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the payment of the Bonds and Credit Agreements. The Agency agrees to make the payments for
<br />the Bonds and Credit Agreements when and as required by the Bond Resolution, the Credit
<br />Agreements, and this Contract, from and to the extent of capitalized interest, proceeds of the
<br />Bonds not expended for the Project, and payments made by the Sponsoring Public Entities.
<br />Section 5._7 General Covenants. Each Sponsoring Public Entity further
<br />represents, covenants and agrees that in accordance with and to the extent permitted by law:
<br />(a) Performance. It will faithfully perform at all times any and all covenants,
<br />undertakings, stipulations, and provisions contained in each ordinance or resolution authorizing
<br />the issuance of its Sponsoring Public Entity's Utility Bonds; and it will, at the time and in the
<br />manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the
<br />fund and accounts created by said ordinances, but only from and to the extent of the sources of
<br />funds and after satisfaction of all prior obligations described therein.
<br />(b) Sponsoring Public Entities' Legal Agency. It is a duly created and existing
<br />municipality of the State, or a conservation and reclamation district and political subdivision of
<br />the State, as applicable, and is duly authorized under the laws of the State to enter into this
<br />Contract, and that all action on its part for the execution and delivery of this Contract has been
<br />duly and effectively taken; and that this Contract is a valid and enforceable special obligation of
<br />the Sponsoring Public Entities in accordance with its terms.
<br />(c) Acpuisition and Construction: Operation and Maintenance. (1) It shall use its best
<br />efforts in accordance with Prudent Utility Practice to acquire and construct, or cause to be
<br />acquired and constructed, any capital improvements to its System needed for it to secure delivery
<br />of its proportionate share of treated water from the Project at the agreed Delivery Points, which
<br />shall mean and include any capital extensions, improvements, and betterments, in accordance
<br />with the plans and specifications therefor, as modified from time to time with due diligence and
<br />in a sound and economical manner; and (2) it shall at all times use its best efforts to operate or
<br />cause to be operated its System properly and in an efficient manner, consistent with Prudent
<br />Utility Practice, and shall use its best efforts to maintain, preserve, reconstruct and keep the same
<br />or cause the same to be so maintained, preserved, reconstructed and kept, with the appurtenances
<br />and every part and parcel thereof, in good repair, working order and condition, and shall from
<br />time to time make, or use its best efforts to cause to be made, all necessary and proper repairs,
<br />replacement, and renewals so that at all times the operation of its System may be properly and
<br />advantageously conducted
<br />(d) Wig. It has or will obtain lawful title, whether such title is in fee or lesser
<br />interest, to the lands, buildings, structures, and facilities constituting its System; it will defend the
<br />title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, for the
<br />benefit of the Agency and the owners of the Bonds, against the claims and demands of all
<br />persons whomsoever; and it is lawfully qualified to pledge the gross revenues of its System to
<br />the payment of the payments required by this Contract in the manner prescribed herein, and has
<br />lawfully exercised such rights.
<br />(e) Liens. It will from time to time, and before the same become delinquent, pay and
<br />discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully
<br />imposed upon its System; it will pay all lawful claims for rents, royalties, labor, materials, and
<br />supplies which if unpaid might by law become a lien or charge thereon, the lien of which would
<br />be prior to or interfere with the liens hereof, so that the priority of the lien granted hereamder
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