Accepting Terms of Credit Enhancement Policy Pertaining Sewage Works Refunding Revenue Bonds of 2001

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for reasons other than: (i) a refunding to obtain savings; or (ii) the issuance of additional bonds pursuant to an additional bonds test. The City shall send a copy of each of such amendments or supplemental ordinances which are consented to by the MBIA to Standard & Poor's ( "S &P "). C. Events of Default and Remedies. Each of the following shall be deemed to constitute an event of default under the Bond Ordinance: (i) the City fails to pay principal when due; (ii) the City fails to pay interest when due; (iii) the City fails to observe any other covenant or condition of the Bond Ordinance and such failure continues for 30 days; or (iv) the City declares bankruptcy. MBIA, acting alone, shall have the right to direct all remedies in the event of a default. MBIA shall be recognized as the registered owner of each bond which it insures for the purposes of exercising all rights and privileges available to bondholders. For bonds which it insures, MBIA shall have the right to institute any suit, action, or proceeding at law or in equity under the same terms as a bondholder in accordance with applicable provisions of the governing documents. Any acceleration ofprincipal payments with respect to the 2001 Bonds shall be subject to the MBIA's prior written consent. D. Defeasance. In addition to the limitations set forth in Section 15 of the Bond Ordinance, defeasance requires the deposit of: (i) cash; (ii) U.S. Treasury certificates, notes and bonds (including State and Local Government Series -- "SLGs "); (iii) direct obligations of the Treasury which have been stripped by the Treasury itself, CATS, TIGRS and similar securities; (iv) the interest component of Resolution Funding Corp. (REFCORP) strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form; (v) pre - refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S &P; provided, however, that if the issue is only rated by S &P (i.e., there is no Moody's rating), then the pre - refunded bonds must have been pre - refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre - refunded municipals; (vi) Obligations issued by the following agencies which are backed by the full faith and credit of the United States: (a) U.S. Export- Import Bank (Eximbank) - direct obligations or fully guaranteed certificates of beneficial ownership, (b) Farmers Home Administration (FmHA) - certificates ofbeneficial ownership, (c) Federal Financing Bank, (d) General Services Administration - participation certificates, (e) U.S. Maritime Administration - Guaranteed Title XI financing, (f) U.S. Department of Housing and Urban Development (HUD) - project notes, local authority bonds, new communities debentures (U.S. government guaranteed debentures), and U.S. Public Housing notes and bonds (U.S. government guaranteed public housing notes and bonds). E. Agents. In all transactions under the Bond Ordinance where there is an agent/enhancer (other than the MBIA), the trustee, tender agent (if any), and paying agent (if any) must be commercial banks with trust powers. In addition, the remarketing agent must have trust powers if it is responsible for holding moneys or receiving bonds. SECTION 2. This Resolution shall be in full force and effect from and after its passage. -2-