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Agr Commitment GO Bonds MBIA MBIA Insurance Corporation 113 King Street, Armonk, NY 10504 Tel 914-273-4545 www.mbia.com Capital Strength. Triple-A Performance. VIA COURIER April 16, 2004 Rod Franz City of Salina 300 West Ash, Room 206 Salina, Kansas 67402 RE: $5,585,000 City of Salina, Kansas, General Obligation Refunding Bonds, Series 2004-A Dear Mr. Franz: Enclosed please find the following documents for the referenced issue: 1. Two Commitments, each of which should be executed and ope original returned to our offices in the enclosed self-addressed stamped envelopè. The second Commitment should be retained for your files; Disclosure language and a form of the Financial Guaranty Insurance Policy (the "Policy") for inclusion in the Official Statement; 2. A form of our Statement ofInsurance for printing on the Obligations; and A form of our "Payments Under the Policy/Other Required Provisions" for inclusion in your authorizing document. Please note that all of the conditions to the Commitment must be met prior to the Policy being released by MBIA. All materials and questions regarding the conditions should be directed to the attention of Cara Lapicola, whose direct dial telephone number is (914) 765- 3404. 3. 4. In addition, under no circumstances should any changes be made to Items 2, 3 and 4, nor should any other versions of these materials be used on any financing unless you have direct confirmation from MBIA as to the acceptability of such changes. Confirmation regarding items 2 and 3 may come only from our Documentation and Closing Department or our Legal Department and may be written or verbal. Confirmation regarding item 4 should come from Cara Lapicola. Since the responsibility for this information remains with us, please send us drafts prior to the printing of any of these documents for our approval. MBIA April 16, 2004 Rod Franz City of Salina Page Two The premium in the amount of $15,000 should be wired to our account number 910-2-721728 with JP Morgan Chase Bank on the day of closing. The Bank's number is ABA# 021000021. MBIA's claims paying ability is rated triple A by Fitch IBCA, Inc., Moody's Investors Service and the Standard and Poor's Rating Group. Inquiries related to ratings on transactions, fees and billing matters should be addressed to the appropriate rating agency. Thank you for sending a copy of the final debt service schedule for this issue. Vi e would also appreciate receiving three copies of the final official statement and three executed unbound copies of the closing transcripts within 60 days of the closing. Thank you for your cooperation concerning these matters. If you have any questions, please contact our offices. Sincerely, ~.t~ Sandra R. Lisanti Associate Documentation and Closing Dept. Phone: (914) 765-3651 Fax: (914) 765-3161/3162 Sandra. Lisanti@mbia.com MBIA COMMITMENT TO ISSUE A FINANCIAL GUARANTY INSURANCE POLICY Application No.: 2004-003075-001 Sale Date: April 19, 2004 Program Type: Negotiated DP Re: $5,585,000 City of Salina, Kansas, General Obligation Refunding Bonds, Series 2004-A (the "Obligations") This commitment to issue a financial guaranty insurance policy (the "Commitment") dated April 16, 2004, constitutes an agreement between CITY OF SALINA, KANSAS (the "Applicant") and MBIA Insurance Corporation (the "Insurer"), a stock insurance company incorporated under the laws of the State of New York. Based on an approved application dated April 12,2004, the Insurer agrees, upon satisfaction of the conditions herein, to issue on the earlier of (i) 120 days of said approval date or (ii) on the date of delivery of and payment for the Obligations, a financial guaranty insurance policy (the "Policy") for the Obligations, insuring the payment of principal of and interest on the Obligations when due. The issuance of the Policy shall be subject to the following terms and conditions: 1. Payment by the Applicant, or by the Trustee on behalf of the Applicant, on the date of delivery of and payment for the Obligations, of a nonrefundable premium in the amount of $15,000 [.235% (premium rate) of $6,431,618.13 (total debt service), premium rounded to the nearest thousand]. The premium set out in this paragraph shall be the total premium required to be paid on the Policy issued pursuant to this Commitment. 2. The Obligations shall have received the unqualified opinion of bond counsel with respect to the tax -exempt status of interest on the Obligations. 3. There shall have been no material adverse change in the Obligations or the Resolution, Bond Ordinance, Trust Indenture or other official document authorizing the issuance of the Obligations or in the final official statement or other similar document, including the financial statements included therein. 4. There shall have been no material adverse change in any information submitted to the Insurer as a part of the application or subsequently submitted to be a part of the application to the Insurer. 5. No event shall have occurred which would allow any underwriter or any other purchaser of the Obligations not to be required to purchase the Obligations at closing. 6. A Statement ofTnsurance satisfactory to the Insurer shall be printed on the Obligations. 7. Prior to the delivery of and payment for the Obligations, none of the information or documents submitted as a part of the application to the Insurer shall be determined to contain any untrue or misleading statement of a material fact or fail to state a material fact required to be stated therein or necessary in order to make the statements contained therein not misleading. 8. No material adverse change affecting any security for the Obligations shall have occurred prior to the delivery of and payment for the Obligations. 9. The Insurer's "Payments Under the Policy/Other Required Provisions" (see attached) shall be included in the authorizing document. MBIA 10. The Applicant agrees not to use the Insurer's name in any public document including, without limitation, a press release or presentation, announcement or forum without the Insurer's prior consent. In the event that the Applicant is advised by counsel that it has a legal obligation to disclose the Insurer's name in any press release, public announcement or other public document, the Applicant shall provide the Insurer with at least three (3) business days' prior written notice of its intent to use the Insurer's name together with a copy of the proposed use of the Insurer's name and of any description of a transaction with the Insurer and shall obtain the Insurer's prior consent as to the form and substance of the proposed use of the Insurer's name and any such description. 11. This Commitment may be signed in counterpart by the parties hereto. 12. Compliance with the Insurer's following conditions (see attached). a. Criteria for Current Refundings; b. Standard Conditions for Refunding; and c. General Document Provisions. Dated this 16th day of April, 2004. :BT~:¡~ CITY OF SALINA, KANSAS ',1 1 By: (/ / ( "^,,,... C-.. ~ Title: MBIA CRITERIA FOR CURRENT REFUNDINGS A. The period between closing on the refunding bonds and redemption of the refunded bonds shall not exceed 60 days. The proceeds of the refunding issue shall be sufficient to redeem the refunded bonds without reinvestment income (i.e. gross funded). B. c. Should the proceeds be invested, such investment(s) must mature in an amount and at such time so that sufficient cash will be available to effect the redemption. The Trustee must verify and confirm this in writing to the Insurer. Investments, to be held in a fiduciary account, must be limited to: D. 1. Cash 2. Direct obligations of the u.S. Treasury. 3. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and have a rating S&P of AAAm-G or AAAm. If the money market fund has been rated by Moody's, it must rated Aaa as well. Investments in money market funds are limited to 10 days. by be MBIA STANDARD CONDITIONS FOR REFUNDINGS A. Receipt by the Insurer of the final debt service schedule on the issue within three business days from the sale date. B. Receipt, satisfactory review and subsequent oral approval by the Insurer at least ten days in advance of closing of draft copies of: 1. a verification by an independent CPA firm of the sufficiency of the escrow to timely retire the refunded bonds; 2. the escrow securities purchase contracts of SLG subscription forms or open market confirmations; and, 3. the escrow agreement Final and signed copies of all the above documents to be sent via overnight mail from closing. c. An independent CPA firm is defined as a licensed CPA firm acting at arms length of the transaction on behalf of the bondholders. It may not be the underwriter, bond counselor financial adviser for the refunding issue. The firm must carry errors and omissions insurance. The Insurer reserves the right to review the provider of the verification on a deal by deal basis. Receipt by the Insurer at least five business days prior to closing of a draft opinion from Bond Counsel (or Special Tax Counsel) to the effect that the refunding bonds are being issued in compliance with state law and that the interest on the refunding bonds is tax-exempt. Receipt by the Insurer at least five business days prior to closing of a draft opinion from Bond Counsel stating that the refunded bonds have been legally defeased. (This condition is only applicable in those situations where the refunding issue is legally defeasing the refunded issue.) Final executed copies of items C and D to be sent via overnight mail. E. If the escrow agreement allows for the substitution of securities in the escrow account, then it should be provided in the escrow agreement that no such substitution may occur unless there has tìrst been delivered to the escrow agent/trustee, (1) a CPA verification that the escrow investments, as substituted, are sufficient to pay debt service, as it becomes due, on the refunded bonds and (2) an opinion of nationally recognized bond counsel to the etTect that the substitution is permitted under the documents and the substitution has no adverse effect on the tax-exempt nature ofthe refunding bonds. See 2 above for the definition of an independent CPA. D. F. Escrow investments must be limited to: 1. Cash 2. U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series -- "SLGS"). 3. Direct obligations of the Treasury which have been stripped by the Treasury itselC CATS, TIGRS and similar securities. 4. Resolution Funding Corp. (REFCORP) Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable. MBIA 5. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If however, 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 to satisfy this condition. 6. Obligations issued by the following agencies which are backed by the full tàif1 and credit of the U.S.: a. U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership b. Farmers Home Administration (FmHA) Certificates of beneficial ownership c. Federal Financing Bank d. General Services Administration e. Participation certificates U.S. Maritime Administration f. Guaranteed Title XI financing U.S. Department of Housing and Urban Development (HUD) Project Notes Local Authority Bonds New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds G. If a forward supply contract is being executed in conjunction with the refunding (or subsequent to the closing of the refunding transaction), the following conditiorls must also be met: 1. The Insurer must review and approve the forward supply contract at least five business days prior to closing (or after closing, at least five business days prior to execution if not contemplated at the time of closing). 2. The forward supply contract must provide by its terms that the securities delivered under the forward supply are sufficient (when taken with other funds remaining in the escrow) as to amount and timeliness to retire the refunded bonds. 3. The Insurer requires an opinion from a nationally recognized bankruptcy counsel that the securities in escrow and payments to owners of refunded bonds will not constitute assets the forward supply contract supplier and will not be subject to automatic stay in the bankruptcy and/or msolvency of the supplier. of event of 4. The supplier of the securities delivered under the forward supply contract must atTirm in the contract that it has no rights to or interest in the monies or securities held in the escrow. 5. The escrow agent must be acceptable to the Insurer. The Insurer reserves the right to replace the escrow agent for cause. 6. See 6 above for investments permitted under the forward supply contract. Investments must be non-cal1ab1e. MBIA 7. The supplier should have no right to substitute the original escrow securities. The supplier may substitute securities previously delivered by the supplier under the forward supply contract only if: a. The substituted securities mature on a date that is later than the previously delivered securities would have matured; and b. The substituted securities mature prior to the date needed to pay principal and/or interest on the bonds. 8. Two days before each delivery date for the forward supply securities, the escrow agent must notify the Insurer in writing of the securities to be delivered, the maturity amount of the securities and the maturity date. 9. The forward supply contract cannot be amended or modified without the Insurer's written consent. MBIA GENERAL DOCUMENT PROVISIONS A. B. c. D. Notice to the Insurer The basic legal documents must provide that any notices required to be given by any party should also be given to the Insurer, Attn: Insured Portfolio Management. Amendments. In the basic legal document, there are usually two methods of amendment. The first, which typically does not require the consent of the bondholders, is for amendments which will cure ambiguities, correct formal defects or add to the security of the financing. The second, in which bondholder consent is a prerequisite, covers the more substantive types of amendments. For all financings, the Insurer must be given notice of any amendments that are of the first type and the Insurer's consent must be required for all amendments of the second type. All documents must contain a provision which requires copies of any amendments to such documents which are consented to by the Insurer to be sent to Standard & Poor's. Supplemental Legal Document. If the basic legal document provides for a supplemental legal document to be issued for reasons other than (1) a refunding to obtain savings; or (2) the issuance of additional bonds pursuant to an additional bonds test, there must be a requiremem that the Insurer's consent also be obtained prior to the issuance of any additional bonds and/or execution of such supplemental legal document. Events of Default and Remedies. All documents normally contain provisions which define the events of default and which prescribe the remedies that may be exercised upon the occurrence of an event of default. At a minimum, events of default will be defined as follows: 1. 2. the issuer/obligor fails to pay principal when due; the issuer/obligor fails to pay interest when due; 3. the issuer/obligor fails to observe any other covenant or condition of the document and such failure continues for 30 days and the issuer/obligor declares bankruptcy. 4. The Insurer, acting alone, shall have the right to direct all remedies in the event of a default. The Insurer 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, the Insurer 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. Other than the usual redemption provisions, any acceleration of principal payments must be subject to the Insurer's prior written consent. E. Defeasance requires the deposit of: 1. 2. Cash U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series -- " SLGs") 3. Direct obligations of the Treasury which have been stripped by the Treasury itself, CATS, TIGRS and similar securities 4. Resolution Funding Corp. (REFCORP) Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable. Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If however, 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 to satisfy this condition. 5. MBIA 6. Obligations issued by the fol1owing agencies which are backed by the ful1 tàith and credit of the U.S. a. U.S. Export-Import Bank (Eximbank) Direct obligations or ful1y guaranteed certificates of beneficial ownership b. Farmers Home Administration (FmHA) c. Certificates of beneficial ownership 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 U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds The Insurer shal1 be provided with an opinion of counsel acceptable to the Insurer that the Obligations have been lega11y defeased and that the escrow a¡"rreement establishing such defeasance operates to lega11y defease the Obligations within the meaning of the Indenture and the Supplemental Indenture relating to the Obligations. In addition, the Insurer wi11 be entitled to receive (i) 15 business days notice of any advance refunding of the Obligations and (ii) an accountant's report with respect to the sufficiency of the amounts deposited in escrow to defease the Obligations. F. Agents: 1. 2. In transactions where there is an agent/enhancer (other than the Insurer), the trustee, tender agent (if any), and paying agent (if any) must be commercial banks with trust powers. The remarketing agent must have trust powers if they are responsible for holdtng moneys or receiving bonds. As an alternative, the documents may provide that if the rernarketing agent is removed, resigns or is unable to perform its duties, the trustee must assume the responsibilities of remarketing agent until a substitute acceptable to the Insurer is appointed. ST ANDARD FORM FOR MBIA DISCLOSURE [GENERAL AND S-I] [The section entitled "The MBIA Insurance Corporation Insurance Policy" is for use in public finance transactions] [The MBIA Insurance Corporation Insurance Policy The following information has been furnished by MBIA Insurance Corporation ("MBIA") for use in this Official Statement. Reference is made to Appendix for a specimen ofMBIA's policy. MBIA's policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the Issuer to the Paying Agent or its successor of an amount equal to (i) the principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the [Bonds/Securities] as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by MBIA's policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner of the [Bonds/Securities] pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law (a "Preference"). MBIA's policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any [Bonds/Securities]. MBIA's policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of [Bonds/Securities] upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. MBIA's policy also does not insure against nonpayment of principal of or interest on the [Bonds/Securities] resulting from the insolvency, negligence or any other act or omission of the Paying Agent or any other paying agent for the [Bonds/Securities]. Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by MBIA from the Paying Agent or any owner of a [Bond/Security] the payment of an insured amount for which is then due, that such required payment has not been made, MBIA on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such [Bonds/Securities] or presentment of such other proof of ownership of the [Bonds/Securities], together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the [Bonds/Securities] as are paid by MBIA, and appropriate instruments to effect the appointment of MBIA as agent for such owners of the [Bonds/Securities] in any legal proceeding related to payment of insured amounts on the [Bonds/Securities], such instruments being in a form satisfactory to U.S. Bank Trust National Association, u.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the insured amounts due on such [Bonds/Securities], less any amount held by the Paying Agent for the payment of such insured amounts and legally available therefor.] MBIA MBIA Insurance Corporation ("MBIA") is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the "Company"). The Company is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the Territory of Guam. MBIA has three branches, one in the Republic of France, one in the Republic of Singapore and one in the Kingdom of Spain. New York has laws prescribing minimum capital requirements, limiting classes and concentrations of investments and requiring the approval of policy rates and forms. State laws also regulate the amount of both the aggregate and individual risks that may be insured, the payment of dividends by MBIA, changes in control and transactions among affiliates. Additionally, MBIA is required to maintain contingency reserves on its liabilities in certain amounts and for certain periods of time. MBIA does not accept any responsibility for the accuracy or completeness of this [Prospectus/Private Placement Memorandum/Official Statement] or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the policy and MBIA set forth under the heading [" "]. Additionally, MBIA makes no representation regarding the [Bonds/Securities] or the advisability of investing in the [Bonds/Securities] . The Financial Guarantee Insurance Policies are not covered by the Property/Casualty Insurance Security Fund specified in Article 76 ofthe New York Insurance Law. MBIA Information The following document filed by the Company with the Securities and Exchange Commission (the "SEC") is incorporated herein by reference: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 2003. Any documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended, after the date of this [Prospectus/Private Placement Memorandum/Official Statement] and prior to the termination of the offering of the [Bonds/Securities] offered hereby shall be deemed to be incorporated by reference in this [Prospectus/Private Placement Memorandum/Official Statement] and to be a part hereof. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this [Prospectus/Private Placement Memorandum/Official Statement], shall be deemed to be modified or superseded for purposes of this [Prospectus/Private Placement Memorandum/Official Statement] to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute: a part of this [Prospectus/Private Placement Memorandum/Official Statement]. The Company files annual, quarterly and special reports, information statements and other information with the SEC under File No. 1-9583. Copies of the SEC filings (including (1) the Company's Annual Report on Form 10-K for the year ended December 31, 2003, and (2) the Company's Quarterly Reports on Form IO-Q for the quarters ended March 31, 2003, June 30, 2003 and September 30, 2003) are available (i) over the Internet at the SEC's web site at http://www.sec.gov; (ii) at the SEC's public reference room in Washington D.C.; (iii) over the Internet at the Company's web site at http://www.mbia.com; and (iv) at no cost, upon request to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504. The telephone number ofMBIA is (914) 273-4545. As of December 31, 2002, MBIA had admitted assets of $9.2 billion (audited), total liabilities of $6.0 billion (audited), and total capital and surplus of $3.2 billion (audited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of December 31, 2003 MBIA had admitted assets of $9.9 billion (unaudited), total liabilities of $6.2 billion (unaudited), and total capital and surplus of $3.7 billion (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. Financial Strength Ratings of MBIA Moody's Investors Service, Inc. rates the financial strength ofMBIA "Aaa." Standard & Poor's, a division of The McGraw-Hill Companies, Inc. rates the financial strength of MBIA "AAA." Fitch Ratings rates the financial strength ofMBIA "AAA." Each rating ofMBIA should be evaluated independently. The ratings reflect the respective rating agency's current assessment of the creditworthiness of MBIA and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the [Bonds/Securities], and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the [Bonds/Securities]. MBIA does not guaranty the market price of the [Bonds/Securities] nor does it guaranty that the ratings on the [Bonds/Securities] will not be revised or withdrawn. STD FINANCIAL GUARANTY INSURANCE POLICY MBIA Insurance Corporation Armonk, New York 10504 Policy No. [NUMBER] MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the tenDS of this policy, hereby lli1conditionally and Î1Tevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to [pAYING AGENTfIRUSTEE] or its successor (the "Paying Agent") of an amOlli1t equal to (i) the principal of (either at the stated maturity or by any advancement of maturity ptU'Suant to a mandatory sinking fì.md payment) and interest on, the Obligations (as that tenn is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity ptU'Suant to a mandatory sinking fì.md payment, the payments guaranteed hereby shall be made in such amowlts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered fÌDm any owner pursuant to a final judgment by a court of competent jmisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amOlli1ts reteITed to in clauses (i) and (ii) of the preceding sentence shall be refeITed to herein collectively as the "Insured AmOlli1ts." "Obligatioll'>" shall mean: [PAR] [LEGAL NAME OF ISSUE] Upon receipt of telephonic or telegraphic notice, such notice subsequently confinned in writing by registered or certified mill, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured AmOlli1t for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of fì.mds, in an aCCOlli1t with u.s. Bank Tw,i National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured AmOlli1ts which are then due. Upon presentment and swrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured AmOlli1ts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured AmOlli1ts on the Obligations, such instruments being in a fonn satisfactory to u.S. Bank Trust National Association, u.S. Bank Trust National Association shall disburse to such owners, or the Paying Agent payment of the Insured AmOlli1ts due on such Obligations, less any amOlli1t held by the Paying Agent for the payment of such Insured AmOlli1ts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the tenn "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The tenn owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the lli1derlying secmity for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Annonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refì.mdabIe for any reason including the pa~iTl1ent prior to maturity of the Obligations. IN WITNESS WHEREOF, the Insurer has caused this policy to be executed in facsimile on its behalfby its duly authorized officers, this [DAY] day of [MONTIl, YEAR]. President MBIA Insurance Corporation tP ,~ 1?"'"\Ì¡ \C~:i Secretary STD-R-7 4/95 STATEMENT OF INSURANCE MBIA Insurance Corporation (the "Insurer") has issued a policy containing the following provisions, such policy being on file at [INSERT NAME OF TRUSTEE OR PAYING AGENT. INCLUDING CITY. STATE]. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to fINSERT NAME OF TRUSTEE OR PAYING AGENTl or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean: [INSERT LEGAL TITLE OF BONDS. CENTERED AS FOLLOWS:] [$ PARAMOUNT] rISSUER] [DESCRIPTION OF BONDS] Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. including the payment prior to maturity of the Obligations. The premium on this policy is not refundable for any reason MBIA INSURANCE CORPORATION STD-R-l PAYMENTS UNDER THE POLICY/OTHER REQUIRED PROVISIONS A. In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the Obligations, the Paying Agentffrustee has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying AgentITrustee shall immediately notifY the Insurer or its designee on the same Business Day by telephone or telegraph, confinned in writing by registered or certified mail, of the amount of the deficiency. B. If the deficiency is made up in whole or in part prior to or on the payment date, the Paying AgentITrustee shall so notifY the Insurer or its designee. C. In addition, if the Paying Agentffrustee has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligations to a trustee in bankruptcy or creditors or others pUTh'Uant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying AgentITrustee shall notifY the Insurer or its designee of such fact by telephone or telegraphic notice, confinned in writing by registered or certified mail. D. The Paying AgentITrustee is hereby iITevocabIy designated, appointed, directed and authorized to act as attorney-in-fact for Holders of the Obligations as follows: 1. If and to the extent there is a deficiency in amOlmts required to pay interest on the Obligations, ¡be Paying AgentITrustee shall (a) execute and deliver to u.s. Bank Trust National Association, or its successors under the Policy (the "Insurance Paying Agentffrustee"), in fonn satisfactOIY to the Insurance Paying AgentITrustee, an instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying AgentITrustee) in accordance with the tenor of the Policy payment fÌ'om the Insurance Paying Agentffrustee with respect to the claims for interest so assigned, and (c) disburse the same to such respective Holders; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying AgentITrustee shall (a) execute and deliver to the Insurance Paying AgentITrustee in fonn satisfactory to the Insurance Paying Agentffrustee an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Obligation SUITendered to the Insurance Paying Agentffrustee of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying AgentIT rustee and available for such payment (but such assignment shaH be delivered only if payment fÌ'om the Insurance Paying Agentffrustee is received), (b) receive as designee of the respective Holders (and not as Paying AgentITrustee) in accordance with the tenor of the Policy payment therefor fÌ'om the Insurance Paying AgentITrustee, and (c) disburse the same to such Holders. E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agentffrustee fÌ'orn proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligation and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. lITespective of whether any such assignment is executed and delivered, the Issuer and the Paying AgellltITrustee hereby agree for the benefit of the Insurer that: 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying AgentITrustee), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest fÌ'om the Issuer, with interest thereon as provided and solely fÌ'om the sources stated in this Indenture and the Obligations; and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Indenture and the Obligation, but only fÌ'om the sources and in the manner provlded herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure docUl1lent, if any, circulated with respect to such additional Obligations. H. Copies of any amendments made to the docUl1lents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. I. The Insurer shall receive notice of the resignation or removal of the Paying AgentITrustee and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis, copies of the Issuer's audited financial statements and Annual Budget. Notices: Any notice that is required to be given to a holder of the Obligation or to the Paying AgentITrustee pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 Killg Street, Annonk, New York 10504 Attention: Surveillance. K. The Issuer/Obligor agrees to reimburse the Iru,w-er immediately and unconditionally upon demand, to the extent pennitted by law, for all reasonable expenses, including attorneys' fees and expenses, incurred by the Insurer in connection with (i) the enforcement by the Insurer of the Issuer's /Obligor's obligations, or the preservation or defense of any rights of the Insurer, under this ResoIutionlIndenture and any other docUl1lent executed in connection with the issuance of the Obligations, and (ii) any consent, amendment, waiver or other action with respect to the ResoIutionlIndenture or any related docrunent, whether or not granted or approved, together with interest on all such expenses ITom and including the date incurred to the date of payment at Citlòank's Prime Rate plus 3% or the maximrun interest rate pennitted by law, whichever is less. In addition, the Insurer reserves the right to charge a fee in connection with its review of any such consent, amendment or waiver, whether or not granted or approved . L. The Issuer/Obligor agrees not to use MBIA's name in any public docrunent including, without limitation a press release or presentation, annOlmcement or forum without MBIA's prior consent. In the event that the Issuer/Obligoris advised by counsel that it has a legal obligation to disclose MBIA's name in any press release, public annOlmcement or other public docrunent, the Issuer/Obligor shall provide MBIA with at least three (3) business days' prior written notice of its intent to use MBIA's name together with a copy of the proposed use ofMBIA's name and of any description of a transaction with MBIA and shall obtain MBIA's prior consent as to the fonn and substance of the proposed use ofMBIA's name and any such description. M. The Issuer /Obligor shall not enter into any agreement nor shall it consent to or participate in any auangement puv,;uant to which Bonds are tendered or purchased for any pUlpOse other than the redemption and cancellation or legal defeasance of such Bonds without the prior written consent of MBIA Revised 4/03 Municipal Bond Investors Assurance Corporation Logo Reproduction Sheet Logo lengths are indicated in inches 5" MBIA iMBIA A1BIA 3' MBIA MBIA MBIA MBIA " MBIA MBIA .MBIA MBIA A1BIA MBIA .MBIA JMBIA A1BIA A1BIA 1 1/2" MBIA MBIA 1 1/4" .MBIA .MBIA 1 " JMBIA JMBIA 3/4"