Article 4. Indentures of California Education Code >> Division 9. >> Title 3. >> Part 57. >> Chapter 5. >> Article 4.

The regents may enter into indentures providing for the aggregate principal amount, date or dates, maturities, interest rates, denominations, form, registration, transfer, and interchange of any revenue bonds and coupons issued pursuant to this chapter, and the terms and conditions on which the bonds shall be executed, issued, secured, sold, paid, redeemed, funded, and refunded. Reference on the face of the bonds to such indenture by its date of adoption, or the apparent date on the face thereof, is sufficient to incorporate all of the provisions of the indenture and of this chapter into the body of the bonds and their appurtenant coupons. Each taker and subsequent holder of the bonds or coupons, whether the coupons are attached to, or detached from, the bonds, has recourse to all of the provisions of the indentures and of this chapter, and is bound thereby.

An indenture pursuant to which bonds are issued may include any and all such convenants and agreements on the part of the regents as the regents deems necessary or advisable for the better security of the bonds issued pursuant to the indenture.

An indenture shall provide the means by which payments of principal and interest of bonds shall be secured.

An indenture may include a clause relating to the bonds issued pursuant to the indenture requiring the regents to pay or cause to be paid punctually the principal of all such bonds and the interest on such bonds on the date or dates, or at the place or places, and in the manner mentioned in such bonds and in the coupons appertaining to the bonds in accordance with such indenture.

The regents may include in an indenture such limitations as to competitive projects, both as to location and comparative rentals, as may be deemed necessary or desirable for the security of revenue bonds issued pursuant to this chapter.

The regents may also include in an indenture a covenant that no project acquired, constructed, or completed from the proceeds of revenue bonds issued by the regents shall be used without charge for such use or that no facilities of any such project shall be furnished free of charge to any person.

An indenture may include a clause relating to the bonds issued pursuant to the indenture, requiring the regents to operate the project continuously, to the extent practicable under conditions as they may from time to time exist, in an efficient and economical manner.

An indenture may include a clause relating to the bonds issued pursuant to the indentures requiring the regents to make all necessary repairs, renewals, and replacements to any project, and to keep the project at all times in good repair, working order, and condition.

An indenture may include a clause relating to the bonds issued pursuant to the indenture requiring the regents to preserve and protect the security of the bonds and the rights of the holders of the bonds and to warrant and defend such rights.

An indenture may include a clause relating to the bonds issued pursuant to the indenture requiring the regents to pay and discharge, or cause to be paid and discharged, all lawful claims for labor, materials, and supplies or other charges which, if unpaid, might become a lien or charge upon the revenues, or any part of the revenues, of any project acquired, constructed, or completed from the proceeds of the sale of the bonds, or upon any physicial properties, or which might impair the security of the bonds.

An indenture may include a clause relating to the bonds issued pursuant to the indenture which limits, restricts, or prohibits any right, power, or privilege of the regents to mortgage or otherwise encumber, sell, lease, or dispose of any improvements constructed from the proceeds of the bonds, or to enter into any lease or agreement which impairs or impedes the operation of a project, or any part of a project, necessary to secure adequate revenues or which otherwise impairs or impedes the rights of the holders of the bonds with respect to such revenues.

An indenture may include a clause relating to the bonds issued pursuant to the indenture requiring the regents to fix, prescribe, and collect rates, rentals, or other charges in connection with the services and facilities furnished from the project acquired, constructed, or purchased from part or all of the proceeds of the bonds, sufficient to pay the principal of, and interest on, the bonds as they become due and payable, together with such additional sums as may be required for any sinking fund, reserve fund, or other special fund provided for the further security of such bonds or as a depreciation charge or other charges in connection with such project.

An indenture may include a clause relating to the bonds issued pursuant to the indenture requiring the regents to hold, or cause to be held, in trust the revenues, or any part of revenues, pledged to the payment of such bonds and the interest on such bonds, or to any reserve or other fund created for the further protection of the bonds, and to apply such revenues, or part of revenues, or cause them to be applied only as provided in the indenture.

An indenture may include a clause defining the power of the regents in applying the proceeds of the sale of any issue of bonds for the acquiring, constructing, or completing of any project or any part of any project.

An indenture may include a clause limiting the power of the regents to issue additional bonds for the purpose of acquiring, constructing, or completing any project or any part of any project.

An indenture may include a clause requiring, specifying, or limiting the kind, amount, and character of insurance to be maintained by the regents on any project, or any part of any project, and the use and disposition of the proceeds of any such insurance thereafter collected.

An indenture may include a clause providing the events of default and the terms and conditions upon which any or all of the bonds of the regents then or thereafter issued may become or be declared due and payable prior to maturity, and the terms and conditions upon which such declaration and its consequences may be waived.

An indenture may include a clause designating the rights, limitations, powers, and duties arising upon breach by the regents of any of the covenants, conditions, or obligations contained in any indenture.

An indenture may include a clause prescribing procedure by which the terms and conditions of the indenture may be subsequently amended or modified with the consent of the regents and the vote or written assent of the holders of a specified principal amount or specified proportion of the bonds issued and outstanding. Such clause may provide for meetings of bondholders and for the manner in which the consent of the bondholders may be given. The clause shall specifically state the effect of such amendment or modification upon the rights of the holders of all of the bonds and interest coupons appertaining to the bonds, whether attached to the bonds or detached from the bonds.

With respect to any clause providing for the modification or amendment of an indenture, the regents may agree that bonds held by the regents or by the state or any political subdivision of the state, including any public corporation, board, or agency of any class or kind, shall not be counted as outstanding bonds, or be entitled to vote or assent, but shall, nevertheless, be subject to any such modification or amendment.

An indenture may include a clause or clauses providing for such other acts and matters as may be necessary or convenient or desirable in order better to secure the bonds or to make the bonds more marketable.

The regents may provide in an indenture that the proceeds from the sale of all revenue bonds authorized pursuant to this chapter shall be paid directly to any bank or trust company designated by the regents as the fiscal agent or depositary of the regents, to be held in a separate account to be designated the "construction fund" and to be disbursed in the manner and upon the conditions provided in the indenture for any of the following:
  (a) The acquisition, construction, and completion of the project, including the payment of the cost of all surveys, preparation of plans and specifications, and the payment of all architectural, engineering, legal, and administrative costs.
  (b) The payment of all costs and expenses of, and incident to, the issuance and sale of bonds.
  (c) The payment of interest due, or to become due, on the bonds during the period of actual construction, and for such further period as may be specified in the indenture for the issuance of the bonds not exceeding two years after the period of construction.

Moneys in any construction fund may be invested as the regents in its sole discretion shall determine, subject only to such limitations as may be provided in an indenture providing for the issuance of revenue bonds.

After all the revenue bonds shall have been fully paid and discharged, or provision for their payment and discharge irrevocably made, any surplus moneys in the construction fund shall, subject to the limitations and restrictions in any indenture providing for the issuance of the revenue bonds, become and be the property of the regents, and be used by the regents for any lawful purpose.