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(e) Liens or Encumbrances. The City will not at any time create or permit to <br /> accrue or to exist any lien or other encumbrance or indebtedness upon the System or the Revenue <br /> of the System, or any part thereof(other than the lien and charge of the outstanding Previously <br /> Refunded Bonds), prior or superior to the lien thereon for the payment of the Parity Bonds, and <br /> will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, <br /> materials or supplies which, if unpaid, might become a lien or charge upon the Revenue of the <br /> System, or any part thereof, or upon any funds in the hands of the City, prior to or superior to the <br /> lien of the Parity Bonds, or which might impair the security of the Parity Bonds. <br /> (f) Insurance. The City will keep the works, plants and facilities comprising <br /> the System insured, and will carry such other insurance, with responsible insurers, with policies <br /> payable to the City, against risks, accidents or casualties, at least to the extent that insurance is <br /> usually carried by private corporations operating like properties, or will implement a <br /> self-insurance program with reserves a dequate, i n the judgment of the C ouncil, to protect the <br /> City and the holders of the Bond against loss. In the event of any loss or damage, the City will <br /> promptly repair or replace the damaged portion of the insured property and apply the proceeds of <br /> any insurance policy for that purpose; or in the event the City should determine not to repair or <br /> reconstruct such damaged portion of the properties of the System, the proceeds of such insurance <br /> shall be paid into any Reserve Account to the extent that such transfer shall be necessary to make <br /> up any deficiency in said Reserve Account and the balance, if any, shall, at the option of the <br /> City, be used either for repairs, renewals, replacements, or capital additions to the System, for the <br /> redemption of Parity Bonds, or for deposit into the Revenue Bond Fund. <br /> (g) Books and Accounts. The City shall keep proper books of account in <br /> accordance with any applicable rules and regulations prescribed by the State of Washington. <br /> -35- P:\CMW\CMW5NP 04/22/03 <br />