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<br />16 <br />EL185-68-707442.v4 <br />Section 11. Priority of Payments. If the money on hand in the Debt Service Account <br />shall be insufficient at any time to pay the principal then due and interest then accrued on all <br />Bonds payable therefrom, said money shall first be applied to the payment pro rata of the <br />accrued interest on all Bonds, and any balance shall be applied first in payment of maturing <br />principal; as between Bonds having different maturity dates, the principal of earlier maturing <br />Bonds shall be paid first; and as between Bonds maturing on the same date, the principal of <br />Bonds shall be paid pro rata. <br />Section 12. Covenants. For the protection of the Holders of the Bonds, the City and <br />the Commission hereby covenant and agree to and with the Holders thereof from time to time as <br />follows: <br />(a) They will at all times adequately maintain and efficiently operate the <br />Electric System. They will from time to time make all needful and proper repairs, <br />replacements, additions and betterments to the equipment and facilities of the Electric <br />System so that it may at all times be operated properly and advantageously and so that the <br />value and efficiency of the facilities shall be at all times fully maintained and its revenues <br />unencumbered by reason thereof. <br />(b) In order to ensure the efficient and economical operation of the Electric <br />System and the proper maintenance thereof, the Commission on behalf of the City will <br />employ an experienced manager to operate and maintain the Electric System. Such <br />manager shall be employed on a full-time basis and the compensation shall be paid as an <br />operating expense of the Electric System. <br />(c) The rates for all service and the charges for all electricity and services <br />supplied by the Electric System to the City and its residents and to all consumers shall be <br />reasonable and just, taking into account the cost and value of the Electric System, the cost <br />of maintaining and operating the Electric System and the proper and necessary <br />allowances for depreciation and amounts required for the payment of principal and <br />interest on the bonds payable from the Net Revenues. Charges to all customers shall be <br />uniform for all users of the same class. The Commission on behalf of the City will bill its <br />customers and the City on a monthly basis and, subject to the requirements of State law, <br />will discontinue service to any customer whose bill remains unpaid 30 days following the <br />mailing of such bill and service will not be restored until the bill and any penalties have <br />been paid in full. <br />(d) They will establish, maintain and collect such charges and rates as will <br />produce revenues sufficient to pay the reasonable cost of operation and maintenance of <br />the Electric System and to produce, in each Fiscal Year, Net Revenues at least equal to <br />110% of the annual interest and principal requirements of the Outstanding Bonds in such <br />Fiscal Year. Such rates and charges will be increased from time to time whenever <br />necessary to carry out the obligations of this Resolution. <br />(e) The City and the Commission will not sell, lease, mortgage, or in any <br />manner dispose of all or substantially all of properties of the Electric System until all of <br />the Outstanding Bonds have been paid in full; provided, however, that the City or the <br />77