HomeMy WebLinkAboutSpecial Meeting #1
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. CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
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From: Fred Wilson, City Administrator
Subject: RESOLUTION OF THE CITY OF
SAN BERNARDINO AUTHORIZING THE
ISSUANCE OF ONE OR MORE SERIES OF
PENSION OBLIGATION BONDS,
APPROVING THE FORM OF AND
AUTHORIZING THE EXECUTION AND
DELIVERY OF A TRUST AGREEMENT,
AND AUTHORIZING A V ALIDA nON
ACTION AND OTHER MATTERS
RELATING THERETO
Dept: City Administrator's Office
Date: March 2, 2005
MICC Meeting Date: March 7, 2005
Synopsis of Previous Council Action:
February 23, 2005 - Ways and Means Committee forwards the CSCDA Pension
Obligation Bond program proposal, along with Public Financial Management's (PFM)
review and the PERS actuarial for consideration by the Mayor and Council
Recommended Motion:
Adopt resolution.
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Signature J
Contact person: I=rprl INil"nn
Phone:
5122
Supporting data attached: staff report resolution, Ward: all
other documents
FUNDING REQUIREMENTS:
Amount: none
Source: (Ace!. No.)
(Ace!. Description)
Finance:
Council Notes:
Agenda Item No.
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RESOLUTION NO.
RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
ISSUANCE OF ONE OR MORE SERIES OF PENSION OBLIGATION BONDS,
APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND
DELIVERY OF A TRUST AGREEMENT, AND AUTHORIZING A VALIDATION
ACTION AND OTHER MATTERS RELATING THERETO
WHEREAS, the legislative body (the "Legislative Body") of the City of San
Bernardino (the "Local Agency") adopted a retirement plan pursuant to the Public Employees'
Retirement Law, commencing with Section 20000 of the Government Code of the State of
California, as amended (the "Retirement Law"); and
WHEREAS, the Retirement Law obligates the Local Agency to (I) make
annual contributions to the California Public Employees' Retirement System (the "System"), to
fund pension benefits for its employees, (2) amortize the unfunded accrued actuarial liability
with respect to such pension benefits, and (3) appropriate funds for the purposes described in
(I) and (2); and
WHEREAS, the obligation of the Local Agency to pay its unfunded accrued
actuarial liability to the System ( the "Pension Obligation") is evidenced by a contract between
the Local Agency and the System, dated March I, 1945, as heretofore and hereafter amended
from time to time (collectively, the "PERS Contract"); and
WHEREAS, the Local Agency desires to issue bonds (the "Pension Obligation
Bonds") in an aggregate principal amount not to exceed the Pension Obligation, plus an
additional amount to pay costs of issuance of the Pension Obligation Bonds, for the purpose of
refunding the PERS Contract and thereby providing funds to the System in payment of all or
part of the Pension Obligation and to authorize the issuance of additional bonds in the future
from time to time for the purpose of paying the obligations of the Local Agency to the Systern
required pursuant to the Retirement Law, including (i) all or a portion of the unfunded accrued
actuarial liability of the Local Agency remaining unpaid on the date of issuance of such
additional bonds and (ii) refunding the Pension Obligation Bonds or additional series of bonds;
and
WHEREAS, there is on file with the Legislative Body the proposed form of
Trust Agreement (the "Trust Agreement") to be entered into between the Local Agency and a
financial institution to be selected as trustee (the "Trustee"), relating to the Pension Obligation
Bonds, including the forms of Bonds attached thereto as an exhibit.
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF
THE CITY OF SAN BERNARDINO AS FOLLOWS;
Section I, This Legislative Body hereby finds and declares that the issuance of
the Pension Obligation Bonds to refund the Pension Obligation, and the other actions
contemplated by this Resolution are in the best interests of the Local Agency and are
anticipated to result in savings based on current actuarial assumptions.
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RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
1 ISSUANCE OF ONE OR MORE SERIES OF PENSION OBLIGATION BONDS,
APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND
2 DELIVERY OF A TRUST AGREEMENT, AND AUTHORIZING A VALIDATION
ACTION AND OTHER MATTERS RELATING THERETO
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Section 2. This Legislative Body hereby authorizes and approves the issuance
of the Pension Obligation Bonds and hereby authorizes and directs the Mayor to execute the
Pension Obligation Bonds, and to cause the Pension Obligation Bonds to be authenticated and
delivered in accordance with the Trust Agreement. The Pension Obligation Bonds shall be in
substantially the forms attached to the Trust Agreement, with such changes therein, deletions
therefrom and additions thereto as the Mayor shall approve, such approval to be conclusively
evidenced by the execution and delivery of the Pension Obligation Bonds; the Pension
Obligation Bonds may be issued as either current interest fixed rate bonds, listed securities,
capital appreciation bonds, index bonds or auction rate securities or a combination thereof, and
may be issued in a single series or in two or more series, at one time or from time to time,
provided, however, that the aggregate initial principal amount of the Pension Obligation Bonds
shall not exceed the amount of the Pension Obligation (as confirmed by the System or the
Local Agency's actuary) remaining unpaid on the date of issuance of the Pension Obligation
Bonds, plus an additional amount to pay costs of issuance of the Pension Obligation Bonds.
original issue discount, and underwriter's discount on the Pension Obligation Bonds (such
underwriter's discount, excluding original issue discount, not to exceed one percent (I %) of the
aggregate principal amount of the Pension Obligation Bonds, provided that, if listed securities
are issued, the underwriter's discount for the listed securities shall not exceed three percent
(3%) of the aggregate principal amount of the listed securities); the maximum interest rate on
each series of the Pension Obligation Bonds which are issued as fixed rate bonds, including
current interest fixed rate bonds, listed securities or capital appreciation bonds shall not exceed
seven and one-half percent (7.5%) per annum and the maximum interest rate on each series of
the Pension Obligation Bonds which are issued as variable rate bonds, including index bonds or
auction rate securities shall not exceed seventeen percent (17%) per annum; and the Pension
Obligation Bonds shall mature not later than thirty (30) years following their date of issuance.
The Pension Obligation Bonds shall constitute an obligation imposed by law, pursuant to the
Constitution of the State of California and the Retirement Law and an obligation of the Local
Agency not limited as to payment from any special source of funds, The Pension Obligation
Bonds shall not, however, constitute an obligation of the Local Agency for which the Local
Agency is obligated to levy or pledge any form of taxation or for which the Local Agency has
levied or pledged any form of taxation,
Section 3. The proposed form of Trust Agreement, between the Local Agency
and the Trustee, on file with the City Clerk, is hereby approved. The Mayor, the City
Administrator and the City Clerk (the "Authorized Representatives") are each hereby
authorized and directed, severally, or any such officer's designee, for and on behalf of the
Local Agency, to execute and deliver the Trust Agreement, substantially in the form on file
with the City Clerk, with such changes therein, deletions therefrom and additions thereto
(including, but not limited to changes, deletions and additions as may be required by a
municipal bond insurer) as such Authorized Representative shall approve, such approval to be
conclusively evidenced by the execution and delivery of the Trust Agreement. Pursuant to the
terms of the Trust Agreement, the Legislative Body hereby approves the issuance of additional
series of bonds in the future from time to time (which additional series of bonds may be current
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RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
ISSUANCE OF ONE OR MORE SERIES OF PENSION OBLIGATION BONDS,
APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND
DELIVERY OF A TRUST AGREEMENT, AND AUTHORIZING A VALIDATION
ACTION AND OTHER MATTERS RELATING THERETO
interest fixed rate bonds, listed securities, capital appreciation bonds, index bonds, auction rate
securities, variable rate bonds or tender option bonds) pursuant to supplemental trust
agreements, subject to the limitations contained in the Trust Agreement presented to this
meeting, for the purpose of refunding the Pension Obligation Bonds or any additional series of
bonds from time to time issued pursuant to a supplemental trust agreement or for the purpose of
paying the obligations of the Local Agency to the System required pursuant to the Retirement
Law, including all or a portion of the unfunded accrued actuarial liability of the Local Agency
remaining unpaid on the date of issuance of such additional series of bonds.
Section 4. This Legislative Body hereby finds and determines that the entering
into of an interest rate swap agreement in the form of the International Swap Dealers
Association Master Agreement with appropriate schedules, confirmations and other related
documents (the "Swap Agreement") with a counterparty pursuant to Section 5922 of the
California Government Code in a notional amount not exceeding the aggregate authorized
principal amount of the Pension Obligation Bonds is designed to result in a lower cost of
borrowing for such Pension Obligation Bonds, and the Authorized Representatives are hereby
authorized to negotiate a Swap Agreement with a counterparty in a notional amount not
exceeding the aggregate principal amount of any Pension Obligation Bonds, with a view to
reducing the Local Agency's cost of borrowing evidenced and represented by such Pension
Obligation Bonds, and the Authorized Representatives are hereby authorized and directed,
severally, or any such officer's designee, for and on behalf of the Local Agency, to execute and
deliver the Swap Agreement, substantially in the form on file with the City Clerk, with such
changes therein, deletions therefrom and additions thereto (including, but not limited to
changes, deletions and additions as may be required by a municipal bond insurer) as such
Authorized Representative shall approve, such approval to be conclusively evidenced by the
execution and delivery of the Swap Agreement; provided, that (i) no Swap Agreement shall
have a term extending beyond the stated final maturity date of the Pension Obligation Bonds;
(ii) the net amounts, if any, payable by the Local Agency with respect to a Swap Agreement
shall be payable solely and exclusively from lawfully available moneys of the Local Agency,
and (iii) each Swap Agreement shall provide for receipt of payment by the Local Agency at
each payment date under the Swap Agreement of the net amounts, if any, owed under the Swap
Agreement.
Section 5. If an Authorized Representative determines that it will be
advantageous to the Local Agency to purchase municipal bond insurance or secure other credit
or liquidity enhancement with respect to some or all of the Pension Obligation Bonds, such
Authorized Representative or his designee is hereby authorized to do so at market rates.
Section 6. This Legislative Body hereby designates Orrick, Herrington &
Sutcliffe LLP ("Orrick"), as bond counsel for the Pension Obligation Bonds, with bond counsel
services to consist of and be limited to rendering an opinion on the validity of the Pension
Obligation Bonds, the preparation of documents providing for the issuance of the Pension
Obligation Bonds and the validation action relating to the Pension Obligation Bonds, This
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RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
ISSUANCE OF ONE OR MORE SERIES OF PENSION OBLIGATION BONDS,
APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND
DELIVERY OF A TRUST AGREEMENT, AND AUTHORIZING A VALIDATION
ACTION AND OTHER MATTERS RELATING THERETO
Legislative Body hereby agrees to compensate Orrick in the amount of $7,500 to cover a
portion of the cost of the validation action (plus court filing fees and publication costs if paid
by Orrick), such amount to be paid from proceeds of the Pension Obligation Bonds, or if the
Local Agency does not for any reason (including, without limitation, a challenge to the
validation action) issue Pension Obligation Bonds prior to or during the 2005-2006 Fiscal Year,
from any available funds of the Local Agency, In the event the Pension Obligation Bonds are
issued for purchase by the California Statewide Communities Development Authority (the
"Pool Bond Issuer"), all other fees and expenses of Orrick shall be the responsibility of the
Pool Bond Issuer to be paid from proceeds of bonds (the "Pool Bonds") issued by the Pool
Bond Issuer to purchase the Local Agency's Pension Obligation Bonds. If the Local Agency
issues Pension Obligation Bonds in reliance on the validation and other than for purchase by
the Pool Bond Issuer and substitutes a firm other than Orrick as bond counsel, the Legislative
Body hereby agrees to compensate Orrick an additional $7,500 to more clearly approximate its
true fees and costs associated with the validation action, such amount to be paid from proceeds
of the Pension Obligation Bonds or from any available funds. This Legislative Body hereby
acknowledges and consents to and waives any conflict arising from the appointment of Orrick
also as bond counsel and issuer counsel to the Pool Bond Issuer in connection with the Pool
Bonds,
Section 7. The Authorized Representatives of the Local Agency are, and each
of them hereby is, authorized and directed to do any and all things, including bringing a
validation action under Section 860 of the California Code of Civil Procedure, and to take any
and all actions (including any required publications of summons or other notice) and execute
and deliver any and all documents which they or any of them deem necessary or advisable in
order to consummate the transactions contemplated by this Resolution and the Trust Agreement
and otherwise to carry out, give effect to and comply with the terms and intent of this
Resolution and the Trust Agreement, including supplying information for and approving any
portion of any official statement or any future continuing disclosure for the Pool Bonds
pertaining to the Local Agency and approving any bond purchase agreement between the Pool
Bond Issuer and the Local Agency or between the Pool Bond Issuer and the underwriter of the
Pool Bonds, including any representations, warranties or covenants of the Local Agency
contained therein,
Section 8, This Resolution shall take effect from and after its date of adoption,
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RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING THE
ISSUANCE OF ONE OR MORE SERIES OF PENSION OBLIGATION BONDS,
APPROVING THE FORM OF AND AUTHORIZING THE EXECUTION AND
DELIVERY OF A TRUST AGREEMENT, AND AUTHORIZING A VALIDATION
ACTION AND OTHER MATTERS RELATING THERETO
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor
5 and Common Council of the City of San Bernardino at a
meeting thereof, held on the
6 day of
.2005, by the following vote, to wit:
7 Council Members:
NAYS
ABSTAIN ABSENT
AYES
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ESTRADA
LONGVILLE
MCGINNIS
DERRY
KELLEY
JOHNSON
City Clerk
The foregoing resolution is hereby approved this
day of
2005.
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Judith Valles, Mayor
City of San Bernardino
Approved as to
Form and legal content:
JAMES F. PENMAN,
City Attorney
By: ~/hJ.o t. P~
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THIS TRUST AGREEMENT made and entered into as of June 1,2005 (the
"Trust Agreement") by and between WELLS FARGO BANK, NATIONAL ASSOCIATION, a
national banking association duly organized and existing under and by virtue of the laws of the
United States of America, as Trustee (the "Trustee") and the CITY OF SAN BERNARDINO
(the "Local Agency"), a duly organized, validly existing and operating local agency (as defined
in Section 53570 of the California Government Code), under the laws of the State of California,
WIT N E SSE T H:
WHEREAS, the Local Agency is obligated by the Public Employees' Retirement
Law, commencing with Section 20000 of the Government Code of the State of California, as
amended (the "Retirement Law"), to make payments to the California Public Employees'
Retirement System (the "System") relating to pension benefits accruing to the System's
members; and
WHEREAS, the Local Agency has entered into a contract with the System dated
March I, 1945, as heretofore and hereafter amended from time to time (the "PERS Contract"),
evidencing the Local Agency's obligation to pay the Local Agency's unfunded accrued actuarial
liability; and
WHEREAS, the Local Agency is authorized pursuant to Articles 1 0 and 11
(commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of the Government Code
of the State of California (the "Act") to issue bonds for the purpose of refunding any evidence of
indebtedness of the Local Agency; and
WHEREAS, for the purpose of refunding the Local Agency's obligations to the
System evidenced by the PERS Contract, the Local Agency has determined to issue its City of
San Bernardino Taxable Pension Obligation Bonds, 2005 Series A, in the aggregate principal
amount of [Par Amount) (the "2005 Series A Bonds" and, collectively with Additional Bonds,
the "Bonds"), all pursuant to and secured by this Trust Agreement providing for the issuance of
Bonds, all in the manner provided herein; and
WHEREAS, in order to provide for the authentication and delivery of the Bonds,
to establish and declare the terms and conditions upon which the Bonds are to be issued and to
secure the payment of the principal thereof and interest thereon, the Local Agency has authorized
the execution and delivery of this Trust Agreement; and
WHEREAS, all acts and proceedings required by law necessary to make the
Bonds, when executed by the Local Agency, authenticated and delivered by the Trustee and duly
issued, the valid, binding and legal obligations of the Local Agency payable in accordance with
their terms, and to constitute this Trust Agreement a valid and binding agreement of the parties
hereto for the uses and purposes herein set forth in accordance with its terms, have been done
and taken, and the execution and delivery of this Trust Agreement have been in all respects duly
authorized;
NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH, that in
order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at
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any time issued and outstanding under this Trust Agreement, according to their tenor, and to
secure the peIformance and observance of all the covenants and conditions therein and herein set
forth, and to declare the terms and conditions upon and subject to which the Bonds are to be
issued and received, and in consideration of the premises and of the mutual covenants herein
contained and of the purchase and acceptance of the Bonds by the holders thereof, and for other
valuable consideration, the receipt whereof is hereby acknowledged, the Local Agency does
hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to
time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
SECTION 1.01. Definitions, Unless the context otherwise requires, the terms
defined in this section shall for all purposes hereof and of any Supplemental Trust Agreement
and of any certificate, opinion, request or other document herein or therein mentioned have the
meanings herein specified:
"AN' Financial Commercial Paner Rate
The term ." AA' Financial Commercial Paper Rate," on any date of determination
for any Auction Rate Period, means:
(i) (A) for any Standard Auction Rate Period of 35 days or any
Special Auction Rate Period of fewer than 49 days, the interest equivalent of the 30-day
rate, and (B) for any Special Auction Rate Period of: (1) 49 or more but fewer than 70
days, the interest equivalent of the 60-day rate; (2) 70 or more but fewer than 85 days, the
arithmetic average of the interest equivalent of the 60-day and 90-day rates; (3) 85 or
more but fewer than 99 days, the interest equivalent of the 90-day rate; (4) 99 or more but
fewer than 120 days, the arithmetic average of the interest equivalent of the 90-day and
the l20-day rates; (5) 120 or more but fewer than 141 days, the interest equivalent of the
120-day rate; (6) 141 or more but fewer than 162 days, the arithmetic average of the
interest equivalent of the 120-day and 180-day rates; and (7) 162 or more but fewer than
183 days, the interest equivalent of the 180-day rate, in each case on commercial paper
placed on behalf of entities whose corporate bonds are rated "Aa" by Moody's or "AA"
by S&P or Fitch, or the equivalent of such rating by Moody's, S&P or Fitch or another
rating agency, as made available on a discount basis or otherwise by the Federal Reserve
Bank of New York for the Business Day immediately preceding such date of
determination; or
(ii) if the Federal Reserve Bank of New York does not make available
any such rate, then the arithmetic average of such rates, as quoted on a discount basis or
otherwise, by the Commercial Paper Dealers to the Auction Agent for the close of
business on the Business Day immediately preceding such date of determination;
provided, that if any Commercial Paper Dealer does not quote a commercial paper rate required
in order to make the foregoing determinations, the "AA" Financial Commercial Paper Rate shall
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be determined on the basis of such quotations as may be furnished by a substitute Commercial
Paper Dealer or Dealers selected by the Local Agency, For the purpose of this definition, the
"interest equivalent" means the equivalent yield of an interest-bearing security on a 360-day
basis or a rate stated on a discount basis (a "discount rate") for commercial paper of a given
number of days maturity shall be equal to the product of (A) 100, times (B) the quotient (rounded
upwards to the next higher one-thousandth (0,001) of I % of ((x) the discount rate (expressed in
decimals) divided by (y) the difference between (I) 1.0 and (2) a fraction, the numerator of
which shall be the product of the discount rate (expressed in decimals) times the number of days
in which such commercial paper matures, and the denominator of which shall be 360),
Accreted Value
The "Accreted Value" means, with respect to any Capital Appreciation Bond, an
amount equal to the principal amount of such Bond, plus interest accrued thereon from its date
compounded on each Interest Payment Date (through and including the maturity date of such
Bond) at the "original issue yield" for such Bond; provided, that the Accreted Value on any date
other than an Interest Payment Date shall be calculated by straight line interpolation of the
Accreted Values as of the immediately preceding and succeeding Interest Payment Date. The
term "original issue yield" means, with respect to any particular Bond, the yield to maturity of
such Bond from the initial date of delivery thereof calculated on the basis of semiannual
compounding on each Interest Payment Date,
Act
The term "Act" means Articles 10 and 11 (commencing with Section 53570) of
Chapter 3 of Division 2 of Title 5 of the Government Code of the State ofCalifomia.
Additional Bonds
The term "Additional Bonds" means all Bonds of the Local Agency authorized by
and at any time Outstanding pursuant hereto and executed, issued and delivered in accordance
with Article III.
Aggregate Principal Amount
The term "Aggregate Principal Amount" means, as of any date of calculation, the
principal amount or Accreted Value of the Bonds referred to,
Auction Rate Securities
The term "Auction Rate Securities" means all Bonds issued in such Mode prior to
their Fixed Rate Conversion Date, if any, in anyone or more Tranches,
Authorized Denominations
The term "Authorized Denominations" means (a) as to Bonds issued as Standard
Bonds, $5,000 principal amount or any integral multiple thereof; (b) as to Bonds issued as Listed
Securities, $25,00 principal amount or any integral multiple thereof; (c) as to Bonds issued as
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Auction Rate Securities, $25,000 principal amount or any integral multiple thereof; (d) as to
Capital Appreciation Bonds, $5,000 Maturity Amount or any integral multiple thereof; (e) as to
Bonds issued as Index Bonds, $5,000 principal amount or any integral multiple thereof; and
(f) any other principal amount or integral multiple thereof as provided in a Supplemental Trust
Agreement.
Authorized Renresentatives
The term "Authorized Representatives" means the Mayor, City Administrator and
City Clerk of the City of San Bernardino,
Beneficial Owner
The term "Beneficial Owner" means, (a) as to Auction Rate Securities, a customer
of a Broker-Dealer (other than the Local Agency) who is listed on the records of that Broker-
Dealer (or, if applicable, the Auction Agent) as a holder of Auction Rate Securities; and (b) as to
all Bonds that are not issued in the form of Auction Rate Securities, the beneficial owner of each
such Bond, determined under the rules ofDTC.
Bond Fund
The term "Bond Fund" means the Bond Fund established in Section 4.01(b) of
this Trust Agreement.
. Bonds
The term "Bonds" means the 2005 Series A Bonds and all Additional Bonds,
Business Day
The term "Business Day" means any day other than a Saturday or Sunday or day
upon which the Trustee is authorized by law to remain closed,
Calculation Agent
The term "Calculation Agent" means the Calculation Agent for Index Bonds,
designated in a Supplemental Trust Agreement or in Schedule I hereto, or its successor appointed
by the Local Agency,
Capital Aonreciation Bonds
The term "Capital Appreciation Bonds" means Bonds the interest on which is
payable at maturity and compounded on each Interest Payment Date through and including the
maturity dates thereof as specified in the Accreted Value Table for such Bonds attached hereto as
Exhibit F or in a similar exhibit to a Supplemental Trust Agreement.
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Certificate of the Local Agency
The term "Certificate of the Local Agency" means an instrument in writing signed
by anyone of the Authorized Representatives of the Local Agency or such officer's designee, or
by any other officer of the Local Agency duly authorized by the Common Council of the Local
Agency in writing to the Trustee for that purpose, If and to the extent required by the provisions
of Section 10,07, each Certificate of the Local Agency shall include the statements provided for
in Section 10.07,
Closing Date for the 2005 Series A Bonds
The term "Closing Date" means the date on which the 2005 Series A Bonds are
delivered to the Original Purchaser for the 2005 Series A Bonds,
Commercial Paper Dealers
The term "Commercial Paper Dealers" means those entities designated in a
Supplemental Trust Agreement or in Schedule I hereto or in lieu of any thereof, its affiliates or
successors, if such entity is a commercial paper dealer; provided that in the event that any
Commercial Paper Dealer should fail to qualify as a commercial paper dealer, the Local Agency
may appoint another organization to serve as a Commercial Paper Dealer hereunder.
Coroorate Trust Office
. The term "Corporate Trust Office" means such corporate trust office of the
Trustee as may be designated from time to time by written notice from the Trustee to the Local
Agency, initially being Los Angeles, California, The Trustee may designate in writing to the
Local Agency and the Holder such other office or agency from time to time for purposes of
registration, transfer, exchange, payment or redemption of Bonds,
Costs ofIssuance
The term "Costs of Issuance" rneans all items of expense directly or indirectly
payable by or reimbursable to the Local Agency and related to the Bonds, including, but not
limited to, costs of preparation and reproduction of documents, costs of rating agencies and costs
to provide information required by Tating agencies, filing and recording fees, initial fees and
charges of the Trustee, legal fees and charges, fees and disbursements of consultants and
professionals, fees and expenses of the underwriter or placement agent, fees and charges fOT
preparation, execution and safekeeping of the Bonds, premiums for bond insurance, if any, and
any other cost, charge or fee in connection with the original execution and delivery ofthe Bonds,
Costs ofIssuance Fund
The term "Costs ofIssuance Fund" means the Costs ofIssuance Fund established
in Section 2,II(b) of this Trust Agreement.
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Defeasance Securities
The term "Defeasance Securities" means:
(I) Cash (insured at aU times by the Federal Deposit Insurance Corporation);
and
(2) Obligations of or obligations guaranteed as to principal and interest by, the
United States or any agency or instrumentality thereof, when such obligations are backed by the
full faith and credit ofthe United States, including:
. U,S, Treasury obligations
. AU direct or fully guaranteed obligations
. Farmers Home Administration
. General Services Administration
. Guaranteed Title XI financing
. Government National Mortgage Association (GNMA)
. State and Local Government Series
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Any security used for defeasance must provide for the timely payment of
principal and interest and cannot be callable or prepayable prior to maturity or earlier redemption
of the rated debt (excluding securities that do not have a fixed par value and/or whose terms do
not promise a fixed dollar amount at maturity or call date),
Financial Newsoaner
The term "Financial Newspaper" means The Wall Street Journal or The Bond
Buver, or any other newspaper or journal printed in the English language, publishing financial
news and selected by the Trustee, who shall be under no liability by reason of such selection,
Fiscal Year
The term "Fiscal Year" means the twelve-month period terminating on June 30 of
each year, or any other annual accounting period hereafter selected and designated by the Local
Agency as its Fiscal Year in accordance with applicable law,
Fixed Rate
The term "Fixed Rate" means a rate of interest that does not change during a
specific term, without adjustment, resetting or variation due to the effects of marketing,
remarketing or indices,
Fixed Rate Bonds
The term "Fixed Rate Bonds" means those Bonds which, by their terms, have
been issued in denominations of$5,000 principal amount or any integral multiple thereof, bear
. interest at regular fixed rates, payable semiannually (except that the first interest period with
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respect thereto may be less than six months but not more than twelve months following their
Closing Date), and shall include Standard Bonds and those Bonds issued as Listed Securities,
Holder
The term "Holder" means any person who shall be the registered owner of any
Outstanding Bond,
Indenendent Certified Public Accountant
The term "Independent Certified Public Accountant" means any certified public
accountant or firm of such accountants duly licensed and entitled to practice and practicing as
such under the laws of the State or a comparable successor, appointed and paid by the Local
Agency, and who, or each of whom --
(I) is in fact independent according to the Statement of Auditing
Standards No. I and not under the domination of the Local Agency;
(2) does not have a substantial financial interest, direct or indirect, in the
operations of the Local Agency; and
(3) is not connected with the Local Agency as a member, officer or
employee of the Local Agency, but who may be regularly retained to audit the
accounting records of and make reports thereon to the Local Agency.
Index Adiustment Date
The term "Index Adjustment Date" means each Thursday (whether or not such
day is a Business Day), commencing on the Closing Date; however, if the Closing Date is a
Thursday, then the first Index Adjustment Date shall mean the first Thursday following the
Closing Date,
Index Bonds
The term "Index Bonds" means those Bonds which have been issued in
denominations of $5,000 principal amount or integral multiples thereof and bear interest at an
Index Rate,
Index Rate
The term "Index Rate" means the interest rate on Index Bonds established
according to LffiOR, as provided in Section 2,02(e) below,
Index Rate Determination Date
The term "Index Rate Determination Date" means the first Business Day of the
applicable Index Rate Period,
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Index Rate Period
The term "Index Rate Period" means, with respect to the Index Bonds, each
period commencing on an Index Adjustment Date and ending on the day before the next Index
Adjustment Date.
Interest Account
The term "Interest Account" means the account by that name established in
Section 4,02 of this Trust Agreement.
Interest Accrual Date
The term "Interest Accrual Date" means each date established for the accrual and
compounding of interest on Capital Appreciation Bonds, initially as set forth in Schedule I hereto
and as may be modified as set forth in a Supplemental Trust Agreement.
Interest Payment Date
The term "Interest Payment Date" means each date upon which interest is due on
the Bonds (or, with respect to Capital Appreciation Bonds, compounded), as initially set forth in
Schedule I hereto or as set forth in any Supplemental Trust Agreement.
Interest Rate Period
The term "Interest Rate Period" means any designated period during which a
Series of Bonds are Outstanding in the form of Auction Rate Securities or bear interest at the
Index Rate,
LIB OR
The term "LIB OR" on any date of determination for any Auction Rate Period,
means:
(i) subject to clause (ii) below, (A) for any Standard Auction Rate
Period or any Special Auction Rate period of fewer than 49 days, the offered rate for
deposits in U.S. dollars for a one-month period which appears on Telerate Page 3750 at
approximately 11:00 a.m" London time, on such date, or if such date is not a London
Business Day, then on the next preceding London Business day (the "calculation date")
and (b) for any Special Auction Rate period of (i) 49 or more but fewer than 70 days,
such rates for deposits in U,S, dollars for a two-month period; (ii) 70 or more but fewer
than 85 days, the arithmetic average of such rates for deposits in U.S. dollars for two-and
three-month periods; (iii) 85 or more but fewer than 120 days, such rate for deposits in
U,S, dollars for a three-month period; (iv) 120 or more but fewer than 148 days, the
arithmetic average of such rates for deposits in U.S, dollars for three-and six-month
periods; (v) 148 or more but fewer than 180 days, such rate for deposits in U.S, dollars
for a six-month period; (vi) 180 or more but fewer than 225 days, the arithmetic average
of such rates for deposits in U,S, dollars for six- and nine-month periods; (vii) 225 or
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more but fewer than 290 days, such rate for deposits in U.S, dollars for a nine-month
period; (viii) 290 or more but fewer than 325 days, the arithmetic average of such rates
for deposits in U.S, dollars for nine-month and one-year periods; and (ix) 325 days or
more, such rate for deposits in U,S. dollars for a one-year period; or
(ii) if, on any calculation date, no rate appears on Telerate Page 3750
as specified in clause (i) above, the arithmetic average of the offered quotations offour
major banks in the London interbank market, selected by the Market Agent for deposits
in u.s. dollars for the respective periods specified in clause (i) above to prime banks in
the London interbank market at approximately 11 :00 a,m" London time, on such
calculation date and in a principal amount of not less than $1,000,000 that is
representative of a single transaction in such market at such time, unless fewer than two
such quotations are provided, in which case, the arithmetic average of the rates quoted at
approximately 11:00 a,m" New York time, on the date next preceding such calculation
date by three major banks in the City of New York, selected by the Market Agent, for
loans in U,S. dollars to leading European banks in a principal amount of not less than
$1,000,000 that is representative of a single transaction in such market at such time,
LffiOR Spread
The term "LffiOR Spread" means the percentage of LffiOR established on the
Closing Date for the affected Bonds, as provided in a Supplemental Trust Agreement or in
Schedule I hereto,
Listed Securities
The term "Listed Securities" means those Bonds which, by their terms, bear
interest at regular fixed rates of interest, issued in denominations of$25,OO principal amount and
integral multiples thereof, which are listed on the New York Stock Exchange,
Local Agency
The term "Local Agency" means the City ofSim Bernardino, California.
London Business Dav
The term "London Business Day" means a day that is a Business Day and a day
on which dealings in deposits in U,S, dollars are transacted, or with respect to any future date,
are expected to be transacted, in the London, U,K., interbank market.
Maturitv Amount
The term "Maturity Amount" means the Accreted Value of any Capital
Appreciation Bond on its maturity date,
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Mode
The term "Mode" means the Principal Amount, Authorized Denomination,
interest rate and payment structure, including any methodology for the reset thereof, for any
Series of Bonds, This Trust Agreement authorizes the issuance of Bonds in the following
Modes: Fixed Rate Bonds, Listed Securities, Auction Rate Securities, Capital Appreciation
Bonds, Index Bonds and any other Mode as set forth in a Supplemental Trust Agreernent.
Opinion of Counsel
The term "Opinion of Counsel" means a written opinion of counsel of recognized
national standing in the field oflaw relating to municipal bonds, appointed and paid by the Local
Agency,
Original Purchaser of the 2005 Series A Bonds
The term "Original Purchaser of the 2005 Series A Bonds" means California
Statewide Communities Development Authority,
Outstanding
The term "Outstanding," when used as of any particular time with reference to
Bonds, means (subject to the provisions of Section 7,02) all Bonds except
(I) Bonds theretofore cancelled by the Trustee or surrendered to the
Trustee for cancellation;
(2) Bonds paid or deemed to have been paid within the meaning of
Section 9,01; and
(3) Bonds in lieu of or in substitution for which other Bonds shall have
been executed, issued and delivered by the Local Agency pursuant hereto,
Permitted Investments
The term "Permitted Investments" means any of the following to the extent
permitted by the laws of the State:
(1) Defeasance Securities;
(2) Obligations of any of the following federal agencies which
obligations represent the full faith and credit of the United States of America, including:
. Export-Import Bank
. Rural Economic Community Development Administration
. U,S, Maritime Administration
. Small Business Administration
. U.S, Department of Housing & Urban Development (PHA's)
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. Federal Housing Administration
. Federal Financing Bank;
(3) Direct obligations of any of the following federal agencies which
obligations are not fully guaranteed by the full faith and credit of the United States of America:
. Senior debt obligations issued by the Federal National Mortgage
Association (FNMA) or the Federal Home Loan Mortgage
Corporation (FHLMC)
· Obligations of the Resolution Funding Corporation (REFCORP)
· Senior debt obligations of the Federal Home Loan Bank System
. Senior debt obligations of other Government Sponsored Agencies
approved by the 2005 Series A Bond Insurer;
(4) U.S, dollar denominated deposit accounts, federal funds and
bankers' acceptances with domestic commercial banks (including the Trustee and its affiliates)
which have a rating on their short-term certificates of deposit on the date of purchase of"P-l" by
Moody's Investors Service, Inc. and "A-I" or "A-1+" by Standard & Poor's Ratings Services
and which mature not more than three hundred sixty (360) calendar days after the date of
purchase. (Ratings on holding companies are not considered as the rating of the bank):
(5) Commercial paper which is rated at the time of purchase in the
single highest classification, "P-l" by Moody's Investors Service, Inc, and "A-l+" by Standard
& Poor's Ratings Services and which matures not more than two hundred seventy (270) calendar
days after the date of purchase;
(6) Investments in a money market fund rated "AAAm" or "AAAm-
G" or better by Standard & Poor's Ratings Services, including funds for which the Trustee or its
affiliates provide investment advisory or other management services;
(7) Pre-refunded municipal obligations defined as follows: Any bonds
or other obligations of any state of the United States of America or of any agency,
instrumentality or local governmental unit of any such state which are not callable at the option
of the obligor prior to maturity or as to which irrevocable instructions have been given by the
obligor to call on the date specified in the notice; and
(A) which are rated, based on an irrevocable escrow account or fund (the
"escrow"), in the highest rating category of Moody's Investors Service, Inc, and
Standard & Poor's Ratings Services or any successors thereto; or
(B) which are fully secured as to interest and principal and redemption
premiums, if any, by an escrow consisting only of cash or obligations described in
paragraph (2) of the definition of Defeasance Securities, which escrow may be
applied only to the payment of such interest and principal and redemption
premiums, if any, on such bonds or other obligations on the maturity date or dates
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thereof or the specified redemption date or dates pursuant to such irrevocable
instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a
nationally recognized independent certified public accountant, to pay principal of
and interest and redemption premiums, if any, on the bonds or other obligations
described in this paragraph on the maturity date or dates specified in the
irrevocable instructions referred to above, as appropriate;
(8) Municipal obligations rated "AaalAAA" or general obligations of
States with a rating of "A2! A" or higher by both Moody's Investors Service, Inc, and Standard &
Poor's Ratings Services;
(9) Investment agreements approved in writing by the 2005 Series A
Bond Insurer (supported by appropriate opinions of counsel);
(10) The Local Agency Investment Fund (as that term is defined in
Section 16429.1 of the Government Code of the State, as such Section may be amended or
recodified from to time); and
(11) Other forms of investments (including repurchase agreements)
approved in writing by the 2005 Series A Bond Insurer,
The value of the above investments shall be determined as follows:
(b) For the purpose of determining the amount in any fund, all Permitted
Investments credited to such fund shall be valued at fair market value, The Trustee shall
determine the fair market value based on accepted industry standards and from accepted industry
providers, Accepted industry providers shall include but are not limited to pricing services
provided by Financial Times Interactive Data Corporation, Merrill Lynch, Salomon Smith
Barney, Bear Stearns, or Lehman Brothers;
(c) As to certificates of deposit and bankers' acceptances, the face amount
thereof, plus accrued interest thereon; and
(d) As to any investment not specified above, the value thereof established by
prior agreement among the Local Agency, the Trustee and the 2005 Series A Bond Insurer,
Princioal Account
The term "Principal Account" means the account by that name established in
Section 4,02 of this Trust Agreement.
PERS Contract
The term "PERS Contract" means the contract dated March 1, 1945, between the
Local Agency and the System, as heretofore and hereafter amended from tirne to time,
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Principal Amount
The term "Principal Amount" means (a) as to any Fixed Rate Bond, Auction Rate
Security or Index Bond, the principal amount thereof; or (b) as to any Capital Appreciation
Bond, the Maturity Amount thereof.
Principal Payment Date
The term "Principal Payment Date" means a date on which principal is due on the
Bonds as set forth in a Supplemental Trust Agreement or on Schedule I attached hereto.
Oualified Swap Agreement
The term "Qualified Swap Agreement" or "Swap Agreement" means (i) any
ISDA Master Swap Agreement, by and between the Local Agency and a Qualified Swap
Provider, which includes Schedule A thereto and the applicable Commitment, (a) that is entered
into by the Local Agency with an entity that is a Qualified Swap Provider at the time the
arrangement is entered into; (b) which provides that the Local Agency shall pay to such entity an
amount based on the interest accruing at a Fixed Rate on an amount equal to the principal
amount of Outstanding Bonds covered by such Swap Agreement, if any, and that such entity
shall pay to the Local Agency an amount based on the interest accruing on a principal amount
equal to the then-Outstanding principal amount of the affected Bonds, at a variable rate of
interest computed according to a formula set forth in the Swap Agreement (which need not be
the same formula by which the Auction Rate, if applicable, is calculated) or that one shall pay to
the other any net amount due under such arrangement; and (c) which has been designated in
writing to the Trustee in a Certificate of the Local Agency as a Qualified Swap Agreement with
respect to the affected Bonds,
Oualified Swap Provider
The term "Qualified Swap Provider" means with respect to the counterparty under
any other Swap Agreement meeting the requirements of the definition thereof, a financial
institution approved by the Local Agency, and (A) the long-term, unsecured and unsubordinated
obligations of which are rated at the time of execution of the related Qualified Swap Agreement
by at least one Rating Agency as described in clause (i) below and by at least one other Rating
Agency as described in clause (ii) below: (i) at least "Aa3" by Moody's or "M-" by S&P or
Fitch and (ii) not lower than "A2" by Moody's or "A" by S&P or Fitch"; or (B) the obligations
of which under the particular Qualified Swap Agreement and any Swap Policy related thereto are
unconditionally guaranteed by a bank or non-bank financial institution, the long-term, unsecured
and unsubordinated obligations of which are rated at the time of execution of the Qualified
Swap Agreement by at least one Rating Agency as described in clause (i) above and by at least
one other rating agency as described in clause (ii) above,
Rating Agencies
The term "Rating Agencies" means Moody's Investors Service, Inc, and Standard
& Poor's Corporation, or, in the event that Moody's Investors Service, Inc, or Standard & Poor's
Corporation no longer maintains a rating on the Bonds, any other nationally recognized bond
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rating agency then maintaining a rating on the Bonds, but, in each instance, only so long as
Moody's Investors Service, Inc., Standard & Poor's Corporation or other nationally recognized
rating agency then maintains a rating on the Bonds.
Record Date
The term "Record Date" means the date set forth as such in a Supplemental Trust
Agreement or on Schedule I attached hereto.
Refunding Fund
The term "Refunding Fund" means the fund by that name established in
Section 2,1 I (a) of this Trust Agreement.
Renorted Rate
The term "Reported Rate" means the rate that appears on Telerate Page 3750 or a
successor reporter of such rates, selected by the Calculation Agent and acceptable to the Local
Agency.
Retirement Law
The term "Retirement Law" means the Public Employees' Retirement Law,
commencing with Section 20000 of the Government Code of the State of California, as amended,
Serial Bonds
The term "Serial Bonds" rneans Bonds for which no sinking fund payments are
provided,
Series
The term "Series" means all of the Bonds designated as being within a certain
series, regardless of variations in maturity date, interest rate (but within the same Mode),
redemption and other provisions, and any Bonds thereafter issued in transfer or exchange for
such Bonds pursuant to this Trust Agreement.
Standard Bonds
The term "Standard Bonds" means those Fixed Rate Bonds issued in Authorized
Denominations of $5,000 and any integral multiple thereof.
State
The term "State" means the State of California,
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Surolus Account
The term "Surplus Account" means the account by that name established in
Section 4,02 of this Trust Agreement.
Supplemental Trust Agreement
The term "Supplemental Trust Agreement" means any trust agreement then in full
force and effect which has been duly executed and delivered by the Local Agency and the
Trustee amendatory hereof or supplemental hereto; but only if and to the extent that such
Supplemental Trust Agreement is specifically authorized hereunder,
Swap Payments
The term "Swap Payments" means any of the periodic payments due from the
Local Agency pursuant to the terms of a Qualified Swap Agreement.
Svstem
The term "System" means the California Public Employees' Retirement System.
Telerate Page 3750
The term "Telerate Page 3750" means the display designated on page 3750 on
Moneyline Telerate, Inc, (or such other page as may subsequently replace the 3750 page on that
service or such other service as may be nominated by the British Banker's Association for the
purpose of displaying London interbank offered rates for U,S, dollar deposits),
Term Bonds
The term 'Term Bonds" means Bonds which are payable on or before their
specified maturity dates from sinking fund payments established for that purpose and calculated
to retire such Bonds on or before their specified maturity dates,
Tranche
The term "Tranche" means the designated portion of a Series of Bonds sharing a
particular Mode and other characteristics, Each Tranche of Bonds within a Series of Bonds must
be within the same Mode,
Treasurv Note Rate
The term "Treasury Note Rate" means (a) the bond equivalent yield, calculated in
accordance with prevailing industry conventions, of the rate on the most recently auctioned
direct obligation of the United States Government having a remaining maturity closest to the
length of the applicable Auction Rate Period, as quoted in The Wall Street Journal on such date
for the Business Day next preceding such date; or (b) in the event that such rate is not published
in The Wall Street Journal, then the bond equivalent yield, calculated in accordance with
DOCSSFl :80 1656.1
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prevailing industry conventions, as calculated by reference to the arithmetic average of the bid
price quotations of the most recently auctioned direct obligation of the United States
Government having a remaining maturity closest to the length of the applicable Auction Rate
Period, based on bid price quotations on such date obtained by the Auction Agent from the U,S,
Government Securities Dealers,
Trust Agreement
The term "Trust Agreement" means this Trust Agreement, dated as of June I,
2005, between the Local Agency and the Trustee, as originally executed and as it may from time
to time be amended or supplemented by all Supplemental Trust Agreements executed pursuant to
the provisions hereof.
Trustee
The term 'Trustee" means Wells Fargo Bank, National Association, or any other
association or corporation which may at any time be substituted in its place as provided in
Section 6,01.
Written Request of the Local Agency
The term "Written Request of the Local Agency" means an instrument in writing
signed by anyone of the Authorized Representatives of the Local Agency or such officer's
designee, or by any other officer of the Local Agency duly authorized by the Common Council
of the Local Agency in writing to the Trustee for that purpose.
2005 Series A Bond Insurer
The term "2005 Series A Bond Insurer means the municipal bond insurer, if any,
designated in Schedule I hereto,
2005 Series A Bonds
The term "2005 Series A Bonds" means the Standard Bonds of the Local Agency
of that Series designation authorized by and at any time Outstanding pursuant hereto and
executed, issued and delivered in accordance with Section 2,02(a) hereof,
SECTION 1.02. Trust Agreement Constitutes Contract. In consideration of the
acceptance of the Bonds by the Holders thereof, the Trust Agreement shall be deemed to be and
shall constitute a contract among the Local Agency, the Trustee and the Holders from time to
time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to
provide for the payment of the interest on and principal of and redemption premiums, if any, on
all Bonds which may from time to time be authorized, executed, issued and delivered hereunder,
subject to the agreements, conditions, covenants and provisions contained herein; and all
agreements and covenants set forth herein to be performed by or on behalf of the Local Agency
shall be for the equal and proportionate benefit, protection and security of all Holders of the
Bonds without distinction, preference or priority as to security or otherwise of any Bonds over
any other Bonds by reason of the number or date thereof or the time of authorization, sale,
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execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided
herein or therein.
ARTICLE II
ISSUANCE OF 2005 SERIES A BONDS; GENERAL BOND PROVISIONS
SECTION 2.01. Authorization and Purpose of 2005 Series A Bonds, The Local
Agency has reviewed all proceedings heretofore taken relative to the authorization of the 2005
Series A Bonds and has found, as a result of such review, and hereby finds and determines that
all acts, conditions and things required by law to exist, to have happened and to have been
performed precedent to and in the issuance of the 2005 Series A Bonds do exist, have happened
and have been performed in due time, form and manner as required by law, and that the Local
Agency is now duly authorized, pursuant to each and every requirement of the Act, to issue the
2005 Series A Bonds in the form and manner and for the purpose provided herein and that the
2005 Series A Bonds shall be entitled to the benefit, protection and security of the provisions
hereof,
The obligations of the Local Agency under the Bonds, including the obligation to
make all payments of interest and principal when due, are obligations of the Local Agency
imposed by law and are absolute and unconditional, without any right of set-off or counterclaim,
The Bonds do not constitute an obligation of the Local Agency for which the Local Agency is
obligated to levy or pledge any form of taxation, Neither the Bonds nor the obligation of the
Local Agency to make payments on the Bonds constitute an indebtedness of the Local Agency,
the State of California, or any of its political subdivisions within the meaning of any
constitutional or statutory debt limitation or restriction,
SECTION 2.02. Terms of the 2005 Series A Bonds; General Bond Provisions,
The 2005 Series A Bonds shall be designated "City of San Bernardino Taxable Pension
Obligation Bonds, 2005 Series A" and shall be in the aggregate principal amount of [Par
Amount) ([Par Amount)), consisting of Standard Bonds in the aggregate principal amount of
[Par Amount).
(a) Description of2005 Series A Standard Bonds, The 2005 Series A Standard
Bonds shall be dated the date of original delivery, shall be issued only in fully registered form in
denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars
($5,000) (not exceeding the principal amount of2005 Series A Bonds maturing at anyone time),
and shall mature on the dates and in the principal amounts and bear interest at the rates as set
forth in Schedule I hereto.
The 2005 Series A Standard Bonds shall bear interest at the rates (based on a 360-
day year of twelve 30-day months) set forth above, payable on the Interest Payment Dates for the
2005 Series A Standard Bonds, The 2005 Series A Standard Bonds shall bear interest from the
Interest Payment Date next preceding the date of authentication thereof, unless such date of
authentication is an Interest Payment Date or during the period from the sixteenth day of the
month preceding an Interest Payment Date to such Interest Payment Date, in which event they
shall bear interest from such Interest Payment Date, or unless such date of authentication is prior
DOCSSF\:80!656.!
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to the first Record Date, in which event they shall bear interest from their dated date; provided,
however, that if at the time of authentication of any 2005 Series A Standard Bond interest is then
in default on the Outstanding 2005 Series A Standard Bonds, such 2005 Series A Standard Bond
shall bear interest from the Interest Payment Date to which interest has previously been paid or
made available for payment on the Outstanding 2005 Series A Standard Bonds, Payment of
interest on the 2005 Series A Standard Bonds due on or before the maturity or prior redemption
thereof shall be made to the person whose name appears in the 2005 Series A Bonds registration
books kept by the Trustee pursuant to Section 2.08 as the registered owner thereof as of the close
of business on the Record Date for an Interest Payment Date, whether or not such day is a
Business Day, such interest to be paid by check mailed on the Interest Payment Date by first-
class mail to such registered owner at the address as it appears in such books; provided that upon
the written request of a Holder of $1,000,000 or more in aggregate principal amount of Bonds
received by the Trustee prior to the applicable Record Date, interest shall be paid by wire
transfer in immediately available funds, Any such written request shall remain in effect until
rescinded in writing by the Holder.
The principal of the 2005 Series A Standard Bonds shall be payable in lawful
money of the United States of America at the Corporate Trust Office ofthe Trustee, Payment of
the principal of the 2005 Series A Standard Bonds shall be made upon the surrender thereof at
maturity or on redemption prior to maturity at the Corporate Trust Office of the Trustee,
(b) Description of Capital Appreciation Bonds, The Local Agency may issue
Capital Appreciation Bonds as Additional Bonds pursuant to the terms and provisions of
Article III hereof. The Capital Appreciation Bonds shall be dated the date of original delivery,
shall be issued only in fully registered form in the denominations of five thousand dollars
($5,000) Accreted Value at maturity, or any integral multiple thereof, and interest thereon shall
be computed at the rates, as set forth in the Supplemental Trust Agreement authorizing the
Capital Appreciation Bonds,
The interest on the Capital Appreciation Bonds shall be compounded (on the basis
of a 360-day year composed of twelve thirty (30)-day months) at the respective rates set forth
above on the Interest Payment Dates for the Capital Appreciation Bonds and shall be payable on
their maturity date or redemption prior thereto as part of the final Accreted Value for a Capital
Appreciation Bond (as set forth in the Accreted Value Table attached to the Supplemental Trust
Agreement authorizing such Bonds), The Accreted Value for each Capital Appreciation Bond
shall be determined by reference to the Accreted Value Table attached to the Supplemental Trust
Agreement authorizing such Bonds and the interest rate set forth in the Supplemental Trust
Agreement authorizing such Bonds above is for illustrative purposes only,
(c) Description of Listed Securities, The Local Agency may issue Listed
Securities as Additional Bonds pursuant to the terms and provisions of Article III hereof, The
Listed Securities shall be dated the date of original delivery, shall be issued only in fully
registered form in denominations of twenty-five dollars ($25,00) or any integral multiple of
twenty-five dollars ($25,00) (not exceeding the principal amount of Bonds maturing at anyone
time), and shall mature on the dates and in the principal amounts and bear interest at the rates as
. set forth in the Supplemental Trust Agreement authorizing such Listed Securities.
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The Listed Securities shall bear interest at the rates (based on a 360-day year of
twelve 30-day months) set forth in the Supplemental Trust Agreement authorizing such Bonds,
payable on the Interest Payment Dates for the Listed Securities, The Listed Securities shall bear
interest from the Interest Payment Date next preceding the date of authentication thereof, unless
such date of authentication is an Interest Payment Date or during the period from the sixteenth
day of the month preceding an Interest Payment Date to such Interest Payment Date, in which
event they shall bear interest from such Interest Payment Date, or unless such date of
authentication is prior to the first Record Date, in which event they shall bear interest from their
dated date; provided, however, that if at the time of authentication of any Listed Security interest
is then in default on the Outstanding Listed Securities, such Listed Security shall bear interest
from the Interest Payment Date to which interest has previously been paid or made available for
payment on the Outstanding Listed Securities. Payment of interest on the Listed Securities due
on or before the maturity or prior redemption thereof shall be made to the person whose name
appears in the Bonds registration books kept by the Trustee pursuant to Section 2.08 as the
registered owner thereof as of the close of business on the Record Date for an Interest Payment
Date, whether or not such day is a Business Day, such interest to be paid by check mailed on the
Interest Payment Date by first-class mail to such registered owner at the address as it appears in
such books; provided that upon the written request of a Holder of $1 ,000,000 or more in
aggregate principal amount of Bonds received by the Trustee prior to the applicable Record
Date, interest shall be paid by wire transfer in immediately available funds, Any such written
request shall remain in effect until rescinded in writing by the Holder,
The principal of the Listed Securities shall be payable in lawful money of the
United States of America at the Corporate Trust Office of the Trustee, Payment ofthe principal
of the Listed Securities shall be made upon the surrender thereof at maturity or on redemption
prior to maturity at the Corporate Trust Office of the Trustee,
(d) Descrintion of Auction Rate Securities, The Local Agency may issue Auction
Rate Securities as Additional Bonds pursuant to the terms and provisions of Article ill hereof.
The Auction Rate Securities shall be dated the date of original delivery, shall be issued only in
fully registered form in denominations of twenty five thousand dollars ($25,000) or any integral
multiple thereof (not exceeding the principal amount of2005 Series A Bonds maturing at any
one time), and shall mature on the dates and in the principal amounts and bear interest at the
rates as set forth in the Supplemental Trust Agreement authorizing such Auction Rate Securities,
The Auction Rate Securities shall bear interest at the rates, shall be payable on the
dates, and shall be subject to the terms and provisions, as set forth in the Supplemental Trust
Agreement authorizing such Auction Rate Securities,
The principal of the Auction Rate Securities shall be payable in lawful money of
the United States of America at the Corporate Trust Office of the Trustee; provided, however,
that payments of principal of Auction Rate Securities, at maturity or upon earlier redemption,
shall be made by wire transfer of immediately available funds to the Securities Depository so
long as the Auction Rate Securities are in book-entry form, unless such method of payment of
principal shall have been modified by written agreement among the Trustee, the Securities
. Depository and the Auction Agent.
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(e) Description ofIndex Bonds, The Local Agency may issue Index Bonds as
Additional Bonds pursuant to the terms and provisions of Article III hereof. The Index Bonds
shall be dated the date of original delivery, shall be issued only in fully registered form in
denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars
($5,000) (not exceeding the principal amount of Bonds maturing at anyone time), and shall
mature on the dates and in the principal amounts and bear interest at the rates as set forth in the
Supplemental Trust Agreement authorizing such Bonds,
Unless otherwise set forth in the Supplemental Trust Agreement authorizing such
Bonds, the Index Bonds shall bear interest as follows:
(a) On or immediately prior to the Closing Date, the Purchaser of the Bonds shall
determine and the Local Agency shall approve the LIBOR Spread to apply to Index Bonds
issued hereunder, reflected in the Supplemental Trust Agreement authorizing such Additional
Bonds.
(b) On each Index Rate Determination Date until the end of the applicable Index
Rate Period (each, an "Index Adjustment Date"), the Calculation Agent will (i) calculate the
interest rate for the Index Bonds, based on the LIBOR Spread, and (ii) notify the Trustee of
such interest rate, which shall apply to all Index Bonds until the immediately following Index
Adjustment Date.
(c) Promptly upon the calculation of the Index Rate by the Calculation Agent, and
notification thereof to the Trustee, the Trustee will notify the Local Agency of the Index Rate for
the applicable period, The Index Rate calculated by the Calculation Agent, absent manifest
error, shall be binding and conclusive upon the Beneficial Owners, the Owners, the Local
Agency, the Calculation Agent and the Trustee,
(d) If the following circumstances exist on any Index Rate Determination Date,
the Index Rate shall be determined by the following alternative method: (i) In the event that no
Reported Rate appears on Telerate Page 3750 as of approximately 11 :00 a,m" London, U.K"
time, on an Index Rate Determination Date, the Index Rate for that week shall be based on the
Reported Rate for the preceding week; provided, however, that if no Reported Rate appears in
Telerate Page 3750 for two consecutive weeks, the Index Rate shall be determined by the
Calculation Agent and shall be the minimum percentage of four-week U,S. Treasury Bills that
would have been necessary (as determined in the best business judgment of the Calculation
Agent, based on its examination of taxable municipal obligations comparable to the Index Bonds
known by the Calculation Agent to have been priced or traded under then-prevailing marketing
conditions) to permit the Calculation Agent to sell the Index Bonds on such date and at the time
of such determination at their principal amount (without regard to accrued interest), if the Index
Bonds were being sold on such date.
( e) If the appropriate interest rate or LIB OR Spread is not or cannot be
determined for Index Bonds for whatever reason, the method of determining the interest rate for
the Index Bonds shall automatically be established in accordance with paragraph (d) of this
Section, until such time as the LIBOR Spread can again be determined based on the available
published LIB OR.
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The principal of the Index Bonds shall be payable in lawful money of the United
States of America at the Corporate Trust Office of the Trustee, Payment of the principal of the
Index Bonds shall be made upon the surrender thereof at maturity or on redemption prior to
maturity at the Corporate Trust Office of the Trustee,
SECTION 2.03. Redemption of2005 Series A Bonds,
(a) Ootional Redemption. The 2005 Series A Bonds maturing
are subject to optional redemption prior to their maturity at the option of
the Local Agency, in whole or in part (and if in part, pro rata as described below) on any date, at
a redemption price equal to the greater of:
(I) 100 percent of the principal amount of the 2005 Series A Bonds to
be redeemed; or
(2) the sum of the present values of the remaining scheduled payments
of principal and interest on the 2005 Series A Bonds to be redeemed (exclusive of
interest accrued to the date fixed for redemption) discounted to the date of
redemption on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Rate (defined below) plus 10 basis points,
plus in each case, accrued and unpaid interest on the 2005 Series A Bonds being redeemed to the
date fixed for redemption,
"Comparable Treasury Issue" means, with respect to any redemption date for a
particular 2005 Series A Bond, the US Treasury security or securities selected by the
Independent Investment Banker which has an actual or interpolated maturity comparable to the
remaining average life of the applicable 2005 Series A Bond to be redeemed, and that would be
utilized in accordance with customary financial practice in pricing new issues of debt securities
of cornparable maturity to the remaining average life of the 2005 Series A Bond to be redeemed,
"Comparable Treasury Price" means, with respect to any redemption date for a
particular 2005 Series A Bond, (I) the average of the Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest Reference Treasury Deal
Quotations, or (2) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such quotations,
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee in consultation with the Local Agency.
"Reference Treasury Dealer" means each of the dealers designated in Schedule I
hereto and their respective successors and three other firms, specified by the Local Agency from
time to time, that are primary U,S, Government securities dealers in the City of New York (each
a "Primary Treasury Dealer"); provided, however, that if any of them ceases to be a Primary
Treasury Dealer, the Local Agency will substitute another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date for a particular 2005 Series A Bond, the average, as
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determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m" New York City time, on the third business date
preceding such redemption date,
"Treasury Rate" means, with respect to any redemption date for a particular 2005
Series A Bond, the rate per annum equal to the semiannual equivalent yield to maturity or
interpolated maturity of the Comparable Treasury Issue, assuming that the Comparable Treasury
Issue is purchased on the redemption date for a price equal to the Comparable Treasury Price,
(b) Mandatorv Sinking Fund Redemntion, The 2005 Series A Term Bonds are
subject to mandatory sinking fund redemption on the dates and in the amounts designated in
Schedule I hereto, upon notice hereinafter provided,
(c) Selection of Bonds for Redemption, Redemption payments on the 2005
Series A Bonds, being redeemed in part will be made on a pro rata basis to each holder in whose
name such Bonds are registered at the close of business on the fifteenth day of the calendar
month immediately preceding the redemption date, "Pro rata" means, in connection with any
mandatory sinking fund redemption or any optional redemption in part, with respect to the
allocation of amounts to be redeemed, the application to such amounts of a fraction, the
numerator of which is equal to the amount of the specific maturity of the 2005 Series A Bonds
held by a holder of such Bonds, and the denominator of which is equal to the total amount of
such maturity of 2005 Series A Bonds, then Outstanding,
So long as the Authority is the Holder of all 2005 Series A Bonds, neither the
Local Agency nor the Trustee will have responsibility for prorating partial redemptions,
(d) Notice of Redemntion, Notice of redemption of2005 Series A Bonds shall be
mailed by first-class mail by the Trustee, not less than thirty (30) nor more than sixty (60) days
prior to the redemption date to the respective Holders of the Bonds designated for redemption at
their addresses appearing on the registration books of the Trustee, Each notice of redemption
shall state the date of such notice, the redemption price, if any, (including the name and
appropriate address of the Trustee), the CUSIP number (if any) of the maturity or maturities, and,
ifless than all of any such maturity is to be redeemed, the distinctive certificate numbers of the
2005 Series A Bonds of such maturity, to be redeemed and, in the case of 2005 Series A Bonds
to be redeemed in part only, the respective portions of the principal amount thereof to be
redeemed. Each such notice shall also state that on said date there will become due and payable
on each of said Bonds the redemption price, if any, thereof and in the case of a 2005 Series A
Bond to be redeemed in part only, the specified portion of the principal amount thereof to be
redeemed, together with interest accrued thereon to the redemption date, and that from and after
such redemption date interest thereon shall cease to accrue, and shall require that such 2005
Series A Bonds be then surrendered at the address of the Trustee specified in the redemption
notice, Failure to receive such notice or any defect therein shall not invalidate any of the
proceedings taken in connection with such redemption.
In the event ofredemption of Bonds (other than sinking fund redemptions), the
Trustee shall mail a notice of redemption upon receipt of a Written Request of the Local Agency
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but only after the Local Agency shall file a Certificate of the Local Agency with the Trustee that
on or before the date set for redemption, the Local Agency shall have deposited with or
otherwise made available to the Trustee for deposit in the Principal Account the money required
for payment of the redemption price, including accrued interest, of all Bonds then to be called for
redemption (or the Trustee determines that money will be deposited with or otherwise made
available to it in sufficient time for such purpose), together with the estimated expense of giving
such notice,
If notice of redemption has been duly given as aforesaid and money for the
payment of the redemption price of the Bonds called for redemption is held by the Trustee, then
on the redemption date designated in such notice Bonds so called for redemption shall become
due and payable, and from and after the date so designated interest on such Bonds shall cease to
accrue, and the Holders of such Bonds shall have no rights in respect thereof except to receive
payment of the redemption price thereof.
All Bonds redeemed pursuant to the provisions of this section shall be cancelled
by the Trustee and shall be destroyed with a certificate of destruction furnished to the Local
Agency and shall not be reissued,
SECTION 2.04. Fonn of Bonds, The Bonds and the authentication endorsement
and assignment to appear thereon shall be substantially in the fonns set forth in Exhibit A,
Exhibit B, Exhibit C, Exhibit D and Exhibit E attached hereto and by this reference herein
incorporated and in the forms set forth in a Supplemental Trust Agreement.
SECTION 2.05. Execution of Bonds, The City Administrator is hereby
authorized and directed to execute each of the Bonds on behalf of the Local Agency and the City
Clerk of the Local Agency is hereby authorized and directed to countersign each of the Bonds on
behalf of the Local Agency, The signatures of such City Administrator and City Clerk may be
by printed, lithographed, engraved or otherwise reproduced by facsimile reproduction, In case
any officer whose signature appears on the Bonds shall cease to be such officer before the
delivery of the Bonds to the purchaser thereof, such signature shall nevertheless be valid and
sufficient for all purposes as if such officer had remained in office until such delivery of the
Bonds.
Only those Bonds bearing thereon a certificate of authentication in the fonn
hereinbefore recited, executed manually and dated by the Trustee, shall be entitled to any benefit,
protection or security hereunder or be valid or obligatory for any purpose, and such certificate of
the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly
authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection
and security hereof,
SECTION 2.06. Transfer and Payment of Bonds, Any Bond may, in accordance
with its terms, be transferred in 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 Bonds for cancellation at the Corporate Trustee Office of the
Trustee, accompanied by delivery of a duly executed written instrument of transfer in a form
acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the
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Local Agency shall execute and the Trustee shall authenticate and deliver to the transferee a new
Bond or Bonds of the same series and maturity for a like aggregate principal amount. The cost
of printing Bonds and any services rendered or expenses incurred by the Trustee in connection
with any transfer shall be paid by the Local Agency, The Trustee shall require the payment by
the Holder requesting such transfer of any tax or other governmental charge required to be paid
with respect to such transfer as a condition precedent to the exercise of such privilege,
The Local Agency and the Trustee may deem and treat the registered owner of
any Bond as the absolute owner of such Bond for the purpose of receiving payment thereof and
for all other purposes, whether such Bonds shall be overdue or not, and neither the Local Agency
nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the
interest on and principal of and redemption premium, if any, on such Bonds shall be made only
to such registered owner, which payments shall be valid and effectual to satisfy and discharge
liability on such Bonds to the extent of the sum or sums so paid,
The Trustee shall not be required to register the transfer of or exchange any Bond
which has been selected for redernption in whole or in part, from and after the day of mailing of
a notice of redemption of such Bond selected for redemption in whole or in part as provided in
Section 2,03,
SECTION 2.07. Exchange of Bonds, Bonds may be exchanged at the Corporate
Trust Office of the Trustee for a like aggregate principal amount of Bonds of the same series and
maturity of other authorized denominations, The cost of printing Bonds and any services
rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by
the Local Agency, The Trustee shall require the payment by the Holder requesting such
exchange of any tax or other governmental charge required to be paid with respect to such
exchange as a condition precedent to the exercise of such privilege, The Trustee shall not be
required to exchange any Bond which has been selected for redemption in whole or in part, from
and after the day of mailing of a notice of redemption of such Bond selected for redemption in
whole or in part as provided in Section 2,03,
SECTION 2.08. Bond Registration Books. The Trustee will keep at its
Corporate Trust Office sufficient books for the registration and transfer of the Bonds which shall
during normal business hours be open to inspection by the Local Agency, and upon presentation
for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register
or transfer the Bonds in such books as hereinabove provided,
SECTION 2.09. Mutilated. Destroved, Stolen or Lost Bonds, If any Bond shall
become mutilated the Trustee at the expense of the Holder shall thereupon authenticate and
deliver, a new Bond oflike tenor and amount in exchange and substitution for the Bond so
mutilated, but only upon surrender to the Trustee of the Bond so mutilated, Every mutilated
Bond so surrendered to the Trustee shall be cancelled.
If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or
theft may be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and
indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Holder,
DOCSSFI :801656.1
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shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution
for the Bond so lost, destroyed or stolen,
The Trustee may require payment of a reasonable sum for each new Bond issued
under this Section and of the expenses which may be incurred by the Local Agency and the
Trustee in the premises. Any Bond issued under the provisions of this Section in lieu of any
Bond alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the
benefits of this Trust Agreement with all other Bonds of the same series secured by this Trust
Agreement. Neither the Local Agency nor the Trustee shall be required to treat both the original
Bond aod any replacement 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 replacement Bond shall be
treated as one and the same.
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SECTION 2.10. Temporary Bonds, The Bonds issued under this Trust
Agreement may be initially issued in temporary form exchangeable for definitive Bonds when
ready for delivery, The temporary Bonds may be printed, lithographed or typewritten, shall be of
such denominations as may be determined by the Local Agency, shall be in fully registered form
and may contain such reference to any ofthe provisions of this Trust Agreement as may be
appropriate. Every temporary Bond shall be executed and authenticated as authorized by the
Local Agency, in accordance with the terms of the Act. Ifthe Local Agency 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 Corporate Trust Office
of the Trustee, and the Trustee shall deliver in exchange for such temporary Bonds an equal
aggregate principal amount of definitive Bonds of authorized denominations, Until so
exchanged, the temporary Bonds shall be entitled to the same benefits under this Trust
Agreement as definitive Bonds delivered hereunder,
SECTION 2.11. Procedure for the Issuance of2005 Series A Bonds: Application
of Bond Proceeds, At any time after the sale of the 2005 Series A Bonds in accordance with the
Act, the Local Agency shall execute the 2005 Series A Bonds for issuance hereunder and shall
deliver them to the Trustee, and thereupon the 2005 Series A Bonds shall be authenticated and
delivered by the Trustee to the Original Purchaser of the 2005 Series A Bonds upon the
Certificate of the Local Agency. The proceeds of the purchase of the 2005 Series A Bonds shall
be applied to pay Costs ofIssuance and the obligation of the Local Agency to the System
pursuant to the Retirement Law, as set forth in the Certificate of the Local Agency,
Upon receipt of the purchase price of Additional Bonds, if any, the Trustee shall
set aside and deposit the proceeds received from such sale as set forth in the Supplemental Trust
Agreement authorizing such Additional Bonds, which proceeds may be deposited in the
following respective accounts or funds:
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(a) The Trustee shall deposit the amount, if any, set forth in the Supplemental
Trust Agreement authorizing such Additional Bonds in the Refunding Fund, On the Closing
Date for such Bonds, the Trustee shall promptly transfer all amounts in the Refunding Fund to
the System or to refund Bonds, as set forth in the Supplemental Trust Agreement authorizing
such Additional Bonds,
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(b) The Trustee shall deposit the amount, if any, set forth in the Supplemental
Trust Agreement authorizing such Additional Bonds in the Costs ofIssuance Fund, which fund
the Local Agency hereby agrees to maintain with the Trustee. All money in the Costs of
Issuance Fund shall be used and withdrawn by the Trustee to payor reimburse the Costs of
Issuance of the Additional Bonds upon receipt ofa Written Request of the Local Agency filed
with the Trustee, each of which shall be sequentially numbered and shall state the person to
whom payment is to be made, the amount to be paid, the purpose for which the obligation was
incurred and that such payment is a proper charge against said fund, On the date which is six
months following the Closing Date for the Additional Bonds or upon the earlier Written Request
of the Local Agency, any remaining balance in the Costs ofIssuance Fund shall be transferred to
the Interest Account.
SECTION 2.12. Validitv of Bonds, The recital contained in the Bonds that the
same are issued pursuant to the Act and pursuant hereto shall be conclusive evidence of their
validity and of the regularity of their issuance, and all Bonds shall be incontestable from and
after their issuance. The Bonds shall be deemed to be issued, within the meaning hereof,
whenever the definitive Bonds (or any temporary Bonds exchangeable therefor) shall have been
delivered to the purchaser thereof and the proceeds of sale thereof received.
ARTICLE III
ISSUANCE OF ADDITIONAL BONDS
SECTION 3.01. Conditions for the Issuance of Additional Bonds, The Local
Agency may at any time issue Additional Bonds on a parity with the 2005 Series A Bonds, but
only subject to the following specific conditions, which are hereby made conditions precedent to
the issuance of any such Additional Bonds:
(a) The Local Agency shall be in compliance with all agreements and covenants
contained herein,
(b) The issuance of such Additional Bonds shall have been authorized pursuant to
the Act and shall have been provided for by a Supplemental Trust Agreement which shall specify
the following:
(1) The purpose for which such Additional Bonds are to be issued;
provided that such Additional Bonds shall be applied solely for (i) the purpose of satisfying any
obligation to make payments to the System pursuant to the Retirement Law relating to pension
benefits accruing to the System's members, and/or for payment of all costs incidental to or
connected with the issuance of Additional Bonds for such purpose, and/or (ii) the purpose of
refunding any Bonds then Outstanding, including payment of all costs incidental to or connected
with such refunding;
(2) Whether such Bonds are current interest fixed rate bonds, listed
securities, index bonds, auction rate securities, variable rate bonds, tender option bonds, capital
appreciation bonds or bonds bearing interest at such other interest rate modes as may be set forth
in a Supplemental Trust Agreement;
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(3)
The authorized principal amount and designation of such
Additional Bonds;
(4) The date and the maturity dates of and the sinking fund payment
dates, if any, for such Additional Bonds;
(5)
(6)
such Additional Bonds;
The interest payment dates for such Additional Bonds;
The denomination or denominations of and method of numbering
(7) The redemption premiums, if any, and the redernption terms, if
any, for such Additional Bonds;
(8) The amount, if any, to be deposited from the proceeds of sale of
such Additional Bonds in the Interest Account hereinafter referred to; and
(9) Such other provisions (including the requirements of a book-entry
Bond registration system, if any) as are necessary or appropriate and not inconsistent herewith,
SECTION 3.02. Procedure for the Issuance of Additional Bonds, At any time
after the sale of any Additional Bonds in accordance with the Act, the Local Agency shall
execute such Additional Bonds for issuance hereunder and shall deliver them to the Trustee, and
thereupon such Additional Bonds shall be delivered by the Trustee to the purchaser thereof upon
the Written Request of the Local Agency, but only upon receipt by the Trustee of the following
documents or money or securities, all of such documents dated or certified, as the case may be,
as of the date of delivery of such Additional Bonds by the Trustee:
(a) An executed copy of the Supplemental Trust Agreement authorizing the
issuance of such Additional Bonds;
(b) A Written Request of the Local Agency as to the delivery of such Additional
Bonds;
(c) An Opinion of Counsel to the effect that (I) the Local Agency has executed
and delivered the Supplemental Trust Agreement, and the Supplemental Trust Agreement is
valid and binding upon the Local Agency and (2) such Additional Bonds are valid and binding
obligations of the Local Agency;
(d) A Certificate of the Local Agency stating that all requirements of Article III
have been complied with and containing any other such statements as may be reasonably
necessary to show compliance with the conditions for the issuance of such Additional Bonds
contained herein;
(e) Such further documents, money or securities as are required by the provisions
of the Supplemental Trust Agreement providing for the issuance of such Additional Bonds,
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ARTICLE IV
FUNDS AND ACCOUNTS
SECTION 4.01. Bond Fund; Deposits to Bond Fund,
(a) In order to meet the Local Agency's obligations under the Retirement Law,
the Local Agency shall deposit or cause to be deposited with the Trustee on or before August I
of each Fiscal Year (or such other date as provided in a Supplemental Trust Agreement) the
amount which, together with moneys transferred pursuant to Section 4,02(c) hereof, is sufficient
to pay the Local Agency's debt service obligations on the Bonds payable during such Fiscal
Year. In addition, in the event debt service is payable on the Bonds in July of any year, the
deposit made pursuant to this Section 4,OI(a) shall also include an amount equal to debt service
on the Bonds payable in July of the next succeeding Fiscal Year,
In establishing the amounts of the Local Agency's obligations on the Bonds to be
prepaid in each Fiscal Year, (i) (A) the debt service for Auction Rate Securities not subject to a
Qualified Swap Agreement with an Auction Rate Period of less than 360 Rate Period Days shall
be prepaid at the actual average interest rate for the immediately preceding Fiscal Year plus 200
basis points (2,00%), and if such information is not available for the full immediately preceding
Fiscal Year, then the debt service for such Auction Rate Securities shall be prepaid at the average
one-month LIBOR plus 200 basis points (2,00%) for the immediately preceding Fiscal Year; the
debt service for Index Bonds not subject to a Qualified Swap Agreement shall be prepaid at the
average one-month LIBOR in effect during the immediately preceding Fiscal Year, plus 200
basis points (2,00%); or (B) the debt service for Auction Rate Securities not subject to a
Qualified Swap Agreement with an Auction Rate Period of360 Rate Period Days or longer shall
be prepaid at the actual interest rate in effect for such Auction Rate Securities; and (ii) the debt
service for all other Bonds then Outstanding shall be prepaid at (A) the rate prescribed under the
applicable Qualified Swap Agreement, if any, for Auction Rate Securities and Index Bonds
subject to a Qualified Swap Agreement, and (B) the actual interest rate in effect for Fixed Rate
Bonds,
(b) All amounts payable by the Local Agency hereunder shall be promptly
deposited by the Trustee upon receipt thereof in a special fund designated as the "Bond Fund"
which fund is hereby created and shall be held in trust by the Trustee,
SECTION 4.02. Allocation ofMonevs in Bond Fund, On or before each Interest
Payment Date or date fixed for redemption of Bonds, the Trustee shall transfer from the Bond
Fund, in immediately available funds, for deposit into the following respective accounts (each of
which is hereby created and which the Trustee shall maintain in trust separate and distinct from
the other funds and accounts established hereunder), the following amounts in the following
order of priority, the requirements of each such account (including the making up of any
deficiencies in any such account resulting from lack of funds sufficient to make any earlier
required deposit) at the time of deposit to be satisfied before any deposit is made to any account,
subsequent in priority:
(a)
Interest Account,
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(b)
Principal Account, and
(c) Surplus Account.
All money in each of such accounts shall be held in trust by the Trustee and shall be applied,
used and withdrawn only for the purposes hereinafter authorized in this section,
(a) Interest Account. On each Interest Payment Date, the Trustee shall set aside
from the Bond Fund and deposit in the Interest Account that amount of money which is equal to
the amount of interest becoming due and payable on all Outstanding Bonds on such Interest
Payment Date,
No deposit need be made in the Interest Account if the amount contained therein
is at least equal to the aggregate amount of interest becoming due and payable on all Outstanding
Bonds on such Interest Payment Date.
All money in the Interest Account 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
(including accrued interest on any Bonds purchased or redeemed prior to maturity),
(b) Princinal Account. On or before each Principal Payment Date, the Trustee
shall set aside from the Bond Fund and deposit in the Principal Account an amount of money
equal to the amount of all sinking fund payments required to be made on such Principal Payment
Date into the respective sinking fund accounts for all Outstanding Term Bonds and the principal
amount of all Outstanding Serial Bonds maturing on such Principal Payment Date.
No deposit need be made in the Principal Account if the amount contained therein
is at least equal to the aggregate amount of the principal or Accreted Value of all Outstanding
Serial Bonds maturing by their terms on such Principal Payment Date plus the aggregate amount
of all sinking fund payments required to be made on such Principal Payment Date for all
Outstanding Term Bonds,
The Trustee shall establish and maintain within the Principal Account a separate
subaccount for the Term Bonds of each series and maturity, designated as the "_ Sinking
Account" (the "Sinking Account"), inserting therein the series and maturity (if more than one
such account is established for such series) designation of such Bonds. With respect to each
Sinking Account, on each mandatory sinking account payment date established for such Sinking
Account, the Trustee shall apply the mandatory sinking account payment required on that date to
the redemption (or payment at maturity, as the case may be) of Term Bonds of the series and
maturity for which such Sinking Account was established, upon the notice and in the manner
provided in Article II; provided that, at any time prior to giving such notice of such redemption,
the Trustee may upon the Written Request of the Local Agency, apply moneys in such Sinking
Account to the purchase for cancellation of Term Bonds of such series and maturity at public or
private sale, as and when and at such prices (including brokerage and other charges, but
excluding accrued interest, which is payable from the Interest Account), as may be directed by
the Local Agency, except that the purchase price (excluding accrued interest) shall not exceed
the redemption price that would be payable for such Bonds upon redemption by application of
such Mandatory Sinking Account Payment. If, during the twelve-month period immediately
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preceding said mandatory sinking account payment date, the Trustee has purchased Term Bonds
of such series and maturity with moneys in such Sinking Account, such Bonds so purchased shall
be applied, to the extent of the full principal amount or Accreted Value thereof, as applicable, to
reduce said mandatory sinking account payment.
All money in the Principal Account shall be used and withdrawn by the Trustee
solely for the purpose of paying the principal or Accreted Value of the Bonds, as applicable, as
they shall become due and payable, whether at maturity or redemption, except that any money in
any sinking fund account shall be used and withdrawn by the Trustee only to purchase or to
redeem or to pay Term Bonds for which such Sinking Account was created,
(c) Surplus Account. On the Business Day following the last Interest Payment
Date of each Fiscal Year, or on such other date as provided in a Supplemental Trust Agreement,
any moneys remaining in the Bond Fund shall be deposited by the Trustee in the Surplus
Account. So long as no Event of Default has occurred and is continuing, moneys deposited in
the Surplus Account shall be transferred by the Trustee to or upon the order of the Local Agency,
as specified in a Written Request of the Local Agency,
SECTION 4.03. Deposit and Investments of Monev in Accounts and Funds. All
money held by the Trustee in any ofthe accounts or funds established pursuant hereto shall be
invested in Pennitted Investments at the Written Request of the Local Agency, Ifno Written
Request of the Local Agency is received, the Trustee shall invest funds held by it in Pennitted
Investments described in clause 6 of the definition thereof, Such investments shall, as nearly as
practicable, mature on or before the dates on which such money is anticipated to be needed for
disbursement hereunder, All interest, profits and other income received from any money so
invested shall be deposited in the Bond Fund, The Trustee shall have no liability or
responsibility for any loss resulting from any investment made or sold in accordance with the
provisions of this Article IV, except for any loss due to the negligence or willful misconduct of
the Trustee, The Trustee may act as principal or agent in the acquisition or disposition of any
investment and may impose its customary charge therefor,
SECTION 4.04. Establishment of Denosit Fund and Transfers Therefrom, The
following Section shall apply in the event the Local Agency were to elect to enter into a
Qualified Swap Agreement in connection with Additional Bonds, The Trustee shall establish a
special fund designated as the "City of San Bernardino Deposit Fund, Series _" (the "Deposit
Fund"), The Deposit Fund shall be funded and applied solely in accordance with this Section; it
is intended for the proper matching of debt service payments on the Auction Rate Securities and
Index Bonds, if any, that are covered by Qualified Swap Agreements, with the related Swap
Payments and the required netting of such payments in order to assure full and timely payments
to the Holders of the Auction Rate Securities and Index Bonds affected by such Qualified Swap
Agreements (collectively, "Swapped Bonds"), In the absence of any Qualified Swap
Agreements, the Deposit Fund will remain unfunded,
On or before the date that is two (2) Business Days prior to each Interest Payment
Date or such other date that may be established for Swapped Bonds, the Trustee shall transfer
into the Deposit Fund the portion of the Local Agency's Debt Service Prepayment Obligation on
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deposit in the Bond Fund that is necessary in order to make Swap Payments for all Swapped
Bonds.
ARTICLE V
COVENANTS OF THE LOCAL AGENCY
SECTION 5.01. Punctual Payment and Performance. The Local Agency will
punctually pay the interest on and the principal of and redemption premiums, if any, to become
due on every Bond issued hereunder in strict conformity with the terms hereof and of the Bonds,
and will faithfully observe and perform all the agreements and covenants to be observed or
performed by the Local Agency contained herein and in the Bonds,
SECTION 5.02. Extension of Payment of Bonds, The Local Agency shall not
directly or indirectly extend or assent to the extension ofthe maturity of any of the Bonds or the
time of payment of any claims for interest by the purchase of such Bonds or by any other
arrangement, and in case the maturity of any of the Bonds or the time of payment of any such
claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in
case of any default hereunder, to the benefits of this Trust Agreement, except subject to the prior
payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest
thereon which shall not have been so extended, Nothing in this Section shall be deemed to limit
the right of the Local Agency to issue Bonds for the purpose of refunding any Outstanding
Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the
Bonds,
SECTION 5.03. Additional Debt. The Local Agency expressly reserves the
right to enter into one or more other agreements or indentures for any of its purposes, and
reserves the right to issue other obligations for such purposes,
SECTION 5.04. Power to Issue Bonds. The Local Agency is duly authorized
pursuant to law to issue the Bonds and to enter into this Trust Agreement. The Bonds and the
provisions of this Trust Agreement are the legal, valid and binding obligations of the Local
Agency in accordance with their terms, The Bonds constitute obligations imposed by law,
SECTION 5.05. Accounting Records and Reports, The Local Agency will keep
or cause to be kept proper books of record and accounts in which complete and correct entries
shall be made of all transactions relating to the receipts, disbursements, allocation and
application of moneys on deposit in the funds and accounts established hereunder,
SECTION 5.06. Prosecution and Defense of Suits. The Local Agency will
defend against every suit, action or proceeding at any time brought against the Trustee upon any
claim to the extent involving the failure of the Local Agency to fulfill its obligations hereunder;
provided that the Trustee or any affected Holder at its election may appear in and defend any
such suit, action or proceeding, The Local Agency, to the extent permitted by law, will
indemnify and hold harmless the Trustee against any and all liability claimed or asserted by any
person to the extent arising out of such failure by the Local Agency, and will indemnify and hold
harmless the Trustee against any attorney's fees or other expenses which it may incur in
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connection with any litigation to which it may become a party by reason of its actions hereunder,
except for any loss, cost, damage or expense resulting from the negligence, willful misconduct or
breach of duty by the Trustee, Notwithstanding any contrary provision hereof, this covenant
shall remain in full force and effect even though all Bonds secured hereby may have been fully
paid and satisfied,
SECTION 5.07. Further Assurances, Whenever and so often as reasonably
requested to do so by the Trustee or any Holder, the Local Agency will promptly execute and
deliver or cause to be executed and delivered all such other and further assurances, documents or
instruments, and promptly do or cause to be done all such other and further things as may be
necessary or reasonably required in order to further and more fully vest in the Holders all rights,
interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon
them hereby.
SECTION 5.08. Waiver of Laws, The Local Agency shall not at any time insist
upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or
extension law now or at any time hereafter in force that may affect the covenants and agreements
contained in this Trust Agreement or in the Bonds, and all benefit or advantage of any such law
or laws is hereby expressly waived by the Local Agency to the extent permitted by law,
ARTICLE VI
THE TRUSTEE
SECTION 6.01. The Trustee, Wells Fargo Bank, National Association shall
serve as the Trustee for the Bonds for the purpose of receiving all money which the Local
Agency is required to deposit with the Trustee hereunder and for the purpose of allocating,
applying and using such money as provided herein and for the purpose of paying the interest on
and principal of and redemption premiums, if any, on the Bonds presented for payment at the
Corporate Trust Office of the Trustee with the rights and obligations provided herein, The Local
Agency agrees that it will at all times maintain a Trustee having a corporate trust office in Los
Angeles or San Francisco, California,
The Local Agency may at any time, unless there exists any event of default as
defined in Section 8,01, remove the Trustee initially appointed and any successor thereto and
may appoint a successor or successors thereto by an instrument in writing; provided that any
such successor shall be a bank or trust company doing business and having a corporate trust
office in Los Angeles or San Francisco, California, having a combined capital (exclusive of
borrowed capital) and surplus of at least one fifty million dollars ($50,000,000) and subject to
supervision or examination by federal or state authority, If such bank or trust company publishes
a report of condition at least annually, pursuant to law or to the requirements of any supervising
or examining authority above referred to, then for the purpose of this section the combined
capital and surplus of such bank or trust company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published, The Trustee may at any
time resign by giving written notice of such resignation to the Local Agency and by mailing to
the Holders notice of such resignation, Upon receiving such notice of resignation, the Local
Agency shall promptly appoint a successor Trustee by an instrument in writing, Any removal or
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resignation of a Trustee and appointment of a successor Trustee shall become effective only
upon the acceptance of appointment by the successor Trustee. If, within thirty (30) days after
notice of the removal or resignation of the Trustee no successor Trustee shall have been
appointed and shall have accepted such appointment, the removed or resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor Trustee, which
court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may
be required by law, appoint a successor Trustee having the qualifications required hereby.
The Trustee is hereby authorized to payor redeem the Bonds when duly presented
for payment at maturity or on redemption prior to maturity. The Trustee shall cancel all Bonds
upon payment thereof or upon the surrender thereofby the Local Agency and shall destroy such
Bonds and a certificate of destruction shall be delivered to the Local Agency, The Trustee shall
keep accurate records of all Bonds paid and discharged and cancelled by it.
The Trustee shall, prior to an event of default, and after the curing of all events of
default that may have occurred, perform such duties and only such duties as are specifically set
forth in this Trust Agreement and no implied duties or obligations shall be read into this Trust
Agreement. The Trustee shall, during the existence of any event of default (that has not been
cured), exercise such of the rights and powers vested in it by this Trust Agreement, 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,
SECTION 6.02. Liability of Trustee, The recitals of facts, agreements and
covenants herein and in the Bonds shall be taken as recitals of facts, agreements and covenants
of the Local Agency, and the Trustee assumes no responsibility for the correctness of the same or
makes any representation as to the sufficiency or validity hereof or of the Bonds, or shall incur
any responsibility in respect thereof other than in connection with the rights or obligations
assigned to or imposed upon it herein, in the Bonds or in law or equity, The Trustee shall not be
liable in connection with the performance of its duties hereunder except for its own negligence,
willful misconduct or breach of duty.
The Trustee shall not be bound to recognize any person as the Holder of a Bond
unless and until such Bond is submitted for inspection, if required, and such Holder's title thereto
satisfactorily established, if disputed,
The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts,
The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of not less than a
majority in Aggregate Principal Amount of the Bonds at the time Outstanding, relating to the
time, method and place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this Trust Agreement.
The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Trust Agreement at the request, order or direction of any of the Holders
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pursuant to the provisions of this Trust Agreement unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby, The Trustee has no obligation or liability to the Holders for the
payment of interest on, principal of or redemption premium, if any, with respect to the Bonds
from its own funds; but rather the Trustee's obligations shall be limited to the performance of its
duties hereunder.
The Trustee shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or of any of the
documents executed in connection with the Bonds, or as to the existence of a default or event of
default thereunder. The Trustee shall not be responsible for the validity or effectiveness of any
collateral given to or held by it.
The Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through attorneys-in-fact, agents or receivers, shall not
be answerable for the negligence or misconduct or any such attorney-in-fact, agent or receiver
appointed by it in accordance with the standards specified above. The Trustee shall be entitled to
advice of counsel and other professionals concerning all matters of trust and its duty hereunder,
but the Trustee shall not be answerable for the professional malpractice of any attorney-in-law or
certified public accountant in connection with the rendering of his professional advice in
accordance with the terms of this Trust Agreement, if such attorney-in-law or certified public
accountant was selected by the Trustee with due care,
Whether or not therein expressly so provided, every provision of this Trust
Agreement, or related documents relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Article,
The Trustee shall be protected in acting upon any notice, resolution, requisition,
request (including any Written Request of the Local Agency), consent, order, certificate, report,
opinion, bond or other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties, The Trustee may consult with counsel, who may be
counsel of or to the Local Agency, with regard to legal questions, and the 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 therewith,
Whenever in the administration of its rights and obligations hereunder the Trustee
shall deem it necessary or desirable that a matter be established or proved prior to taking or
suffering any action hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of bad faith on the part ofthe Trustee, be deemed to
be conclusively proved and established by a Certificate of the Local Agency, which certificate
shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof
upon the faith thereof, but in its discretion the Trustee may in lieu thereof accept other evidence
of such matter or may require such additional evidence as it may deem reasonable,
No provision of this Trust Agreement shall require the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the performance or exercise of any of
its duties hereunder, or in the exercise of its rights or powers.
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The Trustee shall have no responsibility, opinion, or liability with respect to any
information, statement or recital in any offering memorandum or other disclosure material
prepared or distributed with respect to the issuance of the Bonds.
All immunities, indemnifications and releases from liability granted herein to the
Trustee shall extend to the directors, employees, officers and agents thereof.
Any company into which the Trustee may be merged or converted or with which
it may be consolidated or any company resulting from any merger, conversion or consolidation
to which it shall be a party or any company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided that such company shall meet the
requirements set forth in Section 6,01, shall be the successor to the Trustee hereunder and vested
with all of the title to the trust estate and all of the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor hereunder, without the execution or filing
of any paper or further act, anything herein to the contrary notwithstanding.
SECTION 6.03. Compensation and Indemnification of Trustee, The Local
Agency covenants to pay to the Trustee from time to time, and the Trustee shall be entitled to,
reasonable compensation for all services rendered by it in the exercise and performance of any of
the powers and duties hereunder of the Trustee, and the Local Agency will payor reimburse the
Trustee upon its request for all expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Trust Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and of all persons
not regularly in its employ) except any such expense, disbursement or advance as may arise from
its negligence, default or willful misconduct, including the negligence or willful misconduct of
any of its officers, directors, agents or employees. The Local Agency, to the extent permitted by
law, shall indemnify, defend and hold harmless the Trustee against any loss, damages, liability or
expense incurred without negligence, willful misconduct or bad faith on the part of the Trustee,
(i) arising out of or in connection with the acceptance or administration of the trusts created
hereby or the exercise or performance of any of its powers or duties hereunder, and (ii) any
untrue statement or alleged untrue statement of any material fact or omission or alleged omission
to state a material fact necessary to make the statements made, in light of the circumstances
under which they were made, not misleading in any official statement or other offering circular
utilized in connection with the sale of the Bonds, including costs and expenses (including
attorneys' fees) of defending itself against any claim or liability in connection with the exercise
or performance of any of its powers hereunder. The rights of the Trustee and the obligations of
the Local Agency under this Section shall survive the discharge of the Bonds and this Trust
Agreement and the resignation or removal of the Trustee,
ARTICLE VII
AMENDMENT OF THE TRUST AGREEMENT
SECTION 7.01. Amendment of the Trust Agreement. The Trust Agreement and
the rights and obligations of the Local Agency and of the Holders may be amended at any time
by a Supplemental Trust Agreement which shall become binding when the written consents of
the Holders of a majority in Aggregate Principal Amount of the Bonds then Outstanding,
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exclusive of Bonds disqualified as provided in Section 7.02, are filed with the Trustee. No such
amendment shall (I) extend the maturity of or reduce the interest rate on or amount of interest on
or principal of or redemption premium, if any, or extend the time of payment on any Bond
without the express written consent of the Holder of such Bond, or (2) reduce the percentage of
Bonds required for the written consent to any such amendment.
The Trust Agreement and the rights and obligations of the Local Agency and of
the Holders may also be amended at any time by a Supplemental Trust Agreement which shall
become binding upon adoption without the consent of any Holders, but only to the extent
permitted by law and after receipt of an approving Opinion of Counsel, for any purpose that will
not materially adversely affect the interests of the Holders, including (without limitation) for any
one or more of the following purposes --
(a) to add to the agreements and covenants required herein to be performed by the
Local Agency other agreements and covenants thereafter to be performed by the Local Agency,
to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any
right or power reserved herein to or conferred herein on the Local Agency;
(b) to make such provisions for the purpose of curing any ambiguity or of
correcting, curing or supplementing any defective provision contained herein and in any
Supplemental Trust Agreement or in regard to questions arising hereunder which the Local
Agency may deem desirable or necessary and not inconsistent herewith;
(c) to provide for the issuance ofany Additional Bonds and to provide the terms
of such Additional Bonds, subject to the conditions and upon compliance with the procedure set
forth in Article III (which shall be deemed not to adversely affect Holders);
(d) to modify, amend or add to the provisions herein or in any Supplemental Trust
Agreement to permit the qualification thereof under the Trust Indenture Act of 1939, as
amended, or any similar federal statutes hereafter in effect, and to add such other terms,
conditions and provisions as may be permitted by such statute or similar statute;
(e) to modify, amend or add to the provisions herein or in any Supplemental Trust
Agreement pertaining to the terms or operations of interest on the Bonds at a variable rate, as the
Local Agency may deem necessary or desirable in order to conform to common market practices
for such bonds; or
(f) to modify, amend or supplement this Trust Agreement and any Supplemental
Trust Agreement in any manner that does not materially adversely affect the interest of Holders
of Bonds,
The Trustee shall not be required to enter into or consent to any supplemental
trust agreement which, in the sole judgment of the Trustee, may adversely affect the rights,
obligations, powers, privileges, indemnities and immunities provided the Trustee herein.
SECTION 7.02. Disoualified Bonds. Bonds owned or held by or for the account
of the Local Agency shall not be deemed Outstanding for the purpose of any consent or other
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action or any calculation of Outstanding Bonds provided in this article, and shall not be entitled
to consent to or take any other action provided in this article.
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment.
After the effective date of any action taken as hereinabove provided, the Local Agency may
determine that the Bonds may bear a notation by endorsement in form approved by the Local
Agency as to such action, and in that case upon demand of the Holder of any Outstanding Bonds
and presentation of his Bond for such purpose at the office of the Trustee a suitable notation as to
such action shall be made on such Bond, If the Local Agency shall so determine, new Bonds so
modified as, in the opinion of the Local Agency, shall be necessary to conform to such action
shall be prepared and executed, and in that case upon demand of the Holder of any Outstanding
Bond a new Bond or Bonds shall be exchanged at the office of the Trustee without cost to each
Holder for its Bond or Bonds then Outstanding upon surrender of such Outstanding Bonds,
SECTION 7.04. Amendment bv Mutual Consent. The provisions of this article
shall not prevent any Holder from accepting any amendment as to the particular Bonds held by
him, provided that due notation thereof is made on such Bonds,
SECTION 7.05. Attornev's Opinion Regarding Supplemental Agreements, The
Trustee may obtain an opinion of counsel that any amendments or supplements to the Trust
Agreement complies with the provisions of this Article VII and the Trustee may conclusively
rely upon such opinion,
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF HOLDERS
SECTION 8.01. Events of Default. If one or more of the following events
(herein called "events of default") shall happen, that is to say:
(a) if default shall be made by the Local Agency in the due and punctual payment
of the interest on any Bond when and as the same shall become due and payable;
(b) if default shall be made by the Local Agency in the due and punctual payment
of the principal of or redemption premium, if any, on any Bond when and as the same shall
become due and payable, whether at maturity as therein expressed or by proceedings for
redemption;
(c) if default shall be made by the Local Agency in the performance of any of the
agreements or covenants required herein to be performed by the Local Agency, and such default
shall have continued for a period of sixty (60) days after the Local Agency shall have been given
notice in writing of such default by the Trustee or the Owners of not less than twenty-five (25%)
in Aggregate Principal Amount of the Bonds at the time Outstanding, specifying such default
and requiring the same to be remedied, provided, however, if the default stated in the notice can
be corrected, but not within the applicable period, the Trustee and such Owners shall not
unreasonably withhold their consent to an extension of such time if corrective action is instituted
by the Local Agency within the applicable period and diligently pursued until the default is
corrected; or
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(d) if the Local Agency shall file a petition or answer seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States
of America or any state therein, or if a court of competent jurisdiction shall approve a petition
filed with or without the consent of the Local Agency seeking arrangement or reorganization
under the federal bankruptcy laws or any other applicable law of the United States of America or
any state therein, or if under the provisions of any other law for the relief or aid of debtors any
court of competent jurisdiction shall assume custody or control of the Local Agency or ofthe
whole or any substantial part of its property;
SECTION 8.02. Institution of Legal Proceedings by Trustee, If one or more of
the events of default shall happen and be continuing, the Trustee may, and upon the written
request of the Holders of not less than fifty-one percent (51%) in Aggregate Principal Amount of
the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall,
proceed to protect or enforce its rights or the rights of the Holders of Bonds under this Trust
Agreement by a suit in equity or action at law, either for the specific performance of any
covenant or agreement contained herein, or in aid of the execution of any power herein granted,
or by mandamus or other appropriate proceeding for the enforcement of any other legal or
equitable remedy as the Trustee shall deem most effectual in support of any of its rights and
duties hereunder.
SECTION 8.03. Non-Waiver. Nothing in this article or in any other provision
hereof or in the Bonds shall affect or impair the obligation of the Local Agency, which is
absolute and unconditional, to pay the interest on and principal of and redemption premiums, if
any, on the Bonds to the respective Holders of the Bonds at the respective dates of maturity or
upon prior redemption as provided herein, or shall affect or impair the right of such Holders,
which is also absolute and unconditional, to institute suit to enforce such payment by virtue of
the contract embodied herein and in the Bonds.
A waiver of any default or breach of duty or contract by the Trustee or any Holder
shall not affect any subsequent default or breach of duty or contract or impair any rights or
remedies on any such subsequent default or breach of duty or contract. No delay or omission by
the Trustee or any Holder to exercise any right or rernedy accruing upon any default or breach of
duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any
such default or breach of duty or contract or an acquiescence therein, and every right or remedy
conferred upon the Holders by the Act or by this Article may be enforced and exercised from
time to time and as often as shall be deemed expedient by the Trustee or the Holders.
If any action, proceeding or suit to enforce any right or exercise any remedy is
abandoned, the Local Agency, the Trustee and any Holder shall be restored to their former
positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.
SECTION 8.04. Actions by Trustee as Attorney-in-Fact. Any action,
proceeding or suit which any Holder shall have the right to bring to enforce any right or remedy
hereunder may be brought by the Trustee for the equal benefit and protection of all Holders,
whether or not the Trustee is a Holder, and the Trustee is hereby appointed (and the successive
Holders, by taking and holding the Bonds issued hereunder, shall be conclusively deemed to
have so appointed it) the true and lawful attorney-in-fact of the Holders for the purpose of
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bringing any such action, proceeding or suit and for the purpose of doing and performing any
and all acts and things for and on behalf of the Holders as a class or classes as may be advisable
or necessary in the opinion of the Trustee as such attorney-in-fact.
SECTION 8.05. Remedies Not Exclusive, No remedy herein conferred upon or
reserved to the Holders is intended to be exclusive of any other remedy, and each 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 and may be exercised without
exhausting and without regard to any other remedy conferred by the Act or any other law.
SECTION 8.06. Limitation on Bondholders' Right to Sue, No Holder of any
Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or
equity, for any remedy under or upon this Trust Agreement, unless (a) such Holder shall have
previously given to the Trustee written notice of the occurrence of an event of default as defined
in Section 8,01 hereunder; (b) the Holders of at least a majority in Aggregate Principal Amount
of all the Bonds then Outstanding shall have rnade written request upon the Trustee to exercise
the powers hereinbefore granted or to institute such suit, action or proceeding in its own name;
(c) said Holders shall have tendered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee
shall have refused or omitted to comply with such request for a period of sixty (60) days after
such request shall have been received by, and said tender of indemnity shall have been made to,
the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any owner of Bonds of any
remedy hereunder; it being understood and intended that no one or more owners of Bonds shall
have any right in any manner whatever by his or their action to enforce any right under this Trust
Agreement, except in the manner herein provided, and that all proceedings at law or in equity to
enforce any provision of the Trust Agreement shall be instituted, had and maintained in the
manner herein provided and for the equal benefit of all Holders of the Outstanding Bonds,
SECTION 8.07. Absolute Obligation of Local Agencv, Nothing in this Section
or in any other provision of this Trust Agreement or in the Bonds contained shall affect or impair
the obligation of the Local Agency, which is absolute and unconditional, to pay the principal of,
premium, if any and interest on the Bonds to the respective Holders of the Bonds at their
respective due dates as herein provided,
ARTICLE IX
DEFEASANCE
SECTION 9.01. Discharge of Bonds,
(a) If the Local Agency shall payor cause to be paid or there shall otherwise be
paid to the Holders of all Outstanding Bonds the interest thereon and the principal thereof and
the redemption premiums, if any, thereon at the times and in the manner stipulated herein and
therein, and shall payor provide for the payment of all fees and expenses of the Trustee, then all
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agreements, covenants and other obligations of the Local Agency to the Holders of such Bonds
hereunder shall thereupon cease, terminate and become void and be discharged and satisfied, In
such event, the Trustee shall execute and deliver to the Local Agency all such instruments as
may be necessary or desirable to evidence such discharge and satisfaction, the Trustee shall pay
over or deliver to the Local Agency all money or securities held by it pursuant hereto which are
not required for the payment of the interest on and principal of and redemption premiums, if any,
on such Bonds.
(b) Any Outstanding Bonds shall prior to the maturity date or redemption date
thereof be deemed to have been paid within the meaning of and with the effect expressed in
subsection (a) of this section if (1) in case any of such Bonds are to be redeemed on any date
prior to their maturity date, the Local Agency shall have given to the Trustee in form satisfactory
to it irrevocable instructions to provide notice in accordance with Section 2.03, (2) there shall
have been deposited with the Trustee either (A) money in an amount which shall be sufficient or
(B) Defeasance Securities which are not subject to redemption prior to maturity (including any
such Defeasance Securities issued or held in book-entry form on the books of the Local Agency
or the Treasury of the United States of America), the interest on and principal of which when
paid will provide money which, together with the money, if any, deposited with the Trustee at
the same time, shall be sufficient, in the opinion of an Independent Certified Public Accountant,
to pay when due the interest to become due on such Bonds on and prior to the maturity date or
redemption date thereof, as the case may be, and the principal of and redemption premiums, if
any, on such Bonds, and (3) in the event such Bonds are not by their terms subject to redemption
within the next succeeding sixty (60) days, the Local Agency shall have given the Trustee in
form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the
Holders of such Bonds that the deposit required by clause (2) above has been made with the
Trustee and that such Bonds are deemed to have been paid in accordance with this section and
stating the maturity date or redemption date upon which money is to be available for the payment
of the principal of and redemption premiums, if any, on such Bonds,
SECTION 9.02. Unclaimed Monev. Anything contained herein to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of
the Bonds or interest thereon which remains unclaimed for two (2) years after the date when such
Bonds or interest thereon have become due and payable, either at their stated maturity dates or
by call for redemption prior to maturity, if such money was held by the Trustee at such date, or
for two (2) years after the date of deposit of such money if deposited with the Trustee after the
date when such Bonds have become due and payable, shall be repaid by the Trustee to the Local
Agency as its absolute property free from trust, and the Trustee shall thereupon be released and
discharged with respect thereto and the Holders shall not look to the Trustee for the payment of
such Bonds; provided, however, that before being required to make any such payment to the
Local Agency, the Trustee may, and at the request of the Local Agency shall, at the expense of
the Local Agency, cause to be published once a week for two (2) successive weeks in a Financial
Newspaper of general circulation in Los Angeles and in San Francisco, California and in the
same or a similar Financial Newspaper of general circulation in New York, New York a notice
that such money remains unclaimed and that, after a date named in such notice, which date shall
not be less than thirty (30) days after the date of the first publication of each such notice, the
balance of such money then unclaimed will be returned to the Local Agency.
DOCSSR801656,!
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ARTICLE X
MISCELLANEOUS
SECTION 10.01. Benefits of the Trust AlITeement Limited to Parties, Nothing
contained herein, expressed or implied, is intended to give to any person other than the Local
Agency, the Trustee and the Holders any right, remedy or claim under or by reason hereof, Any
agreement or covenant required herein to be performed by or on behalf of the Local Agency or
any member, officer or employee thereof shall be for the sole and exclusive benefit of the
Trustee and the Holders,
SECTION 10.02. Successor Is Deemed Included in All References to
Predecessor, Whenever herein either the Local Agency or any member, officer or employee
thereof or the Trustee is named or referred to, such reference shall be deemed to include the
successor or assigns thereof, and all agreements and covenants required hereby to be performed
by or on behalf of the Local Agency or the Trustee, or any member, officer or employee thereof,
shall bind and inure to the benefit of the respective successors thereof whether so expressed or
not.
SECTION 10.03. Execution of Documents bv Holders, Any declaration, request
or other instrument which is permitted or required herein to be executed by Holders may be in
one or more instruments of similar tenor and may be executed by Holders in person or by their
attorneys appointed in writing, The fact and date of the execution by any Holder or his attorney
of any declaration, request or other instrument or of any writing appointing such attorney may be
proved by the certificate of any notary public or other officer authorized to make
acknowledgments of deeds to be recorded in the state or territory in which he purports to act that
the person signing such declaration, request or other instrument or writing acknowledged to him
the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
notary public or other officer. The ownership of any Bonds and the amount, maturity, number
and date of holding the same may be proved by the registration books relating to the Bonds at the
office of the Trustee,
Any declaration, request, consent or other instrument or writing of the Holder of
any Bond shall bind all future Holders of such Bond with respect to anything done or suffered to
be done by the Trustee or the Local Agency in good faith and in accordance therewith,
SECTION 10.04. Waiver of Personal Liability, No member, officer or
employee of the Local Agency or the Local Agency shall be individually or personally liable for
the payment of the interest on or principal of or redemption premiums, if any, on the Bonds by
reason of their issuance, but nothing herein contained shall relieve any such member, officer or
employee from the performance of any official duty provided by the Act or any other applicable
provisions oflaw or hereby,
SECTION 10.05. Acauisition of Bonds by Local Agency. All Bonds acquired
by the Local Agency, whether by purchase or gift or otherwise, shall be surrendered to the
Trustee for cancellation,
DOCSSFI,801656.1
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SECTION 10.06. Destruction of Cancelled Bonds. Whenever provision is made
for the return to the Local Agency of any Bonds which have been cancelled pursuant to the
provisions hereof, the Trustee shall destroy such Bonds and furnish to the Local Agency a
certificate of such destruction,
SECTION 10.07. Content of Certificates, Every Certificate of the Local Agency
with respect to compliance with any agreement, condition, covenant or provision provided herein
shall include (a) a statement that the person or persons making or giving such certificate have
read such agreement, condition, covenant or provision and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or investigation upon which
the statements contained in such certificate are based; (c) a statement that, in the opinion ofthe
signers, they have made or caused to be made such examination or investigation as is necessary
to enable them to express an informed opinion as to whether or not such agreement, condition,
covenant or provision has been complied with; and (d) a statement as to whether, in the opinion
of the signers, such agreement, condition, covenant or provision has been complied with,
.
Any Certificate of the Local Agency may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel unless the person making or giving such certificate knows
that the Opinion of Counsel with respect to the matters upon which his certificate may be based,
as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same
was erroneous, Any Opinion of Counsel may be based, insofar as it relates to factual mattere
information with respect to which is in the possession of the Local Agency, upon a
representation by an officer or officers of the Local Agency unless the counsel executing such
Opinion of Counsel knows that the representation with respect to the matters upon which his
opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should
have known that the same was erroneous,
SECTION 10.08. Publication for Successive Weeks, Any publication required
to be made hereunder for successive weeks in a Financial Newspaper may be made in each
instance upon any Business Day of the first week and need not be made on the same Business
Day of any succeeding week or in the same Financial Newspaper for any subsequent publication,
but may be made. on different Business Days or in different Financial Newspapers, as the case
may be,
SECTION 10.09. Accounts and Funds; Business Davs, Any account or fund
required herein to be established and maintained by the Trustee may be established and
maintained in the accounting records of the Trustee either as an account or a fund, and may, for
the purposes of such accounting records, any audits thereof and any reports or statements with
respect thereto, be treated either as an account or a fund; but all such records with respect to all
such accounts and funds shall at all times be maintained in accordance with sound accounting
practice and with due regard for the protection of the security of the Bonds and the rights of the
Holders. Any action required to occur hereunder on a day which is not a Business Day shall be
required to occur on the next succeeding Business Day,
.
SECTION 10.10. Notices, All written notices to be given hereunder shall be
given by mail to the party entitled thereto at its address set forth below, or at such other address
as such party may provide to the other party in writing from time to time, namely:
DOCSSF 1:80 1656.1
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If to the Local Agency:
City of San Bernardino
300 North "D" Street
San Bernardino, CA 92418-0001
Attention: City Administrator
If to the Trustee:
Attention: Corporate Trust Services
Wells Fargo Bank, National Association
707 Wilshire Boulevard
MAC # E28l8-176
Los Angeles, CA 90017
SECTION 10.11. Article and Section Headings and References, The headings
or titles of the several articles and sections hereof and the table of contents appended hereto shall
be solely for convenience of reference and shall not affect the meaning, construction or effect
hereof, All references herein to "Articles," "Sections" and other subdivisions or clauses are to
the corresponding articles, sections, subdivisions or clauses hereof; and the words "hereby,"
"herein," "hereof," "hereto," "herewith," "hereunder" and other words of similar import refer to
the Trust Agreement as a whole and not to any particular article, section, subdivision or clause
hereof.
SECTION 10.12. Partial Invaliditv, If anyone or more of the agreements or
covenants or portions thereof required hereby to be performed by or on the part of the Local
Agency or the Trustee shall be contrary to law, then such agreement or agreements, such
covenant or covenants or such portions thereof shall be null and void and shall be deemed
separable from the remaining agreements and covenants or portions thereof and shall in no way
affect the validity hereof or of the Bonds, and the Holders shall retain all the benefit, protection
and security afforded to them under the Act or any other applicable provisions of law, The Local
Agency and the Trustee hereby declare that they would have executed and delivered the Trust
Agreement and each and every other article, section, paragraph, subdivision, sentence, clause
and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto
irrespective of the fact that anyone or more articles, sections, paragraphs, subdivisions,
sentences, clauses or phrases hereof or the application thereof to any person or circumstance may
be held to be unconstitutional, unenforceable or invalid,
SECTION 10.13. Execution in Several Counterparts, This Trust Agreement
may be executed in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original; and all such counterparts, or as many of them as the Local
Agency and the Trustee shall preserve undestroyed, shall together constitute but one and the
same instrument.
SECTION 10.14. Governing Law, This Trust Agreement shall be governed by
and construed in accordance with the laws of the State of California,
DOCSSFI :801656.1
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SECTION 10.15. CUSIP Numbers. Neither the Trustee nor the Local Agency
shall be liable for any defect or inaccuracy in the CUSIP number that appears on any Bond or in
any redemption notice. The Trustee may, in its discretion, include in any redemption notice a
statement to the effect that the CUSIP numbers on the Bonds have been assigned by an
independent service and are included in such notice solely for the convenience of the Holders
and that neither Local Agency nor the Trustee shall be liable for any inaccuracies in such
numbers,
DOCSSFL801656.1
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IN WITNESS WHEREOF, the CITY OF SAN BERNARDINO has caused this
Trust Agreement to be signed in its name by the Authorized Representative and WELLS
FARGO BANK, NATIONAL ASSOCIATION, in token of its acceptance of the trusts created
hereunder, has caused this Trust Agreement to be signed by the officer thereunder duly
authorized, all as of the day and year first above written.
CITY OF SAN BERNARDINO
By
Authorized Representative
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
[Title]
DOCSSF!:80!656,!
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EXHIBIT A
[FORM OF STANDARD BOND]
CITY OF SAN BERNARDINO
TAXABLE PENSION OBLIGATION BONDS
2005 SERIES A
No, R-
$
THE OBLIGATIONS OF THE CITY OF SAN BERNARDINO
HEREUNDER, INCLUDING THE OBLIGATION TO MAKE ALL
PAYMENTS OF INTEREST AND PRINCIPAL WHEN DUE, ARE
OBLIGATIONS OF THE CITY OF SAN BERNARDINO IMPOSED BY
LAW AND ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT
ANY RIGHT OF SET-OFF OR COUNTER CLAIM, THIS BOND
DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY OF SAN
BERNARDINO FOR WHICH THE CITY OF SAN BERNARDINO IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION
OR FOR WHICH THE CITY OF SAN BERNARDINO HAS LEVIED
OR PLEDGED ANY FORM OF TAXATION, NEITHER THE BONDS
NOR THE OBLIGATION OF THE CITY OF SAN BERNARDINO TO
MAKE PAYMENTS ON THE BONDS CONSTITUTE AN
INDEBTEDNESS OF THE CITY OF SAN BERNARDINO, THE
STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION,
Interest
Rate
Maturity
Date
Original
Issue Date
CUSIP
REGISTERED OWNER:
PRINCIPAL SUM: DOLLARS
The City of San Bernardino, duly organized and validly existing under and
pursuant to the Constitution and laws of the State of California (the "Local Agency"), for value
received hereby, promises to pay to the registered owner identified above or registered assigns,
on the maturity date specified above (subject to any right of prior redemption hereinafter
provided for) the principal sum specified above, together with interest on such principal sum
from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication
of this Bond (unless this Bond is authenticated as of an Interest Payment Date or during the
period from the sixteenth day of the month preceding an Interest Payment Date to such Interest
Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless
this Bond is authenticated prior to the first Interest Payment Date, in which event it shall bear
DOCSSFl:8016561
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interest from the original issue date specified above) until the principal hereof shall have been
paid at the interest rate per annum specified above, payable on , and
semiannually thereafter on each and (each an "Interest Payment Date").
Interest due on or before the maturity or prior redemption of this Bond shall be payable only by
check mailed on the Interest Payment Date by first-class mail to the registered owner hereof;
provided that upon the written request of a registered owner of $1,000,000 or more in aggregate
principal amount of Bonds received by the Trustee (as hereinafter defined) prior to the applicable
record date, interest shall be paid by wire transfer in immediately available funds. The principal
hereof is payable in lawful money of the United States of America at the Corporate Trust Office
of Wells Fargo Bank, National Association, as Trustee.
This Bond is one ofa duly authorized issue of bonds of the Local Agency
designated as its "Taxable Pension Obligation Bonds, 2005 Series A" (the "Bonds") in aggregate
principal amount of dollars ($ ), all oflike tenor and date
(except for variations relating to numbers, maturities and interest rates), and is issued under and
pursuant to the provisions of Articles 10 and 11 (commencing with Section 53570) of Chapter 3
of Division 2 of Title 5 of the Government Code of the State of California and all laws
amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions
of a trust agreement, dated as of June 1, 2005 (the "Trust Agreement"), between the Local
Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee") (copies of which
are on file at the Corporate Trust Office of the Trustee), The Bonds and Additional Bonds may
be issued as Standard Bonds, Capital Appreciation Bonds, Listed Securities, Auction Rate
Securities and Index Bonds (as those terms are defined in the Trust Agreement); this Bond is a
Standard Bond,
Under the Trust Agreement, Additional Bonds and other obligations may be
issued on a parity with the Bonds, but subject to the conditions and upon compliance with the
procedures set forth in the Trust Agreement. The Bonds and any bonds or other obligations
issued on a parity with the Bonds are obligations imposed by law payable from funds to be
appropriated by the Local Agency pursuant to the Public Employees' Retirement Law,
commencing with Section 20000 of the Government Code of the State of California, as amended
(the "Retirement Law"), Reference is hereby made to the Act and to the Trust Agreement and
any and all amendments thereof and supplements thereto for a description of the terms on which
the Bonds are issued, the rights of the registered owners of the Bonds, security for payment of
the Bonds, remedies upon default and limitations thereon, and amendment of the Trust
Agreement (with or without consent of the registered owners of the Bonds); and all the. terms of
the Trust Agreement are hereby incorporated herein and constitute a contract between the Local
Agency and the registered owner of this Bond, to all the provisions of which the registered
owner of this Bond, by acceptance hereof, agrees and consents,
The Bonds are subject to redemption on the dates, at the redernption prices and
pursuant to the terms set forth in the Trust Agreement. Notice of redemption of any Bonds or
any portions thereof shall be given as set forth in the Trust Agreement. Failure by the Trustee to
give notice pursuant to the Trust Agreement to anyone or more of the Information Services, or
the insufficiency of any such notice or the failure of any registered owner to receive any
redemption notice mailed to such registered owner or any immaterial defect in the notice so
mailed shall not affect the sufficiency of the proceedings for the redemption of any Bonds,
DOCSSFL80 1656.1
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This Bond is transferable only on a register to be kept for that purpose at the
above-mentioned office of the Trustee by the registered owner hereof in person or by his duly
authorized attorney upon payment of the charges provided in the Trust Agreement and upon
surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee
duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully
registered Bond or Bonds in the same aggregate principal amount of authorized denominations
will be issued to the transferee in exchange therefor. The Local Agency and the Trustee may
deem and treat the registered owner hereof as the absolute owner hereof for the purpose of
receiving payment of the interest hereon and principal hereof and for all other purposes, whether
or not this Bond shall be overdue, and neither the Local Agency nor the Trustee shall be affected
by any notice or knowledge to the contrary; and payment of the interest on and principal of this
Bond shall be made only to such registered owner, which payments shall be valid and effectual
to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid.
This Bond shall not be entitled to any benefit, protection or security under the
Trust Agreement or become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been executed and dated by the
Trustee.
It is hereby certified that all acts, conditions and things required by law to exist, to
have happened and to have been performed precedent to and in the issuance of this Bond do
exist, have happened and have been performed in due time, form and manner as required by law
and that the amount of this Bond, together with all other indebtedness of the Local Agency, does
not exceed any limit prescribed by the Constitution or laws of the State of California and is not in
excess of the amount of Bonds permitted to be issued under the Trust Agreement.
DOCSSFl :80 1656.1
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IN WITNESS WHEREOF, the City of San Bernardino has caused this Bond to be
executed in its name and on its behalf by the facsimile signature of the Mayor and to be
countersigned by the facsimile signature of the City Clerk of the City of San Bernardino, and has
caused this Bond to be dated as of the original issue date specified above.
CITY OF SAN BERNARDINO
By
Mayor
Countersigned
City Clerk
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Trust Agreement
which has been authenticated on
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Signatory
DOCSSFI :801656.1
A-4
[FORM OF ASSIGNMENT]
. For value received the undersigned hereby sells, assigns and transfers unto
(Taxpayer Identification Number: ) the within Bond and all rights
thereunder, and hereby irrevocably constitutes and appoints attorney
to transfer the within bond on the books kept for registration thereof, with full power of
substitution in the premises.
.
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Dated:
Note: The signature to this Assignment must correspond with the name as written on the face of
the Bond in every particular, without alteration or enlargement or any change whatever,
Signature Guaranteed:
Notice:
Signature must be guaranteed by an eligible guarantor institution,
DOCSSFL80!656,!
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EXHIBIT B
[FORM OF CAPITAL APPRECIA nON BOND]
CITY OF SAN BERNARDINO
TAXABLE PENSION OBLIGATION BONDS
[SERIES DESIGNATION]
No,R-
$
THE OBLIGATIONS OF THE CITY OF SAN BERNARDINO
HEREUNDER, INCLUDING THE OBLIGATION TO MAKE ALL
PAYMENTS OF INTEREST AND PRINCIPAL WHEN DUE, ARE
OBLIGATIONS OF THE CITY OF SAN BERNARDINO IMPOSED BY
LAW AND ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT
ANY RIGHT OF SET-OFF OR COUNTER CLAIM. THIS BOND
DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY OF SAN
BERNARDINO FOR WHICH THE CITY OF SAN BERNARDINO IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION
OR FOR WHICH THE CITY OF SAN BERNARDINO HAS LEVIED
OR PLEDGED ANY FORM OF TAXATION, NEITHER THE BONDS
NOR THE OBLIGATION OF THE CITY OF SAN BERNARDINO TO
MAKE PAYMENTS ON THE BONDS CONSTITUTE AN
INDEBTEDNESS OF THE CITY OF SAN BERNARDINO, THE
STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION,
Interest
Rate
Maturity
Date
Original
Issue Date
CUSIP
REGISTERED OWNER:
PRINCIPAL SUM:
DOLLARS
ACCRETED VALUE AT MATURITY:
The City of San Bernardino, duly organized and validly existing under and
pursuant to the Constitution and laws of the State of California (the "Local Agency"), for value
received hereby, promises to pay to the registered owner identified above or registered assigns,
on the maturity date specified above (subject to any right of prior redemption hereinafter
provided for) the Accreted Value specified above, Interest on the principal sum specified above
at approximately the interest rate specified above from the Original Issue Date specified above
based on a 360-day year of twelve 30-day months, shall be compounded on , and
semiannually thereafter on and in each year to the maturity date specified
DOCSSFL801656.1
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above, and shall be payable at maturity or at the earlier redemption hereof. Payment of such
principal and interest shall be in accordance with the amounts set forth in the Accreted Value
Table hereinafter set forth and for payments between compounding dates by straight line
interpolations, The Accreted Value hereof is payable in lawful money of the United States of
America at the Corporate Trust Office of Wells Fargo Bank, National Association, as Trustee.
This Bond is one of a duly authorized issue of bonds of the Local Agency
designated as its "Taxable Pension Obligation Bonds, [Series Designation]" (the "Bonds") in
aggregate principal amount of dollars ($ ), all ofiike tenor
and date (except for variations relating to numbers, maturities and interest rates), and is issued
under and pursuant to the provisions of Articles 10 and II (commencing with Section 53570) of
Chapter 3 of Division 2 of Title 5 of the Govemment Code of the State of Cali fomi a and all laws
amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions
of a trust agreement, dated as of June 1,2005 (the "Trust Agreement"), between the Local
Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee") (copies of which
are on file at the Corporate Trust Office of the Trustee), The Bonds and any Additional Bonds
may be issued as Standard Bonds, Capital Appreciation Bonds, Listed Securities, Auction Rate
Securities and Index Bonds (as those terms are defined in the Trust Agreement); this Bond is a
Capital Appreciation Bond,
Under the Trust Agreement, Additional Bonds and other obligations may be
issued on a parity with the Bonds, but subject to the conditions and upon compliance with the
procedures set forth in the Trust Agreement. The Bonds and any bonds or other obligations
issued on a parity with the Bonds are obligations imposed by law payable from funds to be
appropriated by the Local Agency pursuant to the Public Employees' Retirement Law,
commencing with Section 20000 of the Government Code of the State of Cali fomi a, as amended
(the "Retirement Law"), Reference is hereby made to the Act and to the Trust Agreement and
any and all amendments thereof and supplements thereto for a description of the terms on which
the Bonds are issued, the rights of the registered owners of the Bonds, security for payment of
the Bonds, remedies upon default and limitations thereon, and amendment of the Trust
Agreement (with or without consent of the registered owners of the Bonds); and all the terms of
the Trust Agreement are hereby incorporated herein and constitute a contract between the Local
Agency and the registered owner of this Bond, to all the provisions of which the registered
owner of this Bond, by acceptance hereof, agrees and consents,
The Bonds are subject to redemption on the dates, at the redemption prices and
pursuant to the terms set forth in the Trust Agreement. Notice of redemption of any Bonds or
any portions thereof shall be given as set forth in the Trust Agreement. Failure by the Trustee to
give notice pursuant to the Trust Agreement to anyone or more of the Information Services, or
the insufficiency of any such notice or the failure of any registered owner to receive any
redemption notice mailed to such registered owner or any immaterial defect in the notice so
mailed shall not affect the sufficiency of the proceedings for the redemption of any Bonds,
This Bond is transferable only on a register to be kept for that purpose at the
above-mentioned office of the Trustee by the registered owner hereof in person or by his duly
authorized attorney upon payment of the charges provided in the Trust Agreement and upon
surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee
DOCSSFI:80!656.!
B-2
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duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully
registered Bond or Bonds in the same aggregate principal amount of authorized denominations
will be issued to the transferee in exchange therefor. The Local Agency and the Trustee may
deem and treat the registered owner hereof as the absolute owner hereof for the purpose of
receiving payment of the interest hereon and principal hereof and for all other purposes, whether
or not this Bond shall be overdue, and neither the Local Agency nor the Trustee shall be affected
by any notice or knowledge to the contrary; and payment of the interest on and principal of this
Bond shall be made only to such registered owner, which payments shall be valid and effectual
to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid,
This Bond shall not be entitled to any benefit, protection or security under the
Trust Agreement or become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been executed and dated by the
Trustee,
It is hereby certified that all acts, conditions and things required by law to exist, to
have happened and to have been performed precedent to and in the issuance of this Bond do
exist, have happened and have been perfonned in due time, fonn and manner as required by law
and that the amount of this Bond, together with all other indebtedness of the Local Agency, does
not exceed any limit prescribed by the Constitution or laws of the State of California and is not in
excess of the amount of Bonds permitted to be issued under the Trust Agreement.
DOCSSFI :801656.1
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IN WITNESS WHEREOF, the City of San Bernardino has caused this Bond to be
executed in its name and on its behalf by the facsimile signature of the Mayor and to be
countersigned by the facsimile signature of the City Clerk of the City of San Bernardino, and has
caused this Bond to be dated as of the original issue date specified above,
CITY OF SAN BERNARDINO
By
Mayor
Countersigned
City Clerk
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Trust Agreement
which has been authenticated on
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Signatory
OOCSSFl:801656.l
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[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto
(Taxpayer Identification Number: ) the within Bond and all rights
thereunder, and hereby irrevocably constitutes and appoints attorney to
transfer the within bond on the books kept for registration thereof, 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 Bond in every particular, without alteration or enlargement or any change whatever,
Signature Guaranteed:
Notice:
Signature must be guaranteed by an eligible guarantor institution.
DOCSSFLSOI656,\
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EXHIBIT C
[FORM OF LISTED SECURITY]
$
(CONSISTING OF
IN $25 DENOMINATIONS OF)
CITY OF SAN BERNARDINO
TAXABLE PENSION OBLIGATION BONDS
[SERIES DESIGNATION]
No. R-
Maximum Number of Bonds
issued as of
THE OBLIGATIONS OF THE CITY OF SAN BERNARDINO
HEREUNDER, INCLUDING THE OBLIGATION TO MAKE ALL
PAYMENTS OF INTEREST AND PRINCIPAL WHEN DUE, ARE
OBLIGATIONS OF THE CITY OF SAN BERNARDINO IMPOSED BY
LAW AND ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT
ANY RIGHT OF SET-OFF OR COUNTER CLAIM, THIS BOND
DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY OF SAN
BERNARDINO FOR WHICH THE CITY OF SAN BERNARDINO IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION
OR FOR WHICH THE CITY OF SAN BERNARDINO HAS LEVIED
OR PLEDGED ANY FORM OF TAXATION, NEITHER THE BONDS
NOR THE OBLIGATION OF THE CITY OF SAN BERNARDINO TO
MAKE PAYMENTS ON THE BONDS CONSTITUTE AN
INDEBTEDNESS OF THE CITY OF SAN BERNARDINO, THE
STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION,
REGISTERED OWNER:
PRINCIPAL SUM:
DOLLARS
The City of San Bernardino, duly organized and validly existing under and
pursuant to the Constitution and laws of the State of California (the "Local Agency"), for value
received hereby, promises to pay to the registered owner identified above or registered assigns,
on the maturity date specified above (subject to any right of prior redemption hereinafter
provided for) the principal sum specified above, together with interest on such principal sum
from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication
of this Bond (unless this Bond is authenticated as of an Interest Payment Date or during the
period from the sixteenth day of the month preceding an Interest Payment Date to such Interest
DOCSSF L80 J 656, J
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Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless
this Bond is authenticated prior the first Interest Payment Date, in which event it shall bear
interest from the original issue date specified above) until the principal hereof shall have been
paid at the interest rate per annum specified above, payable on , and thereafter on
each (each an "Interest Payment Date"), Interest due on or before the maturity or
prior redemption of this Bond shall be payable only by check mailed on the Interest Payment
Date by first-class mail to the registered owner hereof; provided that upon the written request of
a registered owner of$I,OOO,OOO or more in aggregate principal amount of Bonds received by
the Trustee (as hereinafter defined) prior to the applicable record date, interest shall be paid by
wire transfer in immediately available funds, The principal hereof is payable in lawful money of
the United States of America at the Corporate Trust Office of Wells Fargo Bank, National
Association, as Trustee,
This Bond is one of a duly authorized issue of bonds of the Local Agency
designated as its "Taxable Pension Obligation Bonds, [Series Designation]" (the "Bonds") in
aggregate principal amount of dollars ($ ), all of like tenor
and date (except for variations relating to numbers, maturities and interest rates), and is issued
under and pursuant to the provisions of Articles 10 and 11 (commencing with Section 53570) of
Chapter 3 of Division 2 of Title 5 of the Government Code of the State of California and all laws
amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions
of a trust agreement, dated as of June 1, 2005 (the "Trust Agreement"), between the Local
Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee") (copies of which
are on file at the Corporate Trust Office of the Trustee), The Bonds and any Additional Bonds
may be issued as Standard Bonds, Capital Appreciation Bonds, Listed Securities, Auction Rate
Securities and Index Bonds (as those tenus are defined in the Trust Agreement); this Bond is a
Listed Security,
Under the Trust Agreement, Additional Bonds and other obligations may be
issued on a parity with the Bonds, but subject to the conditions and upon compliance with the
procedures set forth in the Trust Agreement. The Bonds and any bonds or other obligations
issued on a parity with the Bonds are obligations imposed by law payable from funds to be
appropriated by the Local Agency pursuant to the Public Employees' Retirement Law,
commencing with Section 20000 of the Government Code of the State of California, as amended
(the "Retirement Law"), Reference is hereby made to the Act and to the Trust Agreement and
any and all amendments thereof and supplements thereto for a description of the terms on which
the Bonds are issued, the rights of the registered owners of the Bonds, security for payment of
the Bonds, remedies upon default and limitations thereon, and amendment of the Trust
Agreement (with or without consent of the registered owners of the Bonds); and all the tenus of
the Trust Agreement are hereby incorporated herein and constitute a contract between the Local
Agency and the registered owner of this Bond, to all the provisions of which the registered
owner of this Bond, by acceptance hereof, agrees and consents,
The Bonds are subject to redemption on the dates, at the redemption prices and
pursuant to the tenus set forth in the Trust Agreement. Notice of redemption of any Bonds or
any portions thereof shall be given as set forth in the Trust Agreement. Failure by the Trustee to
give notice pursuant to the Trust Agreement to anyone or more of the Information Services, or
the insufficiency of any such notice or the failure of any registered owner to receive any
DOCSSF\ :80 1656.\
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redemption notice mailed to such registered owner or any immaterial defect in the notice so
mailed shall not affect the sufficiency of the proceedings for the redemption of any Bonds.
This Bond is transferable only on a register to be kept for that purpose at the
above-mentioned office of the Trustee by the registered owner hereof in person or by his duly
authorized attorney upon payment of the charges provided in the Trust Agreement and upon
surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee
duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully
registered Bond or Bonds in the same aggregate principal amount of authorized denominations
will be issued to the transferee in exchange therefor. The Local Agency and the Trustee may
deem and treat the registered owner hereof as the absolute owner hereof for the purpose of
receiving payment of the interest hereon and principal hereof and for all other purposes, whether
or not this Bond shall be overdue, and neither the Local Agency nor the Trustee shall be affected
by any notice or knowledge to the contrary; and payment of the interest on and principal of this
Bond shall be made only to such registered owner, which payments shall be valid and effectual
to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid,
This Bond shall not be entitled to any benefit, protection or security under the
Trust Agreement or become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been executed and dated by the
Trustee,
It is hereby certified that all acts, conditions and things required by law to exist, to
have happened and to have been performed precedent to and in the issuance of this Bond do
exist, have happened and have been performed in due time, form and manner as required by law
and that the amount of this Bond, together with all other indebtedness of the Local Agency, does
not exceed any limit prescribed by the Constitution or laws of the State of Cali fomi a and is not in
excess of the amount of Bonds permitted to be issued under the Trust Agreement.
DOCSSFL80 1656.1
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IN WITNESS WHEREOF, the City of San Bernardino has caused this Bond to be
executed in its name and on its behalf by the facsimile signature of the Mayor and to be
countersigned by the facsimile signature of the City Clerk of the City of San Bernardino, and has
caused this Bond to be dated as of the original issue date specified above.
CITY OF SAN BERNARDINO
By
Mayor
Countersigned
City Clerk
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Trust Agreement
which has been authenticated on
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Signatory
DOCSSF1:801656.1
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[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto
(Taxpayer Identification Number: ) the within Bond and all rights
thereunder, and hereby irrevocably constitutes and appoints attorney to
transfer the within bond on the books kept for registration thereof, 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 Bond in every particular, without alteration or enlargement or any change whatever,
Signature Guaranteed:
Notice:
Signature must be guaranteed by an eligible guarantor institution,
DOCSSFL801656,I
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EXHIBIT D
[FORM OF AUCTION RATE SECURITY]
CITY OF SAN BERNARDINO
TAXABLE PENSION OBLIGATION BONDS
[SERIES DESIGNATION]
No, R-
$
THE OBLIGATIONS OF THE CITY OF SAN BERNARDINO
HEREUNDER, INCLUDING THE OBLIGATION TO MAKE ALL
PAYMENTS OF INTEREST AND PRINCIPAL WHEN DUE, ARE
OBLIGATIONS OF THE CITY OF SAN BERNARDINO IMPOSED BY
LAW AND ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT
ANY RIGHT OF SET-OFF OR COUNTER CLAIM, THIS BOND
DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY OF SAN
BERNARDINO FOR WHICH THE CITY OF SAN BERNARDINO IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION
OR FOR WHICH THE CITY OF SAN BERNARDINO HAS LEVIED
OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS
NOR THE OBLIGATION OF THE CITY OF SAN BERNARDINO TO
MAKE PAYMENTS ON THE BONDS CONSTITUTE AN
INDEBTEDNESS OF THE CITY OF SAN BERNARDINO, THE
STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION,
Interest
Rate
Maturity
Date
Original
Issue Date
CUSIP
REGISTERED OWNER:
PRINCIPAL SUM:
DOLLARS
The City of San Bernardino, duly organized and validly existing under and
pursuant to the Constitution and laws of the State of California (the "Local Agency"), for value
received hereby, promises to pay to the registered owner identified above or registered assigns,
on the maturity date specified above (subject to any right of prior redemption hereinafter
provided for) the principal sum specified above, together with interest on such principal sum
from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication
of this Bond (unless this Bond is authenticated as of an Interest Payment Date or during the
period from the sixteenth day of the month preceding an Interest Payment Date to such Interest
Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless
. this Bond is authenticated prior to the first Interest Payment Date, in which event it shall bear
OOCSSFL801656.l
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.
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interest from the original issue date specified above) until the principal hereof shall have been
paid, The principal hereof is payable in lawful money of the United States of America at the
Corporate Trust Office of Wells Fargo Bank, National Association, as Trustee,
This Bond is issued as an Auction Rate Security, and will initially bear interest at
the Applicable Auction Rate established pursuant to the Auction and Settlement Procedures set
forth in the Auction Agent Agreement. Interest on Auction Rate Securities will accrue for each
Auction Interest Period or portion thereof and will be payable in arrears on each succeeding
Interest Payment Date, The length of an Auction Interest Period may be adjusted pursuant to the
Trust Agreement.
While this Bond is an Auction Rate Security, except as otherwise specifically
provided in the Trust Agreement, the provisions of the Trust Agreement and the Auction and
Settlement Procedures set forth in the Auction Agent Agreement shall govern the interest rates
per annum and the payment terms of this Bond, Interest due on or before the maturity or prior
redemption of this Bond shall be payable only by check mailed on the Interest Payment Date by
first-class mail to the registered owner hereof by Wells Fargo Bank, National Association, as
trustee (the "Trustee") provided that upon the written request of an Owner of $1,000,000 or more
in aggregate principal amount of Bonds received by the Trustee prior to the applicable record
date, interest shall be paid to such Owner by wire transfer in immediately available funds, The
principal hereof is payable in lawful money of the United States of America at the Corporate
Trust Office of the Trustee,
This Bond is one of a duly authorized issue of bonds of the Local Agency
designated as its "Taxable Pension Obligation Bonds, [Series Designation]" (the "Bonds") in
aggregate principal amount of dollars ($ ), all oflike tenor
and date (except for variations relating to numbers, maturities and interest rates), and is issued
under and pursuant to the provisions of Articles 10 and 11 (commencing with Section 53570) of
Chapter 3 of Division 2 of Title 5 of the Government Code of the State of California and all laws
amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions
of a trust agreement, dated as of June 1, 2005 (the "Trust Agreement"), between the Local
Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee") (copies of which
are on file at the Corporate Trust Office of the Trustee), The Bonds and any Additional Bonds
may be issued as Standard Bonds, Capital Appreciation Bonds, Listed Securities, Auction Rate
Securities and Index Bonds (as those terms are defined in the Trust Agreement); this Bond is an
Auction Rate Security Bond.
Under the Trust Agreement, Additional Bonds and other obligations may be
issued on a parity with the Bonds, but subject to the conditions and upon compliance with the
procedures set forth in the Trust Agreement. The Bonds and any bonds or other obligations
issued on a parity with the Bonds are obligations imposed by law payable from funds to be
appropriated by the Local Agency pursuant to the Public Employees' Retirement Law,
commencing with Section 20000 of the Government Code ofthe State of California, as amended
(the "Retirement Law"), Reference is hereby made to the Act and to the Trust Agreement and
any and all amendments thereof and supplements thereto for a description of the terms on which
the Bonds are issued, the rights of the registered owners of the Bonds, security for payment of
the Bonds, remedies upon default and limitations thereon, and amendment of the Trust
DOCSSFI :801656.1
D-2
.
Agreement (with or without consent of the registered owners of the Bonds); and all the terms of
the Trust Agreement are hereby incorporated herein and constitute a contract between the Local
Agency and the registered owner of this Bond, to all the provisions of which the registered
owner of this Bond, by acceptance hereof, agrees and consents.
Interest on Auction Rate Securities shall accrue for each Interest Period and shall
be payable in arrears, on each succeeding Interest Payment Date, An "Interest Payment Date"
for the Bonds means, during the Initial Interest Period, , 2005 and thereafter each
and until and thereafter ; and shall also
mean the maturity date of Auction Rate Securities. An "Interest Period" means, (i) unless
otherwise changed as described in the Trust Agreement, the period commencing on the date of
the original issuance of the Bonds through and including the last day of the initial Interest Period,
the Initial Auction Period and thereafter each successive period of days,
commencing on a (or the day following the last Interest Period, if the prior Interest
Period does not end on a ) and ending on (and including) a (unless
such is not followed by a Business Day, in which case the next succeeding day (need
not be consecutive) that is followed by a Business Day), and (ii) if the Auction Periods are
changed as provided for in the Trust Agreement, each period commencing on an Interest
Payment Date and ending on, but excluding, the next succeeding Interest Payment Date, Interest
Payment Dates may change in the event of a change in the length of one or more Auction
Periods.
.
Interest on the Bonds during the initial Interest Period and during any Auction
Period shall be computed by the Trustee on the basis set forth in a Supplemental Trust
Agreement. The Trustee shall make the calculation described above not later than the close of
business of each Auction Date.
The rate of interest on the Auction Rate Securities during the Initial Interest
Period (which ends on , ---> shall be the rate of % per annum, The rate of
interest on Auction Rate Securities for each Interest Period following the Initial Interest Period
(including the Initial Auction Period), shall be equal to the per annum rate of interest that results
from implementation of the Auction Procedures described in the Trust Agreement unless the
Auction Rate exceeds the Maximum Auction Rate, in which case the rate of interest shall be the
Maximum Rate; provided that if on any Auction Date, an Auction is not held for any reason,
then the rate of interest for the next succeeding Interest Period will be determined as set forth in a
Supplemental Trust Agreement. Notwithstanding the foregoing, (i) if the ownership of Auction
Rate Securities is no longer maintained in book-entry form by DTC, the rate of interest on
Auction Rate Securities for any Auction Period commencing after the delivery of certificates
representing Auction Rate Securities shall equal the Maximum Auction Rate on the Business
Day immediately preceding the first day of such Interest Period or (ii) if a Payment Default
occurs, Auctions will be suspended and the interest rate for the Interest Period commencing on or
after such Payment Default and for each Interest Period thereafter to and including the Interest
Period, if any, during which, or commencing less than two Business Days after, such Payment
Default is cured will equal the Default Rate, Notwithstanding anything herein to the contrary, no
Auction Rate shall exceed the Maximum Auction Rate,
.
DOCSSFUOI656.1
D-3
.
.
Notwithstanding anything herein to the contrary, if the Auction Rate Securities, or
portion thereof, have been selected for redemption during the next succeeding Interest Period,
such Auction Rate Security or portion thereof will not be included in the Auction preceding such
redemption date, and will bear interest until the redemption date at the rate established for the
Interest Period prior to said Auction.
By purchasing Auction Rate Securities, whether in an Auction or otherwise, each
prospective purchaser or its Broker-Dealer must agree and will be deemed to have agreed: (i) to
participate in Auctions on the terms set forth in the Trust Agreement; (ii) so long as the
beneficial ownership of the Auction Rate Securities is maintained in book-entry form by DTC, to
sell, transfer or otherwise dispose of Auction Rate Securities only pursuant to a Bid or a Sell
Order in an Auction, or to or through a Broker-Dealer, provided that in the Auction Rate
Securities so transferred, its Participant or its Broker-Dealer advises the Auction Agent of such
transfer; and (iii) to have its beneficial ownership of Bonds maintained at all times in book-entry
form by the purchaser for the account of its Participants, which in turn will maintain records of
such beneficial ownership, and to authorize such Participants to disclose to the Auction Agent
such information with respect to such beneficial ownership as the Auction Agent may request.
.
Following the Initial Interest Period, Auction Rate Securities will bear interest at
the applicable Auction Rate, which will be established for the Initial Auction Period and each
Subsequent Auction Period in accordance with the Auction Procedures described in the Trust
Agreement; provided, however, that as of the Initial Auction Date, each Existing Owner of
Auction Rate Securities will be automatically deemed by the Auction Agent to have submitted a
Sell Order for all of the Auction Rate Securities then owned by such Existing Owner unless such
Existing Owner, prior to the Submission Deadline, submits a Hold Order to a Broker-Dealer
indicating the principal amount of Auction Rate Securities which such Existing Owner desires to
continue to hold regardless to the Auction Rate for the next succeeding Interest Period,
During the Initial Interest Period, this Bond is transferable as provided in the
Trust Agreement, only upon the books of the Trustee kept for the purpose at the principal
corporate trust office of the Trustee, by the registered owner hereof in person, or by his or her
duly authorized attorney, upon surrender of this Bond together with a written instrument of
transfer satisfactory to the Trustee duly executed by the registered owner or his or her duly
authorized attorney, and thereupon a new registered Bond or Bonds, in the same aggregate
principal amount, Mode and maturity, in the same denomination, or in different authorized
denominations equal in the aggregate to the principal amount of this Bond, shall be issued to the
transferee in exchange therefor as provided in the Trust Agreement, and upon payment of the
charges therein prescribed, During the Initial Interest Period, the Trustee shall not be required to
register the transfer or exchange of any Bond during the 15 day period next preceding selection
of Bonds for redemption (if applicable) or as to any Bond selected for any redemption,
Following the Initial Interest Period and so long as the ownership of the Auction
Rate Securities is maintained in book-entry form by DTC, an Existing Owner may sell, transfer
or otherwise dispose of the Bonds only pursuant to a Bid or Sell Order (as defined in the Trust
Agreement) placed in an Auction or through a Broker-Dealer, provided that, in the case of all
transfers other than pursuant to Auctions, such Existing Owner, its Broker-Dealer or its
. Participant advises the Auction Agent of such transfer. An Auction shall be conducted on each
DOCSSFI ,80 1656,1
D-4
Auction Date, if there is an Auction Agent on such Auction Date, in the marmer described in the
. Trust Agreement.
Following the Initial Interest Period, the Market Agent, with the written consent
of the Local Agency, may change from time to time the length of one or more Auction Periods
(an "Auction Period Adjustment"), The Market Agent shall initiate the Auction Period
Adjustment by giving written notice to the Trustee, the Auction Agent, the Local Agency, the
Insurer and DTC at least 10 days prior to the Auction Date for such Auction Period, Any such
changed Auction Period shall not be less than seven days,
On any Interest Payment Date, at the option of the Local Agency, all, but not less
than all, of the Bonds of a [Series ] [Tranche ] may be converted from Auction Rate Securities to
Bonds bearing interest at fixed interest rates and on such date (the "Fixed Rate Conversion
Date"), the Auction Rate Securities of such [Series][Tranche] will be subject to mandatory tender
for purchase at a price of par, plus accrued but unpaid interest (the "Tender Price"), Upon
satisfaction of certain conditions set forth in the Trust Agreement, the affected Auction Rate
Securities shall be purchased or deemed purchased at their Tender Price,
.
The Bonds are subject to redemption on the dates, at the redemption prices and
pursuant to the terms set forth in the Trust Agreement. Notice of redemption of any Bonds or
any portions thereof shall be given as set forth in the Trust Agreement. Failure by the Trustee to
give notice pursuant to the Trust Agreement to anyone or more of the Information Services, or
the insufficiency of any such notice or the failure of any registered owner to receive any
redemption notice mailed to such registered owner or any immaterial defect in the notice so
mailed shall not affect the sufficiency of the proceedings for the redemption of any Bonds,
This Bond is transferable only on a register to be kept for that purpose at the
above-mentioned office of the Trustee by the registered owner hereof in person or by his duly
authorized attorney upon payment of the charges provided in the Trust Agreement and upon
surrender of this Bond together with a written instrument oftransfer satisfactory to the Trustee
duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully
registered Bond or Bonds in the same aggregate principal amount of authorized denominations
will be issued to the transferee in exchange therefor, The Local Agency and the Trustee may
deem and treat the registered owner hereof as the absolute owner hereof for the purpose of
receiving payment of the interest hereon and principal hereof and for all other purposes, whether
or not this Bond shall be overdue, and neither the Local Agency nor the Trustee shall be affected
by any notice or knowledge to the contrary; and payment of the interest on and principal of this
Bond shall be made only to such registered owner, which payments shall be valid and effectual
to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid,
This Bond shall not be entitled to any benefit, protection or security under the
Trust Agreement or become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been executed and dated by the
Trustee,
.
It is hereby certified that all acts, conditions and things required by law to exist, to
have happened and to have been performed precedent to and in the issuance of this Bond do
DOCSSF1,801656.1
D-5
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exist, have happened and have been performed in due time, form and manner as required by law
and that the amount of this Bond, together with all other indebtedness of the Local Agency, does
not exceed any limit prescribed by the Constitution or laws of the State of California and is not in
excess of the amount of Bonds permitted to be issued under the Trust Agreement.
DOCSSF\ ;80\656,\
D-6
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IN WITNESS WHEREOF, the City of San Bernardino has caused this Bond to be
executed in its name and on its behalf by the facsimile signature of the Mayor and to be
countersigned by the facsimile signature of the City Clerk of the City of San Bernardino, and has
caused this Bond to be dated as of the original issue date specified above,
CITY OF SAN BERNARDINO
By
Mayor
Countersigned
City Clerk
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Trust Agreement
which has been authenticated on
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Signatory
DOCSSF1:801656.1
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[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and tfansfers unto
(Taxpayer Identification Number: ) the within Bond and all rights
thereunder, and hereby irrevocably constitutes and appoints attorney to transfer
the within bond on the books kept for registration thereof, 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 Bond in every particular, without alteration or enlargement Of any change whatever.
Signature Guaranteed:
Notice:
Signature must be guaranteed by an eligible guarantor institution,
DQCSSFI,801656,1
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[FORM OF NOTICE OF PAYMENT DEF AUL T]
VIA FACSIMILE OR E-MAIL
To: Auction Agent
Broker Dealer( s)
NOTICE IS HEREBY GIVEN that a Payment Default has occurred in connection with the
above-referenced Bonds of the City of San Bernardino (the "Local Agency") as specified in the
Trust Agreement, dated as of , 2005, between the Local Agency and
, as trustee (the "Trustee"), and has not been cured.
Determination of the interest rate on the Auction Rate Securities pursuant to the Auction
Procedures will be suspended. The interest rate on the Auction Rate Securities for each Auction
Interest Period commencing after will equal the Non-Payment Rate as it is determined by the
Trustee on the first day of such Auction Interest Period. All terms used herein and not otherwise
defined shall have the meanings given such terms in the Trust Agreement.
Dated:
, as Trustee
By
Authorized Signatory
cc: City of San Bernardino
DOCSSFI:801656.1
D-9
f
[NOTICE OF CURE OF PAYMENT DEF AUL T]
e
VIA FACSIMILE OR E-MAIL
To: Auction Agent
Broker Dealer( s)
NOTICE IS HEREBY GIVEN that the Payment Default previously reported in connection with
the above-referenced Bonds of the City of San Bernardino (the "Local Agency") as specified in
the Trust Agreement, dated as of , 2005, between the Local Agency and
, as trustee (the "Trustee"), has been cured.
Dated:
, as Trustee
By
Authorized Signatory
e cc: City of San Bernardino
e
DOCSSFl:80 1656.1
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EXHIBIT E
[FORM OF INDEX BOND]
CITY OF SAN BERNARDINO
TAXABLE PENSION OBLIGATION BONDS
[SERIES DESIGNATION)
No.R-_
$
THE OBLIGATIONS OF THE CITY OF SAN BERNARDINO
HEREUNDER, INCLUDING THE OBLIGATION TO MAKE ALL
PAYMENTS OF INTEREST AND PRINCIPAL WHEN DUE, ARE
OBLIGATIONS OF THE CITY OF SAN BERNARDINO IMPOSED BY
LAW AND ARE ABSOLUTE AND UNCONDITIONAL, WITHOUT
ANY RIGHT OF SET-OFF OR COUNTER CLAIM. THIS BOND
DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY OF SAN
BERNARDINO FOR WHICH THE CITY OF SAN BERNARDINO IS
OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION
OR FOR WHICH THE CITY OF SAN BERNARDINO HAS LEVIED
OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS
NOR THE OBLIGATION OF THE CITY OF SAN BERNARDINO TO
MAKE PAYMENTS ON THE BONDS CONSTITUTE AN
INDEBTEDNESS OF THE CITY OF SAN BERNARDINO, THE
STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR
RESTRICTION.
Interest
Rate
Maturity
Date
Original
Issue Date
CUSIP
LffiOR plus %
REGISTERED OWNER:
PRINCIP AL SUM:
DOLLARS
The City of San Bernardino, duly organized and validly existing under and
pursuant to the Constitution and laws of the State of California (the "Local Agency"), for value
received hereby, promises to pay to the registered owner identified above or registered assigns,
on the maturity date specified above (subject to any right of prior redemption hereinafter
provided for) the principal sum specified above, together with interest on such principal sum
from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication
of this Bond (unless this Bond is authenticated as of an Interest Payment Date or during the
period from the sixteenth day of the month preceding an Interest Payment Date to such Interest
DOCSSFl:801656.1
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Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless
this Bond is authenticated prior to the first Interest Payment Date, in which event it shall bear
interest from the original issue date specified above) until the principal hereof shall have been
paid. This Bond is issued as an Index Bond, and will bear interest at the Index Rate established
pursuant to the Trust Agreement. Interest on Index Bonds will accrue for each Index Rate Period
or portion thereof and will be payable in arrears on each succeeding Interest Payment Date. The
length of an Index Rate Period may be adjusted pursuant to the Trust Agreement. Interest due on
or before the maturity or prior redemption of this Bond shall be payable only by check mailed on
the Interest Payment Date by first-class mail to the registered owner hereof; provided that upon
the written request of an Owner of $1,000,000 or more in aggregate principal amount of Bonds
received by the Trustee prior to the applicable record date, interest shall be paid to such Owner
by wire transfer in immediately available funds. The principal hereof is payable in lawful money
of the United States of America at the Corporate Trust Office of the Trustee. shall
serve as initial Calculation Agent for the Index Bonds (the "Calculation Agent"); for so long as
there are Index Bonds, either or another designated member of the National
Association of Securities Dealers shall serve the Local Agency in the capacity of Calculation
Agent.
On each Index Rate Determination Date following the date of delivery of this
Bond, until the end of the applicable Interest Rate Period for Index Bonds (each, an "Index
Adjustment Date"), the Calculation Agent will (i) calculate the interest rate applicable to this
Bond, based on the above LIBOR Percentage (being the designated percentage of LffiOR or
LffiOR Spread, as set forth in a Supplemental Trust Agreement), and (ii) notify the Trustee of
such interest rate for the upcoming Interest Rate Period.
The Trust Agreement provides for the setting of an alternate rate for Index Bonds,
in the event that LffiOR is no longer a published index.
This Bond is one of a duly authorized issue of bonds of the Local Agency
designated as its "Taxable Pension Obligation Bonds, [Series Designation)" (the "Bonds") in
aggregate principal amount of dollars ($ ), all oflike tenor
and date (except for variations relating to numbers, maturities and interest rates), and is issued
under and pursuant to the provisions of Articles 10 and II (commencing with Section 53570) of
Chapter 3 of Division 2 of Title 5 of the Government Code of the State of California and all laws
amendatory thereof or supplemental thereto (the "Act") and under and pursuant to the provisions
of a trust agreement, dated as of June I, 2005 (the "Trust Agreement"), between the Local
Agency and Wells Fargo Bank, National Association, as trustee (the "Trustee") (copies of which
are on file at the Corporate Trust Office of the Trustee). The Bonds and any Additional Bonds
may be issued as Standard Bonds, Capital Appreciation Bonds, Listed Securities, Auction Rate
Securities and Index Bonds (as those terms are defined in the Trust Agreement); this Bond is an
Index Bond.
Under the Trust Agreement, Additional Bonds and other obligations may be
issued on a parity with the Bonds, but subject to the conditions and upon compliance with the
procedures set forth in the Trust Agreement. The Bonds and any bonds or other obligations
issued on a parity with the Bonds are obligations imposed by law payable from funds to be
appropriated by the Local Agency pursuant to the Public Employees' Retirement Law,
DOCSSF I :801656.1
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commencing with Section 20000 of the Government Code of the State of California, as amended
(the "Retirement Law"). Reference is hereby made to the Act and to the Trust Agreement and
any and all amendments thereof and supplements thereto for a description of the terms on which
the Bonds are issued, the rights of the registered owners of the Bonds, security for payment of
the Bonds, remedies upon default and limitations thereon, and amendment of the Trust
Agreement (with or without consent of the registered owners of the Bonds); and all the terms of
the Trust Agreement are hereby incorporated herein and constitute a contract between the Local
Agency and the registered owner of this Bond, to all the provisions of which the registered
owner of this Bond, by acceptance hereof, agrees and consents.
The Bonds are subject to redemption on the dates, at the redemption prices and
pursuant to the terms set forth in the Trust Agreement. Notice of redemption of any Bonds or
any portions thereof shall be given as set forth in the Trust Agreement. Failure by the Trustee to
give notice pursuant to the Trust Agreement to anyone or more of the Information Services, or
the insufficiency of any such notice or the failure of any registered owner to receive any
redemption notice mailed to such registered owner or any immaterial defect in the notice so
mailed shall not affect the sufficiency of the proceedings for the redemption of any Bonds.
This Bond is transferable only on a register to be kept for that purpose at the
above-mentioned office of the Trustee by the registered owner hereof in person or by his duly
authorized attorney upon payment of the charges provided in the Trust Agreement and upon
surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee
duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully
registered Bond or Bonds in the same aggregate principal amount of authorized denominations
will be issued to the transferee in exchange therefor. The Local Agency and the Trustee may
deem and treat the registered owner hereof as the absolute owner hereof for the purpose of
receiving payment of the interest hereon and principal hereof and for all other purposes, whether
or not this Bond shall be overdue, and neither the Local Agency nor the Trustee shall be affected
by any notice or knowledge to the contrary; and payment of the interest on and principal of this
Bond shall be made only to such registered owner, which payments shall be valid and effectual
to satisfy and discharge liability on this Bond to the extent of the sum or sums so paid.
This Bond shall not be entitled to any benefit, protection or security under the
Trust Agreement or become valid or obligatory for any purpose until the certificate of
authentication and registration hereon endorsed shall have been executed and dated by the
Trustee.
It is hereby certified that all acts, conditions and things required by law to exist, to
have happened and to have been performed precedent to and in the issuance of this Bond do
exist, have happened and have been performed in due time, form and rnanner as required by law
and that the amount of this Bond, together with all other indebtedness of the Local Agency, does
not exceed any limit prescribed by the Constitution or laws of the State of California and is not in
excess of the amount of Bonds permitted to be issued under the Trust Agreement.
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IN WITNESS WHEREOF, the City of San Bernardino has caused this Bond to be
executed in its name and on its behalf by the facsimile signature of the Mayor and to be
countersigned by the facsimile signature of the City Clerk of the City of San Bernardino, and has
caused this Bond to be dated as of the original issue date specified above.
CITY OF SAN BERNARDINO
By
Mayor
Countersigned
City Clerk
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds described in the within-mentioned Trust Agreement
which has been authenticated on
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Signatory
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EXHIBIT F
ACCRETED VALUE TABLE
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EXHIBIT G
PROVISIONS RELATING TO AUCTION RATE SECURITIES
The following definitions shall apply to this Exhibit G in addition to the
definitions found in Section 1.0 I of this Trust Agreement.
All-Hold Rate
The term "All-Hold Rate" means, on any date of determination, the interest rate
per annum equal to the percentage set forth in a Supplemental Trust Agreement; provided that in
no event shall the All-Hold Rate be more than the Maximum Auction Rate.
Applicable Auction Rate
The term "Applicable Auction Rate" means the rate per annum at which interest
accrues with respect to the Auction Rate Securities of each Tranche for any Auction Interest
Period.
Applicable Percentage
The term "Applicable Percentage" means, on any date of determination, the
percentage (as such percentage may be adjusted pursuant hereto) based upon the prevailing
rating of the Auction Rate Securities in effect at the close of business on the Business Day
e immediately preceding such date.
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PREVAILING RATINGS
APPLICABLE PERCENTAGE
"Aaa"j"AAA"
"Aa"j"AA"
"A"/"A"
"Baa"j"BBB"
Below "Baa"/Below "BBB"
[Set forth in a Supplemental Trust
Agreement]
For purposes of this definition, the "prevailing rating" of the Auction Rate
Securities will be:
(i) "AAA"/ "Aaa," if the Auction Rate Securities have a rating of
"AAA" by S&P or Fitch and a rating of "Aaa" by Moody's, or the equivalent of such
ratings by a substitute rating agency or agencies selected as provided below:
(ii) ifnot "AN'/ "Aaa," then "AN'/ "Aa," ifthe Auction Rate
Securities have a rating of "AA-" or better by S&P or Fitch and a rating of "Aa" or better
by Moody's, or the equivalent of such ratings by a substitute Rating Agency or Agencies
selected as provided below;
(iii) ifnot "AAA"/ "Aaa" or "AA"/ "Aa," then "A"/ "A," if the Auction
Rate Securities have a rating of"A-" or better by S&P or Fitch and a rating of "A" or
DOCSSFI :801656.1
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better by Moody's, or the equivalent of such ratings by a substitute Rating Agency or
Agencies selected as provided below;
(iv) ifnot "AAA"j "Aaa," "AA"j "Aa," or "A"! "A," then "BBB"/
"Baa" If the Auction Rate Securities have a rating of"BBB-" or better by S&P or Fitch
and a rating of "Baa" or better by Moody's, or the equivalent of such ratings by a
substitute Rating Agency or Agencies selected as provided below; and
(v) ifnot any of the foregoing ratings, then below "BBB"/"Baa,"
whether or not the Auction Rate Securities are rated by any Rating Agency.
Auction
The term "Auction" means the implementation of the Auction Procedures on an
Auction Date.
Auction Agent Agreement
The term "Auction Agent Agreement" means the initial Auction Agent
Agreement for Auction Rate Securities identified in a Supplemental Trust Agreement, unless and
until a substitute Auction Agent Agreement acceptable to the Broker-Dealer and the Insurer is
entered into, after which "Auction Agent Agreement" shall mean such substitute Auction Agent
Agreement in each case as from time to time amended or supplemented.
e Auction Agent
The term "Auction Agent" means the initial Auction Agent for the Auction Rate
Securities identified in a Supplemental Trust Agreement, unless and until a substitute Auction
Agent Agreement, acceptable to the Broker-Dealer and the Insurer, becomes effective, after
which "Auction Agent" shall mean the related substitute Auction Agent.
Auction Agent Fee
The term "Auction Agent Fee" means the fee set forth in the applicable Auction
Agent Agreement.
Auction Date
The term "Auction Date" means the Business Day immediately preceding the first
day of each Auction Interest Period for each Tranche of Auction Rate Securities, other than:
(a) each Auction Interest Period for each Tranche commencing after the
ownership of the Auction Rate Securities is no longer maintained in book-entry form by the
Securities Depository; or
(b) each Auction Interest Period commencing after the occurrence and during the
continuance of a Payment Default; or
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(c) any Auction Interest Period commencing less than two Business Days after
the cure or waiver of a Payment Default.
Auction Documents
The term "Auction Documents" means, collectively, the Auction Agent
Agreement, each Broker-Dealer Agreement and each Market Agent Agreement, in each case, as
supplemented or amended from time to time.
Auction Interest Period
The term "Auction Interest Period" or "Interest Period" means, as to the
applicable Auction Rate Securities of a Tranche, each period during which a specific Auction
Rate is in effect, as a result of an Auction, for such Tranche of Auction Rate Securities, which
Auction Interest Period may be a 7-, 14-,21-, 28-or 35-day period or such other period as may be
designated from time to time by the Local Agency and the Market Agent with the consent of the
Insurer pursuant to an Auction Period Adjustment for a Tranche of Auction Rate Securities, each
Auction Interest Period running from, and including, the Rate Adjustment Date and ending on,
and including, the day immediately preceding the next succeeding Rate Adjustment Date;
provided that the initial Auction Interest Period, if any, shall be as stated in a Supplemental Trust
Agreement.
Auction Period Adjustment
The term "Auction Period Adjustment" means an adjustment to the length of an
Auction Interest Period implemented by the Local Agency and the Market Agent pursuant to this
Trust Agreement and the Market Agent Agreement as described below under Section 2.10 of this
Exhibit G.
Auction Procedures
The term "Auction Procedures" means the Auction and Settlement Procedures set
forth in the Auction Agent Agreement.
Auction Rate
The term "Auction Rate" means, as to the interest rate with respect to the
applicable Tranche of Auction Rate Securities, the rate of interest per annum that results from
implementation of the Auction Procedures with respect to such Tranche of Auction Rate
Securities, and determined as described in Section 2.03 or 2.04 of this Exhibit G; provided,
however, that the Auction Rate shall not exceed 17% per annum or the Maximum Auction Rate,
if lower than 17% per annum.
Auction Rate Period
The term "Auction Rate Period" means the Initial Auction Rate Period and any
Subsequent Auction Rate Period, including 7-,14-,21-, 28-and 35-day periods.
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Broker-Dealer
The term "Broker-Dealer" means any broker or dealer (each as defined in the
Securities Exchange Act of 1934), commercial bank or other entity permitted by law to perform
the functions required of a Broker-Dealer set forth in the Auction Procedures which is an
"Authorized Broker-Dealer" under the Broker-Dealer Agreement, and which:
(d) is a Securities Depository System Participant (or an affiliate ofa Securities
Depository System Participant);
(e) has been appointed as such by the Local Agency and approved by the Insurer
pursuant to Section 2. I 6 of this Exhibit G; and
(I) has entered into a Broker-Dealer Agreement that is in effect on the date of
reference.
When used herein at a time when more than one Broker-Dealer is acting under the Trust
Agreement, the term "the Broker-Dealer" shall mean, as the context dictates, either all such
Broker-Dealers collectively, or only each Broker-Dealer acting with respect to the applicable
Auction Rate Securities.
Broker-Dealer Agreement
The term "Broker-Dealer Agreement" means each agreement between the
Auction Agent and the applicable Broker-Dealer relating to the Auction Rate Securities pursuant
to which the Broker-Dealer agrees to participate in Auctions as set forth in the Auction
Procedures, as from time to time amended or supplemented, with the consent of the Insurer.
Broker-Dealer Fee
The term "Broker-Dealer Fee" means the fee set forth in the applicable Broker-
Dealer Agreement.
Date of Interest Accrual
The term "Date of Interest Accrual" means the first day of any Rate Period for
Auction Rate Securities.
Existing Owners
The term "Existing Owners" means, with respect to Auction Rate Securities,
those registered owners of such Auction Rate Securities as of the day prior to each Auction Date.
Existing Owners Registrv
The term "Existing Owners Registry" means, with respect to each Tranche of
Auction Rate Securities, the registry of Persons who are Existing Owners of the related Tranche
DOCSSFl:801656.1
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of Auction Rate Securities, maintained by the Auction Agent as provided in the applicable
Auction Agent Agreement.
Fixed Rate Conversion
The term "Fixed Rate Conversion" means the conversion of the interest rate mode
for the Bonds issued as Auction Rate Securities to a Fixed Rate.
Fixed Rate Conversion Date
The term "Fixed Rate Conversion Date" means the date upon which a Fixed Rate
Conversion occurs.
Initial Auction Rate Period
The term "Initial Auction Rate Period" means with respect to Auction Rate
Securities, the period from and including the Closing Date on such Auction Rate Securities to but
excluding the later of (a) the Initial Interest Payment Date or (b) the first day of the subsequent
Auction Rate Period for such Auction Rate Securities.
Initial Interest Payment Date
The term "Initial Interest Payment Date," with respect to Auction Rate Securities,
refers to the initial Interest Payment Date for such Auction Rate Securities set forth in a
e Supplemental Trust Agreement.
Insurer
The term "Insurer," means the municipal bond insurer or other credit enhancer, if
any, for a Series of Auction Rate Securities.
Market Agent
The term "Market Agent" means the market agent or market agents appointed
pursuant to Section 2.14 of this Exhibit G, their successors and assigns.
Market Agent Agreement
The term "Market Agent Agreement" means any Market Agent Agreement
entered into with respect to Auction Rate Securities, including that certain Market Agent
Agreement delivered on the Closing Date, as it may from time to time be amended or
supplemented, with the Insurer's consent.
Maximum Auction Rate
The term "Maximum Auction Rate," on any date of determination for any
Auction Rate Period, means the interest rate per annum equal to the lowest on such date of:
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(i)
the Applicable Percentage of LffiOR on such date, unless:
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(1) such Auction Rate Period is proposed to be a Special
Auction Rate Period, in which case, the Applicable Percentage is applied to:
(a) the higher of (I) the Reference Rate for an Auction Rate
Period equal in length to the then-ending Auction Rate Period on such date and (II)
LffiOR, if any, for an Auction Rate Period equal in length to the then-ending Auction
Rate Period on such date;
(b) the higher of (I) the Reference Rate for such Special
Auction Rate Period on such date and (II) LffiOR, if any, for such Special Auction Rate
Period on such date; and
(c) the higher of (I) the Reference Rate for a Standard
Auction Rate Period on such date and (II) LffiOR, if any, for a Standard Auction Rate
Period on such date; or
(2) such Auction Rate Period succeeds a Special Auction Rate
Period and an Auction for a Standard Auction Rate Period at which Sufficient Clearing
Bids existed has not occurred since such Special Auction Rate Period, in which case, the
higher of:
(a) the Auction Rate for the then-ending Auction Rate
Period; and
(b) the Applicable Percentage of the higher of (I) the higher
of (aa) the Reference Rate for an Auction Rate Period equal in length to the then-ending
Auction Rate Period on such date and (bb) LIB OR, if any, for an Auction Rate Period
equal in length to the then-ending Auction Rate Period on such date and (II) the higher of
(aa) the Reference Rate for an Auction Rate Period equal in length to such Special
Auction Rate Period and (bb) LffiOR, if any, for an Auction Rate Period equal in length
to such Special Auction Rate Period;
(ii) 17% per annum; and
(iii) the maximum rate, if any, established under the laws of the State
for obligations of public agencies such as the Local Agency.
Minimum Auction Rate
The term "Minimum Auction Rate," on any date of determination, means the rate
per annum as set forth in a Supplemental Trust Agreement; provided, however, that in no event
shall such Minimum Auction Rate exceed the lesser of (i) 17% per annum, and (ii) the maximum
rate, if any, established under the laws of the State for obligations of public agencies such as the
Local Agency.
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Non-Payment Rate
The term "Non-Payment Rate" means, for Auction Rate Securities of each
Tranche, on any date of determination, the interest rate per annum equal to the Maximum
Auction Rate, provided that in no event shall the Non-Payment Rate be more than the maximum
rate permitted by State law.
Notice of Cure ofPavrnent Default
The term "Notice of Cure of Payment Default" means a notice substantially in the
form appended to the form of Auction Rate Security in Exhibit D.
Notice of Payment Default
The term "Notice of Payment Default" means a written notice as to a payment
default of Auction Rate Securities, in form and substance acceptable to the applicable Auction
Agent.
Notice of Percentage Change
The term "Notice of Percentage Change" means a written notice to the Trustee,
the Broker-Dealer and the Auction Agent substantially in the form set forth in Exhibit H hereto.
Overdue Rate
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The term "Overdue Rate" means, as to any Auction Rate Securities, on any date
of determination and for any Standard Auction Rate Period, the interest rate per annum equal to
265% of the Reference Rate equal in length to the then-ending Standard Auction Rate Period,
and for any Special Auction Rate Period, the interest rate per annum equal to 265% ofLffiOR
equal in length to the then-ending Special Auction Rate Period; provided that in no event shall
the Overdue Rate exceed the lesser of (I) 17% per annum and (2) the maximum rate on such date
permitted by State law for public agencies such as the Local Agency.
Payment Default
The term "Payment Default" means the default of the Local Agency in the due
and punctual payment of (a) any installment of interest on the Bonds or (b) any principal of,
premium, if any, or interest on, the Bonds at their maturity (whether on the Stated Maturity Date,
prior redemption or otherwise), which default shall continue for a period of two Business Days
and which, in either case, is followed by the failure of the applicable Insurer to make, in
accordance with the related Insurance Policy, due and punctual payments to or on behalf of the
Owners of the Bonds of such installments or payments described in clause (a) or (b), if so
required under such Insurance Policy.
Potential Beneficial Owner
The term "Potential Beneficial Owner" shall mean a customer of a Broker-Dealer
e that is not a Beneficial Owner of Auction Rate Securities but that wishes to purchase Auction
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Rate Securities, or that is a Beneficial Owner of Auction Rate Securities that wishes to purchase
an additional principal amount of Auction Rate Securities.
Potential Owner
The term "Potential Owner" shall mean a Broker-Dealer (or any such other person
as may be permitted by the Local Agency) that is not an Existing Owner or that is an Existing
Owner that wishes to become the Existing Owner of an additional principal amount of Auction
Rate Securities.
Rate Adiustment Date
The term "Rate Adjustment Date" means with respect to each Tranche of the
Auction Rate Securities, the date on which a new Interest Rate becomes effective with respect to
such Tranche of Auction Rate Securities, and shall mean the initial Rate Adjustment Date and,
thereafter, the first Business Day following each Rate Determination Date (which, until an
Auction Period Adjustment, generally is each fourth Wednesday, or the next Business Day if
such Wednesday is not a Business Day).
Rate Determination Date
The term "Rate Determination Date" means, initially, those dates set forth for the
Tranches of Auction Rate Securities in a Supplemental Trust Agreement, and thereafter, the
Business Day immediately preceding the first day of each related Auction Interest Period, other
than: (i) an Auction Interest Period which commences on a Fixed Rate Conversion Date: (ii)
each Auction Interest Period commencing after the ownership of Auction Rate Securities is no
longer maintained in Book-Entry Form; (iii) each Auction Interest Period commencing after and
during the continuance of a Payment Default; or (iv) an Auction Interest Period commencing less
than two Business Days after the cure or waiver of a Payment Default. Notwithstanding the
foregoing, the Rate Determination Date for one or more Auction Interest Periods may be
changed as described below under Section 2.10 of this Exhibit G.
Rate Period
The term "Rate Period" means that period commencing on a Date of Interest
Accrual and ending on the earlier of the Fixed Rate Conversion Date or the stated maturity date
of the affected Auction Rate Security.
Rate Period Davs
The term "Rate Period Days" means for any Auction Rate Period or Interest
Period, shall mean the number of days that would constitute such Auction Rate Period or Interest
Period but for the application of Section 2.10 of this Exhibit G.
Reference Rate
The term "Reference Rate" means (i) for a Standard Auction Rate Period or any
Special Auction Rate Period of at least 35 but fewer than 180 Rate Period Days, the "AA"
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Financial Commercial Paper Rate or the Applicable LIBOR Percentage for such Auction Rate
Period, whichever is lesser; (ii) for an Auction Rate Period of more than 180 but fewer than 365
Rate Period Days, the Treasury Note Rate for such Auction Rate Period; and (iii) for an Auction
Rate Period of more than 364 Rate Period Days, the Treasury Note Rate for such Auction Rate
Period.
Regular Record Date
The term "Regular Record Date" means, with respect to Auction Rate Securities,
the second Business Day immediately preceding each Interest Payment Date.
Sell Order
The term "Sell Order" has the meaning given to such term in the Auction
Procedures.
Special Auction Rate Period
The term "Special Auction Rate Period" means a Subsequent Auction Rate
Period, other than a Standard Auction Rate Period, designated pursuant to Section 2.11 of this
Exhibit G that consists of a specified number of Rate Period Days not fewer than 28 and not
more than 1,820 and evenly divisible by 7, subject to adjustment as provided in said Section,
provided that the consent of the Insurer shall be required for the establishment of any Auction
Rate Period which exceeds 35 days.
Standard Auction Rate Period
The term "Standard Auction Rate Period" means any Auction Rate Period
consisting of7, 14,21,28 or 35 Rate Period Days.
Stated Maturitv Date
The term "Stated Maturity Date" means the date given as the stated maturity date
on each Bond.
Submission Deadline
The term "Submission Deadline" means I :00 p.m., New York time, on any
Auction Date or such other time on any Auction Date by which Broker-Dealers are required to
submit Orders (as defined in Section 2.05(a)(i) of this Exhibit G) to the Auction Agent, as
specified by the Auction Agent from time to time.
Subsequent Auction Rate Period
The term "Subsequent Auction Rate Period" means the period from and including
the Initial Interest Payment Date for Auction Rate Securities to but excluding the next Interest
Payment Date for Auction Rate Securities and each period thereafter from and including one
Interest Payment Date to but excluding the next succeeding Interest Payment Date; provided that
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if any Subsequent Auction Rate Period is a Special Auction Rate Period consisting of more than
91 days, such term shall mean the period commencing on the first day of such Special Auction
Rate Period and ending on the last day of the last Interest Period thereof; provided, further, that
the Subsequent Auction Rate Period shall normally begin on the respective Interest Payment
Date after the end of such Special Auction Rate Period, and the Auction therefor shall normally
be held on the preceding Business Day.
Substitute Commercial Paper Dealer
The term "Substitute Commercial Paper Dealer" means the dealer identified in a
Supplemental Trust Agreement, or their affiliates or successors, if such affiliate or successor is a
commercial paper dealer, provided that neither such person nor any of its affiliates or successors
shall be a Commercial Paper Dealer.
Sufficient Clearing Bids
The term "Sufficient Clearing Bids" shall have the meaning set forth in this
Exhibit G.
Tender Price
The term "Tender Price" means the price at which Auction Rate Securities are
tendered for purchase upon conversion to Fixed Rate Bonds, comprised of the principal amount
thereof, plus interest, if any, accrued to the date of purchase, being payable solely from the
proceeds of remarketing of said Auction Rate Securities in the form of Fixed Rate Bonds.
Undelivered Bond
The term "Undelivered Bond" means any Auction Rate Security which constitutes
an Undelivered Bond under the provisions of the Trust Agreement.
SECTION 2.01. Auction Interest Periods. After the Initial Auction Rate Period
for any Bonds issued as Auction Rate Securities, each Auction Interest Period shall be that
period established in accordance with the definition of Subsequent Auction Interest Period.
SECTION 2.02. Dated Date of Auction Rate Securities, Initial Accrual of
Interest. Each Auction Rate Security shall be dated its date of delivery. Interest thereon shall be
payable from the Interest Payment Date next preceding the date of execution thereof, unless:
(a) it is executed on an Interest Payment Date, in which event interest
with respect thereto shall be payable from such Interest Payment Date; or
(b) it is executed after a Regular Record Date and on or before the
following Interest Payment Date, in which event interest with respect thereto shall be payable
from such Interest Payment Date; or
(c) it is executed on or before the first Regular Record Date, in which
event interest with respect thereto shall be payable from its Dated Date;
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provided. however, that if, as ofthe date of execution of any Auction Rate Security, interest is in
default with respect to any Outstanding Auction Rate Security, interest on such Auction Rate
Security shall be payable from the Interest Payment Date to which interest has previously been
paid or made available for payment with respect to the Outstanding Auction Rate Securities.
SECTION 2.03. Interest on Auction Rate Securities - General.
(a) Auction Rate Securities shall bear interest at an Auction Rate
(computed on the basis set forth in a Supplemental Trust Agreement).
(b) Interest on Auction Rate Securities shall accrue at the Auction Rate
for each Auction Rate Period and shall be payable in arrears, commencing on the Initial Interest
Payment Date specified in a Supplemental Trust Agreement and payable on each Interest
Payment Date for the Bonds, from the date of delivery of such Auction Rate Securities, or, as to
Auction Raie Securities delivered following the applicable Closing Date, from the most recent
Interest Payment Date to which interest thereon has been paid. More specifically interest is
payable on the dates set forth in a Supplemental Trust Agreement.
SECTION 2.04. Interest on Auction Rate Securities During Subsequent Auction
Rate Periods. The rate of interest on Auction Rate Securities during each Subsequent Auction
Rate Period therefor shall be equal to the Auction Rate; provided that:
(a) if a Notice of Percentage Change and the Applicable Percentage
used to determine the Maximum Auction Rate shall have been given by the applicable Market
Agent in accordance with Section 2.09 of this Exhibit G and because of a failure to satisfy the
condition set forth in clause (ii) of Section 2.09(c) of this Exhibit G, such adjustment shall not
have taken effect. an Auction shall not be held on the Auction Date immediately preceding the
next succeeding Subsequent Auction Rate Period, the rate of interest for such Subsequent
Auction Rate Period shall equal the Maximum Auction Rate on such Auction Date, and the
length of such Subsequent Auction Rate Period shall be 7 Rate Period Days, provided, that if
such Maximum Auction Rate shall be in effect for the lesser of (a) three such Auction Rate
Periods or (b) 35 days, following which, the Local Agency shall initiate proceedings to convert
such Auction Rate Securities to a Fixed Rate;
(b) if a notice of Fixed Rate Conversion of the Auction Rate Securities
shall have been given by the Local Agency in accordance with Section 2.02 of this Exhibit G and
because of the failure to satisfy one or more of the conditions set forth in the applicable Section,
such Conversion shall not have taken effect, the rate of interest for the next succeeding
Subsequent Auction Rate Period shall equal the Maximum Auction Rate on the proposed
effective Fixed Rate Conversion Date and the length of such Subsequent Auction Rate Period
shall be 7 Rate Period Days, provided, that if such Maximum Auction Rate shall be in effect for
the lesser of (a) three such Auction Rate Periods or (b) 35 days, following which, the Local
Agency shall initiate proceedings to convert such Auction Rate Securities to a Fixed Rate;
(c) if on any Auction Date, an Auction is not held for any other
reason, the rate of interest for the next succeeding Subsequent Auction Rate Period and the
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length of such Subsequent Auction Rate Period shall be as set forth in a Supplemental Trust
Agreement; and
(d) if a notice of a change in the length of a Standard Auction Rate
Period shall have been given by the Local Agency in accordance with Section 2.10 of this
Exhibit G and because of a failure to satisfy the condition set forth in clause (c) of Section 2.1 0
of this Exhibit G, such change in length of the Standard Auction Rate Period shall not have taken
effect, the rate of interest for the next succeeding Subsequent Auction Rate Period shall equal the
Maximum Auction Rate on the proposed date of such change in length of the Standard Auction
Rate Period, and the length of such Subsequent Auction Rate Period will be 7 Rate Period Days,
provided that if such Maximum Auction Rate shall be in effect for the lesser of (a) three such
Auction Rate Periods or (b) 35 days, following which, the Local Agency shall initiate
proceedings to convert such Auction Rate Securities to a Fixed Rate.
(e)
Notwithstanding the foregoing, if:
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(i) the ownership of Auction Rate Securities is no longer maintained
in book-entry form by the Securities Depository, no further Auctions will be held, and the
applicable Auction Rate for any Subsequent Auction Rate Period commencing after the
delivery of certificated securities representing the Auction Rate Securities shall equal the
Maximum Auction Rate as determined by the Auction Agent on the Business Day
immediately preceding the first day of such Subsequent Auction Rate Period, and the
length of such Subsequent Auction Rate Period shall be 7 Rate Period Days; provided,
that if such Maximum Auction Rate shall be in effect for the lesser of (a) three such
Auction Rate Periods or (b) 35 days, following which, the Local Agency shall initiate
proceedings to convert such Auction Rate Securities to a Fixed Rate;
(ii) a Payment Default shall have occurred during any Auction Rate
Period (other than an Auction Rate Period consisting of more than 364 Rate Period
Days), the rate of interest for each Subsequent Auction Rate Period commencing
thereafter to and including the Subsequent Auction Rate Period, if any, during which, or
commencing less than two Business Days after all such Payment Defaults are cured, shall
equal the Overdue Rate for a Standard Auction Rate Period on the first day of each such
Subsequent Auction Rate Period; or
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(iii) a Payment Default shall have occurred during a Special Auction
Rate Period consisting of more than 364 Rate Period Days, (i) the rate of interest for the
portion of such Special Auction Rate Period during which such Payment Default shall not
have been cured shall equal the Overdue Rate for such Special Auction Rate Period on
the day of the occurrence of such Payment Default and (ii) if such Payment Default shall
have not been cured at least two Business Days prior to the next succeeding Subsequent
Auction Rate Period, the rate of interest for such Subsequent Auction Rate Period and for
each Subsequent Auction Rate Period commencing thereafter, to and including the
Subsequent Auction Rate Period, if any, during which, or commencing less than two
Business Days after, such Payment Default is cured, shall equal the Overdue Rate for
such Special Auction Rate Period on the first day of each such Subsequent Auction Rate
Period.
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Following the Trustee's delivery of a Notice of Cure of Payment Default to the
Auction Agent, the restrictions set forth in clauses (ii) and (iii) above shall be suspended and the
interest rate shall be established pursuant to the Auction Procedures.
SECTION 2.05. Auction Procedures. Subject to the provisions of subsection (b)
of this Section, Auctions shall be conducted on each Auction Date in the following manner:
(a)
(i)
Prior to the Submission Deadline on each Auction Date:
(A) each Beneficial Owner of Auction Rate Securities may
submit to a Broker-Dealer by telephone or facsimile transmission
information as to:
(I) the principal amount of Outstanding Auction Rate
Securities, if any, held by such Beneficial Owner which such Beneficial
Owner desires to continue to hold, without regard to the Auction Rate for
the next succeeding Auction Rate Period;
(II) the principal amount of Outstanding Auction Rate
Securities, if any, which such Beneficial Owner offers to sell, if the
Auction Rate for the next succeeding Auction Rate Period shall be less
than the rate per annum specified by such Beneficial Owner; and/or
(III) the principal amount of Outstanding Auction Rate
Securities, if any, held by such Beneficial Owner which such Beneficial
Owner offers to sell, without regard to the Auction Rate that may be set
for the next succeeding Auction Rate Period; and
(B) one or more Broker-Dealers may contact Potential
Beneficial Owners to determine the principal amount of Auction Rate
Securities which each such Potential Beneficial Owner offers to purchase
if the Auction Rate for the next succeeding Auction Rate Period shall not
be less than the rate per annum specified by such Potential Beneficial
Owner.
For the purposes hereof, the communication to a Broker-Dealer of information
referred to in paragraphs (A) or (B) of this clause is hereinafter referred to as an "Order" and
each Beneficial Owner and each Potential Beneficial Owner placing an Order is hereinafter
referred to as a "Bidder;" an Order containing the information referred to (x) in paragraph (A)(I)
hereof is hereinafter referred to as a "Hold Order," (y) in paragraph (A)(II) or (B) hereof is
hereinafter referred to as a "Bid," and (z) in paragraph (A)(III) hereof is hereinafter referred to as
a "Sell Order." The submission by a Broker-Dealer of an Order to the Auction Agent shall
likewise be referred to herein as an "Order," and an Existing Owner or Potential Owner who
places an Order with the Auction Agent or on whose behalf an Order is Placed with the Auction
Agent shall likewise be referred to herein as a "Bidder."
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(ii) (A) Subject to the provisions of subsection (b) of this Section, a
Bid by a Beneficial Owner or an Existing Owner shall constitute an irrevocable offer to
sell:
(I) the principal amount of Outstanding Auction Rate
Securities specified in such Bid if the Auction Rate determined as
provided in this Section shall be less than the rate specified therein; or
(II) such principal amount or a lesser principal amount
of Outstanding Auction Rate Securities to be determined as set forth in
subsection (d)(i)(D) of this Section if the Auction Rate determined as
provided in this Section shall be equal to the rate specified therein; or
(III) such principal amount of Outstanding Auction Rate
Securities if the rate specified therein shall be higher than the Maximum
Auction Rate, or such principal amount or a lesser principal amount of
Outstanding Auction Rate Securities to be determined as set forth in
subsection (d)(ii)(C) of this Section if the rate specified therein shall be
higher than the Maximum Auction Rate and Sufficient Clearing Bids do
not exist.
(B) Subject to the provisions of subsection (b) of this Section, a
Sell Order by a Beneficial Owner shall constitute an irrevocable offer to
sell:
(I) the principal amount of Outstanding Auction Rate
Securities specified in such Sell Order if Sufficient Clearing Bids exist; or
(II) such principal amount or a lesser principal amount
of Outstanding Auction Rate Securities as set forth in clause (C) of
paragraph (ii) of subsection (d) of this Section if Sufficient Clearing Bids
do not exist.
(C) Subject to the provisions of subsection (b) of this Section, a
Bid by a Potential Beneficial Owner or a Potential Owner shall constitute
an irrevocable offer to purchase:
(I) the principal amount of Outstanding Auction Rate
Securities specified in such Bid if the Auction Rate determined as
provided in this Section shall be higher than the rate specified therein; or
(II) such principal amount or a lesser principal amount
of Outstanding Auction Rate Securities as set forth in subsection (d)(i)(E)
of this Section if the Auction Rate determined as provided in this Section
shall be equal to the rate specified therein.
(b) (i) Each Broker-Dealer shall submit in writing to the Auction
Agent prior to the Submission Deadline on each Auction Date all Orders obtained by such
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Broker-Dealer, designating itself (unless otherwise permitted by the Local Agency) as an
Existing Owner in respect of the principal amount of Auction Rate Securities subject to Orders
submitted or deemed submitted to it by Beneficial Owners or by Potential Beneficial Owners,
and shall specify with respect to each such Order:
(A) the name of the Bidder placing such Order (which shall be
the Broker-Dealer, unless otherwise permitted by the Local Agency);
(B) the aggregate principal amount of Auction Rate Securities
that are the subj ect of such Order;
(C) to the extent that such Bidder is an Existing Owner:
(I) the principal amount of Auction Rate Securities, if
any, subject to any Hold Order placed by such Existing Owner;
(II) the principal amount of Auction Rate Securities, if
any, subject to any Bid placed by such Existing Owner and the rate
specified in such Bid; and
(ill) the principal amount of Auction Rate Securities, if
any, subject to any Sell Order placed by such Existing Owner; and
(D) to the extent such Bidder is a Potential Owner, the rate
specified in such Potential Owner Bid.
(ii) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Auction Agent shall round such rate up to the next
highest one thousandth (.00 I) of 1%.
(iii) If an Order or Orders covering all Outstanding Auction Rate
Securities held by any Existing Owner is not submitted to the Auction Agent prior to the
Submission Deadline, the Auction Agent shall deem a Hold Order to have been submitted
on behalf of such Existing Owner covering the principal amount of Outstanding Auction
Rate Securities held by such Existing Owner and not subject to an Order submitted to the
Auction Agent.
(iv) None of the Local Agency, the Trustee or the Auction Agent shall
be responsible for any failure of a Broker-Dealer to submit an Order to the Auction Agent
on behalf of any Existing Owner, Beneficial Owner, Potential Owner or Potential
Beneficial Owner, nor shall any such party be responsible for failure by a Securities
Depository to effect any transfer or to provide the Auction Agent with current
information regarding registration of transfers.
(v) If any Existing Owner submits to the Auction Agent, through a
Broker-Dealer, one or more Orders covering in the aggregate more than the principal
amount of Outstanding Auction Rate Securities held by such Existing Owner, such
Orders shall be considered valid as follows and in the following order of priority:
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(A) all Hold Orders shall be considered valid, but only up to
and including in the aggregate the principal amount of Auction Rate
Securities held by such Existing Owner, and if the aggregate principal
amount of Auction Rate Securities subject to such Hold Orders exceeds
the aggregate principal amount of Outstanding Auction Rate Securities
held by such Existing Owner, the aggregate principal amount of Auction
Rate Securities subject to each such Hold Order shall be reduced pro rata
to cover the aggregate principal amount of Outstanding Auction Rate
Securities held by such Existing Owner;
(B) (I) any Bid shall be considered valid up to and
including the excess of the principal amount of Outstanding Auction Rate
Securities held by such Existing Owner over the aggregate principal
amount of Auction Rate Securities subject to any Hold Orders referred to
in clause (A) of this paragraph (v);
(II) subject to subclause (I) of this clause (B), if more
than one Bid with the same rate is submitted on behalf of such Existing
Owner and the aggregate principal amount of Outstanding Auction Rate
Securities subject to such Bids is greater than such excess, such Bids shall
be considered valid up to and including the amount of such excess, and the
principal amount of Auction Rate Securities subject to each Bid with the
same rate shall be reduced pro rata to cover the principal amount of
Auction Rate Securities equal to such excess;
(III) subject to subclause (I) and (II) of this clause (B), if
more than one Bid with different rates is submitted on behalf of such
Existing Owner, such Bids shall be considered valid first in the ascending
order of their respective rates until the highest rate is reached at which
such excess exists and then at such rate up to and including the amount of
such excess; and
(IV) in any such event, the aggregate principal amount of
Outstanding Auction Rate Securities, if any, subject to Bids not valid
under this clause (B) shall be treated as the subject of a Bid by a Potential
Owner at the rate therein specified; and
(C) all Sell Orders shall be considered valid up to and including
the excess of the principal amount of Outstanding Auction Rate Securities
held by such Existing Owner over the aggregate principal amount of
Auction Rate Securities subject to Hold Orders referred to in clause (A) of
this paragraph and valid Bids referred to in clause (B) of this paragraph.
(vi) If more than one Bid for Auction Rate Securities is submitted by or
on behalf of any Potential Owner, each Bid submitted shall be a separate Bid with the
rate and principal amount therein specified.
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(vii) Any Bid or Sell Order submitted by an Existing Owner covering
an aggregate principal amount of Auction Rate Securities not equal to $25,000 or an
integral multiple thereof shall be rounded down to the nearest integral multiple of
$25,000. Any Bid submitted by a Potential Owner covering an aggregate principal
amount of Auction Rate Securities not equal to $25,000 or an integral multiple thereof
shall be rounded down to the nearest integral multiple of$25,000.
(viii) Any Bid submitted by an Existing Owner or a Potential Owner
specifying a rate lower than the Minimum Rate, if any, shall be treated as a Bid
specifying the Minimum Rate, if any.
(c) (i) Not earlier than the Submission Deadline on each Auction
Date, the Auction Agent shall assemble all valid Orders submitted or deemed submitted to it by
the Broker-Dealers (each such Order as submitted or deemed submitted by a Broker-Dealer
being hereinafter referred to individually as a "Submitted Hold Order," a "Submitted Bid" or a
"Submitted Sell Order," as the case may be, or as a "Submitted Order") and shall determine:
(A) the excess of the total principal amount of Outstanding
Auction Rate Securities over the sum of the aggregate principal amount of
Outstanding Auction Rate Securities subject to Submitted Hold Orders
(such excess being hereinafter referred to as the "Available Auction Rate
Securities"); and
(B) from the Submitted Orders whether:
(I) the aggregate principal amount of Outstanding
Auction Rate Securities subject to Submitted Bids by Potential Owners
specifying one or more rates equal to or lower than the Auction Rate
Securities Maximum Auction Rate;
exceeds or is equal to the sum of:
(II) the aggregate principal amount of Outstanding
Auction Rate Securities subject to Submitted Bids by Existing Owners
specifying one or more rates higher than the Maximum Auction Rate; and
(III) the aggregate principal amount of Outstanding
Auction Rate Securities subject to Submitted Sell Orders
(in the event such excess or such equality exists (other than
because the sum of the principal amounts of Auction Rate Securities in
subclauses (II) and (III) above is zero because all of the Outstanding
Auction Rate Securities are subject to Submitted Hold Orders), such
Submitted Bids in subclause (I) above being hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(C) if Sufficient Clearing Bids exist, the lowest rate specified in
such Submitted Bids (the "Winning Bid Rate") which if:
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(I) (aa) each such Submitted Bid from Existing
Owners specifying such lowest rate and (bb) all other Submitted Bids
from Existing Owners specifying lower rates were rejected, thus entitling
such Existing Owners to continue to hold the principal amount of Auction
Rate Securities subject to such Submitted Bids; and
(II) (aa) each such Submitted Bid from Potential
Owners specifying such lowest rate and (bb) all other Submitted Bids
from Potential Owners specifying lower rates were accepted, would result
in such Existing Owners described in clause (B)(I) above continuing to
hold an aggregate principal amount of Outstanding Auction Rate
Securities which, when added to the aggregate principal amount of
Outstanding Auction Rate Securities to be purchased by such Potential
Owners described in clause (B)(Il) above, would equal not less than the
Available Auction Rate Securities.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to subsection (c) (i) hereof, the Auction Agent, by telecopy confirmed in writing,
shall advise the Local Agency and the Trustee of the Maximum Auction Rate and the
Minimum Rate, if any, and the components thereof on the Auction Date and, based on
such determinations, the Auction Rate for the next succeeding Auction Rate Period as
follows:
(A) if Sufficient Clearing Bids exist, that the Auction Rate for
the next succeeding Auction Rate Period shall be equal to the Winning Bid
Rate so determined;
(B) if Sufficient Clearing Bids do not exist (other than because
all of the Outstanding Auction Rate Securities are subject to Submitted
Hold Orders), that the Auction Rate for the next succeeding Auction Rate
Period shall be equal to the Maximum Auction Rate, which succeeding
Auction Rate Period shall be 7 Rate Period Days; or
(C) if all Outstanding Auction Rate Securities are subject to
Submitted Hold Orders, that the Auction Rate for the next succeeding
Auction Rate Period shall be equal to the All-Hold Rate on such Auction
Date.
(d) Existing Owners shall continue to hold the principal amount of
Auction Rate Securities that are subject to Submitted Hold Orders, and, based on the
determinations made pursuant to subsection (c)(i) of this Section, Submitted Bids and Submitted
Sell Orders shall be accepted or rejected and the Auction Agent shall take such other action as
set forth below:
(i) If Sufficient Clearing Bids have been made, all Submitted Sell
Orders shall be accepted and, subject to the provisions of subsection (d)(iv) and (v)
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hereof, Submitted Bids shall be accepted or rejected as follows in the following order of
priority and all other Submitted Bids shall be rejected:
(A) Any Existing Owner's Submitted Bids specifying any rate
that is higher than the Winning Bid Rate shall be accepted, thus requiring
each such Existing Owner to sell the aggregate principal amount of
Auction Rate Securities subject to such Submitted Bids;
(B) Any Existing Owner's Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be rejected, thus entitling
each such Existing Owner to continue to hold the aggregate principal
amount of Auction Rate Securities subject to such Submitted Bids;
(C) Any Potential Owner's Submitted Bids specifying any rate
that is lower than the Winning Bid Rate shall be accepted, thus requiring
each such Potential Owner to purchase the aggregate principal amount of
Auction Rate Securities subject to such Submitted Bids;
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(D) Any Existing Owner's Submitted Bid specifying a rate that
is equal to the Winning Bid Rate shall be rejected, thus entitling such
Existing Owner to continue to hold the aggregate principal amount of
Auction Rate Securities subject to such Submitted Bid, unless the
aggregate principal amount of Outstanding Auction Rate Securities subject
to all such Submitted Bids shall be greater than the principal amount of
Auction Rate Securities (the "remaining principal amount") equal to the
excess of the Available Auction Rate Securities over the aggregate
principal amount of Auction Rate Securities subject to Submitted Bids
described in clauses (B) and (C) of this paragraph (i), in which event such
Submitted Bid of such Existing Owner shall be rejected in part, and such
Existing Owner shall be entitled to continue to hold the principal amount
of Auction Rate Securities subject to such Submitted Bid, but only in an
amount equal to the aggregate principal amount of Auction Rate Securities
obtained by multiplying the remaining principal amount by a fraction, the
numerator of which shall be the principal amount of Outstanding Auction
Rate Securities held by such Existing Owners subject to such Submitted
Bid and the denominator of which shall be the sum of the principal
amount of Outstanding Auction Rate Securities subject to such Submitted
Bids made by all such Existing Owners that specified a rate equal to the
Winning Bid Rate; and
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(E) Each Potential Owner's Submitted Bid specifying a rate
that is equal to the Winning Bid Rate shall be accepted but only in an
amount equal to the principal amount of Auction Rate Securities obtained
by multiplying the excess of the aggregate principal amount of Available
Auction Rate Securities over the aggregate principal amount of Auction
Rate Securities subject to Submitted Bids described in clauses (B), (C) and
(D) of this paragraph by a fraction, the numerator of which shall be the
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aggregate principal amount of Outstanding Auction Rate Securities subject
to such Submitted Bids and the denominator of which shall be the sum of
the principal amount of Outstanding Auction Rate Securities subject to
Submitted Bids made by all such Potential Owners that specified a rate
equal to the Winning Bid Rate.
(ii) If Sufficient Clearing Bids have not been made (other than because
all of the Outstanding Auction Rate Securities are subject to Submitted Hold Orders),
subject to the provisions of paragraph (iv) of this subsection, Submitted Orders shall be
accepted or rejected as follows in the following order of priority and all other Submitted
Bids shall be rejected:
(A) Any Existing Owner's Submitted Bids specifying any rate
that is equal to or lower than the Maximum Auction Rate shall be rejected,
thus entitling such Existing Owners to continue to hold the aggregate
principal amount of Auction Rate Securities subject to such Submitted
Bids;
(B) Any Potential Owner's Submitted Bids specifying any rate
that is equal to or lower than the Maximum Auction Rate shall be accepted
and any rate that is higher than the Maximum Auction Rate shall be
rejected, thus requiring such Potential Owners to purchase the aggregate
principal amount of Auction Rate Securities subject to such Submitted
Bids; and
(C) Each Existing Owner's Submitted Bid specifying any rate
that is higher than the Maximum Auction Rate and the Submitted Sell
Order of each Existing Owner shall be accepted, thus entitling each
Existing Owner that submitted any such Submitted Bid or Submitted Sell
Order to sell the subject to such Submitted Bid or Submitted Sell Order,
but in both cases only in an amount equal to the aggregate principal
amount of Auction Rate Securities obtained by multiplying the aggregate
principal amount of Auction Rate Securities subject to Submitted Bids
described in clause (B) of this paragraph by a fraction, the numerator of
which shall be the aggregate principal amount of Outstanding Auction
Rate Securities held by such Existing Owner subject to such Submitted
Bid or Submitted Sell Order and the denominator of which shall be the
aggregate principal amount of Outstanding Auction Rate Securities subject
to all such Submitted Bids and Submitted Sell Orders.
(iii) If all Outstanding Auction Rate Securities are subject to Submitted
Hold Orders, all Submitted Bids shall be rejected.
(iv) If, as a result of the procedures described in paragraphs (i) or (ii) of
this subsection, any Existing Owner would be entitled or required to sell, or any Potential
Holder would be entitled or required to purchase, a principal amount of Auction Rate
Securities that is not equal to $25,000 or an integral multiple thereof the Auction Agent
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shall, in such manner as, in its sole discretion, it shall determine, round up or down the
principal amount of Auction Rate Securities to be purchased or sold by any Existing
Owner or Potential Owner so that the principal amount of Auction Rate Securities
purchased or sold by each Existing Owner or Potential Owner shall be equal to $25,000
or an integral multiple thereof.
(v) If, as a result of the procedures described in paragraph (ii) of this
subsection, any Potential Owner would be entitled or required to purchase less than
$25,000 principal amount or an integral multiple thereof of Auction Rate Securities, the
Auction Agent shaJl, in such manner as, in its sole discretion, it shall determine, allocate
Auction Rate Securities for purchase among Potential Owners so that only Auction Rate
Securities in principal amounts of $25,000 or an integral multiple thereof are purchased
by any Potential Owner, even if such aJlocation results in one or more of such Potential
Owners not purchasing any Auction Rate Securities.
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(e) Based on the results of each Auction, and in accordance with the
Settlement Procedures set forth in the applicable Auction Agent Agreement, the Auction Agent
shall determine the aggregate principal amount of Auction Rate Securities to be purchased and
the aggregate principal amount of Auction Rate Securities to be sold by Potential Owners and
Existing Owners and, with respect to each Potential Owner and Existing Owner, to the extent
that such aggregate principal amount of Auction Rate Securities to be sold differs from such
aggregate principal amount of Auction Rate Securities to be purchased, determine to which other
Potential Owner(s) or Existing Owner(s) they shall deliver, or from which other Potential
Owner(s) or Existing Owner(s) they shall receive, as the case may be, Auction Rate Securities.
SECTION 2.06. Deposit and Application of Interest Payments. The foJlowing
times and dates are modified as required by the terms of any Insurance Policy applicable to the
Bonds at the time payments of interest are required to be made to the respective Owners thereof.
The Trustee is instructed to comply with the particular terms of the Insurance Policy in order to
insure timely and fuJl payment of interest on the Bonds covered thereby.
(a) During any period while Auction Rate Securities are Outstanding,
the Local Agency shaJl pay to the Trustee not later than 5:00 P.M., New York time, on the third
Business Day next preceding each Interest Payment Date an aggregate amount of funds available
on such Interest Payment Date in New York equal to the aggregate amount of interest payable on
the Auction Rate Securities on such Interest Payment Date.
(b) Not later than 12:15 P.M., New York time, on the third Business
Day next preceding each Interest Payment Date that is immediately preceded by an Auction
Date, the Trustee shall determine the payment (or nonpayment, as the case may be) of the
aggregate amount of interest payable on the Auction Rate Securities on such Interest Payment
Date. So long as no Payment Default with respect to the Auction Rate Securities has previously
occurred and is continuing and the ownership of the Auction Rate Securities is maintained in
book-entry form by the Securities Depository, (i) if the Trustee determines that a Payment
Default has occurred, the Trustee shaJl immediately send a notice thereof in substantially the
form of the appropriate exhibit to the Auction Agent and to the Owners of the Auction Rate
e Securities by telecopy or similar means, and (ii) if all such nonpayments are cured prior to 1:00
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P.M., New York time, on such Interest Payment Date, the Trustee shall immediately send a
notice thereof in substantially the form of the appropriate exhibit to the Auction Agent and to the
Owners of the Auction Rate Securities by telecopy or similar means.
(c) The Trustee shall calculate the amount of interest due and payable
on each Interest Payment Date by 10:00 A.M., New York time, on the third Business Day next
preceding such Interest Payment Date or date set for purchase, as the case may be and shall
immediately notify the Local Agency of such amount. In preparing such calculation, the Trustee
may rely on calculations or other services provided by the Market Agent, the Auction Agent, the
Local Agency or any person or persons selected by the Trustee in its discretion.
SECTION 2.07. Calculation of Maximum Auction Rate, Minimum Rate. AIl-
Hold Rate and Overdue Rate During Auction Rate Period. The Auction Agent shall calculate the
Maximum Auction Rate, the All-Hold Rate and the Minimum Rate, if any, on each Auction
Date. If the ownership of the Auction Rate Securities is no longer maintained in book-entry
form by DTC, the Auction Agent shall calculate the Maximum Auction Rate on the Business
Day immediately preceding the first day of each Subsequent Auction Rate Period commencing
after the delivery of certificates representing the Auction Rate Securities pursuant to this Trust
Agreement. If a Payment Default shall have occurred, the Auction Agent shall calculate the
Overdue Rate (i) as of the first day of the Subsequent Auction Rate Period commencing after the
occurrence of and during the continuance of such Payment Default, (ii) on the date of the
occurrence of a Payment Default during a Special Auction Rate Period consisting of more than
364 Rate Period Days and (iii) as of the first day of any Subsequent Auction Rate Period
commencing after the occurrence of a Payment Default to and including the Subsequent Auction
Rate Period, if any, commencing less than two Business Days after all such Payment Defaults
are cured.
SECTION 2.08. Notification of Payment Dates. Promptly after the Date of
Interest Accrual and each Interest Payment Date and in any event at least 10 days prior (unless
the then current Auction Rate Period is a Standard Auction Rate Period of7 Rate Period Days, in
which case, at least 6 days prior) to the next Interest Payment Date following the Date of Accrual
or such Interest Payment Date, as the case may be, the Auction Agent shall advise the Trustee
and any Paying Agent, so long as no Payment Default has occurred and is continuing and the
ownership of the Auction Rate Securities is maintained in book-entry form by DTC, of such next
succeeding Interest Payment Date. In the event that any day that is scheduled to be an Interest
Payment Date shall be changed after the Auction Agent shall have given the notice referred to in
the preceding sentence, not later than 9: 15 A.M., New York time, on the Business Day next
preceding the earlier of the new Interest Payment Date or the previous Interest Payment Date, the
Auction Agent will, by such means as the Auction Agent deems practicable, give notice of such
change to the Trustee and to any Paying Agent, so long as no Payment Default has occurred and
is continuing and the ownership of the Auction Rate Securities is maintained in book-entry form
by DTC.
SECTION 2.09. Adiustment in Percentages.
(a) During any period while Auction Rate Securities are Outstanding,
the Market Agent may, with the consent of the Insurer, adjust the percentage used in determining
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the Minimum Rate and the Applicable Percentage used in determining the Maximum Auction
Rate if any such adjustment is necessary, in the judgment of the Market Agent, to reflect any
Change of Preference Law such that the Maximum Auction Rate and Minimum Rate shall have
substantially equal market values before and after such Change of Preference Law. In making
any such adjustment, the Market Agent shall take the following factors, as in existence both
before and after such Change of Preference Law, into account:
(i) short-term taxable market rates and indices of such short-term
rates;
(ii) the market supply and demand for short-term taxable securities;
(iii) yield curves for short-term and long-term taxable securities or
obligations having a credit rating that is comparable to the Auction Rate Securities;
(iv) general economic conditions; and
(v) economic and financial factors present in the securities industry
that may affect or that may be relevant to the Auction Rate Securities.
(b) The Market Agent shall communicate its determination to adjust
the percentage used in determining the Minimum Rate and the Applicable Percentage used in
determining the Maximum Auction Rate pursuant to subsection (a) of this Section by means of
Notice of Percentage Change delivered at least 10 days prior to the Auction Date on which the
Market Agent desires to effect the change to the Local Agency, the Trustee and the Auction
Agent in substantially the form set forth herein as Exhibit H.
(c) An adjustment in the percentage used to determine the Minimum
Rate and the Applicable Percentage used to determine the Maximum Auction Rate shall take
effect on an Auction Date only if:
(i) the Trustee, the Insurer and the Auction Agent receive, by
II :00 A.M., New York time, on the Business Day immediately preceding such Auction
Date, a certificate from the Market Agent by telecopy or similar means, authorizing the
adjustment of the percentage used to determine the Minimum Rate and the Applicable
Percentage used to determine the Maximum Auction Rate which shall be specified in
such authorization; and
(ii) the Trustee, the Insurer and the Auction Agent receive by
9:30 A.M., New York time, on such Auction Date, an opinion of Bond Counsel to the
effect that the adjustment in the percentage used to determine the Minimum Rate and the
Applicable Percentage used to determine the Maximum Auction Rate is authorized by
this Agreement.
SECTION 2.10. Change in Standard Auction Rate Period.
(a) While any Auction Rate Securities are Outstanding, the Local
Agency, at its option, with the consent of the Insurer, may from time to time on any Interest
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Payment Date change the length of the Standard Auction Rate Period on all or a portion of any
Auction Rate Securities from one period to another in order to accommodate economic and
financial factors that may affect or be relevant to the length of the Standard Auction Rate Period
and the interest rate borne by such Auction Rate Securities. The Local Agency shall initiate the
change in the length of a Standard Auction Rate Period by giving written notice to the Trustee,
the Auction Agent, the Broker-Dealers, the Insurer and the Securities Depository that the
Standard Auction Rate Period will change if the conditions described below are satisfied and the
proposed effective date of the change, at least ten Business Days prior to the Auction Date for
such Standard Auction Rate Period and that such Auction Rate Securities are subject to
mandatory tender for purchase on the Interest Payment Date immediately following the Auction
Date on which there has been a successful Auction of such Auction Rate Securities for the first
Standard Auction Rate Period.
(b) The change in the length of a Standard Auction Rate Period shall
not be allowed unless Sufficient Clearing Bids existed at both the Auction before the date which
the notice of the proposed change was given as provided in (a) above and the Auction
immediately preceding the proposed change.
(c) The change in length of a Standard Auction Rate Period shall take
effect only if (A) the Trustee and the Auction Agent receive by II :00 a.m., New York time, on
the Business Day before the Auction Date for the first such Standard Auction Rate Period, a
certificate from the Local Agency Representative, authorizing the change in the length of the
Standard Auction Rate Period specified in such certificate, and (B) Sufficient Clearing Bids exist
at the Auction on the Auction Date for such first Standard Auction Rate Period. If the condition
referred to in (A) above is not met, the Auction Rate for the next Auction Rate Period shall be
determined pursuant to the Auction Procedures and the Auction Rate Period shaH be the Auction
Rate Period determined without reference to the proposed change. If the condition referred to in
(B) above is not met, the Auction Rate for the next Auction Rate Period shall be established at
the Maximum Auction Rate for the lesser of (a) three Standard Auction Periods or (b) 35 days,
following which period, the Local Agency shall initiate proceedings to convert such Auction
Rate Securities to a Fixed Rate.
(d) Any Auction Rate Securities for which the Standard Auction Rate
Period is changed shall be subject to mandatory tender for purchase on the Interest Payment Date
immediately following the Auction Date on which there has been a successful Auction of such
Auction Rate Securities (subject to the availability of funds sufficient to pay the Tender Price of
such Auction Rate Securities having been provided to the Trustee through the remarketing of
such Auction Rate Securities to new Owners) at a price equal to the principal amount being
tendered and accrued interest thereon.
SECTION 2.11. Designation ofSoecial Auction Rate Periods.
(a) The Local Agency, at its option, with the consent of the Insurer,
may designate any succeeding Subsequent Auction Rate Period as a Special Auction Rate
Period. A designation of a Special Auction Rate Period shall be effective only if (i) notice
thereof shall have been given in accordance with subsection (c) and subsection (d)(i) of this
Section, (ii) an Auction shall have been held on the Auction Date for such Special Auction Rate
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Period and Sufficient Clearing Bids shall have existed in such Auction, and (iii) if any notice of
redemption shall have been mailed by the Trustee, the related redemption price shall be on
deposit with the Trustee.
(b) In the event the Local Agency wishes to designate a Subsequent
Auction Rate Period as a Special Auction Rate Period, but the day following what would
otherwise be the last day of such Special Auction Rate Period is not the day set forth in a
Supplemental Trust Agreement that is a Business Day, then the Local Agency shall designate
such Subsequent Auction Rate Period as a Special Auction Rate Period consisting of the period
commencing on the first day following the end of the immediately preceding Auction Rate
Period and ending on the first preceding day that is followed by the day set forth in a
Supplemental Trust Agreement that is a Business Day preceding what would otherwise be such
last day.
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(c) If the Local Agency proposes to designate any succeeding
Subsequent Auction Rate Period as a Special Auction Rate Period pursuant to subsection (a) of
this Section, not less than 20 (or such lesser number of days as may be agreed to from time to
time by the Auction Agent and the Insurer) nor more than 30 days prior to the date the Local
Agency proposes to designate as the first day of such Special Auction Rate Period (which shall
be the day that would otherwise be the first day of the next succeeding Auction Rate Period), the
Local Agency shall give written notice thereof to the Trustee, the Insurer, the Auction Agent, the
Market Agent and the Securities Depository. Each such notice shall state (i) that the Local
Agency may exercise its option to designate a succeeding Subsequent Auction Rate Period as a
Special Auction Rate Period, specifying the first and last days thereof, and the conditions thereto
and (ii) that the Local Agency will, by II :00 A.M., New York time, on the second Business Day
next preceding the first day of such proposed Special Auction Rate Period (or by such later time
or date, or both, as may be agreed to by the Auction Agent) notify the Auction Agent of either
(x) its determination, to exercise such option, in which case, the Local Agency Representative
shall specify the Special Auction Rate Period designated, or (y) its determination not to exercise
such option.
(d) No later than II :00 A.M., New York time, on the second Business
Day next preceding the first day of any proposed Special Auction Rate Period as to which notice
has been given as set forth in subsection (c) of this Section (or such later time or date, or both, as
may be agreed to by the Auction Agent), the Local Agency Representative shall deliver to the
Auction Agent either:
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(i) (A) a notice stating (1) that the Local Agency has determined to
designate the next succeeding Auction Rate Period as a Special Auction Rate Period,
specifying the same and the first day thereof, (2) the Auction Date immediately prior to
the first day of such Special Auction Rate Period, (3) that such Special Auction Rate
Period shall not commence if (x) an Auction shall not be held on such Auction Date for
any reason or (y) an Auction shall be held on such Auction Date but Sufficient Clearing
Bids shall not exist in such Auction, (4) the Interest Payment Dates during such Special
Auction Rate Period and (B) an opinion of Bond Counsel to the effect that such
designation of a Special Auction Rate Period is authorized by this Trust Agreement; or
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(ii) a notice stating that the Local Agency has determined not to
exercise its option to designate a Special Auction Rate Period and that the next
succeeding Auction Rate Period shall be a Standard Auction Rate Period.
(e) If the Local Agency fails to deliver either of the notices or the
opinion described in subsection (d) (i) or (ii) of this Section with respect to any designation of
any proposed Special Auction Rate Period to the Auction Agent by II :00 A.M., New York time,
on the second Business Day next preceding the first day of such proposed Special Auction Rate
Period (or by such later time or date, or both, as may be agreed to by the Auction Agent), the
Local Agency shall be deemed to have delivered a notice to the Auction Agent with respect to
such Special Auction Rate Period to the effect set forth in paragraph (ii) of subsection (d) of this
Section.
SECTION 2.12. Conversion of Auction Rate Securities to Fixed Interest Rate
Bonds. (a) At the option of the Local Agency, with the prior written consent of the Insurer, the
Qualified Swap Counterparty and the Swap Policy Provider (if the affected Auction Rate
Securities are covered by a Qualified Swap Agreement), all but not less than all of any Series of
Bonds may be converted from Auction Rate Securities to Fixed Rate Bonds as follows:
(i) The Fixed Rate Conversion Date shall be an Interest Payment
Date.
(ii) The Local Agency shall give written notice of any such conversion
to the Trustee, the applicable Auction Agent, the Insurer, the Qualified Swap
Counterparty and the Swap Policy Provider (if applicable) and the applicable Broker-
Dealer not less than fifteen (15) days nor more than thirty (30) days prior to the date on
which the Trustee is required to notify the affected Owners of the conversion ofthe
applicable Tranche or Series pursuant to subparagraph (iii) immediately below. Such
notice shall specify the proposed Fixed Rate Conversion Date of the applicable Tranche
and the principal amount of Auction Rate Securities to be converted to Fixed Rate Bonds
bearing interest at fixed interest rates. Together with such notice, the Local Agency shall
file with the applicable Broker-Dealer and the Trustee a form of Opinion of Counsel
addressed to the Broker-Dealer, the Trustee, the Local Agency and the Insurer to the
effect that the conversion of the Auction Rate Securities of the applicable Tranche to
fixed interest rates will not adversely affect the validity of the Fixed Rate Bonds under
State law. No conversion shall become effective unless on or before the proposed Fixed
Rate Conversion Date, the Local Agency shall also file with the Trustee an Opinion of
Counsel addressed to the Trustee, the Local Agency and the Insurer substantially in the
form described in the immediately preceding sentence, dated the Fixed Rate Conversion
Date, and subject to the availability of funds sufficient to pay the Tender Price of such
Auction Rate Securities having been provided to the Trustee through the remarketing of
such Auction Rate Securities to new Owners.
(iji) Not fewer than forty (40) days prior to the Fixed Rate Conversion
Date established for the applicable Series or Tranche, the Trustee shall mail a written
notice of the conversion to the Owners of all Auction Rate Securities (with a copy to the
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Insurer and the Auction Agent) of the applicable Series or Tranche to be converted,
which notice shall:
(I) specify the Fixed Rate Conversion Date established for the
affected Bonds;
(2) notify such Owners that the Auction Rate Securities of the
applicable Series or Tranche to be converted will be subject to mandatory
tender for purchase on such Fixed Rate Conversion Date at a price equal
to 100% of the principal amount of such Auction Rate Securities, plus
interest accrued and unpaid with respect thereto, if any, to but not
including the Fixed Rate Conversion Date;
(3) notify such Owners that in the event of a failed conversion,
or in the event the Local Agency exercises its right of election to revoke
the conversion pursuant to subparagraph (v) below, such Auction Rate
Securities will not be subject to mandatory tender, will be returned to their
Owners, will automatically convert to the Auction Interest Period in effect
immediately prior to the Fixed Rate Conversion Date and will bear interest
at the Maximum Auction Rate;
(4) set forth the time, the place and the manner for tendering
such Auction Rate Securities for purchase; and
(5) set forth any other matters required to be stated pursuant to
this paragraph.
(iv) Not later than 12:00 noon, New York time, on the Business Day
immediately preceding the Fixed Rate Conversion Date established for the applicable
Series or Tranche, at the direction of the Local Agency, the applicable Broker-Dealer
shall determine, by offering for sale and using at least its best efforts to find purchasers
for the Tranches of Auction Rate Securities which are to be converted to Fixed Rate
Bonds:
(I) the Fixed Rate(s) applicable to such Bonds after such Fixed
Rate Conversion Date;
(2) the allocation of such Bonds between Serial Bonds and
Term Bonds, which allocation shall be subject to the approval of the
Insurer and shall be made in such manner as shall:
A. produce the lowest aggregate interest payable with
respect to the Auction Rate Securities to be
converted to Fixed Rate Bonds;
B.
establish mandatory Redemption Dates and related
principal amounts for Serial Bonds, if any, and
establish mandatory redemption dates and related
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Principal Amounts for Term Bonds other than
Serial Bonds, if any, which are consistent, on a pro
rata basis, with the principal of such Bonds prior to
such Fixed Rate Conversion Date;
C.
permit Bond Counsel to render the opinion
described in subparagraph (ii) above;
provided, however, that if Bond Counsel is unable to render such opinion because of the
allocation procedures set forth in this subparagraph (iv), all such converted Bonds shall
be redesignated as Serial Bonds with mandatory redemption dates and related principal
amounts which are consistent, on a pro rata basis, with the applicable principal of such
Bonds prior to the Fixed Rate Conversion Date, subject to the Insurer's approval of the
new redemption dates and principal amounts.
Such determination shall be conclusive and binding upon the Local Agency, the
Trustee and the Owners of the Auction Rate Securities of the applicable Series or
Tranche to be converted to which such rate or rates will be applicable. Not later than
5:00 p.m., New York time, on the date of determination of the fixed interest rate(s), as
provided in the first sentence of this subparagraph, the applicable Broker-Dealer shall
notify the Local Agency and the Trustee of the following by facsimile notice:
(3) the aggregate principal amount of the Bonds bearing
interest at fixed rates as a result of such Fixed Rate Conversion;
(4) a schedule of the mandatory redemption dates and related
principal amounts of converted Bonds which the Local Agency has
redesignated as Serial Bonds and which the Insurer has approved; and
(5) a schedule of the mandatory redemption dates and related
principal amounts of converted Bonds which are to be Term Bonds, if any,
and which the Insurer has approved.
If necessary or appropriate in the Opinion of Counsel, the Local Agency shall
execute and deliver a supplement to this Trust Agreement setting forth, among other
things, the terms of the Fixed Rate Bonds;
(v) The Local Agency may revoke its election to effect a conversion of
the applicable Series or Tranche of the Auction Rate Securities to Fixed Rate Bonds by
giving written notice of such revocation to the Trustee, the Insurer, the Qualified Swap
Provider (if applicable), the Swap Policy Provider (if applicable), and the applicable
Broker-Dealer and at any time prior to the Business Day immediately preceding the
Fixed Rate Conversion Date.
(vi) Auction Rate Securities of the applicable Series or Tranche which
are to be converted to Fixed Rate Bonds shall be subject to mandatory tender for
purchase on a proposed Fixed Rate Conversion Date (subject to the availability of funds
sufficient to pay the Tender Price of such Auction Rate Securities having been provided
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to the Trustee through the remarketing of such Bonds) at a price equal to 100% of the
principal amount of such Auction Rate Securities, if any, plus interest accrued and unpaid
with respect thereto to, but not including, the Fixed Rate Conversion Date.
(vii) If on a proposed Fixed Rate Conversion Date, any condition
precedent to such conversion required under this paragraph shall not be satisfied, the
Trustee shall give written notice by first-class mail, postage prepaid, as soon as
practicable and in any event not later than the next succeeding Business Day to the
Owners of the applicable Series or Tranche to be converted that such conversion has not
occurred, that the particular Auction Rate Securities to be converted shall not be
purchased on the failed Fixed Rate Conversion Date, that the Auction Agent shall
continue to implement the Auction Procedures on the Auction Dates with respect to the
Auction Rate Securities which otherwise would have been converted, excluding,
however, the Auction Date falling on the Business Day next preceding the failed Fixed
Rate Conversion Date, and that the interest rate with respect to the affected Bonds shall
continue to be the applicable Auction Rate; provided, however, that the interest rate on
the Auction Rate Securities during the Auction Interest Period commencing on such
failed Fixed Rate Conversion Date shall be established at the Maximum Auction Rate for
the lesser of (a) three Standard Auction Periods or (b) 35 days, following which period,
the Local Agency shall initiate new proceedings to convert such Auction Rate Securities
to a Fixed Rate.
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(b)
Purchase of Auction Rate Securities.
(1) Mandatorv Tender for Purchase Upon Conversion to Fixed
Interest Rates. The Auction Rate Securities shall be subject to mandatory
tender for purchase if at any time the Trustee gives written notice mailed
to the Owners of the affected Auction Rate Securities, in accordance with
the procedures set forth in subsection (2) immediately below, that, at the
option of the Local Agency, particular Auction Rate Securities are to be
converted to a Fixed Rate pursuant to the provisions of the immediately
preceding paragraph; subject to the availability of funds sufficient to pay
the Tender Price of such Auction Rate Securities having been provided to
the Trustee through the remarketing of such Auction Rate Securities. The
Auction Rate Securities of such Series or Tranche subject to mandatory
tender shall be purchased or deemed purchased at the Tender Price.
(2) Notice of Mandatorv Tender for Purchase. In connection
with any mandatory tender for purchase of any Auction Rate Securities of
any Series or Tranche in accordance with the immediately preceding
paragraphs, the Trustee shall give written notice to the affected Owners
and to the Auction Agent by facsimile transmission, to be received no later
than 2:00 p.m. New York time, on the day the notice is sent:
A.
that the Tender Price of any Auction Rate Security
subject to mandatory tender for purchase shall be
payable only upon surrender of that Auction Rate
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Security to the Trustee at its Principal Office for
delivery of Auction Rate Securities, accompanied
by an instrument of transfer, in form satisfactory to
the Trustee, executed in blank by the duly
authorized attorney for such Owner or Owners, with
such signature guaranteed in the manner set forth in
the form attached to the Auction Rate Securities;
B.
that, provided that moneys sufficient to effect such
purchase have been provided to the Trustee through
the remarketing of such Auction Rate Securities by
the applicable Broker-Dealer, and provided that the
Local Agency has not exercised its right of election
to revoke the conversion pursuant to paragraph
(a)(v) of this Section, Auction Rate Securities
subject to mandatory tender for purchase shall be
purchased on the Tender Date;
c.
that if any Owner of an Auction Rate Security
subject to mandatory tender for purchase does not in
fact surrender such Auction Rate Security to the
Trustee for purchase on the Tender Date, then such
Auction Rate Security, on and after such Tender
Date, shall be deemed to be an Undelivered Auction
Rate Security, that no interest shall accrue with
respect to such Auction Rate Security on and after
such Tender Date and that the Auction Rate
Security shall have no rights under the Trust
Agreement other than to receive payment of the
Tender Price; and
D. that. in the event moneys sufficient to pay the
Tender Price of such Auction Rate Securities have
not been provided to the Trustee through the
remarketing of such Auction Rate Securities, such
Auction Rate Securities shall not be purchased or
deemed purchased and shall continue to have
interest accrue with respect thereto as if such failed
purchase had not occurred.
E.
If the circumstances described in clause D above
should occur, then the affected Auction Rate
Securities shall not be purchased or deemed
purchased and shall continue to have interest accrue
thereon as described in clause D above. The
Insurance Policy may not be drawn upon to
purchase any Auction Rate Securities hereunder.
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DOCSSFl:801656.1
(3) Undelivered Auction Rate Securities. The following
provisions shall apply to Auction Rate Securities not delivered by a date
established for its surrendered, properly endorsed by its Owner (each, an
"Undelivered Auction Rate Security"):
A.
The Trustee may refuse to accept delivery of any
Undelivered Auction Rate Security for which a
proper instrument of transfer has not been provided;
provided, however, that such refusal shall not affect
the validity of the purchase of such Undelivered
Auction Rate Security.
B.
If funds in the amount of the purchase price of the
Undelivered Auction Rate Security are available for
payment to the Owners thereof on the Tender Date
and at the time specified, then, from and after the
Tender Date and time of such required delivery:
(1) such Undelivered Auction Rate Security
shall be deemed to be purchased and shall no longer
be deemed to be Outstanding under this Trust
Agreement;
(2) interest shall no longer accrue with respect
to such Undelivered Auction Rate Security; and
(3) funds in the amount of the purchase price of
the Undelivered Auction Rate Security shall be held
uninvested by the Trustee for the benefit of the
Owner thereof (provided that such Auction Rate
Security shall have no right to any investment
proceeds derived from such funds), to be paid on
delivery (and proper endorsement) of such
Undelivered Auction Rate Security to the Trustee at
its Principal Office for delivery of the Auction Rate
Securities. Any money which the Trustee
segregates and holds in trust for the payment of the
Tender Price of any Auction Rate Security which
remains unclaimed for two years after the date of
purchase shall be paid to the Local Agency. After
the payment of such unclaimed money to the Local
Agency, the former Owner of such Auction Rate
Security shall look only to the Local Agency for the
payment of the Tender Price. The Local Agency
shall not be liable for any interest on unclaimed
money and shall not be regarded as a trustee of such
money.
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(c) Determination by Trustee; Notice of Tender. For purposes of this
Section, the Trustee shall determine timely and proper delivery of Auction Rate Securities and
the proper endorsement of Auction Rate Securities delivered. Such determination shall be
binding on the Owners of such Auction Rate Securities, the Local Agency, and the Broker-
Dealer, absent manifest error.
SECTION 2.13. Transfer and Exchange of Auction Rate Securities.
(a) The registration of any Auction Rate Security may, in accordance
with its terms, be transferred upon the Registration Books by the Person in whose name it is
registered, in Person or by his attorney duly authorized in writing upon surrender of such
Auction Rate Security for cancellation at the Office of the Trustee, accompanied by delivery of a
written instrument of transfer in a form acceptable to the Trustee, duly executed. Whenever any
Auction Rate Security shall be surrendered for registration of transfer, the Trustee shall execute
and deliver a new Auction Rate Security or Auction Rate Securities for a like aggregate principal
amount in authorized denominations. The Trustee shall require the payment by the Auction Rate
Security Owners requesting such transfer of any tax or other governmental charge required to be
paid with respect to such transfer. The cost of printing any Auction Rate Securities and any
services rendered or any expenses incurred by the Trustee in connection with any transfer shall
be paid by the Local Agency. The Trustee shall not be required to transfer:
(i) any Auction Rate Securities during the period between the date
fifteen (15) days prior to the date of selection of Auction Rate Securities for redemption
and such date of selection, or
(ii) any Auction Rate Securities selected for redemption.
(b) Auction Rate Securities may be exchanged, upon surrender
thereof, at the Office of the Trustee for a like aggregate principal amount of Auction Rate
Securities of other Authorized Denominations of the same maturity. Whenever any Auction
Rate Security or Auction Rate Securities shall be surrendered for exchange, the Trustee shall
execute and deliver a new Auction Rate Security or Auction Rate Securities for like aggregate
principal amount in Authorized Denominations. The Trustee shall require the payment by the
Auction Rate Security Owners requesting such exchange of any tax or other governmental
charge required to be paid with respect to such exchange. The cost of printing any Auction Rate
Securities and any services rendered or any expenses incurred by the Trustee in connection with
any exchange shall be paid by the Local Agency. The Trustee shall not be required to exchange:
(i) any Auction Rate Securities during the period between the date
fifteen (15) days prior to the date of selection of Auction Rate Securities for redemption
and such date of selection, or
(ii) any Auction Rate Securities selected for redemption.
SECTION 2.14. Market Agent. The Local Agency hereby authorizes and
expressly directs the Trustee, as agent for the Beneficial Owners of the Auction Rate Securities,
to enter into a Market Agent Agreement relating to any Auction Rate Securities with a Market
Agent, with the consent of the Insurer. The Market Agent shall serve in such capacity under the
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terms and provisions hereof and of the applicable Market Agent Agreement. The Market Agent
shall be a member of the National Association of Securities Dealers, Inc., having capitalization
of at least $25,000,000, and be authorized by law to perform all the duties imposed upon it by
this Trust Agreement and the Market Agent Agreement. The Market Agent will promptly resign
following receipt of a request by the Trustee or the Insurer (with a copy to any Qualified Swap
Provider, any Swap Policy Provider, the Local Agency and the Trustee) or at any time, with the
prior written consent of the Insurer, upon and pursuant to the written direction of the Beneficial
Owners of at least two-thirds of the aggregate principal amount of the Auction Rate Securities
then Outstanding filed with the Market Agent, the Insurer, any Qualified Swap Provider, any
Swap Policy Provider, and the Local Agency, provided that such removal shall not take effect
until the appointment by the Local Agency of a substitute Market Agent and the successors
acceptance of their duties and obligations pursuant to appropriate documentation. The Market
Agent may also resign upon 30 days' prior written notice delivered to the Trustee, provided that
such resignation shall not take effect until the appointment by the Local Agency of a substitute
Market Agent. If the Local Agency is unable to appoint a substitute Market Agent within 30
days following receipt of such written notice of resignation, the Market Agent may petition the
appropriate court having jurisdiction to appoint a substitute Market Agent. Notwithstanding the
provisions of this paragraph, the Market Agent may be removed at any time, at the request of the
Local Agency with the consent of the Insurer, for any breach of its obligations under this Section
or under the Market Agent Agreement. Any substitute Market Agent must be approved by the
Insurer.
The periodic fees of the Market Agent shall be invoiced to the Trustee with a
copy to the Local Agency, and paid from the Service Account. The Trustee may conclusively
rely upon the determinations made by the Market Agent with regard to its compensation and any
representations made in such invoice.
The Trustee shall not be liable under any circumstances for any action taken,
suffered or omitted by the Market Agent and shall be indemnified as set forth herein.
SECTION 2.15. Auction Agent.
(a) The Local Agency authorizes and expressly directs the Trustee, as
agent for the Beneficial Owners of the Auction Rate Securities, to enter into an Auction Agent
Agreement relating to Auction Rate Securities with a designated Auction Agent, including any
Auction Agent for Auction Rate Securities as may be appointed in a Supplemental Trust
Agreement. Any Auction Agent shall be:
(i) subject to the written approval of the applicable Broker-Dealer and
the Insurer; and either:
(A) a bank or trust company duly organized under the laws of
the United States of America or any state or territory thereof having its
principal place of business in New York, New York, or such other location
as approved by the Trustee and the Market Agent in writing and having a
combined capital stock or surplus of at least $15,000,000; or
DOCSSFl :801656.1
G-33
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(B) a member of the National Association of Securities
Dealers, Inc., having a capitalization of at least $15,000,000, and, in either
case, authorized by law to perform all the duties imposed upon it under the
applicable Auction Agent Agreement and Section 2.05 of this Exhibit G.
The Auction Agent may at any time resign and be discharged of its duties
as Auction Agent and obligations under the Auction Agent Agreement by
giving at least 90 days' prior notice to the Trustee, the Local Agency, the
Insurer, any Qualified Swap Provider, any Swap Policy Provider and the
Market Agent. The Auction Agent may be removed at any time by a
request of the Trustee or the Insurer (with a copy to the Trustee and the
Local Agency) and upon thirty days' notice to the Auction Agent or upon
the written direction of the Local Agency or, with the prior written consent
of the Insurer, any Qualified Swap Provider (if applicable), any Swap
Policy Provider (if applicable), the Beneficial Owners of at least two-
thirds of the aggregate principal amount of the Auction Rate Securities
then Outstanding, by an instrument signed by such Beneficial Owners or
their attorneys and filed with the Auction Agent, the applicable Broker-
Dealer, the Trustee, the Insurer, any Qualified Swap Provider (if
applicable), any Swap Policy Provider (if applicable), and the Market
Agent upon at least 30 days' prior notice. Neither resignation nor removal
of the Auction Agent pursuant to the provisions of the preceding two
sentences shall be effective until and unless a Substitute Auction Agent
has been appointed and has accepted such appointment. A substitute
Auction Agent Agreement shall be entered into with any substitute
Auction Agent. Notwithstanding the foregoing, the Auction Agent may
terminate the Auction Agent Agreement if, within 45 days after notifying
the Trustee, the applicable Broker-Dealer, the Local Agency, the Insurer
and the Market Agent in writing that it has not received payment of any
Auction Agent Fee due it in accordance with the terms of the Auction
Agent Agreement, the Auction Agent does not receive such payment. The
Trustee shall not be liable for any action taken, suffered or omitted by the
Auction Agent.
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(b) The periodic fees of the Auction Agent shall be invoiced to the
Trustee, with a copy to the Local Agency, and paid from the Service Account. The Trustee may
conclusively rely upon the determinations made by the Auction Agent with regard to its
compensation and any representations made in such invoice.
(c) If the Auction Agent shall resign or be removed or be dissolved, or
if the property or affairs of the Auction Agent shall be taken under the control of any state or
federal court or administrative body because of bankruptcy or insolvency, or for any other
reason, the Trustee, at the direction of the Local Agency, with the consent of the Insurer, the
Qualified Swap Provider (if applicable), the Swap Policy Provider (if applicable), shall use its
best efforts to appoint a substitute Auction Agent for such Series of Bonds.
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(d) The Auction Agent is acting as agent for the Beneficial Owners of
the Auction Rate Securities in connection with Auctions. In the absence of bad faith, negligent
DOCSSF!:801656.1
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failure to act or negligence on its part, the applicable Auction Agent shall not be liable for any
action taken, suffered or omitted or any error of judgment made by it in the performance of its
duties under the Auction Agent Agreement and shall not be liable for any error of judgment
made in good faith unless the Auction Agent shall have been guilty of gross negligent in
ascertaining (or failing to ascertain) the pertinent facts.
(e) Notwithstanding the provisions of paragraph (a) of this Section, the
Auction Agent may be removed at any time, at the request of the Local Agency, with the consent
of the Insurer, the Qualified Swap Provider (if applicable) and the Swap Policy Provider (if
applicable), for any breach of its obligations under this Trust Agreement or under the related
Auction Agent Agreement.
SECTION 2.16. Broker-Dealers.
(a) The Auction Agent will enter into a Broker-Dealer Agreement
with a Broker-Dealer for the Auction Rate Securities, including any Broker-Dealer Agreement
with a Broker-Dealer appointed in a Supplemental Trust Agreement. The Local Agency may,
from time to time, with the consent of the Insurer approve one or more additional Persons to
serve as Broker-Dealers under Broker-Dealer Agreements and shall be responsible for providing
such Broker-Dealer Agreements to the Trustee and the applicable Auction Agent, promptly
following the execution thereof.
(b) The periodic fees of the Broker-Dealer shall be invoiced to the
Trustee, with a copy to the Local Agency, and paid from the Service Account. The Trustee may
conclusively rely upon the determinations made by the Broker-Dealer with regard to its
compensation and any representations made in such invoice.
(c) Any Broker-Dealer maybe removed at any time, at the request of
the Local Agency, for any breach of is obligations hereunder or under the Broker-Dealer
Agreement, provided that at least one Broker-Dealer Agreement must be in effect immediately
following such removal.
SECTION 2.17. No Local Agencv or Trustee Liability for Auction Failures.
Neither the Local Agency nor the Trustee shall be responsible for any failure of a Broker-Dealer
to submit an Order (as defined in the applicable Auction Agent Agreement) to the Auction Agent
on behalf of any Owners or prospective Owners, nor shall the Local Agency nor the Trustee be
responsible for failure by any Securities Depository to effect any transfer or to provide the
Auction Agent with current information regarding registration of transfers. The Local Agency
shall have no liability if there are not Sufficient Clearing Bids (as such term is defined in the
applicable Auction Agent Agreement) from time to time pursuant to the Auction Procedures.
DOCSSFI :801656.1
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EXHIBIT H
FORM OF NOTICE OF PERCENTAGE CHANGE
$
CITY OF SAN BERNARDINO
TAXABLE PENSION OBLIGATION BOND, 2005 SERIES A
NOTICE OF CHANGE IN LIBOR RATE
CUSIP NUMBER(S):
NOTICE IS HEREBY GIVEN by , as Trustee in
connection with the referenced Bonds that the following LffiOR rate will become effective
through
[SPREAD]
One-Month LffiOR Rate
Currently in Effect:
Rate Reset:
_% (Month Rate)
Fixed Spread to LffiOR
%
Rate Determination
%
%
By:
Authorized Officer
DOCSSFl :801656.1
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SCHEDULE I
PRICING TERMS
The following provisions shall apply to the 2005 Series A Bonds:
I. Interest Payment Date:
2. Principal Payment Dates:
3. Record Date:
4. Reference Treasury Dealer:
5. 2005 Series A Bond Insurer:
6. Maturity Dates, Principal Amounts and
Interest Rates:
Maturity Date Principal Interest
L-l Amount Rate
7. Sinking Fund Redemptions:
Date
( ) Amount
DOCSSFl:801656.1
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TRUST AGREEMENT
between the
CITY OF SAN BERNARDINO
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
Dated as of June 1,2005
City of San Bernardino
Taxable Pension Obligation Bonds
DOCSSF!:801656.l
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; EQUAL SECURITY ............................................................ 2
SECTION 1.0 I. Definitions............ ............ ........ .... ... .... ......... ................. ...... ..... ...... 2
SECTION 1.02. Trust Agreement Constitutes Contract......................................... 16
ARTICLE II ISSUANCE OF 2005 SERIES A BONDS; GENERAL BOND
PROVISIONS ...................... ........... .... .... ..................... .... ... ........ ....... .... ... ..... 17
SECTION 2.01. Authorization and Purpose of2005 Series A Bonds ................... 17
SECTION 2.02. Terms of the 2005 Series A Bonds; General Bond
Provisions... .......... ........ .... ....... ..... ... .... ................... ....... ..... ...... .... 17
Redemption of 2005 Series A Bonds........................................... 21
Form of Bonds .. .... ..... ... ... ......... ................. .... ... ................ ...... ..... 23
Execution of Bonds .... ... .... ..... ........................ ... ....... ............. ....... 23
Transfer and Payment of Bonds................................................... 23
Exchange of Bonds.. ..... .... .... .... ... .... .... ...... ....... ....... ......... ........... 24
Bond Registration Books ............................................................. 24
Mutilated, Destroyed, Stolen or Lost Bonds................................ 24
Temporary Bonds... .... ... .... .... .... ... ..... ..................... .......... .... ... ..... 25
Procedure for the Issuance of 2005 Series A Bonds;
Application of Bond Proceeds ..................................................... 25
SECTION 2.12. Validity of Bonds .........................................................................26
ARTICLE III ISSUANCE OF ADDITIONAL BONDS .....................................................26
SECTION 3.01. Conditions for the Issuance of Additional Bonds ........................26
SECTION 3.02. Procedure for the Issuance of Additional Bonds ......................... 27
SECTION 2.03.
SECTION 2.04.
SECTION 2.05.
SECTION 2.06.
SECTION 2.07.
SECTION 2.08.
SECTION 2.09.
SECTION 2.10.
SECTION 2.11.
ARTICLE IV FUNDS AND ACCOUNTS ..........................................................................28
SECTION 4.01. Bond Fund; Deposits to Bond Fund............................................. 28
SECTION 4.02. Allocation of Moneys in Bond Fund ...........................................28
SECTION 4.03. Deposit and Investments of Money in Accounts and Funds........ 30
SECTION 4.04. Establishment of Deposit Fund and Transfers Therefrom........... 30
ARTICLE V COVENANTS OF THE LOCAL AGENCy................................................ 31
SECTION 5.01. Punctual Payment and Performance ............................................31
SECTION 5.02. Extension of Payment of Bonds.................................................. .31
DOCSSF1:801656.1
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TABLE OF CONTENTS
(continued)
Page
SECTION 5.03. Additional Debt............................................................................31
SECTION 5.04. Power to Issue Bonds................................................................... 31
SECTION 5.05. Accounting Records and Reports................................................. 31
SECTION 5.06. Prosecution and Defense of Suits ................................................ 31
SECTION 5.07. Further Assurances.......................................................................32
SECTION 5.08. Waiver of Laws ............................................................................32
ARTICLE VI THE TRUSTEE .............................................................................................32
SECTION 6.01. The Trustee ..................................................................................32
SECTION 6.02. Liability ofTrustee ......................................................................33
SECTION 6.03. Compensation and Indemnification of Trustee............................ 35
ARTICLE VII AMENDMENT OF THE TRUST AGREEMENT ....................................... 36
SECTION 7.01. Amendment of the Trust Agreement ........................................... 36
SECTION 7.02. Disqualified Bonds.......................................................................37
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment ........37
SECTION 7.04. Amendment by Mutual Consent .................................................. 37
SECTION 7.05. Attorney's Opinion Regarding Supplemental Agreements ......... 37
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF HOLDERS....................... 37
SECTION 8.01. Events of Default .........................................................................37
SECTION 8.02. Institution of Legal Proceedings by Trustee ................................38
SECTION 8.03. Non- W aiver.... ... .... ..... ... ....... ........ ... .... ....... .... .... ....... ......... .......... 38
SECTION 8.04. Actions by Trustee as Attorney-in-Fact....................................... 39
SECTION 8.05. Remedies Not Exclusive ..............................................................39
SECTION 8.06. Limitation on Bondholders' Right to Sue.................................... 39
SECTION 8.07. Absolute Obligation of Local Agency......................................... 39
ARTICLE IX DEFEASANCE.............................................................................................. 40
SECTION 9.01. Discharge of Bonds......................................................................40
SECTION 9.02. Unclaimed Money........................................................................ 40
ARTICLE X MISCELLANEOUS ......................................................................................41
SECTION 10.01. Benefits of the Trust Agreement Limited to Parties .................... 41
DOCSSF1:801656.1
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TABLE OF CONTENTS
(continued)
Page
e
Successor Is Deemed Included in AJI References to
Predecessor ..... ....... ... ... ........ ..... ... ..... ......... ......... .......... ....... ... ..... 41
SECTION 10.03. Execution of Documents by Holders ........................................... 41
SECTION 10.04. Waiver of Personal Liability ........................................................ 42
SECTION 10.05. Acquisition of Bonds by Local Agency....................................... 42
SECTION 10.06. Destruction of CanceJled Bonds ..................................................42
SECTION 10.07. Content of Certificates .................................................................42
SECTION 10.08. Publication for Successive Weeks ............................................... 42
SECTION 10.09. Accounts and Funds; Business Days ...........................................42
SECTION 10.10. Notices .........................................................................................43
SECTION 10.11. Article and Section Headings and References ............................. 43
SECTION 10.12. Partial Invalidity...........................................................................43
SECTION 10.13. Execution in Several Counterparts............................................... 44
SECTION 10.14. Governing Law ............................................................................44
e SECTION 10.15. CUSIP Numbers...........................................................................44
EXHffiIT A [FORM OF STANDARD BOND] ...........................................................................1
EXHffiIT B [FORM OF CAPITAL APPRECIATION BOND]................................................... 1
EXHffiIT C [FORM OF LISTED SECURITY] ........................................................................... I
EXHffiIT D [FORM OF AUCTION RATE SECURITy]............................................................ I
EXHffiIT E [FORM OF INDEX BOND] ..................................................................................... 1
EXHffiIT F ACCRETED VALUE T ABLE..................................................................................1
EXHffiIT G PROVISIONS RELATING TO AUCTION RATE SECURITIES.......................... 1
EXHffiIT H FORM OF NOTICE OF PERCENTAGE CHANGE............................................... 1
SCHEDULE I PRICING TERMS .................................................................................................1
SECTION 10.02.
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Sa I.
CITY OF SAN BERNARDINO
MISCELLANEOUS PLAN
CalPERS Actuarial Issues - 6/30/03 Valuation
JOHN E. BARTEL
[.)/1 R:T(~ r: -I' ['\ J. L.(....
-l'))d_..\ "
March 7, 2005
Entered into Record 8t /--'i-- --.,
COIIIII:IIICrnvOevCms Mtg: a 7/0oS
by ~ ~':'7G
re Allenda Item / - .. '"'n1"~
~~1_~
City ClertclCDC See,
City of San Bernardino
......
MisceUaneous
TODic
Definitions
Plan Funded Status
Demographic Information
Plan Assets
Actuarial Obligations
Contribution Rates
Contribution Projections
Estimated 2.5% @ 55
Estimated 2.7% @ 55
Estimated 3.0% @ 60
Contribution Projections
Benefit Factors
Super Funded Status
PalZe
1
4
7
11
15
17
19
21
25
29
33
39
43
(iQ)
0: ClkrlU"City "rSaa 8llmInlioo'CIIPERS'fj.)O.fI]'$an 8anadlnu Mill: O'''''J.(I'7Ao1,:
.
'\
Definitions
Present Value of Belleft..
JUDe 30, 1003
C.rrnt Ner...
e..
,-..,....,.........
PVB - Present Value of all Projected Benefits:
. Discounted value (at valuation date - 6/30/03), of all future expected benefit
payments based on various (actuarial) assumptions
Actuarial Liability:
.,. Discounted value (at valuation date) of benefits earned through valuation date
'.' ,:'.{..,al\ie of past service benefit]
." Portipn of PVB "earned" at measurement
....~,.;Curtent N~rmal Cost:.
~'. ".' :....Pllrtioo otPVBallocllted to (or "earned" during) current year
. Value of employee and employer current service benefit
.
.
~,..~.
, 0317,2005
[I]
Definitions
Presmt Va'" of Bftellts
Ju.e 30. 2003
. Target- Have money in the bank to cover Actuarial Liability (past service)
. Unfunded Liability - Money short of target at valuation date
. Excess Assets / Surplus:
. Money over and above target at that Doint in time.
. Doesn't mean you're done contributing.
. Super Funded:
. Assets cover whole pie (PVB)
. If everything goes exactly like PERS calculated, you'll never have to put another
(employer or employee) dime in. '
6CD 03"'2005
2
II
Deftnitions
_v.....r_
s_. 38, 2003
..........v_.r_
J...Jt. JOt1
. Contribution =
. NonnalCoM
. + Unfunded Liability Amortization
or
. - Excess Asset Amortization
I ~
Lln'''~
3
-
Plan Funded Status
Miscellaneous
. Future events that might cause rate fluctuations:
. Asset Gains/Losses:
o Smoothing will not mitigate upcoming asset losses
. Experience Gains/Losses (somewhat mitigated because of
smoothing):
o Disabilities
o Salaries
o Retirements
. Pooling
. Air Time Service Purchase
. Benefit Improvements?
o 2.5%@55
o 2.7%@55
o 3.0%@60
\
(iq)
. 03'7/2005
4
-
Plan Funded Status
Miscellaneous
"
Presot v.... .f8eMllh
Ju.e 38, 1002
lWiIeded 1'\'.
Present V...e of 8eaeflb
1_.. 3D, ZI03
June 30. 2002
$ 13,200,000
36,700,000
209,700,000
259,600,000
Unfunded PVB
Excess Assets
Actuarial Liability
PVB
June 30. 2003
$ 45,400,000
6,800,000
238,200,000
290,400,000
~I..
. 037/2005
5
II
Plan Funded Status
Miscellaneous
. What happened between 6/30/02 and 6/30/03?
. Assetgain/(loss): :::::(12.1)million
. Actuarial gain/(Ioss): ::::: (3.3) million
o Average Salary $39,700 ~ $42,200
o Number of Actives 980 ~ 995
o Number of Inactives 544 ~ 581
o Number of Retirees 813 ~ 837
. CaIPERS Method & Assumption Changes: ::::: (11.7) million
. Contribution gain/(loss): ::::: (2.6) million
o Expected ::::: (2.8)
o Actual ::::: 0.3
. CaIPERS 2 Year Lag: ::::: (0.2) million.
(i1'l) ,. 03i7l2oo5
6
[I]
-,~~~
~
~
Members l.n~lud~d in Valualion
!".,,<..,.
MisdU_neous
100
\,000
900
800
700
600
500
400
300
200
[] Actiye
EI Transfers
. Vested Terminations
-- "--- -....
. Receivin Payments
@U7'2005
7
II
Average Age/Service
Miscellaneous
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
\0.0
5.0
(i1D
/ l0317i200S
8
[IJ
Average PE~able Wages
Misc~lIaneous
(fi:1)
03/7,2005
9
Total Annual PERSable Wages (Millions)
Miscellaneous
5
50
45
40
35
30
25
20
15
10
o
[J ('urrent
[] Projected
(fi:1) 03/7'2005
10
-
Actuarial Investment Return
Misc..uaneous
..... AVA Rate 13.5% 15.7% 19.9% 11.9% 11.2% 4.8% -4.1% 3.2%
-" --- -- _.._---,- .--.-..--- -........--.--.. . ----.--- _.~.--~-_.. ----- .-....-
___MVARate 15.3% 20.t% 19.5% 12.5% 10.5% -7.2% .6.0% 3.7%
~
03/7/2005
II
.-
Actuarial Investment Return
Miscellaneous
. Above assumes contributions, payments, etc. received evenly throughout
year.
. 6/30/03:
. Market Value return = 3.69%
. Actuarial Value return = 3.2%
. 6/30/04:
. Market Value return =16.57%
. Actuarial Value return = 7.1%
. 6/30/05:
. Market Value return through 10/31/04 = 9.22%
. Estimated Annualized MV A Return =13.4%
. Estimated Annualized A V A Return :::: 9.2%
\
6CP 12 [IJ
OJ/7J100S
. Actuarial
lJ Market
(riD
. I 03/72005
Asset Values (Millions)
MisceDaneolls
13
Asset ValDes
MisceDaneous
. 6/30/00 Actuarial Value ". 95% Market
. 6/30/01 Actuarial Value ".107% Market
. 6/30/02 Actuarial Value ". 110% Market
. 6/30/03 Actuarial Value ". 110% Market
. 6/30/04 Actuarial Value will be ". I 0 I % Market
(B:1) 0)/7/2005
14
-
-
I
I
I
\ I
I
I
Funded Stat,.. (Millions)
Mise"'~beous
I::IAclu~riaI!jability
. Actuarial Asset Value
I
l
(k1), 03/711005
15
-
Funded Status
MisceDaneous
.
Actuarial assumption changes:
. Interest rate
o General inflation
o Real rate of return
o Total
. Payroll growth
6/30/03
3.00%
4.75
7.75
3.25%
6/30/02
3.50%
4.75
8.25
3.75%
.
Investment losses - Impact on funded status:
. 6/30/04 [16.57% compared to 7.75%]
. Actuarial asset "reserve"
. Total estimated % loss
. Total estimated unrecognized loss
[1.2% x $ 223 million]
+8.8%
-10.0%
-1.2%
$ 2.6 million
~
. 0311'2005
16
fI
Contribution Rates
MisceDaneous
o Normal Cost
_""_'0 ____._..._
[J UAL Amon
. Total
7.6%
(K1)
03'7 200S
17
II
Contribution Rates
Miscellaneous
. Nonnal cost
. Amortization bases:
. GainILoss
. Fresh Start
. Assumption Change
Sub-total
6/30/02
2004/2005
7.8%
6/30/03
2005/2006
7.90/.
-7.8%
4.7%
-7.3%
2.2%
-0.4%
7.6./.
Multiple
::::: 2 years
. Total:
. Amortization period
-7.8%
0.0./.
15 years
. 6/30/04:
. Large Market Asset Gain
. Modest Actuarial Asset Loss
. Actuarial gains or losses?
(B:1)1
. 03'1'2005
18
[I
Contribution Projection
Miscanineous
. Market Value Investment Return:
. June 30, 2004
. June 30, 2005 - 2009 25% Confidence Limit"':
50% Confidence Limit:
75% Confidence Limit:
16.57%
:::; 2.6 %,
:::; 7.750/.
:::; 12.90/.
.Confidence Limits - Actual Return will fall below the given rate with indicated probabilities
. Fresh Starts:
. No Fresh Starts for 05/06
. 20 Year Fresh Start in 06/07
. 15 Year +0.3% 20 Year +0.3%
30 Year +0.3%
. No Other:
. Gains or Losses
. Method or Assumption Changes
. Benefit Improvements
~l
~[)"I }
. 03'1"2001
19
II
Contribution Projection
Miscellaneous
Investment Return Varies
and 20- Year Fresh Start 06/07
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
03/04 04/05
--D- 25th 0.0% 0,0%
-k- 50th 0.0% 0.0%
-.-75th 0.0% 0.0%
.-------
... ...
(&.Dl '
, :01m2001
05/06 06/07 07/08 08/09 09/10 10/11
7.6% 8,2% 10.0"10 12.3% 14.7% 17.0"10
7.6% 8.2% 8.4% 8.6% 8.6% 8.7%
7.6% 8.2% 6,8% 4.6% 1.9% 0.0%
20 -
2.50/o@55
Estimated
PrtHllt Value of Benefits
Before IJW. (ii 5~
Prae.t V.lue of8eHfttl
AfI<l'LS'~~5!I
IFIlIlIn N_1l
c_
Before 2.5% (IU 55
$ 45,400,000
6,800,000
Unfunded PVB
Excess Assets!
(Unfunded Liability)
Actuarial Liability
PVB
238,200,000
290,400,000
(i\1).03'n005
21
(U.r.ded
..-
.......
After 2.5% (IU 55
$ 69,100,000
(9,600,000)
254,500,000
314,000,000
-
2.5% @ 55
Estimated
. Present Value of Benefits Increase
. Actuarial Liability Increase
. Employer contribution rate increase
. Normal Cost = 1.2%
. Prior Cost = 3.4%
. Asset Method =0.0%
. Fresh Start =0.0%
. Employee contribution rate increase
\
C':\{
~ l)j)
03/7/2005
22
= $ 23.6 million
= $ 16.3 million
=4.7%
1.0%
II
--"'~.. '
2.5% @ 55
Estblutted
. Consider amendment as 4 separate pieces:
. Increase in Future Normal Costs (Normal Cost Rate) 1.2%
o "Permanent" current & future service increase
. Increase in Actuarial Liability: 3.4%
o 20 year amortization for past service increase
. Increase in Actuarial Vahle of Assets: 0.0%
. Fresh Start: 0.0%
o Excess assets amortized over a fixed period after amendment
(i1'j) 03/7'2005
23
II
2.5% @ 55
Estimated
Before Due to After
ChaoKe ChaoKe ChanKe
. pva $ 290.4 $ 23.6 $ 314.0
. Actuarial Liability 238.2 16.3 254.5
. Actuarial Asset Value 245.0 0.0 245.0
. Employer Rate:
. Normal Cost 7.9% 1.2% 9.2%
. Amortization:
0 Prior Cost 3.4 3.4
0 (Gain)/Loss 4.7 4.7
0 Fresh Start -7.3 -7.3
0 Assumption Change 2.2 - 2.2
-
0 Sub-total -0.4 3.4 3.0
. Total 7.6 4.6 12.2
(i}4) O3nl2005
24
-
2.7% @ 55
Estimated
Preseal Vallie of BeaeRts
Belore 2.7.". (fi 55
Prelfllt V.... of Be.dllI
All... z.7%(li:5S
_N'-
Coot
Before 2.7% (tV, SS
$ 45,400,000
6,800,000
Unfunded PVB
Excess Assets!
(Unfunded Liability)
Actuarial Liability
PVB
238,200,000
290,400,000
61V
. 03'7.'2005
25
I~
-
~)
After 2.70/. (tV, S5
$ 83,700,000
(20,800,000)
265,800,000
328,600,000
-
.
2.7% @ 55
Estimated
. Present Value of Benefits Increase
. Actuarial Liability Increase
. Employer contribution rate increase
. Normal Cost =2.4%
. Prior Cost =5.8%
. Asset Method =0.0%
. Fresh Start =0.0%
. Employee contribution rate increase
(RD1
OH'200S
26
= $38.2 million
=$ 27.6 million
=8.2%
1.0%
II
e.."
I
\ I
I
I
I
--.
'-"~"~'~~"-_.t'.." :111
2.7~. @ 55
Estlnuited
. Consider amendment as 4 separate pieces:
. Increase in Future Normal Costs (Normal Cost Rate) 2.4%
o "Permanent" current & future service increase
. Increase in Actuarial Liability: 5.8%
o 20 year amortization for past service increll$e
. Increase in Actuarial Value of Assets: 0.0%
. Fresh Start: 0.0%
o Excess assets amortized over a fixed period after amendment.
(ill) 0lI7,2ooS
27
-
. PVB
. Actuarial Liability
. Actuarial Asset Value
. Employer Rate:
. Normal Cost
. Amortization:
o Prior Cost
o (Gain)/Loss
o Fresh Start
o Assumption Change
o . Sub-total
. Total
.2.7%@55
Estimated
Before Due to After
Change Change Change
$ 290.4 $ 38.2 $ 328.6
238.2 27.6 265.8
245.0 0.0 245.0
7.9% 2.4% 10.3%
5.8 5.8
4.7 4.7
-7.3 -7.3
2.2 - 2.2
-
-0.4 5.8 5.4
7.6 8.2 15.7
~
03",2005
28
II
3.0% @ 60
Estimated
Preseal Value of lIneflb
Before 3.8% @ 60
PrtHllt V.I.. of ..eAts
Aller 3.0"" Ii!' 60
Before 3% (tV, 60
$ 45,400,000
6,800,000
Unfunded PVB
Excess Assetsl
(Unfunded Liability)
Actuarial Liability
PVB
238,200,000
290,400,000
t;7;\
~ i)!1
03/71200S
29
(...-
-
~)
After 3 % (tV, 60
$ 98,500,000
(30,000,000)
274,900,000
343,500,000
-
3.0% @ 60
Estimated
. Present Value of Benefits Increase
. Actuarial Liability Increase
. Employer contribution rate increase
. Normal Cost =3.2%
. Prior Cost =7.6%
. Asset Method =0.0%
. Fresh Start =0.0%
. Employee contribution rate increase
~.q.j
~ L\J ,
OlI1i200S
30
= $ 53.1 million
= $ 36.7 million
= 10.8%
1.0%
[II
--
3.00/0 @ 6P
Estimated
. Consider amendment as 4 separate pieces:
. . Increase in Future Normal Costs (Normal Cost Rate) 3.2%
o "Permanent" current & future service increase
. Increase in Actuarial Liability: 7.6%
o 20 year amortization for past service increase
. Increase in Actuarial Value of Assets: 0.0%
. F:resh Start: 0.0%
o Excess assets amortized over a fixed period after amendment.
I
I
I
I
I
(iC[). 03/7.Z00S
31
-
.
3.0% @ 60
Estimated
Before Due to After
Change Change Change
. PVB $ 290.4 $ 53.1 $ 343.5
. Actuarial Liability 238.2 36.7 274.9
. Actuarial Asset Value 245.0 0.0 245.0
. Employer Rate:
. Normal Cost 7.9% 3.2% 11.1%
. Amortization:
0 Prior Cost 7.6 7.6
0 (Gain)/Loss 4.7 4.7
0 Fresh Start -7.3 -7.3
0 Assumption Change 2.2 - 2.2
-
I 0 Sub-total -0.4 7.6 7.2
. Total 7.6 10.8 18.4
i
, I
\ I
(i11) .03!7iZOOS 32 II
Contribution Projection
Miscellaneous
. Market Value Investment Return:
. June 30, 2004
. June 30, 2005 - 2009 25% Confidence Limit:
16.57%
::::: 2.6%
. Fresh Starts:
. No Additional Fresh Starts
. No Other:
. Gains or Losses
. Method or Assumption Changes
. Benefit Improvements
(iC[) 0317'2ooS
33 .
-
Contribution Projection
Miscellaneous
30%
Investment Return Varies
25%
"
o ,.6/
20%
o
o
0" '
6
6'"
.D
.-
. [J. '
15%
A
6'
I] I]
10%
5%
0%
03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
o 3%@ 60 0.0% 0.0% 18.4% 18.5% 20.0% 22,0% 24.2% 26.3%
11 2.7%@55 0.0% 0.0% 15.7% 15.8% 17.3% 19.4% 21.5% 23.6%
Il) 2.5% @ 55 0,0% 0,0% 12,2% 12.3% 13.8% 15,9% 18.1% 20.2%
~2% 55 0,0% 0.0% 7.6% 7,6% 9,1% 11.2% 13.4% 15.5%
(iL1).03/7'ZooS 34 II
"Iw-~"'m._~ '
Contribution P{ojection
Miscellaneous
. Market Value Investment Return:
. June 30, 2004
. June 30,2005 - 2009 50% Confidence Limit:
16.57%
::;: 7.75%
. Fresh Starts:
. No Additional Fresh Starts
. No Other:
. Gains or Losses
. Method or Assumption Changes
. Benefit Improvements
~.r."
~ It'IJ
03l7i2ooS
35
II
Contribution Projection'
Miscellaneous
20%
18%
16%
14%
12%
10%
8%
6%
4%
2% - '-.'--".. -..-...-
0"10
Investment Return Varies
\!l
o
!>
o
0..,._,- ."0-'"
~
. 6
".
A", '
".......... .."
Q, .. ,. ,0.", ,D." .
I]--~.'~'II'-"
03/04
03%@6O 0.0%
A 2.7%@55 0.0%
I] 2.5% @ 55 0.0%
-+- 2% 55 0,0%
... "0"-- '0' 0 _...___..___m_.._.._______
. .
---~-_.- -"-,-"---,-.---, ---
- -- --.--.---.-.------
. -. - -.---..-----.- ..-----.-----
04/05 05/06 06/07 07/08 08/09 09/10 10/11
0.0"10 18.4% 18.5% 18,4% 18.3% 18.1% 17.9%
0.0"/. 15.7% 15.8% 15.7% 15.6% 15.5% 15.3%
0.0% 12.2% 12.3% 12.3% 12.1% 12.0"10 11.8%
0.0% 7.6% 7.6% 7.6% 7.5% 7,3% 7.1%
~
03i7.:200S
36
-
Contribution Projection
Miscellaneous
. Market Value Investment Return:
. June 30, 2004
. June 30, 2005 - 2009 75% Confidence Limit:
16.57%
::::: 12.9%
. Fresh Starts:
. No Additional Fresh Starts
. No Other:
. Gains or Losses
. Method or Assumption Changes
. Benefit Improvements
(fuD1.
01'7/2005
37
-
Contribution Projection
Miscellaneous
20% Investment Return Varies
18% 0 0.
a
16% i>:: ~,
14% A" ,0..,
12% c 0
& o.
10% 0
8% ~ .~!~.n
6% ' ,. .......~'-
4%
2% D
0%
03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
o. 3%@60 0.0% 0.0% 18.4% 18.5% 16.8% 14.3% 11.4% 8.4%
62.7%@55 0,0% 0.0% 15,7% 15.8% 14.1% 11.6% 8.7% 5,7%
On 2.5% @ 55 0,0% 0,0% 12.2% 12.3% 10.7% 8.1% 5.3% 2.3%
-+-2% 55 0.0% 0.0% 7.6% 7.6% 6.0% 3.5% 0.6% 0.0%
(iLD -
03'7,100S 38
".."" .. '~'~"''''''''-f'.'o"",''''. '
. r ~
Benefit Factors
Miscellaneous
Benefit Factor Comparison
1'..1Il"2%@60 O-'2%@55 '0'2.5%@556'2,7%@55 03%@601
3.0%
0" .
o....."g.---_
2.8% --.....----..------
2,6%
--.. -......~ >0'...,
",. _.../::;-:jlI'
<:"If'.'
D."
o '--"--
..IF"'-6 '..-0':' 6 .. 6........... ....6.......6........'.--6---6
,n it(.n -, ;0. . .._, u, ..., u,.....,_.~.
~::..o. '."..G, '0.., ,0..
2,2%
..
=>
ts 2.0%
&:
1.8%
. .;, .... .'"
..,." ...,'
IV' . .'
/
2.4%
, x<..
...
.x/
,0
_/
, _. .....!t' .... _..._ .. ,..... ..
.,,10 .."
1.4% ,.~_.- . .
;..tc
X"
1.6%
lC'
X'
1.2% '
. X'"''
~.~-~_.:;:>)(-'''..;:
..If'''' .lC:'::.
)C, ..-'
1.0%
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Retirement Age
(fi1) -
-[ 03:7/2005 39
Benefit Eaetors
Miscellaneous'
2%<iiJ60 2 %<iiJ55 2.5%<iiJ55 2.7%<iiJ55 3%<iiJ60
50 1.092% 1.426% 2.000% 2.000% 2.000%
51 1.156% 1.522% 2.100% 2.140% 2.100%
52 1.224% 1.628% 2.200% 2.280% 2.200%
53 1.296% 1.742% 2.300% 2.420% 2.300%
54 1.376% 1.866% 2.400% 2.560% 2.400%
55 1.460% 2.000% 2.500% 2.700% 2.500%
56 1.552% 2.052% 2.500% 2.700% 2.600%
57 1.650% 2.104% 2.500% 2.700% 2.700%
58 1.758% 2.156% 2.500% 2.700% 2.800%
I 59 1.874% 2.210% 2.500% 2.700% 2.900%
60 2.000% 2.262% 2.500% 2.700% 3.000%
61 2.134% 2.314% 2.500% 2.700% 3.000%
62 2.272% 2.366% 2.500% 2.700% 3.000%
63 2.418% 2.418% 2.500% 2.700% 3.000%
64 2.418% 2.418% 2.500% 2.700% 3.000%
65 2.418% 2.418% 2.500% 2.700% 3.000%
(&D 0).7i2ooS 40 II
Actuarial Asset Values
Miscellaneous
6/30/2003:
Market Value
Actuarial Value
6/30/2004:
Market Value
Actuarial Value:
1. Project @ 7.75%
2. Adjust (l/3(MV-A V)]
3. Limited by corridor
Actuarial Rate of Return
Ratio of Actuarial Value to Market Value
(fCi)
( 1 . 03/7/2005
41
100.0
110.0
16.57%
116.6
118.5
117.9
117.9
7.17%
101.1%
II
Actuarial Asset Values
Miscellaneous
1. Project Actuarial Value forward from prior year using 7.75%
2. Adjust Actuarial Value by 1/3 difference between MV & A V
3. Actuarial Value must fall within corridor of:
90% of Market Value and
110% of Market Value
Asset Alternatives not available after 6/30/03
(lq)
03n,200S
42
[I]
<'T'. ....,.",. ' ",....W,.
.. 01, y
Super Funded Status
Miscellaneous
50,0
184,6
179.4
5.2
2001
243,2
266,1
.' .n..... .__ ___..__........_
(22,9)
300.0
250.0
200,0
150,0
100.0
(50,0)
lJ PV Bens
m Actuarial Asset Value
"._~_"'_ ._..n..__
. Su (Excess)/ Shortfall
(i\"'[) OJ,7!2ooS
43
-
Super Funded Status
Miscellaneous
. Super Funded if Actuarial Value Assets> Present Value of Benefits
. Super Funded means:
. Super Surplus may be used to pay employee contributions
. 6/30/03 valuation ~ contributions during 2005/2006 fiscal year
. 'Plan will not likely become Super Funded in the near future.
(iC[)
OJ/7f200S
44
-
.~<~ -
~.~
-nr'~'~""""~' "
",,-, "'"".,,- " ~
t.
So
CITY OF SAN BERNARDINO
SAFETY PLAN
CalPERS Actuarial Issues - 6/30/03 Valu.tion
JOHN E. BARTEL
g4~i!~E ,1,\1 h i lC:
March 7. 2005
Safety
Tooic Page
Definitions 1
Plan Funded Status 4
Demographic Information 7
Plan Assets 11
Actuarial Obligations 15
Contribution Rates 17
Contribution Projections 19
3% @ 55 Amended 6/30/98 21
Estimated 3% @ 50 25
Contribution Projections (with Amendments) 29
Super Funded Status 35
(B.{)
O:--ClimbrCIlY\lrSan hnlrdini,CIIPERS'.6-1U-nJ Sin hnardino Sard)' OHll-lI7.do:
Defmitions
,..
.'
Present Value of Benefits
JUDe 30, 1083
-. ""u1
c_
C.lTftlt N....
C..
. PVB - Present Value of all Projected Benefits:
. Discounted value (at valuation date - 6/30/03), of all future expected benefit
payments based on various (actuarial) assumptions
. Actuarial Liability:
. Discounted value (at valuation date) of benefits earned through valuation date
[value of past service benefit]
. Portion of PVB "earned" at measurement
. Current Normal Cost:
. Portion ofPVB allocated to (or "earned" during) current year
. Value of employee and employer current service benefit
(iN)
03'7.2005
II
Definitions
Present Value of Beaeflb
Juae 30, 1083
· Target- Have money in the bank to cover Actuarial Liability (past service)
· Unfunded Liability - Money short of target at valuation date
. Excess Assets I Surplus:
. Money over and above target at that Doint in time.
. Doesn't mean you're done contributing.
. Super Funded:
. Assets cover whole pie (PVB)
· If everything goes exactly like PERS calculated, you'll never have to put another
(employer or employee) dime in.
(l}"j) 03!7i2ooS
2
II
. -ITr"':,"'o"'4"''''''''''''''''''~'r'''~ii'W'r'~''l
'..,.....'...
':
Definitions
Prelelllv.....r_
Ja.. JO, 2003
PreHllt Vltu or IIeMIltl
.a:.... 30, %003
. Contribution =
. NormalCo~
. + Unfunded Liability Amortization
or
. - Excess Asset Amortization
~.
, I, 03i71200S
3
II
Plan Funded Status
Safety
. Future events that might cause rate fluctuations:
. Asset Gains/Losses:
o Smoothing will not mitigate upcoming asset losses
. Experience Gains/Losses (somewhat mitigated because of
smoothing):
o Disabilities
o Salaries
o Retirements
. Pooling
. Air Time Service Purchase
. Benefit Improvements?
o 3%@50
~
,. j 03m200S
4
II
. .
Plan Funded Status
Safety
'. .
Present VII.t 0' BeIleftb
J... 30. 2002
r....... v.... or lIeoell..
J... 30. z003
June 30. 2002
$ 131,300,000
(59,100,000)
324,700,000
396,800,000
Unfunded PVB
(Unfunded Liability)
Actuarial Liability
PVB
June 30. 2003
$ 148,300,000
(72,800,000)
339,900,000
415,400,000
(Bi)
, OJ.72ooS
5
II
Plan Funded Status
Safety
. What happened between 6/30/02 and 6/30/03?
. Asset gain/(Ioss): = (12.7) million
. Actuarial gain/(loss): = (4.6) million
o Average Salary $77,200 ~ $81,400
o Number of Actives 416 ~ 423
o Number of Inactives 69 ~ 77
o Number of Retirees 481 ~ 493
. CalPERS Method & Assumption Changes: = 9.2 million
. Contribution gain/(loss): = 0.4 million
o Expected = (7.2)
o Actual = 7.6
. CalPERS 2 Year Lag: = (6.0) million
~
- OJ/7I2ooS
6
II
-]~fT '=l7'''''''''''''~'''~..''''" .,,=~,_."
.'
Members Included in Valuation
safety
so
500
450
400
350
300
250
200
150
100
o Aclive
o Transfers
. Vested Tenninations
. Receivin Pa enlS
~
. 1 OJi7i2ooS
7
II
Average Age/Service
Safety
~
" 03i7!200S
8
II
. ,
Average PERSable Wages
Safety
'..'"
(iiV. 03/7. zoos
9
II
Total Annual PERSable Wages (Millions)
Safety
(itj)
.. '~3111200S
\0
II
l rIH~'''''''''''''~''''F'f~''''--''-'' .0
Actuarial Investment Return
Slfety
'''~'.~''''~.''''..'.~.-~ ..'
..... AVARale 15.5% 26.1% 1\.1% -4,2%
__MVARale 20.1% 19.5% 12.5% 10.5% -7.2% -6,0%
(r\1)l
'. "(}3i1/200S
11
II
Actuarial Investment Return
Safety
. Above assumes contributions, payments, etc. received evenly throughout
year.
. 6/30/03 :
. Market Value return
. Actuarial Value return
. 6/30/04:
. Market Value return
. Actuarial Value return
. 6/30/05:
. Market Value return through 10/31/04
. Estimated Annualized MV A Return
. Estimated Annualized A V A Return
(EN)
. . 031712005
12
= 3.69%
= 3.4%
=16.57%
= 7.1%
= 9.22%
::::13.4%
= 9.2%
II
Asset Values (Millions)
Safety
o
300
250
200
150
100
50
. Actuarial
-.--.- .---- --
o Market
(i}D.. Ol'NooS
13
II
Asset Values
Safety
. 6/30/00 Actuarial Value ::: 95% Market
. 6/30/01 Actuarial Value ::: 107% Market
. 6/30/02 Actuarial Value ::: 110% Market
. 6/30/03 Actuarial Value ::: 110% Market
. 6/30/04 Actuarial Value will be ::: 101 % Market
~
. I 01!7!200S
14
II
~.''''--'~,.'-~._..~.
Funded Status (Millions)
Safety
o Actuarial,Uabil!tL.,
_Actuarial Asset Value
2003
339.9
______n____. ~_.'__'
267.\
(Bl) 03i7/2ooS
15
II
~H'~.'''U__
Funded Status
Safety
.
Actuarial assumption changes:
. Interest rate
o General inflation
o Real rate of return
o Total
. Payroll growth
6/30/03
3.00%
4.75
7.75
3.25%
6/30/02
3.50%
4.75
8.25
3.75%
.
Investment losses - Impact on funded status:
. 6/30/04 [16.57% compared to 7.75%]
. Actuarial asset "reserve"
. Total estimated % loss
. Total estimated unrecognized loss
[1.2% x $ 243 million]
+8.8%
-10.0%
-1.2%
$ 2.9 million
~
. 03n1100S
16
II
Contribution Rates
Safety
'. <<
1996 1997 1998 1999 2000 2001 2002 2003
o Nonnal Cost 13.6% 10.4% 12.9% 13.0% \5.8% 15.9"10 15.9"10 14.5%
IJUAL Amort 8,7% 1.3% -7.9% -9,2% -3,2% 5.1% 11.5% 14.2%
. Total 22,3% 11.7% 5.\% 3.8% 12,6% 20.9% 27.4% 28,6%
(l\'1) .
' OH'200S 17
Contribution Rates
Safety
.
.
Normal cost
Amortization bases:
. GainILoss
. Fresh Start
. Assumption Changes
Sub-total
6/30/02
2004/2005
15.9%
6/30/03
2005/2006
14.5%
11.5%
5.3%
11.2%
-2.4%
14.2%
28.6%
Multiple
::::: 23 years
. Total:
. Amortization period
11.5% ,,!-f
27.4%).!
30 years
. 6/30/04:
. Large Market Asset Gain
. Modest Actuarial Asset Loss
. Actuarial gains or losses?
(Bl) OJ:7,200S
18
II
'~'n-F
..~"' ,
Contribution Projections
Safety
. Market Value Investment Return:
. June 30, 2004
. June 30, 2005 - 2009 25% Confidence Limit.:
50% Confidence Limit:
75% Confidence Limit:
16.57%
::= 2.60/.
::::: 7.75%
::=12.9%
.Confidence Limits - Actual Return wiD fall below the given rate with indicated probabilitie~
. Fresh Starts:
. No Fresh Starts for 05/06
. 20 Year 1.2% 25 Year -0.7%
30 Year
-2.0%
. No Other:
. Gains or Losses
. Method or Assumption Changes
. Benefit Improvements
(t\j) 03,7/2005
19
II
Contribution Projections
Safety
Investment Return Varies
45%
40%
35%
~
. ,. .~H__
_u _~.___~____.
/ It----.-..--.---..,==-.::::::.~-~::-----.----'-- --..----"
" .---
30%
25%
20%
15%
10%
5%
05/06
06/07
07/08
30,8%
28.8%
26.6%
0% '
(lCi)1
03!7/1OOS
20
II
3% @ 55
Amendment - 6/30/1998
Preseat V.I.e of Beatfirs
Before 3.oy. ~ $~
Prenat V.lue of Bneflts
All... 3.0% (/I: 55
. ~
..j
.
Before 3.0% (tV, 55
$ 38,200,000
13,800,000
219,800,000
271,700,000
Unfunded PVB
Excess Assets
Actuarial Lia~i1ity
PVB
After 3.0% (tV, 55
$ 53,300,000
2,500,000
231,000,000
286,800,000
(ii'l)...03!7200S
21
r
3% @ 55
Amendment - 6/30/1998
. Present Value of Benefits Increase
= $ 15.1 million
. Actuarial Liability Increase
. Employer contribution rate increase
. Normal Cost :::2.3%
. Prior Cost =4.2%
. Asset Method ::: 0.0%
. Fresh Start ::: 0.0%
. Employee contribution rate increase
::: $ 11.3 million
:::6.5%
0.0%
(l}7i) 03!712ooS
22
II
"-~ ~~".,..
r--..
I
I
I
I
I
I
I
~~c.._~~.
3% @ 55
Amendment - 6/30/1998
. Consider amendment as 4 separate pieces:
. Increase in Future Normal Costs (Normal Cost Rate) 2.3%
o "Permanent" current & future service increase
. Increase in Actuarial Liability: 4.2%
o 20 year amortization for past service increase
. Increase in Actuarial Value of Assets: 0.0%
. Fresh Start: 0.0%
o Excess assets amortized over a fixed period after amendment.
@"D
0317/2005
23
II
3% @ 55
Amendment - 6/30/1998
Before Due to After .
Change Change ChuKe
. PVB $ 271.7 $ 15.1 $ 286.8
. Actuarial Liability 219.8 11.3 231.0
. Actuarial Asset Value 233.5 0.0 233.5
. Employer Rate:
. Normal Cost 12.9% 2.3% 15.2%
. Amortization:
0 Prior Cost 4.2 4.2
0 (Gain)/Loss -8.0 -8.0
0 CalPERS Minimum 1.3 1.3
0 Assumption Change 3.0 3.0
0 Method Change -4.2 - -4.2
-
0 Sub-total -7.9 4.2 -3.7
. Total 5.1 6.5 11.5
(tH)
. 03171200S
24
II
3% @ 50
Estimated
< I
Preseat Val.e of 8en.efIu
Berore 3.0.;' @ 58
Present Value of ....eflts
All... 3.0% (j; so
Before 3.0% (tV, SO
$ 148,300,000
(72,800,000)
339,900,000
415,400,000
Unfunded PVB
(Unfunded Liability)
Actuarial Liability
PVB
After 3.0% (tV, SO
$ 166,100,000
(87,800,000)
354,900,000 .
433,200,000
(i\!). OJ'7i2ooS
25
II
3% @ 50
Estimated
. Present Value of Benefits Increase = $ 17.8 million
. Actuarial Liability Increase = $ 15.0 million
. Employer contribution rate increase =6.2%
. Normal Cost =2.4%
. Prior Cost =3.8%
. Asset Method =0.0%
. Fresh Start =0.0%
. Employee contribution rate increase 0.0%
~ OJ/7i200S
26
II
--,.~.,~." . '".
'T'P'''~'.''"''
. ',,"w.~_~m'"
....,.:.,.""'"><:;vr"":r""".~.,,=-,= . "
I.
3% @ 50
Estimated
. Consider amendment as 4 separate pieces:
. Increase in Future Normal Costs (Normal Cost Rate)
o "Permanent" current & future service increase
. Increase in Actuarial Liability:
o 20 year amortization for past service increase
. Increase in Actuarial Value of Assets:
2.4%
3.8%
0.0%
. Fresh Start: 0.0%
o Excess assets amortized over a fixed period after amendment.
(&D
. 1 03171200;
27
II
3% @ 50
Estimated
Before Due to After
Change Change Change
. PVB $415.4 $ 17.8 $ 433.2
. Actuarial Liability 339.9 15.0 354.9
. Actuarial Asset Value 267.1 0.0 267.1
. Employer Rate:
. Normal Cost 14.5% 2.4% 16.9%
. Amortization:
0 Prior Cost 3.8 3.8
0 (Gain)/Loss 5.3 5.3
0 Fresh Start 11.2 11.2
0 Assumption Changes -2.4 3.8 -2.4
0 Sub-total 14.2 3.8 18.0
. Total 28.6 6.2 34.9
(B1)
, . 03/71ZOOS
28
II
Contribution Projection
Safety
'. I
. Market Value Investment Return:
. June 30, 2004
. June 30, 2005 - 2009 25% Confidence Limit:
16.57%
::::: 2.6%
. Fresh Starts:
. No Additional Fresh Start
. No Other:
. Gains or Losses
. Method or Assumption Changes
. Benefit Improvements
~
03;712005
29
III
Contribution Projection
Safety
50% Investment Return Varies
45% ,~"'----
6
40%
35% 6 6'
30%
25%
20%
15%
10%
5%
0%
03/04 04/05 05/06 . 06/07 07/08 08/09 09/10 10/11
20,9% 27.4% 34.9% 35.0% 37,1% 39.9% 42.8% 45.7%
- -, _ _nm___
20,9% 27.4% 28.6% 28.8% 30.8% 33.6% 36.6% 39,4%
(R:Dj
. 03r7!2ooS
30
II
--"".,-,-" ''',p' C.",
,"
""',m
.. "."""=~".,"""",,"="~'
Contribution Projection
Safety
. Market Value Investment Return:
. June 30, 2004
. June 30, 2005 - 2009 50% Confidence Limit:
16.57%
::::: 1.75%
. Fresh Starts:
. No Additional Fresh Start
. No Other:
. Gains or Losses
. Method or Assumption Changes
. Benefit Improvements
(lC!) .03i7/200S
31
II
Contribution Projection
Safety
40%
Investment Return Varies
35%
'/r
6
, ..6, ,-6-'-'''''' .oF"",o~''''A''
30%
25%
r'
o
o .
.
o
20%
15%
05/06 06107 07/08 08/09 09110 10/11
27.4% 34.9"10 35.0% 35.0% 34.9% 34.7% 34.5%
-.-------....--.- .u__..____..______ ..--..,.----- --.------.
27.4% 28.6% 28.8% 28.8% 28.7% 28.5% 28.3%
~
03i712OOS
32
.
Contribution Projection
Safety
'. I
. Market Value Investment Return:
. June 30, 2004
. June 30,2005 - 2009 25% Confidence Limit:
16.57%
::::: 12.9%
. Fresh Starts:
. No Additional Fresh Start
. No Other:
. Gains or Losses
. Method or Assumption Changes
. Benefit Improvement~
~ 03!7'ZOOS
33
II
Contribution Projection
Safety
Investment Return Varies
6- A
6
04/05
06107 07/08 08/09 09110 10/11
35.0% 32.9% 29.6% 25.8% 21.8%
" ---_.._~_._- _.-..---. - n_n ..------
28.8% 26.6% 23.3% 19,5% 15.6%
\ I
I
20,9%
__ ~. ____u_
20,9%
27,4%
27,4%
(i}:'[) 03",ZooS
34
fit
v.e..~",~,.p,o",' .
."...."[""'..,0 _
'''"''"_",m,,,,..,m"''~
<"""'."".1"'t0;.'1<"'''''''~''='''''''~ ~
..
Super Funded Status (Millions)
Safety
DPV Bens
- --~.__._._.
III Actuarial Asset Value
. Su r (Excess)! Shortfall
150,0
100,0
50.0
(B7i) 03/7,200S
35
II
Super Funded Status (Millions)
Safety
. Super Funded if Actuarial Value Assets> Present Value of Benefits
. Super Funded means:
. Super Surplus mav be used to pay employee contributions
. 6/30/03 valuation ~ contributions during 2005/2006 fiscal year
. Plan will not likely become Super Funded in the near future.
(K1)
'0317,1OOS
36
.
Actuarial Asset Values
Safety
6/30/2003:
Market Value
Actuarial Value
100.0
110.0
6/30/2004:
Market Value
Actuarial Value:
1. Project@7.75%
2. Acljust [l13(MV-A V))
3. Limited by corridor
Actuarial Rate of Return
Ratio of Actuarial Value to Market Value
16.57%
116.6.
118.5
117.9
117.9
7.17%
101.1%
~
,I 03-NooS
37
-
-.
II
Actuarial Asset Values
Safety
1. Project Actuarial Value forward from prior year using 7.75%
2. Adjust Actuarial Value by 1/3 difference between MV & A V
3. Actuarial Value must fall within corridor of:
90% of Market Value and
110% of Market Value
Asset Alternatives not available after 6/30/03
(Bl). OJ/7,2ooS
38
II
_ C~~_,_,_
A
CalPERS
Actuarial & Employer Services Division
PO Box 942709
Sacramento. CA 94229-2709
Telecommunications Device for the Deaf - (916) 326-3240
(916) 326-3420 FAX (916) 326-3005
June 1, 2001
3'~eJ~
OO~@~OW~!ID
JUN 0 6 2001
HUMAN RESOURCES
City of San Bernardino
Employer Code #0061
Reply to Section 105
Mr. Edward S. Raya
Director of Human Resources
City of San Bernardino
300 North D Street
San Bernardino, CA 92418-0001
Dear Mr. Raya:
The contract amendment has been executed by CaIPERS. The effective date of the
contract amendment is July 1, 2001.
If you have any questions regarding your contract, please do not hesitate to contact,
Jean Krum at (916) 326-3009.
Sincerely,
~~-G0~
Public Agency Contract Services
CC:cc
Enclosure
C0308 (Rev, 9/99)
California Public Employees' Retirement System
Lincoln Plaza - 400 P Street - Sacramento, CA 95814
.-.'" '-...."" ,.'...,,""'" ........>"'''.,'........''..~...~'''"''i-
MC-I097
A
CalPERS
EXHIBIT "A"
California
Public Employees' Retirement System
.
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of San Bernardino
.
The Board of Administration, California Public Employees' Retirement System,
hereinafter referred to as Board, and the governing body of the above public agency,
hereinafter referred to as Public Agency, having entered into a contract effective March
1, 1945, and witnessed February 6,1945, and as amended effective November 1,1949,
September 1, 1951, January 1, 1952, July 1, 1954, February 1, 1965, February 24,
1969, March 8, 1971, October 1, 1973, October 28, 1974, March 17, 1975, April 28,
1975, November 10, 1975, July 6, 1977, January 7, 1985, May 27, 1985, September 16,
1988, August 27,1990, August 1,1996, July 3,1997, January 1,1998, August 1.1998,
November 1, 1999 and June 1, 2001 which provides for participation of Public Agency
in said System, Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 13 are hereby stricken from said contract as executed
effective June 1, 2001, and hereby replaced by the following paragraphs
numbered 1 through 13 inclusive:
1. All words and terms used herein which are defined in the Public
Employees' Retirement Law shall have the meaning as defined therein
unless otherwise specifically provided. "Normal retirement age" shall
mean age 55 for local miscellaneous members and age 55 for local safety
members.
2. Public Agency shall participate in the Public Employees' Retirement
System from and after March 1, 1945 making its employees as hereinafter
provided, members of said System subject to all provisions of the Public
Employees' Retirement Law except such as apply only on election of a
contracting agency and are not provided for herein and to all amendments
to said Law hereafter enacted except those, which by express provisions
thereof, apply only on the election of a contracting agency.
.''"....,..,'=..~,....
rJ''''~-~'''- :~~ :"'""',:"~_~' ~_ ..:<'____~
KC-I097
3. Employees of Public Agency in the following classes shall become
members of said Retirement System except such in each such class as
are excluded by law or this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
c. Employees other than local safety members (herein referred to as
local miscellaneous members).
4. In addition to the classes of employees excluded from membership by
said Retirement Law, the following classes of employees shall not become
members of said Retirement System:
a. CROSSING GUARDS HIRED ON OR AFTER JANUARY 1, 1952;
b. LIBRARY PAGES HIRED ON OR AFTER MARCH 17, 1975;
c. LIFEGUARDS;
d. SENIOR LIFEGUARDS;
e. SUPERVISING LIFEGUARDS;
f. RECREATION INTERNS;
g. RECREATION AIDES
h. RECREATION LEADERS;
i. SENIOR RECREATION LEADERS;
j. RECREATION SPECIALIST;
k. LOCKER ATTENDANTS;
I. VEHICLE OPERATORS; AND
m. EXTRA RELIEF HEAVY LABORERS (EXTRA BOARD).
5. Prior to January 1, 1975, those members who were hired by Public
Agency on a temporary and/or seasonal basis not to exceed 6 months
were excluded from PERS membership by contract. Government Code
Section 20336 superseded this contract provision by providing that any
such temporary and/or seasonal employees are excluded from PERS
membership subsequent to January 1, 1975. Legislation repealed and
replaced said Section with Government Code Section 20305 effective July
1, 1994.
6. The percentage of final compensation to be provided for each year of
credited prior and current service as a local miscellaneous member shall
be determined in accordance with Section 21354 of said Retirement Law
(2% at age 55 Full).
7. The percentage of final compensation to be provided for each year of
credited prior and current service as a local safety member shall be
determined in accordance with Section 21363.1 of said Retirement Law
(3% at age 55 Full). The required member contribution rate is 9% of
reportable compensation.
IIC-I097
8. Public Agency elected and elects to be subject to the following optional
provisions:
a. Sections 21624, 21626 and 21628 (Post-Retirement Survivor
Allowance).
b. Section 21222.1 (One-Time 5% Increase - 1970). Legislation
repealed said Section effective January 1, 1980.
c.. Section 20042 (One-Year Final Compensation).
d. Section 21024 (Military Service Credit as Public Service), Statutes
of 1974.
e. Section 21222.2 (One-Time 5% Increase - 1971). Legislation
repealed said Section effective January 1, 1980.
f. Section 21319 (One-Time 15% Increase for Local Miscellaneous
Members Who Retired or Died Prior to July 1, 1971).
g. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local fire
members and local miscellaneous members only.
h. Section 20903 (Two Years Additional Service Credit) for local
miscellaneous members only.
i. Section 21635 (Post-Retirement Survivor Allowance to Continue
After Remarriage) for local fire members only.
9. Public Agency, in accordance with Government Code Section 20790,
ceased to be an "employer" for purposes of Section 20834 effective on
April 28, 1975. Accumulated contributions of Public Agency shall be fixed
and determined as provided in Government Code Section 20834, and
accumulated contributions thereafter shall be held by the Board as
provided in Government Code Section 20834.
10. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with
respect to local miscellaneous members and local safety members of said
Retirement System.
11. Public Agency shall also contribute to said Retirement System as follows:
a. Contributions required per covered member on account of the 1959
Survivor Benefits provided under Section 21574 of said Retirement
Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a
single account, based on term insurance rates, for survivors of all
local fire members and local miscellaneous members only.
--,
,-
- -
1
, "'T'vl~'"'RNrlT ~~~'%'''''';':,'~''"'''",~,~M,~,~,
KC-I097
b. A reasonable amount, as fixed by the Board, payable in one
installment within 60 days of date of contract to cover the costs of
administering said System as it affects the employees of Public
Agency, not including the costs of special valuations or of the
periodic investigation and valuations required by law.
c. A reasonable amount, as fixed by the Board, payable in one
installment as the occasions arise, to cover the costs of special
valuations on account of employees of Public Agency, and costs of
the periodic investigation and valuations required by law.
12. Contributions required of Public Agency and its employees shall be
subject to adjustment by Board on account of amendments to the Public
Employees' Retirement Law, and on account of the experience under the
Retirement System as determined by the periodic investigation and
valuation required by said Retirement Law.
13. Contributions required of Public Agency and its employees shall be paid
by Public Agency to the Retirement System within fifteen days after the
end of the period to which said contributions refer or as may be prescribed
by Board regulation. If more or less than the correct amount of
contributions is paid for any period, proper adjustment shall be made in
connection with subsequent remittances. Adjustments on account of
errors in contributions required of any employee may be made by direct
payments between the employee and the Board.
B.
This amendment shall be effective on the 1st day of
July
,2001
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF SAN BERNARDINO
.;).001
Attest:
~ h.~
Cle
AMENDMENT
PERS..cON-702A (Rev. 8\96)
"".~=w'~_~,~, '
'~"."'.~~','~,""." "i,.q".,-,~-
~
A
CalPERS
Actuarial & Employer Services Division
PO Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf - (916) 326-3240
(916) 326-3420 FAX (916) 326-3005
'I '@ s>
c;;r-
March 12, 2001
Employer Code #0061
Reply to Section 105
Mr. Edward S. Raya
Director of Human Resources
City of San Bernardino
300 North D Street
San Bernardino, CA 92418-0001
[Ki[g@[gD\'!7[g~
MAR 1 4 2001
Dear Mr. Raya:
HUMAN RESOURCES
City of San Bernardino
The contract amendment has been executed by CaIPERS. The effective date of the
contract amendment is June 1, 2001.
If you have any questions regarding your contract, please do not hesitate to contact,
Jean Krum at (916) 326-3009.
Sincerely,
~l~~
Public Agency Contract Services
CC:cc
Enclosure
C0308 (Rev. 9199)
California Public Employees' Retirement System
Lincoln Plaza - 400 P Street - Sacramento, CA 95814
--.
_,m '" ".
'" " c .
"~'~:?':~4~ . ."",",'1!!!!!
A
CalPERS
California
Public Employees' Retirement System
.
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council
City of San Bernardino
.
The Board of Administration, California Public Employees' Retirement System, hereinafter referred
to as Board, and the governing body of the above public agency, hereinafter referred to as Public
Agency, having entered into a contract effective March 1, 1945, and witnessed February 6, 1945,
and as amended effective November 1, 1949, September 1, 1951, January 1, 1952, July 1, 1954,
February 1, 1965, February 24, 1969, March 8, 1971, October 1,1973, October 28,1974, March
17, 1975, April 28, 1975, November 10, 1975, July 6, 1977, January 7, 1985, May 27, 1985,
September 16,1988, August 27,1990, August 1,1996, July 3, 1997, January 1,1998, August 1,
1998 and November 1, 1999 which provides for participation of Public Agency in said System,
Board and Public Agency hereby agree as follows:
A. Paragraphs 1 through 13 are hereby stricken from said contract as executed effective
November 1, 1999, and hereby replaced by the following paragraphs numbered 1 through
13 inclusive:
1. All words and terms used herein which are defined in the Public Employees'
Retirement Law shall have the meaning as defined therein unless otherwise
specifically provided. "Normal retirement age" shall mean age 55 for local
miscellaneous members and age 50 for local safety members.
2. Public Agency shall participate in the Public Employees' Retirement System from and
after March 1, 1945 making its employees as hereinafter provided, members of said
System subject to all provisions of the Public Employees' Retirement Law except
such as apply only on election of a contracting agency and are not provided for
herein and to all amendments to said Law hereafter enacted except those, which by
express provisions thereof, apply only on the election of a contracting agency.
'-"~'""T"'''F''I'7'''1' -
..
3. Employees of Public Agency in the following classes shall become members of said
Retirement System except such in each such class as are excluded by law or this
~~~~ .
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
c. Employees other than local safety members (herein referred to as local
miscellaneous members).
4. In addition to the classes of employees excluded from membership by said
Retirement Law, the following classes of employees shall not become members of
said Retirement System:
a. CROSSING GUARDS HIRED OR OR AFTER JANUARY 1, 1952;
b. LIBRARY PAGES HIRED ON OR AFTER MARCH 17, 1975;
c. LIFEGUARDS;
d. SENIOR LIFEGUARDS;
e. SUPERVISING LIFEGUARDS;
1. RECREATION INTERNS;
g. RECREATION AIDES
h. RECREATION LEADERS;
i. SENIOR RECREATION LEADERS;
j. RECREATION SPECIALIST;
k. LOCKER ATTENDANTS;
I. VEHICLE OPERATORS; AND
m. EXTRA RELIEF HEAVY LABORERS (EXTRA BOARD).
5. Prior to January 1, 1975, those members who were hired by Public Agency on a
temporary anellor seasonal basis not to exceed 6 months were excluded from
CalPERS membership by contract. Government Code Section 20336 superseded
this contract provision by providing that any such temporary anellor seasonal
employees are excluded from CalPERS membership subsequent to January 1,1975.
Legislation repealed and replaced said Section with Government Code Section
20305 effective July 1, 1994.
6. The percentage of final compensation to be provided for each year of credited prior
and current service as a local miscellaneous member shall be determined in
accordance with Section 21354 of said Retirement Law (2% at age 55 Full).
7. The percentage of final compensation to be provided for each year of credited prior
and current service as a local safety member shall be determined in accordance with
Section 21362 of said Retirement Law (2% at age 50 Full).
T....~.~ rr.w"" T""'...A,'W'IT<,,~,.~~~,,-
8. Public Agency elected and elects to be subject to the following optional provisions:
a. Sections 21624,21626 and 21628 (Post-Retirement Survivor Allowance).
b. Section 21222.1 (Special 5% Increase-1970). Legislation repealed said
Section effective January 1, 1980.
c. Section 20042 (One-Year Final Compensation).
d. Section 21024 (Military Service Credit as Public Service), Statutes of 1974.
e. Section 21222.2 (Special 5% Increase-1971). Legislation repealed said
Section effective January 1, 1980.
f. Section 21319 (Special 15% Increase for Local Miscellaneous Members who
retired or Died Prior to July 1, 1997).
g. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local fire members
and local miscellaneous members only.
h. Section 20903 (Two Years Additional Service Credit) for local miscellaneous
members only.
i. Section 21635 (Post-Retirement Survivor Allowance to Continue After
Remarriage) for local fire members only.
9. Public Agency, in accordance with Government Code Section 20790, ceased to be
an "employer" for purposes of Section 20834 effective on April 28, 1975.
Accumulated contributions of Public Agency shall be fixed and determined as
provided in Government Code Section 20834, and accumulated contributions
thereafter shall be held by the Board as provided in Government Code Section
20834.
10. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with respect to
local miscellaneous members and local safety members of said Retirement System.
11. Public Agency shall also contribute to said Retirement System as follows:
a. Contributions required per covered member on account of the 1959 Survivor
Benefits provided under Section 21574 of said Retirement Law. (Subject to
annual change.) In addition, all assets and liabilities of Public Agency and its
employees shall be pooled in a single account, based on term insurance rates,
for survivors of all local miscellaneous members and local fire members.
b. A reasonable amount, as fixed by the Board, payable in one installment within
60 days of date of contract to cover the costs of administering said System as
it affects the employees of Public Agency, not including the costs of special
valuations or of the periodic investigation and valuations required by law.
.. "", '-="~~<"C"'r.'" Tv'~'''~''''''''TII'](''=<'~'=~''''',,''c''''':''''!f'-":';\!!!l!FW'''i!!ill<_,
_ ~-&mIl
.'
c. A reasonable amount, as fixed by the Board, payable in one installment as the
occasions arise, to cover the costs of special valuations on account of
employees of Public Agency, and costs of the periodic' investigation and
valuations required by law.
12. Contributions required of Public Agency and its employees shall be subject to
adjustment by Board on account of amendments to the Public Employees'
Retirement Law, and on account ofthe experience under the Retirement System as
determined by the periodic investigation and valuation required by said Retirement
Law.
13. Contributions required of Public Agency and its employees shall be paid by Public
Agency to the Retirement System within fifteen days after the end of the period to
which said contributions refer or as may be prescribed by Board regulation. If more
or less than the correct amount of contributions is paid for any period, proper
adjustment shall be made in connection with subsequent remittances. Adjustments
on account of errors in contributions required of any employee may be made by
direct payments between the employee and the Board.
B. This amendment shall be effective on the 1,;/ day of J'rl ~ , j.9~.
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM CITY OF: SAN BERNARDIN9)
BY
KENNE
ACTUARIAL
PUBLIC EM
~ ;LO.:{oo/)
Witness Date
Attest:
f2~.1J,~
Clerk '--
AMENDMENT
PERS-CON-702A (Rev, 8\96)
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CalPERS
Actuarial & Employer Services Division
PO Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf - (916) 326-3240
(916) 326-3420 FAX (916) 326-3005
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October 14, 1999
Employer Code #0061
Reply to Section 105
Mr. Edward Raya
Director of Human Resources
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
Dear Mr. Raya:
The 1959 Survivor Agreement has been executed by CaIPERS. The effective date of
the contract amendment is November 1, 1999. This document was inadvertently
omitted when we mailed the executed copy of the contract amendment on September
27, 1999.
If you have any questions regarding your contract, please do not hesitate to contact,
Jean Krum at (916) 326-3009.
Sincerely,
Yfl~
Public Agency Contract Servic s
JM:jm
Enclosure
C0308 (Rev. 9199)
California Public Employees' Retirement System
Lincoln Plaza - 400 P Street - Sacramento, CA 95814
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--'
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ERN ARD IN 0 300 NORTH nO" STREET. SAN 8ERNAR.DINO, CALIFORNIA 92418
'.
July 8, 1999
SENT VIA FAX & U.S. MAIL
Ms. Jean Krum, Employee Representative
Califomia Public Employees' Retirement System
Actuarial & Employer Services Division
P.O. Box 942709
Sacramento, CA 94229-2709
Dear Ms. Krum:
EMPLOYER CODE #0081, SECTION 105
CONRACT AMENDMENT, COVERAGE GROUP ",4001
Enclosed please find an amended Anticipated Schedule of Agency Actions. These date
changes are necessary in order to comply with PERS' law after presenting the first
reading bf the Ordinance at our Council meeting of August 2, 1999.--
Also, we understand that an employee election will not be necessary as the local fire .
members of our agency already have the Third Level of 1959 Survivor Benefits.
If you have any questions, please call this office at (909) 384-5161.
Sincerely,
ESRldp
enclosure
cc: Fred Wilson, City Administrator; Barbara Pachon, Director of Finance; Rachel Clark,
City Clerk; Dee Saenz, Personnel Analyst; Huston Car1yJe. Sr. Asst. City Attomey;
Larry Pitzer, Police Chief; Skip Kulikoff, President, SBCPF
Jill :"~,,","f""'l"",q'~li"~"'
......iORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
.' ......-\.ctuarialand Employer Services Division
/" / Public Aaency Contract Services
./ P.O. Box 942709
Sacramento, CA 94229-2709
(916) 326-3420 FAX (916) 658-1586
AMENDED
ANTICIPATED SCHEDULE OF AGENCY ACTIONS
The City of San Bel'DardiDo, NOO61, hereby requests the documents DecesSary to amend its
COD1rICt to include the benefit as shown below.
..L Section 21574 (Fourth Level of 1959 Survivor Benefits) for local tire members.
Eater ......:
-- 1. W5/99 TIlE DAlP'or.a'.~ mE RESOLUTION OF INTENTION FilOM
nus OmCE TO INCLUDE IN AGENDA FOIl YOUll GOVERNING BODY. 11Iia
"UP. must be at I - four weeks from the "UP. thi. form is received in the Public ~-.ev
-COidrICt Services office. .
2. 7119/99 AOOP110N OF RESOLUTION OF INTENTION. ~ tint reading oftbe Ordinanc:e
2a. 8/2199 mft~Irr\IIi~~f~~r~
3. . N/A EMPLOYEE ELEC1l0N. (NecesSlry for options which affect the employees' rate of
'coatn"bution:)
4. 9fl 199 AOOP110N OF FINAL ORDINANCE. This date l'.M'lnot be earlier thAn 20 davs after
adoption of the Resolution of Intention (date 112).
S. lC>n7'9 EFFECTIVE DATE OF ORDINANCE. Usually 30 days following the date of adoption
(date 1#4), unless In Urgency Ordinance is adopIed waiving the 3Cklay period.
6. 11/1/99 EFFECTIVE DATE OF CalPERS AMENDMENT TO CONTRACI'. No cbaap in
employee or employer contn'bution rates - the effective date ClIIl be the day followiDg the
effective date of the Ordinance (date liS). .than. in employee or employer contribution
rates - the effective date cannot be earlier than the fll'St day of a payroll period following
the effective date of the Ordinance (date #5).
BY ED MYA
TITLE DIRECTOR OF HUMAN RESOURCES
TELEPHONE
(909) 384-5161
Date 717199
THIS omCE WILL PREPARE ALL DOCUMENTS NECESSARY TO AMEND YOUR CONTRACT. IF YOUR
AGENCY ATl'EMPTS TO EXPEDm THE AMENDMENT PROCESS BY PROCEEDING WITHOUT nu:
DOCUMENTS PROVIDED BY THIS OmCE, LEGAL REVIEW MAYBE REQUIRED WHICH COULD DELAY
THE ANTICIPATED EFFECTIVE DATE OF THE AMENDMENT.
(0nINa)
PERS-CON-8 (Rev. 3/98)
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CalPERS
Actuarial & Employer Services Division
PO Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf - (916) 326-3240
(916) 326-3420 FAX (916) 326-3005
September 27, 1999
Employer Code #0061
Reply to Section 105
Mr. Edward Raya
Director of Human Resources
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
Dear Mr. Raya:
The contract amendment has been executed by CaIPERS. The effective date of the
contract amendment is November 1,1999.
If you have any questions regarding your contract, please do not hesitate to contact,
Jean Krum at (916) 326-3009.
Sincerely, .
~~
Public Agency Contract Services
Enclosure
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C0308 (Rev, 9199)
California Public Employees' Retirement System
Lincoln Plaza - 400 P Street. Sacramento, CA 95814
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CaIPERS
California
Public Employees' Retirement System
'.
.
AMENDMENT TO CONTRACT
Between the
Board of Administration
California Public Employees' Retirement System
and the
City Council .
City of San Bernardino
.
T~e Board of Administration, California Public Employees' Retirement System' hereinafter referred
~(~as Board, and the governing body ofthe above public agency, hereinaftet.referred to as Public
'; Ag&ncy, having entered intoa. contract effective March 1, 1945. and witne$sed February 6. 1945,
'and as amended effective November 1.1949. September 1. 1951. January 1.1952, July 1, 1954.
',February 1, 1965. February, 24.1969. March 8, 1971, October 1, 1973, o.ctobe('28,.'1974, March
17, 1975, April 28, 1975,'....Qvember 10, 1975. July 6, 1977. January 7/198~,.:May27; 1985,
Se.Ptember16,1988,Augusf27, 1990. August 1, 1996, July 3. 1997. Jam"lry,1.1~8 tlnd August
. 1,1998 which provides for participation of Public Agency in said System. .~.,~nd Public Agency
, h~rebY agree as fol!QWs: "
A. Paragraphs 1 through 13 are hereby stricken,Jrom said contract as executed effective
August 1, 1998, and hereby replaced by the following paragraphs numbered 1 through 13
inclusive:
1. All words and terms used herein which are defined in the Public Employees'
Retirement Law shall have the meaning as defined therein unless otherwise
specifically provided. "Normal retirement age" shall mean age 60 for local
miscellaneous members and age 50 for local safety members.
2. Public Agency shall participate in the Public Employees' Retirement System from and
after March 1, 1945 making its employees as hereinafter provided, members of said
System subject to all provisions of the Public Employees' Retirement Law except
such as apply only on election of a contracting agency and are not provided for
herein and to all amendments to said Law hereafter enacted except those, which by
express provisions thereof. apply only on the election of a contracting agency.
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3. Employees of Public Agency in the following classes shall become members of said
Retirement System except such in each. such class as are excluded by law or this
agreement: '
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
c. Employees other than local safety' members (herein referred to as local
miscellaneous members).
4. In addition to the classes of employees excluded from membership by said
Retirement Law, the following classes of employees shall not become members of
said Retirement System:
a. CROSSING GUARDS HIRED OR OR AFTER JANUARY 1,1852;
b. LIBRARY PAGES HIRED ON OR AFTER MARCH 17, 1975;
c. LIFEGUARDS;
d. SENIOR LIFEGUARDS;
e. SUPERVISING LIFEGUARDS;
f. RECREATION INTERNS;
g. RECREATION AIDES
Il. RECREATION LEADERS;
'1. SENIOR RECREATION LEADERS;
j. RECREATION SPECIALIST;
k. LOCKER ATTENDANTS;
I. VEHICLE OPERATORS; AND
m. EXTRA RELIEF HEAVY LABORERS (extRA BOARD).
Piiorto January 1, 1975, those memberS who were hired by Public Agency on a
t,""porary and/or seasonal basis not to exceed 6 . months were,.. exc:luded from
Cl!IIPERS. membership by contract. Government Code .Section 203.36sup8rseded
this ,.Contract provision by providing that any such, t~inporary ahdlorseasonal
employees are excluded from CalPERS membership subsequent to January 1, 1975.
Legislation repealed and replaced said"Section with Government COde Section
20305 effective July 1, 1994.
6. The percentage of final compensation to be provided for each year of credited prior
and current service as a local miscellaneous member shall be determined in
accordance with Section 21353 of said Retirement Law (2% at age 60 Full).
7. The percentage of final compensation to be provided for each year of credited prior
and current service as a local safety member shall be determined in accordance with
Section 21362 of said Retirement Law (2% at age 50 Full).
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8. Public Agency elected and elects to be subject to the following optional provisions:
a. Sections 21624, 21626 and 21628 '(Post-Retirement Survivor Allowance).
b. Section 21222.1 (Special 5% Increase-1970). Legislation repealed said
Section effective January 1, 1980.
'.
c. Section 20042 (One-Year Final Compensation).
d. Section 21024 (Military Service Credit as Public Service), Statutes of 1974.
e. Section 21222.2 (Special 5% Increase-1971). Legislation repealed said
Section effective January 1,1980.
f. Section 21319 (Special 15% Increase for Local Miscellaneous Members).
g. Section 21574 (Fourth Level of 1959 Survivor Benefits) for local fire members
and local miscellaneous members only.
h. Section 20903 (Two Years Additional Service Credit), Statutes of 1979.
Legislation repealed said Section effective January 1, 1999 for local
miscellaneous members only.
i. Section 21635 (Post-Retirement Survivor Allowance to Continue After
Remarriage) for local fire members only.
9. Public Agency, in accordance with' Govemment Code Section 20790, ceased to be
an "employer" for purposes of Section 20834 effective on April 28, 1975.
Accumulated contributions of Public Agency shall be fixed, and determined as
provid8d in Govemment Code Section 20834, and accumulated contributions
thereafter shall be held by the Board as provided in Government Code Section
20.~34.
10. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of priQr and future service liabilitY with respect to
local miscellaneous members and local safety members of said Retirement System.
11. Public Agency shall also contribute to said Retirement System as follows:
a. Contributions required per covered member on account of the 1959 Survivor
Benefits provided under Section 21574 of said Retirement Law. (Subject to
annual change.) In addition, all assets and liabilities of Public Agency and its
employees shall be pooled in a single account, based on term insurance rates,
for survivors of all local miscellaneous members and local fire members. .
b. A reasonable amount, as fixed by the Board, payable in one installment within
60 days of date of contract to cover the costs of administering said System as
it affects the employees of Public Agency, not including the costs of special
valuations or of the periodic investigation and valuations required by law.
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c. A reasonable amount, as fixed by the Board, payable in one installment as the
occasions arise, . to cover the costs of special valuations on account of
employees of Public Agency, and costs of the periodic investigation and
valuations required by law.
12. Contributions required of Public Agency and its employees shall be subject to
adjustment by Board on account of amendments to the Public Employees'
Retirement Law, and on account of the experience under the Retirement System as
detennined by the periodic investigation and valuation required by said Retirement
Law.
13. Contributions required of Public Agency and its employees shall be paid by Public
Agency to the Retirement System within fifteen days after the end of the period to
which said contributions refer or as may be prescribed by Board regulation. If more
or less than the correct amount of contributions is paid for any period, proper
adjustment shall be made in connection with subsequent remittances. Adjustments
on account of errors in contributions required of any employee may be made by
direct payments between the employee and the Board.
B.
This amendment shall be effective on the 1st day of
,19~.
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
BY BY
KEN PRE
ACTUARIAL & E PLOYER SERVICES IVISION
EES' RETIREMENT SYSTEM
Attest:
~ /;7. ~
Clerk
AMENDMENT
PERS-CON-702A (Rev. 8\96)
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CalPERS
Actuarial & Employer Services Division
PO Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf - (916) 326-3240
(916) 326-3420 FAX (916) 326-3005
September 27, 1999
Employer Code #0061
Reply to Section 105
Mr. Edward Raya
Director of Human Resources
City of San Bernardino
300 North D Street
San Bernardino, CA 92418
Dear Mr. Raya:
The contract amendment has been executed by CaIPERS. The effective date of the
contract amendment is November 1,1999.
If you have any questions regarding your contract, pJease do not hesitl:lte to contact,
Jean Krum at (916) 326-3009.
Sincerely,'
~~
Public Agency Contract Services
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C0308 (Rev, 9199)
California Public Employ.... Retirement System
Lincoln Plaza - 400 P Street - Sacramento, CA 95814
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1999-117
AGREEMENT
TO POOL
1959 SURVIVOR BENEFITS ASSETS AND LIABILITIES
BETWEEN THE
BOARD OF ADMINISTRATION
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
'.
AND THE
CITY COUNCIL
CITY OF SAN BERNARDINO
WHEREAS, Govemment Code Section 21574 provides for a single employer rate to be
established to provide benefits under said Section on account of members
employed by contracting agencies electing to include the provision of said
Section in their contracts; and
WHEREAS. Govemment Code Section 21574. requires pooling of all assets and
liabilities of all contracting agencies subject to said Section;
NOW, THEREFORE BE IT AGREED, that assets and liabilities of the City of San
Bemardino and its covered employees shall be pooled pursuant to the
prOVisions of Govemment Code Section 21574.
BOARD OF ADMINISTRATION CITY COUNCIL
PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF THE
CITY OF SAN BERNARDINO
BY
PRESI
ACTUAR L & EMPLOYER SER CES DIVISION'
PUBLIC MPLOYEES' RETIREMENT SYSTEM
Date
() 71</ ,h~
, .
PER8-CON-59 (Rev, 7196)
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,
-=PERs
hLd':'
Actuarial & Employer Services Division
P.O. Box 942709
Sacramento, CA 94229-2709
Telecommunications Device for the Deaf - (916) 326-3240
(916) 326-3420 FAX (916) 658-1586
P?
September 30,1997
Employer Code #0061
'.
Reply to Section 220
Ms. Barbara Dillon
Director of Personnel
City of San Bernardino
300 North "D" Street
San Bernardino, CA 92418
Dear Ms. Dillon:
The contract amendment has been executed by CalPERS. The effective date of the
contract amendment is January 1, 1998.
Enclosed please find a copy of your contract amendment in lieu of the original.
If you have any questions regarding your contract, please do not hesitate to contact Cheryl
Salvador, Employer Representative, at (916) 341-2073.
Sincerely,
A~-.J~~,-ec/
Debra LaPerle
Public Agency Contract Services
Enclosure
C0308 (Rev, 2/97)
California Public Employees' Retirement System
Lincoln Plaza - 400 P Street - Sacramento, CA 95814
_..."~ ',. '.'~'~"<"T'j~~-.-
AMENDMENT TO CONTRACT
BETWEEN THE
BOARD OF ADMINISTRATION
OF THE
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE
CITY COUNCIL
OF THE
CITY OF SAN BERNARDINO
'.
The Board of Administration, Public Employees' Retirement System, hereinafter referred to as
Board, and the governing body of above public agency, hereinafter referred to as Public Agency,
having entered into a contract effective March 1, 1945, and witnessed February 6, 1945, and as
amended effective November 1, 1949, September 1, 1951, January 1, 1952, July 1, 1954,
February 1, 1965, February 24, 1969, March 8,1971, October 1, 1973, October 28,1974, March
17, 1975, April 28, 1975, November 10, 1975, July 6, 1977, January 7, 1985, May 27, 1985,
September 16, 1988, August 27, 1990, August 1, 1996, and July 3, 1997 which provides for
participation of Public Agency in said System, Board and Public Agency hereby agree as
follows:
A. Paragraphs 1 through 13 are hereby stricken from said contract as executed effective July
3, 1997, and hereby replaced by the following paragraphs numbered 1 through 13
inclusive:
1. All words and terms used herein which are defined in the Public Employees'
Retirement Law shall have the meaning as defined therein unless otherwise
specifically provided. "Normal retirement age" shall mean age 60 for local
miscellaneous members and age 50 for local safety members.
2. Public Agency shall participate in the Public Employees' Retirement System from
and after March 1, 1945 making its employees as hereinafter provided, members
of said System subject to all provisions of the Public Employees' Retirement Law
except such as apply only on election of a contracting agency and are not provided
for herein and to all amendments to said Law hereafter enacted except those,
which by express provisions thereof, apply only on the election of a contracting
agency.
3. Employees of Public Agency in the following classes shall become members of
said Retirement System except such in each such class as are excluded by law or
this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. I Local Police Officers (herein referred to as local safety members);
-
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c. Employees other than local safety members (herein referred to as local
miscellaneous members).
4. In addition to the classes of employees excluded from membership by said
Retirement Law, the following classes of employees shall not become members of
said Retirement System: '.
a. CROSSING GUARDS HIRED ON OR AFTER JANUARY 1, 1952;
b. LIBRARY PAGES mRED ON OR AFTER MARCH 17, 1975;
c. LIFEGUARDS;
d. SENIOR LIFEGUARDS;
e. SUPERVISING LIFEGUARDS;
f. RECREATION INTERNS;
g. RECREATION AIDES;
b. RECREATION LEADERS;
1. SENIOR RECREATION LEADERS;
j. RECREATION SPECIALIST;
k. LOCKER ATTENDANTS;
I. VEHICLE OPERATORS; AND
m. EXTRA RELIEF HEAVY LABORERS (EXTRA BOARD).
5. Prior to January 1, 1975, those members who were hired by Public Agency on a
temporary and/or seasonal basis not to exceed 6 months were excluded from
PERS membership by contract. Government Code Section 20336 superseded this
contract provision by providing that any such temporary and/or seasonal
employees are excluded from PERS membership subsequent to January 1, 1975.
Legislation repealed and replaced said Section with Government Code Section
20305 effective July 1, 1994.
6. The percentage of final compensation to be provided for each year of credited
prior and current service as a local miscellaneous member shall be determined in
accordance with Section 21353 of said Retirement Law (2% at age 60 Full).
7. The percentage of final compensation'to be provided for each year of credited
prior and current service as a local safety member shall be determined in
accordance with Section 21362 of said Retirement Law (2% at age 50 Full).
8. Public Agency elected and elects to be subject to the following optional
provisions:
a. Sections 21624, 21626 and 21628 (Post-Retirement Survivor Allowance).
b. Section 21222.1 (Special 5% Increase-1970). Legislation repealed said
Section effective January 1, 1980.
c. Section 20042 (One- Year Final Compensation).
'no<
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d. Section 21024 (Military Service Credit as Public Service), Statutes of
1974.
e. Section 21222.2 (Special 5% Increase-1971). Legislation repealed said
Section effective January 1, 1980.
f. Section 21319 (Special 15% Increase for Local Miscellaneous Members).
g. Section 21573 (Third Level of 1959 Survivor Benefits) for local fire
members only.
h. Section 20903 (Two Years Additional Service Credit) for local
miscellaneous members only.
i. Section 21635 (Post-Retirement Survivor Allowance to Continue After
Remarriage) for local fire members only.
9. Public Agency, in accordance with Government Code Section 20790, ceased to be
an "employer" for purposes of Section 20834 effective on April 28, 1975.
Accumulated contributions of Public Agency shall be fixed and determined as
provided in Government Code Section 20834, and accumulated contributions
thereafter shall be held by the Board as provided in Government Code Section
20834.
10. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with respect
to local miscellaneous members and local safety members of said Retirement
System.
11. Public Agency shall also contribute to said Retirement System as follows:
a. Per covered member, $1.50 per month on account Of the liability for the
1959 Survivor Benefits provided under Section 21573 of said Retirement
Law. (Subject to annual change.) In addition, all assets and liabilities of
Public Agency and its employees shall be pooled in a single account,
based on term insurance rates, for survivors of all local fire members.
b. A reasonable amount, as fixed by the Board, payable in one installment
within 60 days of date of contract to cover the costs of administering said
System as it affects the employees of Public Agency, not including the
costs of special valuations or of the periodic investigation and valuations
required by law.
c. A reasonable amount, as fixed by the Board, payable in one installment as
the occasions arise, to cover the costs of special valuations on account of
employees of Public Agency, and costs of the periodic investigation and
valuations required by law.
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12. Contributions required of Public Agency and its employees shall be subjec~ to
adjustment by Board on account of amendments to the Public Employees'
Retirement Law, and on account of the experience under the Retirement System
as determined by the periodic investigation and valuation required by said
Retirement Law.
13. Contributions required of Public Agency. and its employees sh~ll be paid by
Public Agency to the Retirement System within fifteen days after the end of the
period to which said contributions refer or as may be prescribed by Board
regulation. If more or less than the correct amount of contributions is paid for any
period, proper adjustment shall be made in connection with subsequent
remittances. Adjustments on account of errors in contributions required of any
employee may be made by direct payments between the employee and the Board.
B.
This amendment shall be effective on the 1st day of January
,19~.
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
CITY COUNCIL
OF THE
CITY OF SAN BERNARDINO
BY ~W7!1~ B~~
KENNE W. MARZION, CHIEF PREsiDING OFFICER
ACTUARIAL & EMPLOYER SERVICES DIVISION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
~~
Witness Dilte
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,
)Cj 97
/
Attest:
~A..c~ J1.c..LQ../~
"Cler
AMENDMENT
PERS-CON.702A (Rev, 8\96)
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--PERS
Actuarial & Employer Services Division
P.O. Box 942709
Sacramento, CA 94229-2709 R E C :~. , , .... -- ,.
Telecommunications Device for the Deaf - (g16) ~t~-~~40 1'.' If"'.. !,
(916) 326-3420 FAX (916) 658-1586" 7 ...;..' ~" :.. . ;
September 25,1997
;"IT~ [..:
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, .. . . Employer Code #0061
Ms. Barbara Dillon
Director of Personnel
City of San Bernardino
300 North "D" Street
San Bernardino, CA 92418
Reply to Section 220
Dear Ms. Dillon:
The contract amendment has been executed 1)y, CalJ>ERS. The effective date of the
contract amendment is January 1,1998. . ,
If you have any questions regarding your contni~ pl~C\o not he.sitate to contact Ellie Wright,
Employer Representative, at (916) 326-3625. .". ..
Sincerely,
."" ...,
~ Bi~~~ -
r/o1 Debra LaPerle
'tJ Public Agency Contract Services
DL:br
Enclosure
C0308 (Rev, 2197)
California PubUc Employees' Retiremeat System
Uacola Plaza - 400 P Street - Sacnmeato, CA 95814
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AMENDMENT TO CONTRACT
BETWEEN THE
BOARD OF ADMINISTRATION
OF THE
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
AND THE
CITY COUNCIL
OF THE
CITY OF SAN BERNARDINO
The Board of Administration, Public Employees' Retirement System, hereinafter referred to as
Board, and the governing bOdy of above public agency, hereinafter referred to as Public Agency,
having entered into a contract effective MarCh 1, 1945, and witnessed February 6, 1945, and as
amended effective November 1, 1949,S~ber 1, 1951, January 1, 1952, July 1, 1954,
February 1, 1965, February 24, 1969, March 8; 1971, October 1, 1973, October 28, 1974, March
17, 1975, April 28, 1975, November 10, 1975,;July 6, 1977, January 7, 1985, May 27, 1985,
September 16, 1988, August 27, 1990, Augustl,r996,and July 3, 1997 which provides for
participation of Public Agency in said System,BQ~djmd Public Agency hereby agree as
follows:
A.
Paragraphs 1 through 13 are hereby stricken from said contract as executed effective July
3, 1997, and hereby replaced by the following paragraphs numbered 1 through 13
inclusive:
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1. All words and terms used herein which are defined in the Public Employees'
Retirement Law shall have the meaning as defined therein unless otherwise
specifically provided. ''Normal retirement age" shall mean age 60 for local
miscellaneous members and age 50 for local safety members.
2. Public Agency shall participate in the Public Employees' Retirement System from
and after March 1, 1945 making its employees as hereinafter provided, members
of said System subject to all provisions of the Public Employees' Retirement Law
except such as apply only on election of a contracting agency and are not provided
for herein and to all amendments to said Law hereafter enacted except those,
which. by express provisions thereof, apply only on the election of a contracting
agency.
3. Employees of Public Agency in the following classes shall become members of
said Retirement System except such in each such class as are excluded by law or
this agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
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c. Employees other than local safety members (herein referred to as local
miscellaneous members).
4. In addition to the classes of employees excluded from membership by said
Retirement Law, the following classes of employees shall not become members of
said Retirement System:
a.. CROSSING GUARDS HIRED ON OR AFTER JANUARY 1, 1952;
b. LmRARY PAGES HIRED ON OR AFrER MARCH 17, 1975;
Co LIFEGUARDS;
d. SENIOR LIFEGUARDS;
e. SUPERVISING LIFEGUARDS;
f. RECREATION INTERNS;
g. RECREATION AIDES;
h. RECREATION.LE.wERS;
i. SENIOR RE~A'l10N LEADERS;
j. RECREATION SPECMLIST;
k. LOCKER A'ITENDANTS;
L VEmCLE OPE~TORS; AND
m. EXTRA RELIEF HEAVY LAl,lOJlERS (EXTRA BOARD).
5. Prior to January 1, 1975, those members-who were hired by Public Agency on a
temporary and/or seasonal basis not to exceed 6 months' were excluded from
PERS membership by contract. Government Code Section 20336 superseded this
contract provision by providing that any such temporary and/or seasonal
employees are excluded from PERS membership subsequent to January 1, 1975.
Legislation repealed and replaced said Section with Government Code Section
20305 effective July 1, 1994.
6. The percentage of:final compensation to be provided for each year of credited
prior and current service as a local miscellaneous member shall be determined in
accordance with Section 21353 of said Retirement Law (2% at age 60 Full).
7. The percentage of:final compensation to be provided for each year of credited
prior and current service as a local safety member shall be determined in
accordance with Section 21362 of said Retirement Law (2% at age 50 Full).
8. PUblic Agency elected and elects to be subject to the following optional
provisions:
a. Sections 21624, 21626 and 21628 (post-Retirement Survivor Allowance).
b. Section 21222.1 (Special 5% Increase-1970). Legislation repealed said
Section effective January 1, 1980.
c. Section 20042 (One- Year Final Compensation).
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d. Section 21024 (Military Service Credit as Public Service), Statutes of
1974.
e. Section 21222.2 (Special 5% Increase-1971). Legislation repealed said
Section effective January 1, 1980.
f. Section 21319 (Special 15% Increase for Local Miscellaneous Members).
g. Section 21573 (Third Level of 1959 Survivor Benefits) for local fire
members only.
h. Section 20903 (Two Years Additional Service Credit) for local
miscellaneous members only.
i. Section 2163S(post~Retirement Survivor Allowance to Continue After
Remarriage) for local fire members only.
9. Public Agency, in accordance wi~ Government Code Section 20790, ceased to be
an "employer" for purposes of Section 20834 effective on April 28, 1975.
Accumulated contributions of Public Agepcy shaD be fixed and determined as
provided in Government Code Section 20834, aild accumulated contributions
thereafter shall be held by the Board. as'. provided in Government Code Section
20834.
10. Public Agency shall contribute to said Retirement System the contributions
determined by actuarial valuations of prior and future service liability with respect
to local miscellaneous members and local safety members of said Retirement
System.
11. Public Agency shall also contribute to said Retirement System as follows:
a. Per covered member, $1.50 per month on account of the liability for the
1959 Survivor Benefits provided under Section 21573 of said Retirement
Law. (Subject to annual change.) In addition, all assets and liabilities of
Public Agency and its employees shall be pooled in a single account,
based on term insurance rates, for survivors of all local fire members.
b. A reasonable amount, as fixed by the Board, payable in one installment
within 60 days of date of contract to cover the costs of administering said
System as it affects the employees of Public Agency, not including the
costs of special valuations or of the periodic investigation and valuations
required by law.
c. A reasonable amount, as fixed by the Board, payable in one installment as
the occasions arise, to cover the costs of special valuations on account of
employees of Public Agency, and costs of the periodic investigation and
valuations required by law.
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12. Contributions required of Public Agency and its employees shall be subject to
adjustment by Board on, account of amendments to the Public Employees'
Retirement Law, and on account of the experience under the Retirement System
as determined by the periodic investigation and valuation required by said
Retirement Law.
13. Contributions required of Public Agency and its employees shall be paid by
Public Agency to the Retirement System within fifteen days after the end of the
period to which said contributions refer or as may be prescribed by Board
regulation. If more or less than the correct amount of contributions is paid for any
period, proper adjustment shall be made in connection with subsequent
remittances. Adjustments on account of errors in contributions required of any
employee may be made by direct payments between the employee and the Board.
B.
This amendment shall be effective on, ,the 1st day of January
,1998 .
BOARD OF ADMINISTRATION . . .' ,
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
CITY COUNCIL
OF THE
CITY OF SAN BERNARDINO
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BY ..~ {4~ 111 ..... '. ;"~JelIA.
~W.MARZlON.CHIEF~ - PRES~INGOF CER
ACTUARIAL & EMPLOYER SERVICES DMSION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
nH~dr tls,/'1 '7
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AMENDMENT
PERS-CON-702A (Rev. 8\96)
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AMENDMENT TO CONTRACT
BETWEEN THE
BOARD OF ADMINISTRATION
OF THE
PUBUC EMPLOYEES' RETIREMENT SYSTEM
AND THE
CITY COUNCIL
OF THE
CITY OF SAN BERNARDINO
The Board of Mmini!ltration, Public Employees' Retirement System, hereinafter referred to as Board,
and the governing body of above public agency, hereinafter referred to as Public Agency, having entered
into a contract effective March 1, 1945, and witnessed February 6, 1945, and as amended effective
November 1, 1949, September 1, 1951, January 1, 1952, July 1, 1954, February 1, 1965, February 24,
1969, March 8,1971, October 1,1973, October 28,1974, March 17,1975, April 28, 1975, November
10, 1975, July 6, 1977, January 7, 1985, May 27, 1985, September 16, 1988 and August 27, 1990,
which provides for participation of Public Agency in said System, Board and Public Agency hereby agree
as follows:
A. Paragraphs 1 through 13 are hereby stricken from said contract as executed effective August 27,
1990, and hereby replaced by the following paragraphs numbered 1 through 13 inclusive:
1.
All words and terms used herein which are defined in the Public Employees' Retirement
Law shall have the meaning as defined therein unless otherwise specifically provided.
"Normal retirement age" shall mean age 60 for local miscellaneous members and age 50
for loc8J. safety members.
.
2. Public Agency Shall participate in the Public Employees' Retirement System from and
after March 1, 1945 malcing its employees as hereinafter provided, members of said
System subject to all provisions of the Public Employees' Retirement Law except such
as apply. only on election of a contracting agency and are not provided for herein and to
all amendments to said Law hereafter enacted except those, which by express provisions
thereof, apply only on the election of a contracting agency.
3. Employees of Public Agency in the following classes Shall become members of said
Retirement System except such in each such class as are excluded by law or this
agreement:
a. Local Fire Fighters (herein referred to as local safety members);
b. Local Police Officers (herein referred to as local safety members);
c. Employees other than local safety members (herein referred to as local
miscellaneous members).
4. In addition to the classes of employees excluded from membership by said Retirement
Law, the following classes of employees shall not become members of said Retirement
System:
a. CROSSING GUARDS lURED ON OR AFI'ER JANUARY 1, 1952;
b. LIBRARY PAGES lURED ON OR AFTER MARCH 17, 1975;
c. LIFEGUARDS;
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d. SENIOR LIFEGUARDS;
e. SUPERVISING LIFEGUARDS;
f. RECREATION INTERNS;
g. RECREATION AIDES;
h. RECREATION LEADERS;
i. SENIOR RECREATION LEADERS;
j. RECREATION SPECIAUSTS;
Ie. LOCKER A1TENDANTS;
I. VEHICLE OPERATORS; AND
m. EXTRA )lilT .TRIl' IlEA VY LABORERS (EXTRA BOARD).
5. Prior to January 1, 1975, those members who were ~ by Public Agency on a
temporary and/or seasonal basis not to exceed 6 months were excluded from PERS
membership by contract. Government Code Section 20336 supersedes this contract
provision by providing that any such temporary and/or seasonal employees are excluded
from PERS membership subsequent to January I, 1975. Legislation repealed and
replaced said Section with Government Code Section 20305 effective July 1, 1994.
6. The percentage of final compensation to be provided for each year of credited prior and
current service as a local miscellaneous member shall be determined in accordance with
Section 21251.13 of said Retirement Law (2% at age 60 Full).
7. The percentage of final compensation to be provided for each year of credited prior and
current service as a local safety member shall be determined in accordance with Section
21362 of said Retirement Law (2 % at age 50 Full).
8. Public Agency elected and elects to be subject to the following optional provisions:
a. Sections 21624, 21626 and 21628 (post-Retirement Survivor Allowance) for local
miscellaneous members and local fire members only.
b. Section 21222.1 (Special 5% Increase -1970). Legislation repealed said Section
effective January 1~ 1980.
c. Section 20042 (One-Year Final Compensation).
d. Section 21024 (Military Service Credit as Public Service), Statutes of 1974.
e. Section 21222.2 (Special 5% Increase - 1971). Legislation repealed said Section
effective January 1, 1980.
f. Section 21319 (Special 15% Increase for Local Miscellaneous Members).
g. Section 21573 (Third Level of 1959 Survivor Benefits) for local fire members
only.
9. Public Agency, in accordance with Govenunent Code Section 20790, ceased to be an
"employer" for purposes of Section 20834 effective on April 28, 1975. Accumulated
contributions of Public Agency shall be fIXed and determined as provided in Government
Code Section 20834, and accumulated contributions thereafter shall be held by the Board
as provided in Govenunent Code Section 20834.
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10. Public Agency shall contribute to said Retirement System the contributions determined
by actuarial valuations of prior and future service liability with respect to local
miscellaneous members and local safety members of said Retirement System.
-
11. Public Agency shall also contribute to said Retirement System as follows:
a. Public Agency sball contribute $2.00 per member, per month on account of the
liability for the 1959 Survivor Benefits provided under Section 21573 of said
Retirement Law. (Subject to annual change.) In addition, all assets and
liabilities of Public Agency and its employees shall be pooled in a single account,
based on term insurance rates, for survivors of all local fire members.
. b. A reasonable amount, as fixed by the Board, payable in one installment within
60 days of date of contract to cover the costs of adminillltering said System as it
affects the employees of Public Agency, not including the costs of special
valuations or of the periodic investigation and valuations required by law.
c. A reasonable amount, as fixed by the Board, payable in one installment as the
occasions arise, to cover the costs of special valuations on account of employees
of Public Agency, and costs of the periodic investigation and valuations required
by law.
12. Contributions required of Public Agency and its employees shall be subject to adjustment
by Board on account of amendments to the Public Employees' Retirement Law, and on
account of the experience under the Retirement System as determined by the periodic
investigation and valuation required by said Retirement Law.
13. Contributions required of Public Agencfand its employees shall be paid by Public
Agency to the Retirement System within fifteen days after the end of the period to which
said contributions refer or.as may be prescribed by Board regulation. If more or less
than the correct amount of contributions is paid for any period, proper adjustment shall
be made in connection with subsequent remittances. Adjustments on account of errors
in contributions required of any employee may be made by direct payments between the
employee and the Board.
B. This amendment shall be effective on the /~ day of ~ ' 19~.
BOARD OF ADMINISTRATION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
CItY COUNCIL
OF THE
CITY OF SAN BERNARDINO
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BYD~/~)~f ~ ~~~
ACTUARIAL & EMPLOYER SERVICES DMSION
PUBLIC EMPLOYEES' RETIREMENT SYSTEM
n~~~ r- /5, I '19 U
Wi~~~e-- , I ,
AMENDMENT
PER-CON-702A (Rev. 1/96)
Attest:
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Cler