9523-04 Authorizing the Acquistion, COnstuction and, Installation of Certain Additions

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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 "PolicYCosts") 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 2004 Bonds or (ii) remedies which would adversely affect the holders of the 2004 Bonds; (b.) This Ordinance shall not be discharged and the 2004 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 2004 Bonds and any Parity Bonds) in all revenues and collateral pledged as security for the 2004 Bonds, for the repayment of the Policy Costs; (d.) No additional bonds will be issued without the Reserve Policy Issuer's prior written consent as long as Policy Costs are past due and still owing to the Reserve Policy Issuer; (e.) This Ordinance shall not be modified or amended without the prior written consent of the Reserve Policy Issuer; and (f.) The Reserve Policy Issuer shall be provided with written notice of the resignation or removal of the Registrar and Paying Agent and the appointment of a successor thereto and of the issuance of additional indebtedness of the City's Sewage Works at the address specified in the Reserve Policy Agreement. SECTION 12. Sewage Works Improvement Fund. On the first day of each calendar month after the 2004 Bonds are issued, after meeting the requirements for operation, repair, and maintenance and the Sinking Fund, all available net revenues shall be credited to the Sewage Works Improvement Fund as set forth in the Prior Ordinances and continued hereby. Said -13-