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Revenues of the System have not in any manner been pledged to the payment of any debt or obligation of the City or of the System. (c) So long as any of the Bonds or any interest thereon remain outstanding, the City will not sell or encumber the System or any substantial part thereof, provided that this shall not be construed to prohibit the sale of such machinery or other properties or equipment which has become obsolete or otherwise unsuited to the efficient operation of the System; also, with the exception of the Additional Parity Obligations expressly permitted by this Ordinance to be issued, it will not encumber the net revenues of the System unless such encumbrance is made junior and subordinate to all of the provisions of this Ordinance. (d) No free service of the System shall be allowed, and should the City or any of its agencies or instrumentalities make use of the services and facilities of the System, payment of the reasonable value thereof shall be made by the City out of moneys from sources other than the revenues and income of the System. (e) To the extent that it legally may, the City further covenants and agrees that, as long as any Parity Revenue Obligations, or any interest thereon, are outstanding, no franchise ~hall be granted for the installation or operation of any competing waterworks or sewer system; and that the City will prohibit the operation of any water system or sewer system other than those owned by the City, and the operation of any such system by anyone other than this City is hereby prohibited. Section 10.05. Pavment of the Bonds. While any of the Bonds are outstanding and unpaid, there shall be made available to the Paying AgentlRegistrar, out of the Interest and Sinking Fund, money sufficient to pay the interest on and the principal of the Bonds, as applicable, as will accrue or mature on each applicable Interest Payment Date. Section 10.06. Other Representations and Covenants. (a) The City will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance and in each Bond; and the City will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance. (b) The City is duly authorized under the laws of the State of Texas to issue the Bonds; all action on its part for the creation and issuance of the Bonds has been duly and effectively taken; and the Bonds in the hands of the Owners thereof are and will be valid and enforceable obligations of the City in accordance with their terms. Section 10.07. Covenants Regarding Tax Exemption of Interest on "the Bonds. (a) The City covenants to take any action necessary to assure, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the City covenants as follows: (1) to take any action to assure that no more than 10 percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use," as defined in section 141(b)(6) of the Code or, ifmore than 10 percent of the proceeds or the projects financed therewith are so used, such amounts, whether or not received by the City, with respect to such private business use, do not, under the terms of this Ordinance or any San Marcos WS 2005A: Ordinance 11.16-2005 28