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VIRGIN VALLEY WATER DISTRICT, NEVADA GENERAL OBLIGATION (LIMITED TAX)

WATER REFUNDING BOND (ADDITIONALLY SECURED BY PLEDGED REVENUES)

SERIES 2015

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TABLE OF CONTENTS Page

ARTICLE I. SHORT TITLE, DEFINITIONS, INTERPRETATION, RATIFICATION, TRANSMITTAL AND EFFECTIVE DATE ..................................................... 4

Section 101. Short Title. ......................................................................................................4 Section 102. Meaning and Construction. .............................................................................4 Section 103. Successors. ....................................................................................................13 Section 104. Parties Interested Herein. ..............................................................................13 Section 105. Ratification. ...................................................................................................13 Section 106. Ordinance Irrepealable. .................................................................................13 Section 107. Severability. ..................................................................................................13 Section 108. Repealer. .......................................................................................................14 Section 109. Effective Date. ..............................................................................................14

ARTICLE II. GOVERNING BODY'S DETERMINATIONS, AUTHORITY FOR AND AUTHORIZATION OF PROJECT NECESSITY OF THE PROJECT AND BOND, PROJECT COST, AND OBLIGATION OF DISTRICT .......... 15

Section 201. Authority for Ordinance. ...............................................................................15 Section 202. Life of Improvements. ..................................................................................15 Section 203. Necessity of Project and Bond. .....................................................................15 Section 204. Authorization of Project. ...............................................................................15 Section 205. Estimated Cost of Project..............................................................................15 Section 206. Ordinance to Constitute Contract. .................................................................15 Section 207. Bond Equally Secured...................................................................................15 Section 208. General Obligations. .....................................................................................16 Section 209. No Pledge of Property. ..................................................................................16 Section 210. No Recourse Against Officers and Agents. ..................................................16 Section 211. No Bond Election Required. .........................................................................16 Section 212. Sale of Bond; Approval of Loan Contract and Escrow Agreement..............16

ARTICLE III. AUTHORIZATION, TERMS, EXECUTION, REGISTRATION, USE OF DEPOSITORY AND ISSUANCE OF BOND ................................................. 17

Section 301. Authorization of Bond. .................................................................................17 Section 302. Bond Details..................................................................................................17 Section 303. Prepayment Option. ......................................................................................18 Section 304. Compliance with Federal and State Laws. ....................................................18 Section 305. Negotiability. ................................................................................................18 Section 306. Registration, Transfer and Exchange of Bond. .............................................18 Section 307. Execution of Bond. .......................................................................................19 Section 308. Use of Predecessor's Signature. ....................................................................20 Section 309. Incontestable Recital in Bond. ......................................................................20 Section 310. State Tax Exemption. ....................................................................................20 Section 311. Bond Execution. ............................................................................................20

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Section 312. Registrar's Registration. ................................................................................20 Section 313. Bond Delivery. ..............................................................................................21 Section 301. Use of Single Bond. ......................................................................................21 Section 302. Bond Details..................................................................................................21 Section 303. Bond Form. ...................................................................................................21

ARTICLE IV. USE OF BOND PROCEEDS ............................................................................... 30

Section 401. Disposition of Bond Proceeds. ......................................................................30 Section 402. Moneys for Project. .......................................................................................30 Section 403. Purchaser Not Responsible. ..........................................................................30 Section 404. General Tax Levies. ......................................................................................30 Section 405. Priorities for the Bond. ..................................................................................31 Section 406. Correlation of Levies. ...................................................................................31 Section 407. Use of General Fund. ....................................................................................32 Section 408. Use of Other Funds. ......................................................................................32 Section 409. Legislative Duties. ........................................................................................32 Section 410. Appropriation of General Taxes. ..................................................................32 Section 411. Maintenance of Escrow Account. .................................................................32 Section 412. Insufficiency of Escrow Account..................................................................32 Section 413. Redemption of Refunded Bonds; Notice of Refunding. ...............................33

ARTICLE V. ADMINISTRATION OF AND ACCOUNTING FOR PLEDGED REVENUES ...................................................................................................... 34

Section 501. Pledge Securing the Bond. ............................................................................34 Section 502. Revenue Fund. ..............................................................................................34 Section 503. Operation and Maintenance Fund. ................................................................34 Section 504. Bond Fund Payments. ...................................................................................35 Section 505. Rebate Account. ............................................................................................35 Section 506. Termination of Deposits. ..............................................................................36 Section 507. Payment of Additional Securities. ................................................................36 Section 508. Use of Remaining Revenues. ........................................................................36

ARTICLE VI. GENERAL ADMINISTRATION ........................................................................ 37

Section 601. Administration of Accounts. .........................................................................37 Section 602. Places and Times of Deposits. ......................................................................37 Section 603. Investment of Moneys...................................................................................37 Section 604. Required and Permissive Investments. .........................................................37 Section 605. Accounting for Investments. .........................................................................38 Section 606. Redemption or Sale of Authorized Investments. ..........................................38 Section 607. Character of Funds. .......................................................................................38 Section 608. Accelerated Payments. ..................................................................................38 Section 609. Payment of Securities Requirements. ...........................................................38

ARTICLE VII. SECURITIES LIENS AND ADDITIONAL SECURITIES ............................... 40

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Section 701. Lien on the Pledged Revenues. .....................................................................40 Section 702. Equality of the Bond; Defraying Delinquencies. ..........................................40 Section 703. Issuance of Additional Securities..................................................................40 Section 704. Issuance of Refunding Securities. .................................................................42 Section 705. Partial Refundings. ........................................................................................43 Section 706. Limitations Upon Refundings. ......................................................................43 Section 707. Protection of Securities Not Refunded. ........................................................43 Section 708. Supplemental Instrument. .............................................................................43

ARTICLE VIII. MISCELLANEOUS PROTECTIVE COVENANTS ........................................ 45

Section 801. General. .........................................................................................................45 Section 802. Operation of the System................................................................................45 Section 803. Payment of Taxes, Etc. .................................................................................45 Section 804. No Competing Facilities. ..............................................................................45 Section 805. Rate Covenant. ..............................................................................................46 Section 806. Performance of Duties. .................................................................................46 Section 807. Further Assurances........................................................................................46 Section 808. Conditions Precedent. ...................................................................................47 Section 809. Covenant to Perform. ....................................................................................47 Section 810. Protective Security. .......................................................................................47 Section 811. Accumulation of Interest Claims. .................................................................47 Section 812. Prompt Payment of the Bond. .......................................................................47 Section 813. Use of Pledged Revenues..............................................................................47 Section 814. Use of Bond Fund. ........................................................................................48 Section 815. Additional Securities. ....................................................................................48 Section 816. Other Liens....................................................................................................48 Section 817. Corporate Existence. .....................................................................................48 Section 818. Collection of Pledged Revenues. ..................................................................48 Section 819. Records. ........................................................................................................48 Section 820. Maintenance and Inspection of Records. ......................................................48 Section 821. Completion of Project. ..................................................................................49 Section 822. Tax Covenant. ...............................................................................................49

ARTICLE IX. MISCELLANEOUS ............................................................................................. 50

Section 901. Defeasance. ...................................................................................................50 Section 902. Delegated Powers..........................................................................................50 Section 903. Statute of Limitations. ...................................................................................51 Section 904. Evidence of Bondowners. .............................................................................51 Section 905. Warranty Upon Issuance of the Bond. ..........................................................52 Section 906. Immunities of Purchaser. ..............................................................................52 Section 907. Prior Contracts. .............................................................................................52 Section 908. Governmental Powers. ..................................................................................52 Section 909. Provisions Relating to Variable Rate Indebtedness. .....................................53

ARTICLE X. PRIVILEGES, RIGHTS AND REMEDIES .......................................................... 54

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Section 1001. Bondowner's Remedies. ................................................................................54 Section 1002. Right to Enforce Payment. ............................................................................54 Section 1003. Events of Default. .........................................................................................54 Section 1004. Remedies for Default. ...................................................................................55 Section 1005. Receiver's Rights and Privileges. ..................................................................55 Section 1006. Rights and Privileges Cumulative. ................................................................55 Section 1007. Prejudicial Action Unnecessary. ...................................................................55

ARTICLE XI. CONCERNING THE Paying Agent and Registrar .............................................. 56

Section 1101. Appointment of Registrar and Paying Agent. ...............................................56 Section 1102. Resignation of Paying Agent and Registrar. .................................................56 Section 1103. Removal of Paying Agent and Registrar. .....................................................56 Section 1104. Successor Paying Agent and Registrar. ........................................................56 Section 1105. Merger or Consolidation. ..............................................................................57

ARTICLE XII. AMENDMENT OF ORDINANCE .................................................................... 58

Section 1201. Privilege of Amendment. ..............................................................................58 Section 1202. Limitations Upon Amendments. ...................................................................58 Section 1203. Notice of Amendment. ..................................................................................59 Section 1204. Binding Consent to Amendment. ..................................................................59 Section 1205. Time Consent Binding. .................................................................................59 Section 1206. Unanimous Consent. .....................................................................................59 Section 1207. Exclusion of District's Bond. ........................................................................60 Section 1208. Notation on Bond. .........................................................................................60 Section 1209. Proof of Instruments and Bond. ....................................................................60

Summary - An ordinance authorizing the issuance of the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015" and otherwise concerning the bond and the water revenues pledged for their payment.

ORDINANCE NO. ___ (of the Virgin Valley Water District, Nevada)

AN ORDINANCE OF THE GOVERNING BOARD OF THE VIRGIN VALLEY WATER DISTRICT, NEVADA, PROVIDING FOR THE ISSUANCE OF ITS REGISTERED, NEGOTIABLE, GENERAL OBLIGATION (LIMITED TAX) WATER REFUNDING BOND (ADDITIONALLY SECURED BY PLEDGED REVENUES) SERIES 2015; AND PROVIDING OTHER MATTERS RELATING THERETO.

WHEREAS, the Virgin Valley Water District (the "District") located in Clark County, Nevada was duly created pursuant to Chapter 100, Statutes of Nevada 1993, as amended (the "District Act") to provide adequate and efficient water service to the residents of the Virgin Valley area; and

WHEREAS, the District, acting through its Governing Board (the "Board"), is authorized to refund certain outstanding obligations of the District (the "Refunding Project" or the "Project") as so designated and if so designated in the Certificate of the District Officer, as defined herein;

WHEREAS, the District is authorized to incur indebtedness to finance the Project pursuant to the District Act, Nevada Revised Statutes ("NRS") Sections 350.350 to 350.490, inclusive, designated in Section 350.350 as the "Water and Sewer Revenue Bond Law" (the "Water and Sewer Act") and NRS Sections 350.500 through 350.720, inclusive, designated in Section 350.500 thereof as the "Local Government Securities Law" (the "Bond Act") and to evidence such borrowing by the issuance general obligation bonds of the District for the purpose of defraying wholly or in part the cost of the Project; and

WHEREAS, pursuant to the District Act, the Bond Act, the Water and Sewer Act and other acts supplemental thereto, the District is herein authorized to issue the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015" to be issued as a single bond (the "Bonds" or as a single bond, the "Bond") in a principal amount not to exceed $13,800,000 for the purpose of financing the refunding of certain outstanding obligations and paying the costs of issuance of the Bond; and

WHEREAS, the District has (i) previously issued the: previously issued the "Virgin Valley Water District, Nevada, Water Revenue Bonds, Series 2003" (the "2003

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Bonds") and the "Virgin Valley Water District, Nevada, Water Revenue Bonds, Series 2006" (the "2006 Bonds" and together with the 2003 Bonds, the "Superior Obligations"), secured by a lien on the Pledged Revenues; and

WHEREAS, the Board has previously issued the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Bonds (Additionally Secured by Pledged Revenues) Series 2008" (the "2008 Bonds") and the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bonds (Additionally Secured by Pledged Revenues) Series 2011" (the "2011 Bonds"), secured by a lien on the Pledged Revenues which is subordinate to the lien thereon of the Superior Obligations; and

WHEREAS, the 2008 Bonds maturing on and after March 1, 2019, are subject to redemption prior to their respective maturities, at the option of the District, on and after March 1, 2018, at a price equal to the principal amount of each Bond or portion thereof so redeemed and accrued interest thereon to the redemption date, without premium; and

WHEREAS, the Board has determined to refund the portion of the 2008 Bonds designated in the Certificate of the District Officer (the "Refunded Bonds") and to call the Refunded Bonds for redemption on March 1, 2018; and

WHEREAS, other than the Superior Obligations, the 2008 Bonds and the 2011 Bonds, the District has never pledged nor in any way hypothecated the Pledged Revenues to the payment of any outstanding bonds or for any other purpose, with the result that the proceeds of the Pledged Revenues may now be pledged lawfully and irrevocably to the Bond, all as herein provided; and

WHEREAS, the Board does hereby declare that it is necessary and for the best interest of the District to complete the Project and to issue bonds of the District for such purpose; and

WHEREAS, the Board is therefore authorized by the Bond Act without any further preliminaries:

(A) To commence the Project;

(B) To issue and sell the Bond for the Project; and

(C) To exercise the incidental powers provided in the Bond Act in connection with the powers authorized therein as otherwise expressly provided therein; and

WHEREAS, the District requested the Administrator of the Division of Environmental Protection of the Department of Conservation and Natural Resources as Administrator of the State of Nevada Account for the Revolving Fund (the "Administrator" and "Revolving Fund," respectively), under NRS 445A.200 to 445A.295, inclusive (the "Project Act"), to make a loan to the District by purchasing the Bond in the form of a single Bond in the principal amount necessary to effect the Refunding Project; and

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WHEREAS, the Board for Financing Water projects has authorized the Administrator to make a loan to the District from the Revolving Fund to defray the cost of the Project; and

WHEREAS, the Bond Act and the Project Act permit the Bond to be sold at private sale to the State of Nevada (the "State"); and

WHEREAS, after private negotiation pursuant to the Bond Act and the Project Act, the Board has determined to sell its Bond to the State for a price equal to the principal amount of the Bond as set forth in the Loan Contract (as defined herein) and otherwise upon the terms provided below and in the Loan Contract, which price does not result in an effective interest rate on the Bond in excess 3% over the Index of Twenty Bonds most recently published in The Bond Buyer prior to the time a negotiated offer for the Bond was accepted to evidence the obligation to repay the loan from the Revolving Fund; and

WHEREAS, the Bond will constitute a general obligation of the District (as more fully described herein) and payment of the principal of, interest on and redemption premiums due in connection with the Bond shall be paid from Pledged Revenues (as defined herein); and

WHEREAS, the Board hereby elects to have Chapter 348, NRS (the "Supplemental Bond Act") apply to the Bond; and

WHEREAS, the Board is therefore authorized and empowered by the District Act, the Bond Act and the Water and Sewer Act without any further preliminaries:

(1) To issue and sell the Bond; and

(2) To exercise the incidental powers provided in the Bond Act, the District Act and the Water and Sewer Act in connection with the powers authorized therein or as otherwise expressly provided therein.

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NOW, THEREFORE, THE GOVERNING BOARD OF THE VIRGIN VALLEY WATER DISTRICT DOES ORDAIN:

ARTICLE I.

SHORT TITLE, DEFINITIONS, INTERPRETATION, RATIFICATION, TRANSMITTAL AND EFFECTIVE DATE

Section 101. Short Title. This ordinance shall be known and may be cited as the "2015 Water Refunding Bond Ordinance" (the "Ordinance").

Section 102. Meaning and Construction.

A. Definitions. The following terms, except where the context by clear implication otherwise requires, shall have the specified meanings for all purposes of this ordinance:

"Acquire" or "acquisition" means the opening, laying out, establishment, purchase, construction, securing, installation, reconstruction, lease, gift, grant from the United States of America, any agency, instrumentality or corporation thereof, the State of Nevada, any body corporate and politic therein, any corporation or any person, the endowment, bequest, devise, condemnation, transfer, assignment, option to purchase, other contract, or other acquirement (or any combination thereof) of any project or an interest therein, authorized by the District Act.

"Authorized Investments" means investments authorized for the District under State law.

The term "Banking Institution" or "Insured Bank" means a state or national bank or trust company which is a member of the Federal Deposit Insurance Corporation and of the Federal Reserve System, is located within the United States.

"Board" of "Governing Body" means the Board of Virgin Valley Water District, Nevada, or its successor in functions, if any.

"Bond Act" means sections 350.500 through 350.720, Nevada Revised Statutes, and all laws amendatory thereof, and designated in section 350.500 thereof as the Local Government Securities Law.

"Bond Fund" means, collectively, , the accounts designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015, Interest Account" (the "Interest Account") and the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015, Principal Account" (the "Principal Account") created in this Ordinance.

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"Bond Requirements" means the principal of, any prior redemption premiums due, if any, in connection with, and the interest on the Bond, any Superior Obligations and additional bonds or other securities payable from the Pledged Revenues, or such part of such securities as may be designated.

"Bond Year" for the purposes of this Ordinance means the twelve (12) months commencing on the second day of June of any calendar year and ending on the first day of June of the next succeeding calendar year.

"2003 Bonds" means the securities designated as the "Virgin Valley Water District, Nevada, Water Revenue Bonds, Series 2003".

"2006 Bonds" means the securities designated as the "Virgin Valley Water District, Nevada, Water Revenue Bonds, Series 2006".

"2008 Bonds" means the securities designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Bonds (Additionally Secured by Pledged Revenues) Series 2008".

"2011 Bonds" means the securities designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bonds (Additionally Secured by Pledged Revenues) Series 2011."

"Bond" means the securities issued hereunder and designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015."

"Business Day" means any day other than a Saturday or Sunday on which banks in Nevada and New York, New York are open for commercial banking business exclusive of any day on which the New York Stock Exchange is closed.

The term "combined average annual principal and interest requirements" means (i) the sum of the Bond Requirements of the Bond and any other designated Parity Securities payable from the Pledged Revenues, which Bond Requirements come due during any Bond Year from the date of calculation to the last day on which any of the Bond, any Outstanding Superior Obligations and any Parity Securities are due and payable, but not including any securities which are no longer Outstanding under the defeasance provisions of Section 901 hereof, (ii) divided by the number of years (including any fraction thereof) from the date of the calculation of the combined average annual principal and interest requirements to the last day on which any of the Bond are due and payable.

The term "combined maximum annual principal and interest requirements" means the maximum sum of the principal of and interest on the Outstanding Bond, and any other designated Parity Securities payable from the Pledged Revenues, to be paid during any one Bond Year for the period beginning with the Bond Year in which such computation is made and ending with the Bond Year in which any Bond, any Outstanding Superior Obligations and any Parity Securities last become due at maturity or on a date on which the Bond, any Outstanding Superior Obligations and any Parity Securities thereafter maturing have been called for prior

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redemption, but excluding any reserve requirements to secure such payments unless otherwise expressly provided. Any such computation shall be made by the District Manager or an Independent Accountant unless otherwise expressly provided.

"Comparable Bond Year" means, in connection with any Fiscal Year, the Bond Year which commences in the Fiscal Year. For example, for the Fiscal Year commencing on the first day of July, 2015, the Comparable Bond Year commences on the second day of June 2015, and ends on the first day of June, 2016.

"Cost of the Project," or any phrase of similar import, means all or any part designated by the Governing Body of the costs of the Project or interest in the Improvements being acquired, which cost, at the option of the Governing Body (except as limited by law) may include all or any part of the incidental costs pertaining to the Project including, without limitation:

Preliminary expenses advanced by the District from funds available for use therefor or any other source, or advanced by any District or town with the approval of the District from funds available therefor or from any other source, or advanced by the State or the Federal Government, with the approval of the District (or any combination thereof);

(a) The costs of making, publishing, posting, mailing and otherwise giving any notice in connection with the Project the filing or recordation of instruments, the taking of options, the issuance of the Bond and any other securities pertaining to the Project and the fees and expenses of the Paying Agent, Registrar and the Escrow Agent;

(b) The costs of contingencies;

(c) The costs of amending any ordinance, resolution or other instrument authorizing the issuance of or otherwise pertaining to outstanding securities payable from any Pledged Revenues;

(d) The administrative expenses and issuance costs of the State Treasurer through the Department of Conservation and Natural Resources; and

(e) All other expenses necessary or desirable and pertaining to the Project, as estimated or otherwise ascertained by the Governing Body.

"Costs of Issuance Account" means the special account designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015, Costs of Issuance Account" created in Section 401 hereof.

"Department" means the State of Nevada Department of Conservation and Natural Resources.

"District" means the Virgin Valley Water District, Nevada, and constituting a political subdivision thereof, or any successor municipal corporation; and where the context so

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indicates, either such term means the geographical area comprising the Virgin Valley Water District.

"District Act" means Chapter 100, Statutes of Nevada 1993 and all laws amendatory thereof.

"District Engineer" means the engineer for the District or any registered or licensed professional engineer, or firm of such engineers, as from time to time determined by the Governing Body:

(a) Who has a wide and favorable repute for skill and experience in the field of designing, preparing plans and specifications for, and supervising the construction of facilities like those comprising the Project;

(b) Who is entitled to practice and is practicing under the laws of the State; and

(c) Who is selected, retained and compensated by the Governing Body, in the name and on behalf of the District, and who may be in the regular employ or control of the District.

"District Manager" means the de jure or de facto District Manager of the District or his or her successor in functions, if any.

"District Officer" means the de jure or de facto District Manager as the chief administrative officer or the chief financial officer of the District or his or her successor in functions, if any.

"District Treasurer" or "Treasurer" means the de jure or de facto treasurer of the District or his or her successor in functions, if any.

"Escrow Account" means the account designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015" created in Section 401 hereof.

"Escrow Agent" means the escrow bank designated in the Escrow Agreement.

"Escrow Agreement" means the Escrow Agreement between the District and the Escrow Agent.

"Events of Default" means the events stated in Section 1003 hereof.

"Federal Government" means the United States, or any agency, instrumentality or corporation thereof.

"Federal Securities" means bills, certificates of indebtedness, notes, bonds or similar securities which are direct obligations of or the principal and interest of which securities are unconditionally guaranteed by, the United States of America.

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"Fiscal Year" means the twelve (12) months commencing on the first day of July of any calendar year and ending on the last day of June of the next succeeding calendar year.

"General Taxes" means general (ad valorem) taxes levied by the District against all taxable property within the boundaries of the District (unless otherwise qualified).

"Gross Revenues" means all income and revenues derived directly or indirectly by the District from the operation and use and otherwise pertaining to the Municipal Utility System or any part thereof, whether resulting from repairs, enlargements, extensions, betterments or other improvements to the Municipal Utility System, or otherwise, and includes all revenues received by the District from the Municipal Utility System, including, without limitation, all fees, rates, and other charges for the use of the Municipal Utility System, or for any service rendered by the District in the operation thereof, directly or indirectly, the availability of any such service or the sale or other disposal of any commodity derived therefrom, but excluding any moneys borrowed and used for the acquisition of capital improvements and any moneys received as grants, appropriations or gifts from the United States, the State or other sources, the use of which is limited by the grantor or donor to the construction of capital improvements for the Municipal Utility System, except to the extent any such moneys shall be received as payments for the use of the Municipal Utility System, services rendered thereby, the availability of any such service or the disposal of any such commodities. "Gross Revenues" shall also include all income or other gain from the investment of such income and revenues and of the proceeds of securities payable from Gross Revenues or Pledged Revenues.

The terms "hereby," "herein," "hereinabove," "hereinafter," "hereinbefore," "hereof," "hereto," "hereunder" and any similar term refer to this Ordinance and not solely to the particular portion thereof in which such word is used; "heretofore" means before the adoption of this Ordinance; and "hereafter" means after the adoption of this Ordinance.

The terms "holder" or "owner" or any similar term, when used in connection with any bonds, or any other designated securities, means the Person in possession and the apparent owner of the designated item.

The terms "improve" or "improvement" means the extension, widening, lengthening, betterment, alteration, reconstruction or other major improvement, or any combination thereof, of any properties pertaining to the Project or an interest therein, or any other properties herein designated; but the term does not mean renovation, reconditioning, patching, general maintenance or other minor repair.

"Independent Accountant" means any certified public accountant, or firm of such certified public accountants, as from time to time determined by the Governing Body, duly licensed to practice and practicing as such under the laws of the State, appointed and compensated by the Governing Body on behalf and in the name of the District:

(a) Who is, in fact, independent and not under the domination of the District;

(b) Who does not have any substantial interest, direct or indirect, with the District, and

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(c) Who is not connected with the District as an officer or employee thereof, but who may be regularly retained to make annual or similar audits of any books or records of the District.

"Instrument" means this Ordinance; and the terms "instrument of the District," "instrument of the Governing Body," "amendatory instrument," "supplemental instrument," or any phrase of similar import mean any resolution or ordinance adopted by the Governing Body on behalf of the District.

"Municipal Utility System" means the water system of the District, consisting of all properties, real, personal, mixed or otherwise, now owned or hereafter acquired by the District through purchase, construction or otherwise, and used in connection with such system of the District, and in any way pertaining thereto, whether or not located within or without or both within and without the boundaries of the District, including, without limitation, machinery, apparatus, structures, buildings and related or appurtenant furniture, fixtures and other equipment, as such system is from time to time extended, bettered or otherwise improved, or any combination thereof.

"Net Revenues" or "Pledged Revenues" means the Gross Revenues remaining after the deduction of Operation and Maintenance Expenses.

"Operation and Maintenance Fund" means the "Virgin Valley Water District, Nevada, Municipal Utility System Operation and Maintenance Fund" previously created by ordinance of the Board and continued herein.

"Operation and Maintenance Expenses" means all reasonable and necessary current expenses of the District paid or accrued, of operating, maintaining and repairing the Municipal Utility System, including, without limitation:

(a) engineering, auditing, reporting, legal and other overhead expenses relating to the administration, operation and maintenance of the Municipal Utility System;

(b) fidelity bond and property and liability insurance premiums pertaining to the Municipal Utility System or a reasonably allocable share of a premium of any blanket bond or policy pertaining to the Municipal Utility System;

(c) payments to pension, retirement, health and hospitalization funds, and other insurance and to any self-insurance fund as insurance premiums not in excess of such premiums which would otherwise be required for such insurance;

(d) any general taxes, assessments, excise taxes or other charges which may be lawfully imposed upon the District, the Municipal Utility System, revenues therefrom or the District's income from or operations of any properties under its control and pertaining to the Municipal Utility System, or any privilege in connection with the Municipal Utility System or its operations;

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(e) the reasonable charges of any Paying Agent and Registrar and any depository bank pertaining to the Bond or any other securities payable from Gross Revenues or otherwise pertaining to the Municipal Utility System;

(f) contractual services, professional services, salaries, other administrative expenses and costs of materials, supplies, repairs and labor pertaining to the Municipal Utility System or to the issuance of the Bond, or any other securities relating to the Municipal Utility System, including, without limitation, the expenses and compensation of any receiver or other fiduciary under the Bond Act;

(g) the costs incurred by the Board in the collection and any refunds of all or any part of Gross Revenues;

(h) any costs of utility services furnished to the Municipal Utility System;

(i) any lawful refunds of any Gross Revenues; and

(j) all other administrative, general and commercial expenses pertaining to the Municipal Utility System; but excluding:

(i) any allowance for depreciation;

(ii) any costs of extensions, enlargements, betterments and other improvements, or any combination thereof;

(iii) any reserves for major capital replacements, other than normal repairs;

(iv) any reserves for operation, maintenance or repair of the Municipal Utility System;

(v) any allowance for the prepayment at maturity of any Bond or other security or the payment of any interest thereon or any prior redemption premium due in connection therewith;

(vi) any liabilities incurred in the acquisition or improvement of any properties comprising any project or any existing facilities, or any combination thereof, pertaining to the Municipal Utility System, or otherwise; and

(vii) any liabilities imposed on the District for any legal liability not based on contract, including, without limitation, negligence in the operation of the Municipal Utility System.

"Outstanding" when used with reference to the Bond or any other designated securities and as of any particular date means all the Bond or any such other securities payable from the Pledged Revenues in any manner theretofore or thereupon being executed and delivered:

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(a) Except any Bond or other security canceled by the District or otherwise on the District's behalf, at or before such date;

(b) Except any Bond or other security for the payment of the redemption of which cash or Federal Securities at least equal to the Bond Requirements to the date of maturity or the Redemption Date, shall have theretofore been deposited with a trust bank in escrow or in trust for that purpose; and

(c) Except any Bond in lieu of or in substitution for which another bond shall have been duly executed and delivered.

"Parity Securities" means Outstanding 2008 Bonds, 2011 Bonds, the Bond and any other bonds, securities or obligations payable from the Pledged Revenues with a lien thereon on a parity with the lien thereon of the Bond herein authorized to be issued.

"Paying Agent" means U.S. Bank National Association, or any successor thereto as paying agent and registrar for the Bond appointed by the Chief Financial Officer of the District.

"Person" means a corporation, firm, other body corporate (including the Federal Government, the State, or any other body corporate and politic other than the District), partnership, association or individual, and also includes an executor, administrator, trustee, receiver or other representative appointed according to law.

"Purchaser" means the State of Nevada, acting by and through the Administrator of the Division of Environmental Protection of the Department of Conservation and Natural Resources, as Administrator of the Account for the Revolving Fund to finance and refinance the construction of projects defined in NRS 445A.230 of the State of Nevada.

"Rebate Account" means the account designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015, Rebate Account" created in Section 506 hereof.

"Redemption Date" means a date fixed for the redemption prior to the maturities of the Bond or other designated securities payable from Pledged Revenues in any notice of prior redemption or otherwise fixed and designated by the District.

"Refunded Bonds" means the portion of the 2008 Bonds, if any, designated as the "Refunded Bonds" in the Certificate of the District Officer.

"Registrar" means U.S. Bank National Association, or any successor thereto as paying agent and registrar for the Bond appointed by the Chief Financial Officer of the District.

"Revenue Fund" means the fund designated as the "Revenue Fund" previously created by ordinance of the Board and continued herein.

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"Revolving Fund" means the Account for the Revolving Fund as defined in NRS 445A.203 to finance and refinance the construction of projects as defined in NRS 445A.230 of the State of Nevada created by NRS 445A.255.

"Safe Drinking Water Act" means the "Safe Drinking Water Act," 42 U.S.C. Sections 300f et seq., as amended.

"Secretary" means the de jure or de facto Secretary of the District or his or her successor in functions, if any.

"State" means the State of Nevada; and where the context so indicates, "State" means the geographical area comprising the State of Nevada.

"Subordinate Securities" means bonds, securities or obligations payable from the Pledged Revenues with a lien thereon subordinate and junior to the lien thereon of the Bond, including, but not limited to, bonds or securities which are general obligations of the District additionally secured by Pledged Revenues.

"Superior Obligations" means the Outstanding 2003 Bonds and the 2006 Bonds and any other bonds, securities or obligations payable from the Pledged Revenues and having a lien thereon prior and superior to the lien thereon of the Bond.

"Supplemental Bond Act" means NRS 348.010 through 348.450.

"Tax Code" means the Internal Revenue Code of 1986, as amended to the date of delivery of the Bond.

The term "trust bank" means a Banking Institution as defined herein, which bank is authorized to exercise and is exercising trust powers, and also means any branch of the Federal Reserve Bank.

Construction. This Ordinance, except where the context by clear implication herein otherwise requires, shall be construed as follows:

(a) Words in the singular number include the plural, and words in the plural include the singular.

(b) Words in the masculine gender include the feminine and the neuter, and when the sense so indicates words of the neuter gender refer to any gender.

(c) Articles, sections, subsections, paragraphs and subparagraphs mentioned by number, letter, or otherwise, correspond to the respective articles, sections, subsections, paragraphs and subparagraphs of this ordinance so numbered or otherwise so designated.

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(d) The titles applied to articles, sections, subsections, paragraphs and subparagraphs in this Ordinance are inserted only as a matter of convenience and ease in reference and in no way define, limit or describe the scope of any provisions of this Ordinance.

(e) Any securities held by the District shall not be deemed Outstanding for the purpose of redemption or for the purpose of consents hereunder or for any other purpose provided herein.

Section 103. Successors. Whenever the District or the Governing Body is named or is referred to, such provisions shall be deemed to include any successors of the District or the Governing Body, respectively, whether so expressed or not. All of the covenants, stipulations, obligations and agreements by or on behalf of and other provisions for the benefit of the District or the Governing Body contained herein shall bind and inure to the benefit of any such successors and shall bind and inure to the benefit of any officer, board, district, commission, authority, agent or instrumentality to whom or to which there shall be transferred by or in accordance with law any right, power or duty of the District or the Governing Body or of their respective successors, if any, the possession of which is necessary or appropriate in order to comply with any such covenants, stipulations, obligations, agreements or other provisions hereof.

Section 104. Parties Interested Herein. Nothing herein expressed or implied is intended or shall be construed to confer any right, remedy or claim under or by reason hereof or any covenant, condition or stipulation hereof upon or to give such to any person, other than the District, the Governing Body, and the owners of the Bond and such holders of any other securities payable from) the Pledged Revenues when reference is expressly made thereto. All the covenants, stipulations, promises and agreements herein contained by and on behalf of the District shall be for the sole and exclusive benefit of the District, the Governing Body, the Paying Agent and Registrar, and any owner of the Bond and any holder of any such other security in the event of such a reference.

Section 105. Ratification. All action heretofore taken (not inconsistent with the provisions of this Ordinance) by the Board and the officers of the District, and otherwise taken by the District directed:

A. Project. Toward the Project, and

B. Bond. Toward the sale and delivery of the Bond for that purpose, be, and the same hereby is, ratified, approved and confirmed.

Section 106. Ordinance Irrepealable. After the Bond is issued, this Ordinance shall constitute an irrevocable contract between the District and the holder or holders of the Bond; and this Ordinance (subject to the provisions of section 901 (Defeasance) and article XI (amendments) of this Ordinance), if the Bond is in fact issued, shall be and shall remain irrepealable until the Bond, as to all Bond Requirements, shall be fully paid, canceled and discharged, as herein provided, except as herein otherwise expressly provided.

Section 107. Severability. If any section, subsection, paragraph, clause or other provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the

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invalidity or unenforceability of such section, subsection, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance.

Section 108. Repealer. All bylaws, orders, and other instruments, or parts thereof, inconsistent herewith are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed to revive any bylaw, order, or other instrument, or part thereof, heretofore repealed.

Section 109. Effective Date. After this Ordinance is signed by the President and attested and sealed by the Secretary, this Ordinance shall be in effect from the date of its adoption.

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ARTICLE II.

GOVERNING BODY'S DETERMINATIONS, AUTHORITY FOR AND AUTHORIZATION OF PROJECT

NECESSITY OF THE PROJECT AND BOND, PROJECT COST, AND OBLIGATION OF DISTRICT

Section 201. Authority for Ordinance. This Ordinance is adopted pursuant to the District Act, the Bond Act, the Water and Sewer Act and the Supplemental Bond Act; and the District determines:

A. Compliance with District Act, Bond and Supplemental Bond Acts. The provisions of this Ordinance are necessary to carry out the purposes of the District in accordance with the District Act, the Bond Act, the Water and Sewer Act and the Supplemental Bond Act; and

B. Approval. The total cost of, and plans and specifications for, the Project (to the extent heretofore determined and prepared) are approved.

Section 202. Life of Improvements. The Governing Body determines:

A. Estimated Life. The estimated life or estimated period of usefulness of the improvements refinanced by the Bond is not less than eighteen (18) years; and

B. Bond Term. The Bond will mature at times not exceeding such estimated life or estimated period of usefulness.

Section 203. Necessity of Project and Bond. It is necessary and in the best interest of the District and its inhabitants that the District undertake the Project and issue the Bond.

Section 204. Authorization of Project. The Governing Body, on behalf of the District, determines to effect the Project; and the Project is hereby so authorized.

Section 205. Estimated Cost of Project. The Cost of the Project is expected to be paid from proceeds from the sale of the Bond and other legally available funds of the District.

Section 206. Ordinance to Constitute Contract. In consideration of the purchase and acceptance of the Bond by those who shall own the same from time to time, the provisions of the Ordinance shall be deemed to be and shall constitute contracts between the District and the owners from time to time of the Bond.

Section 207. Bond Equally Secured. The covenants and agreements of the District herein set forth shall be for the equal benefit, protection and security of the owners of any and all of the Outstanding Bond all of which, regardless of the time or times of their issue or maturity shall be of equal rank without preference, priority or distinction, except as otherwise expressly provided in or pursuant to this Ordinance.

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Section 208. General Obligations. All of the Bond, as to all Bond Requirements, shall constitute general obligations of the District, which hereby pledges its full faith and credit for their payment. So far as possible, Bond Requirements shall be paid from Pledged Revenues. However, the Bond as to all Bond Requirements shall also be payable from the General Taxes (except to the extent that other moneys such as Pledged Revenues are available therefor) as herein provided.

Section 209. No Pledge of Property. The payment of the Bond is not secured by any encumbrance, mortgage or other pledge of property of the District, except for its Pledged Revenues and any other moneys pledged for the payment of the Bond, but excluding the Rebate Account and the Escrow Account. No property of the District, subject to such exception, shall be liable to be forfeited or taken in payment of the Bond.

Section 210. No Recourse Against Officers and Agents. No recourse shall be had for the payment of the Bond Requirements of the Bond or for any claim based thereon or otherwise upon this Ordinance against any individual member of the Governing Body or any officer or other agent of the District, past, present or future, either directly or indirectly through the Governing Body or the District, or otherwise, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any penalty or otherwise, all such liability, if any, being by the acceptance of the Bond and as a part of the consideration of their issuance specially waived and released.

Section 211. No Bond Election Required. The Bond which is a general obligation additionally secured by Pledged Revenues shall be issued without being required to be authorized at an election by any electors of the District.

Section 212. Sale of Bond; Approval of Loan Contract and Escrow Agreement. The sale of the Bond to the State on the terms provided herein and in accordance with the loan agreement between the Department and the District, to be executed by a District Officer (the "Loan Contract") is hereby approved. The form, terms and provisions of the Loan Contract substantially in the form as is currently on file with the Secretary to the Board, with such changes as are agreed to by a District Officer, whose execution thereof shall be conclusive evidence of such agreement, not inconsistent with the provisions of this Ordinance is hereby ratified, approved and confirmed. The Escrow Agreement in substantially the form as is currently on file with the Secretary to the Board is hereby approved. A District Officer is hereby authorized and directed to execute and deliver the Escrow Agreement with such changes as are agreed to by a District Officer and are not inconsistent herewith, whose execution thereof shall be conclusive evidence of such agreement. The officers of the District are hereby authorized to take all action necessary or appropriate to effectuate the provisions of this Ordinance, including without limitation, assembling of financial and other information concerning the District, the Project, the Pledged Revenues and the Bond.

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ARTICLE III.

AUTHORIZATION, TERMS, EXECUTION, REGISTRATION, USE OF DEPOSITORY AND ISSUANCE OF BOND

Section 301. Authorization of Bond. The "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015," in the principal amount designated in the Certificate of the District Officer but not to exceed $13,800,000, payable as to all the Bond Requirements solely out of the Pledged Revenues, are hereby authorized to be issued, pursuant to the District Act, the Bond Act, the Water and Sewer Act and the Supplemental Bond Act. The District pledges irrevocably, but not necessarily exclusively, such Pledged Revenues to the payment of the Bond Requirements of the Bond subordinate to the Outstanding Superior Obligations and on a parity with the Outstanding Parity Securities, the proceeds thereof to be used (except as herein otherwise expressly provided) solely to defray the Cost of the Project.

Section 302. Bond Details. A. The Bond shall be issued in fully registered form, i.e., registered as to both principal and interest, in compliance with Section 149 of the Tax Code, and the regulations of the Secretary of the Treasury thereunder. The Bond shall be dated initially as of the date of delivery thereof to the State, and shall be issued as a single bond in the maximum principal amount set forth in the Loan Contract for the Bond or such lesser amount as is advanced under the Loan Contract for the Bond, as shown on the principal advance panel appended to the Bond. The Bond shall bear interest (calculated on the basis of a 360 day year of twelve 30 day months) from its date until its maturity date (or, if redeemed prior to maturity as provided below, its redemption date) at the rate per annum set forth in the Loan Contract on the unpaid principal amount advanced from the date or dates of each advance until the principal thereof is paid in full. Interest payments shall be payable semiannually on January 1 and July 1 of each year commencing on January 1, 2016. Principal payments shall be payable annually on January 1, commencing January 1, 2016. The principal and interest payments shall be structured so as to produce payments substantially consistent in amount from payment date to payment date and which shall amortize the Outstanding principal amount of the Bond within 18 years of the date of delivery of the Bond.

B. The installments of principal and interest on the Bond shall be paid, as long as the State is the registered owner of the Bond, by electronic funds transfer to the State, and otherwise by check or warrant made to the order of the registered owner of the Bond and mailed to the address of the registered owner shown on the registration records kept by the Registrar for the Bond, as of the close of business on the day immediately prior to such payment date, or if such date is not a business day, on or before the next succeeding business day. So long as the State is the registered owner, such payment shall be made by depositing with the State Treasurer, not later than the principal or interest payment date, the amount coming due on the Bond on such date, or if such payment date is not a business day, on or before the next succeeding business day, immediately available funds in an amount sufficient to make the payment then due. The final installment of principal on the Bond whether at maturity or prior redemption, shall be made only on presentation and surrender of the Bond, as provided herein hereof, at the office of the Paying Agent. If any installment of principal shall not be paid when due, interest shall continue to accrue at the rate set forth in the Loan Contract until the principal thereof is paid in full, plus a

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penalty in the amount of one-tenth of one percent (0.1%) will be due for each day of nonpayment commencing 10 days after the maturity date of that principal installment. The Paying Agent may make payments of interest on any Bond by such alternative means as may be mutually agreed to between the owner of such Bond and the Paying Agent. All such payments shall be made in lawful money of the United States of America without deduction for any service charges of the Paying Agent or Registrar.

Section 303. Prepayment Option.

A. Installments of principal on the Bond shall be subject to prepayment prior to maturity, at the option of the District, in whole or in part on any January 1 or July 1 from any installments of principal selected by the District, as directed by the General Manager, at a price equal to the principal amount of the Bond, or portion thereof, so prepaid, and the accrued interest thereon to the Redemption Date; provided that (i) the State consents in writing to such prepayment or (ii) a change in use of the facilities financed by the Bond occurs which change in use necessitates remedial action under Treas. Reg. Section 1.141-12 in order to comply with the covenant in Section 822 hereof. If all or a portion of the principal of the bond is so called for prior redemption, no payment of the principal of or interest on the Bond due on or after the date fixed for redemption shall be made unless the Bond is presented to the Paying Agent and notation of the installments of principal redeemed is made on such Bond. Notwithstanding the provisions of this section, any notice of redemption may contain a statement that the redemption is conditioned upon the receipt by the Paying Agent of funds on or before the date fixed for redemption sufficient to pay the redemption price of the Bond so called for redemption, and that if such funds are not available, such redemption shall be canceled by written notice to the owner(s) of the Bond called for redemption in the same manner as the original redemption notice was mailed.

Section 304. Compliance with Federal and State Laws. The District agrees that it will, at all times that the Bond is outstanding, comply with and require its contractors and subcontractors to comply with all applicable federal and state laws, rules, guidelines, regulations and requirements. The District covenants that it will comply with the requirements of the Safe Drinking Water Act and 40 CFR Part 31 and comply with, implement and fulfill all environmental mitigation measures committed to by the District as a part of its request to the Administrator for financing from the Revolving Fund.

Section 305. Negotiability. Subject to the registration and payment provisions herein provided, the Bond shall be fully negotiable within the meaning of and for the purposes of the Uniform Commercial Code -Investment Securities, and each registered owner shall possess all rights enjoyed by registered owners of negotiable instruments under the Uniform Commercial Code--Investment Securities.

Section 306. Registration, Transfer and Exchange of Bond. The Bond shall be subject to the following provisions relating to their registration, transfer and exchange:

A. Records for the registration and transfer of the Bond shall be kept by the Registrar. Upon the surrender for transfer of any Bond at the Registrar, duly endorsed for transfer or accompanied by an assignment in form satisfactory to the Registrar duly executed by

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the registered owner or his attorney duly authorized in writing, the Registrar shall authenticate and deliver in the name of the transferee or transferees a new Bond of a like aggregate principal amount and of the same maturity bearing a number or numbers not previously assigned. The Bond may be exchanged at the Registrar for an equal aggregate principal amount of the Bond of the same maturity of other authorized denominations, as provided in Section 302 (Bond Details) hereof. The Registrar shall authenticate and deliver the Bond which the registered owner making the exchange is entitled to receive, bearing number or numbers not previously assigned. The Registrar shall require the payment by the owner of any Bond requesting exchange or transfer, of any tax or other governmental charge required to be paid with respect to such exchange or transfer and may require the payment of a fee sufficient to pay the cost of preparing and authenticating a new bond.

B. The Registrar shall not be required to transfer or exchange any Bond subject to redemption during a period beginning at the opening of business 15 days before the date of mailing by the Registrar of a notice of prior redemption of the Bond and ending at the close of business on the day of such mailing, or (ii) any Bond after the mailing of notice calling such Bond, or any portion thereof, for redemption as herein provided.

C. The person is whose name any Bond shall be registered, in the registration records kept by the Registrar, shall be deemed and regarded as the absolute owner thereof for the purpose of making payment thereof (except to the extent otherwise provided in Section 302 (Bond Details) hereof with respect to interest payments), and for all other purposes; and payment of or on account of either principal or interest on any Bond shall be made only to or upon the written order of the registered owner thereof or his or her legal representative, but such registration may be changed upon transfer of such Bond in the manner and subject to the conditions and limitation provided herein. All such payments shall be valid and effectual to discharge the liability upon such Bond to the extent of the sum or sums so paid.

D. If any Bond shall be lost, stolen, destroyed or mutilated, the Registrar shall, upon receipt of such evidence, information or indemnity relating thereto as it or the District may reasonably require, and upon payment of all expenses in connection therewith, authenticate and deliver a replacement the Bond of a like aggregate principal amount and of the same maturity, bearing a number or numbers not previously assigned. If such lost, stolen, destroyed or mutilated Bond shall have matured, the Registrar may direct that such Bond be paid by the Registrar in lieu of replacement.

E. Whenever any Bond shall be surrendered to the Registrar upon payment thereof, or to the Registrar for transfer, exchange or replacement as provided herein, such Bond shall be promptly canceled by the Registrar and counterparts of a certificate of such cancellation shall be furnished by the Registrar, upon request.

Section 307. Execution of Bond. The Bond shall be executed as follows:

A. Filings with Secretary of State. Pursuant to section 350.638, Bond Act, and to the act cited as the Uniform Facsimile Signatures of Public officials Act, designated as chapter 351, Nevada Revised Statutes, and to the Supplemental Bond Act and prior to the execution of any Bond by facsimile signature, the President, the Treasurer, and the Secretary

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shall each file with the Secretary of State of the State of Nevada his or her manual signature certified under oath.

B. Manner of Execution. Each Bond shall be signed and executed in the name of and on behalf of the District with the manual or the engraved, imprinted, stamped or otherwise reproduced facsimile of the signature of the President and shall be countersigned, manually subscribed and executed by the Treasurer; each Bond shall be authenticated with the manual or the printed, engraved, stamped or otherwise placed thereon facsimile of the official seal of the District; and each Bond shall be signed, executed and attested with such a manual or a facsimile of the signature of the Secretary.

C. Authentication. No Bond shall be valid or obligatory for any purpose unless the certificate of authentication thereon, substantially in the form hereinafter provided, has been duly manually executed by the Registrar. The Registrar's certificate of authentication shall be deemed to have been duly executed by it if it is manually signed by an authorized officer or employee of the Registrar, but it shall not be necessary that the same officer or employee sign the certificate of authentication on all of the Bond issued hereunder. By authenticating any of the Bond delivered pursuant to this Ordinance, the Paying Agent shall be deemed to have assented to all of the provisions of this Ordinance.

Section 308. Use of Predecessor's Signature. The Bond bearing the signatures of the officers in office at the time of the signing thereof shall be the valid and binding obligations of the District, notwithstanding that before the delivery thereof and the payment therefor any or all of the persons whose signatures appear thereon shall have ceased to fill their respective offices. The President, the Treasurer and the Secretary, at the time of the execution of the Bond and of the signature certificate, may adopt as and for his own facsimile signature the facsimile signature of his predecessor in office in the event that such facsimile signature appears upon any of the Bond.

Section 309. Incontestable Recital in Bond. Pursuant to section 350.628, Bond Act, each Bond shall recite that it is issued pursuant to the Project Act, to the Bond Act, and to the Supplemental Bond Act, which recital shall be conclusive evidence of the validity of the Bond and the regularity of their issuance.

Section 310. State Tax Exemption. Pursuant to section 350.710, Bond Act, the Bond, their transfer, and the income therefrom shall forever be and remain free and exempt from taxation by the State or any subdivision thereof, except the tax on estates imposed pursuant to the provisions of chapter 375A of NRS or the tax on generation-skipping transfers imposed pursuant to the provisions of chapter 375B of NRS.

Section 311. Bond Execution. The President, the Treasurer and the Secretary are authorized and directed to prepare and to execute the Bond as herein provided.

Section 312. Registrar's Registration. In a separate book or electronic records, the Registrar shall maintain the registration records of the District for the Bond showing the name and address of the registered owner of each Bond authenticated and delivered, the date of

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authentication, the maturity of the Bond and its interest rate, principal amount and Bond number and its prefix, if any.

Section 313. Bond Delivery. After such registration by the Registrar, he or she shall cause the Bond to be delivered to the Purchaser, upon due payment being made in accordance with the terms of their sale.

Section 301. Use of Single Bond. The Bond shall be initially evidenced by a single registered bond in the maximum principal amount set forth in the Loan Contract for the Bond, numbered R-1, which Bond shall be manually signed and executed in the name of and on behalf of the District by the President, countersigned and manually subscribed by the Treasurer, with the seal of the District affixed thereto and attested and manually signed by the Secretary. The principal installments and interest on the Bond shall be paid by check, draft or warrant made to the order of the registered owner of the Bond and mailed to the address of the registered owner shown on the Bond registration records of the Registrar on or before such payment date, or if such payment date is not a business day, on or before the next succeeding business day. So long as the State is the registered owner, such payment shall be made by depositing with the State Treasurer by electronic transfer, on or before the payment date, or if such payment date is not a business day, on or before the next succeeding business day, immediately available funds in an amount sufficient to make the payment then due. The final installment of principal on the Bond shall be made only upon surrender of the Bond at the office of the Paying Agent. The Bond shall mature in installments of principal and bear interest substantially as provided in Sections 301 through 303 hereof. If a portion of principal of the Bond is called for prepayment, no payment of the principal or Redemption Price of or interest on the Bond, due on or after the date fixed for prepayment shall be made unless the Bond is presented to the Paying Agent and notation of the installments of principal so called for prepayment is made on such Bond. The Bond must be registered in the name of its owner and may be assigned by the registered owner in the manner and with the effect set forth in the provisions for registration contained in the form thereof hereinafter set forth.

The Registrar and Paying Agent shall maintain at its office registration records for the Bond showing the name and address of the registered owner, the amounts and dates of any principal prepayments on the Bond, and the dates of any transfer of the Bond.

Section 303. Bond Form. Subject to the provisions of this Ordinance, each Bond shall be in substantially the following form, with such omissions, insertions, endorsements and variations as to any recitals of fact or other provisions as may be required by the circumstances, be required or permitted by this Ordinance, or be consistent with this Ordinance and necessary or appropriate to conform to the rules and requirements of any governmental authority or any usage or requirement of law with respect thereto:

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(Form of Bond)

TRANSFER OF THIS BOND OTHER THAN BY REGISTRATION IS NOT EFFECTIVE

VIRGIN VALLEY WATER DISTRICT, NEVADA GENERAL OBLIGATION (LIMITED TAX)

WATER REFUNDING BOND (ADDITIONALLY SECURED BY PLEDGED REVENUES)

SERIES 2015 NO. R-1 Principal Amount $____________ Loan Contract No. _________

Virgin Valley Water District, Nevada, in the State of Nevada (herein the "District" and the "State," respectively), for value received hereby acknowledges itself to be indebted and promises to pay to the State of Nevada, c/o the State Treasurer, for deposit to the Account for the Revolving Fund (the "Revolving Fund"), the principal sum of [_____________Million _____ Hundred Thousand and No/100-----Dollars ($_______,000)] in installments of principal in the amounts and years listed in the ordinance duly adopted by the Board of the District on _______________, 2015 (the "Ordinance") and the Loan Contract (as defined in the Ordinance) (unless prepaid as provided herein and noted on the Prepayment Panel appended hereto) in lawful money of the United States of America, together with interest on the unpaid installments of principal from the date of delivery of this Bond appearing below until payment of such installments of principal shall have been discharged as provided in the Ordinance, said interest being payable on January 1 and July 1 of each year commencing on the January 1, 2016, and said installments of principal bearing interest at the rate of _________% per annum, and being payable on January 1 and July 1 of the years and in the amounts and at the times designated in the Ordinance and the Loan Contract, not to exceed 18 years from the date of the delivery of the Bond.

The principal of and interest on this Bond (the "Bond Requirements") are payable by check, draft or warrant made to the order of the registered owner hereof and mailed by U.S. Bank National Association or any successor thereto as paying agent for this Bond (the "Paying Agent") to the address shown for the registered owner on the registration records of U.S. Bank National Association or any successor thereto as registrar for the Bond (the "Registrar"). If the State is the registered owner hereof, payment of the Bond Requirements shall be made by depositing with the State Treasurer, on or before any principal or interest payment date or prior redemption date, the amount coming due on such payment date, by electronic transfer in immediately available funds. If any payment date is not a business day, payment may be made on or before the next succeeding business day. If payment of any installment of principal of this Bond is not made when due, interest on such installment shall continue at the interest rate specified for such installment in the Ordinance until such principal installment is paid in full, plus a penalty in the amount of one-tenth of one percent (0.1%) will be due for each day of nonpayment commencing 10 days after the maturity date of that principal installment. The final

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installment of principal on this Bond is payable only on presentation and surrender of this Bond at the office of the Paying Agent.

This single bond is a duly authorized bond of the District (the "Bond") to defray, in part, the cost of refunding certain outstanding obligations of the District (the "Project") under the authority of and in full compliance with the constitution and laws of the State.

Installments of principal of the Bond are subject to prepayment as provided in the Ordinance. If a prepayment is made on this Bond as specified in the Ordinance, interest shall cease to accrue on the amount prepaid from and after the date fixed for prepayment. If a portion of the principal of this Bond is called for prepayment, no payment of the principal of and interest due in connection with this Bond due on and after the prepayment date shall be made unless this Bond is presented to the Paying Agent and notation of the installments of principal so called for prepayment is made on the Prepayment Panel appended hereto.

This Bond must be registered in the name of the owner as to both principal and interest on the registration records kept by the Paying Agent in conformity with the provisions stated herein and endorsed hereon and subject to the terms and conditions set forth in the Bond Ordinance. No transfer of this Bond shall be valid unless made on the registration records maintained at the principal office of the Paying Agent by the registered owner or his attorney duly authorized in writing.

This Bond is fully transferable by the registered owner hereof in person or by his duly authorized attorney on the registration records kept by the Paying Agent upon surrender of this Bond together with a duly executed written instrument of transfer satisfactory to the Paying Agent. Upon such transfer a new fully registered Bond of authorized denomination or denominations of the same aggregate principal amount and maturity will be issued to the transferee in exchange for this Bond, subject to such terms and conditions as set forth in the Bond Ordinance.

The District and the Paying Agent may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of making payment (except to the extent otherwise provided hereinabove and in the Bond Ordinance with respect to the Regular and Special Record Dates for the payment of interest) and for all other purposes and neither the District nor the Paying Agent shall be affected by notice to the contrary.

The Bond does not constitute a debt or an indebtedness of the District within the meaning of any constitutional or statutory provision or limitation, shall not be considered or held to be general obligations of the District, and are payable and collectible solely out of the income derived from certain Pledged Revenues (as defined in the Bond Ordinance); and the owner hereof may not look to any general or other fund for the payment of the Bond Requirements of this obligation except the special funds pledged therefor.

Payment of the Bond Requirements of the Bond shall be made solely from and as security for such payment there are irrevocably pledged, pursuant to the Bond Ordinance, a special account identified as the Bond Fund (as defined in the Bond Ordinance) into which

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account the District covenants to pay, from revenues derived from the Pledged Revenues, sums sufficient to pay when due the Bond Requirements of the Bond.

The Bond is equitably and ratably secured by a lien on such Pledged Revenues, and the Bond constitutes an irrevocable lien (but not necessarily an exclusive lien) upon such Pledged Revenues on a parity with the outstanding Parity Securities (as defined in the Bond Ordinance) and subordinate to the outstanding Superior Obligations (as defined in the Bond Ordinance). The Bond and other securities, in addition to the Bond and the Parity Securities, subject to expressed conditions, may be issued and made payable from such Pledged Revenues having a lien thereon subordinate and junior to the lien or, subject to additional expressed conditions, having a lien thereon prior and superior to the lien of the Bond and on a parity with the Superior Obligations, in accordance with the provisions of the Bond Ordinance.

The District covenants and agrees with the owner of this Bond and with each and every person who may become the owner hereof that it will keep and will perform all of the covenants of the Bond Ordinance.

This Bond is issued to finance the cost to refund certain outstanding obligations of the District.

Reference is made to the Bond Ordinance and any and all modifications and amendments thereof and supplements thereto, to Chapter 100, Statutes of Nevada 1993, as amended (the "District Act"), Nevada Revised Statutes ("NRS") Sections 350.350 to 350.490, inclusive (the "Water and Sewer Act"), to the Local Government Securities Law, now cited as sections 350.500 through 350.720, Nevada Revised Statutes, and all laws amendatory thereof (herein the "Bond Act"), to the Supplemental Bond Act now cited as sections 348.010 through 348.450 Nevada Revised Statutes (herein the "Supplemental Bond Act"), and to all laws supplemental thereto, for an additional description of the nature and extent of the security for the Bond, the accounts, funds or revenues pledged, the nature and extent and manner of enforcement of the pledge, the rights and remedies of the owners of the Bond with respect thereto, the terms and conditions upon which the Bond is issued, and a statement of rights, duties, immunities and obligations of the District, and other rights and remedies of the owners of the Bond.

The Bond is issued pursuant to the District Act, the Water and Sewer Act, the Bond Act, and the Supplemental Bond Act; pursuant to section 350.628 of the Bond Act, this recital is conclusive evidence of the validity of the Bond and the regularity of its issuance; and pursuant to section 350.710 of the Bond Act, the Bond, its transfer, and the income therefrom shall forever be and remain free and exempt from taxation by the State or any subdivision thereof, except the tax on estates imposed pursuant to the provisions of chapter 375A of NRS or the tax on generation-skipping transfers imposed pursuant to the provisions of chapter 375B of NRS.

To the extent and in the respects permitted by the Bond Ordinance, the provisions of the Bond Ordinance or any instrument amendatory thereof or supplemental thereto may be modified or amended by action of the District taken in the manner and subject to the conditions and exceptions prescribed in the Bond Ordinance. The pledge of revenues and other obligations of the District are taken in the manner and subject to the conditions and exceptions prescribed in

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the Bond Ordinance. The pledge of revenues and other obligations of the District under the Bond Ordinance may be discharged at or prior to the respective maturities of the Bond upon the making of provision for the payment thereof on the terms and conditions set forth in the Bond Ordinance.

It is further certified, recited and warranted that all the requirements of law have been fully complied with by the proper officers of the District in the issuance of this Bond, and that it is issued pursuant to and in strict conformity with the Constitution and laws of the State, particularly the terms and provisions of the District Act, the Water and Sewer Act, the Bond Act, the Supplemental Bond Act, and all laws supplemental thereto.

No recourse shall be had for the payment of the Bond Requirements of this Bond or for any claim based thereon or otherwise in respect to the Bond Ordinance, against any individual member of the Board, or any officer or other agent of the District, past, present or future, either directly or indirectly through such governing body or the District, or otherwise, whether by virtue of any constitution, statute or rule of law, or by the endorsement of any penalty or otherwise, all such liability, if any, being by the acceptance of this Bond and as a part of the consideration of its issuance specifically waived and released.

This Bond shall not be valid or obligatory for any purpose until the Paying Agent shall have manually signed the certificate of authentication hereon.

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IN WITNESS WHEREOF, the District has caused this Bond to be signed and executed in its name and upon its behalf with the manual or facsimile signature of the President, and to be countersigned, manually subscribed and executed with the manual or facsimile signature of the District Treasurer; has caused the manual or facsimile of the seal of the District to be affixed hereon; has caused this Bond to be signed, executed and attested with the manual or facsimile signature of its Secretary, all as of the date hereof.

VIRGIN VALLEY WATER DISTRICT, NEVADA (Manual or Facsimile Signature) President (Manual or Facsimile Signature) Treasurer (MANUAL IMPRESSION OR FACSIMILE SEAL) Attest: (Manual or Facsimile Signature) Secretary

(End of Form of Bond)

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(Form of Registration and Authentication Panel)

AUTHENTICATION AND MANDATORY REGISTRATION FOR PAYMENT AS TO PRINCIPAL AND INTEREST

The within bond is registered in the office of the Registrar in the name of the last owner listed below, and the principal amount of the bond and interest thereon shall be payable only to such owner, all in accordance with the within-mentioned Ordinance.

Date of Authentication Name of Address of Signature of and Registration Owner Owner Registrar _____________ State of Nevada, State Treasurer ___________________

Treasurer, as 101 North Carson #4 Custodian of the Carson City, Revolving Fund of Nevada 89701 the State of Nevada

_____________ _______________ ________________ ____________________ _____________ _______________ ________________ ____________________

(End of Form of Registration and Authentication Panel)

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(Form of Principal Prepayment Panel on Bond)

PREPAYMENT PANEL

The following installments of principal (or portions thereof) of this Bond have been prepaid by Virgin Valley Water District, Nevada, in accordance with the terms of the within-mentioned Ordinance.

Due Date of Installments Principal

Date of (or portions Amount Signature of Prepayment thereof) Prepaid Prepaid Paying Agent

__________ _________________ __________ ______________

__________ _________________ __________ ______________

__________ _________________ __________ ______________

(End of Form of Principal Prepayment Panel)

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(Form of Principal Advance Panel)

VIRGIN VALLEY WATER DISTRICT, NEVADA GENERAL OBLIGATION (LIMITED TAX) WATER REFUNDING BOND

(ADDITIONALLY SECURED BY PLEDGED REVENUES) SERIES 2015

CONTRACT NO. _____________

MAXIMUM PRINCIPAL AMOUNT _____________

PRINCIPAL ADVANCE PANEL

Amount of Date of Signature of Principal Advanced Advance Registrar

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

\__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

__________________ __________________ _____________________________

(End of Form of Principal Advance Panel)

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ARTICLE IV.

USE OF BOND PROCEEDS

Section 401. Disposition of Bond Proceeds. When the Bond has been duly executed, the District Officer shall deliver it to the State upon receipt of the agreed purchase price, as stated in the Loan Contract for the Bond, and shall authenticate and register it in the name of the State on the Bond registration records of the Registrar and make notation of such registration on the registration panel appended to the Bond. The District Officer shall cause the proceeds of the Bond to be deposited in the following manner and priority and are hereby pledged therefor:

A. Escrow Account. Proceeds derived from the sale of the Bond, together with other available moneys of the District, if any, in an amount sufficient to establish an initial cash balance and to purchase the Federal Securities (as hereinafter defined) designated in the Escrow Agreement necessary to defease the Refunded Bonds shall be deposited into a special and separate account held by the Escrow Agent designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015 Escrow Account" (the "Escrow Account") and used as provided in Section 411 hereof.

B. Costs of Issuance Account. The balance of the proceeds derived from the sale of the Bond upon receipt after a request for a principal advance shall be credited to a separate account hereby created and to be known as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015 Costs of Issuance Account" (the "Costs of Issuance Account") and held by the Chief Financial Officer of the District to pay the costs of issuance of the Bond.

Section 402. Moneys for Project. All moneys received and held by the District for the Project from all sources, including, without limitation, any surplus Pledged Revenues appropriated by the Governing Body for that purpose, shall be deposited in the Costs of Issuance Account, including, without limitation, the Bond proceeds deposited therein pursuant to subsection B, Section 401 (Disposition of Bond Proceeds) hereof. The moneys in the Costs of Issuance Account, except as herein otherwise expressly provided, shall be used and paid out solely for the purpose of defraying the Cost of the Project, including the costs of issuance of the Bond. After completion of the Project, any moneys remaining in the Cost of Issuance Account may be transferred to the Bond Fund to pay the principal of and interest on the Bond, as so designated by the District Officer.

Section 403. Purchaser Not Responsible. The validity of the Bond shall not be dependent on or be affected by the validity or regularity of any proceedings relating to the Project. The Purchaser and any subsequent owner of the Bond shall in no manner be responsible for the application or disposal by the District or by any of its officers, agents and employees of the moneys derived from the sale of the Bond or of any other moneys herein designated.

Section 404. General Tax Levies. So far as possible, the Bond Requirements of the Bond shall be paid from Pledged Revenues of the Municipal Utility System. However,

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pursuant to NRS 350.596, at any time when there are not on hand from such tax levy or levies sufficient funds on deposit in the Bond Fund to pay, when due the principal of and interest on the Bond, the Bond Requirements shall be paid out of a general fund of the District or out of any other funds that may be available for such purpose, including, without limitation, any proceeds of General Taxes. For the purpose of repaying any moneys so paid from any such fund or funds (other than any moneys available without replacement for the payment of such Bond Requirements on other than a temporary basis), and for the purpose of creating funds for the payment of the Bond Requirements, there are hereby created two separate accounts designated as the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015, Interest Account" (the "Interest Account") and the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015 Principal Account" (the "Principal Account") (collectively, the "Bond Fund"). Pursuant to NRS 350.592 and 350.594, there shall be duly levied immediately after the issuance of the Bond and annually thereafter, until all of the Bond Requirements shall have been fully paid, satisfied and discharged, a General Tax on all property, both real and personal, subject to taxation within the boundaries of the District, including the net proceeds of mines, fully sufficient to reimburse such fund or funds for any such amounts temporarily advanced to pay such initial installments of principal and interest, and to pay the interest on the Bond becoming due after such initial installment, and to pay and retire the Bond as it thereafter becomes due at maturity as herein provided, after there are made due allowances for probable delinquencies. The proceeds of such annual levies shall be duly credited to such separate accounts for the payment of such Bond Requirements. In the preparation of the annual budget or appropriation resolution or ordinance for the District, the Board shall first make proper provisions through the levy of sufficient General Taxes for the payment of the interest on and the retirement of the principal of the bonded indebtedness of the District, including, without limitation, the Bond, subject to the limitation imposed by NRS 361.453 and Section 2, art. 10, State Constitution, and the amount of money necessary for this purpose shall be a first charge against all the revenues received by the District.

Section 405. Priorities for the Bond. As provided in NRS 361.463, in any year in which the total General Taxes levied against the property in the District by all overlapping units within the boundaries of the District exceeds the limitation imposed by NRS 361.453, or a lesser or greater amount fixed by the State Board of Examiners in any Fiscal Year, and it becomes necessary by reason thereof to reduce the levies made by any and all such units, the reductions so made shall be in General Taxes levied by such unit or units (including, without limitation, the District and the State) for purposes other than the payment of their bonded indebtedness, including interest thereon. The General Taxes levied for the payment of such bonded indebtedness and the interest thereon shall always enjoy a priority over General Taxes levied by each such unit (including, without limitation, the District and the State) for all other purposes where reduction is necessary in order to comply with the limitation of NRS 361.453.

Section 406. Correlation of Levies. General Taxes shall be levied and collected in the same manner and at the same time as other taxes are levied and collected, and the proceeds thereof for the Bond shall be kept in the Principal Account and in the Interest Account, which accounts shall be used for no other purpose than the payment of principal and interest, respectively, as the same fall due.

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Section 407. Use of General Fund. Any sums becoming due on the Bond at any time when there are on hand from such General Taxes (and any other available moneys) insufficient funds to pay the same shall be promptly paid when due from general funds on hand belonging to the District, reimbursement to be made for such general funds in the amounts so advanced when the General Taxes herein provided for have been collected, pursuant to NRS 350.596.

Section 408. Use of Other Funds. Nothing in this Ordinance prevents the District from applying any funds (other than General Taxes but including Pledged Revenues) that may be available for that purpose to the payment of the Bond Requirements as the same, respectively, fall due, and upon such payments, the levy or levies herein provided may thereupon to that extent be diminished, pursuant to NRS 350.598.

Section 409. Legislative Duties. In accordance with NRS 350.592, it shall be the duty of the Board annually, at the time and in the manner provided by law for levying other General Taxes of the District, if such action shall be necessary to effectuate the provisions of this Ordinance, to ratify and carry out the provisions hereof with reference to the levy and collection of General Taxes; and the Board shall require the officers of the District to levy, extend and collect such General Taxes in the manner provided by law for the purpose of creating funds for the payment of the principal of the Bond and the interest thereon. Such General Taxes when collected shall be kept for and applied only to the payment of the principal of and the interest on the Bond as hereinbefore specified.

Section 410. Appropriation of General Taxes. In accordance with NRS 350.602, there is hereby specially appropriated the proceeds of such General Taxes to the payment of such principal of and interest on the Bond; and such appropriations will not be repealed nor the General Taxes postponed or diminished (except as herein otherwise expressly provided) until the Bond Requirements of the Bond have been wholly paid.

Section 411. Maintenance of Escrow Account. The Escrow Account shall be maintained in an amount at the time of the initial deposits therein and at all times subsequently at least sufficient, together with the known minimum yield to be derived from the initial investment and any temporary reinvestment of the deposits therein or any part thereof in Federal Securities, to pay the Costs of the Project. Moneys shall be withdrawn by the Escrow Agent from the Escrow Account in sufficient amounts and at such times to permit the payment without default of principal of, premium and interest due in connection with the Refunded Bonds through and including the respective redemption dates thereof. Any moneys remaining in the Escrow Account derived from the proceeds of the Bond after provision shall have been made for the redemption in full of the Refunded Bonds shall be applied to any lawful purpose of the District as the Board may hereafter determine.

Section 412. Insufficiency of Escrow Account. If for any reason the amount in the Escrow Account shall at any time be insufficient for the purpose of Section 411 hereof, the District shall forthwith from the first moneys available therefor pursuant to Section 508 hereof deposit in such account such additional moneys as shall be necessary to permit the payment in full of the costs of the Refunding Project.

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Section 413. Redemption of Refunded Bonds; Notice of Refunding. The District has elected and does hereby declare its intent to refund and defease the Refunded Bonds and call the Refunded Bonds for redemption on March 1, 2018. The District hereby authorizes and irrevocably instructs the Paying Agent to effectuate the giving of the notice of refunding and defeasance of the Refunded Bonds in the name and on behalf of the District. The notice of refunding and defeasance of the Refunded Bonds shall be given as soon as practicable after delivery of the Bond in the manner provided in the ordinance authorizing the issuance of the Refunded Bonds.

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ARTICLE V.

ADMINISTRATION OF AND ACCOUNTING FOR PLEDGED REVENUES

Section 501. Pledge Securing Bond. Subject only to the rights and obligations of the District to cause amounts to be withdrawn therefrom and to pay the Cost of the Project as provided herein, the Pledged Revenues and all moneys and securities paid or to be paid to or held or to be held in any account under Article V of this Ordinance and under Section 401 (Disposition of Bond Proceeds) hereto, except moneys required to be deposited in the Rebate Account, the Costs of Issuance Account and the Escrow Account, are hereby pledged to secure the payment of the Bond Requirements of the Bond; and this pledge shall be valid and binding so far as the Bond is concerned from and after the date of the delivery of the Bond, and the moneys, as received by the District and hereby pledged, shall immediately be subject to the lien of this pledge without any physical delivery thereof, any filing, or further act, and the lien of this pledge and the obligation to perform the contractual provisions hereby made shall have priority over any or all other obligations and liabilities of the District, except for the Superior Obligations, the liens of which on the Pledged Revenues are prior and superior to the lien thereon of the Bond and except for any Parity Securities, the liens of which on the Pledged Revenues are on a parity with the lien thereon of the Bond; and the lien of this pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the District (except as herein otherwise provided), irrespective of whether such parties have notice thereof. All funds and accounts created by this Ordinance shall be separate and special funds or accounts and shall be held by the Chief Financial Officer, except for the Escrow Account which shall be held by the Escrow Agent.

Section 502. Revenue Fund. So long as the Bond shall be Outstanding, as to any Bond Requirements, the entire Gross Revenues shall be set aside upon the receipt of such revenues by the District and credited to the special account in the treasury of the District and designated as the "Revenue Fund". So long as the Bond shall be Outstanding, as to any Bond Requirements, the following payments shall be made from the Revenue Fund as provided in Section 503 (Operation and Maintenance Fund Payments) through Section 508 (Use of Remaining Revenues) hereof.

Section 503. Operation and Maintenance Fund. First, as a first charge on the Revenue Fund so long as the Bond shall be outstanding as to any Bond Requirements, there shall be set aside in and credited to a separate account from time to time (such account heretofore created) and known as the "Virgin Valley Water District, Nevada, Municipal Utility System Operation and Maintenance Fund" (the "Operation and Maintenance Fund") money sufficient to pay operation and maintenance expenses of the Municipal Utility System, such operation and maintenance expenses of the Municipal Utility System are to be as budgeted and approved in accordance with the NRS Sections 354.470 to 354.626, inclusive, and any laws amendatory thereof, and as such expenses become due and payable thereupon they shall be promptly paid; any surplus remaining at the end of the fiscal year and not needed for operation and maintenance expenses of the Municipal Utility System shall be transferred to the Revenue Fund and shall be used for the purposes thereof as herein provided.

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Section 504. Bond Fund Payments.

A. Second, from any moneys remaining in the Revenue Fund and concurrently with transfers to any bond funds, reserve funds and rebate funds created with respect to Superior Obligations, there shall be credited to such bond funds, reserve funds and rebate funds such amounts as are required to be deposited by the ordinances authorizing the issuance of the Superior Obligations.

B. Third, from any moneys in the Revenue Fund, there shall be credited to the Bond Fund concurrently with payments to the bond funds for and any Parity Securities, the following:

(1) Monthly, commencing on the first day of the month immediately succeeding the date of delivery of the Bond, an amount in equal monthly installments necessary, together with any other moneys from time to time available therefor from whatever source, including, without limitation, the moneys, if any, provided in subsection A, Section 401, and in Section 405 hereof, to pay the next maturing installment of interest on the Bond at least one calendar month before such amount is due, and monthly thereafter, commencing on each interest payment date, one-sixth of the amount necessary, together with any other moneys from time to time available therefor and on deposit therein from whatever source, to pay the next maturing installment of interest on the Bond then Outstanding and any Outstanding Parity Securities hereafter except to the extent any other moneys are available therefor.

(2) Monthly, commencing on or before the first day of the month immediately succeeding the date of delivery of the Bond, an amount in equal monthly installments necessary, together with any other moneys from time to time available therefor from whatever source, to pay the next installment of principal of the Bond coming due at maturity at least one calendar month before such amount is due, and monthly thereafter, commencing on each principal payment date, one-twelfth of the amount necessary, together with any other moneys from time to time available therefor and on deposit therein from whatever source, to pay the next installment of principal of the Bond coming due at maturity, or subject to mandatory sinking fund redemption, if any. The moneys credited to the Bond Fund shall be used to pay the Bond Requirements of the Bond as the Bond Requirements become due, including any mandatory sinking fund payments, if any, and any outstanding Parity Securities hereafter issued, except to the extent any other moneys are available therefor.

Section 505. Rebate Account. Fourth, and after the payments hereinabove required to be made by Sections 504 through 505 hereof are made, the District shall deposit Pledged Revenues into the "Virgin Valley Water District, Nevada, General Obligation (Limited Tax) Water Refunding Bond (Additionally Secured by Pledged Revenues) Series 2015, Rebate Account" (the "Rebate Account") as required under Section 148 of the Tax Code and regulations promulgated thereunder and shall apply such funds to the extent required to comply with the covenant in Section 822 (Tax Covenant) hereof to make payments to the United States. Any moneys in such fund not needed for such purpose shall be transferred to the Bond Fund. Payments into similar rebate funds for any additional Parity Securities shall be made concurrently with payments into the Rebate Account.

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Section 506. Termination of Deposits. No payment need be made into the Bond Fund, if the amount in the Bond Fund totals a sum at least equal to the entire amount of the Outstanding Bond and any Outstanding Parity Securities as to all Bond Requirements to their respective maturities or to any redemption date on which the District shall have exercised or shall have obligated itself to exercise its option to redeem prior to their respective maturities the Outstanding Bond or any such Outstanding Parity Securities thereafter maturing, and both accrued and not accrued, in which case moneys in those two accounts in an amount, except for any interest or other gain to accrue from any investment of moneys in Federal Securities from the time of any such deposit to the time or respective times the proceeds of any such investment shall be needed for such payment, at least equal to such Bond Requirements, shall be used together with any such gain from investments solely to pay such Bond Requirements as the same become due; and any moneys in excess thereof in those two funds and any other moneys derived from the Pledged Revenues may be used in any lawful manner determined by the Governing Body.

Section 507. Payment of Additional Securities. Fifth, and subject to the provisions hereinabove in this Article V, but subsequent to the payments hereinabove required to be made, as provided in Article VII hereof with respect to Parity Securities, any moneys remaining in the Revenue Fund may be used by the District for the payment of Bond Requirements of additional bonds or other additional securities payable from the Pledged Revenues having a lien on the Pledged Revenues subordinate to the lien of the Bond and subordinate to the lien of any securities hereafter issued on a parity with the Bond which are hereafter authorized to be issued in accordance with Article VII and any other provisions herein supplemental thereto, including any reasonable reserves required for such securities, as the same accrue; but the lien of such additional Bonds or other additional securities on the Pledged Revenues and the pledge thereof for the payment of such additional securities shall be subordinate to the lien and pledge of the Bond and any Parity Securities on a parity with the Bond, as herein provided. Any additional Parity Securities shall be payable from the Bond Fund pursuant to Sections 504 (Bond Fund Payments) through 505 (Rebate Account) hereof concurrently with payments for the Bond.

Section 508. Use of Remaining Revenues. After the transfers hereinabove required to be made are made, any remaining Pledged Revenues in the Revenue Fund may be used at the end of any Fiscal Year (or whenever in any Fiscal Year there shall have been credited to the Bond Fund, to the Rebate Account, and to each other bond account and reserve account, if any, for the payment of any Superior Obligations, additional Parity Securities or Subordinate Securities, all amounts required to be credited to those special accounts for all of that Fiscal Year, both accrued and thereafter becoming due in the balance of the Fiscal Year, as hereinabove provided in this Article V), for any one or any combination of lawful purposes, as the Governing Body may from time to time determine.

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ARTICLE VI.

GENERAL ADMINISTRATION

Section 601. Administration of Accounts. The special accounts designated in Articles IV and V hereof (except the Escrow Account) shall be administered as provided in this Article VI.

Section 602. Places and Times of Deposits. Each of such special accounts shall be maintained as a book account and kept separate from all other accounts as a trust account solely for the purpose herein designated therefor, and the moneys accounted for in such special bond accounts shall be deposited in one bank account or more in an Insured Bank or Insured Banks as determined and designated by the Governing Body (except as otherwise expressly stated herein). Nothing herein shall prevent the commingling of moneys accounted for in any two (2) or more book accounts pertaining to the Pledged Revenues or to any such fund and any other funds of the District (each of which funds consists of a self-balancing group of accounts and constitutes an independent fiscal and accounting entity) in any Authorized Investment hereunder. Each such bank account shall be continuously secured to the fullest extent required or permitted by the laws of the State for the securing of public funds and shall be irrevocable and not withdrawable by anyone for any purpose other than the respective designated purposes. Each periodic payment shall be credited to the proper account not later than the date therefor herein designated, except that when any such date shall not be a Business Day, then such payment shall be made on or before the next preceding Business Day.

Section 603. Investment of Moneys. Any moneys in any such account, and not needed for immediate use, may be invested or reinvested by the Chief Financial Officer at the direction of a District Officer in Authorized Investments. Authorized Investments shall be immediately available in lawful money of the United States on demand, or shall be subject to redemption at any time at a fixed value by the holder thereof at the option of such holder, or shall mature on or prior to the date or respective dates on which the proceeds are to be expended as estimated by the District Officer upon each date of such investment or reinvestment, but Authorized Investments in any reserve fund shall so be subject to redemption at the holder's option at face value or shall mature on or prior to the last maturity date of the Bond or any other outstanding securities. For the purpose of any such investment or reinvestment, Authorized Investments shall be deemed to mature at the earliest date on which the obligor is, on demand, obligated to pay a fixed sum in discharge of the whole of such obligations. Authorized Investments shall be valued as frequently as deemed necessary, but not less often than quarterly, at the market value thereof, exclusive of accrued interest. Deficiencies in any fund or account shall be remedied no later than the succeeding valuation date.

Section 604. Required and Permissive Investments. The Chief Financial Officer shall have no obligation to make any investment or reinvestment hereunder, unless any moneys on hand and accounted for in any one account exceeds $5,000 and at least $5,000 therein will not be needed for a period of not less than sixty (60) days. In such event the Chief Financial Officer shall invest or reinvest in Authorized Investments not less than substantially all the amount which will not be needed during such sixty-day period, except for any moneys on deposit in an interest-bearing account in any Insured Bank, regardless whether such moneys are

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evidenced by certificate of deposit or otherwise, pursuant to Sections 603 (Investments of Moneys) and 607 (Character of Funds) hereof. The Treasurer or the Chief Financial Officer may invest or reinvest any moneys on hand at any time as provided in Section 603 (Investment of Moneys) hereof even though it is not obligated to do so.

Section 605. Accounting for Investments. The Authorized Investments so purchased as an investment or reinvestment of moneys in any such account shall be deemed at all times to be a part of the account and held in trust therefor. Except as herein otherwise provided, any interest or other gain in any account from any investments and reinvestment in Authorized Investments and from any deposits of moneys in any Insured Bank pursuant to this Article shall be credited to the account, and any loss in any account resulting from any such investments and reinvestments in Authorized Investments and from any such deposits in any Insured Bank shall be charged or debited to the account. Except as provided in Section 603 (Investment of Moneys) hereof, no loss or profit in any account on any investments or reinvestments in Authorized Investments or any certificates of deposit shall be deemed to take place as a result of fluctuations in the market quotations of the investments, reinvestments or certificates prior to the sale or maturity thereof.

Section 606. Redemption or Sale of Authorized Investments. The Chief Financial Officer shall present for redemption at maturity or sale on the prevailing market at the best price obtainable any Authorized Investments so purchased as an investment or reinvestment of moneys in any account whenever it shall be necessary so to do in order to provide moneys to meet any withdrawal, payment or transfer from such account. Neither the Treasurer nor any other officer of the District shall be liable or responsible for any loss resulting from any such investment or reinvestment made in accordance with this Ordinance.

Section 607. Character of Funds. The moneys in any account herein authorized shall consist either of lawful money of the United States or Authorized Investments.

Section 608. Accelerated Payments. Nothing contained in Article V hereof prevents the accumulation in any account herein designated of any monetary requirements at a faster rate than the rate or minimum rate, as the case may be, provided in Article V; but no payment shall be accelerated if such acceleration shall cause the Governing Body to default in the payment of any obligation of the District pertaining to the Pledged Revenues. Nothing herein contained requires in connection with the Pledged Revenues received in any Fiscal Year the accumulation of monetary requirements in any account for the payment in the Comparable Bond Year of Bond Requirements due in connection with the Bond or other securities payable from the Pledged Revenues and heretofore, herein or hereafter authorized, in excess of such Bond Requirements due in such Comparable Bond Year, or of any reserves required to be accumulated and maintained therefor, and of any existing deficiencies, and payable from such account, as the case may be, except as may be otherwise provided herein.

Section 609. Payment of Securities Requirements. The moneys credited to any account designated in Article V hereof for the payment of the Bond Requirements due in connection with the Bond or other securities payable from the Pledged Revenues and heretofore, herein or hereafter authorized shall be used, without requisition, voucher, warrant or further order or authority (other than is contained herein) or any other preliminaries, to pay promptly the

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Bond Requirements payable from such account as such securities become due, upon the respective redemption dates, if any, on which the District is obligated to pay such securities, or upon the respective interest payment and bond maturity dates of such securities, as provided therefor herein or otherwise, except to the extent any other moneys are available therefor, including, without limitation, moneys accounted for in the Bond Fund.

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ARTICLE VII.

SECURITIES LIENS AND ADDITIONAL SECURITIES

Section 701. Lien on the Pledged Revenues. The Bond authorized herein constitutes an irrevocable lien (but not necessarily an exclusive lien) upon the Pledged Revenues, on a parity with the lien thereon of the Outstanding Parity Securities and subordinate to the lien thereon of the Outstanding Superior Obligations.

Section 702. Equality of Bond; Defraying Delinquencies. The Bond authorized to be issued hereunder and any Parity Securities hereafter authorized to be issued with a lien on the Pledged Revenues on a parity with the lien of the Bond and from time to time Outstanding are equitably and ratably secured by a lien on the Pledged Revenues and shall not be entitled to any priority one over the other in the application of the Pledged Revenues regardless of the time or times of the issuance of such securities, it being the intention of the Governing Body that there shall be no priority among the Bond and any such Parity Securities regardless of the fact that they may be actually issued and delivered at different times, except as expressly set forth herein.

If at any time the District shall for any reason fail to pay into the Bond Fund or the Rebate Account the full amount above stipulated from the Pledged Revenues, then an amount shall be paid first into the Bond Fund and second into the Rebate Account at such time equal to the difference between that paid from the Pledged Revenues and the full amount so stipulated. If the Parity Securities are Outstanding, and if the proceedings authorizing issuance of those securities require the replacement of moneys in a bond fund, reserve fund or rebate account therefor, then the moneys replaced in such funds shall be replaced on a pro rata basis related to the principal amount of the then Outstanding Bond and the then Outstanding Parity Securities, as moneys become available therefor, first into all of such bond and reserve funds and second into all such rebate accounts.

Section 703. Issuance of Additional Securities.

A. Additional Parity Securities.

(1) Nothing herein, except as expressly hereinafter provided, shall prevent the issuance by the District of additional Parity Securities payable from Pledged Revenues and constituting a lien thereon on a parity with the lien thereon of the Bond, provided, however, that the following are express conditions to the authorization and issuance of any such Parity Securities:

(a) At the time of the adoption of the supplemental instrument authorizing the issuance of the additional Parity Securities as provided in Section 708 hereof, the District shall not be in default in making any payments required by Article V hereof.

(b) The Pledged Revenues (subject to adjustments as hereinafter provided) certified by the District Officer or an Independent Accountant or the District Engineer to be derived in either the Fiscal Year immediately preceding, or any 12 consecutive months of the 18 months immediately preceding, the date of the issuance of the

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proposed Parity Securities, will be sufficient to pay at least an amount equal to maximum annual debt service for the principal and interest requirements (to be paid during that Fiscal Year) of the Outstanding Bond, any other Outstanding Parity Securities of the District, the Parity Securities proposed to be issued and any Outstanding Superior Obligations (excluding any reserves therefor).

(c) In any determination of whether or not additional Parity Securities may be issued in accordance with the foregoing earnings test, consideration shall be given to any probable estimated increase or reduction in Operation and Maintenance Expenses that will result from the expenditure of the funds proposed to be derived from the issuance and sale of the additional Parity Securities.

(d) In any determination of whether or not additional Parity Securities may be issued in accordance with the foregoing earnings test, the respective annual principal (or redemption price) and interest requirements shall be reduced to the extent such requirements are scheduled to be paid with moneys held in trust or in escrow for that purpose by any Trust Bank, including the known minimum yield from any investment in Federal Securities.

(e) A written certificate or written opinion by the District Officer, the District Engineer, or an Independent Accountant or consulting engineer that the foregoing earnings test is met shall be conclusively presumed to be accurate in determining the right of the District to authorize, issue, sell and deliver additional Parity Securities.

(f) In connection with the authorization of any such additional securities the Board may on behalf of the District adopt any additional covenants or agreements with the holders of such additional securities; provided, however, that no such covenant or agreement may be in conflict with the covenants and agreements of the District herein and no such covenant or agreement may be materially adverse to the interests of the holders of the Bond. Any finding of the Board to the effect that the foregoing requirements are met shall, if made in good faith, conclusively establish that the foregoing requirements have been met for purposes of this Ordinance.

A. Subordinate Securities. Nothing herein, except as expressly hereinafter provided, shall prevent the District from issuing additional Subordinate Securities payable from all or a portion of the Pledged Revenues and constituting a lien thereon subordinate to the lien thereon of the Bond, any Outstanding Parity Securities and any Outstanding Superior Obligations.

C. Issuance of Superior Obligations. Nothing in this Ordinance prevents the issuance by the District of additional Superior Obligations payable from the Pledged Revenues and constituting a lien thereon prior and superior to the lien thereon of the Bond or prevents the issuance of bonds or other securities refunding all or a part of the Bond, except as provided in Sections 706 through 708 hereof; but before any such additional Superior Obligations are authorized or actually issued:

(1) Absence of Default. At the time of the adoption of the supplemental instrument authorizing the issuance of the additional Superior Obligations as

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provided in Section 708 hereof, the District shall not be in default in making any payments required by Article V hereof.

(2) Earnings Test. The Pledged Revenues (subject to adjustments as hereinafter provided) projected by the District Officer or an Independent Accountant or the District Engineer to be derived in the later of (i) the Fiscal Year immediately following the Fiscal Year in which the facilities to be financed with the proceeds of the additional Parity Securities are projected to be completed or (ii) the first Fiscal Year for which no interest has been capitalized for the payment of any Parity Securities, including the Superior Obligations proposed to be issued, will be sufficient to pay at least an amount equal to 125% of the combined maximum annual principal and interest requirements of the Outstanding Superior Obligations and any other Outstanding Superior Obligations of the District and the Superior Obligations proposed to be issued (excluding any reserves therefor).

(3) Adjustment of Pledged Revenues. In any determination of whether or not additional Superior Obligations may be issued in accordance with the foregoing earnings test, consideration shall be given to any estimated increase or reduction in Operation and Maintenance expenses that will result from the expenditure of the funds proposed to be derived from the issuance and sale of the additional Superior Obligations.

(4) Reduction of Annual Requirements. In any determination of whether or not additional Superior Obligations may be issued in accordance with the foregoing earnings test, the respective annual principal (or redemption price) and interest requirements shall be reduced to the extent such requirements are scheduled to be paid with moneys held in trust or in escrow for that purpose by any trust bank within or without the State, including the known minimum yield from any investment in Federal Securities.

(5) Certification of Revenues. A written certificate or written opinion by the District Officer, the District Engineer, or an Independent Accountant or consulting engineer that the foregoing earnings test is met shall be conclusively presumed to be accurate in determining the right of the District to authorize, issue, sell and deliver additional Superior Obligations.

(6) Additional Covenants. In connection with the authorization of any such additional securities the Board may on behalf of the District adopt any additional covenants or agreements with the holders of such additional securities; provided, however, that no such covenant or agreement may be in conflict with the covenants and agreements of the District herein and no such covenant or agreement may be materially adverse to the interests of the holders of the Bond. Any finding of the Board to the effect that the foregoing requirements are met shall, if made in good faith, conclusively establish that the foregoing requirements have been met for purposes of this Ordinance.

Section 704. Issuance of Refunding Securities. At any time after the Bond, or any part thereof, are issued and remain Outstanding, if the Governing Body shall find it desirable to refund any Outstanding Bond or other Outstanding securities payable from and constituting a lien upon the Pledged Revenues, such Bond or other securities, or any part thereof, may be refunded, regardless whether the priority of the lien for the payment of the refunding securities

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on the Pledged Revenues is changed (except as provided in Sections 703 (for additional Parity Securities) and 707 through 708 hereof).

Section 705. Partial Refundings. The refunding bonds or other refunding securities so issued shall enjoy complete equality of lien with the portion of the Bond or other securities of the same issue which is not refunded, if there are any; and the owner or owners of such refunding bonds or such other refunding securities shall be subrogated to all of the rights and privileges enjoyed by the owner of owners of the unrefunded Bond or other unrefunded securities of the same issue partially refunded by the refunding securities.

Section 706. Limitations Upon Refundings. Any refunding bonds or other refunding securities payable from the Pledged Revenues shall be issued with such details as the Governing Body may by instrument provide, subject to the provisions of Section 708 hereof, and subject to the inclusion of any such rights and privileges designated in Section 707 hereof, but without any impairment of any contractual obligation imposed upon the District by any proceedings authorizing the issuance of any unrefunded portion of such Outstanding securities of any one or more issues (including but not necessarily limited to the Bond).

Section 707. Protection of Securities Not Refunded. If only a part of the Outstanding Bond and any other Outstanding securities of any issue or issues payable from the Pledged Revenues is refunded, then such securities may not be refunded without the consent of the owner or owners of the unrefunded portion of such securities:

A. Requirements Not Increased. Unless the refunding bonds or other refunding securities do not increase for any Bond Year or Fiscal Year the aggregate principal and interest requirements evidenced by such refunding securities and by the Outstanding securities not refunded on and prior to the last maturity date of such unrefunded securities, and the lien of any refunding bonds or other refunding securities on the Pledged Revenues is not raised to a higher priority than the lien thereon of the Bond or other securities thereby refunded; or

B. Subordinate Lien. Unless the lien on the Pledged Revenues for the payment of the refunding securities is subordinate to each such lien for the payment of any securities not refunded; or

C. Default and Earnings Test. Unless the refunding bonds or other refunding securities are issued in compliance with Sections 703 hereof.

Section 708. Supplemental Instrument. Additional bonds or other additional securities payable from the Pledged Revenues shall be issued only after authorization thereof by a supplemental instrument of the Governing Body stating the purpose or purposes of the issuance of such additional securities, directing the application of the proceeds thereof to such purpose or purposes, directing the execution thereof, and fixing and determining the date, principal amount, maturity or maturities, designation and numbers thereof, the maximum rate or the rate or rates of interest to be borne thereby, any prior redemption privileges of the District with respect thereto (or delegating to a District Officer the fixing of such terms in accordance with State law) and any other provisions thereof in accordance with this Ordinance. All additional securities shall bear such date, shall bear such numbers and series designation, letters or symbols prefixed to their

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numbers distinguishing them from each other security, shall be payable at such place or places, may be subject to redemption prior to maturity on such terms and conditions, and shall bear interest at such rate or at such different or varying rates per annum, as may be fixed by instrument or other document of the District.

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ARTICLE VIII.

MISCELLANEOUS PROTECTIVE COVENANTS

Section 801. General. The District hereby particularly covenants and agrees with the owner of the Bond and makes provisions which shall be a part of its contract with such owners to the effect and with the purposes set forth in the following provisions and sections of this Article.

Section 802. Operation of the System. The District shall at all times operate the Municipal Utility System properly and in a sound and economical manner and shall maintain, preserve and keep the Municipal Utility System properly, or cause the same so to be maintained, preserved and kept, in good repair, working order and condition. The District also shall from time to time make or cause to be made all necessary and proper repairs, replacements and renewals so that at all times the operation of the Municipal Utility System may be properly and advantageously conducted in conformity with standards customarily followed by municipalities operating water and sanitary systems of like size and character.

Except for the use of the Municipal Utility System or services pertaining thereto in the normal course of business, neither all nor a substantial part of the Municipal Utility System shall be sold, leased, mortgaged, pledged, encumbered, alienated or otherwise disposed of until all the Bond has been paid in full, or unless provision has been made therefor as hereinafter provided.

Section 803. Payment of Taxes, Etc. The District shall pay or cause to be paid all taxes, assessments and other municipal or governmental charges, if any, lawfully levied or assessed upon or in respect of the Municipal Utility System or any part thereof, or upon any portion of the Gross Revenues, when the same shall become due. The District shall duly observe and comply with all valid requirements of any municipal or governmental authority relative to the Municipal Utility System or any part thereof, except for any period during which the validity of the same is being contested in good faith by proper legal proceedings. The District shall not create or suffer to be created any lien or charge on the Municipal Utility System or any part thereof, or upon the Gross Revenues, except the pledge and lien created by this Ordinance for the payment of the Bond and any Outstanding parity or subordinate securities issued in accordance herewith, and except as herein otherwise permitted. The District shall pay or cause to be discharged or shall make adequate provision to satisfy and to discharge within 60 days after the same shall become payable, all lawful claims and demands for labor, materials, supplies or other objects which, if unpaid, might by law become a lien upon the Municipal Utility System or any part thereof, or upon the Gross Revenues. Nothing herein contained requires the District to pay or cause to be discharged or to make provision for any such tax, assessment, lien, charge or demand before the time when payment thereon shall be due, or so long as the validity thereof shall be contested in good faith by appropriate legal proceedings.

Section 804. No Competing Facilities. The District shall neither construct nor permit to be constructed other facilities or structures to be operated by the District separate from the Municipal Utility System and competing for Gross Revenues otherwise available for the payment of the Bond or any other securities payable from Pledged Revenues; provided, however,

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that nothing herein contained shall impair the police powers of the District or otherwise cause the District to violate any applicable law.

Section 805. Rate Covenant. The District shall charge against users or against purchasers of services or commodities pertaining to the Municipal Utility System such fees, rates and other charges as shall be sufficient to produce Gross Revenues annually which, together with any other funds available therefor, will be in each Fiscal Year of the District at least equal to 100% of the sum of:

A. an amount equal to the annual Operation and Maintenance Expenses for such Fiscal Year;

B. an amount equal to the debt service due in such Fiscal Year on the then Outstanding Bond and any Outstanding Parity Securities; and

C. any other amounts payable from the Pledged Revenues and pertaining to the Municipal Utility System, including, without limitation, debt service on any Superior Obligations, Subordinate Securities and any other securities or obligations pertaining to the Municipal Utility System, operation and maintenance reserves, capital reserves and prior deficiencies pertaining to any account relating to Gross Revenues.

The foregoing rate covenant is subject to compliance by the District with any legislation of the United States of America, the State or other governmental body, or any regulation or other action taken by the United States, the State or any agency or political subdivision of the State pursuant to such legislation, in the exercise of the police power thereof for the public welfare, which legislation, regulation or action limits or otherwise inhibits the amounts of fees, rates and other charges collectible by the District for the use of or otherwise pertaining to, and all services rendered by, the Municipal Utility System.

Subject to the foregoing, the District shall cause all fees, rates and other charges pertaining to the Municipal Utility System to be collected as soon as reasonable and shall provide methods of collection and penalties to the end that the Gross Revenues shall be adequate to meet the requirements hereof.

Section 806. Performance of Duties. The District shall faithfully and punctually perform or cause to be performed all duties with respect to the Pledged Revenues and the Project required by the District Act, the Constitution and laws of the State and the various resolutions, ordinances and other instruments of the District, including, without limitation, the proper segregation of the proceeds of the Bond and the Pledged Revenues and their application from time to time to the respective accounts provided therefor.

Section 807. Further Assurances. At any and all times the District, except when otherwise required by law, shall, so far as it may be authorized by law, pass, make, do, execute, acknowledge, deliver and file or record all and every such further instruments, acts, deeds, conveyances, assignments, transfers, other documents and assurances as may be necessary or desirable for the better assuring, conveying, granting, assigning and confirming all and singular the rights, the Pledged Revenues, and other moneys and accounts hereby pledged or assigned, or which the District may hereafter become bound to pledge or to assign, or as may be

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reasonable and required to carry out the purposes of this Ordinance and to comply with the District Act, the Bond Act and all laws supplemental thereto. The District shall at all times, to the extent permitted by law, defend, preserve and protect the pledge of the Pledged Revenues and other moneys and accounts pledged hereunder and all the rights of every owner of any Bond against all claims and demands of all Persons whomsoever.

Section 808. Conditions Precedent. Upon the date of issuance of the Bond, all conditions, acts and things required by the Constitution or statutes of the State, including without limitation, the District Act and the Bond Act, or this Ordinance, to exist, to have happened, and to have been performed precedent to or in the issuance of the Bond shall exist, have happened, and have been performed; and the Bond, together with all other obligations of the District, shall not contravene any debt or other limitation prescribed by the State Constitution or statutes.

Section 809. Covenant to Perform. The District shall observe and perform all of the terms and conditions contained in this Ordinance and the District Act, the Bond Act and all laws supplemental thereto and shall comply with all valid acts, rules, regulations, orders and directives of any legislative, executive, administrative or judicial body applicable to the Project, to any such other facilities, or to the District.

Section 810. Protective Security. The District and the officers, agents and employees of the District shall not take any action in such manner or to such extent as might prejudice the security for the payment of the Bond Requirements of the Bond and any other securities payable from the Pledged Revenues according to the terms thereof. No contract shall be entered into nor any other action taken by which the rights of any owner of any Bond or other security payable from the Pledged Revenues might be prejudicially and materially impaired or diminished.

Section 811. Accumulation of Interest Claims. In order to prevent any accumulation of coupons or claims for interest after maturity, the District shall not directly or indirectly extend or assent to the extension of the time for the payment of any coupon or claim for interest on any of the Bond or any other securities payable from the Pledged Revenues; and the District shall not directly or indirectly be a party to or approve any arrangements for any such extension or for the purpose of keeping alive any of such coupons or other claims for interest. If the time for the payment of any such coupons or of any other such installment of interest shall be extended in contravention of the foregoing provisions, such coupon or installment or installments of interest after such extension or arrangement shall not be entitled in case of default hereunder to the benefit or the security of this Ordinance, except upon the prior payment in full of the principal of all Bond and any such other securities then Outstanding and of all matured interest on such securities the payment of which has not been extended.

Section 812. Prompt Payment of Bond. The District shall promptly pay the Bond Requirements of the Bond issued hereunder and secured hereby at the places, on the dates, and in the manner specified herein and in the Bond according to the true intent and meaning hereof.

Section 813. Use of Pledged Revenues. None of the Pledged Revenues shall be used for any purpose other than as provided herein. The District shall apply the Pledged

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Revenues to the payment of the Bond, any other securities payable from Pledged Revenues, and the interest thereon (but not necessarily exclusively thereto), and the District is not obligated to make such payments from any other source or moneys, but it is not prohibited from making such payments from any moneys which may be lawfully used for that purpose.

Section 814. Use of Bond Fund. The Bond Fund shall be used solely and only and the moneys credited to such account are hereby pledged for the purpose of paying the Bond Requirements of the Bond and any Parity Securities hereafter authorized and then Outstanding, except for those moneys in excess of such Bond Requirements, both accrued and not accrued, to their respective maturities or any Redemption Date or Redemption Dates, whichever due date is earlier, if any (subject to the provisions of Sections 702 and 901 hereof)

Section 815. Additional Securities. Any other securities hereafter authorized to be issued and payable from the Pledged Revenues shall not hereafter be issued, unless the additional securities are also issued in conformance with the provisions of Articles VI and VIII hereof.

Section 816. Other Liens. Other than as provided herein, there are no liens or encumbrances of any nature whatsoever on or against the Project, or any part thereof, or on or against the Pledged Revenues derived or to be derived.

Section 817. Corporate Existence. The District shall maintain its corporate identity and existence so long as any of the Bond remains Outstanding, unless another body corporate and politic by operation of law succeeds to the powers, privileges, rights, liabilities, disabilities, duties and immunities of the District and is obligated by law to fix and collect the Pledged Revenues as herein provided without adversely affecting to any substantial degree at any time the privileges and rights of any owner of any Outstanding Bond.

Section 818. Collection of Pledged Revenues. The Board, on behalf of the District, shall cause the Pledged Revenues, to be collected as soon as reasonable, shall prescribe and enforce rules and regulations or impose contractual obligations for the payment thereof, including without limitation, the imposition of penalties for any defaults, to the end that the Pledged Revenues shall be adequate to meet the requirements of this Ordinance and of any other instruments supplemental hereto.

Section 819. Records. So long as the Bond and any other securities payable from the Pledged Revenues remain Outstanding, proper books of record and account shall be kept by the District, separate and apart from all other records and accounts, showing complete and correct entries of all transactions relating to the Project or the Pledged Revenues, or to both. Such books shall include (but not necessarily be limited to) monthly records showing:

A. Receipts. The revenues received from the Pledged Revenues, and

B. Expenses. A detailed statement of the expenditures from the Pledged Revenues.

Section 820. Maintenance and Inspection of Records. All requisitions, requests, certificates, opinions and other documents received by any individual on behalf of the

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District in connection with the Project under the provisions of this Ordinance shall be retained in the District's official records. The Paying Agent shall have the right at all reasonable times to inspect all records, accounts and data relating thereto, concerning the Project and the Pledged Revenues, to make copies of such records, accounts and data, and to inspect the Project and all properties comprising the Project.

Section 821. Completion of Project. The District, with the proceeds derived from the sale of the Bond and any other available moneys, shall proceed to cause the Project to be completed without delay to the best of the District's ability and with due diligence, as herein provided.

Section 822. Tax Covenant. The District covenants for the benefit of the owners of the Bond that it will not take any action or omit to take any action with respect to the Bond, the proceeds thereof, any other funds of the District or any project refinanced with the proceeds of the Bond if such action or omission (i) would cause the interest on the Bond to lose its exclusion from gross income for federal income tax purposes under Section 103 of the Tax Code, or (ii) would cause interest on the Bond to lose its exclusion from alternative minimum taxable income as defined in Section 55(b)(2) of the Tax Code except to the extent such interest is required to be included in the adjusted current earnings adjustment applicable to corporations under Section 56 of the Tax Code in calculating corporate alternative minimum taxable income. The foregoing covenant shall remain in full force and effect notwithstanding the payment in full or defeasance of the Bond until the date on which all obligations of the District in fulfilling the above covenant under the Tax Code have been met.

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ARTICLE IX.

MISCELLANEOUS

Section 901. Defeasance. When all Bond Requirements of the Bond have been duly paid, the pledge, the lien, and all obligations hereunder as to the Bond shall thereby be discharged and the Bond shall no longer be deemed to be Outstanding within the meaning of this Ordinance. There shall be deemed to be such due payment when the District has placed in escrow or in trust with a Trust Bank, an amount sufficient (including the known minimum yield available for such purpose from the Federal Securities in which such amount may be initially invested wholly or in part) to meet all Bond Requirements of the Bond, as the same become due to the final maturity of the Bond, or upon any redemption date as of which the District shall have exercised or shall have obligated itself to exercise its prior redemption option by a call of the Bond for payment then. The Federal Securities shall become due before the respective times on which the proceeds thereof shall be needed, in accordance with a schedule established and agreed upon between the District and the Trust Bank at the time of the creation of the escrow or trust, or the Federal Securities shall be subject to redemption at the option of the holders thereof to assure availability as needed to meet the schedule. For the purpose of this Section "Federal Securities" shall include only Federal Securities which are not callable for redemption prior to their maturities except at the option of the owner thereof. When such defeasance is accomplished the Paying Agent shall mail written notice of the defeasance to the registered owner of the Bond at the addresses last shown on the registration records for the Bond maintained by the Registrar.

Section 902. Delegated Powers. The officers of the District be, and they hereby are, authorized and directed to take all action necessary or appropriate to effectuate the provisions of this Ordinance, including, without limitation:

A. Printing. The printing of the Bond;

B. Final Certificate. The execution of such certificates as may be reasonably required by the Purchaser, relating, inter alia, to:

(1) The signing of the Bond,

(2) The tenure and identity of the officials of the Governing Body and of the District,

(3) to the assessed valuation of the taxable property in and the indebtedness of the District,

(4) to the rate of taxes levied against the taxable property within the District,

(5) The exclusion of interest on the Bond from gross income for purposes of federal income taxation,

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(6) The accuracy and completeness of any information provided the State in connection with the Bond as of the date of delivery of the Bond, and

(7) The delivery of the Bond and the receipt of the Bond purchase price, and

(8) If it is in accordance with fact, the absence of litigation, pending or threatened, affecting the validity thereof.

C. Information. The assembly and dissemination of financial and other information concerning the District, the Board and the Bond; and

D. Loan Agreement; Paying Agent and Registrar Agreement; Escrow Agreement. The execution and delivery of the Loan Agreement, the Paying Agent and Registrar Agreement and the Escrow Agreement by the Chief Financial Officer or the District Manager in substantially the forms on file with the Secretary, are hereby authorized and approved, with such changes, amendments or modifications as are agreed to by the person executing such document and any other documents and agreements to effect the provisions of this Ordinance. The execution of any such document shall be conclusive evidence of consent to such changes, amendments or modifications.

Section 903. Statute of Limitations. No action or suit based upon any Bond, or other obligation of the District shall be commenced after it is barred by any statute of limitations pertaining thereto. Any trust or fiduciary relationship between the District and the owner of any Bond or other obligee regarding any such obligation shall be conclusively presumed to have been repudiated on the maturity date or other due date thereof unless the Bond is presented for payment or demand before the expiration of the applicable limitation period. Any moneys from whatever source derived remaining in any account reserved, pledged or otherwise held for the payment of any such obligation, action or suit shall revert to the Revenue Fund, unless the Governing Body shall otherwise provide by instrument of the District. Nothing hereby contained prevents the payment of any such obligation after any action or suit for its collection has been barred if the Governing Body deems it in the best interests of the public so to do and orders such payment to be made.

Section 904. Evidence of Bondowners. Any request, consent or other instrument which this Ordinance may require or may permit to be signed and to be executed by the owner of the Bond may be in one or more instruments of similar tenor and shall be signed or shall be executed by each such owner in person or by such owner's attorney appointed in writing. Proof of the execution of any such instrument or of an instrument appointing any such attorney, or the holding by any Person of the Bond, shall be sufficient for any purpose of this Ordinance (except as otherwise herein expressly provided) if made in the following manner:

A. Proof of Execution. The fact and the date of the execution by any owner of the Bond or such owner's attorney of such instrument may be provided by the certificate, which need not be acknowledged or verified, of an officer of a bank or trust company satisfactory to the Secretary, or of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which such notary purports to act, that

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the individual signing such request or other instrument acknowledged to such notary the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer; the authority of the individual or individuals executing any such instrument on behalf of a corporate owner of any Bond may be established without further proof if such instrument is signed by an individual purporting to be the president or vice president of such corporation with a corporate seal affixed and attested by an individual purporting to be its secretary or an assistant secretary; and the authority of any Person or Persons executing any such instrument in any fiduciary or representative capacity may be established without further proof if such instrument is signed by a Person or Persons purporting to act in such fiduciary or representative capacity; and

B. Proof of Holdings. The amount of the Bond owned by any Person executing any instrument as an owner of the Bond and the number, date and other identification thereof, together with the date of holding the Bond, may be proved by reference to the registration records kept by the Paying Agent.

Section 905. Warranty Upon Issuance of Bond. The Bond, when duly executed and delivered for the purpose provided in this Ordinance, shall constitute a warranty by and on behalf of the District for the benefit of each and every future owner of any of the Bond that the Bond have been issued for a valuable consideration in full conformity with law.

Section 906. Immunities of Purchaser. The Purchaser and any associate thereof are under no obligation to any owner of the Bond for any action that they may or may not take or in respect of anything that they may or may not do by reason of any information contained in any reports or other documents received by them under the provisions of this Ordinance. The immunities and exemptions from liability of the Purchaser and any associate thereof hereunder extend to their partners, directors, successors, employees and agents.

Section 907. Prior Contracts. Nothing herein contained impairs the District's obligation of contracts with any Person in connection with the District, including, without limitation, the Pledged Revenues, this Ordinance or the Project (or any combination thereof). If any provision herein is inconsistent with any provision in any existing contract pertaining to the District in such a manner as to effect prejudicially and materially the rights and privileges thereunder, so long as such contract shall remain viable and in effect such provision therein shall control such inconsistent provision herein and the latter provision shall be subject and subordinate to such provision in such existing contract.

Section 908. Governmental Powers. The enforceability of the obligations of the District is:

A. State and U.S. Powers. Subject to the reasonable exercise in the future by the State and its governmental bodies of the police power inherent in the sovereignty of the State and to the exercise by the United States of the powers delegated to it by the Constitution of the United States,

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B. Limitations upon Suits. Subject to the limitations stated in the llth Amendment, Constitution of the United States, upon suits against states in federal courts by citizens of other states or citizens or subjects of foreign states, and

C. Sovereign Immunity. Subject to the possible passage hereafter of a State statute re-establishing the doctrine of sovereign immunity (heretofore waived by the State subject to certain exceptions and conditions) of the State, the District, and any other political subdivision of the State from liability and suits thereagainst in the absence of the State's consent thereto. Nothing herein prohibits or limits the exercise by the Federal Government, the State, the District, or any other governmental entity of their respective sovereign powers. Generally, the District can neither contract away any such sovereign powers nor limit or inhibit by contract the proper exercise of such powers, and this Ordinance does not purport to do so.

Section 909. Provisions Relating to Variable Rate Indebtedness. For all purposes, variable rate indebtedness shall be assumed to bear interest at the highest of: (i) the actual rate on the date of calculation, or if the indebtedness in not yet outstanding, the initial rate (if established and binding), (ii) if the indebtedness has been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, or if no debt is outstanding for the twelve prior months under the authorizing document, the average rate borne by reference to an index comparable to that to be utilized in determining the interest rate for the debt to be issued and (iii) (A) if interest on the indebtedness is excludable from gross income under the applicable provisions of the Tax Code, the most recently published Bond Buyer "Revenue Bond Index" (or comparable index if no longer published), or (B) if interest is not so excludable, the interest rate on direct U.S. Treasury Obligations with comparable maturities; provided, however, that for purposes of any rate covenant measuring actual debt service coverage during a test period, variable rate indebtedness shall be deemed to bear interest at the actual rate per annum applicable during the test period.

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ARTICLE X.

PRIVILEGES, RIGHTS AND REMEDIES

Section 1001. Bondowner's Remedies. Each owner of the Bond shall be entitled to all of the privileges, rights and remedies provided herein, in the District Act, the Bond Act, the Water and Sewer Act, the Supplemental Bond Act and this Ordinance, and as otherwise provided or permitted at law or in equity or by other statute, except as provided in Sections 209 (Character of Agreement) through 213 (No Bond Election) hereof, but subject to the provisions herein concerning the Pledged Revenues and the proceeds of the Bond. The Bond is expressly not subject to acceleration upon an event of default.

Section 1002. Right to Enforce Payment. Nothing in this article affects or impairs the right of any owner of any Bond issued hereunder to enforce the payment of the Bond Requirements of such Bond or the obligation of the District to pay the Bond Requirements of each Bond to the owner thereof at the time and the place expressed in the Bond.

Section 1003. Events of Default. Each of the following events is hereby declared an "Event of Default":

A. Nonpayment of Principal. Payment of the principal of the Bond, shall not be made when the same shall become due and payable, either at maturity or otherwise;

B. Nonpayment of Interest. Payment of any installment of interest shall not be made when the same becomes due and payable;

C. Incapable to Perform. The District shall for any reason be rendered incapable of fulfilling its obligations hereunder;

D. Nonperformance of Duties. The District shall have failed to carry out and, to perform (or in good faith to begin the performance of) all acts and things lawfully required to be carried out or to be performed by it under any contract relating to the Pledged Revenues, or otherwise, including, without limitation, this Ordinance, and such failure shall continue for sixty (60) days after receipt of notice from the owners of ten percent (10%) in principal amount of the Bond then Outstanding.

E. Appointment of Receiver. An order or decree shall be entered by a court of competent jurisdiction with the consent or acquiescence of the District appointing a receiver or receivers for the Pledged Revenues and any other moneys subject to the lien to secure the payment of the Bond, or if an order or decree having been entered without the consent or acquiescence of the District, shall not be vacated or discharged or stayed on appeal within sixty (60) days after entry; and

F. Default of Any Provision. The District shall make default in the due and punctual performance of any other of the representations, covenants, conditions, agreements and other provisions contained in the Bond or in this Ordinance on its part to be performed, and if such default shall continue for sixty (60) days after written notice specifying such default and

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requiring the same to be remedied shall have been given to the District by the owners of ten percent (10%) in principal amount of the Bond then Outstanding.

Section 1004. Remedies for Default. Upon the happening and continuance of any of the Events of Default, as provided in Section 1003 hereof, then and in every case the owner or owners of not less than a majority in principal amount of the Bond then Outstanding, including, without limitation, a trustee or trustees therefor, may proceed against the District and its agents, officers and employees to protect and to enforce the rights of any owner of Bond under this Ordinance by mandamus or by other suit, action or special proceedings in equity or at law, in any court of competent jurisdiction, either for the appointment of a receiver or for the specific performance of any covenant or agreement contained herein or in an award of execution of any power herein granted for the enforcement of any proper, legal or equitable remedy as the owner or owners may deem most effectual to protect and to enforce the rights aforesaid, or thereby to enjoin any act or thing which may be unlawful or in violation of any right of any owner of any Bond, or to require the District to act as if it were the trustee of an express trust, or any combination of such remedies. All such proceedings at law or in equity shall be instituted, had and maintained for the equal benefit of all owners of the Bond and any Parity Securities then Outstanding.

Section 1005. Receiver's Rights and Privileges. Any receiver appointed in any proceedings to protect the rights of such owners hereunder, the consent of any such appointment being hereby expressly granted by the District, may collect, receive and apply all Pledged Revenues arising after the appointment of such receiver in the same manner as the District itself might do.

Section 1006. Rights and Privileges Cumulative. The failure of any owner of any outstanding Bond to proceed in any manner herein provided shall not relieve the District, its Governing Body, or any of its officers, agents or employees of any liability for failure to perform or carry out any duty, obligation or other commitment. Each right or privilege of any such owner is in addition and is cumulative to any other right or privilege, and the exercise of any right or privilege by or on behalf of any of them shall not be deemed a waiver of any other right or privilege thereof.

Section 1007. Prejudicial Action Unnecessary. Nothing in this article requires the District to proceed as provided herein if the Governing Body determines in good faith and without any abuse of its discretion that if the District so proceeds it is more likely than not to incur a net loss rather than a net gain or such action is otherwise likely to affect materially and prejudicially the owners of the outstanding Bond and of any Outstanding securities on a parity with the Bond.

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ARTICLE XI.

CONCERNING THE PAYING AGENT AND REGISTRAR

Section 1101. Appointment of Registrar and Paying Agent. U.S. Bank National Association is hereby appointed and confirmed as Registrar and Paying Agent for the Bond. The Paying Agent and Registrar shall signify its acceptance of the duties and obligations imposed upon it by this Ordinance by executing the certificate of authentication endorsed upon the Bond; and the Paying Agent and Registrar shall be deemed to have accepted such duties and obligations not only with respect to the Bond so authenticated, but also with respect to the Bond thereafter to be issued hereunder. All moneys and securities held by the Paying Agent at any time pursuant to the terms of this Ordinance shall be and hereby are assigned, transferred, and set over unto such Paying Agent in trust for the purposes and under the terms and conditions on this Ordinance.

Section 1102. Resignation of Paying Agent and Registrar. The Paying Agent and Registrar, or any successor thereof, may at any time resign and be discharged of its duties and obligations hereunder by giving not less than 60 days' written notice to the District. Such resignation shall take effect upon the day specified in such notice unless previously a successor shall have been appointed by the Chief Financial Officer of the District or holders of the Bond as herein provided, in which event such resignation shall take effect immediately on the appointment of such successor.

Section 1103. Removal of Paying Agent and Registrar. The Paying Agent and Registrar, or any successor thereof, may be removed at any time by the District, upon notice mailed to the State Treasurer, and at any time by the holders of a majority in principal amount of the Bond and any other bonds payable from Pledged Revenues then Outstanding, which payment is secured by a lien on such revenues, excluding any such bonds held by or for the account of the District, by an instrument or concurrent instruments in writing signed and acknowledged by such holders of bonds or by their attorneys-in-fact duly authorized and delivered to the District. Copies of each such instrument shall be delivered by the District to the Paying Agent and Registrar and to any successor thereof.

Section 1104. Successor Paying Agent and Registrar. In case the Paying Agent and Registrar, or any successor thereof, shall resign or shall be removed or shall become incapable of acting or shall be adjudged a bankrupt or insolvent, or if a receiver, liquidator, or conservator thereof or of its property shall be appointed, or if any public officer shall take charge or control thereof or of its property or affairs, a successor may be appointed by the Chief Financial Officer of the District, or in the case of removal of the Paying Agent and Registrar by the holders, a successor may be appointed by the holders of a majority in principal amount of the then Outstanding Bond and any other Parity Securities payable from Pledged Revenues, which payment is secured by a lien on such revenues excluding any such bonds held by or for the account of the District, by an instrument or concurrent instruments in writing signed and acknowledged by such holders of such Parity Securities or by their attorneys-in-fact duly authorized and delivered to the District. Pending such appointment by holders of such bonds, the District shall forthwith appoint a successor to act until such appointment is made by the holders of such bonds. Copies of each such instrument and of any instrument of the District providing for any such appointment shall be delivered by the District to the successor and to the

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predecessor Paying Agent and Registrar. If no appointment of a successor shall be made within 30 days after the Paying Agent and Registrar has been removed or resigned or after the occurrence of any other event requiring or authorizing such appointment, any holder of such Parity Securities or the Paying Agent and Registrar of such bonds may apply to any court of competent jurisdiction for the appointment of such a successor, and the court thereupon after such notice, if any, as the court may deem proper and may prescribe, may appoint such successor. Any successor appointed under the provisions of this section shall be able to accept the appointment on reasonable and customary terms and authorized by law to perform all the duties required by this Ordinance. No resignation or removal of the Paying Agent and Registrar shall become effective until a successor has been appointed and has accepted the duties of Paying Agent and Registrar.

Section 1105. Merger or Consolidation. Any company in which the Paying Agent and Registrar may be merged or with which it may consolidate or any company resulting from any merger or consolidation to which it shall be a party or any company to which the Paying Agent and Registrar may sell or transfer all or substantially all of its corporate trust business, if such company is a trust bank qualified to be a successor to the Paying Agent and Registrar under the provisions of § 1108 hereof, shall be the successor to the Paying Agent and Registrar without any further act, deed, or conveyance.

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ARTICLE XII.

AMENDMENT OF ORDINANCE

Section 1201. Privilege of Amendment. This Ordinance may be amended or supplemented by instruments adopted by the Governing Body in accordance with the laws of the State, without receipt by the District of any additional consideration but with the written consent of the State Treasurer at the time of the adoption of the amendatory or supplemental instrument, excluding the Bond which may then be held or owned for the account of the District, but including such refunding securities as may be issued for the purpose of refunding the Bond if the refunding securities are not owned by the District:

A. Without the consent of or notice to the registered owner of the Bond for the purpose of curing any ambiguity or formal defect or omission herein;

B. With the written consent of the owners of sixty-six percent (66%) in aggregate principal amount of the Bond Outstanding at the time of the adoption of such amendatory or supplemental instrument, not including in any case any Bond which may then be held or owned for the account of the District, but including such refunding securities as may be issued for the purpose of refunding any of the Bond issued hereunder if such refunding securities are not owned by the District.

Section 1202. Limitations Upon Amendments. No such instrument shall permit without the consent of the owner of the Bond adversely affected thereby:

A. Changing Payment. A change in the maturity of the principal of any Outstanding Bond or any installment of interest thereon, without the consent of the State Treasurer; or

B. Reducing Return. A reduction in the principal amount of any Bond, or the rate of interest thereon, without the consent of the holder of the Bond and without the consent of the State Treasurer; or

C. Prior Lien. The creation of a lien upon or a pledge of revenues ranking prior to the lien or to the pledge created by this Ordinance except as herein specifically provided; or

D. Modifying Any Bond. A reduction of the principal amount or percentages or otherwise affecting the description of Bond or the consent of the holders of which or of which the consent of the State Treasurer is required for any such modification or amendment; or

E. Priorities Between Bonds. The establishment of priorities as between Bonds issued and Outstanding under the provisions of this Ordinance; or

F. Partial Modification. The modifications of or otherwise prejudicially affecting the rights or privileges of the holders of less than all of the Bond then Outstanding.

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Section 1203. Notice of Amendment. Whenever the Governing Body proposes to amend or modify this Ordinance under the provisions of this article, it shall cause notice of the proposed amendment to be mailed within thirty (30) days to the State Treasurer and the registered owner of the Bond. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy of the proposed amendatory instrument is on file in the office of the Paying Agent for public inspection. A copy of such amendment shall be sent to Moody's Investors Services and Standard and Poors' Ratings Group if such agencies are maintaining a rating on the Bond at the time of such amendment. Whenever at any time within one (1) year from the date of mailing notice of such amendment there shall be filed in the office of the Paying Agent an instrument or instruments executed by the State Treasurer and the owners of at least sixty-six percent (66%) in aggregate principal amount of the Bond then Outstanding, which instrument or instruments shall refer to the proposed amendatory instrument described in such notice and shall specifically consent to and approve the adoption of such instrument, thereupon, but not otherwise, the Governing Body may adopt such amendatory instrument and such instrument shall become effective. Any consent given by the State Treasurer pursuant to the provisions hereof shall be irrevocable.

Section 1204. Binding Consent to Amendment. If the owners of at least sixty-six percent (66%) in aggregate principal amount of the Bond Outstanding, at the time of the adoption of such amendatory instrument, or the predecessors in title of such owners, shall have consented to and approved the adoption thereof as herein provided, no owner of any Bond whether or not such owner shall have consented to or shall have revoked any consent as in this article provided, shall have any right or interest to object to the adoption of such amendatory instrument or to object to any of the terms or provisions therein contained or to the operation thereof or to enjoin or restrain the District from taking any action pursuant to the provisions thereof.

Section 1205. Time Consent Binding. Any consent given by the owner of the Bond pursuant to the provisions of this article shall be irrevocable for a period of six (6) months from the date of the publication of the notice above provided for and shall be conclusive and binding upon all future owners of the same Bond during such period. Such consent may be revoked at any time after six (6) months from the last date of the publication of such notice, by the owner who gave such consent or by a successor in title by filing notice of such revocation with the Paying Agent, but such revocation shall not be effective if the owners of sixty-six percent (66%) in aggregate principal amount of the Bond Outstanding have, prior to the attempted revocation, consented to and approved the amendatory instrument referred to in such revocation.

Section 1206. Unanimous Consent. Notwithstanding anything contained in the foregoing provisions of this Article, the terms and the provisions of this Ordinance or of any instrument amendatory thereof or supplemental thereto, the rights and the obligations of the District and of the owners of the Bond thereunder may be modified or amended in any respect upon the adoption by the District and upon the filing with the Paying Agent of an instrument to that effect and with the consent of the owners of all the then Outstanding Bond, such consent to be given as provided in Section 904 hereof; and no notice to owners of Bond, either by mailing or by publication, shall be required, nor shall the time of consent be limited except as may be provided in such consent.

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Section 1207. Exclusion of District's Bond. Any portion of the Bond owned or held by or for the account of the District shall not be deemed Outstanding and shall be excluded for the purpose of consent or of other action or of any calculation of outstanding Bond provided for in this article, and the District shall not be entitled with respect to such Bond to give any consent or to take any other action provided for in this article. At the time of any consent or of other action taken under this Article, the District shall furnish the Paying Agent a certificate of the District Manager upon which the District may rely, describing any portion of the Bond so to be excluded.

Section 1208. Notation on Bond. The Bond authenticated and delivered after the effective date of any action taken as in this article provided may bear a notation by endorsement or otherwise in form approved by the Governing Body as to such action; and if any such Bond so authenticated and delivered shall bear such notation, then upon demand of the State Treasurer at such effective date and upon presentation of such Bond for the purpose at the principal office of the Paying Agent, suitable notation shall be made on such Bond by the Paying Agent as to any such action. If the Governing Body shall so determine, a new Bond so modified as in the opinion of the Governing Body to conform to such action shall be prepared, authenticated and delivered; and upon demand of the owner of any Bond then Outstanding, shall be exchanged without cost to such owner for the Bond then Outstanding upon surrender of such Bond; and upon demand of the State Treasurer of the Bond then Outstanding, shall be exchanged without cost to the State Treasurer upon surrender of such Bond.

Section 1209. Proof of Instruments and Bond. The fact and date of execution of any instrument under the provisions of this Article, the amount and number of the Bond held by any Person executing such instrument, and the date of his holding the same may be proved as provided by Section 904 hereof.

PASSED AND ADOPTED THIS MAY 5, 2015.

[SEAL]

Attest:

____________________________________ Secretary President of the Board

STATE OF NEVADA ) ) COUNTY OF CLARK ) ) VIRGIN VALLEY ) WATER DISTRICT )

The undersigned, the duly qualified Secretary of the Governing Board of Virgin

Valley Water District (the "District"), in the County of Clark and State of Nevada, does hereby

certify:

A. That the foregoing pages are a true, perfect and complete copy of an

ordinance adopted by the Governing Board (the "Board") of the District at a meeting of the

District held on May 5, 2015, as recorded in the regular official record book of the proceedings

of the District.

B. That said proceedings were duly had and taken and the following

members of the Board were present at said meeting and voted as follows:

Those Voting Aye: Nephi Julien Barbara Ellestad Sandra Ramaker Richard Bowler Robert "Bubba" Smith

Those Voting Nay: Those Absent: Those Abstaining:

C. That all members of the Board were duly notified of said meeting.

D. That pursuant to NRS 241.020, written notice of the meeting of the Board

was given at least three (3) working days before the meeting, including in the notice the time,

place, location and agenda of the meeting:

(1) By delivering a copy of the notice to each Board member,

(2) By posting a copy of the notice at the principal office of the

District, or if there is no principal office, at the building in which the meeting is to

be held, on the official website of the State of Nevada pursuant to NRS 232.2175,

on the District's website and at least three other separate, prominent places within

the jurisdiction of the District, to wit:

2

VIRGIN VALLEY WATER DISTRICT 500 Riverside Road Mesquite, NV 89027 AMERICA FIRST CREDIT UNION 590 W Mesquite Blvd Mesquite, NV 89027 BUNKERVILLE U.S. POST OFFICE 170 Main Street Bunkerville, NV 89007 MESQUITE CITY HALL 10 E Mesquite Blvd Mesquite NV 89027 MESQUITE U.S. POST OFFICE 510 W Mesquite Blvd Mesquite, NV 89027 WEBSITE: vvh2o.com

and (3) Prior to 9:00 a.m. at least 3 working days before such meeting,

such notice was mailed to each person, if any, who has requested notice of

meetings of the Board in compliance with NRS 241.020(3)(b) by United States

Mail, or if feasible and agreed to by the requestor, by electronic mail.

A copy of the notice as posted, delivered and mailed is attached hereto as Exhibit A.

E. That the official records and files of the District are kept at the office of

the District, and are open to public inspection during regular office hours as provided in NRS

239.010.

IN WITNESS WHEREOF, I have hereunto set my hand this May 5, 2015.

Secretary-Treasurer Virgin Valley Water District

A-1

EXHIBIT A

(Attach Copy of Notice of Meeting)