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All the register maintained by the registrar on the 15th day preceding the date of interest payment or maturity of each bond. Section 7. REREGISTRATION. Any bond may be registered to a new owner by completing the assignment certificate on the reverse of the bond and delivering the bond to the registrar. Upon reregistration, any bond may be replaced by one or more bonds of the same maturity and aggregate amount in denominations of $5000 or any integral multiple thereof. Section 8. COVENANTS. In the event of a default in the payment of any bond or any installment of interest thereon, bondholders shall have the remedies set forth in the Improvement Bond Act of 1915. In addition, the City Council makes the following covenants, which shall constitute a contract with the bondholders: Section 8. 1. FORECLOSURE OF LIENS. If any installment of principal or interest of any assessment levied in Sewer Assessment District No. 11 becomes delinquent, the City Council shall cause an action to be filed in the Superior Court of the County of Santa Clara to foreclose the lien of the delinquent assessment under the authority of Section 8830 and following of the Streets and Highways Code of the State of California. This action shall be filed not later than one hundred fifty (150) days after the date of delinquency. Section 8.2 . ARBITRAGE. During the term of the bonds, the Town will make no use of bond proceeds which, if such use had been reasonably expected at the date the bonds are, issued, could have caused the bonds to be "arbitrage bonds" within the meaning of Section 148 of the United States Internal Revenue Code of 1986, and regulations of the Internal Revenue Service adopted thereunder, and further shall rebate to the United States any amounts actually earned as arbitrage in accordance with the provisions of that Code and those regulations. Section 8.3 . MAINTENANCE OF TAX EXEMPTION. The Town will take all reasonable actions required to maintain the status of interest on the bonds as excludable from gross income for federal income tax purposes and as exempt from the State of California personal income taxes. Regularly passed and adopted this 21st day of September, 1988. ATTEST: 4 City Clerk