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Optional Term Certificates. A bidder may elect to have all or a portion of the Certificates scheduled to mature in consecutive years issued as term certificates scheduled to mature in the latest of said consecutive years and subject to mandatory prepayment requirements consistent with the schedule of serial maturities set forth above, subject to the following conditions: (1) not less than all Certificates of the same serial maturity shall be converted to term certificates with mandatory prepayment requirements and (2) a bidder shall make such an election by completing the applicable paragraph on the Official Bid Form or including such information in an electronic bid submitted via PARITY*. For purposes of computing the true interest cost (as hereinafter defined) and awarding the Certificates, the maturity of such term certificates shall be treated as if the amounts subject to mandatory sinking fund prepayment are equal to the amounts and mature on the dates currently specified as serial certificates. Book-Entry Only System. The Certificates will initially be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York, to which payments of principal of and interest on the Certificates will be made. Individual purchases of Certificates will be made in book-entry form only. Purchasers will not receive certificates representing their interest in Certificates purchased. Conditions of Bids. Proposals will be received on the Certificates bearing such rate or rates of interest as may be specified by the bidders, subject to the following conditions: The same rate shall apply to all Certificates of the same maturity. Each interest rate specified shall be a multiple of 1/8 or 1/20 of 1%. No interest rate shall exceed 6.0% per annum. The difference between the highest rate specified and the lowest rate specified shall not exceed 4.5%. No supplemental interest payments will be authorized. No bid shall be for less than 98.25% of the principal amount of the Certificates plus accrued interest, if any. Rates shall be in ascending order, in which no rate of a later maturity shall be less than the rate of an earlier maturity, provided that rates may be repeated. Each bid shall specify the total interest cost (expressed in dollars) during the life of the Certificate issue on the basis of such bid, the premium or discount, if any, constituting a part of the bid, and the true interest cost (expressed as a percentage) on the basis of such bid. Solely for purposes of the calculations set forth in the preceding sentence, each bidder shall assume an issuance date for the Certificates of July 1, 2004. Each bidder agrees that, if it is awarded the Certificates, it will provide to the City the certification as to initial offering prices described under the caption "Certification as to Offering Prices" in this Notice. Basis of Award. The Certificates will be awarded to the bidder whose bid will result in the lowest true interest cost (the "Canadian Method") calculated by doubling the semiannual interest rate (compounded semiannually) necessary to discount the debt service payments from the payment dates to the date of the Certificates to equal the price bid, excluding interest accrued to the date of delivery. If there is any discrepancy between the true interest data shown on the bid form and the true interest cost determined from the premium or discount, if any, and the coupons specified on the bid form, the latter shall govern and the true interest cost specified in the bid shall be adjusted accordingly. If two or more proper bids are received providing for identical lowest true interest cost, the City shall determine by lot which bid, if any, shall be accepted and its determination shall be final. Pre-Bid Revisions. The City reserves the right to issue a Supplemental Notice of Certificate Sale not later than 48 hours prior to the sale date via the TM3 News Service or such other method of communication deemed appropriate by the City (the "Supplemental Notice"). If issued, the Supplemental Notice may modify (i) the maturity amounts of the Certificates and/or (ii) such other terms of this Notice as the City determines. ?my such modifications will supersede the maturities and such other terms as set forth herein. -3-