A Twenty-First Supplemental Electric System Revenue Bond Resolution supplementing certain resolutions of The Metropolitan Government of Nashville and Davidson County by approving certain terms and provisions and ratifying certain actions of the Electric Power Board of The Metropolitan Government of Nashville and Davidson County relating to the issuance of Electric System Revenue Bonds, 2004 Series A.

WHEREAS, under authority conferred by Appendix III of the Charter of The Metropolitan Government of Nashville and Davidson County and the laws of the State of Tennessee, the Metropolitan Council adopted Substitute Resolution No. R85-746 on November 5, 1985; and

WHEREAS, as requested by the Electric Power Board of The Metropolitan Government of Nashville and Davidson County, the Metropolitan Council, by Substitute Resolution No. RS04-303 adopted on May 18, 2004, has authorized the issuance of bonds pursuant to such Substitute Resolution No. R85-746, as heretofore supplemented and amended, such bonds to be designated as the Electric System Revenue Bonds, 2004 Series A; and

WHEREAS, the Metropolitan Council hereby approves certain terms and provisions and ratifies certain actions of the Electric Power Board of The Metropolitan Government of Nashville and Davidson County relating to the issuance of such Electric System Revenue Bonds, 2004 Series A
.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:

ARTICLE I

AUTHORITY AND DEFINITIONS

101. Supplemental Resolution. This Twenty-First Supplemental Electric System Revenue Bond Resolution is supplemental to the Electric System Revenue Bond Resolution adopted by the Metropolitan Government on November 5, 1985, as heretofore supplemented and amended (the "Bond Resolution").

102. Authority for this Twenty-First Supplemental Resolution. This Twenty-First Supplemental Resolution is adopted (i) pursuant to the provisions of the Act and (ii) in accordance with Article X of the Bond Resolution.
103. Definitions.

A. Except as provided by this Twenty-First Supplemental Resolution, all terms which are defined in Section 101 of the Bond Resolution or Section 103 of the Twentieth Supplemental Resolution shall have the same meanings, respectively, in this Twenty-First Supplemental Resolution as such terms are given in said Section 101 of the Bond Resolution or Section 103 of the Twentieth Supplemental Resolution.

B. In this Twenty-First Supplemental Resolution:
Ambac Assurance shall mean Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance company.
Bond Resolution shall mean the Electric System Revenue Bond Resolution adopted by the Metropolitan Government on November 5, 1985, as supplemented and amended, including, without limitation, as supplemented by the Twentieth Supplemental Resolution and by this Twenty-First Supplemental Resolution.
Continuing Disclosure Agreement shall mean the Continuing Disclosure Agreement to be entered into by and among the Metropolitan Government, the Board and SouthTrust Bank, as disclosure agent.
Contract of Purchase shall mean the Purchase Contract entered into by and among the Metropolitan Government, the Board and the Underwriters.
Financial Guaranty Insurance Policy shall mean the financial guaranty insurance policy issued by Ambac Assurance insuring the payment when due of the principal of and interest on the Insured 2004 Series A Bonds as provided therein.
Insured 2004 Series A Bonds shall mean the 2004 Series A Bonds maturing on May 15, 2018, May 15, 2020, May 15, 2021, May 15, 2025 and May 15, 2029, including Sinking Fund Installments on such 2004 Series A Bonds maturing on May 15, 2029, and $4,155,000 principal amount of the 2004 Series A Bonds maturing on May 15, 2024.
Official Statement shall mean the Official Statement of the Metropolitan Government relating to the 2004 Series A Bonds.
Sale Resolution shall mean the resolution of the Board adopted on June 14, 2004 entitled "A RESOLUTION DETERMINING CERTAIN DETAILS OF $110,000,000 AGGREGATE PRINCIPAL AMOUNT OF ELECTRIC SYSTEM REVENUE BONDS, 2004 SERIES A, OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY, AND CERTAIN OTHER MATTERS WITH RESPECT TO SAID 2004 SERIES A BONDS", a copy of which resolution of the Board is annexed hereto as Exhibit A.
Twentieth Supplemental Resolution shall mean the Twentieth Supplemental Electric System Revenue Bond Resolution adopted by the Metropolitan Government on May 18, 2004.
Underwriters shall mean Morgan Keegan & Company, Inc., UBS Financial Services Inc., Merrill Lynch & Co., Wiley Bros.-Aintree Capital, LLC and Harvestons Securities, Inc.

ARTICLE II

RATIFICATION OF BOARD’S ACTION WITH
RESPECT TO 2004 SERIES A BONDS
201. Ratification of Principal Amounts, Maturities and Interest Rates and Accrued Interest Payable from the Proceeds of the 2004 Series A Bonds. The determinations of the Board with respect to the aggregate principal amount of, the maturities and principal amount of each maturity of, the interest rates for, and the optional and mandatory sinking fund redemption provisions for, the 2004 Series A Bonds, the determination of the amount of interest on the 2004 Series A Bonds payable from the proceeds of the 2004 Series A Bonds, the determination to insure the Insured 2004 Series A Bonds pursuant to the Financial Guaranty Insurance Policy and such other matters as are determined in Sections 1, 2, 3, 4 and 5 of the Sale Resolution, as the same is required under the Twentieth Supplemental Resolution, be and the same are hereby approved, ratified and confirmed. The Metropolitan Mayor, the Treasurer of the Metropolitan Government and the Metropolitan Clerk are hereby authorized to execute and to deliver the 2004 Series A Bonds in the name of and on behalf of the Metropolitan Government in the form as set forth in Section 209 of the Twentieth Supplemental Resolution, with such variations, omissions and insertions as are required or permitted consistent with the Bond Resolution and the Sale Resolution, in exchange for the purchase price therefor as set forth in the Contract of Purchase and in Section 202 of this Twenty-First Supplemental Resolution.

202. Approval of Purchase Contract and Purchase Price. The Contract of Purchase, in substantially the form attached hereto as Exhibit B, be and the same is hereby approved. The Metropolitan Mayor, the Treasurer of the Metropolitan Government and the Director of Finance of the Metropolitan Government, any one of whom may act alone, are hereby authorized and directed to execute and deliver the Contract of Purchase in the name of and on behalf of the Metropolitan Government, with such changes, insertions or omissions as the person executing the same shall approve, such execution and delivery thereof to be conclusive evidence of the approval of any such changes, insertions or omissions, and any such actions previously undertaken are hereby approved, ratified and confirmed. The sale of the 2004 Series A Bonds to the Underwriters at a purchase price of $108,749,930.85 (the par amount of $110,000,000.00 less net original issue discount of $638,603.15 less underwriters’ discount of $611,466.00), plus accrued interest from the dated date of the 2004 Series A Bonds to the delivery date of the 2004 Series A Bonds, is hereby approved.
The appropriate officials of the Metropolitan Government are hereby authorized, empowered, and directed, from and after the execution and delivery of the Contract of Purchase, to do all acts and things, and to execute all documents, as may be necessary or convenient to carry out and to comply with the provisions of the Contract of Purchase, as executed and delivered.

203. Approval of Continuing Disclosure Agreement. The Continuing Disclosure Agreement, in substantially the form attached hereto as Appendix F to the Official Statement, be and the same is hereby approved. The Metropolitan Mayor, the Treasurer of the Metropolitan Government and the Director of Finance of the Metropolitan Government, any one of whom may act alone, are hereby authorized and directed to execute and deliver the Continuing Disclosure Agreement in the name and on behalf of the Metropolitan Government, with such changes, insertions or omissions as the person executing the same shall approve, such execution and delivery thereof to be conclusive evidence of the approval of any such changes, insertions or omissions.

204. Approval of Official Statement. The Official Statement in substantially the form attached hereto as Exhibit C be and the same is hereby approved, and the use of the Official Statement by the Underwriters in connection with the offering and sale of the 2004 Series A Bonds is hereby approved, ratified and confirmed.

205. Tax Covenant. The Metropolitan Government hereby covenants and agrees with the Holders of the 2004 Series A Bonds to do the following:

(1) The Metropolitan Government shall comply with each applicable requirement of the Internal Revenue Code of 1986, as amended (the "Code"), necessary to maintain the exclusion of interest on the 2004 Series A Bonds from gross income for Federal income tax purposes. In furtherance of the covenant contained in the preceding sentence, the Metropolitan Government agrees to comply with the provisions of the Tax and Arbitrage Certificate (the "Tax Certificate") to be prepared by Bond Counsel for the 2004 Series A Bonds and to be executed by the Metropolitan Government on the date of the initial issuance and delivery of the 2004 Series A Bonds, as such Tax Certificate may be amended from time to time, as a source of guidance for achieving compliance with the Code, and the Metropolitan Mayor, the Treasurer of the Metropolitan Government and the Director of Finance of the Metropolitan Government, any one of whom may act alone, are hereby authorized and directed to execute and deliver the Tax Certificate on behalf of and in the name of the Metropolitan Government.

(2) The Metropolitan Government shall make any and all payments required to be made to the United States Department of the Treasury in connection with the 2004 Series A Bonds pursuant to Section 148(f) of the Code from amounts on deposit in the funds and accounts established under the Bond Resolution, as heretofore and hereafter amended and supplemented, or otherwise available therefor.

(3) Notwithstanding any provision of the Bond Resolution to the contrary, so long as necessary to maintain the exclusion from gross income of interest on the 2004 Series A Bonds for Federal income tax purposes, the covenants contained in this Section shall survive the payment of the 2004 Series A Bonds and the interest thereon, including any payment or defeasance thereof pursuant to Section 1201 of the Bond Resolution.

ARTICLE III
BOND INSURANCE PROVISIONS

301. Ambac Assurance Consent Language.

A. Consent of Ambac Assurance.
Any provision of the Bond Resolution expressly recognizing or granting rights in or to Ambac Assurance may not be amended in any manner which affects the rights of Ambac Assurance thereunder without the prior written consent of Ambac Assurance. Ambac Assurance reserves the right to charge the Metropolitan Government a fee for any consent or amendment to the Bond Resolution while the Financial Guaranty Insurance Policy is outstanding.

B. Consent of Ambac Assurance in Lieu of Bondholder Consent.
Unless otherwise provided in this paragraph, Ambac Assurance’s consent shall be required in lieu of the consent of the Holders of the Insured 2004 Series A Bonds, when required, for the following purposes: (i) execution and delivery of any supplemental resolution or any amendment, supplement or change to or modification of the Bond Resolution; (ii) removal of the Fiscal Agent or Paying Agent and selection and appointment of any successor fiscal agent or paying agent; and (iii) initiation or approval of any action not described in (i) or (ii) above which requires consent of the holders of the Insured 2004 Series A Bonds.

C. Consent of Ambac Assurance in the Event of Insolvency.
Any reorganization or liquidation plan with respect to the Metropolitan Government must be acceptable to Ambac Assurance. In the event of any reorganization or liquidation, Ambac Assurance shall have the right to vote on behalf of all Bondholders who hold Ambac Assurance-insured Bonds absent a default by Ambac Assurance under the applicable financial guaranty insurance policy insuring such Bonds.

D. Consent of Ambac Assurance Upon Default.
With respect to the Insured 2004 Series A Bonds only, anything in the Bond Resolution to the contrary notwithstanding, upon the occurrence and continuance of an Event of Default as defined therein, Ambac Assurance shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders of the Insured 2004 Series A Bonds or the Fiscal Agent for the benefit of the Holders of the Insured 2004 Series A Bonds under the Bond Resolution, including, without limitation: (i) the right to accelerate the principal of the Insured 2004 Series A Bonds as described in the Bond Resolution, and (ii) the right to annul any declaration of acceleration, and Ambac Assurance shall also be entitled to approve all waivers of Events of Default.

E. Acceleration Rights.
Upon the occurrence of an Event of Default, the Fiscal Agent may, with the consent of Ambac Assurance, and shall, at the direction of Ambac Assurance or holders of not less than twenty-five percent (25%) in principal amount of the Outstanding Insured 2004 Series A Bonds with the consent of Ambac Assurance, by written notice to the Metropolitan Government and Ambac Assurance, declare the principal of the Insured 2004 Series A Bonds to be immediately due and payable, whereupon that portion of the principal of the Insured 2004 Series A Bonds thereby coming due and the interest thereon accrued to the date of payment shall, without further action, become and be immediately due and payable, anything in the Bond Resolution or in the Insured 2004 Series A Bonds to the contrary notwithstanding.

302. Information to be Given to Ambac Assurance.

A. Financial Statements.
While the Financial Guaranty Insurance Policy is in effect, the Metropolitan Government or the Board, as appropriate, shall furnish to Ambac Assurance upon request (to the attention of the Surveillance Department, unless otherwise indicated), the following:
(a) a copy of any financial statement, audit and/or annual report of the Board; and
(b) such additional information it may reasonably request.

B. Bondholder Notices.
While the Financial Guaranty Insurance Policy is in effect, (i) the Metropolitan Government, the Board or the Fiscal Agent, as appropriate, shall furnish to Ambac Assurance (to the attention of the Surveillance Department, unless otherwise indicated), a copy of any notice to be given to the registered owners of the Insured 2004 Series A Bonds, including, without limitation, notice of any redemption of or defeasance of the Insured 2004 Series A Bonds, and (ii) the Metropolitan Government or the Board, as appropriate, shall furnish to Ambac Assurance (to the attention of the Surveillance Department, unless otherwise indicated) any certificate rendered pursuant to the Bond Resolution relating to the security for the Insured 2004 Series A Bonds.

C. Continuing Disclosure.
To the extent that the Metropolitan Government has entered into a continuing disclosure agreement with respect to the Insured 2004 Series A Bonds, Ambac Assurance shall be included as party to be notified while the Financial Guaranty Insurance Policy is in effect (such notice to be sent to the attention of the Surveillance Department, unless otherwise indicated).

D. Failure to Provide Information.
The Board or the Metropolitan Government, as appropriate, shall notify Ambac Assurance (to the attention of the General Counsel's office, unless otherwise indicated) of any failure of the Metropolitan Government to provide relevant notices or certificates.

E. Notice of Insufficient Funds.
Notwithstanding any other provision of the Bond Resolution, the Fiscal Agent, the Board or the Metropolitan Government, as appropriate, shall immediately notify Ambac Assurance (to the attention of the General Counsel's office, unless otherwise indicated) if at any time there are insufficient moneys to make any payments of principal and/or interest on the Insured 2004 Series A Bonds as required and immediately upon the occurrence of any Event of Default under the Bond Resolution.

F. Permission to Discuss Affairs.
The Metropolitan Government and the Board will permit Ambac Assurance to discuss the affairs, finances and accounts of the Board or any information Ambac Assurance may reasonably request regarding the security for the Insured 2004 Series A Bonds with appropriate officers of the Metropolitan Government and/or the Board. The Fiscal Agent, the Board or the Metropolitan Government, as appropriate, to the extent legal, will permit Ambac Assurance to have access to the System and to have access to and to make copies of all books and records relating to the Insured 2004 Series A Bonds at any reasonable time.

G. Accounting.
Ambac Assurance shall have the right to direct an accounting at the Metropolitan Government’s expense, and the Metropolitan Government’s failure to comply with such direction within thirty (30) days after receipt of written notice of the direction from Ambac Assurance shall be deemed a default hereunder and under the Bond Resolution; provided, however, that if compliance cannot occur within such period, then such period will be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any registered owner of the Insured 2004 Series A Bonds.

303. Permitted Investments.

A. Defeasance.

With respect to a defeasance of the Insured 2004 Series A Bonds, "Investment Securities" means and includes only
(1) cash (insured at all times by the Federal Deposit Insurance Corporation), or
(2) obligations of, or obligations guaranteed as to principal and interest by, the United States of America or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the United States of America, including:
· U.S. treasury obligations
· All direct or fully guaranteed obligations
· Farmers Home Administration
· General Services Administration
· Guaranteed Title XI financing
· Government National Mortgage Association (GNMA)
· State and Local Government Series
Any security used for defeasance must provide for the timely payment of principal and interest and cannot be callable or prepayable prior to maturity or earlier redemption of the rated debt (excluding securities that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date).

B. All Other Investments.
For all purposes other than defeasance investments in refunding escrow accounts, the term "Investment Securities" shall mean and include, to the extent otherwise constituting "Investment Securities" under the Bond Resolution, only those investments as described in paragraph A above and the following:

(1) obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including:
S Export-Import Bank
S Rural Economic Community Development Administration
S U.S. Maritime Administration
S Small Business Administration
S U.S. Department of Housing & Urban Development (PHA’s)
S Federal Housing Administration
S Federal Financing Bank;

(2) direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America:
S Senior debt obligations issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC)
S Obligations of the Resolution Funding Corporation (REFCORP)
S Senior debt obligations of the Federal Home Loan Bank System
S Senior debt obligations of other Government Sponsored Agencies approved by Ambac Assurance;

(3) U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of "A-1" or "A-1+" by Standard & Poor’s Credit Market Services. A Division of The McGraw-Hill Companies ("S&P") and "P-1" by Moody’s Investors Service, Inc. ("Moody’s") and maturing no more than 360 calendar days after the date of purchase (ratings on holding companies are not considered as the rating of the bank);

(4) commercial paper which is rated at the time of purchase in the single highest classification ("A-1+" by S&P and "P-1" by Moody’s) and which matures not more than 270 calendar days after the date of purchase;

(5) investments in a money market fund rated "AAAm" or "AAAm-G" or better by S&P;

(6) "Pre-refunded Municipal Obligations" defined as follows: any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and

(A) which are rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of S&P or Moody’s or any successors thereto; or

(B) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph A(2) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;

(7) municipal obligations rated "Aaa/AAA" or general obligations of states with a rating of "A2/A" or higher by both Moody's and S&P;

(8) investment agreements approved in writing by Ambac Assurance [supported by appropriate opinions of counsel]; and

(9) other forms of investments (including repurchase agreements) approved in writing by Ambac Assurance.

C. Valuation.
The value of the above investments shall be determined as follows:
a) For the purpose of determining the amount in any Fund, all Investment Securities credited to such Fund shall be valued at fair market value. The Fiscal Agent shall determine the fair market value based on accepted industry standards and from accepted industry providers. Accepted industry providers shall include but are not limited to pricing services provided by Financial Times Interactive Data Corporation, Merrill Lynch, Salomon Smith Barney, Bear Stearns, or Lehman Brothers.
b) as to certificates of deposit and bankers' acceptances: the face amount thereof, plus accrued interest thereon; and
c) as to any investment not specified above: the value thereof established by prior agreement between the Metropolitan Government, the Fiscal Agent and Ambac Assurance.

304. Defeasance Language.

A. Outstanding Bonds.
The term "Outstanding" contained in Section 101 of the Bond Resolution shall specifically include Insured 2004 Series A Bonds which fall into the category described in paragraph B below.

B. Defeasance.
Notwithstanding anything herein or in the Bond Resolution to the contrary, in the event that the principal and/or interest due on the Insured 2004 Series A Bonds shall be paid by Ambac Assurance pursuant to the Financial Guaranty Insurance Policy, the Insured 2004 Series A Bonds shall remain Outstanding for all purposes, shall not be defeased or otherwise satisfied and shall not be considered paid by the Metropolitan Government, and the assignment and pledge of the Pledged Funds and all covenants, agreements and other obligations of the Metropolitan Government to the registered owners shall continue to exist and shall run to the benefit of Ambac Assurance, and Ambac Assurance shall be subrogated to the rights of such registered owners.

305. Payment Procedure Pursuant to the Financial Guaranty Insurance Policy.

As long as the Financial Guaranty Insurance Policy shall be in full force and effect, the Metropolitan Government, the Fiscal Agent and any Paying Agent agree to comply with the following provisions:
(a) At least one (1) day prior to all interest payment dates the Fiscal Agent or Paying Agent, if any, will determine whether there will be sufficient funds in the Funds and Accounts to pay the principal of or interest on the Insured 2004 Series A Bonds on such interest payment date. If the Fiscal Agent or Paying Agent, if any, determines that there will be insufficient funds in such Funds or Accounts, the Fiscal Agent or Paying Agent, if any, shall so notify Ambac Assurance. Such notice shall specify the amount of the anticipated deficiency, the Insured 2004 Series A Bonds to which such deficiency is applicable and whether such Insured 2004 Series A Bonds will be deficient as to principal or interest, or both. If the Fiscal Agent or Paying Agent, if any, has not so notified Ambac Assurance at least one (1) day prior to an interest payment date, Ambac Assurance will make payments of principal or interest due on the Insured 2004 Series A Bonds on or before the first (1st) day next following the date on which Ambac Assurance shall have received notice of nonpayment from the Fiscal Agent or Paying Agent, if any.
(b) The Fiscal Agent or Paying Agent, if any, shall, after giving notice to Ambac Assurance as provided in (a) above, to the extent legal, make available to Ambac Assurance and, at Ambac Assurance’s direction, to The Bank of New York, in New York, New York, as insurance trustee for Ambac Assurance or any successor insurance trustee (the "Insurance Trustee"), the registration books of the Metropolitan Government maintained by the Fiscal Agent or Paying Agent, if any, and all records relating to the Funds and Accounts maintained under the Bond Resolution.
(c) The Fiscal Agent or Paying Agent, if any, to the extent legal, shall provide Ambac Assurance and the Insurance Trustee with a list of registered owners of Insured 2004 Series A Bonds entitled to receive principal or interest payments from Ambac Assurance under the terms of the Financial Guaranty Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Insured 2004 Series A Bonds entitled to receive full or partial interest payments from Ambac Assurance and (ii) to pay principal upon Insured 2004 Series A Bonds surrendered to the Insurance Trustee by the registered owners of Insured 2004 Series A Bonds entitled to receive full or partial principal payments from Ambac Assurance.
(d) The Fiscal Agent or Paying Agent, if any, shall, at the time it provides notice to Ambac Assurance pursuant to (a) above, notify registered owners of Insured 2004 Series A Bonds entitled to receive the payment of principal or interest thereon from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest payments next coming due upon proof of Bondholder entitlement to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner’s right to payment, (iii) that should they be entitled to receive full payment of principal from Ambac Assurance, they must surrender their Insured 2004 Series A Bonds (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Insured 2004 Series A Bonds to be registered in the name of Ambac Assurance) for payment to the Insurance Trustee, and not the Fiscal Agent or Paying Agent, if any, and (iv) that should they be entitled to receive partial payment of principal from Ambac Assurance, they must surrender their Insured 2004 Series A Bonds for payment thereon first to the Fiscal Agent or Paying Agent, if any, who shall note on such Insured 2004 Series A Bonds the portion of the principal paid by the Fiscal Agent or Paying Agent, if any, and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal.
(e) In the event that the Fiscal Agent or Paying Agent, if any, has notice that any payment of principal of or interest on an Insured 2004 Series A Bond which has become due for payment and which is made to a Bondholder by or on behalf of the Metropolitan Government has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Fiscal Agent or Paying Agent, if any, shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner’s payment is so recovered, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available, and the Fiscal Agent or Paying Agent, if any, shall furnish to Ambac Assurance its records evidencing the payments of principal of and interest on the Insured 2004 Series A Bonds which have been made by the Fiscal Agent or Paying Agent, if any, and subsequently recovered from registered owners and the dates on which such payments were made.
(f) In addition to those rights granted Ambac Assurance under the Bond Resolution, Ambac Assurance shall, to the extent it makes payment of principal of or interest on Insured 2004 Series A Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Financial Guaranty Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Fiscal Agent or Paying Agent, if any, shall note Ambac Assurance’s rights as subrogee on the registration books of the Metropolitan Government maintained by the Fiscal Agent or Paying Agent, if any, upon receipt from Ambac Assurance of proof of the payment of interest thereon to the registered owners of the Insured 2004 Series A Bonds, and (ii) in the case of subrogation as to claims for past due principal, the Fiscal Agent or Paying Agent, if any, shall note Ambac Assurance’s rights as subrogee on the registration books of the Metropolitan Government maintained by the Fiscal Agent or Paying Agent, if any, upon surrender of the Insured 2004 Series A Bonds by the registered owners thereof together with proof of the payment of principal thereof.

306. Fiscal Agent-Related Provisions.

A. Removal and Resignation.
Notwithstanding anything to the contrary contained in the Bond Resolution, the following provisions relating to the Fiscal Agent and Paying Agent shall apply to the Insured 2004 Series A Bonds:
(1) The Fiscal Agent (or Paying Agent) may be removed at any time, at the request of Ambac Assurance, for any breach of the trust set forth herein,
(2) Ambac Assurance shall receive prior written notice of any Fiscal Agent (or Paying Agent) resignation.
(3) Every successor Fiscal Agent appointed pursuant to the Bond Resolution with respect to the Insured 2004 Series A Bonds shall be a trust company or bank in good standing located in or incorporated under the laws of the State, duly authorized to exercise trust powers and subject to examination by federal or state authority, having a reported capital and surplus of not less than $75,000,000 and acceptable to Ambac Assurance. Any successor Paying Agent, if applicable, shall not be appointed unless Ambac Assurance approves such successor in writing.

B. Adverse Action.
Notwithstanding any other provision of the Bond Resolution, in determining whether the rights of the holders of the Insured 2004 Series A Bonds will be adversely affected by any action taken pursuant to the terms and provisions of the Bond Resolution, the Fiscal Agent (or Paying Agent) shall consider the effect on the Holders of the Insured 2004 Series A Bonds as if there were no Financial Guaranty Insurance Policy.

C. Successor Fiscal Agent.
Notwithstanding any other provision of the Bond Resolution, no removal, resignation or termination of the Fiscal Agent (or Paying Agent) shall take effect until a successor, acceptable to Ambac Assurance, shall be appointed.

307. Interested Parties.

A. Ambac Assurance As Third Party Beneficiary.
To the extent that the Bond Resolution confers upon or gives or grants to Ambac Assurance any right, remedy or claim under or by reason of the Bond Resolution, Ambac Assurance is hereby explicitly recognized as being a third-party beneficiary thereunder and may enforce any such right, remedy or claim conferred, given or granted thereunder.

B. Parties Interested Herein.
Nothing in the Bond Resolution expressed or implied is intended or shall be construed to confer upon, or to give or grant to, any person or entity, other than the Metropolitan Government, the Fiscal Agent, Ambac Assurance, the Paying Agent, if any, and the registered owners of the Insured 2004 Series A Bonds, any right, remedy or claim under or by reason of the Bond Resolution or any covenant, condition or stipulation thereof, and all covenants, stipulations, promises and agreements in the Bond Resolution contained by and on behalf of the Metropolitan Government shall be for the sole and exclusive benefit of the Metropolitan Government, the Fiscal Agent, Ambac Assurance, the Paying Agent, if any, and the registered owners of the Insured 2004 Series A Bonds.

308. Bond Form.

The form of the Insured 2004 Series A Bonds shall contain thereon the following legend:
Financial Guaranty Insurance Policy No. 22666BE (the "Policy") with respect to payments due for principal of and interest on this bond has been issued by Ambac Assurance Corporation ("Ambac Assurance"). The Policy has been delivered to The Bank of New York, New York, New York, as the Insurance Trustee under said Policy and will be held by such Insurance Trustee or any successor insurance trustee. The Policy is on file and available for inspection at the principal office of the Insurance Trustee and a copy thereof may be secured from Ambac Assurance or the Insurance Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owner of this bond acknowledges and consents to the subrogation rights of Ambac Assurance as more fully set forth in the Policy.

309. Representations, Warranties and Covenants for Revised Article 9 Collateral.

A. The Bond Resolution creates a valid and binding pledge and assignment as security of the Pledged Funds as security for payment of the Insured 2004 Series A Bonds, enforceable by the Fiscal Agent in accordance with the terms of the Bond Resolution.

B. Under the laws of the State, (1) such pledge and assignment as security interest, and (2) each pledge, assignment, lien or other security interest made to secure any prior obligations of the Metropolitan Government which, by the terms of the Bond Resolution, rank on a parity with or prior to the pledge and assignment as security granted by the Bond Resolution, is and shall be prior to any judicial lien hereafter imposed on such collateral to enforce a judgment against the Metropolitan Government on a simple contract. By the date of issue of the Insured 2004 Series A Bonds, the Metropolitan Government will have filed all financing statements describing, and transferring such possession or control over, such collateral (and for so long as any issued 2004 Series A Bonds are Outstanding the Metropolitan Government will file, continue and amend all such financing statements and transfer such possession and control) as may be necessary to establish and maintain such priority in each jurisdiction in which the Metropolitan Government is organized or such collateral may be located or that may otherwise be applicable pursuant to Uniform Commercial Code §§9.301--9.306 of such jurisdiction.

C. The Metropolitan Government has not heretofore made a pledge of, granted a lien on or security interest in, or made an assignment or sale of such collateral that ranks on a parity with or prior to the pledge and assignment as security granted by the Bond Resolution, except for the pledge and assignment as security granted to secure the Senior Lien Bonds and the other Bonds issued under the Bond Resolution. The Metropolitan Government shall not hereafter make or suffer to exist any pledge or assignment of, lien on, or security interest in, such collateral that ranks prior to or on a parity with the pledge and assignment as security granted by the Bond Resolution, or file any financing statement describing any such pledge, assignment, lien or security interest, except as expressly permitted hereby.

ARTICLE IV

RESOLUTION TO REMAIN IN EFFECT; EFFECTIVE DATE

401. Resolution To Remain In Effect. Save and except as supplemented by this Twenty-First Supplemental Resolution, the Bond Resolution and the Twentieth Supplemental Resolution shall remain in full force and effect.

402. Effective Date. This Twenty-First Supplemental Electric System Revenue Bond Resolution shall take effect from and after its adoption, the welfare of the Metropolitan Government requiring it.

Sponsored by: Brenda Gilmore

LEGISLATIVE HISTORY
Referred:	Budget & Finance Committee
Introduced:	June 15, 2004
Substitute Introduced:	June 15, 2004
Adopted:	June 15, 2004
Approved:	June 16, 2004
By: