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2. The bonds may be redeemed and paid in advance of maturity upon the second day of January or July in any year by giving a notice provided by law and by paying principal and accrued interest together with a premium equal to five per cent (5%) of the principal. 3. The bonds shall be issued substantially in the form set forth in Section 8652 of the Streets and Highways Code. 4. The bonds shall be signed by the Treasurer and the City Clerk of the City, and the Clerk shall also affix the corporate seal of the City to the bonds. The coupons affixed to the bonds may be signed by the Treasurer by an engraved, printed or lithographed signature. 5. The proceeds from the sale of the bonds shall be placed in the fund hereby created, pursuant to Section 10602 and 10424 of the Streets and Highways Code, which shall be called the "Assessment District No. 246 Construction Fund" and the moneys in the fund shall be used only for the purposes authorized in the assessment proceedings. 6. The bonds shall be payable at the principal office of First Interstate Bank of California in Los Angeles, California, the Paying Agent of the City, and shall be paid out of the Redemption Fund created pursuant to Section 8671 of the Streets and Highways Code. In all respects not recited herein said bonds shall be governed by the provi- sions of the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code. 7. Pursuant to Section 8 of Resolution No. 81-119 and the provisions of Part 16 (commencing with Section 8880) of Division 10 of the Streets and Highways Code of the State of California, from the proceeds received from the sale of the bonds, the amount of $ 315.000 shall be deposited by the City Treasurer in a special reserve fund (the "Reserve Fund") which the City hereby covenants and agrees to main- tain. The Reserve Fund shall be designated and identified as the "Assessment District No. 246 Reserve Fund." The Reserve Fund shall constitute a trust fund for the benefit of the bondholders, and shall be maintained, used , trans- ferred, reimbursed and liquidated as follows: (a) Whenever there are insufficient funds in the Redemption Fund to pay the next maturing installment of the principal of or interest on the bonds, an amount necessary to pay such deficiency shall be advanced from the Reserve Fund to the Redemption Fund. The amounts so advanced shall be reimbursed from the proceeds of redemption or sale of the parcels for which payment of delinquent installments of assessments and interest thereon or real property taxes has been made from the Reserve Fund. (b) In the event unpaid assessments are paid in advance, in whole or in part, the assessments thus paid shall be proportionately reduced by an amount equal to the ratio of the total amount initially provided for the Reserve Fund to the total amount originally assessed in the proceedings for the issuance of the -2-