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1967-11-07; Building Authority; Resolution 3
r. i . k_^Proof of November 3, 1967—J.B.Co. — Phone 627 9514 RESOLUTION NO. RESOLUTION OF THE GOVERNING BOARD OF THE CARLSBAD BUILDING AUTHORITY CONSTITUTING ITS INDENTURE PROVIDING THE TERMS AND CONDITIONS FOR THE ISSUANCE OF $460,000 PRINCIPAL AMOUNT OF CARLSBAD BUILDING AUTHORITY REVENUE BONDS BE IT RESOLVED BY THE CARLSBAD BUILDING AUTHORITY, as follows: ARTICLE I DEFINITIONS AND SECURITY SECTION 1.01. Definitions and Security. The terms defined in this section shall have the following meanings unless the context otherwise requires: Act "Act" means Article 1, Chapter 5, Division 7, Title 1 of the Government Code of the State of California (commencing with Section 6500). Bond Act "Bond Act" means Article 2, Chapter 5, Division 7, Title 1 of the Government Code of the State of California (commencing with Section 6540). City The term "City" means the City of Carlsbad, a municipal corporation duly organized and existing under the laws of the State of California. County The term "County" means the County of San Diego, a body^ corporate and politic of the State of California. Agreement "Agreement" means that certain Agreement entered into pursuant to the Act entitled: "Joint Exercise of Powers Agreement Between the City of Carlsbad and the County of San Diego Creating the Carlsbad Building Authority" under and pursuant to which the Authority has been organized. Authority The term "Authority" means the Carlsbad Building Authority, a public entity created by the Agreement pursuant to the Act. Governing Board The term "Governing Board" means the governing board of the Authority created by the Agreement. Lease The term "Lease" means the Carlsbad Civic Center Lease, covering the leasing of the Project from the Authority by the City and any amendments thereof as may be permitted hereunder. Proof'of November 3, IPfi- J.B.Co. — Phone 627 9514 Site "Site" means the land on which the Facilities described in the Lease are to be located. Facilities "Facilities" means the governmental buildings in the Civic Center in the City of Carlsbad for City Offices, City Council Chambers, Police Facilities with facilities and appurtenances necessary or con- venient for any of the foregoing, including, but not limited to, accessory structures, parking, walks and landscaping to be constructed and used pursuant to the Lease. "Facilities" includes all of the Project except the Site. Project or Leased Premises "Project" or "Leased Premises" means the Site and the Facilities thereon. Resolution The term "Resolution" means this Resolution, adopted by the Authority, which under the Bond Act, is referred to as the Indenture which provides the terms and conditions for the issuance of the Bonds. Bonds The term "Bonds" means the Carlsbad Building Authority Revenue Bonds, authorized by, and at any time outstanding pursuant to, this Resolution. Additional Bonds The term "Additional Bonds" means such other issue of Bonds, revenue notes or any other evidences of indebtedness payable out of the Revenues, ranking on a parity with these Bonds and authorized to be issued pursuant to Sections 3.05 and 3.06 hereof. Additional Bonds may be issued as Additional Serial Bonds or Additional Term Bonds. Bondholder, Holder of Bonds The term "Bondholder" or "Holder of Bonds" or any similar term means any person who shall be the bearer of any outstanding Bond: (i) payable to bearer, registered to bearer or not registered, or (ii) the registered owner or his duly authorized attorney, representative or assigns of any outstanding Bond which shall at the time be registered so as to be payable other than to bearer. For the purpose of Bondholders' voting rights or consents, issuer-owned Bonds shall not be counted. Construction Contract "Construction Contract" means the construction contract or contracts providing for the construction of the Facilities, a copy of each of which is or will be on file in the office of the City Clerk of the City. Fiscal Year The term "fiscal year" means the fiscal year as established from time to time by the City, being of the date of this Resolution, the period from July 1 to and including the following June 30. Maximum Annual Debt Service The term "Maximum Annual Debt Service" means an amount equal to the maximum amount required to be paid in any fiscal year on the then outstanding Bonds and Additional Serial Bonds and as hereinafter provided. Whenever it is necessary to calculate said Maximum Annual Debt Service, said maximum shall be deemed to be the maximum sum obtained for any fiscal year thereafter by totaling the following for each fiscal year thereafter: 2 Proof of November 3, 196^-J.B.Co Phone 627 9514 (a) The principal amount of all outstanding Serial Bonds and Additional Serial Bonds payable in such fiscal year; (b) The amount of minimum sinking fund payments for Term Bonds required to be made in such fiscal year together with the premium thereon, if any be payable; and (c) The interest which would be due during such fiscal year on the aggregate amount of Bonds which would be outstanding in such fiscal year if the bonds are retired as scheduled, but deducting and excluding from such aggregate amount the amount of Bonds already retired. Opinion of Counsel, Bond Counsel The term "opinion of counsel" means a written opinion of counsel (who may be counsel for the Authority) retained by the Authority and acceptable to the Trustee. Bond Counsel means any attorney or firm of attorneys of national and favorable reputation in the field of municipal bond finance. Any opinion of such counsel may be based upon, insofar as it relates to factual matters, information with respect to which is in the possession of the Authority, upon a certificate or opinion of, or repre- sentation by, an officer or officers of the Authority, unless such counsel knows, or in the exercise of reasonable care should have known, that the certificate or opinion or representation with respect to the matters upon which his opinion may be based, as aforesaid, is erroneous. Certificate of the Authority, Statement of the Authority, etc. The terms "Certificate of Authority," "Statement of the Authority," "Written Request of the Authority" and "Written Consent of the Authority" mean, respectively, a written certificate, statement, request or consent signed in the name of the Authority by such person as may be designated and authorized to sign for the Authority for such purpose. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. Written Requisition The term "Written Requisition" means a requisition prepared in such form or forms and signed by the City Treasurer of the City and containing the information required by this Resolution. Architect's Certificate The term "Architect's Certificate" means a certificate signed by a duly authorized officer or rep- resentative of Weber & Edwards, as Architect of the Project. City Manager's Certificate The term "Certificate" means a certificate signed by the City Manager or his duly authorized representative. Federal Securities The term "Federal Securities" means direct obligations of the United States and those for which the full faith and credit of the United States are pledged for the payment of principal and interest; bonds, consolidated bonds, collateral trust debentures, or other obligations issued by federal land banks or federal intermediate credit banks established under the Federal Farm Loan Act, as amended; deben- tures and consolidated debentures issued by the Central Bank for Cooperatives and banks for cooperatives established under the Farm Credit Act of 1933, as amended; bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act; bonds, debentures and other obligations of the Federal National Mortgage Association established under the Proof' of November 3, 1967^-J.B.Co. — Phone 627 9514 National Housing Act, as amended; and bonds of any federal home loan bank established under said Act; and, also, any securities now or hereafter authorized, both the principal of and interest on which is guaranteed directly or indirectly by the full faith and credit of the United States of America. Financial Newspaper or Journal The term "financial newspaper or journal" means The Wall Street Journal or The Daily Bond Buyer or any other newspaper or journal devoted to financial news and selected by the Trustee, whose decision shall be final and conclusive. Supplemental Resolution The term "supplemental resolution" means any resolution at any time in full force and effect which has been duly adopted by the Authority under the Bond Act, or any act supplementary thereto or amendatory thereof, at a meeting ot the Authority duly convened and held, at which a quorum was present and acted thereon, amendatory of or supplemental to this Resolution, but only if and to the extent that such supplemental resolution is specifically authorized hereunder. Trustee The term "Trustee" means the United States National Bank, or its successor for the time being as Trustee hereunder. The Trustee shall act as fiscal agent hereunder. SECTION 1.02. Security. Pursuant to the Bond Act and this Resolution the outstanding and unpaid Bonds shall be and are equally secured by a pledge of and lien upon the Revenues as defined in this Resolution, and so long as any of such Bonds or interest coupons thereof are outstanding and unpaid, such Revenues and the interest thereon may be used only as provided in this Resolution, unless the authority to make other use of such Revenues shall be authorized by the Bondholders pursuant to the provisions of this Resolution, and during such period the Agreement shall be irrevocable and may not be amended or modified in any manner to the detriment of the Bondholders. Any Bond for the payment and discharge of which upon maturity, or upon redemption prior to maturity, provision has been made through the setting apart in a reserve fund or special trust account created pursuant to this Resolution or otherwise to insure the payment thereof, of money sufficient for the purpose or through the irrevocable segregation for that purpose in some sinking fund or other fund or trust account of moneys sufficient therefor, shall be deemed to be no longer outstanding and unpaid within the meaning of any provisions of this Resolution. This Resolution, including, without limitation, all covenants and agreements herein set forth to be performed on behalf of the Authority shall be for the equal and proportionate benefit, security and protection of all Holders of such Bonds and interest coupons without preference, priority or distinction, as to security or otherwise, of any of such Bonds or interest coupons over any of the others by reason of time of issue, sale or negotiation thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein. The term "Revenues" as used in this Resolution shall include: First: Revenues derived from the operation of the Project, to wit: (a) All rental and other income received by the Authority as lessor under the Lease, and/or (b) All rental and other income of any type and nature derived by the Authority from the use and operation of the Project if the same is operated by the Authority in case of default by the City. Second: Certain other revenues, to wit: (a) Any damages received under the terms of the Construction Contract that are not part of the cost of the Project under Section 3.04, and/or Prooi of November 3, 19wT—JJB.Co.— Phone 627 9514 (b) Any interest or other income derived from the investment of the funds herein provided for that are not part of the Construction Fund under Section 3.03. Third: All rentals and other income of any type and nature received by the Authority as lessor or otherwise from improvements to or additions to or extensions of the Project later constructed or made. This Resolution fixes the terms and conditions of the Bonds and in its articles, sections and clauses thereof makes such provision and covenants as are valid under the Constitutions of the State of California and the United States of America and are deemed necessary or desirable to facilitate the issuance and sale of the Bonds and for the protection or security of the Holders thereof. Bonds issued under this Resolution shall not constitute a debt, liability or obligation of any of the public agencies (City of Carlsbad and County of San Diego) who are parties to the Agreement creating the Authority. Nothing in this Resolution or in any subsequent resolution shall preclude: (a) the Authority from providing, subject to the limitations in Section 6.15, for the issuance, sale or exchange of refunding Bonds, revenue notes or any other evidences of indebtedness payable out of the Revenues for the purpose of redeeming or retiring prior to maturity any of such Bonds which are subject to call and redemption prior to maturity and from providing for the payment of said Bonds from proceeds of such refunding Bonds issued under the Bond Act as the same now exists or as hereafter amended, or under any other law of the State of California; or (b) the issuance of Additional Bonds, revenue notes or any other evidences of indebtedness payable out of the Revenues pursuant to Sections 3.05 and 3.06 and subject to the limitations thereof, ranking on a parity with said Bonds. ARTICLE II THE BONDS SECTION 2.01. Authorization. Bonds of the Authority are hereby authorized to be issued under and subject to the terms of this Resolution for the object and purpose of providing the funds required for the acquisition, construction and financing of the Project, including expenses incidental thereto or connected therewith. The Bonds are designated as the "Carlsbad Building Authority Revenue Bonds." The Bonds may be sold in one issue or in such series as from time to time shall be established and authorized by the Authority, subject to the conditions and limitations herein contained. SECTION 2.02. Terms of Bonds. The Bonds to be issued under this Resolution, shall be in aggregate principal amount of $460,000 and such issue of Bonds is hereby created. Said Bonds shall be known as the "Carlsbad Building Revenue Bonds". The Bonds may be initially issued in the form of coupon Bonds, registrable as to principal only, in the denomination of $5,000 each, or in fully registered form without coupons, in denominations of $5,000 each or any multiple thereof. The coupon Bonds shall be dated as of December 15, 1967, shall be numbered 1 to 92 inclusive. The Bonds shall bear interest from their dates payable semiannually on the fifteenth day of June and the fifteenth day of December in each year and mature on December 15 in the amounts and on the dates as follows: Maturity Principal Maturity Principal Date Amount Date Amount 1968 $ 5,000 1974 $ 10,000 1969 10,000 1975 10,000 1970 10,000 1976 10,000 1971 10,000 1977 15,000 1972 10,000 1978 20,000 1973 10,000 1992 340,000 Proof'of November 3, 1967*^- J.B.Co. — Phone 627 9514 The Bonds maturing in the years 1968 to 1978, inclusive are herein sometimes referred to as "Serial Bonds", the Bonds maturing in the year 1992 are herein sometimes referred to as "Term Bonds". The interest coupons attached to the Bonds shall be numbered in consecutive numerical order y> from 1 upwards in the order of their respective maturities. Each such coupon shall represent six (6) \ months' interest on the Bond to which it is attached. Both the principal of and interest on the Bonds shall be payable at the Main Office of the Trustee, the United States National Bank, in the City of San Diego, California, or, at the option of the Holder, at the offices of the Paying Agents of the Authority in the City of Los Angeles, California, the City and County of San Francisco, California, the City of New York, New York, or the City of Chicago, Illinois, in lawful money of the United States of America. The fully registered Bonds shall be numbered by Trustee as Trustee shall determine and shall be dated as of the date of authentication thereof, except that in the case of registered Bonds issued in exchange for other registered Bonds and in the case of exchanges of coupon Bonds for registered Bonds shall be dated so that no gain or loss of interest shall result from such exchange or transfer. Each fully registered Bond shall bear interest from the interest payment date next preceding the date thereof unless it is dated as of an interest payment date, in which event it shall bear interest from the date thereof, or unless it is dated prior to the first interest payment date, in which event it shall bear interest from December 15, 1967. Interest on fully registered Bonds shall be paid by the Trustee (out of funds provided for that pur- pose by the Authority) by check or draft mailed to the registered owner at his address as it appears on the register kept by the Trustee pursuant to Section 2.08 of this Resolution. The Bonds shall be subject to redemption prior to their respective stated maturities as provided in Article IV. SECTION 2.03. Forms of Bonds. The coupon Bonds, the interest coupons to be attached thereto, the registration certificate to appear thereon, the registered Bonds without coupons, the Trustee's certi- ficate of authentication endorsed on the registered Bonds, the registration to appear on registered Bonds, and the Assignment shall be in substantially the forms hereinafter set forth with necessary or appropriate variations, omissions and insertions, as permitted or required by this Resolution. The recitals of regularity of proceedings in the Bonds issued and sold under this Resolution shall be conclusive evidence of compliance with the provisions of the Bond Act and of the validity of such Bonds. [FORM OF COUPON BOND] No $5,000 CARLSBAD BUILDING AUTHORITY REVENUE BOND CARLSBAD BUILDING AUTHORITY, a duly constituted public entity and public agency created by the City of Carlsbad and County of San Diego in the State of California (herein called the "Authority"), for value received, hereby promises to pay (but only out of the Revenues herein- after referred to) to the bearer hereof, or, if this Bond be registered, to the registered owner hereof, on , 19 (subject to the right of prior redemption hereinafter men- tioned), the principal sum of Five Thousand Dollars ($5,000), together with interest thereon from the date hereof until the principal hereof shall have been paid, or provided for, in accordance with the Resolution hereinafter referred to, at the rate of per cent ( %) per annum, payable semiannually on June 15 and December 15 in each year. Interest due on or before the maturity of this Bond shall be payable only according to the tenor, and upon presentation and surrender, of the annexed interest coupons as they severally become due. Both the principal hereof and interest hereon are payable at the Main Office of the Trustee, United States National Bank, in the City of San Diego, California, or, at the option of the Holder, at the offices of the Paying Agents of the Authority in the City of Los Angeles, California, the City and County of San Francisco, California, the City of New York, New York, or the City of Chicago, Illinois, in lawful money of the United States of America. 6 Prooi of November 3, 1967 —- J.B.Co.—Phone 627 9514 This Bond is one of a duly authorized issue of Carlsbad Building Authority Revenue Bonds (herein called the "Bonds") aggregating $460,000 in principal amount. Said issue of Bonds is regu- larly issued pursuant to the provisions of Article 2 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (herein called the "Bond Act"), and pursuant to a Resolution of the Authority authorizing the issuance of the Bonds (herein called the "Resolution") entitled: "Resolution of the Governing Board of the Carlsbad Building Authority Constituting Its Indenture Providing the Terms and Conditions for the Issuance of $460,000 Principal Amount of Carlsbad Building Authority Revenue Bonds". Reference is hereby made to the Resolution (a copy of which is on file at said office of the Trustee and the office of the City Clerk of the City of Cudahy), to any resolutions supplemental thereto and to the Bond Act for a description of the terms and conditions under which the Bonds are issued, the provisions with regard to Revenues, as that term is defined in the Resolution, and the rights of the Holders and registered owners of the Bonds issued in negotiable form and of the bearers of the appurtenant coupons and the rights of the owners of Bonds issued in fully registered form; and all the terms of the Resolution and the Bond Act are hereby incorporated herein and constitute a contract between the Authority and the Holder from time to time of this Bond, and to all the provisions thereof the Holder of this Bond, by his acceptance hereof, consents and agrees. This Bond and the interest hereon and all other Bonds and the interest thereon (to the extent set forth in the Resolution) are payable from, and are secured by a pledge of and lien upon, the Revenues derived by the Authority from the Project (as that term is defined in the Resolution), and all such Revenues constitute a trust fund, in accordance with the provisions of the Resolution and the Bond Act, for the security and payment or redemption of, and for the security and pay- ment of interest on, the Bonds. This Bond is a special obligation of the Authority only, and is not a liability of any other public agency, or a pledge of or lien against the property or funds of the Authority, except to the extent of the pledge of and lien upon the Revenues, as provided by the Resolution. Neither the payment of the principal of this Bond, or any part thereof, nor any interest or premium thereon constitute a debt, liability or obligation of the City of Carlsbad or the County of San Diego, the public agencies who are parties to the Agreement creating the Authority. The Bonds of the issue of which this Bond is one are redeemable prior to maturity in the event of loss of or damage to or condemnation of the Project on any succeeding date, as more fully set out in the Resolution, for the principal amount thereof and accrued interest to the date of redemption plus the premium applicable thereto, as hereinafter set forth in the succeeding paragraph regardless of maturity dates relating to call therein, at the option of the Authority, as a whole or in part but only in the manner and only from the funds as provided in said Resolution. Except as set forth in the preceding paragraph, Bonds maturing on or prior to December 15, 1978, are not subject to call and redemption prior to maturity. Bonds maturing on or after Decem- ber 15, 1979, are subject to call and redemption prior to maturity, at the option of the Authority as a whole, or in part in inverse order of maturity and by lot within a single maturity, from funds derived by the Authority from any source, on December 15, 1978, or on any interest payment date thereafter, upon payment of a redemption price equal to the principal amount thereof plus a premium equal to one-half of one percent plus an additional one-fourth of one percent for each year or fraction of a year from the redemption date to the maturity date of the Bonds, but in no event shall the premium exceed four percent (4%); provided, however, the Bonds maturing on December 15, 1992 are subject to call and redemption prior to maturity, at par, from moneys in the Sinking Fund, in the manner and subject to the terms and provisions, and with the effect set forth in the Resolution. Notice of call and redemption prior to maturity shall be given as provided in the Resolution. The Bonds are issuable as coupon Bonds, registrable as to principal only, in the denomination of $5,000, or as fully registered Bonds without coupons in denominations of $5,000 or any cProof of November 3, 196T^-J.B.Co. -•Phone 627 9514 multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Resolution, registered Bonds without coupons may be exchanged for a like aggregate princi- pal amount of coupon Bonds bearing all unmatured coupons or for a like aggregate principal amount of registered Bonds without coupons of other authorized denominations of the same series, interest rate or rates and maturity or maturities and coupon Bonds bearing all unmatured coupons may be exchanged for a like aggregate principal amount of registered Bonds without coupons of authorized denominations, of the same series, interest rate or rates and maturity or maturities. This Bond is negotiable and transferable by delivery unless registered as to principal in the name of the Holder. This Bond may be registered as to principal in the name of the Holder on books of the Authority kept at the Main Office of the Trustee in the City of Los Angeles, California, upon presentation hereof to the Trustee, such registration to be made on such books and endorsed hereon by the Trustee. After such registration no transfer hereof shall be valid unless made on said books at the request of the registered owner or his duly authorized attorney and similarly noted hereon. This Bond may be discharged from registration by like transfer to bearer and thereby trans- ferability by delivery shall be restored, but this Bond shall again be subject to successive registrations and transfers as before. The principal of this Bond, if registered, unless registered to bearer, shall be payable only to or upon the order of the registered owner or his legal representative. Notwith- standing the registration of this Bond as to principal, the coupons shall remain payable to bearer and shall continue to be transferable by delivery. The rights and obligations of the Authority and of the Holders and registered owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms pro- vided in the Resolution, but no such modification or amendment shall (a) extend the maturity of the principal of or interest on this Bond, or (b) reduce the principal amount or redemption price or rate of interest hereon, or (c) reduce the percentage of Bonds required for the written consent to an amendment or modification, all as more fully set forth in the Resolution. It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Bond Act and the laws of the State of California, and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Bond Act or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Resolution. IN WITNESS WHEREOF, THE CARLSBAD BUILDING AUTHORITY has caused this Bond to be executed in its name and on its behalf with the signature of its Chairman and the countersignature of its Auditor and the seal of the Authority to be imprinted hereon, and the interest coupons attached hereto to be executed with the facsimile signature of its Treasurer, all as of the fifteenth day of December, 1967. CARLSBAD BUILDING AUTHORITY By Chairman (Seal) Countersigned: Auditor Proof of November 3,— J.B.CO. — Phone 627 9514 [FORM OF INTEREST COUPON] CARLSBAD BUILDING AUTHORITY, on unless the Bond herein mentioned shall have been called for previous redemption and payment of the redemption price duly provided for, will pay (but only out of the Revenues referred to in said Bond) to bearer at the Main Office of the Trustee, United States National Bank, in the City of San Diego, California, or, at the option of the Holder, at the offices of the Paying Agents of the Authority in the cities of Los Angeles and San Francisco, California, New York, New York, or Chicago, Illinois, upon surrender hereof, the sum set forth herein in lawful money of the United States of America, being interest then due on its CARLSBAD BUILDING AUTHORITY REVENUE BOND, dated December 15, 1967. 1, 19...., $- No Coupon No Auditor [FORM OF CERTIFICATE OF REGISTRATION] [Note: There must be no writing in the space below except by the Trustee.] Date of Registration Name of Registered Owner Address of Registered Owner Signature of Trustee [FORM OF FULLY REGISTERED BOND] Fully Registered Bond No Coupon Bond Nos CARLSBAD BUILDING AUTHORITY REVENUE BOND CARLSBAD BUILDING AUTHORITY, a duly constituted public entity and public agency created by the City of Carlsbad and the County of San Diego in the State of California (herein called the "Authority"), for value received, hereby promises to pay (but only out of the revenues hereinafter referred to) to or registered assigns (subject to the right of prior redemption hereinafter mentioned), the principal sum of Dollars ($ ), being bonds maturing on December 15 as follows: Maturity Date Amount Rate Maturity Date Amount Rate Proof of November 3, 19iM—J.B.Co. — Phone 627 9514 together with interest thereon from the interest payment date next preceding the date hereof (unless the date hereof is prior to June 15, 1968, in which event from December 15, 1967, or f r>«- unless this Bond is dated June 15 or December 15, in which event from the date hereof) until the ^^ principal hereof shall have been paid, or provided for, in accordance with the Resolution hereinafter referred to, at the rate or rates above indicated, payable semiannually on June 15 and December 15 in each year. Both the principal hereof and interest hereon are payable at the Main Office of the Trustee, United States National Bank, in the City of San Diego, California, or, at the option of the Holder, at the offices of the Paying Agents of the Authority in the City of Los Angeles, California, the City and County of San Francisco, California, the City of New York, New York, or the City of Chicago, Illinois, in lawful money of the United States of America. This Bond is one of a duly authorized issue of Carlsbad Building Authority Revenue Bonds (herein called the "Bonds") aggregating $460,000 in principal amount. Said issue of Bonds is regularly issued pursuant to the provisions of Article 2 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (herein called the "Bond Act"), and pursuant to a Resolution of the Authority authorizing the issuance of the Bonds (herein called the "Resolu- tion") entitled: "Resolution of the Governing Board of the Carlsbad Building Authority Con- stituting Its Indenture Providing the Terms and Conditions for the Issuance of $460,000 Principal Amount of Carlsbad Building Authority Revenue Bonds". Reference is hereby made to the Resolution (a copy of which is on file at said office of the Trustee and the office of the City Clerk of the City of Carlsbad), to any resolutions supplemental thereto and to the Bond Act for a descrip- tion of the terms and conditions under which the Bonds are issued, the provisions with regard to the Revenues, as that term is defined in the Resolution, and the rights of the Holders and registered owners of the Bonds issued in negotiable form and the bearers of the appurtenant coupons and the rights of the owners of Bonds issued in fully registered form; and all the terms of the Resolution and the Bond Act are hereby incorporated herein and constitute a contract between the Authority and the registered owner of this Bond, and to all the provisions thereof the registered owner of this Bond, by his acceptance hereof, consents and agrees. This Bond and the interest hereon and all other Bonds and the interest thereon (to the extent set forth in the Resolution) are payable from, and are secured by a pledge of and lien upon, the Revenues derived by the Authority from the Project (as that term is defined in the Resolution), and all such Revenues constitute a trust fund, in accordance with the provisions of the Resolution and the Bond Act, for the security and payment or redemption of, and for the security and pay- ment of interest on, the Bonds. This Bond is a special obligation of the Authority only, and is not a liability of any other public agency, or a pledge of or lien against the property or funds of the Authority, except to the extent of the pledge of and lien upon the Revenues, as provided by the Resolution. Neither the payment of the principal of this Bond, or any part thereof, nor any interest or premium thereon constitute a debt, liability or obligation of the City of Carlsbad, or the County of San Diego, the public agencies who are parties to the Agreement creating the Authority. The Bonds of the issue of which this Bond is one are redeemable prior to maturity in the event of loss of or damage to or condemnation of the Project on any succeeding date, as more fully set out in the Resolution, for the principal amount thereof and accrued interest to the date of redemption plus the premium applicable thereto, as hereinafter set forth in the succeeding paragraph regardless of maturity dates relating to call therein, at the option of the Authority, as a whole or in part but only in the manner and only from the funds as provided in said Resolution. Except as set forth in the preceding paragraph, Bonds maturing on or prior to December 15, 1978, are not subject to call and redemption prior to maturity. Bonds maturing on or after December 15, 1979, are subject to call and redemption prior to maturity, at the option of the Authority, as a whole, or in part in inverse order of maturity and by lot within a single maturity, 10 Proof of November 3, 19fl"K— J.B.Co. — Phone 627 9514 from funds derived by the Authority from any source, on December 15, 1978, or on any interest payment date thereafter, upon payment of a redemption price equal to the principal amount thereof plus a premium equal to one-half of one percent plus an additional one-fourth of one percent for 6 each year or fraction of a year from the redemption date to the maturity date of the Bonds, but in no event shall the premium exceed four percent (4%); provided, however, the Bonds maturing on December 15, 1992 are subject to call and redemption prior to maturity, at par, from moneys in the Sinking Fund, in the manner and subject to the terms and provisions, and with the effect set forth in the Resolution. Notice of call and redemption prior to maturity shall be given as provided in the Resolution. The Bonds are issuable as coupon Bonds, registrable as to principal only, in the denomination of $5,000, or as fully registered Bonds without coupons in denominations of $5,000 or any multiple thereof. Subject to the limitations and upon payment of the charges, if any, provided in the Resolution, registered Bonds without coupons may be exchanged for a like aggregate principal amount of coupon Bonds bearing all unmatured coupons or for a like aggregate principal amount of registered Bonds without coupons of other authorized denominations, of the same series, interest rate or rates, maturity or maturities, and coupon Bonds bearing all unmatured coupons may be exchanged for a like aggregate principal amount of registered Bonds without coupons of authorized denominations of the same series, interest rate or rates, and maturity or maturities. This Bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at the Main Office of the Trustee in the City of San Diego, California, but only in the manner, subject to the limitations and upon payment of the charges provided in the Resolution, and upon surrender and cancellation of this Bond. Upon such transfer a new registered Bond of authorized denomination or denominations of the same series, interest rate or rates, ma- turity or maturities, for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Authority, the Trustee and any Paying Agent may treat the registered owner hereof as the absolute owner hereof for all purposes, and the Authority, the Trustee and any Paying Agent shall not be affected by any notice to the contrary. The rights and obligations of the Authority and of the Holders and registered owners of the Bonds may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Resolution, but no such modification or amendment shall (a) extend the maturity of the principal of or interest on this Bond, or (b) reduce the principal amount or redemption price or rate of interest hereon, or (c) reduce the percentage of Bonds required for the written consent to an amendment or modification, all as more fully set forth in the Resolution. It is hereby certified that all of the conditions, things and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time, form and manner as required by the Bond Act and the laws of the State of California, and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Bond Act or any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Resolution. This Bond shall not be entitled to any benefit under the Resolution, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been signed by the Trustee. IN WITNESS WHEREOF, THE CARLSBAD BUILDING AUTHORITY has caused this Bond to be executed in its name and on its behalf with the signature of its Chairman and the countersignature of its Auditor and the seal of the Authority to be imprinted hereon, all as of the day of , 19 11 Proof'of NoVfember 3, 1967*— J.B.Co. — Phone 627 9514 CARLSBAD BUILDING AUTHORITY By Chairman (Seal) Countersigned: Auditor [FORM OF CERTIFICATE OF AUTHENTICATION ON REGISTERED BONDS] This is one of the Bonds described in the within-mentioned Resolution. UNITED STATES NATIONAL BANK, as Trustee By- A uthorized Officer [FORM OF ENDORSEMENT ON REGISTERED BONDS] This registered Bond, issued in fully registered form without coupons, is issued in lieu of or in exchange for coupon Bond(s) of this same issue of the denomination of $5.000 and bearing the coupon Bond numbers shown on the face hereof, each not contemporaneously outstanding, aggregating the face value hereof; and coupon Bonds of this same issue and of the denomination of $5,000 and bearing the numbers above referred to, have been reserved and will be issued in exchange for this Bond in the manner, with the effect and under the terms and conditions stated on the face of the Bond and in the Resolution referred to therein. [FORM OF ASSIGNMENT] For value received hereby sell, assign and transfer unto the within-mentioned Bond and hereby irrevocably constitute and appoint attorney, to transfer the same on the books of the Trustee with full power of substitution in the premises. Dated: NOTE: The signature to this Assignment must correspond with the name as written on the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever. [FORM OF ENDORSEMENT] PAYMENTS ON ACCOUNT OF PRINCIPAL No writing below except by the Trustee or by the registered owner of this bond. Amount of Bond Numbers Balance of Bond Numbers Redemption Principal of Principal ofDate Paid Bonds Paid Unpaid Bonds Unpaid Signature 12 Proof of November 3, iP— J.B.Co. — Phone 627 9514 SECTION 2.04. Execution of Bonds. All of the Bonds shall be executed in the name and on behalf of the Authority and under its seal with the signature of the Chairman of the Authority and the countersignature of the Auditor of the Authority. Either such signature or such countersignature may be printed, lithographed, engraved or otherwise mechanically reproduced, but one of them shall be manually affixed to each Bond by the Chairman or the Auditor, as determined by the Authority. The seal of the Authority may be printed, engraved, stamped or otherwise placed in facsimile form on the Bonds. The coupons to be attached to the Bonds shall bear the facsimile signature of the Auditor of the Authority. In case any such officer whose signature or countersignature appears on the Bonds or coupons shall cease to be such officer before the Bonds so signed shall have been delivered, such signature or countersignature shall nevertheless be valid and sufficient for all purposes the same as if he had remained in office until the delivery of the Bonds, and such Bonds shall be issued and outstanding hereunder and shall be as binding upon the Authority as though the person who signed such Bonds had been such official on the date borne by the Bonds and on the date of delivery. Also, any Bond or coupons may be signed and sealed on behalf of the Authority by such person as at the actual date of execution of such Bond shall be the Chairman or Auditor of the Authority, as the case may be, although on the date borne by such Bond such person shall not have been such official. Bonds issued in registered form shall bear thereon a certificate of authentication, executed by the Trustee, in order to be or become valid or obligatory for any purpose or entitled to the benefits of this Resolution. Such certificate of the Trustee shall be conclusive evidence that the Bonds issued in registered form and so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Resolution. Prior to the delivery of any coupon Bond, all coupons thereon then matured shall be detached and cancelled by the Trustee and delivered to or upon the order of the Authority. SECTION 2.05. Transfer and Registration of Coupon Bonds. All coupon Bonds shall be nego- tiable and transferable by delivery, unless registered as to principal in the manner hereinafter provided. The Holder of any coupon Bond may have the ownership of the principal thereof registered on the books required to be kept pursuant to the provisions of Section 2.08, and such registration shall be noted on the Bond. After such registration no transfer shall be valid unless made on said books at the request of the registered owner or by his duly authorized attorney and similarly noted on the Bond; but such Bond may be discharged from registration by being in like manner transferred to bearer and thereupon negotiability and transferability by delivery shall be restored; and such Bond may again and from time to time be registered or transferred to bearer, as before. Such registration, however, shall not affect the negotiability of the coupons, and every such coupon shall continue to be negotiable and transferable by delivery merely and shall remain payable to bearer, and payment thereof to bearer shall fully discharge the Authority and the Trustee in respect of the interest therein mentioned, whether or not the Bond therein mentioned be at the time registered as to principal. All transfers, registrations and discharges from registration of coupon Bonds pursuant to this section shall be made under such reasonable regulations as the Trustee may prescribe and shall be without expense to the Holder of the Bonds, except that any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Bondholder requesting such transfer, registration or discharge from registration, as a condition precedent to the exercise of such privilege. As to any coupon Bond registered as to principal, the person in whose name the same shall be registered shall be deemed the owner thereof for all purposes of this Resolution and payment of or on account of the principal of such Bond shall be made only to or upon the order in writing of such registered owner, but such registration may be changed as hereinbefore provided. All such payments 13 Proof'of November 3, 196-J.B.Co.— Phone 627 9514 shall be valid and effectual to satisfy and discharge liability upon such Bond to the extent of the sum or sums so paid. The Authority, the Trustee and any Paying Agent may treat the bearer of any Bond which shall not at the time be registered as to principal, whether or not such Bond shall be overdue, > and the bearer of any coupon, whether or not the Bond to which such coupon shall appertain shall at the time be registered as to principal and whether or not such coupon shall be overdue, as the absolute owner of such Bond or coupon for the purpose of receiving payment thereof and for all other purposes whatsoever, and the Authority, the Trustee and any Paying Agent shall not be affected by any notice to the contrary. SECTION 2.06. Tra/w/er of Registered Bonds. Any fully registered Bond without coupons may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such fully registered Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond shall be issued under this Resolution as a fully registered Bond without coupons, there shall be reserved by the Authority unissued an aggregate principal amount of coupon Bonds, of the same series, interest rate or rates and maturity or maturities and of the denomination of $5,000 each, equal to the principal amount of such registered Bond. Whenever any fully registered Bond shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and deliver a new fully registered Bond or Bonds without coupons, of the same series, interest rate or rates and maturity or maturities and for a like aggregate principal amount. Trustee shall require the payment by the Bondholder requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. No transfers of fully registered Bonds shall be required to be made during the fifteen (15) days next preceding each interest payment date. SECTION 2.07. Exchange of Bonds. Fully registered Bonds without coupons may be exchanged at the Main Office of the Trustee in the City of San Diego, California, for a like aggregate principal amount of coupon Bonds of the same series, interest rate or rates and maturity or maturities (or for a like aggregate principal amount of fully registered Bonds of other authorized denominations of the same series, interest rate or rates and maturity or maturities), and coupon Bonds may be exchanged at said office of the Trustee for a like aggregate principal amount of fully registered Bonds of authorized denominations of the same series, interest rate or rates and maturity or maturities. All coupon Bonds surrendered for exchange and delivered in exchange shall have attached thereto all unmatured coupons appertaining thereto (and any matured coupons but unpaid). Trustee shall require the payment by the Bondholder requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. No such exchange shall be required to be made during the fifteen (15) days next preceding each interest payment date. SECTION 2.08. Bond Register. The Trustee will keep or cause to be kept at its Main Office in the City of San Diego, California, sufficient books for the registration and transfer of the Bonds, which shall at all times be open to inspection by the Authority; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said register, Bonds as hereinbefore provided. SECTION 2.09. Temporary Bonds. Any series of Bonds issued under this Resolution may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The tempo- rary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Authority, shall be without coupons and may contain such reference to any of the 14 Proof of Novemjier 3, 19>K— J.B.Co Phone 627 9514 provisions of this Resolution as may be appropriate. Every temporary Bond shall be executed by the Authority and be authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive fully registered Bonds. If the Authority issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Main Office of the Trustee in the City of San Diego, California, and the Trustee shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive coupon Bonds or definitive fully registered Bonds without coupons of authorized denominations of the same series, interest rate or rates and maturity or maturities. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Resolution as definitive Bonds of the same series delivered hereunder. SECTION 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated the Authority, at the expense of the owner of said Bond, shall execute, and the Trustee shall thereupon deliver, a new Bond of like tenor and number (having annexed appropriate coupons corresponding to those, if any, annexed to the mutilated Bond) in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated together with any unpaid coupons thereto appertaining. [Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and redelivered to, or upon the order of, the Authority.] If any Bond shall be lost, destroyed or stolen, evi- dence of such loss, destruction or theft may be submitted to the Authority and the Trustee and, if such evidence be satisfactory to both and indemnity satisfactory to them shall be given, the Authority, at the expense of the owner, shall execute, and the Trustee shall thereupon deliver, a new Bond of like tenor and numbered as Trustee shall determine (having annexed appropriate coupons corresponding to those, if any annexed to the lost, destroyed or stolen Bond) in lieu of and in substitution for the Bond so lost, destroyed or stolen. The Trustee may require payment of an appropriate fee for each new Bond issued under this section and of the expenses which may be incurred by the Authority and the Trustee in the premises. Any Bond or coupon issued under the provisions of this section in lieu of any Bond or coupon alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits of this Resolution with all other Bonds and coupons of the same issue secured by this Resolution. Neither the Authority nor the Trustee nor any Paying Agent shall be required to treat both the original Bond and any duplicate Bond as being outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds outstanding hereunder, but both the original and duplicate Bond shall be treated as one and the same. ARTICLE III DISPOSITION OF BOND PROCEEDS SECTION 3.01. Issuance of Bonds. At any time after the adoption of this Resolution, the Authority may order the Trustee to deliver the Bonds. SECTION 3.02. Creation of Funds. The Trustee shall establish, maintain and hold in trust seven separate funds which are hereby created for the purpose of this Resolution as follows: (a) Construction Fund. The Construction Fund pursuant to Section 3.04. (b) Revenue Fund. The Revenue Fund pursuant to Section 5.01. (c) Interest Fund. The Interest Fund pursuant to Section 5.02. (d) Retirement Fund. The Retirement Fund pursuant to Section 5.02. (e) Sinking Fund. The Sinking Fund pursuant to Section 5.02. (f) Reserve Fund. The Reserve Fund pursuant to Section 5.02. (g) Working Capital Fund. The Working Capital Fund pursuant to Section 5.02. (h) Operation and Maintenance Fund. The Operation and Maintenance Fund pursuant to Section 5.02. 15 • ' - C. Proof' of November 3, 1967*^- J.B.Co. — Phone 627 9514 SECTION 3.03. Application of Proceeds of Bonds. The proceeds received by the Authority from the sale of the Bonds shall be deposited with the Trustee, who shall forthwith set aside such proceeds (except premium and accrued interest which shall be credited directly to the Interest Fund), in the Construction Fund, from which the following amounts shall be allocated and deposited in the following y£~ respective funds: -^ (a) The Trustee shall set aside in the Reserve Fund an amount equal to one-half of the Maximum Annual Debt Service on the outstanding Bonds. (b) The Trustee shall set aside in the Interest Fund an amount, which together with premium and accrued interest, if any, shall be equal to six (6) months' interest from the date of the Bonds. (c) The Trustee shall set aside in the Working Capital Fund the sum of one thousand five hundred dollars ($1,500). There shall also be deposited, transferred to, or held in the Construction Fund by the Trustee: (i) Any monthly rent which may be paid by the City with respect to any portion of the Project prior to completion of the entire Project. (ii) All interest and other income earned on stated moneys in the following funds held by the Trustee under the provisions of this Resolution for periods prior to completion of the entire Project: (1) the Construction Fund, or (2) the Reserve Fund under Section 5.02(c) if such a transfer is requested by the Authority, or (3) the Interest Fund moneys transferred pursuant to Section 3.03. (iii) Any moneys received from the Authority. (iv) Any moneys to the extent received by the Trustee from any other source (including, without limitation, any moneys donated for such purpose and moneys received pursuant to Sections 6.02 and 6.04) for the payment of the cost of the Project. (d) The Governing Board of the Authority may at any time, after the elapse of six (6) months from the date of the Bonds, direct the Trustee to transfer to the Interest Fund all or any part of the interest due on the Bonds for the next twelve (12) months' period beginning six (6) months after the date of the Bonds to the extent that moneys are available in the Construction Fund; provided, however, that the sum in the Interest Fund immediately following the date of completion of construction which has been obtained from Bond proceeds shall not exceed a sum representing twelve (12) months' interest following completion of construction. There shall be paid by the Authority to the Trustee for credit to the Construction Fund any moneys described in the foregoing clauses of this paragraph. SECTION 3.04. Construction Fund. A. The moneys in the Construction Fund shall be applied to the payment of the cost of the acquisition, construction and financing of the Project including any or all expenses incidental thereto or connected therewith, including, but without limiting the generality of the foregoing, the costs of surveys, preparation of plans and specifications, acquisition of lands and other property, engineering, inspection and administrative costs, legal and financial consultants fees, taxes levied on Authority, if any, expenses, compensation and indemnification of the Trustee and costs of the issuance and sale of the Bonds, and including the reimbursement of the City for any of the foregoing costs and expenses whether the same were incurred before or after the adoption of this Resolution. B. Payments from the Construction Fund shall be made in accordance with the provisions of this section. Before any such payment shall be made by the Trustee there shall be filed with the Trustee: (a) A Written Requisition stating in respect to each payment to be made, (i) The item of the payment; (ii) the name of the person to whom payment is due; 16 Proof of November 3, IWf— J.B.Co. — Phone 627 9514 (iii) The amount to be paid; (iv) The purpose, by general classification, for which the obligation to be paid was incurred; V* (v) That the obligation or obligations in the stated amount or amounts have been t incurred by or on behalf of the Authority, and that each item thereof is a proper charge against moneys in the Construction Fund and has not been paid; and (vi) That there has not been filed with or served upon the Authority or City notice of any lien, right to lien, or attachment upon, or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such Written Requisition, which has not been released or will not be released simultaneously with such payment, other than materialmen's or mechanics' liens accruing by mere operation of law which will not be released until final payment is made. (b) In the case of each payment made under the Construction Contract the Written Requisi- tion shall state that an Architect's Certificate, if applicable, and a City Manager's Certificate is on file with the City, certifying approval thereof and further certifying that insofar as such obligation was incurred for work, materials, equipment and supplies, such work was actually performed, or such materials, equipment or supplies were actually installed, in furtherance of the construction of the Project or delivered at the Site of the work for that purpose, or delivered for storage or fabrication at a place or places approved by City. C. Upon receipt of each such Written Requisition (with Architect's Certificate attached, if the same is so required), the Trustee shall pay the amount set forth in such Written Requisition as directed by the terms thereof. D. When the Project shall have been completed, a Certificate of the City, as agent for the Authority, stating the fact and date of such completion and stating that all of such cost of construction and incidental expenses have been determined and paid, or payment thereof duly provided for by moneys set aside by the Trustee for that purpose, together with an Architect's Certificate stating the fact and date of such completion, shall be delivered to the Trustee by the City. E. Upon receipt of such Certificate, the Trustee shall transfer anv remaining balance in the Construction Fund as follows: (1) First, to the Reserve Fund to the extent necessary to maintain said fund in an amount at least equal to one-half of the Maximum Annual Debt Service. (2) Second, any remaining balance after the transfer to the Reserve Fund shall be transferred or held by the Trustee as directed by resolution of the Governing Board of the Authority in its sole discretion in the amounts and for the following purposes: (i) An amount to the Interest Fund which, together with other moneys in such fund, shall not exceed a sum representing Bond interest to accrue to a date twelve (12) months following completion of construction. Whether or not such transfer is made, whatever sum remains in said Interest Fund which has been obtained from Bond proceeds and is not required to pay the next succeeding Bond interest payment following completion of construction and does not exceed a sum representing twelve (12) months' interest following completion of construction shall be credited against the next installment of Base Rental as provided in Section 4(g) of the Lease. (ii) An amount to be retained in the Construction Fund for changes, alterations and additions to the Project, for the defense of lawsuits brought against the Authority and to respond in damages if such lawsuits are successful in whole or in part, all as requested or approved by the City. (iii) An amount to the Revenue Fund. 17 , Proof' of NoVfember 3, 1967"^- J.B.Co. — Phone 627 9514 SECTION 3.05. Issuance of Additional Bonds. In addition to the Bonds authorized to be issued under this Resolution, the Authority may by supplemental resolution establish one or more other issues of Additional Bonds, on a parity with these Bonds and may issue and deliver such Additional Bonds, in such principal amount as shall be determined by the Authority, but only upon compliance by the Authority with the provisions of Section 3.06, and subject to the following specific conditions which are hereby made conditions precedent to the issuance of such Additional Bonds: (a) Such Additional Bonds shall have been authorized to finance the completion of the Project or an addition to the Project, and the issuance thereof shall have been determined and declared by the Authority, in a supplemental resolution, to be necessary for that purpose. (b) The Authority shall be in compliance with all covenants and undertakings set forth in this Resolution. (c) The supplemental resolution authorizing issuance of such Additional Bonds shall require that the proceeds of the sale of such Additional Bonds shall be applied solely for the completion of the Project or an addition thereto and expenses and costs incidental thereto, including costs and expenses incident to the issuance and sale of such Additional Bonds and interest on said Additional Bonds during the actual period of completion of the Project or such addition, and for a period of not to exceed twelve (12) months thereafter. (d) Such Additional Bonds shall be equally and ratably secured with all other bonds herein authorized, without preference or priority of any of the Bonds over any other Bonds, except as expressly provided in this Resolution. (e) The Additional Bonds may be Serial Bonds payable as to principal on December 15 of each year in which principal falls due, or may be Term Bonds with mandatory sinking fund call dates on December 15 of each year as provided in the sinking fund provisions in the supplemental resolution and payable as to interest on June 15 and December 15 of each year, and shall not be subject to redemption prior to December 15, 1978. (f) The Authority shall have entered into a revised lease with the City in and by which the City obligates itself in the manner provided in the Lease to increase the payments of Base Rental and Additional Rental to the Authority for the use of the Project at the times and in the amounts also sufficient to provide for the payment of the principal of and interest on such Additional Bonds as such principal and interest become due. (g) The Authority shall increase the Reserve Fund upon the issuance of Additional Bonds so that said Reserve Fund contains at all times an amount equal to one half of the Maximum Annual Debt Service on all Bonds outstanding. SECTION 3.06. Proceedings for the Issuance of Additional Bonds. Whenever the Authority shall determine to issue Additional Bonds pursuant to Section 3.05, the Authority shall adopt a supple- mental resolution determining that the issuance of such Additional Bonds is necessary for the completion of the Project or for an addition to the Project, specifying the principal amount of such Additional Bonds and prescribing the terms and conditions of such Additional Bonds and the funds to be established for the security and payment thereof. Such supplemental resolution shall prescribe the form or forms of such Additional Bonds and shall provide for the distinctive designation, denominations, methods of numbering, date, maturity dates, interest rates, interest payment dates, places of payment of principal and interest and whethei such Additional Bonds are to be coupon Bonds with or without provision for registration as to principal only or as fully registered Bonds without coupons or a combination thereof, and shall also provide for the continuation of the Revenue Fund herein provided for and for the creation of appropriate principal funds, interest funds, sinking funds, if any, reserve funds, if any, and other funds applicable to, and required for the security of the Additional Bonds. 18 3, 198fProof ot November 3, 1997—J.B.Co. — Phone 627 9514 The Authority may by such supplemental resolution prescribe any other provisions respecting the Additional Bonds not inconsistent with the terms of this Resolution, including registration, transfer and exchange provisions, and provisions for the payment of principal and interest. Before such Additional Bonds shall be issued and delivered, the Authority shall file the following documents with the Trustee: (a) The Certificate of the Authority certifying that the issuance of such Additional Bonds is necessary to provide for the completion of the Project or for an addition to the Project, and setting forth the estimated cost of completion thereof and the estimated date of completion thereof. (b) The supplemental resolution authorizing such Additional Bonds. (c) An opinion of counsel setting forth (1) that he has examined the supplemental resolution; (2) that the execution and delivery of the Additional Bonds have been sufficiently and duly authorized by the Authority; (3) that the issuance of the Additional Bonds is authorized by the Act; (4) that said Additional Bonds, when duly executed and delivered by the Authority, will be valid and binding obligations of the Authority, payable from Revenues in accordance with the terms of this Resolution and the supplemental resolution authorizing the issuance of such Additional Bonds; (5) that upon the delivery of the Additional Bonds the aggregate principal amount of Bonds then outstanding will not exceed the amount at the time permitted by law or the then limits of indebtedness of the Authority, if any; and (6) that the Authority, upon the completion of the Project or the addition thereto to be financed by said Additional Bonds, will be authorized to use and operate the Project in the case of default by the City and to use and apply the Revenues from the Project for the payment of the Bonds. (d) The Certificate of the Authority certifying that the requirements set forth in Section 3.05 have been either met or provided for, together with a copy of the Lease or revised lease to the City required by said section. SECTION 3.07. Validity of Bonds. The validity of the authorization and issuance of any of the Bonds shall not be dependent on or affected in any way by (a) any proceedings taken by the Authority or its agents for the acquisition, construction or completion of the Project or any part thereof, or (b) any contracts made by the Authority or its agents in connection therewith, or (c) the failure to complete the Project or any part thereof. ARTICLE IV REDEMPTION OF BONDS PRIOR TO MATURITY SECTION 4.01. Terms of Redemption. In the event of loss of, substantial damage to or condem- nation of the whole or any substantial part of the Project, so as to render the same unusable, as more fully set out in Sections 6.04 and 6.12, all or any part of the Bonds at that time outstanding, may, at the option of the Authority, be called and redeemed prior to maturity on any succeeding date, at a redemption price equal to the principal amount thereof with accrued interest to the date of redemption plus the premium applicable thereto as hereinafter set forth in the succeeding paragraph of this section regardless of maturity dates relating to call therein, but only in the manner and only from the funds as hereinafter provided in Sections 6.04 and 6.12. If less than all bonds are called pursuant to this paragraph, Trustee shall determine a principal amount in each maturity to be called and shall, notwith- standing any other provision in this Resolution to the contrary, adjust the minimum amount of Term Bonds to be redeemed in each of the years as provided in Section 5.02(c) hereof so that thereafter the sum of annual (i) debt service and (ii) minimum sinking fund payments shall be approximately equal for each year involved. Bonds to be then called in each maturity will be selected by lot. Except as set forth in the preceding paragraph, Bonds maturing on or prior to December 15, 1978, are not subject to call and redemption prior to maturity. Bonds maturing on or after December 15, 1979, 19 cProof of November 3, 1967^-J.B.Co Phone 627 9514 are subject to call and redemption prior to maturity, at the option of the Authority, as a whole, or in part, in inverse order of maturity and by lot within a single maturity, from funds derived by the Authority from any source, on December 15, 1978, or on any interest payment date thereafter, upon payment of a redemption price equal to the principal amount thereof plus a premium equal to one-half of one percent plus an additional one-fourth of one percent for each year or fraction of a year from the redemption date to the maturity date of the Bonds, but in no event shall the premium exceed four percent (4%); provided, however, the Bonds maturing on December 15, 1992 are subject to call and redemption prior to maturity, at par, from moneys in the Sinking Fund, in the manner and subject to the terms and provisions, and with the effect set forth in Section 5.02(C). The interest payment date on which Bonds are to be presented for redemption is hereinafter sometimes called the "redemption date." SECTION 4.02. Selection of Bonds for Redemption. The Governing Board of the Authority may by resolution direct the call and redemption prior to maturity of Bonds by the Trustee in such amount as funds are available therefor. SECTION 4.03. Notice of Redemption. Notice of call and redemption prior to maturity (except as provided below) shall be given by publication at least once prior to the redemption date in a financial newspaper or journal, printed in the English language and customarily published on each business day, of general circulation in the City of New York, New York, such publication to be not less than thirty (30) nor more than sixty (60) days before such redemption date. If any Bond called for redemption is fully registered, or is registered as to principal, notice of redemption thereof shall also be mailed, not less than thirty (30) nor more than sixty (60) days prior to the redemption date, to each registered owner of such Bond, but neither failure to mail such notice nor any defect in any notice so mailed shall affect the sufficiency of the proceedings for the redemption of any of the Bonds. The notice of redemption shall (a) state the redemption date; (b) state the redemption price; (c) state the numbers and date of maturity of the Bonds to be redeemed; provided, however, that whenever any call includes all of the outstanding Bonds of any maturity, the numbers of the Bonds need not be stated; (d) require that such Bonds be surrendered with all interest coupons maturing subsequent to the redemption date (except that no coupons need be surrendered on fully registered Bonds) at the place or places of redemption; (e) require that Bonds which at the time of call are registered so as to be payable otherwise than to bearer shall be accompanied by appropriate instruments of assignment duly executed in blank; and (f) state that interest on the Bonds in such notice designated for redemption shall cease to accrue from and after such redemption date and that on said date there will become due and payable on each of said Bonds the principal amount thereof to be redeemed, interest accrued thereon to the redemption date and the premium thereon (such premium to be specified). If at the time of giving notice of redemption no Bonds are outstanding except Bonds registered as to principal, or fully registered, publication of such notice shall be deemed to have been waived if such notice shall have been mailed by registered or certified mail to each registered owner of such Bonds at his address as it appears on the registration books or at such address as he may have filed with the Trustee for that purpose. The actual receipt by the Holder of any Bond of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for the redemption of such Bonds or the cessation of interest on the redemption date. Notice of redemption of Bonds shall be given by the Trustee for and on behalf of the Authority. A certificate by the Trustee that notice of call and redemption has been given as herein provided shall be conclusive as against all parties, and no Bondholder whose Bond or registered Bond is called for redemption may object thereto or object to the cessation of interest on the redemption date fixed by any claim or showing that he failed to actually receive such notice of call and redemption. SECTION 4.04. Partial Redemption of Registered Bond. Upon surrender of any fully registered Bond without coupons redeemed in part only, the Trustee shall endorse on the reverse of such Bond 20 Proof of Norember 3, 19G*- J.B.Co. — Phone 627 9514 a notation of such partial redemption. The registered owner of any fully registered Bond without coupon may, in lieu of surrendering such Bond to the Trustee for endorsement, endorse on the reverse of such Bond a notation of such partial redemption, in such form as may be satisfactory to the Authority y* and the Trustee and under such conditions as the Trustee may approve. Such partial redemption shall ^ be valid upon payment of the amount thereby required to be paid to such registered owner, and the - Authority and the Trustee shall be released and discharged from all liability to the extent of such payment, irrespective of whether such endorsement shall or shall not have been made upon the reverse of such fully registered Bond by such registered owner and irrespective of any error or omission in such endorsement. SECTION 4.05. Redemption Fund. Prior to the publication in Section 4.03 hereof, the Trustee shall establish, maintain and hold in trust a separate fund which is hereby created for the purpose of this Resolution entitled "Redemption Fund", and there shall be set aside in the Redemption Fund moneys for the purpose and sufficient to redeem, at the premiums payable as in this Resolution provided, if any, the Bonds designated in such notice of redemption. Said moneys must be set aside in said fund solely for that purpose and shall be applied on or after the redemption date to the payment (principal and premium, if any) of the Bonds to be redeemed upon presentation and surrender of such Bonds and (except as to fully registered Bonds) all interest coupons maturing after the redemption date. Any interest coupon due on or prior to the redemption date shall be paid from the Interest Fund upon presentation and surrender thereof. Any interest due on or prior to the redemption date upon fully registered Bonds shall be paid from said Interest Fund. Each Bond presented (if unregistered or registered as to principal only) must have attached thereto or presented therewith all interest coupons maturing after the redemption date. SECTION 4.06. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the principal of and interest and premium payable upon redemption of the Bonds being set aside in the Redemption Fund, the Bonds so called for redemption shall, on the redemption date designated in such notice, become due and payable at the redemption price specified in such notice, interest on the Bonds so called for redemption shall cease to accrue, the coupons for interest thereon maturing subsequent to the redemption date shall be void, and said Bonds shall cease to be entitled to any lien, benefit or security under this Resolution, and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. All unpaid interest installments represented by coupons which shall have matured on or prior to the date of redemption designated in such notice shall continue to be payable to the respective Holders thereof but without interest thereon. All Bonds fully redeemed pursuant to the provisions of this Article IV and the appurtenant coupons, if any, shall be cancelled upon surrender thereof and delivered to, or upon the order of, the Authority. ARTICLE V USE OF REVENUES SECTION 5.01. Revenue Fund. All revenues shall be immediately deposited with the Trustee and the Trustee shall credit said moneys to a special fund, designated as the "Revenue Fund," which the Trustee shall establish and maintain. All moneys at any time deposited in the Revenue Fund shall be held in trust for the benefit of the Holders from time to time of the Bonds and the coupons appertaining thereto, but shall nevertheless be disbursed, allocated and applied solely for the uses and purposes hereinafter in this Article V set forth. SECTION 5.02. Allocation of Moneys in Revenue Fund to Special Funds. The Trustee shall transfer from the Revenue Fund the following amounts at the times and in the manner hereinafter 21 Proof-of November 3, 1967*1 J.B.Co. — phone 627 9514 provided for, and shall deposit such amounts, in the following order of priority, in the following respective funds (which, except for initial payments from Bond proceeds, are derived from the Revenue Fund and are subdivisions thereof) each of which Funds shall be disbursed and applied only as herein authorized: (a) Interest Fund. On or before August 1 of each year, beginning August 1, 1968, the Trustee shall deposit in the Interest Fund hereby established (the initial payment into which is provided for in Section 3.03) a sum sufficient, together with the balance then on hand in said fund, to pay the twelve (12) months' interest becoming due on the Bonds on the next succeeding December 15 and June 15, respectively. No payment need be made into the Interest Fund if the amount contained therein is at least equal to the interest to become due in the next ensuing twelve (12) months payment period upon all of the Bonds then outstanding. Moneys in the Interest Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable or transferring such moneys to the Paying Agents for that purpose. (b) Retirement Fund. On or before August 1 of each year, beginning August 1, 1968, the Trustee shall deposit in the Retirement Fund hereby established a sum sufficient, together with the balance then on hand in said fund to pay the aggregate amount of principal of the outstanding Bonds maturing on the next succeeding December 15. No payment need be made into the Retirement Fund if the amount contained therein is at least equal to such maturity of principal becoming due in the current fiscal year. Moneys in the Retirement Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the principal on the Bonds as it shall become due and payable or transferring such moneys to the Paying Agents for that purpose. (c) Sinking Fund. On or before August 1 of each year commencing August 1, 1979, after the transfers heretofore required have been made, there shall be transferred from the Revenue Fund to the Sinking Fund an amount not less than the minimum amount hereinafter specified. Except as provided in Section 4.01 hereof, such transfers shall in no event be less than amounts (herein sometimes referred to as "minimum sinking fund payments") which will be sufficient to call and redeem the Term Bonds in the following respective minimum principal amounts on December 15th in each of the following years, to wit: Year Minimum Amount Each Year Year Minimum Amount Each Year 1979 $20,000 1980 20,000 1981 20,000 1982 20,000 1983 20,000 1984 20,000 1985 25,000 1986 $25,000 1987 25,000 1988 25,000 1989 25,000 1990 30,000 1991 30,000 1992 35,000 The minimum sinking fund payment to be made as aforesaid shall be the amount needed to call and redeem the minimum amount of Term Bonds which according to the above table are to be called and redeemed, it being the intent of this provision that the respective minimum amounts necessary to call and redeem Term Bonds according to the above table (or to purchase all or any part of such bonds in lieu of call and redemption prior to maturity) shall be transferred to the Redemption Fund at least one month before the redemption date. In the event that the transfer made for any year is less than the minimum sinking fund payment for that year because of lack of funds or for any other reason the deficiency shall be added to and become a part of the minimum sinking fund payment required for the following year. Except as hereinafter provided, moneys in the Sinking Fund shall be used solely for the purpose of purchasing and/or calling and redeeming Term Bonds prior to maturity as herein provided. Money 22 i, iwf—J.B.CO. — ]Pro6f of Ndvember 3, IW— J.B.Co. — Phone 627 9514 in said fund which has not been set aside in the Redemption Fund for the purpose of call and redemp- tion of Term Bonds prior to maturity may be used by the Authority to purchase from time to time on the open market any of the outstanding Term Bonds at such prices and in such manner, either at public or private sale or otherwise, as the Authority in its discretion may determine but the purchase price (including brokerage or other charges, but excluding accrued interest) shall not exceed the maximum redemption price thereof (as provided in Section 4.01) on the next interest payment date of the Term Bonds so purchased. In the event any Additional Term Bonds are issued with provision for sinking fund payments sufficient to call and redeem said Additional Term Bonds the money in the Sinking Fund shall be used for the purpose of purchasing and/or calling and redeeming said Additional Term Bonds and the Term Bonds of this issue in the manner provided in this resolution and subsequent resolutions of issuance without priority for any Term Bonds of the issue or any issue of Additional Term Bonds. The Authority covenants that whenever on any November 15 of any year there shall be in said Sinking Fund an amount at least sufficient to call $5,000 principal amount of Term Bonds, the moneys in said fund shall be used to call Term Bonds at the next available call date in the largest amount which can be called with the money available. The Term Bonds to be called shall be determined by lot. Money in the Sinking Fund to be used to call Term Bonds shall for that purpose be transferred to the Redemption Fund. All Term Bonds not paid prior to December 15, 1992, shall be paid on said date and, to the extent necessary, money in the Sinking Fund shall be used to pay said Term Bonds and any interest thereon. (d) Reserve Fund. The Trustee shall deposit in the Reserve Fund (the initial payment into which is provided for in Section 3.03) such amounts as may be necessary to maintain on deposit in the Reserve Fund an amount equal to one-half of the Maximum Annual Debt Service. The moneys in the Reserve Fund shall be applied solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to ma- turity pursuant to this Resolution), for the purpose of paying the principal of the Bonds at their maturities, or to make minimum sinking fund payments to the extent that there are insufficient moneys available for such purposes in the Interest Fund, the Retirement Fund, the Sinking Fund, or in the Revenue Fund. An amount equal to one-half of the Maximum Annual Debt Service on the Bonds outstanding shall be main- tained at all times in the Reserve Fund by payments from the Revenue Fund from time to time as may be necessary, and any deficiency therein shall be made up from time to time from the Revenue Fund. If requested by the Authority in each of the years prior to completion of construction of the Project, any moneys in excess of one-half of the Maximum Annual Debt Service then in the Reserve Fund shall be transferred to the Construction Fund, and thereafter any moneys in excess of one-half of the Maximum Annual Debt Service in the Reserve Fund shall on June 30 and December 30 of each year be trans- ferred to the Revenue Fund. No payment need be made into the Reserve Fund if and when the aggregate amount of the moneys on deposit therein equals one-half of the Maximum Annual Debt Service. Moneys in the Reserve Fund may be used to pay the principal and/or interest on the last maturity or maturities of Bonds outstanding. (e) Working Capital Fund. Commencing after the initial Base Rental under the Lease is paid and thereafter following each August 1, provided that the current August 1 transfers to the Interest Fund, the Retirement Fund and the Sinking Fund is provided for or has been made, and the amount required to pay principal and interest on the Bonds and make the minimum sinking fund payments in said fiscal year based upon the amount of Base Rental payments provided therefor have been retained, the Trustee shall deposit in the Working Capital Fund for the Revenue Fund, to the extent available sums sufficient for the payment of: (i) All taxes and assessments of any nature whatsoever, including, but not limited to, excise taxes, ad valorem taxes, ad valorem and specific lien special assessments and gross receipts taxes, if any, levied upon the Project or upon the Authority's interest therein or upon the Authority's operation thereof or the Authority's rental income derived therefrom. 23 Proof'of November 3, 1967"^-J.B.Co. — Phone 627 9514 (ii) All expenses (not otherwise paid or provided for out of the proceeds of the sale of Bonds of the Authority) incidental to the issuance of the Bonds and all administrative costs of the Author- ity, including but without limiting the generality of the foregoing, salaries, wages, expenses, com- pensation and indemnification of the Trustee under this Resolution, fees and charges of auditors, accountants, attorneys and engineers, and all other necessary administrative charges of the Authority or charges required to be paid by it in order to comply with the terms of the Bonds or of this Resolution and to defend the Authority and its members. (iii) Insurance premiums, if any, on all insurance required or permitted under the provisions of Section 8 of the Lease, or otherwise. (iv) All costs and expenses which the Authority may incur in consequence of or because of any default by the City under the Lease, including reasonable attorneys' fees and costs of suit or action at law to enforce the terms and conditions of the Lease. (v) All sums necessary to maintain an amount of $1,500 in the Working Capital Fund. The Trustee shall, pursuant to subsection (b) of Section 4 of the Lease, bill the City for any balance of the amounts due to pay any of the foregoing items of Additional Rentals when the same become due and, upon receipt of same, deposit such amounts in the Working Capital Fund. (f) Operation and Maintenance Fund. If at any time the Authority shall operate the Project, by reason of default by the City, the Trustee shall deposit in the Operation and Maintenance Fund hereby established, whose priority shall be the same as the Working Capital Fund above, all amounts which shall be required to provide for the payment of all costs of maintenance and operation of the Project, including costs of repairs and replacements, labor costs and insurance. Moneys in the Operation and Maintenance Fund shall be disbursed by the Trustee to pay such costs upon the Written Request of the Authority. Any moneys in the Revenue Fund on June 30, 1969 or on each June 30 thereafter, except amounts transferred for the purposes aforesaid, shall be declared surplus and (a) be used and applied by the Trustee at the direction of the Authority, to the purchase of the Bonds, provided that the Bonds shall not be purchased at a price in excess of the then current redemption price or in excess of the maximum redemption price if the Bonds are not then subject to redemption, or (b) may be transferred to the Redemption Fund and be used to call and redeem Bonds prior to maturity, or (c) may be transferred to the Construction Fund to be set aside and accumulated therein for future changes, alterations and additions to the Project which the Authority may from time to time deem desirable or (d) to reimburse City for any additional rent previously paid. ARTICLE VI COVENANTS OF THE AUTHORITY SECTION 6.01. Punctual Payment. The Authority shall punctually pay or cause to be paid the principal and interest (and premium, if any) to become due in respect of all the Bonds, in strict con- formity with the terms of the Bonds and of this Resolution, and it shall faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all supplemental resolutions and of the Bonds. SECTION 6.02. Against Encumbrances and Sale. The Authority covenants that the Project or any part thereof, or any real or personal property essential to the operation thereof, shall not be mortgaged or otherwise encumbered, sold, leased, pledged, any charge placed thereon, or disposed of as a whole or substantially as a whole unless such sale or other disposition be so arranged as to provide f&r a continuance of payments into the Revenue Fund sufficient in amount to permit payment there- from of the princ'pal of and interest on and premiums, if any, due upon the call and redemption 24 Proof of November 3, 196T^— J.B.Co. — Phone 627 9514 thereof, of the Bonds and any Additional Bonds, payment of which is required to be made out of the Revenues, and also to provide for such payments into the funds as are required under the terms of this Resolution. The Revenues shall not be mortgaged, encumbered, sold, leased, pledged, any charge placed thereon, or disposed of or used except as authorized by the terms of this Resolution. The Authority further covenants that it will not enter into any agreement which impairs the operation of the Project or any part of it necessary to secure adequate revenues to pay the principal and interest of the Bonds or which otherwise would impair the rights of the Bondholders with respect to the Revenues or the operation of the Project. If any substantial part of the Project is sold, the payment therefor shall either be used for the acquisition and/or construction of improvements and extensions of the Project or shall be placed in the appropriate funds and shall be used to pay or call and redeem said Bonds and Additional Bonds in the manner provided in this Resolution and any supplemental resolution. SECTION 6.03. Construction of Project. The Authority shall, or shall cause its agent or agents to, acquire and construct the Project in conformity with the Construction Contract and with all expedi- tion practicable. The Authority covenants that it has or will require that any proceeds from the Performance Bonds and the Labor and Materials' Bonds provided for in the Construction Contract, with the approval of the sureties named in said bonds, be deposited with the Trustee for the deposit of such proceeds by the Trustee hi the Construction Fund. SECTION 6.04. To Maintain Insurance. Authority shall at all times maintain or cause to be maintained with responsible insurers all such insurance on the properties (valued as defined below) which is customarily maintained with respect to properties of like character against accident to, loss of or damage to such properties. Notwithstanding the generality of the foregoing, the Authority shall not be required to maintain or cause to be maintained any insurance which is not available from reputable insurers on the open market or more insurance than is specifically referred to below. Authority shall keep or cause to be kept a policy or policies of insurance against loss or damage to the property covered by the Resolution resulting from fire, lightning, vandalism, malicious mischief, riot and civil commotion, and such perils ordinarily defined as "extended coverage" and other perils as Authority and the City may agree should be insured against on forms and in amounts satisfactory to each. Such insurance shall be maintained in an amount not less than the full insurable value of the properties (such value to include amounts spent for construction of the Facilities, parking lots, and architectural, engineering, legal and administrative fees and Project inspection and supervision) or the amount of Authority's outstanding Bonds, whichever amount is the less. The term "full insurable value" as used in this section shall mean the actual replacement cost, using the items of value set forth above (including the cost of restoring the surface of grounds owned or leased by the Authority but excluding the cost of restoring trees, plants and shrubs), less physical depreciation. Said "full insurable value" shall be determined from time to time but not less frequently than once in every thirty-six (36) months. The Authority shall also: (a) Keep or cause to be kept the property covered by the Resolution insured: (i) Against war risks, as and when such insurance is obtainable from reputable insurance companies of the United States of America or any agency thereof, in an amount not less than 80% of the then full insurable value thereof; and (ii) Against loss or damage from leakage of sprinkler systems now or hereafter installed therein in amounts to be determined by Authority; and (iii) Against loss or damage by explosion of steam boilers, pressure vessels and similar apparatus now or hereafter installed therein in amounts to be determined by Authority; and 25 Proof'of November 3, 196W-J.B.Co. — Phone 627 9514 (b) Keep or cause to be kept the Project insured by earthquake insurance (if such insurance is obtainable on the open market from reputable insurance companies) against loss or damage by earthquake in an amount at least equal to the lesser of the following: .> (i) the full insurable value of such properties (as defined above) with an 80% co- ,. insurance clause and with deductible conditions of not to exceed 5% for any one loss which ^i is less than the face amount of the policy; or (ii) the amount of the outstanding Bonds. (c) Maintain or cause to be maintained use and occupancy or business interruption or rental income insurance against the perils of fire, lightning, vandalism and malicious mischief and such other perils ordinarily denned as "extended coverage" in an amount equal to not less than two (2) years rental; and (d) Maintain or cause to be maintained public liability insurance against claims for bodily injury or death, or damage to property occurring upon, in or about the property, such insurance to afford protection to a limit of not less than $1,000,000 with respect to bodily injury or death to any one person, not less than $2,000,000 with respect to bodily injury or death to any number of persons in any one accident, and property damage liability insurance in an amount not less than $50,000; and (e) Maintain or cause to be maintained workmen's compensation insurance issued by a responsible carrier authorized under the laws of the State of California to insure employers against liability for compensation under the Workmen's Compensation Insurance and Safety Act now in force in California, or any act hereafter enacted as an amendment or supplement thereto or in lieu thereof, such workmen's compensation insurance to cover all persons employed in connection with the Project and to cover full liability for compensation under any such act aforesaid, based upon death or bodily injury claims made by, for or on behalf of any person incurring or suffering injury or death during or in connection with the Project or the business of the Authority. All insurance herein provided for shall be effected under policies issued by insurers of recognized responsibility, licensed or permitted to do business in the State of California. All policies or certificates issued by the respective insurers for insurance shall provide that such policies or certificates shall not be cancelled or materially changed without at least ten (10) days prior written notice to the Trustee, and shall carry loss payable endorsements in favor of the Trustee where applicable. The copies of such policies shall be deposited with the Trustee by the Authority, together with appropriate evidence of payment of the premiums therefor; and, at least ten (10) days prior to the expiration dates of expiring policies or contracts held by the Trustee, copies of renewal or new policies on contracts or certificates, shall be deposited with the Trustee. All proceeds of insurance with respect to loss or damage to the property shall be paid to the Trustee (except that proceeds for any one loss not exceeding $5,000 need not be paid to the Trustee but may be paid to the Authority and applied by it to the repair, restoration or replacement of the property destroyed or damaged). Upon payment thereof to the Trustee, and (1) if the Project is to be repaired or rebuilt, the Trustee shall deposit the same in the Construction Fund for application as provided with respect to moneys in such fund or (2) if the Project is not to be repaired or rebuilt, the Trustee shall deposit the same in the Redemption Fund (Section 4.05) for application as provided for moneys in such fund. SECTION 6.05. Discharge Claims. In order to fully preserve and protect the priority and security of the Bonds, the Authority shall pay from the proper fund and discharge or cause to be discharged all lawful claims for labor, materials and supplies furnished for or in connection with the Project which, if unpaid, may become a lien or charge upon the Revenues prior or superior to the lien of the Bonds 26 Proof of November 3:, 190*ii-J.B.Co. —Phone 627 9514 and impair the security of the Bonds. The Authority shall also, from time to time, duly pay and discharge, or cause to be paid and discharged, any taxes, assessments or other governmental charges lawfully imposed upon the Project or upon the Revenues, after the same has become due and pajable, except that the Authority may, in good faith, contest any such tax, assessment or governmental charge, as well as any lawful claim for labor, materials or supplies for work completed or materials or supplies furnished which, if unpaid, might by law become a lien or charge upon the Revenues or the Project, or which might impair the security of the Bonds. SECTION 6.06. Financial Reports. Within one hundred twenty (120) days after the close of each fiscal year, the Authority shall furnish to the Trustee, and to any Bondholder who shall make written request therefor prior to the close of such fiscal year, detailed certified reports of audit, based on an examination in accordance with generally accepted auditing standards, prepared by an independent public accountant, covering the operations of the Authority in connection with the Bonds issued pursuant to this Resolution or Additional Bonds issued pursuant to a subsequent resolution or resolution for the next preceding fiscal year, showing the Revenues and expenses for such period and the types and amounts of insurance coverage in force for such period and the expiration dates thereof. Such audit report shall include statements of the status of each fund pertaining to the Bonds or the Project, showing the amount and source of deposits therein, the amount and purpose of the withdrawals therefrom and the balance therein at the beginning and end of the fiscal year. SECTION 6.07. Maintenance of Paying Agents. The Trustee, subject to the approval of the Authority, shall appoint and at all times have Paying Agents for the payment of the principal of, and the interest (and premium, if any) on, the Bonds in each of the places mentioned in Section 2.02. It shall be the duty of the Trustee to make such credit arrangements with such Paying Agents as may be necessary to assure, to the extent of the moneys held by the Trustee for such payment, the prompt payment of the principal of, and interest (and premium, if any) on, the Bonds presented at any place of payment specified herein. SECTION 6.08. Collection of Rentals. The Authority shall, if at any time it is operating the Project by reason of default by the City, promptly collect all rents and charges due for the occupancy or use of the facilities of the Project as the same become due, and shall promptly and vigorously enforce its rights against any tenant or other person who does not pay such rents or charges as they become due. The Authority shall at all times maintain and vigorously enforce all of its rights under the Lease. SECTION 6.09. Amendment of Lease. The Authority shall not consent to the amendment, alteration or modification, in whole or in part, of the Lease, except in the case of any one of the following cases: (a) with the written consent of the Treasurer, if, in the opinion of the Treasurer, such amendment, alteration or modification does not materially adversely affect the rights of the Holders of the Bonds, (b) as may be necessary in connection with the issuance of Additional Bonds pursuant to the provisions of this Resolution, or (c) with the written consent of the Holders of sixty percent (60%) in aggregate principal amount of the Bonds then outstanding, exclusive of issuer-owned Bonds. Any such written consent shall be obtained in the manner provided herein, except that, in cases where no supple- mental resolution is provided for, the Authority shall adopt a resolution expressing its consent to the amendment, alteration or modification involved. SECTION 6.10. Maintain and Preserve the Project. The Authority shall, or shall cause City as lessee under the Lease or, Authority's agents or lessees in the case of default, to operate, maintain and preserve the Project in good repair and working order and to operate the Project in an efficient and economical manner; provided, however, that in the case of default the Authority or its agents or lessees may lease or rent concessions, or lease or rent the Project or any part thereof, or otherwise provide for the operating of the Project or any part thereof. 27 . . f"*- Proof «©f November 3, 1967^ J.B.Co. — Phone 627 9514 SECTION 6.11. Prosecution and Defense of Suits Relating to Title. The Authority hereby agrees that it will upon request of the Trustee promptly from time to time take such action as may be necessary and proper to remedy or cure any defect in or cloud upon the title to the Project or any part thereof, whether now existing or hereafter developing, and shall prosecute all such suits, actions and other proceedings as may be appropriate for such purpose. SECTION 6.12. Eminent Domain. The Trustee upon receipt of any moneys as the result of the condemnation of all or any part of the Project shall deposit the same in the Redemption Fund created by Section 4.05 and said moneys shall be used as provided in Section 11 of the Lease. SECTION 6.13. Maintenance of Revenues. The Authority shall, if it should operate the Project by reason of default by the City, fix, prescribe and collect rates, tolls, fees, rentals or other charges in connection with the services and facilities furnished from the Project sufficient to pay principal of and interest on the Bonds as they become due, together with all expenses of operation, maintenance and repair of the Project and such additional sums as may be required for the Reserve Fund; provided, however, that all rates, tolls, fees, rentals or other charges in connection with the services and facilities furnished by the Project shall be subject to such provisions, if any, relative thereto as may be contained in the Agreement. SECTION 6.14. City Budgets. In the event of a failure by City to perform its covenants relating to budgeting under Section 4(d) of the Lease, the Authority shall promptly take such action as may be necessary to cause such annual budget or appropriation resolution to be amended, corrected or augmented so as to include therein amounts required to be raised by the City in the ensuing fiscal year for the payment of rentals due under the Lease and shall notify the Trustee of the proceedings then taken or proposed to be taken by the Authority. The Authority shall keep the Trustee advised of all proceedings thereafter taken by the Authority. In the event that the Authority does not take action which the Trustee, in its sole discretion, deems adequate to cause such annual budget or appropriation resolution to be amended, corrected or augmented so as to include therein the amounts required by the City in the then ensuing fiscal year for the payment of rentals due under the Lease, then the Trustee shall promptly take such action. SECTION 6.15. Limits on Additional Debt. The Authority covenants tnat: (a) No additional indebtedness evidenced by revenue bonds, revenue notes or any omer evidences of indebtedness payable out of the Revenues shall be issued pursuant to said Bond Act or any other law of the State of California having any priority in payment of principal or interest out of the Revenues over the Bonds authorized by this Resolution. (b) No Additional Bonds, revenue notes or any other evidences of indebtedness payable out of the Revenues shall be issued, except pursuant to Sections 3.05 and 3.06 and subject to the limitations thereof, and ranking on a parity with these Bonds. (c) No refunding bonds, revenue notes or any other evidences of indebtedness payable out of the Revenues shall be issued to refund a part of the Bonds authorized by this Resolution unless the Authority shall have entered into a lease or revised lease with the City in and by which the City obligates itself in the manner provided in the Lease to make payments of Base Rental to the Authority for the use of the Project at the times and in the amounts sufficient to provide for the payment of the principal of and interest on Bonds outstanding after such refunding as such principal and interest become due. SECTION 6.16. Further Assurances. The Authority shall make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Resolution, and for the better assuring and confirming unto the Holders of the Bonds of the rights and benefits provided in this Resolution. 28 Proof of November 3, 199T— J.B.Co. — Phone 627 9514 ARTICLE VII SECURITY FOR DEPOSITS AND INVESTMENT OF FUNDS SECTION 7.01. Moneys Deposited To Be Held in Trust. All moneys deposited under the pro- y> visions of this Resolution with the Trustee shall be held in trust and applied only in accordance with O the provisions of this Resolution, and shall not be subject to lien or attachment by any creditor of the >• Authority, other than the lien of the Holders of the Bonds issued pursuant to and secured by this Resolution. SECTION 7.02. Security For Deposits. All moneys held hereunder by the Trustee shall be held in time or demand deposits and shall be continuously and fully secured at all times by such obligations and to the fullest extent as shall be required by law for public deposits, except to the extent that moneys are invested as hereinafter provided. SECTION 7.03. Investment of Funds. Moneys held in any fund created hereunder shall be invested with reasonable diligence by the Trustee in Federal Securities to the extent permitted by law for public funds or held or deposited pursuant to Section 7.02 hereof, in such a manner as, in the opinion of Trustee, will maximize interest returns. All such investments shall mature not later than the date or dates when the moneys held in such funds will be required for the purposes in this Resolution provided. SECTION 7.04. Investments and Income as Part of Funds; Liquidation. Except as otherwise herein expressly provided, moneys in any fund created hereunder shall be deemed at all times to be a part of such fund and the interest and income accruing thereon and any profit realized from the liquidation of any such investment shall be credited to such fund and any loss resulting from the liquidation of any such investment shall be charged to such fund. For the purposes of any such investment, obligations shall be deemed to mature at the earliest date on which the obligor is on demand irrevocably required to pay a fixed sum in discharge of the whole of such obligations. In computing the balance in any such fund, obligations shall be valued at the then estimated or appraised market value thereof. The Trustee shall sell at the best price obtainable, or present for redemption, any obligations so purchased as an investment whenever it shall be requested in writing by the Authority so to do or whenever it shall be necessary in order to provide moneys to meet any payment or transfer from any such fund. The Trustee shall not be liable or responsible for making any investment or for any loss resulting therefrom, if such investment is made in conformity with this Resolution. The Trustee shall advise the Authority in writing, when reasonably requested to do so, of the details of all investments held for the credit of any such funds in the custody of the Trustee under the provisions of this Resolution as of the end of the preceding month. ARTICLE VIII CONCERNING THE TRUSTEE SECTION 8.01. Acceptance of Trusts by Trustee. The Trustee accepts and agrees to execute the trusts imposed upon it by this Resolution, but only upon the terms and conditions and subject to the provisions of this Resolution, to all of which the parties hereto and the respective Holders of the Bonds agree. All funds created under this Resolution shall be held by the Trustee and administered as trust funds as herein provided. SECTION 8.02. Absence of Responsibility of Trustee. The Trustee shall be under no obligation to effect or maintain insurance, or to renew any policies of insurance, or to inquire as to the sufficiency of any policies of insurance carried by the Authority under the Lease. The Trustee shall not have any 29 Proof'of November 3, 196TS-. J.B.Co. — Phone 627 9514 responsibility in respect of the validity or sufficiency of this Resolution or the due execution or acknowl- edgment thereof by the Authority, or in respect of the validity of any Bonds authenticated and de- livered by the Trustee in accordance with the provisions of this Resolution, or of the coupons appertaining thereto. The recitals, statements and representations contained herein and in the Bonds (excluding the Trustee's certificate on the Bonds) shall be taken and construed as made by and on the part of the Authority and not by the Trustee and the Trustee does not assume nor shall it be under any responsi- bility for the correctness of the same. SECTION 8.03. Trustee Not Responsible for Actions of Authority. The Trustee shall not be liable or responsible because of the failure of the Authority or of any of its officers, employees or agents to make any collections or deposits, or to perform any act herein required of the Authority or its officers, directors, employees or agents. The Trustee shall not be responsible for the application of any of the proceeds of the Bonds or any other moneys deposited with it and paid out, invested, withdrawn or transferred in accordance with the provisions of this Resolution. The immunities and exemptions from liability of the Trustee hereunder shall extend to its directors, officers, employees and agents. SECTION 8.04. Compensation of Trustee. Subject to the provisions of any contract between the Authority and the Trustee, the Authority shall pay to the Trustee, in the manner provided in this Resolution, reasonable compensation for all services performed by it hereunder, and also all of its reasonable expenses, charges and other disbursements and those of its attorneys, agents, and employees incurred in and about the acceptance, administration and execution of the trusts hereby created and the performance of its powers and duties hereunder, and shall indemnify and hold the Trustee harmless against any liabilities which it may incur in the exercise and performance of its powers and duties here- under. Notwithstanding the foregoing, the Trustee agrees that so long as there is no default hereunder the Trustee shall be entitled to receive for all services hereunder or in connection herewith a reasonable fee to be computed as set forth in a separate contract. SECTION 8.05. Duties and Responsibilities of Trustee. The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Resolution. The Trustee shall exercise such of the rights and powers vested in it by this Resolution, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Resolution shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct. SECTION 8.06. Certain Rights of Trustee. The Trustee (a) may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, coupon or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) may consult with counsel and any opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance with such opinion; (c) shall be under no obligation to exercise any of the rights or powers vested in it by this Resolution at the request, order or direction of any of the Bondholders pursuant to the provisions of this Resolution, unless such Bondholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby; (d) shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Resolution. 30 ••*•>. Proof of'November 3, isf-J.B.Co. — Phone 627 9514 SECTION 8.07. Eligibility for Appointment as Trustee. The Trustee hereunder shall at all times be a corporation organized and doing business under the laws of the United States or the State of California authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $1,000,000, subject to supervision or examination by Federal or State Authority and having its principal office and place of business in the State of California. If such corporation publishes reports of its condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this section the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this section, the Trustee shall resign immediately in the manner and with the effect below specified. SECTION 8.08. Resignation and Removal; Appointment of Successor Trustee, (a) The Trustee, or any trustee hereafter appointed, may at any time resign by giving written notice of resignation to the Authority. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor trustee (which may, but shall not be required to be the Auditor and/or Treasurer of the Authority) to exercise the duties of Trustee by written instrument, in duplicate, executed by order of the Governing Board of the Authority, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within thirty (30) days after the resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Bondholder who has been a bona fide Holder of a Bond or Bonds for at least six (6) months may on behalf of himself and all others similarly situated, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor trustee. (b) In case at any time any of the following shall occur — (i) The Trustee shall cease to be eligible and shall fail to resign after written request therefor by the Authority or by any such Bondholder, or (ii) The Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Authority may remove the Trustee and appoint a successor trustee (which may, but shall not be required to be the Auditor and/or Treasurer of the Authority if permitted under subsection (c) of this section) to exercise the duties of Trustee by written instrument, in duplicate, executed by order of the Governing Board of the Authority, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or any Bondholder who has been a bona fide Holder of a Bond or Bonds for at least six (6) months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Authority may appoint the Auditor and/or Treasurer of the Authority to exercise the duties of the Trustee if: (i) The Trustee or any successor trustee cannot legally perform the duties required here- under because of the occurrence of either of the following, subsequent to the effective date of this Resolution: (aa) the enactment of any constitutional provision, law, rule or regulation of any governmental agency having jurisdiction thereof, or (bb) any judicial decision, whether or not involving this Resolution, which is applicable to this Resolution and the Trusteeship created hereunder. 31 Proof, of .November 3, 19&*L J.B.Co. — Phone 627 9514 (ii) The services of the Trustee or any successor trustee cannot be obtained at a reason- able cost. Such reasonable cost shall be determined by like costs charged by financial institu- tions similarly situated in the United States performing duties of a comparable nature. (d) The Holders of a majority in aggregate principal amount of the Bonds at the time outstanding may at any time remove the Trustee and appoint a successor trustee; provided, however, (i) such successor shall be eligible for appointment under this Resolution, and (ii) the fees of the successor trustee shall be within the amounts budgeted therefor by the Authority, and (iii) that if the Authority objects to the successor trustee it may appoint a successor trustee (which may, but shall not be required to be, the Auditor and/or Treasurer of the Authority if permitted under subsection (c) of this section) to exercise the duties of Trustees. (e) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this section shall become effective upon notice of or acceptance of appoint- ment by the successor trustee as provided below. SECTION 8.09. Acceptance of Appointment by Successor Trustee. Any successor corporate trustee appointed as above provided shall execute, acknowledge and deliver to the Authority and to its predecessor trustee an instrument accepting such appointment hereunder, and, if the Auditor and/or Treasurer are appointed to exercise the duties of Trustee hereunder, the Authority shall notify such officer or officers; and thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor hereunder, with like effect as if originally named as trustee herein; but, nevertheless, on the written request of the Authority or of the successor trustee, the trustee ceasing to act shall, upon payment of its charges then unpaid, execute, acknowledge and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon request of any such successor trustee, the Authority shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such suc- cessor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such trustee to secure any amounts then due it. The Trustee ceasing to act shall upon such vesting thereafter be fully relieved and discharged of and from all further liability or responsibility either to the Authority or to the Holders of the then outstanding Bonds except to the extent of liability, if any, arising prior to such vesting in the successor trustee. No successor trustee shall accept appointment as provided in this section unless at the time of such acceptance such successor trustee shall be eligible. No successor trustee shall be appointed under the provisions of this Resolution or be substituted for the present Trustee hereunder or for any successor of the present Trustee hereunder unless the Commissioner of Corporations of the State of California shall have been notified in writing of such proposed appointment or substitution and shall not have disapproved thereof within a period of fifteen (15) days after the giving of such notice SECTION 8.10. Merger or Consolidation of Trustee. Any corporation into which the Trustee may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Trustee, shall be the successor trustee hereunder, provided such corporation shall be eligible, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. SECTION 8.11. Requirements as to Trustee's Records. The records of the Trustee pertaining to the Bonds and to the Trustee hereunder shall be available to and open for inspection at all times by the Authority, City, County and any other public body, agency or commission having jurisdiction, and the Trustee shall retain in its possession all financial statements funished to it pursuant to this Resolution. 32 Proof of- November 3, 19W^- J.B.Co. — Phone 627 9514 ARTICLE IX EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND PROOFS OF OWNERSHIP OF BONDS SECTION 9.01. Method of Execution of Instruments by Bondholders. Any request, direction, consent or other instrument in writing required or permitted by this Resolution to be signed or executed by Bondholders may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Bondholders in person or by agent appointed by an instrument in writing. Proof of the execution of any such instrument and of the ownership of Bonds shall be sufficient for any purpose of this Resolution, and shall be conclusive, in favor of the Trustee with regard to any action taken under such instrument, if made in the following manner: (a) The fact and date of the execution by any person of any such instrument may be proved by the verification of any officer in any jurisdiction who, by the laws thereof, has power to take affidavits within such jurisdiction, to the effect that such instrument was subscribed and sworn to before him, or by an affidavit of a witness to such execution. (b) The fact of the holding of coupon Bonds by any Bondholder and the amount and the numbers of such Bonds and the date of his holding the same (unless such Bonds be registered) may be proved by the affidavit of the person claiming to be such Holder, if such affidavit shall be deemed by the Trustee to be satisfactory, or by a certificate executed by any trust company, bank, banker or any other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such person had on deposit with such trust company, bank, banker or other depositary the Bonds described in such certificate. The Trustee may conclusively assume that such ownership continues until written notice of the contrary is served upon the Trustee. The ownership of registered Bonds shall be proved by the registration books kept by the Trustee under the provisions of this Resolution. Nothing contained in this Article shall be construed as limiting the Trustee to such proof, it being intended that the Trustee may accept any other evidence of the matters herein stated which may seem sufficient. Any request or consent of the Holder of any Bond shall bind every future Holder of the same Bond in respect of anything done by the Trustee in pursuance of such request or consent. ARTICLE X SUPPLEMENTAL RESOLUTIONS SECTION 10.01. Without Consent of Bondholders. The Authority and the Trustee, may, from time to time and at any time, enter into such resolutions or agreements supplemental hereto as shall not be inconsistent with the terms and provisions hereof (which supplemental resolutions or agreements shall thereafter form a part hereof), (a) to cure any ambiguity or formal defect or omission in this Resolution or in any supple- mental agreement, or (b) to grant to or confer upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Bondholders or the Trustee. SECTION 10.02. With Consent of Bondholders. Subject to the terms and provisions contained in this section, and not otherwise, the Holders of not less than sixty percent (60%) in aggregate principal amount of the Bonds then outstanding (exclusive of issuer-owned Bonds) shall have the right, from time to time, anything contained in this Resolution to the contrary notwithstanding, to consent to and approve the execution by the Authority and the Trustee of such resolutions or agreements supplemental hereto as shall be deemed necessary or desirable by the Authority for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Resolution or in 33 Proof'of'November 3, 1967*^ J.B.Co. — Phone 627 9514 any supplemental resolution or agreement; provided, however, that nothing herein contained shall permit, or be construed as permitting, (a) an extension of the maturity of the principal of or interest on any outstanding Bonds, or (b) a reduction in the principal amount or redemption price of any outstanding Bonds or the rate of interest thereon, or (c) a reduction in the aggregate principal amount of the Bonds required for consent to such a supplemental resolution or agreement. Nothing herein contained, however, shall be construed as making necessary the approval by Bondholders of the execution of any supplemental resolutions or agreements. If at any time the Authority shall request the Trustee to enter into any supplemental resolution or agreement for any of the purposes of this section, the Trustee shall, at the expense of the Authority, cause notice of the proposed execution of such supplemental resolution or agreement to be published in a daily financial journal or newspaper of general circulation in the City of New York, New York, and shall also cause a similar notice to be mailed, postage prepaid, (1) to all Holders of registered Bonds, registered other than to bearer, then outstanding, at their addresses as they appear on the registration books hereinabove provided for, (2) to such Bondholders as have, within two (2) years preceding such transmission, filed their names and addresses with the Trustee for that purpose, and (3) to each Bond- holder whose name and address the Trustee shall receive and preserve in its capacity as Paying Agent hereunder. Such notice shall briefly set forth the nature of the proposed supplemental resolution or agreement and shall state that a copy thereof is on file at the office of the Trustee for inspection by all Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail the notice required by this section, and any such failure shall not affect the validity of such supplemental resolution or agreement when consented to and approved as provided in this section. Whenever at any time within one (1) year after the date of the first publication of such notice, the Authority shall deliver to the Trustee an instrument or instruments purporting to be executed by the Holders of not less than sixty percent (60%) in aggregate principal amount of the Bonds then outstanding (exclusive of issuer-owned Bonds), which instrument or instruments shall refer to the proposed supplemental resolution or agreement described in such notice, and shall specifically consent to and approve the execution thereof in substantially the form of the copy thereof referred to in such notice as on file with the Trustee, thereupon, but not otherwise, the Trustee may execute such supplemental resolution or agreement in substantially such form, without liability or responsibility to any Holder of any Bond, whether or not such Holder shall have consented thereto. If the Holders of not less than sixty percent (60%) in aggregate principal amount of the Bonds outstanding at the tune of the execution of such supplemental resolution or agreement (exclusive of issuer-owned Bonds) shall have consented to and approved the execution thereof as herein provided, no Holder of any Bond shall have any right to object to the execution of such supplemental resolution or agreement, or to object to any of the terms and provisions contained therein or the operation thereof, or hi any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Authority from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any supplemental resolution or agreement pursuant to the provisions of this section, this Resolution shall be, and be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Resolution of the Authority and the Trustee and all Holders of Bonds then outstanding shall thereafter bs determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments. SECTION 10.03. Approval by Counsel. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, the opinion of Bond Counsel, as conclusive evidence that any such proposed supplemental resolution or agreement complies with the provisions of this Resolution, and that it is proper for the Trustee, under the provisions of this Article, to join in the execution of such supple- mental resolution or agreement. 34 cProof of November 3, 196T«£-J.B.Co. — Phone 627 9514 SECTION 10.04. Approval by Authority and Bondholders. Notwithstanding anything contained in the foregoing provisions of this Resolution, the rights and obligations of the Authority and of the Holders of the Bonds, and the terms and provisions of the Bonds, and this Resolution or any supple- mental resolution or agreement, may be modified or altered in any respect with the consent of the Authority, the Trustee and the consent of the Holders of all of the Bonds then outstanding. ARTICLE XI DEFEASANCE SECTION 11.01. Payment of Bonds and Discharge of Resolution. If the Authority shall pay or cause to be paid, or there shall otherwise be paid, to the Holders of the Bonds and coupons, the principal and interest and redemption price, if any, to become due thereon, then the pledge of and lien upon revenues, the right, title and interest of the Trustee, and all other rights granted hereby, shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall cause an accounting for such period or periods as shall be requested by the Authority, to be prepared and filed with the Authority, and the Trustee, upon the request of the Authority, shall release this Resolution and execute and deliver to the Authority all such instruments as may be desirable to evidence such release, discharge and satisfaction, and the Trustee and the Paying Agent shall pay over or deliver to the Authority all moneys or securities held by them pursuant to this Resolution which are not required for the payment or redemption of Bonds or coupons not theretofore surrendered for such payment or redemption. SECTION 11.02. Bonds, Coupons and Redemption Price Deemed to be Repaid. Bonds or coupons for the payment and discharge of which upon maturity, or upon redemption prior to maturity, provision has been made through the setting apart in a reserve fund or special trust account created pursuant to this Resolution or otherwise to insure the payment thereof, of money sufficient for the purpose or through the irrevocable segregation for that purpose in some sinking fund or other fund or trust account of moneys sufficient therefor with the Trustee or otherwise shall, as provided in Section 1.02, no longer be deemed to be outstanding and unpaid; provided, however, that if any such Bonds are to be redeemed prior to the maturity thereof, the Authority shall have taken all action necessary to redeem such Bonds and notice of such redemption shall have been duly given or provision satisfactory to the Trustee shall have been made for the giving of such notice; and provided, further, that, if the maturity or redemption date of any such Bond shall not have arrived, provision shall have been made by the Authority by deposit with the Trustee or Paying Agent, or other method satisfactory to the Trustee, for the payment to the Holder of any such Bonds and coupons, upon surrender thereof, whether or not prior to the maturity or redemption date thereof, of the full amount to which they would be entitled by way of principal, redemption price or interest to the date of such maturity or redemption, and provision shall have been made by the Authority, satisfactory to the Trustee, for the publication, at least twice, at an interval of not less than seven (7) days between publications, in a daily financial journal or daily newspaper of general circulation published in the City of New York, State of New York, of a notice to the Holders of such Bonds and coupons that such moneys are so available for such payment. Moneys held for payment or redemption in accordance with the provisions of this section shall be deposited or invested by the Trustee, pursuant to Article VII hereof, to mature or be withdrawable, as the case may be, not later than the time when needed for such payment or redemption. Net interest earned on such investments shall remain in such special fund, if needed, or in lieu thereof shall be paid to the Revenue Fund. 35 Proof -of -November 3, 196?*^ J.B.Co. — Phone 627 9514 ARTICLE XII EVENTS OF DEFAULT AND REMEDIES OF BONDHOLDERS SECTION 12.01. Events of Default and Acceleration of Maturities. If one or more of the fol- lowing events (herein called "events of default") shall happen, that is to say— (a) if default shall be made in the due and punctual payment of the principal of, or premium (if any) on, any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise; (b) if default shall be made in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable, and such default shall have continued for a period of thirty (30) days; (c) if default shall be made by the Authority in the observance of any of the covenants, agreements or conditions on its part in this Resolution or in the Bonds contained, and such default shall have continued for a period of sixty (60) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Authority by the Trustee, or to the Authority and the Trustee by the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Bonds at the time outstanding; or (d) if the Authority fails to bring suit or other legal proceedings against the City for failure by the City to budget, appropriate or pay the amounts due the Authority under the Lease and such failure continues for a period of thirty (30) days after the City's failure to so budget, appropriate or pay; or (e) if, under the provisions of any law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property, and such custody or control shall not be terminated or stayed within sixty (60) days from the date of assumption of such custody or control; then and in each and every such case during the continuance of such event of default, the Trustee may or the Holders of not less than a majority in aggregate principal amount of the Bonds at the time outstanding shall be entitled, upon notice in writing to the Authority, to declare the principal of all of the Bonds then outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Resolution or in the Bonds contained to the contrary notwithstanding. This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, the Authority shall pay to or shall deposit with Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee, or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding, by written notice to the Authority and to the Trustee, may, on behalf of the Holders of all of the Bonds, rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. SECTION 12.02. Suits at Law or in Equity and Mandamus. In case one or more of the events of default shall happen, then, and in every such case, the Trustee may, and upon written request of not less than twenty percent (20%) in aggregate principal amount of the Bonds then outstanding (exclusive of issuer-owned Bonds), shall proceed to protect and enforce the rights vested in Bond- 36 L_J Proof of' November 3, 1967*^- J.B.Co Phone 627 9514 holders by this Resolution by appropriate judicial proceeding. The provisions of this Resolution and all resolutions or orders in the proceedings for the issuance of the Bonds shall constitute a contract with the Holders of the Bonds, and such contract may be enforced by any Bondholder by mandamus, injunction or other applicable legal action, suit, proceeding or other remedy. SECTION 12.03. Non-waiver. No delay or omission of the Trustee or of any Holder of any of the Bonds or coupons to exercise any right or power arising upon the happening of any event of default shall impair any such right or power or shall be construed to be a waiver of any such event of default or an acquiescence therein, and every power and remedy given by this Article XII to the Trustee or to the Holders of Bonds may be exercised from time to time and as often as shall be deemed expedient by the Trustee or the Holders of Bonds. SECTION 12.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee or to the Holders of Bonds is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise. ARTICLE XIII MISCELLANEOUS PROVISIONS SECTION 13.01. Liability of Authority Limited to Revenues. Notwithstanding anything in this Resolution contained, the Authority shall not be required to advance any moneys derived from any source of income other than the Revenues, for the payment of the principal of or interest on the Bonds or for the maintenance and operation of the Project. Nevertheless, the Authority may, but shall not be required to, advance for any of the purposes hereof any other funds of the Authority which may be made available to it for such purposes. SECTION 13.02. Successor to Authority. All of the covenants, stipulations, obligations and agreements contained in this Resolution by or in behalf of or for the benefit of the Authority shall bind or inure to the benefit of the successor or successors of the Authority from time to time, and any officer, board, corporation, commission, authority, agency or instrumentality to whom or to which any power or duty affecting such covenants, stipulations, obligations and agreements shall be transferred by or in accordance with law. SECTION 13.03. Notice. Any notice, demand, direction, request or other instrument authorized or required by this Resolution to be given to or filed with the Authority, the City or the Trustee shall be deemed to have been sufficiently given or filed for all purposes of this Resolution if and when delivered to or sent by registered mail, return receipt requested to: City— City Clerk, City Hall, Carlsbad, California. Authority— Secretary—.C/O City Clerk, City Hall, Carlsbad, California. Trustee — At its then principal office in San Diego, California or such other address as Trustee shall designate in writing for such purpose. All documents received by the Trustee under the provisions of this Resolution shall be retained in its possession, subject at all reasonable times to the inspection of the Authority, any Bondholder, and the agents and representatives thereof. SECTION 13.04. Severability. In case any one or more of the provisions of this Resolution or of the Bonds or coupons shall for any reason be held to be illegal or invalid, such illegality or invalidity 37 f - m i • Proof'of'November t, 1967*^ J.B.Co. — Phone 627 9514 shall not affect any other provision of this Resolution or of said Bonds or coupons, but this Resolution and said Bonds and coupons shall be construed and enforced as if such illegal or invalid provisions had not been contained therein. In case any covenant, stipulation, obligation or agreement contained in the Bonds or in this Resolution shall for any reason be held to be in violation of law, then such covenant, stipulation, or obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the Authority to the full extent permitted by law. SECTION 13.05. Personal Liability. No member of the Authority and no officer, agent or em- ployee thereof, or of the City, shall be individually or personally liable for the payment of the principal of or interest on the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. SECTION 13.06. Validity of Multiple Copies. This Resolution may be executed in multiple counter- parts, each of which shall be regarded for all purposes as an original; and such counterparts shall constitute but one and the same instrument. SECTION 13.07. Headings. Any headings preceding the texts of the several Articles hereof, and any table of contents or marginal notes appended to copies hereof, shall be solely for convenience of reference and shall not constitute a part of this Resolution, nor shall they affect its meaning, construction or effect. The foregoing Resolution is adopted by the Carlsbad Building Authority this 7th day of November, 1967, by the following vote: Ayes: Peterson, Helton and Jose Noes: None Absent: None Chairman Carlsbad Building Authority ; Secretary Carlsbad Building Authority 38 Proof' of November 3, 196^1 J.B.Co. — Phone 627 9514 t .* t SECRETARY'S CERTIFICATEClaud R. Helton I, , Secretary of Carlsbad Building Authority, hereby certify that the foregoing is a full, true and correct copy of a Resolution duly adopted at an adjourned special meeting of the members of said Authority duly and regularly held at the regular meeting place thereof on the 7th day of November, 1967, of which meeting all of the members of said Authority had due notice and at which a majority thereof was present; and that at said meeting said Resolution was adopted by the following vote: Ayes: Peterson, Helton and Jose Noes: None Absent: None I further certify that I have carefully compared the foregoing Resolution with the original minutes of said meeting on file and of record in my office; that said Resolution is a full, true and correct copy of the original Resolution adopted at said meeting and entered in said minutes; and that said Resolution has not been amended, modified or rescinded since the date of its adoption, and the same is now in full force and effect. WITNESS my hand and the seal of Carlsbad Building Authority this 7th day of November, 1967. . 2L. Secretary Carlsbad Building Authority 1 IN WITNESS WHEREOF, Trustee has caused this Indenture (called Resolution) to be executed by its Trust Officer and Assistant Trust Officer and its corporate seal affixed. UNITED STATES NATIONAL BANK Trustee Date of signing ^1967 (Seal) ; ^ Assistant Trust Officer 39