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<br /> States mail, first class postage prepaid., to the address of each Owner of a Bond appearing on the books of the
<br /> Paying Agent/Registrar at the close of business on the last busÌDess day preceding the date of mailing such notice.
<br /> If a date for the payment of the principal of or interest on the Bonds is a Saturday, Sunday, legal holiday,
<br /> or a day on ""wch banking institutions in the city in which the Designated Payment/Transfer Office is located are
<br /> authorized by law or executive order to close, then the date for such payment shall be the next succeeding day
<br /> which is not a Saturday, Sunday, legal holiday, or day on which such banking institutions are authorized to close;
<br /> and payment on such date shall have the same force and effect as if made on the original date payment was due.
<br /> This Bond is one of a series of fully registered bonds specified in the title hereof issued in the aggregate
<br /> principal amount of $7,500,000 (herein referred to as the "Bonds"), issued pursuant to a certain Ordinance of the
<br /> City Council of the City (the "Ordinance") for the purpose of acquiring, constructing and installing additions,
<br /> improvements and extensions to the City's wastewater (sewer) system.
<br /> This Bond and all the Bonds of the series of which it is a part constitute special obligations of the City
<br /> of San Marcos, Texas, and, together with certain Previously Issued Parity Obligations defined and described in
<br /> the Ordinance, are payable as to both principal and interest from and equally secured by a lien on and pledge of
<br /> the Net Revenues of the City's combined Waterworks and Sewer System. Reference is hereby made to the
<br /> Ordinance for a more complete statement of the covenants and provisions securing the payment of this Bond and
<br /> the series of which it is one.
<br /> The City expressly reserves the right to issue further and additional special revenue obligations equally
<br /> secured by a lien on and pledge of the net revenues of the City's combined Waterworks and Sewer System on a
<br /> parity ""ith the bonds of this issue; provided., however, that any and all such additional. parity obligations may be
<br /> issued only in accordance with and subject to the covenants, conditions, limitations and restrictions relating
<br /> thereto which are set out and contained in the Ordinance, to which reference is hereby made for more complete
<br /> and full particulars.
<br /> The holder hereof shall never have the right to demand payment of this obligation out of any funds raised
<br /> or to be raised by ta.xation.
<br /> The City has reserved the option to redeem the Bonds maturing on and after February IS, 2007, before
<br /> their respective scheduled maturity in whole or in part in integral multiples of $5,000, in inverse order of maturity,
<br /> on February IS, 2006, or on any date thereafter, at a price equal to the principal amount of the Bonds so called
<br /> for redemption plus accrued interest to the redemption date. ff less than all of the Bonds are to be redeemed., the
<br /> City shall determine the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by
<br /> lot Bonds, or portions thereof within such maturity or maturities and in such amounts, for redemption.
<br /> Notice of such redemption or redemptions shall be sent by United States mail, fIrst class postage prepaid,
<br /> not less than 30 days before the date fixed for redemption, to the registered owner of each of the Bonds to be
<br /> redeemed in whole or in part. Notice having been so given, the Bonds or portions thereof designated for
<br /> redemption shall become due and payable on the redemption date specified in such notice, and from 'and after such
<br /> date, notwithstanding that any of the Bonds or portions thereof so called for redemption shall not have been
<br /> surrendered for payment, interest on such Bonds or portions thereof shall cease to accrue.
<br /> As provided in the Ordinance, and subject to certain limitations therein set forth, this Bond is transferable
<br /> upon SUlTender of this Bond for transfer at the Designated Payment/Transfer Office, with such endorsement or
<br /> other evidence of transfer as is acceptable to the Paying Agent/Registrar, and, thereupon, one or more new fully
<br /> "'\SA. '...,"" \ wwn,."..oo<::3\O II.DNCE.FN 16
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