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harmless from, and defend each of them against, any claim, demand, loss, damage, liability or expense (including attorneys' fees) as a result of any such lien or claim of lien against any portion of the Water System The City may pledge, encumber or otherwise secure its obligations with the Net Water Revenues, provided, that in all instances any such pledge, lien or security is wholly subordinate and junior to the obligations of the City contained herein, particularly Section 3 02 SECTION 5 04 Against Sale or Other Disposition of Property The City will not sell, lease or otherwise dispose of the Water System or any part thereof essential to the proper operation of the Water System or to the maintenance of the Net Water Revenues, and will not enter into any agreement or lease which would impair the operation of the Water System or any part thereof necessary to secure adequate Net Water Revenues for the payment of the 2017 Installment Sale Payments, or which would otherwise impair the rights of the Authority with respect to the Net Water Revenues or the operation of the Water System, provided, that any real or personal property which has become nonoperative or which is not needed for the efficient and proper operation of the Water System, or any material or equipment which has become worn out, may be sold if such sale will not reduce the Net Water Revenues below the requirements to be maintained under Section 5 14 SECTION 5 05 Tax Covenants (a) The City will not directly or indirectly use or permit the use of any proceeds of the obligation provided herein or any other funds of the City or take or omit to take any action that would cause such obligation to be an"arbitrage bond" within the meaning of Section 148(a) of the Code or a"federal-guaranteed obligation" within the meaning of Section 149(b) of the Code or a"private activity bond" as described in Section 141 of the Code The City will not allow 10% or more of the proceeds of the obligations provided herein to be used in the trade or business of any nongovernmental units and will not loan 5% or more of the proceeds of the obligations provided herein to any nongovernmental units To that end, as long as any 2017 Installment Sale Payments are unpaid, the City will comply with all requirements of such sections of the Code to the extent applicable to the obligations provided herein In the event that at any time the City is of the opinion that for purposes of this Section 5 05(a) it is necessary to restrict or to limit the yield on the investment of any moneys held by the City under this 2017 Installment Sale Agreement or by the Trustee under the Trust Agreement, the City shall so instruct the Trustee in writing and the trustee, as appropriate, shall act in accordance with such instructions The City and the Authority covenant that they will at all times do and perform all acts necessary or desirable in order to assume that the interest on the Authority's Series 2017 Bonds will not be included in gross income of the registered owners thereof for federal income tax purposes and will take no action that would result in such interest being so included (b) The City will pay or cause to be paid the Rebate Requirement as provided in the Tax Certificate, as defined in the Trust Agreement This covenant shall survive payment in full of the 2017 Installment Sale Payments The City shall establish and maintain a fund separate from any other fund established and maintained hereunder designated the Rebate Fund The City will cause the Rebate Requirement to be deposited in the Rebate Fund as provided in the Tax 12 2762682 3