Authorizing Issuance of Revenue Bonds concerning construction of Improvements to Waterworks, not to exceed $2,050,000

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During the continuance of any default in the payment of either principal of or interest or premium on any 1999 Bonds or Parity Bonds, no payment shall be made with respect to any subordinate obligations issued pursuant to Section 21(e). Moneys available for payment to holders of such subordinate obligations shall, in the event of an insufficient amount being available to pay all debt service with respect to the subordinate obligations when due, be applied to the subordinate obligations in accordance with the sequence and other terms set forth above with respect to payments regarding 1999 Bonds and Parity Bonds unless otherwise provided in the ordinance authorizing the subordinate obligations. SECTION 21. Further Covenants of the City. For the purpose of further safeguarding the interests of the owners of the 1999 Bonds, it is hereby specifically provided as follows: (a) The City, through the Board, shall at all times maintain the works in good condition, and operate the same in an efficient manner and at a reasonable cost. (b) So long as any of the 1999 Bonds are outstanding, the City, through the Board, shall maintain insurance on the insurable parts of the works, acceptable to the State of Indiana including fidelity bonds, of a kind and in an amount such as would normally be carried by private entities engaged in a similar type of business. All insurance shall be placed with responsible insurance companies qualified to do business under the laws of the State of Indiana. Insurance proceeds shall be used in replacing or repairing the property destroyed or damaged, or if not used for that purpose, shall be treated and applied as Net Revenues. (c) So long as any of the 1999 Bonds are outstanding, the City shall not mortgage, pledge or otherwise encumber the works, or any part thereof, and shall not sell, lease or otherwise dispose of any part of the same, excepting only such machinery, equipment or other property as maybe replaced, or shall no longer be necessary for use in connection with said utility; provided, the foregoing restrictions shall not apply to the extent approved otherwise by the owners of all 1999 Bonds then outstanding if the City receives an opinion of nationally recognized bond counsel to the effect that the transaction will not cause the interest on the 1999 Bonds to be included in gross income for federal income tax purposes, or the City receives the prior written consent of the State of Indiana, if such 1999 Bonds aze sold to the State of Indiana. (d) If the 1999 Bonds are sold to the Indiana Bond Bank or the State of Indiana to finance Eligible Costs, the City shall not borrow any money, enter into any contract or agreement or incur any other liabilities in connection with the waterworks, other than for normal operating expenditures, without the prior written consent of the State of Indiana if such undertaking would involve, commit or use the revenues of the waterworks. -23-