9534-04 Supplementing and Amending Ordinance No. 8919-98 - the Sewage Works and Issuance of Revenue Bonds and Various matters

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Bonds, to provide for payment of principal and interest on the 1998 Bonds in the event that funds in the Bond and Interest Account are insufficient to pay the principal and interest on the 1998 Bonds when due. The Mayor and the Controller are hereby authorized to obtain such a Reserve Policy, and are authorized to enter into an agreement ("Reserve Policy Agreement") with the Reserve Policy Issuer and to negotiate the terms of the Reserve Policy Agreement pursuant to advice of the City's financial advisor. The Mayor and the Controller are authorized to execute the Reserve Policy Agreement and any and all other documents or instruments required to obtain the Reserve Policy. In the event a draw is made against the Reserve Policy, the City shall repay the amount of the draw and related expenses incurred by the Reserve Policy Issuer together with interest thereon at the rate set forth in the Reserve Policy Agreement. The repayment of the draw amount, related expenses and accrued interest (the "Policy Costs") shall be paid from the funds that would have been set aside to replenish the Debt Service Reserve Account. Repayment of the Policy Costs shall commence in the first month following each draw, in an amount equal to no less than one twelfth (1/12) of the aggregate Policy Costs related to such draw. If and to the extent cash has been deposited to the Debt Service Reserve Account, all such cash (or permitted investments) shall be used prior to any drawing under the Reserve Policy, and the payment of any Policy Costs under the Reserve Policy shall be made prior to replenishment of any such cash amounts. If, in addition to the Reserve Policy, any other Debt Service Reserve Account substitute instrument ("Additional Reserve Policy") is provided, drawings under the Reserve Policy and any such Additional Reserve Policy, and repayment of Policy Costs and reimbursement of amounts due under the Additional Reserve Policy, shall be made on a pro-rata basis (calculated by reference to the maximum amounts available thereunder) after applying all available cash in the Debt Service Reserve Account and prior to replenishment of any such cash draws, respectively. The City hereby agrees that: (a.) If the Sewage Works fails to pay any Policy Costs in accordance with the requirements set forth above, the Reserve Policy Issuer shall be entitled to exercise any and all remedies available at law or under the authorized documents other than (i) acceleration of the maturity of the 1998 Bonds or (ii) remedies which would adversely affect the holders of the 1998 Bonds; (b.) This Ordinance shall not be discharged and the 1998 Bonds defeased until all Policy Costs owing to the Reserve Policy Issuer shall have been paid in full; (c.) The Reserve Policy Issuer is granted a security interest (subordinate to that of the holders of the 1998 Bonds and any Parity Bonds) in all revenues and -3-