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and ad valorem taxes pledged, which additional taxes may be levied without limitation as to rate or amount. The Bonds of this series are issued only as fully registered Bonds in denominations of$5,000 or any integral multiple thereof of single maturities. The City may elect on February 1, 2032, and on any date thereafter to prepay Bonds due on or after February 1, 2033. Redemption may be in whole or in part and if in part, at the option of the City and in such manner as the City will determine. If less than all Bonds of a maturity are called for redemption, the City will notify the Depository Trust Company ("DTC") of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Prepayments will be at a price of par plus accrued interest. The Bonds maturing on February 1, 2039, shall hereinafter be referred to collectively as the "Term Bonds." The principal amount of the Term Bonds subject to mandatory sinking fund redemption on any date may be reduced through earlier optional redemptions, with any partial redemptions of the Term Bonds credited against future mandatory sinking fund redemptions of such Term Bond in such order as the City shall determine. The Term Bonds are subject to mandatory sinking fund redemption and shall be redeemed in part at par plus accrued interest on February 1 of the following years and in the principal amounts as follows: Sinking Fund Installment Date February 1. 2039 Term Bond 2036 2037 2038 2039* * Maturity Princinal Amount $35,000 40,000 40,000 40,000 The City Council has designated the Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code") relating to disallowance of interest expense for financial institutions and within the $10 million .limit allowed by the Code for the calendar year of issue. IT IS HEREBY CERTIFIED AND RECITED that in and by the Resolution, the City has covenanted and agreed that it will continue to own and operate the water system free from competition by other like municipal utilities; that adequate insurance on said system and suitable fidelity bonds on employees will be carried; that proper and adequate books of account will be kept showing all receipts and disbursements relating to the Water System fund, into which it will pay all of the gross revenues from the water system; that it will also create and maintain a Water Improvements Account within the General Obligation Improvement and Water Revenue Bonds, Series 2024A Debt Service Fund, into which it will pay, out of the net revenues from the water system, a sum sufficient to pay principal of and interest on the Water Improvement Bonds when LA515-142-950087.v2 B-2