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it is expressly understood and agreed by and among the parties to this Installment Purchase Contract and the Indenture that each of the agreements, conditions, covenants and terms contained in the Indenture and this Installment Purchase Contract is an essential and material term�of the purchase of and any payment for the Project by the City. The City will faithfully observe and perform all the agreements, conditions, covenants and terms required to be observed and performed by it pursuant to all outstanding Parity Obligations as such may from time to time be amended. Section 5.02. Against Encumbrances. The City hereby covenants that, subject to Section 7.02 of the Indenture, there is no pledge of or lien on Net Revenues senior to the pledge and lien securing the Installment Payments. The City will not make any further pledge of or place any lien on the Net Revenues, provided that the City may at any time, or from time to time, pledge or encumber the Net Revenues in connection with the issuance or execution of Parity Obligations or other obligations permitted by Section 4.03 hereof,or subordinate to the pledge of Net Revenues herein: Section 5.03. Aeainst Sale or Other Disposition of Propert� The City will not sell, lease, encumber or otherwise dispose of the Enterprise or any part thereof in excess of one-half of one percent of the book value of the Enterprise in any Fiscal Year, unless a Finance Officer certifies that such sale, lease, encumbrance or disposition will not materially adversely affect the operation of the Enterprise or the Net Revenues; provided however, any real or personal property which has become non-operative or which is not needed for the efficient and proper operation of the Enterprise, or any material or equipment which has become worn out, may be sold or exchanged at not less than the fair market value thereof and the � proceeds (if any)of such sale or exchange shall be deposited in the Revenue Fund. The City will not enter into any agreement or lease which would impair the ability of the City to meet the covenant set forth in Section 5.14 hereof or which would otherwise impair the rights of the Bond Owners or the operation of the Enterprise. Section 5.04. Against Competitive Facilities. The City will not, to the extent permitted by law, acquire, maintain or operate and will not, to the extent permitted by�law and its current contractual rights and obligations and within the reasonable scope of its powers,permit any other public or private agency,corporation, district or p.olitical subdivision or any person whomsoever to acquire, maintain or operate within the City any utility systenn competitive with the Enterprise, which utility system has a materially adverse impact on Revenues. Section 5.05. Tax Covenants. The City shall not take any action or permit to be taken any action within its control which would cause or which, with the passage of time if not cured would cause, the 13 338529_1.DOC