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HomeMy WebLinkAbout1992-088 1 2 3 4 5 6 RESOLUTION NO. ~8 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE CURRENT REFUNDING OF A PORTION, AND THE DEFEASANCE OF THE REMAINDER, OF THE CITY I S OUTSTANDING $18,840,000 SINGLE FAMILY MORTGAGE REVENUE REFUNDING BONDS (GNMA MORTGAGE- BACKED SECURITIES), SERIES 1990A, APPROVING ESCROW TRUST AGREEMENT RELATING TO SUCH DEFEASANCE AND PROVIDING FOR OTHER MATTERS PROPERLY RELATED THERETO. 7 WHEREAS, the City of San Bernardino is a municipal 8 corporation and a charter city duly created and existing pursuant 9 to the Constitution and the laws of the State of California (the 10 "City"). 11 12 WHEREAS, pursuant to a Resolution adopted by the Mayor 13 and Common Council on behalf of the city on May 21, 1990, the 14 City has heretofore issued its Single Family Mortgage Revenue 15 Refunding Bonds (GNMA Mortgage-Backed Securities), Series 1990A 16 in the aggregate principal amount of eighteen million eight 17 hundred and forty thousand dollars ($18,840,000) (the "Bonds") 18 under a Trust Indenture dated as of May 1, 1990 (the 19 "Indenture"), between the city and Security Pacific National Bank 20 (the "Trustee"); and 21 22 WHEREAS, the Bonds were issued for the purpose of 23 providing for the current refunding of a series of then- 24 outstanding bonds of the City, thereby making moneys available to 25 implement a home mortgage financing program (the "Program") 26 within the city by financing the purchase of certain qualifying 27 mortgage loans (the "Home Mortgages") for single residences 28 located in the City, through the purchase by the Trustee, on - 1 - 1 behalf of the City, of fully modified mortgage-backed securities 2 guaranteed as to timely payment of principal and interest by the 3 Government National Mortgage Association (the "GNMA Securities") ; 4 and 5 6 WHEREAS, Home Mortgages may be originated under the 7 Program during the Home Mortgage Origination Period ending on 8 February 1, 1993; and 9 10 WHEREAS, as of the date hereof no Home Mortgages have 11 been originated; and 12 13 WHEREAS, Section 4.04 of the Indenture provides that 14 the Bonds are subject to redemption at the option of the city, as 15 a whole or in part, on any date on or after November 1, 1991, at 16 a redemption price equal to the principal amounts of the Bonds to 17 be redeemed, together with accrued interest to the redemption 18 date, without premium, to the extent that moneys remaining in the 19 Program Fund (established under the Indenture) have not been used 20 to acquire GNMA Securities; and 21 22 WHEREAS, Article X of the Indenture provides that upon 23 the deposit in trust of noncallable direct obligations of, or 24 obligations fully guaranteed as to principal and interest by, the 25 united States or any agency or instrumentality thereof when such 26 obligations are backed by the full faith and credit of the united 27 States (the "Escrow Securities"), to provide for the payment of 28 any Bond, then all liability of the city in respect of such Bond - 2 - 1 shall cease, terminate and be completely discharged, and the 2 owner thereof shall thereafter be entitled only to payment from 3 such securities; and 4 5 WHEREAS, due to the decrease in mortgage market 6 interest rates since the implementation of the Program, the city 7 considers it desirable and in its best interest to terminate the 8 Program at this time. 9 10 NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON 11 COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS: 12 13 SECTION 1. The City hereby approves the termination 14 of the Program and authorizes the Mayor or the Administrator of 15 the Economic Development Agency of the City of San Bernardino 16 (the "Agency Administrator") to direct the Trustee to transfer 17 appropriate amounts from the Program Fund to the Redemption Fund, 18 give the required redemption notice pursuant to the Indenture, 19 and redeem on the earliest practical date under the Indenture the 20 Bonds maturing on November 1, 2000. 21 22 SECTION 2. After final calculations are made and 23 certified to by the Underwriter as to the moneys necessary to 24 discharge the lien of the Indenture with respect to the Bonds 25 maturing on November 1, 2005 and May 1, 2023, the City hereby 26 authorizes the Mayor or the Agency Administrator to direct the 27 Trustee to withdraw said moneys from the Program Fund and 28 transfer such moneys to Security Pacific National Bank, as escrow - 3 - 1 trustee, pursuant to the Escrow Trust Agreement attached as 2 Exhibit A hereto. 3 4 SECTION 3. The Escrow Trust Agreement in 5 substantially the form as on file with the Agency Administrator 6 and containing substantially the terms and provisions set forth 7 therein is hereby approved, and the Agency Administrator is 8 hereby authorized and directed to execute and deliver the Escrow 9 Trust Agreement, on behalf of the City, with such changes therein 10 from the form of the Escrow Trust Agreement as on file as shall 11 be approved by Sabo & Green, a Professional Corporation, and the 12 Agency Administrator, the execution thereof to establish 13 conclusive evidence of such approval. The city Clerk is hereby 14 authorized and directed to attest the execution of the Escrow 15 Trust Agreement. 16 17 SECTION 4. The Mayor, the Agency Administrator, the 18 city Clerk, and other City Staff, as necessary, are hereby 19 authorized and directed to execute any and all documents and 20 papers and to perform and do any and all acts and things deemed 21 necessary or convenient in order to effect the execution and 22 delivery of the Escrow Trust Agreement and the performance of any 23 other action which may be necessary or desirable in connection 24 therewith, or to carry out the intent and purposes of this 25 Resolution, including the execution of a certificate authorizing 26 an investment banking group established by Miller & Schroeder 27 Financial, Inc., to purchase, on behalf of the City, certain 28 Escrow Securities and to provide compensation therefor. - 4 - 1 2 3 4 5 A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE CURRENT REFUNDING OF A PORTION, AND THE DEFEASANCE OF THE REMAINDER, OF THE CITY'S OUTSTANDING $18,840,000 SINGLE FAMILY MORTGAGE REVENUE REFUNDING BONDS (GNMA MORTGAGE-BACKED SECURITIES), SERIES 1990A, APPROVING ESCROW TRUST AGREEMENT RELATING TO SUCH DEFEASANCE AND PROVIDING FOR OTHER MATTERS PROPERLY RELATED THERETO. SECTION 5. The findings and determinations herein 6 shall be final and conclusive. This Resolution shall take effect 7 upon the date of its adoption. 8 9 10 11 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a regular meeting 12 thereof, held on the 2nd March day of 13 1992, by the following vote, to wit: 14 Council Members: AYES NAYS ABSTAIN ABSENT 15 ESTRADA REILLY 16 HERNANDEZ MAUDSLEY 17 MINOR POPE-LUDLAM 18 MILLER x x x x x -1L- x 19 20 21 22 23 24 25 26 27 28 CZ~l~~ The foregoing resolution is hereby Approved as to form and legal content: 4th day of March , 1992~ May San JAMES F. PENMAN ~ By: - V'/tc....) sa 116\DOC\I - 5 - .FEB 281992 HWB\SANBERNA\ETA wgb-hd ESCROW TRUST AGREEMENT BY AND BETWEEN CITY OF SAN BERNARDINO, CALIFORNIA AND SECURITY PACIFIC NATIONAL BANK LOS ANGELES, CALIFORNIA as Escrow Trustee Dated as of March 1, 1992 relating to $18,840,000 CITY OF SAN BERNARDINO, CALIFORNIA Single Family Mortgage Revenue Refunding Bonds (GNMA Mortgage-Backed Securities) Series 1990A TABLE OF CONTENTS Paqe section 1. Escrow Fund 2 section 2. Deposits . . 2 section 3. Escrow Requirement 2 section 4. Creation of Lien . 2 section 5. Application of Moneys in Escrow Fund. . . 3 section 6. substitute securities 3 section 7. Liability of Escrow Trustee 4 section 8. Fees and Expenses of Escrow Trustee . . . . . . 5 section 9. Defeased Bonds' Fees 5 section 10. Resiqnation or Remoyal of Escrow Trustee: Successor Escrow Trustee 5 section 11. Indemnification 7 section 12. Amendments to Aqreement 8 section 13. Notices 9 section 14. Notices to Bondholders 9 section 15. Reliance: Good Faith: Counsel 9 section 16. No Recourse 9 section 17. Successors and Assiqns 10 section 18. Termination 10 section 19. Separability 10 section 20. Goyerninq Law 10 section 21. Counterparts 10 Schedule A Schedule B Schedule C Exhibit A Exhibit B Escrow Requirements Escrowed Securities Application of Receipts from Escrowed Securities to Escrow Requirements CPA Verification Report Notice of Defeasance THIS ESCROW TRUST AGREEMENT (herein called "Agreement") made as of the 1st day of March, 1992 by and between the city of San Bernardino, California (the "City"), a municipal corporation duly organized and existing under and by virtue of, the Constitution and laws of the State of California (the "State") and Security Pacific National Bank, a national banking association, duly organized and existing under the laws of the united States of America, with its principal corporate trust office located in Los Angeles, California (the "Escrow Trustee"); WITNESSETH: WHEREAS, pursuant to a Resolution adopted on May 21, 1990 (the "1990 Resolution"), by the city council of the City of San Bernardino, the City heretofore issued its Single Family Mortgage Revenue Refunding Bonds (GNMA Mortgage-Backed Securities), Series 1990A in the aggregate principal amount of $18,840,000 (the "Bonds"), under a Trust Indenture dated as of May 1, 1990 (the "Indenture"), between the City and Security Pacific National Bank, as trustee (in such capacity, the "Trustee"), for the purpose of current refunding a series of then-outstanding bonds of the city, thereby making moneys available to implement a home mortgage financing program (the "Program") within the City by financing the purchase of certain qualifying mortgage loans (the "Home Mortgages") for single family residences located in the City, through the purchase by the Trustee, on behalf of the City, of fully modified mortgage-backed securities guaranteed as to timely payment of principal and interest by the Government National Mortgage Association (the "GNMA Securities"); and WHEREAS, pursuant to a Resolution adopted on March 2, 1992 (the "1992 Resolution"), the City has determined to direct the Trustee to effect the redemption of the Bonds maturing on November 1, 2000, in the aggregate principal amount of $1,735,000 (the "Redeemed Bonds"); and WHEREAS, pursuant to the 1992 Resolution, the City has determined to cause the defeasance of the Bonds maturing on November 1, 2005 and May 1, 2023, in the aggregate principal amount of $17,105,000 (hereinafter sometimes referred to as the "Defeased Bonds"), to their respective maturity dates, and it is necessary that provision be duly and legally made with the Trustee for the payment of the principal of and interest on the Defeased Bonds; and WHEREAS, Article X of the Indenture provides that upon the deposit in trust of noncallable direct obligations of, or obligations fully 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 of the united States, to provide for the payment of any Bond, then all liability 1 of the City in respect of such Bond shall cease, terminate and be completely discharged and the owner thereof shall thereafter be entitled only to payment from such securities; and WHEREAS, the city has directed that moneys remaining in the Program Fund Indenture) be applied to the purchase of described herein; and $ (established the Escrowed of the under the Securities WHEREAS, it is the intent of this Agreement to provide for the application of said moneys in such manner as to cause the defeasance of the lien of the Indenture with respect to the Defeased Bonds pursuant to the requirements of the Indenture. NOW, THEREFORE, IN CONSIDERATION of the foregoing and of the mutual covenants herein contained, and in order to accomplish the above, the parties hereto covenant, agree and bind themselves as follows: section 1. Escrow Fund. There is hereby created by the city and ordered maintained in its name a trust account in the custody of the Escrow Trustee to be designated "The City of San Bernardino, California Single Family Mortgage Revenue Refunding Bonds (GNMA Mortgage-Backed Securities), Series 1990A Escrow Fund" (the "Escrow Fund"). Section 2. receipt of: Deposits. The Escrow Trustee acknowledges (a) The sum of $ Fund under the Indenture. previously held in the Program (b) [Reserved] The Escrow Trustee shall use such amounts to acquire the securities shown on Schedule B, for deposit to the Escrow Fund for the Defeased Bonds. Such securities and cash are hereinafter collectively referred to as the "Escrowed Securities". section 3. Escrow Requirement. The parties hereto each acknowledge, agree and certify that the principal of and income derived from the Securities will be applied to pay the debt service requirements on the Defeased Bonds set forth in Schedule A hereto (collectively, the "Escrow Requirements"). Attached hereto as Exhibit A is an opinion of , independent certified public accountants, upon which the Escrow Trustee may rely, stating that the receipts from the Escrowed securities will be adequate to assure timely payment of the Escrow Requirements. section 4. Creation of Lien. The trust created hereby shall be irrevocable. The owners of the Defeased Bonds are hereby given an express lien on, and security interest in, the Escrowed 2 Securities and the cash in the Escrow Fund and all earnings thereon and proceeds thereof until used and applied in accordance with this Agreement. The maturing principal of, and earnings on, the Escrowed Securities and any cash in the Escrow Fund are hereby pledged and assigned, and shall be applied solely for the payment of the principal of, the premium, if any, and interest on the Defeased Bonds. section 5. Application of Monevs in Escrow Fund. The Escrow Trustee shall apply all receipts of principal of and interest on the Escrowed Securities in the Escrow Fund to the payment of the principal of the Escrow Requirements as the same become due and payable as set forth on Schedule C attached hereto, and shall, prior to each date upon which interest or principal is due on the Defeased Bonds, as shown on Schedule C attached hereto (each a "Payment Date"), pay such amounts, by check mailed in such manner as to arrive at the office of Security Pacific National Bank, as paying agent (the "Paying Agent") for the Defeased Bonds, at least one (1) business day prior to the Payment Dates, at the times and in the amounts shown on Schedule C. The Escrow Trustee shall provide the city with a copy of all reports of cash transfers or other communications transmitted by the Escrow Trustee to the Paying Agent. upon payment of the Escrow Requirements by the Escrow Trustee, the Escrow Trustee shall transfer any amounts remaining hereunder to the city. section 6. Substitute Securities. (a) At the written request of the city, and upon compliance with the conditions hereinafter stated, the Escrow Trustee shall have the power to request the redemption of, sell, transfer or otherwise dispose of any Escrowed Securities in the Escrow Fund and to substitute therefor other securities which are direct obligations of, or obligations unconditionally guaranteed as to timely payment of principal and interest by, the United States of America, including united States Treasury Securities - State and Local Series (the "U.S. Obligations"), which are not subject to redemption prior to maturity except at the option of the holder thereof and which are available for purchase with the proceeds derived from such disposition on the date of such transaction. The Escrow Trustee shall purchase such substitute U.S. Obligations with the proceeds derived from the sale, transfer, disposition or redemption of the Escrowed Securities in the Escrow Fund. The transactions may be effected only by simultaneous sale and purchase transactions, and only if (a) the Escrow Trustee shall receive the opinion of Ritter & Eichner, Washington, D.C. to the effect that such disposition and substitution would not cause any of the Bonds to be "arbitrage bonds" within the meaning of section 148 (a) of the Internal Revenue Code of 1986, as amended thereunder (the "Code") or described in paragraph (3) or (4) of section 149 (d) of the Code and the regulations thereunder; and (b) concurrently with such 3 substitution, the Escrow Trustee shall have received from an independent certified public accountant a certification that, after such transaction, the principal of and interest on all of the Escrowed securities in the Escrow Fund will, together with other moneys available for such purpose, be sufficient at all times to pay the principal of and interest on the Defeased Bonds when due. (b) To facilitate timely delivery of the Escrowed Securities described on Schedule B hereto which may not be available for delivery on the date of delivery of this Agreement, the Escrow Trustee is directed to accept substitute u.s. Obligations in lieu thereof, provided the maturing principal of and interest on such substitute U.S. Obligations (excluding any interest after any optional call date) is at least equal to the maturity value of such unavailable Escrowed Securities, and payment of such principal of and interest on the substitute U.S. Obligations will be received on or before the maturity date of the unavailable Escrowed Securities. Subsequently, whenever the correct Escrowed Securities shall be tendered to the Escrow Trustee, the Escrow Trustee shall accept such Escrowed Securities in exchange for the substitute U.S. Obligations. The city hereby covenants that no part of the moneys or funds at any time in the Escrow Fund shall be used directly or indirectly to acquire any securities or obligations, the acquisition of which would cause the Bonds or the Defeased Bonds to be "arbitrage bonds" within the meaning of section 148 of the Code. Liabilitv of Escrow Trustee. Section 7. (a) The Escrow Trustee shall not be liable for any loss resulting from any investment, sale, transfer or other disposition made pursuant to this Agreement in compliance with the provisions hereof. The Escrow Trustee shall have no lien whatsoever on, or right of set-off with respect to, any of the moneys or Escrowed Securities on deposit in the Escrow Fund for the payment of fees and expenses for services rendered by the Escrow Trustee under this Agreement or otherwise. (b) The Escrow Trustee shall not be liable for the accuracy of the calculations as to the sufficiency of the Escrowed Securities and moneys to pay the Defeased Bonds. So long as the Escrow Trustee applies the Escrowed Securities and monies as provided herein, the Escrow Trustee shall not be liable for any deficiencies in the amounts necessary to pay the Defeased Bonds caused by such calculations. Notwithstanding the foregoing, the Escrow Trustee shall not be relieved of liability arising from, and proximate to, its failure to comply fully with the terms of this Agreement. 4 (c) In the event of the Escrow Trustee's failure to account for any of the Escrowed securities or moneys received by it, said Escrowed securities or moneys shall be and remain the property of the City in trust for the owners of the Defeased Bonds and if, for any reason, such Escrowed securities or moneys are not applied as herein provided, the assets of the Escrow Trustee shall be impressed with a trust for the amount thereof until the required application shall be made. section 8. Fees and Expenses of Escrow Trustee. In consideration of the services rendered by the Escrow Trustee under this Agreement, the City and the Escrow Trustee agree that the Escrow Trustee has received its proper fees and expenses except any extraordinary fees and expenses which may be incurred by the Escrow Trustee subsequent to the execution and delivery of this Agreement which extraordinary fees and expenses shall be billed directly to and paid by the city from any legally available moneys but shall not be secured by a lien on the Escrowed Securities. section 9. Defeased Bonds' Fees. The Escrow Trustee acknowledges that the amounts already paid to the Escrow Trustee represent full and complete payment of compensation for services as Escrow Trustee for the Defeased Bonds and Trustee for the Defeased Bonds. section 10. Resiqnation or Removal of Escrow Trustee: Successor Escrow Trustee. The Escrow Trustee at the time acting hereunder may, at any time, resign and be discharged from its duties and responsibilities hereby created by giving written notice to the City not less than sixty (60) days prior to the date when the resignation is to take effect. Such resignation shall take effect immediately upon the occurrence of the following events: (a) the acceptance by the city of the resignation, (b) the appointment of a successor Escrow Trustee (which may be a temporary Escrow Trustee), (c) the acceptance by such successor Escrow Trustee of the terms, covenants and conditions of this Agreement, (d) the transfer of the Escrow Fund, including the moneys and Escrowed Securities held therein, to such successor Escrow Trustee, (e) the refund to the City of a pro rata portion of the fees paid to the Escrow Trustee pursuant to section 9 hereof, and (f) the completion of any other actions required for the principal of, and interest on, the Escrowed Securities to be made payable to such successor Escrow Trustee rather than to the resigning Escrow Trustee. The Escrow Trustee may be removed at any time by an instrument or concurrent instruments in writing, delivered to the Escrow Trustee and to the city and signed by the registered owners of a majority in principal amount of the Defeased Bonds then outstanding. The Escrow Trustee may also be removed by the city if the Escrow Trustee fails to make timely payment on any Payment Date of the amounts required to be paid by it on such Payment Date by 5 this Agreement to the Paying Agent. Any removal pursuant to this paragraph shall become effective upon the occurrence of the following events: (i) the appointment of a successor Escrow Trustee (which may be a temporary Escrow Trustee), (ii) the acceptance by such successor Escrow Trustee of the terms, covenants and conditions of this Agreement, (iii) the transfer of the Escrow Fund, including the moneys and Escrowed Securities held therein, to such successor Escrow Trustee, and (iv) the completion of any other actions required for the principal of, and interest on, the Escrowed Securities to be made payable to such successor Escrow Trustee rather than to the Escrow Trustee being removed. In the event that the Escrow Trustee shall resign or be removed, or be dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case the Escrow Trustee shall be taken under the control of any public officer, or of a receiver appointed by a court, the City shall appoint a temporary Escrow Trustee to fill such vacancy until a successor Escrow Trustee shall be appointed by the City in the manner above provided, and any such temporary Escrow Trustee so appointed by the city shall immediately and without further act be superseded by the successor Escrow Trustee so appointed. In the event that no appointment of a successor Escrow Trustee or a temporary successor Escrow Trustee shall have been made by the registered owners of a majority in principal amount of Defeased Bonds then outstanding or by the City pursuant to the foregoing provisions of this section within sixty (60) days after written notice of resignation of the Escrow Trustee has been given to the city, the registered owner of any Defeased Bond or any retiring Escrow Trustee may apply to any court of competent jurisdiction for the appointment of a successor Escrow Trustee, and, thereupon, such court may, after such notice, if any, as it shall deem proper, appoint a successor Escrow Trustee. No successor Escrow Trustee shall be appointed unless such successor Escrow Trustee shall be a corporation with full trust powers, authorized to do business in the state of California, organized under the banking laws of the united States or the state of California, and having, at the time of appointment, a reported capital and surplus of not less than $20,000,000. Every successor Escrow Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and to the city an instrument in writing accepting such appointment hereunder and, thereupon, such successor Escrow Trustee, without any further act, deed or conveyance, shall become fully vested with all of the rights, immunities, powers, trusts, duties and obligations of its predecessor, but such predecessor shall, nevertheless, on the written request of such successor Escrow Trustee or the city, execute and deliver an instrument transferring to such successor Escrow Trustee all the estates, properties, rights, powers and 6 trusts of such predecessor hereunder, and every predecessor Escrow Trustee shall deliver, to its successor, all securities and moneys held by such predecessor Escrow Trustee. In the event that any transfer, assignment or instrument in writing from the city be required by any successor Escrow Trustee for more fully and certainly vesting in such successor Escrow Trustee the estates, rights, powers and duties hereby vested or intended to be vested in the predecessor Escrow Trustee, any such transfer, assignment and instrument in writing shall, on request, be executed, acknowledged and delivered by the city. Any corporation into which the Escrow Trustee, or any successor to it of the duties and responsibilities created by this Agreement, may be merged or converted, or with which it or any successor to it may be consolidated, or any corporation resulting from any merger, conversion, consolidation or tax free reorganization to which the Escrow Trustee or any successor to it shall be a party, shall, if satisfactory to the City, be the successor Escrow Trustee under this Agreement, without the execution or filing of any paper or any other act on the part of the parties hereto, anything herein to the contrary notwithstanding. section 11. Indemnification. The obligations of the City hereunder are not general obligations of the city but are limited obligations of the City payable solely from the sources provided in the Indenture. The City hereby agrees (whether or not any of the transactions contemplated hereby are consummated), to the extent funds are available under the Indenture to indemnify, protect, save and hold harmless the Escrow Trustee and its respective successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, at any time, the Escrow Trustee (whether or not also indemnified against the same by the city or any other person under any other agreement or instrument) and in any way relating to or arising out of the execution and delivery of this Agreement, the establishment of the Escrow Fund established hereunder, the acceptance of the moneys and securities deposited therein, the purchase of the Escrowed Securities, the retention of the Escrowed Securities or the proceeds thereof and any payment, transfer or other application of moneys or securities by the Escrow Trustee in accordance with the provisions of this Agreement; provided, however, that the city shall not be required to indemnify the Escrow Trustee against its own negligence or misconduct. In no event shall the City be liable to any person by reason of the transactions contemplated hereby other than to the Escrow Trustee as set forth in this section. The indemnities contained in this section shall survive the termination of this Agreement. 7 The Escrow Trustee and its respective successors, assigns, agents and servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in connection with the execution and delivery of this Agreement, the establishment of the Escrow Fund, the acceptance of the moneys deposited therein, the purchase of the Escrowed Securities, the retention of the Escrowed Securities or the proceeds thereof or any payment, trans.fer or other application of the moneys or securities by the Escrow Trustee in accordance with the provisions of this Agreement or by reason of any non-negligent act, omission or error of the Escrow Trustee made in good faith in the conduct of its duties. The duties and obligations of the Escrow Trustee shall be determined by the express provisions of this Agreement. The Escrow Trustee may consult with counsel who mayor may not be counsel to the City, and in reliance upon the opinion of such counsel shall have full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action under this Agreement, such matter may be deemed to be conclusively established by a certificate signed by an authorized officer of the city. section 12. Amendments to Aqreement. This Agreement is made for the benefit of the city and the registered owners from time to time of the Defeased Bonds and it shall not be amended without the written consent of all such registered owners, the Escrow Trustee and the city; provided, however, that the City and the Escrow Trustee may, without the consent of, or notice to, such registered owners, enter into such agreements supplemental to this Agreement as shall not materially adversely affect the rights of such registered owners and as shall not be inconsistent with the terms and provisions of this Agreement for anyone or more of the following purposes: (al to cure any ambiguity or formal defect or omission in this Agreement; (b) to grant to, or confer upon, the Escrow Trustee for the benefit of the registered owners of the Defeased Bonds, any additional rights, remedies, powers or authority that may lawfully be granted to, or conferred upon, such holders or the Escrow Trustee; and (cl to include under this Agreement additional funds, securities or properties. The Escrow Trustee shall be entitled to rely exclusively upon an unqualified opinion of the counsel of its choice which has been approved by the city with respect to compliance with this section, including the extent, if any, to which any change, modification, addition or elimination affects the rights of the registered owners 8 of the Defeased Bonds or that any instrument executed hereunder complies with the conditions and provisions of this section. Notice of any such amendment shall be given at least ten (10) days prior to its effective date to Standard & Poor's Corporation, 25 Broadway, 21st Floor, New York, New York 10004. Section 13. Notices. (a) All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when delivered or mailed by registered or certified mail, postage prepaid, addressed as follows: (a) if to the city, to: city of San Bernardino 300 North "D" Street San Bernardino, California 92418 (b) if to the Escrow Trustee, to: security Pacific National Bank 333 South Beaudry Avenue (w24-30) Los Angeles, California 90017 Attention: Corporate Services Division Section 14. Notices to Bondholders. As soon as possible following the execution and delivery of this Agreement, the Escrow Trustee shall cause to be published in a financial journal or newspaper of general circulation in the city of New York, New York, a Notice of Defeasance in substantially the form attached hereto as Exhibit B. Section 15. Reliance: Good Faith: Counsel. (a) The Escrow Trustee may rely on any document believed by it, upon the exercise of due care, to be genuine and to have been signed or presented by the proper person. The Escrow Trustee need not investigate any fact or matter stated in the document. (b) The Escrow Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers, provided that the Escrow Trustee's conduct does not constitute negligence. (c) The Escrow Trustee may consult with counsel of its own choosing and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. Section 16. No Recourse. No recourse under or upon any obligation, covenant, or agreement contained in the Indenture, this Agreement or in any Defeased Bond, or under any judgment obtained 9 against the City, or the enforcement of any assessment, or any legal or equitable proceedings by virtue of any constitution or statute or otherwise, or under any circumstances under or independent of the Indenture or this Agreement, shall be had against any incorporator, director or officer as such, past, present or future of the City, either directly or through the city or otherwise, for the payment for or to the city or any receiver thereof, or for or to the holder of any Defeased Bond, or otherwise, of any sum that may be due and unpaid by the city upon any such Defeased Bond. Any and all personal liability of every nature whether at common law or in equity or by statute or by constitution or otherwise of any such incorporator, director or officer, as such, to respond, by reason of any act of omission on his part or otherwise, for the payment for or to the holder of any Defeased Bond or otherwise of any sum that may remain due and unpaid upon the Defeased Bonds hereby secured or any of them is expressly waived and released as a condition of and in consideration for the execution of this Agreement and the defeasance of the Defeased Bonds. section 17. Successors and Assiqns. All the covenants and agreements in this Agreement contained by or on behalf of the city or the Escrow Trustee shall bind and inure to the benefit of their respective successors and assigns, whether or not so expressed. section 18. Termination. This Agreement shall terminate when all transfers required to be made by the Escrow Trustee under the provisions hereof shall have been made. section 19. Separabilitv. If anyone or more of the covenants or agreements provided in this Agreement on the part of the City or the Escrow Trustee to be performed should be determined by a court of competent jurisdiction to be contrary to law, such covenant or agreement shall be deemed and construed to be severable from the remaining covenants and agreements herein contained and shall in no way affect the validity of the remaining provisions of this Agreement. section 20. Governinq Law. This Agreement shall be governed by the applicable laws of the state. section 21. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name and on its behalf by its Mayor and the Escrow Trustee, in token of its acceptance of the trust created hereunder, has caused this Agreement to be executed in its name by its duly authorized officer, all as of the day and year first above written. 10 ATTEST: CITY OF SAN BERNARDINO By City Clerk By city Administrator ATTEST: SECURITY PACIFIC NATIONAL BANK as Escrow Trustee By By Authorized Officer 11 SCHEDULE A ESCROW REQUIREMENTS SCHEDULE B ESCROWED SECURITIES APPLICATIO~ OF RECEIPTS FROM ESCROWED SECURITIES TO ESCROW REQUIREMENTS SCHEDULE C EXHIBIT A [CPA VERIFICATION REPORT] EXHIBIT B NOTICE OF DEFEASANCE CITY OF SAN BERNARDINO, CALIFORNIA Single Family Mortgage Revenue Refunding Bonds (GNMA Mortgage-Backed Securities) Series 1990A Maturing: November 1, 2005 May 1, 2023 OWNERS of the above-described Bonds (the "Defeased Bonds") are hereby NOTIFIED that, pursuant to an Escrow Trust Agreement dated as of March 1, 1992, between the city of San Bernardino, California (the "city"), and Security Pacific National Bank, Los Angeles, California, as Escrow Trustee (the "Escrow Trustee"), the Escrow Trustee has received and holds in irrevocable trust, cash monies or general and direct obligations of the united States of America, or obligations the payment of which is guaranteed by the United States of America (collectively, the "Escrowed Securities") the principal of and interest on which obligations, when due, will provide monies together with any such cash sufficient to pay principal and interest on the Bonds when due. The Escrow Trustee shall collect the principal of and interest on such obligations and shall pay the same, together with any such cash monies held by the Escrow Trustee to Security Pacific National Bank, Los Angeles, California, as Paying Agent with respect to the Defeased Bonds, in such amounts and at such times as shall be required to pay the principal of and interest on the Defeased Bonds. The Defeased Bonds are now deemed to have been paid, and the owners thereof shall hereafter be limited to the application of such cash monies or Escrowed Securities for the payment of the principal of and the interest on such Defeased Bonds as the same are redeemed or become due and payable as described above. SECURITY PACIFIC NATIONAL BANK, as Escrow Trustee By: Title: DATE: , 1992