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ARTICLE V COVENANTS OF THE CITY; SPECIAL TAX COVENANTS SECTION 5.01 Punctual Payment; Compliance With Documents. The City shall punctually pay or cause to be paid the interest and principal to become due with respect to all of the Series 2019 Bonds in strict conformity with the terms of the Series 2019 Bonds and of this Indenture, and will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Contracts for Additional Obligations. SECTION 5.02 Against Encumbrances. The City will not mortgage or otherwise encumber, pledge or place any charge upon the facilities, suppliers or equipment or any part thereof, furnished by any of the Gas Tax Revenues, except as provided in the Indenture. SECTION 5.03 Discharge of Claims. The City covenants that in order to fully preserve and protect the priority and security of the Series 2019 Bonds the City shall pay from the Gas Tax Revenues and discharge all lawful claims for labor, materials and supplies furnished for or in connection with the Improvements which, if unpaid, may become a lien or charge upon the Gas Tax Revenues prior or superior to the lien of the Series 2019 Bonds and impair the security of the Series 2019 Bonds. The City shall also pay from the Gas Tax Revenues all taxes and assessments or other governmental charges lawfully levied or assessed upon or in respect of the Improvements or upon any part thereof or upon any of the Gas Tax Revenues therefrom. SECTION 5.04 Maintenance of Gas Tax Revenues. The City will use its best efforts to comply with all provisions of law and any regulations issued thereunder relating to the Gas Tax Revenues, including, but not limited to, Sections 2119 and 2151 through 2155 of the California Streets and Highways Code and Sections 65089.3 and 65089.4 of the California Government Code relating to conformance with the congestion management program relating to the City and will take any and all reasonable actions required in order to maintain the City's ability to receive the Gas Tax Revenues and apply the same as provided herein; provided, that nothing herein shall require the City to take any action or expend any City funds to comply with any such requirements deemed unreasonable in the sole discretion of the City, so long as failure to take such action or expend such funds will not cause the amount of estimated Gas Tax Revenues to be received by the City in the next Fiscal Year to be less than one hundred fifty percent (150%) of the Maximum Annual Debt Service as of the date of calculation. SECTION 5.05 Records and Accounts. The City covenants that it shall keep proper books of record and accounts of the Gas Tax Fund, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the Gas Tax Fund. Said books shall, upon reasonable request, be subject to the inspection of the Owners of not less than ten percent (10%) of the Outstanding Series 2019 Bonds or their representatives authorized in writing. The City covenants that it will cause the Gas Tax Fund to be audited annually by an Independent Certified Public Accountant and will make available for inspection by the Bond Owners at the Principal Corporate Trust Office of the Trustee in Los Angeles, California, upon reasonable request, a copy of the report of such Independent Certified Public Accountant. 55394.00055\32329348.3 554-40