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User hereby covenants that so long as any Bonds are Outstanding User will not terminate <br />this Operating Agreement except as provided in this Section or Section 601 hereof Withdrawal <br />from the JPA Agreement shall not constitute a withdrawal from this Operating Agreement User <br />shall use its best efforts to maintain its existence and the existence of the Authority will not <br />dissolve or otherwise dispose of all or substantially all of its own or the Authoritys assets and <br />will not consolidate with or merge into another public agency or permit one or more public <br />agencies to consolidate with or merge into it provided however that User may dissolve <br />consolidate or merge sell or otherwise transfer to another entity all or substantially all of its <br />assets provided that the surviving resulting or transferee entity as the case may be i is a public <br />agency of the State of California or a subdivision thereof ii assumes in writing all of the <br />obligations of User under this Operating Agreement and iii provides an opinion of Bond <br />Counsel addressed to the Trustee Counties and the Authority to the effect that such dissolution <br />consolidation merger sale or transfer will not adversely affect the exclusion of interest on the <br />Bonds from gross income for federal income tax purposes and complies with the requirements <br />of this Section 407 The Authority will use its best efforts to enforce the provisions of this <br />Section 407 <br />So long as any Bonds are Outstanding the User if a Member hereby covenants not to <br />amend or modify the JPA Agreement in a manner which materially affects this Operating <br />Agreement without first obtaining an opinion of Bond Counsel that such modification or <br />amendment does not materially adversely affect the interests of the Bond Owners <br />Section 408 Payment of Claims <br />The Authority will pay and discharge any and all lawful claims for labor materials or <br />supplies which if unpaid might become a lien on the Revenues or any part thereof or on any <br />funds in the control of the Authority prior or superior to the lien of the Bonds or which might <br />impair the security of the Bonds <br />Section 409 Compliance with Contracts <br />The Authority will comply with keep observe and perform all agreements conditions <br />covenants and terms express or implied required to be performed by it contained in all contracts <br />for the use of the Project and all other contracts affecting or involving the Project to the extent <br />that the Authority is a party thereto including the contract with the initial Project vendor <br />Section 410 Insurance <br />a The Authority shall procure and maintain or cause to be procured and <br />maintained throughout the term of this Operating Agreement casualty insurance against loss or <br />damage to the Project in an amount at least equal to the lesser of replacement cost of the Project <br />or the then outstanding principal amount of the Bonds Such insurance shall as nearly as <br />practicable cover loss or damage by explosion windstorm riot aircraft vehicle damage smoke <br />fire lightning vandalism malicious mischief and such other hazards as are normally covered by <br />such insurance with extended coverage Such insurance shall not cover loss or damage by <br />seismic activity Such insurance shall be subject to such deductibles as are customarily <br />maintained by public agencies with respect to works and properties of a like character but in any <br />12 <br />Project Operating Agreement 1 117 10 <br />City Artomey Group