the case may be, for consent to any such amendment, addition, or rescission. DEFEASANCE ... The Ordinances provide that the Town may discharge its obligations to the registered owners of any or all of the Obligations to pay principal, interest and redemption price thereon either (i) by depositing with the Comptroller of Public Accounts of the State a sum of money equal to the principal of, premium, if any, and all interest to accrue on the Obligations to maturity or date of redemption or (ii) by depositing with the Paying Agent/Registrar or other lawfully authorized entity amounts sufficient, together with the investment earnings thereon, to provide for the payment and/or redemption of the Obligations; provided that such deposits may be invested and reinvested only in (a) direct obligations of the United States of America, including obligations that are unconditionally guaranteed by the United States of America and (b) noncallable obligations of an agency or instrumentality of 12 the United States, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the Town adopts or approves the proceedings authorizing the issuance of refunding obligations, are rated as to investment quality by a nationally recognized investment rating firm not less than "AAA" or its equivalent; or (iii) any combination of (i) and (ii) above. The foregoing obligations may be in book entry form, and shall mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment and/or redemption of the Obligations. If any of such Obligations are to be redeemed prior to their respective dates of maturity, provision must have been made for giving notice of redemption as provided in the Ordinance. If any of the Obligations are to be redeemed prior to their respective dates of maturity, provision must have been made for the payment to the registered owners of such Obligations at the date of maturity or prior redemption of the full amount to which such owner would be entitled and for giving notice of redemption as provided in the Ordinance. Under current Texas law, upon the making of a deposit as described above, such Obligations shall no longer be regarded to be outstanding or unpaid. After firm banking and financial arrangements for the discharge and final payment or redemption of the Obligations have been made as described above, all rights of the Town to initiate proceedings to call the Obligations for redemption or take any other action amending the terms of the Obligations are extinguished; provided, however, that the right to call the Obligations for redemption is not extinguished if the Town: (i) in the proceedings providing for the firm banking and financial arrangements, expressly reserves the right to call the Obligations for redemption; (ii) gives notice of the reservation of that right to the owners of the Obligations immediately following the making of the firm banking and financial arrangements; and (iii) directs that notice of the reservation be included in any redemption notices that it authorizes. BooK-ENTRY-ONLY SYSTEM ... This section describes how ownership of the Obligations is to be transferred and how the principal of, premium, if any, and interest on the Obligations are to be paid to and credited by The Depository Trust Company ("DTC'), New York, New York while the Obligations are registered in its nominee name. The information in this section concerning DTC and the Book-Enoy-Only System has been provided by DTC for use in disclosure documents such as this Official Statement. The Town believes the source of such information to be reliable, but takes no responsibility for the accuracy or completeness thereof. The Town cannot and does not give any assurance that (1) DTC will distribute payments of debt service on the Obligations, or redemption or other notices, to DTC Participants, (2) DTC Participants or others will distribute debt service payments paid to DTC or its nominee (as the registered owner of the Obligations), or redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or (3) DTC will serve and act in the manner described in this Official Statement. The current rules applicable to DTC are on file with the Securities and Exchange Commission, and the current procedures of DTC to be followed in dealing with DTC Participants are on file with DTC. DTC will act as securities depository for the Obligations. The Obligations will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Obligation certificate will be issued for each maturity and series of the Obligations, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities Obligations. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of "AA+". The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and kvww.dtc.ors. Purchases of Obligations under the DTC system must be made by or through Direct Participants, which will receive a credit for the Obligations on DTC's records. The ownership interest of each actual purchaser of each Obligation ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Obligations are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive Obligations representing their ownership interests in Obligations, except in the event that use of the book -entry system for the Obligations is discontinued. 13 To facilitate subsequent transfers, all Obligations deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Obligations with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Obligations; DTC's records reflect only the identity of the Direct Participants to whose accounts such Obligations are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Obligations may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Obligations, such as redemptions, tenders, defaults, and proposed amendments to the Obligations documents. For example, Beneficial Owners of Obligations may wish to ascertain that the nominee holding the Obligations for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the register and request that copies of the notices be provided directly to them. Redemption notices for the Obligations shall be sent to DTC. If less than all of the Obligations within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Obligations unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Town as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Obligations are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Obligations will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Town or the Paying Agent/Registrar of each series, on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Paying Agent/Registrar of each series, or the Town, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, principal and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Town or Paying Agent/Registrar of each series, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to one or both series of the Obligations at any time by giving reasonable notice to the Town or the respective Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, obligation Obligations are required to be printed and delivered. The Town may decide to discontinue the use of the system of book -entry -only transfers through DTC (or a successor depository). In that event, Obligations will be printed and delivered. Use of Certain Terms in Other Sections of this Official Statement ... In reading this Official Statement it should be understood that while the Obligations are in the Book -Entry -Only System, references in other sections of this Official Statement to registered owners should be read to include the person for which the Participant acquires an interest in the Obligations, but (i) all rights of ownership must be exercised through DTC and the Book -Entry -Only System, and (ii) except as described above, notices that are to be given to registered owners under the Ordinance will be given only to DTC. Information concerning DTC and the Book -Entry -Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Town, the Financial Advisor, or the Initial Purchaser. Effect of Termination of Book -Entry -Only System ... In the event that the Book -Entry -Only System of the Obligations is discontinued, printed securities will be issued to the DTC Participants or the holder, as the case may be, and such Obligations will be subject to transfer, exchange and registration provisions as set forth in the Ordinances and summarized under "THE OBLIGATIONS - Transfer, Exchange and Registration" below. PAYING AGENT/REGISTRAR ... The initial Paying Agent/Registrar is The Bank of New York Mellon Trust Company, N.A., Dallas, Texas. In the Ordinances, the Town retains the right to replace the Paying Agent/Registrar. The Town covenants to maintain and provide a Paying Agent/Registrar at all times until the Obligations, as the case may be, are duly paid and any successor Paying Agent/Registrar shall be a commercial bank, financial institution or trust company or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar for the Obligations. Upon any change in the Paying Agent/Registrar for the Obligations, the Town agrees to promptly cause a written notice thereof to be sent to each registered owner of the Obligations affected by the changes by United States mail, first class, postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. 14 TRANSFER, EXCHANGE AND REGISTRATION ... In the event the Book -Entry -Only System should be discontinued, printed Obligations will be issued to the registered owners thereof and thereafter may be transferred and exchanged on the registration books of the Paying Agent/Registrar only upon presentation and surrender to the Paying Agent/Registrar and such transfer or exchange shall be without expense or service charge to the registered owner, except for any tax or other governmental charges required to be paid with respect to such registration, exchange and transfer. Obligations may be assigned by the execution of an assignment form on the respective Obligations or by other instrument of transfer and assignment acceptable to the Paying Agent/Registrar. New Obligations will be delivered by the Paying Agent/Registrar, in lieu of the Obligations being transferred or exchanged, at the designated office of the Paying Agent/Registrar, or sent by United States mail, first class, postage prepaid, to the new registered owner or his designee. To the extent possible, new Obligations issued in an exchange or transfer of Obligations will be delivered to the registered owner or assignee of the registered owner in not more than three business days after the receipt of the Obligations to be canceled, and the written instrument of transfer or request for exchange duly executed by the registered owner or his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. New Obligations registered and delivered in an exchange or transfer shall be in any integral multiple of $5,000 for any one maturity and for a like aggregate principal amount and series as the Obligations surrendered for exchange or transfer. See "THE OBLIGATIONS - Book -Entry -Only System" herein for a description of the system to be utilized initially in regard to ownership and transferability of the Obligations. Neither the Town nor the Paying Agent/Registrar shall be required to transfer or exchange any Obligation called for redemption, in whole or in part, within 45 days of the date fixed for redemption; provided, however, such limitation on transfer shall not be applicable to an exchange by the registered owner of the uncalled balance of a Obligation. RECORD DATE FOR INTEREST PAYMENT ... The record date ("Record Date") for the interest payable on the Obligations on any interest payment date means the close of business on the last business day of the preceding month. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the 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 Holder of a Obligation appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. OBLIGATION [MOLDERS' REMEDIES ... The Ordinances establishes as "events of default" (i) the failure to make payment of principal of or interest on any of the Obligations when due and payable; or (ii) default in the performance of observance of any other covenant, agreement or obligation of the Town, which default materially and adversely affects the rights of the related Owners, including but not limited to their prospect or ability to be repaid in accordance with the Ordinances, and the continuation thereof for a period of sixty days after notice of such default is given by any Owner to the Town. Under State law, there is no right to the acceleration of maturity of the Obligations upon the failure of the Town to observe any covenant under the Ordinances. If an Owner of a Obligation does not receive payment of principal of or interest on the Obligations when due, the Owner may seek a writ of mandamus from a court of competent jurisdiction. The issuance of a writ of mandamus may be sought if there is no other available remedy at law to compel performance under the Obligations or the Ordinances and the Town's obligations are not uncertain or disputed. The remedy of mandamus is controlled by equitable principles, so rests with the discretion of the court, but may not be arbitrarily refused. There is no acceleration of maturity of the Obligations in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. The respective Ordinances do not provide for the appointment of a trustee to represent the interest of the Owners of the Obligations upon any failure of the Town to perform in accordance with the terms of the respective Ordinances, or upon any other condition and accordingly all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the registered owners. The Texas Supreme Court ruled in Tooke v. City of Mexia, 197 S.W. 3rd 325 (Tex. 2006), that a waiver of governmental immunity in a contractual dispute must be provided for by statute in "clear and unambiguous" language. Because it is unclear whether the Texas legislature has effectively waived the City's governmental immunity from a suit for money damages, Owners may not be able to bring such a suit against the City for breach of the Obligations or covenants in the Ordinances. Even if a judgment against the City could be obtained, it could not be enforced by direct levy and execution against the City's property. Further, the registered owners cannot themselves foreclose on property within the City or sell property within the City to enforce the tax lien on taxable property to pay the principal of and interest on the Obligations. On April 1, 2016, the Texas Supreme Court ruled in Wasson Interests, Ltd. v. City of Jacksonville, 59 Tex. Sup. Ct. J. 524 (Tex. 2016) that governmental immunity does not imbue a city with derivative immunity when it performs proprietary, as opposed to governmental, functions in respect to contracts executed by a city. Texas jurisprudence has generally held that proprietary functions are those conducted by a city in its private capacity, for the benefit only of those within its corporate limits, and not as an arm of the government or under the authority or for the benefit of the state. In Wasson, the Court recognized that the distinction between governmental and proprietary functions is not clear. Therefore, in considering municipal breach of contract cases, it is incumbent on the courts to determine whether a function is proprietary or governmental based upon the common law and statutory guidance. Issues related to the applicability of governmental immunity as they relate to the issuance of municipal debt have not been adjudicated. Each situation will be evaluated based on the facts and circumstances surrounding the contract in question. 15 The Town may waive immunity under Texas Government Code Chapter 1371 ("Chapter 1371"). The Town, however, is not issuing the Obligations pursuant to Chapter 1371 and has not waived its immunity. Furthermore, the Town is eligible to seek relief from its creditors under Chapter 9 of the U.S. Bankruptcy Code ("Chapter 9"). Although Chapter 9 provides for the recognition of a security interest represented by a specifically pledged source of revenues, the pledge of ad valorem taxes in support of a general obligation of a bankrupt entity is not specifically recognized as a security interest under Chapter 9. Chapter 9 also includes an automatic stay provision that would prohibit, without Bankruptcy Court approval, the prosecution of any other legal action by creditors or holders of Obligations of an entity which has sought protection under Chapter 9. Therefore, should the Town avail itself of Chapter 9 protection from creditors, the ability to enforce would be subject to the approval of the Bankruptcy Court (which could require that the action be heard in Bankruptcy Court instead of other federal or state court); and the Bankruptcy Code provides for broad discretionary powers of a Bankruptcy Court in administering any proceeding brought before it. The opinion of Bond Counsel will note that all opinions with respect to the rights of the Owners of the Obligations are subject to the applicable provisions of federal bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions generally, and may be limited by general principles of equity which permit the exercise of judicial discretion. (REMAINDER OF PAGE INTENTIONALL Y LEFT BLANK) TAX INFORMATION The following is a summary of certain provisions of State law as it relates to ad valorem taxation and is not intended to be complete. Prospective investors are encouraged to review Title I of the Texas Tax Code, as amended (the "Property Tax Code'), for identification of property subject to ad valorem taxation, property exempt or which may be exempted from ad valorem taxation if claimed, the appraisal of property for ad valorem tax purposes, and the procedures and limitations applicable to the levy and collection of ad valorem taxes. VALUATION OF TAXABLE PROPERTY ... The Property Tax Code provides for countywide appraisal and equalization of taxable property values and establishes in each county of the State an appraisal district and an appraisal review board (the "Appraisal Review Board") responsible for appraising property for all taxing units within the county. The appraisal of property within the Town is the responsibility of the Rockwall Central Appraisal District (the "Appraisal District"). Except as generally described below, the Appraisal District is required to appraise all property within the Appraisal District on the basis of 100% of its market value and is prohibited from applying any assessment ratios. In determining market value of property, the Appraisal District is required to consider the cost method of appraisal, the income method of appraisal and the market data comparison method of appraisal, and use the method the chief appraiser of the Appraisal District considers most appropriate. The Property Tax Code requires appraisal districts to reappraise all property in its jurisdiction at least once every three (3) years. A taxing unit may require annual review at its own expense, and is entitled to challenge the determination of appraised value of property within the taxing unit by petition filed with the Appraisal Review Board. State law requires the appraised value of an owner's principal residence ("homestead" or "homesteads") to be based solely on the property's value as a homestead, regardless of whether residential use is considered to be the highest and best use of the property. State law further limits the appraised value of a homestead to the lesser of (1) the market value of the property or (2) 110% of the appraised value of the property for the preceding tax year plus the market value of all new improvements to the property. State law provides that eligible owners of both agricultural land and open -space land, including open -space land devoted to farm or ranch purposes or open -space land devoted to timber production, may elect to have such property appraised for property taxation on the basis of its productive capacity. The same land may not be qualified as both agricultural and open -space land. The appraisal values set by the Appraisal District are subject to review and change by the Appraisal Review Board. The appraisal rolls, as approved by the Appraisal Review Board, are used by taxing units, such as the Town, in establishing their tax rolls and tax rates (see "TAX INFORMATION— Town and Taxpayer Remedies"). STATE MANDATED HOMESTEAD EXEMPTIONS ... State law grants, with respect to each city in the State, various exemptions for disabled veterans and their families, surviving spouses of members of the armed services killed in action, and surviving spouses of first responders killed or fatally wounded in the line of duty. LOCAL OPTION HOMESTEAD EXEMPTIONS ... The governing body of a taxing unit, including a city, county, school district, or special district, at its option may grant: (1) an exemption of up to 20% of the appraised value of all homesteads (but not less than $5,000) and (2) an additional exemption of at least $3,000 of the appraised value of the homesteads of persons sixty-five (65) years of age or older and the disabled. Each taxing unit decides if it will offer the local option homestead exemptions and at what percentage or dollar amount, as applicable. The exemption described in (2), above, may be created, increased, decreased or repealed at an election called by the governing body of a taxing unit upon presentment of a petition for such creation, increase, decrease, or repeal of at least 20% of the number of qualified voters who voted in the preceding election of the taxing unit. LOCAL OPTION FREEZE FOR THE ELDERLY AND DISABLED ... The governing body of a county, municipality or junior college district may, at its option, provide for a freeze on the total amount of ad valorem taxes levied on the homesteads of persons 65 years of age or older or of disabled persons above the amount of tax imposed in the year such residence qualified for such exemption. Also, upon voter initiative, an election may be held to determine by majority vote whether to establish such a freeze on ad valorem taxes. Once the freeze is established, the total amount of taxes imposed on such homesteads cannot be increased except for certain improvements, and such freeze cannot be repealed or rescinded. PERSONAL PROPERTY ... Tangible personal property (furniture, machinery, supplies, inventories, etc.) used in the "production of income" is taxed based on the property's market value. Taxable personal property includes income -producing equipment and inventory. Intangibles such as goodwill, accounts receivable, and proprietary processes are not taxable. Tangible personal property not held or used for production of income, such as household goods, automobiles or light trucks, and boats, is exempt from ad valorem taxation unless the governing body of a taxing unit elects to tax such property. FREEPORT AND GOODS -IN -TRANSIT EXEMPTIONS ... Certain goods that are acquired in or imported into the State to be forwarded outside the State, and are detained in the State for 175 days or less for the purpose of assembly, storage, manufacturing, processing or fabrication ("Freeport Property") are exempt from ad valorem taxation unless a taxing unit took official action to tax Freeport Property before April 1, 1990 and has not subsequently taken official action to exempt Freeport Property. Decisions to continue taxing Freeport Property may be reversed in the future; decisions to exempt Freeport Property are not subject to reversal. 17 Certain goods that are acquired in or imported into the State to be forwarded to another location within or without the State, stored in a location that is not owned by the owner of the goods and are transported to another location within or without the State within 175 days ("Goods -in -Transit"), are generally exempt from ad valorem taxation; however, the Property Tax Code permits a taxing unit, on a local option basis, to tax Goods -in -Transit if the taxing unit takes official action after conducting a public hearing, before January 1 of the first tax year in which the taxing unit proposes to tax Goods -in -Transit. Goods -in -Transit and Freeport Property do not include oil, natural gas or petroleum products, and Goods -in -Transit does not include aircraft or special inventories such as manufactured housing inventory, or a dealer's motor vehicle, boat, or heavy equipment inventory. A taxpayer may receive only one of the Goods -in -Transit or Freeport Property exemptions for items of personal property. OTHER EXEMPT PROPERTY ... Other major categories of exempt property include property owned by the State or its political subdivisions if used for public purposes, property exempt by federal law, property used for pollution control, farm products owned by producers, property of nonprofit corporations used for scientific research or educational activities benefitting a college or university, designated historic sites, solar and wind -powered energy devices, and certain classes of intangible personal property. TAX INCREMENT REINVESTMENT ZONES ... A city or county, by petition of the landowners or by action of its governing body, may create one or more tax increment reinvestment zones ("TIRZ") within its boundaries. At the time of the creation of the TIRZ, a "base value" for the real property in the TIRZ is established and the difference between any increase in the assessed valuation of taxable real property in the TIRZ in excess of the base value is known as the "tax increment". During the existence of the TIRZ, all or a portion of the taxes levied against the tax increment by a city or county, and all other overlapping taxing units that elected to participate, are restricted to paying only planned project and financing costs within the TIRZ and are not available for the payment of other obligations of such taxing units. TAX ABATEMENT AGREEMENTS . . . Taxing units may also enter into tax abatement agreements to encourage economic development. Under the agreements, a property owner agrees to construct certain improvements on its property. The taxing unit, in turn, agrees not to levy a tax on all or part of the increased value attributable to the improvements until the expiration of the agreement. The abatement agreement could last for a period of up to 10 years. For a discussion of how the various exemptions described above are applied by the Town, see "TAX INFORMATION— Town Application of Tax Code" herein. TEMPORARY EXEMPTION FOR QUALIFIED PROPERTY DAMAGED BY A DISASTER ... The Property Tax Code entitles the owner of certain qualified (i) tangible personal property used for the production of income, (ii) improvements to real property, and (iii) manufactured homes located in an area declared by the governor to be a disaster area following a disaster and is at least 15 percent damaged by the disaster, as determined by the chief appraiser, to an exemption from taxation of a portion of the appraised value of the property. The amount of the exemption ranges from 15 percent to 100 percent based upon the damage assessment rating assigned by the chief appraiser. Except in situations where the territory is declared a disaster on or after the date the taxing unit adopts a tax rate for the year in which the disaster declaration is issued, the governing body of the taxing unit is not required to take any action in order for the taxpayer to be eligible for the exemption. If a taxpayer qualifies for the exemption after the beginning of the tax year, the amount of the exemption is prorated based on the number of days left in the tax year following the day on which the governor declares the area to be a disaster area. For more information on the exemption, reference is made to Section 11.35 of the Tax Code. Section 11.35 of the Tax Code was enacted during the 2019 legislative session, and there is no historical judicial precedent for how the statute will be applied. Texas Attorney General Opinion KP-0299, issued on April 13, 2020, concluded a court would likely find the Texas Legislature intended to limit the temporary tax exemption to apply to property physically harmed as a result of a declared disaster. TOWN AND TAXPAYER REMEDIES ... Under certain circumstances, taxpayers and taxing units, including the Town, may appeal the determinations of the Appraisal District by timely initiating a protest with the Appraisal Review Board. Additionally, taxing units such as the Town may bring suit against the Appraisal District to compel compliance with the Property Tax Code. Beginning in the 2020 tax year, owners of certain property with a taxable value in excess of the current year "minimum eligibility amount", as determined by the State Comptroller, and situated in a county with a population of one million or more, may protest the determinations of an appraisal district directly to a three -member special panel of the appraisal review board, appointed by the chairman of the appraisal review board, consisting of highly qualified professionals in the field of property tax appraisal. The minimum eligibility amount is set at $50 million for the 2020 tax year, and is adjusted annually by the State Comptroller to reflect the inflation rate. The Property Tax Code sets forth notice and hearing procedures for certain tax rate increases by the Town and provides for taxpayer referenda that could result in the repeal of certain tax increases (see "TAX INFORMATION — Public Hearing and Maintenance and Operations Tax Rate Limitations"). The Property Tax Code also establishes a procedure for providing notice to property owners of reappraisals reflecting increased property value, appraisals which are higher than renditions, and appraisals of property not previously on an appraisal roll. 18 LEVY AND COLLECTION OF TAXES ... The Town is responsible for the collection of its taxes, unless it elects to transfer such functions to another governmental entity. Taxes are due October 1, or when billed, whichever comes later, and become delinquent after January 31 of the following year. A delinquent tax incurs a penalty of six percent (60/6) of the amount of the tax for the first calendar month it is delinquent, plus one percent (19/6) for each additional month or portion of a month the tax remains unpaid prior to July 1 of the year in which it becomes delinquent. If the tax is not paid by July 1 of the year in which it becomes delinquent, the tax incurs a total penalty of twelve percent (12%) regardless of the number of months the tax has been delinquent and incurs an additional penalty of up to twenty percent (20%) if imposed by the Town. The delinquent tax also accrues interest at a rate of one percent (1%) for each month or portion of a month it remains unpaid. The Property Tax Code also makes provision for the split payment of taxes, discounts for early payment and the postponement of the delinquency date of taxes for certain taxpayers. Furthermore, the Town may provide, on a local option basis, for the split payment, partial payment, and discounts for early payment of taxes under certain circumstances. PUBLIC HEARING AND MAINTENANCE AND OPERATIONS TAX RATE LIMITATIONS ... The following terms as used in this section have the meanings provided below: "adjusted" means lost values are not included in the calculation of the prior year's taxes and new values are not included in the current year's taxable values. "de minimis rate" means the maintenance and operations tax rate that will produce the prior year's total maintenance and operations tax levy (adjusted) from the current year's values (adjusted), plus the rate that produces an additional $500,000 in tax revenue when applied to the current year's taxable value, plus the debt service tax rate. "no -new -revenue tax rate" means the combined maintenance and operations tax rate and debt service tax rate that will produce the prior year's total tax levy (adjusted) from the current year's total taxable values (adjusted). "special taxing unit" means a city for which the maintenance and operations tax rate proposed for the current tax year is 2.5 cents or less per $100 of taxable value. "unused increment rate" means the cumulative difference between a city's voter -approval tax rate and its actual tax rate for each of the tax years 2020 through 2022, which may be applied to a city's tax rate in tax years 2021 through 2023 without impacting the voter -approval tax rate. "voter -approval tax rate" means the maintenance and operations tax rate that will produce the prior year's total maintenance and operations tax levy (adjusted) from the current year's values (adjusted) multiplied by 1.035, plus the debt service tax rate, plus the "unused increment rate." The Town's tax rate consists of two components: (1) a rate for funding of maintenance and operations expenditures in the current year (the "maintenance and operations tax rate"), and (2) a rate for funding debt service in the current year (the "debt service tax rate"). Under State law, the assessor for the Town must submit an appraisal roll showing the total appraised, assessed, and taxable values of all property in the Town to the Town Council by August 1 or as soon as practicable thereafter. A city must annually calculate its "voter -approval tax rate" and "no -new -revenue tax rate" (as such terns are defined above) in accordance with forms prescribed by the State Comptroller and provide notice of such rates to each owner of taxable property within the city and the county tax assessor -collector for each county in which all or part of the city is located. A city must adopt a tax rate before the later of September 30 or the 60th day after receipt of the certified appraisal roll, except that a tax rate that exceeds the voter -approval tax rate must be adopted not later than the 71 st day before the next occurring November uniform election date. If a city fails to timely adopt a tax rate, the tax rate is statutorily set as the lower of the no -new -revenue tax rate for the current tax year or the tax rate adopted by the city for the preceding tax year. As described below, the Property Tax Code provides that if a city adopts a tax rate that exceeds its voter -approval tax rate or, in certain cases, its "de minimis rate", an election must be held to determine whether or not to reduce the adopted tax rate to the voter - approval tax rate. A city may not adopt a tax rate that exceeds the lower of the voter -approval tax rate or the no -new -revenue tax rate until each appraisal district in which such city participates has delivered notice to each taxpayer of the estimated total amount of property taxes owed and the city has held a public hearing on the proposed tax increase. For cities with a population of 30,000 or more as of the most recent federal decennial census, if the adopted tax rate for any tax year exceeds the voter -approval tax rate, that city must conduct an election on the next occurring November uniform election date to determine whether or not to reduce the adopted tax rate to the voter -approval tax rate. For cities with a population less than 30,000 as of the most recent federal decennial census, if the adopted tax rate for any tax year exceeds the greater of (i) the voter -approval tax rate or (ii) the de minimis rate, the city must conduct an election on the next occurring November uniform election date to determine whether or not to reduce the adopted tax rate to the voter -approval tax rate. However, for any tax year during which a city has a population of less than 30,000 as of the most recent federal decennial census 19 and does not qualify as a special taxing unit, if a city's adopted tax rate is equal to or less than the de minimis rate but greater than both (a) the no -new -revenue tax rate, multiplied by 1.08, plus the debt service tax rate or (b) the city's voter -approval tax rate, then a valid petition signed by at least three percent of the registered voters in the city would require that an election be held to determine whether or not to reduce the adopted tax rate to the voter -approval tax rate. Any city located at least partly within an area declared a disaster area by the Governor of the State or the President of the United States during the current year may calculate its "voter -approval tax rate" using a 1.08 multiplier, instead of 1.035, until the earlier of (i) the second tax year in which such city's total taxable appraised value exceeds the taxable appraised value on January 1 of the year the disaster occurred, or (ii) the third tax year after the tax year in which the disaster occurred. State law provides cities and counties in the State the option of assessing a maximum one-half percent (1/21/6) sales and use tax on retail sales of taxable items for the purpose of reducing its ad valorem taxes, if approved by a majority of the voters in a local option election. If the additional sales and use tax for ad valorem tax reduction is approved and levied, the no -new -revenue tax rate and voter -approval tax rate must be reduced by the amount of the estimated sales tax revenues to be generated in the current tax year. The calculations of the no -new -revenue tax rate and voter -approval tax rate do not limit or impact the Town's ability to set a debt service tax rate in each year sufficient to pay debt service on all of the Town's tax -supported debt obligations, including the Obligations. Reference is made to the Property Tax Code for definitive requirements for the levy and collection of ad valorem taxes and the calculation of the various defined tax rates. DEBT TAx RATE LIMITATIONS ... All taxable property within the Town is subject to the assessment, levy and collection by the Town of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal of and interest on all ad valorem tax debt within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the Town, and limits its maximum ad valorem tax rate to $2.50 per $100 Taxable Assessed Valuation. Administratively, the Attorney General of the State of Texas will permit allocation of $1.50 of the $2.50 maximum tax rate for all General Obligation debt service, as calculated at the time of issuance. THE TOWN'S RIGHTS IN THE EVENT OF TAX DELINQUENCIES ... Taxes levied by the Town are a personal obligation of the owner of the property. On January 1 of each year, a tax lien attaches to property to secure the payment of all state and local taxes, penalties, and interest ultimately imposed for the year on the property. The lien exists in favor of each taxing unit, including the Town, having power to tax the property. The Town's tax lien is on a parity with tax liens of such other taxing units. A tax lien on real property takes priority over the claim of most creditors and other holders of liens on the property encumbered by the tax lien, whether or not the debt or lien existed before the attachment of the tax lien; however, whether a lien of the United States is on a parity with or takes priority over a tax lien of the Town is determined by applicable federal law. Personal property, under certain circumstances, is subject to seizure and sale for the payment of delinquent taxes, penalty, and interest. At any time after taxes on property become delinquent, the Town may file suit to foreclose the lien securing payment of the tax, to enforce personal liability for the tax, or both. In filing a suit to foreclose a tax lien on real property, the Town must join other taxing units that have claims for delinquent taxes against all or part of the same property. Collection of delinquent taxes may be adversely affected by the amount of taxes owed to other taxing units, adverse market conditions, taxpayer redemption rights, or bankruptcy proceedings which restrain the collection of a taxpayer's debt. Federal bankruptcy law provides that an automatic stay of actions by creditors and other entities, including governmental units, goes into effect with the filing of any petition in bankruptcy. The automatic stay prevents governmental units from foreclosing on property and prevents liens for post -petition taxes from attaching to property and obtaining secured creditor status unless, in either case, an order lifting the stay is obtained from the bankruptcy court. In many cases, post -petition taxes are paid as an administrative expense of the estate in bankruptcy or by order of the bankruptcy court. 20 TOWN APPLICATION OF TAX CODE ... The Town grants an exemption to the market value of the residence homestead of persons 65 years of age or older of $10,000; the disabled are also granted an exemption of $10,000. The Town has granted an additional exemption of 20% of the market value of residence homesteads; minimum exemption of $5,000. See Table 1 for a listing of the amounts of the exemptions described above. The Town has not adopted the tax freeze for citizens who are disabled or are 65 years of age or older, which became a local option and subject to local referendum on January 1, 2004. Ad valorem taxes are not levied by the Town against the exempt value of residence homesteads for the payment of debt. The Town does not tax nonbusiness personal property; and collects taxes for the Town. The Town does not permit split payments, and discounts are not allowed. The Town does not tax freeport property. The Town does tax goods -in -transit. The Town does collect the additional one-half cent sales tax for reduction of ad valorem taxes. The Town has adopted a tax abatement policy. (REMAINDER OF PAGE INTENTIONALL Y LEFT BLANK) 21 TABLE 1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION DEBT 202021 Market Valuation Established by Tarrant and Denton Central Appraisal Districts $2,168,594,657 Less Exemptions/Reductions at 100%Market Value: Residential Homestead, Over 65 and Disabled $146,635,530 Disabled Veterans 22,000 Homestead Cap Adjustment 32,986,963 Abatements 200,326,631 Productivity Loss 138,760,155 Prorated Exempt Property 2,990,070 Miscellaneous Personal Property 2,230,798 523,952,147 202021 Taxable Assessed Valuation $1,644,642,510 Town Funded Debt Payable from Ad Valorem Takes (as of 6/12021) General Obligation Debt $ 27,007,000 tul The Certificates 3,220,000 (2) The Bonds 4,430,000 1�1 Total Funded Debt Payable from Ad Valorem Taxes $ 34,657,000 Less Self -Supporting Debt: (3) 4B Economic Development Corporation Revenue Debt 29,242,000 (4) Net General Purpose Funded Debt Payable from Ad Valorem Taxes $ 5,415,000 Interest and Sinking Fund as of 6/12021 $ 251,872 Ratio Total Funded Debt to Taxable Assessed Valuation ........................................... 2.11% 2021 Estimated Population - 1,798 Per Capita Taxable Assessed Valuation - $914,707 Per Capita Total Funded Debt $19,275 (1) Excludes the Refunded Obligations. Preliminary, subject to change. (2) Preliminary, subject to change. (3) General obligation debt in the amounts shown for which repayment is currently provided from surplus net revenues of the System. It is the Town's current policy to provide these payments from such revenues; provided this policy is subject to change in the future. In the event payment is not made from revenues, the Town will be required to assess and collect an ad valorem tax sufficient to make such debt service payments. (4) Includes a portion of the Bonds. Preliminary, subject to change. 22 TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY Taxable Appraised Value for Fiscal Year Ended September 30, 2021 2020 2019 % of - % of % of Category Amount Total Amount Total Amount Total Real, Residential, Single -Family $1,146,269,215 52.86% $1,052,964,039 50.12% $ 870,735,334 54.90% Real, Residential, Multi -Family - 0.00% - 0.00% - 0.00% Real, Vacant Lots/Tracts 75,243,672 3.47% 54,104,620 2.58% 55,980,798 3.53% Real, Acreage (Land Only) 44,478,170 2.05% 246,905,774 11.75% 89,651,727 5.65% Real, Farm and Ranch Improvements 10,658,430 0.49% 15,230,695 0.73% 17,359,038 1.09% Real, Commercial 678,500,251 31.29% 575,767,096 27.41% 414,592,462 26.14% Real, Oil, Gas and Other Mineral Reserves - 0.00% - 0.00% - 0.00% Real and Tangible Personal, Utilities 75,997,029 3.50% 71,965,560 3.43% 62,223,046 3.92% Tangible Personal, Commercial 81,303,166 3.75% 26,366,790 1.260/a 45,940,242 2.90% Tangible Personal, Industrial 869,392 0.04% - 0.00% - 0.00% Tangible Personal, Other - 0.00% 2,685,937 0.13% - 0.00% Real Property, Inventory 55,275,332 2.55% 54,728,471 2.61% 29,446,890 1.86% Total Appraised Value Before Exemptions $2,168,594,657 100.00% $2,100,718,982 100.00% $1,585,929,537 100.00% Adjustments (292,413,372) 96,079,622 Less: Total Exemption (523,952,147) (620,528,015) (384,466,601) Taxable Assessed Value $1,644,642,510 $1,187,777,595 $1,297,542,558 Taxable Appraised Value for Fiscal Year Ended September 30, 2018 2017 % of % of Category Amount Total Amount Total Real, Residential, Singe -Family $ 793,990,395 51.43% $ 741,486,786 52.64% Real, Residential, Multi -Family - 0.00% - 0.00% Real, VacantLots/rracts 72,651,498 4.71% 50,679,165 3.60% Real, Acreage (Land Only) 146,174,352 9.47% 80,224,575 5.70% Real, Farm and Ranch Improvements 12,813,926 0.83% 19,106,996 1.36% Real, Commercial 416,308,604 26.97% 422,349,740 29.98% Real, Oil, Gas and Other Mineral Reserves - 0.00% - 0.00% Real and Intangible Personal, Utilities 2,981,235 0.19% 39,885,212 2.83% Tangible Personal, Commercial 79,490,280 5.15% 51,477,909 3.65% Tangible Personal, Industrial - 0.00% - 0.00% Tangible Personal, Other - 0.00% 0.00% Real Property, Inventory 19,449,976 1.26% 3,374,770 0.24% Total Appraised Value BeforeExemptions $1,543,860,266 100.00% $1,408,585,153 100.00% Adjustments 103,404,642 124,352,810 Less: Total Exemption (438,184,605) (369,534,674) Taxable Assessed Value $1,209,080,303 $1,163,403,289 NOTE: Valuations shown are certified taxable assessed values reported by the Appraisal Districts. Certified values are subject to change throughout the year as contested values are resolved and the Appraisal Districts updates records. 23 TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT HISTORY Fiscal Taxable Year Taxable Assessed Ended Estimated Assessed Valuation 9-30 Population Valuation Per Capita 2017 1,486 $1,163,403,289 $ 782,909 2018 1,558 1,209,080,303 776,046 2019 1,610 1,297,542,558 805,927 2020 1,664 1,187,777,595 713,809 2021 1,798 1,644,642,510 914,707 Gross Ratio Net Ratio Ad Valorem of Gross Ad Valorem of Net Tax Debt Tax Debt Gross Tax TaXDebt Tax Debt Net Tax Outstanding to Taxable Debt Outstanding to Taxable Debt at End Assessed Per at End Assessed Per of Year Valuation Capita ofYear "I Valuation Capita $36,207,000 3.11% $24,365 $3,177,000 0.27% $2,138 36,766,000 3.04% 23,598 2,973,000 0.25% 1,908 35,171,000 2.71% 21,845 2,755,000 0.21% 1,711 33,449,000 2.82% 20,102 2,528,000 0.21% 1,519 34,657,0001'1 2.11% 19,275 5,415,000 (3) 0.33% 3,012 (1) Includes the Obligations and excludes the Refunded Obligations. Preliminary, subject to change. (2) The above statemen of indebtedness does not include general obligation debt for which repayment is provided from revenues of the Economic Development Corporation Fund ("self-supporting debt"). See "Table 1 — Valuation, Exemptions and General Obligation Debt" and "Table I I — Computation of Self -Supporting Debt" herein. (3) Includes the Certificates, a portion of the Bonds and excludes Refunded Obligations and self-supporting debt. Preliminary, subject to change. TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY Fiscal Year Distribution Ended Tax General Interest and % Current % Total 9/30 Rate Fund Sinking Fund Tax Levy Collections Collections 2017 $ 0.13695 $ 0.12882 $ 0.00813 $ 1,562,054 98.39% 100.00% 2018 0.13615 0.11133 0.02482 1,630,300 99.65% 99.16% 2019 0.15600 0.13201 0.02399 1,966,661 99.33% 98.88% 2020 0.16018 0.11453 0.04565 2,365,878 101.12% 101.31% 2021 0.16788 0.12490 0.04298 2,709,157 98.24% 111 98.24% 111 (1) Collections for part year only, through June 1, 2021. Tax bills are mailed in October of each year and become delinquent on February 1 of the following year. TABLE 5 -TEN LARGEST TAXPAYERS 2020/21 % of Total Taxable Taxable Assessed Assessed Name of Taxpayer Nature of Property Valuation Valuation DCLI LLC Conference Center $ 124,815,191 7.59% SOL Westlake LP Commercial Real Estate 105,385,372 6.41% FMR Texas LTD Partnership Commercial Real Estate 74,789,941 4.55% Cellco Partnership Telecommunications 69,502,321 4.23% Solana Land LP Real Estate Developer 44,275,231 2.69% HM C Solana LLC Commercial Real Estate 36,573,910 2.22% Bre Solana LLC Commercial Real Estate 26,000,000 1.58% Lexington TNI Westlake LP Commercial Real Estate 16,155,960 0.98% Fidelity Investments Inc Investments 12,698,496 0.77% Quail Hollow Development II LLC Real Estate Developer 10,499,457 0.64% $ 520,695,879 31.66% GENERAL OBLIGATION DEBT LIMITATION ... No general obligation debt limitation is imposed on the Town under current State law (however, see "THE OBLIGATIONS - Tax Rate Limitation"). 24 TABLE 6 - TAX ADEQUACY 2021 Gross Principal and Interest Requirements $ 2,889,060 (t) $0.1775 Tax Rate at 99.00% Collection Produces $ 2,890,048 ttl 2021 Net Principal and Interest Requirements $ 303,011 (�) $0.0187 Tax Rate at 99.00% Collection Produces $ 304,473 (Zl Average Annual Gross Principal and Interest Requirements, 2021-2046 $ 1,912,478 ttl $0.1175 Tax Rate at 99.00% Collection Produces $ 1,913,130 t11 Average Annual Net Principal and Interest Requirements, 2021-2041 $ 329,016 (2) $0.0203 Tax Rate at 99.00% Collection Produces $ 330,524 (Z) Maximum Gross Principal and Interest Requirements, 2024 $ 3,064,421 ttl $0.1883 Tax Rate at 99.00% Collection Produces $ 3,065,893 Itl Maximum Net Principal and Interest Requirements, 2026 $ 506,637 (ZI $0.0312 Tax Rate at 99.00% Collection Produces $ 507,997 (2) (1) Includes the Obligations and excludes the Refunded Obligations. Preliminary, subject to change. (2) Includes the portion of the Bonds not treated as self-supporting. Excludes Refunded Obligations and self-supporting debt. Preliminary, subject to change. See "Table 11 — Computation of Self -Supporting Debt." TABLE 7 - ESTIMATED OVERLAPPING DEBT Expenditures of the various taxing entities within the territory of the Town are paid out of ad valorem taxes levied by such entities on properties within the Town. Such entities are independent of the Town and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax debt ("Tax Debt") was developed from information contained in "Texas Municipal Reports" published by the Municipal Advisory Council of Texas. Except for the amounts relating to the Town, the Town has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional Tax Debt since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional Tax Debt, the amount of which cannot be determined. The following table reflects the estimated share of overlapping Tax Debt of the Town. TaxineJurisdiction Town of Westlake Carroll Independent School District Denton County Keller Independent School District Northwest Independent School District Tarrant County Tarrant County College District Tarrant County Hospital District Trophy Club MUD # 1 Total Direct and Overlapping Funded Debt 2020/21 City's Authorized Taxable 2020/21 Total Estimated Overlapping But Unissued Assessed Tax Funded % Funded Debt Debt As Of Value Rate Debt Applicable As of 6-1-21 9-1-21 $ 1,644,642,510 $ 0.160180 $ 5,415,000 "' 100.00% $ 5,415,000- 9,931,742,170 1.286000 330,630,000 6.93% 22,912,659 115,693,123,870 0.225000 607,670,000 0.01% 60,767 9,690,625 20,328,739,911 1.395000 894,579,060 4.36% 39,003,647 - 22,291,509,381 1.466000 1,040,921,739 1.90% 19,777,513 745,721,000 219,908,316,431 0.234000 240,445,000 0.77% 1,851,427 30,600,000 221,750,828,044 0.130000 264,175,000 0.77% 2,034,148 525,000,000 220,311,777,399 0.224000 14,495,000 0.77% 111,612 - 1,914,799,192 0.108000 7,205,000 30.46% 2,194,643 - $ 93,361,415 Ratio of Direct and Overlapping Funded Debt to Taxable Assessed Valuation ............................... 5.68% Per Capita Overlapping Funded Debt............................................................... $ 51,925.15 (1) Includes a portion of the Bonds and the Certificates; excludes the Refunded Obligations and self-supporting debt. 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C 01 a0 w w r r b W) Vl V m m M N N O O o O O O o O O O O O o O O o O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 00 0 0 0 0 •� o 0 0 0 C 0 0 0 0 0 0 0 C 0 0 0 0 0 0 0 0 0 0 0 0 C 0 vi ao N N vi O V- O O vi 0 0 V1 In Vi O �/i V1 to V1 O kn O O O O N V b 7 r Gl V o m oo R C1 r CT 7 r O m r O V r b oo O r o m N 7 Vl 10 r= 01 CD m 'IT 10 r o0 O\ O N m Vl b v V \ N N N N N N N N N m M M m m m m m m m 7 V' C• V R V O O 0 O O O O O CD O O CD O CD O CD CDO CD CDO O O O O CD 0` N N N N N N N N N N N N N N N N N N N N N N N N N N •--� N M '�t b N TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION Budgeted General Purpose Net Debt Service Requirements, Fiscal Year Ending 9/30/21..................... $ 2,691,274 Interest and Sinking Fund Balance, as of 9/30/2020...................................... $ 150,518 Budgeted Interest and Sinking Fund Tax Levy Collection ................................. 632,381 Budgeted Transfers............................................................... 2,022,191 2,805,090 Ending Fund Balance, 9/30/2021 ................................................................ $ 113,816 TABLE 10 - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS As of September 30, 2020, the Town has no authorized but unissued debt outstanding. TABLE I - COMPUTATION OF SELIF-SUPPORTING DEBT Revenue Available for Debt Service from Economic Development Corportion Fund, Fiscal Year Ended 9-30-20 .......... $1,844,725 Less: Economic Development Corportion General Obligation Debt Requirements, 2021 Fiscal Year .................... 2,586,049 Balance............................................................................................. $ (741,324)c�I Percentage of Economic Development Corportion General Obligation Bonds, Self -Supporting ........................ 71.33% ICI (1) It is the Town's current policy to pay the self-supporting debt listed in the Table above from the respective revenues sources listed above. Such policy, however, is subject to change in the future. In the event the Town changes its policy, or such revenues are not sufficient to pay debt service on such self-supporting debt, the Town will be required to assess an ad valorem tax to pay such debt service. ANTICIPATED ISSUANCE OP ADDITIONAL GENERAL OBLIGATION DEBT ... The Town does not anticipate issuing additional general obligation debt within the next 6 months. TABLE 12 —OTHER OBLIGATIONS As of September 30, 2020, the Town had certain other proprietary, contractual, special revenue and lease obligations payable from and secured by sources other than ad valorem taxes as described more fully in Note 5 to the audited financial statements (see APPENDIX B, "EXCERPTS FROM THE Town's ANNUAL FINANCIAL REPORT" herein). PENSION FUND ... The Town provides for two pension plans; one provides for defined retirement pension benefits to the Town's employees, Texas Municipal Retirement System - TMRS, and the other provides defined retirement pension benefits to teachers at Westlake Academy, Teacher Retirement System of Texas (TRS). Both plans are described in detail below. Aggregate amounts for the two pension plans are as follows: TMRS TRS Total Pension Liability $ 1,440,488 $1,502,914 $ 2,943,402 Deferred outflows of Resources 689,373 955,246 1,644,619 Deferred inflows of Resources 290,909 268,967 559,876 Pension Expense 639,541 1,192,380 1,831,921 The Town participates as one of 888 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System ("TMRS"). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple -employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six -member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS's defined benefit pension plan is a tax -qualified plan under section 401 (a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the Town are required to participate in TMRS. 27 Benefits Provided ... TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the city, within the options available in the state statutes governing TMRS. At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the city -financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payment options. Members may also choose to receive a portion of their benefit in one of seven payment options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits and interest. Changes in Net Pension Liability: Balance at 12/31/2018 Service cost Interest Difference between expected and actual experience Change in Assumptions Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expense Other changes Net changes Balance at 12/31/2019 Increase (Decrease) Total Plan Net Pension Fiduciary Pension Liability Net Position Liability (a) (b) (a) - (b) $8,183,993 $6,442,632 $ 1,741,361 651,255 651,255 570,598 570,598 131,635 131,635 89,534 - 89,534 - 470,903 (470,903) 279,349 (279,349) - 999,440 (999,440) (112,642) (112,642) - - (5,628) 5,628 - (169) 169 1,330,380 1,631,253 (300,873) $9,514,373 $8,073,885 $ 1,440,488 For more detailed information concerning the retirement plan, see APPENDIX B, "EXCERPTS FROM THE TOWN'S ANNUAL FINANCIAL REPORT" herein. OTHER POST -EMPLOYMENT BENEFITS ... The Town provides for two other post -employment benefit (OPEB) plans; one provides for postemployment health insurance benefits for teachers at Westlake Academy through a multiple employer defined benefit medical plan Texas Public School Retired Employees Group Insurance Program (TRS-Care), and the other is the Texas' Municipal Retirement System Supplemental Death Benefits Fund (TMRS-SDBF), a single employer defined benefit OPEB plan for the Town employees. For more detailed information concerning the death benefits plan, see APPENDIX B, "EXCERPTS FROM THE TOwN'S ANNUAL FINANCIAL REPORT". 28 FINANCIAL INFORMATION TABLE 13 - CHANGES IN NET ASSETS Revenues: Fiscal Year Ended September 30, Prop -ram Revenues 2020 2019 2018 2017 2016 Charges for Services $ 2,645,897 $ 6,808,893 $ 3,195,972 $ 4,471,161 $ 3,794,327 Operating Grants and Contributions 9,725,263 9,166,821 7,044,597 8,047,113 7,863,168 Capital Grants and Contributions 280,000 1,861,623 424,948 3,485,255 269,185 General Revenues Sales taxes 7,378,900 8,032,671 6,003,605 4,650,744 4,609,523 Property taxes 2,411,279 1,956,630 1,629,640 1,576,750 1,476,355 Hotel occupancy taxes 369,145 861,710 849,167 751,601 822,490 Mixed beverage taxes 41,949 66,923 62,347 68,432 61,476 Franchises taxes 972,520 964,239 779,506 818,423 930,043 Unrestricted grants - - - - - Interest on investments 260,003 517,128 356,076 182,095 55,600 Miscellaneous 72,688 142,230 215,076 278,071 241,501 Total Revenues $ 24,157,644 $ 30,378,868 $ 20,560,934 $ 24,329,645 $ 20,123,668 Expenses General government $ 6,555,048 $ 6,091,403 $ 4,776,161 $ 5,716,302 $ 4,491,557 Public safety 3,991,114 3,489,071 3,133,733 3,063,003 2,737,084 Culture and recreation 282,512 299,815 184,685 217,489 187,274 Economic development 1,326,090 1,368,049 469,852 163,578 141,779 Public works 150,037 306,982 1,820,908 1,634,549 1,102,636 Visitor services 802,244 927,670 885,654 737,071 740,835 Education 9,979,674 9,523,906 6,568,453 8,566,295 9,516,287 Interest on long -tern debt 1,103,925 1,131,485 1,184,818 1,401,199 990,413 Total Expenses $ 24,190,644 $ 23,138,381 $ 19,024,264 $ 21,499,486 $ 19,907,865 Increase in Net Position before Transfers $ (33,000) $ 7,240,487 $ 1,536,670 $ 2,830,159 $ 215,803 Transfers 77,158 207,213 71,466 169,316 264,578 Change in Net Position $ 44,158 $ 7,447,700 $ 1,608,136 $ 2,999,475 $ 480,381 Net position, beginning 62,592,643 55,144,943 tut 58,048,432 55,048,957 54,568,576 Prior Period Adjustment - - (4,511,655) - - Net position, ending $ 62,636,801 $ 62,592,643 $ 55,144,913 $ 58,048,432 $ 55,048,957 k.) .........,... (Remainder of page intentionally left blank) 29 TABLE 14 - MUNICIPAL SALES TAX HISTORY The Issuer has adopted the Municipal Sales and Use Tax Act, Texas Tax Code, Chapter 321, as amended, which grants the Issuer the power to impose and levy a 1% Local Sales and Use Tax within the boundaries of the Issuer; the proceeds are credited to the General Fund and are not pledged to the payment of the Obligations. Collection and enforcement are effected through the Office of the Comptroller of Public Accounts of the State of Texas, which remits the proceeds of the tax, after deduction of a 2% service fee, to the Issuer monthly. Revenue from the 1% Local Sales and Use Tax, for the years shown, has been: Fiscal Year % of Equivalent of Ended Total Ad Valorem Ad Valorem Per 9/30 Collected Tax Levy Tax Rate Capita 2017 $ 4,650,744 297.73% $0.3998 $ 3,130 2018 6,003,605 368.25% 0.4965 3,853 2019 8,032,671 408.44% 0.6191 4,989 2020 7,378,900 311.89% 0.6212 41434 2021 3,132,358 � 115.62% 0.1905 1,742 (1) Collections through June 1, 2021. In addition, the Town collects an additional sales and use tax of one-half of one percent (1/2 of 1%) for economic development purposes as authorized by Chapter 505, Texas Local Government Code and an additional sales and use tax of one-half of one percent (1/2 of 1 %) for purposes of property tax reduction. The sales tax breakdown for the Town is as follows: Breakdown of Sales Tax Collected Taxing Unit Tax Rate The Town's (approximate allocation): General Fund $ 0.0100 413 Economic Dev. Fund 0.0050 Property TaxReduction 0.0050 State of Texas 0.0625 Total $ 0.0825 FINANCIAL POLICIES Basis ofAccounling ... The Town's accounting records of the governmental fund revenues and expenditures are recognized on the modified accrual basis. Revenues are recognized in the accounting period in which they are available and measurable. Expenditures are recognized in the accounting period in which the fund liability occurred, if measurable, except for unmatured interest on general long-term debt. Proprietary Fund revenues and expenses are recognized on the full accrual basis. Revenues are recognized in the accounting period in which they are earned and become measurable. Expenses are recognized in the accounting period in which they are incurred. Fund Balances ... It is the Town's policy regarding the General Fund and Enterprise Funds that working capital resources should be maintained at a minimum of 10% of the Fund's operating expenditure budget. The Town maintains its various debt service finds in accordance with the covenants of the bond ordinances. Budgetary Procedures ... The Town establishes the fiscal year as the twelve-month period beginning each October 1. Each year between May and July, the Town Manager analyzes, and then after review, submits a budget of estimated revenues and expenditures to the Town Council. Subsequently, the Town Council will hold work sessions to discuss and amend the budget to coincide with their direction of the Town. Various public hearings may be held to comply with applicable law. The Town Council will adopt a budget prior to September 30. If the Council fails to adopt a budget then the budget presented to the Council by the Town Manager becomes the adopted budget. During the fiscal year, budgetary control is maintained by the monthly review of departmental appropriation balances. Actual operations are compared to the amounts set forth in the budget. Departmental appropriations that have not been expended lapse at the end of the fiscal year. Therefore, funds that were budgeted and not used by the departments during the fiscal year are not available for their use unless appropriated in the ensuing fiscal year's budget. 31 INVESTMENTS The Town invests its investable funds in investments authorized by Texas law, including particularly V.T.C.A., Texas Government Code, Chapter 2256, as amended (the "PFIA"), in accordance with investment policies approved by the Town Council. Both State law and the Town's investment policies are subject to change. LEGAL INVESTMENTS ... Under State law, the Town is authorized to invest in (I) obligations, including letters of credit, of the United States or its agencies and instrumentalities, including the Federal Home Loan Banks; (2) direct obligations of the State or its agencies and instrumentalities; (3) collateralized moItgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States; (4) other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States; (5) obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than "A" or its equivalent; (6) bonds issued, assumed or guaranteed by the State of Israel; (7) interest -bearing banking deposits that are guaranteed or insured by the Federal Deposit Insurance Corporation or its successor, or the National Credit Union Share Insurance Fund or its successor; (8) interest -bearing banking deposits other than those described by clause (7) if (A) the funds invested in the banking deposits are invested through: (i) a broker with a main office or branch office in this State that the Town selects from a list the Town Council or a designated investment committee of the Town adopts as required by Section 2256.025, Texas Government Code; or (ii) a depository institution with a main office or branch office in the State that the Town selects; (B) the broker or depository institution selected as described by (A) above arranges for the deposit of the funds in the banking deposits in one or more federally insured depository institutions, regardless of where located, for the Town's account; (C) the full amount of the principal and accrued interest of the banking deposits is insured by the United States or an instrumentality of the United States; and (D) the Town appoints as the Town's custodian of the banking deposits issued for the Town's account: (i) the depository institution selected as described by (A) above; (ii) an entity described by Section 2257.041(d), Texas Government Code; or (iii) a clearing broker dealer registered with the SEC and operating under SEC Rule 15c3-3; (9) (i) certificates of deposit or share certificates meeting the requirements of Chapter 2256, Texas Government Code (the "Public Funds Investment Act"), that are issued by an institution that has its main office or a branch office in the State and are guaranteed or insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or their respective successors, and are secured as to principal by obligations described in clauses (1) through (8) or in any other manner- and provided for by law for Town deposits, or (ii) certificates of deposits where (a) the funds are invested by the Town through (A) a broker that has its main office or a branch office in the State and is selected from a list adopted by the Town as required by law, or (B) a depository institution that has its main office or branch office in the State that is selected by the Town, (b) the broker or the depository institution selected by the Town arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the Town, (c) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States, and (d) the Town appoints the depository institution selected under (a) above, a custodian as described by Section 2257. 041 ( d), Texas Government Code, or a clearing broker -dealer registered with the SEC and operating pursuant to SEC Rule 156-3 (17 C.F.R. Section 240.15c3-3) as custodian for the Town with respect to the certificates of deposit; (10) fully collateralized repurchase agreements as defined in the Public Funds Investment Act, that have a defined termination date, are secured by a combination of cash and obligations described in clauses (1) or (13) in this paragraph, require the securities being purchased by the Town or cash held by the Town to be pledged to the Town, held in the Town's name, and deposited at the time the investment is made with the Town or with a third party selected and approved by the Town, and are placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in the State; (I1) securities lending programs if (i) the securities loaned under the program are 100% collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (8) above, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm at not Jess than "A" or its equivalent or (c) cash invested in obligations described in clauses (I) through (8) above, clauses (13) through (15) below, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the Town, held in the Town's name and deposited at the time the investment is made with the Town or a third party designated by the Town; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State; and (iv) the agreement to lend securities has a term of one year or less; (12) certain bankers' acceptances with stated maturity of 270 days or less, if the short-term obligations of the accepting bank or its parent are rated not less than "A-1" or "P-1" or the equivalent by at least one nationally recognized credit rating agency; (13) commercial paper with a stated maturity of 365 days or less that is rated nqt less than "A-1" or "P-V or the equivalent by either (a) two nationally recognized credit rating agencies or (b) one nationally recognized credit rating agency if the paper is fully secured by an irrevocable letter of credit issued by a United States or state bank; (14) no-load money market mutual funds registered with and regulated by the SEC that provide the Town with .a prospectus and other information required by the Securities Exchange Act of 1934 or the Investment Company Act of 1940 and that comply with federal SEC Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated under the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.); and (15) no-load mutual finds registered with the SEC that have an average weighted maturity of less than two years, and have either (a) a duration of one year or more and invest exclusively in obligations described in under this heading, or (b) a duration of less than one year and the investment portfolio is limited to investment grade securities, excluding asset -backed securities. In addition, bond proceeds may be invested in guaranteed investment contracts that have a defined termination date and are secured by obligations, including letters of credit, of the United States or its agencies and instrumentalities, other than the prohibited obligations described below, in an amount at least equal to the amount of bond proceeds invested under such contract. 32 A political subdivision such as the Town may enter into securities lending programs if (i) the securities loaned under the program are 100% collateralized, a loan made under the program allows for termination at any time and a loan made under the program is either secured by (a) obligations that are described in clauses (1) through (8) above, other than the prohibited obligations described below, (b) irrevocable letters of credit issued by a state or national bank that is continuously rated by a nationally recognized investment rating firm at not less than A or its equivalent or (c) cash invested in obligations described in clauses (1) through (8) above, clauses (13) through (15) above, or an authorized investment pool; (ii) securities held as collateral under a loan are pledged to the Town, held in the Town's name and deposited at the time the investment is made with the Town or a third party designated by the Town; (iii) a loan made under the program is placed through either a primary government securities dealer or a financial institution doing business in the State; and (iv) the agreement to lend securities has a term of one year or less. For these purposes, (A) any event described in the immediately preceding clause (12) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Town 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 Town, 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 of business of the Town, and (B) the Town intends the words used in clauses (15) and (16) in the immediately preceding paragraph and in the definition of Financial Obligation to have the meanings ascribed to them in SEC Release No. 34-83885 dated August 20, 2018. The Ordinances define "Financial Obligation" as (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that "financial obligation" shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. The Town may invest in such obligations directly or through government investment pools that invest solely in such obligations provided that the pools are rated no lower than "AAA" or "AAA-m" or an equivalent by at least one nationally recognized rating service. The Town may also contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of its public funds or other funds under its control for a term up to two years, but the Town retains ultimate responsibility as fiduciary of its assets. In order to renew or extend such a contract, the Town must do so by order, ordinance, or resolution. The Town is specifically prohibited from investing in: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of underlying mortgage -backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage -backed security and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Under State law, the Town is required to invest its funds under written investment policies that primarily emphasize safety of principal and liquidity; that address investment diversification, yield, maturity, and the quality and capability of investment management; and that includes a list of authorized investments for Town funds, maximum allowable stated maturity of any individual investment, the maximum average dollar -weighted maturity allowed for pooled fund groups, methods to monitor the market price of investments acquired with public funds, a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis, and procedures to monitor rating changes in investments acquired with public funds and the liquidation of such investments consistent with the Public Funds Investment Act. All Town funds must be invested consistent with a formally adopted "Investment Strategy Statement" that specifically addresses each funds' investment. Each Investment Strategy Statement will describe its objectives concerning: (1) suitability of investment type, (2) preservation and safety of principal, (3) liquidity, (4) market ability of each investment, (5) diversification of the portfolio, and (6) yield. The Town is required to designate one or more officers or employees as investment officers to be responsible for the investment of its funds. In the administration of the duties of an investment officer, the person so designated shall exercise the judgment and care, under prevailing circumstances that a prudent person would exercise in the management of the person's own affairs. Unless authorized by law, a person may not deposit, withdraw, or manage in any other manner the funds of the Town. Under State law, Town investments must be made "with judgment and care, under prevailing circumstances, that a person of prudence, discretion and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived." At least quarterly the investment officers of the Town shall submit an investment report for the period. The report must: (1) describe the investment position of the Town, (2) be prepared jointly and signed by each investment officer, (3) contain a summary of each pooled fund group that states: the beginning market value, the ending market value and the fully accrued interest for the reporting period of each pooled fund group, (4) state the book value and market value of each separately listed asset at the end of the reporting period, (5) state the maturity date of each separately invested asset, (6) state the account or pooled fund group for which each individual investment was acquired, and (7) state the compliance of the investment portfolio as it relates to: (a) adopted investment strategy statements and (b) State law. If the Town invests in other than money market mutual funds, investment pools or accounts offered by its depository bank in the form of Obligations of deposit, or money market accounts or similar accounts, the reports prepared by the investment officers shall be reviewed at least annually by an independent auditor, and the result of the review shall be reported to the Town Council. No person may invest Town funds without express written authority from the Town Council. 33 Under State law, the Town is additionally required to: (1) annually review its adopted policies and strategies; (2) adopt a rule, order, ordinance or resolution stating that it has reviewed its investment policy and investment strategies and records any changes made to either its investment policy or investment strategy in the respective rule, order, ordinance or resolution; (3) require any investment officers with personal business relationships or relatives with firms seeking to sell securities to the Town to disclose the relationship and file a statement with the Texas Ethics Commission and the Town; (4) require the qualified representative of firms offering to engage in an investment transaction with the Town to: (a) receive and review the Town's investment policy, (b) acknowledge that reasonable controls and procedures have been implemented to preclude investment transactions conducted between the Town and the business organization that are not authorized by the Town's investment policy (except to the extent that this authorization is dependent on an analysis of the makeup of the Town's entire portfolio or requires an interpretation of subjective investment standards), and (c) deliver a written statement in a form acceptable to the Town and the business organization attesting to these requirements; (5) perform an annual audit of the management controls on investments and adherence to the Town's investment policy; (6) provide specific investment training for the treasurer, chief financial officer and investment officers; (7) restrict reverse repurchase agreements to not more than 90 days and restrict the investment of reverse repurchase agreement funds to no greater than the term of the reverse purchase agreement; (8) restrict the investment in no-load mutual funds in the aggregate to no more than 15% of the Town's monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service; (9) require local government investment pools to conform to the new disclosure, rating, net asset value, yield calculation, and advisory board requirements; and (10) at least annually review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the Town. The Town's current investment policy is in compliance with the State law requirements described above. TABLE I5- CURRENT INVESTMENTS As of June 1, 2021, the Town's investable general funds were invested in the following categories: Description Percent Bank Accounts (Cash and Cash Equivalent) 100.00% TexPool 0.00% Total 100.00% Westlake Issuer Academy (1) Total $ 30,358,640 $ 1,421,814 $ 31,780,454 105 105 210 $ 30,358,745 $ 1,421,919 $ 31,780,664 (1) Represents investments of the Westlake Academy, a component unit of the Issuer the balances and transactions of which are blended with the balances and transactions of the Issuer. Investments of other component units of the Issuer may also be blended with the Issuer or alternatively may be excluded and "discretely presented." 34 TAX MATTERS The following discussion of certain federal income tax considerations is for general information only and is not tax advice. Each prospective purchaser of the Obligations should consult its own tax advisor as to the tax consequences of the acquisition, ownership and disposition of the Obligations. TAX EXEMPTION ... In the opinion of Bracewell LLP, Dallas, Texas, Bond Counsel, under existing law, interest on the Obligations is excludable from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and is not a specific preference item for purposes of the alternative minimum tax. The Code imposes a number of requirements that must be satisfied for interest on state or local obligations, such as the Obligations, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of bond proceeds and the source of repayment of bonds, limitations on the investment of bond proceeds prior to expenditure, a requirement that excess arbitrage earned on the investment of bond proceeds be paid periodically to the United States and a requirement that the issuer file an information report with the Internal Revenue Service (the "Service"). The Town has covenanted in the Resolution that it will comply with these requirements. Bond Counsel's opinion will assume continuing compliance with the covenants of the Resolution pertaining to those sections of the Code that affect the excludability of interest on the Obligations from gross income for federal income tax purposes and, in addition, will rely on representations by the Town, the Town's Financial Advisor and the Initial Purchasers of the Obligations with respect to matters solely within the knowledge of the Town, the Town's Financial Advisor and the Initial Purchasers of the Obligations, respectively, which Bond Counsel have not independently verified. If the Town fails to comply with the covenants in the Resolution or if the foregoing representations are determined to be inaccurate or incomplete, interest on the Obligations could become includable in gross income from the date of delivery of the Obligations, regardless of the date on which the event causing such inclusion occurs. Except as stated above, Bond Counsel will express no opinion as to the amount of interest on the Obligations or any federal, state or local tax consequences resulting from the receipt or accrual of interest on, or acquisition, ownership or disposition of, the Obligations. Certain actions may be taken or omitted subject to the terms and conditions set forth in the Ordinances upon the advice or with the approving opinions of Bond Counsel will express no opinion with respect to Bond Counsel's ability to render an opinion that such actions, if taken or omitted, will not adversely affect the excludability of interest on the Obligations from gross income for federal tax purposes. Bond Counsel's opinions are based on existing law, which is subject to change. Such opinions are further based on Bond Counsel's knowledge of facts as of the date thereof. Bond Counsel assume no duty to update or supplement their opinions to reflect any facts or circumstances that may thereafter come to Bond Counsel's attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, Bond Counsel's opinions are not a guarantee of result and are not binding on the Service; rather, such opinions represent Bond Counsel's legal judgments based upon their review of existing law and in reliance upon the representations and covenants referenced above that they deem relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given as to whether or not the Service will commence an audit of the Obligations. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the Town as the taxpayer and the Owners may not have a right to participate in such audit. Public awareness of any future audit of the Obligations could adversely affect the value and liquidity of the Obligations, regardless of the ultimate outcome of the audit. QUALIFIED TAX-EXEMPT OBLIGATIONS FOR FINANCIAL INSTITUTIONS ... Section 265(a) of the Code provides, in general, that a deduction for interest on indebtedness incurred to acquire or carry tax-exempt obligations is disallowed. Section 265(b) of the Code provides a specific complete disallowance of any deduction by a financial institution of its pro rata interest expense to reflect such financial institution's investment in tax-exempt obligations acquired after August 7, 1986. Section 265(b) of the Code also provides an exception for financial institutions for tax-exempt obligations that are properly designated or deemed designated by an issuer as "qualified tax-exempt obligations." The Obligations have been designated as "qualified tax-exempt obligations" based, in part, on the Town's representation that the amount of the Obligations, when added to the amount of all other tax-exempt obligations (not including private activity bonds other than "qualified 501(c)(3) bonds" or any obligations issued to currently refund any obligation to the extent the amount of the refunding obligation did not exceed the outstanding amount of the refunded obligation) issued or reasonably anticipated to be issued by or on behalf of the Town during 2021, is not expected to exceed $10,000,000. Further, the Town and entities aggregated with the Town under the Code have not designated more than $10,000,000 in "qualified tax-exempt obligations" (including the Obligations) during 2021. Notwithstanding the designation of the Obligations as "qualified tax-exempt obligations" under this exception, financial institutions acquiring the Obligations will be subject to a 20% disallowance of allocable interest expense. 35 ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS Collateral Tax Consequences ... Prospective purchasers of the Obligations should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to financial institutions, life insurance and property and casualty insurance companies, certain S corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, low and middle income taxpayers otherwise qualifying for the health insurance premium assistance credit and individuals otherwise qualifying for the earned income tax credit. In addition, certain foreign corporations doing business in the United States may be subject to the "branch profits tax" on their effectively connected earnings and profits, including tax- exempt interest such as interest on the Obligations. These categories of prospective purchasers should consult their own tax advisors as to the applicability of these consequences. Prospective purchasers of the Obligations should also be aware that, under the Code, taxpayers are required to report on their returns the amount of tax-exempt interest, such as interest on the Obligations, received or accrued during the year. Tax Accounting Treatment of Original Issue Premium ... The issue price of all or a portion of the Obligations may exceed the stated redemption price payable at maturity of such Obligations. Such Obligations (the "Premium Obligations") are considered for federal income tax purposes to have "bond premium" equal to the amount of such excess. The basis of a Premium Obligation in the hands of an initial owner is reduced by the amount of such excess that is amortized during the period such initial owner holds such Premium Obligation in determining gain or loss for federal income tax purposes. This reduction in basis will increase the amount of any gain or decrease the amount of any loss recognized for federal income tax purposes on the sale or other taxable disposition of a Premium Obligation by the initial owner. No corresponding deduction is allowed for federal income tax purposes for the reduction in basis resulting from amortizable bond premium. The amount of bond premium on a Premium Obligation that is amortizable each year (or shorter period in the event of a sale or disposition of a Premium Obligation) is determined using the yield to maturity on the Premium Obligation based on the initial offering price of such Premium Obligation. The federal income tax consequences of the purchase, ownership and redemption, sale or other disposition of Premium Obligations that are not purchased in the initial offering at the initial offering price may be determined according to rules that differ from those described above. All owners of Premium Obligations should consult their own tax advisors with respect to the determination for federal, state, and local income tax purposes of amortized bond premium upon the redemption, sale or other disposition of a Premium Obligation and with respect to the federal, state, local, and foreign tax consequences of the purchase, ownership, and sale, redemption or other disposition of such Premium Obligations. Tax Accounting Treatment of Original Issue Discount. . . The issue price of all or a portion of the Obligations may be less than the stated redemption price payable at maturity of such Obligations (the "Original Issue Discount Obligations"). In such case, the difference between (i) the amount payable at the maturity of each Original Issue Discount Obligation, and (ii) the initial offering price to the public of such Original Issue Discount Obligation constitutes original issue discount with respect to such Original Issue Discount Obligation in the hands of any owner who has purchased such Original Issue Discount Obligation in the initial public offering of the Obligations. Generally, such initial owner is entitled to exclude from gross income (as defined in Section 61 of the Code) an amount of income with respect to such Original Issue Discount Obligation equal to that portion of the amount of such original issue discount allocable to the period that such Original Issue Discount Obligation continues to be owned by such owner. Because original issue discount is treated as interest for federal income tax purposes, the discussions regarding interest on the Obligations under the captions "TAX MATTERS — Tax Exemption" and "TAX MATTERS — Additional Federal Income Tax Considerations — Collateral Tax Consequences" and "—Tax Legislative Changes" generally apply and should be considered in connection with the discussion in this portion of the Official Statement. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Obligation prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Obligation in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Original Issue Discount Obligation was held by such initial owner) is includable in gross income. The foregoing discussion assumes that (i) the Initial Purchasers of the Obligations has purchased the Obligations for contemporaneous sale to the public and (ii) all of the Original Issue Discount Obligations have been initially offered, and a substantial amount of each maturity thereof has been sold, to the general public in arm's-length transactions for a price (and with no other consideration being included) not more than the initial offering prices thereof stated on the cover page of this Official Statement. Neither the Town nor Bond Counsel has made any investigation or offers any comfort that the Original Issue Discount Obligations will be offered and sold in accordance with such assumptions. Under existing law, the original issue discount on each Original Issue Discount Obligation accrues daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the date of the Obligations and ratably within each such six-month period) and the accrued amount is added to an initial owner's basis for such Original Issue Discount Obligation for purposes of determining the amount of gain or loss recognized by such owner upon the redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (i) the sum of the issue price and the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (ii) the amounts payable as current interest during such accrual period on such Obligation. 36 The federal income tax consequences of the purchase, ownership, and redemption, sale or other disposition of Original Issue Discount Obligations that are not purchased in the initial offering at the initial offering price may be determined according to rules that differ from those described above. All owners of Original Issue Discount Obligations should consult their own tax advisors with respect to the determination for federal, state, and local income tax purposes of interest accrued upon redemption, sale or other disposition of such Original Issue Discount Obligations and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership, redemption, sale or other disposition of such Original Issue Discount Obligations. TAx LEGisLATWE CHANGES ... Current law may change so as to directly or indirectly reduce or eliminate the benefit of the excludability of interest on the Obligations from gross income for federal income tax purposes. Any proposed legislation, whether or not enacted, could also affect the value and liquidity of the Obligations. Prospective purchasers of the Obligations should consult with their own tax advisors with respect to any recently -enacted, proposed, pending or future legislation. CONTINUING DISCLOSURE OF INFORMATION In the Ordinance, the Town has made the following agreement for the benefit of the registered and beneficial owners of the Obligations. The Town is required to observe the agreement for so long as it remains obligated to advance funds to pay the Obligations. Under the agreement, the Town will be obligated to provide certain updated financial information and operating data annually and timely notice of specified events to the Municipal Securities Rulemaking Board ("MSRB"). This information will be publicly available on the MSRB's Electronic Municipal Market Access System ("EMMA") at http://emma.msrb.ors/. ANNUAL REPORTS... The Town will provide certain updated financial information and operating data to the MSRB annually. The information to be updated includes all quantitative financial information and operating data with respect to the Town of the general type included in this Official Statement under Tables numbered 1 through 6 and 8 through 15 and in Appendix B, which is the Town's annual audited financial report. The Town will update and provide the information in the numbered tables within six months after the end of each fiscal year ending in and after 2021 and, if not submitted as part of such annual financial information, the Town will provide audited financial statements when and if available, and in any event, within 12 months after the end of each fiscal year. If the audit of such financial statements is not complete within 12 months after any such fiscal year end, then the Town will file unaudited financial statements within such 12-month period and audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available. Any such financial statements will be prepared in accordance with the accounting principles described in Appendix B or such other accounting principles as the Town may be required to employ from time to time pursuant to State law or regulation. The Town's current fiscal year end is September 30. Accordingly, the Town must provide updated information included in the above -referenced tables by the last day of March in each year, and audited financial statements for the preceding fiscal year (or unaudited financial statements if the audited financial statements are not yet available) must be provided by September 30 in each year, unless the Town changes its fiscal year. If the Town changes its fiscal year, it will file notice of the change (and of the date of the new fiscal year end) with the MSRB prior to the next date by which the Town otherwise would be required to provide financial information and operating data as set forth above. All financial information, operating data, financial statements and notices required to be provided to the MSRB shall be provided in an electronic format and be accompanied by identifying information prescribed by the MSRB. Financial information and operating data to be provided as set forth above may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document) available to the public on the MSRB's Internet Web site or filed with the Securities and Exchange Commission (the "SEC"), as permitted by SEC Rule 15c2-12 (the "Rule"). EVENT NOTICES ... The Town will provide notice in a timely manner not in excess of ten business days after the occurrence of the event of any of the following events with respect to the Obligations, as applicable: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Obligations, or other material events affecting the tax status of the Obligations; (7) modifications to rights of holders of the Obligations, if material; (8) Bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Obligations, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the Town; (13) the consummation of a merger, consolidation, or acquisition involving the Town or the sale of all or substantially all of the assets of the Town, 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 Paying Agent/Registrar or change in the name of the Paying Agent/Registrar, if material; (15) incurrence of a financial obligation of the Town, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of any such financial obligation of the Town, any of which affect security holders, if material; and (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of any such financial obligation of the Town, any of which reflect financial difficulties. 37 For these purposes, (A) any event described in the immediately preceding clause (12) is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the Town 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 Town, 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 conforming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets of business of the Town, and (B) the Town intends the words used in clauses (15) and (16) in the immediately preceding paragraph and in the definition of Financial Obligation to have the meanings ascribed to them in SEC Release No. 34-83885 dated August 20, 2018. The Ordinances define "Financial Obligation" as (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that "financial obligation" shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. In addition, the Town will provide timely notice of any failure by the Town to provide information, data, or financial statements in accordance with its agreement described above under "Annual Reports." AVAILABILITY OF INFORMATION— The Town has agreed to provide the foregoing information only as described above. Investors will be able to access continuing disclosure information filed with the MSRB free of charge via the Electronic Municipal Market Access ("EMMA") system at www.emma.msrb.org. LIMITATIONS AND AMENDMENTS ... The Town has agreed to update information and to provide notices of certain events only as described above. The Town has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The Town makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Obligations at any future date. The Town disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although holders of Obligations may seek a writ of mandamus to compel the Town to comply with its agreement. The Town may amend its continuing disclosure agreement from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Town, if (i) the agreement, as amended, would have permitted an Initial Purchaser to purchase or sell Obligations in the offering described herein in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Obligations consent to the amendment or (b) any person unaffiliated with the Town (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the registered and beneficial owners of the Obligations. The Town may also amend or repeal the provisions of its continuing disclosure agreement if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an Initial Purchaser from lawfully purchasing or selling Obligations in the primary offering of the Obligations. If the Town so amends the agreement, it has agreed to include with the next financial information and operating data provided in accordance with its agreement described above under "Annual Reports" an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. COMPLIANCE WITH PRIOR UNDERTAKINGS ... During the last five years, the Town believes it has complied in all material respects with all continuing disclosure agreements made by it in accordance with the Rule. 38 OTIIER INFORMATION RATINGS The Obligations and the presently outstanding tax supported debt of the Town are rated "AAA" by S&P, without regard to credit enhancement. An explanation of the significance of such rating may be obtained from the company furnishing the rating. The rating reflects only the view of such company and the Town makes no representation as to the appropriateness of the rating. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating company, if in the judgment of such company, circumstances so warrant. Any such downward revision or withdrawal of such rating, or either of them, may have an adverse effect on the market price of the Obligations. LITIGATION It is the opinion ofthe Town Attorney and Town Staff that there is no pending litigation against the Town that would have a material adverse financial impact upon the Town or its operations. REGISTRATION AND QUALIFICATION OF OBLIGATIONS FOR SALE The sale of the Obligations has not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the exemption provided thereunder by Section 3(a)(2); and the Obligations have not been qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Obligations been qualified under the securities acts of any other jurisdiction. The Town assumes no responsibility for qualification of the Obligations under the securities laws of any jurisdiction in which the Obligations may be sold, assigned, pledged, hypothecated or otherwise transferred. This disclaimer of responsibility for qualification for sale or other disposition of the Obligations shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration provisions. LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC FUNDS IN TEXAS Section 1201.041 of the Public Security Procedures Act (Chapter 1201, Texas Government Code) provides that the Obligations are negotiable instruments, investment securities governed by Chapter 8, Texas Business and Commerce Code, and are legal and authorized investments for insurance companies, fiduciaries, and trustees, and for the sinking funds of municipalities or other political subdivisions or public agencies of the State. With respect to investment in the Obligations by municipalities or other political subdivisions or public agencies of the State, the Texas Public Funds Investment Act requires that the Obligations be assigned a rating of at least "A" or its equivalent as to investment quality by a national rating agency. See "OTHER INFORMATION - Ratings" herein. In addition, various provisions of the Texas Finance Code provide that, subject to a prudent investor standard, the Obligations are legal investments for state banks, savings banks, trust companies with capital of one million dollars or more, and savings and loan associations. The Obligations are eligible to secure deposits of any public funds of the State, its agencies, and its political subdivisions, and are legal security for those deposits to the extent of their market value. No review by the Town has been made of the laws in other states to determine whether the Obligations are legal investments for various institutions in those states. LEGAL MATTERS The Town will furnish a complete transcript of proceedings had incident to the authorization and issuance of the Obligations, including the unqualified approving legal opinion of the Attorney General of Texas approving the Initial Bond and Initial Certificate respectively, and to the effect that the Obligations are valid and binding obligations of the Town payable from the proceeds of an annual ad valorem tax levied, within the limits prescribed by law, on all taxable property within the Town. Issuance of the Obligations is also subject to the legal opinion of Bracewell LLP ("Bond Counsel") to like effect and to the effect that the interest on the Obligations will be excludable from gross income for federal income tax purposes under existing law. See "TAX MATTERS" herein. The form of Bond Counsel's opinion are attached hereto as Appendix C. Bond Counsel was not requested to participate, and did not take part, in the preparation of the Official Statement or Notice of Sale, and such firm has not assumed any responsibility with respect thereto or undertaken independently to verify any of the information contained therein, except that, in its capacity as Bond Counsel, such firm has reviewed the information describing the Bonds and Certificates in the Official Statement to verify that such description conforms to the provisions of the Ordinances. The legal opinions of Bond Counsel will accompany the Bonds and the Certificates deposited with DTC or will be printed on the Bonds and Certificates in the event of the discontinuance of the Book -Entry -Only System. The various legal opinions to be delivered concurrently with the delivery of the Obligations express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. 39 FINANCIAL ADVISOR Hilltop Securities Inc., is employed as Financial Advisor to the Town in connection with the issuance of the Obligations. The Financial Advisor's fee for services rendered with respect to the sale of the Obligations is contingent upon the issuance and delivery of the Obligations. The Financial Advisor has agreed, in its Financial Advisory contract, not to bid for the Obligations, either independently or as a member of a syndicate organized to submit a bid for the Obligations. Hilltop Securities Inc., in its capacity as Financial Advisor, has not verified and does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the Obligations, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies. The Financial Advisor to the Town has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the Town and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. INITIAL PURCHASER OF THE BONDS After requesting competitive bids for the Bonds, the Town accepted the bid of (the "Initial Purchaser of the Bonds") to purchase the Bonds at the interest rates shown on page 2 of this Official Statement at a price of $ . The Initial Purchaser of the Bonds can give no assurance that any trading market will be developed for the Bonds after their sale by the Town to the Initial Purchaser of the Bonds. The initial yields shown on page 2 of this Official Statement will be established by and are the sole responsibility of the Initial Purchaser of the Bonds and may subsequently be changed at the sole discretion of the Initial Purchaser of the Bonds. The Town has no control over the determination of the initial yields and has no control over the prices at which the Bonds are sold in the secondary market. INITIAL PURCHASER OF THE CERTIFICATES After requesting competitive bids for the Certificates, the Town accepted the bid of (the "Initial Purchaser of the Certificates") to purchase the Certificates at the interest rates shown on page 4 of this Official Statement at a price of $ . The Initial Purchaser of the Certificates can give no assurance that any trading market will be developed for the Certificates after their sale by the Town to the Initial Purchaser of the Certificates. The initial yields shown on page 4 of this Official Statement will be established by and are the sole responsibility of the Initial Purchaser of the Certificates and may subsequently be changed at the sole discretion of the Initial Purchaser of the Certificates. The Town has no control over the determination of the initial yields and has no control over the prices at which the Certificates are sold in the secondary market, CERTIFICATION OF THE OFFICIAL STATEMENT AND NO -LITIGATION CERTIFICATE At the time of payment for and delivery of the Obligations, the Initial Purchaser will be furnished a certificate, executed by a proper Town official, acting in such person's official capacity, to the effect that to the best of such person's knowledge and belief: (a) the descriptions and statements of or pertaining to the Town contained in its Official Statement and any addenda, supplement or amendment thereto, for its Obligations on the date of such Official Statement, on the date of purchase of said Obligations, and on the date of delivery, were and are true and correct in all material respects; (b) insofar as the Town and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an 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 the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, of, or pertaining to, entities other than the Town and their activities contained in such Official Statement are concerned, such statements and data have been obtained from sources which the Town believes to be reliable and that the Town has no reason to believe that they are untrue in any material respect; (d) there has been no material adverse change in the financial condition of the Town since September 30, 2020, the date of the last audited financial statements of the Town appearing in the Official Statement. FORWARD-LOOIQNG STATEMENTS DISCLAIMER The statements contained in this Official Statement, and in any other information provided by the Town, that are not purely historical, are forward -looking statements, including statements regarding the Town's expectations, hopes, intentions, or strategies regarding the future. Readers should not place undue reliance on forward -looking statements. All forward -looking statements included in this Official Statement are based on information available to the Town on the date hereof, and the Town assumes no obligation to update any such forward -looking statements. The Town's actual results could differ materially from those discussed in such forward -looking statements. The forward -looking statements included herein are necessarily based on various assumptions and estimates and are inherently subject to various risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, judicial, and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive, and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Town. Any of such assumptions could be inaccurate and, therefore, there can be no assurance that the forward -looking statements included in this Official Statement will prove to be accurate. 40 MISCELLANEOUS The financial data and other information contained herein have been obtained from the Town's records, audited financial statements and other sources which are believed to be reliable. There is no guarantee that any of the assumptions or estimates contained herein will be realized. All of the summaries of the statutes, documents and resolutions contained in this Official Statement are made subject to all of the provisions of such statutes, documents and resolutions. These summaries do not purport to be complete statements of such provisions and reference is made to such documents for further information. Reference is made to original documents in all respects. The Ordinances will also approve the form and content of this Official Statement, and any addenda, supplement or amendment thereto, and authorize its further use in the reoffering of the Obligations by the Initial Purchasers of the Obligations. 41 Schedule I SCHEDULE OF REFUNDED OBLIGATIONS* General Obligation Refunding Bonds, Series 2011 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 12/1/20.11 2/15/2022 3.000% $ 770,000 $ 770,000 2/15/2023 3.000% 790,000 790,000 2/15/2024 3.500% 820,000 820,000 2/15/2025 3.500% 260,000 260,000 2/15/2026 3.500% 260,000 260,000 2/15/2027 4.000% 275,000 275,000 2/15/2028 4.000% 290,000 290,000 $ 3,465,000 $ 3,465,000 The 2022 - 2028 maturities will be redeemed prior to original maturity on September 28, 2021 at par. Combination Tax and Revenue Certificates of Obligation, Series 2011 Principal Principal Original Original Interest Amount Amount Dated Date Maturity Rate Outstanding Refunded 3/1/2011 2/15/2022 2.400% $ 96,000 $ 96,000 2/15/2023 2.400% 101,000 101,000 2/15/2024 2.400% 106,000 106,000 2/15/2025 2.400% 111,000 111,000 2/15/2026 2.400% 117,000 117,000 2/15/2027 2.400% 123,000 123,000 2/15/2028 2.400% 129,000 129,000 2/15/2029 2.400% 136,000 136,000 2/15/2030 2.400% 143,000 143,000 2/15/2031 2.400% 150,000 150,000 $ 1,212,000 $ 1,212,000 The 2022 - 2031 maturities will be redeemed prior to original maturity on September 28, 2021 at par. * Preliminary, subject to change. APPENDIX A GENERAL INFORMATION REGARDING THE TOWN 43 THIS PAGE LEFT BLANK INTENTIONALLY TIDE TOWN The Town of Westlake was incorporated in 1956 and is located along the border and within the counties of Tarrant and Denton in the rapidly growing northern triangle of the Dallas -Fort Worth Metroplex. The Town combines a rural Texas atmosphere with the conveniences of the Metroplex. It is the home of the famous Circle T Ranch which was acquired in 1993 by Hillwood Development, a company controlled by H. Ross Perot, Jr. Another high profile corporate campus development in Westlake is known as Solana and is located along Texas Highway 114. Its tenants include CoreLogic, Wells Fargo Bank, Sabre Corporation, Levi Strauss & Co, Boy Scouts of America, Pfizer Inc. and other well-known international businesses as well as smaller local businesses. Solana's Village Circle provides a mix of office, retail, restaurant, and hotel space. Solana currently has the largest taxable assessed valuation of the Town of Westlake's tax base. County Characteristics: Tarrant County, where most of Westlake is located, was created in 1849 from Navarro County. It is a manufacturing and wholesale trade center for much of west Texas, with its economy closely tied in with the Dallas/Fort Worth urban area. The City of Fort Worth is the county seat. The County is one of the largest manufacturing counties in the United States. Industries include tourism, plastics, planes, helicopters, mobile homes, food, electronic equipment, chemicals, automobiles and airports. DFW International Airport, the nation's largest, is located here. Minerals include stone, sand, gravel, gas and cement. Agriculture includes wheat, horticulture, horses, hay and beef cattle. The following colleges and universities located in Tarrant County: The University of Texas at Arlington, Tarrant County College District (all campuses), Texas Christian University, University of North Texas Health Science Center, Texas Wesleyan University and The College of St. Thomas More. The Naval Air Station - Joint Reserve Base is also located in Tarrant County EMPLOYMENT DATA April Average Annual 2021 2020 2019 2018 2017 2016 Denton County Civilian Labor Force 507,813 503,962 503,398 483,589 471,075 452,147 Total Employment 483,132 471,296 488,509 468,029 455,245 436,615 Unemployment 24,681 32,666 14,889 15,560 15,830 15,532 Unemployment Rate 4.9% 6.5% 3.0% 3.2% 3.4% 3.4% Tarrant County Civilian Labor Force 1,087,875 1,082,822 1,079,646 1,059,616 1,036,145 1,011,543 Total Employment 1,023,339 1,003,269 1,043,814 1,022,224 997,323 971,204 Unemployment 64,536 79,553 35,832 37,392 38,822 40,339 Unemployment Rate 5.9% 7.3% 3.3% 3.5% 3.7% 4.0% State of Texas Civilian Labor Force 14,031,008 13,983,319 14,037,537 13,812,790 13,572,824 13,346,836 Total Employment 13,087,505 12,915,337 13,541,936 13,274,820 12,983,493 12,728,898 Unemployment 943,503 1,067,982 495,601 537,970 589,331 617,938 Unemployment Rate 6.7% 7.6% 3.5% 3.9% 4.3% 4.6% A-1 THIS PAGE LEFT BLANK INTENTIONALLY APPENDIX B EXCERPTS FROM THE TOWN OF WESTLAKE, TEXAS ANNUAL FINANCIAL REPORT For the Year Ended September 30, 2020 The information contained in this Appendix consists of excerpts from the Town of Westlake, Texas Annual Financial Report for the Year Ended September 30, 2020, and is not intended to be a complete statement of the Town's financial condition. Reference is made to the complete Report for further information. THIS PAGE LEFT BLANK INTENTIONALLY APPENDIX C FORM OF BOND COUNSEL'S OPINIONS THIS PAGE LEFT BLANK INTENTIONALLY #8102476.2 ORDINANCE NO. 932 relating to $3,215,000 TOWN OF WESTLAKE, TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION SERIES 2021 Adopted: August 23, 2021 [Form of Bond Counsel Opinion [Date] TOWN OF WESTLAKE, TEXAS GENERAL OBLIGATION REFUNDING BONDS SERIES 2021 WE HAVE ACTED as bond counsel for the Town of Westlake, Texas (the "Issuer"), in connection with the bonds hereinafter described (the "Bonds"): TOWN OF WESTLAKE, TEXAS GENERAL OBLIGATION REFUNDING BONDS, SERIES 2021, dated August 15, 2021, in the aggregate principal amount of $ The Bonds mature, bear interest, are subject to redemption prior to maturity and may be transferred and exchanged as set out in the Bonds and in the ordinance adopted by the Town Council of the Issuer authorizing their issuance (the "Ordinance"). WE HAVE REPRESENTED the Issuer as bond counsel for the sole purpose of rendering our opinion with respect to the legality and validity of the Bonds under the Constitution and laws of the State of Texas and with respect to the excludability of interest on the Bonds from gross income for federal income tax purposes. We have not investigated or verified original proceedings, records, data or other material, but have relied solely upon the transcript of proceedings described in the following paragraph. We have not assumed any responsibility with respect to the financial condition or capabilities of the Issuer or the disclosure thereof in connection with the sale of the Bonds. Our role in connection with the Issuer's Official Statement prepared for use in connection with the sale of the Bonds has been limited as described therein. IN OUR CAPACITY as bond counsel, we have participated in the preparation of and have examined a transcript of proceedings pertaining to the Bonds, on which we have relied in giving our opinion. The transcript contains certified copies of certain proceedings of the Issuer; a deposit agreement (the "Deposit Agreement") between the Issuer and the paying agent/registrar for the obligations being refunded (the "Refunded Bonds Paying Agent"); the certification of the Refunded Bonds Paying Agent (the "Sufficiency Certificate") verifying the sufficiency of the deposits made with the Refunded Bonds Paying Agent for defeasance of the obligations being refunded (the "Refunded Bonds"); customary certificates of officers, agents and representatives of the Issuer and other public officials; and other certified showings relating to the authorization and issuance of the Bonds. We have also analyzed such laws, regulations, guidance, documents and other materials as we have deemed necessary to render the opinions herein. Moreover, we have also examined executed Bond No. 1 of this issue. Capitalized terms used herein, unless otherwise defined, have the meanings set forth in the Ordinance. In providing the opinions set forth herein, we have relied representations and certifications of the Issuer and other parties involved with the issuance of the Bonds with respect to matters solely within the knowledge of the Issuer and such parties, which we have not independently verified. In addition, we have assumed for purposes of this opinion continuing compliance with the covenants in the Ordinance, including, but not limited to, covenants relating to the tax-exempt status of the Bonds. BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT: (1) The transcript of proceedings evidences complete legal authority for the issuance of the Bonds in full compliance with the Constitution and laws of the State of Texas presently effective, and therefore, the Bonds constitute valid and legally binding obligations of the Issuer; (2) Firm banking and financial arrangements have been made for the discharge and final payment of the Refunded Bonds pursuant to the deposit of funds with the Refunded Bonds Paying Agent, made in accordance with the Deposit Agreement, and therefore, the Refunded Bonds are deemed to be fully paid and no longer outstanding except for the purpose of being paid from the funds provided therefor to the Refunded Bonds Paying Agent for the Refunded Bonds; and (3) A continuing ad valorem tax upon all taxable property within the Issuer, necessary to pay the principal of and interest on the Bonds, has been levied and pledged irrevocably for such purposes, within the limit prescribed by law, and the total indebtedness of the Issuer, including the Bonds, does not exceed any constitutional, statutory or other limitations; and (4) Interest on the Bonds is excludable from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended. In addition, interest on the Bonds is not a specific preference item for purposes of the alternative minimum tax. THE RIGHTS OF THE OWNERS of the Bonds are subject to the applicable provisions of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions generally, and may be limited by general principles of equity which permit the exercise of judicial discretion. Except as stated above, we express no opinion as to the amount of interest on the Bonds or any federal, state or local tax consequences resulting from the receipt or accrual of interest on, or the acquisition, ownership or disposition of, the Bonds. This opinion is specifically limited to the laws of the State of Texas and, to the extent applicable, the laws of the United States of America. Further, in the event that the representations of the Issuer and other parties are determined to be inaccurate or incomplete or the Issuer fails to comply with the covenants of the Ordinance, interest on the Bonds could become includable in gross income for federal income tax purposes from the date of the original delivery of the Bonds, regardless of the date on which the event causing such inclusion occurs. Our opinions are based on existing law and our knowledge of facts as of the date hereof and may be affected by certain actions that may be taken or omitted on a later date. We assume no duty to update or supplement our opinions, and this opinion letter may not be relied upon in connection with any changes to the law or facts, or actions taken or omitted, after the date hereof. [Form of Bond Opinion] [Date] TOWN OF WESTLAKE, TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021 WE HAVE represented the Town of Westlake, Texas (the "Issuer"), as its bond counsel in connection with an issue of certificates of obligation (the "Certificates") described as follows: TOWN OF WESTLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021, dated August 15, 2021, in the principal amount of The Certificates mature, bear interest, are subject to redemption prior to maturity and may be transferred and exchanged as set out in the Certificates and in the ordinance adopted by the City Council of the Issuer authorizing their issuance (the "Ordinance"). WE HAVE represented the Issuer as its bond counsel for the purpose of rendering an opinion with respect to the legality and validity of the Certificates under the Constitution and laws of the State of Texas and with respect to the exclusion of interest on the Certificates from gross income for federal income tax purposes. We have not investigated or verified original proceedings, records, data or other material, but have relied solely upon the transcript of proceedings described in the following paragraph. We have not assumed any responsibility with respect to the financial condition or capabilities of the Issuer or the disclosure thereof in connection with the sale of the Certificates. Our role in connection with the Issuer's Official Statement prepared for use in connection with the sale of the Certificates has been limited as described therein. IN OUR CAPACITY as bond counsel, we have participated in the preparation of and have examined a transcript of certified proceedings pertaining to the Certificates, on which we have relied in giving our opinion. The transcript contains certified copies of certain proceedings of the Issuer; customary certificates of officers, agents and representatives of the Issuer and other public officials and other certified showings relating to the authorization and issuance of the Certificates. We also have analyzed such laws, regulations, guidance, documents and other materials as we have deemed necessary to render the opinions herein. We have also examined executed Certificate No. 1 of this issue. In providing the opinions set forth herein, we have relied on representations and certifications of the City and other parties involved with the issuance of the Certificates with respect to matters solely within the knowledge of the City and such parties, which we have not independently verified. In addition, we have assumed for purposes of this opinion continuing compliance with the covenants in the Ordinance, including, but not limited to, covenants relating to the tax-exempt status of the Certificates. BASED ON SUCH EXAMINATION, IT IS OUR OPINION THAT: (A) The transcript of certified proceedings evidences complete legal authority for the issuance of the Certificates in full compliance with the Constitution and laws of the State of Texas presently effective and, therefore, the Certificates constitute valid and legally binding obligations of the Issuer; and (B) A continuing ad valorem tax upon all taxable property within the Town of Trophy Club necessary to pay the principal of and interest on the Certificates, has been levied and pledged irrevocably for such purposes, within the limit prescribed by law, and the total indebtedness of the Issuer, including the Certificates, does not exceed any constitutional, statutory or other limitations. In addition, the Certificates are further secured by a limited pledge of the surplus net revenues of the Issuer's waterworks and sewer system as provided in the Ordinance. (C) Interest on the Certificates is excludable from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986, as amended. In addition, interest on the Certificates is not a specific preference item for purposes of the alternative minimum tax. The rights of the owners of the Certificates are subject to the applicable provisions of the federal bankruptcy laws and any other similar laws affecting the rights of creditors of political subdivisions generally, and may be limited by general principles of equity which permit the exercise of judicial discretion. Except as stated above, we express no opinion as to the amount of interest on the Certificates or any federal, state or local tax consequences resulting from the receipt or accrual of interest on, or the acquisition, ownership or disposition of, the Certificates. This opinion is specifically limited to the laws of the State of Texas and, to the extent applicable, the laws of the United States of America. Further, in the event that the representations of the Issuer and other parties upon which we relied are determined to be inaccurate or incomplete or the Issuer fails to comply with the covenants of the Ordinance, interest on the Certificates could become includable in gross income for federal income tax purposes from the date of the original delivery of the Certificates, regardless of the date on which the event causing such inclusion occurs. Our opinions are based on existing law and our knowledge of facts as of the date hereof and may be affected by certain actions that may be taken or omitted on a later date. We assume no duty to update or supplement our opinions, and this opinion letter may not be relied upon in connection with any changes to the law or facts, or actions taken or omitted, after the date hereof. -2- THIS PAGE LEFT BLANK INTENTIONALLY Financial Advisory Services Provided By M RapSecu ri ties A Hilltop Holdings Company- TABLE OF CONTENTS (continued) Page -i- #8102476.2 ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.1. Definitions................................................................................................................2 Section 1.2. Findings....................................................................................................................4 Section 1.3. Table of Contents, Titles, and Headings ..................................................................4 Section 1.4. Interpretation ............................................................................................................4 ARTICLE II SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND Section 2.1. Payment of the Certificates ......................................................................................5 Section 2.2. Interest and Sinking Fund ........................................................................................6 ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE CERTIFICATES Section 3.1. Authorization ...........................................................................................................6 Section 3.2. Date, Denomination, Maturities, and Interest ..........................................................7 Section 3.3. Medium, Method, and Place of Payment .................................................................8 Section 3.4. Execution and Registration of Certificates ..............................................................9 Section 3.5. Ownership ................................................................................................................9 Section 3.6. Registration, Transfer, and Exchange ....................................................................10 Section 3.7. Cancellation ...........................................................................................................10 Section 3.8. Temporary Certificates ..........................................................................................11 Section 3.9. Replacement Certificates .......................................................................................11 Section 3.10. Book-Entry-Only System.......................................................................................12 Section 3.11. Successor Securities Depository; Transfer Outside Book-Entry-Only System ....................................................................................................................13 Section 3.12. Payments to Cede & Co .........................................................................................13 ARTICLE IV REDEMPTION OF CERTIFICATES BEFORE MATURITY Section 4.1. Limitation on Redemption .....................................................................................14 Section 4.2. Optional Redemption .............................................................................................14 Section 4.3. Mandatory Sinking Fund Redemption ...................................................................14 Section 4.4. Partial Redemption.................................................................................................15 Section 4.5. Notice of Redemption to Owners ..........................................................................16 Section 4.6. Payment Upon Redemption ...................................................................................16 Section 4.7. Effect of Redemption .............................................................................................16 Section 4.8. Conditional Notice of Redemption ........................................................................17 Section 4.9. Lapse of Payment ...................................................................................................17 TABLE OF CONTENTS (continued) Page -ii- #8102476.2 ARTICLE V PAYING AGENT/REGISTRAR Section 5.1. Appointment of Initial Paying Agent/Registrar .....................................................17 Section 5.2. Qualifications .........................................................................................................17 Section 5.3. Maintaining Paying Agent/Registrar .....................................................................17 Section 5.4. Termination ............................................................................................................18 Section 5.5. Notice of Change to Owners ..................................................................................18 Section 5.6. Agreement to Perform Duties and Functions.........................................................18 Section 5.7. Delivery of Records to Successor ..........................................................................18 ARTICLE VI FORM OF THE CERTIFICATES Section 6.1. Form Generally ......................................................................................................18 Section 6.2. Form of the Certificates .........................................................................................19 Section 6.3. CUSIP Registration ................................................................................................26 Section 6.4. Legal Opinion ........................................................................................................26 Section 6.5. Statement Insurance ...............................................................................................26 ARTICLE VII SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS; FLOW OF FUNDS Section 7.1. Sale of Certificates; Official Statement .................................................................26 Section 7.2. Control and Delivery of Certificates ......................................................................27 Section 7.3. Deposit of Proceeds ...............................................................................................27 ARTICLE VIII INVESTMENTS Section 8.1. Investments ............................................................................................................28 Section 8.2. Investment Income .................................................................................................28 ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.1. Payment of the Certificates ....................................................................................28 Section 9.2. Other Representations and Covenants ...................................................................28 Section 9.3. Federal Income Tax Matters ..................................................................................29 ARTICLE X DEFAULT AND REMEDIES Section 10.1. Events of Default ...................................................................................................31 Section 10.2. Remedies for Default .............................................................................................31 Section 10.3. Remedies Not Exclusive ........................................................................................31 TABLE OF CONTENTS (continued) Page -iii- #8102476.2 ARTICLE XI DISCHARGE Section 11.1. Discharge ...............................................................................................................32 ARTICLE XII CONTINUING DISCLOSURE UNDERTAKING Section 12.1. Annual Reports ......................................................................................................32 Section 12.2. Material Event Notices ..........................................................................................32 Section 12.3. Limitations, Disclaimers and Amendments ...........................................................34 ARTICLE XIII AMENDMENTS Section 13.1. Amendments ..........................................................................................................35 ARTICLE XIV MISCELLANEOUS Section 14.1. Changes to Ordinance ............................................................................................35 Section 14.2. Partial Invalidity.....................................................................................................36 Section 14.3. No Personal Liability .............................................................................................36 ARTICLE XV EFFECTIVENESS Section 15.1. Effectiveness ..........................................................................................................36 #8102476.2 AN ORDINANCE AUTHORIZING THE ISSUANCE OF $3,215,000 TOWN OF WESTLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021; LEVYING A TAX, AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID CERTIFICATES; AWARDING THE SALE OF THE CERTIFICATES; AUTHORIZING THE EXECUTION AND DELIVERY OF A PAYING AGENT AGREEMENT; APPROVING THE OFFICIAL STATEMENT; ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, under the provisions of the Texas Local Government Code, Chapter 271, Subchapter C, as amended, the Town of Westlake, Texas (the “Town”), is authorized to issue certificates of obligation for the purposes specified in this Ordinance and for the payment of all or a portion of the contractual obligations for professional services, including that of engineers, attorneys, and financial advisors in connection therewith, and to sell the same for cash as herein provided; and WHEREAS, the Town is authorized to provide that such obligations will be payable from and secured by the levy of a direct and continuing ad valorem tax against all taxable property within the Town, in combination with all or a part of certain revenues of the Town’s municipal drainage utility system (the “System”) remaining after payment of any obligations of the Town payable in whole or in part from a lien on or pledge of such revenues that would be superior to the obligations to be authorized herein as authorized by Chapter 1502, Texas Government Code; and WHEREAS, the Town Council has found and determined that it is necessary and in the best interests of the Town and its citizens that it issue such certificates of obligation authorized by this Ordinance; and WHEREAS, pursuant to a resolution heretofore passed by this governing body, notice of intention (the “Notice of Intention”) to issue certificates of obligation of the Town payable as provided in this Ordinance was published in a newspaper of general circulation in the Town in accordance with the requirements of law, such certificates of obligation to be issued for the purpose of paying contractual obligations to be incurred for the purposes set forth in Section 3.01 hereof; and WHEREAS, the Notice of Intention stated that the Town Council intended to pass an ordinance authorizing the issuance of the Certificates at its Town Council meeting held on the date of adoption of this Ordinance; and WHEREAS, no petition of any kind has been filed with the Town Secretary, any member of the Town Council or any other official of the Town, protesting the issuance of such certificates of obligation; and WHEREAS, this Town Council is now authorized and empowered to proceed with the issuance of said certificates of obligation and to sell the same for cash; and -2- #8102476.2 WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and public notice of the time, place, and purpose of said meeting was given as required by Chapter 551, Texas Government Code, as amended; therefore, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, THAT: ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.1. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise in this Ordinance, the following terms shall have the meanings specified below: “Business Day” means a day that is not a Saturday, Sunday, legal holiday or other day on which banking institutions in the Town where the Designated Payment/Transfer Office is located are required or authorized by law or executive order to close. “Certificate” means any of the Certificates. “Certificate Date” means the date designated as the initial date of the Certificates by Section 3.02(a) of this Ordinance. “Certificates” means the certificates of obligation authorized to be issued by Section 3.01 of this Ordinance and designated as “Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021. “Closing Date” means the date of the initial delivery of and payment for the Certificates. “Code” means the Internal Revenue Code of 1986, as amended, and, with respect to a specific section thereof, such reference shall be deemed to include (a) the Regulations promulgated under such section, (b) any successor provision of similar import hereafter enacted, (c) any corresponding provision of any subsequent Internal Revenue Code, and (d) the Regulations promulgated under the provisions described in (b) and (c). “Designated Payment/Transfer Office” means (i) with respect to the initial Paying Agent/Registrar named herein, its office in Dallas, Texas, or at such other location 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. “DTC” means The Depository Trust Company of New York, New York, or any successor securities depository. “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. -3- #8102476.2 “EMMA” means the Electronic Municipal Market Access System. “Event of Default” means any event of default as defined in Section 10.01 of this Ordinance. “Financial Obligation” means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that “financial obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. “Fiscal Year” means such fiscal year as shall from time to time be set by the Town Council. “Initial Certificate” means the initial certificate authorized by Section 3.04(d) of this Ordinance. “Interest and Sinking Fund” means the interest and sinking fund established by Section 2.02 of this Ordinance. “Interest Payment Date” means the date or dates upon which interest on the Certificates is scheduled to be paid until their respective dates of maturity or prior redemption, such dates being February 15 and August 15 of each year commencing February 15, 2022. “MSRB” means the Municipal Securities Rulemaking Board. “Net Revenues” means the gross revenues of the System less the expenses of operation and maintenance as said expenses are defined by Chapter 1502, Texas Government Code, as amended. “Ordinance” means this Ordinance. “Owner” means the person who is the registered owner of a Certificate or Certificates, as shown in the Register. “Paying Agent/Registrar” means initially U.S. Bank, N.A., Dallas, Texas, or any successor thereto as provided in this Ordinance. “Prior Lien Bonds” means any and all bonds or other obligations of the Town presently outstanding or that may be hereafter issued, payable from and secured by a first lien on and pledge of the Net Revenues or by a lien on and pledge of the Net Revenues subordinate to a first lien and pledge of such Net Revenues but superior to the lien and pledge of the Surplus Revenues made for the Certificates. “Record Date” means the fifteenth (15th) day of the month next preceding an Interest Payment Date. “Register” means the Register specified in Section 3.06(a) of this Ordinance. -4- #8102476.2 “Regulations” means the applicable proposed, temporary or final Treasury Regulations promulgated under the Code or, to the extent applicable to the Code, under the Internal Revenue Code of 1954, as such regulations may be amended or supplemented from time to time. “Representations Letter” means the Blanket Letter of Representations between the Town and DTC. “Rule” means SEC Rule 15c2-12, as amended from time to time. “SEC” means the United States Securities and Exchange Commission. “Special Payment Date” means the Special Payment Date prescribed by Section 3.03(b). “Special Record Date” means the Special Record Date prescribed by Section 3.03(b). “Surplus Revenues” means the revenues of the System remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with the Town’s Prior Lien Bonds; provided, however, that the amount of such Surplus Revenues pledged to the payment of the Certificates shall be limited to $1,000. “System” as used in this Ordinance means the Town’s water and wastewater utility system, including all present and future additions, extensions, replacements, and improvements thereto. “Town” means the Town of Westlake, Texas. “Unclaimed Payments” means money deposited with the Paying Agent/Registrar for the payment of principal of, redemption premium, if any, or interest on the Certificates as the same come due and payable or money set aside for the payment of Certificates duly called for redemption prior to maturity. Section 1.2. Findings. The declarations, determinations, and findings declared, made, and found in the preamble to this Ordinance 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 Ordinance 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 Ordinance 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 -5- #8102476.2 words of the singular number shall be construed to include correlative words of the plural number and vice versa. (b) This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein. ARTICLE II SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND Section 2.1. Payment of the Certificates. (a) Pursuant to the authority granted by the Texas Constitution and laws of the State of Texas, there shall be levied and there is hereby levied for the current year and for each succeeding year thereafter while any of the Certificates or any interest thereon is outstanding and unpaid, an ad valorem tax on each one hundred dollars valuation of taxable property within the Town, at a rate sufficient, within the limit prescribed by law, to pay the debt service requirements of the Certificates, being (i) the interest on the Certificates, and (ii) a sinking fund for their redemption at maturity or a sinking fund of two percent per annum (whichever amount is the greater), when due and payable, full allowance being made for delinquencies and costs of collection. (b) The ad valorem tax thus levied shall be assessed and collected each year against all property appearing on the tax rolls of the Town most recently approved in accordance with law, and the money thus collected shall be deposited as collected to the Interest and Sinking Fund. (c) Said ad valorem tax, the collections therefrom, and all amounts on deposit in or required hereby to be deposited to the Interest and Sinking Fund are hereby pledged and committed irrevocably to the payment of the principal of and interest on the Certificates when and as due and payable in accordance with their terms and this Ordinance. (d) The amount of taxes to be provided annually for the payment of principal of and interest on the Certificates shall be determined and accomplished in the following manner: (i) The Town’s annual budget shall reflect (i) the amount of debt service requirements to become due on the Certificates in the next succeeding Fiscal Year of the Town and (ii) the amount on deposit in the Interest and Sinking Fund, as of the date such budget is prepared (after giving effect to any payments required to be made during the remainder of the then current Fiscal Year), and (iii) the amount of Surplus Revenues estimated and budgeted to be available for the payment of such debt service requirements on the Certificates during the next succeeding Fiscal Year. (ii) The amount required to be provided in the succeeding Fiscal Year of the Town from ad valorem taxes shall be the amount, if any, the debt service requirements to be paid on the Certificates in the next succeeding Fiscal Year of the Town exceeds the sum of (i) the amount shown to be on deposit in the Interest and Sinking Fund (after giving effect to any payments required to be made during the remainder of the then current Fiscal Year) at the time the annual budget is prepared, and (ii) the Surplus Revenues shown to be budgeted and available for payment of said debt service requirements. -6- #8102476.2 (iii) Following the final approval of the annual budget of the Town, the governing body of the Town shall, by ordinance, levy an ad valorem tax at a rate sufficient to produce taxes in the amount determined in paragraph (ii) above, to be utilized for purposes of paying the principal of and interest on the Certificates in the next succeeding Fiscal Year of the Town. (e) The Town hereby covenants and agrees that the Surplus Revenues are hereby irrevocably pledged equally and ratably to the payment of the principal of, redemption premium, if any, and interest on the Certificates, as the same become due. (f) If the liens and provisions of this Ordinance shall be released in a manner permitted by Article XI hereof, then the collection of such ad valorem tax may be suspended or appropriately reduced, as the facts may permit, and further deposits to the Interest and Sinking Fund may be suspended or appropriately reduced, as the facts may permit. In determining the aggregate principal amount of outstanding Certificates, there shall be subtracted the amount of any Certificates that have been duly called for redemption and for which money has been deposited with the Paying Agent/Registrar for such redemption. Section 2.2. Interest and Sinking Fund. (a) The Town hereby establishes a special fund or account to be designated the “Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021, Interest and Sinking Fund” (the “Interest and Sinking Fund”) said fund to be maintained at an official depository bank of the Town separate and apart from all other funds and accounts of the Town. (b) Money on deposit in or required by this Ordinance to be deposited to the Interest and Sinking Fund shall be used solely for the purpose of paying the interest on and principal of the Certificates when and as due and payable in accordance with their terms and this Ordinance. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE CERTIFICATES Section 3.1. Authorization. The Town’s certificates of obligation to be designated “Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021” (the “Certificates”), are hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State of Texas, specifically Subchapter C, Chapter 271, Texas Local Government Code. The Certificates shall be issued in the aggregate principal amount of $3,215,000 for the following purposes, to wit: (i) designing, developing, constructing and acquiring drainage improvements and facilities within the Town, including the acquisition of land therefor; (ii) designing, developing, constructing, improving and renovating Town parks, trails and recreation facilities, including the acquisition of land therefor, (iii) designing, developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks, bridges, and other public ways of the Town, including streetscaping, signage, streetlighting, right-of-way protection, utility relocation, and related storm drainage improvements; and acquiring rights-of-way in connection therewith, (iv) designing, -7- #8102476.2 developing, constructing, and renovating Town cemetery improvements; and (iv) professional services incurred in connection with items (i) through (iv) and to pay the costs incurred in connection with the issuance of the Certificates. Section 3.2. Date, Denomination, Maturities, and Interest. (a) The Certificates shall be dated August 15, 2021. The Certificates shall be in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof and shall be numbered separately from one upward, except the Initial Certificate, which shall be numbered T-1. (b) The Certificates shall mature on February 15 in the years and in the principal amounts set forth in the following schedule: $1,385,000 Serial Certificates Years Principal Amount Interest Rate 2022 $ 125,000 4.000% 2023 120,000 4.000 2024 125,000 4.000 2025 130,000 4.000 2026 135,000 4.000 2027 140,000 4.000 2028 145,000 4.000 2029 150,000 4.000 2030 155,000 4.000 2031 160,000 4.000 $1,830,000 Term Certificates Years Principal Amount Interest Rate 2033 $335,000 2.000% 2035 355,000 2.000 2037 365,000 2.000 2039 380,000 2.000 2041 395,000 2.000 (c) Interest shall accrue and be paid on each Certificate respectively until its maturity or prior redemption from the later of the Certificate Date or the most recent interest payment date to which interest has been paid or provided for at the rates per annum for each maturity specified in the schedule contained in subsection (b) above. Such interest shall be payable semiannually on February 15 and August 15 of each year commencing February 15, 2022, and shall be computed on the basis of a 360-day year of twelve 30-day months. -8- #8102476.2 Section 3.3. Medium, Method, and Place of Payment. (a) The principal of, redemption premium, if any, and interest on the Certificates shall be paid in lawful money of the United States of America. (b) Interest on the Certificates shall be payable to the Owners as shown in the Register at the close of business on the Record Date; provided, however, 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”) shall be established by the Paying Agent/Registrar, 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 (the “Special Payment Date,” which shall be 15 days after the Special Record Date) shall be sent at least five Business Days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each Owner of a Certificate appearing on the Register at the close of business on the last Business Day next preceding the date of mailing of such notice. (c) Interest shall be paid by check, dated as of and mailed on the Interest Payment Date, and sent by the Paying Agent/Registrar to each Owner, first class United States mail, postage prepaid, to the address of each Owner as it appears in the Register, or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the Owner; provided, however, that the Owner shall bear all risk and expense of such alternative banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. (d) The principal of each Certificate shall be paid to the Owner thereof on the due date, whether at the maturity date or the date of prior redemption thereof upon presentation and surrender of such Certificate 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 Certificates 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, then the date for such payment shall be the next succeeding day which 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. (f) Unclaimed Payments shall be segregated in a special escrow account and held in trust, uninvested by the Paying Agent/Registrar, for the account of the Owners of the Certificates to which the Unclaimed Payments pertain. Subject to Title 6 of the Texas Property Code, Unclaimed Payments remaining unclaimed by the Owners entitled thereto for three years after the applicable payment or redemption date shall be applied to the next payment or payments on the Certificates thereafter coming due and, to the extent any such money remains after the retirement of all outstanding Certificates, shall be paid to the Town to be used for any lawful purpose. Thereafter, neither the Town, the Paying Agent/Registrar, nor any other person shall be liable or -9- #8102476.2 responsible to any Owners of such Certificates for any further payment of such unclaimed moneys or on account of any such Certificates, subject to Title 6 of the Texas Property Code. Section 3.4. Execution and Registration of Certificates. (a) The Certificates shall be executed on behalf of the Town by the Mayor and the 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal of the Town had been manually impressed upon each of the Certificates. (b) In the event that any officer of the Town whose manual or facsimile signature appears on the Certificates ceases to be such officer before the authentication of such Certificates 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 Certificate shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Paying Agent/Registrar. It shall not be required that the same officer or authorized signatory of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Certificates. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Certificate 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 of Public Accounts of the State of Texas, or by his duly authorized agent, which Certificate shall be evidence that the Certificate has been duly approved by the Attorney General of the State of Texas, that it is a valid and binding obligation of the Town, and that it has been registered by the Comptroller of Public Accounts of the State of Texas. (d) On the Closing Date, one initial Certificate (the “Initial Certificate”) representing the entire principal amount of all Certificates, payable in stated installments to the initial purchaser, or its designee, executed by the Mayor and Town Secretary of the Town, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts, will be delivered to the initial purchaser or its designee. Upon payment for the Initial Certificate, the Paying Agent/Registrar shall cancel the Initial Certificate and deliver to DTC on behalf of the initial purchaser one registered definitive Certificate for each year of maturity of the Certificates in the aggregate principal amount of all Certificates for such maturity, registered in the name of Cede & Co., as nominee of DTC. Section 3.5. Ownership. (a) The Town, the Paying Agent/Registrar, and any other person may treat the person in whose name any Certificate is registered as the absolute owner of such Certificate for the purpose of making and receiving payment as herein provided (except interest shall be paid to the person in whose name such Certificate is registered on the Record Date or Special Record Date, -10- #8102476.2 as applicable), and for all other purposes, whether or not such Certificate is overdue, and neither the Town nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. (b) All payments made to the Owner of a Certificate shall be valid and effectual and shall discharge the liability of the Town and the Paying Agent/Registrar upon such Certificate to the extent of the sums paid. Section 3.6. Registration, Transfer, and Exchange. (a) So long as any Certificates remain outstanding, the Town shall cause the Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a register (the “Register”) in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Certificates in accordance with this Ordinance. (b) The ownership of a Certificate may be transferred only upon the presentation and surrender of the Certificate 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 Certificate shall be effective until entered in the Register. (c) The Certificates shall be exchangeable upon the presentation and surrender thereof at the Designated Payment/Transfer Office of the Paying Agent/Registrar for a Certificate or Certificates of the same maturity and interest rate and in a denomination or denominations of any integral multiple of $5,000, and in an aggregate principal amount equal to the unpaid principal amount of the Certificates presented for exchange. The Paying Agent/Registrar is hereby authorized to authenticate and deliver Certificates exchanged for other Certificates in accordance with this Section. (d) Each exchange Certificate 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 Ordinance to the same extent as the Certificate or Certificates in lieu of which such exchange Certificate is delivered. (e) 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 Certificates. 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 Certificate. (f) Neither the Town nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption, in whole or in part, within 45 calendar 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 Certificate. Section 3.7. Cancellation. All Certificates paid or redeemed before scheduled maturity in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates -11- #8102476.2 are authenticated and delivered in accordance with this Ordinance, shall be canceled and proper records made regarding such payment, redemption, exchange, or replacement. The Paying Agent/Registrar shall then return such canceled Certificates to the Town or may in accordance with law dispose of such cancelled Certificates. Section 3.8. Temporary Certificates. (a) Following the delivery and registration of the Initial Certificate and pending the preparation of definitive Certificates, the proper officers of the Town may execute and, upon the Town’s request, the Paying Agent/Registrar shall authenticate and deliver, one or more temporary Certificates that are printed, lithographed, typewritten, mimeographed, or otherwise produced, in any denomination, substantially of the tenor of the definitive Certificates 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 Certificates may determine, as evidenced by their signing of such temporary Certificates. (b) Until exchanged for Certificates in definitive form, such Certificates in temporary form shall be entitled to the benefit and security of this Ordinance. (c) The Town, without unreasonable delay, shall prepare, execute and deliver to the Paying Agent/Registrar the Certificates in definitive form; thereupon, upon the presentation and surrender of the Certificate or Certificates in temporary form to the Paying Agent/Registrar, the Paying Agent/Registrar shall cancel the Certificates in temporary form and shall authenticate and deliver in exchange therefor a Certificate or Certificates of the same maturity and series, in definitive form, in the authorized denomination, and in the same aggregate principal amount, as the Certificate or Certificates in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.9. Replacement Certificates. (a) Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Certificate, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Certificate 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 Certificate 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 Certificate is lost, apparently destroyed or wrongfully taken, the Paying Agent/ Registrar, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser, shall authenticate and deliver a replacement Certificate 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 Certificate; -12- #8102476.2 (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar to save it 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 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 Paying Agent/Registrar. (c) If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the Town and the Paying Agent/Registrar shall be entitled to recover such replacement Certificate 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 or the Paying Agent/Registrar in connection therewith. (d) In the event that any such mutilated, lost, apparently destroyed, or wrongfully taken Certificate has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Certificate, may pay such Certificate when it becomes due and payable. (e) Each replacement Certificate 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 Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. Section 3.10. Book-Entry-Only System. (a) Notwithstanding any other provision hereof, upon initial issuance of the Certificates, the Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. (b) With respect to Certificates 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 Certificates. 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 with respect to any ownership interest in the Certificates, (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 Certificates, 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 Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the Town and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute owner of such Certificate for the -13- #8102476.2 purpose of payment of principal of, premium, if any, and interest on Certificates, for the purpose of giving notices of redemption and other matters with respect to such Certificate, for the purpose of registering transfer with respect to such Certificate, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if any, and interest on the Certificates only to or upon the order of the respective Owners as shown in the Register, as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Town’s obligations with respect to payment of, premium, if any, and interest on the Certificates to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Register, shall receive a certificate evidencing the obligation of the Town to make payments of amounts due pursuant to this Ordinance. 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., the word “Cede & Co.” in this Ordinance shall refer to such new nominee of DTC. (c) The Representations Letter previously executed and delivered by the Town, and applicable to the Town’s obligations delivered in book-entry-only form to DTC as securities depository, is hereby ratified and approved for the Certificates. Section 3.11. Successor Securities Depository; Transfer Outside Book-Entry-Only System. In the event that the Town or the Paying Agent/Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the Representations Letter of the Town to DTC, and that it is in the best interest of the Town and the beneficial owners of the Certificates that they be able to obtain certificated Certificates, or in the event DTC discontinues the services described herein, 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 Certificates to such successor securities depository; or (ii) notify DTC and DTC Participants of the availability through DTC of certificated Certificates and cause the Paying Agent/Registrar to transfer one or more separate registered Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event, the Certificates 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 Certificates shall designate, in accordance with the provisions of this Ordinance. Section 3.12. Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary, so long as the Certificates 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 Certificates, and all notices with respect to such Certificates shall be made and given, respectively, in the manner provided in the Representations Letter of the Town to DTC. -14- #8102476.2 ARTICLE IV REDEMPTION OF CERTIFICATES BEFORE MATURITY Section 4.1. Limitation on Redemption. The Certificates shall be subject to redemption before scheduled maturity only as provided in this Article IV. Section 4.2. Optional Redemption. (a) The Town reserves the option to redeem Certificates maturing on and after February 15, 2031 in whole or any part, before their respective scheduled maturity dates, on February 15, 2030 or on any date thereafter, such redemption date or dates to be fixed by the Town, at a price equal to the principal amount of the Certificates called for redemption plus accrued interest to the date fixed for redemption. (b) If less than all of the Certificates are to be redeemed pursuant to an optional redemption, the Town shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot the Certificates, or portions thereof, within such maturity or maturities and in such principal amounts for redemption. (c) The Town, at least 45 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent/Registrar, shall notify the Paying Agent/Registrar of such redemption date and of the principal amount of Certificates to be redeemed. Section 4.3. Mandatory Sinking Fund Redemption. (a) The Certificates maturing on February 15, in the years 2033, 2035, 2037, 2039 and 2041 (the “Term Certificates”) are subject to scheduled mandatory redemption and will be redeemed by the Town, in part at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth below. $ 335,000 Term Certificates Maturing February 15, 2033 Redemption Date Redemption Amount February 15, 2032 $165,000 February 15, 2033* 170,000 *maturity $355,000 Term Certificates Maturing February 15, 2035 Redemption Date Redemption Amount February 15, 2034 $175,000 February 15, 2035* 180,000 *maturity -15- #8102476.2 $365,000 Term Certificates Maturing February 15, 2037 Redemption Date Redemption Amount February 15, 2036 $180,000 February 15, 2037* 185,000 *maturity $380,000 Term Certificates Maturing February 15, 2039 Redemption Date Redemption Amount February 15, 2038 $190,000 February 15, 2039* 190,000 *maturity $395,000 Term Certificates Maturing February 15, 2041 Redemption Date Redemption Amount February 15, 2040 $195,000 February 15, 2041* 200,000 *maturity (b) At least forty-five (45) days prior to each scheduled mandatory redemption date, the Paying Agent/Registrar shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Term Certificates equal to the aggregate principal amount of such Term Certificates to be redeemed, shall call such Term Certificates for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in Section 4.05. (c) The principal amount of the Term Certificates required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section 4.03 shall be reduced, at the option of the Town, by the principal amount of any Term Certificates which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the Town at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Section 4.4. Partial Redemption. (a) A portion of a single Certificate of a denomination greater than $5,000 may be redeemed, but only in a principal amount equal to $5,000 or any integral multiple thereof. If such a Certificate is to be partially redeemed, the Paying Agent/Registrar shall treat each $5,000 portion of the Certificate as though it were a single Certificate for purposes of selection for redemption. (b) Upon surrender of any Certificate for redemption in part, the Paying Agent/Registrar, in accordance with Section 3.06 of this Ordinance, shall authenticate and deliver -16- #8102476.2 an exchange Certificate or Certificates in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered, such exchange being without charge. (c) The Paying Agent/Registrar shall promptly notify the Town in writing of the principal amount to be redeemed of any Certificate as to which only a portion thereof is to be redeemed. Section 4.5. Notice of Redemption to Owners. (a) The Paying Agent/Registrar shall give notice of any redemption of Certificates 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 Certificate (or part thereof) to be redeemed, at the address shown on the Register at the close of business on the Business Day next preceding the date of mailing such notice. (b) The notice shall state the redemption date, the redemption price, the place at which the Certificates are to be surrendered for payment, and, if less than all the Certificates outstanding are to be redeemed, an identification of the Certificates or portions thereof to be redeemed. (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. Section 4.6. Payment Upon Redemption. (a) Before or on each redemption date, the Town shall deposit with the Paying Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying Agent/Registrar shall make provision for the payment of the Certificates to be redeemed on such date by setting aside and holding in trust such amounts as are received by the Paying Agent/Registrar from the Town and shall use such funds solely for the purpose of paying the principal of, redemption premium, if any, and accrued interest on the Certificates being redeemed. (b) Upon presentation and surrender of any Certificate called for redemption at the Designated Payment/Transfer Office of the Paying Agent/Registrar on or after the date fixed for redemption, the Paying Agent/Registrar shall pay the principal of, redemption premium, if any, and accrued interest on such Certificate to the date of redemption from the money set aside for such purpose. Section 4.7. Effect of Redemption. (a) Notice of redemption having been given as provided in Section 4.05 of this Ordinance, the Certificates or portions thereof called for redemption shall become due and payable on the date fixed for redemption and, unless the Town defaults in its obligation to make provision for the payment of the principal thereof, redemption premium, if any, or accrued interest thereon, such Certificates or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Certificates are presented and surrendered for payment on such date. -17- #8102476.2 (b) If the Town shall fail to make provision for payment of all sums due on a redemption date, then any Certificate or portion thereof called for redemption shall continue to bear interest at the rate stated on the Certificate until due provision is made for the payment of same by the Town. Section 4.8. Conditional Notice of Redemption. The Town reserves the right to give notice of its election or direction to redeem Bonds conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or authorized securities, in an amount equal to the amount necessary to effect the redemption, with the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the redemption date, or (ii) that the Town retains the right to rescind such notice at any time on or prior to the scheduled redemption date if the Town delivers a certificate of the Town to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice and such notice and redemption shall be of no effect if such moneys and/or authorized securities are not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of redemption to the affected Owners. Any Bonds subject to conditional redemption and such redemption has been rescinded shall remain Outstanding and the rescission of such redemption shall not constitute an event of default. Further, in the case of a conditional notice of redemption, the failure of the Town to make moneys and or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default. Section 4.9. Lapse of Payment. Money set aside for the redemption of Certificates and remaining unclaimed by the Owners of such Certificates shall be subject to the provisions of Section 3.03(f) hereof. ARTICLE V PAYING AGENT/REGISTRAR Section 5.1. Appointment of Initial Paying Agent/Registrar. U.S. Bank, N.A., Dallas, Texas, is hereby appointed as the initial Paying Agent/Registrar for the Certificates. Section 5.2. Qualifications. Each Paying Agent/Registrar shall be a commercial bank, a trust company organized under the laws of the State of Texas, or other entity duly qualified and legally authorized to serve as and perform the duties and services of paying agent and registrar for the Certificates. Section 5.3. Maintaining Paying Agent/Registrar. (a) At all times while any of the Certificates are outstanding, the Town will maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. The Mayor is hereby authorized and directed to execute an agreement with the Paying Agent/Registrar specifying the duties and responsibilities of the Town and the Paying Agent/Registrar in substantially the form -18- #8102476.2 presented at this meeting, such form of agreement being hereby approved. The signature of the Mayor shall be attested by the Town Secretary of the Town. (b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the Town will promptly appoint a replacement. Section 5.4. Termination. The Town, upon not less than sixty (60) days’ notice, reserves the right to terminate the appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to be terminated written notice of such termination. Section 5.5. Notice of Change to Owners. Promptly upon each change in the entity serving as Paying Agent/Registrar, the Town will cause notice of the change to be sent to each Owner by first class United States mail, postage prepaid, at the address thereof in the Register, stating the effective date of the change and the name and mailing address of the replacement Paying Agent/Registrar. Section 5.6. Agreement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar and executing the Paying Agent/Registrar Agreement, the Paying Agent/Registrar is deemed to have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed thereby. Section 5.7. Delivery of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent/Registrar, promptly upon the appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent books and records relating to the Certificates to the successor Paying Agent/Registrar. ARTICLE VI FORM OF THE CERTIFICATES Section 6.1. Form Generally. (a) The Certificates, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the Assignment form to appear on each of the Certificates, (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 Ordinance, 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 Certificates, as evidenced by their execution thereof. -19- #8102476.2 (b) Any portion of the text of any Certificates may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Certificates. (c) The definitive Certificates, if any, shall be typewritten, photocopied, 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 Certificates, as evidenced by their execution thereof. (d) The Initial Certificate submitted to the Attorney General of the State of Texas may be typewritten and photocopied or otherwise reproduced. Section 6.2. Form of the Certificates. The form of the Certificates, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the form of Certificate of the Paying Agent/Registrar and the form of Assignment appearing on the Certificates, shall be substantially as follows: (a) Form of Certificate. REGISTERED No. _________ REGISTERED $_________ United States of America State of Texas Counties of Tarrant and Denton TOWN OF WESTLAKE, TEXAS COMBINATION TAX AND REVENUE CERTIFICATE OF OBLIGATION SERIES 2021 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP NUMBER: ______% February 15, ____ August 15, 2021 ______ ___ The Town of Westlake (the “Town”), in the Counties of Tarrant and Denton, State of Texas, for value received, hereby promises to pay to _____________________________ or registered assigns, on the Maturity Date specified above, the sum of _______________________ DOLLARS unless this Certificate shall have been sooner called for redemption and the payment of the principal hereof shall have been provided for, and to pay interest on such principal amount from the later of Dated Date specified above or the most recent interest payment date to which interest has been paid or provided for until payment of such principal amount has been provided for, at the -20- #8102476.2 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 February 15 and August 15 of each year, commencing February 15, 2022. The principal of this Certificate shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Certificate at the designated office in Dallas, Texas, of U.S. Bank, N.A., as Paying Agent/Registrar (the “Designated Payment/Transfer Office”), or, with respect to a successor paying agent/registrar, at the Designated Payment/Transfer Office of such successor Paying Agent/Registrar. Interest on this Certificate is payable by check dated as of the interest payment date, and will be mailed by the Paying Agent/Registrar to the registered owner at the address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expenses of such customary banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. For the purpose of the payment of interest on this Certificate, the registered owner shall be the person in whose name this Certificate is registered at the close of business on the “Record Date,” which shall be the fifteenth day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled payment date and for 30 days thereafter, a new record date for such interest payment (a “Special Record Date”) shall be established by the Paying Agent/Registrar, 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 (the “Special Payment Date,” which date 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 Certificate appearing on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. If the date for the payment of the principal of or interest on this Certificate 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. This Certificate is one of a series of fully registered certificates specified in the title hereof dated August 15, 2021 and issued in the aggregate principal amount of $3,215,000 (herein referred to as the “Certificates”), issued pursuant to a certain ordinance of the Town (the “Ordinance”) for the purpose of paying contractual obligations to be incurred for authorized public improvements (the “Project”) as described in the Ordinance, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and the issuance of the Certificates. -21- #8102476.2 The Certificates and the interest thereon are payable from the levy of a direct and continuing ad valorem tax within the limits prescribed by law, against all taxable property in the Town and from a pledge of certain Surplus Revenues (not to exceed $1,000) of the Town’s water and wastewater utility system, all as described and provided for in the Ordinance. The Town has reserved the option to redeem the Certificates maturing on or after February 15, 2031, in whole or in part, before their respective scheduled maturity dates, on February 15, 2030, or on any date thereafter, at a price equal to the principal amount of the Certificates so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the Town shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Certificates, or portions thereof, within such maturity and in such principal amounts, for redemption. The Certificates maturing February 15, in the years 2033, 2035, 2037, 2039 and 2041 (the “Term Certificates”) are subject to scheduled mandatory redemption and will be redeemed by the Town, in part at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth below. $ 335,000 Term Certificates Maturing February 15, 2033 Redemption Date Redemption Amount February 15, 2032 $165,000 February 15, 2033* 170,000 *maturity $355,000 Term Certificates Maturing February 15, 2035 Redemption Date Redemption Amount February 15, 2034 $175,000 February 15, 2035* 180,000 *maturity $365,000 Term Certificates Maturing February 15, 2037 Redemption Date Redemption Amount February 15, 2036 $180,000 February 15, 2037* 185,000 *maturity $380,000 Term Certificates Maturing February 15, 2039 Redemption Date Redemption Amount February 15, 2038 $190,000 February 15, 2039* 190,000 -22- #8102476.2 *maturity $395,000 Term Certificates Maturing February 15, 2041 Redemption Date Redemption Amount February 15, 2040 $195,000 February 15, 2041* 200,000 *maturity At least forty-five (45) days prior to each scheduled mandatory redemption date, the Paying Agent/Registrar shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Term Certificates equal to the aggregate principal amount of such Term Certificates to be redeemed, shall call such Term Certificates for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in the Ordinance. In lieu of calling the Term Certificates described above, for mandatory redemption, the Town reserves the right to purchase such Term Certificates at a price not exceeding the principal amount thereof, plus accrued interest, with (a) moneys on deposit in the Interest and Sinking Fund which are available for the mandatory redemption of such Term Certificates or (b) other lawfully available funds. Upon any such purchase in lieu of redemption, not less than five (5) days prior to a mandatory redemption date, the Town shall deliver such Term Certificates to the Paying Agent/Registrar prior to the selection of the Term Certificates for redemption and the principal amount so delivered shall be credited against the amount required to be called for redemption in that year. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Certificates to be redeemed in whole or in part. Notice having been so given, the Certificates or portions thereof designated for redemption shall become due and payable on the redemption date specified in such notice; from and after such date, notwithstanding that any of the Certificates or portions thereof so called for redemption shall not have been surrendered for payment, interest on such Certificates or portions thereof shall cease to accrue. The Town reserves the right to give notice of its election or direction to redeem Certificates conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or authorized securities, in an amount equal to the amount necessary to effect the redemption, with the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the redemption date, or (ii) that the Town retains the right to rescind such notice at any time on or prior to the scheduled redemption date if the Town delivers a certificate of the Town to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice and such notice and redemption shall be of no effect if such moneys and/or authorized securities are not so deposited or if the notice is rescinded. -23- #8102476.2 The Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of redemption to the affected Owners. Any Certificates subject to conditional notice of redemption and such redemption has been rescinded shall remain Outstanding and the rescission of such redemption shall not constitute an event of default. Further, in the case of a conditional redemption, the failure of the Town to make moneys and or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default. As provided in the Ordinance, and subject to certain limitations therein set forth, this Certificate is transferable upon surrender of this Town for transfer 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; thereupon, one or more new fully registered Certificates 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 Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption where such redemption is scheduled to occur within 45 calendar days of the date fixed for redemption; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Certificate. The Town, the Paying Agent/Registrar, and any other person may treat the person in whose name this Certificate 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 Certificate is registered on the Record Date, or the Special Record Date, as applicable) and for all other purposes, whether or not this Certificate be overdue, and neither the Town nor the Paying Agent/Registrar shall be affected by notice to the contrary. IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Certificate and the series of which it is a part is duly authorized by law; that all acts, conditions, and things to be done precedent to and in the issuance of the Certificates have been properly done and performed and have happened in regular and due time, form, and manner as required by law; that ad valorem taxes upon all taxable property in the Town have been levied for and pledged to the payment of the debt service requirements of the Certificates within the limit prescribed by law; that, in addition to said taxes, further provisions have been made for the payment of the debt service requirements of the Certificates from a pledge of a limited amount of the Surplus Revenues, as described in the Ordinance, derived by the Town from the operation of the municipal drainage utility system in an amount limited to $1,000, that when so collected, such taxes and Surplus Revenues shall be appropriated to such purposes; and that the total indebtedness of the Town, including the Certificates, does not exceed any constitutional or statutory limitation. -24- #8102476.2 IN WITNESS WHEREOF, the Town has caused this Certificate to be executed by the manual or facsimile signature of the Mayor of the Town and countersigned by the manual or facsimile signature of the Town Secretary, and the official seal of the Town has been duly impressed or placed in facsimile on this Certificate. Mayor, Town of Westlake, Texas Town Secretary, Town of Westlake, Texas [SEAL] (b) Form of Comptroller’s Registration Certificate. The following Comptroller’s Registration Certificate may be deleted from the definitive Certificates if such certificate on the Initial Certificate is fully executed. OFFICE OF THE COMPTROLLER § OF PUBLIC ACCOUNTS § REGISTER NO. ____________ OF THE STATE OF TEXAS § I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Certificate has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the Town of Westlake, Texas; and that this Certificate has this day been registered by me. Witness my hand and seal of office at Austin, Texas, _____________________. Comptroller of Public Accounts of the State of Texas (c) Form of Certificate of Paying Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from each Initial Certificate if the Comptroller’s Registration Certificate appears thereon. -25- #8102476.2 CERTIFICATE OF PAYING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Certificates of this series of Certificates was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Certificates referred to in the within-mentioned Ordinance. , as Paying Agent/Registrar Dated: By: Authorized Signatory (d) Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (print or typewrite name, address and Zip Code of transferee): (Social Security or other identifying number: ____________________) the within Certificate and all rights hereunder and hereby irrevocably constitutes and appoints ____________________ attorney to transfer the within Certificate on the books kept for registration hereof, 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 Certificate in every particular and must be guaranteed in a manner acceptable to the Paying Agent/Registrar. (e) The initial Certificate shall be in the form set forth in subsections (a) through (d) of this Section, except for the following alterations: (i) immediately under the name of the Certificate, the headings “INTEREST RATE,” and “MATURITY DATE” shall both be completed with the words “As Shown Below” and the words “CUSIP NO.” shall be deleted; (ii) in the first paragraph of the Certificate, the words “on the Maturity Date specified above, the sum of ____________________ DOLLARS” shall be deleted and the following will be inserted: “on the first day of September in the years, in the principal installments and bearing interest at the per annum rates set forth in the following schedule: -26- #8102476.2 Years Principal Amount Interest Rate (Information to be inserted from Section 3.02(c) hereof). (iii) the Initial Certificate shall be numbered T-1. Section 6.3. CUSIP Registration. The Town may secure identification numbers through the CUSIP Global Services, managed by S&P Capital IQ on behalf of the American Bankers Association, and may authorize the printing of such numbers on the face of the Certificates. It is expressly provided, however, that the presence or absence of CUSIP numbers on the Certificates shall be of no significance or effect in regard to the legality thereof and neither the Town nor the attorneys approving said Certificates as to legality are to be held responsible for CUSIP numbers incorrectly printed on the Certificates. Section 6.4. Legal Opinion. The approving legal opinion of Bracewell LLP, Bond Counsel, may be attached to or printed on the reverse side of each Certificate over the certification of the Town Secretary of the Town, which may be executed in facsimile. Section 6.5. Statement Insurance. A statement relating to a municipal bond insurance policy, if any, to be issued for the Certificates, may be printed on each Certificate. ARTICLE VII SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS; FLOW OF FUNDS Section 7.1. Sale of Certificates; Official Statement. (a) The Certificates, having been duly advertised and offered for sale at competitive bid, are hereby officially sold and awarded BOK Financial Securities, Inc. (the “Purchaser”) for a purchase price equal to the principal amount thereof plus and a cash premium of $249,741.54, being the bid which produced the lowest true interest cost to the Town. The Initial Certificate shall be registered in the name of the Purchaser or its designee. (b) The form and substance of the Preliminary Official Statement and any addenda, supplement or amendment thereto, are hereby in all respects approved and adopted and is hereby deemed final as of its date within the meaning and for the purposes of paragraph (b)(1) of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended. The Mayor and Town Secretary are hereby authorized and directed to cause to be prepared a final Official Statement (the “Official Statement”) incorporating applicable pricing information pertaining to the Certificates, and to execute the same by manual or facsimile signature and deliver appropriate numbers of executed copies thereof to the Purchaser. The Official Statement as thus approved, executed and delivered, with such appropriate variations as shall be approved by the Mayor and the Purchaser, may be -27- #8102476.2 used by the Purchaser in the public offering and sale thereof. The Town Secretary is hereby authorized and directed to include and maintain a copy of the 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, and the preliminary public offering of the Certificates by the Purchaser, is hereby ratified, approved and confirmed. (c) All officers of the Town are authorized to execute such documents, certificates and receipts as they may deem appropriate in order to consummate the delivery of the Certificates in accordance with the terms of sale therefor including, without limitation, the Purchase Contract. Further, in connection with the submission of the record of proceedings for the Certificates to the Attorney General of the State of Texas for examination and approval of such Certificates, the appropriate officer of the Town is hereby authorized and directed to issue a check of the Town payable to the Attorney General of the State of Texas as a nonrefundable examination fee in the amount required by Chapter 1202, Texas Government Code (such amount per series to be the lesser of (i) 1/10th of 1% of the principal amount of such series of the Certificates or (ii) $9,500.) (d) The obligation of the Purchaser to accept delivery of the Certificates is subject to the Purchaser being furnished with the final, approving opinion of Bracewell LLP, bond counsel for the Town, which opinion shall be dated and delivered the Closing Date. (e) The Mayor is hereby authorized and directed to execute the contractual agreement with Southwest Securities, Inc. setting forth such firm’s responsibilities as financial advisor to the Town, and the terms thereof in the form presented at this meeting is hereby approved and accepted. Section 7.2. Control and Delivery of Certificates. (a) The Mayor of the Town is hereby authorized to have control of the Initial Certificate and all necessary records and proceedings pertaining thereto pending investigation, examination, and approval of the Attorney General of the State of Texas, registration by the Comptroller of Public Accounts of the State of Texas and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Accounts, delivery of the Certificates shall be made to the Underwriter or a representative thereof under and subject to the general supervision and direction of the Mayor, against receipt by the Town of all amounts due to the Town under the terms of sale. (c) In the event the Mayor or Town Secretary is absent or otherwise unable to execute any document or take any action authorized herein, the Mayor Pro Tem and the Assistant Town Secretary, respectively, shall be authorized to execute such documents and take such actions, and the performance of such duties by the Mayor Pro Tem and the Assistant Town Secretary shall for the purposes of this Ordinance have the same force and effect as if such duties were performed by the Mayor and Town Secretary, respectively. Section 7.3. Deposit of Proceeds. (a) Proceeds of the Certificates in the amount of $3,400,000 (including premium in the amount of $185,000 shall be deposited to a special account of the Town, such moneys to be -28- #8102476.2 dedicated and used solely for the purposes for which the Certificates are being issued as herein provided in Section 3.01(i). (b) Premium received on the Certificates in the amount of $64,741.54 shall be used to pay the cost of issuing the Certificates. To the extent any of such amount is not used for such purposes, such excess shall be deposited to the Interest and Sinking Fund. ARTICLE VIII INVESTMENTS Section 8.1. Investments. (a) Money in the Interest and Sinking Fund created by this Ordinance, at the option of the Town, may be invested in such securities or obligations as permitted under applicable law. (b) Any securities or obligations in which such money is so invested shall be kept and held in trust for the benefit of the Owners and shall be sold and the proceeds of sale shall be timely applied to the making of all payments required to be made from the fund from which the investment was made. Section 8.2. Investment Income. (a) Interest and income derived from investment of the Interest and Sinking Fund be credited to such fund. (b) Interest and income derived from investment of the funds to be deposited pursuant to Section 7.03(b) hereof shall be credited to the account where deposited until the acquisition or construction of said projects is completed and thereafter, to the extent such interest and income are present, such interest and income shall be deposited to the Interest and Sinking Fund. ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.1. Payment of the Certificates. On or before each Interest Payment Date for the Certificates and while any of the Certificates are outstanding and unpaid, there shall be made available to the Paying Agent/Registrar, out of the Interest and Sinking Fund, money sufficient to pay such interest on and principal of, redemption premium, if any, and interest on the Certificates as will accrue or mature on the applicable Interest Payment Date, maturity date and, if applicable, on a date of prior redemption. Section 9.2. Other Representations and Covenants. (a) The Town will faithfully perform, at all times, any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance and in each Certificate; the Town will promptly pay or cause to be paid the principal of, redemption premium, if any, and interest on each Certificate on the dates and at the places and manner prescribed in such Certificate; and the Town -29- #8102476.2 will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance. (b) The Town is duly authorized under the laws of the State of Texas to issue the Certificates; all action on its part for the creation and issuance of the Certificates has been duly and effectively taken; and the Certificates in the hands of the Owners thereof are and will be valid and enforceable obligations of the Town in accordance with their terms. Section 9.3. Federal Income Tax Matters. (a) General. The Town covenants not to take any action or omit to take any action that, if taken or omitted, would cause the interest on the Certificates to be includable in gross income for federal income tax purposes. In furtherance thereof, the Town covenants to comply with sections 103 and 141 through 150 of the Code and the provisions set forth in the Federal Tax Certificate executed by the Town in connection with the Certificates. (b) No Private Activity Bonds. The Town covenants that it will use the proceeds of the Certificates (including investment income) and the property financed, directly or indirectly, with such proceeds so that the Certificates will not be “private activity bonds” within the meaning of section 141 of the Code. Furthermore, the Town will not take a deliberate action (as defined in section 1.141-2(d)(3) of the Regulations) that causes the Certificates to be a “private activity bond” unless it takes a remedial action permitted by section 1.141-12 of the Regulations. (c) No Federal Guarantee. The Town covenants not to take any action or omit to take any action that, if taken or omitted, would cause the Certificates to be “federally guaranteed” within the meaning of section 149(b) of the Code, except as permitted by section 149(b)(3) of the Code. (d) No Hedge Bonds. The Town covenants not to take any action or omit to take action that, if taken or omitted, would cause the Certificates to be “hedge bonds” within the meaning of section 149(g) of the Code. (e) No Arbitrage Bonds. The Town covenants that it will make such use of the proceeds of the Certificates (including investment income) and regulate the investment of such proceeds of the Certificates so that the Certificates will not be “arbitrage bonds” within the meaning of section 148(a) of the Code. (f) Required Rebate. The Town covenants that, if the Town does not qualify for an exception to the requirements of section 148(f) of the Code, the Town will comply with the requirement that certain amounts earned by the Town on the investment of the gross proceeds of the Certificates, be rebated to the United States. (g) Information Reporting. The Town covenants to file or cause to be filed with the Secretary of the Treasury an information statement concerning the Certificates in accordance with section 149(e) of the Code. (h) Record Retention. The Town covenants to retain all material records relating to the expenditure of the proceeds (including investment income) the Certificates and the use of the -30- #8102476.2 property financed, directly or indirectly, thereby until three years after the last Certificate is redeemed or paid at maturity (or such other period as provided by subsequent guidance issued by the Department of the Treasury) in a manner that ensures their complete access throughout such retention period. (i) Registration. If the Certificates are “registration-required bonds” under section 149(a)(2) of the Code, the Certificates will be issued in registered form. (j) Favorable Opinion of Bond Counsel. Notwithstanding the foregoing, the Town will not be required to comply with any of the federal tax covenants set forth above if the Town has received an opinion of nationally recognized bond counsel that such noncompliance will not adversely affect the excludability of interest on the Certificates from gross income for federal income tax purposes. (k) Continuing Compliance. Notwithstanding any other provision of this Ordinance, the Town’s obligations under the federal tax covenants set forth above will survive the defeasance and discharge of the Certificates for as long as such matters are relevant to the excludability of interest on the Certificates from gross income for federal income tax purposes. (l) Official Intent. For purposes of section 1.150-2(d) of the Regulations, to the extent that an official intent to reimburse has not previously been adopted by the Town, this Ordinance serves as the Town’s official declaration of intent to use proceeds of the Certificates to reimburse itself from proceeds of the Certificates issued in the maximum amount authorized by this Ordinance for certain expenditures paid in connection with the projects set forth herein. Any such reimbursement will only be made (i) for an original expenditure paid no earlier than 60 days prior to the date hereof and (ii) not later than 18 months after the later of (A) the date the original expenditure is paid or (B) the date the project to which such expenditure relates is placed in service or abandoned, but in to event more than three years after the original expenditure is paid. (m) Qualified Tax-Exempt Obligations. The Town hereby designates the Certificates as “qualified tax-exempt obligations” for purposes of section 265(b) of the Code. In connection therewith, the Town represents that (i) the aggregate amount of tax-exempt obligations (including the Certificates) issued by the Town in the same calendar year as the Bonds that have been designated as “qualified tax-exempt obligations” under section 265(b)(3) of the Code does not exceed $10,000,000 and (ii) the reasonably anticipated amount of tax-exempt obligations (including the Certificates) that will be issued by the Town in the same calendar year as the Certificates will not exceed $10,000,000. The term “tax-exempt obligation” does not include (i) “private activity bonds” within the meaning of section 141 of the Code, other than “qualified 501(c)(3) bonds” within the meaning of section 145 of the Code or (ii) obligations issued to currently refund any obligation to the extent that the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation. In addition, the Town includes all entities that are aggregated with the Town under the Code. -31- #8102476.2 ARTICLE X DEFAULT AND REMEDIES Section 10.1. Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of, redemption premium, if any, or interest on any of the Certificates when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement, or obligation of the Town, which default materially and adversely affects the rights of the Owners, including but not limited to their prospect or ability to be repaid in accordance with this Ordinance, and the continuation thereof for a period of sixty (60) days after notice of such default is given by any Owner to the Town. Section 10.2. Remedies for Default. (a) Upon the happening of any Event of Default, then any Owner or an authorized representative thereof, including but not limited to a trustee or trustees therefor, may proceed against the Town for the purpose of protecting and enforcing the rights of the Owners under this Ordinance by mandamus or other suit, action or special proceeding in equity or at law in any court of competent jurisdiction for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Owners hereunder or any combination of such remedies. (b) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Owners of Certificates then outstanding. Section 10.3. Remedies Not Exclusive. (a) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Certificates or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Certificates shall not be available as a remedy under this Ordinance. (b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. -32- #8102476.2 ARTICLE XI DISCHARGE Section 11.1. Discharge. The Certificates may be defeased, discharged or refunded in any manner permitted by applicable law. ARTICLE XII CONTINUING DISCLOSURE UNDERTAKING Section 12.1. Annual Reports. (a) The Town shall provide annually to the MSRB, (1) within six months after the end of each fiscal year of the Town, financial information and operating data with respect to the Town of the general type included in the final Official Statement, being information described in Tables 1-6 and 8-15, including financial statements of the Town if audited financial statements of the Town are then available, and (2) if not provided as part such financial information and operating data, audited financial statements of the Town within 12 months after the end of each fiscal year, when and if available. Any financial statements so to be provided shall be (i) prepared in accordance with the accounting principles prescribed by the Generally Accepted Accounting Principles or such other accounting principles as the Town may be required to employ, from time to time, by State law or regulation, and (ii) audited, if the Town commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within 12 months after any such fiscal year end, then the Town shall file unaudited financial statements within such 12-month period and audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available. (b) If the Town changes its fiscal year, it will notify the MSRB of the change (and of the date of the new fiscal year end) prior to the next date by which the Town otherwise would be required to provide financial information and operating data pursuant to this Section. (c) The financial information and operating data to be provided pursuant to this Section may be set forth in full in oe or more documents or may be included by specific referenced to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to the MSRB or filed with the SEC. Section 12.2. Material Event Notices. (a) The Town shall notify the MSRB, in a timely manner not in excess of ten (10) Business Days after the occurrence of the event, of any of the following events with respect to the Certificates: (i) Principal and interest payment delinquencies; (ii) Non-payment related defaults, if material; -33- #8102476.2 (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Certificates, or other material events affecting the tax status of the Certificates; (vii) Modifications to rights of holders of the Certificates, if material; (viii) Certificate calls, if material, and tender offers; (ix) Defeasances; (x) Release, substitution, or sale of property securing repayment of the Certificates, if material; (xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the Town; (xiii) The consummation of a merger, consolidation, or acquisition involving the Town or the sale of all or substantially all of the assets of the Town, 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; and (xiv) Appointment of a successor Paying Agent/Registrar or change in the name of the Paying Agent/Registrar, if material. (xv) Incurrence of a Financial Obligation of the Town, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Town, any of which affect security holders, if material; and (xvi) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Town, any of which reflect financial difficulties. Any event described in (xii), is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for an obligated person in a proceeding under the U.S. 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 obligated person, 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, -34- #8102476.2 arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person; and the Town intends the words used in the immediately preceding paragraphs (xv) and (xvi) and the definition of financial obligations in those sections to have the same meanings as when they are used in rule and sec release no. 34-83885, dated August 20, 2018. (b) The Town shall provide to the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner, notice of a failure by the Town to provide required annual financial information and notices of material events in accordance with Sections 12.01 and 12.02. All documents provided to the MSRB pursuant to this section shall be accompanied by identifying information as prescribed by the MSRB. Section 12.3. Limitations, Disclaimers and Amendments. (a) The Town shall be obligated to observe and perform the covenants specified in this Article for so long as, but only for so long as, the Town remains an “obligated person” with respect to the Certificates within the meaning of the Rule, except that the Town in any event will give notice of any redemption calls and any defeasances that cause the Town to be no longer an “obligated person.” (b) The provisions of this Article are for the sole benefit of the Owners and beneficial owners of the Certificates, and nothing in this Article, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Town undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Article and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Town’s financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Article or otherwise, except as expressly provided herein. The Town does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Certificates at any future date. UNDER NO CIRCUMSTANCES SHALL THE TOWN BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE TOWN, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS ARTICLE, 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. (c) No default by the Town in observing or performing its obligations under this Article shall constitute a breach of or default under the Ordinance for purposes of any other provisions of this Ordinance. (d) Nothing in this Article is intended or shall act to disclaim, waive, or otherwise limit the duties of the Town under federal and state securities laws. -35- #8102476.2 (e) The provisions of this Article may be amended by the Town from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Town, but only if (i) the provisions of this Article, as so amended, would have permitted an underwriter to purchase or sell Certificates in the primary offering of the Certificates in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (A) the Owners of a majority in aggregate principal amount (or any greater amount required by any other provisions of this Ordinance that authorizes such an amendment) of the Outstanding Certificates consent to such amendment or (B) an entity or individual person that is unaffiliated with the Town (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Owners and beneficial owners of the Certificates. If the Town so amends the provisions of this Article, it shall include with any amended financial information or operating data next provided in accordance with Section 12.01 an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in type of financial information or operating data so provide. ARTICLE XIII AMENDMENTS Section 13.1. Amendments. This Ordinance shall constitute a contract with the Owners, be binding on the Town, and shall not be amended or repealed by the Town so long as any Certificate remains outstanding except as permitted in this Section. The Town may, without consent of or notice to any Owners, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Owners, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the Town may, with the written consent of the Owners of the Certificates holding a majority in aggregate principal amount of the Certificates then outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Owners of outstanding Certificates, no such amendment, addition, or rescission shall (i) extend the time or times of payment of the principal of and interest on the Certificates, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of or interest on the Certificates, (ii) give any preference to any Certificate over any other Certificate, or (iii) reduce the aggregate principal amount of Certificates required to be held by Owners for consent to any such amendment, addition, or rescission. ARTICLE XIV MISCELLANEOUS Section 14.1. Changes to Ordinance. The Mayor and the Chief Financial Officer, in consultation with Bond Counsel, are hereby authorized to make changes to the terms of this Ordinance if necessary or desirable to carry out the purposes hereof or in connection with the approval of the issuance of the Certificates by the Attorney General of Texas. -36- #8102476.2 Section 14.2. Partial Invalidity. 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 the Ordinance. Section 14.3. No Personal Liability. No recourse shall be had for payment of the principal of or interest on any Certificates or for any claim based thereon, or on this Ordinance, against any official or employee of the Town or any person executing any Certificates. ARTICLE XV EFFECTIVENESS Section 15.1. Effectiveness. This Ordinance shall take effect immediately from and after its passage. Signature Page for Ordinance Series 2021 Combination Tax and Revenue Certificates of Obligation #8102476.2 APPROVED AND ADOPTED this August 23, 2021. Mayor Town of Westlake, Texas ATTEST: Town Secretary Town of Westlake, Texas #8102476.1 ORDINANCE NO. 932 relating to $_________________ TOWN OF WESTLAKE, TEXAS COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION SERIES 2021 Adopted: August 23, 2021 TABLE OF CONTENTS (continued) Page -i- #8102476.1 ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.1. Definitions................................................................................................................2 Section 1.2. Findings....................................................................................................................4 Section 1.3. Table of Contents, Titles, and Headings ..................................................................4 Section 1.4. Interpretation ............................................................................................................4 ARTICLE II SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND Section 2.1. Payment of the Certificates ......................................................................................5 Section 2.2. Interest and Sinking Fund ........................................................................................6 ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE CERTIFICATES Section 3.1. Authorization ...........................................................................................................6 Section 3.2. Date, Denomination, Maturities, and Interest ..........................................................7 Section 3.3. Medium, Method, and Place of Payment .................................................................8 Section 3.4. Execution and Registration of Certificates ..............................................................9 Section 3.5. Ownership ................................................................................................................9 Section 3.6. Registration, Transfer, and Exchange ....................................................................10 Section 3.7. Cancellation ...........................................................................................................10 Section 3.8. Temporary Certificates ..........................................................................................11 Section 3.9. Replacement Certificates .......................................................................................11 Section 3.10. Book-Entry-Only System.......................................................................................12 Section 3.11. Successor Securities Depository; Transfer Outside Book-Entry-Only System ....................................................................................................................13 Section 3.12. Payments to Cede & Co .........................................................................................13 ARTICLE IV REDEMPTION OF CERTIFICATES BEFORE MATURITY Section 4.1. Limitation on Redemption .....................................................................................14 Section 4.2. Optional Redemption .............................................................................................14 Section 4.3. Mandatory Sinking Fund Redemption ...................................................................14 Section 4.4. Partial Redemption.................................................................................................15 Section 4.5. Notice of Redemption to Owners ..........................................................................16 Section 4.6. Payment Upon Redemption ...................................................................................16 Section 4.7. Effect of Redemption .............................................................................................16 Section 4.8. Conditional Notice of Redemption ........................................................................17 Section 4.9. Lapse of Payment ...................................................................................................17 TABLE OF CONTENTS (continued) Page -ii- #8102476.1 ARTICLE V PAYING AGENT/REGISTRAR Section 5.1. Appointment of Initial Paying Agent/Registrar .....................................................17 Section 5.2. Qualifications .........................................................................................................17 Section 5.3. Maintaining Paying Agent/Registrar .....................................................................17 Section 5.4. Termination ............................................................................................................18 Section 5.5. Notice of Change to Owners ..................................................................................18 Section 5.6. Agreement to Perform Duties and Functions.........................................................18 Section 5.7. Delivery of Records to Successor ..........................................................................18 ARTICLE VI FORM OF THE CERTIFICATES Section 6.1. Form Generally ......................................................................................................18 Section 6.2. Form of the Certificates .........................................................................................19 Section 6.3. CUSIP Registration ................................................................................................26 Section 6.4. Legal Opinion ........................................................................................................26 Section 6.5. Statement Insurance ...............................................................................................26 ARTICLE VII SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS; FLOW OF FUNDS Section 7.1. Sale of Certificates; Official Statement .................................................................26 Section 7.2. Control and Delivery of Certificates ......................................................................27 Section 7.3. Deposit of Proceeds ...............................................................................................28 ARTICLE VIII INVESTMENTS Section 8.1. Investments ............................................................................................................28 Section 8.2. Investment Income .................................................................................................28 ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.1. Payment of the Certificates ....................................................................................28 Section 9.2. Other Representations and Covenants ...................................................................29 Section 9.3. Federal Income Tax Matters ..................................................................................29 ARTICLE X DEFAULT AND REMEDIES Section 10.1. Events of Default ...................................................................................................31 Section 10.2. Remedies for Default .............................................................................................31 Section 10.3. Remedies Not Exclusive ........................................................................................31 TABLE OF CONTENTS (continued) Page -iii- #8102476.1 ARTICLE XI DISCHARGE Section 11.1. Discharge ...............................................................................................................32 ARTICLE XII CONTINUING DISCLOSURE UNDERTAKING Section 12.1. Annual Reports ......................................................................................................32 Section 12.2. Material Event Notices ..........................................................................................32 Section 12.3. Limitations, Disclaimers and Amendments ...........................................................34 ARTICLE XIII AMENDMENTS Section 13.1. Amendments ..........................................................................................................35 ARTICLE XIV MISCELLANEOUS Section 14.1. Changes to Ordinance ............................................................................................35 Section 14.2. Partial Invalidity.....................................................................................................36 Section 14.3. No Personal Liability .............................................................................................36 ARTICLE XV EFFECTIVENESS Section 15.1. Effectiveness ..........................................................................................................36 #8102476.1 AN ORDINANCE AUTHORIZING THE ISSUANCE OF $_______________ TOWN OF WESTLAKE, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2021; LEVYING A TAX, AND PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID CERTIFICATES; AWARDING THE SALE OF THE CERTIFICATES; AUTHORIZING THE EXECUTION AND DELIVERY OF A PAYING AGENT AGREEMENT; APPROVING THE OFFICIAL STATEMENT; ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT; AND DECLARING AN EFFECTIVE DATE. WHEREAS, under the provisions of the Texas Local Government Code, Chapter 271, Subchapter C, as amended, the Town of Westlake, Texas (the “Town”), is authorized to issue certificates of obligation for the purposes specified in this Ordinance and for the payment of all or a portion of the contractual obligations for professional services, including that of engineers, attorneys, and financial advisors in connection therewith, and to sell the same for cash as herein provided; and WHEREAS, the Town is authorized to provide that such obligations will be payable from and secured by the levy of a direct and continuing ad valorem tax against all taxable property within the Town, in combination with all or a part of certain revenues of the Town’s municipal drainage utility system (the “System”) remaining after payment of any obligations of the Town payable in whole or in part from a lien on or pledge of such revenues that would be superior to the obligations to be authorized herein as authorized by Chapter 1502, Texas Government Code; and WHEREAS, the Town Council has found and determined that it is necessary and in the best interests of the Town and its citizens that it issue such certificates of obligation authorized by this Ordinance; and WHEREAS, pursuant to a resolution heretofore passed by this governing body, notice of intention (the “Notice of Intention”) to issue certificates of obligation of the Town payable as provided in this Ordinance was published in a newspaper of general circulation in the Town in accordance with the requirements of law, such certificates of obligation to be issued for the purpose of paying contractual obligations to be incurred for the purposes set forth in Section 3.01 hereof; and WHEREAS, the Notice of Intention stated that the Town Council intended to pass an ordinance authorizing the issuance of the Certificates at its Town Council meeting held on the date of adoption of this Ordinance; and WHEREAS, no petition of any kind has been filed with the Town Secretary, any member of the Town Council or any other official of the Town, protesting the issuance of such certificates of obligation; and WHEREAS, this Town Council is now authorized and empowered to proceed with the issuance of said certificates of obligation and to sell the same for cash; and -2- #8102476.1 WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and public notice of the time, place, and purpose of said meeting was given as required by Chapter 551, Texas Government Code, as amended; therefore, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF WESTLAKE, TEXAS, THAT: ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.1. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise in this Ordinance, the following terms shall have the meanings specified below: “Business Day” means a day that is not a Saturday, Sunday, legal holiday or other day on which banking institutions in the Town where the Designated Payment/Transfer Office is located are required or authorized by law or executive order to close. “Certificate” means any of the Certificates. “Certificate Date” means the date designated as the initial date of the Certificates by Section 3.02(a) of this Ordinance. “Certificates” means the certificates of obligation authorized to be issued by Section 3.01 of this Ordinance and designated as “Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021. “Closing Date” means the date of the initial delivery of and payment for the Certificates. “Code” means the Internal Revenue Code of 1986, as amended, and, with respect to a specific section thereof, such reference shall be deemed to include (a) the Regulations promulgated under such section, (b) any successor provision of similar import hereafter enacted, (c) any corresponding provision of any subsequent Internal Revenue Code, and (d) the Regulations promulgated under the provisions described in (b) and (c). “Designated Payment/Transfer Office” means (i) with respect to the initial Paying Agent/Registrar named herein, its office in Dallas, Texas, or at such other location 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. “DTC” means The Depository Trust Company of New York, New York, or any successor securities depository. “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. -3- #8102476.1 “EMMA” means the Electronic Municipal Market Access System. “Event of Default” means any event of default as defined in Section 10.01 of this Ordinance. “Financial Obligation” means a (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of a debt obligation or any such derivative instrument; provided that “financial obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. “Fiscal Year” means such fiscal year as shall from time to time be set by the Town Council. “Initial Certificate” means the initial certificate authorized by Section 3.04(d) of this Ordinance. “Interest and Sinking Fund” means the interest and sinking fund established by Section 2.02 of this Ordinance. “Interest Payment Date” means the date or dates upon which interest on the Certificates is scheduled to be paid until their respective dates of maturity or prior redemption, such dates being February 15 and August 15 of each year commencing February 15, 2022. “MSRB” means the Municipal Securities Rulemaking Board. “Net Revenues” means the gross revenues of the System less the expenses of operation and maintenance as said expenses are defined by Chapter 1502, Texas Government Code, as amended. “Ordinance” means this Ordinance. “Owner” means the person who is the registered owner of a Certificate or Certificates, as shown in the Register. “Paying Agent/Registrar” means initially U.S. Bank, N.A., Dallas, Texas, or any successor thereto as provided in this Ordinance. “Prior Lien Bonds” means any and all bonds or other obligations of the Town presently outstanding or that may be hereafter issued, payable from and secured by a first lien on and pledge of the Net Revenues or by a lien on and pledge of the Net Revenues subordinate to a first lien and pledge of such Net Revenues but superior to the lien and pledge of the Surplus Revenues made for the Certificates. “Record Date” means the fifteenth (15th) day of the month next preceding an Interest Payment Date. “Register” means the Register specified in Section 3.06(a) of this Ordinance. -4- #8102476.1 “Regulations” means the applicable proposed, temporary or final Treasury Regulations promulgated under the Code or, to the extent applicable to the Code, under the Internal Revenue Code of 1954, as such regulations may be amended or supplemented from time to time. “Representations Letter” means the Blanket Letter of Representations between the Town and DTC. “Rule” means SEC Rule 15c2-12, as amended from time to time. “SEC” means the United States Securities and Exchange Commission. “Special Payment Date” means the Special Payment Date prescribed by Section 3.03(b). “Special Record Date” means the Special Record Date prescribed by Section 3.03(b). “Surplus Revenues” means the revenues of the System remaining after payment of all operation and maintenance expenses thereof, and all debt service, reserve, and other requirements in connection with the Town’s Prior Lien Bonds; provided, however, that the amount of such Surplus Revenues pledged to the payment of the Certificates shall be limited to $1,000. “System” as used in this Ordinance means the Town’s water and wastewater utility system, including all present and future additions, extensions, replacements, and improvements thereto. “Town” means the Town of Westlake, Texas. “Unclaimed Payments” means money deposited with the Paying Agent/Registrar for the payment of principal of, redemption premium, if any, or interest on the Certificates as the same come due and payable or money set aside for the payment of Certificates duly called for redemption prior to maturity. Section 1.2. Findings. The declarations, determinations, and findings declared, made, and found in the preamble to this Ordinance 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 Ordinance 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 Ordinance 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 -5- #8102476.1 words of the singular number shall be construed to include correlative words of the plural number and vice versa. (b) This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein. ARTICLE II SECURITY FOR THE CERTIFICATES; INTEREST AND SINKING FUND Section 2.1. Payment of the Certificates. (a) Pursuant to the authority granted by the Texas Constitution and laws of the State of Texas, there shall be levied and there is hereby levied for the current year and for each succeeding year thereafter while any of the Certificates or any interest thereon is outstanding and unpaid, an ad valorem tax on each one hundred dollars valuation of taxable property within the Town, at a rate sufficient, within the limit prescribed by law, to pay the debt service requirements of the Certificates, being (i) the interest on the Certificates, and (ii) a sinking fund for their redemption at maturity or a sinking fund of two percent per annum (whichever amount is the greater), when due and payable, full allowance being made for delinquencies and costs of collection. (b) The ad valorem tax thus levied shall be assessed and collected each year against all property appearing on the tax rolls of the Town most recently approved in accordance with law, and the money thus collected shall be deposited as collected to the Interest and Sinking Fund. (c) Said ad valorem tax, the collections therefrom, and all amounts on deposit in or required hereby to be deposited to the Interest and Sinking Fund are hereby pledged and committed irrevocably to the payment of the principal of and interest on the Certificates when and as due and payable in accordance with their terms and this Ordinance. (d) The amount of taxes to be provided annually for the payment of principal of and interest on the Certificates shall be determined and accomplished in the following manner: (i) The Town’s annual budget shall reflect (i) the amount of debt service requirements to become due on the Certificates in the next succeeding Fiscal Year of the Town and (ii) the amount on deposit in the Interest and Sinking Fund, as of the date such budget is prepared (after giving effect to any payments required to be made during the remainder of the then current Fiscal Year), and (iii) the amount of Surplus Revenues estimated and budgeted to be available for the payment of such debt service requirements on the Certificates during the next succeeding Fiscal Year. (ii) The amount required to be provided in the succeeding Fiscal Year of the Town from ad valorem taxes shall be the amount, if any, the debt service requirements to be paid on the Certificates in the next succeeding Fiscal Year of the Town exceeds the sum of (i) the amount shown to be on deposit in the Interest and Sinking Fund (after giving effect to any payments required to be made during the remainder of the then current Fiscal Year) at the time the annual budget is prepared, and (ii) the Surplus Revenues shown to be budgeted and available for payment of said debt service requirements. -6- #8102476.1 (iii) Following the final approval of the annual budget of the Town, the governing body of the Town shall, by ordinance, levy an ad valorem tax at a rate sufficient to produce taxes in the amount determined in paragraph (ii) above, to be utilized for purposes of paying the principal of and interest on the Certificates in the next succeeding Fiscal Year of the Town. (e) The Town hereby covenants and agrees that the Surplus Revenues are hereby irrevocably pledged equally and ratably to the payment of the principal of, redemption premium, if any, and interest on the Certificates, as the same become due. (f) If the liens and provisions of this Ordinance shall be released in a manner permitted by Article XI hereof, then the collection of such ad valorem tax may be suspended or appropriately reduced, as the facts may permit, and further deposits to the Interest and Sinking Fund may be suspended or appropriately reduced, as the facts may permit. In determining the aggregate principal amount of outstanding Certificates, there shall be subtracted the amount of any Certificates that have been duly called for redemption and for which money has been deposited with the Paying Agent/Registrar for such redemption. Section 2.2. Interest and Sinking Fund. (a) The Town hereby establishes a special fund or account to be designated the “Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021, Interest and Sinking Fund” (the “Interest and Sinking Fund”) said fund to be maintained at an official depository bank of the Town separate and apart from all other funds and accounts of the Town. (b) Money on deposit in or required by this Ordinance to be deposited to the Interest and Sinking Fund shall be used solely for the purpose of paying the interest on and principal of the Certificates when and as due and payable in accordance with their terms and this Ordinance. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE CERTIFICATES Section 3.1. Authorization. The Town’s certificates of obligation to be designated “Town of Westlake, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2021” (the “Certificates”), are hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State of Texas, specifically Subchapter C, Chapter 271, Texas Local Government Code. The Certificates shall be issued in the aggregate principal amount of $_________________ for the following purposes, to wit: (i) designing, developing, constructing and acquiring drainage improvements and facilities within the Town, including the acquisition of land therefor; (ii) designing, developing, constructing, improving and renovating Town parks, trails and recreation facilities, including the acquisition of land therefor, (iii) designing, developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks, bridges, and other public ways of the Town, including streetscaping, signage, streetlighting, right-of-way protection, utility relocation, and related storm drainage improvements; and acquiring rights-of-way in connection -7- #8102476.1 therewith, (iv) designing, developing, constructing, and renovating Town cemetery improvements; and (iv) professional services incurred in connection with items (i) through (iv) and to pay the costs incurred in connection with the issuance of the Certificates. Section 3.2. Date, Denomination, Maturities, and Interest. (a) The Certificates shall be dated August 15, 2021. The Certificates shall be in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof and shall be numbered separately from one upward, except the Initial Certificate, which shall be numbered T-1. (b) The Certificates shall mature on February 15 in the years and in the principal amounts set forth in the following schedule: $ Serial Certificates Years Principal Amount Interest Rate 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 $ Term Certificates Years Principal Amount Interest Rate 20__ 20__ 20__ 20__ (c) Interest shall accrue and be paid on each Certificate respectively until its maturity or prior redemption from the later of the Certificate Date or the most recent interest payment date to which interest has been paid or provided for at the rates per annum for each maturity specified in the schedule contained in subsection (b) above. Such interest shall be payable semiannually on February 15 and August 15 of each year commencing February 15, 2022, and shall be computed on the basis of a 360-day year of twelve 30-day months. -8- #8102476.1 Section 3.3. Medium, Method, and Place of Payment. (a) The principal of, redemption premium, if any, and interest on the Certificates shall be paid in lawful money of the United States of America. (b) Interest on the Certificates shall be payable to the Owners as shown in the Register at the close of business on the Record Date; provided, however, 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”) shall be established by the Paying Agent/Registrar, 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 (the “Special Payment Date,” which shall be 15 days after the Special Record Date) shall be sent at least five Business Days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each Owner of a Certificate appearing on the Register at the close of business on the last Business Day next preceding the date of mailing of such notice. (c) Interest shall be paid by check, dated as of and mailed on the Interest Payment Date, and sent by the Paying Agent/Registrar to each Owner, first class United States mail, postage prepaid, to the address of each Owner as it appears in the Register, or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the Owner; provided, however, that the Owner shall bear all risk and expense of such alternative banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. (d) The principal of each Certificate shall be paid to the Owner thereof on the due date, whether at the maturity date or the date of prior redemption thereof upon presentation and surrender of such Certificate 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 Certificates 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, then the date for such payment shall be the next succeeding day which 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. (f) Unclaimed Payments shall be segregated in a special escrow account and held in trust, uninvested by the Paying Agent/Registrar, for the account of the Owners of the Certificates to which the Unclaimed Payments pertain. Subject to Title 6 of the Texas Property Code, Unclaimed Payments remaining unclaimed by the Owners entitled thereto for three years after the applicable payment or redemption date shall be applied to the next payment or payments on the Certificates thereafter coming due and, to the extent any such money remains after the retirement of all outstanding Certificates, shall be paid to the Town to be used for any lawful purpose. Thereafter, neither the Town, the Paying Agent/Registrar, nor any other person shall be liable or -9- #8102476.1 responsible to any Owners of such Certificates for any further payment of such unclaimed moneys or on account of any such Certificates, subject to Title 6 of the Texas Property Code. Section 3.4. Execution and Registration of Certificates. (a) The Certificates shall be executed on behalf of the Town by the Mayor and the 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 Certificates shall have the same effect as if each of the Certificates had been signed manually and in person by each of said officers, and such facsimile seal on the Certificates shall have the same effect as if the official seal of the Town had been manually impressed upon each of the Certificates. (b) In the event that any officer of the Town whose manual or facsimile signature appears on the Certificates ceases to be such officer before the authentication of such Certificates 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 Certificate shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Paying Agent/Registrar. It shall not be required that the same officer or authorized signatory of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Certificates. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Certificate 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 of Public Accounts of the State of Texas, or by his duly authorized agent, which Certificate shall be evidence that the Certificate has been duly approved by the Attorney General of the State of Texas, that it is a valid and binding obligation of the Town, and that it has been registered by the Comptroller of Public Accounts of the State of Texas. (d) On the Closing Date, one initial Certificate (the “Initial Certificate”) representing the entire principal amount of all Certificates, payable in stated installments to the initial purchaser, or its designee, executed by the Mayor and Town Secretary of the Town, approved by the Attorney General, and registered and manually signed by the Comptroller of Public Accounts, will be delivered to the initial purchaser or its designee. Upon payment for the Initial Certificate, the Paying Agent/Registrar shall cancel the Initial Certificate and deliver to DTC on behalf of the initial purchaser one registered definitive Certificate for each year of maturity of the Certificates in the aggregate principal amount of all Certificates for such maturity, registered in the name of Cede & Co., as nominee of DTC. Section 3.5. Ownership. (a) The Town, the Paying Agent/Registrar, and any other person may treat the person in whose name any Certificate is registered as the absolute owner of such Certificate for the purpose of making and receiving payment as herein provided (except interest shall be paid to the person in whose name such Certificate is registered on the Record Date or Special Record Date, -10- #8102476.1 as applicable), and for all other purposes, whether or not such Certificate is overdue, and neither the Town nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. (b) All payments made to the Owner of a Certificate shall be valid and effectual and shall discharge the liability of the Town and the Paying Agent/Registrar upon such Certificate to the extent of the sums paid. Section 3.6. Registration, Transfer, and Exchange. (a) So long as any Certificates remain outstanding, the Town shall cause the Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a register (the “Register”) in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Certificates in accordance with this Ordinance. (b) The ownership of a Certificate may be transferred only upon the presentation and surrender of the Certificate 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 Certificate shall be effective until entered in the Register. (c) The Certificates shall be exchangeable upon the presentation and surrender thereof at the Designated Payment/Transfer Office of the Paying Agent/Registrar for a Certificate or Certificates of the same maturity and interest rate and in a denomination or denominations of any integral multiple of $5,000, and in an aggregate principal amount equal to the unpaid principal amount of the Certificates presented for exchange. The Paying Agent/Registrar is hereby authorized to authenticate and deliver Certificates exchanged for other Certificates in accordance with this Section. (d) Each exchange Certificate 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 Ordinance to the same extent as the Certificate or Certificates in lieu of which such exchange Certificate is delivered. (e) 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 Certificates. 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 Certificate. (f) Neither the Town nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption, in whole or in part, within 45 calendar 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 Certificate. Section 3.7. Cancellation. All Certificates paid or redeemed before scheduled maturity in accordance with this Ordinance, and all Certificates in lieu of which exchange Certificates or replacement Certificates -11- #8102476.1 are authenticated and delivered in accordance with this Ordinance, shall be canceled and proper records made regarding such payment, redemption, exchange, or replacement. The Paying Agent/Registrar shall then return such canceled Certificates to the Town or may in accordance with law dispose of such cancelled Certificates. Section 3.8. Temporary Certificates. (a) Following the delivery and registration of the Initial Certificate and pending the preparation of definitive Certificates, the proper officers of the Town may execute and, upon the Town’s request, the Paying Agent/Registrar shall authenticate and deliver, one or more temporary Certificates that are printed, lithographed, typewritten, mimeographed, or otherwise produced, in any denomination, substantially of the tenor of the definitive Certificates 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 Certificates may determine, as evidenced by their signing of such temporary Certificates. (b) Until exchanged for Certificates in definitive form, such Certificates in temporary form shall be entitled to the benefit and security of this Ordinance. (c) The Town, without unreasonable delay, shall prepare, execute and deliver to the Paying Agent/Registrar the Certificates in definitive form; thereupon, upon the presentation and surrender of the Certificate or Certificates in temporary form to the Paying Agent/Registrar, the Paying Agent/Registrar shall cancel the Certificates in temporary form and shall authenticate and deliver in exchange therefor a Certificate or Certificates of the same maturity and series, in definitive form, in the authorized denomination, and in the same aggregate principal amount, as the Certificate or Certificates in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.9. Replacement Certificates. (a) Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Certificate, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Certificate 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 Certificate 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 Certificate is lost, apparently destroyed or wrongfully taken, the Paying Agent/ Registrar, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Certificate has been acquired by a bona fide purchaser, shall authenticate and deliver a replacement Certificate 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 Certificate; -12- #8102476.1 (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar to save it 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 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 Paying Agent/Registrar. (c) If, after the delivery of such replacement Certificate, a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the Town and the Paying Agent/Registrar shall be entitled to recover such replacement Certificate 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 or the Paying Agent/Registrar in connection therewith. (d) In the event that any such mutilated, lost, apparently destroyed, or wrongfully taken Certificate has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Certificate, may pay such Certificate when it becomes due and payable. (e) Each replacement Certificate 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 Ordinance to the same extent as the Certificate or Certificates in lieu of which such replacement Certificate is delivered. Section 3.10. Book-Entry-Only System. (a) Notwithstanding any other provision hereof, upon initial issuance of the Certificates, the Certificates shall be registered in the name of Cede & Co., as nominee of DTC. The definitive Certificates shall be initially issued in the form of a single separate certificate for each of the maturities thereof. (b) With respect to Certificates 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 Certificates. 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 with respect to any ownership interest in the Certificates, (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 Certificates, 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 Certificates. Notwithstanding any other provision of this Ordinance to the contrary, the Town and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose name each Certificate is registered in the Register as the absolute owner of such Certificate for the -13- #8102476.1 purpose of payment of principal of, premium, if any, and interest on Certificates, for the purpose of giving notices of redemption and other matters with respect to such Certificate, for the purpose of registering transfer with respect to such Certificate, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if any, and interest on the Certificates only to or upon the order of the respective Owners as shown in the Register, as provided in this Ordinance, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Town’s obligations with respect to payment of, premium, if any, and interest on the Certificates to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Register, shall receive a certificate evidencing the obligation of the Town to make payments of amounts due pursuant to this Ordinance. 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., the word “Cede & Co.” in this Ordinance shall refer to such new nominee of DTC. (c) The Representations Letter previously executed and delivered by the Town, and applicable to the Town’s obligations delivered in book-entry-only form to DTC as securities depository, is hereby ratified and approved for the Certificates. Section 3.11. Successor Securities Depository; Transfer Outside Book-Entry-Only System. In the event that the Town or the Paying Agent/Registrar determines that DTC is incapable of discharging its responsibilities described herein and in the Representations Letter of the Town to DTC, and that it is in the best interest of the Town and the beneficial owners of the Certificates that they be able to obtain certificated Certificates, or in the event DTC discontinues the services described herein, 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 Certificates to such successor securities depository; or (ii) notify DTC and DTC Participants of the availability through DTC of certificated Certificates and cause the Paying Agent/Registrar to transfer one or more separate registered Certificates to DTC Participants having Certificates credited to their DTC accounts. In such event, the Certificates 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 Certificates shall designate, in accordance with the provisions of this Ordinance. Section 3.12. Payments to Cede & Co. Notwithstanding any other provision of this Ordinance to the contrary, so long as the Certificates 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 Certificates, and all notices with respect to such Certificates shall be made and given, respectively, in the manner provided in the Representations Letter of the Town to DTC. -14- #8102476.1 ARTICLE IV REDEMPTION OF CERTIFICATES BEFORE MATURITY Section 4.1. Limitation on Redemption. The Certificates shall be subject to redemption before scheduled maturity only as provided in this Article IV. Section 4.2. Optional Redemption. (a) The Town reserves the option to redeem Certificates maturing on and after February 15, 20____ in whole or any part, before their respective scheduled maturity dates, on February 15, 20____ or on any date thereafter, such redemption date or dates to be fixed by the Town, at a price equal to the principal amount of the Certificates called for redemption plus accrued interest to the date fixed for redemption. (b) If less than all of the Certificates are to be redeemed pursuant to an optional redemption, the Town shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot the Certificates, or portions thereof, within such maturity or maturities and in such principal amounts for redemption. (c) The Town, at least 45 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent/Registrar, shall notify the Paying Agent/Registrar of such redemption date and of the principal amount of Certificates to be redeemed. Section 4.3. Mandatory Sinking Fund Redemption. (a) The Certificates maturing on February 15, in the years 20__, 20__, 20__, 20__ and 20__ (the “Term Certificates”) are subject to scheduled mandatory redemption and will be redeemed by the Town, in part at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth below. $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity -15- #8102476.1 $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity (b) At least forty-five (45) days prior to each scheduled mandatory redemption date, the Paying Agent/Registrar shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Term Certificates equal to the aggregate principal amount of such Term Certificates to be redeemed, shall call such Term Certificates for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in Section 4.05. (c) The principal amount of the Term Certificates required to be redeemed on any redemption date pursuant to subparagraph (a) of this Section 4.03 shall be reduced, at the option of the Town, by the principal amount of any Term Certificates which, at least 45 days prior to the mandatory sinking fund redemption date (i) shall have been acquired by the Town at a price not exceeding the principal amount of such Term Certificates plus accrued interest to the date of purchase thereof, and delivered to the Paying Agent/Registrar for cancellation, or (ii) shall have been redeemed pursuant to the optional redemption provisions hereof and not previously credited to a mandatory sinking fund redemption. Section 4.4. Partial Redemption. (a) A portion of a single Certificate of a denomination greater than $5,000 may be redeemed, but only in a principal amount equal to $5,000 or any integral multiple thereof. If such a Certificate is to be partially redeemed, the Paying Agent/Registrar shall treat each $5,000 portion of the Certificate as though it were a single Certificate for purposes of selection for redemption. (b) Upon surrender of any Certificate for redemption in part, the Paying Agent/Registrar, in accordance with Section 3.06 of this Ordinance, shall authenticate and deliver -16- #8102476.1 an exchange Certificate or Certificates in an aggregate principal amount equal to the unredeemed portion of the Certificate so surrendered, such exchange being without charge. (c) The Paying Agent/Registrar shall promptly notify the Town in writing of the principal amount to be redeemed of any Certificate as to which only a portion thereof is to be redeemed. Section 4.5. Notice of Redemption to Owners. (a) The Paying Agent/Registrar shall give notice of any redemption of Certificates 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 Certificate (or part thereof) to be redeemed, at the address shown on the Register at the close of business on the Business Day next preceding the date of mailing such notice. (b) The notice shall state the redemption date, the redemption price, the place at which the Certificates are to be surrendered for payment, and, if less than all the Certificates outstanding are to be redeemed, an identification of the Certificates or portions thereof to be redeemed. (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. Section 4.6. Payment Upon Redemption. (a) Before or on each redemption date, the Town shall deposit with the Paying Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying Agent/Registrar shall make provision for the payment of the Certificates to be redeemed on such date by setting aside and holding in trust such amounts as are received by the Paying Agent/Registrar from the Town and shall use such funds solely for the purpose of paying the principal of, redemption premium, if any, and accrued interest on the Certificates being redeemed. (b) Upon presentation and surrender of any Certificate called for redemption at the Designated Payment/Transfer Office of the Paying Agent/Registrar on or after the date fixed for redemption, the Paying Agent/Registrar shall pay the principal of, redemption premium, if any, and accrued interest on such Certificate to the date of redemption from the money set aside for such purpose. Section 4.7. Effect of Redemption. (a) Notice of redemption having been given as provided in Section 4.05 of this Ordinance, the Certificates or portions thereof called for redemption shall become due and payable on the date fixed for redemption and, unless the Town defaults in its obligation to make provision for the payment of the principal thereof, redemption premium, if any, or accrued interest thereon, such Certificates or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Certificates are presented and surrendered for payment on such date. -17- #8102476.1 (b) If the Town shall fail to make provision for payment of all sums due on a redemption date, then any Certificate or portion thereof called for redemption shall continue to bear interest at the rate stated on the Certificate until due provision is made for the payment of same by the Town. Section 4.8. Conditional Notice of Redemption. The Town reserves the right to give notice of its election or direction to redeem Bonds conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or authorized securities, in an amount equal to the amount necessary to effect the redemption, with the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the redemption date, or (ii) that the Town retains the right to rescind such notice at any time on or prior to the scheduled redemption date if the Town delivers a certificate of the Town to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice and such notice and redemption shall be of no effect if such moneys and/or authorized securities are not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of redemption to the affected Owners. Any Bonds subject to conditional redemption and such redemption has been rescinded shall remain Outstanding and the rescission of such redemption shall not constitute an event of default. Further, in the case of a conditional notice of redemption, the failure of the Town to make moneys and or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default. Section 4.9. Lapse of Payment. Money set aside for the redemption of Certificates and remaining unclaimed by the Owners of such Certificates shall be subject to the provisions of Section 3.03(f) hereof. ARTICLE V PAYING AGENT/REGISTRAR Section 5.1. Appointment of Initial Paying Agent/Registrar. U.S. Bank, N.A., Dallas, Texas, is hereby appointed as the initial Paying Agent/Registrar for the Certificates. Section 5.2. Qualifications. Each Paying Agent/Registrar shall be a commercial bank, a trust company organized under the laws of the State of Texas, or other entity duly qualified and legally authorized to serve as and perform the duties and services of paying agent and registrar for the Certificates. Section 5.3. Maintaining Paying Agent/Registrar. (a) At all times while any of the Certificates are outstanding, the Town will maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. The Mayor is hereby authorized and directed to execute an agreement with the Paying Agent/Registrar specifying the duties and responsibilities of the Town and the Paying Agent/Registrar in substantially the form -18- #8102476.1 presented at this meeting, such form of agreement being hereby approved. The signature of the Mayor shall be attested by the Town Secretary of the Town. (b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the Town will promptly appoint a replacement. Section 5.4. Termination. The Town, upon not less than sixty (60) days’ notice, reserves the right to terminate the appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to be terminated written notice of such termination. Section 5.5. Notice of Change to Owners. Promptly upon each change in the entity serving as Paying Agent/Registrar, the Town will cause notice of the change to be sent to each Owner by first class United States mail, postage prepaid, at the address thereof in the Register, stating the effective date of the change and the name and mailing address of the replacement Paying Agent/Registrar. Section 5.6. Agreement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar and executing the Paying Agent/Registrar Agreement, the Paying Agent/Registrar is deemed to have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed thereby. Section 5.7. Delivery of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent/Registrar, promptly upon the appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent books and records relating to the Certificates to the successor Paying Agent/Registrar. ARTICLE VI FORM OF THE CERTIFICATES Section 6.1. Form Generally. (a) The Certificates, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the Assignment form to appear on each of the Certificates, (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 Ordinance, 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 Certificates, as evidenced by their execution thereof. -19- #8102476.1 (b) Any portion of the text of any Certificates may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Certificates. (c) The definitive Certificates, if any, shall be typewritten, photocopied, 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 Certificates, as evidenced by their execution thereof. (d) The Initial Certificate submitted to the Attorney General of the State of Texas may be typewritten and photocopied or otherwise reproduced. Section 6.2. Form of the Certificates. The form of the Certificates, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the form of Certificate of the Paying Agent/Registrar and the form of Assignment appearing on the Certificates, shall be substantially as follows: (a) Form of Certificate. REGISTERED No. _________ REGISTERED $_________ United States of America State of Texas Counties of Tarrant and Denton TOWN OF WESTLAKE, TEXAS COMBINATION TAX AND REVENUE CERTIFICATE OF OBLIGATION SERIES 2021 INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP NUMBER: ______% February 15, ____ ____________, 2021 ______ ___ The Town of Westlake (the “Town”), in the Counties of Tarrant and Denton, State of Texas, for value received, hereby promises to pay to _____________________________ or registered assigns, on the Maturity Date specified above, the sum of _______________________ DOLLARS unless this Certificate shall have been sooner called for redemption and the payment of the principal hereof shall have been provided for, and to pay interest on such principal amount from the later of Dated Date specified above or the most recent interest payment date to which interest has been paid or provided for until payment of such principal amount has been provided for, at the -20- #8102476.1 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 February 15 and August 15 of each year, commencing February 15, 2022. The principal of this Certificate shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Certificate at the designated office in Dallas, Texas, of U.S. Bank, N.A., as Paying Agent/Registrar (the “Designated Payment/Transfer Office”), or, with respect to a successor paying agent/registrar, at the Designated Payment/Transfer Office of such successor Paying Agent/Registrar. Interest on this Certificate is payable by check dated as of the interest payment date, and will be mailed by the Paying Agent/Registrar to the registered owner at the address shown on the registration books kept by the Paying Agent/Registrar or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the registered owner; provided, however, such registered owner shall bear all risk and expenses of such customary banking arrangement. At the option of an Owner of at least $1,000,000 principal amount of the Certificates, interest may be paid by wire transfer to the bank account of such Owner on file with the Paying Agent/Registrar. For the purpose of the payment of interest on this Certificate, the registered owner shall be the person in whose name this Certificate is registered at the close of business on the “Record Date,” which shall be the fifteenth day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled payment date and for 30 days thereafter, a new record date for such interest payment (a “Special Record Date”) shall be established by the Paying Agent/Registrar, 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 (the “Special Payment Date,” which date 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 Certificate appearing on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. If the date for the payment of the principal of or interest on this Certificate 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 have the same force and effect as if made on the original date payment was due and no additional interest shall be due by reason of nonpayment on the date on which such payment is otherwise stated to be due and payable. This Certificate is one of a series of fully registered certificates specified in the title hereof dated ________________ and issued in the aggregate principal amount of $_________________ (herein referred to as the “Certificates”), issued pursuant to a certain ordinance of the Town (the “Ordinance”) for the purpose of paying contractual obligations to be incurred for authorized public improvements (the “Project”) as described in the Ordinance, and to pay the contractual obligations for professional services of attorneys, financial advisors and other professionals in connection with the Project and the issuance of the Certificates. -21- #8102476.1 The Certificates and the interest thereon are payable from the levy of a direct and continuing ad valorem tax within the limits prescribed by law, against all taxable property in the Town and from a pledge of certain Surplus Revenues (not to exceed $1,000) of the Town’s water and wastewater utility system, all as described and provided for in the Ordinance. The Town has reserved the option to redeem the Certificates maturing on or after February 15, 20___, in whole or in part, before their respective scheduled maturity dates, on February 15, 20___, or on any date thereafter, at a price equal to the principal amount of the Certificates so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Certificates are to be redeemed, the Town shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot or other customary method that results in a random selection the Certificates, or portions thereof, within such maturity and in such principal amounts, for redemption. The Certificates maturing February 15, in the years 20__, 20__, 20__, 20__ and 20___ (the “Term Certificates”) are subject to scheduled mandatory redemption and will be redeemed by the Town, in part at a price equal to the principal amount thereof, without premium, plus accrued interest to the redemption date, out of moneys available for such purpose in the Interest and Sinking Fund, on the dates and in the respective principal amounts as set forth below. $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* -22- #8102476.1 *maturity $ Term Certificates Maturing February 15, 20 Redemption Date Redemption Amount February 15, 20__ February 15, 20__* *maturity At least forty-five (45) days prior to each scheduled mandatory redemption date, the Paying Agent/Registrar shall select for redemption by lot, or by any other customary method that results in a random selection, a principal amount of Term Certificates equal to the aggregate principal amount of such Term Certificates to be redeemed, shall call such Term Certificates for redemption on such scheduled mandatory redemption date, and shall give notice of such redemption, as provided in the Ordinance. In lieu of calling the Term Certificates described above, for mandatory redemption, the Town reserves the right to purchase such Term Certificates at a price not exceeding the principal amount thereof, plus accrued interest, with (a) moneys on deposit in the Interest and Sinking Fund which are available for the mandatory redemption of such Term Certificates or (b) other lawfully available funds. Upon any such purchase in lieu of redemption, not less than five (5) days prior to a mandatory redemption date, the Town shall deliver such Term Certificates to the Paying Agent/Registrar prior to the selection of the Term Certificates for redemption and the principal amount so delivered shall be credited against the amount required to be called for redemption in that year. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Certificates to be redeemed in whole or in part. Notice having been so given, the Certificates or portions thereof designated for redemption shall become due and payable on the redemption date specified in such notice; from and after such date, notwithstanding that any of the Certificates or portions thereof so called for redemption shall not have been surrendered for payment, interest on such Certificates or portions thereof shall cease to accrue. The Town reserves the right to give notice of its election or direction to redeem Certificates conditioned upon the occurrence of subsequent events. Such notice may state (i) that the redemption is conditioned upon the deposit of moneys and/or authorized securities, in an amount equal to the amount necessary to effect the redemption, with the Paying Agent/Registrar, or such other entity as may be authorized by law, no later than the redemption date, or (ii) that the Town retains the right to rescind such notice at any time on or prior to the scheduled redemption date if the Town delivers a certificate of the Town to the Paying Agent/Registrar instructing the Paying Agent/Registrar to rescind the redemption notice and such notice and redemption shall be of no effect if such moneys and/or authorized securities are not so deposited or if the notice is rescinded. The Paying Agent/Registrar shall give prompt notice of any such rescission of a conditional notice of redemption to the affected Owners. Any Certificates subject to conditional notice of redemption -23- #8102476.1 and such redemption has been rescinded shall remain Outstanding and the rescission of such redemption shall not constitute an event of default. Further, in the case of a conditional redemption, the failure of the Town to make moneys and or authorized securities available in part or in whole on or before the redemption date shall not constitute an event of default. As provided in the Ordinance, and subject to certain limitations therein set forth, this Certificate is transferable upon surrender of this Town for transfer 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; thereupon, one or more new fully registered Certificates 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 Paying Agent/Registrar shall be required to issue, transfer or exchange any Certificate called for redemption where such redemption is scheduled to occur within 45 calendar days of the date fixed for redemption; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Certificate. The Town, the Paying Agent/Registrar, and any other person may treat the person in whose name this Certificate 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 Certificate is registered on the Record Date, or the Special Record Date, as applicable) and for all other purposes, whether or not this Certificate be overdue, and neither the Town nor the Paying Agent/Registrar shall be affected by notice to the contrary. IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Certificate and the series of which it is a part is duly authorized by law; that all acts, conditions, and things to be done precedent to and in the issuance of the Certificates have been properly done and performed and have happened in regular and due time, form, and manner as required by law; that ad valorem taxes upon all taxable property in the Town have been levied for and pledged to the payment of the debt service requirements of the Certificates within the limit prescribed by law; that, in addition to said taxes, further provisions have been made for the payment of the debt service requirements of the Certificates from a pledge of a limited amount of the Surplus Revenues, as described in the Ordinance, derived by the Town from the operation of the municipal drainage utility system in an amount limited to $1,000, that when so collected, such taxes and Surplus Revenues shall be appropriated to such purposes; and that the total indebtedness of the Town, including the Certificates, does not exceed any constitutional or statutory limitation. -24- #8102476.1 IN WITNESS WHEREOF, the Town has caused this Certificate to be executed by the manual or facsimile signature of the Mayor of the Town and countersigned by the manual or facsimile signature of the Town Secretary, and the official seal of the Town has been duly impressed or placed in facsimile on this Certificate. Mayor, Town of Westlake, Texas Town Secretary, Town of Westlake, Texas [SEAL] (b) Form of Comptroller’s Registration Certificate. The following Comptroller’s Registration Certificate may be deleted from the definitive Certificates if such certificate on the Initial Certificate is fully executed. OFFICE OF THE COMPTROLLER § OF PUBLIC ACCOUNTS § REGISTER NO. ____________ OF THE STATE OF TEXAS § I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Certificate has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding obligation of the Town of Westlake, Texas; and that this Certificate has this day been registered by me. Witness my hand and seal of office at Austin, Texas, _____________________. Comptroller of Public Accounts of the State of Texas (c) Form of Certificate of Paying Agent/Registrar. The following Certificate of Paying Agent/Registrar may be deleted from each Initial Certificate if the Comptroller’s Registration Certificate appears thereon. -25- #8102476.1 CERTIFICATE OF PAYING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Certificates of this series of Certificates was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Certificates referred to in the within-mentioned Ordinance. , as Paying Agent/Registrar Dated: By: Authorized Signatory (d) Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto (print or typewrite name, address and Zip Code of transferee): (Social Security or other identifying number: ____________________) the within Certificate and all rights hereunder and hereby irrevocably constitutes and appoints ____________________ attorney to transfer the within Certificate on the books kept for registration hereof, 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 Certificate in every particular and must be guaranteed in a manner acceptable to the Paying Agent/Registrar. (e) The initial Certificate shall be in the form set forth in subsections (a) through (d) of this Section, except for the following alterations: (i) immediately under the name of the Certificate, the headings “INTEREST RATE,” and “MATURITY DATE” shall both be completed with the words “As Shown Below” and the words “CUSIP NO.” shall be deleted; (ii) in the first paragraph of the Certificate, the words “on the Maturity Date specified above, the sum of ____________________ DOLLARS” shall be deleted and the following will be inserted: “on the first day of September in the years, in the principal installments and bearing interest at the per annum rates set forth in the following schedule: -26- #8102476.1 Years Principal Amount Interest Rate (Information to be inserted from Section 3.02(c) hereof). (iii) the Initial Certificate shall be numbered T-1. Section 6.3. CUSIP Registration. The Town may secure identification numbers through the CUSIP Global Services, managed by S&P Capital IQ on behalf of the American Bankers Association, and may authorize the printing of such numbers on the face of the Certificates. It is expressly provided, however, that the presence or absence of CUSIP numbers on the Certificates shall be of no significance or effect in regard to the legality thereof and neither the Town nor the attorneys approving said Certificates as to legality are to be held responsible for CUSIP numbers incorrectly printed on the Certificates. Section 6.4. Legal Opinion. The approving legal opinion of Bracewell LLP, Bond Counsel, may be attached to or printed on the reverse side of each Certificate over the certification of the Town Secretary of the Town, which may be executed in facsimile. Section 6.5. Statement Insurance. A statement relating to a municipal bond insurance policy, if any, to be issued for the Certificates, may be printed on each Certificate. ARTICLE VII SALE AND DELIVERY OF CERTIFICATES; DEPOSIT OF PROCEEDS; FLOW OF FUNDS Section 7.1. Sale of Certificates; Official Statement. (a) The Certificates, having been duly advertised and offered for sale at competitive bid, are hereby officially sold and awarded _____________________________ (the “Purchaser”) for a purchase price equal to the principal amount thereof plus accrued interest of $________________ and a cash premium of $______________, being the bid which produced the lowest true interest cost to the Town. The Initial Certificate shall be registered in the name of the Purchaser or its designee. (b) The form and substance of the Preliminary Official Statement and any addenda, supplement or amendment thereto, are hereby in all respects approved and adopted and is hereby deemed final as of its date within the meaning and for the purposes of paragraph (b)(1) of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended. The Mayor and Town Secretary are hereby authorized and directed to cause to be prepared a final Official Statement (the “Official Statement”) incorporating applicable pricing information pertaining to the Certificates, and to execute the same by manual or facsimile signature and deliver appropriate numbers of executed copies thereof to the Purchaser. The Official Statement as thus approved, executed and delivered, -27- #8102476.1 with such appropriate variations as shall be approved by the Mayor and the Purchaser, may be used by the Purchaser in the public offering and sale thereof. The Town Secretary is hereby authorized and directed to include and maintain a copy of the 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, and the preliminary public offering of the Certificates by the Purchaser, is hereby ratified, approved and confirmed. (c) All officers of the Town are authorized to execute such documents, certificates and receipts as they may deem appropriate in order to consummate the delivery of the Certificates in accordance with the terms of sale therefor including, without limitation, the Purchase Contract. Further, in connection with the submission of the record of proceedings for the Certificates to the Attorney General of the State of Texas for examination and approval of such Certificates, the appropriate officer of the Town is hereby authorized and directed to issue a check of the Town payable to the Attorney General of the State of Texas as a nonrefundable examination fee in the amount required by Chapter 1202, Texas Government Code (such amount per series to be the lesser of (i) 1/10th of 1% of the principal amount of such series of the Certificates or (ii) $9,500.) (d) The obligation of the Purchaser to accept delivery of the Certificates is subject to the Purchaser being furnished with the final, approving opinion of Bracewell LLP, bond counsel for the Town, which opinion shall be dated and delivered the Closing Date. (e) The Mayor is hereby authorized and directed to execute the contractual agreement with Southwest Securities, Inc. setting forth such firm’s responsibilities as financial advisor to the Town, and the terms thereof in the form presented at this meeting is hereby approved and accepted. Section 7.2. Control and Delivery of Certificates. (a) The Mayor of the Town is hereby authorized to have control of the Initial Certificate and all necessary records and proceedings pertaining thereto pending investigation, examination, and approval of the Attorney General of the State of Texas, registration by the Comptroller of Public Accounts of the State of Texas and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Accounts, delivery of the Certificates shall be made to the Underwriter or a representative thereof under and subject to the general supervision and direction of the Mayor, against receipt by the Town of all amounts due to the Town under the terms of sale. (c) In the event the Mayor or Town Secretary is absent or otherwise unable to execute any document or take any action authorized herein, the Mayor Pro Tem and the Assistant Town Secretary, respectively, shall be authorized to execute such documents and take such actions, and the performance of such duties by the Mayor Pro Tem and the Assistant Town Secretary shall for the purposes of this Ordinance have the same force and effect as if such duties were performed by the Mayor and Town Secretary, respectively. -28- #8102476.1 Section 7.3. Deposit of Proceeds. (a) First: All amounts received on the Closing Date as accrued interest on the Certificates from the Certificate Date to the Closing Date, shall be deposited to the Interest and Sinking Fund. (b) Second: Proceeds of the Certificates in the amount of $____________ (including premium in the amount of $________________ shall be deposited to a special account of the Town, such moneys to be dedicated and used solely for the purposes for which the Certificates are being issued as herein provided in Section 3.01(i). (c) Third: Premium received on the Certificates in the amount of $______________ shall be used to pay the cost of issuing the Certificates. To the extent any of such amount is not used for such purposes, such excess shall be deposited to the Interest and Sinking Fund. ARTICLE VIII INVESTMENTS Section 8.1. Investments. (a) Money in the Interest and Sinking Fund created by this Ordinance, at the option of the Town, may be invested in such securities or obligations as permitted under applicable law. (b) Any securities or obligations in which such money is so invested shall be kept and held in trust for the benefit of the Owners and shall be sold and the proceeds of sale shall be timely applied to the making of all payments required to be made from the fund from which the investment was made. Section 8.2. Investment Income. (a) Interest and income derived from investment of the Interest and Sinking Fund be credited to such fund. (b) Interest and income derived from investment of the funds to be deposited pursuant to Section 7.03(b) hereof shall be credited to the account where deposited until the acquisition or construction of said projects is completed and thereafter, to the extent such interest and income are present, such interest and income shall be deposited to the Interest and Sinking Fund. ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.1. Payment of the Certificates. On or before each Interest Payment Date for the Certificates and while any of the Certificates are outstanding and unpaid, there shall be made available to the Paying Agent/Registrar, out of the Interest and Sinking Fund, money sufficient to pay such interest on and principal of, redemption premium, if any, and interest on the Certificates as will accrue or mature -29- #8102476.1 on the applicable Interest Payment Date, maturity date and, if applicable, on a date of prior redemption. Section 9.2. Other Representations and Covenants. (a) The Town will faithfully perform, at all times, any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance and in each Certificate; the Town will promptly pay or cause to be paid the principal of, redemption premium, if any, and interest on each Certificate on the dates and at the places and manner prescribed in such Certificate; and the Town will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance. (b) The Town is duly authorized under the laws of the State of Texas to issue the Certificates; all action on its part for the creation and issuance of the Certificates has been duly and effectively taken; and the Certificates in the hands of the Owners thereof are and will be valid and enforceable obligations of the Town in accordance with their terms. Section 9.3. Federal Income Tax Matters. (a) General. The Town covenants not to take any action or omit to take any action that, if taken or omitted, would cause the interest on the Certificates to be includable in gross income for federal income tax purposes. In furtherance thereof, the Town covenants to comply with sections 103 and 141 through 150 of the Code and the provisions set forth in the Federal Tax Certificate executed by the Town in connection with the Certificates. (b) No Private Activity Bonds. The Town covenants that it will use the proceeds of the Certificates (including investment income) and the property financed, directly or indirectly, with such proceeds so that the Certificates will not be “private activity bonds” within the meaning of section 141 of the Code. Furthermore, the Town will not take a deliberate action (as defined in section 1.141-2(d)(3) of the Regulations) that causes the Certificates to be a “private activity bond” unless it takes a remedial action permitted by section 1.141-12 of the Regulations. (c) No Federal Guarantee. The Town covenants not to take any action or omit to take any action that, if taken or omitted, would cause the Certificates to be “federally guaranteed” within the meaning of section 149(b) of the Code, except as permitted by section 149(b)(3) of the Code. (d) No Hedge Bonds. The Town covenants not to take any action or omit to take action that, if taken or omitted, would cause the Certificates to be “hedge bonds” within the meaning of section 149(g) of the Code. (e) No Arbitrage Bonds. The Town covenants that it will make such use of the proceeds of the Certificates (including investment income) and regulate the investment of such proceeds of the Certificates so that the Certificates will not be “arbitrage bonds” within the meaning of section 148(a) of the Code. (f) Required Rebate. The Town covenants that, if the Town does not qualify for an exception to the requirements of section 148(f) of the Code, the Town will comply with the -30- #8102476.1 requirement that certain amounts earned by the Town on the investment of the gross proceeds of the Certificates, be rebated to the United States. (g) Information Reporting. The Town covenants to file or cause to be filed with the Secretary of the Treasury an information statement concerning the Certificates in accordance with section 149(e) of the Code. (h) Record Retention. The Town covenants to retain all material records relating to the expenditure of the proceeds (including investment income) the Certificates and the use of the property financed, directly or indirectly, thereby until three years after the last Certificate is redeemed or paid at maturity (or such other period as provided by subsequent guidance issued by the Department of the Treasury) in a manner that ensures their complete access throughout such retention period. (i) Registration. If the Certificates are “registration-required bonds” under section 149(a)(2) of the Code, the Certificates will be issued in registered form. (j) Favorable Opinion of Bond Counsel. Notwithstanding the foregoing, the Town will not be required to comply with any of the federal tax covenants set forth above if the Town has received an opinion of nationally recognized bond counsel that such noncompliance will not adversely affect the excludability of interest on the Certificates from gross income for federal income tax purposes. (k) Continuing Compliance. Notwithstanding any other provision of this Ordinance, the Town’s obligations under the federal tax covenants set forth above will survive the defeasance and discharge of the Certificates for as long as such matters are relevant to the excludability of interest on the Certificates from gross income for federal income tax purposes. (l) Official Intent. For purposes of section 1.150-2(d) of the Regulations, to the extent that an official intent to reimburse has not previously been adopted by the Town, this Ordinance serves as the Town’s official declaration of intent to use proceeds of the Certificates to reimburse itself from proceeds of the Certificates issued in the maximum amount authorized by this Ordinance for certain expenditures paid in connection with the projects set forth herein. Any such reimbursement will only be made (i) for an original expenditure paid no earlier than 60 days prior to the date hereof and (ii) not later than 18 months after the later of (A) the date the original expenditure is paid or (B) the date the project to which such expenditure relates is placed in service or abandoned, but in to event more than three years after the original expenditure is paid. (m) Qualified Tax-Exempt Obligations. The Town hereby designates the Certificates as “qualified tax-exempt obligations” for purposes of section 265(b) of the Code. In connection therewith, the Town represents that (i) the aggregate amount of tax-exempt obligations (including the Certificates) issued by the Town in the same calendar year as the Bonds that have been designated as “qualified tax-exempt obligations” under section 265(b)(3) of the Code does not exceed $10,000,000 and (ii) the reasonably anticipated amount of tax-exempt obligations (including the Certificates) that will be issued by the Town in the same calendar year as the Certificates will not exceed $10,000,000. The term “tax-exempt obligation” does not include (i) “private activity bonds” within the meaning of section 141 of the Code, other than “qualified -31- #8102476.1 501(c)(3) bonds” within the meaning of section 145 of the Code or (ii) obligations issued to currently refund any obligation to the extent that the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation. In addition, the Town includes all entities that are aggregated with the Town under the Code. ARTICLE X DEFAULT AND REMEDIES Section 10.1. Events of Default. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of, redemption premium, if any, or interest on any of the Certificates when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement, or obligation of the Town, which default materially and adversely affects the rights of the Owners, including but not limited to their prospect or ability to be repaid in accordance with this Ordinance, and the continuation thereof for a period of sixty (60) days after notice of such default is given by any Owner to the Town. Section 10.2. Remedies for Default. (a) Upon the happening of any Event of Default, then any Owner or an authorized representative thereof, including but not limited to a trustee or trustees therefor, may proceed against the Town for the purpose of protecting and enforcing the rights of the Owners under this Ordinance by mandamus or other suit, action or special proceeding in equity or at law in any court of competent jurisdiction for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Owners hereunder or any combination of such remedies. (b) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Owners of Certificates then outstanding. Section 10.3. Remedies Not Exclusive. (a) No remedy herein conferred or reserved is intended to be exclusive of any other available remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Certificates or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Certificates shall not be available as a remedy under this Ordinance. (b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. -32- #8102476.1 ARTICLE XI DISCHARGE Section 11.1. Discharge. The Certificates may be defeased, discharged or refunded in any manner permitted by applicable law. ARTICLE XII CONTINUING DISCLOSURE UNDERTAKING Section 12.1. Annual Reports. (a) The Town shall provide annually to the MSRB, (1) within six months after the end of each fiscal year of the Town, financial information and operating data with respect to the Town of the general type included in the final Official Statement, being information described in Tables 1-6 and 8-15, including financial statements of the Town if audited financial statements of the Town are then available, and (2) if not provided as part such financial information and operating data, audited financial statements of the Town within 12 months after the end of each fiscal year, when and if available. Any financial statements so to be provided shall be (i) prepared in accordance with the accounting principles prescribed by the Generally Accepted Accounting Principles or such other accounting principles as the Town may be required to employ, from time to time, by State law or regulation, and (ii) audited, if the Town commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within 12 months after any such fiscal year end, then the Town shall file unaudited financial statements within such 12-month period and audited financial statements for the applicable fiscal year, when and if the audit report on such statements becomes available. (b) If the Town changes its fiscal year, it will notify the MSRB of the change (and of the date of the new fiscal year end) prior to the next date by which the Town otherwise would be required to provide financial information and operating data pursuant to this Section. (c) The financial information and operating data to be provided pursuant to this Section may be set forth in full in oe or more documents or may be included by specific referenced to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to the MSRB or filed with the SEC. Section 12.2. Material Event Notices. (a) The Town shall notify the MSRB, in a timely manner not in excess of ten (10) Business Days after the occurrence of the event, of any of the following events with respect to the Certificates: (i) Principal and interest payment delinquencies; (ii) Non-payment related defaults, if material; -33- #8102476.1 (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Certificates, or other material events affecting the tax status of the Certificates; (vii) Modifications to rights of holders of the Certificates, if material; (viii) Certificate calls, if material, and tender offers; (ix) Defeasances; (x) Release, substitution, or sale of property securing repayment of the Certificates, if material; (xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the Town; (xiii) The consummation of a merger, consolidation, or acquisition involving the Town or the sale of all or substantially all of the assets of the Town, 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; and (xiv) Appointment of a successor Paying Agent/Registrar or change in the name of the Paying Agent/Registrar, if material. (xv) Incurrence of a Financial Obligation of the Town, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Town, any of which affect security holders, if material; and (xvi) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Town, any of which reflect financial difficulties. Any event described in (xii), is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for an obligated person in a proceeding under the U.S. 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 obligated person, 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, -34- #8102476.1 arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person; and the Town intends the words used in the immediately preceding paragraphs (xv) and (xvi) and the definition of financial obligations in those sections to have the same meanings as when they are used in rule and sec release no. 34-83885, dated August 20, 2018. (b) The Town shall provide to the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner, notice of a failure by the Town to provide required annual financial information and notices of material events in accordance with Sections 12.01 and 12.02. All documents provided to the MSRB pursuant to this section shall be accompanied by identifying information as prescribed by the MSRB. Section 12.3. Limitations, Disclaimers and Amendments. (a) The Town shall be obligated to observe and perform the covenants specified in this Article for so long as, but only for so long as, the Town remains an “obligated person” with respect to the Certificates within the meaning of the Rule, except that the Town in any event will give notice of any redemption calls and any defeasances that cause the Town to be no longer an “obligated person.” (b) The provisions of this Article are for the sole benefit of the Owners and beneficial owners of the Certificates, and nothing in this Article, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Town undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Article and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Town’s financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Article or otherwise, except as expressly provided herein. The Town does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Certificates at any future date. UNDER NO CIRCUMSTANCES SHALL THE TOWN BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY CERTIFICATE OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE TOWN, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS ARTICLE, 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. (c) No default by the Town in observing or performing its obligations under this Article shall constitute a breach of or default under the Ordinance for purposes of any other provisions of this Ordinance. (d) Nothing in this Article is intended or shall act to disclaim, waive, or otherwise limit the duties of the Town under federal and state securities laws. -35- #8102476.1 (e) The provisions of this Article may be amended by the Town from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Town, but only if (i) the provisions of this Article, as so amended, would have permitted an underwriter to purchase or sell Certificates in the primary offering of the Certificates in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (A) the Owners of a majority in aggregate principal amount (or any greater amount required by any other provisions of this Ordinance that authorizes such an amendment) of the Outstanding Certificates consent to such amendment or (B) an entity or individual person that is unaffiliated with the Town (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interests of the Owners and beneficial owners of the Certificates. If the Town so amends the provisions of this Article, it shall include with any amended financial information or operating data next provided in accordance with Section 12.01 an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in type of financial information or operating data so provide. ARTICLE XIII AMENDMENTS Section 13.1. Amendments. This Ordinance shall constitute a contract with the Owners, be binding on the Town, and shall not be amended or repealed by the Town so long as any Certificate remains outstanding except as permitted in this Section. The Town may, without consent of or notice to any Owners, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Owners, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the Town may, with the written consent of the Owners of the Certificates holding a majority in aggregate principal amount of the Certificates then outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Owners of outstanding Certificates, no such amendment, addition, or rescission shall (i) extend the time or times of payment of the principal of and interest on the Certificates, reduce the principal amount thereof, the redemption price, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of or interest on the Certificates, (ii) give any preference to any Certificate over any other Certificate, or (iii) reduce the aggregate principal amount of Certificates required to be held by Owners for consent to any such amendment, addition, or rescission. ARTICLE XIV MISCELLANEOUS Section 14.1. Changes to Ordinance. The Mayor and the Chief Financial Officer, in consultation with Bond Counsel, are hereby authorized to make changes to the terms of this Ordinance if necessary or desirable to carry out the purposes hereof or in connection with the approval of the issuance of the Certificates by the Attorney General of Texas. -36- #8102476.1 Section 14.2. Partial Invalidity. 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 the Ordinance. Section 14.3. No Personal Liability. No recourse shall be had for payment of the principal of or interest on any Certificates or for any claim based thereon, or on this Ordinance, against any official or employee of the Town or any person executing any Certificates. ARTICLE XV EFFECTIVENESS Section 15.1. Effectiveness. This Ordinance shall take effect immediately from and after its passage. Signature Page for Ordinance Series 2021 Combination Tax and Revenue Certificates of Obligation #8102476.1 APPROVED AND ADOPTED this August 23, 2021. _____________________, Mayor Town of Westlake, Texas [SEAL] ATTEST: Town Secretary Town of Westlake, Texas DM-#8076671.1 TOWN OF WESTLAKE NOTICE OF INTENTION TO ISSUE CERTIFICATES OF OBLIGATION NOTICE IS HEREBY GIVEN that the Town Council of the Town of Westlake, Texas (the “Town”), will meet at the Town Council Chambers, 1500 Solana Boulevard Building 7, Suite 7200 Westlake, TX 76262, at 5:00 p.m., on the 23rd day of August, 2021 (unless alternative meeting arrangements are required to address public health concerns, which meeting arrangements will be specified in the notice of such meeting posted in accordance with applicable law), which is the time and place tentatively set for the passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of the Town’s Combination Tax & Revenue Certificates of Obligation, Series 2021 (the “Certificates”), in the maximum aggregate principal amount not to exceed $3,400,000, payable from the levy of a direct and continuing ad valorem tax against all taxable property within the Town sufficient to pay the interest on this series of Certificates as due and to provide for the payment of the principal thereof as the same matures, as authorized by Chapter 271, Subchapter C, Texas Local Government Code, as amended, and from all or a part of the surplus revenues of the Town’s water and wastewater revenue system, such pledge of surplus revenues being limited to $1,000, bearing interest at any rate or rates not to exceed the maximum interest rate authorized by law, as shall be determined within the discretion of the Town Council of the Town at the time of issuance of the Certificates, and maturing over a period not to exceed forty (40) years from the date of issuance, for the purposes of evidencing the indebtedness of the Town for all or any part of the costs associated with (i) designing, developing, constructing and acquiring drainage improvements and facilities within the Town, including the acquisition of land therefor; (ii) designing, developing, constructing, improving and renovating Town parks, trails and recreation facilities, including the acquisition of land therefor, (iii) designing, developing, constructing, improving, extending, and expanding streets, thoroughfares, sidewalks, bridges, and other public ways of the Town, including streetscaping, signage, streetlighting, right-of-way protection, utility relocation, and related storm drainage improvements; and acquiring rights-of-way in connection therewith, (iv) designing, developing, constructing, and renovating Town cemetery improvements; and (v) professional services incurred in connection with items (i) through (iv) and to pay the costs incurred in connection with the issuance of the Certificates. The estimated combined principal and interest required to pay the Certificates on time and in full is $4,405,706. Such estimate is provided for illustrative purposes only, and is based on an assumed interest rate of approximately 2.75%. Market conditions affecting interest rates vary based on a number of factors beyond the control of the Town, and the Town cannot and does not guarantee a particular interest rate associated with the Certificates. As of the date of this notice, the aggregate principal amount outstanding of tax-supported debt obligations of the Town is $31,684,000. Based on the Town’s expectations, as of the date of this notice, the combined principal and interest required to pay all of the outstanding tax-supported debt obligations of the Town on time and in full is $43,511,990. WITNESS MY HAND AND THE OFFICIAL SEAL OF THE TOWN, this 21st day of June, 2021. /s/Todd Wood, Town Secretary Town of Westlake, Texas Rating Action S&P Global Ratings assigned its 'AAA' rating to Westlake, Texas' proposed $19.43 million series 2021 general obligation (GO) refunding bonds and proposed $3.4 million certificates of obligation. At the same time, S&P Global Ratings has affirmed the ‘AAA’ rating on Westlake’s debt outstanding. The outlook on all ratings is stable. The bonds are secured by the town's direct and continuing annual ad valorem tax, levied within the limits prescribed by law, on all taxable property within the town. The maximum allowable rate in Texas is $2.50 per $100 of assessed value (AV) for all purposes with the portion dedicated to debt service limited to $1.50. The town's levy is well below the maximum, at 16.7 cents, 0.43 cents of which is for debt service. We rate the bonds under our GO criteria because we do not differentiate between the town's limited- and unlimited-tax pledges due to its tax rate flexibility, very strong liquidity, and high investment-grade debt. Officials intend to use series 20121 bond proceeds to refund a portion of the town's existing debt (series 2011 GO and COs) for present value savings and the COs will be used to finance public works projects. A limited pledge of net waterworks and sewer system revenue--not to exceed $1,000--further secures the certificates. Given the limited nature of the additional pledged revenue, the ratings on these obligations reflect the strength of the town's ad valorem tax pledge. Westlake's GO debt is eligible to be rated above the sovereign because we assess the town can maintain better credit characteristics than the U.S. in a stress scenario. Under our criteria "Ratings Above the Sovereign--Corporate and Government Ratings: Methodology And Assumptions" (published Nov. 19, 2013), U.S. local governments are considered to have moderate sensitivity to country risk. The town's GO pledge is the primary source of security on the debt; this severely limits the possibility of negative sovereign intervention in the payment of the debt or in the town's operations. The institutional framework in the U.S. is predictable for local governments, allowing them significant autonomy and independent treasury management, and has no history of government intervention. Westlake has considerable financial flexibility, as demonstrated by its very strong general fund balance as a percentage of expenditures, as well as very strong liquidity. Credit overview The town of Westlake is favorably located northwest of Dallas, with both commercial and residential developments contributing to a growing tax base, with 38% growth from fiscal 2020 to fiscal 2022. The expectation is that the tax base will continue to grow with the completion of the mixed-use development, Entrada, by an estimated $300 million, and with the development of the remaining 60% of the land. Despite a reliance on sales tax revenues, the town has maintained very strong reserves and financial performance, managing swings in revenues (both sales and hotel occupancy) during the pandemic, reflective of good financial practices and policies. Offsetting these credit strengths, the town has an elevated debt profile, but which we believe is affordable given the size of the tax base and expectation for future growth and lack of near-term borrowing plans. The rating reflects our opinion of the town's: • Very strong economy, with access to a broad and diverse metropolitan statistical area (MSA); • Strong management, with good financial policies and practices under our Financial Management Assessment (FMA) methodology; • Strong budgetary performance, closing with operating surpluses in the general fund and at the total governmental fund level in fiscal 2020; • Very strong budgetary flexibility, with a high available fund balance in fiscal 2020 of 166% of operating expenditures; • Very strong liquidity, with total government available cash at 100.6% of total governmental fund expenditures and 8.0x governmental debt service, and access to external liquidity we consider strong; • Very weak debt and contingent liability profile, with debt service carrying charges at 12.6% of expenditures and net direct debt that is 208.1% of total governmental fund revenue; and • Strong institutional framework score. Environmental, social, and governance (ESG) factors We analyzed the town's environmental, social, and governance risks relative to its economy, management, financial measures, and debt and liability profile, and determined that all are in line with our view of the sector standard. Stable Outlook Downside scenario We could lower the rating if the town were to experience multi-year financial deterioration resulting in a material reduction of available reserves, coupled with an elevated debt profile, and weakening economic characteristics. Very strong economy We consider Westlake's economy very strong. The town, with an estimated population of 1,310, is located in Denton and Tarrant counties in the Dallas-Fort Worth-Arlington MSA, which we consider to be broad and diverse. The town has a projected per capita effective buying income of 271% of the national level, which we view as extremely high, and a positive credit factor and per capita market value of $1.3 million. Overall, the town's market value grew by 38.5% over the past year to $1.6 billion in 2021. The weight- averaged unemployment rate of the counties was 7.3% in 2020. Its favorable location among the three leading regional cities offers residents several employment opportunities, including nearby Dallas-Fort Worth International Airport and Fort Worth's Alliance Gateway Airport. The town's tax base, while predominantly residential, also has a significant commercial base as well, making up approximately 51%, and 27% of 2021 assessed value, respectively. According to representatives, the town has five residential developments with entitlements to approximately 200 homes, with an expected price range of $2.5 million to $7 million. Overall, the average house price in the town has increased from $.5 million in 2017 to $2 million. Additionally, the town has a mixed-used development, Entrada, with 322 residential units with an estimated value of $1 million each and approximately one million square feet of commercial entitlement (retail, hotel, and office spaces). The town's commercial presence includes major employers and taxpayers such as Deloitte University, an international training facility for Deloitte; Fidelity; Charles Schwab corporate headquarters, newly established in the last three years; and the Solana complex. The Solana mixed-use complex contains several offices, eateries, and a hotel. Continued growth in these sectors has supported significant cumulative AV growth over the last five years to $1.3 billion. We expect growth to continue as the town has approximately 60% of land available for development. Town officials attribute residential demand to the town's favorable location as well as the opening of a local charter school, Westlake Academy, which is operated by the town’s management and funded through the town. The large commercial presence contributes to the town's concentrated tax base; however, officials have no concerns with any of the town's leading taxpayers and employers. Additionally, continued economic expansion has resulted in the improvement of tax base concentration from 38% in fiscal 2017 to 31% in fiscal 2021. We anticipate further planned residential and commercial construction to continue to support local tax base growth and further diversification over the next two years. Strong management We view the town's management as strong, with good financial policies and practices under our FMA methodology, indicating financial practices exist in most areas, but that government officials might not formalize or monitor all of them regularly. Highlights of the town's practices include its: • Revenue and expenditure assumptions based, in part, on five years of historical trends and estimates of the town's needs; • Quarterly budget reports to the city council on a year-to-date comparison of the budget and amendments performed as needed; • Formal investment policy that management reviews annually with quarterly reports on investment performance and holdings to the council; • Formal long term financial plan and five-year forecast of revenue and expenditures across all funds; • Rolling five-year capital plan that identifies funding sources and uses; and • Formal minimum general fund balance policy of maintaining 180 days' operating expenditures in available fund balance, though preference is to hold 300 days. The town currently lacks a comprehensive debt management policy. Strong budgetary performance Westlake's budgetary performance is strong in our opinion. The town had operating surpluses of 13.8% of expenditures in the general fund and 4.0% across all governmental funds in fiscal 2020. Our view of the town’s budgetary performance includes adjustments made to account for recurring transfers in and out in each of the last three audited years. In fiscal 2020, Westlake posted strong operating results, with a $1.4 million general fund surplus. Sales tax is the town's leading revenue source followed by franchise tax, accounting for 64% and 19% of general fund revenue, respectively. Property taxes account for less than 1% of revenues in the general fund. Solid gains in year-over-year sales tax collections in 2018 and 2019 have given way to fluctuations in more recent years. Management notes that although sales tax, hotel occupancy tax, and user development fees were down, 8%, 57%, and 66%, respectively, in 2020 due to the pandemic, property taxes increased 23% in the same period, partially offsetting some losses. Management also notes that these fees are rebounding and improving consistently in the current year. The town conservatively budgeted for a total governmental deficit in fiscal 2021 due to the uncertainties surrounding the pandemic However, the town’s historical operational performance has demonstrated the ability to exceed budgeted expectations and per the most recent budget report, the town is expecting a modest surplus in the general fund at fiscal year-end. For fiscal 2022, the town is budgeted for a 6% increase in revenues and 2% increase in expenditures, indicating another year of positive performance. Based on the town’s historical performance, rebounding revenue sources, and the addition of federal stimulus funds, we expect the town’s financial performance to remain consistent in the near term. Very Strong budgetary flexibility Westlake currently maintains available fund balances of more than 75% of expenditures, which we believe to be exceptional. Management has maintained available fund balances of more than 100% of expenditures in each of the last three audited fiscal years. Officials are projecting the fund balance ratio will remain more than 100% in fiscal years 2021 and 2022. Based on projections, we do not expect the budgetary flexibility score to decrease below what we consider a very strong level. Flexibility is additionally supported by the town's formal fund balance policy equal to a minimum of 180 days of operating expenses. Very strong liquidity In our opinion, Westlake's liquidity is very strong, with total government available cash at 1x of total governmental fund expenditures and 8.0x governmental debt service in 2020. In our view, the town has strong access to external liquidity if necessary. The town has demonstrated its access to external liquidity through its frequent debt issuance over the past two decades. As of Sept. 30, 2020, investments were primarily held in mutual funds, with a small portion in TexPool, the state's local government investment pool. We do not consider these investments to be aggressive. The town of Westlake has privately placed three series of debt totaling $5.2 million in debt. These series include 2017 tax notes, series 2011 COs, and a capital lease. The legal documents for this debt include standard events of default, and do not include acceleration of principal or default rates as remedi es for default. Therefore, we do not consider this debt to be a contingent liability risk. Very weak debt and contingent liability profile In our view, Westlake's debt and contingent liability profile is very weak. Total governmental fund debt service is 12.6% of total governmental fund expenditures, and net direct debt is 208.1% of total governmental fund revenue. Following this issuance, the town will have approximately $49.8 million outstanding limited tax debt, The town has no authorized but unissued debt after this issuance, and they do not have plans to get voter authorization for additional debt at this time. Given the lack of near-term borrowing plans, we anticipate the town debt profile to remain stable. Pension and other post-employment benefits (OPEB) We do not view pension and OPEB liabilities as a source of credit risk for the town, as required contributions currently represent an affordable share of total governmental expenditures. The town participates in: • Texas Municipal Retirement System (TMRS): 84.9% funded with a net pension liability of $1.4 million as of Dec. 31, 2019. • Texas Retirement System (TRS): 75.5% funded with a net pension liability of $1.5 million as of Dec. 31, 2019. • The town also participates in the TMRS supplemental death benefits fund, offering term life insurance to retirees. However, the town's participation in the plan is voluntary and can be discontinued in any year at council discretion. Therefore, we do not view OPEB liabilities as a credit risk. • Texas Public School Retired Employees' Group Insurance program (TRS-Care), which provides health insurance coverage to members of the TRS pension plan is 4.99% funded and the town has a proportionate share of the net OPEB liability of $2.3 million. TMRS' and TRS’ actuarially determined contributions fell short of our minimum funding progress (MFP) metric. The MFP metric assesses whether the most recent employer and employee contributions cover total service cost, plus unfunded interest cost, plus one-thirtieth of the principal. When MFP is achieved, it indicates that an issuer has a strong funding discipline that aims to ensure timely progress on reducing its plans' liabilities. The plans use certain assumptions that could increase contribution volatility, including 6.75% and 7.25% discount rates, respectively, which we view as aggressive, though there are other offsetting factors. For more information on pensions, see "Pension Spotlight: Texas," published Feb. 25, 2020. Despite the potential for contribution volatility, we expect strong reserves would allow the town to absorb the increases with minimal disruption to financial performance in the near term. Westlake's combined required pension and actual other postemployment benefit (OPEB) contributions totaled 3.2% of total governmental fund expenditures in 2020. The town made its full required pension contribution in 2020. Strong institutional framework The institutional framework score for Texas municipalities is strong.