|
<br />.
<br />
<br />e
<br />
<br />(b)Authoritv's Legal Authority. It is a duly created and existing political subdivision of the State of Texas,
<br />and is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds; it has the lawful
<br />power to pledge the revenues supporting the Bonds and has lawfully exercised said power under the Constitution
<br />and laws of the State of Texas, including said power existing under the Act; the Bonds issued hereunder shall be
<br />ratably secured by said pledge of revenues, in such manner that one Bond shall have no preference over any other
<br />Bond; all action on its part for the creation and issuance of said obligations has been duly and effectively taken; and
<br />said obligations in the hands of the holders and owners thereof are and will be valid and enforceable special
<br />obligations of the Authority'in accordance with their terms.
<br />
<br />(c) Title. It has or will obtain lawful title to the lands, buildings, structures, and facilities constituting the
<br />System; it will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof,
<br />for the benefit of the holders and owners of the Parity Bonds, against the claims and demands of all persons
<br />whomsoever; it is lawfully qualified to pledge the Net Revenues to the payment of the Parity Bonds in the manner
<br />prescribed herein; and it has lawfully exercised such rights.
<br />
<br />(d) Liens. It will from time to time and before the same become delinquent pay and discharge all taxes,
<br />assessments, and governmental charges, if any, which shall be lawfully imposed upon it or the System; it will pay all
<br />lawful claims for rents, royalties, labor, materials, and supplies which if unpaid might by law become a lien or
<br />charge thereon, the lien of which. would be prior to or in~erfere with the liens hereof, s~ that the priority of the liens
<br />granted hereunder shall be fully preserved in the manner provided herein; and it will not create or siJffer to be
<br />created any mechanic's, laborer's, materialman's or other lien or charge which might or could be prior to the liens
<br />hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired; provided, however,
<br />that no such tax, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's,
<br />laborer's, materialman's, or other lien or charge, shall be required to be paid so long as the validity of the same shall
<br />be contested in good faith by the Authority.
<br />
<br />(e) Operation of Svstem: No Free Service. It shall continuously and efficiently operate the System and
<br />maintain the System in good condition, repair, and working order, all at reasonable cost. No free service of the
<br />System shall be allowed, and should the Authority, or any of its agencies or instrumentalities, lessees, or
<br />concessionaires, make use of the services and facilities of the System, payment monthly of the standard retail price
<br />of the services provided shall be made by the Authority, or any of its. agencies or instrumentalities, lessees, or
<br />concessionaires, out of funds from sources other than the revenues of the System, unless made from surplus Net
<br />Revenues.
<br />
<br />(f) Further Encumbrance. The rents, revenues, and income of the System have not in any. manner been
<br />pledged to the payment of any debt or obligations of the Authority or of the System; and it shall not additionally sell
<br />, or encumber the Net Revenues in any manner, except as permitted in the Parity Bonds Resolutions in connection
<br />with Additional Bonds, unless said encumbrance is made junior and subordinate in all respects to the liens, pledges,
<br />covenants, and agreements of the Prior Lien Bonds Resolution and the Parity Bonds Resolutions; but the right of the
<br />Authority to issue revenue bonds payable from a subordinate lien on the surplus Net Revenues is specifically
<br />recognized and retained.
<br />
<br />(g) Insurance. (i) The Board shall cause to be insured for such parts of the System as would usually be
<br />insured by corporations operating like properties, with a responsible insurance company or companies, against risks,
<br />accidents, or casualties against which and to the' extent insurance is usually carried by corporations operating like
<br />properties, including, to the extent reasonably obtainable, fIre and extended coverage insurance, insurance against
<br />damage by floods, and use and occupancy insurance. Public liability and property damage insurance shall also be
<br />carried unless legal counsel for the Board gives a written opinion to the effect that the Authority and the Board are
<br />not liable for claims which would be protected by such insurance. All insurance premiums shall be paid as an
<br />Operating Expense. At any time while any contractor engaged in construction work shall be fully responsible
<br />therefor. the Board shall not be required to carry insurance on the work being constructed if the contractor is
<br />required to carry appropriate insurance. All such policies shall be open to the inspection of the Bondholders and
<br />their representatives at all reasonable times. Upon the happening of any loss or damage covered by insurance from
<br />one or more of said causes, the Board shall make due proof of loss and shall do all things necessary or desirable to
<br />cause the insuring companies to make payment in full directly to the Board. The proceeds of insurance covering
<br />such property, together with any other funds necessary and available for such purpose, shall be used forthwith by the
<br />
<br />19
<br />
|