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HomeMy WebLinkAboutOrdinance 15961a DALLAS /FORT WORTH INTERNATIONAL AIRPORT THIRTY NINTH SUPPLEMENTAL CONCURRENT BOND ORDINANCE Passed concurrently by the City Councils of the Cities of Dallas and Fort Worth authorizing $130 000 000 aggregate principal amount of DALLAS /FORT NORTH INTERNATIONAL AIRPORT JOINT REVENUE AUCTION RATE REFUNDING BONDS SERIES 2004A Passed by the City Council of the City of Dallas April 28 2004 Passed by the City Council of the City of Fort Worth April 27 2004 Effective April 28 2004 DAL504 /71005 Dallas 799667 8.DOC TABLE OF CONTENTS Page Preambles 1 ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1 1 Short Title 2 Section 1.2 Definitions 2 Section 1 3 Table of Contents, Titles and Headings 4 Section 14 Interpretation 4 Section 1 5 Declarations and Additional Rights and Limitations Under Controlling Medium, Method and Place of Payment Ordinances 5 ARTICLE II PURPOSES PLEDGE AND SECURITY FOR BONDS Section 2 1 Purposes of Ordinance 7 Section 2.2 Pledge, Security for Sources of Payment of Bonds 7 ARTICLE III AUTHORIZATION GENERAL TERMS AND PROVISIONS REGARDING THE BONDS Section 3 1 Authorization. 7 Section 3.2 Initial Date, Denominations, Number Maturity Initial Registered Owner Characteristics of the Initial Bond and Expiration Date of Delegation. 8 Section 3.3 Medium, Method and Place of Payment 10 Section 3 4 Ownership 11 Section 3.5 Registration, Transfer and Exchange 11 Section 3 6 Cancellation and Authentication 12 Section 3 7 Temporary Bonds 12 Section 3 8 Replacement Bonds 13 Section 3 9 Book Entry Only System 14 Section 3 10 Successor Securities Depository 15 Section 3 11 Payments to Cede & Co 15 ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY Section 4 1 Limitation on Redemption 15 Section 4.2 Optional Redemption 15 Section 4.3 Partial Redemption 15 Section 4 4 Mandatory Redemption of Certain Bonds 16 Section 4 5 Notice of Redemption to Holders 16 DAL504/71005 Dallas 799667 KDOC (1) Section 4 6 Payment Upon Redemption 17 Section 4 7 Effect of Redemption 17 ARTICLE V PAYING AGENTIREGISTRAR Section 5 1 Appointment of Initial Paying Agent/Registrar 17 Section 5.2 Qualifications 17 Section 5 3 Maintaining Paying Agent/Registrar 18 Section 5 4 Termination 18 Section 5 5 Notice of Change 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 BONDS Section 6 1 Form Generally 18 Section 6.2 Form of Bonds 19 Section 6.3 CUSIP Registration 27 Section 6 4 Legal Opinion 27 ARTICLE Vii EXECUTION APPROVAL, REGISTRATION SALE AND DELIVERY OF BONDS AND RELATED DOCUMENTS Section 7 1 Method of Execution, Delivery of Initial Bond 28 Section 7.2 Approval and Registration 29 Section 7.3 TEFRA Approval 29 Section 7 4 Approval of Credit Agreements 29 Section 7 5 Approval of Auction Agreement 29 Section 7 6 Approval of Broker Dealer Agreement. 29 Section 7 7 Official Statement 30 Section 7 8 Further Action 30 Section 7 9 Attorney General Modification 30 Section 7 10 Refunding and Redemption of Refunded Obligations 30 ARTICLE VIII GENERAL PROVISIONS Section 8 1 Deposit and Uses of Bond Proceeds 31 Section 8.2 Payment of the Bonds 31 Section 8.3 Representations and Covenants 31 Section 8 4 Covenants Regarding Tax Exemption 32 Section 8 5 Disposition of Project 34 Section 8 6 Bond Insurance and Credit Agreements 34 DAL504 /71005 Dallas 799667_8 DOC (11) ARTICLE IX REPEAL, SEVERABILITY AND EFFECTIVE DATE Section 9 1 Ordinance Irrepealable Section 9.2 Severablllty Section 9 3 Effective Date Schedule I Refunded Obligations Appendix A Provisions for Bl Modal Obligations Appendix B Form of Underwriting Agreement Appendix C Parameters for Credit Agreement Appendix D Form of Auction Agreement Appendix E Form of Broker Dealer Agreement Appendix F Form of Official Statement DAL504 /71005 Dallas 799667_8.DOC (111) 35 35 36 CITY OF DALLAS ORDINANCE CITY OF FORT WORTH ORDINANCE THIRTY NINTH SUPPLEMENTAL CONCURRENT BOND ORDINANCE AUTHORIZING DALLAS/FORT WORTH INTERNATIONAL AIRPORT JOINT REVENUE AUCTION RATE REFUNDING BONDS, SERIES 2004A, FOR LAWFUL PURPOSES PROVIDING THE SECURITY THEREFOR, PROVIDING FOR THE SALE, EXECUTION AND DELIVERY THEREOF SUBJECT TO CERTAIN PARAMETERS AND PROVIDING OTHER TERMS, PROVISIONS AND COVENANTS WITH RESPECT THERETO WHEREAS prior to the adoption of this ordinance (herein defined and cited as the `Thirty Ninth Supplemental Concurrent Bond Ordinance" or as the or this `Ordinance "), the City Councils of the Cities of Dallas and Fort Worth (the `Cities ") passed the Thirtieth Supplemental Concurrent Bond Ordinance (defined and cited herein as the `Thirtieth Ordinance ") relating to the Dallas /Fort Worth International Airport (the Airport") and WHEREAS the Thirtieth Ordinance amended and supplemented the prior ordinance of the Cities that is defined therein as the 1968 Ordinance" and WHEREAS the 1968 Ordinance, as amended and supplemented by the Thirtieth Ordinance, and the Thirtieth Ordinance, now constitute the controlling bond ordinances of the Cities (herein defined together as the `Controlling Ordinances ") that relate to the financing of the Airport and that, together (i) prescribe the terms and conditions upon the basis of which the Additional Obligations, Credit Agreements, and Panty Credit Agreement Obligations may be issued and executed, and (ii) provide and establish the pledge, security and liens securing the Cities special obligations to pay when due the Outstanding Obligations, the Initial Obligations, any Panty Credit Agreement Obligations, and any Additional Obligations, and WHEREAS, the City Councils of the Cites of Dallas and Fort Worth, on November 13 and 14 1990 respectively concurrently adopted the Eighteenth Supplemental Regional Airport Concurrent Bond Ordinance authorizing the issuance of the Dallas -Fort Worth Regional Airport Joint Revenue Refunding Bonds, Series 1992A (the `Series 1992A Bonds "), in the aggregate principal amount of $116,280 000• and WHEREAS, the City Councils of the Cities of Dallas and Fort Worth, on May 13 and May 14 1997 respectively concurrently adopted the Twenty- Seventh Supplemental Regional Airport Concurrent Bond Ordinance authorizing the issuance of the Dallas -Fort Worth Regional Airport Joint Revenue Construction and Refunding Bonds, Series 1997 (the `Series 1997 Bonds "), in the aggregate principal amount of $142,070 000• and WHEREAS each City Council hereby finds and determines that the refunding of all or a portion of the outstanding maturities of the Series 1992A Bonds and Series 1997 Bonds described in Schedule I (collectively the `Refunded Obligations ") for the purposes of making DAL504 /71005 Dallas 799667 8.DOC such fixed rate debt long -term vanable rate debt of the Cities and restructuring the debt payable from the revenues of the Airport is in the best interest of the Cities, and WHEREAS each City Council hereby finds and determines that refunding the Refunded Obligations into long term variable rate debt and restructuring the debt payable from the revenues of the Airport does not make it practicable to make the determinations otherwise required by Section 1207 008(a)(2) Texas Government Code, as amended, and WHEREAS, it is also anticipated that debt service savings can be achieved by the issuance of the Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A (the `Bonds ") to among other things, refund all or a portion of the Refunded Obligations, and WHEREAS this Ordinance is adopted for the purpose of, among the other purposes set forth below refunding all or a portion of the Refunded Obligations, as set forth in the Officers Pricing Certificate; and WHEREAS in accordance with the Controlling Ordinances, the Cities have been requested by the Dallas /Fort Worth International Airport Board (the `Board ") to issue Additional Obligations pursuant to this Ordinance to refund all or a portion of the Refunded Obligations and for other purposes as further described in Section 3 1 and WHEREAS each City Council finds and determines that the meeting at which this Ordinance was adopted was open to the public, and public notice of the time, place and subject matter of the public business to be considered and acted upon at said meeting, including this Ordinance, was given, all as required by Applicable Law - NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF DALLAS NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1 1 Short Title. This Ordinance may hereafter be cited in other documents and without further description as the `Thirty -Ninth Supplemental Concurrent Bond Ordinance. Section 1.2 Definitions. The capitalized terms used herein, including in the preambles hereto that are not otherwise defined herein shall have the same meanings and definitions as are applied to such terms, respectively in, or incorporated into the Controlling Ordinances. Additionally unless otherwise expressly provided or unless the context clearly requires otherwise, the following additional terms shall have the respective meanings specified below - Authorized Officer — means the Chief Executive Officer the Senior Executive Vice President, the Executive Vice President and Chief Financial Officer and the Vice DAL504/71005 Dallas 799667_8.DOC 2 President Finance of the Board, and, in the event any of such positions is renamed or otherwise reorganized, including any person holding or exercising the duties of any comparable position. Bond means any of the Bonds. Bond Date means the date of the Bonds, as designated in the Officers Pricing Certificate. Bonds means the bonds entitled `Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A, as further described in Section 3 1 and Appendix A. Closing Date means the date on which the Bonds are actually delivered to and paid for by the Purchaser Designated Payment /Transfer Office means (i) with respect to the initial Paying Agent /Registrar named herein, its office in Austin, Texas, or such other location as may be designated by the Paying Agent /Registrar and (u) with respect to any successor Paying Agent/Registrar the office of such successor designated and located as may be agreed upon by the Cities 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 such parties Initial Bond means the Bond described in Section 3.2 with the insertions required by Section 6.2(d) Insurer or Insurers means the issuer of the Policy or of the Policies if more than one are issued, as certified by an Authorized Officer on the Closing Date. Interest Payment Date — has the meaning set forth in Appendix A. Mandatory Redemption Dates means the dates on which the Cities are obligated to redeem Bonds in advance of their respective maturity dates and includes the dates on which any Sinking Fund Installment shall be due. Master Paving Agent Agreement means the paying agent agreement previously executed by the Board and the Paying Agent/Registrar that specifies the duties and responsibilities of the Paying Agent /Registrar with respect to bonds or other obligations issued by the Cities in relation to the Airport. Officers Pricing Certificate means the certificate to be executed by one or more Authorized Officers pursuant to Section 3.2 and attached as Schedule I to the Underwriting Agreement. DAL504 /71005 Dallas 799667 8.DOC Ordinance means this Ordinance. Original Issue Date means the Closing Date. Paving Agent/Registrar means J.P Morgan Trust Company National Association, or any successor thereto as provided in this Ordnance. Policy or Policies means the policy or policies of municipal bond insurance relating to the Bonds issued on the Closing Date by the Insurer or the Insurers if more than one. Purchaser means the person, firm or entity or the group thereof, or the representative of such group initially purchasing the Bonds from the Cities pursuant to the Underwriting Agreement. Rebate Fund means the special fund required to be created and maintained in Section 8 4 and is the type of fund referred to in the definition of that term in the Thirtieth Ordinance. Record Date — has the meaning set forth in Appendix A. Representation Letter means the `Blanket Letter of Representations" between the Cities and DTC, as approved and ratified in Section 3 9(c) Stated Maturity Date means the respective date or dates on which the Bonds are stated to mature as provided in accordance with Section 3.2(b) Thirtieth Ordinance means the Thirtieth Supplemental Concurrent Bond Ordinance passed by the City Councils of the Cities and effective on February 23 2000 Underwriting Agreement means the Underwriting Agreement hereafter entered into as contemplated and authorized in Section 3.2(b) In addition to the foregoing definitions, the definitions of terms contained in Appendix A attached hereto are hereby incorporated herein. 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 arse. Section 14 Interpretation. (a) Unless the context requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. DAL504 /71005 Dallas 799667_8.DOC 10 (b) Article and Section references shall mean references to Articles and Sections of this Ordinance unless designated otherwise. (c) If any one or more of the covenants, provisions or agreements contained herein should be contrary to Applicable Law then such covenants, provisions or agreements shall be deemed separable from the remaining covenants, provisions, and agreements hereof, and shall in no way affect the validity of the remaining covenants, provisions, and agreements contained in this Ordinance. Section 1 5 Declarations and Additional Rights and Limitations Under Controllin g Ordinances. (a) For all purposes of the Outstanding Ordinances and the Controlling Ordinances, as amended and supplemented, the Cities declare and provide as follows (1) The Bonds are Additional Obligations that are authorized by Section 3.2 of the Thirtieth Ordinance. The Bonds are not Interim Obligations. (iii) Each Policy is a Credit Agreement, and each Insurer is a Credit Provider However a Policy does not create a Panty Credit Agreement Obligation. A Policy if any entered into for the purpose of providing all or a portion of the amount equal to the Debt Service Reserve Requirement is hereby declared to be a Credit Agreement hat is on a panty with Subordinate Lien Obligations, provided however the provisions of subsection 5.2(b)(iii) of the Thirtieth Ordinance shall continue to apply with respect to any deficiencies in the Debt Service Reserve Fund, including any costs of a Policy with respect to the Debt Service Reserve Fund. (iv) Administrative Expenses shall include the fees and expenses owed to the Paying Agent /Registrar (v) The amount of the Debt Service Reserve Requirement on account of the Bonds is an amount that is not less than the average annual Debt Service that will be required to be paid on or with respect to all Outstanding Obligations as of the date following the delivery of the Bonds. In the event that the amount on deposit in the Debt Service Reserve Fund is less than the amount required, as determined in the Officers Pricing Certificate, the amount specified in Section 8 1 shall be deposited to the Debt Service Reserve Fund out of the proceeds of the Bonds or shall be used to enter into a Credit Agreement to satisfy the Debt Service Reserve Requirement. (vi) The Stated Maturity Dates and the Mandatory Redemption Dates established in accordance with Article III are Principal Payment Dates for the purposes of the Thirtieth Ordinance. (vii) Each Insurer as a Credit Provider is authorized to give and withdraw notices of default under the provisions of Section 7 1(vii) of the Thirtieth Ordinance. DAL504 /71005 Dallas 799667 8.130C 5- (viii) As permitted by Section 5 1 of the Thirtieth Ordinance, the Board confirms the creation of the Capitalized Interest Account in the Construction Fund. The Capitalized Interest Account is a Pledged Fund, subject to the terms and provisions of Section 8 6 (ix) This Ordinance is an Additional Supplemental Ordinance. (x) Each of the Authorized Officers is designated and appointed as an officer" of the Cities for the limited purposes of administering this Ordinance, including particularly the bi -modal provisions contained in Appendix A, and the related documents and agreements described herein in accordance with Chapter 1371 Government Code, as amended, and the Authorized Officers are instructed to submit periodic reports, not less frequently than annually to the Cities as to the actions taken in connection therewith during the preceding period, and to provide such other information regarding the implementation of such agreements and this Ordinance as either of the Cities shall request. (xi) Appendix A attached hereto `Provisions for Bi Modal Obligations, is approved in substantially the form attached hereto with such additions or modifications as may be approved by an Authorized Officer The final form of such Appendix A shall be as set forth and attached as Appendix A to the Officers Pricing Certificate, which is hereby incorporated into this Ordinance and shall have the same force and effect as if set forth herein. (b) For all purposes of the Outstanding Ordinances and the Controlling Ordinances, as amended and supplemented, the following additional rights and limitations are granted and imposed. (i) No amendment to any Outstanding Ordinance or this Ordinance shall be approved or adopted pursuant to any of Sections 8.2, 8.3 8 4 or 8 5 of the Thirtieth Ordinance, whether with or without the consent of the Holders, unless and until the same is approved by the Insurer to the extent required under the terms of the Credit Agreement. (ii) The Cities shall have the right to amend the Outstanding Ordinances, the Controlling Ordinances, and this Ordinance without the consent of or notice to the Holders, for any purpose not prohibited by Section 8 3 of the Thirtieth Ordinance, if such amendment is (i) approved by the Insurer and such other Credit Providers, if any as may be required by an Additional Supplemental Ordinance or (ii) is approved in accordance with Section A -601 of Appendix A. (iii) Whenever in this Ordinance, or in the Controlling Ordinances, the right is granted to redeem Bonds in advance of a Stated Maturity Date, any such redemption may be accomplished with any lawfully available money The Bonds may be redeemed according to their respective terms, and pro rata redemptions are not required. All money delivered to the Paying Agent/Registrar for the DAL504/71005 Dallas 799667 8.DOC on purpose of paying the principal of and interest on Bonds shall be held uninvested by the Paying Agent /Registrar (iv) In the event of the occurrence of an Event of Default, the right of acceleration of the Stated Maturity Date or the Mandatory Redemption Date of any Bond or of any Parity Credit Agreement Obligation is not granted as a remedy and the right of acceleration is expressly denied. (v) The specific information that must be provided pursuant to the disclosure requirements of Section 10 1 of the Thirtieth Ordinance with respect to the Bonds shall be (A) the audited financial statements of the Board for each Fiscal Year ending on and after September 30 2004 and (B) the annual financial information shall be the operating data relating to the Bonds set forth in the numbered tables in the official statement relating to the issuance of the Bonds. The Board shall provide such information on behalf of the Cities. ARTICLE II PURPOSES, PLEDGE AND SECURITY FOR BONDS Section 2 1 Purposes of Ordinance The purposes of this Ordinance are to prescribe the specific terms and provisions of the Bonds, to extend expressly the pledge, lien, security and provisions of the Controlling Ordinances to and for the benefit of the Holders, to provide certain covenants to and for the benefit of each Insurer and/or Credit Provider and to sell the Bonds to the Purchaser Section 2.2 Pledge, Security for, Sources of Payment of Bonds (a) The pledge, the security and the filing provisions of Sections 2.2 and 2 4 respectively of the Thirtieth Ordinance are hereby expressly restated, fixed, brought forward and granted to the Holders, and to each Insurer as a Credit Provider (b) The Bonds, as Additional Obligations" under the Controlling Ordinances, are secured by a lien on and pledge of the Pledged Revenues and the Pledged Funds on a panty with the Prior Obligations, the Initial Obligations, and any other Additional Obligations that are Outstanding, and with Panty Credit Agreement Obligations, if any that are unpaid from time to time, as declared and provided in Section 2.2 of the Thirtieth Ordinance. ARTICLE III AUTHORIZATION GENERAL TERMS AND PROVISIONS REGARDING THE BONDS Section 3 1 Authorization. Additional Obligations, to be designated `Cities of Dallas and Fort Worth, Texas, Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A, are hereby authorized to be issued and delivered in accordance with Applicable Law and as provided herein and in the Officers Pricing Certificate. The Bonds shall be issued and the proceeds thereof shall be used, together with other available funds, if any for the purpose of refunding all or a portion of the Refunded Obligations, as set forth in the Officers Pricing Certificate, to provide funding for the Debt Service Reserve Requirement DAL504 /71005 Dallas 799667_8.DOC 7 through either the deposit of Bond proceeds, the use of other available funds, if any or entering into a surety or such other agreement and to pay the Cities and the Board s costs incurred in connection with the issuance of the Bonds, including the costs of the Policy or Policies for Insurance or the surety or debt service reserve agreement. Section 3 2 Initial Date, Denominations Number Maturity Initial Registered Owner Characteristics of the Initial Bond and Expiration Date of Delegation. (a) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated the date designated in the Officers Pricing Certificate, in the denomination and maximum aggregate principal amount of $130 000 000 numbered T 1 payable in annual installments of principal to the initial registered owner thereof (to be determined by the Authorized Officers, as hereinafter provided) or to the registered assignee or assignees of said Bond or any portion or portions thereof (in each case, the `registered owner ") with the annual installments of principal of the Initial Bond to be payable on the dates, respectively and in the principal amounts, respectively to be stated in the Initial Bond set forth in this Ordinance and the Officers Pricing Certificate, and as provided in this Ordinance, but with the final installment of principal (the maximum term) to be not later than November 1 2024 (b) As authorized by Chapter 1371 Government Code, as amended, the Authorized Officers are hereby authorized, appointed, and designated as the officers or employees of the Cities authorized to act on behalf of the Cities in the selling and delivering of the Initial Bond and carrying out the other procedures specified in this Ordinance, including the determination of the price at which the Initial Bond will be sold, the amount of each Principal Installment thereof in the maximum aggregate amount of $130 000 000 the due date of each Principal Installment, which shall be November 1 in each year in which a Principal Installment is due, the rate of interest to be borne by each Principal Installment, the redemption features, whether the Bonds are to be issued as two or more subsenes, and all other matters relating to the issuance, sale, and delivery of the Initial Bond and the Bonds. The Authorized Officers, acting for and on behalf of the Cities, are authorized to enter into and carry out an Underwriting Agreement in substantially the form attached hereto as Appendix B as approved by the City Attorneys of the Cities with one or more of the parties indicated in Appendix B at such price, in the aggregate principal amount, with such Principal Installments, with such interest rates, with such redemption features and other matters, as shall be determined by the Authorized Officers and set forth therein and in the Officers Pricing Certificate, provided that: (i) the price to be paid for the Initial Bond shall not be less than 95% of the initial aggregate principal amount thereof with a maximum underwriter's discount of 0 3 %, and (ii) no installment of principal of the Initial Bond shall bear interest at an initial rate greater than 3 0% per annum. It is further provided, however that, notwithstanding the foregoing provisions, the Initial Bond shall not be delivered unless prior to delivery the Bonds have been rated by a nationally recognized rating agency for municipal securities in one of the four highest rating categories for long term obligations, as required by Applicable Law In connection with the issuance and delivery of the Bonds, each of the Authorized Officers, acting for and on behalf of the Cities, is authorized to set out in and execute one or more Officers Pricing Certificates such information as contemplated by Appendix A hereto Such Officers Pricing Certificate shall include such information as such Authorized Officer(s) deem appropriate or is required by Appendix A and this Ordinance and may include among other things, if such Authorized Officer(s) determine that the Bonds shall initially be issued in the Auction Rate Mode, the initial Auction Period, the initial Auction Date, the initial Auction DAL504 /71005 Dallas 799667 8.130C Period Rate, the Stated Maturity Date and the Sinking Fund Installments, if any all an accordance with Appendix A hereto (c) Each of the Authorized Officers is authorized to establish which maturity or maturities, if any shall be insured based on recommendations of the Co- Financial Advisors of the Airport, and such Authorized Officer(s) shall specify the name or names of the Insurer or Insurers in the Underwriting Agreement and shall specify therein which maturity or maturities, if any will be insured. Each of the Authorized Officers is also authorized to establish whether the Debt Service Reserve Requirement shall be funded with Bond proceeds, with other available Rinds, if any or with a Credit Agreement in the form of a debt service reserve fund agreement, surety or such other form of Credit Agreement based on recommendations of the Co- Financial Advisors of the Airport. A general form of or the parameters for the Credit Agreement is set forth in Appendix C (d) The Initial Bond (i) may be prepaid or redeemed prior to the respective scheduled due dates of installments of principal thereof as provided for in this Ordinance and in the Officers Pricing Certificate, (u) may be assigned and transferred, (iii) may be converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest on the Initial Bond shall be payable, all as provided, and in the manner required or indicated, in the FORM OF BOND set forth in this Ordinance and as determined by the Authorized Officers, as provided herein and in the Officers Pricing Certificate, with such changes and additions as are required to meet the terms of the Underwriting Agreement and the Officers Pricing Certificate, including the name as to which the Initial Bond shall be registered. (e) In the event the Underwriting Agreement shall not be executed on or before 5 00 p.m. on October 1 2004 the delegation to the Authorized Officers pursuant to this Ordinance shall cease to be effective unless the City Council of each of the Cities shall act to extend such delegation. (f) Pursuant to the provisions of Chapter 1371 Government Code, as amended, and Section 1 5(a) hereof, the Cities delegate to the Authorized Officers the continuing authority under the terms of this Ordinance, to establish, alter or consent to changes in interest rates, interest rate Modes, and interest rate periods or to consent to any amendment to this Ordinance as contemplated in Appendix A, and to execute and enter into on behalf of the Cites an Auction Agreement, one or more Broker Dealer Agreements, a Remarketing Agreement and a Tender Agency Agreement, and to enter into any other certificate, document or other instrument, or to take any other action, including the making of any finding or determination, that the Authorized Officers determine is necessary or appropriate to carry out the provisions of Appendix A or to take all such action or perform such functions as contemplated by this Ordinance or any Broker Dealer Agreement, Auction Agreement, Remarketing Agreement or Tender Agency Agreement; provided, however that prior to its effective date, the form of any such Broker Dealer Agreement, Auction Agreement, Remarketing Agreement or Tender Agency Agreement that is to be entered into after the Closing Date must be approved by the Board and, as appropriate, the City Council DAL504 /71 005 Dallas 799667 8. DOC M Section 3 3 Medium, Method and Place of Payment. (a) The principal of, premium, if any and interest on the Bonds shall be paid in any coin or currency of the United States of America which, on the respective dates of payment, is legal tender for the payment of public and private debts, as provided in this Section and Appendix A, Article A II. (b) Interest on the Bonds shall be payable to the Holders whose names appear in the Obligation Register (as defined in section 3 5) at the close of business on the Record Date provided, however that in the event of nonpayment of interest on a scheduled Interest Payment Date, and for 30 days thereafter a new record date for such interest payment (a `Special Record Date ") will be established by the Paying Agent /Registrar if and when funds for the payment of such interest have been received from the Cities or the Board. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the `Special Payment Date, which shall be at least 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 Bond 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. (c) While Bonds are in the Fixed Rate Mode, interest on the Bonds shall be paid by check (dated as of the Interest Payment Date) and sent by the Paying Agent/Registrar to the Holder entitled to such payment, United States mail, first class postage prepaid, to the address of the Holder as it appears in the Obligation Register or by such other customary banking arrangements acceptable to the Paying Agent /Registrar and the person to whom interest is to be paid, provided, however that such person shall bear all risk and expenses of such other customary banking arrangements Upon written request of a registered owner of at least $1 000 000 in principal amount of Bonds, all payments of the principal of, redemption premium, if any and interest on the Bonds shall be paid by wire transfer in immediately available funds to an account designated by such registered owner (d) The principal of each Bond shall be paid to the Holder on the due date thereof (whether at the maturity date or the date of prior redemption thereof) upon presentation and surrender of such Bond at the Designated Payment/Transfer Office. (e) If a date for the payment of the principal of or interest on the Bonds is a Saturday Sunday legal holiday or a day on which banking institutions in the Cities or in the city in which the Designated Payment /Transfer Office is located, are authorized by law or executive order to close, then the date for such payment shall be the next succeeding Business Day and payment on such date shall have the same force and effect as if made on the original date payment was due. (f) Subject to any applicable escheat, unclaimed property or similar and Applicable Law unclaimed payments remaining unclaimed by the Holders entitled thereto for three years after the applicable payment or redemption date shall be paid to the Board and thereafter neither the Cities, the Paying Agent/Registrar nor any other person shall be liable or responsible to any Holders of such Bonds for any further payment of such unclaimed moneys or on account of any such Bonds. (g) The unpaid principal balance of the Initial Bond shall bear interest from the Closing Date of the Initial Bond to the respective scheduled due dates, or to the respective dates DAL504 /71005 Dallas 799667_8.DOC 10- of prepayment or redemption, of the Principal Installments of the Initial Bond, and said interest shall be payable to the registered owner thereof, all in the manner provided and on the dates fixed by the Authorized Officers in accordance with this Ordinance and the Officers Pricing Certificate, and with interest rates as fixed by the Authorized Officers in accordance with this Ordinance and the Officers Pricing Certificate, and as set forth in the Underwriting Agreement. Section 3 4 Ownership (a) The Cities, the Board, the Paying Agent /Registrar and any other person may treat each Holder as the absolute owner of such Bond for the purpose of making and receiving payment of the principal thereof and premium, if any thereon, and for the further purpose of making and receiving payment of the interest thereon (subject to the provisions herein that interest is to be paid to each Holder on the Record Date) and for all other purposes, whether or not such Bond is overdue, and neither the Cities, the Board, nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary (b) All payments made to the person deemed to be the Holder in accordance with this Section shall be valid and effectual and shall discharge the liability of the Cities, the Board, and the Paying Agent /Registrar upon such Bond to the extent of the sums paid. Section 3 5 Registration, Transfer and Exchange. (a) So long as any Bonds remain outstanding, the Board shall cause the Paying Agent /Registrar to keep a register (the `Obligation Register ") in which, subject to such reasonable regulations as it may prescribe, the Paying Agent /Registrar shall provide for the registration and transfer of Bonds in accordance with this Ordinance. (b) Ownership of any Bond may be transferred in the Obligation Register only upon the presentation and surrender thereof at the Paying Agent's Designated Payment /Transfer Office for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar evidencing assignment of the Bonds, or any portion thereof in any Authorized Denomination, to the assignee or assignees thereof, and the right of such assignee or assignees thereof to have the Bond or any portion thereof registered in the name of such assignee or assignees. No transfer of any Bond shall be effective until entered in the Obligation Register Upon assignment and transfer of any Bond or portion thereof, a new Bond or Bonds will be issued by the Paying Agent/Registrar in conversion and exchange for such transferred and assigned Bond. To the extent possible the Paying Agent/Registrar will issue such new Bond or Bonds in not more than three business days after receipt of the Bond to be transferred in proper form and with proper instructions directing such transfer (c) Any Bond may be converted and exchanged only upon the presentation and surrender thereof at the Designated Payment /Transfer Office of the Paying Agent /Registrar together with a written request therefor duly executed by the registered owner or assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantees of signatures satisfactory to the Paying Agent/Registrar for a Bond or Bonds of the same maturity and interest rate and in any authorized denomination and in an aggregate principal amount equal to the unpaid principal amount of the Bond presented for exchange. If a portion of any Bond is redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations DAL504/71005 Dallas 799667_8.DOC 11 of any Authorized Denomination at the request of the registered owner and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. To the extent possible, a new Bond or Bonds shall be delivered by the Paying Agent/Registrar to the registered owner of the Bond or Bonds in not more than three business days after receipt of the Bond to be exchanged in proper form and with proper instructions directing such exchange (d) Each Bond issued in exchange for any Bond or portion thereof assigned, transferred or converted shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged. Each substitute Bond shall bear a letter and /or number to distinguish it from each other Bond. The Paying Agent/Registrar shall convert and exchange the Bonds as provided herein, and each substitute Bond delivered in accordance with this Section shall constitute an original contractual obligation of the Cities and shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such substitute Bond is delivered. (e) The Board will pay as Administrative Expenses, the Paying Agent/Registrar's reasonable and customary charge for the initial registration or any subsequent transfer exchange or conversion of Bonds, but the Paying Agent/Registrar will require the Holder 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 exchange or conversion of a Bond. In addition, the Cities hereby covenant with the Holders of the Bonds that the Board will (i) pay the reasonable and standard or customary fees and charges of the Paying Agent /Registrar for its services with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay the fees and charges of the Paying Agent /Registrar for services with respect to the transfer registration, conversion and exchange of Bonds as provided herein. (f) Neither the Cities, the Board, nor the Paying Agent /Registrar shall be required to issue, transfer or exchange any Bond called for redemption, in whole or in part, where such redemption is scheduled to occur within 45 calendar days after the transfer or exchange date; provided, however such limitation shall not be applicable to an exchange by the Holder of the uncalled principal balance of a Bond. Section 3 6 Cancellation and Authentication. All Bonds paid or redeemed before their Stated Maturity Dates in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance with this Ordinance, shall be canceled upon the making of proper records regarding such payment, redemption, exchange or replacement. The Paying Agent /Registrar shall dispose of the canceled Bonds in accordance with Applicable Law Section 3 7 Temporary Bonds. (a) Following the delivery and registration of the Initial Bond and pending the preparation of definitive Bonds, the proper officers of the Cities may execute and, upon the Cities or the Board s request, the Paying Agent/Registrar shall authenticate and deliver one or more temporary Bonds that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Bonds in lieu of which they are delivered, without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers of the Cities DAL504 /71005 Dallas 799667 8.DOC 12 executing such temporary Bonds may determine, as evidenced by their signing of such temporary Bonds. (b) Until exchanged for Bonds in definitive form, such Bonds in temporary form shall be entitled to the benefit and security of this Ordinance. (c) The Cites or the Board, without unreasonable delay shall prepare, execute and deliver to the Paying Agent/Registrar the Bonds in definitive form, thereupon, upon the presentation and surrender of the Bond or Bonds in temporary form to the Paying Agent/Registrar the Paying Agent/Registrar shall cancel the Bonds in temporary form and authenticate and deliver in exchange therefor a Bond or Bonds of the same maturity and series, in definitive form, in the authorized denomination, and in the same aggregate principal amount, as the Bond or Bonds in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner Section 3 8 Replacement Bonds. (a) Upon the presentation and surrender to the Paying Agent/Registrar at the Designated Payment/Transfer Office, of a mutilated Bond, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding. The Cities, the Board, or the Paying Agent/Registrar may require the Holder of such Bond to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected therewith. (b) In the event any Bond is lost, apparently destroyed or wrongfully taken, the Paying Agent /Registrar pursuant to Subchapter D of Chapter 1201 Government Code, as amended, and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser shall authenticate and deliver a replacement Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding, provided that the Holder first: (1) furnishes to the Paying Agent /Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction or theft of such Bond, (ii) furnishes such security or indemnity as may be required by the Paying Agent /Registrar and the Cities to save them 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 Cities and the Paying Agent /Registrar (c) If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the Cities, the Board, and the Paying Agent/Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser and shall be entitled to recover upon the security or DAL504/71005 Dallas 799667 8.DOC 13 indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Cities, the Board, or the Paying Agent/Registrar in connection therewith. (d) In the event that any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the Paying Agent /Registrar in its discretion, instead of issuing a replacement Bond, may pay such Bond. (e) Each replacement Bond delivered in accordance with this Section shall constitute an original contractual obligation of the Cities and shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. Section 3 9 Book EntEy Only System. (a) The definitive Bonds shall be initially issued in the form of a separate single fully registered Bond for each of the maturities thereof Upon initial issuance, the ownership of each such Bond shall be registered in the name of Cede & Co as nominee of DTC and except as provided in Section 3 10 all of the outstanding Bonds shall be registered in the name of Cede & Co as nominee of DTC (b) With respect to Bonds registered in the name of Cede & Co as nominee of DTC the Cities, the Board, and the Paying Agent/Registrar shall have no responsibility or obligation to any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest in the Bonds, except as provided in this Ordinance. Without limiting the immediately preceding sentence, the Cities, the Board, 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 Bonds, (ii) the delivery to any DTC Participant or any other person, other than a Holder as shown on the Obligation Register of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than a Holder as shown in the Register of any amount with respect to principal of, premium, if any or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary the Cities, the Board, and the Paying Agent /Registrar shall be entitled to treat and consider the person in whose name each Bond is registered in the Obligation Register as the absolute owner of such Bond for the purpose of payment of principal of, premium, if any and interest on the Bonds, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfer with respect to such Bond, and for all other purposes whatsoever The Paying Agent/Registrar shall pay all principal of, premium, if any and interest on the Bonds only to or upon the order of the respective Holders, as shown in the Obligation Register or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Cities obligations with respect to payment of, premium, if any and interest on the Bonds to the extent of the sum or sums so paid. No person other than a Holder as shown in the register shall receive a certificate evidencing the obligation of the Cities 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 and subject to the provisions in this Ordinance with respect to interest checks or drafts being mailed to the registered Owner at the close of business on the Record Date, the word `Cede & Co in this Ordinance shall refer to such new nominee of DTC DAL504/71005 Dallas 799667_8.DOC 14- (c) The `Representation Letter" previously executed and delivered by an Authorized Officer and made applicable to the Bonds delivered in book - entry -only form to DTC as securities depository therefor is hereby ratified and approved for the Bonds Section 3 10 Successor Securities De ository In the event that the Cities, the Board, or the Paying Agent/Registrar determine that DTC is incapable of discharging its responsibilities described herein and in the Representation Letter and that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, or in the event DTC discontinues the services described herein, the Cities, the Board, or the Paying Agent /Registrar shall (>.) 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, as identified by DTC of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (>i) notify DTC and DTC Participants, as identified by DTC of the availability through DTC of Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to their DTC accounts, as identified by DTC In such event, the Bonds shall no longer be restricted to being registered in the Obligation 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 Holders transferring or exchanging Bonds shall designate, in accordance with the provisions of this Ordinance. Section 3 11 Payments to Cede & Co Notwithstanding any other provision of this Ordinance to the contrary so long as any Bonds are registered in the name of Cede & Co as nominee of DTC, all payments with respect to principal of, premium, if any and interest on such Bonds, and all notices with respect to such Bonds, shall be made and given, respectively in the manner provided in the Representation Letter ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY Section 4 1 Limitation on Redemption. The Bonds shall be subject to redemption before scheduled maturity only as provided in this Article IV in Appendix A and in the Officers Pricing Certificate. Section 4 2 Optional Redemption. (a) The Bonds shall be subject to optional redemption prior to maturity in the manner provided in this Article IV in Appendix A and in the Officers Pricing Certificate. (b) To the extent the Bonds that are in the Fixed Rate Mode are subject to optional redemption, the Board, 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 Bonds to be redeemed. Section 4 3 Partial Redem tp ion. (a) If less than all of the Bonds are to be redeemed pursuant to Section 4.2, the Board shall have the right to determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent /Registrar to call at random DAL504 /71005 Dallas 799667 8.DOC 15 the Bonds, or portions thereof, within such maturity or maturities and in such principal amounts for redemption as determined by the Board in its sole discretion. (b) A portion of a single Bond may be redeemed, but only in a principal amount equal to an Authorized Denomination. If such a Bond is to be partially redeemed, the Paying Agent/Registrar shall treat each portion of the Bond equal to the smallest permitted Authorized Denomination as though it were a single Bond for purposes of selection for redemption. (c) Upon surrender of any Bond for redemption in part, the Paying Agent/Registrar in accordance with Section 3.5 of this Ordinance, shall authenticate and deliver an exchange Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered, such exchange being without charge. (d) The Paying Agent /Registrar shall promptly notify the Board in writing of the principal amount to be redeemed of any Bond as to which only a portion thereof is to be redeemed. Section 4 4 Mandatory Redemption of Certain Bonds. (a) The Bonds shall be subject to mandatory redemption prior to maturity in the manner provided in this Article IV in Appendix A and in the Officers Pricing Certificate (b) Subject to the provisions of subsection (c) of this Section, when less than all of the Bonds of a specified maturity that have been designated as term Bonds pursuant to Section A 204(d) of Appendix A are required to be redeemed as determined in accordance with this Section, the Board, acting on behalf of the Cites, shall have the right and shall direct the Paying Agent /Registrar to call by lot the Bonds, or portions thereof within a maturity that are to be called for redemption. A portion of a single Bond may be redeemed, but only in a principal amount equal to an Authorized Denomination. The Paying Agent /Registrar shall treat each portion of the Bond equal to the smallest permitted Authorized Denomination as though it were a single Bond for purposes of selection for redemption. Upon surrender of any Bond for redemption in part, the Paying Agent /Registrar shall authenticate and deliver an exchange Bond or Bonds in an aggregate amount equal to the unredeemed portion of the Bond so surrendered. (c) In lieu of the procedure described in subsection (b) of this Section, if less than all of such Bonds described in subsection (b) are required to be redeemed, the Cities and the Board shall have the right to accept tenders of Bonds of the applicable maturity and to purchase Bonds of such maturity in the open markets at any price that is less than the applicable Redemption Price for the Bonds required to be redeemed. Section 4 5 Notice of Redemption to Holders. (a) The Paying Agent/Registrar shall give notice of any redemption of Bonds that are in the Fixed Rate Mode by sending notice by first class United States mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the Holder of each Bond (or part thereof) to be redeemed, at the address shown on the Obligation Register DAL504 /71005 Dallas 799667_8.DOC 16- (b) The notice shall state the redemption date, the redemption price, the place at which the Bonds are to be surrendered for payment; and, if less than all the Bonds outstanding are to be redeemed, an identification of the Bonds 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 Holder receives such notice. Section 4 6 Payment Upon Redem tp ion. (a) Before or on each redemption date, the Board on behalf of the Cities 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 Bonds 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 Board and shall use such funds solely for the purpose of paying the principal of, redemption premium, if any and accrued interest on the Bonds being redeemed, or the tender or negotiated price in the case of Bonds tendered or purchased under Section 4 4(c) (b) Upon presentation and surrender of any Bond called for redemption at the Designated Payment/Transfer Office 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 Bond 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 this Ordinance, the Bonds or portions thereof called for redemption shall 'become due and payable on the date fixed for redemption and, unless the Cites fail in their obligation to make provision for the payment of the principal thereof, redemption premium, if any or accrued interest thereon on the date fixed for redemption, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Bonds are presented and surrendered for payment on such date. (b) If the Cities shall fail to make provision for payment of all sums due on a redemption date, then any Bond or portion thereof called for redemption shall continue to bear interest at the rate stated on the Bond until due provision is made for the payment of same by the Cities. ARTICLE V PAYING AGENT /REGISTRAR Section 5 1 Appointment of Initial PUing_Agent/Registrar J.P Morgan Trust Company National Association, is hereby appointed as the initial Paying Agent /Registrar for the Bonds, under and subject to the terms and provisions of the Master Paying Agent Agreement. Section 5.2 Qualifications. The Paying Agent /Registrar shall be a commercial bank, a trust company organized under applicable laws, or any other entity duly qualified and legally authorized to serve as and perform the duties and services of paying agent and registrar for the Bonds DAL504 /71005 Dallas 799667 8.130C 17 Section 5 3 Maintaining Paving A ent /Re istrar (a) At all times while any Bonds are Outstanding, the Cities will maintain a Paying Agent /Registrar that is qualified under Section 5.2 of this Ordinance. (b) If the Paying Agent /Registrar resigns or otherwise ceases to serve as such, the Board will promptly appoint a replacement. Section 5 4 Termination. The Cities, acting through the Board, upon not less than 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, provided, that such termination shall not be effective until a successor Paying Agent/Registrar has been appointed and has accepted the duties of Paying Agent/Registrar for the Bonds. Section 5 5 Notice of Change. Promptly upon each change in the entity serving as Paying Agent/Registrar the Board will cause notice of the change to be sent to each Holder and Insurer by first class United States mail, postage prepaid, at the address in the Obligation 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 the Paying Agent/Registrar acknowledges receipt of copies of the Controlling Ordinances and this Ordinance, and is deemed to have agreed to the provisions of thereof, and to perform the duties and functions of Paying Agent /Registrar prescribed therein and herein. 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 Obligation Register (or a copy thereof) and all other pertinent books and records relating to the Bonds to the successor Paying Agent /Registrar ARTICLE VI FORM OF THE BONDS Section 6 1 Form Generally (a) The Bonds, including the Registration Certificate of the Comptroller of Public Accounts of the State, the Certificate of the Paying Agent/Registrar and the Assignment form to appear on each of the Bonds, (i) shall be substantially in the form set forth in this Article, with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this 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 Board. (b) Any portion of the text of any Bonds may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Bonds. DAL504 /71005 Dallas 799667 8.DOC i (c) The Bonds, including the Initial Bond submitted to the Attorney General of Texas and any temporary Bonds, shall be typed, printed, lithographed, photocopied or engraved, and may be produced by any combination of these methods or produced in any other similar manner all as determined by the officers executing such Bonds, as evidenced by their execution thereof Section 6.2 Form of Bonds. The form of Bonds, including the form of the Registration Certificate of the Comptroller of Public Accounts of the State, the form of Certificate of the Paying Agent /Registrar and the form of Assignment appeanng on the Bonds, shall be substantially as follows DAL504 /71005 Dallas 799667 8.DOC 19- (a) [Form of Bond] REGISTERED No United States of America State of Texas Cites of Dallas and Fort Worth, Texas REGISTERED E.1 DALLAS /FORT WORTH INTERNATIONAL AIRPORT JOINT REVENUE AUCTION RATE REFUNDING BONDS, SERIES 2004A MATURITY DATE ORIGINAL ISSUE DATE DATED DATE CUSIP NO 1 2004 The Cities of Dallas and Fort Worth, Texas (the `Cities "), for value received, hereby promise to pay to or registered assigns, on the Maturity Date, as specified above, the sum of DOLLARS unless this Bond shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provision for such payment shall have been made, and to pay interest on the unpaid principal amount hereof at the rate or rates of interest and at the times provided herein. Interest on the Bonds shall accrue from the date of delivery Capitalized terms appearing herein that are defined terms in the Ordinances defined below have the meanings assigned to them in the Ordinances. Reference is made to the Ordinances for such definitions and for all other purposes. The principal of this Bond shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Bond at the corporate trust office in Austin, Texas (the `Designated Payment/Transfer Office "), of J.P Morgan Trust Company National Association or with respect to a successor Paying Agent/Registrar at the Designated Payment/Transfer Office of such successor While this Bond is in the Auction Rate Mode, accrued and unpaid interest on this Bond shall be due on the Interest Payment Dates and payable by wire transfer of immediately available funds to the account specified by the Owner in a written direction received by the Paying Agent/Registrar on or prior to a Record Date or if no such account number is furnished, by check mailed by the Paying Agent/Registrar to the Owner at the address appearing on the books required to be kept by the Paying Agent /Registrar pursuant to the Thirty Ninth Supplemental Ordinance (as defined below) While this Bond is in the Fixed Rate Mode, accrued and unpaid interest shall be due and payable as provided in the Thirty -Ninth Supplemental Ordinance. The payment of the Purchase Price of this Bond on any Mandatory Purchase Date shall be made by wire transfer in DAL504 /71005 Dallas 799667 8.130C 20- immediately available funds by the Tender Agent to the account specified by the Owner in a written direction received by the Tender Agent or if no such account number is furnished, by check mailed by the Tender Agent to the Owner at the address appearing on the books required to be kept by the Paying Agent /Registrar pursuant to -the Thirty Ninth Supplemental Ordinance. Any such direction shall remain in effect until revoked or revised by such Owner by an instrument in writing delivered to the Paying Agent/Registrar or the Tender Agent, as the case may be. For the purpose of the payment of interest on this Bond, the registered owner shall be the person in whose name this Bond is registered at the close of business on the `Record Date, which while this Bond is in the Auction Rate Mode shall be the opening of business on the Business Day next preceding an Interest Payment Date; provided, however that in the event of nonpayment of interest on a scheduled Interest Payment Date, and for 30 days thereafter a new record date for such interest payment (a `Special Record Date ") will be established by the Paying Agent/Registrar if and when funds for the payment of such interest have been received. 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 Holder of a Bond appearing on the books of the Paying Agent /Registrar at the close of business on the last business day preceding the date of mailing such notice. If a date for the payment of the principal of or interest on the Bonds is a Saturday Sunday legal holiday or a day on which banking institutions in the Cities or in the city in which the Designated Payment/Transfer Office is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding Business Day and payment on such date shall have the same force and effect as if made on the original date payment was due. This Bond is one of a series of fully registered bonds specified in the title hereof, dated 1 2004 issued in the aggregate principal amount of $_,000 000 pursuant to the `Controlling Ordinances, as defined in the Thirty Ninth Supplemental Concurrent Bond Ordinance adopted concurrently by the City Councils of the Cities (the `Thirty Ninth Supplemental Ordinance ") The Controlling Ordinances and the Thirty -Ninth Supplemental Ordinance are herein collectively referred to as the `Ordinances. This Bond is one of the Additional Obligations authorized by the Ordinances and is subject to the terms and provisions thereof. The Ordinances and their respective terms and provisions are incorporated herein for all purposes. The Bonds were issued by the Cities for the purposes of obtaining funds to refund certain Obligations previously issued by the Cities, to provide funding for the Debt Service Reserve Requirement through either the deposit of Bond proceeds or entering into a surety or such other agreement and /or to pay the Cities and the Board s costs incurred in connection with the issuance of the Bonds, including the costs of the Policy or Policies for Insurance or the surety or debt service reserve agreement. The Bonds and the interest thereon are payable from, and are secured by a first lien on and pledge of the Pledged Revenues and the Pledged Funds. DAL504 /71 005 Dallas 799667 8.DOC 21 The lien on and pledge of the Pledged Revenues and Pledged Funds created and granted in the Ordinances in favor of the Bonds is on a panty with the lien and pledge thereof granted by the Cities in favor of the Holders of Outstanding Obligations and any Additional Obligations or Panty Credit Agreement Obligations that may be issued or executed pursuant to the Controlling Ordinances, as defined and permitted therein. The Cities have reserved the right in the Ordinances to issue Additional Obligations and Panty Credit Agreement Obligations that, after issuance, may be secured by liens on and pledges of the Pledged Revenues and Pledged Funds on a panty with the lien thereon in favor of the Bonds The Cities have also reserved the right in the Ordinances to issue Subordinate Lien Obligations, and Net Revenue Obligations and Credit Agreement Obligations in connection therewith, provided the lien and pledge securing the same are expressly made junior and subordinate to the pledge and lien securing the Obligations and Parity Credit Agreement Obligations. All covenants requiring the Cities to pay principal and interest or other payments on Obligations, Subordinate Lien Obligations, Net Revenue Obligations, and Credit Agreement Obligations shall be point, and not several, obligations, and all monetary obligations shall be payable and collectible solely from the revenues and funds expressly pledged thereto by the Ordinances or by an Additional Supplemental Ordinance, such revenues and funds being owned in undivided interests by the City of Dallas (to the extent of 7 /11ths thereof) and by the City of Fort Worth (to the extent of 4 /11ths thereof) and, each and every Holder shall by his acceptance of this Bond consent and agree that no claim, demand, suit, or judgment for the payment of money shall ever be asserted, filed, obtained or enforced against either of the Cities apart from the other City and from sources other than the funds and revenues pledged thereto and no liability or judgment shall ever be asserted, entered or collected against either City individually except out of such pledged revenues and exceeding in the case of Dallas an amount equal to 7 /11ths of the total amount asserted or demanded, and in the case of Fort Worth an amount equal to 4 /11ths of the total amount asserted or demanded. The Holders hereof shall never have the right to demand payment of this obligation out of any funds rased or to be raised by taxation. DETERMINATION OF INTEREST This Bond is initially issued in the Auction Rate Mode. The Mode applicable to this Bond may at any time be changed to a Fixed Rate Mode, all as provided in the Thirty Ninth Supplemental Ordinance. From the Original Issue Date set forth above to the initial Auction Date specified in accordance with the Thirty -Ninth Supplemental Ordinance for the Bonds, this Bond shall bear interest at a rate per annum specified in accordance with the Thirty Ninth Supplemental Ordinance During any other Interest Period or Auction Period, as the case may be, in any Mode, the interest rate applicable to this Bond will be determined at the times and in the manner provided in the Thirty Ninth Supplemental Ordinance. While this Bond is in a Fixed Rate Mode or in the Auction Rate Mode with an Auction Period over 180 days, interest hereon shall be computed on the basis of a year of 360 days composed of twelve 30 -day months While this Bond is in an Auction Rate Mode with an Auction Period of 180 days or less, interest hereon shall be computed on the basis of a 360 -day year for the actual number of days elapsed to the Interest Payment Date. DAL504 /71005 Dallas 799667_8 DOC 22 PURCHASE OF BOND This Bond is subject to mandatory purchase at a price equal to the Purchase Price thereof on the Mandatory Purchase Date. Notice of any proposed Mandatory Purchase Date shall be given to Owners of Bonds by the Paying Agent /Registrar as provided in the Thirty Ninth Supplemental Ordinance. The Owner of this Bond does not have the right to retain it after any Mandatory Purchase Date. Funds for the payment of the Purchase Price due on a Mandatory Purchase Date shall be derived solely from the sources in the order of priority indicated and under the terms and conditions provided in the Thirty Ninth Supplemental Ordinance. None of the Board, the Cities, the Tender Agent nor the Remarketing Agent shall have any liability or obligation to pay or except from the sources identified in the Thirty Ninth Supplemental Ordinance, make available such Purchase Price. Unless otherwise provided in a certificate of an Authorized Officer delivered to the Paying Agent/Registrar and Tender Agent on a Mandatory Purchase Date, the failure to pay any such Purchase Price for Bonds that have been tendered or deemed tendered for purchase from the sources identified in the Thirty Ninth Supplemental Ordinance shall not constitute an Event of Default under the Thirty Ninth Supplemental Ordinance or the Controlling Ordinances and in the case of such failure such Bonds shall not be purchased and shall remain in the Auction Rate Mode REDEMPTION OF BOND This Bond shall be subject to redemption prior to maturity at the option of the Board, in whole or in part, on the redemption dates and at the Redemption Prices and in the manner and under the terms and conditions provided in the Thirty Ninth Supplemental Ordinance. Under certain conditions described in the Thirty Ninth Supplemental Ordinance, the Board on behalf of the Cities may in connection with a change in the Mode to a Fixed Rate Mode, waive or otherwise alter its rights to redeem thereafter any Bonds of which this Bond is one in the Fixed Rate Mode. The Bonds are subject to mandatory sinking fund redemption in part (in accordance with procedures of DTC, so long as DTC is the sole registered owner and otherwise at random in such manner as the Paying Agent/Registrar in its discretion deems proper) on November 1 or if November 1 is not an Interest Payment Date, then on the succeeding Interest Payment Date, of each year and in the respective principal amounts set forth below at 100% of the principal amount thereof, plus accrued interest to the Redemption Date, from Sinking Fund Installments which are required to be made in amounts sufficient to redeem on November 1 or if November 1 is not an Interest Payment Date, then on the succeeding Interest Payment Date, of each year set forth below the principal amount of such respective Bonds specified for each of the years shown below• DAL504/71005 Dallas 799667 8.130C 23 Sinking Fund Installments Year Principal Amount ill *Stated Maturity Date The Paying Agent /Registrar will select at random the specific Bonds in Authorized Denominations to be redeemed by mandatory redemption as provided in the Thirty Ninth Supplemental Ordinance and the Officers Pricing Certificate. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 15 days (or if the Bonds are in the Fixed Rate Mode, 30 days) before the date fixed for redemption, to the registered owner of each of the Bonds to be redeemed in whole or in part. Notice having been so given, the Bonds 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 Bonds or portions hereof so called for edeniption shall not have been surrendered for payment, interest on such Bonds or portions thereof shall cease to accrue. As provided in the Ordinances, and subject to certain limitations therein set forth, this Bond is transferable upon surrender of this Bond for transfer at the Designated Payment/Transfer Office, with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar and, thereupon, one or more new fully registered Bonds of the same stated maturity of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees Neither the Cities, the Board, nor the Paying Agent /Registrar shall be required to issue, transfer or exchange any Bond called for redemption where such redemption is scheduled to occur within 45 calendar days of the transfer or exchange date, provided, however such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. The Cities, the Board, the Paying Agent/Registrar and any other person may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except interest shall be paid to the person in whose name this Bond is registered on the Record Date or Special Record Date, as applicable) and for all other purposes, whether or not this Bond be overdue, and neither the Cities, the Board, nor the Paying Agent/Registrar shall be affected by notice to the contrary IT IS HEREBY CERTIFIED AND RECITED that the issuance of this Bond and the series of which it is a part is duly authorized by law- that all acts, conditions and things required DAL504 /71005 Dallas 799667_8.DOC 24- to be done precedent to and in the issuance of the Bonds have been properly done and performed and have happened in regular and due time, form and manner as required by law IN WITNESS WHEREOF the City Council of the City of Dallas, Texas, has caused the facsimile seal of that City to be placed hereon and this Bond to be signed by the facsimile signature of its Mayor and countersigned by the facsimile signatures of its City Manager and City Secretary and the City Council of the City of Fort Worth, Texas, has caused the facsimile seal of that City to be placed hereon and this Bond to be signed by the facsimile signature of its Mayor countersigned by the facsimile signature of its City Secretary and approved as to form and legality by its City Attorney COUNTERSIGNED City Manager City of Dallas, Texas City Secretary City of Dallas, Texas COUNTERSIGNED City Secretary City of Fort Worth, Texas APPROVED AS TO FORM AND LEGALITY City Attorney City of Fort Worth, Texas DAL504 /71005 Dallas 799667 8.DOC 25- Mayor City of Dallas, Texas Mayor City of Fort Worth, Texas (b) [Form of Certificate of Pang A eg nt/Re istrarl CERTIFICATE OF PAYING AGENT/REGISTRAR This is one of the Bonds referred to in the within mentioned Ordinances. The series of Bonds of which this Bond is a part was originally issued as one Initial Bond which was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated (c) [Form of Assignment] as Paying Agent/Registrar ASSIGNMENT Authorized Signatory 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 Bond and all rights hereunder and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration hereof, with full power of substitution in the premises Date NOTICE The signature on this Assignment must Signature Guaranteed By- correspond with the name of the registered owner as it appears on the face of the within Bond in every particular and must be guaranteed in a manner satisfactory to the Paying Agent/Registrar Authorized Signatory DAL504 /71005 Dallas 799667 8.DOC 26- (d) Initial Bond Insertions. (i) The Initial Bond shall be in the form set forth in paragraph (a) of this Section, except that: (A) immediately under the name of the Bond, the heading `CUSIP NO shall be deleted, and (B) the Initial Bond shall be numbered T 1 (ii) The following Registration Certificate of Comptroller of Public Accounts shall appear on the Initial Bond in lieu of the Certificate of the Paying Agent/Registrar- REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER § OF PUBLIC ACCOUNTS § REGISTER NO THE STATE OF TEXAS I HEREBY CERTIFY THAT there is on file and of record in my office a certificate to the effect that the Attorney General of the State of Texas has approved this Bond as required by law and that he finds that it has been issued in conformity with the constitution and laws of the State of Texas, and that this Bond has been registered this day by me WITNESS MY SIGNATURE AND SEAL OF OFFICE this [SEAL] Comptroller of Public Accounts of the State of Texas Section 6 3 CUSIP Registration. The Cities may secure identification numbers through the CUSIP Service Bureau Division of Standard & Poor's Corporation, New York, New York, and may authorize the printing of such numbers on the face of the Bonds. It is expressly provided, however that the presence or absence of CUSIP numbers on the Bonds shall be of no significance or effect as regards the legality thereof and neither the Cities, the Board, nor the attorneys approving said Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed on the Bonds. Section 6 4 Legal Opinion. The approving legal opinions of McCall, Parkhurst & Horton L.L.P Vinson & Elkins L.L.P and Renee Higginbotham Brooks, Esq Co -Bond Counsel shall be delivered to the Paying Agent /Registrar and the delivery thereof shall be acknowledged by the Paying Agent /Registrar on behalf of the Holders of the Bonds. DAL504 /71005 Dallas 799667_8.DOC 27 ARTICLE VII EXECUTION APPROVAL, REGISTRATION SALE AND DELIVERY OF BONDS AND RELATED DOCUMENTS Section 7 1 Method of Execution, Delivery of Initial Bond. (a) Each of the Bonds shall be signed and executed on behalf of the City of Dallas by the manual or facsimile signature of its Mayor and countersigned by the manual or facsimile signatures of its City Manager and City Secretary and the corporate seal of that City shall be impressed, printed, lithographed or otherwise reproduced or placed on each bond. Each of the Bonds shall be signed and executed on behalf of the City of Fort Worth by the manual or facsimile signature of its Mayor and countersigned by the manual or facsimile signature of its City Secretary the same shall be approved as to form and legality by the manual or facsimile signature of the City Attorney of the City and its corporate seal shall be impressed, printed, lithographed or otherwise reproduced or placed upon each bond. All manual or facsimile signatures placed upon the Bonds shall have the same effect as if manually placed thereon, all to be done in accordance with Applicable Law (b) In the event the Mayor City Secretary City Manager or City Attorney of either of the Cities is absent or otherwise unable to execute any document or take any action authorized herein, the Mayor Pro Tem, the Assistant City Secretary an Assistant City Manager or an Assistant City Attorney 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 City Secretary and an Assistant City Manager and an Assistant City Attorney shall, for the purposes of this Ordinance, have the same force and effect as if such duties were performed by the Mayor City Secretary City Manager and City Attorney respectively If any official from either City whose manual or facsimile signature shall appear on the Bonds, shall cease to be such official before the Authentication of the Bonds or before delivery of the Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purpose as if such official had remained in such office. (c) On the Closing Date, one `Initial Bond, representing the entire principal amount of the Bonds, payable in stated installments to the Purchaser or its designee, executed by manual or facsimile signatures of the Mayors and the City Manager of the City of Dallas and countersigned by the City Secretaries of the Cites and approved as to form and legality by the City Attorney of the City of Fort Worth, approved by the Attorney General of Texas, and registered and manually signed by the Comptroller of Public Accounts of the State, will be delivered to the Purchaser or its designee. Upon payment for the Initial Bond, the Paying Agent /Registrar shall cancel the Initial Bond and deliver to DTC on behalf of the Purchaser registered definitive Bonds as described in Section 3 7 (d) Except as provided below no Bond 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 in this Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar It shall not be required that the same authorized representative of the Paying Agent/Registrar sign the Certificate of Paying Agent /Registrar on all of the Bonds In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Bond shall have attached thereto the Comptroller's Registration Certificate substantially In the form provided in this Ordinance, manually executed DAL504 /71005 Dallas 799667_8.DOC by the Comptroller of Public Accounts of the State or by his duly authorized agent, which certificate shall be evidence that the Initial Bond has been duly approved by the Attorney General of the State and that it is a valid and binding obligation of the Cities, and has been registered by the Comptroller Section 7 2 Approval and Registration. The Board is hereby authorized to have control and custody of the Bonds and all necessary records and proceedings pertaining thereto pending their delivery and the Chairman, and the officers and employees of the Board and of the Cities are hereby authorized and instructed to make such certifications and to execute such instruments as may be necessary to accomplish the delivery of the Bonds or the Initial Bond to the Attorney General of the State of Texas and to assure the investigation, examination and approval thereof by the Attorney General and their registration by the Comptroller of Public Accounts. Upon registration of the Bonds, the Comptroller of Public Accounts (or a deputy designated in writing to act for him) shall manually sign the Comptroller's Registration Certificate accompanying the Bonds and the seal of the Comptroller shall be impressed, or placed in facsimile, on such certificate. The Chairman of the Board and the Chief Executive Officer of the Airport shall be further authorized to make such agreements and arrangements with the purchasers of the Bonds and with the Paying Agent/Registrar as may be necessary to assure that the Bond will be delivered to such purchasers in accordance with the terms of sale. Section 7.3 TEFRA Approval. Any Authorized Officer or the Assistant Vice President Finance is hereby appointed to be the designated Hearing Officer for a public hearing relating to the Bonds to be held for purposes of satisfying Section 147 of the Code and the Mayors are hereby authorized to approve the issuance of the Bonds and the use of the proceeds thereof for the purpose of satisfying the requirements of Section 147 of the Code. Section 7 4 Approval of Credit Agreements. The Board is authorized to enter into Credit Agreements relating to the Bonds from time to time while the Bonds are Outstanding in accordance with Applicable Law Section 7 5 Approval of Auction Agreement. (a) The Auction Agreement, in substantially the form attached hereto as Appendix D is hereby approved and accepted. (b) The respective officials of the Cities and of the Board, whose names appear thereon, are authorized to execute and deliver the Auction Agreement to the Auction Agent on and as of the Closing Date, with such changes therein as such officers shall deem appropriate and in the best interests of the Cities and the Board, as conclusively evidenced by their execution thereof. (c) Unless otherwise provided, each of the Authorized Officers, acting on behalf of the Board and the Cities, is authorized to exercise any rights reserved by or granted to or take any action permitted to be taken by the Cities and the Board under the Auction Agreement or described in this Ordinance relating to the Auction Agreement. Section 7 6 Approval of Broker Dealer Agreement. (a) The Broker Dealer Agreement, in substantially the form attached hereto as Appendix E, is hereby approved and accepted DAL504 /71005 Dallas 799667 8.DOC 29- (b) The respective 6fficials of the Cities and of the Board, whose names appear thereon, are authorized to execute and deliver the Broker Dealer Agreement to the Broker Dealer on and as of the Closing Date, with such changes therein as such officers shall deem appropriate and in the best interests of the Cities and the Board, as conclusively evidenced by their execution thereof. (c) Unless otherwise provided, each of the Authorized Officers, acting on behalf of the Board and the Cities, is authorized to exercise any rights reserved by or granted to or take any action permitted to be taken by the Cities and the Board under the Broker Dealer Agreement. (d) Each of the Authorized Officers is hereby authorized, if appropriate, to execute and deliver on behalf of the Cities and the Board multiple broker - dealer agreements having substantially the terms set forth in the Broker Dealer Agreement. Section 7 7 Official Statement. In connection with the offer and sale of the Bonds, a preliminary official statement and a final official statement are hereby duly authorized. A copy of the preliminary official statement (the `Preliminary Official Statement ") has been presented to and considered at this meeting, and is attached as Appendix F The execution of a final official statement for the Bonds and any supplements thereto which may be necessary to accomplish the issuance of Bonds is hereby authorized, with such changes therein as shall be approved by an Authorized Officer or the Board, with an Authorized Officer's execution of the Officers Pricing Certificate for the Bonds to constitute conclusive evidence of such approval. Section 7 8 Further Action. The Authorized Officers and each of them are authorized, empowered and directed to execute such other documents in addition to those enumerated herein and to take such other actions as they deem necessary or advisable in order to carry out and perform the purposes of this Ordinance, including, without limitation, the execution, when required or appropriate in fulfilling the terms of this Ordinance, of a Remarketing Agreement with a Remarketing Agent to be selected by the Board and a Tender Agency Agreement with a Tender Agent to be selected by the Board. Section 7 9 Attorney General Modification. In order to obtain the approval of the Bonds by the Attorney General of the State of Texas, any provision of this Ordinance may be modified, altered or amended with nonsubstantive changes after the date of its adoption if required by the Attorney General in connection with the Attorney General s examination as to the legality of the Bonds and approval thereof in accordance with the applicable law Such changes, if any shall be provided to the City Secretary of each City and such City Secretary shall insert such changes into this Ordinance as if approved on the date hereof. Section 7 10 Refunding and Redemption of Refunded Obligations. (a) The Cities hereby direct that the Refunded Obligations, or such portion thereof specified in the Officers Pricing Certificate, be called for redemption on July 1 2004 or such other date as shall be specified in the Officers Pricing Certificate (the `Redemption Date ") and that J.P Morgan Trust Company National Association, as successor paying agent for the Refunded Obligations (the `Escrow Agent "), deposit an amount sufficient, with investment earnings thereon, if any to pay the amount due on the Refunded Obligations on the Redemption Date, which amount represents DAL504 /71005 Dallas 799667 8.130C 30- the par amount of the outstanding principal amount of, plus accrued interest on, plus redemption premium, if any for the Refunded Obligations to the Redemption Date (the `Redemption Price "), all in accordance with the form of notice of redemption prepared by the Escrow Agent and attached to the Escrow Agreement. The Refunded Obligations shall not bear interest after the Redemption Date. (b) The Board is hereby authorized to enter into an escrow agreement, which is hereby approved in the general form approved by the Board, with the Escrow Agent. The Escrow Agent is authorized to take such steps as may be necessary or appropriate to purchase securities on behalf of the Board and to create and fund the Escrow Fund contemplated by the Escrow Agreement through the use of the proceeds of the Bonds and other lawfully available monies of the Board, and to use such monies to redeem the Refunded Obligations on the Redemption Date. ARTICLE VIII GENERAL PROVISIONS Section 8 1 Deposit and Uses of Bond Proceeds. The proceeds received from the sale of the Bonds, together with other available funds, if any shall be as applied as follows (i) an amount shall be deposited to the Debt Service Reserve Fund or shall be used to purchase a Credit Agreement, which together with the amount on deposit therein, is equal to the Debt Service Reserve Requirement; (ii) an amount, together with interest earnings thereon, if any equal to the Redemption Price shall be deposited into the Escrow Fund for the Refunded Obligations, and (iii) an amount equal to the Cities and the Board s costs of issuance of the Bonds will be deposited into the Construction Fund. Section 8.2 Payment of the Bonds. While any of the Bonds are outstanding and unpaid, the Board shall make available to the Paying Agent /Registrar out of the Debt Service Fund or the Debt Service Reserve Fund, the amounts and at the times required by this Ordinance and the Controlling Ordinances, money sufficient to pay when due all amounts required to be paid by this Ordinance, the Controlling Ordinances, the Outstanding Ordinances, and the Additional Supplemental Ordinances, if any that authorize the issuance of Initial Obligations or Additional Obligations. Section 8.3 Representations and Covenants. (a) The Cities and the Board will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in the Controlling Ordinances and this Ordinance; the Cities will promptly pay or cause to be paid from Pledged Revenues the principal of, interest on, and premium, if any with respect to each Bond on the dates and at the places and manner prescribed in each Bond, and the Cities will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by the Controlling Ordinances and this Ordinance. (b) The Cities are duly authorized by Applicable Law to issue the Bonds, all action on their part for the issuance of the Bonds has been duly and effectively taken, and the Bonds in the hands of the Holders are and will be valid and enforceable special obligations of the Cities and the Board in accordance with their terms. DAL504/71005 Dallas 799667 8.DOC 31 (c) The Board, the officers, employees and agents are hereby directed to observe, comply with and carry out the terms and provisions of this Ordinance. Section 8 4 Covenants Regarding Tax Exemption. The Cities and the Board covenant to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Internal Revenue Code of 1986 as amended (the 'Code'), the interest on which is not includable in the gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Cities and the Board covenant as follows (a) to take such action or refrain from such action which would result in the Bonds not being exempt facility bonds" as the term is defined in section 142 of the Code; in particular which would result in less than 95 percent of the net proceeds being used to provide an airport" within the meaning of section 142(a)(1) of the Code; (b) to take such action to assure at all times while the Bonds remain outstanding, the facilities, directly or indirectly financed with the proceeds thereof will be owned by a governmental unit; (c) that no part of the facilities, directly or indirectly financed with the proceeds of the Bonds will constitute (1) any lodging facility (ii) any retail facility (including food or beverage facilities) in excess of a size necessary to serve passengers and employees at the exempt facility (iii) any retail facility (other than parking) for passengers or the general public, located outside the exempt facility terminal, (iv) any office building for individuals who are not employees of a governmental unit or of the operating authority for the exempt facility or (v) any industrial park or manufacturing facility - (d) that the maturity of the Bonds does not exceed 120 percent of the economic life of the facilities, directly or indirectly financed with the proceeds of the Bonds, as more specifically set forth in section 147(b) of the Code; (e) that fewer than 25 percent of the proceeds of the Bonds will be used for the acquisition of land or an interest therein, unless such land is acquired for noise abatement or wetland preservation or the future use of the Airport, and there is no other significant use of such land, (f) that any property acquired, directly or indirectly with the proceeds of the Bonds was not placed -in- service prior to such acquisition unless the provisions of section 147(4) of the Code, relating to rehabilitation, are satisfied, (g) that the costs of issuance to be financed with the proceeds of the Bonds do not exceed two (2) percent of the proceeds of the Bonds, (h) to refrain from taking any action that would result in the Bonds being `federally guaranteed within the meaning of section 149(b) of the Code; (i) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly to acquire or to replace funds which were used, directly or indirectly to acquire DAL504 /71005 Dallas 799667 8.130C 32 investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with (i) proceeds of the Bonds invested for a reasonable temporary period, within the meaning of Section 148 of the Code, of 90 days or less until such proceeds are needed for the purpose for which the bonds are issued, (ii) proceeds or amounts invested in a bona fide debt service fund, within the meaning of section 1 148 -1(b) of the Treasury Regulations, and (iii) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10 percent of the stated principal amount (or in the case of a discount, the issue price) of the Bonds, 0) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary to satisfy the requirements of section 148 of the Code (relating to arbitrage) (k) to create and maintain a Rebate Fund, as required below to pay to the United States of America at least once during each five year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90 percent of the `Excess Earnings, within the meaning of section 48(f) of the Code and to pay to the United S tes Of America, not later than 60 days after the Bonds have been paid in full, 100 percent of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and (1) to maintain such records as will enable the Cities to fulfill their responsibilities under this section and section 148 of the Code and to retain such records for at least six years following the final payment of principal and interest on the Bonds In order to facilitate the requirements of subsection (k) of this Section, the Rebate Fund shall be established and maintained by the Board, on behalf of itself and the Cities, for the sole benefit of the United States of America, and such fund shall not be subject to the claim of any other Person, including Holders and Credit Providers Amounts on deposit in the Rebate Fund in accordance with section 148 of the Code shall be paid periodically to the United States of America in such amounts and at such times as are required by said section. The Cities understand that the term `proceeds" includes disposition proceeds, as defined in the Treasury Regulations, and, in the case of refunding bonds, transferred proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the Bonds. It is the understanding of the Cites that the covenants contained in this Ordinance are intended to assure compliance with the Code and any regulations or rulings promulgated by the U S Department of the Treasury pursuant thereto In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the Cities and the Board will not be required to comply with any covenant contained herein to the extent that such failure to comply in the opinion of nationally recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code In the event that regulations or rulings are hereafter DAL504 /71005 Dallas 799667_8.130C 33 promulgated which impose additional requirements which are applicable to the Bonds, the Cities and the Board agree to comply with the additional requirements to the extent necessary in the opinion of nationally recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. Section 8 5 Disposition of Protect. The Cities covenant that the property constituting the projects financed or refinanced with the proceeds of the Bonds will not be sold or otherwise disposed in a transaction resulting in the receipt by the Cities of cash or other compensation, unless the Cities obtain an opinion of nationally- recognized bond counsel that such sale or other disposition will not adversely affect the tax - exempt status of the Bonds. For purposes of the foregoing, the portion of the property comprising personal property and disposed in the ordinary course shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes hereof, the Cities shall not be obligated to comply with this covenant if they obtain an opinion that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest on the Bonds. Section 8 6 Bond Insurance and Credit Agreements. The Bonds have been offered with one or more commitments for bond insurance provided by the Insurer or Insurers and the Debt Service Reserve Requirement may be satisfied with the purchase of a Credit Agreement, with the bond insurance and /or Credit Agreement to be evidenced by one or more of the then current legal forms of the Policy or Policies. The Cities have sold one or more maturities of the Bonds based on such insurance but are not required to obtain bond insurance from another source if the Insurer does not honor or is unable to honor its obligations to deliver the Policy or Policies on the Closing Date. In the event such insurance is not issued as to one or more maturities on the Closing Date or the Cities do not enter into a Credit Agreement to fund the Debt Service Reserve Requirement as a result of issuing the Bonds, respectively this Section shall be of no force and effect. In accordance with the terms and conditions imposed by the Insurer or Insurers or Credit Provider or Credit Providers, and subject to the preceding sentence, the Cities covenant and agree that: (a) Upon the occurrence of an Event of Default which would require any Insurer or Credit Provider to make payments under a Policy or Credit Agreement, each obligated Insurer or Credit Provider and its designated agent shall be provided with access to the registration books relating to the Bonds. In addition, each obligated Insurer or Credit Provider shall be deemed the sole Holder of the Bonds that it has insured with respect to any action taken pursuant to Article VII of the Thirtieth Ordinance. In determining whether a payment default relating to the Bonds has occurred pursuant to Section 7 1(i) and (ii) of the Thirtieth Ordinance, no effect shall be given to payments made under any Policy or Credit Agreement. Furthermore, notice of any payment default with respect to the Bonds shall be given immediately by the Board to each Insurer or Credit Provider (b) Notwithstanding any other provision of this Ordinance, no resignation or removal of the Paying Agent/Registrar shall become effective until a successor has been appointed and has accepted the duties of the Paying Agent /Registrar Each Insurer and Credit Provider shall be furnished with written notice of the resignation or removal of the Paying Agent/Registrar and the appointment of any successor thereto DAL504/71005 Dallas 799667 8.130C 34- (c) The following information and data shall be provided to each Insurer and Credit Provider by the Board periodically as follows. (i) Annually when available, the Airport budget as approved by the Cities and the annual audited financial statements. (ii) An official statement or offering document, if any prepared in connection with the issuance of any Obligations (iii) Notice of any draw upon the Debt Service Reserve Fund. (iv) Simultaneously with the delivery of the annual audited financial statements such other statistical data concerning passenger statistics, landing weights and aircraft operations as are compiled and made generally available by the Airport. ARTICLE IX REPEAL, SEVERABILITY AND EFFECTIVE DATE Section 9 1 Ordinance Irrepealable. After any of the Bonds shall be issued, this Ordinance shall constitute a contract between the Cities, the Holders, and each Insurer and this Ordinance shall be and remain irrepealable until the Bonds and the interest thereon shall be fully paid, canceled, refunded or discharged or provision for the payment thereof shall be made. Section 9.2 Severability If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or lack of enforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance If any Section, paragraph, clause or provision of the Contract and Agreement shall for any reason be held to be invalid or unenforceable, the invalidity or lack of enforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of the Contract and Agreement, or of any other provisions of this Ordinance not dependent directly for effectiveness upon the provision of the Contract and Agreement thus declared to be invalid and unenforceable DAL504 /71005 Dallas 799667_8.130C 35 Section 9 3 Effective Date. This Ordinance, when duly passed by both Cities, shall be in full force and effect. DAL504 /71005 Dallas 799667 8.DOC (Verification Pages Follow) 36- 2004 APPROVED AND ADOPTED BY THE DALLAS CITY COUNCIL THIS APRILo, APPROVED AS TO FORM6wS City Attorney City of Dallas, T Signature Page to Thirty-Ninth Supplemental Concurrent Bond Ordinance PASS D E 'HE FORT WORTH CITY COUNCIL THIS APRIL, 2004 (SEAL) ATTEST City ecretary City of Fort Worth, Texas LITY Signature Page to Thirty -Ninth Supplemental Concurrent Bond Ordinance OFFICIAL ACTION OF THE DALLAS CITY COUNCIL April 28, 2004 04 -1469 Item 67 Approval of the Thirty -Ninth Supplemental Concurrent Bond Ordinance authorizing Dallas/Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A, in a maximum aggregate principal amount of $130 000,000 for lawful purposes, providing the security therefore, providing for the sale, execution and delivery thereto subject to certain parameters, and providing other terms, provisions and covenants with respect thereto Financing: No cost consideration to the City Councilmember Lill announced that she had a conflict of interest and would abstain from voting or participating in any discussion. Councilmember Lill left the city council chamber Councilmember Mayor Pro Tern Loza moved to pass the ordinance Motion seconded by Councilmember Blaydes and unanimously adopted. (Lill abstain, Rasansky absent) Assigned ORDINANCE NO 25577 5/17/04 10:24 AM GA2004MMCC042804.doc OFFICE OF THE CITY SECRETARY CITY OF DALLAS TEXAS THE STATE OF TEXAS COUNTY OF DALLAS CITY OF DALLAS I, Shirley Acy City Secretary of the City of Dallas, Texas, do hereby certify- 1 That the above and foregoing is a true and correct copy of an excerpt from the minutes of the City Council of the City of Dallas, had in regular meeting, Apnl ' , 2004 confirming the passage of Dallas /Fort Worth International Airport Thirty Ninth Supplemental Concurrent Bond Ordinance authorizing the issuance of Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A which ordinance is duly of record in the minutes of said City Council 2 That said meeting was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551 Texas Government Code, as amended. 2004 WITNESS MY HAND and seal of the City of Dallas, Texas, this 'P('7FO�' day of April,., - 94�� � � City Secretary City of Dallas, Texas (SEAL) Notary Page to Thirty -Ninth Supplemental Concurrent Bond Ordinance THE STATE OF TEXAS COUNTY OF TARRANT CITY OF FORT WORTH I, Sylvia Glover Acting City Secretary of the City of Fort Worth, Texas, do hereby certify- 1 That the above and foregoing is a true and correct copy of an Ordinance, duly presented and passed by the City Council of the City of Fort Worth, Texas, at a regular meeting held on April, 2004 as same appears of record in the Office of the City Secretary 2. That said meeting was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Chapter 551 Texas Government Code, as amended. WITNESS MY HAND and the Official Seal of the City of Fort Worth, Texas, thiso?-Z�— day of April, 2004 (SEAL) .1'1" �, Z -) , � � V, , Actid City Secretary City of Fort Worth, Texas Notary Page to Thirty -Ninth Supplemental Concurrent Bond Ordinance Series Dallas -Fort Worth Regional Airport Joint Revenue Refunding Bonds, Series 1992A Dallas -Fort Worth Regional Airport Joint Revenue Construction nd Refunding Bonds, Series 1997 SCHEDULEI SCHEDULE OF REFUNDED OBLIGATIONS Original Original Issue Issue Date Amount 02/05/1992 $116,280,000 07/03/1997 $142,070,000 Amount to be Refunded $ 8,905,000 9,515,000 10,390,000 11 115,000 11,945,000 13,000,000 13,880,000 15 165,000 $30,000,000 *Or ch other date as shall be specified the Officers Pricing Certificate. Schedule I Maturities to be Refunded 2005 2006 2007 2008 2009 2010 2011 2012 Redemption Redemption Date Price 07/01/2004 102% 2024 07/01 /2004 100% Draft of 03/18/04 APPENDIX A PROVISIONS FOR BI MODAL OBLIGATIONS DAL504 /71005 Dallas 799703 3.DOC TABLE OF CONTENTS APPENDIX A ARTICLE A I DEFINITIONS Section A 101 Definitions Section A 102 Rules of Construction. ARTICLE A II INTEREST RATE MODES, INTEREST RATES AND PAYMENT Section A 201 Denominations, Medium, Method and Place of Payment of Principal Section A -402 and Interest Section A 202 Determination of Fixed Rate Section A 203 Determination of Interest Rate and Auction Period During Auction Section A -405 Rate Mode Section A 204 Changes in Mode ARTICLE A III REDEMPTION OF BONDS Section A 301 Optional Redemption Section A 302 Redemption from Sinking Fund Installments Section A 303 Notice of Redemption of Bonds in Auction Rate Mode ARTICLE A IV PURCHASE OF BONDS Section A -401 Mandatory Purchase on Any Mode Change Date Section A -402 Notice of Mandatory Tender for Purchase Section A -403 Purchase Fund Section A -404 Remarketing of Bonds of a Series, Notices Section A -405 Source of Funds for Purchase of Bonds of a Series Section A -406 Delivery of Bonds Section A -407 Delivery and Payment for Purchased Bonds of a Series Bonds. DAL504 /71005 Dallas 744703 3.DOC (A i) Undelivered Page Al A -4 A -4 A5 A5 A -6 A -8 A9 A9 A10 A10 A10 All A 11 A 12 A 12 Section A 501 Section A 502 Section A 503 Section A 504 Remarketing Agent Tender Agent Auction Agent Broker Dealers ARTICLE A V AGENTS ARTICLE A VI MISCELLANEOUS Section A -601 Modifications or Amendments to the Thirty -Ninth Ordinance Section A -602 Notices Exhibit I — Auction Rate Mode Provisions DAL504/71005 Dallas 799703 3.DOC (A ii) A 13 A 13 A 14 A 14 A 14 A 14 I1 APPENDIX A PROVISIONS FOR BI MODAL OBLIGATIONS ARTICLE A I DEFINITIONS Section A 101 Definitions. Capitalized terms used but not otherwise defined in this Appendix A shall have the meanings set forth in the Thirty -Ninth Supplemental Concurrent Bond Ordinance adopted by the Cities of Dallas and Fort Worth, Texas (the `Thirty Ninth Ordinance') The following terms shall, for all purposes herein and (except as the context may otherwise require) in the Thirty -Ninth Ordinance, have the following meanings Alternate Rate means, on any Rate Determination Date, the BMA Index or if the BMA Index is no longer published, an index or a rate selected or determined by the Board. Auction Agent shall have the meaning set forth in Exhibit I hereto Auction Agreement shall have the meaning set forth in Exhibit I hereto Auction Date shall have the meaning set forth in Exhibit I hereto Auction Period shall have the meaning set forth in Exhibit I hereto Auction Period Rate shall have the meaning set forth in Exhibit I hereto Auction Procedures shall have the meaning set forth in Exhibit I hereto Auction Rate Mode means the mode during which the duration of the Auction Period and the interest rate is determined in accordance with Section A 203 hereof and Exhibit I hereto Authorized Denominations means with respect to Bonds of a Series (i) in an Auction Rate Mode, $25 000 and any integral multiple thereof and (ii) in a Fixed Rate Mode, $5 000 and any integral multiple thereof. BMA Index means The Bond Market Association Municipal Swap Index released by Municipal Market Data to its subscribers. Bonds or Bonds of a Series and words of like import shall mean any Bonds authorized pursuant to the Thirty -Ninth Ordinance and issued in accordance with the Thirty -Ninth Ordinance, or all such Bonds collectively as the context may require. Broker Dealer shall have the meaning set forth in Exhibit I hereto Broker Dealer Agreement shall have the meaning set forth in Exhibit I hereto DAL504/71005 Dallas 799703_3.DOC Al Business Day means a day other than (i) a Saturday Sunday or legal holiday (ii) a day on which the Paying Agent/Registrar the Insurer the Tender Agent, the Auction Agent (if the Bonds of a Series are in an Auction Rate Mode), the Broker Dealers (if the Bonds of a Series are in an Auction Rate Mode), the Remarketing Agent or banks and trust companies in New York, New York are authorized or required to remain closed, or (iii) a day on which the New York Stock Exchange is closed. Electronic Means means telecopy facsimile transmission, e-mail transmission or other similar electronic means of communication providing evidence of transmission, including a telephonic communication confirmed by any other method set forth in this definition. Favorable Opinion of Bond Counsel means, with respect to any action the occurrence of which requires such an opinion, an opinion of nationally recognized bond counsel to the effect that such action is permitted under the Acts, the Thirty -Ninth Ordinance and the Controlling Ordinances, and that such action will not impair the exclusion of interest on such Bonds from gross income for purposes of federal income taxation (subject to the inclusion of any exceptions contained in the opinion delivered upon original issuance of the Bonds) Fixed Rate means an interest rate fixed to the Stated Maturity Date of the Bonds of a Series. Fixed Rate Mode means the period during which Bonds of a Series bear interest at a Fixed Rate. Interest Payment Date means the following dates upon which interest is payable on Bonds of a Series. (a) the Stated Maturity Date or any Mode Change Date; (b) with respect to the Auction Rate Mode, each date that is specified as an `Interest Payment Date" in Exhibit I hereto and (c) with respect to the Fixed Rate Mode, each May 1 and November 1 provided that the Interest Payment Dates for the Fixed Rate Mode may be changed in connection with the conversion to such Mode upon receipt of a Favorable Opinion of Bond Counsel. Interest Period means the period of time that any interest rate remains in effect, which period, with respect to Bonds of a Series in the Fixed Rate Mode, shall be the period from and including the Mode Change Date that they began to bear interest at the Fixed Rate to and including the Stated Maturity Date or date of redemption prior to the Stated Maturity Date. Mandatory Purchase Date means any Mode Change Date. Maximum Auction Rate shall have the meaning set forth in Exhibit 1 hereto Maximum Rate means ten percent (10 %) per annum or such higher rate as determined by an Authorized Officer- provided, however that in no event shall the Maximum Rate exceed the maximum rate permitted by applicable law DAL504/71005 Dallas 799703_3.DOC A2 Mode means the Auction Rate Mode or the Fixed Rate Mode. Mode Change Date means, with respect to Bonds of a Series, the date the Auction Rate Mode terminates and the Fixed Rate Mode begins. Mode Change Notice shall have the meaning specified in Section A 204(b) hereof. Notice Parties means the Board, the Paying Agent/Registrar the Remarketing Agent (if any) the Tender Agent (if any), the Auction Agent (if any), and all Broker Dealers (if any) Owner means, with respect to any Bond, the Holder of such Bond pursuant to the Thirtieth Ordinance. Purchase Fund means the fund created in Section A -403 hereof. Purchase Price means an amount equal to the principal amount of any Bond of a Series purchased on any Mandatory Purchase Date. Rate Determination Date means any date on which the interest rate on any Bonds of a Series is required to be determined, being in the case of any Bonds of a Series to be in the Fixed Rate Mode, a Business Day prior to the first day of an Interest Period. Rating Agencies means Fitch, Moody's and S &P or such other nationally recognized securities rating agencies selected by the Board. Record Date means, with respect to Bonds of a Series (i) in the Auction Rate Mode, the opening of business on the Business Day next preceding an Interest Payment Date and (ii) in the Fixed Rate Mode, the fifteenth (15th) day (whether or not a Business Day) of the calendar month next preceding each Interest Payment Date. Redemption Date means the date fixed for redemption of Bonds of a Series subject to redemption in any notice of redemption given in accordance with the terms hereof. Remarketing Agent means the remarketing agent, if any appointed pursuant to Section A 501 of this Appendix A. Remarketing Agreement means the remarketing agreement entered into among the Board, the Cities and the Remarketing Agent with respect to the Bonds of a Series pursuant to which the Remarketing Agent has agreed to remarket the Bonds of such Series on the Mandatory Purchase Date at a price of not less than 100% of the principal amount thereof. Remarketing Proceeds Account means the account by that name created in Section A -403 hereof. Securities Depository has the meaning set forth in Exhibit I. Series means the series, or subseries, as the case may be, designation assigned to the Bonds. DAL504 /71005 Dallas 799703_3.DOC A3 Sinking Fund Installments mean the sinking fund installments for the Bonds as specified in the Officers Pricing Certificate. Tender Agent means the tender agent, if any appointed pursuant to Section A 502 hereof. Tender Agency Agreement means the tender agency agreement entered into among the Board, the Cities and the Tender Agent with respect to the Bonds of a Series. Thirty -Ninth Ordinance means the Thirty -Ninth Supplemental Concurrent Bond Ordinance passed concurrently by the City Councils of the Cities in connection with the issuance of the Bonds. Section A 102 Rules of Construction. (a) This Appendix A constitutes an integral part of the Thirty -Ninth Ordinance and, except to the extent provided in the next sentence, has the same force and effect as if set forth in the forepart of the Thirty Ninth Ordinance. In the event of any conflict between this Appendix A and the forepart of the Thirty -Ninth Ordinance, the forepart of the Thirty -Ninth Ordinance shall control. (b) References in the Thirty Ninth Ordinance and in this Appendix A to Articles or Sections with A preceding the number of an Article or Section are to such Article or Section of this Appendix A. (c) To the extent that the Bonds of any Series are issued in or re- designated into two or more subseries, references in the Thirty -Ninth Ordinance and in this Appendix A to the Bonds of a Series shall be deemed to refer to Bonds of such subsenes. (d) Unless otherwise provided in the Thirty -Ninth Ordinance and this Appendix A, references in the Thirty Ninth Ordinance and in this Appendix A to `time" shall be deemed to refer to New York, New York time. ARTICLE A II INTEREST RATE MODES, INTEREST RATES AND PAYMENT Section A 201 Denominations, Medium, Method and Place of Payment of Pnncwal and Interest. The Bonds of each Series shall be issued in Authorized Denominations. While Bonds are in the Auction Rate Mode, accrued and unpaid interest on the Bonds of a Series shall be due on the Interest Payment Dates and payable by wire transfer of immediately available funds to the account specified by the Owner in a written direction received by the Paying Agent/Registrar on or prior to a Record Date or if no such account number is furnished, by check mailed by the Paying Agent/Registrar to the Owner at the address appearing on the books required to be kept by the Paying Agent/Registrar pursuant to the Thirty -Ninth Ordinance. The payment of the Purchase Price of Bonds of a Series on any Mandatory Purchase Date shall be made by wire transfer in immediately available funds by the Tender Agent to the account specified by the Owner in a written direction received by the Tender Agent or if no such account DAL504 /71005 Dallas 799703 3.DOC A -4 number is furnished, by check mailed by the Tender Agent to the Owner at the address appearing on the books required to be kept by the Paying Agent/Registrar pursuant to the Thirty -Ninth Ordinance. Any such direction shall remain in effect until revoked or revised by such Owner by an instrument in writing delivered to the Paying Agent/Registrar or the Tender Agent, as the case may be. Interest on Bonds of a Series that are issued in the Fixed Rate Mode or in the Auction Rate Mode with an Auction Period over 180 days shall be calculated on the basis of a 360 -day year composed of twelve 30 -day months. Interest on Bonds of a Series that are issued in the Auction Rate Mode with an Auction Period of 180 days or less shall be calculated on the basis of a 360 -day year for the actual number of days elapsed to the Interest Payment Date. The interest rates for Bonds of a Series contained in the records of the Paying Agent/Registrar shall be conclusive and binding upon the Board, the Cities, the Remarketing Agent, the Tender Agent, the Auction Agent, all Broker Dealers and the Owners. The Owner of a Bond of a Series shall be paid (and shall be obligated to pay as part of the price paid by such Owner in connection with the remarketing to it of such Bonds) interest thereon for an Interest Period or Auction Period only in the amount that would have accrued thereon at the rate or rates established pursuant to this Appendix A, as applicable. No Bond of a Series may bear interest at an interest rate higher than the Maximum Rate. Section A 202 Determination of Fixed Rate. (a) Fixed Rate. The Fixed Rate to be effective for the Interest Period commencing on any Mode Change Date after which Bonds of a Series will bear interest at a Fixed Rate, shall be determined by the Remarketing Agent. No later than 4.00 p.m. on the Business Day next preceding the Mode Change Date, the Remarketing Agent shall determine the Fixed Rate and shall make the Fixed Rate available by Electronic Means to each other Notice Party The Fixed Rate shall be the minimum rate that, in the sole judgment of the Remarketing Agent, would result in a sale of the Bonds of the Series at a price equal to the principal amount thereof on the Rate Determination Date taking into consideration the duration of the Interest Period. (b) Failure to Establish Fixed Rate. If, for any reason, a Fixed Rate cannot be established on a Mode Change Date, the Bonds of the Series affected shall remain in the Auction Rate Mode for an Auction Period and bearing an Auction Period Rate as provided in Section A 204(c)(5) Section A 203 Determination of Interest Rate and Auction Period During Auction Rate Mode. (a) During any Auction Rate Mode, the Bonds of a Series shall bear interest at the Auction Period Rate for each Auction Period determined as set forth in this Section and Exhibit I hereto The provisions of such Exhibit I constitute an integral part of this Appendix A and the Thirty Ninth Ordinance and have the same force and effect as if set forth in the forepart of this Appendix A or the Thirty Ninth Ordinance. To the extent that the Bonds of any Series are initially issued in an Auction Rate Mode, (i) the initial Auction Period for the Bonds of such DAL504 /71005 Dallas 799703_3.DOC A5 Series shall commence from .and include the Closing Date and shall expire on and include the initial Auction Date, (ii) the initial Auction Date for the Bonds of such Series (which will be the day of the week on which Auctions will generally be conducted) shall be the date set forth in the Officers Pricing Certificate and (iii) the Auction Period Rate for the initial Auction Period for such Bonds of a Series shall be the interest rate set forth in the Officers Pricing Certificate. After the initial Auction Period, each Auction Period shall be an Auction Period set forth in the Officers Pricing Certificate unless such Auction Period is adjusted or changed to a daily 7 -day 28 -day 35 -day or a Special Auction Period in accordance with Exhibit I hereto For any other Auction Period that is not an initial Auction Period, the Auction Period Rate shall be the rate of interest determined in accordance with Exhibit I. (b) During any Auction Rate Mode, upon the occurrence of a default of the Cities in the payment of principal, Sinking Fund Installment, interest or premium on any Bond of a Series in the Auction Rate Mode after the same shall have become due, whether at maturity upon call for redemption or on an Interest Payment Date, the Paying Agent/Registrar shall immediately give notice of the occurrence of such events to the Auction Agent. (c) (1) Less than all of the Bonds of a Series then subject to a particular Auction Period may be converted to another Auction Period in accordance with Exhibit I, provided, however that in such event such Series shall be re- designated into two or more subsenes for each separate Auction Period with a new CUSIP number for each subsenes. (2) If less than all of the Bonds of a Series then subject to a particular Auction Period are converted to another Auction Period in accordance with Exhibit I, the particular Bonds of a Series or portions thereof which are to be converted to a new Auction Period shall be selected by the Auction Agent in its discretion subject to the provisions hereof regarding Authorized Denominations of Bonds of a Series subject to such Mode. (3) All Bonds of any Series shall be in the same Auction Period, except to the extent that the Bonds of any Series are issued in or re- designated into two or more subsenes. If the Bonds of any Series are issued in or re- designated into two or more subsenes, then all Bonds within any subsenes shall be in the same Auction Period. Section A 204 Changes in Mode. (a) Changes. The Auction Rate Mode may be changed to the Fixed Rate Mode at the times and in the manner hereinafter provided. Any Bonds of a Series converted to a Fixed Rate Mode shall not be changed to any other Mode. (b) Notice of Intention to Change Mode. The Board shall give written notice (the `Mode Change Notice ") to the Notice Parties of its intention to effect a change in the Mode from the Auction Rate Mode then prevailing to the Fixed Rate Mode, together with the proposed Mode Change Date. Such notice shall be given at least twenty (20) days prior to the Mode Change Date. DAL504 /71005 Dallas 799703_3.DOC A -6 (c) General Provisions Apylyina to Changes from One Mode to Another (1) The Mode Change Date must be a Business Day that is the Interest Payment Date following the last day of an Auction Period. (2) On or prior to the date the Board provides the notice to the Notice Parties pursuant to Section A 204(b) hereof, the Board shall have received a letter from counsel acceptable to the Board and addressed to the Board (with a copy to all other Notice Parties) to the effect that it expects to be able to deliver a Favorable Opinion of Bond Counsel on the Mode Change Date. (3) No change to the Fixed Rate Mode will become effective unless all conditions precedent thereto have been met and the following items shall have been delivered to the Remarketing Agent by 11.00 a.m., or such later time as is acceptable to the Board and the Remarketing Agent, on the Mode Change Date: (a) a Favorable Opinion of Bond Counsel dated the Mode Change Date; (b) if required, unless a Tender Agency Agreement and Remarketing Agreement is effective, an executed copy of such Tender Agency Agreement and Remarketing Agreement; (c) a certificate of an authorized officer of the Tender Agent to the effect that all of the Bonds of a Series tendered or deemed tendered, unless otherwise redeemed, have been purchased at a price at least equal to the Purchase Price thereof; and (d) evidence that each of the Cities has approved the change to the Fixed Rate Mode. (4) If all conditions to the Mode change are met, the Interest Period(s) for the Fixed Rate Mode shall commence on the Mode Change Date and the Interest Rate(s) shall be determined by the Remarketing Agent in the manner provided in Section A 202 (5) In the event the foregoing conditions have not been satisfied, the Bonds of a Series that are subject to the Mode Change Notice will not be subject to mandatory tender for purchase, will continue to bear interest in the Auction Rate Mode and the Auction Period Rate for the Auction Period commencing on the failed Mode Change Date shall be equal to the Maximum Auction Rate as determined on the Auction Date for such Auction Period and the Auction Period commencing on the failed Mode Change Date shall be a seven -day Auction Period. Thereafter the Auction Period Rate for each succeeding Auction Period shall be determined in accordance with Exhibit I and each Auction Period shall be a seven -day Auction Period until the length of the Auction Period is changed in accordance with Exhibit I. (d) Serial and Term Bonds. The Board may in the notice given pursuant to Section A 204(b) hereof in connection with any change of Bonds of a Series to the Fixed Rate DAL504 /71005 Dallas 799703_3.DOC A7 Mode, provide that all or some of such Bonds shall be serial or term Bonds. The total aggregate principal amount of Bonds due on any date, whether in a Fixed Rate Mode or an Auction Rate Mode, shall be equal to the Sinking Fund Installment specified for such date, and the remaining Sinking Fund Installments shall continue to be sinking fund installments for the Bonds of the Series due on the Stated Maturity Date, unless the Board specifies otherwise in the notice. The interest rate for serial or term Bonds maturing on a particular date may be different from the interest rate or rates established for other Bonds. (e) Partial Mode Changes and Subsenes Desi ations. (1) Less than all of the Bonds of a Series then subject to the Auction Rate Mode may be converted to the Fixed Rate Mode pursuant to this Section, provided, however that in such event such Series shall be re- designated into two or more subsenes for each separate Mode with a new CUSIP number for each subsenes. (2) If less than all of the Bonds of a Series then subject to the Auction Rate Mode are converted to the Fixed Rate Mode pursuant to this Section, the particular Bonds of a Series or portions thereof which are to be converted to the Fixed Rate Mode shall be selected by the Board in its discretion subject to the provisions hereof regarding Authorized Denominations of Bonds of a Series subject to such Fixed Rate Mode. ARTICLE A III REDEMPTION OF BONDS Section A 301 Optional Redemption. (a) Bonds of a Series in the Auction Rate Mode shall be subject to redemption at the option of the Board, in whole or in part, on any Interest Payment Date immediately following an Auction Period, at the Redemption Price equal to the principal amount thereof, plus accrued interest to the Redemption Date; provided, however that in the event of a partial redemption of Bonds of a Series in an Auction Rate Mode, the aggregate principal amount of Bonds of a Series in an Auction Rate Mode which will remain outstanding shall be equal to or more than $10 000 000 unless otherwise consented to by each Broker Dealer To the extent the Bonds that are in the Auction Rate Mode are subject to optional redemption, the Board, at least 20 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent/Registrar shall notify the Paying Agent/Registrar the Auction Agent and any Broker Dealers of such redemption date and of the principal amount of Bonds to be redeemed. (b) Bonds of a Series in the Fixed Rate Mode are subject to redemption at the option of the Board, in whole or in part, on any date following the `No Call Period" set forth below at the Redemption Prices set forth below• DAL504 /71005 Dallas 799703_3.DOC •i OPTIONAL REDEMPTION DURING FIXED RATE MODE Duration of Interest Period in Fixed Rate Mode Greater than or equal to 10 years Greater than or equal to 8 years and less than 10 years Greater than or equal to 4 years and less than 8 years Less than 4 years No Call Period (commencing on the date of commencement of the Fixed Rate Mode Interest Period) Redemption Price 8 years 100% 6 years 100% 3 years 100% Bonds are subject to optional 100% redemption at any time (c) The Board on behalf of the Cities may in connection with a change to a Fixed Rate Mode, alter its rights as described above in Section A 301(b) or in Article IV of the Thirty Ninth Ordinance to redeem any Bonds of such Series on and after the Mode Change Date without the consent of Owners of the Bonds of such Series, provided, that notice describing the alteration shall be submitted to the Tender Agent and the Remarketing Agent, together with a Favorable Opinion of Bond Counsel, addressed to them. Section A 302 Redemption from Sinking Fund Installments. To the extent that the Officers Pricing Certificate provides that Bonds of a Series are subject to redemption from sinking fund installments, the date on which a Sinking Fund Installment shall be due when the Bonds of such Series are in an Auction Rate Mode shall be the dates set forth in the Officers Pricing Certificate, or if any such date is not an Interest Payment Date, the Interest Payment Date immediately succeeding such date. Section A 303 Notice of Redemption of Bonds in Auction Rate Mode. (a) The Paying Agent/Registrar shall give notice of any redemption of Bonds that are in the Auction Rate Mode by sending notice by first class United States mail, postage prepaid, not less than 15 days before the date fixed for redemption, to the Owner of each Bond (or part hereof) to be redeemed, at the address shown on the Obligation Register (b) The notice shall state the redemption date, the redemption price, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds outstanding are to be redeemed, an identification of the Bonds 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. DAL504 /71005 Dallas 799703_3.DOC A9 ARTICLE A IV PURCHASE OF BONDS Section A -401 Mandatory Purchase on Any Mode Change Date. The Bonds of a Series to be changed to the Fixed Rate Mode from the Auction Rate Mode are subject to mandatory tender for purchase on the Mode Change Date at the Purchase Price. Section A -402 Notice of Mandatory Tender for Purchase. (a) The Paying Agent/Registrar shall, at least fifteen (15) days prior to any Mode Change Date, give notice of the mandatory tender for purchase of such Bonds that is to occur on such date. (b) Notice of any mandatory tender of Bonds of a Series shall state that such Bonds are to be purchased pursuant to Section A -401 and shall be provided by the Paying Agent/Registrar or caused to be provided by the Paying Agent/Registrar by mailing a copy of the notice of mandatory tender by first -class mail to each Owner of Bonds of the Series at the respective addresses shown on the registry books. Each notice of mandatory tender for purchase shall identify the reason for the mandatory tender for purchase, and specify the Mandatory Purchase Date, the Purchase Price, the place and manner of payment, that the Owner has no right to retain such Bonds and that no further interest will accrue from and after the Mandatory Purchase Date to such Owner Each notice of mandatory tender for purchase caused by a change in the Mode applicable to the Bonds of a Series shall in addition specify the conditions that have to be satisfied pursuant to Section A 204 hereof in order for the Fixed Rate Mode to become effective and the consequences that the failure to satisfy any of such conditions would have. The Paying Agent/Registrar shall give a copy of any notice of mandatory tender given by it to the other Notice Parties. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner of any Bond receives the notice, and the failure of such Owner to receive any such notice shall not affect the validity of the action described in such notice. Failure by the Paying Agent/Registrar to give a notice as provided in this Section shall not affect the obligation of the Tender Agent to purchase the Bonds of a Series subject to mandatory tender for purchase on the Mandatory Purchase Date. Section A -403 Purchase Fund. (a) Funds and Accounts. There is hereby established, and there shall be maintained with the Tender Agent for the Bonds of each Series, a separate fund to be known as the `Purchase Fund. The Tender Agent shall further establish a separate account within such Purchase Fund to be known as the `Remarketing Proceeds Account. To the extent that the Bonds of a Series are re- designated into two or more subseries, the Tender Agent shall establish and maintain a separate Purchase Fund with separate accounts therein for the Bonds of each such subsenes. (b) Remarketing Proceeds Account. Upon receipt of the proceeds of a remarketing of Bonds of a Series on a Mandatory Purchase Date, the Tender Agent shall deposit such proceeds DAL504 /71005 Dallas 799703_3.DOC A 10 in the related Remarketing Proceeds Account for application to the payment of the Purchase Price of such Bonds. (c) No Investment, Amounts Applied Solely to Related Series. Amounts held by the Tender Agent in the Remarketing Proceeds Account relating to the Bonds of a Series shall not be deemed as Pledged Funds or Pledged Revenues under the Controlling Ordinances and shall be held uninvested and separate and apart from all other funds and accounts. (d) Payment of Purchase Price by Tender Agent. The Tender Agent shall pay the Purchase Price of Bonds of a Series to their Owners from the moneys in the Remarketing Proceeds Account in accordance with this Appendix A by 3.00 p.m. on any Mandatory Purchase Date. Section A -404 Remarketing of Bonds of a Series, Notices. (a) Remarketing of Bonds of a Series. The Remarketing Agent for Bonds of a Series shall offer for sale and use its best efforts to find purchasers for all Bonds required to be tendered for purchase. (b) Notice of Remarketing, Registration Instructions New Bonds. (i) The Remarketing Agent shall notify the Tender Agent by Electronic Means not later than 1145 a.m. on the Mandatory Purchase Date of the registration instructions as may be necessary to re- register Bonds, and (ii) Unless otherwise permitted by the Securities Depository and the book entry-only system applicable to a Series of Bonds, the Tender Agent shall authenticate and have available for delivery to the Remarketing Agent prior to 12.30 p.m. on the Mandatory Tender Date new Bonds of the Series for the respective purchasers thereof. (c) Transfer of Funds. The Remarketing Agent shall at or before 1145 a.m. on the Mandatory Purchase Date (x) notify the Board and the Tender Agent by Electronic Means of the amount of tendered Bonds of the Series that were not successfully remarketed, and (y) confirm to the Board and the Tender Agent the transfer of the Purchase Price of remarketed Bonds of the Series to the Tender Agent in immediately available funds at or before 12.00 noon, such confirmation to include the pertinent Fed Wire reference number Section A -405 Source of Funds for Purchase of Bonds of a Series. On or before the close of business on the Mandatory Purchase Date with respect to Bonds of a Series, the Tender Agent shall purchase such Bonds from the Owners at the Purchase Price. Unless otherwise provided in a certificate of an Authorized Officer delivered to the Paying Agent/Registrar the Tender Agent and the Remarketing Agent on a Mandatory Purchase Date, funds for the payment of such Purchase Price shall be derived solely from the immediately available funds on deposit in the Remarketing Proceeds Account with respect to Bonds of such Series. Notwithstanding the foregoing, unless otherwise provided in a certificate of an Authorized Officer delivered to the Tender Agent and the Remarketing Agent on a Mandatory Purchase Date, the Board shall have the option, but shall not be obligated, to transfer DAL504 /71005 Dallas 799703_3.DOC A 11 immediately available funds to the Tender Agent for the payment of the Purchase Price of any Bond that is tendered or deemed tendered for purchase in accordance with this Appendix A and the Purchase Price of which is not paid on the Mandatory Purchase Date from the source identified above. None of the Board, the Cities, the Tender Agent nor the Remarketing Agent shall have any liability or obligation to pay or except from the source identified above, make available such Purchase Price. Unless otherwise provided in a certificate of an Authorized Officer delivered to the Paying Agent/Registrar and Tender Agent on a Mandatory Purchase Date, the failure to pay any such Purchase Price for Bonds of a Series that have been tendered or deemed tendered for purchase from the source identified above shall not constitute an Event of Default under the Thirty -Ninth Ordinance or the Controlling Ordinances and in the case of such failure such Bonds shall not be purchased and shall remain in the Auction Rate Mode for an Auction Period and bearing an Auction Period Rate as provided in Section A 204(c)(5) Section A -406 Delivery of Bonds. Except as otherwise required or permitted by the book -entry-only system of the Securities Depository the Bonds of a Series sold by the Remarketing Agent pursuant to Section A -404 shall be delivered by the Remarketing Agent to the purchasers of those Bonds by 3.00 p.m. on the Mandatory Purchase Date. Section A -407 Delivery and Payment for Purchased Bonds of a Series Undelivered Bonds. Except as otherwise required or permitted by the book -entry-only system of the Securities Depository the Bonds of a Series purchased pursuant to this Article shall be delivered by the Owners thereof (with all necessary endorsements) at or before 12.00 noon on the Mandatory Purchase Date, at the office of the Tender Agent in New York, New York. Payment of the Purchase Price shall be made by wire transfer in immediately available funds by the Tender Agent by the close of business on the Mandatory Purchase Date, or if the Owner has not provided or caused to be provided wire transfer instructions, by check mailed to the Owner at the address appearing in the books required to be kept by the Paying Agent/Registrar pursuant to the Thirty -Ninth Ordinance. If Bonds of a Series to be purchased are not delivered by the Owners to the Tender Agent by 12.00 noon on the Mandatory Purchase Date, the Tender Agent shall hold any funds received for the purchase of those Bonds in trust in a separate account and shall pay such funds to the former Owners upon presentation of the Bonds subject to tender Any such amounts shall be held uninvested. Such undelivered Bonds shall be deemed tendered and cease to accrue interest as to the former Owners on the Mandatory Purchase Date, and moneys representing the Purchase Price shall be available against delivery of those Bonds at the Principal Office of the Tender Agent; provided, however that any funds which shall be so held by the Tender Agent and which remain unclaimed by the former Owner of any such Bond not presented for purchase for a period of three years after delivery of such funds to the Tender Agent, shall, to the extent permitted by law upon request in writing by the Board and the furnishing of security or indemnity to the Tender Agent's satisfaction, be paid to the Board free of any trust or lien and thereafter the former Owner of such Bond shall look only to the Board and then only to the extent of the amounts so received by the Board without any interest thereon and the Tender Agent shall have no further responsibility with respect to such moneys or payment of the Purchase Price of such Bonds. The Tender Agent shall authenticate a replacement Bond of a Series for any undelivered Bond of such Series which may then be remarketed by the Remarketing Agent. DAL504 /71005 Dallas 799703_3.DOC A 12 ARTICLE A V AGENTS Section A 501 Remarketing Agent. The Board shall appoint and employ the services of a Remarketing Agent prior to any Mode Change Date while the Bonds of any Series are in the Auction Rate Mode. Any Remarketing Agent may at any time resign and be discharged of the duties and obligations created by the Thirty -Ninth Ordinance and the Remarketing Agreement by giving notice to the Board and the Tender Agent in accordance with the Remarketing Agreement. Any Remarketing Agent may be removed at any time, at the direction of the Board, by an instrument filed with the related Remarketing Agent and the related Tender Agent in accordance with the Remarketing Agreement. Any Remarketing Agent shall be selected by the Board and shall be a member of the National Association of Securities Dealers, Inc., shall have a capitalization of at least fifteen million dollars ($15 000 000), and shall be authorized by law to perform all the duties set forth herein. The Board s execution of a Certificate setting forth the effective date of the appointment of a Remarketing Agent and the name, address and telephone number of such Remarketing Agent shall be conclusive evidence that (i) such Remarketing Agent has been appointed and is qualified to act as Remarketing Agent under the terms of the Thirty -Ninth Ordinance and (ii) if applicable, the predecessor Remarketing Agent has been removed in accordance with the provisions of the Thirty -Ninth Ordinance and the Remarketing Agreement. Each Remarketing Agent shall keep such books and records as shall be consistent with prudent industry practice and make such books and records available for inspection by the Board at all reasonable times. Section A 502 Tender Agent. The Board shall appoint and employ the services of the Tender Agent prior to any Mode Change Date while the Bonds of any Series are in the Auction Rate Mode. The Tender Agent may at any time resign and be discharged of the duties and obligations created by the Thirty Ninth Ordinance and the Tender Agency Agreement by giving notice to the Board in accordance with the Tender Agency Agreement, provided that a successor Tender Agent shall be appointed and acting hereunder on or prior to the effective date of such resignation or discharge. The Tender Agent may be removed at any time, at the direction of the Board, by an instrument filed with the related Remarketing Agent and the Tender Agent in accordance with the Tender Agency Agreement, provided that a successor Tender Agent shall be appointed and acting hereunder on or prior to the effective date of such removal. The Tender Agent shall be selected by the Board and shall be a bank or other financial institution that satisfies the qualifications determined by the Board and set forth in any applicable provisions of law The Board s execution of a Certificate setting forth the effective date of the appointment of a Tender Agent and the name, address and telephone number of such Tender Agent shall be conclusive evidence that (i) such Tender Agent has been appointed and is DAL504 /71005 Dallas 799703_3.DOC A 13 qualified to act as Tender Agent under the terms hereof and (ii) if applicable, the predecessor Tender Agent has been removed in accordance with the provisions hereof. The Tender Agent shall keep such books and records as shall be consistent with prudent industry practice and make such books and records available for inspection by the Board, at all reasonable times. Section A 503 Auction Agent. The Board shall appoint and employ the services of an Auction Agent while the Bonds of any Series are in the Auction Rate Mode. The Board shall have the right to remove the Auction Agent as provided in the Auction Agreement. Section A 504 Broker Dealers. The Board shall appoint and employ the services of one or more Broker Dealers for the Bonds of each Series that are in the Auction Rate Mode. The Board shall have the right to remove any Broker Dealer as provided in the applicable Broker Dealer Agreement. ARTICLE A VI MISCELLANEOUS Section A -601 Modifications or Amendments to the Thirty Ninth Ordinance. The provisions of the Controlling Ordinances, any Outstanding Ordinance, and the Thirty Ninth Ordinance, including, without limitation, the provisions of the Officers Pricing Certificate and this Appendix A, may be modified or amended by obtaining the consent or deemed consent of the Owners of all Outstanding Bonds of such Series during an Auction Rate Mode, in accordance with Section 2.07(b) of Exhibit I hereto Section A -602 Notices. (a) Notices to Owners. All notices required to be given to Owners of Bonds of a Series, unless otherwise expressly provided, shall be given by first class mail, postage prepaid. (b) Notices to Rating Agencies. The Board shall give written notice to the Rating Agencies of any of the following events. (1) any material changes to the Thirty -Ninth Ordinance that affect the Bonds, (2) a conversion to the Fixed Rate Mode; and (3) any redemption, defeasance or mandatory tender of all the Outstanding Bonds. (c) Demands. Requests. All notices, demands and requests to be given to or made hereunder by the Board, the Tender Agent, the Remarketing Agents, the Auction Agent, the Broker Dealers or the Rating Agencies shall, unless otherwise expressly provided herein, be given or made in writing and shall be deemed to be properly given or made if by United States registered or certified mail, return receipt requested, postage prepaid, addressed as set forth DAL504 /71005 Dallas 799703 IDOC A 14 below Notices, demands and requests that may be given by Electronic Means may be sent to the telephone or fax numbers, as applicable, set forth below- (i) As to the Board. The address, phone number and fax number specified in the Officers Pricing Certificate. (ii) As to the Tender Agent: The address, phone number and fax number specified in the Tender Agency Agreement. (iii) As to the Remarketing Agent(s) The address, phone number and fax number specified in the related Remarketing Agreement. (iv) As to the Auction Agent: (v) As to the Broker Dealer(s) or to such other address as is provided by the entity DAL504 /71005 Dallas 799703_3.DOC A 15 The address, phone number and fax number specified in the Auction Agreement. The address, phone number and fax number specified in the related Broker Dealer Agreement. EXHIBIT I TO PROVISIONS FOR BI MODAL OBLIGATIONS AUCTION RATE MODE PROVISIONS DAL504 /71005 Dallas 79971 1 4.DOC Draft of 03/31/04 TABLE OF CONTENTS Page No. ARTICLE I Definitions Section 101 Definitions .I 1 Section 102 Rules of Construction. J9 ARTICLE II Auction Procedures Section 2.01 Orders by Existing Owners and Potential Owners .19 Section 2.02 Submission of Orders by Broker Dealers to Auction Agent. .I 12 Section 2.03 Determination of Auction Period Rate .I 14 Section 2.04 Allocation of Bonds of a Series. .I 15 Section 2.05 Notice of Auction Period Rate .I 18 Section 2.06 Index .I 19 Section 2.07 Miscellaneous Provisions Regarding Auctions .I 19 Section 2.08 Changes in Auction Period or Auction Date .120 ARTICLE III Auction Agent Section 3 01 Auction Agent .122 Section 3 02 Qualifications of Auction Agent; Resignation, Removal J22 DAL504 /71005 Dallas 799711 4.DOC (I i) EXHIBIT I AUCTION RATE MODE PROVISIONS ARTICLE I DEFINITIONS Section 1.01 Definitions. In addition to the words and terms elsewhere defined, or whose defined meanings are incorporated by reference, in the Provisions for Bi Modal Obligations (hereinafter referred to as Appendix A') to which this Exhibit I is attached, the following words and terms as used in this Exhibit I and elsewhere in Appendix A have the following meanings with respect to Bonds of a Series in an Auction Rate Mode unless the context or use indicates another or different meaning or intent: Agent Member means a member of, or participant in, the Securities Depository who shall act on behalf of a Bidder All Hold Rate means, as of any Auction Date, 45% of the Index in effect on such Auction Date. Auction means each periodic implementation of the Auction Procedures. Auction Agent means initially Deutsche Bank Trust Company Americas, and thereafter the auctioneer or any successor appointed in accordance with Section 3 01 or 3 02 of this Exhibit I. Auction Agreement means an agreement among the Cities, the Board, the Paying Agent/Registrar and the Auction Agent pursuant to which the Auction Agent agrees to follow the procedures specified in this Exhibit I, with respect to the Bonds of a Series in an Auction Rate Mode, as such agreement may from time to time be amended or supplemented. Auction Date means during any period in which the Auction Procedures are not suspended in accordance with the provisions hereof: (a) if the Bonds of a Series are in a daily Auction Period, each Business Day- (b) if the Bonds of a Series are in a Special Auction Period, the last Business Day of the Special Auction Period, and (c) if the Bonds of a Series are in any other Auction Period, the Business Day next preceding each Interest Payment Date for such Bonds of a Series (whether or not an Auction shall be conducted on such date), provided, however that the last Auction Date with respect to the Bonds of any Series in an Auction Period other than a daily Auction Period or Special Auction Period shall be the earlier of (i) the Business Day next preceding the Interest Payment Date next preceding the Mode Change Date for such Bonds of a Series, and (ii) the Business Day next preceding the Interest Payment Date next preceding the Stated Maturity Date for such Bonds, and provided, further that if the Bonds of a Series are in a daily Auction Period, the last DAL504 /71005 Dallas 799711 4.DOC I1 Auction Date shall be the earlier of (x) the Business Day next preceding the Mode Change Date for such Bonds, and (y) the Business Day next preceding the Stated Maturity Date for the Bonds of a Series. The last Business Day of a Special Auction Period shall be the Auction Date for the Auction Period which begins on the next succeeding Business Day if any On the Business Day preceding the conversion from a daily Auction Period to another Auction Period, there shall be two Auctions, one for the last daily Auction Period and one for the first Auction Period following the conversion. Auction Multiple means, as of any Auction Date, the percentage of Index (in effect on such Auction Date) determined as set forth below based on the Prevailing Rating of the Bonds of such Series in effect at the close of business on the Business Day immediately preceding such Auction Date- Prevailing Rating AAA/AAA/Aaa AA/AA/Aa A/A/A BBB /BBB /Baa Below BBB /BBB /Baa Auction Period means Percentage of Index 125% 150% 200% 250% 275% (a) with respect to Bonds of a Series in a daily Auction Period, a period beginning on each Business Day and extending to but not including the next succeeding Business Day- (b) with respect to Bonds of a Series in a seven day Auction Period and with Auctions generally conducted on (i) Fridays, a period of generally seven days beginning on a Monday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on the Sunday thereafter (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) Mondays, a period of generally seven days beginning on a Tuesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Monday) and ending on the Monday thereafter (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iii) Tuesdays, a period of generally seven days beginning on a Wednesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Tuesday) and ending on the Tuesday thereafter (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iv) Wednesdays, a period of generally seven days beginning on a Thursday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Wednesday) and ending on the Wednesday thereafter (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), and (v) Thursdays, a period of generally seven days beginning on a Friday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Thursday) and ending on the DAL504/71005 Dallas 799711 4.DOC I2 Thursday thereafter (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (c) with respect to Bonds of a Series in a 28 -day Auction Period and with Auctions generally conducted on (i) Fridays, a period of generally 28 days beginning on a Monday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on the fourth Sunday thereafter (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) Mondays, a period of generally 28 days beginning on a Tuesday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Monday) and ending on the fourth Monday thereafter (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iii) Tuesdays, a period of generally 28 days beginning on a Wednesday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Tuesday) and ending on the fourth Tuesday thereafter (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iv) Wednesdays, a period of generally 28 days beginning on a Thursday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Wednesday) and ending on the fourth Wednesday thereafter (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), and (v) Thursdays, a period of generally 28 days beginning on a Friday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Thursday) and ending on the fourth Thursday thereafter (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (d) with respect to Bonds of a Series in a 35 -day Auction Period and with Auctions generally conducted on (i) Fridays, a period of generally 35 days beginning on a Monday (or the last day of the prior Auction Period if the prior Auction Period does not end on Sunday) and ending on the fifth Sunday thereafter (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) Mondays, a period of generally 35 days beginning on a Tuesday (or the last day of the prior Auction Period if the prior Auction Period does not end on Monday) and ending on the fifth Monday thereafter (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iii) Tuesdays, a period of generally 35 days beginning on a Wednesday (or the last day of the prior Auction Period if the prior Auction Period does not end on Tuesday) and ending on the fifth Tuesday thereafter (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iv) Wednesdays, a period of generally 35 days beginning on a Thursday (or the last day of the prior Auction Period if the prior Auction Period does not end on Wednesday) and ending on the fifth Wednesday thereafter (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), and (v) Thursdays, a period of generally 35 days beginning on a Friday (or the last day of the prior Auction Period if the prior Auction Period does not end on Thursday) and ending on the fifth Thursday thereafter (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) and DAL504 /71005 Dallas 799711 4.DOC I3 (e) a Special Auction Period, provided, however, that (a) if there is a conversion of Bonds of a Series with Auctions generally conducted on Fridays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Sunday (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Sunday (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Sunday (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, (b) if there is a conversion of Bonds of a Series with Auctions generally conducted on Mondays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Monday (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Monday (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Monday (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, (c) if there is a conversion of Bonds of a Series with Auctions generally conducted on Tuesdays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Tuesday (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Tuesday (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the DAL504 /71005 Dallas 799711 4.130C I -4 Interest Payment Date for the prior Auction Period) and shall end on the Tuesday (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, (d) if there is a conversion of Bonds of a Series with Auctions generally conducted On Wednesdays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Wednesday (unless such Wednesday is not followed by a Business Day in which case On the next succeeding day which is followed by a Business Day), (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Wednesday (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Wednesday (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, and (e) if there is a conversion of Bonds of a Series with Auctions generally conducted on Thursdays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Thursday (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Thursday (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Thursday (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, provided further, however, that any Auction Period that is greater than 35 days may be extended as provided in paragraph (d) of Section 2.03 of this Exhibit I. Auction Period Rate means with respect to Bonds of each Series, the rate of interest to be borne by the Bonds of such Series during each Auction Period determined in accordance with Section 2.03 of this Exhibit I, provided, however in no event may the Auction Period Rate or the Auction Rate exceed the Maximum Rate. Auction Procedures means the procedures for conducting Auctions for Bonds of a Series in an Auction Rate Mode set forth in this Exhibit I. DAL504 /71005 Dallas 799711 4.DOC I5 Auction Rate means for each series of Bonds for each Auction Period, (i) if Sufficient Clearing Bids exist, the Winning Bid Rate, provided, however if all of such Bonds of a Series are the subject of Submitted Hold Orders, the All Hold Rate with respect to such Bonds and (ii) if Sufficient Clearing Bids do not exist, the Maximum Auction Rate with respect to such Bonds. Available Bonds means for each series of Bonds on each Auction Date, the aggregate principal amount of such Bonds that are not the subject of Submitted Hold Orders. Bid has the meaning specified in subsection (a) of Section 2 01 of this Exhibit I. Bidder means each Existing Owner and Potential Owner who places an Order Broker Dealer means, initially RBC Dain Rauscher Inc., and thereafter any entity that is permitted by law to perform the function required of a Broker Dealer described in this Exhibit that is a member of, or a direct participant in, the Securities Depository that has been selected by the Board, and that is a party to a Broker Dealer Agreement with the Auction Agent. Broker Dealer Agreement means an agreement among the Auction Agent, the Board, the Cities and a Broker Dealer pursuant to which such Broker Dealer agrees to follow the procedures described in this Exhibit I, as such agreement may from time to time be amended or supplemented. Default Rate means, in respect of any Auction Period other than a daily Auction Period, a per annum rate equal to three hundred percent (300 %) of the Index determined on the Auction Date next preceding the first day of such Auction Period or in the case of Bonds of a Series in a daily Auction Period, three hundred percent (300 %) of the Index determined on the Auction Date which was the first day of such Auction Period, provided, however the Default Rate shall not exceed the Maximum Rate. Existing Owner means (a) with respect to and for the purpose of dealing with the Auction Agent in connection with an Auction, a person who is a Broker Dealer and (b) with respect to and for the purpose of dealing with a Broker Dealer in connection with an Auction, a person who is a beneficial owner of Bonds. Fitch means Fitch Ratings, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency `Fitch" shall be deemed to refer to any other nationally recognized securities rating agency other than Moody's or S &P designated by an Authorized Officer Hold Order has the meaning specified in subsection (a) of Section 2.01 of this Exhibit I. Index shall have the meaning specified in Section 2.06 of this Exhibit I. Interest Payment Date means. (a) when used with respect to any Auction Period (including the initial Auction Period commencing on and including the Closing Date, and expiring on and including the initial DAL504 /71005 Dallas 799711 4.DOC I -6 Auction Date specified in the Officers Pricing Certificate) other than a daily Auction Period or a Special Auction Period, the Business Day immediately following such Auction Period, (b) when used with respect to a daily Auction Period, the first Business Day of the month immediately succeeding such Auction Period, and (c) when used with respect to a Special Auction Period, (A) in the case of Bonds of a Series with Auctions generally conducted on Fridays, each thirteenth Monday after the first day of such Special Auction Period or the next Business Day if such Monday is not a Business Day and on the Business Day immediately following such Special Auction Period, (B) in the case of Bonds of a Series with Auctions generally conducted on Mondays, each thirteenth Tuesday after the first day of such Special Auction Period or the next Business Day if such Tuesday is not a Business Day and on the Business Day immediately following such Special Auction Period, (C) in the case of Bonds of a Series with Auctions generally conducted on Tuesdays, each thirteenth Wednesday after the first day of such Special Auction Period or the next Business Day if such Wednesday is not a Business Day and on the Business Day immediately following such Special Auction Period, (D) in the case of Bonds of a Series with Auctions conducted on Wednesdays, each thirteenth Thursday after the first day of such Special Auction Period or the next Business Day if such Thursday is not a Business Day and on the Business Day immediately following such Special Auction Period and (E) in the case of Bonds of a Series with Auctions generally conducted on Thursdays, each thirteenth Friday after the first day of such Special Auction Period or the next Business Day if such Friday is not a Business Day and on the Business Day immediately following such Special Auction Period. Maximum Auction Rate means as of any Auction Date, the product of the Index multiplied by the Auction Multiple; provided, however that in no event shall the Maximum Auction Rate exceed the Maximum Rate, anything herein to the contrary notwithstanding. Moody's means Moody's Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency ` Moody's" shall be deemed to refer to any other nationally recognized securities rating agency other than Fitch or S &P designated by an Authorized Officer Order means a Hold Order Bid or Sell Order Potential Owner means any Person, including any Existing Owner who may be interested in acquiring a beneficial interest in the Bonds of a Series in addition to the Bonds currently owned by such Person, if any Prevailing Rating means (a) AAA/AAA/Aaa, if the Bonds of a Series shall have a rating of AAA or better by S &P and Fitch and a rating of Aaa or better by Moody's, (b) if not AAA/AAA/Aaa, AA/AA /Aa if the Bonds of a Series shall have a rating of AA or better by S &P and Fitch and a rating of Aa3 or better by Moody's, (c) if not AAA/AAA/Aaa or AA/AA/Aa, A/A/A if the Bonds of a Series shall have a rating of A or better by S &P and Fitch and a rating of A3 or better by Moody's, (d) if not AAA/AAA/Aaa, AA/AA/Aa or A/A/A, BBB /BBB /Baa if the Bonds of a Series shall have a rating of BBB- or better by S &P and Fitch and a rating of DAL504 /71005 Dallas 799711 4.DOC I7 Baa3 or better by Moody's, and (e) if not AAA/AAA/Aaa, AA/AA/Aa, A/A/A or BBB /BBB /Baa, then below BBB /BBB /Baa, whether or not the Bonds of a Series are rated by any Rating Agency For purposes of this definition, S &P s and Fitch s rating categories of AAA, AA A and `BBB- and Moody's rating categories of Aaa, Aa3 A3 and `Baa3 shall be deemed to refer to and include the respective rating categories correlative thereto in the event that any such Rating Agencies shall have changed or modified their generic rating categories or if any successor thereto appointed in accordance with the definitions thereof shall use different rating categories. If the Bonds of a Series are not rated by a Rating Agency the requirement of a rating by such Rating Agency shall be disregarded. If the ratings for the Bonds of a Series are split between the foregoing categories, the lowest rating shall determine the Prevailing Rating. Principal Office means, with respect to the Auction Agent, the office thereof designated in the Auction Agreement as the office of the Auction Agent to which notices, requests or communications should be sent. Securities Depository means The Depository Trust Company and its successors and assigns or any other securities depository selected by the Board which agrees to follow the procedures required to be followed by such securities depository in connection with the Bonds of a Series. Sell Order has the meaning specified in subsection (a) of Section 2.01 of this Exhibit I. S &P means Standard & Poor's Ratings Services, a Division of The McGraw Hill Companies, Inc. a corporation organized and existing under the laws of the State of New York, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency `S &P" shall be deemed to refer to any other nationally recognized securities rating agency other than Fitch or Moody's, designated by an Authorized Officer Special Auction Period means any period of more than 180 but less than 365 days which begins on an Interest Payment Date and ends (i) in the case of Bonds of a Series with Auctions generally conducted on Fridays, on a Sunday unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day (ii) in the case of Bonds of a Series with Auctions generally conducted on Mondays, on a Monday unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day (iii) in the case of Bonds of a Series with Auctions generally conducted on Tuesdays, on a Tuesday unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day (iv) in the case of Bonds of a Series with Auctions generally conducted on Wednesdays, on a Wednesday unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day and (v) in the case of Bonds of a Series with Auctions generally conducted on Thursdays, on a Thursday unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day DAL504 /71005 Dallas 799711_4.DOC I -8 Submission Deadline means 1.00 p.m., New York City time, on each Auction Date for Bonds of a Series not in a daily Auction Period and 11.00 a.m., New York City time, on each Auction Date for Bonds of a Series in a daily Auction Period, or such other time on such date as shall be specified from time to time by the Auction Agent pursuant to the Auction Agreement as the time by which Broker Dealers are required to submit Orders to the Auction Agent. Submitted Bid has the meaning specified in subsection (b) of Section 2.03 of this Exhibit I. Submitted Hold Order has the meaning specified in subsection (b) of Section 2.03 of this Exhibit I. Submitted Order has the meaning specified in subsection (b) of Section 2.03 of this Exhibit I. Submitted Sell Order has the meaning specified in subsection (b) of Section 2 03 of this Exhibit I. Sufficient Clearing Bids means with respect to Bonds of a Series, an Auction for which the aggregate principal amount of Bonds of such Series that are the subject of Submitted Bids by Potential Owners specifying one or more rates not higher than the Maximum Auction Rate is not less than the aggregate principal amount of Bonds of such Series that are the subject of Submitted Sell Orders and of Submitted Bids by Existing Owners specifying rates higher than the Maximum Auction Rate. Winning Bid Rate means with respect to Bonds of a Series the lowest rate specified in any Submitted Bid for such Series which if selected by the Auction Agent as the Auction Period Rate would cause the aggregate principal amount of Bonds of such Series that are the subject of Submitted Bids specifying a rate not greater than such rate to be not less than the aggregate principal amount of Available Bonds of such series. Section 1.02 Rules of Construction. (a) This Exhibit I constitutes an integral part of the Appendix A and, except to the extent provided in the next sentence, has the same force and effect as if set forth in Appendix A. In the event of any conflict between this Exhibit I and Appendix A, Appendix A shall control. (b) References in this Exhibit I to Articles or Sections are to such Article or Section of this Exhibit I. ARTICLE II AUCTION PROCEDURES Section 2.01 Orders by Existing Owners and Potential Owners. (a) Prior to the Submission Deadline on each Auction Date: DAL504 /71005 Dallas 799711_4.DOC I9 (i) each Existing Owner may submit to a Broker Dealer in writing or by such other method as shall be reasonably acceptable to such Broker Dealer information as to (A) the principal amount of Bonds of a Series, if any held by such Existing Owner which such Existing Owner irrevocably commits to continue to hold for the next succeeding Auction Period without regard to the rate determined by the Auction Procedures for such Auction Period, (B) the principal amount of Bonds of a Series, if any held by such Existing Owner which such Existing Owner irrevocably commits to continue to hold for the next succeeding Auction Period if the rate determined by the Auction Procedures for such Auction Period shall not be less than the rate per annum then specified by such Existing Owner (and which such Existing Owner irrevocably offers to sell on the next succeeding Interest Payment Date (or the same day in the case of a daily Auction Period) if the rate determined by the Auction Procedures for the next succeeding Auction Period shall be less than the rate per annum then specified by such Existing Owner), and/or (C) the principal amount of Bonds of a Series, if any held by such existing Owner which such Existing Owner irrevocably offers to sell on the next succeeding Interest Payment Date (or on the same day in the case of a daily Auction Period) without regard to the rate determined by the Auction Procedures for the next succeeding Auction Period, and (ii) for the purpose of implementing the Auctions and thereby to achieve the lowest possible interest rate on the Bonds of a Series, the Broker Dealers shall contact Potential Owners, including Persons that are Existing Owners, to determine the principal amount of Bonds of a Series, if any which each such Potential Owner irrevocably offers to purchase if the rate determined by the Auction Procedures for the next succeeding Auction Period is not less than the rate per annum then specified by such Potential Owner For the purposes hereof, an Order containing the information referred to in clause (i)(A) above is herein referred to as a `Hold Order an Order containing the information referred to in clause (i)(B) or (ii) above is herein referred to as a `Bid, and an Order containing the information referred to in clause (i)(C) above is herein referred to as a `Sell Order (b) (i) A Bid by an Existing Owner shall constitute an irrevocable offer to sell (A) the principal amount of Bonds of a Series specified in such Bid if the rate determined by the Auction Procedures on such Auction Date shall be less than the rate specified therein, or (B) such principal amount or a lesser principal amount of Bonds of a Series to be determined as described in subsection (a)(v) of Section 2 04 hereof if the rate determined by the Auction Procedures on such Auction Date shall be equal to such specified rate; or DAL504 /71005 Dallas 799711 4.DOC I 10 sell. (C) a lesser principal amount of Bonds of a Series to be determined as described in subsection (b)(iv) of Section 2.04 hereof if such specified rate shall be higher than the Maximum Auction Rate and Sufficient Clearing Bids do not exist. (ii) A Sell Order by an Existing Owner shall constitute an irrevocable offer to (A) the principal amount of Bonds of a Series specified in such Sell Order- or (B) such principal amount or a lesser principal amount of Bonds of a Series as described in subsection (b)(iv) of Section 2 04 hereof if Sufficient Clearing Bids do not exist. (iii) A Bid by a Potential Owner shall constitute an irrevocable offer to purchase: (A) the principal amount of Bonds of a Series specified in such Bid if the rate determined by the Auction Procedures on such Auction Date shall be higher than the rate specified therein, or (B) such principal amount or a lesser principal amount of Bonds of a Series as described in subsection (a)(vi) of Section 2.04 hereof if the rate determined by the Auction Procedures on such Auction Date shall be equal to such specified rate. (c) Anything herein to the contrary notwithstanding: (i) for purposes of any Auction, any Order which specifies Bonds of a Series to be held, purchased or sold in a principal amount which is not equal to the Authorized Denomination for Bonds of such Series or an integral multiple thereof shall be rounded down to the nearest amount that is equal to the Authorized Denomination for Bonds of such Series, and the Auction Agent shall conduct the Auction Procedures as if such Order had been submitted in such lower amount; (ii) for purposes of any Auction other than during a daily Auction Period, any portion of an Order of an Existing Owner which relates to a Bond of a Series which has been called for redemption on or prior to the Interest Payment Date next succeeding such Auction shall be invalid with respect to such portion and the Auction Agent shall conduct the Auction Procedures as if such portion of such Order had not been submitted, (iii) for purposes of any Auction other than during a daily Auction Period, no portion of a Bond of a Series which has been called for redemption on or prior to the Interest Payment Date next succeeding such Auction shall be included in the calculation of Available Bonds for such Auction, and DAL504 /71005 Dallas 799711_4.DOC I 11 (iv) the Auction Procedures shall be suspended with respect to the Bonds of a Series during the period commencing on the date of the Auction Agent's receipt of notice from the Paying Agent/Registrar of the occurrence of a default of the Cities in the payment of principal, Sinking Fund Installment, interest or premium on any Bond of such Series in the Auction Rate Mode after the same shall have become due, whether at maturity upon call for redemption or on an Interest Payment Date but shall resume two Business Days after the date on which the Auction Agent receives notice from the Paying Agent/Registrar that such default has been waived or cured, with the next Auction to occur on the next regularly scheduled Auction Date occurring thereafter Section 2.02 Submission of Orders by Broker Dealers to Auction Agent. (a) Each Broker Dealer shall submit to the Auction Agent in writing or by such other method as shall be reasonably acceptable to the Auction Agent, including such electronic communication acceptable to the parties, prior to the Submission Deadline on each Auction Date, all Orders obtained by such Broker Dealer and, if requested, specifying with respect to each Order- (i) the name of the Bidder placing such Order- (ii) the aggregate principal amount of Bonds of each Series, if any that are the subject of such Order- (iii) to the extent that such Bidder is an Existing Owner- (A) the principal amount of Bonds of each Series, if any subject to any Hold Order placed by such Existing Owner- (B) the principal amount of Bonds of each Series, if any subject to any Bid placed by such Existing Owner and the rate specified in such Bid, and (C) the principal amount of Bonds of each Series, if any subject to any Sell Order placed by such Existing Owner- (iv) to the extent such Bidder is a Potential Owner the rate specified in such we (b) If any rate specified in any Bid contains more than three figures to the right of the decimal point, the Auction Agent shall round such rate up to the next highest one thousandth of one percent (0 001 %) (c) If an Order or Orders covering all of the Bonds of a particular Series held by an Existing Owner is not submitted to the Auction Agent prior to the Submission Deadline, the Auction Agent shall deem a Hold Order to have been submitted on behalf of such Existing Owner covering the principal amount of Bonds of such Series held by such Existing Owner and not subject to Orders submitted to the Auction Agent; provided, however that if there is a conversion from one Auction Period to another Auction Period or an amendment or modification to the Thirty -Ninth Ordinance in accordance with Section 2.07(b) of this Exhibit I and Orders DAL504 /71005 Dallas 799711 4.DOC I 12 have not been submitted to the Auction Agent prior to the Submission Deadline covering the aggregate principal amount of Bonds of the Series to be converted held by such Existing Owner the Auction Agent shall deem a Sell Order to have been submitted on behalf of such Existing Owner covering the principal amount of Bonds of such Series to be converted held by such Existing Owner not subject to Orders submitted to the Auction Agent. (d) If one or more Orders covering in the aggregate more than the principal amount of Outstanding Bonds of a Series held by any Existing Owner are submitted to the Auction Agent, such Orders shall be considered valid as follows. (i) all Hold Orders shall be considered Hold Orders, but only up to and including in the aggregate the principal amount of Bonds of such Series held by such Existing Owner- (ii) (A) any Bid of an Existing Owner shall be considered valid as a Bid of an Existing Owner up to and including the excess of the principal amount of Bonds of such Series held by such Existing Owner over the principal amount of the Bonds of such Series subject to Hold Orders referred to in paragraph (i) above; (B) subject to clause (A) above, all Bids of an Existing Owner with the same rate shall be aggregated and considered a single Bid of an Existing Owner up to and including the excess of the principal amount of Bonds of such Series held by such Existing Owner over the principal amount of Bonds of such Series held by such Existing Owner subject to Hold Orders referred to in paragraph (i) above; (C) subject to clause (A) above, if more than one Bid with different rates is submitted on behalf of such Existing Owner such Bids shall be considered Bids of an Existing Owner in the ascending order of their respective rates up to the amount of the excess of the principal amount of Bonds of such Series held by such Existing Owner over the principal amount of Bonds of such Series held by such Existing Owner subject to Hold Orders referred to in paragraph (i) above; and (D) the principal amount, if any of such Bonds of such Series subject to Bids not considered to be Bids of an Existing Owner under this paragraph (ii) shall be treated as the subject of a Bid by a Potential Owner- and (iii) all Sell Orders shall be considered Sell Orders, but only up to and including a principal amount of Bonds of such Series equal to the excess of the principal amount of Bonds of such Series held by such Existing Owner over the sum of the principal amount of the Bonds considered to be subject to Hold Orders pursuant to paragraph (i) above and the principal amount of Bonds of such Series considered to be subject to Bids of such Existing Owner pursuant to paragraph (ii) above. (e) If more than one Bid is submitted on behalf of any Potential Owner each Bid submitted with the same rate shall be aggregated and considered a single Bid and each Bid DAL504 /71005 Dallas 799711 4.DOC I 13 submitted with a different rate shall be considered a separate Bid with the rate and the principal amount of Bonds of such Series specified therein. (f) Neither the Board, the Cities nor the Auction Agent shall be responsible for the failure of any Broker Dealer to submit an Order to the Auction Agent on behalf of any Existing Owner or Potential Owner Section 2.03 Determination of Auction Period Rate. (a) Not later than 9 30 a.m. New York City time, on each Auction Date for Bonds of each Series in an Auction Rate Mode, the Auction Agent shall advise the Broker Dealers and the Authorized Officers by telephone or other electronic communication acceptable to the parties of the All Hold Rate, the Maximum Auction Rate and the Index for the Bonds of such Series. (b) Promptly after the Submission Deadline on each Auction Date for Bonds of each Series in an Auction Rate Mode, the Auction Agent shall assemble all Orders submitted or deemed submitted to it by the Broker Dealers (each such Order as submitted or deemed submitted by a Broker Dealer being hereinafter referred to as a `Submitted Hold Order a `Submitted Bid" or a `Submitted Sell Order as the case may be, and collectively as a `Submitted Order") and shall determine (i) the Available Bonds, (ii) whether there are Sufficient Clearing Bids, and (iii) the Auction Rate. (c) Promptly after the Auction Agent has made the determinations pursuant to subsection (b) above, the Auction Agent shall advise the Authorized Officers by telephone (promptly confirmed in writing), telex or facsimile transmission or other electronic communication acceptable to the parties of the Auction Rate for the next succeeding Auction Period and an Authorized Officer shall promptly notify the Securities Depository of such Auction Rate. (d) In the event the Auction Agent fails to calculate or for any reason, fails to timely provide the Auction Rate for any Auction Period, including any failure caused by the lack of a duly appointed Auction Agent or Broker Dealer (i) if the preceding Auction Period was a period of 35 days or less, the new Auction Period shall be the same as the preceding Auction Period and the Auction Period Rate for the new Auction Period shall be the same as the Auction Period Rate for the preceding Auction Period, and (ii) if the preceding Auction Period was a period of greater than 35 days, the preceding Auction Period shall be extended to the seventh day following the day that would have been the last day of such Auction Period had it not been extended (or if such seventh day is not followed by a Business Day then to the next succeeding day which is followed by a Business Day) and the Auction Period Rate in effect for the preceding Auction Period will continue in effect for the Auction Period as so extended. In the event an Auction Period is extended as set forth in clause (ii) of the preceding sentence, an Auction shall be held on the last Business Day of the Auction Period as so extended to take effect for an Auction Period beginning on the Business Day immediately following the last day of the Auction Period as extended which Auction Period will end on the date it would otherwise have ended on had the prior Auction Period not been extended. DAL504 /71005 Dallas 799711 4.DOC 114 (e) In the event that the Auction Procedures are suspended pursuant to paragraph (iv) of subsection (c) of Section 2.01 of this Exhibit I with respect to any Bond of Series, the Auction Period Rate for the next succeeding Auction Period shall be the Default Rate. (f) In the event that all of the conditions for a change in the Mode applicable to the Bonds of a Series from an Auction Rate Mode to the Fixed Rate Mode pursuant to Section A 204 of Appendix A have not been met or in the event of a failure to change the length of the current Auction Period due to the lack of Sufficient Clearing Bids at the Auction on the Auction Date for the first new Auction Period, the Auction Period Rate for the next Auction Period shall be the Maximum Auction Rate and the Auction Period shall be a seven -day Auction Period (except as provided in Section 2.08(a)(iv) with respect to the daily Auction Period) (g) If the Bonds of a Series are not rated [or if the Bonds of a Series are no longer maintained in book -entry form by the Securities Depository] then the Auction Period Rate shall be the Maximum Auction Rate. (h) (i) If on any Auction Date for any daily seven -day 28 -day or 35 -day Auction Period, other than an Auction Date on which the Board is attempting to change Auction Periods, as described in Section 2.08(a), the Auction for such date does not produce Sufficient Clearing Bids, the Auction Period Rate for the next Auction Period shall be the Maximum Auction Rate and the Auction Period shall be the same as the preceding Auction Period. (ii) If on any Auction Date for any Special Auction Period the Auction for such date does not produce Sufficient Clearing Bids, the Auction Period Rate for the next Auction Period shall be the Maximum Auction Rate and the Auction Period shall be a seven -day Auction Period. Section 2.04 Allocation of Bonds of a Series. (a) In the event of Sufficient Clearing Bids for Bonds of a Series, subject to the further provisions of subsections (c) and (d) below Submitted Orders for such Series shall be accepted or rejected as follows in the following order of priority- (i) the Submitted Hold Order of each Existing Owner shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Hold Order- (ii) the Submitted Sell Order of each Existing Owner shall be accepted and the Submitted Bid of each Existing Owner specifying any rate that is higher than the Winning Bid Rate shall be rejected, thus requiring each such Existing Owner to sell the Bonds of a Series that are the subject of such Submitted Sell Order or Submitted Bid, (iii) the Submitted Bid of each Existing Owner specifying any rate that is lower than the Winning Bid Rate shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Bid, DAL504 /71005 Dallas 799711 4.DOC I 15 (iv) the Submitted Bid of each Potential Owner specifying any rate that is lower than the Winning Bid Rate shall be accepted, thus requiring each such Potential Owner to purchase the Bonds of a Series that are the subject of such Submitted Bid, (v) the Submitted Bid of each Existing Owner specifying a rate that is equal to the Winning Bid Rate shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Bid, but only up to and including the principal amount of Bonds of a Series obtained by multiplying (A) the aggregate principal amount of Outstanding Bonds of a Series which are not the subject of Submitted Hold Orders described in paragraph (i) above or of Submitted Bids described in paragraphs (iii) or (iv) above by (B) a fraction the numerator of which shall be the principal amount of Outstanding Bonds of a Series held by such Existing Owner subject to such Submitted Bid and the denominator of which shall be the aggregate principal amount of Outstanding Bonds of a Series subject to such Submitted Bids made by all such Existing Owners that specified a rate equal to the Winning Bid Rate, and the remainder if any of such Submitted Bid shall be rejected, thus requiring each such Existing Owner to sell any excess amount of Bonds of a Series, (vi) the Submitted Bid of each Potential Owner specifying a rate that is equal to the Winning Bid Rate shall be accepted, thus requiring each such Potential Owner to purchase the Bonds of a Series that are the subject of such Submitted Bid, but only in an amount equal to the principal amount of Bonds of a Series obtained by multiplying (A) the aggregate principal amount of Outstanding Bonds of a Series which are not the subject of Submitted Hold Orders described in paragraph (i) above or of Submitted Bids described in paragraphs (iii), (iv) or (v) above by (B) a fraction the numerator of which shall be the principal amount of Outstanding Bonds of a Series subject to such Submitted Bid and the denominator of which shall be the sum of the aggregate principal amount of Outstanding Bonds of a Series subject to such Submitted Bids made by all such Potential Owners that specified a rate equal to the Winning Bid Rate, and the remainder of such Submitted Bid shall be rejected, and (vii) the Submitted Bid of each Potential Owner specifying any rate that is higher than the Winning Bid Rate shall be rejected. (b) In the event there are not Sufficient Clearing Bids for Bonds of a Series, subject to the further provisions of subsections (c) and (d) below Submitted Orders for each Bonds of a Series shall be accepted or rejected as follows in the following order of priority- (i) the Submitted Hold Order of each Existing Owner shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Hold Order- (ii) the Submitted Bid of each Existing Owner specifying any rate that is not higher than the Maximum Auction Rate with respect to Bonds of a Series, shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Bid, DAL504 /71005 Dallas 799711 4.DOC I 16 (iii) the Submitted Bid of each Potential Owner specifying any rate that is not higher than the Maximum Auction Rate with respect to Bonds of a Series, shall be accepted, thus requiring each such Potential Owner to purchase the Bonds of a Series that are the subject of such Submitted Bid, (iv) the Submitted Sell Orders of each Existing Owner shall be accepted as Submitted Sell Orders and the Submitted Bids of each Existing Owner specifying any rate that is higher than the Maximum Auction Rate with respect to Bonds of a Series, shall be deemed to be and shall be accepted as Submitted Sell Orders, in both cases only up to and including the principal amount of Bonds of a Series obtained by multiplying (A) the aggregate principal amount of Bonds of a Series subject to Submitted Bids described in paragraph (iii) of this subsection (b) by (B) a fraction the numerator of which shall be the principal amount of Outstanding Bonds of a Series held by such Existing Owner subject to such Submitted Sell Order or such Submitted Bid deemed to be a Submitted Sell Order and the denominator of which shall be the principal amount of Outstanding Bonds of a Series subject to all such Submitted Sell Orders and such Submitted Bids deemed to be Submitted Sell Orders, and the remainder of each such Submitted Sell Order or Submitted Bid shall be deemed to be and shall be accepted as a Hold Order and each such Existing Owner shall be required to continue to hold such excess amount of Bonds of a Series; and (v) the Submitted Bid of each Potential Owner specifying any rate that is higher than the Maximum Auction Rate with respect to the Bonds of a Series shall be rej ected. (c) If, as a result of the procedures described in subsection (a) or (b) above, any Existing Owner or Potential Owner would be required to purchase or sell an aggregate principal amount of Bonds of a Series which is not an integral multiple of the Authorized Denomination for Bonds of such Series on any Auction Date, the Auction Agent shall by lot, in such manner as it shall determine in its sole discretion, round up or down the principal amount of Bonds of a Series to be purchased or sold by any Existing Owner or Potential Owner on such Auction Date so that the aggregate principal amount of Bonds of a Series purchased or sold by each Existing Owner or Potential Owner on such Auction Date shall be an integral multiple of the Authorized Denomination for Bonds or such Series, even if such allocation results in one or more of such Existing Owners or Potential Owners not purchasing or selling any Bonds of a Series on such Auction Date. (d) If, as a result of the procedures described in subsection (a) above, any Potential Owner would be required to purchase a principal amount of Bonds of a Series that is less than the Authorized Denomination for Bonds of such Series on any Auction Date, the Auction Agent shall by lot, in such manner as it shall determine in its sole discretion, allocate such Bonds for purchase among Potential Owners so that the principal amount of Bonds of a Series purchased on such Auction Date by any Potential Owner shall be an integral multiple of the Authorized Denomination for Bonds of such Series, even if such allocation results in one or more of such Potential Owners not purchasing such Bonds on such Auction Date. DAL504 /71005 Dallas 799711 4.DOC I 17 Section 2.05 Notice of Auction Period Rate. (a) On each Auction Date, the Auction Agent shall notify by telephone or other telecommunication device or other electronic communication acceptable to the parties or in writing each Broker Dealer that participated in the Auction held on such Auction Date of the following with respect to Bonds of each Series for which an Auction was held on such Auction Date: (i) the Auction Period Rate determined on such Auction Date for the succeeding Auction Period, (ii) whether Sufficient Clearing Bids existed for the determination of the Winning Bid Rate; (iii) if such Broker Dealer submitted a Bid or a Sell Order on behalf of an Existing Owner whether such Bid or Sell Order was accepted or rejected and the principal amount of Bonds of a Series, if any to be sold by such Existing Owner- (iv) if such Broker Dealer submitted a Bid on behalf of a Potential Owner whether such Bid was accepted or rejected and the principal amount of Bonds of a Series, if any to be purchased by such Potential Owner- (v) if the aggregate principal amount of the Bonds of a Series to be sold by all Existing Owners on whose behalf such Broker Dealer submitted Bids or Sell Orders is different from the aggregate principal amount of Bonds of a Series to be purchased by all Potential Owners on whose behalf such Broker Dealer submitted a Bid, the name or names of one or more Broker Dealers (and the Agent Member if any of each such other Broker Dealer) and the principal amount of Bonds of a Series to be (A) purchased from one or more Existing Owners on whose behalf such other Broker Dealers submitted Bids or Sell Orders or (B) sold to one or more Potential Owners on whose behalf such Broker Dealer submitted Bids, and (vi) the immediately succeeding Auction Date. (b) On each Auction Date, with respect to Bonds of each Series for which an Auction was held on such Auction Date, each Broker Dealer that submitted an Order on behalf of any Existing Owner or Potential Owner shall (i) advise each Existing Owner and Potential Owner on whose behalf such Broker Dealer submitted an Order as to (A) the Auction Period Rate determined on such Auction Date, (B) whether any Bid or Sell Order submitted on behalf of each such Owner was accepted or rejected, in whole or in part, and (C) the immediately succeeding Auction Date; (ii) instruct each Potential Owner on whose behalf such Broker Dealer submitted a Bid that was accepted, in whole or in part, to instruct such Potential Owner's Agent Member to pay to such Broker Dealer (or its Agent Member) through the Securities Depository the amount necessary to purchase the principal amount of such Bonds of a Series to be purchased pursuant to such Bid (including, with respect to such Bonds of a Series in a daily Auction Period, accrued interest if the purchase date is not an Interest Payment Date for such Bond) against receipt of such Bonds of a Series, and (iii) instruct each Existing Owner on whose behalf such Broker Dealer submitted a Sell Order that was accepted or a Bid that was rejected, in whole or in part, to DAL504 /71005 Dallas 799711 4.DOC I 18 instruct such Existing Owner's Agent Member to deliver to such Broker Dealer (or its Agent Member) through the Securities Depository the principal amount of such Bonds of a Series to be sold pursuant to such Bid or Sell Order against payment therefor Section 2.06 Index. (a) (i) The Index on any Auction Date with respect to Bonds of a Series in an Auction Period of 180 days or less shall be the One Month LIBOR Rate on such date. If such rate is unavailable, the Index for the Bonds of a Series shall be an index or rate agreed to by all Broker Dealers and consented to by an Authorized Officer on behalf of the Board. (ii) The Index on any Auction Date with respect to Bonds of a Series in an Auction Period over 180 days shall be the Special Auction Period Rate on such date. If such rate is unavailable, the Index for the Bonds of a Series shall be an index or rate agreed to by all Broker Dealers and consented to by an Authorized Officer on behalf of the Board. `One Month LIBOR Rate" means, as of any date of determination, the offered rate for deposits in U S dollars for a one month period which appears on the Telerate Page 3750 at approximately 11.00 a.m., London time, on such date, or if such date is not a date on which dealings in U S dollars are transacted in the London interbank market, then on the next preceding day on which such dealings were transacted in such market. `Special Auction Period Rate" means, as of any date of determination, [the offered rate for deposits in U S dollars for a period most nearly equal in length to the Special Auction Period for which such Special Auction Period Rate would apply as determined by an Authorized Officer which appears on the Telerate Page 3750 at approximately 11 -00 a.m., London time, on such date, or if such date is not a date on which dealings in U S dollars are transacted in the London interbank market, then on the next preceding day on which such dealings were transacted in such market] (b) If for any reason on any Auction Date the Index shall not be determined as hereinabove provided in this Section, the Index shall be the Index for the Auction Period ending on such Auction Date. (c) The determination of the Index as provided herein shall be conclusive and binding upon the Board, the Cities, the Broker Dealers, the Auction Agent and the Owners of the Bonds of a Series. Section 2.07 Miscellaneous Provisions Regarding Auctions. (a) In this Exhibit I, each reference to the purchase, sale or holding of `Bonds" shall refer to beneficial interests in such Bonds, unless the context clearly requires otherwise. (b) During an Auction Rate Mode, with respect to the Bonds of a Series, the provisions of the Thirty -Ninth Ordinance, including the Officers Pricing Certificate, Appendix A, this Exhibit I and the definitions contained in this Exhibit I, including, without limitation, the definitions of Maximum Rate, Maximum Auction Rate, All Hold Rate, Index, Default Rate, Auction Multiple and the Auction Period Rate, may be modified or amended DAL504 /71005 Dallas 799711 4.DOC I 19 pursuant to the Thirty -Ninth Ordinance by obtaining, when required by the Thirty -Ninth Ordinance, the consent of the owners of all Outstanding Bonds of such Series as follows, provided, however that no such modification or amendment that adversely affect the rights, duties or obligations of the Auction Agent shall be made without the consent of the Auction Agent. If on the first Auction Date occurring at least 20 days after the date on which the Paying Agent/Registrar mailed notice of such proposed modification or amendment to the registered owners of the Outstanding Bonds of a Series as and to the extent required by the Thirty -Ninth Ordinance, (i) the Auction Period Rate which is determined on such date is the Winning Bid Rate and (ii) there is delivered to the Board and the Cities a Favorable Opinion of Bond Counsel, the proposed modification or amendment shall be deemed to have been consented to by the owners of all affected Outstanding Bonds of such Series. (c) If the Securities Depository notifies the Board that it is unwilling or unable to continue as Owner of the Bonds of a Series or if at any time the Securities Depository shall no longer be registered or in good standing under the Securities Exchange Act of 1934 as amended, or other applicable statute or regulation and a successor to the Securities Depository is not appointed by the Board within 90 days after the Board receives notice or becomes aware of such condition, as the case may be, the Cities shall execute and the Paying Agent/Registrar shall authenticate and deliver certificates representing the Bonds of such Series. Such Bonds shall be authorized in such names and authorized denominations as the Securities Depository pursuant to instructions from the Agent Members or otherwise, shall instruct the Board, the Cities and the Paying Agent/Registrar (d) During an Auction Rate Mode, so long as the ownership of the Bonds of a Series is maintained in book -entry form by the Securities Depository an Existing Owner or a beneficial owner may sell, transfer or otherwise dispose of a Bond only pursuant to a Bid or Sell Order in accordance with the Auction Procedures or to or through a Broker Dealer provided that (i) in the case of all transfers other than pursuant to Auctions such Existing Owner or its Broker Dealer or its Agent Member advises the Auction Agent of such transfer and (ii) a sale, transfer or other disposition of Bonds of a Series from a customer of a Broker Dealer who is listed on the records of that Broker Dealer as the holder of such Bonds to that Broker Dealer or another customer of that Broker Dealer shall not be deemed to be a sale, transfer or other disposition for purposes of this paragraph if such Broker Dealer remains the Existing Owner of Bonds of a Series so sold, transferred or disposed of immediately after such sale, transfer or disposition. Section 2.08 Changes in Auction Period or Auction Date. (a) Changes in Auction Period. (i) During any Auction Rate Mode, the Board may from time to time on any Interest Payment Date, change the length of the Auction Period with respect to all of the Bonds of any Series among a daily seven -day 28 -day 35 -day and a Special Auction Period in order to accommodate economic and financial factors that may affect or be relevant to the length of the Auction Period and the interest rate borne by Bonds of such Series. An Authorized Officer shall initiate the change in the length of the Auction Period by giving written notice to the Auction Agent, the Broker Dealers and the Securities Depository that the Auction Period shall change if the conditions described herein are satisfied and the proposed effective date of the change, at least 10 Business Days prior to the Auction Date for such Auction Period. DAL504 /71005 Dallas 799711 4.DOC 120 (ii) Any such changed Auction Period shall be for a period of one day seven - days, 28 -days, 35 -days or a Special Auction Period and shall be for all of the Bonds of a subsenes in an Auction Rate Mode. (iii) The change in the length of the Auction Period for Bonds of any Series shall not be allowed unless Sufficient Clearing Bids existed at both the Auction before the date on which the notice of the proposed change was given as provided in this subsection (a) and the Auction immediately preceding the proposed change. (iv) The change in length of the Auction Period for Bonds of any Series shall take effect only if (A) the Auction Agent receives, by 11.00 a.m., New York City time, on the Business Day before the Auction Date for the first such Auction Period, a certificate from an Authorized Officer consenting to the change in the length of the Auction Period specified in such certificate and (B) Sufficient Clearing Bids exist at the Auction on the Auction Date for such first Auction Period. For purposes of the Auction for such first Auction Period only each Existing Owner shall be deemed to have submitted Sell Orders with respect to all of its Bonds of a Series for which there is to be a change in the length of the Auction Period except to the extent such Existing Owner submits an Order with respect to such Bonds. If the condition referred to in (A) above is not met, the Auction Rate for the next Auction Period shall be determined pursuant to the Auction Procedures and the Auction Period shall be the Auction Period determined without reference to the proposed change. If the condition referred to in (A) is met but the condition referred to in (B) above is not met, the Auction Rate for the next Auction Period shall be the Maximum Auction Rate and the Auction Period shall be a seven -day Auction Period (provided however that if the Auction Period, without reference to the proposed change, would have been the daily Auction Period, then the Auction Period shall remain the daily Auction Period). (v) On the conversion date for Bonds of a Series from one Auction Period to another any Bonds of such Series which are not the subject of a specific Hold Order or Bid shall be deemed to be subject to a Sell Order (b) Changes in Auction Date. During any Auction Rate Mode, the Auction Agent, with the written consent of an Authorized Officer may specify an earlier Auction Date for Bonds of any Series (but in no event more than five Business Days earlier) than the Auction Date that would otherwise be determined in accordance with the definition of Auction Date" in order to conform with then current market practice with respect to similar securities or to accommodate economic and financial factors that may affect or be relevant to the day of the week constituting an Auction Date and the interest rate borne on such Bonds. The Auction Agent shall provide notice of its determination to specify an earlier Auction Date for an Auction Period by means of a written notice delivered at least 45 days prior to the proposed changed Auction Date to the Board, the Broker Dealers and the Securities Depository DAL504 /71005 Dallas 799711 4.DOC 121 ARTICLE III AUCTION AGENT Section 3.01 Auction Agent. (a) The Auction Agent shall be appointed by the Board to perform the functions specified herein. The Auction Agent shall designate its Principal Office and signify its acceptance of the duties and obligations imposed upon it hereunder by an Auction Agreement delivered to the Board, the Cities, the Paying Agent/Registrar and each Broker Dealer which shall set forth such procedural and other matters relating to the implementation of the Auction Procedures as shall be satisfactory to the Board. (b) Subject to any applicable governmental restrictions, the Auction Agent may be or become the owner of or trade in Bonds with the same rights as if such entity were not the Auction Agent. Section 3.02 Oualifications of Auction Agent; Resignation, Removal. The Auction Agent shall be (a) a bank or trust company organized under the laws of the United States or any state or territory thereof having a combined capital stock, surplus and undivided profits of at least $30 000 000 or (b) a member of National Association of Securities Dealers having a capitalization of at least $30 000,000 and, in either case, authorized by law to perform all the duties imposed upon it by the Thirty -Ninth Ordinance and a member of or a participant in, the Securities Depository The Auction Agent may at any time resign and be discharged of the duties and obligations created by the Thirty -Ninth Ordinance by giving at least ninety (90) days notice to each Broker Dealer and the Board. The Auction Agent may be removed at any time by the Board by written notice, delivered to the Auction Agent and each Broker Dealer Upon any such resignation or removal, the Board shall appoint a successor Auction Agent meeting the requirements of this Section. In the event of the resignation or removal of the Auction Agent, the Auction Agent shall pay over assign and deliver any moneys and Bonds held by it in such capacity to its successor The Auction Agent shall continue to perform its duties hereunder until its successor has been appointed by the Board. In the event that the Auction Agent has not been compensated for its services, the Auction Agent may resign by giving thirty (30) days notice to the Board even if a successor Auction Agent has not been appointed. DAL504 /71005 Dallas 799711 4.DOC 122 APPENDIX B $129 750,000 DALLAS /FORT WORTH INTERNATIONAL AIRPORT Joint Revenue Auction Rate Refunding Bonds Series 2004A $64,875,000 Subseries 2004A 1 $64,875,000 Subseries 2004A 2 Underwriting Agreement THIS UNDERWRITING AGREEMENT dated May 13 2004 has been executed by and among the Cites of Dallas and Fort Worth, Texas (the `Cities "), the Dallas /Fort Worth International Airport Board (the `Board "), and RBC Dain Rauscher Inc (the `Underwriter ") In accordance with the 2004A Ordinance (as hereinafter defined) the Cities, Board and Underwriter agree that $129 750 000 aggregate principal amount of Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A (the `Bonds') shall be issued by the Cities in two (2) subsenes designated as Subsenes 2004A 1 and Subsenes 2004A 2 (individually a `Subseries "), each of which will be dated May 1 2004 and will possess the characteristics, terms and provisions set forth in the Officers Pricing Certificate attached as Schedule I hereto 1 Commitment. ( ) T -on on of tbia— Undei writing Agreement by the Cities, the Board and the Underwriter this Underwriting Agreement shall be in full force and effect in accordance with its terms and shall be binding upon the Cities, the Board and the Underwriter (b) Currently with the execution of this Underwriting Agreement, the Underwriter has delivered to the Board a check payable to the order of the Board in an amount equal to $1,300 000 The Board agrees to hold such check uncashed until the Closing '(as hereinafter defined) to ensure the performance by the Underwriter of its obligation to purchase, accept delivery of and pay for the Bonds at the Closing. Concurrently with the payment by the Underwriter of the purchase price of the Bonds, the Board shall return such check to the Underwriter as provided in Paragraph 7 hereof. Should the Board fail to deliver the Bonds at the Closing, or should the Board be unable to satisfy the conditions to the obligation of the Underwriter to purchase, accept delivery of and pay for the Bonds, as set forth in this Underwriting Agreement (unless waived by the Underwriter) or should such obligations of the Underwriter be terminated for any reason permitted by this Underwriting Agreement, such check shall immediately be returned to the Underwriter In the event the Underwriter fails (other than for a reason permitted hereunder) to purchase, accept delivery of and pay for the Bonds at the Closing as herein provided, such check shall be retained by the Board as full liquidated damages for such failure of the Underwriter and for any defaults hereunder on the part of the Underwriter The Underwriter the Cities and the Board understand that in such event the Board s and /or the Cities actual damages may be greater or may be less than such amount. Accordingly the Underwriter hereby waives any right to claim that the Board s or the Cities' actual damages are 831163_1 DOC less than such amount, and the Board s and the Cities' acceptance of this offer shall constitute a waiver of any right the Board or the Cities may have to additional damages from the Underwriter The Underwriter hereby agrees not to stop or cause payment on said check to be stopped unless the Board or either of the Cities has breached any of the terms of this Underwriting Agreement. (c) Inasmuch as this purchase and sale represents a negotiated transaction, the Board and the Cities understand, and hereby confirm, that the Underwriter is not acting as a fiduciary of the Board or the Cities, but rather is acting solely in its individual capacity as Underwriter for its own account. 2. Purchase, Sale and Closing. Bonds. On the terms and conditions and upon the basis of the representations hereinafter set forth, the Underwriter hereby agrees to purchase from the Cities, and the Cities will sell to the Underwriter the Bonds at an aggregate purchase price of $129,360 750 (being the principal amount of the Bonds less an Underwriter's Discount of $389,250 00) such Underwriter's Discount being 0 3% of the principal amount of the Bonds. Purchase Obligation. The Underwriter is obligated to purchase all of the Bonds if any of the Bonds are purchased. The parties hereto understand and agree that no Bonds will be issued, sold or purchased unless all the Bonds are issued, sold and purchased. Payment for the Bonds. The Underwriter shall pay the purchase price set forth above the Bonds r1 g a ly lol�lr fa�laral fiends, payable by wire for the d t�.e C -losing with IMMeA ate .u,,.. ,,...,. a. transfer to J P Morgan Trust Company National Association, as Treasurer for the account of the Board. Closing and Delivery The Closing (the `Closing ") will be held at the offices of Vinson & Elkins L.L.P Dallas, Texas 75201 at 9.00 A.M. local time on May 20 2004 or at such other place or at such other date or time as may be agreed upon by the parties hereto The initially issued Bond will be registered in the name of the Underwriter and will be delivered at Closing in fully registered form. The definitive Bonds of each Subsenes will be issued in registered form in the name of Cede & Co as nominee of The Depository Trust Company New York, New York in denominations equal to the principal amount of each maturity of each Subsenes. Expenses. All costs and expenses of the Cities and the Board in connection with the authorization, issuance, sale and delivery of the Bonds and the other items herein specified to be delivered to the Underwriter shall be paid for by or provision for payment made by the Board. Said costs and expenses shall include. the costs of printing the Bonds, the 2004A Ordinance and the Official Statement (as such terms are hereinafter defined), including distribution costs thereof, in all cases in reasonable quantities, the fees and charges of any engineers, consultants, advisors, auditors, bond insurers and the rating agencies; and the fees and expenses of Co -Bond Counsel and Co- Financial Advisors to the Board in connection with the transactions herein contemplated. All expenses of the Underwriter including travel and the fees 2 and expenses of Underwriter's counsel, shall be paid by the Underwriter 3. Background. (a) Pursuant to a Contract and Agreement between the Cities, dated and effective as of April 15 1968 (the `Contract Between the Cities "), the Cities authorized and directed the Board, acting on behalf of the Cities, to proceed with the development of the Dallas/Fort Worth International Airport (the Airport") Pursuant to the Contract Between the Cities, the City Councils of the Cities on November 11 and 12, 1968, adopted the 1968 Regional Airport Concurrent Bond Ordinance authorizing the issuance of Dallas /Fort Worth Regional Airport Joint Revenue Bonds for the financing of the Airport, which Ordinance, as previously amended and supplemented, has been amended and supplemented by the Thirtieth Supplemental Concurrent Bond Ordinance (the `Thirtieth Supplement ") adopted by the City Council of the City of Fort Worth on February 22, 2000 and by the City Council of the City of Dallas on February 23 2000 (as amended and supplemented, the `1968 Ordinance ") The Bonds will constitute Additional Obligations under the 1968 Ordinance and will be issued under the provisions of the 1968 Ordinance, as supplemented and amended, including the Thirty -Ninth Supplemental Concurrent Bond Ordinance (the `2004A Ordinance ") adopted by the City Council of the City of Fort Worth on April 27 2004 and by the City Council of the City of Dallas on April 28 2004 The Bonds are being issued to refund the Refunded Obligations, as more particularly described in the Official Statement under the caption `Purpose and Plan of Financing. Except where herein noted to the contrary `Ordinance refers to all the ordinances under which the Bonds are issued, including, particularly the 1968 Ordinance, the Thirtieth Supplement and the 2004A Ordinance. Capitalized terms not otherwise defined herein shall have the meanings assigned such terms in the Ordinance or the Official Statement. (b) The Bonds are issued under the provisions of applicable laws, including Chapter 22 of the Texas Transportation Code and Chapter 1371 of the Texas Government Code, as amended (collectively the Act ") and under the provisions of the Ordinance (c) The Board and the Cities ratify and approve the use by the Underwriter of the final Official Statement dated May 6 2004 relating to the Bonds provided by the Board to the Underwriter (which, together with all appendices and exhibits thereto and with all information incorporated by reference therein, is herein called the `Official Statement ") for customary purposes in connection with the public offering of the Bonds The Board and the Cities confirm that, as of its date, the Official Statement was deemed final by the Board acting for and on behalf of the Cities for purposes of Rule 15c2 12(b)(1) of the Securities Exchange Commission (the `Rule ") The Official Statement is hereby approved by the Board acting for and on behalf of the Cities. At or prior to the Closing, the Board and the Cities shall provide to the Underwriter an adequate number of copies of the Official Statement, as requested by the Underwriter for distribution. The Board and the Cities authorize and approve the use of the Official Statement, the Contract Between the Cities and the Ordinance in connection with the public offering and sale of the Bonds. 3 (d) The respective officers of the Airport, auditors, counsel and advisors referred to in this Underwriting Agreement are: Executive Director- Mr Jeffrey P Fegan, Chief Executive Officer of the Airport Co -Bond Counsel McCall, Parkhurst & Horton L.L.P Dallas, Texas, Vinson & Elkins L.L.P Dallas, Texas, and Renee Higginbotham- Brooks, Esq Fort Worth, Texas Accountants. KPMG, L.L.P Dallas, Texas Financial Advisors First Southwest Company Dallas, Texas, and Estrada Hinojosa & Company Inc., Dallas, Texas Airport Consultant: Leigh Fisher Associates Counsel to the Underwriter- Kelly Hart & Hallman, Fort Worth, Texas, and West & Gooden, P C Dallas, Texas 4 Representations and Warranties of the Cities and the Board. (a) The Cities and the Board acknowledge that the Cities will sell the Bonds to the Underwriter and that the Underwriter will purchase from the Cities the Bonds and will make a public offering of such Bonds in reliance upon the representations and covenants herein set forth. (b) The Cities, each as to itself only represent and warrant that: (i) The Cities are and will be at the time of the Closing duly organized and existing as cities in the State of Texas with the powers and authority among others, set forth in the Act. (ii) The Board is and will be at the Closing duly organized and existing as a point board in the State of Texas with the powers and authority among others, set forth in the Act, the Contract Between the Cities and the Ordinance and with the powers and authority to carry out and consummate all transactions contemplated by this Underwriting Agreement, the Official Statement, the Auction Agreement, the Broker Dealer Agreement, the Contract Between the Cities, the Ordinance, the Capital Trust Agreement (hereinafter defined) and the Use Agreements (as defined in the Official Statement and hereinafter as amended, called the `Use Agreements ") (iii) When delivered to and paid for by the Underwriter at the Closing, the Bonds (A) will have been duly authorized, executed, issued and delivered in conformity with the Act and the Ordinance, and be entitled to the benefit and security of the Contract Between the Cities, the Ordinance, the Use Agreements and the Act, and (B) will constitute valid and binding special obligations of the Cities of the character referred to in the Act. El (iv) The adoption of the 2004A Ordinance, the execution and delivery of this Underwriting Agreement, the Bonds, the Auction Agreement, and the Broker Dealer Agreement, and the consummation of the transactions contemplated thereby and hereby and the compliance with the provisions thereof and hereof under the circumstances contemplated thereby and hereby will not conflict with or constitute on the part of the Cities a breach of or a default under any agreement or instrument to which either of the Cities is a party or by which either is bound or any existing law administrative regulation, court order or consent decree to which either of the Cities is subject. (v) The Auction Agreement and Broker Dealer Agreement have been duly authorized, executed and delivered by the Cities. (c) The Board represents and warrants that: (i) The Board is and will be at the time of the Closing duly organized and existing as a joint board in the State of Texas, with the powers and authority among others, set forth in the Act, the Contract Between the Cities and the Ordinance and with the powers and authority to carry out and consummate all transactions contemplated by this Underwriting Agreement, the Auction Agreement, the Broker Dealer Agreement, the Official Statement, the Contract Between the Cities, the Ordinance and the Use Agreements (ii) The execution and delivery of this Underwriting Agreement, the Auction Agreement, and the Broker - Dealer Agreement, and the consummation of the transactions contemplated hereby and Thereby and the compliance with the provisions hereof and thereof under the circumstances contemplated hereby and thereby will not conflict with or constitute on the part of the Board a breach of or default under any agreement or other instrument to which the Board is a party or by which it is bound or any existing law administrative regulation, court order or consent decree to which the Board is subject. (iii) The statements and information contained in the Official Statement do not, and as of the Closing will not, contain any untrue statement of a material fact and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. (iv) The financial statements included in the Official Statement have been prepared in all material respects on a consistent basis, and present fairly the financial position of the Board and the results of the operation of the Airport at the dates and for the periods indicated, and there has been no material adverse change in the financial condition or operations of the Airport since the date thereof. (v) To the best of the Board's knowledge and belief, the factual information and assumptions in the Report of the Airport Consultant (the `Report") prepared by Leigh Fisher Associates (the Airport Consultant ") dated May 6 2004 on the proposed issuance of Cities of Dallas and Fort Worth, Texas, Dallas /Fort Worth International Airport, Joint Revenue Bonds, Series 2004A and Series 2004B are true, accurate and 5 complete in all material respects. (d) The Capital Improvement Trust Account Agreement, dated as of April 1 1972, as amended by the Amendment to Capital Improvement Trust Account Agreement made effective as of October 1 1981 (hereinafter called the `Capital Trust Agreement ") and the Use Agreements are not inconsistent with or in violation of the provisions of the Contract Between the Cities, the Ordinance or any other contract or agreement to which the Board is a party (e) Except as disclosed in the Official Statement, there are no pending legal, administrative or judicial proceedings to which either the Cities or the Board are parties (i) contesting the corporate existence or powers of the Board or of the Cities with respect to the obligations of the Cities under the Contract Between the Cities, the Ordinance or the Bonds, or (ii) contesting or affecting the authority for the issuance of, or the security for the Bonds, or seeking to restrain or enjoin the issuance or the delivery of the Bonds, or (iii) contesting or affecting the validity of the Bonds, the Ordinance, the Contract Between the Cities, the Use Agreements, the Capital Trust Agreement, the Auction Agreement, the Broker Dealer Agreement, or this Underwriting Agreement; or (iv) seeking to restrain or enjoin the collection of the income or revenues available or pledged to the payment of the Bonds under the Ordinance. Except as disclosed in the Official Statement, neither the Board nor the Cities are parties to any litigation or other proceeding pending or to their knowledge, threatened which, if decided adversely to the Board or either of the Cities, would have a materially adverse effect on the operations of the Airport or the financial condition of the Board. (f) The Contract Between the Cities, the Ordinance, the Use Agreements, and the Capital Trust Agreement are and at the Closing will f•" F d of ect n ccordance , be lute tGTCe ai'i with their terms and, as of the Closing, will not have been amended, modified or supplemented by the Cities or the Board except as the Official Statement shall disclose, and there shall have been duly adopted and there shall be in full force and effect such resolutions and ordinances as, in the opinion of Co -Bond Counsel, shall be necessary in connection with the transactions contemplated hereby (g) Notwithstanding the foregoing, under no circumstances shall any event (including rating agency action) relating to the creditworthiness of the Airport or any Signatory Airline (including but not limited to a filing for bankruptcy by a Signatory Airline or any similar action seeking protection from creditors), in itself, constitute a material adverse change for purposes of this Section 4 5 Covenant of Underwriter The Underwriter agrees to make a bona fide public offering of all of the Bonds upon the terms and conditions set forth in the Official Statement; provided, however the Underwriter reserves the right to change the yields or prices set forth therein subsequent to such initial public offering as the Underwriter shall deem necessary in connection with the offering of the Bonds. on 6 Covenants of the Cities and the Board. The Cities and the Board hereby covenant that: (a) The proceeds from the sale of the Bonds will be used or applied as is provided in the Contract Between the Cities, the Ordinance (and, particularly the 2004A Ordinance) and herein. (b) The Cities and the Board will provide such information under their control as necessary for the Underwriter to comply with the filing requirements of Rule G -36 of the Municipal Securities Rulemaking Board. (c) The Cities and the Board will cooperate in qualifying the Bonds for offering and sale under the `Blue Sky" or other securities laws of those states designated by the Underwriter at the Underwriter's expense; provided, however that neither the Cities nor the Board shall be required to execute a general or special consent to service of process or to qualify to do business in any state or place as a result of such Bond offering or sale. The Cities and the Board will advise the Underwriter immediately of receipt by any of them of any notification with respect to the suspension of the qualification of the Bonds for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose (d) If, during the period from the date of this Agreement to and including the date the Underwriter is no longer required pursuant to the Rule to provide the Official Statement to potential customers requesting an Official Statement (such date being the earlier of (i) 90 days from the end of the underwriting period and (ii) the time when the Official Statement is available to any person from a nationally recognized municipal securities information repository but in no case less than 25 days after the end of the underwriting period), the Cities or the Board become aware of the occurrence of any event as a result of which, in the opinion of the Cities or the Board, it is necessary to amend or supplement the Official Statement in order to cause the same not to contain any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, the Cities and the Board will prepare and furnish to the Underwriter an amendment or supplement to the Official Statement so that the Official Statement, as so amended or supplemented, will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. The expenses in connection with the printing and distribution of such amendment or supplement to the Official Statement shall be borne by the Cities and the Board. Unless otherwise notified in writing by the Underwriter by the Closing Date, the Board and the Cities may assume that the end of the underwriting period" for purposes of the Rule is the Closing Date. In the event such notice is given in writing, the Underwriter agrees to notify the Board and the Cities in writing following the occurrence of the end of the underwriting period" as defined in the Rule. The end of the underwriting period as used in this Agreement means the Closing Date or such later date as to which notice is given by the Underwriter in accordance with the preceding sentence. The Underwriter agrees (i) to deliver or caused to be delivered, to and filed with a nationally recognized municipal securities information repository the Official Statement promptly after the same is made available to the 7 Underwriter by the Cities and the Board, and (ii) to notify the Cities and the Board promptly after the Underwriter no longer retains an unsold balance of the Bonds for sale to the public. The Cities and the Board will, before the Official Statement is amended or supplemented at any time subsequent to the time of the Closing, furnish a copy of each proposed amendment or supplement to the Underwriter who will have the right to approve it, approval of which shall not be unreasonably withheld. 7 Conditions of the Underwriter's Obligations. The obligation of the Underwriter to purchase the Bonds is subject to the fulfillment of the following conditions at or before the Closing. Should the following conditions not be fulfilled in respect of the Bonds, the obligations of the Underwriter under this Underwriting Agreement shall terminate and neither the Cities, the Board nor the Underwriter shall have any further obligation hereunder except that the check referred to in Section 1(b) hereof shall be returned by the Board to the Underwriter (a) The Cities' and the Board's representations contained in Section 4 hereof shall be true at and as of the time of the Closing, and shall be confirmed at the Closing by certificates, in form and substance satisfactory to the Underwriter by- (i) the Cities, but each given as to itself only signed by the City Attorney of each City or signed by other appropriate officials acceptable to the Underwriter and (ii) the Board signed by the Chief Executive Officer Notwithstanding the foregoing, a downgrade in the underlying uninsured ratings of the Airport or an event relating to the creditworthiness of the Airport or any Signatory Airline (including but not limited to a filing for bankruptcy by a Signatory Airline or any similar action seeking protection from creditors) will not, in and of itself, be grounds for a termination by the Underwriter of its obligation to purchase the Bonds as provided herein. (b) There shall be delivered to the Underwriter at or prior to the Closing two duly executed copies of the Official Statement. (c) Neither the Cities nor the Board shall have defaulted in the performance of any covenants or obligations hereunder (d) The Underwriter shall receive at the Closing: (i) A certified copy of the 2004A Ordinance. (ii) A fully executed original of the Auction Agreement. (iii) A fully executed original of the Broker Dealer Agreement. (iv) Opinions of Co -Bond Counsel, dated the date of the Closing, in the form and substance as set forth in Appendix B to the Official Statement, and a further opinion, dated the date of the Closing, covering those points outlined in Exhibit A. E (v) An opinion of Legal Counsel to the Board, dated the date of Closing, in the form and substance as set forth in Exhibit B (vi) A certificate of an Authorized Officer or the Assistant Vice President Finance, dated as of the Closing, satisfactory in form and substance to the Underwriter (vii) An executed copy of the Report together with any amendments or supplements thereto, if any and an executed copy of a letter or letters, in form and substance acceptable to the Underwriter from the Airport Consultant dated the date of Closing consenting to the inclusion of the Report in the Official Statement and supplementing the Report and documenting the financial forecasts to evidence compliance with the requirements of Section 3 4(a)(iii)(A) of the Thirtieth Supplement. (viii) Evidence satisfactory to the Underwriter of receipt of a municipal bond guaranty insurance policy insuring the Bonds issued by MBIA Insurance Corporation and of ratings on the Bonds of Aaa by Moody's Investors Service, AAA by Standard & Poor's Ratings Group a Division of The McGraw Hill Companies Inc. and AAA by Fitch, Inc. (ix) Evidence satisfactory to the Underwriter that the amount on deposit in the Debt Service Reserve Fund is equal to the Debt Service Reserve Requirement. (e) The Underwriter shall have received such additional documentation it may reasonably request to evidence- (i) compliance with applicable law- (ii) the validity of the Bonds, the Contract Between the Cities, the Ordinance, the Use Agreements, the Auction Agreement, the Broker Dealer Agreement and this Underwriting Agreement; (iii) that the Cities and any other obligated person, as defined to paragraph (f)(10) of the Rule, have agreed to the undertakings to be provided pursuant to paragraph (b)(5) of the Rule as described in the Official Statement; and (iv) the truth and accuracy as of the time of Closing, of all representations herein contained and the due performance or satisfaction at or prior to such time of all agreements then to be performed and all conditions then to be satisfied as contemplated under this Underwriting Agreement. (f) At the Closing, there shall not have been any material adverse change in the affairs or financial condition of the Airport or the Board, taken as a whole, from that described in the Official Statement which, in the reasonable judgment of the Underwriter makes it inadvisable to proceed with the sale of the Bonds, and the Underwriter shall have received a certificate of the Board certifying that no material adverse change has occurred, or if such a change has occurred, full information with respect thereto Notwithstanding the foregoing, provided all other conditions precedent have been satisfied, under no circumstances shall any event (including rating agency action) relating to the creditworthiness of the Airport or any Signatory Airline (including but not limited to a filing for bankruptcy by a Signatory Airline or any similar action seeking protection from creditors), in itself, constitute a material adverse change E 8 Events Permitting the Underwriter to Terminate. The Underwriter may terminate its obligation to purchase the Bonds if, between the date hereof and the Closing, (i) legislation shall have been enacted by the Congress of the United States, or recommended to the Congress for passage by the President of the United States or introduced and favorably reported for passage to either House of Congress by any Committee of such House to which such legislation had been referred for consideration, or a decision shall have been rendered by a court of the United States or the Tax Court of the United States, or an order ruling or regulation shall have been issued or proposed by or on behalf of the Treasury Department of the United States or the Internal Revenue Service, or a release or official statement made by the President of the United States or by the Treasury Department of the United States or by the Internal Revenue Service, with respect to federal taxation upon revenues or other income of the general character to be derived by the Board or upon interest received on obligations of the general character of the Bonds which, in the reasonable judgment of the Underwriter materially adversely affects the market for the Bonds, or (ii) legislation shall have been enacted by the Congress of the United States to become effective on or prior to the Closing, or a decision of a court of the United States shall be rendered, or a stop order ruling, regulation or proposed regulation by or on behalf of the Securities and Exchange Commission or other agency having jurisdiction over the subject matter shall be issued or made, to the effect that the issuance, sale and delivery of the Bonds, or any other obligations of any similar public body of the general character of the Cities, is in violation of the Securities Act of 1933 as amended, or the enactment of the Ordinance or the execution and delivery of any indenture of similar character is in violation of the Trust Indenture Act of 1939 as amended, or with the purpose or effect of otherwise prohibiting the issuance, sale or delivery of the Bonds as contemplated hereby or by the Official Statement or of obligations of the general character of Bonds, or (iii) there shall exist any event which in the Underwriter's reasonable opinion either (A) makes untrue or incorrect in any material respect any statement contained in the Official Statement or (B) is not reflected in the Official Statement but should be reflected therein in order to make the statements contained therein not misleading in any material respect, or (iv) there shall have occurred or be continuing any hostilities, or other national or international calamity or crisis, the effect of such calamity or crisis on the financial markets of the United States being such as, in the Underwriter's reasonable judgment, would make it impracticable for the Underwriter to purchase and /or deliver the Bonds, or (v) there shall be in force a general suspension of trading on the New York Stock Exchange, Inc. or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange, Inc. whether by virtue of a determination by that Exchange or by order of the Securities and Exchange Commission, or any other governmental authority having jurisdiction, or (vi) a general banking moratorium shall have been declared by either federal, Texas or New York authorities having jurisdiction and be in force. 9 Governing Law- Notices and Other Actions. (a) This Underwriting Agreement shall be governed by and construed and interpreted in accordance with the laws of the United States of America and the State of Texas. 10 (b) All notices, demands and formal actions hereunder will be in writing, mailed, telegraphed or delivered to Dallas/Fort Worth International Airport Board Attention. Chief Executive Officer P O Drawer 619428 Dallas/Fort Worth Airport, Texas 75261 -9428 City of Dallas Attention. City Manager 1500 Marilla Street Dallas, Texas 75201 City of Fort Worth Attention. City Manager 1000 Throckmorton Fort Worth, Texas 76102 The Underwriter• RBC Dam Rauscher Inc. Attn. Becky Heflin 2711 North Haskell, Suite 2400 Dallas, Texas 75204 10 Miscellaneous. This Underwriting Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. This Underwriting Agreement will inure to the benefit of and be binding upon the parties and their successors, and will not confer any rights upon any other person. All representations and agreements by you in this Underwriting Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter and shall survive the delivery of any payment for the Bonds. Time shall be of the essence of this Underwriting Agreement. [Remainder of this page intentionally left blank] 11 DALLAS /FORT WORTH INTERNATIONAL AIRPORT BOARD By ,oWe?('Ex(5*c'utive Offir6er ATTEST SeniorExecutzve Vice President and Chief Operating Officer [Seal] CITY OF FO,ZT WORTH, TEXAS City Manager APPROVED AS TO FORM AND LEGALITY City Attorney CITY OF DALLAS TEXAS City Manager DALLAS /FO T WORTH INTERNATIONAL AIRPORT BOARD ATTEST Senior Executive Vi e President and Chief Operating Officer [Seal] I: Chief Executi CITY OF PORT WORTH, TEXAS City Manager APPROVED AS TO FORM AND LEGALITY City Attorney TO FORM. j c''n City CITY OF DALLAS TEXAS By �T- -- City M ger RBC DAM RAUSCHER INC (Series 2004A) SCHEDULE I OFFICERS PRICING CERTIFICATE Pursuant to the Thn-ty -Ninth Supplemental Concurrent Bond Ordinance adopted by the Cities of Fort Worth and Dallas, Texas, on April 27 2004 and April 28 2004 respectively (the `Ordinance ") authorizing the issuance, sale and delivery of Dallas/Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A (the `Bonds "), the undersigned Authorized Officer in accordance with Section 3.2 of the Ordinance, does hereby certify and determine as of May 13 2004 as follows. 1 Capitalized terms not otherwise defined herein shall have the meanings assigned such terms in the Ordinance including Appendix A thereto 2 The Initial Bond shall consist of a single bond in the principal amount of $129 750 000 3 The purchase price for the Bonds to be paid to or upon the order of the Dallas /Fort Worth International Airport Board (the `Board ") by RBC Dain Rauscher Inc. (the `Underwriter ") of the Bonds listed in the Underwriting Agreement shall be $129,360750 The net original issue discount reflected in such purchase pr, $ -0- The Underwriter's discount reflected in such purchase price is $389,250 00 which Underwriter's discount does not exceed three dollars ($3 00) for each one thousand dollars ($1000 00) principal amount of the Bonds. 4 Except as otherwise provided herein, the Provisions for Bi Modal Obligations appended as Appendix A to this Officers Pricing Certificate ( "Appendix A') constitutes an integral part of this Officers Pricing Certificate and has the same force and effect as if set forth in the forepart of this Officers Pricing Certificate. 5 The Bonds shall be issued as two (2) subsenes designated as Subsenes 2004A 1 and Subsenes 2004A 2 (each a `Subsenes ") in the respective principal amounts of $64,875 000 and $64 875 000 shall be dated May 1 2004 shall bear interest from the date of their initial delivery in accordance with this Officers Pricing Certificate, and shall have a Stated Maturity Date of November 1 2024 6 The Bonds shall be initially issued in an Auction Rate Mode. The initial Auction Period for the Bonds shall commence from and include the date of initial delivery of the Bonds and shall expire on and include the initial Auction Date specified below The Auction Period Rate for the initial Auction Period for the Bonds shall be the rate per annum specified below After the initial Auction Period, each Auction Period for a Subsenes shall be the Auction Period specified below unless the length of such Auction Period for such subsenes is adjusted or changed to a daily 7 day 28 -day or 35 -day Auction Period or a Special Auction Period in accordance with Appendix A. Interest on the Bonds shall be payable on the Business Day immediately succeeding the initial Auction Date specified below and on each Interest Payment Date thereafter Initial Initial Interest Subseries Initial Auction Date Auction Auction Date Auction Period Payment Date Rate 2004A -I June 15 2004 1 12% ch fifth T sday 35 day June 16, 2004 thereafter 2004A -2 June 29 2004 1 12% each fifth Tuesday 35 day June 30, 2004 thereafter 7 RBC Dam Rauscher Inc. 1s hereby appointed as the initial Broker Dealer for the Bonds. 8 The Bonds are subject to mandatory sinking fund redemption in part (in accordance with the provisions of the Ordinance) on November 1 or if November 1 is not an Interest Payment Date, then on the succeeding Interest Payment Date, of each year and in the respective principal amounts of each Subsenes set forth below at 100% of the principal amount thereof, plus accrued interest to the Redemption Date, from Sinking Fund Installments which are required to be made in amounts sufficient to redeem on November 1 or if November 1 is not an Interest Payment Date, then on the succeeding Interest Payment Date Sinking Fund Installment Year Subseries A 1 Subseries A 2 2004 $ 725,000 $ 725 000 2005 5,500,000 5,500,000 2006 4,375,000 4,375,000 2007 4,625,000 4,625,000 2008 4775,000 4775,000 2009 4,975,000 4,975,000 2010 7,250,000 7,250,000 2011 7,575,000 7,575,000 2012 7,900,000 7,900,000 2013 175,000 175,000 2014 150,000 150,000 2015 150,000 150,000 2016 175,000 175,000 2017 175,000 175,000 2018 175,000 175,000 2019 200;000 200,000 2020 225,000 225 000 2021 200,000 200,000 2022 200,000 200,000 2023 4,725,000 4725,000 2024 10,625,000 10,625,000 Stated Maturity Date Interest Payment Date each fifth Wednesday thereafter ch fifth Wednesday thereafter Credit towards the mandatory sinking fund installment requirements may be made as follows, and if made, will thereafter reduce the amount of such Subsenes otherwise subject to mandatory Sinking Fund Installments on the date credit, is taken. (a) If the Board directs the Paying Agent/Registrar to purchase Bonds with money in the Debt Service Fund (at a price not greater than par plus accrued interest to the date of purchase), then a credit of 100% of the principal amount of Bonds purchased will be made against the next sinking fund installment due on the Subsenes of Bonds purchased, and after providing for the payment of such sinking fund installment the Board may direct the Paying Agent/Registrar to apply such excess amounts to purchase Bonds of any particular sinking fund installment of one or both subseries as selected by the Board, or (b) if the Board purchases or redeems Bonds of a Subsenes with other available moneys, then the principal amount of those Bonds will be credited against future Sinking Fund Installments in any order and in any annual amount, that the Board may direct. 9 The obligations to be refunded with a portion of the proceeds of the Bonds are described in Appendix B to this Officers Pricing Certificate and shall be called for redemption on July 1 2004 10 The Board hereby represents and warrants that (i) the pledge set forth in Article II of the Ordinance is and shall be valid and binding from and after the date of issuance and delivery of the Bonds, and the items set forth in such pledge are and shall be immediately subject to the lien of such pledge without any physical delivery thereof or further act and the lien of such pledge is and shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Board and the Cities irrespective of whether such parties have notice thereof; and (ii) neither the Ordinance nor any other instrument need be recorded or filed to protect the pledge set forth in Article II of the Ordinance. 11 The payment of the principal of and interest on the Bonds shall be insured by a municipal bond guaranty insurance policy (the `Policy ") issued by MBIA Insurance Corporation. The Policy shall be issued upon the terms and conditions of the commitment attached to this Officers Pricing Certificate as Exhibit A MBIA Insurance Corporation is an Insurer and a Credit Provider as provided in Section 1.5(a)(iii) of the Ordinance. 12 For purposes of Section A -602 of Appendix A, the address, phone number and fax number of the Board shall be as follows Dallas /Fort Worth International Airport Board 3200 E. Airfield Drive P O Drawer 619428 DFW Airport, Texas 75261 9428 Attention. Chief Executive Officer Phone (972) 574 -3200 Fax (972) 574 -5509 13 This certificate is an Officers Pricing Certificate within the meaning of the Ordinance and is executed pursuant to and in accordance with the delegation of authority authorized by and contained in Section 3.2 of the Ordinance. The undersigned hereby finds and determines that, in accordance with the requirements of the Ordinance, this Officers Pricing Certificate and the information contained herein complies with and satisfies the terms and provisions of the Ordinance in accordance with the delegation contained therein. [Signature Page of this Certificate Follows] IN WITNESS WHEREOF the undersigned Authorized Officer has hereunto set his hand effective as of the date set forth above. DALLAS/FORT WORTH INTERNATIONAL AIRPORT BOARD By Title APPENDIX A PROVISIONS FOR BI MODAL OBLIGATIONS DAL504 /71005 Dallas 799703 6.130C TABLE OF CONTENTS Page APPENDIX A ARTICLE A I DEFINITIONS Section A 101 Definitions A 1 Section A 102 Rules of Construction A -4 ARTICLE A II INTEREST RATE MODES INTEREST RATES AND PAYMENT Section A 201 Denominations, Medium, Method and Place of Payment of Principal and Interest A -4 Section A 202 Determination of Fixed Rate A 5 Section A 203 Determination of Interest Rate and Auction Period During Auction Rate Mode A -6 Section A 204 Changes in Mode A 7 ARTICLE A III REDEMPTION OF BONDS Section A 301 Optional Redemption A-8 Section A 302 Redemption from Sinking Fund Installments A 9 Section A 303 Notice of Redemption of Bonds in Auction Rate Mode A 9 ARTICLE A IV PURCHASE OF BONDS Section A -401 Mandatory Purchase on Any Mode Change Date A 10 Section A -402 Notice of Mandatory Tender for Purchase A 10 Section A -403 Purchase Fund A 10 Section A -404 Remarketing of Bonds of a Series Notices A 11 Section A -405 Source of Funds for Purchase of Bonds of a Series A I 1 Section A -406 Delivery of Bonds A 12 Section A -407 Delivery and Payment for Purchased Bonds of a Series Undelivered Bonds A 12 DAL504 /71005 Dallas 799703_6.DOC ARTICLE A V AGENTS (A i) Section A 501 Remarketing Agent A 13 Section A 502 Tender Agent A 13 Section A 503 Auction Agent A 14 Section A 504 Broker Dealers A 14 ARTICLE A VI MISCELLANEOUS Section A -601 Modifications or Amendments to the Thirty Ninth Ordinance A 14 Section A -602 Notices A 14 Exhibit I — Auction Rate Mode Provisions I 1 DAL504 /71005 Dallas 799703 6.130C (A 11) APPENDIX A PROVISIONS FOR BI MODAL OBLIGATIONS ARTICLE A I DEFINITIONS Section A 101 Definitions. Capitalized terms used but not otherwise defined in this Appendix A shall have the meanings set forth in the Thirty Ninth Supplemental Concurrent Bond Ordinance adopted by the Cities of Dallas and Fort Worth, Texas (the `Thirty Ninth Ordinance ") The following terms shall, for all purposes herein and (except as the context may otherwise require) in the Thirty -Ninth Ordinance, have the following meanings Alternate Rate means, on any Rate Determination Date, the BMA Index or if the BMA Index is no longer published, an index or a rate selected or determined by the Board with the consent of the Insurer which consent shall not be unreasonably withheld. Auction Agent shall have the meaning set forth in Exhibit I hereto Auction Agreement shall have the meaning set forth in Exhibit I hereto Auction Date shall have the meaning set forth in Exhibit I hereto Auction Period shall have the meaning set forth in Exhibit I hereto Auction Period Rate shall have the meaning set forth in Exhibit I hereto Auction Procedures shall have the meaning set forth in Exhibit I hereto Auction Rate Mode means the mode during which the duration of the Auction Period and the interest rate is determined in accordance with Section A 203 hereof and Exhibit I hereto Authorized Denominations means with respect to Bonds of a Series (i) in an Auction Rate Mode, $25 000 and any integral multiple thereof and (ii) in a Fixed Rate Mode, $5 000 and any integral multiple thereof BMA Index means The Bond Market Association Municipal Swap Index released by Municipal Market Data to its subscribers. Bonds or Bonds of a Series and words of like import shall mean any Bonds authorized pursuant to the Thirty Ninth Ordinance and issued in accordance with the Thirty Ninth Ordinance, or all such Bonds collectively as the context may require. Broker Dealer shall have the meaning set forth in Exhibit I hereto Broker - Dealer Agreement shall have the meaning set forth in Exhibit I hereto DAL504 /71005 Dallas 799703_6.DOC Al Business Day means a day other than (i) a Saturday Sunday or legal holiday (n) a day on which the Paying Agent /Registrar the Insurer the Tender Agent, the Auction Agent (if the Bonds of a Series are in an Auction Rate Mode) the Broker Dealers (if the Bonds of a Series are in an Auction Rate Mode) the Remarketing Agent or banks and trust companies in New York, New York are authorized or required to remain closed, or (iii) a day on which the New York Stock Exchange is closed. Electronic Means means telecopy facsimile transmission, e mail transmission or other similar electronic means of communication providing evidence of transmission, including a telephonic communication confirmed by any other method set forth in this definition. Favorable Opinion of Bond Counsel means, with respect to any action the occurrence of which requires such an opinion, an opinion of nationally recognized bond counsel to the effect that such action is permitted under the Acts, the Thirty Ninth Ordinance and the Controlling Ordinances, and that such action will not impair the exclusion of interest on such Bonds from gross income for purposes of federal income taxation (subject to the inclusion of any exceptions contained in the opinion delivered upon original issuance of the Bonds) Fixed Rate means an interest rate fixed to the Stated Maturity Date of the Bonds of a Series Fixed Rate Mode means the period during which Bonds of a Series bear interest at a Fixed Rate. Insurer means MBIA Insurance Corporation. Interest Payment Date means the following dates upon which interest is payable on Bonds of a Series (a) the Stated Maturity Date or any Mode Change Date; (b) with respect to the Auction Rate Mode, each date that is specified as an `Interest Payment Date" in Exhibit I hereto and (c) with respect to the Fixed Rate Mode, each May 1 and November 1 provided that the Interest Payment Dates for the Fixed Rate Mode may be changed in connection with the conversion to such Mode upon receipt of a Favorable Opinion of Bond Counsel Interest Period means the period of time that any interest rate remains in effect, which period, with respect to Bonds of a Series in the Fixed Rate Mode, shall be the period from and including the Mode Change Date that they began to bear interest at the Fixed Rate to and including the Stated Maturity Date or date of redemption prior to the Stated Maturity Date Mandatory Purchase Date means any Mode Change Date. Maximum Auction Rate shall have the meaning set forth in Exhibit I hereto DAL504/71005 Dallas 799703 6.130C A2 Maximum Rate means ten percent (10 %) per annum or such higher rate as determined by an Authorized Officer with the consent of the Insurer which consent shall not be unreasonably withheld, provided, however that in no event shall the Maximum Rate exceed the maximum rate permitted by applicable law including Chapter 1204 of the Texas Government Code. Mode means the Auction Rate Mode or the Fixed Rate Mode. Mode Change Date means, with respect to Bonds of a Series, the date the Auction Rate Mode terminates and the Fixed Rate Mode begins. Mode Change Notice shall have the meaning specified in Section A 204(b) hereof. Notice Parties means the Board, the Paying Agent /Registrar the Insurer the Remarketing Agent (if any) the Tender Agent (if any) the Auction Agent (if any) and all Broker Dealers (if any) Owner means, with respect to any Bond, the Holder of such Bond pursuant to the Thirtieth Ordinance. Purchase Fund means the fund created in Section A -403 hereof Purchase Price means an amount equal to the principal amount of any Bond of a Series purchased on any Mandatory Purchase Date Rate Determination Date means any date on which the interest rate on any Bonds of a Series is required to be determined, being in the case of any Bonds of a Series to be in the Fixed Rate Mode, a Business Day prior to the first day of an Interest Period. Rating Agencies means Fitch, Moody's and S &P or such other nationally recognized securities rating agencies selected by the Board. Record Date means, with respect to Bonds of a Series (i) in the Auction Rate Mode, the opening of business on the Business Day next preceding an Interest Payment Date and (ii) in the Fixed Rate Mode, the fifteenth (15th) day (whether or not a Business Day) of the calendar month next preceding each Interest Payment Date. Redemption Date means the date fixed for redemption of Bonds of a Series subject to redemption in any notice of redemption given in accordance with the terms hereof. Remarketing Agent means the remarketing agent, if any appointed pursuant to Section A 501 of this Appendix A. Remarketing Agreement means the remarketing agreement entered into among the Board, the Cities and the Remarketing Agent with respect to the Bonds of a Series pursuant to which the Remarketing Agent has agreed to remarket the Bonds of such Series on the Mandatory Purchase Date at a price of not less than 100% of the principal amount thereof. DAL504 /71005 Dallas 799703_6.DOC A3 Remarketing Proceeds Account means the account by that name created in Section A -403 hereof. Securities Depository has the meaning set forth in Exhibit I. Series means the series, or subsenes, as the case may be, designation assigned to the Bonds Sinking Fund Installments mean the sinking fund installments for the Bonds as specified in the Officers Pricing Certificate. Tender Agent means the tender agent, if any appointed pursuant to Section A 502 hereof. Tender Agency Agreement means the tender agency agreement entered into among the Board, the Cities and the Tender Agent with respect to the Bonds of a Series. Thirty -Ninth Ordinance means the Thirty -Ninth Supplemental Concurrent Bond Ordinance passed concurrently by the City Councils of the Cities in connection with the issuance of the Bonds. Section A 102 Rules of Construction. (a) This Appendix A constitutes an integral part of the Thirty Ninth Ordinance and, except to the extent provided in the next sentence, has the same force and effect as if set forth in the forepart of the Thirty Ninth Ordinance. In the event of any conflict between this Appendix A and the forepart of the Thirty Ninth Ordinance, the forepart of the Thirty Ninth Ordinance shall control (b) References in the Thirty Ninth Ordinance and in this Appendix A to Articles or Sections with A preceding the number of an Article or Section are to such Article or Section of this Appendix A. (c) To the extent that the Bonds of any Series are issued in or re- designated into two or more subsenes, references in the Thirty Ninth Ordinance and in this Appendix A to the Bonds of a Series shall be deemed to refer to Bonds of such subsenes. (d) Unless otherwise provided in the Thirty Ninth Ordinance and this Appendix A, references in the Thirty Ninth Ordinance and in this Appendix A to `time" shall be deemed to refer to New York, New York time. ARTICLE A II INTEREST RATE MODES, INTEREST RATES AND PAYMENT Section A 201 Denominations Medium Method and Place of Payment of Principal and Interest. The Bonds of each Series shall be issued in Authorized Denominations. While Bonds are in the Auction Rate Mode, accrued and unpaid interest on the Bonds of a Series shall DAL504 /71005 Dallas 799703 6.130C A -4 be due on the Interest Payment Dates and payable by wire transfer of immediately available funds to the account specified by the Owner in a written direction received by the Paying Agent /Registrar on or prior to a Record Date or if no such account number is furnished, by check mailed by the Paying Agent/Registrar to the Owner at the address appearing on the books required to be kept by the Paying Agent/Registrar pursuant to the Thirty Ninth Ordinance. The payment of the Purchase Price of Bonds of a Series on any Mandatory Purchase Date shall be made by wire transfer in immediately available funds by the Tender Agent to the account specified by the Owner in a written direction received by the Tender Agent or if no such account number is furnished, by check mailed by the Tender Agent to the Owner at the address appearing on the books required to be kept by the Paying Agent /Registrar pursuant to the Thirty Ninth Ordinance. Any such direction shall remain in effect until revoked or revised by such Owner by an instrument in writing delivered to the Paying Agent/Registrar or the Tender Agent, as the case may be. Interest on Bonds of a Series that are issued in the Fixed Rate Mode or in the Auction Rate Mode with an Auction Period over 180 days shall be calculated on the basis of a 360 -day year composed of twelve 30 -day months. Interest on Bonds of a Series that are issued in the Auction Rate Mode with an Auction Period of 180 days or less shall be calculated on the basis of a 360 -day year for the actual number of days elapsed to the Interest Payment Date. The interest rates for Bonds of a Series contained in the records of the Paying Agent /Registrar shall be conclusive and binding upon the Board, the Cities, the Remarketing Agent, the Tender Agent, the Auction Agent, all Broker Dealers and the Owners. The Owner of a Bond of a Series shall be paid (and shall be obligated to pay as part of the price paid by such Owner in connection with the remarketing to it of such Bonds) interest thereon for an Interest Period or Auction Period only in the amount that would have accrued thereon at the rate or rates established pursuant to this Appendix A, as applicable. No Bond of a Series may bear interest at an interest rate higher than the Maximum Rate. Section A 202 Determination of Fixed Rate. (a) Fixed Rate. The Fixed Rate to be effective for the Interest Period commencing on any Mode Change Date after which Bonds of a Series will bear interest at a Fixed Rate, shall be determined by the Remarketing Agent. No later than 4 00 p.m. on the Business Day next preceding the Mode Change Date, the Remarketing Agent shall determine the Fixed Rate and shall make the Fixed Rate available by Electronic Means to each other Notice Party The Fixed Rate shall be the minimum rate that, in the sole judgment of the Remarketing Agent, would result in a sale of the Bonds of the Series at a price equal to the principal amount thereof on the Rate Determination Date taking into consideration the duration of the Interest Period. (b) Failure to Establish Fixed Rate. If, for any reason, a Fixed Rate cannot be established on a Mode Change Date, the Bonds of the Series affected shall remain in the Auction Rate Mode for an Auction Period and bearing an Auction Period Rate as provided in Section A 204(c)(5) DAL504 /71005 Dallas 799703 6.130C A5 Section A 203 Determination of Interest Rate and Auction Period During Auction Rate Mode. (a) During any Auction Rate Mode, the Bonds of a Series shall bear interest at the Auction Period Rate for each Auction Period determined as set forth in this Section and Exhibit I hereto The provisions of such Exhibit I constitute an integral part of this Appendix A and the Thirty Ninth Ordinance and have the same force and effect as if set forth in the forepart of this Appendix A or the Thirty Ninth Ordinance. To the extent that the Bonds of any Series are initially issued in an Auction Rate Mode, (1) the initial Auction Period for the Bonds of such Series shall commence from and include the Closing Date and shall expire on and include the initial Auction Date, (ii) the initial Auction Date for the Bonds of such Series (which will be the day of the week on which Auctions will generally be conducted) shall be the date set forth in the Officers Pricing Certificate and (iii) the Auction Period Rate for the initial Auction Period for such Bonds of a Series shall be the interest rate set forth in the Officers Pricing Certificate. After the initial Auction Period, each Auction Period shall be an Auction Period set forth in the Officers Pricing Certificate unless such Auction Period is adjusted or changed to a daily 7 -day 28 -day 35 -day or a Special Auction Period in accordance with Exhibit I hereto For any other Auction Period that is not an initial Auction Period, the Auction Period Rate shall be the rate of interest determined in accordance with Exhibit I. (b) During any Auction Rate Mode, upon the occurrence of a default by the Insurer in the payment of principal, Sinking Fund Installment, interest or premium on any Bond of a Series in the Auction Rate Mode which is unpaid by the Cities after the same shall have become due, whether at maturity upon call for redemption or on an Interest Payment Date, the Paying Agent/Registrar shall immediately give notice of the occurrence of such events to the Auction Agent. (c) (1) Less than all of the Bonds of a Series then subject to a particular Auction Period may be converted to another Auction Period in accordance with Exhibit I, provided, however that in such event such Series shall be re- designated into two or more subsenes for each separate Auction Period with a new CUSIP number for each subsenes (2) If less than all of the Bonds of a Series then subject to a particular Auction Period are converted to another Auction Period in accordance with Exhibit I, the particular Bonds of a Series or portions thereof which are to be converted to a new Auction Period shall be selected by the Auction Agent in its discretion subject to the provisions hereof regarding Authorized Denominations of Bonds of a Series subject to such Mode. (3) All Bonds of any Series shall be in the same Auction Period, except to the extent that the Bonds of any Series are issued in or re- designated into two or more subsenes. If the Bonds of any Series are issued in or re- designated into two or more subsenes, then all Bonds within any subsenes shall be in the same Auction Period. DAL504 /71005 Dallas 799703_6.DOC A -6 Section A 204 Changes in Mode. (a) Changes. The Auction Rate Mode may be changed to the Fixed Rate Mode at the times and in the manner hereinafter provided. Any Bonds of a Series converted to a Fixed Rate Mode shall not be changed to any other Mode. (b) Notice of Intention to Change Mode. The Board shall give written notice (the `Mode Change Notice ") to the Notice Parties of its intention to effect a change in the Mode from the Auction Rate Mode then prevailing to the Fixed Rate Mode, together with the proposed Mode Change Date. Such notice shall be given at least twenty (20) days prior to the Mode Change Date. (c) General Provisions Applym;; to Changes from One Mode to Another (1) The Mode Change Date must be a Business Day that is the Interest Payment Date following the last day of an Auction Period. (2) On or prior to the date the Board provides the notice to the Notice Parties pursuant to Section A 204(b) hereof, the Board shall have received a letter from counsel acceptable to the Board and addressed to the Board (with a copy to all other Notice Parties) to the effect that it expects to be able to deliver a Favorable Opinion of Bond Counsel on the Mode Change Date. (3) No change to the Fixed Rate Mode will become effective unless all conditions precedent thereto have been met and the following items shall have been delivered to the Remarketing Agent by 11 00 a.m. or such later time is ceptable to the Board and the Remarketing Agent, on the Mode Change Date (a) a Favorable Opinion of Bond Counsel dated the Mode Change Date (b) if required, unless a Tender Agency Agreement and Remarketing Agreement is effective, an executed copy of such Tender Agency Agreement and Remarketing Agreement; (c) a certificate of an authorized officer of the Tender Agent to the effect that all of the Bonds of a Series tendered or deemed tendered, unless otherwise redeemed, have been purchased at a price at least equal to the Purchase Price thereof; and (d) evidence that each of the Cities has approved the change to the Fixed Rate Mode. (4) If all conditions to the Mode change are met, the Interest Penod(s) for the Fixed Rate Mode shall commence on the Mode Change Date and the Interest Rate(s) shall be determined by the Remarketing Agent in the manner provided in Section A 202 DAL504/71005 Dallas 799703 6.130C A7 (5) In the event the foregoing conditions have not been satisfied, the Bonds of a Series that are subject to the Mode Change Notice will not be subject to mandatory tender for purchase, will continue to bear interest in the Auction Rate Mode and the Auction Period Rate for the Auction Period commencing on the failed Mode Change Date shall be equal to the Maximum Auction Rate as determined on the Auction Date for such Auction Period and the Auction Period commencing on the failed Mode Change Date shall be a seven -day Auction Period. Thereafter the Auction Period Rate for each succeeding Auction Period shall be determined in accordance with Exhibit I and each Auction Period shall be a seven -day Auction Period until the length of the Auction Period is changed in accordance with Exhibit I. (d) Serial and Term Bonds. The Board may in the notice given pursuant to Section A 204(b) hereof in connection with any change of Bonds of a Series to the Fixed Rate Mode, provide that all or some of such Bonds shall be serial or term Bonds. The total aggregate principal amount of Bonds due on any date, whether in a Fixed Rate Mode or an Auction Rate Mode, shall be equal to the Sinking Fund Installment specified for such date, and the remaining Sinking Fund Installments shall continue to be sinking fund installments for the Bonds of the Series due on the Stated Maturity Date, unless the Board specifies otherwise in the notice. The interest rate for serial or term Bonds maturing on a particular date may be different from the interest rate or rates established for other Bonds. (e) Partial Mode Changes and Subsenes Designations. (1) Less than all of the Bonds of a Series then subject to the Auction Rate Mode may be converted to the Fixed Rate Mode pursuant to this Section, provided, however that in such event such Series shall be re- designated into two or more Subsenes for each separate Mode with a new CUSIP number for each subsenes. (2) If less than all of the Bonds of a Series then subject to the Auction Rate Mode are converted to the Fixed Rate Mode pursuant to this Section, the particular Bonds of a Series or portions thereof which are to be converted to the Fixed Rate Mode shall be selected by the Board in its discretion subject to the provisions hereof regarding Authorized Denominations of Bonds of a Series subject to such Fixed Rate Mode. ARTICLE A III REDEMPTION OF BONDS Section A 301 Optional Redemption. (a) Bonds of a Series in the Auction Rate Mode shall be subject to redemption at the option of the Board, in whole or in part, on any Interest Payment Date immediately following an Auction Period, at the Redemption Price equal to the principal amount thereof, plus accrued interest to the Redemption Date; provided, however that in the event of a partial redemption of Bonds of a Series in an Auction Rate Mode, the aggregate principal amount of Bonds of a Series in an Auction Rate Mode which will remain outstanding shall be equal to or more than $10 000 000 unless otherwise consented to by each Broker Dealer To the extent the Bonds that are in the Auction Rate .Mode are subject to optional redemption, the Board, at least 20 days before the redemption date, unless a shorter period shall be satisfactory to the Paying DAL504 /71005 Dallas 799703 6.130C W. Agent/Registrar shall notify the Paying Agent /Registrar the Auction Agent and any Broker Dealers of such redemption date and of the principal amount of Bonds to be redeemed. (b) Bonds of a Series in the Fixed Rate Mode are subject to redemption at the option of the Board, in whole or in part, on any date following the `No Call Period set forth below at the Redemption Prices set forth below OPTIONAL REDEMPTION DURING FIXED RATE MODE Duration of Interest Period in Fixed Rate Mode Greater than or equal to 10 years Greater than or equal to 8 years and less than 10 years Greater than or equal to 4 years and less than 8 years Less than 4 years No Call Period (commencing on the date of commencement of the Fixed Rate Mode Interest Period) Redemption Price 8 years 100% 6 years 100% 3 years 100% Bonds are subject to optional 100% redemption at any time (c) The Board on behalf of the Cities may in connection with a change to a Fixed Rate Mode, alter its rights as described above in Section A 301(b) or in Article IV of the Thirty Ninth Ordinance to redeem any Bonds of such Series on and after the Mode Change Date without the consent of Owners of the Bonds of such Series, provided, that notice describing the alteration shall be submitted to the Tender Agent and the Remarketing Agent, together with a Favorable Opinion of Bond Counsel, addressed to them Section A 302 Redemption from Sinking Fund Installments. To the extent that the Officers Pricing Certificate provides that Bonds of a Series are subject to redemption from sinking fund installments, the date on which a Sinking Fund Installment shall be due when the Bonds of such Series are in an Auction Rate Mode shall be the dates set forth in the Officers Pricing Certificate, or if any such date is not an Interest Payment Date, the Interest Payment Date immediately succeeding such date. Section A 303 Notice of Redemption of Bonds in Auction Rate Mode. (a) The Paying Agent/Registrar shall give notice of any redemption of Bonds that are in the Auction Rate Mode by sending notice by first class United States mail, postage prepaid, not less than 15 days before the date fixed for redemption, to the Owner of each Bond (or part hereof) to be redeemed, at the address shown on the Obligation Register (b) The notice shall state the redemption date, the redemption price, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds outstanding are to be redeemed, an identification of the Bonds or portions thereof to be redeemed. DAL504 /71005 Dallas 799703_6.DOC A9 (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. ARTICLE A IV PURCHASE OF BONDS Section A -401 Mandatory Purchase on Any Mode Change Date. The Bonds of a Series to be changed to the Fixed Rate Mode from the Auction Rate Mode are subject to mandatory tender for purchase on the-Mode Change Date at the Purchase Price. Section A -402 Notice of Mandatory Tender for Purchase (a) The Paying Agent/Registrar shall, at least fifteen (15) days prior to any Mode Change Date, give notice of the mandatory tender for purchase of such Bonds that is to occur on such date. (b) Notice of any mandatory tender of Bonds of a Series shall state that such Bonds are to be purchased pursuant to Section A -401 and shall be provided by the Paying Agent /Registrar or caused to be provided by the Paying Agent/Registrar by mailing a copy of the notice of mandatory tender by first -class mail to each Owner of Bonds of the Series at the respective addresses shown on the registry books Each notice of mandatory tender for purchase shall identify the reason for the mandatory tender for purchase, and specify the Mandatory Purchase Date, the Purchase Price, the place and manner of payment, that the Owner has no right to retain such Bonds and that no further interest will accrue from and after the Mandatory Purchase Date to such Owner Each notice of mandatory nder fur purchase caused by change in the Mode applicable to the Bonds of a Series shall in addition specify the conditions that have to be satisfied pursuant to Section A 204 hereof in order for the Fixed Rate Mode to become effective and the consequences that the failure to satisfy any of such conditions would have. The Paying Agent/Registrar shall give a copy of any notice of mandatory tender given by it to the other Notice Parties. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner of any Bond receives the notice, and the failure of such Owner to receive any such notice shall not affect the validity of the action described in such notice. Failure by the Paying Agent/Registrar to give a notice as provided in this Section shall not affect the obligation of the Tender Agent to purchase the Bonds of a Series subject to mandatory tender for purchase on the Mandatory Purchase Date. Section A -403 Purchase Fund. (a) Funds and Accounts. There is hereby established, and there shall be maintained with the Tender Agent for the Bonds of each Series, a separate fund to be known as the `Purchase Fund. The Tender Agent shall further establish a separate account within such Purchase Fund to be known as the `Remarketing Proceeds Account. To the extent that the Bonds of a Series are re- designated into two or more subsenes, the Tender Agent shall establish and maintain a separate Purchase Fund with separate accounts therein for the Bonds of each such subsenes. DAL504/71005 Dallas 799703 6.DOC A10 (b) Remarketing Proceeds Account. Upon receipt of the proceeds of a remarketing of Bonds of a Series on a Mandatory Purchase Date, the Tender Agent shall deposit such proceeds in the related Remarketing Proceeds Account for application to the payment of the Purchase Price of such Bonds (c) No Investment; Amounts Applied Solely to Related Series. Amounts held by the Tender Agent in the Remarketing Proceeds Account relating to the Bonds of a Series shall not be deemed as Pledged Funds or Pledged Revenues under the Controlling Ordinances and shall be held uninvested and separate and apart from all other funds and accounts. (d) Payment of Purchase Price by Tender Agent. The Tender Agent shall pay the Purchase Price of Bonds of a Series to their Owners from the moneys in the Remarketing Proceeds Account in accordance with this Appendix A by 3.00 p.m. on any Mandatory Purchase Date. Section A -404 Remarketmiz of Bonds of a Series, Notices. (a) Remarketing of Bonds of a Series. The Remarketing Agent for Bonds of a Series shall offer for sale and use its best efforts to find purchasers for all Bonds required to be tendered for purchase. (b) Notice of Remarketing; Registration Instructions, New Bonds. (i) The Remarketing Agent shall notify the Tender Agent by Electronic Means not later than 11 45 a.m. on the Mandatory Purchase Date of the registration instructions as may be necessary to re- register Bonds, and (u) Unless otherwise permitted by the Securities Depository and the book entry-only system applicable to a Series of Bonds, the Tender Agent shall authenticate and have available for delivery to the Remarketing Agent prior to 12 30 p.m. on the Mandatory Tender Date new Bonds of the Series for the respective purchasers thereof. (c) Transfer of Funds. The Remarketing Agent shall at or before 11 45 a.m. on the Mandatory Purchase Date (x) notify the Board and the Tender Agent by Electronic Means of the amount of tendered Bonds of the Series that were not successfully remarketed, and (y) confirm to the Board and the Tender Agent the transfer of the Purchase Price of remarketed Bonds of the Series to the Tender Agent in immediately available funds at or before 12 00 noon, such confirmation to include the pertinent Fed Wire reference number Section A -405 Source of Funds for Purchase of Bonds of a Series. On or before the close of business on the Mandatory Purchase Date with respect to Bonds of a Series, the Tender Agent shall purchase such Bonds from the Owners at the Purchase Price. Unless otherwise provided in a certificate of an Authorized Officer delivered to the Paying Agent/Registrar the Insurer the Tender Agent and the Remarketing Agent on a Mandatory Purchase Date, funds for the payment of such Purchase Price shall be derived solely from the immediately available funds on deposit In the Remarketing Proceeds Account with respect to Bonds of such Series. DAL504 /71005 Dallas 799703 6.130C A 11 Notwithstanding the foregoing, unless otherwise provided in a certificate of an Authorized Officer delivered to the Tender Agent and the Remarketing Agent on a Mandatory Purchase Date, the Board shall have the option, but shall not be obligated, to transfer immediately available funds to the Tender Agent for the payment of the Purchase Price of any Bond that is tendered or deemed tendered for purchase in accordance with this Appendix A and the Purchase Price of which is not paid on the Mandatory Purchase Date from the source identified above. None of the Board, the Cities, the Tender Agent nor the Remarketing Agent shall have any liability or obligation to pay or except from the source identified above, make available such Purchase Price. Unless otherwise provided in a certificate of an Authorized Officer delivered to the Paying Agent/Registrar and Tender Agent on a Mandatory Purchase Date, the failure to pay any such Purchase Price for Bonds of a Series that have been tendered or deemed tendered for purchase from the source identified above shall not constitute an Event of Default under the Thirty Ninth Ordinance or the Controlling Ordinances and in the case of such failure such Bonds shall not be purchased and shall remain in the Auction Rate Mode for an Auction Period and bearing an Auction Period Rate as provided in Section A 204(c)(5) Section A -406 Delivery of Bonds. Except as otherwise required or permitted by the book - entry -only system of the Securities Depository the Bonds of a Series sold by the Remarketing Agent pursuant to Section A -404 shall be delivered by the Remarketing Agent to the purchasers of those Bonds by 3 00 p.m. on the Mandatory Purchase Date. Section A -407 Delivery and Payment for Purchased Bonds of a Series. Undelivered Bonds. Except as otherwise required or permitted by the book -entry -only system of the Securities Depository the Bonds of a Series purchased pursuant to this Article shall be delivered by the Owners thereof (with all necessary endorsements) at or before 12 00 noon on the Mandatory Purchase Date, at the office of the Tender Agent in New York, New York. Payment of the Purchase Price shall be made by wire transfer in immediately available funds by the Tender Agent by the close of business on the Mandatory Purchase Date, or if the Owner has not provided or caused to be provided wire transfer' instructions, by check mailed to the Owner at the address appearing in the books required to be kept by the Paying Agent /Registrar pursuant to the Thirty Ninth Ordinance. If Bonds of a Series to be purchased are not delivered by the Owners to the Tender Agent by 12 00 noon on the Mandatory Purchase Date, the Tender Agent shall hold any funds received for the purchase of those Bonds in trust in a separate account and shall pay such funds to the former Owners upon presentation of the Bonds subject to tender Any such amounts shall be held uninvested. Such undelivered Bonds shall be deemed tendered and cease to accrue interest as to the former Owners on the Mandatory Purchase Date, and moneys representing the Purchase Price shall be available against delivery of those Bonds at the Principal Office of the Tender Agent; provided, however that any funds which shall be so held by the Tender Agent and which remain unclaimed by the former Owner of any such Bond not presented for purchase for a period of three years after delivery of such funds to the Tender Agent, shall to the extent permitted by law upon request in writing by the Board and the furnishing of security or indemnity to the Tender Agent s satisfaction, be paid to the Board free of any trust or lien and thereafter the former Owner of such Bond shall look only to the Board and then only to the extent of the amounts so received by the Board without any interest thereon and the Tender Agent shall have no further responsibility with respect to such moneys or payment of the Purchase Price of such Bonds. The Tender Agent shall authenticate a replacement Bond of a DAL504 /71005 Dallas 799703_6.DOC A 12 Series for any undelivered Bond of such Series which may then be remarketed by the Remarketing Agent. ARTICLE A V AGENTS Section A 501 Remarketing_ Agent. The Board shall appoint and employ the services of a Remarketing Agent, which is reasonably acceptable to the Insurer prior to any Mode Change Date while the Bonds of any Series are in the Auction Rate Mode. Any Remarketing Agent may at any time resign and be discharged of the duties and obligations created by the Thirty Ninth Ordinance and the Remarketing Agreement by giving notice to the Board and the Tender Agent in accordance with the Remarketing Agreement. Any Remarketing Agent may be removed at any time, at the direction of the Board, by an instrument filed with the related Remarketing Agent and the related Tender Agent in accordance with the Remarketing Agreement. Any Remarketing Agent shall be selected by the Board and shall be a member of the National Association of Securities Dealers, Inc. shall have a capitalization of at least fifteen million dollars ($15 000 000) and shall be authorized by law to perform all the duties set forth herein. The Board s execution of a Certificate setting forth the effective date of the appointment of a Remarketing Agent and the name, address and telephone number of such Remarketing Agent shall be conclusive evidence that (1) such Remarketing Agent has been appointed and is qualified to act as Remarketing Agent under the terms of the Thirty Ninth Ordinance and (ii) if applicable, the predecessor Remarketing Agent has been removed in accordance with the provisions of the Thirty -Ninth Ordinance and the Remarketing Agreement. Each Remarketing Agent shall keep such books and records as shall be consistent with prudent industry practice and make such books and records available for inspection by the Board at all reasonable times. Section A 502 Tender Agent. The Board shall appoint and employ the services of the Tender Agent prior to any Mode Change Date while the Bonds of any Series are in the Auction Rate Mode. The Tender Agent may at any time resign and be discharged of the duties and obligations created by the Thirty -Ninth Ordinance and the Tender Agency Agreement by giving notice to the Board in accordance with the Tender Agency Agreement, provided that a successor Tender Agent shall be appointed and acting hereunder on or prior to the effective date of such resignation or discharge. The Tender Agent may be removed at any time, at the direction of the Board, by an instrument filed with the related Remarketing Agent and the Tender Agent in accordance with the Tender Agency Agreement, provided that a successor Tender Agent shall be appointed and acting hereunder on or prior to the effective date of such removal. The Tender Agent shall be selected by the Board and shall be a bank or other financial institution that satisfies the qualifications determined by the Board and set forth in any applicable provisions of law The Board s execution of a Certificate setting forth the effective date of the DAL504 /71005 Dallas 799703_6.130C A 13 appointment of a Tender Agent and the name, address and telephone number of such Tender Agent shall be conclusive evidence that (i) such Tender Agent has been appointed and is qualified to act as Tender Agent under the terms hereof and (ii) if applicable, the predecessor Tender Agent has been removed in accordance with the provisions hereof. The Tender Agent shall keep such books and records as shall be consistent with prudent industry practice and make such books and records available for inspection by the Board, at all reasonable times. Section A 503 Auction Agent. The Board shall appoint and employ the services of an Auction Agent while the Bonds of any Series are in the Auction Rate Mode. The Board shall have the right to remove the Auction Agent as provided in the Auction Agreement. Section A 504 Broker Dealers. The Board shall appoint and employ the services of one or more Broker Dealers, which are reasonably acceptable to the Insurer for the Bonds of each Series that are in the Auction Rate Mode. The Board shall have the right to remove any Broker Dealer as provided in the applicable Broker Dealer Agreement. ARTICLE A VI MISCELLANEOUS Section A -601 Modifications or Amendments to the Thirty Ninth Ordinance. The provisions of the Controlling Ordinances, any Outstanding Ordinance, and the Thirty Ninth Ordinance, including, without limitation, the provisions of the Officers Pricing Certificate and this Appendix A, may be modified or amended by obtaining the consent or deemed consent of the Owners of all Outstanding Bonds of such Series during an Auction Rate Mode, in accordance with Section 2.07(b) of Exhibit I hereto Section A -602 Notices. (a) Notices to Owners. All notices required to be given to Owners of Bonds of a Series, unless otherwise expressly provided, shall be given by first class mail, postage prepaid. (b) Notices to Rating Agencies The Board shall give written notice to the Rating Agencies of any of the following events (1) any material changes to the Thirty Ninth Ordinance that affect the Bonds (2) a conversion to the Fixed Rate Mode; and (3) any redemption, defeasance or mandatory tender of all the Outstanding Bonds. (c) Demands, Requests. All notices, demands and requests to be given to or made hereunder by the Board, the Tender Agent, the Remarketing Agents, the Auction Agent, the Broker Dealers or the Rating Agencies shall, unless otherwise expressly provided herein, be given or made in writing and shall be deemed to be properly given or made if by United States DAL504 /71005 Dallas 799703_6.DOC A14 registered or certified mail, return receipt requested, postage prepaid, addressed as set forth below Notices, demands and requests that may be given by Electronic Means may be sent to the telephone or fax numbers, as applicable, set forth below (i) As to the Board. The address, phone number and fax number specified in the Officers Pricing Certificate. (ii) As to the Tender Agent: The address, phone number and fax number specified in the Tender Agency Agreement. (iii) As to the Remarketing Agent(s) The address, phone number and fax number specified In the related Remarketing Agreement. (iv) As to the Auction Agent: (v) As to the Broker Dealer(s) (vi) As to the Insurer- or to such other address as is provided by the entity DAL504 /71005 Dallas 799703 6.130C The address, phone number and fax number specified in the Auction Agreement. The address, phone number and fax number specified in the related Broker Dealer Agreement. The address specified in the Auction Agreement. A15 EXHIBIT I TO PROVISIONS FOR BI MODAL OBLIGATIONS AUCTION RATE MODE PROVISIONS DAL504 /71005 Dallas 799711 6.DOC TABLE OF CONTENTS Page No. ARTICLE I Definitions Section 101 Definitions I 1 Section 102 Rules of Construction .19 ARTICLE II Auction Procedures Section 2 01 Orders by Existing Owners and Potential Owners .19 Section 2 02 Submission of Orders by Broker Dealers to Auction Agent. .I 12 Section 2 03 Determination of Auction Period Rate .I 14 Section 2 04 Allocation of Bonds of a Series. I 15 Section 2 05 Notice of Auction Period Rate .I 18 Section 2 06 Index I 19 Section 2 07 Miscellaneous Provisions Regarding Auctions I 19 Section 2 08 Changes in Auction Period or Auction Date .120 ARTICLE III Auction Agent Section 3 01 Auction Agent 122 Sect n7 fl „�i noflnn(� ni Ailr inn Agent; Resignation, Removal I 22 ion 3 VL �lA al i fi V at'. V 11J V t �u V tl 011 DAL504 /71005 Dallas 799711 6.130C (I i) EXHIBIT I AUCTION RATE MODE PROVISIONS ARTICLE I DEFINITIONS Section 101 Definitions In addition to the words and terms elsewhere defined, or whose defined meanings are incorporated by reference, in the Provisions for Bi Modal Obligations (hereinafter referred to as Appendix A') to which this Exhibit I is attached, the following words and terms as used in this Exhibit I and elsewhere in Appendix A have the following meanings with respect to Bonds of a Series in an Auction Rate Mode unless the context or use indicates another or different meaning or intent: Agent Member means a member of, or participant in, the Securities Depository who shall act on behalf of a Bidder All Hold Rate means, as of any Auction Date, 45% of the Index in effect on such Auction Date. Auction means each periodic implementation of the Auction Procedures Auction Agent means initially Deutsche Bank Trust Company Americas, and thereafter the auctioneer or any successor appointed in accordance with Section 3 01 or 3 02 of this Exhibit I. Auction Agreement means an agreement among the Cities, the Board, the Paying Agent /Registrar and the Auction Agent pursuant to which the Auction Agent agrees to follow the procedures specified in this Exhibit I, with respect to the Bonds of a Series in an Auction Rate Mode, as such agreement may from time to time be amended or supplemented. Auction Date means during any period in which the Auction Procedures are not suspended in accordance with the provisions hereof (a) if the Bonds of a Series are in a daily Auction Period, each Business Day (b) if the Bonds of a Series are in a Special Auction Period, the last Business Day of the Special Auction Period, and (c) if the Bonds of a Series are in any other Auction Period, the Business Day next preceding each Interest Payment Date for such Bonds of a Series (whether or not an Auction shall be conducted on such date) provided, however that the last Auction Date with respect to the Bonds of any Series in an Auction Period other than a daily Auction Period or Special Auction Period shall be the earlier of (i) the Business Day next preceding the Interest Payment Date next preceding the Mode Change Date for such Bonds of a Series, and (ii) the Business Day next preceding the Interest Payment Date next preceding the Stated Maturity Date for such Bonds, and provided, further that if the Bonds of a Series are in a daily Auction Period, the last DAL504 /71005 Dallas 799711_6.DOC I1 Auction Date shall be the earlier of (x) the Business Day next preceding the Mode Change Date for such Bonds, and (y) the Business Day next preceding the Stated Maturity Date for the Bonds of a Series. The last Business Day of a Special Auction Period shall be the Auction Date for the Auction Period which begins on the next succeeding Business Day if any On the Business Day preceding the conversion from a daily Auction Period to another Auction Period, there shall be two Auctions, one for the last daily Auction Period and one for the first Auction Period following the conversion. Auction Multiple means, as of any Auction Date, the percentage of Index (in effect on such Auction Date) determined as set forth below based on the Prevailing Rating of the Bonds of such Series in effect at the close of business on the Business Day immediately preceding such Auction Date, Prevailing Rating AAA/AAA/Aaa AA/AA/Aa A/A/A BBB /BBB /Baa Below BBB /BBB /Baa Auction Period means Percentage of Index 125% 150% 200% 250% 275% (a) with respect to Bonds of a Series in a daily Auction Period, a period beginning on each Business Day and extending to but not including the next succeeding Business Day- (b) with respect to Bonds of a Series in a seven day Auction Period and with Auctions generally conducted on (i) Fridays, a period of generally seven days beginning on a Monday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on the Sunday thereafter (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (u) Mondays, a period of generally seven days beginning on a Tuesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Monday) and ending on the Monday thereafter (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (iii) Tuesdays, a period of generally seven days beginning on a Wednesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Tuesday) and ending on the Tuesday thereafter (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (iv) Wednesdays, a period of generally seven days beginning on a Thursday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Wednesday) and ending on the Wednesday thereafter (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), and (v) Thursdays, a period of generally seven days beginning on a Friday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Thursday) and ending on the DAL504 /71005 Dallas 799711 6.DOC 12 Thursday thereafter (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (c) with respect to Bonds of a Series in a 28 -day Auction Period and with Auctions generally conducted on (i) Fridays, a period of generally 28 days beginning on a Monday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on the fourth Sunday thereafter (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) Mondays, a period of generally 28 days beginning on a Tuesday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Monday) and ending on the fourth Monday thereafter (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iii) Tuesdays, a period of generally 28 days beginning on a Wednesday '(or the last day of the prior Auction Period if the prior Auction Period does not end on a Tuesday) and ending on the fourth Tuesday thereafter (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iv) Wednesdays, a period of generally 28 days beginning on a Thursday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Wednesday) and ending on the fourth Wednesday thereafter (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), and (v) Thursdays, a period of generally 28 days beginning on a Friday (or the last day of the prior Auction Period if the prior Auction Period does not end on a Thursday) and ending on the fourth Thursday thereafter (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (d) with respect to Bonds of a Series in a 35 -day Auction Period and with Auctions generally conducted on (i) Fridays, a penod of generally 35 days beginning on a Monday (or the last day of the prior Auction Period if the prior Auction Period does not end on Sunday) and ending on the fifth Sunday thereafter (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) Mondays, a period of generally 35 days beginning on a Tuesday (or the last day of the prior Auction Period if the prior Auction Period does not end on Monday) and ending on the fifth Monday thereafter (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iii) Tuesdays, a period of generally 35 days beginning on a Wednesday (or the last day of the prior Auction Period if the prior Auction Period does not end on Tuesday) and ending on the fifth Tuesday thereafter (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (iv) Wednesdays, a period of generally 35 days beginning on a Thursday (or the last day of the prior Auction Period if the prior Auction Period does not end on Wednesday) and ending on the fifth Wednesday thereafter (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), and (v) Thursdays, a period of generally 35 days beginning on a Friday (or the last day of the prior Auction Period if the prior Auction Period does not end on Thursday) and ending on the fifth Thursday thereafter (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) and DAL504/71005 Dallas 799711 6.DOC I3 (e) a Special Auction Period, provided, however, that (a) if there is a conversion of Bonds of a Series with Auctions generally conducted on Fridays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i e. the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Sunday (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Sunday (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (1 e. the Interest Payment Date for the prior Auction Period) and shall end on the Sunday (unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, (b) if there is a conversion of Bonds of a Series with Auctions generally conducted on Mondays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Monday (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Monday (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Monday (unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, (c) if there is a conversion of Bonds of a Series with Auctions generally conducted on Tuesdays (1) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Tuesday (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Tuesday (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i e the DAL504/71005 Dallas 799711 6.DOC I -4 Interest Payment Date for the prior Auction Period) and shall end on the Tuesday (unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, (d) if there is a conversion of Bonds of a Series with Auctions generally conducted on Wednesdays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i e the Interest Payment Date for the prior Auction Period) and shall end on the next succeeding Wednesday (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i e. the Interest Payment Date for the prior Auction Period) and shall end on the Wednesday (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i e. the Interest Payment Date for the prior Auction Period) and shall end on the Wednesday (unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, and (e) if there is a conversion of Bonds of a Series with Auctions generally conducted on Thursdays (i) from a daily Auction Period to a seven -day Auction Period, the next Auction Period shall begin on the date of the conversion (i e. the Interest Payment Date for the prior Auction Period) and shall end on the next. succeeding Thursday (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day), (ii) from a daily Auction Period to a 28 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i e. the Interest Payment Date for the prior Auction Period) and shall end on the Thursday (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 21 days but not more than 28 days from such date of conversion, and (iii) from a daily Auction Period to a 35 -day Auction Period, the next Auction Period shall begin on the date of the conversion (i.e. the Interest Payment Date for the prior Auction Period) and shall end on the Thursday (unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day) which is more than 28 days but no more than 35 days from such date of conversion, provided further, however, that any Auction Period that is greater than 35 days may be extended as provided in paragraph (d) of Section 2 03 of this Exhibit I. Auction Period Rate means with respect to Bonds of each Series, the rate of interest to be borne by the Bonds of such Series during each Auction Period determined in accordance with Section 2 03 of this Exhibit I, provided, however in no event may the Auction Period Rate or the Auction Rate exceed the Maximum Rate. Auction Procedures means the procedures for conducting Auctions for Bonds of a Series in an Auction Rate Mode set forth in this Exhibit I. DAL504 /71005 Dallas 799711 6.DOC 1 5 Auction Rate means for each series of Bonds for each Auction Period, (i) if Sufficient Clearing Bids exist, the Winning Bid Rate, provided, however if all of such Bonds of a Series are the subject of Submitted Hold Orders, the All Hold Rate with respect to such Bonds and (ii) if Sufficient Clearing Bids do not exist, the Maximum Auction Rate with respect to such Bonds. Available Bonds means for each series of Bonds on each Auction Date, the aggregate principal amount of such Bonds that are not the subject of Submitted Hold Orders Bid has the meaning specified in subsection (a) of Section 2.01 of this Exhibit I. Bidder means each Existing Owner and Potential Owner who places an Order Broker Dealer means, initially RBC Dam Rauscher Inc. and thereafter any entity that is permitted by law to perform the function required of a Broker Dealer described in this Exhibit that is a member of, or a direct participant in, the Securities Depository that has been selected by the Board, and that is a party to a Broker Dealer Agreement with the Auction Agent. Broker Dealer Agreement means an agreement among the Auction Agent, the Board, the Cities and a Broker Dealer pursuant to which such Broker Dealer agrees to follow the procedures described in this Exhibit I, as such agreement may from time to time be amended or supplemented. Default Rate means, in respect of any Auction Period other than a daily Auction Period, a per annum rate equal to three hundred percent (300 %) of the Index determined on the Auction Date next preceding the first day of such Auction Period or in the case of Bonds of a Series in a daily Auction Period, three hundred percent (300 %) of the Index determined on the Auction Date which was the first day of such Auction Period, provided, however the Defaul Rate shall not exceed the Maximum Rate. Existing Owner means (a) with respect to and for the purpose of dealing with the Auction Agent in connection with an Auction, a person who is a Broker Dealer and (b) with respect to and for the purpose of dealing with a Broker Dealer in connection with an Auction, a person who is a beneficial owner of Bonds. Fitch means Fitch Ratings, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency `Fitch shall be deemed to refer to any other nationally recognized securities rating agency other than Moody's or S &P designated by an Authorized Officer Hold Order has the meaning specified in subsection (a) of Section 2 01 of this Exhibit I. Index shall have the meaning specified,in Section 2 06 of this Exhibit I. Interest Payment Date means (a) when used with respect to any Auction Period (including the initial Auction Period commencing on and including the Closing Date, and expiring on and including the initial DAL504 /71005 Dallas 799711 6.DOC I -6 Auction Date specified in the Officers Pricing Certificate) other than a dally Auction Period or a Special Auction Period, the Business Day immediately following such Auction Period, (b) when used with respect to a daily Auction Period, the first Business Day of the month immediately succeeding such Auction Period, and (c) when used with respect to a Special Auction Period, (A) in the case of Bonds of a Series with Auctions generally conducted on Fridays, each thirteenth Monday after the first day of such Special Auction Period or the next Business Day if such Monday is not a Business Day and on the Business Day immediately following such Special Auction Period, (B) in the case of Bonds of a Series with Auctions generally conducted on Mondays, each thirteenth Tuesday after the first day of such Special Auction Period or the next Business Day if such Tuesday is not a Business Day and on the Business Day immediately following such Special Auction Period, (C) in the case of Bonds of a Series with Auctions generally conducted on Tuesdays, each thirteenth Wednesday after the first day of such Special Auction Period or the next Business Day if such Wednesday is not a Business Day and on the Business Day immediately following such Special Auction Period, (D) in the case of Bonds of a Series with Auctions conducted on Wednesdays, each thirteenth Thursday after the first day of such Special Auction Period or the next Business Day if such Thursday is not a Business Day and on the Business Day immediately following such Special Auction Period and (E) in the case of Bonds of a Series with Auctions generally conducted on Thursdays, each thirteenth Friday after the first day of such Special Auction Period or the next Business Day if such Friday is not a Business Day and on the Business Day immediately following such Special Auction Period. Maximum Auction Rate means as of any Auction Date, the product of the Index multiplied by the Auction Multiple; provided, however that in no event shall the Maximum Auction Rate exceed the Maximum Rate, anything herein to the contrary notwithstanding. Moody's means Moody's Investors Service, Inc a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency ` Moody's" shall be deemed to refer to any other nationally recognized securities rating agency other than Fitch or S &P designated by an Authorized Officer Order means a Hold Order Bid or Sell Order Potential Owner means any Person, including any Existing Owner who may be interested in acquiring a beneficial interest in the Bonds of a Series in addition to the Bonds currently owned by such Person, if any Prevailing Rating means (a) AAA/AAA /Aaa, if the Bonds of a Series shall have a rating of AAA or better by S &P and Fitch and a rating of Aaa or better by Moody's, (b) if not AAA/AAA/Aaa, AA/AA /Aa if the Bonds of a Series shall have a rating of AA or better by S &P and Fitch and a rating of Aa3 or better by Moody's, (c) if not AAA /AAA /Aaa or AA/AA /Aa, A/A/A if the Bonds of a Series shall have a rating of A or better by S &P and Fitch and a rating of A3 or better by Moody's, (d) if not AAA/AAA/Aaa, AA/AA/Aa or A/A/A, BBB /BBB /Baa if the Bonds of a Series shall have a rating of BBB- or better by S &P and Fitch and a rating of DAL504 /71005 Dallas 799711 6.DOC 17 Baa3 or better by Moody's, and (e) if not AAA/AAA /Aaa, AA /AA/Aa, A /A/A or BBB /BBB /Baa, then below BBB /BBB /Baa, whether or not the Bonds of a Series are rated by any Rating Agency For purposes of this definition, S &P s and Fitch s rating categories of AAA, AA A and `BBB- and Moody's rating categories of Aaa, Aa3 A3 and Baa3 shall be deemed to refer to and include the respective rating categories correlative thereto in the event that any such Rating Agencies shall have changed or modified their generic rating categories or if any successor thereto appointed in accordance with the definitions thereof shall use different rating categories If the Bonds of a Series are not rated by a Rating Agency the requirement of a rating by such Rating Agency shall be disregarded. If the ratings for the Bonds of a Series are split between the foregoing categories, the lowest rating shall determine the Prevailing Rating. Principal Office means, with respect to the Auction Agent, the office thereof designated in the Auction Agreement as the office of the Auction Agent to which notices, requests or communications should be sent. Securities Depository means The Depository Trust Company and its successors and assigns or any other securities depository selected by the Board which agrees to follow the procedures required to be followed by such securities depository in connection with the Bonds of a Series. Sell Order has the meaning specified m subsection (a) of Section 2 01 of this Exhibit I. S &P means Standard & Poor's Ratings Services, a Division of The McGraw Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency 'S &P" shall be deemed to refer to any other nationally recognized securities rating agency other than Fitch or Moody's, designated by an Authorized Officer Special Auction Period means any period of more than 180 but less than 365 days which begins on an Interest Payment Date and ends (i) in the case of Bonds of a Series with Auctions generally conducted on Fridays, on a Sunday unless such Sunday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day (ii) in the case of Bonds of a Series with Auctions generally conducted on Mondays, on a Monday unless such Monday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day (iii) in the case of Bonds of a Series with Auctions generally conducted on Tuesdays, on a Tuesday unless such Tuesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day (iv) in the case of Bonds of a Series with Auctions generally conducted on 'Wednesdays, on a Wednesday unless such Wednesday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day and (v) in the case of Bonds of a Series with Auctions generally conducted on Thursdays, on a Thursday unless such Thursday is not followed by a Business Day in which case on the next succeeding day which is followed by a Business Day DAL504 /71005 Dallas 799711 6.130C Vc Submission Deadline means 1 00 p.m. New York City time, on each Auction Date for Bonds of a Series not in a daily Auction Period and 11 00 a.m. New York City time, on each Auction Date for Bonds of a Series in a daily Auction Period, or such other time on such date as shall be specified from time to time by the Auction Agent pursuant to the Auction Agreement as the time by which Broker Dealers are required to submit Orders to the Auction Agent. Submitted Bid has the meaning specified in subsection (b) of Section 2 03 of this Exhibit I. Submitted Hold Order has the meaning specified in subsection (b) of Section 2 03 of this Exhibit I. Submitted Order has the meaning specified in subsection (b) of Section 2.03 of this Exhibit I. Submitted Sell Order has the meaning specified in subsection (b) of Section 2 03 of this Exhibit I. Sufficient Clearing Bids means with respect to Bonds of a Series, an Auction for which the aggregate principal amount of Bonds of such Series that are the subject of Submitted Bids by Potential Owners specifying one or more rates not higher than the Maximum Auction Rate is not less than the aggregate principal amount of Bonds of such Series that are the subject of Submitted Sell Orders and of Submitted Bids by Existing Owners specifying rates higher than the Maximum Auction Rate. Winning Bid Rate means with respect to Bonds of a Series the lowest rate specified in any Submitted Bid for such Series which a selected y Auction Agent as the Auction Period Rate would cause the aggregate principal amount of Bonds of such Series that are the subject of Submitted Bids specifying a rate not greater than such rate to be not less than the aggregate principal amount of Available Bonds of such series. Section 1.02 Rules of Construction. (a) This Exhibit I constitutes an integral part of the Appendix A and, except to the extent provided in the next sentence, has the same force and effect as if set forth in Appendix A. In the event of any conflict between this Exhibit I and Appendix A, Appendix A shall control. (b) References in this Exhibit I to Articles or Sections are to such Article or Section of this Exhibit I. ARTICLE II AUCTION PROCEDURES Section 2.01 Orders by Existiny- Owners and Potential Owners (a) Prior to the Submission Deadline on each Auction Date DAL504 /71005 Dallas 799711_6.DOC I9 (i) each Existing Owner may submit to a Broker Dealer in writing or by such other method as shall be reasonably acceptable to such Broker Dealer information as to (A) the principal amount of Bonds of a Series, if any held by such Existing Owner which such Existing Owner irrevocably commits to continue to hold for the next succeeding Auction Period without regard to the rate determined by the Auction Procedures for such Auction Period, (B) the principal amount of Bonds of a Series, if any held by such Existing Owner which such Existing Owner irrevocably commits to continue to hold for the next succeeding Auction Period if the rate determined by the Auction Procedures for such Auction Period shall not be less than the rate per annum then specified by such Existing Owner (and which such Existing Owner irrevocably offers to sell on the next succeeding Interest Payment Date (or the same day in the case of a daily Auction Period) if the rate determined by the Auction Procedures for the next succeeding Auction Period shall be less than the rate per annum then specified by such Existing Owner), and /or (C) the principal amount of Bonds of a Series, if any held by such existing Owner which such Existing Owner irrevocably offers to sell on the next succeeding Interest Payment Date (or on the same day in the case of a daily Auction Period) without regard to the rate determined by the Auction Procedures for the next succeeding Auction Period, and (ii) for the purpose of implementing the Auctions and thereby to achieve the lowest possible interest rate on the Bonds of a Series, the Broker Dealers shall contact Potential Owners, including Persons that are Existing Owners, to determine the principal amount of Bonds of a Series, if any which each such Potential Owner irrevocably offers to purchase if the rate determined by the Auction Procedures for the next succeeding Auction Period is not less than the rate per annum then specified by such Potential Owner For the purposes hereof, an Order containing the information referred to in clause (i)(A) above is herein referred to as a `Hold Order an Order containing the information referred to in clause (i)(B) or (ii) above is herein referred to as a Bid, and an Order containing the information referred to in clause (1)(C) above is herein referred to as a `Sell Order (b) (i) A Bid by an Existing Owner shall constitute an irrevocable offer to sell (A) the principal amount of Bonds of a Series specified in such Bid if the rate determined by the Auction Procedures on such Auction Date shall be less than the rate specified therein, or (B) such principal amount or a lesser principal amount of Bonds of a Series to be determined as described in subsection (a)(v) of Section 2 04 hereof if the rate determined by the Auction Procedures on such Auction Date shall be equal to such specified rate; or DAL504 /71005 Dallas 799711 6.130C I 10 sell (C) a lesser principal amount of Bonds of a Series to be determined as described in subsection (b)(iv) of Section 2 04 hereof if such specified rate shall be higher than the Maximum Auction Rate and Sufficient Clearing Bids do not exist. (ii) A Sell Order by an Existing Owner shall constitute an irrevocable offer to (A) the principal amount of Bonds of a Series specified in such Sell Order- or (B) such principal amount or a lesser principal amount of Bonds of a Series as described in subsection (b)(iv) of Section 2 04 hereof if Sufficient Clearing Bids do not exist. (iii) A Bid by a Potential Owner shall constitute an irrevocable offer to purchase: (A) the principal amount of Bonds of a Series specified in such Bid if the rate determined by the Auction Procedures on such Auction Date shall be higher than the rate specified therein, or (B) such principal amount or a lesser principal amount of Bonds of a Series as described in subsection (a)(vi) of Section 2 04 hereof if the rate determined by the Auction Procedures on such Auction Date shall be equal to such specified rate. (c) Anything herein to the contrary notwithstanding: (i) for purposes of any Auction, any Order which specifies Bonds of a Series to be held, purchased or sold in a principal amount which is not equal to the Authorized Denomination for Bonds of such Series or an integral multiple thereof shall be rounded down to the nearest amount that is equal to the Authorized Denomination for Bonds of such Series, and the Auction Agent shall conduct the Auction Procedures as if such Order had been submitted in such lower amount; (ii) for purposes of any Auction other than during a daily Auction Period, any portion of an Order of an Existing Owner which relates to a Bond of a Series which has been called for redemption on or prior to the Interest Payment Date next succeeding such Auction shall be invalid with respect to such portion and the Auction Agent shall conduct the Auction Procedures as if such portion of such Order had not been submitted, (iii) for purposes of any Auction other than during a daily Auction Period, no portion of a Bond of a Series which has been called for redemption on or prior to the Interest Payment Date next succeeding such Auction shall be included in the calculation of Available Bonds for such Auction, and DAL504 /71005 Dallas 799711 6.DOC I 11 (iv) the Auction Procedures shall be suspended with respect to the Bonds of a Series during the period commencing on the date of the Auction Agent s receipt of notice from the Paying Agent /Registrar of (i) a default by the Insurer in the due and punctual payment of a claim on the Policy for any installment of scheduled interest on any Bond of such Series in the Auction Rate Mode which is unpaid by the Cities or (ii) a default by the Insurer in the due and punctual payment of a claim on the Policy for any principal of any Bond of such series in the Auction Rate Mode at stated maturity or pursuant to a mandatory redemption which is unpaid by the Cities, but shall resume two Business Days after the date on which the Auction Agent receives notice from the Paying Agent/Registrar that such default has been waived or cured, with the next Auction to occur on the next regularly scheduled Auction Date occurring thereafter Section 2.02 Submission of Orders by Broker Dealers to Auction Agent. (a) Each Broker Dealer shall submit to the Auction Agent in writing or by such other method as shall be reasonably acceptable to the Auction Agent, including such electronic communication acceptable to the parties, prior to the Submission Deadline on each Auction Date, all Orders obtained by such Broker Dealer and, if requested, specifying with respect to each Order- the name of the Bidder placing such Order- (ii) the aggregate principal amount of Bonds of each Series, if any that are the subject of such Order- (iii) to the extent that such Bidder is an Existing Owner- (A) the principal amount of Bonds of each Series, if any subject to any Hold Order placed by such Existing Owner- (B) the principal amount of Bonds of each Series, if any subject to any Bid placed by such Existing Owner and the rate specified in such Bid, and (C) the principal amount of Bonds of each Series, if any subject to any Sell Order placed by such Existing Owner- (iv) to the extent such Bidder is a Potential Owner the rate specified in such :4 (b) If any rate specified in any Bid contains more than three figures to the right of the decimal point, the Auction Agent shall round such rate up to the next highest one thousandth of one percent (0 001 %) (c) If an Order or Orders covering all of the Bonds of a particular Series held by an Existing Owner is not submitted to the Auction Agent prior to the Submission Deadline, the Auction Agent shall deem a Hold Order to have been submitted on behalf of such Existing Owner covering the principal amount of Bonds of such Series held by such Existing Owner and not subject to Orders submitted to the Auction Agent; provided, however that if there is a DAL504 /71005 Dallas 799711_6.DOC I 12 conversion from one Auction Period to another Auction Period or an amendment or modification to the Thirty Ninth Ordinance in accordance with Section 2 07(b) of this Exhibit I and Orders have not been submitted to the Auction Agent prior to the Submission Deadline covering the aggregate principal amount of Bonds of the Series to be converted held by such Existing Owner the Auction Agent shall deem a Sell Order to have been submitted on behalf of such Existing Owner covering the principal amount of Bonds of such Series to be converted held by such Existing Owner not subject to Orders submitted to the Auction Agent. (d) If one or more Orders covering in the aggregate more than the principal amount of Outstanding Bonds of a Series held by any Existing Owner are submitted to the Auction Agent, such Orders shall be considered valid as follows (i) all Hold Orders shall be considered Hold Orders, but only up to and including in the aggregate the principal amount of Bonds of such Series held by such Existing Owner- (n) (A) any Bid of an Existing Owner shall be considered valid as a Bid of an Existing Owner up to and including the excess of the principal amount of Bonds of such Series held by such Existing Owner over the principal amount of the Bonds of such Series subject to Hold Orders referred to in paragraph (i) above; (B) subject to clause (A) above, all Bids of an Existing Owner with the same rate shall be aggregated and considered a single Bid of an Existing Owner up to and including the excess of the principal amount of Bonds of such Series held by such Existing Owner over the principal amount of Bonds of such Series held by such Existing Owner subject to Hold Orders referred to in paragraph (i) above; (C) subject to clause (A) above, if more than one Bid with different rates is submitted on behalf of such Existing Owner such Bids shall be considered Bids of an Existing Owner in the ascending order of their respective rates up to the amount of the excess of the principal amount of Bonds of such Series held by such Existing Owner over the principal amount of Bonds of such Series held by such Existing Owner subject to Hold Orders referred to in paragraph (i) above, and (D) the principal amount, if any of such Bonds of such Series subject to Bids not considered to be Bids of an Existing Owner under this paragraph (ii) shall be treated as the subject of a Bid by a Potential Owner- and (iii) all Sell Orders shall be considered Sell Orders, but only up to and including a principal amount of Bonds of such Series equal to the excess of the principal amount of Bonds of such Series held by such Existing Owner over the sum of the principal amount of the Bonds considered to be subject to Hold Orders pursuant to paragraph (1) above and the principal amount of Bonds of such Series considered to be subject to Bids of such Existing Owner pursuant to paragraph (ii) above. DAL504 /71005 Dallas 799711_6.DOC I 13 (e) If more than one Bid is submitted on behalf of any Potential Owner each Bid submitted with the same rate shall be aggregated and considered a single Bid and each Bid submitted with a different rate shall be considered a separate Bid with the rate and the principal amount of Bonds of such Series specified therein. (f) Neither the Board, the Cities nor the Auction Agent shall be responsible for the failure of any Broker Dealer to submit an Order to the Auction Agent on behalf of any Existing Owner or Potential Owner Section 2.03 Determination of Auction Period Rate. (a) Not later than 9.30 a.m., New York City time, on each Auction Date for Bonds of each Series in an Auction Rate Mode, the Auction Agent shall advise the Broker Dealers and the Authorized Officers by telephone or other electronic communication acceptable to the parties of the All Hold Rate, the Maximum Auction Rate and the Index for the Bonds of such Series. (b) Promptly after the Submission Deadline on each Auction Date for Bonds of each Series in an Auction Rate Mode, the Auction Agent shall assemble all Orders submitted or deemed submitted to it by the Broker Dealers (each such Order as submitted or deemed submitted by a Broker Dealer being hereinafter referred to as a `Submitted Hold Order a `Submitted Bid" or a `Submitted Sell Order as the case may be, and collectively as a `Submitted Order ") and shall determine (i) the Available Bonds, (ii) whether there are Sufficient Clearing Bids, and (iii) the Auction Rate. (c) Promptly after the Auction Agent has made the determinations pursuant to subsection (b) above, the Auction Agent shall advise the Authorized Officers by telephone (promptly confirmed in writing), telex or facsimile transmission or other electronic communication acceptable to the parties of the Auction Rate for the next succeeding Auction Period and an Authorized Officer shall promptly notify the Securities Depository of such Auction Rate. (d) In the event the Auction Agent fails to calculate or for any reason, fails to timely provide the Auction Rate for any Auction Period, including any failure caused by the lack of a duly appointed Auction Agent or Broker Dealer (i) if the preceding Auction Period was a period of 35 days or less, the new Auction Period shall be the same as the preceding Auction Period and the Auction Period Rate for the new Auction Period shall be the same as the Auction Period Rate for the preceding Auction Period, and (ii) if the preceding Auction Period was a period of greater than 35 days, the preceding Auction Period shall be extended to the seventh day following the day that would have been the last day of such Auction Period had it not been extended (or if such seventh day is not followed by a Business Day then to the next succeeding day which is followed by a Business Day) and the Auction Period Rate in effect for the preceding Auction Period will continue in effect for the Auction Period as so extended. In the event an Auction Period is extended as set forth in clause (ii) of the preceding sentence, an Auction shall be held on the last Business Day of the Auction Period as so extended to take effect for an Auction Period beginning on the Business Day immediately following the last day of the Auction Period as extended which Auction Period will end on the date it would otherwise have ended on had the prior Auction Period not been extended, provided however that in the event of such a seven -day DAL504 /71005 Dallas 799711_6.DOC I 14 extension, an Authorized Officer acting on behalf of the Board may change the Auction Period from the Special Auction Period to a seven -day Auction Period upon the completion of such seven -day extension without complying with the otherwise applicable notice or other requirements of Section 2 08 (e) In the event that the Auction Procedures are suspended pursuant to paragraph (iv) of subsection (c) of Section 2.01 of this Exhibit I with respect to any Bond of Series, the Auction Period Rate for the next succeeding Auction Period shall be the Default Rate. (f) In the event that all of the conditions for a change in the Mode applicable to the Bonds of a Series from an Auction Rate Mode to the Fixed Rate Mode pursuant to Section A 204 of Appendix A have not been met or in the event of a failure to' change the length of the current Auction Period due to the lack of Sufficient Clearing Bids at the Auction on the Auction Date for the first new Auction Period, the Auction Period Rate for the next Auction Period shall be the Maximum Auction Rate and the Auction Period shall be a seven -day Auction Period (except as provided in Section 2 08(a)(iv) with respect to the daily Auction Period) (g) If the Bonds of a Series are not rated or if the Bonds of a Series are no longer maintained in book -entry form by the Securities Depository then the Auction Period Rate shall be the Maximum Auction Rate. (h) (i) If on any Auction Date for any daily seven -day 28 -day or 35 -day Auction Period, other than an Auction Date on which the Board is attempting to change Auction Periods, as described in Section 2 08(a), the Auction for such date does not produce Sufficient Clearing Bids, the Auction Period Rate for the next Auction Period shall be the Maximum Auction Rate and the Auction Period shall be the same as the preceding Auction Period. (ii) If on any Auction Date for any Special Auction Period the Auction for such date does not produce Sufficient Clearing Bids, except as provided in subsection (d) above, the Auction Period Rate for the next Auction Period shall be the Maximum Auction Rate and the Auction Period shall be a seven -day Auction Period. Section 2.04 Allocation of Bonds of a Series. (a) In the event of Sufficient Clearing Bids for Bonds of a Series, subject to the further provisions of subsections (c) and (d) below Submitted Orders for such Series shall be accepted or rejected as follows in the following order of priority- (i) the Submitted Hold Order of each Existing Owner shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Hold Order- (ii) the Submitted Sell Order of each Existing Owner shall be accepted and the Submitted Bid of each Existing Owner specifying any rate that is higher than the Winning Bid Rate shall be rejected, thus requiring each such Existing Owner to sell the Bonds of a Series that are the subject of such Submitted Sell Order or Submitted Bid, DAL504 /71005 Dallas 799711_6.DOC I 15 (iii) the Submitted Bid of each Existing Owner specifying any rate that is lower than the Winning Bid Rate shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Bid, (iv) the Submitted Bid of each Potential Owner specifying any rate that is lower than the Winning Bid Rate shall be accepted, thus requiring each such Potential Owner to purchase the Bonds of a Series that are the subject of such Submitted Bid, (v) the Submitted Bid of each Existing Owner specifying a rate that is equal to the Winning Bid Rate shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Bid, but only up to and including the principal amount of Bonds of a Series obtained by multiplying (A) the aggregate principal amount of Outstanding Bonds of a Series which are not the subject of Submitted Hold Orders described in paragraph (i) above or of Submitted Bids described in paragraphs (iii) or (iv) above by (B) a fraction the numerator of which shall be the principal amount of Outstanding Bonds of a Series held by such Existing Owner subject to such Submitted Bid and the denominator of which shall be the aggregate principal amount of Outstanding Bonds of a Series subject to such Submitted Bids made by all such Existing Owners that specified a rate equal to the Winning Bid Rate, and the remainder if any of such Submitted Bid shall be rejected, thus requiring each such Existing Owner to sell any excess amount of Bonds of a Series (vi) the Submitted Bid of each Potential Owner specifying a rate that is equal to the Winning Bid Rate shall be accepted, thus requiring each such Potential Owner to purchase the Bonds of a Series that are the subject of such Submitted Bid, but only in an amount equal to the principal amount of Bonds of a Series obtained by multiplying (A) the aggregate principal amount of Outstanding Bonds of a Series which are not the subject of Submitted Hold Orders described in paragraph (1) above or of Submitted Bids described in paragraphs (ui) (iv) or (v) above by (B) a fraction the numerator of which shall be the principal amount of Outstanding Bonds of a Series subject to such Submitted Bid and the denominator of which shall be the sum of the aggregate principal amount of Outstanding Bonds of a Series subject to such Submitted Bids made by all such Potential Owners that specified a rate equal to the Winning Bid Rate, and the remainder of such Submitted Bid shall be rejected, and (vii) the Submitted Bid of each Potential Owner specifying any rate that is higher than the Winning Bid Rate shall be rejected. (b) In the event there are not Sufficient Clearing Bids for Bonds of a Series, subject to the further provisions of subsections (c) and (d) below Submitted Orders for each Bonds of a Series shall be accepted or rejected as follows in the following order of priority- (i) the Submitted Hold Order of each Existing Owner shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Hold Order• DAL504 /71005 Dallas 799711_6.DOC I 16 (ii) the Submitted Bid of each Existing Owner specifying any rate that is not higher than the Maximum Auction Rate with respect to Bonds of a Series, shall be accepted, thus requiring each such Existing Owner to continue to hold the Bonds of a Series that are the subject of such Submitted Bid, (iii) the Submitted Bid of each Potential Owner specifying any rate that is not higher than the Maximum Auction Rate with respect to Bonds of a Series, shall be accepted, thus requiring each such Potential Owner to purchase the Bonds of a Series that are the subject of such Submitted Bid, (iv) the Submitted Sell Orders of each Existing Owner shall be accepted as Submitted Sell Orders and the Submitted Bids of each Existing Owner specifying any rate that is higher than the Maximum Auction Rate with respect to Bonds of a Series, shall be deemed to be and shall be accepted as Submitted Sell Orders, in both cases only up to and including the principal amount of Bonds of a Series obtained by multiplying (A) the aggregate principal amount of Bonds of a Series subject to Submitted Bids described in paragraph (iii) of this subsection (b) by (B) a fraction the numerator of which shall be the principal amount of Outstanding Bonds of a Series held by such Existing Owner subject to such Submitted Sell Order or such Submitted Bid deemed to be a Submitted Sell Order and the denominator of which shall be the principal amount of Outstanding Bonds of a Series subject to all such Submitted Sell Orders and such Submitted Bids deemed to be Submitted Sell Orders, and the remainder of each such Submitted Sell Order or Submitted Bid shall be deemed to be and shall be accepted as a Hold Order and each such Existing Owner shall be required to continue to hold such excess amount of Bonds of a Series, and (v) the Submitted Bid of each Potential Owner specifying any rate that is higher than the Maximum Auction Rate with respect to the Bonds of a Series shall be rejected. (c) If, as a result of the procedures described in subsection (a) or (b) above, any Existing Owner or Potential Owner would be required to purchase or sell an aggregate principal amount of Bonds of a Series which is not an integral multiple of the Authorized Denomination for Bonds of such Series on any Auction Date, the Auction Agent shall by lot, in such manner as it shall determine in its sole discretion, round up or down the principal amount of Bonds of a Series to be purchased or sold by any Existing Owner or Potential Owner on such Auction Date so that the aggregate principal amount of Bonds of a Series purchased or sold by each Existing Owner or Potential Owner on such Auction Date shall be an integral multiple of the Authorized Denomination for Bonds or such Series, even if such allocation results in one or more of such Existing Owners or Potential Owners not purchasing or selling any Bonds of a Series on such Auction Date. (d) If, as a result of the procedures described in subsection (a) above, any Potential Owner would be required to purchase a principal amount of Bonds of a Series that is less than the Authorized Denomination for Bonds of such Series on any Auction Date, the Auction Agent shall by lot, in such manner as it shall determine in its sole discretion, allocate such Bonds for purchase among Potential Owners so that the principal amount of Bonds of a Series purchased DAL504 /71005 Dallas 799711 6.DOC 1 17 on such Auction Date by any Potential Owner shall be an integral multiple of the Authorized Denomination for Bonds of such Series, even if such allocation results in one or more of such Potential Owners not purchasing such Bonds on such Auction Date. Section 2.05 Notice of Auction Period Rate (a) On each Auction Date, the Auction Agent shall notify by telephone or other telecommunication device or other electronic communication acceptable to the parties or in writing each Broker Dealer that participated in the Auction held on such Auction Date of the following with respect to Bonds of each Series for which an Auction was held on such Auction Date (i) the Auction Period Rate determined on such Auction Date for the succeeding Auction Period, (ii) whether Sufficient Clearing Bids existed for the determination of the Winning Bid Rate; (iii) if such Broker Dealer submitted a Bid or a Sell Order on behalf of an Existing Owner whether such Bid or Sell Order was accepted or rejected and the principal amount of Bonds of a Series, if any to be sold by such Existing Owner- (iv) if such Broker Dealer submitted a Bid on behalf of a Potential Owner whether such Bid was accepted or rejected and the principal amount of Bonds of a Series, if any to be purchased by such Potential Owner• () if the aggregate principal amount of the Bonds of a Series to be sold by all Existing Owners on whose behalf such Broker Dealer submitted Bids or Sell Orders is different from the aggregate principal amount of Bonds of a Series to be purchased by all Potential Owners on whose behalf such Broker Dealer submitted a Bid, the name or names of one or more Broker Dealers (and the Agent Member if any of each such other Broker Dealer) and the principal amount of Bonds of a Series to be (A) purchased from one or more Existing Owners on whose behalf such other Broker Dealers submitted Bids or Sell Orders or (B) sold to one or more Potential Owners on whose behalf such Broker Dealer submitted Bids, and (vi) the immediately succeeding Auction Date. (b) On each Auction Date, with respect to Bonds of each Series for which an Auction was held on such Auction Date, each Broker Dealer that submitted an Order on behalf of any Existing Owner or Potential Owner shall (i) advise each Existing Owner and Potential Owner on whose behalf such Broker Dealer submitted an Order as to (A) the Auction Period Rate determined on such Auction Date, (B) whether any Bid or Sell Order submitted on behalf of each such Owner was accepted or rejected, in whole or in part, and (C) the immediately succeeding Auction Date, (ii) instruct each Potential Owner on whose behalf such Broker Dealer submitted a Bid that was accepted, in whole or in part, to instruct such Potential Owner's Agent Member to pay to such Broker Dealer (or its Agent Member) through the Securities Depository the amount necessary to purchase the principal amount of such Bonds of a Series to be purchased pursuant to DAL504 /71005 Dallas 799711 6.DOC I 18 such Bid (including, with respect to such Bonds of a Series in a daily Auction Period, accrued interest if the purchase date is not an Interest Payment Date for such Bond) against receipt of such Bonds of a Series, and (iii) instruct each Existing Owner on whose behalf such Broker Dealer submitted a Sell Order that was accepted or a Bid that was rejected, in whole or in part, to instruct such Existing Owner's Agent Member to deliver to such Broker Dealer (or its Agent Member) through the Securities Depository the principal amount of such Bonds of a Series to be sold pursuant to such Bid or Sell Order against payment therefor Section 2 06 Index. (a) (i) The Index on any Auction Date with respect to Bonds of a Series in an Auction Period of 180 days or less shall be the One Month LIBOR Rate on such date. If such rate is unavailable, the Index for the Bonds of a Series shall be an index or rate agreed to by all Broker Dealers and consented to by an Authorized Officer on behalf of the Board. (ii) The Index on any Auction Date with respect to Bonds of a Series in an Auction Period over 180 days shall be the Special Auction Period Rate on such date. If such rate is unavailable, the Index for the Bonds of a Series shall be an index or rate agreed to by all Broker Dealers and the Insurer and consented to by an Authorized Officer on behalf of the Board. `One Month LIBOR Rate" means, as of any date of determination, the London interbank offered rate for deposits in U S dollars maturing after one calendar month commencing on the related determination date which appears on the Dow Jones Market Services Page 3750 as of 11.00 a.m. London time, on such date, or if such date is not a date on which dealings in U S dollars are transacted in the London interbank market, then on the next preceding day on which such dealings were transacted in such market. `Special Auction Period Rate" means, as of any date of determination, the London interbank offered rate for deposits in U S dollars maturing after a period most nearly equal in length to the Special Auction Period for which such Special Auction Period Rate would apply as determined by an Authorized Officer which appears on the Dow Jones Market Services Page 3750 as of 11 00 a.m., London time, on such date, or if such date is not a date on which dealings in U S dollars are transacted in the London interbank market, then on the next preceding day on which such dealings were transacted in such market. (b) If for any reason on any Auction Date the Index shall not be determined as hereinabove provided in this Section, the Index shall be the Index for the Auction Period ending on such Auction Date. (c) The determination of the Index as provided herein shall be conclusive and binding upon the Board, the Cities, the Broker Dealers, the Auction Agent and the Owners of the Bonds of a Series. Section 2.07 Miscellaneous Provisions RegardinE Auctions (a) In this Exhibit I, each reference to the purchase, sale or holding of `Bonds" shall refer to beneficial interests in such Bonds, unless the context clearly requires otherwise DAL504/71005 Dallas 799711 6.130C I 19 (b) During an Auction Rate Mode, with respect to the Bonds of a Series, the provisions of the Thirty Ninth Ordinance, including the Officers Pricing Certificate, Appendix A, this Exhibit I and the definitions contained in this Exhibit I, including, without limitation, the definitions of Maximum Rate, Maximum Auction Rate, All Hold Rate, Index, Default Rate, Auction Multiple and the Auction Period Rate, may be modified or amended pursuant to the Thirty -Ninth Ordinance by obtaining, when required by the Thirty Ninth Ordinance, the consent of the owners of all Outstanding Bonds of such Series as follows, provided, however that no such modification or amendment that adversely affect the rights, duties or obligations of the Auction Agent shall be made without the consent of the Auction Agent. If on the first Auction Date occurring at least 20 days after the date on which the Paying Agent/Registrar mailed notice of such proposed modification or amendment to the registered owners of the Outstanding Bonds of a Series as and to the extent required by the Thirty Ninth Ordinance, (i) the Auction Period Rate which is determined on such date is the Winning Bid Rate and (ii) there is delivered to the Board and the Cities a Favorable Opinion of Bond Counsel, the proposed modification or amendment shall be deemed to have been consented to by the owners of all affected Outstanding Bonds of such Series. (c) If the Securities Depository notifies the Board that it is unwilling or unable to continue as Owner of the Bonds of a Series or if at any time the Securities Depository shall no longer be registered or in good standing under the Securities Exchange Act of 1934 as amended, or other applicable statute or regulation and a successor to the Securities Depository is not appointed by the Board within 90 days after the Board receives notice or becomes aware of such condition, as the case may be, the Cities shall execute and the Paying Agent /Registrar shall authenticate and deliver certificates representing the Bonds of such Series Such Bonds shall be authorized in such names and authorized denominations as the Securities Depository pursuant to instructions from the Agent Members or otherwise, shall instruct the Board, the Cities and the Paying Agent /Registrar (d) During an Auction Rate Mode, so long as the ownership of the Bonds of a Series is maintained in book -entry form by the Securities Depository an Existing Owner or a beneficial owner may sell, transfer or otherwise dispose of a Bond only pursuant to a Bid or Sell Order in accordance with the Auction Procedures or to or through a Broker Dealer provided that (1) in the case of all transfers other than pursuant to Auctions such Existing Owner or its Broker Dealer or its Agent Member advises the Auction Agent of such transfer and (ii) a sale, transfer or other disposition of Bonds of a Series from a customer of a Broker Dealer who is listed on the records of that Broker Dealer as the holder of such Bonds to that Broker Dealer or another customer of that Broker Dealer shall not be deemed to be a sale, transfer or other disposition for purposes of this paragraph if such Broker Dealer remains the Existing Owner of Bonds of a Series so sold, transferred or disposed of immediately after such sale, transfer or disposition. Section 2 08 Changes in Auction Period or Auction Date. (a) Changes in Auction Period. (i) During any Auction Rate Mode, the Board may from time to time on any Interest Payment Date, change the length of the Auction Period with respect to all of the Bonds of any Series among a daily seven -day 28 -day 35 -day and a Special Auction Period in order to accommodate economic and financial factors that may affect or be relevant to the length of the Auction Period and the interest rate borne by Bonds of such Series. DAL504 /71005 Dallas 799711 6.DOC 120 An Authorized Officer shall initiate the change in the length of the Auction Period by giving written notice to the Auction Agent, the Broker Dealers and the Securities Depository that the Auction Period shall change if the conditions described herein are satisfied and the proposed effective date of the change, at least 10 Business Days prior to the Auction Date for such Auction Period. (u) Any such changed Auction Period shall be for a period of one day seven - days, 28 -days, 35 -days or a Special Auction Period and shall be for all of the Bonds of a subsenes in an Auction Rate Mode. (iii) The change in the length of the Auction Period for Bonds of any Series shall not be allowed unless Sufficient Clearing Bids existed at both the Auction before the date on which the notice of the proposed change was given as provided in this subsection (a) and the Auction immediately preceding the proposed change. (iv) The change in length of the Auction Period for Bonds of any Series shall take effect only if (A) the Auction Agent receives, by 1 1.00 a.m., New York City time, on the Business Day before the Auction Date for the first such Auction Period, a certificate from an Authorized Officer consenting to the change in the length of the Auction Period specified in such certificate and (B) Sufficient Clearing Bids exist at the Auction on the Auction Date for such first Auction Period. For purposes of the Auction for such first Auction Period only each Existing Owner shall be deemed to have submitted Sell Orders with respect to all of its Bonds of a Series for which there is to be a change in the length of the Auction Period except to the extent such Existing Owner submits an Order with respect to such Bonds. If the condition referred to in (A) above is not met, the Auction Rate for the next Auction Period shall be determined pursuant to the Auction Procedures and the Auction Period shall be the Auction Period determined without reference to the proposed change. If the condition referred to in (A) is met but the condition referred to in (B) above is not met, the Auction Rate for the next Auction Period shall be the Maximum Auction Rate and the Auction Period shall be a seven -day Auction Period (provided however that if the Auction Period, without reference to the proposed change, would have been the daily Auction Period, then the Auction Period shall remain the daily Auction Period) (v) On the conversion date for Bonds of a Series from one Auction Period to another any Bonds of such Series which are not the subject of a specific Hold Order or Bid shall be deemed to be subject to a Sell Order (b) Changes in Auction Date. During any Auction Rate Mode, the Auction Agent, with the written consent of an Authorized Officer may specify an earlier Auction Date for Bonds of any Series (but in no event more than five Business Days earlier) than the Auction Date that would otherwise be determined in accordance with the definition of Auction Date in order to conform with then current market practice with respect to similar securities or to accommodate economic and financial factors that may affect or be relevant to the day of the week constituting an Auction Date and the interest rate borne on such Bonds. The Auction Agent shall provide notice of its determination to specify an earlier Auction Date for an Auction Period by means of DAL504 /71005 Dallas 799711_6.DOC 121 a written notice delivered at least 45 days prior to the proposed changed Auction Date to the Board, the Broker Dealers and the Securities Depository ARTICLE III AUCTION AGENT Section 3 01 Auction Agent. (a) The Auction Agent shall be appointed by the Board to perform the functions specified herein. The Auction Agent shall designate its Principal Office and signify its acceptance of the duties and obligations imposed upon it hereunder by an Auction Agreement delivered to the Board, the Cities, the Paying Agent/Registrar and each Broker Dealer which shall set forth such procedural and other matters relating to the implementation of the Auction Procedures as shall be satisfactory to the Board. (b) Subject to any applicable governmental restrictions, the Auction Agent may be or become the owner of or trade in Bonds with the same rights as if such entity were not the Auction Agent. Section 3 02 Oualifications of Auction A ent• Resi nation Removal. The Auction Agent shall be (a) a bank or trust company organized under the laws of the United States or any state or territory thereof having a combined capital stock, surplus and undivided profits of at least $30 000 000 or (b) a member of National Association of Securities Dealers having a capitalization of at least $30,000 000 and, in either case, authorized by law to perform all the duties imposed upon it by the Thirty Ninth Ordinance and a member of or a participant in, the Securities Depository The Auction Agent may at any time resign and be discharged of the duties and obligations created by the Thirty -Ninth Ordinance by giving at least ninety (90) days notice to each Broker Dealer and the Board. The Auction Agent may be removed at any time by the Board by written notice, delivered to the Auction Agent and each Broker Dealer Upon any such resignation or removal, the Board, with the consent of the Insurer which consent shall not be unreasonably withheld, shall appoint a successor Auction Agent meeting the requirements of this Section. In the event of the resignation or removal of the Auction Agent, the Auction Agent shall pay over assign and deliver any moneys and Bonds held by it in such capacity to its successor The Auction Agent shall continue to perform its duties hereunder until its successor has been appointed by the Board. In the event that the Auction Agent has not been compensated for its services, the Auction Agent may resign by giving forty five (45) days notice to the Board and the Insurer and at the end of such 45 -day period, if the Insurer has not voluntarily paid the unpaid compensation to the Auction Agent, the resignation will become effective, even if a successor Auction Agent has not been appointed. DAL504 /71005 Dallas 799711_6.DOC 122 EXHIBIT A FORM OF SUPPLEMENTAL OPINION OF CO -BOND COUNSEL [Closing Date] Dallas/Fort Worth International Airport Board P O Drawer 619428 Dallas/Fort Worth International Airport, Texas 75261 9428 RBC Dain Rauscher Inc. 2711 North Haskell, Suite 2400 Dallas, Texas 75204 DALLAS /FORT WORTH INTERNATIONAL AIRPORT JOINT REVENUE AUCTION RATE REFUNDING BONDS SERIES 2004A Gentlemen. At yourprequest we have examined the Contract and Agreement (the `Contract ") between the Cities of Dallas and Fort Worth, Texas (the `Cities "), dated and effective as of April 15 1968 the 1968 Dallas /Fort Worth Regional Airport Concurrent Bond Ordinance adopted respectively by the Cities on November 11 and 12, 1968 (the 1968 Ordinance "), authorizing the issuance of Dallas /Fort Worth Regional Airport Joint Revenue Bonds, Series 968 (the `Series 1.968 Bonds ") the thirty -nine (39) Supplemental Concurrent Bond Ordinances which authorize the other series of `Bonds" or `Obligations" (as defined in the 1968 Ordinance or the Thirtieth Supplemental Concurrent Bond Ordinance (the `Thirtieth Supplement ")), including the captioned series of Bonds and which include the Thirtieth Supplement) and the Thirty -Ninth Supplemental Concurrent Bond Ordinance (the `Thirty -Ninth Supplement "), which Ordinances amend and supplement the 1968 Ordinance (the 1968 Ordinance and the thirty -nine (39) supplemental ordinances, as amended, collectively referred to hereinafter as the 'Ordinance') the Underwriting Agreement dated May 13 2004 (the `Underwriting Agreement ") among the Cities, the Dallas /Fort Worth International Airport Board (the `Board ") and RBC Dam Rauscher Inc., the Official Statement dated May 6 2004 (the `Official Statement ") pertaining to the above - captioned bonds, the Auction Agreement dated as of May 1 2004 (the Auction Agreement ") among the Cities, the Board, J P Morgan Trust Company National Association, as Paying Agent/Registrar and Deutsche Bank Trust Company Americas, as Auction Agent (the Auction Agent ") the Broker Dealer Agreement dated as of May 1 2004 among the Auction Agent, the Cities, the Board and RBC Dain Rauscher Inc. as Broker Dealer (the `Broker Dealer Agreement ") the Dallas /Fort Worth Regional Airport Use Agreements variously dated, the initial amendment to certain of such Agreements initially executed by American Airlines, Inc. and Delta Airlines Inc. dated August 1 1977 and the Second Amendment to such Agreements dated October 1 1981 the Capital Improvement Trust Account Agreement, dated April 1 1972, Al and the Amendment to Capital Improvement Trust Account Agreement, dated October 1 1981 the resolution(s) by the Board authorizing the execution of such Second Amendment to the Use Agreements and Amendment to Capital Improvement Trust Account Agreement; the opinion letter signed by the legal counsel of the Board with reference to the validity of the Use Agreements, as amended, and the Capital Improvement Trust Account Agreement, as amended, the Constitution and Statutes of the State of Texas where pertinent; certain provisions, as hereinafter mentioned, of the Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder (the 'Code")- Section 3(a)(2) of the Securities Act of 1933 as amended, and the Trust Indenture Act of 1939 as amended. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Ordinance. Based on such examination, in our opinion (i) the Contract has been duly authorized, executed and delivered and constitutes a valid, binding and enforceable agreement in accordance with its terms, (ii) the 1968 Ordinance, the Thirtieth Supplement and the Thirty -Ninth Supplement have been duly passed by the City Councils of the Cities and the covenants therein constitute valid obligations of the Cities and the Board, including the obligation set forth in Section 6.3(i) of the Thirtieth Supplement on the part of the Board to fix, place into effect, directly or through leases, contracts and agreements with users of the Dallas /Fort Worth International Airport, rentals, rates, fees and charges which shall be at least sufficient to produce in each `Fiscal Year" `Gross Revenues" sufficient to pay all amounts set forth therein, and the Cities and the Board have the legal power and authority to impose rates and charges for the use of the Airport in the amounts necessary to meet such covenant; (iii) the Auction Agreement, the Broker Dealer Agreement and the Underwriting Agreement have been duly authorized, executed and delivered by the Cities and the Board and, assuming the due authorization, execution and delivery by the other parties thereto constitute valid, binding and enforceable agreements of the Cities and the Board in accordance with their terms, (iv) although we have not enfied and are not passing upon, and do not assume responsibility for the accuracy completeness or fairness of the statements contained in the Official Statement, we have reviewed solely in our capacity as Co -Bond Counsel the information contained in the Official Statement under the headings `THE BONDS `SECURITY FOR THE BONDS `THE AIRPORT — The Board, AIRLINE AGREEMENTS `THE CONTRACT AND AGREEMENT `FEDERAL INCOME TAX CONSIDERATIONS, `LEGAL COUNSEL, and `CONTINUING DISCLOSURE" (except for the subcaption `Compliance with Prior Undertakings ") and in Appendices C and F and in the course of this review no facts came to our attention which would lead us to believe that those portions of the Official Statement, as of the date thereof, contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made not misleading; (v) the Second Amendment to the Use Agreements and Amendment to Capital Improvement Trust Account Agreement have been duly and lawfully authorized, executed and delivered by the Board, and the provisions of the Use Agreements, as amended by the Second Amendment and the Capital Improvement Trust Account Agreement, as amended by the Amendment to Capital Improvement Trust Account Agreement are not in violation of any provision of the Contract or the Ordinance, (vi) no registration with the Securities and Exchange Commission under the Securities Act of 1933 as amended, need be made to connection with the offering and sales of the above - captioned Bonds, and (vii) the Ordinance is not required to be qualified under the Trust A2 Indenture Act of 1939 as amended. It should be noted that the enforceability of the Contract, the Ordinance, the Underwriting Agreement, the Auction Agreement and the Broker Dealer Agreement may be limited by bankruptcy insolvency reorganization, or similar laws relating to or affecting creditors' rights generally or by general equity principles. This letter is solely for your benefit and no other party is entitled to rely hereon. Respectfully [:W EXHIBIT B FORM OF OPINION OF GENERAL COUNSEL TO THE BOARD [Closing Date] RBC Dam Rauscher Inc. 2711 North Haskell, Suite 2400 Dallas, Texas 75204 DALLAS/FORT WORTH INTERNATIONAL AIRPORT JOINT REVENUE AUCTION RATE REFUNDING BONDS, SERIES 2004A Gentlemen. At your request I have examined the Contract and Agreement (the `Contract ") between the Cities of Dallas and Fort Worth, Texas (the `Cities "), dated and effective as of April 15 1968 the 1968 Dallas /Fort Worth Regional Airport Concurrent Bond Ordinance adopted respectively by the Cities on November 11 and 12, 1968 (the 1968 Ordinance "), authorizing the issuance of Dallas/Fort Worth Regional Airport Joint Revenue Bonds, Series 1968 (the `Series 1968 Bonds ") the thirty nine (39) Supplemental Concurrent Bond Ordinances which authorize the other serves of `Bonds" or Obligations" (as defined in the 1968 Ordinance or the Thirtieth Supplemental Concurrent Bond Ordinance (the 'Thirtieth Supplement "" uding the captioned series of Bonds and which include the Thirtieth Supplement the Thirty Ninth Supplemental Concurrent Bond Ordinance, which Ordinances amend and supplement the 1968 Ordinance (the 1968 Ordinance and the thirty -nine (39) supplemental ordinances, as amended, collectively referred to hereinafter as the `Ordinance ") the Underwriting Agreement dated May 13 2004 (the `Underwriting Agreement ") among the Cities, the Dallas /Fort Worth International Airport Board (the `Board ") and RBC Dain Rauscher Inc. the Auction Agreement dated as of May 1 2004 (the Auction Agreement ") among the Cities, the Board, J P Morgan Trust Company National Association, as Paying Agent/Registrar and Deutsche Bank Trust Company Americas, as Auction Agent (the Auction Agent ") the Broker Dealer Agreement dated as of May 1 2004 among the Auction Agent, the Cities, the Board and RBC Dam Rauscher Inc. as Broker Dealer (the `Broker Dealer Agreement "), certain below listed portions of the Official Statement dated May 6 2004 (the `Official Statement"), pertaining to the above - captioned Bonds the Dallas /Fort Worth Regional Airport Use Agreements variously dated, the initial amendment to certain of such Agreements initially executed by American Airlines, Inc and Delta Airlines Inc. dated August 1 1977 and the Second Amendment to such Agreements dated October 1 1981 the Capital Improvement Trust Account Agreement, dated April 1 1972, and the Amendment to Capital Improvement Trust Account Agreement, dated October 1 1981 the resolutions by the Board authorizing the execution of such Second Amendment to the Use Agreements and Amendment to Capital Improvement Trust Account Agreement, the Constitution and Statutes of the State of Texas where pertinent; certain provisions, as hereinafter mentioned, of the Internal Revenue Code of 1986 as amended, and the applicable regulations thereunder (the 'Code') IS Based on such examination in my opinion (i) the Contract has been duly authorized, executed and delivered and constitutes a valid, binding and enforceable agreement in accordance with its terms; (ii) the Underwriting Agreement, the Auction Agreement, the Broker Dealer Agreement and the Bonds have been duly authorized, executed and delivered by the Cities and/or the Board, as the case may be, and assuming due authorization, execution and delivery by the other parties thereto constitute valid, binding and enforceable agreements of the Cities and/or the Board in accordance with their respective terms; (iii) the Ordinance creates a valid, binding and enforceable first lien on and pledge of the Pledge Revenues and Pledged Funds on a parity with all other Parity Credit Agreement Obligations and Obligations, (iv) although I have not verified and I am not passing upon, and do not assume any responsibility for the accuracy completeness or fairness of the statements contained in the Official Statement, I have reviewed solely in my capacity as General Counsel the information contained in the Official Statement, including the information under the headings `The Airport" Airline Agreements, `Federal Regulations Regarding Rates and Charges Disputes, `Passenger Facility Charges, `Federal Grant in -Aid, `Federal Reimbursement, `The Contract and Agreement, `Certain Investment Considerations, and `Litigation and in Appendices C and F and in the course of this review no facts came to my attention which would lead me to believe that those portions of the Official Statement, as of the date thereof, contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made not misleading; and (v) the Use Agreements, as amended, and the Capital Improvement Trust Account Agreement, as amended, have been duly and lawfully authorized, executed and delivered by the Board, and the provisions of the Use Agreements, as amended, and the Capital Improvement Trust Account Agreement, as amended, are not in violation of any provision of the Contract or the Ordinance It should be noted that the enforceability of the Contract, Bonds, the Underwriting Agreement, the Auction Agreement and the Broker Dealer Agreement may be limited by bankruptcy insolvency reorganization, or similar laws relating to or affecting creditors' rights generally or by general equity principles. This letter is solely for your benefit and no other party is entitled to rely hereon. Respectfully Gary Keane GENERAL COUNSEL, DALLAS /FORT WORTH INTERNATIONAL AIRPORT BOARD IM APPENDIX C PARAMETERS FOR CREDIT AGREEMENT Terms not defined herein shall have the meanings set forth in the Controlling Ordinances To the extent the Authorized Officers determine to fund the Debt Service Reserve Requirement with a Policy such Policy will have the following parameters Payments pursuant to the Credit Agreement relating to the Policy (the `Credit Agreement ") will be made only from Pledged Revenues and Pledged Funds, although as provided in Section 1 5(a)(iii) the Policy shall not create a Parity Credit Agreement Obligation. The maximum amount the Policy will be insuring is the total incremental Debt Service Reserve Requirement attributable to the Bonds and any Additional Obligations issued concurrently therewith. The execution of the Credit Agreement must not result in or cause the then underlying credit rating on the Obligations to be lowered or withdrawn by a majority of the credit rating agencies. The Policy must provide for either (i) the payment of the principal of and interest on the Obligations when due or ( ) replenishment of the Debt Service Reserve Fund as and when draws are made against it. The Credit Agreement will be in effect for so long as the Cities and /or the Board owes the Credit Provider that issued the Policy (the `Credit Provider ") amounts representing repayment of draws and the interest thereon ( "Policy Costs ") The right and obligations of the Cities and the Board under the Credit Agreement shall be governed by Texas law The Cities and /or the Board shall pay a rate of interest accruing on Policy Costs outstanding that is no greater than the highest rate permitted by law A default under the Credit Agreement shall not entitle the Credit Provider to accelerate the Bonds or any other Outstanding Obligations. DAL504 /71005 Dallas 799667 8.DOC C1 APPENDIX D AUCTION AGREEMENT Dated as of May 1 2004 among CITY OF DALLAS, TEXAS CITY OF FORT WORTH, TEXAS DALLAS /FORT WORTH INTERNATIONAL AIRPORT BOARD J.P MORGAN TRUST COMPANY NATIONAL ASSOCIATION as Paying Agent/Registrar and DEUTSCHE BANK TRUST COMPANY AMERICAS as Auction Agent Relating to CITIES OF DALLAS AND FORT WORTH, TEXAS $130 000 000 Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A DAL504 /71005 Dallas 799801_3.DOC TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1 1 Terms Defined by Reference to the Bond Ordinance 1 Section 1.2 Terms Defined Herein 1 Section 1.3 Rules of Construction 2 ARTICLE II AUCTION Section 2 1 Purpose- Appointment; Incorporation by Reference of Auction Procedures ARTICLE III THE AUCTION AGENT Section 3 1 and Settlement Procedures 3 Section 2.2. Preparation for each Auction. Maintenance of Registry of Beneficial Rights of the Auction Agent. Owners 3 Section 2.3 Auction Schedule 6 Section 2.4 Notice of Auction Results 6 Section 2 5 Notices to Existing Owners 7 Section 2.6 Broker Dealers 7 Section 2.7 Ownership of Bonds 7 Section 2.8 Access to and Maintenance of Auction Records 7 ARTICLE III THE AUCTION AGENT Section 3 1 Duties and Responsibilities of the Auction Agent 8 Section 3.2 Rights of the Auction Agent. 9 Section 3.3 Auction Agent's Disclaimer 9 Section 3 4 Compensation and Expenses of the Auction Agent 9 Section 3.5 Broker Dealer Fee 10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PAYING AGENT/REGISTRAR, THE BOARD THE CITIES AND THE AUCTION AGENT Section 4 1 Representations and Warranties of the Paying Agent/Registrar 10 Section 4.2. Representations and Warranties of the Board and the Cities 11 Section 4.3 Representations and Warranties of the Auction Agent 11 DAL504 /71005 Dallas 799801_3.DOC (i) ARTICLE V MISCELLANEOUS Section 5 1 Term of Agreement 11 Section 5.2. Communications. 12 Section 5.3 Entire Agreement 13 Section 5 4 Benefits Successors and Assigns 13 Section 5.5 Amendment, Waiver 13 Section 5 6 Severability 14 Section 5 7 Execution in Counterparts. Effectiveness of Auction Agreement 14 Section 5 8 Governing Law- Jurisdiction 14 Exhibit A — Form of Broker Dealer Agreement Exhibit B — Settlement Procedures DAL504 /71005 Dallas 799801 3.130C (ii) Al B -1 AUCTION AGREEMENT THIS AUCTION AGREEMENT dated as of May 1 2004 (the Auction Agreement "), among the Cities of Dallas and Fort Worth, Texas (the `Cities "), the Dallas /Fort Worth International Airport Board (the `Board "), J.P Morgan Trust Company National Association, as Paying Agent/Registrar (the `Paying Agent/Registrar "), and Deutsche Bank Trust Company Americas, a New York banking corporation, as Auction Agent (together with its successors and assigns, the Auction Agent") WITNESSETH WHEREAS concurrently with the execution and delivery of this Auction Agreement, the Cities are issuing $130 000 000 of their Dallas/Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A (the `Bonds "), pursuant to the Thirty -Ninth Supplemental Concurrent Bond Ordinance adopted by the City Councils of the Cities and effective as of April _, 2004 (the `Thirty -Ninth Ordinance ") and the Officers Pricing Certificate relating to the Bonds dated May 2004 (the `Officers Pricing Certificate" and, collectively with the Thirty -Ninth Ordinance, the `Bond Ordinance ") WHEREAS, the Bonds may consist of two or more subsenes as provided in the Bond Ordinance; and WHEREAS at the direction of the Cities and the Board, the Paying Agent/Registrar is entering into this Auction Agreement as agent for the Owners pursuant to the Bond Ordinance; and WHEREAS the Auction Agent is to perform certain duties set forth herein, NOW THEREFORE, the Cities, the Board the Paying Agent/Registrar and the Auction Agent hereby agree as follows. ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section l 1 Terms Defined by Reference to the Bond Ordinance. Capitalized terms not defined herein shall have the respective meanings specified in Appendix A to the Bond Ordinance. Section 1.2 Terms Defined Herein. As used herein and in the exhibits hereto the following terms shall have the following meanings, unless the context otherwise requires. Auction Agent Fee" means a fee equal to 7/1000 (seven -one thousands) of 1% and payable pursuant to Section 3 4 hereof. Authorized Officer" shall mean (i) in the case of the Auction Agent, each Vice President, Assistant Vice President and Associate of the Auction Agent assigned to its Trust and Securities Services and every other officer or employee of the Auction Agent designated an DAL504 /71005 Dallas 799801_3.DOC Authorized Officer" for purposes hereof in a written communication delivered to the Board, (ii) in the case of the Board or the Cities, any Authorized Officer as defined in the Thirty -Ninth Ordinance, and (iii) in the case of the Paying Agent/Registrar every officer or employee of the Paying Agent/Registrar designated as an Authorized Officer" for purposes hereof in a written communication delivered to the Auction Agent. `Broker Dealer Agreement" shall mean each agreement among the Auction Agent, a Broker Dealer the Board and the Cities substantially in the form attached hereto as Exhibit A. `Broker Dealer Fee" shall mean, with respect to each Broker Dealer the fee calculated by the Auction Agent as provided in the related Broker Dealer Agreement. `Existing Owner" shall mean (a) with respect to and for the purpose of dealing with the Auction Agent in connection with an Auction, a person who is a Broker Dealer and (b) with respect to and for the purpose of dealing with a Broker Dealer in connection with an Auction, a person who is a beneficial owner of Bonds. `Register" is defined in Section 2.2(c) hereof. `Settlement Procedures" shall mean the Settlement Procedures attached hereto as Exhibit B Section 1.3 Rules of Construction. Unless the context or use indicates another or different meaning or intent, the following rules shall apply to the construction of this Auction Agreement. (a) Words importing the singular number shall include the plural number and vice versa. (b) The captions and headings herein are solely for the convenience of reference and shall not constitute a part of this Auction Agreement nor shall they affect its meaning, construction or effect. (c) The words `hereof, `herein, `hereby `hereto" and `hereunder" and other words of similar import refer to this Auction Agreement as a whole and not to any particular Section, subsection or other subdivision. (d) All references herein to a particular time of day shall be to New York City time. (e) Each reference to the purchase, sale or holding of Bonds shall refer to beneficial ownership interests in Bonds unless the context clearly requires otherwise. (f) Unless the context clearly otherwise requires, all references herein to Section numbers are references to Sections of this Auction Agreement. (g) References herein to `Bonds" shall be deemed to refer to the Bonds of each subsenes, if any DAL504 /71005 Dallas 799801_1DOC 2 ARTICLE II AUCTION Section 2 1 Purpose: Appointment; Incorporation by Reference of Auction Procedures and Settlement Procedures. (a) The Thirty -Ninth Ordinance provides that the interest rate on the Bonds for each Auction Period shall be the Auction Period Rate which shall be, except as otherwise provided therein, the rate per annum that the Auction Agent determines to have resulted from the implementation of the Auction Procedures. (b) The Board and the Cities hereby appoint Deutsche Bank Trust Company Americas as the Auction Agent. Deutsche Bank Trust Company Americas hereby accepts such appointment and agrees to perform during the term of this Auction Agreement the Auction Procedures, Settlement Procedures and other duties herein, in each Broker Dealer Agreement and in Appendix A to the Thirty -Ninth Ordinance specified to be performed by the Auction Agent. (c) The Auction Procedures and other provisions relating thereto contained in Exhibit I to Appendix A of the Thirty -Ninth Ordinance are hereby incorporated herein by reference in their entirety and shall be deemed to be a part hereof to the same extent as if such provisions were expressly set forth herein. No amendment of any of the provisions of the Auction Procedures or any other provisions of the Thirty Ninth Ordinance that adversely affects any right, duty or obligation of the Auction Agent shall be binding upon the Auction Agent without its consent. Section 2.2 Preparation for each Auction. Maintenance of Registry of Beneficial Owners. (a) Not later than seven days prior to any Auction Date for which any change in Broker Dealers is to be effective (or such shorter period as shall be acceptable to the Auction Agent), the Board shall notify or cause to be notified the Auction Agent in writing of such change and, if such change is the addition of a Broker Dealer the Board shall cause to be delivered to the Auction Agent, for execution by the Auction Agent pursuant to Section 2 6(a) hereof, a Broker Dealer Agreement manually signed by such Broker Dealer The Auction Agent shall be entitled to assume that there has been no change in Broker Dealers unless and until it has actual receipt of such notification from an Authorized Officer of the Board. (b) (i) On each Auction Date, the Auction Agent shall determine, with respect to Bonds, the Maximum Auction Rate, the All Hold Rate and the Auction Period Rate. The Prevailing Rating(s) of the Bonds as of the Closing Date is AAA/AAA/Aaa and the Auction Multiple is 125 %. Thereafter if there shall have been a change in the Prevailing Rating of the Bonds, the Board shall supply by facsimile transmission, prior to 9 00 A.M. on the first Auction Date following such change, the new Prevailing Rating of the Bonds and the Auction Multiple. The Auction Agent may conclusively rely upon such information so obtained and shall be entitled to assume that there has been no change in DAL504 /71005 Dallas 799801_3.DOC 3- the Prevailing Rating of the Bonds and the Auction Multiple unless it has been so notified by an Authorized Officer of the Board to the contrary Not later than 9:30 A.M. on each Auction Date, the Auction Agent shall notify the Board and the Broker Dealers by telephone (confirmed to the Board in writing or by facsimile transmission after the Auction) or other electronic communication acceptable to the parties of the Default Rate, the Maximum Auction Rate, the All Hold Rate and the Index. (ii) Upon the occurrence of a default of the Cities in the payment of principal of, Sinking Fund Installment, interest or premium on any Bonds after the same shall have become due, whether at maturity upon call for redemption or on an Interest Payment Date (the `Payment Default "), the Paying Agent/Registrar shall forthwith notify the Auction Agent in writing of the same and upon actual receipt of such written notice, the Auction Procedures shall be suspended commencing on the date of the Auction Agent's actual receipt of notice of such Payment Default from the Paying Agent/Registrar and the interest rate on the Bonds for each Auction Period commencing after the occurrence and during the continuance of such Payment Default to and including the Auction Period, if any during which such Payment Default is cured will equal the Default Rate as determined by the Paying Agent/Registrar on the first day of each such Auction Period as provided in the Thirty -Ninth Ordinance. If such Payment Default is later cured or waved, the Paying Agent/Registrar shall forthwith notify the Auction Agent of the same. The Auction Procedures shall resume two Business Days after the Auction Agent's actual receipt of such written notice of cure or waiver with the next Auction to occur on the next regularly scheduled Auction Date occurring at least two Business Days after such cure or waiver (c) (i) [The Auction Agent shall maintain a registry of the existing owners of Bonds (the `Register ") who shall constitute Existing Owners for purposes of Auctions and shall indicate thereon the identity of the respective Broker Dealer of each Existing Owner if any on whose behalf such Broker Dealer submitted the most recent Order in any Auction which resulted in such Existing Owner continuing to hold or purchase such Bonds.] The Auction Agent shall keep such Register current and accurate, based on the information supplied to it. Each Broker Dealer is required under the Broker Dealer Agreement to which it is a party to deliver to the Auction Agent on the Closing Date a list of the initial Existing Owners that purchased such Bonds through such Broker Dealer The Auction Agent may conclusively rely upon, as evidence of the identities of the Existing Owners, the following: lists provided by a Broker Dealer- the results of Auctions, notices from the Securities Depository regarding the results of redemptions or mandatory tenders, and notices from any Existing Owner the Agent Member of any Existing Owner or the Broker Dealer of any Existing Owner with respect to such Existing Owner's transfer of Bonds to another person and the Auction Agent shall be fully protected in so relying. (ii) The Paying Agent/Registrar shall provide to the Auction Agent any notice of redemption or mandatory tender of the Bonds at or before the time any such notice is first given by the Paying Agent/Registrar to any Owner thereof. In the event of any partial redemption or partial mandatory tender of the Bonds, the Auction Agent shall promptly request the Securities Depository to notify the Auction Agent of the Agent DAL504 /71005 Dallas 799801_3.DOC -4- Members whose Bonds have been called for redemption or mandatory tender and the person or department at such Agent Member to contact regarding such redemption or mandatory tender and, within two Business Days after the Auction Agent's actual receipt of such information, the Auction Agent shall request each such Agent Member to disclose to the Auction Agent (upon selection by such Agent Member of the Existing Owners whose Bonds are to be redeemed or purchased) the principal amount of Bonds of each such Existing Owner if any which are subject to such redemption or mandatory tender provided the Auction Agent shall have been furnished with the name and telephone number of a person or department at such Agent Member from which it is to request such information. In the absence of actual receipt of receiving any such information with respect to an Existing Owner from such Existing Owner's Agent Member (or otherwise), the Auction Agent may continue to treat such Existing Owner as the beneficial owner of the principal amount of Bonds shown in the Auction Agent's Register (iii) The Auction Agent may refuse to register a transfer of beneficial ownership of Bonds from an Existing Owner to another person unless (a) such transfer is pursuant to an Auction or (b) the Auction Agent has been notified in writing (I) in a notice in the form of Exhibit C to the Broker Dealer Agreements by such Existing Owner the Broker Dealer or an Agent Member of such Existing Owner of such transfer (II) in a notice in the form of Exhibit D to the Broker Dealer Agreements by the Broker Dealer of any person that purchased or sold such Bonds in an Auction of the failure of such Bonds to be transferred as a result of such Auction, or (III) in a notice from the Securities Depository regarding the results of mandatory tenders. In the event a notice referred to in the preceding clause (II) is received, the Auction Agent shall register the beneficial ownership of the Bonds covered thereby in the name of the Existing Owner thereof prior to the Auction referred to in such notice. The Auction Agent may in its discretion, but shall not be required to accept any notice delivered pursuant to the terms of the foregoing sentence if received by the Auction Agent after 3 00 P.M. on the Business Day immediately preceding an Auction Date. (iv) The Auction Agent may but shall have no duty to, request the Broker Dealers, as set forth in the Broker Dealer Agreements, to provide the Auction Agent with a list of their respective customers that such Broker Dealers believe are Existing Owners of Bonds. The Auction Agent shall not disclose such information so provided to any person other than the Board, the Cities, the Paying Agent/Registrar and the Broker Dealer that provided the same; provided, however that the Auction Agent reserves the right and is authorized to disclose any such information if (A) it is ordered to do so by a court of competent jurisdiction or a regulatory judicial or quasi judicial agency or authority having the authority to compel such disclosure, (B) it is advised by its counsel that its failure to do so would be unlawful or (C) failure to do so would expose the Auction Agent to loss, liability claim, damage or expense for which it has not received indemnity satisfactory to it. (d) In the event that the notice referred to in clause (vi) of paragraph (a) of the Settlement Procedures states an Auction Date that is subsequently changed, the Auction Agent, by such means as the Auction Agent deems practicable, shall give notice of the new Auction DAL504 /71005 Dallas 799801_3.DOC 5- Date not later than 9.15 A.M. on the earlier of the new Auction Date or the original Auction Date. (e) The Auction Agent shall deliver a copy of any notice received by it from the Paying Agent/Registrar pursuant to clause (ii) of the foregoing paragraph (b) to the effect that an Event of Default has been cured or waived to the Broker Dealers no later than the Business Day following its actual receipt thereof by telecopy or other electronic communication acceptable to the parties. Section 2.3 Auction Schedule. The Auction Agent shall conduct Auctions for the Bonds in accordance with the schedule set forth below Such schedule may be changed by the Auction Agent if directed in writing by the Board to reflect then currently accepted market practices for similar auctions. The Auction Agent shall give written notice of any such change to the Board and each Broker Dealer Such notice shall be given prior to the close of business on the Business Day immediately preceding the first Auction Date on which any such change shall be effective. Time Event By 9:30 A.M. Auction Agent advises the Broker Dealers of, with respect to the Bonds, the Default Rate, the All Hold Rate, the Maximum Auction Rate and the Index, as set forth in Section 2.2(b)(i) hereof. 9 30 A.M. 1.00 P.M. (11 00 A.M. in the case of a daily Auction Period) As soon as practical after 1.00 P.M. (by 11.30 A.M. in the case of a daily Auction Period) Auction Agent assembles information communicated to it by Broker Dealers as provided in Section 2.02 of Exhibit I to Appendix A to the Thirty Ninth Ordinance (the Auction Rate Exhibit ") Submission Deadline is 1.00 P.M. (11.00 A.M. in the case of a daily Auction Period) Auction Agent makes determination pursuant to Section 2.03(b) of the Auction Rate Exhibit. By approximately 3.00 P.M. Submitted Bids and Submitted Sell Orders are accepted and but not later than the close of rejected and Bonds allocated as provided in Section 2 04 of the business (by 12.00 noon in the Auction Rate Exhibit. Auction Agent gives notice of Auction case of a daily Auction results as set forth in Section 2.4 hereof. Period) Section 2.4 Notice of Auction Results. Following such Auction, the Auction Agent shall follow the notification procedures set forth in paragraph (a) of the Settlement Procedures. In addition, promptly after making the determinations required by Section 2 03 of the Auction Rate Exhibit on each Auction Date, the Auction Agent shall give notice of the Auction Rate to the Board by telephone (promptly confirmed in writing) or by telecopy or other electronic communication acceptable to the parties, and an Authorized Officer of the Board shall promptly give notice of such Auction Rate to the Securities Depository DAL504 /71005 Dallas 799801_3.130C INI Section 2.5 Notices to Existing Owners. The Auction Agent shall be entitled to conclusively rely upon the address of each Existing Owner delivered by such Existing Owner In connection with any notice to Existing Owners required to be given by the Auction Agent pursuant to this Article II. Section 2.6 Broker Dealers. (a) On the Closing Date the Auction Agent shall enter a separate Broker Dealer Agreement with RBC Dain Rauscher Inc. for the Bonds. The Auction Agent shall from time to time enter into such other Broker Dealer Agreements with respect to Bonds as the Board shall request and the written consent of the then - existing Broker Dealers for the Bonds, provided, however that such Broker Dealer Agreements shall be effective with respect to an Auction only if the Auction Agent shall have actual receipt of a manually signed copy of such Broker Dealer Agreement in the form of Exhibit A attached hereto at least five Business Days prior to such Auction. (b) The Auction Agent shall terminate any Broker Dealer Agreement as set forth therein if so directed by the Board in writing. Section 2 7 Ownership of Bonds. Neither the Cities, the Board nor any person controlled by the Board or the Cities may submit any Order or Bid, directly or indirectly in any Auction. The Auction Agent shall have no duty to monitor or enforce compliance with this Section 2 7 Section 2.8 Access to and Maintenance of Auction Records. Subject to Section 3 4 hereof, the Auction Agent shall afford to the Board and its agents, independent public accountants and counsel, access at reasonable times during normal business hours to all books, records, documents and other information concerning the conduct and results of Auctions, provided that the Board and any such agent, accountant or counsel of the Board shall furnish the Auction Agent with a letter from an Authorized Officer of the Board requesting that the Auction Agent afford such person access. Except as provided in Sections 3 1(d) and 5 1(b) hereof, the Auction Agent shall maintain records relating to any Auction for a period of two years after such Auction and such records shall, in reasonable detail, accurately and fairly reflect the actions taken by the Auction Agent hereunder At the end of such two -year period the Auction Agent shall deliver copies of such records to the Board if the Board so requests. Subject to Section 3 4 hereof, the Auction Agent shall provide the Board with copies of any report the Auction Agent provides the Securities Depository concerning discrepancies between the records of the Auction Agent and the Securities Depository of the aggregate portions registered in each CUSIP number The Auction Agent shall not be responsible for any actions of the Board or its agents, accountants or counsel for passing on confidential information as a result of access to the records of the Auction Agent. DAL504 /71005 Dallas 799801 3.DOC 7 ARTICLE III THE AUCTION AGENT Section 3 1 Duties and Responsibilities of the Auction Agent. (a) The Auction Agent is acting solely as agent of the Cities and the Board and owes no duties, fiduciary or otherwise, to any person by reason of this Auction Agreement, except as otherwise stated herein, and no implied duties, fiduciary or otherwise, shall be read into this Auction Agreement. (b) The Auction Agent undertakes to perform such duties and only such duties as are expressly set forth herein, or expressly incorporated herein by reference pursuant to Section 2 1 hereof, to be performed by it, and no implied covenants or obligations shall be read into this Auction Agreement against the Auction Agent. In the absence of willful misconduct or negligence on its part, the Auction Agent, whether acting directly or through agents or attorneys as provided in Section 3.2(c), shall not be liable for any action taken, suffered, or omitted or for any error of judgment made by it in the performance of its duties hereunder The Auction Agent shall not be liable for any error of judgment made in good faith unless the Auction Agent shall have been negligent in ascertaining the pertinent facts necessary to make such judgment. (c) Upon termination of this Auction Agreement and at the Board s request, the Auction Agent shall promptly deliver to the Board, copies of the Auction records and accompanying documentation and any other documents referred to in Section 2.8 hereof to the extent not previously delivered to the Board. (d) The Auction Agent shall not be: (i) required to, and does not, make any representations nor have any responsibilities as to the validity accuracy value or genuineness of any signatures or endorsements, other than its own, or any document delivered pursuant to or as contemplated by this Auction Agreement; (ii) obligated to take any legal action hereunder that might, in its judgment, involve any expense or liability unless it has been furnished with reasonable indemnity satisfactory to the Auction Agent; and (iii) responsible for or liable in any respect on account of the identity authority or rights of any person executing or delivering or purporting to execute or deliver any document under this Auction Agreement or any Broker Dealer Agreement. (e) The Auction Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Auction Agreement arising out of or caused, directly or indirectly by circumstances beyond its reasonable control, including without limitation, acts of God, earthquakes, fires, floods, wars, civil or military disturbances, terrorism, sabotage; epidemics, nots, interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents, labor disputes, acts of civil or military authority or governmental actions, it being understood that the Auction Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. DAL504 /71005 Dallas 799801_3.DOC Section 3.2 Rights of the Auction Agent. (a) The Auction Agent may conclusively rely upon, and shall be fully protected in acting or refraining from acting upon, any communication authorized hereby and upon any such written instruction, notice, request, direction, consent, report, certificate, share certificate or other instrument, paper or other document believed by it to be genuine. The Auction Agent shall not be liable for acting, or refraining from acting, in good faith upon any such communication authorized hereby (including, but not limited to, any communication made by telephone or other electronic communication acceptable to the parties), which the Auction Agent reasonably believes to have been given by the particular party or parties. To the extent permitted by law the Auction Agent may record telephone communications with the Board, the Paying Agent/Registrar and the Broker Dealers, and each of such parties may record telephone communications with the Auction Agent. (b) The Auction Agent shall not be required to advance, expend or risk its own funds or otherwise incur or become exposed to financial liability in the performance of its duties hereunder (c) The Auction Agent may perform its duties and exercise its rights hereunder either directly or by or through agents or attorneys. (d) The Auction Agent shall have no obligation or liability in respect of the registration or exemption therefrom of the Bonds under federal or state securities laws in respect of the sufficiency or the conformity of any transfer of the Bonds pursuant to the terms of this Auction Agreement, any Broker Dealer Agreement, the Thirty -Ninth Ordinance or any other document contemplated by any thereof. Section 3.3 Auction Agent's Disclaimer The Auction Agent makes no representations as to the correctness of the recitals in, and assumes no responsibility for the validity accuracy or adequacy of this Auction Agreement, any Broker Dealer Agreement, the Thirty Ninth Ordinance or the Bonds or any Official Statement or any other offering material used in connection with the offer and sale of the Bonds. Section 3 4 Compensation and Expenses of the Auction Agent. The Board shall pay (i) the Auction Agent Fee for the Bonds on the first Interest Payment Date following the Closing Date and annually thereafter and (ii) upon request of the Auction Agent, reasonable out of- pocket expenses, disbursements and advances incurred or made by the Auction Agent in accordance with this Auction Agreement and any Broker Dealer Agreement (including the reasonable compensation, expenses and disbursements of its agents and counsel), except any expense, disbursement or advance attributable to the negligence or willful misconduct of the Auction Agent. The Auction Agent Fee represents compensation for the services of the Auction Agent in conducting Auctions for the benefit of the beneficial owners of the Bonds. The Auction Agent Fee may be adjusted from time to time with the approval of an Authorized Officer upon a written request of the Auction Agent delivered to the Board. To the extent permitted by law the Board shall indemnify the Auction Agent, its directors, officers, agents and employees for and hold it harmless against any loss, liability or expense incurred without negligence or willful misconduct on its part arising out of or in connection with its agency under the Auction DAL504 /71005 Dallas 799801 3.DOC a Agreement and Broker Dealer Agreement, including the costs and expenses of defending itself, its directors, officers, agents and employees against any claim of liability in connection with its exercise or performance of any of its duties thereunder except such as may result from negligence or willful misconduct. Section 3.5 Broker Dealer Fee. The Broker Dealer Fee shall be calculated by the Auction Agent, which shall be conclusive absent manifest error The Broker Dealer Fee shall be communicated by the Auction Agent to the Board and the Paying Agent/Registrar by 4.00 P.M., New York City time, on the Business Day immediately preceding each Interest Payment Date. At or before 10.00 A.M. on each Interest Payment Date, the Board shall pay to the Paying Agent/Registrar the amount due to the Broker Dealer By noon on each Interest Payment Date, the Paying Agent/Registrar shall delver to the Auction Agent the amount constituting the Broker Dealer Fee, by wire transfer of immediately available funds to such account as the Auction Agent may designate. The amount constituting the Broker Dealer Fee shall be held by the Auction Agent on behalf of the Broker Dealer and, immediately upon actual receipt of such Broker Dealer Fee, the Auction Agent shall deliver such Broker Dealer Fee to the Broker Dealer pursuant to the written instructions of the Broker Dealer If any Existing Owner who acquired Bonds through a Broker Dealer transfers any such Bonds to another person other than pursuant to an Auction, the Broker Dealer for the Bonds so transferred shall continue to be the Broker Dealer with respect to such Bonds, provided, however that if the transfer was effected by or if the transferee is, another person who has met the requirements specified in the definition of `Broker Dealer" contained in the Auction Rate Exhibit and executed a Broker Dealer Agreement, such person shall be the Broker Dealer for such Bonds. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PAYING AGENT /REGISTRAR, THE BOARD THE CITIES AND THE AUCTION AGENT Section 4 1 Representations and Warranties of the P Ong A e� ig stray The Paying Agent/Registrar hereby represents and warrants that: (a) this Auction Agreement has been duly and validly authorized, executed and delivered by the Paying Agent/Registrar and constitutes the legal, valid and binding obligation of the Paying Agent/Registrar- (b) neither the execution and delivery of this Auction Agreement, the consummation of the transactions contemplated hereby nor the fulfillment of or compliance with the terms and conditions of this Auction Agreement will conflict with, or violate or result in a breach of the terms, conditions or provisions of, or constitute a default under the organizational documents of the Paying Agent/Registrar any law or regulation, any order or decree of any court or public authority or corporation having jurisdiction over such party or any mortgage, resolution, contract, agreement or undertaking to which the Paying Agent/Registrar is a party or by which it is bound, and (c) any approvals, consents and orders of any governmental corporation, legislative body board, agency or commission having jurisdiction over the Paying Agent/Registrar which DAL504 /71005 Dallas 799801_3.DOC 10- would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the Paying Agent/Registrar of its obligations under this Auction Agreement have been obtained. Section 4.2. Representations and Warranties of the Board and the Cities The Board and the Cities hereby represent and warrant that: (a) this Auction Agreement has been duly and validly authorized, executed and delivered by the Board and the Cities and constitutes the legal, valid and binding obligation of the Board and the Cities, (b) neither the execution and delivery of this Auction Agreement, the consummation of the transactions contemplated hereby nor the fulfillment of or compliance with the terms and conditions of this Auction Agreement will conflict with, or violate or result in a breach of the terms, conditions or provisions of, or constitute a default under the organizational documents of the Board, any law or regulation, any order or decree of any court having jurisdiction over such party or any mortgage, resolution, contract, agreement or undertaking to which the Board or the Cities is a party or by which any of them are bound, and (c) any approvals, consents and orders of any legislative body board, agency or commission having jurisdiction over the Board which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by the Board of its obligations under this Auction Agreement have been obtained. Section 4.3 Representations and Warranties of the Auction Agent. The Auction Agent hereby represents and warrants that this Auction Agreement has been duly and validly authorized, executed and delivered by the Auction Agent and constitutes the legal, valid and binding limited obligation of the Auction Agent. ARTICLE V MISCELLANEOUS Section 5 1 Term of Agreement. (a) This Auction Agreement shall remain in effect until (i) all Bonds (x) are no longer Outstanding, (y) mature, or (z) are purchased on a Mode Change Date pursuant to Appendix A to the Thirty Ninth Ordinance, (ii) the Bonds are no longer held by the Securities Depository in book -entry form, (iii) this Auction Agreement shall be terminated as provided in this Section, or (iv) the Auction Agent is removed as provided in this Section. The Board may terminate the Auction Agent by giving at least fifteen (15) days notice to the Auction Agent and each Broker Dealer- provided, however that a successor Auction Agent has been appointed. The Auction Agent may terminate this Auction Agreement by giving at least ninety (90) days notice to the Board and the Paying Agent/Registrar (and shall give notice of the same to each Broker Dealer) provided, however that a successor Auction Agent has been appointed. In the event the Auction Agent has not been compensated for its services rendered hereunder the Auction Agent may terminate this Auction Agreement by giving at least thirty (30) days notice to the Board (and shall give notice of the same to each Broker Dealer), and upon the expiration of such thirty (30) days, the Auction Agent may resign even if a successor Auction Agent has not been appointed. DAL504 /71005 Dallas 799801_3.DOC 11 (b) Except as otherwise provided in this paragraph (b), the respective rights and duties of the Board, the Cities, the Paying Agent/Registrar and the Auction Agent under this Auction Agreement shall cease upon termination of this Auction Agreement. The representations and warranties of the Board, the Paying Agent/Registrar and the Cities contained herein, and the rights of the Auction Agent under Sections 3.2 and 3 4 hereof, shall survive the termination hereof. Upon termination of this Auction Agreement, the Auction Agent shall be deemed to have resigned as Auction Agent under each of the Broker Dealer Agreements and, upon request of the Board, shall promptly deliver to the Board copies of all books and records maintained by it in connection with its duties hereunder Section 5.2 Communications. Except for (a) communications authorized to be by telephone pursuant to this Auction Agreement or the Auction Procedures and (b) communications in connection with Auctions (other than those expressly required to be in writing), all notices, requests and other communications to any party hereunder shall be in writing (for purposes of this Auction Agreement, telecopy or other electronic communication acceptable to the parties) and shall be given to such party addressed to it, at its address or telecopy number for purposes of this Auction Agreement, set forth below- If to the Board, addressed. If to the City of Dallas, addressed. If to the City of Fort Worth, addressed DAL504 /71005 Dallas 799801 IDOC Dallas/Fort Worth International Airport Board P O Drawer 619428 3200 E. Airfield Drive DFW Airport, TX 75261 9428 Attention. Executive Vice President and Chef Financial Officer Telephone No 972 574 -6334 Facsimile No 972 754 -5509 City of Dallas, Texas 1500 Marilla Street Dallas, Texas 75201 Attention. City Manager Telephone No 214 - 670 -3296 Facsimile No 214 - 670 -3946 City of Fort Worth, Texas 1000 Throckmorton Fort Worth, Texas 76102 Attention. City Manager Telephone No 817- 871 -6116 Facsimile No 817 - 871 -6134 12 If to the Paying Agent/Registrar- If to the Auction Agent, addressed. J.P Morgan Trust Company National Association [TO COME] Attention. Corporate Trust Deutsche Bank Trust Company Americas Trust & Securities Services 60 Wall Street, 27th Floor New York, New York 10005 Attention. Auction Rate Group Telephone No 212 250 -6645 Facsimile No 212 797 -8600 or such other address, telecopier number or e-mail address as such party may hereafter specify for such purpose by notice to the other parties. Each such notice, request or communication shall be effective (a) if given by telecopy when such telecopy is transmitted to the telecop>er number specified herein or (b) if given by any other means, when delivered at the address specified herein. Communications shall be given on behalf of the parties hereto by one of their respective Authorized Officers. Section 5.3 Entire Agreement. This Auction Agreement contains the entire agreement between the parties hereto relating to the subject matter hereof, and there are no other representations, endorsements, promises, agreements or understandings, oral, written or inferred, between the parties hereto relating to the subject matter hereof. Section 5 4 Benefits. Successors and Assigns. This Auction Agreement shall be binding upon the Board, the Cities, the Paying Agent/Registrar and the Auction Agent and their respective successors and assigns. This Auction Agreement shall inure to the benefit of and be enforceable by the Board, the Cities, the Paying Agent/Registrar and the Auction Agent and their respective successors and assigns. Nothing herein, express or implied, shall give to any person, other than the Board, the Cities, the Paying Agent/Registrar and the Auction Agent and their respective successors or assigns, any benefit of any legal or equitable right, remedy or claim hereunder except as otherwise expressly stated, other than the rights expressly granted to the Board and the Cities herein. Section 5.5 Amendment. Waiver (a) This Auction Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by written instrument signed by a duly Authorized Officer of the parties hereto (b) The failure of any party hereto to exercise any right or remedy hereunder in the event of a breach hereof by the other party shall not constitute a waiver of any such right or remedy with respect to any subsequent breach. DAL504 /71005 Dallas 799801_3.DOC 13 Section 5 6 Severability If any clause, provision or section hereof shall be ruled invalid or unenforceable by any court or competent jurisdiction, the invalidity or unenforceability of such clause, provision or section shall not affect any of the remaining clauses, provisions or sections hereof. Section 5 7 Execution in Counterparts. Effectiveness of Auction Agreement. This Auction Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. This Auction Agreement shall take effect immediately upon the execution and delivery hereof. Notwithstanding the actual effective date hereof, for convenience and purposes of reference this Auction Agreement shall be dated as of May 1 2004 Section 5 8 Governing, Law: Jurisdiction. This Auction Agreement shall be deemed to be a contract made under and shall be construed in accordance with and governed by the laws of the State of Texas, provided that the Auction Agent's obligations hereunder shall be construed in accordance with and governed by the laws of the State of New York. Each party hereby consents to the jurisdiction of a state or federal court situated in Dallas or Tarrant County Texas in connection with any dispute ansmg hereunder Each party hereby irrevocably waives, to the fullest extent permitted by applicable law any objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that such proceeding brought in such a court has been brought in an inconvenient forum. DAL504 /71005 Dallas 799801_3.DOC [Signature Page of this Agreement Follows] 14- IN WITNESS WHEREOF the parties hereto have caused this Auction Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date first above written. Approved as to Form. City Attorney Approved as to Form and Legality- City Attorney Attest: Board Secretary CITY OF DALLAS, TEXAS City Manager CITY OF FORT WORTH, TEXAS City Manager DALLAS/FORT WORTH INTERNATIONAL AIRPORT BOARD Chief Executive Officer DEUTSCHE BANK TRUST COMPANY AMERICAS, as Auction Agent Un Authorized Signatory Signature Page to Auction Agreement J.P MORGAN TRUST COMPANY NATIONAL ASSOCIATION as Paying Agent/Registrar LI-A Signature Page to Auction Agreement DAL504 /71005 Dallas 799801 3.DOC EXHIBIT A Form of Broker Dealer Agreement [See separate Broker Dealer Agreement] Al T Auction Period, accrued interest if the purchase date is not an Interest Payment Date for such Bond) against receipt of such principal amount of Bonds, (iii) instruct each Existing Owner on whose behalf such Broker Dealer submitted a Sell Order that was accepted or a Bid that was rejected, in whole or in part, to instruct such Existing Owner's Agent Member to deliver to such Broker Dealer (or its Agent Member) through the Securities Depository the principal amount of Bonds to be sold pursuant to such Bid or Sell Order against payment therefor- (iv) advise each Existing Owner on whose behalf such Broker Dealer submitted an Order and each Potential Owner on whose behalf such Broker Dealer submitted a Bid of the Auction Period Rate for the next succeeding Auction Penod or in the case of Bonds in a daily Auction Period, the Auction Period Rate for the current Auction Period, (v) advise each Existing Owner on whose behalf such Broker Dealer submitted an Order of the Auction Date of the next succeeding Auction, and (vi) advise each Potential Owner on whose behalf such Broker Dealer submitted a Bid that was accepted, in whole or in part, of the Auction Date of the next succeeding Auction. (c) On the basis of the information provided to it pursuant to paragraph (a) above, each Broker Dealer that submitted a Bid or Sell Order shall allocate any funds received by it pursuant to subparagraph (b)(ii) above, and any Bonds received by it pursuant to (b)(iii) above, among the Potential Owners, if any on whose behalf such Broker Dealer submitted Bids and the Existing Owners, if any on whose behalf such Broker Dealer submitted Bids or Sell Orders and any Broker Dealer identified to it by the Auction Agent pursuant to subparagraph (a)(v) above. (d) On the Business Day after the Auction Date or in the case of Bonds in a daily Auction Period, on such Auction Date, the Secunties Depository shall execute the transactions described above, debiting and crediting the accounts of the respective Agent Members as necessary to effect the purchase and sale of Bonds as determined in the Auction. DAL504 /71005 Dallas 799801_3.DOC Im APPENDIX E Draft of 03/05/04 BROKER DEALER AGREEMENT Dated as of May 1 2004 among DEUTSCHE BANK TRUST COMPANY AMERICAS as Auction Agent, CITY OF DALLAS TEXAS CITY OF FORT WORTH, TEN-AS DALLAS/FORT WORTH INTERNATIONAL AIRPORT BOARD and RBC DAIN RAUSCHER INC relating to Cities of Dallas and Fort Worth, Texas $130 000 000 Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A DAL504 /71005 Dallas 799808_3.DOC TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1 1 Terms Defined by Reference to the Bond Ordinance 2 Section 1.2. Terms Defined Herein 2 Section 1.3 Rules of Construction 2 Section 14 Warranties of BD 3 ARTICLE II THE AUCTION Section 2 1 Purpose; Incorporation by Reference of Auction Procedures and Settlement Procedures 3 Section 2.2. Preparation for Each Auction 4 Section 2.3 Auction Schedule; Method of Submission of Orders 4 Section 2 4 Notices 5 Section 2 5 Compensation. 6 Section 2.6 Settlement. 7 ARTICLE III THE AUCTION AGENT Section 3 1 Duties and Responsibilities of the Auction Agent 8 Section 3.2. Rights of the Auction Agent. 8 Section 3.3 Auction Agent's Disclaimer 9 Section 4 1 Disclosure ARTICLE IV DISCLOSURE ARTICLE V MISCELLANEOUS Section 5 1 Termination Section 5.2 Participant. Section 5.3 Communications. Section 5 4 Entire Agreement Section 5 5 Benefits, Successors and Assigns DAL504 /71005 Dallas 799808 3.130C (i) 0 10 10 10 11 11 Section 5 6 Amendment; Waiver Section 5 7 Severability Section 5 8 Execution in Counterparts, Effectiveness of Broker Dealer Agreement Section 5 9 Governing Law Section 5 10 No Implied Duties Exhibit A — Settlement Procedures for Auction Bonds Exhibit B — Order Form Exhibit C — Transfer Form Exhibit D — Notice of Failure to Deliver Exhibit E — Listing of Existing Owners of Auction Bonds DAL504 /71005 Dallas 799808_3.DOC (ii) 12 12 12 12 12 BROKER DEALER AGREEMENT THIS BROKER DEALER AGREEMENT dated as of May 1 2004 (the `Broker Dealer Agreement'), among Deutsche Bank Trust Company Americas (the Auction Agent "), a New York banking corporation (not in its individual capacity but solely as agent of the Cities of Dallas and Fort Worth, Texas (the `Cities ") and the Dallas/Fort Worth International Airport Board (the `Board "), pursuant to authority granted to the Auction Agent in the Auction Agreement, dated as of May 1 2004 (the Auction Agreement'), among the Cities, the Board, J.P Morgan Trust Company National Association, as Paying Agent/Registrar and the Auction Agent), the Cities, the Board and RBC Dam Rauscher Inc. ( "BD ")- WITNESSETH WHEREAS, the Cities are issuing $130 000 000 aggregate principal amount of their Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A (the `Bonds" or Auction Bonds "), and WHEREAS, the Bonds may consist of two or more subseries as provided in the Bond Ordinance (as defined below)- and WHEREAS, BD is to perform certain duties set forth herein, and WHEREAS, the Thirty -Ninth Supplemental Concurrent Bond Ordinance adopted by the City Councils of the Cities and effective as of April _, 2004 (the `Thirty -Ninth Ordinance ") and the Officers Pricing Certificate relating to the Bonds dated May_, 2004 (the `Officers Pricing Certificate" and, collectively with the Thirty Ninth Ordinance, the `Bond Ordinance ") provides that, except as provided therein, the interest rate on the Bonds shall be the Auction Period Rate which shall be, except as otlierwise provided therein, the rate per annum that the Auction Agent determines to have resulted from the implementation of the Auction Procedures, and WHEREAS, Deutsche Bank Trust Company Americas has been appointed as Auction Agent for purposes of the Auction Agreement and, pursuant to Section 2.6(a) of the Auction Agreement, the Board and the Cities have requested and directed the Auction Agent to execute and deliver this Broker Dealer Agreement; and WHEREAS, the Auction Procedures require the participation of one or more Broker Dealers, WHEREAS BD has been selected in the Auction Agreement as Broker Dealer for the Bonds, NOW THEREFORE, the Auction Agent, as agent for the Cities and the Board, BD for the benefit of the Existing Owners and the Potential Owners of the Auction Bonds, and the Cities and the Board agree as follows. DAL504 /71005 Dallas 799808 IDOC ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION Section 1 1 Terms Defined by Reference to the Bond Ordinance. Capitalized terms not defined herein shall have the respective meanings specified in the Bond Ordinance. Unless otherwise specified, Section references to the Auction Agreement refer to such Sections in the Auction Agreement. Section 1.2. Terms Defined Herein. As used herein and in the exhibits hereto, the following terms shall have the following meanings, unless the context otherwise requires. Authorized Officers" shall mean such Vice President, Assistant Vice President and Associate of the Auction Agent assigned to its Trust and Securities Services and every other officer or employee of the Auction Agent designated as an Authorized Officer" for purposes hereof in a communication to the BD `BD Officer" shall mean each officer or employee of BD designated as a `BD Officer" for purposes of this Broker Dealer Agreement in a communication to the Auction Agent. `Broker Dealer Agreement" shall mean this Broker Dealer Agreement and any substantially similar agreement between the Auction Agent and a Broker Dealer `Broker Dealer Fee" shall mean the fee calculated as provided in Section 2.5(b) hereof. `Broker Dealer Fee Rate" shall mean the initial Broker Dealer Fee Rate set forth in Section 2.5(a) hereof; provided, however that if such initial Broker Dealer Fee Rate is adjusted pursuant to Section 2.5(a) hereof, the Broker Dealer Fee Rate shall mean such adjusted Broker Dealer Fee Rate. `Settlement Procedures" shall mean the Settlement Procedures for the Bonds and shall be substantially in the form attached hereto as Exhibit A. Section 1.3 Rules of Construction. Unless the context or rules indicate another or different meaning or intent, the following rules shall apply to the construction of this Broker Dealer Agreement: (a) Words importing the singular number shall include the plural number and vice versa. (b) The captions and headings herein are solely for the convenience of reference and shall not constitute a part of this Broker Dealer Agreement nor shall they affect its meaning, construction or effect. (c) The words `hereof, `herein, `hereto `hereby" and `hereunder" and other words of similar import refer to this Broker Dealer Agreement as a whole and not to any particular Section, subsection or other subdivision. DAL504 /71005 Dallas 799808 IDOC 2 (d) All references herein to a particular time of day shall be to New York City time. (e) Each reference to the purchase, sale or holding of `Bonds" shall refer to beneficial ownership interests in Bonds unless the context clearly requires otherwise. (f) Unless the context clearly otherwise requires, all references herein to Section numbers are references to Sections of this Broker Dealer Agreement. (g) References herein to `Bonds" shall be deemed to refer to the Bonds of each subseries, if any Section 14 Warranties of BD BD hereby represents and warrants that this Broker Dealer Agreement has been duly authorized, executed and delivered by BD and that, assuming the due authorization, execution and delivery hereof by the Auction Agent, this Broker Dealer Agreement constitutes a valid and binding agreement of BD enforceable against it in accordance with its terms. ARTICLE II THE AUCTION Section 2 1 Purpose; Incorporation by Reference of Auction Procedures and Settlement Procedures. (a) The Auction Procedures will be followed by the Auction Agent for the purpose of determining the Auction Period Rate for the Bonds, for each Auction Period after the initial Auction Period. Each periodic implementation of such procedures is hereinafter referred to as an Auction. (b) All of the provisions contained in the Auction Procedures and the Settlement Procedures are incorporated herein by reference in their entirety and shall be deemed to be a part of this Broker Dealer Agreement to the same extent as if such provisions were fully set forth herein. (c) BD agrees to act as, and assumes the obligations of, and limitations and restrictions placed upon, a Broker Dealer under this Broker Dealer Agreement. BD understands that other Persons meeting the requirements specified in the definition of `Broker Dealer" contained in Exhibit I to Appendix A to the Thirty -Ninth Ordinance (the Auction Rate Exhibit ") may execute Broker Dealer Agreements and participate as Broker Dealers in Auctions. BD agrees to handle customer orders in accordance with its respective duties under applicable securities laws and rules. (d) BD and other Broker Dealers may participate in Auctions for their own accounts. The Board may however by notice to BD and all other Broker Dealers, prohibit all of the Broker Dealers from submitting Bids in Auctions for their own accounts, provided that Broker Dealers may continue to submit Hold Orders and Sell Orders. The Auction Agent shall be under no duty or liability with respect to monitoring compliance with this Section 2.1(d) DAL504/71005 Dallas 799808_3.DOC W Section 2.2. Preparation for Each Auction. (a) Not later than 9.30 A.M. on each Auction Date, the Auction Agent shall advise the Broker Dealers by telephone or other electronic communication acceptable to the parties of the Default Rate, the All Hold Rate, the Maximum Auction Rate and the Index. (b) On the Closing Date and from time to time thereafter as the Auction Agent shall request, BD shall provide the Auction Agent, with respect to the Bonds, with a list, substantially in the form of Exhibit E hereto, of the names of its customers that it believes are Existing Owners of the Bonds and the principal amount of Bonds held by each of such customers. The Auction Agent shall not disclose any such information so provided to any Person other than the Board, the Cities or BD- provided, however that the Auction Agent reserves the right and is authorized to disclose any such information if (a) it is ordered to do so by a court of competent jurisdiction or a regulatory judicial or quasi judicial agency or authority having the authority to compel such disclosure, (b) it is advised by its counsel that its failure to do so would be unlawful or (c) failure to do so would expose the Auction Agent to loss, liability claim, damage or expense for which it has not received indemnity satisfactory to it. (c) Not later than 3.00 P.M. on the Record Date preceding each Auction Date, the Auction Agent shall notify BD of any change in the aggregate principal amount of Bonds, as of the opening of business on such Record Date by delivering a notice to BD by telecopy or other electronic communication acceptable to the parties. Section 2.3 Auction Schedule; Method of Submission of Orders. (a) The Auction Agent shall conduct Auctions for the Bonds in accordance with the schedule set forth below Such schedule may be changed at any time by the Auction Agent at the written direction of the Board to reflect then currently accepted market practices for similar auctions. The Auction Agent shall give notice of any such change to BD which notice shall be given prior to the close of business on the Business Day immediately preceding the first Auction Date on which any such change shall be effective. Time Event By 9:30 A.M. 9 30 A.M. 1.00 P.M. (11.00 A.M. m the case of a daily Auction Period) DAL504 /71005 Dallas 799808_3.DOC -4- Auction Agent advises the Broker Dealers of, with respect to the Bonds, the Default Rate, the All Hold Rate, the Maximum Auction Rate and the Index, as set forth in Section 2.2(a) Auction Agent assembles information communicated to it by Broker Dealers as provided in Section 2.02 of the Auction Rate Exhibit. Submission Deadline is 1.00 P.M. (11.00 A.M. in the case of a daily Auction Period) Time As soon as practical after 1 00 P.M. (by 11.30 A.M. in the case of a daily Auction Period) By approximately 3.00 P.M. but not later than the close of business (by 12.00 noon in the case of a daily Auction Period) Event Auction Agent makes determinations pursuant to Section 2 03 of the Auction Rate Exhibit. Submitted Bids and Submitted Sell Orders are accepted and rejected and Bonds allocated as provided Auction Rate Exhibit. notice of the Auction Section 2.4(a) hereof. in Section 2 04 of the Auction Agent gives results as set forth in (b) BD agrees, for the purpose of implementing the Auctions (and thereby achieving the lowest possible interest rate on the Bonds), to contact Potential Owners, including Persons that are not Existing Owners, prior to the Submission Deadline on each Auction Date to determine the principal amount of Auction Bonds, if any that each such Potential Owner offers to purchase if the rate determined by the Auction Procedures for the next succeeding Auction Period is not less than the rate per annum requested by such Potential Owner BD further agrees, upon request, to deliver a copy of the Auction Procedures and other relevant documents prepared for the purpose of disclosure to Potential Owners by the Board relating to the Bonds to each Potential Owner prior to such Potential Owner's participation in any Auction. (c) In each Auction in which BD submits one or more Orders, BD shall submit a separate Order to the Auction Agent for each Potential Owner or Existing Owner on whose behalf BD is submitting an Order and shall not net the Orders of different Potential Owners or Existing Owners on whose behalf BD is submitting Orders. Each Order shall be in writing in substantially the form attached hereto as Exhibit B or in such other form as may be reasonably acceptable to the Auction Agent. (d) BD shall deliver to the Auction Agent, with respect to the Bonds, (i) a written notice, substantially in the form attached hereto as Exhibit C, of transfers of Bonds made through BD by an Existing Owner to another Person other than pursuant to an Auction, and (ii) a written notice, substantially in the form attached hereto as Exhibit D of the failure of any Bonds to be transferred to or by any Person that purchased or sold Bonds through BD pursuant to an Auction. The Auction Agent is not required to accept any such notice specified in this Subsection (d) for an Auction if it is received by it after 3.00 P.M. on the Business Day preceding such Auction. Section 2 4 Notices. (a) On each Auction Date, the Auction Agent shall notify BD by telephone or other electronic communication acceptable to the parties of the results of the Auction as set forth in paragraph (a) of the Settlement Procedures. As soon as reasonably practicable thereafter the Auction Agent shall notify BD if so requested, in writing of the disposition of all Orders submitted by BD in the Auction held on such Auction Date. DAL504 /71005 Dallas 799808_3.DOC 5- (b) The Auction Agent shall notify BD of any change in the Auction schedule set forth in Section 2.3(a) hereof. (c) BD shall notify each Existing Owner or Potential Owner on whose behalf BD has submitted an Order as set forth in paragraph (b) of the Settlement Procedures, and take such other action as is required of BD pursuant to the Settlement Procedures. (d) The Auction Agent shall deliver to BD after receipt all notices and certificates which the Auction Agent is required to deliver to BD pursuant to Article II of the Auction Agreement at the times and in the manner set forth in the Auction Agreement. Section 2.5 Compensation. (a) The Broker Dealer Fee for the Bonds shall be paid by the Board and represents compensation for the services of the Broker Dealer in facilitating Auctions for the benefit of the beneficial owners of the Bonds. The initial Broker Dealer Fee Rate shall equal '/ (one- quarter) of 1% per annum. The Broker Dealer Fee Rate may be adjusted from time to time with the approval of the Board upon a written request of the Broker Dealer delivered to the Board. (b) While the Bonds are in an Auction Period other than a daily Auction Period, on each Interest Payment Date following each Auction Date, each Broker Dealer shall be entitled to receive an amount equal to the product of (x) the Broker Dealer Fee Rate multiplied by (y)(A) if an Auction was held on such Auction Date, the sum of the aggregate principal amount of Bonds that were (1) the subject of a valid Hold Order of an Existing Owner submitted by such Broker Dealer (2) the subject of a Submitted Bid of an Existing Owner submitted by such Broker Dealer and continued to be held by such Existing Owner as a result of such Auction, (3) the subject of a Submitted Bid of a Potential Owner submitted by such Broker Dealer and were purchased by such Potential Owner as a result of such Auction and (4) deemed to be the subject of a Hold Order by an Existing Owner that were acquired by such Existing Owner from such Broker Dealer or (B) if an Auction was not held on such Auction Date, the aggregate principal amount of Outstanding Bonds that were acquired by an Existing Owner through such Broker Dealer multiplied by (z) a fraction, the numerator of which is (i) if the Auction Period is seven days, 28 days or 35 days, the actual number of days in the Auction Period next succeeding such Auction Date or (ii) if the Auction Period is a Special Auction Period of more than 180 days, the number of days in the Auction Period next succeeding such Auction Date calculated on the basis of twelve 30 -day months in a year and in either case the denominator of which is 360 If the Bonds are in a daily Auction Period each Broker Dealer shall be entitled to receive on each Interest Payment Date an amount equal to the sum calculated for each Auction Period in the preceding month of the product of (x) the Broker Dealer Fee Rate multiplied by (y) the aggregate principal amount of Bonds for each Auction Period that were (1) the subject of a valid Hold Order submitted by such Broker Dealer (2) the subject of a Submitted Bid of an Existing Owner submitted by such Broker Dealer and continued to be held by such Existing Owner as a result of such Auction, (3) the subject of a Submitted Bid of a Potential Owner submitted by such Broker Dealer and were purchased by such Potential Owner as a result of such Auction, (4) deemed to be the subject of a Hold Order by an Existing Owner that were acquired by such Existing Owner from such Broker Dealer and (5) if an Auction was not held for any Auction Period, the aggregate principal amount of Outstanding Bonds that were acquired by an Existing DAL504 /71005 Dallas 799808_3.DOC on Owner through such Broker Dealer multiplied by (z) a fraction, the numerator of which is the number of days in the Auction Period and denominator of which is 360 The Broker Dealer Fee shall be calculated by the Auction Agent, which shall be conclusive absent manifest error Such amounts shall be communicated by the Auction Agent to the Board and the Paying Agent/Registrar by 4.00 P.M., New York City time, on the Business Day immediately preceding each Interest Payment Date. On or before 10.00 A.M. on each Interest Payment Date, the Board shall pay to the Paying Agent/Registrar the amount due to the Broker Dealer By noon on each Interest Payment Date, the Paying Agent/Registrar shall deliver to the Auction Agent the amount constituting the Broker Dealer Fee, by wire transfer of immediately available funds to such account as the Auction Agent may designate. The amount constituting the Broker Dealer Fee shall be held by the Auction Agent on behalf of the Broker Dealer and, immediately upon receipt of such Broker Dealer Fee, the Auction Agent shall deliver such Broker Dealer Fee to the Broker Dealer pursuant to the written instructions of the Broker Dealer If any Existing Owner who acquired Bonds through a Broker Dealer transfers any such Bonds to another Person other than through an Auction, the Broker Dealer for the Bonds so transferred shall continue to be the Broker Dealer with respect to such Auction Bonds, provided, however that if the transfer was effected by or if the transferee is, another Person who has met the requirements specified in the definition of `Broker Dealer" contained in the Auction Rate Exhibit and executed a Broker Dealer Agreement, such Person shall be the Broker Dealer for such Bonds. Section 2.6 Settlement. (a) If any Potential Owner on whose behalf BD has submitted an Order fails to deliver funds with respect to any Auction, BD shall promptly deliver such funds to the party entitled to receive such funds. If any Existing Owner on whose behalf BD has submitted an Order fails to instruct its Agent Member to deliver Bonds subject to such Order against payment therefor BD shall instruct such Agent Member to deliver such Bonds against payment therefor The delivery of funds by BD for the purchase of Bonds by a Potential Owner as provided above, shall not relieve such Potential Owner of any liability to BD for payment for such Auction Bonds. Notwithstanding the foregoing provisions of this Section 2.6(a), any delivery or nondelivery of Bonds which represents any departure from the results of an Auction, as determined by the Auction Agent, shall be of no effect unless and until the Auction Agent shall have been notified of such delivery or non - delivery in accordance with the terms of Section 2.3(d) hereof. The Auction Agent shall have no duty or liability with respect to enforcement of this Section 2.6(a) (b) The Auction Agent, the Cities and the Board shall have no responsibility or liability with respect to the failure of an Existing Owner a Potential Owner or its respective Agent Member to deliver Bonds or to pay for Bonds sold or purchased pursuant to the Auction Procedures or otherwise. DAL504 /71005 Dallas 799808_3.DOC 7 ARTICLE III THE AUCTION AGENT Section 3 1 Duties and Responsibilities of the Auction Agent. (a) The Auction Agent is acting solely as agent of the Cities and the Board and owes no duties, fiduciary or otherwise, to any Person by reason of this Broker Dealer Agreement except as expressly set forth herein or in the Auction Agreement, and no implied duties, fiduciary or otherwise, shall be read into this Broker Dealer Agreement against the Auction Agent. (b) The Auction Agent undertakes to perform such duties and only such duties as are expressly set forth herein, or expressly incorporated herein by reference pursuant to Section 2.1(b) hereof, to be performed by it, and no implied covenants or obligations shall be read into this Broker Dealer Agreement against the Auction Agent. (c) In the absence of willful misconduct or negligence on its part, the Auction Agent, whether acting directly or through agents or attorneys as provided in Section 3.2(c) hereof, shall not be liable for any action taken, suffered, or omitted or for any error of judgment made by it in the performance of its duties hereunder The Auction Agent shall not be liable for any error of judgment made In good faith unless the Auction Agent shall have been negligent in ascertaining the pertinent facts necessary to make such judgment. (d) The Auction Agent shall not be: (i) required to, and does not, make any representations nor have any responsibilities as to the validity accuracy value or genuineness of any signatures or endorsements, other than its own, (ii) obligated to take any legal action hereunder that might, in its judgment, involve any expense or liability unless it has been furnished with indemnity satisfactory to it; and (iii) responsible for or liable in any respect on account of the identity authority or rights of any Person executing or delivering or purporting to execute or deliver any document under this Broker Dealer Agreement. (e) The Auction Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under this Broker Dealer Agreement arising out of or caused, directly or indirectly by circumstances beyond its reasonable control, including without limitation, acts of God, earthquakes, fires, floods, wars, civil or military disturbances, terrorism, sabotage; epidemics, hots, interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents, labor disputes, acts of civil or military authority or governmental actions; it being understood that the Auction Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. Section 3.2. Rights of the Auction Agent. (a) The Auction Agent may conclusively rely upon, and shall be fully protected in acting or refraining from acting upon, any communication authorized hereby and upon any such written instruction, notice, request, direction, consent, report, certificate, share certificate or other instrument, paper or other document believed by it to be genuine. The Auction Agent shall not be DAL504 /71005 Dallas 799808_3.D0C liable for acting, or refraining from acting, in good faith upon any such communication made by telephone, facsimile or other electronic communication acceptable to the parties which the Auction Agent reasonably believes (or has no reason not to believe) to have been given by the particular party or parties. The Auction Agent may record telephone communications with the Broker Dealers, and each of such Broker Dealers may record telephone communications with the Auction Agent. (b) The Auction Agent shall not be required to advance, expend or risk its own funds or otherwise incur or become exposed to financial liability in the performance of its duties hereunder (c) The Auction Agent may perform its duties and exercise its rights hereunder either directly or by or through agents or attorneys. (d) The Auction Agent shall have no obligation or liability in respect of the registration or exemption therefrom of the Bonds under federal or state securities laws or in respect of the sufficiency or the conformity of any transfer of the Bonds to the terms of the Auction Agreement, this or any other Broker Dealer Agreement, the Bond Ordinance or any other document contemplated by any thereof. Section 3.3 Auction Agent's Disclaimer The Auction Agent makes no representation as to and assumes no responsibility for the correctness of the recitals in, or the validity (other than the representations in Section 4.3 of the Auction Agreement), adequacy or accuracy of this Broker Dealer Agreement, the Auction Agreement, the Bonds, any offering document used to make offers or sales thereof or any other agreement or instrument executed in connection with the transactions contemplated herein. ARTICLE IV DISCLOSURE Section 4 1 Disclosure. (a) The Board agrees to supply to BD on or prior to the Closing Date, at the Board s expense, such number of copies of the Official Statement relating to the Bonds, dated on or about 2004 including any amendments thereto (the `Official Statement "), as BD shall reasonably request. (b) If, as a result of a change in law or new interpretation of an existing law by a court or regulatory agency it becomes necessary in the reasonable judgment of BD to prepare a disclosure document in connection with Auctions for Bonds, then the Board shall at its expense prepare such disclosure document (the `Disclosure Statement"). DAL504 /71005 Dallas 799808_3.DOC Q ARTICLE V MISCELLANEOUS Section 5 1 Termination. BD may resign at any time, upon five Business Days notice to the Auction Agent; provided, however that BD may resign immediately if it determines, in its reasonable judgment, that for any reason, including, without limitation, (i) a pending or proposed change in applicable tax laws, (ii) a material adverse change in the financial condition of the Dallas /Fort Worth International Airport, (iii) hostilities involving the United States, (iv) a down - rating of the Bonds, or (v) an imposition of material restrictions on the Bonds or similar obligations, it is not advisable to attempt to Auction the Bonds. The Auction Agent at the written direction of the Board shall terminate this Broker Dealer Agreement at any time on five Business Days notice to the other parties hereto Section 5.2. Participant. BD is and for the term of this Broker Dealer Agreement shall remain a member of, a participant in, or an affiliate of such a member or participant in the Securities Depository- and will give the Auction Agent, each other Broker Dealer and the Board two Business Days notice if it ceases to be so or if it changes its participation or affiliation to a different Securities Depository Section 5.3 Communications. Except for (i) communications authorized to be by telephone pursuant to this Broker Dealer Agreement or the Auction Procedures and (ii) communications in connection with Auctions (other than those expressly required to be in writing) all notices, requests and other communications to any party hereunder shall be in writing (for purposes of this Broker Dealer Agreement, telecopy or similar writing or other electronic communication acceptable to the parties shall be deemed to be in writing) and shall be given to such party addressed to it, at its address, telecopy number or e-mail address set forth below and, where appropriate, reference the particular Auction to which such notice relates. If to the BD addressed. If to the City of Dallas, addressed. DAL504 /71005 Dallas 799808_3.DOC RBC Dain Rauscher Inc. [TO COME] Attention. Telephone No Facsimile No City of Dallas, Texas 1500 Marilla Street Dallas, Texas 75201 Attention. City Manager Telephone No 214- 670 -3296 Facsimile No 214 - 670 -3946 10- If to the City of Fort Worth, addressed. If to the Auction Agent, addressed. If to the Board, addressed. City of Fort Worth, Texas 1000 Throckmorton Fort Worth, Texas 76102 Attention. City Manager Telephone No 817- 871 -6116 Facsimile No 817 - 871 -6134 Deutsche Bank Trust Company Americas Trust & Securities Services 60 Wall Street, 27th Floor New York, New York 10005 Attention. Auction Rate Group Telephone No 212 250 -6645 Facsimile No 212 797 -8600 Dallas/Fort Worth International Airport Board P O Drawer 619428 3200 E. Airfield Drive DFW Airport, TX 75261 9428 Attention. Executive Vice President and Chief Financial Officer Telephone No 972 574 -6334 Facsimile No 972 754 -5509 or such other address or telecopy number as such party may hereafter specify for such purpose by notice to the other party Each such notice, request or communication shall be effective (i) if given by telecopier when such telecopy is transmitted to the telecopy number specified herein or (u) if given by any other means, when delivered at the address specified herein. Communications shall be given on behalf of BD by a BD Officer and on behalf of the Auction Agent by an Authorized Officer Section 5 4 Entire Agreement. This Broker Dealer Agreement, and the other agreements and instruments executed and delivered in connection with the issuance of the Bonds, contain the entire agreement between the parties relating to the subject matter hereof, and there are no other representations, endorsements, promises, agreements or understandings, oral, written or inferred, between the parties relating to the subject matter hereof. Section 5.5 Benefits. Successors and Assigns. This Broker Dealer Agreement shall be binding upon, inure to the benefit of, and be enforceable by the respective successors and assigns of BD and the Auction Agent. Nothing in this Broker Dealer Agreement, express or implied, shall give to any Person, other than the Auction Agent and BD and their respective successors and assigns, any benefit of any legal or equitable right, remedy or claim under this DAL504 /71005 Dallas 799808_3.DOC 11 Broker Dealer Agreement, other than the rights expressly granted to the Board and the Cities herein. Section 5 6 Amendment; Waiver (a) This Broker Dealer Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the parties hereto (b) Failure of any party to this Broker Dealer Agreement to exercise any right or remedy hereunder in the event of a breach of this Broker Dealer Agreement by any other party shall not constitute a waiver of any such right or remedy with respect to any subsequent breach. Section 5 7 Severability If any clause, provision or section of this Broker Dealer Agreement shall be ruled invalid or unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such clause, provision or section shall not affect any of the remaining clauses, provisions or sections hereof Section 5 8 Execution in Counterparts, Effectiveness of Broker Dealer Agreement. This Broker Dealer Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. This Broker Dealer Agreement shall take effect immediately upon the execution and delivery hereof. Notwithstanding the actual effective date hereof, for convenience and purposes of reference this Broker Dealer Agreement shall be dated as of May 1 2004 Section 5 9 Governing Law This Broker Dealer Agreement shall be deemed to be a contract made under and shall be construed in accordance with and governed by the laws of the State of Texas, provided that the Auction Agent's obligations hereunder shall be construed in accordance with and governed by the laws of the State of New York. Each party hereby consents to the jurisdiction of a state or federal court situated in Dallas or Tarrant County Texas in connection with any dispute arising hereunder Each party hereby irrevocably waives, to the fullest extent permitted by applicable law any objection which it may now or hereafter have to the laying of venue of any such proceeding brought in such a court and any claim that such proceeding brought in such a court has been brought in an inconvenient forum. Section 5 10 No Implied Duties. Nothing contained in this Broker Dealer Agreement, the Bond Ordinance or the Auction Agreement shall be deemed to imply any duties, covenants or obligations on the part of the Auction Agent, the Cities or the Board not otherwise expressly set forth herein or therein. DAL504 /71005 Dallas 799808_3.DOC [Signature Page Follows] 12 IN WITNESS WHEREOF the parties hereto have caused this Broker Dealer Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date first above written. Approved as to Form. City Attorney Approved as to Form and Legality- City Attorney DEUTSCHE BANK TRUST COMPANY AMERICAS as Auction Agent Authorized Signatory RBC DAIN RAUSCHER INC Un Authorized Signatory CITY OF DALLAS TEXAS IM City Manager CITY OF FORT WORTH, TEXAS IM City Manager [Signatures continued next page] Signature Page of Broker Dealer Agreement Attest: Board Secretary DALLAS/FORT WORTH INTERNATIONAL AIRPORT BOARD LIM Chief Executive Officer Signature Page of Broker Dealer Agreement EXHIBIT A SETTLEMENT PROCEDURES FOR AUCTION BONDS (a) On each Auction Date, the Auction Agent shall notify by telephone or other electronic communication acceptable to the parties, each Broker Dealer that participated in the Auction held on such Auction Date and submitted an Order on behalf of any Existing Owner or Potential Owner of- (i) the Auction Period Rate of the Auction Bonds fixed for the succeeding Auction Period or in the case of Auction Bonds in a daily Auction Period, the Auction Period Rate on the Auction Bonds fixed for the current Auction Period, (ii) whether Sufficient Clearing Bids existed for the determination of the Winning Bid Rate; (iii) if such Broker Dealer submitted a Bid or a Sell Order on behalf of an Existing Owner whether such Bid or Sell Order was accepted or rejected, in whole or in part, and the principal amount of Auction Bonds, if any to be sold by such Existing Owner- (iv) if such Broker Dealer submitted a Bid on behalf of a Potential Owner whether such Bid was accepted or rejected, in whole or in part, and the principal amount of Auction Bonds, if any to be purchased by such Potential Owner- (v) if the aggregate principal amount of Auction Bonds to be sold by all Existing Owners on whose behalf such Broker Dealer submitted Bids or Sell Orders is different from the aggregate principal amount of Auction Bonds to be purchased by all Potential Owners on whose behalf such Broker Dealer submitted a Bid, the name or names of one or more other Broker Dealers (and the Agent Member if any of each such other Broker Dealer) and the principal amount of Auction Bonds to be (A) purchased from one or more Existing Owners on whose behalf such other Broker Dealers submitted Bids or Sell Orders or (B) sold to one or more Potential Owners on whose behalf such other Broker Dealers submitted Bids, and (vi) the immediately succeeding Auction Date. (b) On each Auction Date, each Broker Dealer that submitted an Order on behalf of any Existing Owner or Potential Owner shall. (i) advise each Existing Owner and Potential Owner on whose behalf such Broker Dealer submitted a Bid or Sell Order whether such Bid or Sell Order was accepted or rejected, in whole or in part; (ii) instruct each Potential Owner on whose behalf such Broker Dealer submitted a bid that was accepted, in whole or in part, to instruct such Potential Owner's Agent Member to pay to such Broker Dealer (or its Agent Member) through the DAL504 /71005 Dallas 799808_3.DOC Al Securities Depository the amount necessary to purchase the principal amount of Auction Bonds to be purchased pursuant to such Bid (including, with respect to the Auction Bonds in a daily Auction Period, accrued interest if the purchase date is not an Interest Payment Date for such Auction Bond) against receipt of such principal amount of Auction Bonds, (iii) instruct each Existing Owner on whose behalf such Broker Dealer submitted a Sell Order that was accepted or a Bid that was rejected, in whole or in part, to instruct such Existing Owner's Agent Member to deliver to such Broker Dealer (or its Agent Member) through the Securities Depository the principal amount of Auction Bonds to be sold pursuant to such Bid or Sell Order against payment therefor- (iv) advise each Existing Owner on whose behalf such Broker Dealer submitted an Order and each Potential Owner on whose behalf such Broker Dealer submitted a Bid of the Auction Period Rate for the next succeeding Auction Period or in the case of Auction Bonds in a daily Auction Period, the Auction Period Rate for the current Auction Period, (v) advise each Existing Owner on whose behalf such Broker Dealer submitted an Order of the Auction Date of the next succeeding Auction, and (vi) advise each Potential Owner on whose behalf such Broker Dealer submitted a Bid that was accepted, in whole or in part, of the Auction Date of the next succeeding Auction. (c) on the basis of the information provided to it pursuant to paragraph (a) above, each Broker Dealer that submitted a Bid or Sell Order shall allocate any funds received by it pursuant to subparagraph (b) (ii) above, and any Auction Bonds received by it pursuant to (b) (iii) above, among the Potential Owners, if any on whose behalf such Broker Dealer submitted Bids, the Existing Owners, if any on whose behalf such Broker Dealer submitted Bids or Sell Orders, and any Broker Dealer identified to it by the Auction Agent pursuant to subparagraph (a) (v) above. (d) On the Business Day after the Auction Date or in the case of Auction Bonds in a daily Auction Period, on such Auction Date, the Securities Depository shall execute the transactions described above, debiting and crediting the accounts of the respective Agent Members as necessary to effect the purchase and sale of Auction Bonds as determined in the Auction. DAL504 /71005 Dallas 799808_3.130C A2 EXHIBIT B (Submit only one Order on this Order Form) $130,000 000 Cities of Dallas and Fort Worth, Texas Dallas/Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A Attention. Date of Auction The undersigned Broker Dealer submits the following Order on behalf of the Bidder listed below- Name of Bidder- Bidder places the Order listed below covering the Auction Bonds indicated (complete only one blank) Auction Bonds now held by Bidder (an Existing Owner), and the Order is a (check one) Hold Order- or Bid at rate of %, or Sell Order or $ Auction Bonds not now held by Bidder (a Potential Owner), and the Order is a Bid at a rate of %. Notes (1) If submitting more than one Order for one Bidder use additional Order Forms. (2) If one or more Orders covering in the aggregate more than the number of Outstanding Auction Bonds held by any Existing Owner are submitted, such DAL504 /71005 Dallas 799808_3.DOC M. Orders shall be considered valid in the order or priority set forth in the Auction Procedures. (3) A Hold Order may be placed only by an Existing Owner covering a number of Outstanding Auction Bonds not greater than the number of Outstanding Auction Bonds currently held. (4) Potential Owners may make only Bids, each of which must specify a rate. If more than one Bid is submitted on behalf of any Potential Owner each Bid submitted shall be a separate Bid with the rate specified. (5) Bids may contain no more than three figures to the right of the decimal point. (6) An Order must be submitted in integral multiples of $25 000 DAL504 /71005 Dallas 799808_3.DOC Name of Broker Dealer- IM EXHIBIT C (To be used only for transfers of Auction Bonds made other than pursuant to an Auction) $130 000 000 Cities of Dallas and Fort Worth, Texas Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A TRANSFER FORM Attention. Check I, II or III I. We are the Existing Owner named below II. We are the Agent Member for such Existing Owner III. We are a Broker Dealer for such Existing Owner We hereby notify you that the Existing Owner named below has transferred. Auction Bonds to Auction Bonds may only be transferred in integral multiples of $25 000 DAL504 /71005 Dallas 799808_3.DOC C1 Complete either I or II DAL504 /71005 Dallas 799808 3.130C I. Corporate Name of Existing Owner- LO Printed Name: Title: II. Corporate Name of Existing Owner- By Name of Agent Member or Broker Dealer Submitting this notice: LIN C2 Printed Name- Title: EXHIBIT D (To be used for failure to deliver Auction Bonds sold pursuant to an Auction) $130,000 000 Cities of Dallas and Fort Worth, Texas Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A NOTICE OF FAILURE TO DELIVER Attention. Complete either I or II I. We are a Broker Dealer for to purchase $ , who was to purchase $ Auction Bonds in the Auction held on II. We are a Broker Dealer for (the `Seller "), who was to sell $ Auction Bonds* in the Auction held on We hereby notify you that (check one) the Seller failed to deliver such Auction Bonds to us. the Purchaser failed to make payment to us upon delivery of such Auction Bonds. the following Broker Dealer failed to deliver to us such Auction Bonds the following Broker Dealer failed to make payment to us upon delivery of such Auction Bonds. (Name of Broker Dealer submitting this notice) Printed Name- Title: Auction Bonds may only be transferred in integral multiples of $25 000 DAL504 /71005 Dallas 799808_3.D0C D -1 EXHIBIT E TO BROKER DEALER AGREEMENT LISTING OF EXISTING OWNERS OF AUCTION BONDS $130 000 000 Cities of Dallas and Fort Worth, Texas Dallas /Fort Worth International Airport Joint Revenue Auction Rate Refunding Bonds, Series 2004A Attention. The undersigned Broker Dealer hereby provides the names and related principal amounts of each of its customers that it believes is an Existing Owner of Auction Bonds. Name of Existing Owner Principal Amount of Auction Bonds DAL504 /71005 Dallas 799808 3.130C Name of Broker Dealer- By- Name: Title: E1