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<br />If a date for the payment of the principal of or interest on the Bonds is a Saturday, Sunday, legal
<br />holiday, or a day on which banking institutions in the city in which the Designated Payment/Transfer Office
<br />is located are authorized by law or executive order to close, then the date for such payment shall be the next
<br />succeeding day which is not a Saturday, Sunday, legal holiday, or day on which such banking institutions
<br />are authorized to close; and payment on such date shall have the same force and effect as if made on the
<br />original date payment was due.
<br />
<br />This Bond is one of a series of fully registered bonds specified in the title hereof issued in the
<br />aggregate principal amount of $6,300,000 (herein referred to as the "Bonds"), issued pursuant to a certain
<br />Ordinance of the City Council of the City (the "Ordinance") for the purpose of acquiring, constructing and
<br />installing additions, improvements and extensions to the City's waterworks and sewer system.
<br />
<br />This Bond and all the Bonds of the series of which it is a part constitute special obligations of the
<br />City of San Marcos, Texas, and, together with certain Previously Issued Parity Obligations defined and
<br />described in the Ordinance, are payable as to both principal and interest from and equally secured by a lien
<br />on and pledge of the Net Revenues of the City's combined Waterworks and Sewer System. Reference is
<br />hereby made to the Ordinance for a more complete statement ofthe covenants and provisions securing the
<br />payment of this Bond and the series of which it is one.
<br />
<br />The City expressly reserves the right to issue further and additional special revenue obligations
<br />equally secured by a lien on and pledge of the net revenues of the City's combined Waterworks and Sewer
<br />System on a parity with the bonds of this issue; provided, however, that any and all such additional parity
<br />obligations may be issued only in accordance with and subject to the covenants, conditions, limitations and
<br />restrictions relating thereto which are set out and contained in the Ordinance, to which reference is hereby
<br />made for more complete and full particulars.
<br />
<br />The holder hereof shall never have the right to demand payment of this obligation out of any funds
<br />raised or to be raised by taxation.
<br />
<br />The City has reserved the option to redeem the Bonds maturing on and after August 15, 2009, before
<br />their respective scheduled maturity in whole or in part in integral multiples of$5,000, on August 15,2008,
<br />or on any date thereafter, at a price equal to the principal amount ofthe Bonds so called for redemption plus
<br />accrued interest to the redemption date. If less than all of the Bonds are to be redeemed, the City shaH
<br />determine the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot
<br />Bonds, or portions thereof within such maturity or maturities and in such amounts, for redemption.
<br />
<br />Notice of such redemption or redemptions shall be sent by United States mail, first class postage
<br />prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the
<br />Bonds to be redeemed in whole or in part. Notice having been so given, the Bonds or portions thereof
<br />designated for redemption shall become due and payable on the redemption date specified in such notice,
<br />and from and after such date, notwithstanding that any of the Bonds or portions thereof so called for
<br />redemption shall not have been surrendered for payment, interest on such Bonds or portions ~hereof shall
<br />cease to accrue.
<br />
<br />As provided in the Ordinance, and subject to certain limitations therein set forth, this Bond is
<br />transferable upon surrender of this Bond for transfer at the Designated Payment/Transfer Office, with such
<br />endorsement or other evidence of trans fer as is acceptable to the Paying Agent/Registrar, and, thereupon, one
<br />or more new fully registered Bonds of the same stated maturity, of authorized denominations, bearing the
<br />same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee
<br />or transferees.
<br />
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