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2. If and to the extent of a deficiency in amounts required to pay principal of <br /> any Bonds, the Bond Registrar shall (a) execute and deliver to the Insurance Paying Agent <br /> in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as <br /> agent for such Bondholder in any legal proceeding relating to the payment of such <br /> principal and an assignment to the Insurer of any of the Bonds surrendered to the <br /> Insurance Paying Agent of so much of the principal amount thereof as has not previously <br /> been paid or for which moneys are not held by the Bond Registrar and available for such <br /> payment (but such assignment shall be delivered only if payment from the Insurance <br /> Paying Agent is received), (b) receive as designee of the respective Bondholders (and not <br /> as Bond Registrar) in accordance with the tenor of the Policy payment therefor from the <br /> Insurance Paying Agent, and (c) disburse the same to such Bondholders. <br /> Payments with respect to claims for interest on the principal of Bonds disbursed by the <br /> Bond Registrar from proceeds of the Policy shall not be considered to discharge the obligation of <br /> the Issuer with respect to such Interest, and the Insurer shall become the owner of such unpaid <br /> Interest and claims for the interest in accordance with the tenor of the assignment made to it <br /> under the provisions of this subsection or otherwise. <br /> Irrespective of whether any such assignment is executed and delivered, the City and the <br /> Bond Registrar: <br /> 1. Recognize that to the extent the Insurer makes payments directly or <br /> indirectly(as by paying through the Bond Registrar), on account of principal of or interest <br /> on the Bonds, the Insurer will be subrogated to the rights of such Bondholders to receive <br /> the amount of such principal and interest for the City, with interest thereon as provided <br /> and solely from the sources stated in this Resolution and the Bonds; and <br /> 2. Will accordingly pay to the Insurer the amount of such principal and <br /> interest (including principal and interest recovered under subparagraph(ii) of the first <br /> paragraph of the Policy), with interest thereon as provided in this Resolution and the <br /> Bonds, but only from the sources and in the manner provided herein for the payment of <br /> -29- J:WWWWHOMEW3N3CXDOC <br />