03-10-10 Regular Meeting of the La Porte Area Water Authority

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agreements of the Parity Bonds Resolutions. The right of the Authority to issue revenue bonds payable from a subordinate lien on the surplus Net Revenues is specifically recognized and retained. H. Insurance. The Board shall cause to be insured for such parts of the System as would usually be insured by corporations operating like properties, with a responsible insurance company or companies, against risks, accidents or casualties against which and to the extent insurance is usually carried by corporations operating like properties, including, to the extent reasonably attainable, fire and extended coverage insurance, insurance against damage by floods, and use and occupancy insurance. Public liability and property damage insurance shall also be carried unless legal counsel for the Board gives a written opinion to the effect that the Authority and the Board are not liable for claims which would be protected by such insurance. All insurance premiums shall be paid as an Operating Expense. At any time while any contractor engaged in construction work shall be fully responsible therefore, the Board shall not be required to carry insurance on the work being constructed if the contractor is required to carry appropriate insurance. All such policies shall be open to the inspection of the Bondholders and their representatives at all reasonable times. Upon the happening of any loss or damage covered by insurance from one or more of said causes, the Board shall make due proof of loss and shall do all things necessary or desirable to cause the insurance companies to make payment in fully directly to the Board. The proceeds of insurance covering such property, together with any other funds necessary and available for such purpose, shall be used forthwith by the Board for repairing the property damaged or replacing the property destroyed; provided, however, that if said insurance proceeds and other funds are insufficient for such purpose, then said insurance proceeds pertaining to the System shall be deposited in a special and separate trust fund, at an official depository of the Authority, to be designated the Insurance Account. The Insurance Account shall be held until such time as other funds become available which, together with the funds on deposit in the Insurance Account, will be sufficient to make the repairs or replacements originally required. The annual audit hereinafter required may contain a section commenting on whether or not the Board has complied with the requirements of this Section with respect to the maintenance of insurance, and shall state whether or not all insurance premiums upon the insurance policies to which reference is made have been paid. 1. Records. The Board shall keep proper books of record and account in which full, true, proper and correct entries will be made of all dealings, activities and transactions relating to the System, the Pledged Revenues, and the funds created pursuant to this Resolution, and all books, documents and vouchers relating thereto shall at all reasonable times be made available for inspection upon request of any Bondholder or customer of the Authority. To the extent consistent with the provisions of this Resolution, the Board shall keep its books and records in a manner conforming to standard accounting practices usually would be followed by private corporations owning and operating a system similar to the System, with appropriate recognition being given to essential differences between municipal and corporate accounting practices. 1. Audits. After the close of each fiscal year, an audit shall be made of the books and accounts relating to the System and the Pledged Revenues by an Accountant. The audit shall include a schedule of the deposits made to the various funds created by this Resolution. The 22 HOU3003369.!